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Item 1A. Risk Factors

2026-03-04 compared with 2025-02-26 · 206 added, 243 removed, 445 unchanged (50% of the section changed)

You should carefully consider the risks described below and the other information contained in this report and other filings that we make from time to time with the SEC, including our consolidated financial statements and accompanying notes.

Any of the following risks could materially and adversely affect our business, financial condition, results of operations or liquidity.

Any of the following risks could materially adversely affect our business, financial condition, results of operations or liquidity.

These risks are not the only risks we face.

Our business, financial condition, results of operations or liquidity could also be adversely affected by additional factors that apply to all companies generally or by risks not currently known to us or that we currently view to be immaterial.

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provide no assurance and make no representation that our risk mitigation efforts, although we believe they are reasonable, will be successful.

We can provide no assurance and make no representation that our risk mitigation efforts, although we believe they are reasonable, will be successful.

Risks Related to Our Business and Operations

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Our business depends on consumer demand for our products and, consequently, is sensitive to a number of factors that influence consumer behavior, confidence and spending, including whether consumers make purchases, their choice of price point, their appetite for upgrades or add-on services, or the frequency with which they have an eye exam or replace their eyeglasses.

Conditions that have affected, or may in the future affect, consumer sentiment include general economic conditions, consumer disposable income, energy and fuel prices, recession and fears of recession, unemployment, minimum wages, availability of consumer credit, consumer debt levels, conditions in the housing market, interest rates, tax rates and policies, inflation, consumer confidence in future economic conditions, developments related to the U.S.

Conditions that have affected, or may in the future affect, consumer behavior include general economic conditions, consumer disposable income, energy and fuel prices, recession and fears of recession, unemployment, minimum wages, availability of consumer credit, consumer debt levels, conditions in the housing market, interest rates, tax rates and policies, inflation, tariffs and trade wars, consumer confidence in future economic conditions, the risk of future government shutdowns, developments related to the U.S.

federal debt ceiling and political conditions.

In recent years, global markets and economic conditions have been challenging, particularly in light of elevated interest rates and historic inflation, which has created continued economic uncertainty.

Additionally, uncertainty and market volatility have been magnified as a result of potential shifts in U.S.

and foreign trade, economic, and other policies following the election of a new U.S.

president for a term that commenced in 2025, coupled with a consolidation of party control of both chambers of Congress, which has led to new legislative and regulatory initiatives and the roll-back of certain initiatives of the previous presidential administration, which may impact our business and our clients’ businesses in unpredictable ways, including as a result of the potential implementation of more restrictive trade policies, higher tariffs or the renegotiation of existing trade agreements.

Additionally, uncertainty and market volatility have been magnified as a result of shifts in U.S.

and foreign trade, economic, and other policies, coupled with a consolidation of party control of both chambers of Congress in 2025, which has led to new legislative and regulatory initiatives and the roll-back of certain initiatives of the previous presidential administration, which may impact our business and our clients’ businesses in unpredictable ways, including as a result of the potential implementation of more restrictive trade policies, higher tariffs or the renegotiation of existing trade agreements.

These conditions have impacted customer demand and may continue to have similar impacts in the future.

Reduced customer confidence and spending cutbacks may result in reduced demand for our merchandise and may force us to mark down inventory, increase selling and promotional expenses or, if part of a prolonged or pervasive economic downturn, may slow the pace of new store openings or cause current stores to close.

Additionally, our business is seasonal in nature, with the first and second quarters typically representing a higher portion of net sales to us than other quarters, due in part to the issuance of tax refunds that many consumers have historically utilized for eyewear and eye care spending in the first half of the year.

Additionally, our business is seasonal in nature, with the first and second quarters typically representing a higher portion of net sales to us than other quarters, due in part to annual health insurance program start/reset periods in the first half of the year.

As such, a significant downward trend in the first half of the year could have a substantial negative impact on our annual financial results.

Furthermore, the customers we serve may be disproportionately sensitive to a number of these and other factors outside of our control.

Furthermore, certain of the customers we serve may be disproportionately sensitive to a number of these and other factors outside of our control.

A continuation of these or other similar circumstances could have a material negative impact on our financial performance.

Global political, socio-economic, cultural, and geopolitical issues can also impact macroeconomic conditions and consumer sentiment and could have a material adverse impact on our financial results.

These issues include, but are not limited to, ongoing conflicts across the globe such as in Russia-Ukraine and the Middle East, and relations between Taiwan and China, as well as disruptions caused by terrorist activities or otherwise.

Further escalation of these geopolitical conflicts, including increased trade barriers or restrictions on global trade, could result in, among other things, cyberattacks, supply disruptions, lower consumer demand, and changes to foreign exchange rates and financial markets, any of which may adversely affect our business and financial condition.

These issues include, but are not limited to, ongoing conflicts across the globe such as in Russia-Ukraine and the Middle East, as well as disruptions caused by terrorist activities or otherwise.

Further escalation of these geopolitical conflicts, including by the imposition of increased trade barriers or restrictions on global trade, could result in, among other things, cyberattacks, supply disruptions, lower consumer demand, and changes to foreign exchange rates and financial markets, any of which may adversely affect our business and financial condition.

In addition, the effects of the ongoing conflicts could also heighten many of the other risk factors described herein.

We may not be successful in implementing our transformation initiatives, or in anticipating the impact of important strategic initiatives, and our plans for implementing such initiatives may be altered or delayed due to various factors, which may have an adverse impact on our business and financial results.

We may not be able to implement our transformation initiatives in accordance with our expectations or in a way that generates expected returns, which may result in an adverse impact on our business and financial results.

These strategic initiatives, which include a focus on implementing new pricing architecture, enhancing the customer and patient experience, and optimizing cost structure, are designed to strengthen our core business, improve our results of operations, and drive long-term shareholder value.

We may not be successful in implementing our strategic initiatives, or in anticipating the impact of important strategic initiatives, and our plans for implementing such initiatives may be altered or delayed due to various factors, which may have a material adverse impact on our business and financial results.

We may not be able to implement our strategic initiatives in accordance with our expectations or in a way that generates expected returns, which may result in an adverse impact on our business and financial results.

These strategic initiatives are intended to allow us to better serve our existing customers and expand our target consumer demographics and drive the outcome of a stronger core business and improved operating results.

In addition to other factors listed in this risk factors section, the challenges of company-wide coordination and alignment or our inability to identify or act on opportunities to deliver anticipated cost savings may adversely affect the successful implementation of these initiatives, which could have a material adverse impact on our business and financial results.

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The implementation, timing and results of these complex strategic initiatives are subject to various risks and uncertainties, which may require that we make significant estimates and assumptions in our planning.

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We are dependent on our management’s ability to oversee these initiatives effectively and implement them successfully.

If our estimates and assumptions about our initiatives are incorrect, or if we miscalculate the resources or time, we need to complete them or fail to execute on them effectively, our pursuit of these initiatives may increase our costs and reduce our margins and profitability.

To be effective, our transformation initiatives have required, and will continue to require, significant investment in cross-functional operations and management focus, along with supporting investments.

If we are unable to attract and retain employees or contract with third parties having the specialized skills needed to support our efforts, or implement improvements to systems in a timely manner, our ability to compete and our results of operations could be adversely affected.

In addition, if initiatives related to our new store concepts and improved customer experience do not appeal to our customers or if we are unable to consistently meet our brand execution promises in a cost-effective manner, we may experience a loss of customer confidence or lost sales, which could adversely affect our reputation and results of operations.

In addition, if initiatives related to our new store, marketing or merchandising concepts and improved customer experience do not appeal to our customers or if we are unable to consistently meet our brand execution promises in a cost-effective manner, we may experience a loss of customer confidence or lost sales, which could adversely affect our reputation and results of operations.

A failure to properly execute our plans and business strategies, delays in executing our plans and business strategies, increased costs associated with executing on our plans and business strategies, or failure to identify alternative strategies could have a material adverse effect on our business, financial position, results of operations, and cash flows.

Failure to recruit and retain vision care professionals for in-store roles or to provide remote care offerings could adversely affect our business, financial condition and results of operations.

Our ability to hire and/or contract with vision care professionals for in-store roles and remote care offerings is critical to our operations as well as our growth strategy.

Our operations, like those of many of our competitors, depend on our ability to offer both eyewear and eye exams, which requires the availability of optometrists in or near our stores.

Many states require that opticians be licensed to dispense and fit eyeglasses and contact lenses.

Failure to have vision care professionals available in or near our stores could adversely affect our ability to win managed vision care contracts.

Additionally, as we enable remote medicine solutions at an increased number of our stores, the ability to hire and retain vision care professionals for such remote care offerings and the continued successful installation, implementation and operation of the applicable equipment and remote medicine technology platform is essential to the expansion of our remote medicine strategy.

The inability to attract and retain vision care professionals or enable and maintain remote medicine at applicable locations, could have a material adverse effect on our business, financial condition and results of operations.

Competition for vision care professionals has increased, especially with the increased demand for optometrists in the current constrained labor market.

We compete with other optical retail companies, health systems and group practices for vision care professionals.

Failure to attract, hire and retain vision care professionals, or to design and successfully implement more flexibility to meet the expectations of prospective and existing vision care professionals, could have a material adverse effect on our business, financial condition and results of operations.

There can be no assurance that flexibility initiatives provided to vision care professionals, including with respect to scheduling, will be successful in attracting or retaining vision care professionals or addressing constraints in exam capacity.

In recent years, we have experienced an increased degree of vision care professional shortages and related exam capacity constraints, which continued over the course of 2024, and may continue into 2025 and beyond, despite increased recruitment and retention efforts including wage investments and other enhanced compensation efforts.

Such efforts have increased, and may continue to increase, our operating costs which could adversely impact our results, and ultimately may be unsuccessful.

In addition, due to these same factors, we experienced wage pressure for our vision care professionals and associates in 2024, which we expect to continue in 2025, and which may continue thereafter.

Additionally, our ability to recruit, hire and/or contract with vision care professionals is closely regulated.

For example, there is a risk that state authorities in some jurisdictions may find that our contractual relationships with optometrists or professional corporations or similar entities that employ optometrists, violate laws prohibiting the corporate practice of medicine/optometry, in which case we could be required to restructure these arrangements, which may make it more difficult for us to attract and retain vision care professionals.

“Business-Government Regulation.”

A material change in our relationship with vision care professionals, whether resulting from constraints in exam capacity, a dispute with an eye care practitioner or a group of eye care practitioners controlling multiple practice locations, a government or regulatory authority challenging our operating structure or our relationship with vision care professionals, or other changes to applicable laws or regulations (or interpretations of the same), or the loss of

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these relationships, could impair our ability to provide services to our customers, cause our customers to go elsewhere for their optical needs, or result in legal sanctions against us.

In addition, a limited number of professional corporations or similar entities provide for the vision care services at a number of our retail locations, exposing us to some concentration risk.

A material change to any of the foregoing relationships could have a material adverse effect on our business, financial condition and results of operations.

Any difficulties or delays in securing the services of these professionals could also adversely affect our relationships with our Host partners.

The optical retail industry is highly competitive, and if we do not compete successfully, our business may be adversely impacted.

The optical retail industry is highly competitive, and if we do not compete successfully, our business may be materially adversely impacted.

We operate in the highly competitive optical retail industry and we may be unable to successfully compete against existing or future competitors.

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Some of our competitors are larger or vertically integrated and engaged in the manufacture and distribution of eyewear as well as managed care.

Larger competitors who have greater financial and operational resources, greater brand recognition or broader geographic presence than we do, have large marketing and advertising spends and may be able to offer more competitive prices.

Larger competitors who have greater financial and operational resources, greater brand recognition or broader geographic presence than we do may have large marketing and advertising spends and may be

able to offer more competitive prices.

Vertically integrated competitors may advantageously leverage their structure, making it more difficult for others in the industry, including us, to compete.

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While we strive to evolve in line with changing consumer shopping habits and new technologies, our business and results of operations may be adversely affected if we are not able to effectively respond to changes in the retail markets at the same rate as our competitors.

Our success depends upon our marketing, advertising and promotional efforts.

If we are unable to implement them successfully or efficiently, or if our competitors are more effective than we are, we may experience a material adverse effect on our business, financial condition and results of operations.

We use marketing and promotional programs to attract customers to our stores and to encourage purchases by our customers.

If we fail to successfully or efficiently develop and implement marketing, advertising and promotional strategies or to incorporate innovative approaches in such endeavors, we may be unable to achieve and maintain brand awareness, and customer traffic to our stores and/or websites may be reduced.

We may not be able to advertise cost-effectively in new or smaller markets in which we have lower store density, which could slow growth at such stores.

Changes in the amount and degree of promotional intensity or merchandising strategy by our competitors could cause us to have difficulties in retaining existing customers and attracting new customers.

If the efficacy of our marketing or promotional activities declines or if such activities of our competitors are more effective than ours, or if for any other reason we lose the loyalty of our customers, we may experience a material adverse effect on our business, financial condition and results of operations.

Our success depends substantially on the value of our owned brands, and failure to maintain, protect, and enhance their value could have a negative impact on our business, financial condition, and results of operations.

Our success depends substantially on the value of our owned brands, and failure to maintain, protect, and enhance their value could have a material negative impact on our business, financial condition, and results of operations.

We believe we have built a strong reputation for delivering exceptional value and convenience to our customers through our owned brands, America’s Best and Eyeglass World.

To be successful in the future, we believe we must preserve, grow, and leverage the value of our owned brands across all sales channels.

We expect to invest substantial resources to promote and maintain our brands, but there is no guarantee that our brand development strategies will enhance the recognition of our brands or lead to increased sales.

Failure to do so may materially negatively impact our financial condition and results of operations.

In fiscal 2025, we launched a reinvention of our America’s Best brand, including a new logo and a new brand platform, and embarked on a brand positioning review of our Eyeglass World brand.

We expect to continue to invest substantial resources to promote and maintain our brands, but there is no guarantee that our brand development strategies will enhance the recognition of our brands or lead to increased sales.

The strength of our brands will depend largely on our ability to provide products and services at competitive prices.

Brand promotion activities may not yield increased net revenue, and even if they do, the increased net revenue may not offset the expenses we incur in promoting and maintaining our brands and reputation.

If our efforts to cost-effectively promote and maintain our brands are not successful, our results of operations and our ability to attract and engage customers, partners, and employees may be adversely affected.

If our efforts to cost-effectively promote, maintain and grow our brands are not successful, our results of operations and our ability to attract and engage customers, partners, and employees may be materially adversely affected.

Unfavorable publicity regarding our products, customer service, or privacy and security practices could also harm our reputation and diminish confidence in, and the use of, our products and services.

In addition, negative publicity related to key brands that we have partnered with may damage our reputation, even if the publicity is not directly related to us.

If we fail to maintain, protect, and enhance our brands successfully or to maintain loyalty among

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customers, or if we incur substantial expenses in unsuccessful attempts to maintain, protect, and enhance our brands, we may fail to attract or increase the engagement of customers, and our business, financial condition, and results of operations may suffer.

If we fail to maintain, protect, and enhance our brands successfully or to maintain loyalty among customers, or if we incur substantial expenses in unsuccessful attempts to maintain, protect, and enhance our brands, we may fail to attract or increase the engagement of customers, and our business, financial condition, and results of operations may suffer.

Additionally, if we are unsuccessful in maintaining, protecting and enhancing our brands, we may be required to evaluate whether certain assets, including goodwill and other intangibles, have become impaired.

In fiscal 2024, we recorded a $19.2 million goodwill impairment related to Eyeglass World.

In fiscal 2024, we recorded a goodwill impairment charge related to Eyeglass World.

In the event we are required to record further impairment charges, it could have a material impact on our financial results.

If we fail to open and operate new stores in a timely and cost-effective manner or fail to successfully enter new markets, our financial performance could be materially and adversely affected.

Achieving our growth strategy depends, in large part, on growing our store base and expanding our operations, both in new and existing markets, and operating our new stores successfully.

Our success depends upon our marketing, advertising and promotional efforts.

We use marketing and promotional programs to attract customers to our stores and to encourage purchases by our customers.

We may not be able to advertise cost-effectively in new or smaller markets in which we have lower store density, which could slow growth at such stores.

We have invested in a new CRM system that we believe will enhance our engagement with customers, in particular underdeveloped customer segments.

We have also shifted to a consultative selling model, where we have trained our store associates to provide a more personalized selling experience.

If these expectations on enhancing the customer experience are not realized, our business may be adversely affected.

If we fail to open and operate new stores in a timely and cost-effective manner or fail to successfully enter new markets, our financial performance could be materially adversely affected.

Achieving our growth strategy depends, in part, on growing our store base and expanding our operations, both in new and existing markets, and operating our new stores successfully.

The success of our contemplated expansion depends on many factors, including, among others, our ability to:

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Accordingly, we cannot assure you that we will achieve our planned growth or that our new stores will perform as expected or achieve net sales or profitability levels comparable to those of our existing stores in the time periods estimated by us or at all.

Additionally, in fiscal year 2025, we plan to temporarily moderate new store openings, after which time we expect to return to our more recent store opening cadence as strategic initiatives begin to take hold.

Further, we began temporarily moderating new store openings during fiscal year 2025 and will continue this moderation into fiscal year 2026, after which time we expect to return to our more recent store opening cadence as strategic initiatives begin to take hold.

Our failure to implement our growth strategy and to successfully open and operate new stores in the time frames and at the costs estimated by us, or failure to return to our more recent store opening cadence in the expected time period or at all, could have a material adverse effect on our business, financial condition and results of operations.

Additionally, we may, from time to time, have the opportunity to add stores to our portfolio through acquisition, which may involve risks related to integration, including diversion of management attention from existing core businesses and substantial investment of resources to support integration, and difficulties integrating personnel, operations, financial systems, supply chains, and information technology systems could result in higher-than-expected expenses, delays or loss of customers.

If we fail to successfully integrate acquired stores, or realize the anticipated benefits of acquisitions, our financial condition and results of operations could be materially adversely affected.

Our growth is dependent on our ability to increase sales in existing stores and to successfully reinvest in existing stores.

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We have begun several strategic initiatives to increase our sales and profitability, some of which remain in the early stages.

For example, we recently concluded a comprehensive review of our store portfolio and announced plans to take action on 43 stores, including closing 39 stores by the end of fiscal 2026 and converting four Eyeglass World stores to America’s Best by the end of fiscal 2024.

We intend to allocate capital in fiscal 2025 to increase investments in enhancing the overall patient and customer experience in our existing stores.

If such store closures fail to deliver the expected Adjusted EBITDA improvement in the timeframe expected, or at all, or if we are unable to successfully reallocate capital to enhance existing stores, it could have a material adverse effect on our business, financial condition and results of operations.

For example, during fiscal 2025 we began to enhance our product offering in areas where we are underdeveloped relative to the optical retail category, including by adding frames at higher price points, enhancing our portfolio offering with premium products to meet consumer demand while remaining the destination for value, and introducing innovative products such as Ray-Ban Meta smart glasses.

As we continue to moderate new store openings through fiscal 2026, we intend to reallocate capital to increase investments in enhancing the overall patient and customer experience in our existing stores.

If we are unable to successfully reallocate capital to enhance existing stores, it could have a material adverse effect on our business, financial condition and results of operations.

For more information, see Part II.

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Note 1 “Business and Significant Accounting Policies.”

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If we are unable to successfully implement our pricing strategies, it could have an adverse impact on our business.

If we are unable to successfully implement our pricing strategies, it could have a material adverse impact on our business.

Our continued success depends in part on our ability to adjust our pricing strategies to respond quickly and effectively to shifting economic and competitive conditions as well as evolving customer preferences.

From time to time, and increasingly in connection with our new transformation initiatives, we have taken and may continue to take pricing actions and introduce limited-time promotions or new offers designed to increase demand traffic, awareness and drive sales.

For example, effective January 26, 2025, we implemented a $10 price increase to each of our America’s Best signature offer and our Eyeglass World opening offer.

We have historically employed a

simple, low price/high value strategy, seeking to balance our pricing and growth in a way that consistently delivers savings to our customers.

We are continuing this commitment to value, while at the same modernizing our pricing strategy to maximize that value across a broader range of consumers.

From time to time, and increasingly in connection with our strategic initiatives, we have taken and may continue to take pricing actions and introduce limited-time promotions or new offers designed to increase demand traffic, awareness and drive sales.

For example, in fiscal 2025, we implemented price increases to each of our America’s Best and Eyeglass World opening offer and continued to evolve our product mix to include a greater percentage of frames at price points over $99.

There can be no assurance that future cost increases will be fully absorbed by our customers without any resulting change to their demand for our products and services.

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If our pricing strategies are not successful, or are not as successful as those of our competitors, our sales and market share could decrease and could have an adverse effect on our sales and financial condition.

We are a low-cost provider and our business model relies on the low cost of inputs.

Failure to recruit and retain vision care professionals for in-store roles or to provide remote care offerings could adversely affect our business, financial condition and results of operations.

Our ability to hire and/or contract with vision care professionals for in-store roles and remote care offerings is critical to our operations as well as our growth strategy.

Our operations, like those of many of our competitors, depend on our ability to offer both eyewear and eye exams, which requires the availability of optometrists in or near our stores.

Many states require that opticians be licensed to dispense and fit eyeglasses and contact lenses.

Failure to have vision care professionals available in or near our stores could adversely affect our ability to win managed vision care contracts.

Competition for vision care professionals has increased, especially with the increased demand for optometrists in the current constrained labor market.

We compete with other optical retail companies, health systems and group practices for vision care professionals.

In recent years, we have experienced an increased degree of vision care professional shortages and related exam capacity constraints, which continued over the course of 2025, and may continue into 2026 and beyond, despite increased recruitment and retention efforts including wage investments and other enhanced compensation efforts.

Such efforts have increased, and may continue to increase, our operating costs which could adversely impact our results, and ultimately may be unsuccessful.

In addition, due to these same factors, we experienced wage pressure for our vision care professionals and associates in 2025, which we expect to continue in 2026, and which may continue thereafter.

Additionally, our ability to recruit, hire and/or contract with vision care professionals is closely regulated.

“Business-Government Regulation.”

A material adverse change in our relationship with vision care professionals, whether resulting from constraints in exam capacity, a dispute with an eye care practitioner or a group of eye care practitioners controlling multiple practice locations, a government or regulatory authority challenging our operating structure or our relationship with vision care professionals, or other changes to applicable laws or regulations (or interpretations of the same), or the loss of these relationships, could impair our ability to provide services to our customers, cause our customers to go elsewhere for their optical needs, or result in legal sanctions against us.

In addition, a limited number of professional corporations or similar entities provide for the vision care services at a number of our retail locations, exposing us to some concentration risk.

Any difficulties or delays in securing the services of these professionals could also adversely affect our relationships with our Host partners.

A material change to any of the foregoing relationships could have a material adverse effect on our business, financial condition and results of operations.

We are a value-based provider and our business model relies on value-based inputs.

Factors such as wage rate increases, inflation, cost increases, increases in the price of raw materials and energy prices could have a material adverse effect on our business, financial condition and results of operations.

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In recent years, we have experienced an increasingly competitive labor market for vision care professionals and increased preferences for adjusted work schedules, resulting in the demand for optometrists exceeding supply in certain areas during fiscal year 2025 and causing constraints in exam capacity.

Due to these factors, we experienced wage pressure for our vision care professionals and associates in 2024, which we expect to continue in 2025 and may continue thereafter.

Targeted wage investments, including increases in compensation and other expenses for our optometrists and associates, along with other initiatives, were implemented in response to these factors that have and will continue to impact our costs applicable to revenue and selling, general and administrative expenses.

Due to these factors, we continued to experience some degree of wage pressure for our vision care professionals and associates in 2025, which may continue in 2026 and possibly thereafter.

The costs associated with employment or retention of vision care professionals may increase further, potentially materially.

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These cost increases may be the result of inflationary pressures which could further reduce our sales or profitability.

Increases in other operating costs, including changes in energy prices and lease and utility costs, may increase our cost of products sold or selling, general and administrative expenses.

Our low-price model and competitive pressures in the optical retail industry may inhibit our ability to reflect these increased costs in the price of our products, in which case such increased costs could have a material adverse effect on our business, financial condition and results of operations.

Increases in other operating costs, including changes in energy prices and lease and utility costs, may increase our cost of products sold or SG&A.

Our value-based model and competitive pressures in the optical retail industry may inhibit our ability to reflect these increased costs in the price of our products, in which case such increased costs could have a material adverse effect on our business, financial condition and results of operations.

We require significant capital to fund our expanding business.

If we are unable to maintain sufficient levels of cash flow from our operations, we may not be able to execute or sustain our growth strategy or we may require additional financing, which may not be available to us on satisfactory terms or at all.

To support our expanding business and execute our growth strategy, we need significant amounts of capital, including funds to pay our lease obligations, build out new store spaces, laboratories and distribution centers, implement and operate remote medicine technology and EHR platforms, purchase inventory, pay personnel and further invest in our infrastructure and facilities, including investments in transitioning and updating our ERP and other technological systems and capabilities.

In 2025, we intend to continue to progress both our ERP initiatives and to expand the installation of the EHR platform to the remaining America’s Best locations and our CRM initiatives.

To support our expanding business and execute our growth strategy and strategic initiatives, we need significant amounts of capital, including funds to pay our lease obligations, build out new store spaces, laboratories and distribution centers, implement and operate remote medicine technology and EHR platforms, purchase inventory, pay personnel and further invest in our infrastructure and facilities, including investments in transitioning and updating our ERP, retail operating platforms and other technological systems and capabilities.

In 2026, we intend to continue to progress our CRM, ERP and other initiatives.

We cannot guarantee that these projects will be completed on time or within established budgets.

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Tightening in the credit markets, low liquidity, volatility in the capital markets or a downturn in the economy could result in diminished availability of credit, higher cost of borrowing or lack of confidence in the equity markets, any of which may make it more difficult to obtain additional financing on terms that are favorable to us.

If such financing is not available to us, or is not

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available on satisfactory terms, our ability to operate and expand our business could be curtailed and we may need to delay, limit or eliminate planned store openings or operations or other elements of our growth strategy.

Our growth strategy could strain our existing resources and cause the performance of our existing stores to suffer.

Our planned expansion has placed, and continues to place, increased demands on our existing operational, managerial, supply-chain and administrative resources.

If such financing is not available to us, or is not available on satisfactory terms, our ability to operate and expand our business could be curtailed and we may need to delay, limit or eliminate planned store openings or operations or other elements of our growth strategy, which may have a material adverse impact on our business, financial condition and results of operations.

Our growth strategies could strain our existing resources and cause the performance of our existing stores to suffer.

Our growth strategies, including our planned expansion, have placed, and continue to place, increased demands on our existing operational, managerial, supply-chain and administrative resources.

These increased demands could strain our resources and cause us to operate our business less effectively, which in turn could cause the performance of our new and existing stores to suffer.

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Our laboratories and distribution center have a finite capacity and, to the extent we grow beyond this capacity, we will need to expand our current laboratories and/or distribution center or add new laboratories and/or distribution capabilities, the cost of which could be material.

Should we open additional laboratories or distribution centers, any related construction or expansion projects entail risks which could cause delays and cost overruns, such as unavailability of suitable space, shortages of materials, shortages of skilled labor or work stoppages, unforeseen construction, scheduling, engineering, environmental or geological problems, weather interference, fires or other casualty losses, and unanticipated cost increases.

Should we open additional laboratories or distribution centers, any related construction or expansion projects entail risks which could cause delays and cost overruns, such as unavailability of suitable space, shortages of or delays in obtaining materials, shortages of skilled labor or work stoppages, unforeseen construction, scheduling, engineering, environmental or geological problems, weather interference, fires or other casualty losses, and unanticipated cost increases.

We cannot guarantee that any project will be completed on time or within established budgets.

Any delay or increased costs associated with any project could adversely affect the financial and overall performance of our existing and planned new stores.

Any delay or increased costs

associated with any project could adversely affect the financial and overall performance of our existing and planned new stores.

Implementing new operating capabilities or changing existing operating capabilities could present challenges we do not anticipate and could negatively affect our business, financial condition and results of operations.

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However, we may not be able to effectively manage stores of both brands in the same market, and this close proximity may cause the performance of such America’s Best and/or Eyeglass World stores to suffer.

In addition, oversaturation, or the risk of oversaturation, may reduce or adversely affect the number or location of stores we plan to open, and could thereby materially and adversely affect our growth plans overall or in particular markets.

In addition, oversaturation, or the risk of oversaturation, may reduce or adversely affect the number or location of stores we plan to open, and could thereby materially adversely affect our growth plans overall or in particular markets.

From time to time, we update the whitespace analysis prepared for us through an established partnership with a third-party real estate data analytics firm.

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We are subject to risks associated with leasing substantial amounts of space, including future increases in occupancy costs.

We lease our America’s Best and Eyeglass World store locations, our corporate office, the FirstSight corporate office, our laboratories in Georgia, Texas and Utah, and our distribution center.

We lease our America’s Best and Eyeglass World store locations, our corporate office space, our laboratories in Georgia, Texas and Utah, and our distribution center.

Additionally, we are still obligated under the lease for a distribution center in Ohio that was previously used in our AC Lens business;

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Our failure to achieve these thresholds could cause our occupancy costs for these locations to increase materially on a percentage of sales basis.

The leases generally require us to pay insurance, utilities, real estate taxes and common

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area maintenance expenses, which are highly variable over time.

The leases generally require us to pay insurance, utilities, real estate taxes and common area maintenance expenses, which are highly variable over time.

Our substantial lease obligations could have significant negative consequences, including:

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As we expand our store base, particularly in certain markets that are more expensive, such as California and the Northeast, our lease expense and our cash outlays for rent under lease agreements may increase.

Our inability to enter into new leases or renew existing leases on terms acceptable to us, or be released from our obligations under leases for stores that we close, could materially and adversely affect our business, financial condition and results of operations.

Our inability to enter into new leases or renew existing leases on terms acceptable to us, or be released from our obligations under leases for stores that we close, could materially adversely affect our business, financial condition and results of operations.

Our e-commerce and omni-channel business faces distinct risks, and our failure to successfully manage those risks could have a negative impact on our profitability.

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• reliance on third parties for computer hardware and software, web-hosting, and delivery of merchandise to our customers;

• rapid technology changes;

• rapid technology changes, including the successful integration of artificial intelligence;

• time and costs associated with training and implementing new technologies and systems;

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• natural disasters or adverse weather conditions.

Our online sales also expose us to broader applicability of regulations, as well as additional regulations, such as the prescription verification and other requirements under the FCLCA, rules relating to registration of internet sellers, certain requirements under the Treasury Department’s OFAC, FCPA, anti-money laundering and trade sanction laws, and similar anti-corruption, anti-bribery and international trade laws.

Our online sales also expose us to broader applicability of regulations, as well as additional regulations, such as the prescription verification and other requirements under the FCLCA, rules relating to registration of internet sellers, certain requirements under the Treasury Department’s Office of Foreign Assets Control (“OFAC”), FCPA, anti-money laundering and trade sanction laws, and similar anti-corruption, anti-bribery and international trade laws.

Problems in any of these areas could result in a reduction in sales, increased costs, sanctions or penalties, or damage to our reputation and brands.

In addition, we must keep up to date with competitive technology trends, including the use of new or improved technology, creative user interfaces and other e-commerce marketing tools such as paid search and mobile applications, among others, which may increase our costs and which may not increase sales or attract customers.

In addition, we must keep up to date with competitive technology trends, including the use of artificial intelligence to automate business processes and improve the customer experience, the use of new or improved technology, creative user interfaces and other e-commerce marketing tools such as paid search and mobile applications, among others, which may increase our costs and which may not increase sales or attract customers.

Our competitors, some of whom have greater resources than we do, may also be able to benefit from changes in e-commerce technologies, which could harm our competitive position.

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our customers regardless of the ultimate sales channel or effectively manage our online sales, our ability to compete and our results of operations could be adversely affected.

If we are unable to allow real-time and accurate visibility to product availability when customers are ready to purchase, quickly and efficiently fulfill our customers’ orders using the fulfillment and payment methods they demand, provide a convenient and consistent experience for our customers regardless of the ultimate sales channel or effectively manage our online sales, our ability to compete and our results of operations could be adversely affected.

Furthermore, if our e-commerce and omni-channel business successfully grows, it may do so in part by attracting existing customers, rather than new customers, who choose to purchase products from us online rather than from our brick and mortar stores, thereby detracting from the financial performance of our stores.

If we fail to retain our existing senior management team or attract qualified new personnel, such failure could have a material adverse effect on our business, financial condition and results of operations.

Our business requires disciplined execution at all levels of our organization.

If we fail to retain our existing senior management team, attract qualified new personnel or successfully implement our succession plans, such failure could have a material adverse effect on our business, financial condition and results of operations.

Our business, including the implementation of our strategic transformation, requires disciplined execution at all levels of our organization.

This execution requires an experienced and talented management team.

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Competition for skilled and experienced management is intense, and we may not be successful in attracting and retaining new qualified personnel required to grow and operate our business profitably.

While prepare and regularly review management succession plans, a failure to ensure effective transfers of knowledge and smooth transitions involving senior management could hinder our strategic planning and business operations.

Our operating results and inventory levels fluctuate on a seasonal basis.

Our business is subject to seasonal fluctuation.

We typically realize a higher portion of net sales during the first half of the fiscal year, due to, among other things, the timing of tax refunds and the impact of healthcare plan resets after the close of the prior year.

Adverse events, such as higher unemployment, lapses in or the lack of insurance coverage, delays in the issuance of tax refunds, deteriorating economic conditions, public transportation disruptions, or unanticipated adverse weather or travel conditions, can deter consumers from shopping.

We typically realize a higher portion of net sales during the first half of the fiscal year, due to, among other things, the impact of healthcare plan resets after the close of the prior year.

Adverse events, such as higher unemployment, lapses in or the lack of insurance coverage, deteriorating economic conditions, public transportation disruptions, or unanticipated adverse weather or travel conditions, can deter consumers from shopping.

Any significant decrease in net sales during the first half of the fiscal year could have a material adverse effect on us and could negatively impact our annual results.

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Such store closures due to factors that are outside of our control could materially adversely affect our sales and profitability.

Certain technological advances, greater availability of, or increased consumer preferences for, vision correction alternatives to prescription eyeglasses or contact lenses, or future drug development for the correction of vision-related problems may reduce the demand for our products and adversely impact our business and profitability.

Technological advances in vision care, including the development of artificial intelligence, remote medicine and other new or improved products, as well as future drug development for the correction of vision-related problems, could significantly change how eye exams may be conducted and make our existing products less attractive or even

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Although we have enabled remote medicine technologies in a number of locations to enable the provision of eye examinations by remote doctors to patients in our stores, several companies have developed technologies for, and some companies are incorporating the remote delivery of, eye examinations and eye refractions more broadly.

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Additionally, the greater availability and acceptance, or reductions in the cost, of vision correction alternatives to prescription eyeglasses and contact lenses, such as corneal refractive surgery procedures, photo-refractive keratotomy, or PRK and LASIK, may reduce the demand for our products, lower our sales and thereby adversely impact our business and profitability.

Our profitability and cash flows may be negatively affected if we are not successful in managing our inventory balances and inventory shrinkage.

Our profitability and cash flows may be materially adversely affected if we are not successful in managing our inventory balances and inventory shrinkage.

Efficient inventory management is a key component of our business success and profitability.

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Conversely, if we underestimate future demand for a particular product or do not respond quickly enough to replenish our best-performing products, we may have a shortfall in inventory of such products, likely leading to unfulfilled orders, reduced revenue and customer dissatisfaction.

Our business is partly dependent on our ability to strategically source a sufficient volume and variety of brand name merchandise at opportunistic pricing.

Some of our products are sourced from suppliers or at significantly reduced prices.

We are not always able to purchase specific merchandise on a recurring basis and we may not have control over the supply, design, cost or availability of some products we offer for sale in our stores.

We also compete with other retailers for discounted merchandise to sell in our stores.

To the extent that certain of our suppliers are better able to manage their inventory levels and reduce the amount of their excess inventory, the amount of discount merchandise available to us could also be materially reduced, potentially compromising our profit margin for procured merchandise.

Maintaining adequate inventory requires significant attention and monitoring of market trends, local markets, developments with suppliers and our distribution network, and it is not certain that we will be effective in our inventory management.

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We depend on our distribution centers and optical laboratories.

The loss of, or disruption in the operations of, one or more of these facilities may adversely affect our ability to process and fulfill customer orders and deliver our products in a timely manner, or at all, and may result in quality issues, which would adversely affect our reputation, our business and our profitability.

The loss of, or disruption in the operations of, one or more of these facilities may adversely affect our ability to process and fulfill customer orders and deliver our products in a timely manner, or at all, and may result in quality issues, which would materially adversely affect our reputation, our business and our profitability.

Substantially all of our inventory is shipped directly from suppliers to our distribution center in Lawrenceville, Georgia.

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Once processed at the laboratories, the finished products are returned to our distribution centers for shipment to stores and customers.

Additionally, in 2024, we transitioned the contact lens fulfillment and distribution services previously conducted by AC Lens to a third-party vendor.

Additionally, we rely on a third-party vendor for contact lens fulfillment and distribution services.

We depend in large part on the orderly operation of this receiving and distribution process, which depends, in turn, on adherence to shipping schedules and effective management of our distribution centers.

Increases in transportation costs (including increases in fuel costs), increased shipping costs, issues with overseas shipments, supplier-side delays, reductions in the transportation capacity of carriers, labor strikes or shortages in the transportation industry, disruptions to the national and international transportation infrastructure, and unexpected delivery interruptions or delays also have the potential to derail our distribution process.

We face additional risks related to our international outsourcing laboratory relationships, including port of entry risks such as longshoremen strikes, import restrictions, foreign government regulations, trade restrictions, customs and duties.

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We face additional risks related to our international outsourcing laboratory relationships, including port of entry risks such as import restrictions, foreign government regulations, trade restrictions, customs and duties.

If we change the transportation companies we use, we may face logistical difficulties that could adversely affect deliveries and we could incur costs and expend resources in connection with such change.

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If the performance of our Host brands declines or we are unable to maintain or extend our operating relationships with our Host partners, our business, profitability and cash flows may be adversely affected and we may be required to incur impairment charges.

We derive revenues and operating cash flows from our relationships with our Host partners through our operation of, as of December 28, 2024, 29 Vista Optical locations within select Fred Meyer stores and 53 Vista Optical locations on select military bases.

We derive revenues and operating cash flows from our relationships with our Host partners through our operation of, as of January 3, 2026, 18 Vista Optical locations within select Fred Meyer stores and 53 Vista Optical locations on select military bases.

Termination or expiration of our Host agreements would result in a reduction of our revenues and operating cash flows, which could be material and which could adversely affect our business, financial condition and results of operations including an impairment of the intangible assets.

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We may seek to replace any lost Host locations with new America’s Best or Eyeglass World stores but we may not be able to support the carrying value of the intangible assets at these brands or replace the lost revenues and cash flows.

At December 28, 2024, the carrying value of intangible assets at our Host brands was $8.2 million.

At January 3, 2026, the carrying value of intangible assets at our Host brands was $7.6 million.

We review the carrying value of our goodwill and intangibles for impairment annually, or more frequently when impairment indicators exist.

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If a significant write down were required, the charge could have a material adverse effect on our operating results and stockholders’ equity, and could impact the trading price of our common stock.

During fiscal year 2024, we recorded a $10.5 million impairment of our Fred Meyer contracts and relationships intangible asset due to the decision to close certain Fred Meyer stores as part of our store fleet review.

The termination of our partnership with Walmart has had, and may continue to have, an impact on our business, revenues, profitability and cash flows, which impact could be material.

Following receipt of notice of non-renewal by Walmart on July 20, 2023, our partnership with Walmart, which included supplying and operating Vision Centers in select Walmart stores and arranging for the provision of optometric services at certain Walmart locations in California, ended effective as of February 23, 2024.

Additionally, the agreements governing our provision of contact lens distribution and related services to Walmart and Sam’s Club terminated during the second quarter of 2024 and the Company has wound down substantially all of its AC Lens operations, including the closure of its Ohio distribution center, which largely supported the wholesale distribution and e-commerce contact lens services that we provided to Walmart and Sam’s Club.

A dedicated e-commerce website that was previously managed by AC Lens was transitioned to NVI.

The termination of the Walmart partnership and the wind down of AC Lens operations resulted in a reduction of our revenues, profitability and cash flows, which has affected, and may continue to affect, our business, financial condition and results of operations.

The termination of the Walmart partnership and related wind down of AC Lens operations could continue to have a negative impact on other parts of our business, including, without limitation, impairing our ability to attract and

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retain management, associates and optometrists, to compete for managed vision care contracts, to obtain favorable terms from vendors, or to generate cash to fund our business.

In addition, the termination of the Walmart partnership has adversely affected, and may continue to adversely affect, the market price of our common stock, regardless of our actual operating performance.

We may incur losses arising from our investments in technological innovators in the optical retail industry, including artificial intelligence, which would negatively affect our financial results.

We are regularly presented with opportunities to invest in technological innovators in the optical retail industry.

We have invested in an entity specializing in applying artificial intelligence-powered screening and diagnostic tools to retinal imaging and historically have invested in certain venture-backed emerging companies and technological innovators across the optical retail industry.

Such investments could include equity or debt instruments in companies that may be non-marketable.

The success of these companies may depend on product development, market acceptance, operational efficiency and other key business factors.

If any of these companies fail, we could lose all or part of our investment in that company.

If we determine that impairment indicators exist and that there are other-than-temporary declines in the fair value of the investment, we may be required to write down the investments to their fair value and recognize the related write-down as an investment loss.

During fiscal year 2024, we recorded an impairment of our Fred Meyer contracts and relationships intangible asset due to the decision to close certain Fred Meyer stores as part of our store fleet review.

Sustainability issues, including those related to climate change, could have a material adverse effect on our business, financial condition and results of operations.

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As we published our fourth Corporate Responsibility Report in 2025 and continue to develop our corporate responsibility strategy, our sustainability practices will be evaluated against stakeholders’ evolving expectations and standards for responsible corporate citizenship.

If our practices in the areas of social impact, employee empowerment, environmental stewardship and corporate governance fail to meet such expectations and standards, our reputation or employee and customer retention may be negatively impacted.

Additionally, increased regulatory requirements regarding climate and sustainability disclosures, as well as environmental stewardship, could also lead to increased operational costs.

Conversely, anti-ESG sentiment has gained momentum across the United States, at both the federal and state levels.

Sustainability regulations have resulted in, and may continue to result in, increased general and administrative expenses and increased management time and attention spent complying with or meeting such regulations and expectations and if we fail to meet evolving and divergent stakeholder expectations on sustainability issues, investors may reconsider their investment in the company and customers may choose to find alternative providers, which could have a material adverse effect on our business, financial condition and results of operations.

If our practices in the areas of sustainability, climate and environmental stewardship fail to meet the expectations of our investors, customer, employees and other stakeholders, our reputation or employee and customer retention may be negatively impacted.

Sustainability, climate and environmental regulations have resulted in, and may continue to result in, increased general and administrative expenses and increased management time and attention spent complying with or meeting such regulations.

At the same time, there has been an increase in legal action and political sentiment challenging such regulations.

If we fail to meet evolving and divergent stakeholder expectations and legal standards on sustainability issues, investors may reconsider their investment in the company and customers may choose to find alternative providers, which could have a material adverse effect on our business, financial condition and results of operations.

Risks Related to Our Dependence on Third Parties

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An increasing percentage of our customers receive vision insurance coverage through managed care payors.

These payors represent an increasingly significant portion of our overall revenues and our revenue growth and represented approximately 40% and 37% of our revenues from continuing operations in fiscal years 2024 and 2023, respectively.

While we have relationships with almost all vision care insurers in the U.S.

and with all of the major carriers, a relatively small number of payors currently comprise the majority of our managed care revenues, subjecting us to concentration risk.

Our future operational success could depend on our ability to negotiate contracts with managed vision care companies, vision insurance providers and other third-party payors, several of whom have significant market share.

These payors represent a significant portion of our overall revenues and our revenue growth and represented 42% of our revenues from continuing operations in fiscal 2025.

We maintain strong relationships with almost all vision care insurers in the U.S.

including the major carriers who dominate market share, subjecting us to concentration risk.

Our future operational success could depend on our ability to maintain existing relationships, create partnership opportunities and negotiate contract extensions with managed vision care companies, vision insurance providers and other third-party payors.

As our managed care business continues to expand, we have incurred, and expect to incur, additional costs related to this area of our business.

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Some vertically-integrated payors also have their own networks, and these payors may take actions to maintain or protect these networks in ways that negatively affect us, including by increasing costs or not allowing our new or existing stores to participate in their networks.

Increasing consolidation in the optical retail industry may give such payors greater market power which may adversely affect our ability to negotiate reimbursement rates under managed care arrangements.

Increasing consolidation in the optical retail industry may give such payors

greater market power which may adversely affect our ability to negotiate reimbursement rates under managed care arrangements.

Our inability to enter into arrangements with managed care payors in the future or to maintain existing relationships with managed care payors on commercially reasonable terms could have a material adverse effect on our business, financial condition and results of operations.

In addition, delays in receiving or the failure to receive reimbursements under our managed care arrangements, significant

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changes to the economics of a managed care contract or relationship, or the loss of a significant managed care contract or relationship could have a significant negative impact on our business, financial condition and results of operations.

We face risks associated with vendors from whom our products are sourced and are dependent on a limited number of suppliers.

We purchase all of our merchandise from domestic and international vendors and, in 2024, we transitioned the contact lens fulfillment and distribution services previously conducted by AC Lens to a third-party vendor.

In addition, delays in receiving or the failure to receive reimbursements under our managed care arrangements, significant changes to the economics of a managed care contract or relationship, or the loss of a significant managed care contract or relationship could have a significant negative impact on our business, financial condition and results of operations.

We rely on third-party coverage and reimbursement, including government programs, for an increasing portion of our revenues, the future reduction of which could materially adversely affect our results of operations.

We rely on third-party coverage and reimbursement, including government and private insurance plans, such as managed vision care plans, for an increasing portion of our net revenue.

We are generally reimbursed for the vision care services and products that we provide through payment systems managed by private insurance companies, managed care organizations and governmental agencies.

Coverage and payment levels are determined at each third-party payor’s discretion, and we have limited control over third-party payor’s decision-making with respect to coverage and payment levels.

Coverage restrictions and reductions in reimbursement levels or payment methodologies may negatively impact our sales and profits.

Many third-party payors may continue to explore cost-containment strategies that may potentially impact coverage and/or payment levels for our services and products and impose utilization restrictions and risk-based compensation arrangements.

We cannot provide any assurances that we will be able to maintain or increase our participation in managed care arrangements or that we will be adequately reimbursed by managed care payors, vision insurance providers and other third-party payors for the services we provide and the products we sell.

From time to time, vision care insurance payors may make changes to their electronic data interchange (“EDI”) claim systems.

Such changes may require us to update our processes and could impact our ability to submit claims or to timely receive reimbursements from our managed care partners.

If claims for payment are disputed by managed care payors or if we fail to timely or accurately submit claims, we may not receive payment for such claims in a timely manner or at all, which could negatively impact our relationship with managed care organizations and could require us to take write-offs or otherwise have a significant negative impact on our business, financial condition and results of operations.

Furthermore, any changes to or repeal of the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act, or any other significant changes to the healthcare regulatory landscape, that may be supported by the current presidential and congressional administrations that recently assumed office, may reduce or eliminate coverage or reimbursement rates of insurance-funded eye exams or eyewear.

We face risks associated with vendors from whom our products and certain services are sourced and are dependent on a limited number of suppliers.

We purchase all of our merchandise from domestic and international vendors and rely on a third-party vendor for contact lens fulfillment and distribution services.

For our business to be successful, our suppliers must be willing and able to provide us with products in substantial quantities, in compliance with regulatory requirements, at acceptable costs and on a timely basis.

Our ability to obtain a sufficient selection or volume of merchandise on a timely basis at competitive prices could suffer as a result of any deterioration or change in our vendor relationships or events that adversely affect our vendors.

Other than our contracts for the supply of eyeglass lenses and our private label contact lenses, we typically do not enter into long-term contracts with our vendors and, as such, we operate without significant contractual assurances of continued supply, pricing or access to new products.

Other than our contracts for the supply of eyeglass lenses and contact lenses, we typically do not enter into long-term contracts with our vendors and, as such, we operate without significant contractual assurances of continued supply, pricing or access to new products.

Any of our vendors could discontinue supplying us with desired products in sufficient quantities or offer us less favorable terms on future transactions for a variety of reasons.

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The occurrence of one or more of these events could impact our ability to get products to our customers, result in disruptions to our operations, increase our costs and decrease our profitability.

We also source merchandise directly from suppliers outside of the U.S.

Additionally, a significant amount of our domestically-purchased merchandise is manufactured abroad.

Global sourcing and foreign trade involve numerous factors and uncertainties beyond our control including increased shipping costs, the imposition of additional import or trade restrictions, including legal or economic restrictions on overseas suppliers’ ability to produce and deliver products, increased custom duties and tariffs, unforeseen delays in customs clearance of goods, more restrictive quotas, loss of a most favored nation trading status, currency exchange rates, transportation delays, port of entry issues and foreign government regulations, political instability, public health emergencies, and economic uncertainties in the countries from which we or our vendors source our products.

Moreover, negative press or reports about internationally manufactured products may sway public opinion, and thus customer confidence, away from the products sold in our stores.

These and other issues affecting our international vendors or internationally manufactured merchandise could have a material adverse effect on our business, financial condition and results of operations.

were to withdraw from or materially modify any other international trade agreement to which it is a party or if the U.S.

imposes significant additional tariffs or other restrictions on imports from Mexico, where our outsourced optical laboratories are located, or China, where the majority of our frames are sourced and manufactured, it could have an adverse impact on our business.

Any such tariffs, restrictions or other changes could lead to additional costs, delays in shipments, embargoes or other uncertainties that could negatively impact our relationships with our international vendors and labs and materially adversely affect our business, including by requiring us to increase our prices and identify alternative sources for merchandise and labs.

For example, we source

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merchandise from suppliers located in China and a significant amount of domestically-purchased merchandise is manufactured in China.

Historically, tariffs have not materially affected our financial results, and we believe that less than 10% of costs applicable to revenue are subject to tariffs on Chinese imports;

however, tariff rates are subject to change and have varied over the past few years.

Effective September 1, 2019, the U.S.

government implemented a 15% tariff on specified products imported into the U.S.

from China and, effective February 14, 2020, the 15% tariff was reduced to 7.5%.

In June 2020, the U.S.

government granted a temporary exclusion for plastic and metal frames with a retroactive effective date of September 1, 2019, and such exclusion expired in September 2020.

Most recently, in February 2025, the U.S.

government imposed an additional 10% tariff on imports from China, on top of existing tariff burdens.

The commencement of a new U.S.

president for a term that commenced in 2025, coupled with a consolidation of party control of both chambers of Congress, has ushered in significant uncertainty regarding trade policies and a potential trade war between the U.S.

and other countries.

While we have implemented mitigation plans and continue to focus on additional mitigation strategies to offset the impact of tariffs, including the termination of our outsourced laboratory relationship with China in early 2024 in connection with the termination of our partnership with Walmart and as part of an ongoing effort to reduce exposure to China, costs with respect to products subject to these tariffs have increased.

If we are unable to mitigate the full impact of the enacted tariffs or if there is a further escalation of tariffs, costs on a significant portion of our products may increase further and our financial results may be negatively affected.

Material changes in the pricing practices of our suppliers could negatively impact our profitability.

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As a few major suppliers dominate the optical retail industry, the risks associated with finding alternative sources may be exacerbated.

We rely heavily on our information technology systems, as well as those of our vendors, for our business to effectively operate and to safeguard confidential information;

any significant failure, inadequacy, interruption or security breach could adversely affect our business, financial condition and operations.

We rely heavily on our information technology systems for many functions across our operations, including ERP, managing our supply chain and inventory, processing customer transactions in our stores, allocating lens processing jobs to the appropriate laboratories, providing and maintaining our remote medicine and EHR platforms, our financial accounting and reporting systems, maintenance of certain of our cybersecurity programs, CRM and customer engagement efforts, operating our websites, growing our omni-channel and e-commerce business, and human resources administration.

Our ability to source merchandise and services outside of the U.S.

could be adversely impacted by changes in U.S.

or international laws, including the imposition of tariffs by the U.S.

and the resulting consequences.

We also source merchandise directly from suppliers outside of the U.S.

Additionally, a significant amount of our domestically-purchased merchandise is manufactured abroad.

There is significant uncertainty with the U.S.

tariff regime following the U.S.

Supreme Court decision that struck down certain of the US tariffs implemented by the Trump Administration.

While we intend to seek a refund for duties paid under the invalidated regime, it is uncertain if and when we would receive such a refund.

Although the U.S.

Supreme Court has invalidated certain tariffs, the U.S.

government has and may impose additional new or different tariffs under different authority.

Any new, increased or modified tariffs or other trade restrictions could materially affect our operations.

Moreover, negative press or reports about internationally manufactured products may sway public opinion, and thus customer confidence, away from the products sold in our stores.

We also rely on vendors outside of the U.S.

to provide certain services, including some call center functions.

These services are subject to risks inherent in performing business operations outside of the U.S., including compliance with foreign laws and our ability to adequately oversee such functions.

were to withdraw from or materially modify any other international trade agreement to which it is a party or if the U.S.

The United States-Mexico-Canada Agreement (“USMCA”), the free trade agreement among the U.S., Canada and Mexico, is undergoing a joint review in 2026.

If the USMCA is terminated, or otherwise substantially amended, it could have a material adverse impact on our financial performance.

For example, we source merchandise from suppliers located in China and a significant amount of domestically-purchased merchandise is manufactured in China.

Historically, tariffs have not materially affected our financial results, and we believe that less than 10% of costs applicable to revenue are subject to tariffs on Chinese imports;

however, tariff rates are subject to change and have varied over the past few years.

There is significant uncertainty regarding trade policies between the U.S.

and other countries.

While we have implemented mitigation plans and continue to focus on additional mitigation strategies to offset the impact of tariffs, including the termination of our outsourced laboratory relationship with China in early 2024 in connection with the termination of our partnership with Walmart and as part of an ongoing effort to reduce tariff exposure to China, costs with respect to products subject to these tariffs have increased.

We rely heavily on our information technology systems, as well as those of our vendors, for our business to effectively operate and to safeguard confidential and sensitive information;

any significant failure, inadequacy, interruption or security incident could materially adversely affect our business, financial condition and operations.

We rely heavily on our information technology systems, as well as those of our vendors, for many functions across our operations, including ERP, managing our supply chain and inventory, processing customer transactions in our stores, allocating lens processing jobs to the appropriate laboratories, providing and maintaining our remote medicine and EHR platforms, our financial accounting and reporting systems, maintenance of certain of our cybersecurity programs, CRM and customer engagement efforts, operating our websites, growing our omni-channel and e-commerce business, and human resources administration.

Our ability to effectively manage our business and coordinate the sourcing, distribution and sale of our products depends significantly on the reliability and capacity of these systems.

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The secure processing, maintenance and transmission of this information is critical to our operations.

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Our systems may be subject to damage or interruption from power outages or damages, telecommunications problems, data corruption, software errors, network failures, acts of war or terrorist attacks, fire, flood, ransomware attacks, and natural disasters.

Our existing safety systems, data backup, access protection, user management and information technology emergency planning may not be sufficient to prevent data loss or long-term network outages.

In addition, we may need to upgrade our existing information technology systems or choose to incorporate new technology systems from time to time in order for such systems to support the increasing needs of our expanding business.

Our systems, and those of our vendors, may be subject to damage or interruption from power outages or damages, telecommunications problems, data corruption, software errors, network failures, acts of war or terrorist attacks, fire, flood, ransomware or other cybersecurity attacks, and natural disasters.

Our existing information security systems, data backup, access protection, user management and information technology emergency planning may not be sufficient to prevent data loss or long-term network outages.

Costs and potential problems or interruptions associated with the implementation of new or upgraded systems and technology or with maintenance or adequate support of existing systems could disrupt or reduce the efficiency of our operations.

In particular, we are in the process of implementing a new ERP system.

This system will replace many of our existing operating and financial systems.

The implementation is a major undertaking, both financially and from a management and personnel perspective.

Any material disruptions, delays or deficiencies in the design and implementation of our new ERP system could adversely affect our ability to process orders, ship products, provide services and customer support, send invoices and track payments, fulfill contractual obligations or otherwise operate our business.

Our systems and those of our third-party service providers and business partners may be vulnerable to security breaches, attacks by hackers, acts of vandalism, computer viruses, misplaced or lost data, human errors, or other similar events and are from time to time subject to such incidents.

Security breaches, computer malware and computer hacking have become more prevalent across industries and are increasing in their frequency, level of persistence, sophistication and intensity, and are being conducted by sophisticated, organized groups and individuals.

We may face increased cybersecurity risks due to our reliance on Internet technology and the increased number of employees working remotely following the pandemic.

If unauthorized parties gain access to our networks or databases or those of our third-party service providers or business partners they may be able to steal, publish, delete, use inappropriately or modify our private and sensitive third-party information including protected health information, payment card information and personal identification information.

In addition, associates may intentionally or inadvertently cause data or security breaches that result in unauthorized release of sensitive or confidential information.

Because the techniques used to circumvent security systems can be highly sophisticated, change frequently, are often not recognized until launched against a target and may originate from less regulated and remote areas around the world, we may be unable to proactively address all possible vulnerabilities or implement adequate preventive measures for all situations.

Like most corporations, our systems are a target of attacks.

In particular, we recently implemented an ERP system to replace many of our former operating and financial systems.

This type of implementation is a major undertaking, both financially and from a management and personnel perspective.

Any material disruptions, delays or deficiencies in the implementation of our new ERP system could adversely affect our ability to process orders, ship products, provide services and customer support, send invoices and track payments, fulfill contractual obligations or otherwise operate our business.

Our systems and those of our third-party vendors and business partners may be vulnerable to security attacks by threat actors (including employees, criminal actors, and other third parties), acts of vandalism, use of computer malware, misplaced or lost data, human errors, or other similar events and are from time to time subject to such incidents.

Security incidents, use of computer malware, and computer intrusions or compromises have become more prevalent across industries and are increasing in their frequency, level of persistence, sophistication and intensity, and are being conducted by sophisticated, criminal organized groups and individuals.

We may face increased cybersecurity risks due to our reliance on Internet technology and the increased number of employees working remotely.

If unauthorized parties gain access to our networks or databases, or those of our third-party vendors or business partners they may be able to exfiltrate, publish, delete, or use inappropriately or modify our or our customers’ confidential and sensitive information, including protected health information, payment card information and PII.

In addition, employees may intentionally or inadvertently cause data or security incidents that result in unauthorized access to or release of sensitive or confidential

Because the techniques used to circumvent security systems can be highly sophisticated, change frequently, are often not recognized until launched against a target and may originate from less regulated areas around the world, we may be unable to proactively address all possible vulnerabilities or implement adequate preventive measures to prevent all attacks.

Although the incidents that we have experienced to date have not had a material effect on our business, there can be no assurance that such incidents will not have a material adverse effect on us in the future.

Any such breach, attack, virus or other event could result in costly investigations and litigation exceeding applicable insurance coverage or contractual rights available to us, civil or criminal penalties, operational changes or other response measures, loss of consumer confidence in our security measures, or negative publicity that could adversely affect our financial condition, results of operations and reputation.

Any such incident, attack, or other event could result in costly investigations, regulatory scrutiny, and litigation exceeding applicable insurance coverage or contractual rights available to us, lost profits, increased expenses, civil or criminal penalties, operational changes or other response measures, loss of consumer confidence in our security measures, or negative publicity that could adversely affect our financial condition, results of operations and reputation.

Any material disruption or slowdown of our systems or those of our third-party service providers and business partners, could have a material adverse effect on our business, financial condition and results of operations.

We rely on third-party coverage and reimbursement, including government programs, for an increasing portion of our revenues, the future reduction of which could adversely affect our results of operations.

We rely on third-party coverage and reimbursement, including government and private insurance plans, such as managed vision care plans, for an increasing portion of our net revenue.

Coverage restrictions and reductions in reimbursement levels or payment methodologies may negatively impact our sales and profits.

From time to time, vision care insurance payors may make changes to their EDI claim systems.

Such changes may require us to update our processes and could impact our ability to submit claims or to timely receive reimbursements from our managed care partners.

Furthermore, any changes to or repeal of the Patient Protection and Affordable Care Act, as

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amended by the Health Care and Education Reconciliation Act, or any other significant changes to the healthcare regulatory landscape, that may be supported by the current presidential and congressional administrations that recently assumed office, may reduce or eliminate coverage or reimbursement rates of insurance-funded eye exams or eyewear.

Risks Related to Our Legal and Regulatory Environment

We are subject to extensive state, local and federal vision care and healthcare laws and regulations and failure to adhere to such laws and regulations would adversely affect our business.

We are subject to extensive state, local and federal vision care and healthcare laws and regulations and failure to adhere to such laws and regulations would materially adversely affect our business.

We are subject to extensive state, local and federal vision care and healthcare laws and regulations.

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Our extended warranty plans may subject us to state laws, which vary by state, that regulate the sale of product service contracts or insurance-like arrangements.

It is possible that regulators in certain states could determine that our warranty plans should be subject to these laws and mandate that we comply with various registration, disclosure and financial requirements.

It is possible that regulators in

certain states could determine that our warranty plans should be subject to these laws and mandate that we comply with various registration, disclosure and financial requirements.

In such event, we could be required to incur enhanced compliance costs, or be at risk of cease and desist orders and monetary penalties.

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Our participation in federal healthcare programs, such as Medicare and Medicaid, requires us to comply with laws regarding the way in which we conduct business and submit claims.

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Department of Justice, on behalf of the FDA and/or various forms of FDA enforcement and compliance actions, which include recalls, fines, penalties, injunctions, seizures, prosecutions, adverse publicity (such as FDA press releases) or other adverse actions.

Our failure to comply with applicable regulations could have severe consequences, including the closure of our stores, possible breaches of the agreements relating to certain of our brands, changes to our way of doing business and the imposition of fines and penalties.

We are subject to managed vision care laws and regulations.

We are subject to managed vision care laws and regulations and the failure to comply with such laws and regulations could have a materially negative impact on our business, financial condition or results of operations.

We are engaged in managed vision care, both as a managed care entity through our subsidiary, FirstSight, and as a provider to managed care payors and insurers, and are subject to additional regulations as a result.

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We would also be subject to the risk of cease and desist orders and monetary penalties.

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We are subject to rapidly changing and increasingly stringent laws, regulations, contractual obligations, and industry standards relating to privacy, data security and data protection.

The restrictions and costs imposed by these laws and other obligations, or our actual or perceived failure to comply with them, could subject us to liabilities that adversely affect our business, operations and financial performance.

The restrictions and costs imposed by these laws and other obligations, or our actual or perceived failure to comply with them, could subject us to liabilities that materially adversely affect our business, and financial condition or results of operations.

We are subject to HIPAA, the HITECH Act and the health data privacy, security and breach notification regulations issued pursuant to these statutes, which govern our collection, use, access, disclosure, transmission and/or storage of PHI, in connection with the sales of our products and services, customer service, billing and employment practices, as well as our operations as a business associate to multiple healthcare providers.

HIPAA has several rules with which we must comply, including the HIPAA Privacy, Security, and Breach Notification rules.

Each of these rules sets forth specific standards and controls that covered entities and business associates must implement, and ongoing implementation of these requirements take significant time, effort and resources, including external resources to audit compliance against these rules.

While we take precautions to detect and prevent non-compliance among our employees, subcontractors and service providers, it is not always possible to identify and deter misconduct related to unauthorized access, use, disclosure or destruction of PHI.

In addition, there are existing state privacy, security and breach notification laws and regulations that apply to both PHI and PII collected and/or processed by us.

These existing laws and regulations may be amended and states may adopt new laws or regulations regarding consumer data privacy and individual rights to their data (such as rights to request a business for access to, deletion or modification of, or a portable copy of such individual’s personal information).

In the states that have already implemented comprehensive consumer privacy and data protection laws, individuals also have the right to receive detailed information about how their personal information is used and shared with service providers, contractors, and third parties.

Moreover, such individuals can opt out of the sharing of their personal information and restrict the use of cookies and similar tracking technologies for non-essential purposes.

Our failure to effectively implement the required or addressable data privacy and security safeguards, breach notification procedures, and implement consumer data rights processes, or our failure to accurately anticipate the application or interpretation of these statutes, regulations and standards, could lead to invalidation or modification of our agreements with optometrists or professional corporations or similar entities owned by eye care practitioners, create material civil and/or criminal liability for us or require us to change our business practices, which could result in adverse publicity and loss of consumer trust, and have a material adverse effect on our business, financial condition and results of operations.

Each of these rules sets forth specific standards and controls that covered entities and business associates must implement, and the ongoing implementation of these requirements may take significant time, effort and resources, including engaging external resources to assess compliance with these rules.

While we take precautions to detect and prevent non-compliance among our associates, subcontractors and vendors, it is not always possible to identify and deter misconduct related to unauthorized access, use, disclosure or destruction of PHI.

In addition, there are existing state privacy, security and breach notification laws and regulations that apply to both PHI and PII collected and/or processed by us and/or our third-party vendors.

These existing laws and regulations may be amended and states may adopt new laws or regulations regarding consumer data security and privacy, including individual data privacy rights (such as rights to request a business for access to, deletion or modification of, or a portable copy of such individual’s personal information).

In the states that have enacted comprehensive consumer privacy and data protection laws, companies generally must publicly disclose in a privacy notice how PII is used and shared with vendors, contractors, and third parties.

Moreover, individuals in these states can usually opt out of the selling or sharing of their PII and restrict the use of cookies and similar tracking technologies by companies for non-essential purposes.

Our failure to effectively implement the required or addressable data privacy and security safeguards and breach notification procedures, and to implement consumer data rights processes, or our failure to accurately anticipate the application or interpretation of these laws and regulations and standards, could lead to invalidation or modification of our agreements with optometrists or professional corporations or similar entities owned by eye care practitioners, create material civil and/or criminal liability for us or require us to change our business practices, which could result in adverse publicity and loss of consumer trust, and have a material adverse effect on our business, financial condition and results of operations.

The regulatory environment surrounding information security and privacy is increasingly demanding, with the frequent imposition of new and changing requirements across our business.

For instance, as an entity that collects and maintains PII and PHI, we could be forced, in the event of a data breach, to report the breach not only to affected customers, but also to various public agencies and media outlets, potentially harming our reputation and our business.

Our business partners may have contractual rights of indemnification against us or seek to terminate our contracts with them in the event that their customer or proprietary business information is released as a result of a breach of our information technology.

Additionally, business partners may also face a data breach, allowing for our customer or proprietary business information to be released, which could result in a loss of consumer confidence in our security measures, harm our business and also lead to costly investigations and litigation.

Such a breach also may not be adequately covered under contractual rights of indemnification or by cyber insurance.

Further, if we are unable to comply with the security standards established by banks and the payment card industry, we may be subject to fines, restrictions or expulsion from card acceptance programs, which could adversely affect our retail operations.

For instance, as an entity that collects and maintains PII and PHI, we could be required, in the event of a data incident, to report the incident not only to affected customers, but also to various government agencies, regulators, and media outlets, potentially harming our reputation and our business.

Our business partners may have contractual rights of indemnification against us or seek to terminate our contracts with them in the event that their customer or proprietary business information is disclosed as a result of a compromise of our information technology systems.

Additionally, business partners may also face a data security incident, resulting in our customer or proprietary business information to be disclosed, which could result in a loss of consumer confidence in our security measures, harm our business, financial condition and results of operations, and lead to costly investigations, regulatory scrutiny, and litigation.

Such an incident also may not be adequately covered under contractual rights of indemnification or by cyber insurance policies.

As privacy and information security laws and regulations change and vary from state to state, we may incur additional compliance costs.

We could be adversely affected by product liability, product recall or personal injury issues.

We could be adversely impacted by the supply of defective products, including the infiltration of counterfeit products into the supply chain and contamination or product mishandling issues.

We could be materially adversely affected by product liability, product recall or personal injury issues.

We could be materially adversely impacted by the supply of defective products, including the infiltration of counterfeit products into the supply chain and contamination or product mishandling issues.

Product liability or personal injury claims may be asserted against us with respect to any of the products we sell or services we provide.

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Any significant returns or warranty claims, as well as the timing of such returns or claims, could result in significant additional costs to us and could adversely affect our results of operations.

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We rely on our suppliers to control the quality of both eyeglass components and contact lenses.

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If our merchandise or services do not meet applicable governmental safety standards or our customers’ expectations regarding quality or safety, we could experience lost sales and increased costs, be exposed to legal and reputational risk, or face fines or penalties which could materially adversely affect our financial results.

Failure to comply with laws, regulations and enforcement activities or changes in statutory, regulatory, accounting and other legal requirements could potentially impact our operating and financial results.

Failure to comply with laws, regulations and enforcement activities or changes in statutory, regulatory, accounting and other legal requirements could materially negatively impact our business, financial condition or results of operations.

In addition to the vision care and healthcare laws and regulations discussed above, we are subject to numerous federal, state, local and foreign laws and governmental regulations including those relating to environmental protection, building, land use and zoning requirements, workplace regulations, public accommodation, wage and hour, privacy and information security, consumer protection, immigration, and employment matters.

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If there are amendments to the PCI Standard, the cost of compliance with new requirements could also be substantial and we may suffer loss of critical data and interruptions or delays in our operations as a result.

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Adverse judgments or settlements resulting from legal proceedings relating to our business operations could materially adversely affect our business, financial condition and results of operations.

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There also may be adverse publicity associated with litigation that could negatively affect customer perception of our business and materially damage our reputation.

We may not be able to adequately protect our intellectual property, which could harm the value of our brand and adversely affect our business.

We may not be able to adequately protect our intellectual property, which could harm the value of our brand and materially adversely affect our business.

Our ability to implement our business plan successfully depends in part on our ability to further build brand recognition using our trademarks, service marks and other proprietary intellectual property, including our name and logos.

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We have a significant amount of indebtedness.

As of December 28, 2024, we had approximately $339.0 million of aggregate principal amount of indebtedness associated with our first lien term loan in the aggregate principal amount of $254.2 million (the “Term Loan A”) due in 2028, subject to springing maturity, and $84.8 million of 2.50% convertible senior notes due on May 15, 2025 (the “2025 Notes”) outstanding (excluding finance lease obligations).

As of January 3, 2026, we had approximately $237.6 million of aggregate principal amount of indebtedness associated with our first lien term loan (the “Term Loan A”) due in 2028.

Our leverage could have a number of consequences for us, including:

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• restricting us from capitalizing on business opportunities;

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• limiting our ability to obtain additional financing for working capital, capital expenditures, execution of our business strategy, debt service requirements, acquisitions or other general corporate purposes;

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In addition to refinancing, we may elect to deploy capital to reduce outstanding debt and such capital deployment would reduce our ability to use funds for other purposes.

For example, we repurchased $100.0 million aggregate principal amount of our 2025 Notes in November 2023, and in August 2024, we repurchased an additional $217.7 million of our 2025 Notes for an aggregate cash repurchase price of approximately $215.0 million plus accrued and unpaid interest on such notes.

The Company is continuing to evaluate its alternatives in light of the impending maturity date of the 2025 Notes on May 15, 2025, including, repayment, refinancing and further repurchase prior to maturity.

Additionally, from and after February 15, 2025, the 2025 Notes are convertible into cash up to the amount of $1,000, with any excess amount convertible into shares, based on the applicable conversion rate at such time.

Further, changes in the credit and capital markets, including market disruptions and interest rate fluctuations, may increase the cost of financing, make it more difficult to obtain favorable terms, or restrict our access to these sources of future liquidity.

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A change in interest rates may adversely affect our business.

As of December 28, 2024, our term loan borrowings of $254.2 million were subject to variable interest rates and we had total borrowings of $339.0 million with a weighted average borrowing rate of 6.5%.

Our interest rate collar matured in 2024 and we currently have no hedging of our variable rate debt.

As of January 3, 2026, our term loan borrowings of $237.6 million were subject to variable interest rates, with a weighted average borrowing rate of 5.6%.

Our interest rate collar matured in 2024.

We entered into an interest rate swap during the fourth quarter of 2025 to help offset the variability of cash flows in term loan interest payments attributable to changes in Term SOFR.

The notional amount of the hedge is $100.0 million.

“Interest Rate Derivatives” for further details.

An increase in interest rates, whether because of an increase in market interest rates or a decrease in our creditworthiness, could increase the cost of servicing our debt and could materially reduce our profitability and cash flows.

Moreover, at this time, it is not possible to predict the full effect that the recent discontinuance of LIBOR, or the establishment of alternative reference rates such as SOFR, will have on us or our borrowing costs and such changes may result in an increase in the cost of our variable rate indebtedness.

Moreover, at this time, it is not possible to predict the full effect that the recent discontinuance of London Interbank Offered Rate (“LIBOR”), or the establishment of alternative reference rates such as SOFR, will have on us or our borrowing costs and such changes may result in an increase in the cost of our variable rate indebtedness.

SOFR is a relatively new reference rate and its composition and characteristics are not the same as LIBOR.

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• enter into negative pledge clauses and clauses restricting subsidiary distributions.

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Our credit agreement also contains certain customary affirmative covenants and events of default, including a change of control and financial maintenance covenants prohibiting us from exceeding a certain total leverage ratio or falling below a certain interest coverage ratio.

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If we are forced to refinance these borrowings on less favorable terms or if we are unable to repay, refinance or restructure such indebtedness, our financial condition and results of operations could be adversely affected.

Conversion of the 2025 Notes could dilute the ownership interest of existing stockholders or may otherwise depress the price of our common stock.

As of December 28, 2024, $84.8 million aggregate principal amount of our 2025 Notes were outstanding.

From and after February 15, 2025, the 2025 Notes are convertible into cash up to the amount of $1,000, with any excess amount convertible into shares, based on the applicable conversion rate at such time.

As of February 15, 2025, based on the initial conversion rate of the 2025 Notes, which is subject to adjustment, and the trading price of shares of our common stock, the 2025 Notes would not be convertible into shares of our common stock.

However, if the trading price of our common stock materially increases before the maturity date of the 2025 Notes and a holder elects to convert its 2025 Notes, we may be required to issue a number of shares of our common stock equivalent to such excess amount divided by the volume-weighted average price of our common stock over the relevant observation period (as described in the indenture governing our 2025 Notes).

The conversion of some or all of the 2025 Notes could dilute the ownership interests of existing stockholders to the extent deliver shares of our common stock upon conversion of any of the 2025 Notes.

Any sales in the public market of the common stock issuable upon such conversion could adversely affect prevailing market prices of our common stock.

Risks Related to Ownership of Common Stock

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• guidance, if any, that we provide to the public, any changes in this guidance or our failure to meet this guidance;

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Furthermore, the stock market may experience extreme volatility that, in some cases, may be unrelated or disproportionate to the operating performance of particular companies.

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The powers, preferences and rights of these additional series of preferred stock may be senior to or in parity with our common stock, which may reduce its value.

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Our certificate of incorporation provides, subject to limited exceptions, that the Court of Chancery of the State of Delaware will be the sole and exclusive forum for certain stockholder litigation matters, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, associates or stockholders.

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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