What changed in this filing

/stocks — the workspaceLOADING

Item 1A. Risk Factors

2021-02-17 compared with 2020-02-20 · 197 added, 135 removed, 552 unchanged (38% of the section changed)

4 unchanged sentences

Additional risks and uncertainties not presently known to us or that we currently believe are immaterial may also materially adversely affect our business, results of operations, financial condition and future growth prospects, and our stock price.

We are providing the following summary of the risk factors contained in our Form 10-K to enhance the readability and accessibility of our risk factor disclosures.

We encourage our stockholders to carefully review the full risk factors contained in this Form 10-K in their entirety for additional information regarding the risks and uncertainties that could cause our actual results to vary materially from recent results or from our anticipated future results.

Risks Related to Our Business and Our Industry

 To be commercially successful, we must convince surgeons and hospitals that our products are an attractive alternative to our competitors’ products and to existing surgical treatments of musculoskeletal disorders.

 Pricing pressure from our competitors and our customers may impact our ability to sell our products profitably.

 If our customers are unable to obtain adequate coverage and reimbursement for their purchases of our products, we may not be able to sell them profitably.

 If we are unable to maintain and expand our network of direct sales representatives and independent distributors, we may not be able to generate anticipated sales.

 Our sales and operating results may be negatively affected and we may not grow if we are unable to compete successfully.

 We are dependent on a limited number of third-party suppliers for our Musculoskeletal Solutions products and components used in our Enabling Technologies products.

 The proliferation of physician-owned distributorships (“PODs”) could result in increased pricing pressure on our products or harm our ability to sell our products to physicians.

 Our business could suffer if we lose the services of key members of our senior management, advisors or personnel.

 The safety and efficacy of our products is not yet supported by long-term clinical data.

 If we do not enhance our product offerings and introduce new products, we may be unable to effectively compete.

 We are subject to risks arising from our acquisitions of or investments in new or complementary businesses, products or technologies.

 We are required to maintain high levels of inventory, which may be costly.

 We rely on information technology systems and network infrastructure to operate and manage our business, which may be subject to a breach, cyber-attack or other disruption.

 We are subject to data privacy laws and our failure to comply with them could subject us to substantial liabilities.

 If we experience significant disruptions in our information technology systems, our business, results of operations and financial condition could be adversely affected.

 Consolidation in the healthcare industry could lead to demands for price concessions or to the exclusion of some suppliers from certain of our markets, which could have an adverse effect on our business.

 If our Enabling Technologies products require significant amounts of service after sale or we receive a significant number of warranty claims, our costs may increase.

 We experience long and variable capital sales cycles for our Enabling Technologies products.

 The widespread outbreak of a communicable disease, or any other public health crisis, could adversely affect our financial condition and results of operations.

Risks Related to our Legal and Regulatory Environment

 Our medical device products and operations are subject to extensive governmental regulation both in the United States and abroad.

 Modifications to our products may require new 510(k) or de novo clearances, PMAs or PMA supplements.

 Our HCT/P products are subject to extensive government regulation.

 We and our suppliers are subject to the FDA’s good manufacturing practice regulations and similar international regulations.

 We may be subject to a recall of our products or the discovery of serious safety issues with our products.

 We may be subject to enforcement action if we engage in the off-label promotion of our products.

 Governmental regulation and limited sources and suppliers could restrict our procurement and use of tissue.

 Negative publicity concerning methods of tissue recovery and screening of donor tissue could reduce demand for our regenerative biologics products and impact the supply of available donor tissue.

 We are subject to environmental laws and regulations that can impose significant costs and expose us to potential financial liabilities.

 We or our suppliers may be the subject of claims for non-compliance with FDA regulations in connection with the processing, manufacturing or distribution of regenerative biologics implants and products.

 We and our distributor sales representatives might be subject to claims for failing to comply with U.S.

federal, state and foreign fraud and abuse laws.

Risks Related to our International Operations

 We may fail to obtain or maintain foreign regulatory approvals to market our products in other countries.

 We are subject to risks associated with our non-U.S.

 Our results of operations could suffer if we are unable to manage our planned international expansion effectively.

 We are subject to risks arising from currency exchange rate fluctuations on our international transactions and translation of local currency results into United States dollars, which could adversely affect our profitability.

Risks Related to our Intellectual Property and Potential Litigation

 We could become subject to litigation that could be costly and result in the diversion of management’s time and efforts.

Risks Related to the Ownership of our Class A Common Stock

 Because of their significant stock ownership, our executive officers, and our directors and principal stockholders will be able to exert control over us and our significant corporate decisions.

 We are a “controlled company” within the meaning of the New York Stock Exchange Rules.

 Our Board is authorized to issue and designate shares of our preferred stock in additional series without stockholder approval.

 Anti-takeover provisions in our organizational documents and Delaware law may discourage or prevent a change of control.

Risks Related to Our Business and Our Industry

To be commercially successful, we must convince surgeons and hospitals that our products are an attractive alternative to our competitors’ products and that our Enabling Technologies and Musculoskeletal Solutions products are an attractive alternative to existing surgical treatments of musculoskeletal disorders.

12 unchanged sentences

 the time commitment that may be required for training.

If we are unable to convince surgeons and hospitals to use our products, we will not achieve expected sales or sustain our growth, and our financial condition and results of operation may be adversely affected.

In addition, we believe recommendations and support of our products by influential surgeons are essential for market acceptance and adoption.

If we do not receive support from such surgeons or long-term data does not show the benefits of using our products, surgeons may not use our products.

In such circumstances, we may not achieve expected sales or sustain our growth and may be unable to maintain profitability.

If we are unable to convince surgeons and hospitals to use our products, or long-term data does not show the benefits of using our products, we will not achieve expected sales or sustain our growth, and our financial condition and results of operation may be adversely affected.

Pricing pressure from our competitors and our customers may impact our ability to sell our products at prices necessary to support our current business strategies.

23 unchanged sentences

Reimbursement and healthcare payment systems in international markets vary significantly by country, and include both government-sponsored healthcare and private insurance.

Our Musculoskeletal Solutions products may not obtain international coverage and reimbursement approvals in a timely manner, if at all.

Our Musculoskeletal Solutions products may not obtain international coverage and reimbursement approvals in a timely manner, if at

Our failure to receive such approvals would negatively impact market acceptance of our products in the international markets in which those approvals are sought.

7 unchanged sentences

In such a situation, we may need to seek alternative independent distributors or increase our reliance on our direct sales representatives, which may not prevent our sales from being adversely affected.

If a direct sales representative or independent distributor

were to depart and be retained by one of our competitors, we may be unable to prevent them from helping competitors solicit business from our existing customers, which could further adversely affect our sales.

If a direct sales representative or independent distributor were to depart and be retained by one of our competitors, we may be unable to prevent them from helping competitors solicit business from our existing customers, which could further adversely affect our sales.

Because of the intense competition for their services, we may be unable to recruit or retain additional qualified independent distributors or to hire additional direct sales representatives to work with us.

9 unchanged sentences

We believe that our significant competitors are Medtronic, DePuy Synthes, Stryker, Zimmer Biomet, Smith and Nephew, and NuVasive.

Wright Medical Group, Orthofix International, Integra, and other smaller public and private companies are also competitors of ours.

Orthofix, Integra LifeSciences and other smaller public and private companies are also competitors of ours.

At any time, these or other industry participants may develop alternative treatments, products or procedures for the treatment of musculoskeletal disorders that compete directly or indirectly with our products.

12 unchanged sentences

The frequent introduction by competitors of products that compete with our existing or planned products may also make it difficult to market or sell our products.

In addition, the entry of multiple new products and competitors, including physician-owned distributorships (“PODs”), may lead some of our competitors to employ pricing strategies that could adversely affect the pricing of our products and pricing in the musculoskeletal implant and device market generally.

In addition, the entry of multiple new products and competitors, including PODs, may lead some of our competitors to employ pricing strategies that could adversely affect the pricing of our products and pricing in the musculoskeletal implant and device market generally.

As a result, our ability to compete successfully will depend on our ability to develop proprietary products that reach the market in a timely manner, receive adequate coverage and reimbursement from third-party payors, and are safer, less invasive and more effective than alternatives available for similar purposes.

15 unchanged sentences

Any such disruption or increased expenses could harm our commercialization efforts and adversely affect our ability to generate sales.

If we do not successfully implement our business strategy, our business and results of operations will be adversely affected.

Our business strategy was formed based on assumptions that might prove wrong.

We believe that various demographics and industry-specific trends will help drive growth in our markets and our business, but these demographics and trends are uncertain.

Actual demand for our products could differ materially from projected demand if our assumptions regarding these factors prove to be incorrect or do not materialize, or if alternative treatments to those offered by our products gain widespread acceptance.

We may not be able to successfully implement our business strategy.

To implement our business strategy, we need to, among other things, strengthen our brand, develop and introduce new musculoskeletal surgery products, find new applications for and improve our existing products, obtain regulatory clearance or approval for new products and applications and educate surgeons about the clinical and cost benefits of our products, all of which we believe could increase acceptance of our products by surgeons.

Our strategy of focusing exclusively on the medical devices market may limit our ability to grow.

In addition, we are seeking to increase our sales and, in order to do so, will need to commercialize additional products and expand our direct and distributor sales forces in existing and new territories, all of which could result in our becoming subject to additional or different foreign and domestic regulatory requirements, with which we may not be able to comply.

Moreover, even if we successfully implement our business strategy, our operating results may not improve or may decline.

We may decide to alter or discontinue aspects of our business strategy and may adopt different strategies due to business or competitive factors not currently foreseen, such as new medical technologies that would make our products obsolete.

Any failure to implement our business strategy may adversely affect our business, results of operations and financial condition.

The proliferation of PODs could result in increased pricing pressure on our products or harm our ability to sell our products to physicians who own or are affiliated with those distributorships.

11 unchanged sentences

The loss of members of our management team, key advisors or personnel, or our inability to attract or retain other qualified personnel or advisors, could have a material adverse effect on our business, results of operations and financial condition.

Though members of our sales force generally enter into noncompetition agreements that restrict their ability to compete with us, most of the members of our executive management team are not subject to such agreements.

members of our sales force generally enter into noncompetition agreements that restrict their ability to compete with us, most of the members of our executive management team are not subject to such agreements.

Accordingly, the adverse effect resulting from the loss of certain executives could be compounded by our inability to prevent them from competing with us.

20 unchanged sentences

In addition, even if we are able to successfully develop enhancements or new generations of our products, these enhancements or new generations of products may not produce sales in excess of the costs of development and they may be quickly rendered obsolete by changing customer preferences or the introduction by our competitors of products embodying new technologies or features.

We recently introduced the ExcelsiusGPS ® platform as well as orthopedic trauma products.

We introduced the ExcelsiusGPS ® platform as well as orthopedic trauma products.

Prior to launching, we had no prior experience marketing these new products and we may launch new products in the future that we have no prior experience marketing.

We will need to convince a new audience of surgeons and hospital personnel that our new products are attractive alternatives to competing products for use in applicable procedures.

If we are not successful in convincing surgeons and hospitals of the merit of new

products or educating them on their use, our sales and operating results may be negatively affected and we may not grow as quickly as we anticipate.

If we fail to properly manage our anticipated growth, our business could suffer.

Our rapid growth has placed, and will continue to place, a significant strain on our management and on our operational and financial resources and systems.

Failure to manage our growth effectively could cause us to over-invest or under-invest in infrastructure, and result in losses or weaknesses in our infrastructure, which could materially adversely affect us.

Additionally, our anticipated growth will increase the demands placed on our suppliers, resulting in an increased need for us to carefully monitor for quality assurance.

Any failure by us to manage our growth effectively could have an adverse effect on our ability to achieve our development and commercialization goals.

Our results of operations could suffer if we are unable to manage our planned international expansion effectively.

Expansion into international markets is an element of our business strategy and involves risk.

The sale and shipment of our products across international borders, as well as the purchase of components and products from international sources, subject us to extensive U.S.

and foreign governmental trade, import and export and customs regulations and laws.

Compliance with these regulations and laws is costly and exposes us to penalties for non-compliance.

Other laws and regulations that can significantly affect us include various anti-bribery laws, including the FCPA and anti-boycott laws.

Any failure to comply with applicable legal and regulatory obligations in the United States or abroad could adversely affect us in a variety of ways that include, but are not limited to, significant criminal, civil and administrative penalties, including imprisonment of individuals, fines and penalties, denial of export privileges, seizure of shipments and restrictions on certain business activities.

Also, the failure to comply with applicable legal and regulatory obligations could result in the disruption of our distribution and sales activities.

Our international operations expose us and our independent distributors to risks inherent in operating in foreign jurisdictions, including:

 exposure to different legal and regulatory standards;

 lack of stringent protection of intellectual property;

 obstacles to obtaining domestic and foreign export, import and other governmental approvals, permits and licenses and compliance with foreign laws;

 potentially adverse tax consequences and the complexities of foreign value-added tax systems;

 adverse changes in tariffs and trade restrictions;

 foreign exchange rate risk;

 limitations on the repatriation of earnings;

 difficulties in staffing and managing foreign operations;

 transportation delays and difficulties of managing international distribution channels;

 longer collection periods and difficulties in collecting receivables from foreign entities;

 increased financing costs;

 political, social and economic instability and increased security concerns.

These risks may limit or disrupt our expansion, restrict the movement of funds or result in the deprivation of contractual rights or the taking of property by nationalization or expropriation without fair compensation.

Our goal of succeeding as an international company depends, in part, on our ability to develop and implement policies and strategies that are effective in anticipating and managing these and other risks in the countries in which we do business.

Failure to manage these and other risks may have a material adverse effect on our operations in any particular country and on our business as a whole.

We are subject to risks arising from currency exchange rate fluctuations on our international transactions and translation of local currency results into United States dollars, which could adversely affect our profitability.

Our international operations account for approximately 17.5% of our total net sales, and we intend to continue to expand our international presence.

A significant portion of our foreign revenues and expenses are generated in Japan, the Euro zone, United Kingdom, Switzerland and Australia.

As our reporting currency is the U.S.

dollar, significant changes in currency exchange rates can result in increased exposure to foreign exchange effects on our consolidated results of operations.

We cannot predict changes in currency

exchange rates, the impact of exchange rate changes, nor the degree to which we will be able to manage the impact of currency exchange rate changes.

If we are not successful in convincing surgeons and hospitals of the merit of new products or educating them on their use, our sales and operating results may be negatively affected and we may not grow as quickly as we anticipate.

We may seek to grow our business through acquisitions of or investments in new or complementary businesses, products or technologies, and the failure to manage acquisitions or investments, or the failure to integrate them with our existing business, could have a material adverse effect on us.

29 unchanged sentences

Additionally, the regulatory environment governing information, security and privacy laws is increasingly demanding and continues to evolve.

If our information technology

systems are compromised, we could be subject to fines, damages, litigation and enforcement actions and we could lose trade secrets or other confidential information, the occurrence of which could harm our reputation, business, results of operations and financial condition.

If our information technology systems are compromised, we could be subject to fines, damages, litigation and enforcement actions and we could lose trade secrets or other confidential information, the occurrence of which could harm our reputation, business, results of operations and financial condition.

Our information systems, and those of third-parties with whom we contract, also require an ongoing commitment of significant resources to maintain, protect and enhance existing systems and develop new systems to keep pace with continuing changes in information technology.

10 unchanged sentences

More privacy and security laws and regulations are being adopted, and more are being enforced, with potential for significant financial penalties.

In the E.U., increasingly stringent data protection and privacy rules that will have substantial impact on the use of patient data across the healthcare industry became effective in May 2018.

In the European Union (“E.U.”), increasingly stringent data protection and privacy rules that will have substantial impact on the use of patient data across the healthcare industry became effective in May 2018.

General Data Protection Regulation (“GDPR”) applies uniformly across the E.U.

6 unchanged sentences

While we have invested significant time and resources in preparing for and complying with the GDPR, the GDPR and other similar laws and regulations (including potential new data privacy laws and regulations in the U.S.), as well as any associated inquiries or investigations or any other government actions, may be costly to comply with, result in negative publicity, increase our operating costs, require significant management time and attention, and subject us to remedies that may harm our business, including fines, demands or orders that we modify or cease existing business practices.

In addition, on January 1, 2021 the UK left the European Union.

The UK Data Protection Act 2018 is closely aligned with the GDPR but the EU-UK Trade and Cooperation Agreement (“Agreement”) does not address whether the European Commission determines if the UK’s data protection regime is “adequate” (i.e.

equivalent to the EU’s), so as to permit free movement of data from the EEA to the UK.

However, the Agreement allows data flows to continue from the EEA to the UK for an interim period of up to six months from January 1, 2021 so that a data transfer from the EEA to the UK shall not be considered as transfer to a third country.

If we experience significant disruptions in our information technology systems, our business, results of operations and financial condition could be adversely affected.

16 unchanged sentences

We expect that market demand, government regulation, third-party coverage and reimbursement policies and societal pressures will continue to change the worldwide healthcare industry, resulting in further business consolidations and alliances among our customers, which may reduce competition, exert further downward pressure on the prices of our products and may adversely impact our business, results of operations or financial condition.

Fluctuations in insurance cost and availability could adversely affect our profitability or our risk management profile.

We hold a number of insurance policies, including product liability insurance, directors’ and officers’ liability insurance, property insurance, health insurance and workers’ compensation insurance.

If the costs of maintaining adequate insurance coverage increase significantly in the future, our operating results could be materially adversely affected.

Likewise, if any of our current insurance coverage should become unavailable to us or become economically impractical, we would be required to operate our business without indemnity from commercial insurance providers.

If we operate our business without insurance, we could be responsible for paying claims or judgments against us that would have otherwise been covered by insurance, which could adversely affect our results of operations or financial condition.

If our Enabling Technologies products require significant amounts of service after sale or we receive a significant number of warranty claims, our costs may increase and our financial results may be adversely affected.

3 unchanged sentences

In addition, our reputation could be damaged and our products may not achieve market acceptance and could result in reductions in sales.

We are exposed to the credit risk of some of our customers, which could result in material losses.

Our business is subject to the risk of nonpayment by our customers.

We sell our Enabling Technologies products through various credit and installment payment arrangements.

We may experience loss from a customer’s failure to make payments according to the contractual terms.

Although we have systems in place to monitor and mitigate the associated risk, there can be no assurance that such systems will be effective in reducing the credit risk relating to the sale of our Enabling Technologies products.

If the level of credit losses we experience in the future exceed our expectations, such losses could have a material adverse effect on our financial condition or results of operations.

We experience long and variable capital sales cycles for our Enabling Technologies products, which may cause fluctuations in our financial results.

7 unchanged sentences

If that happens, the market price of our stock would likely decrease.

The widespread outbreak of a communicable disease, or any other public health crisis, could adversely affect our financial condition and results of operations.

We could be negatively affected by the widespread outbreak of a communicable disease, or any other public health crisis that results in disruptions to hospitals and other healthcare facilities.

A novel strain of coronavirus was first identified in Wuhan, China in December 2019, and the disease caused by it, COVID-19, was subsequently declared a pandemic by the World Health Organization in March 2020.

The pandemic has significantly impacted the economic conditions in the U.S.

and globally, accelerating during March and April, as federal, state and local governments have reacted to the public health crisis, creating significant uncertainties in the economy.

While emergency and time-sensitive surgical procedures continue, the outbreak and preventive measures taken to help curb the spread of COVID-19 has negatively impacted the markets we serve, in particular, hospitals and surgical centers globally where elective surgeries have been temporarily postponed.

We believe that certain of these patient volume declines reflect a deferral of elective surgeries to a later period, rather than a permanent reduction in demand;

however, there is no assurance that will occur.

We are considered a provider of “Life-sustaining” goods and services in Pennsylvania and an essential business in other areas.

To date, COVID-19 has not materially affected our supply chain or production schedule, although delays may be possible in the future due to the dynamic nature of the situation.

Given the dynamic nature of this situation, the Company cannot reasonably estimate the impacts of COVID-19 on our financial condition, results of operations or cash flows in the future.

However, while the government mandated restrictions, including elective surgeries, are in place, we do expect that it could continue to have a material adverse impact on our future revenue growth, operating profit and cash flow and may lead to higher than normal inventory levels, revised payment terms with certain of our customers, and a change in effective tax rate driven by changes in the mix of earnings across the Company’s jurisdictions.

Risks Related to our Legal and Regulatory Environment

20 unchanged sentences

The FDA’s 510(k) clearance process usually takes from three to 12 months, but may last longer.

The FDA’s goal is to review de novo classification requests within 120 to 150 FDA review days, but presently, the current average review period is about eight months.

The FDA’s goal is to review de novo classification requests within 150 FDA review days, but presently, the current average review period is about eight months.

The process of obtaining a PMA is much costlier and more uncertain than the 510(k) clearance process and generally takes one to three years, or even longer, from the time the application is submitted to the FDA until an approval is obtained.

10 unchanged sentences

In addition, the FDA may change its clearance and approval policies, adopt additional regulations or revise existing regulations, or take other actions which may prevent or delay approval or clearance of our products under development or impact our ability to modify our currently approved or cleared products on a timely basis.

Most recently, the FDA has been required to dedicate a significant amount of its resources to the review and oversight of medical products intended for COVID-19 or other pandemic-related purposes.

This strain on the FDA’s resources could lead to delays in the FDA’s review of new 510(k) or other marketing applications that are unrelated to COVID-19.

It is also possible that, if we obtain new FDA regulatory clearances or approvals, the clearances or approvals may contain limitations on the indicated uses or may prohibit certain uses which may impact the marketability of the product.

2 unchanged sentences

Regulatory enforcement or inquiries, or other increased scrutiny on us, could dissuade some surgeons from using our products and adversely affect our reputation and the perceived safety and efficacy of our products.

In addition, even after we have obtained the proper regulatory approval to market a product, the FDA has the power to require us to conduct postmarketing studies.

For example, the FDA may issue a Section 522 Order to conduct postmarketing studies.

In addition, even after we have obtained the proper regulatory approval to market a product, the FDA has the power to require us to conduct post marketing studies, such as a Section 522 Order.

These studies can be very expensive and time-consuming to conduct.

24 unchanged sentences

The FDA requires every manufacturer to make this determination in the first instance, but the FDA may review any manufacturer’s decision.

The FDA may not agree with our decisions regarding whether new clearances or approvals are necessary.

FDA may not agree with our decisions regarding whether new clearances or approvals are necessary.

We have modified some of our 510(k)-cleared products, and have determined based on our review of the applicable FDA guidance that in certain instances new 510(k) clearances or PMAs are not required.

2 unchanged sentences

In the United States, we are marketing our human tissue products as Section 361 HCT/Ps, which are not subject to FDA premarket clearance or approval requirements.

The FDA could disagree with our determination that our human tissue products are Section 361 HCT/Ps and could determine that these products are biologics requiring a biological license application approval or medical devices requiring 510(k) or de novo clearance or PMA approval, or NDA (New Drug Application) approval.

The FDA may then require that we cease marketing our human tissue products and/or recall the products unless and until we receive the appropriate clearance or approval from the FDA.

HCT/Ps also are subject to donor eligibility and screening, CGTP, product labeling, and postmarket reporting requirements.

HCT/Ps also are subject to donor eligibility and screening, CGTP, product labeling, and post market reporting requirements.

If we or our suppliers fail to comply with these requirements, we could be subject to FDA enforcement action, including, for example, warning letters, fines, injunctions, product recalls or seizures, and, in the most serious cases, criminal penalties.

1 unchanged sentence

Government Regulation.”

We may fail to obtain or maintain foreign regulatory approvals to market our products in other countries.

We currently market our products internationally and intend to expand our international marketing.

International jurisdictions require separate regulatory approvals and compliance with numerous and varying regulatory requirements.

For example, we intend to continue to seek regulatory clearance to market our primary products in the EEA, Japan, Brazil, Canada and other key markets.

The approval procedures vary among countries and may involve requirements for additional testing, and the time required to obtain approval may differ from country to country and from that required to obtain FDA clearance or approval.

Clearance or approval by the FDA does not ensure approval or certification by regulatory authorities in other countries or jurisdictions, and approval or certification by one foreign regulatory authority does not ensure approval or certification by regulatory authorities in other foreign countries or by the FDA.

The foreign regulatory approval or certification process may include all of the risks associated with obtaining FDA clearance or approval.

We may not obtain foreign regulatory approvals on a timely basis, if at all.

We may not be able to file for regulatory approvals or certifications and may not receive necessary approvals to commercialize our products in any market.

If we fail to receive necessary approvals or certifications to commercialize our products in foreign jurisdictions on a timely basis, or at all, our business, results of operations and financial condition could be adversely affected.

Additionally, in the EEA, we must inform the Notified Body that carried out the conformity assessment of the medical devices we market or sell in the EEA of any planned substantial changes to our quality system or changes to our devices which could affect compliance with the essential requirements or the devices’ intended use.

The Notified Body will then assess the changes and verify whether they affect the products’ conformity.

If the assessment is not favorable, it could prevent us from selling that product in the EEA, which could adversely impact our business and results of operations.

We are subject to risks associated with our non-U.S.

The FCPA and similar worldwide anti-bribery laws in non-U.S.

jurisdictions generally prohibit companies and their intermediaries from making improper payments for the purpose of obtaining or retaining business.

The FCPA also imposes accounting standards and requirements on publicly traded U.S.

corporations and their foreign affiliates, which are intended to prevent the diversion of corporate funds to the payment of bribes and other improper payments, and to prevent the establishment of “off books” slush funds from which such improper payments can be made.

Because of the predominance of government-sponsored healthcare systems around the world, many of our customer relationships outside of the United States are with governmental entities and are therefore subject to such anti-bribery laws.

Our internal control policies and procedures may not always protect us from reckless or criminal acts committed

by our employees or agents.

Violations of these laws, or allegations of such violations, could disrupt our operations, involve significant management distraction and result in a material adverse effect on our business, results of operations and financial condition.

We also could suffer severe penalties, including criminal and civil penalties, disgorgement and other remedial measures, including further changes or enhancements to our procedures, policies and controls, as well as potential personnel changes and disciplinary actions.

Furthermore, we are subject to the export controls and economic embargo rules and regulations of the United States, including, but not limited to, the Export Administration Regulations and trade sanctions against embargoed countries, which are administered by the Office of Foreign Assets Control within the Department of the Treasury, as well as the laws and regulations administered by the Department of Commerce.

These regulations limit our ability to market, sell, distribute or otherwise transfer our products or technology to prohibited countries or persons.

A determination that we have failed to comply, whether knowingly or inadvertently, may result in substantial penalties, including fines and enforcement actions and civil and/or criminal sanctions, the disgorgement of profits and the imposition of a court-appointed monitor, as well as the denial of export privileges, and may have an adverse effect on our reputation.

These and other factors may have a material adverse effect on our international operations or on our business, results of operations and financial condition generally.

If we or our suppliers fail to comply with the FDA’s good manufacturing practice regulations and similar international regulations, this could impair our ability to market our products in a cost-effective and timely manner.

23 unchanged sentences

A government-mandated or voluntary recall by us or one of our distributors could occur as a result of risk to health, component failures, manufacturing errors, design or labeling defects or other deficiencies and issues.

Recalls of any of our products would divert managerial and financial resources and have an adverse effect on our reputation, results of operations and

financial condition, which could impair our ability to produce our products in a cost-effective and timely manner in order to meet our customers’ demands.

Recalls of any of our products would divert managerial and financial resources and have an adverse effect on our reputation, results of operations and financial condition, which could impair our ability to produce our products in a cost-effective and timely manner in order to meet our customers’ demands.

We may also be required to bear other costs or take other actions that may have a negative impact on our future sales and our ability to generate profits.

4 unchanged sentences

Any corrective action, whether voluntary or involuntary, as well as defending ourselves in a lawsuit, will require the dedication of our time and capital, distract management from operating our business and may harm our reputation and financial results.

During the third quarter of 2020, the Company initiated a voluntary Class II recall of specific lots of ALTERA® Spacers.

This recall was initiated because specific lots of ALTERA® implants have internal components that were manufactured using stainless steel rather than the specified cobalt chromium molybdenum alloy.

Only devices made after February 12, 2020 from specific lots were affected, and some parts in some lots may not be affected.

No reports of adverse reactions related to the affected ALTERA® implants have been received to date.

A recall notification was issued to all relevant parties and Globus has collected and replaced impacted field inventory.

We may be subject to enforcement action if we engage in the off-label promotion of our products.

2 unchanged sentences

However, if the FDA determines that our promotional efforts constitutes promotion of an off-label use, it could request that we modify our training or promotional efforts or subject us to regulatory or enforcement actions, including the issuance of an untitled letter, a warning letter, injunction, seizure, civil fine and criminal penalties.

It is also possible that other federal, state or foreign enforcement authorities, such as the Department of Justice (“DOJ”), might take action if they consider our promotional or training materials to constitute promotion of an unapproved/off-label use, which could result in significant criminal and/or civil fines or penalties under other statutory authorities, such as laws prohibiting false claims for reimbursement (e.g., the False Claims Act).

It is also possible that other federal, state or foreign enforcement authorities, such as DOJ or HHS, might take action if they consider our promotional or training materials to constitute promotion of an unapproved/off-label use, which could result in significant criminal and/or civil fines or penalties under other statutory authorities, such as laws prohibiting false claims for reimbursement (e.g., the FCA).

In that event, our reputation could be damaged and adoption of the products would be impaired.

Although our policy is to refrain from statements that could be considered off-label promotion of our products, the FDA or another regulatory agency could disagree and conclude that we have engaged in off-label promotion.

Although our policy is to refrain from statements that could be considered off-label promotion of our products, the FDA, or another regulatory agency or a Relator under the FCA could disagree and conclude that we have engaged in off-label promotion.

In addition, the off-label use of our products may increase the risk of injury to patients, and, in turn, the risk of product liability claims.

Product liability claims are expensive to defend and could divert our management’s attention, result in substantial damage awards against us and harm our reputation.

Claims under the FCA and product liability claims are expensive to defend and could divert our management’s attention, result in substantial damage awards against us and harm our reputation.

Governmental regulation and limited sources and suppliers could restrict our procurement and use of tissue.

3 unchanged sentences

If NOTA is interpreted or enforced in a manner that prevents us from receiving payment for services we render or that prevents us from paying tissue banks or certain of our clients for the services they render for us, our business could be materially adversely affected.

In addition, there is similar legislation in Europe and the UK which we must abide by, including Directive 2004/23/EC in relation to human tissues and cells requiring that donation be unpaid (except for expenses and inconvenience) and voluntary.

We depend on a limited number of sources of human tissue for use in some of our regenerative biologics products and a limited number of entities to process the human tissue for use in those regenerative biologics products, and any failure to obtain tissue from these sources or to have the tissue processed by these entities for us in a timely manner will interfere with our ability to effectively meet demand for our regenerative biologics products incorporating human tissue.

28 unchanged sentences

Violations of these laws are punishable by criminal and civil sanctions, including, in some instances, imprisonment and exclusion from participation in federal and state healthcare programs, including the Medicare, Medicaid and Veterans Administration health programs.

Because of the broad and far-reaching nature of these laws, we may be required to alter or discontinue one or more of our business practices to be in compliance with these laws.

Because of the broad and far-reaching nature of these laws, we may be required to alter or discontinue one or more of our business practices.

Healthcare fraud and abuse regulations are complex, and even minor irregularities can potentially give rise to claims that a statute or prohibition has been violated.

1 unchanged sentence

 the Federal Anti-Kickback Statute, which prohibits, among other things, persons from knowingly and willfully soliciting, receiving, offering or paying remuneration, directly or indirectly, in exchange for or to induce either the referral of an individual for, or the purchase, order or recommendation of, any good or service for which payment may be made under federal healthcare programs such as the Medicare and Medicaid programs;

 federal false claims laws which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, claims for payment from Medicare, Medicaid, or other third-party payors that are false or fraudulent;

 federal false claims laws which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, claims for payment to Medicare, Medicaid, or other third-party payors that are false or fraudulent;

 the federal Health Insurance Portability and Accountability Act of 1996, which created federal criminal laws that prohibit executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters;

1 unchanged sentence

 the FCPA, which prohibits corrupt payments, gifts or transfers of value to foreign officials;

 foreign and U.S.

state law equivalents of each of the above federal laws, such as anti-kickback and false claims laws which may apply to items or services reimbursed by any third-party payor, including commercial insurers;

 the Physician Payment Sunshine Act, which requires medical device companies to report all compensation, gifts and benefits they have provided to certain healthcare professionals;

 foreign and U.S.

state law and code equivalents of each of the above federal laws, such as anti-kickback and false claims laws and disclosure of transfers of value to healthcare professionals which may apply to items or services reimbursed by any third-party payor, including commercial insurers.

Possible sanctions for violation of these laws include monetary fines, civil and criminal penalties, exclusion from Medicare and Medicaid programs and forfeiture of amounts collected in violation of such prohibitions.

5 unchanged sentences

We would be materially and adversely affected if regulatory agencies interpret our financial relationships with surgeons who order our products to be in violation of applicable laws and we were unable to comply with applicable laws.

This could subject us to monetary penalties for non-compliance, the cost of which could be substantial, or we may be unable to accept referrals from such surgeons.

This could subject us to monetary penalties for non-compliance, the cost of which could be substantial.

To enforce compliance with the federal laws, the DOJ has increased its scrutiny of interactions between healthcare companies and healthcare providers, which has led to a number of investigations, prosecutions, convictions and settlements in the healthcare industry.

2 unchanged sentences

Any such investigation or settlement could increase our costs or otherwise have an adverse effect on our business, financial condition and results of operations.

In addition, there has been a recent trend of increased federal and state regulation of payments made to physicians for marketing.

In addition, there has been a recent trend of increased federal and state regulation on payments made to physicians for marketing.

Some states, such as California, Massachusetts and Vermont, mandate implementation of commercial compliance programs, along with the tracking and reporting of gifts, compensation and other remuneration to physicians.

2 unchanged sentences

Federal or state regulatory authorities might challenge our current or future activities under these laws.

Any such challenge could have a material adverse effect on our reputation, business, results of operations and financial condition.

In addition to the penalties described above, any state or federal regulatory review of us, regardless of the outcome, would be costly and time-consuming and could have a material adverse effect on our business, financial condition and results of operations.

Plaintiffs’ attorneys acting on behalf of FCA Relators, who are incentivized to pursue claims against manufacturers by the potential to share in any monetary penalties recovered by the government, also might initiate lawsuits that challenge our current or future activities under these laws.

Any such challenges by regulatory authorities directly or by Relators suing on behalf of the government could have a material adverse effect on our reputation, business, results of operations and financial condition.

In addition to the penalties described above, any state or federal regulatory review or FCA lawsuit, regardless of the outcome, would be costly and time-consuming and could have a material adverse effect on our business, financial condition and results of operations.