What changed in this filing

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Item 1A. Risk Factors

2023-05-22 compared with 2022-05-25 · 89 added, 123 removed, 264 unchanged (45% of the section changed)

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Please refer to the cautionary statements made under the heading “Cautionary Statement Regarding Forward-Looking Information” at the end of Item 1 of this Annual Report on Form 10-K for more information on the qualifications and limitations on forward-looking statements.

Risks Related to the COVID-19 Pandemic

The outbreak of communicable diseases could have, and the ongoing COVID-19 pandemic and its related effects are having, a material adverse impact on our business, financial condition, cash flows and results of operations, and we are unable to predict the extent to which COVID-19 and its related impacts will continue to adversely affect our Company and the achievement of our strategic objectives.

The COVID-19 outbreak has significantly impacted economic activity and markets around the world and is negatively impacting our business, financial condition, cash flows and results of operations in numerous ways, including, but not limited to, those outlined below.

We are unable to predict the extent to which COVID-19 and its related impacts will continue to negatively affect our Company, including the time it will take for vaccines to be broadly distributed and administered worldwide, and the effectiveness of such vaccines in slowing or stopping the spread of COVID-19 and its variants and mitigating the economic effects of the pandemic:

• Product Demand .

As a result of COVID-19, we have experienced both decreased demand and increased volatility in demand for our products.

Lower collection volumes at source plasma collection centers due to COVID-19 factors, including stay-at-home and other government orders designed to slow the spread of COVID-19, donor safety concerns, reduced donor collec tion capacity due to shutdowns and social distancing requirements, and government economic relief programs that may reduce the propensity of people to be donors, have adversely affected and will likely continue to adversely affect demand for our Plasma disposable products.

While elective procedures and hospital capital purchases have increased from initially depressed levels earlier in the pandemic, demand for our Hospital products has been, and in the future may continue to be, negatively impacted by resurgences in COVID-19 and its variants that result in reductions in elective surgeries and trauma cases, restrictions on vendor access at customer sites and the reallocation of hospital resources to address critical intensive care needs.

We also have experienced, and may continue to experience, in certain markets rapid and unpredictable changes in demand for some of our Blood Center disposable products both from reductions in donation volumes relating to resurgences in COVID-19 and its variants and as blood collectors seek to replenish their blood product inventories and safety stocks.

Such changes could impact our ability to meet demand on a timely basis or could result in potential reductions in demand in future periods, including if safety stock levels in certain markets return to pre-COVID-19 levels or the supply of blood held by our customers significantly exceeds the demand for blood from hospitals due to declines of elective surgeries and trauma cases.

• Manufacturing, Supply Chain and Distribution System Disruption .

COVID-19 and its associated economic disruptions could have an adverse impact on our manufacturing capacity, supply chains and distribution systems, including impacts associated with preventive and precautionary measures that we, other businesses and governments are taking, such as the recent area-wide lockdowns implemented in China;

labor shortages and other financial difficulties experienced by our third-party manufacturers and suppliers;

and challenges to our global transportation channels and other aspects of our global supply chain network, including the cost and availability of raw materials and components due to shortages and resulting cost inflation.

Although we have not experienced significant manufacturing or supply chain difficulties to date as a result of COVID-19, we may in the future.

Delays or disruptions experienced by our suppliers and manufacturers caused by the COVID-19 pandemic and associated economic disruptions may prevent us from obtaining raw materials and component parts for our products in a timely manner.

Additionally, China implemented area-wide lockdowns in early 2022 to control the spread of COVID-19, which have disrupted and may continue to disrupt our ability to distribute certain products in China.

A protracted reduction or interruption in any of our manufacturing and distribution processes could have a material adverse effect on our business.

• Potential Liquidity and Credit Impacts .

While we have significant sources of cash and liquidity and access to committed credit lines, w e may be adversely impacted by delays in payments of outstanding receivables if our customers experience financial difficulties or are unable to borrow money to fund their operations, which may adversely impact their ability to pay for our products on a timely basis, if at all, which in turn would adversely affect our financial condition.

As these and other impacts of COVID-19 continue to adversely affect our Company, they may also have the effect of heightening many of the ot her risks described in the Risk Factors section of this Annual Report on Form 10-K.

We believe the magnitude of the adverse impact of these factors on our business, financial condition, cash flows and results of operations in the future will be primarily driven by:

the severity and duration of the COVID-19 pandemic (including the extent of future surges, variants and the efficacy of vaccinations);

global vaccine distribution and acceptance;

the timing, scope and effectiveness of governmental responses to the COVID-19 pandemic and associated economic disruptions;

general confidence about personal health a nd safety;

and the COVID-19 pandemic’s impact on U.S.

and international healthcare systems, the U.S.

economy and the worldwide economy.

Risks Related to our Business and Industry

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Material reductions in purchasing from or loss of a significant customer could adversely affect our business.

In fiscal 2022, our largest Plasma customer, CSL, accounted for more than 10% of our net revenues and our ten largest customers accounted for approximately 45% of our net revenues.

In April 2021, CSL informed us of its intent not to renew its supply agreement for the use of PCS2 plasma collection system devices and the purchase of disposable plasmapheresis kits in the U.S.

following the expiration of the current term, which was amended in fiscal 2022 to extend on a non-exclusive basis through December 2023.

In addition to the anticipated financial impact of the expiration of the CSL supply agreement in Decembe r 2023, we could experience an adverse effect on our results of operations or financial condition if any of our other largest customers materially re duce their purchases from us or terminate their relationship with us for any reason, including material decreases in demand for plasma or development of alternative processes.

In fiscal 2023, our ten largest customers accounted for approximately 48% of our net reve nues.

As previously disclosed, our largest Plasma customer, CSL, informed us in April 2021 of its intent not to renew its supply agreement for the use of PCS2 plasma collection system devices and the purchase of disposable plasmapheresis kits in the U.S.

following the expiration of the then current term of its contract, which was subsequently extended on a non-exclusive basis through December 2025.

Any non-renewal, termination or material reduction in purchasing by any of our largest customers for any reason, includin g material decreases in demand for plasma or development of alternative processes, could have a material adverse effect on our business, financial condition or results or operations.

We face intense competition, and if we are unable to successfully expand our product lines through internal research and new product development or keep pace with rapid technological changes in the healthcare industry, our business may be materially and adversely affected.

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In some circumstances, such adverse events could also cause delays in regulatory approval of new products or the imposition of post-market approval requirements.

Our success depends on our ability to attract and retain key personnel needed to successfully operate the business and to plan for future executive transitions.

Our ability to compete effectively depends on our ability to attract and retain key employees, including people in senior management, sales, marketing and R&D positions, and to facilitate seamless leadership transitions for key positions.

Our ability to recruit and retain key talent will depend on a number of factors, including hiring practices of our competitors, compensation and benefits, work location, work environment, COVID-19 related health and safety protocols (including vaccine mandates) and industry economic conditions.

In December 2019, we relocated our corporate headquarters to a leased office space in Boston, Massachusetts and in response to the COVID-19 pandemic, we instituted remote working practices for many of our employees.

Although we believe our move to Boston and the steps we have taken to build a collaborative, performance driven culture and to maintain employee well-being during COVID-19 will help us to attract and retain key talent, we face intense competition for talent in our industry, particularly as employees are increasingly able to work remotely.

Vaccine mandates applicable to our employees may also lead to employee attrition, challenges securing future labor needs, inefficiencies connected to employee turnover and costs associated with implementation and on-going compliance.

If we fail to attract and r etain key personnel in senior management and other positions, or if our succession planning efforts are not effective, it could have a material adverse effect on our business, financial condition and results of operations.

We are increasingly dependent on information technology systems and subject to privacy and security laws and a cyber-attack or other breach of these systems could have a material adverse effect on our business, financial condition or results of operations.

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Any failure by us or third parties we work with to maintain or protect our respective information technology systems and data integrity, including from cyber-attacks, intrusions or other breaches, could result in the unauthorized access to patient data and personally identifiable information, theft of intellectual property or other misappropriation of assets, or otherwise compromise our confidential or proprietary information and disrupt our operations.

Any of these events, in turn, may cause us to lose existing customers, have difficulty preventing, detecting and controlling fraud, have disputes with customers, physicians and other healthcare professionals, be subject to legal claims and liability, have regulatory sanctions or penalties imposed, have increases in operating expenses, incur expenses or lose revenues as a result of a data privacy breach or theft of intellectual property, or

suffer other adverse consequences, any of which could have a material adverse effect on our business, financial condition or results of operations.

Additionally, the legal and regulatory environment surrounding information security and privacy is increasingly demanding, with the imposition of new and changing requirements across businesses.

We are required to comply with increasingly complex and changing legal and regulatory requirements that govern the collection, use, storage, security, transfer, disclosure and other processing of personal data in the United States and in other countries, including, but not limited to, HIPAA, HITECH, the California Consumer Privacy Act, or CCPA, the California Privacy Rights Act, effective January 1, 2023, and the EU’s General Data Protection Regulation, or GDPR.

We are required to comply with increasingly complex and changing legal and regulatory requirements that govern the collection, use, storage, security, transfer, disclosure and other processing of personal data in the United States and in other countries, including, but not limited to, HIPAA, HITECH, the California Consumer Privacy Act, or CCPA, the California Privacy Rights Act, and the EU’s General Data Protection Regulation, or GDPR.

The GDPR imposes stringent EU data protection requirements and provides for significant penalties for noncompliance.

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CCPA provides consumers with a private right of action against companies who have a security breach due to lack of appropriate security measures, and several other U.S.

states have introduced or proposed similar privacy laws.

In addition, new information security and privacy laws have also come into effect in China and other countries where the Company conducts business.

We or our third-party providers and business partners may also be subjected to audits or investigations by one or more domestic or foreign government agencies relating to compliance with information security and privacy laws and regulations, and noncompliance with the laws and regulations could results in material fines or litigation.

states have introduced or proposed similar privacy laws which may apply to us directly or indirectly through our customers, manufacturers, suppliers or other third-party partners.

In addition, new information security and privacy laws have also come into effect in China and other countries where we conduct business.

We or our third-party providers and business partners may also be subjected to audits or investigations by one or more domestic or foreign government agencies relating to compliance

with information security and privacy laws and regulations, and noncompliance with the laws and regulations could results in material fines or litigation.

We outsource certain aspects of our business to a single third-party vendor that subjects us to risks, including disruptions in business and increased costs.

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Accordingly, we are subject to the risks associated with the vendor’s ability to successfully provide the necessary services to meet our needs.

If our vendor is unable to adequately protect our data or information is lost, if our ability to deliver our services is interrupted (including as a result of significant outbreaks of disease, including the ongoing COVID-19 pandemic, natural disasters, strikes, terrorism attacks or other adverse events in the countries in which the vendor operates), if our vendor's fees are higher than expected, if our vendor makes mistakes in the execution of operations support, or if the vendor terminates our relationship, then our business and operating results may be negatively affected.

If our vendor is unable to adequately protect our data or information is lost, if our ability to deliver our services is interrupted (including as a result of significant outbreaks of disease, natural disasters, extreme weather and other conditions caused by or related to climate change, strikes, terrorism attacks or other adverse events in the countries in which the vendor operates), if our vendor's fees are higher than expected, if our vendor makes mistakes in the execution of operations support, or if the vendor terminates our relationship, then our business and operating results may be negatively affected.

A significant portion of our revenue derives from the sale of blood collection supplies.

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The demand for whole blood disposable products in the U.S.

continued to decrease in fiscal 2022 due to sustained declines in transfusion rates caused by hospitals' improved blood management techniques and protocols.

continues to decrease due to sustained declines in transfusion rates caused by hospitals’ improved blood management techniques and protocols.

In response to this trend, U.S.

blood center collection groups prefer single source vendors for their whole blood collection products and are primarily focused on obtaining the lowest average selling prices.

blood center collection groups are primarily focused on obtaining the lowest average selling prices for their whole blood collection products.

We expect to see continued declines in transfusion rates and the market to remain price-focused and highly competitive for the foreseeable future.

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If a hospital value analysis committee does not approve or revokes prior approval for any of the reasons set forth above, the demand for our vascular closure devices may decrease and we could experience an adverse effect on our results of operations or financial condition.

Additionally, while Hospital capital purchase patterns have increased from initially depressed levels earlier in the COVID-19 pandemic, it is difficult to predict the long-term impact of the pandemic on hospital spending patterns.

The influence of integrated delivery networks, group purchasing organizations and large single accounts has the potential to put price pressure on our Hospital business.

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We manufacture certain key disposables and devices at single locations with limited alternate facilities.

If natural disasters, strikes, terrorism attacks or other adverse events occur that result in the closure of or damage to one or more of these facilities, we may be unable to supply the relevant products at previous levels or at all for some period.

If natural disasters, extreme weather and other conditions caused by or related to climate change, strikes, terrorism attacks or other adverse events occur that result in the closure of or damage to one or more of these facilities, we may be unable to supply the relevant products at previous levels or at all for some period.

Additionally, for reasons of quality assurance or cost effectiveness, we purchase certain finished goods, components and raw materials from sole suppliers who have their own complex supply chains.

We also use certain components in our products, including semiconductor chips, that have been the subject of recent global supply chain shortages and disruptions.

Any disruption to one or more of our suppliers’ production or delivery of sufficient volumes of components conforming to our specifications, including as a result of disruptions ca used by the COVID-19 pandemic (as described above) or otherwise, could disrupt or delay our ability to deliver finished products to our customers.

We have experienced increased levels of unpredictability in the supply of certain raw materials and components, including semiconductor chips, used in the manufacturing of our products.

While we continue to believe we will have access to the raw materials and components that we need, any disruption to one or more of our suppliers’ production or delivery of sufficient volumes of raw materials and components conforming to our specifications could disrupt or delay our ability to deliver finished products to our customers.

For example, we purchase components in Asia for use in manufacturing in the U.S.

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and Mexico to the rest of the world.

Some of our products require sterilization prior to sale or distribution, and we utilize third-party facilities for this process.

If an event occurs that results in damage to or closure, whether temporarily or permanent, of one or more of these facilities, we may be unable to manufacture or sterilize the relevant products at prior levels or at all, and a third party may not be available on a timely basis (if at all) to replace sterilization capacity.

In addition, we manufacture our vascular closure devices under a shelter plan service agreement with Offshore International Incorporated (d/b/a Tetakawi), or Tetakawi, pursuant to which we lease our manufacturing facility in Guaymas, Mexico and Tetakawi is responsible for a number of ongoing services related to the facility, including provision of external security and maintenance, manufacturing personnel related human resource matters, recruiting support, government compliance, workforce transportation and cross-border shipping of raw components.

Many of our products also require sterilization prior to sale or distribution and we utilize a mix of internal resources and contract sterilizers to perform this service.

To the extent we or our contract sterilizers are unable to sterilize our products, whether due to capacity, availability of materials for sterilization, regulatory or other constraints, including federal and state regulations on the use of ethylene oxide, we may be unable to transition to alternative internal or external resources or methods in a timely or cost effective manner, or at all, which could have a material impact on our results of operations and financial condition.

In addition, we manufacture our vascular closure devices under a shelter plan service agreement with Offshore International Incorporated (d/b/a Tetakawi) pursuant to which we lease our manufacturing facility in Guaymas, Mexico.

Tetakawi is responsible for a number of ongoing services related to the facility, including provision of external security and maintenance, manufacturing personnel related human resource matters, recruiting support, government compliance, workforce transportation and cross-border shipping of raw components.

We are reliant on Tetakawi to provide these services and any disruption in these services or our failure to maintain our contractual relationship with Tetakawi could significantly harm our ability to manufacture our vascular closure devices and maintain sufficient quality standards, which would negatively impact our business and results of operations.

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A reduction or interruption in manufacturing, or an inability to secure alternative sources of raw materials, components or finished goods on commercially reasonable terms or in a timely manner, could compromise our ability to manufacture our products on a timely and cost-competitive basis, which may have a material adverse effect on our business, financial condition and results of operations.

Plastics and other petroleum-based products are the principal components of our disposables, which are the main source of our revenues.

Changes in the cost, composition or availability of the plastics and resins we purchase, or cost volatility associated with other raw materials and components used in our products, could adversely affect our business, financial condition and results of operations.

We face risks related to price, composition and availability of the plastic raw materials used in our business.

Changes in the cost, composition or availability of the plastics and resins we purchase, or of other raw materials and components used in our products, could adversely affect our business, financial condition and results of operations.

We face risks related to the price, composition and availability of plastic raw materials used in our disposable products, which represent a substantial portion of our revenues.

Material or sustained increases in the price of petroleum or petroleum derivatives could have an adverse impact on the costs to procure plastic raw materials.

Our results of operations could be negatively impacted by volatility in the cost of these and other raw

materials and components used in our products, including associated freight and energy costs that, in turn, increase the costs of producing and distributing our products.

Recently, we have experienced inflationary pressures that have increased significantly the cost of raw materials, transportation, construction, services, and energy necessary for the production and distribution of our products, which we expect will continue throughout fiscal 2023.

While we have implemented cost containment measures, selective price increases and taken other actions to offset these inflationary pressures in our global supply chain, we may not be able to completely offset all the increases in our operational costs.

Additionally, climate change (including laws or regulations passed in response thereto) could increase our costs, in particular our costs of supply, energy and transportation/freight.

Additionally, our results of operations could be neg atively impacted by volatility in the cost or availability of these and other raw materials and components used in our products that, in turn, increase the costs of producing and distributing our products.

In recent years, we have experienced inflationary pressures that have significantly increased the cost of raw materials, transportation, construction, services and energy necessary for the production and distribution of our products.

Continued uncertainty around inflationary pressures, rising interest rates and macroeconomic conditions have increased the risk of creating new, or exacerbating existing, economic challenges we face.

Wh ile we have implemented cost containment measures, selective price increases and taken other actions to offset these inflationary pressures in our global supply chain, we may not be able to completely offset all the increases in our operational costs.

Additionally, climate change (including laws or regulations passed in response thereto) could increase our supply costs, including energy and transportation/freight-related expenses, or reduce the availability of raw materials.

The composition of the plastic we purchase is also important.

Today, we purchase plastics that contain phthalates, which are used to make plastic malleable.

Today, we purchase plastics that contain DEHP and other phthalates, which are used to make plastic malleable.

Due to regulatory changes and evolving customer expectations, we may be required to remove materials such as phthalates from our devices, find alternative materials which then need to be validated or obtain regulatory approvals from the regulatory authorities for a number of products.

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We may not realize the benefits we expect from our Operational Excellence Program.

In July 2019, our Board of Directors approved a new Operational Excellence Program, also referred to in this report as the 2020 Program, and delegated authority to management to determine the detail of the initiatives that will comprise the program.

During the first quarter of fiscal 2022, the Company revised the program to improve product and service quality, reduce cost principally in our manufacturing and supply chain operations and ensure sustainability while helping to offset impacts from the expiration of CSL’s U.S.

Supply Agreement in December 2023, rising inflationary pressures and effects of the COVID-19 pandemic.

While cost savings from the 2020 Program to date have been consistent with our expectations, it is possible that events and circumstances, such as the aforementioned customer loss, labor shortages, sustained inflationary pressures and other financial or strategic difficulties, delays and unexpected costs, including as a direct or indirect result of the COVID-19 pandemic, could result in our not realizing all of the anticipated benefits or our not realizing the anticipated benefits on our expected timetable.

Our inability to realize all of the anticipated benefits from the 2020 Program could have a material adverse effect on our business, results of operations, cash flows and financial condition.

In July 2019, our Board of Directors approv ed a new Operational Excellence Program, also referred to in this report as the 2020 Program, and delegated authority to management to determine the detail of the initiatives that will comprise the program.

While cost savings from the 2020 Program to date have been consistent with our expectations, it is possible that events and circumstances, such as rising interest rates, macroeconomic uncertainty and the related impacts on us, our customers and suppliers could result in our not realizing all of the anticipated benefits or our not realizing the anticipated benefits on our expected timetable.

Additionally, any material reduction in purchases by significant customers and any actions we take in response to such anticipated reduction could result in a decrease in benefits we realize under the 2020 Program.

Our inability to realize all of the anticipated benefits from the 2020 Pro gram could have a material adverse effect on our business, results of operations, cash flows and financial condition.

If our business development activities are unsuccessful, we may not realize the intended benefits.

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Such transactions are inherently risky and require significant effort and management attention.

The success of any acquisition, investment or alliance, or of any divesture, may be affected by a number of factors, including our ability to properly assess and value the potential business opportunity or to successfully integrate any business we may acquire into our existing business.

For example, we anticipate that a material factor in achieving the anticipated benefits of our March 2021 acquisition of Cardiva will be our ability to effectively integrate and profitably market and sell the vascular closure devices acquired from Cardiva.

Also as a result of the Cardiva acquisition, we have entered into a new line of business.

Unlike our other products, the VASCADE and VASCADE MVP vascular closure devices are designated as Class III medical devices, which are subject to additional and complex regulatory requirements.

Complying with these regulations will be costly, time-consuming and complex.

Furthermore, any new business line and/or new product or service could have an adverse impact on the effectiveness of our system of internal controls.

The success of any acquisition, investment or alliance, or of any divestiture, may be affected by a number of factors, including our ability to properly assess and value the potential business opportunity or to successfully integrate any business we may acquire into our existing business.

Promising partnerships and acquisitions may also not be completed for reasons such as competition among prospective partners or buyers, the inability to reach satisfactory terms, the need for regulatory approvals or the existence of economic conditions affecting our access to capital for acquisitions and other capital investments.

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In the future, the FDA may determine that our products will require more costly, lengthy and uncertain de novo or PMA processes.

Modifications to Class III devices, like the Vascular Closure products we acquired from Cardiva in March 2021, may require additional clinical studies or supplemental PMA submissions.

Modifications to Class III devices, like our Vascular Closure products, may require additional clinical studies or supplemental PMA submissions.

If the FDA requires us to go through a lengthier, more rigorous process for future products or modifications to existing products, our product introductions or modifications could be delayed or canceled, which could adversely affect our revenue.

In particular, the FDA has recently placed increased scrutiny on cybersecurity for medical devices which may necessitate additional time and cost for product development, submission and approval or clearance.

In addition, even if we do obtain clearance or approval, the FDA may not approve or clear these products for the indications that we requested.

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For example, the EU has adopted the EU Medical Device Regulation, or EU MDR, and EU In Vitro Diagnostic Regulation, or EU IVDR, each of which impose stricter requirements for the marketing and sale of medical devices beyond those of the current medical device directives they replace, including in the area of clinical evaluation requirements, quality systems and post-market surveillance.

The EU MDR became fully applicable as of May 26, 2021 and the EU IVDR is fully applicable as of May 26, 2022.

There is a transition period for devices with a notified body certificate with an expiry date after the date of full application, provided that there are no significant changes to the design or intended use.

However, a new EU certificate under the applicable regulations must be obtained before that expiry date if there is to be no interruption in manufacturing and supply of devices to the market.

Complying with the requirements of these regulations may require us to incur significant expenditures.

Complying with the requirements of these regulations may require us to incur significant expenditures and we may experience delays that negatively impact the ability to sell our full suite of products in certain jurisdictions.

Similarly, the separation of states from participation in the EU, such as through the cessation of the UK’s membership in the EU (commonly known as “Brexit”) and the separation of the Swiss and EU medical product markets with the adoption of the EU MDR (commonly referred to as “Swexit”), may result in further regulatory risk and complexity as the former EU member or participant state establishes separate laws and regulations governing medical products.

More stringent regulations have also been introduced in many countries outside of Europe that previously did not have medical device regulations, had minimal regulations or relied on reciprocal recognition of approval in other markets.

Failure to meet these requirements could adversely impact our business in the EU and other applicable regions.

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Any product for which we obtain clearance or approval, and the manufacturing processes, reporting requirements, post-approval clinical data and promotional activities for such product, will be subject to continued regulatory review, oversight and periodic inspection (both routine and unannounced) by the FDA and other domestic and foreign regulatory bodies.

In particular, we and our third-party suppliers m ust comply with the FDA's QSR or cGMP requirements (depending on the products at issue), which address, among other things, the methods of documentation of the design, testing, production, control, quality assurance, labeling, packaging, sterilization, storage and shipping of our products.

In particular, we and our third-party suppliers must comply with the FDA’s QSR or cGMP requirements (depending on the products at issue), which address, among other things, the methods of documentation of the design, testing, production, control, quality assurance, labeling, packaging, sterilization, storage and shipping of our products.

Any future failure by us or one of our suppliers to comply with applicable statutes and regulations administered by the FDA or other regulatory authority could result in administrative actions, field actions, or civil or criminal enforcement actions.

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Other environmental laws may have similar consequences to us or our suppliers, or result in liability to us.

The enactment of additional environmental laws in the future may increase our compliance costs or otherwise adversely impact our operations.

Additionally, increased environmental regulation, including the enactment of laws and regulations to address climate change, may increase our compliance costs or restrict certain aspects of our activities.

If our products cause or contribute to a death or serious injury, or malfunction in certain ways, we will be subject to medical device reporting requirements.

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Failure to report these events to the FDA or other applicable regulatory authorities within the required timeframes, or at all, could lead to enforcement actions, fines and criminal sanctions against us.

Class III medical devices are those that pose the highest risk to patients.

As a result of the acquisition of our Vascular Closure products from Cardiva in March 2021, we may receive a greater number of complaints requiring investigation and potentially need to file a greater number of medical device reports with FDA, which may require additional time and resources.

Our relationships with customers and third-party payers are subject to applicable anti-kickback, fraud and abuse, transparency and other healthcare laws and regulations, which could expose us to criminal sanctions, civil penalties, exclusion, contractual damages, reputational harm and diminished profits and future earnings.

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Changes in tax laws or exposure to additional income tax liabilities could have a material impact on our financial condition, results of operations and/or liquidity.

We are subject to income taxes, non-income based taxes and tax audits, in both the U.S.

We are subject to income taxes, non-income based taxes and tax audits in the U.S.

and various foreign jurisdictions.

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We regularly assess the likely outcomes of these audits in order to determine the appropriateness of our tax provision and have established contingency reserves for material, known tax exposures.

However, the calculation of such tax exposures involves the application of complex

tax laws and regulations in many jurisdictions, as well as interpretations as to the legality under various rules in certain jurisdictions.

However, the calculation of such tax exposures involves the application of complex tax laws and regulations in many jurisdictions, as well as interpretations as to the legality under various rules in certain jurisdictions.

Therefore, there can be no assurance that we will accurately predict the outcomes of these disputes or other tax audits or that issues raised by tax authorities will be resolved at a financial cost that does not exceed our related reserves and the actual outcomes of these disputes and other tax audits could have a material impact on our results of operations or financial condition.

Chang es in tax laws and regulations, or their interpretation and application, in the jurisdictions where we are subject to tax could materially impact our effective tax rate.

For example, the U.S.

Congress has recently been debating changes to U.S.

corporate income tax laws, including provisions that may alter the U.S.

taxation of the profits of foreign subsidiary corporations.

If ultimately enacted, these changes could have a material impact on our future effective tax rate.

Additionally, the U.S.

Congress, government agencies in non-U.S.

jurisdictions where we and our affiliates do business and the Organization for Economic Co-operation and Development, or OECD, have recently focused on issues related to the taxation of multinational corporations.

The OECD has released its comprehensive plan to create an agreed set of international rules for fighting base erosion and profit shifting.

In addition, the OECD, the European Commission and individual countries are examining changes to how t axing rights should be allocated among countries in light of the digital economy.

As a result, the tax laws in the U.S.

and other countries in which we and our affiliates do business could change on a prospective or retroactive basis and any such changes could materially adversely affect our business, results of operations or financial condition.

The tax regimes we are subject to or operate under are unsettled and may be subject to significant change.

For example, in August 2022, the United States enacted the Inflation Reduction Act that imposes a 15% minimum tax for large corporations on global adjusted financial statement income for tax years beginning after December 31, 2022, and a 1% excise tax on certain share repurchases occurring after December 31, 2022.

We do not currently expect that the Inflation Reduction Act will have a material impact on our income tax liability, but we will continue to monitor this change in future periods.

We are unable to predict what changes to the tax laws of the U.S.

and other jurisdictions may be proposed or enacted in the future or what effect such changes would have on our business.

Any significant increase in our future effective tax rate could have a material adverse impact on our business, financial condition, results of operations, or cash flows.

There is also a high level of uncertainty in the current tax environment stemming from both global initiatives put forth by the Organization for Economic Co-operation and Development (the “OECD”) and unilateral measures being implemented by various countries due to a lack of consensus on these global initiatives.

Further, unilateral measures in response to such measures are creating additional uncertainty.

As we expand the scale of our international business activities, any changes in the U.S.

or foreign taxation of such activities may increase our worldwide effective tax rate and harm our business, financial condition and results of operations.

Such changes may also apply retroactively to our historical operations and result in taxes greater than the amounts estimated and recorded in our financial statements.

Risks Related to our Financial Obligations and Indebtedness

We have a significant amount of debt that may decrease our business flexibility, access to capital, and/or increase our borrowing costs, and we may still incur additional debt in the future, which may adversely affect our operations and financial results.

As of April 2, 2022, we had $500 million aggregate principal amount of indebtedness under our convertible senior notes due 2026 (the “2026 Notes”) as well as a $350.0 million term loan (the “Term Loan”) and access to a $350.0 million revolving loan (the “Revolving Credit Facility” and together with the Term Loan, the “Credit Facilities”).

As of April 2, 2022, we had $284.4 million of debt outstanding under the Term Loan and no borrowings were outstanding under the Revolving Credit Facility.

Our Credit Facilities contain financial covenants that require us to maintain specified financial ratios that may limit our ability to borrow additional funds and that require us to make interest and principal payments.

As of April 2, 2022, we were in compliance with the covenants pursuant to our Cr edit Facilities, and we currently forecast that we will be in compliance with our Credit Facility covenants through the period ending April 1, 2023.

Additionally, our Credit Facilities mature on June 15, 2023 and the Company will be required to pay the scheduled remaining balance of the Term Loan over the four calendar quarters preceding the expiration of the Credit Facilities in payments of $70.0 million per quarter commencing September 30, 2022, along with any amounts outstanding under the Revolving Credit Facility as of the maturity date.

In July 2022, the Company entered into an amended and restated credit agreement with certain lenders to refinance the existing term loan and revolving loan and extend their maturity date through June 2025.

The amended and restated credit agreement provides for a $280.0 million term loan and access to a $420.0 million revolving loan (together, the “Revised Credit Facilities”).

As of April 1, 2023, in addition to our $500.0 million aggregate principal amount of indebtedness under our convertible senior notes due 2026 (the “2026 Notes”), the Company had $274.7 million of debt outstanding under the term loan and no borrowings were ou tstanding under the revolving credit facility.

Our Revised Credit Facilities contain financial covenants that require us to maintain specified financial ratios that may limit our ability to borrow additional funds and that require us to make interest and principal payments.

As of April 1, 2023, we were in compliance with the covenants pursuant to our Revised Credit Facilities, and we currently forecast that we will be in compliance with these covenants through the period ending March 30, 2024.

The conditional conversion feature of the 2026 Notes, if triggered, may adversely affect our financial condition and operating results.

Under certain circumstances, the noteholders may convert their 2026 Notes at their option prior to the scheduled maturities.

If one or more noteholders elect to convert their 2026 Notes, we would be required to settle a portion or all of our conversion obligation through the payment of cash, which could adversely affect ou r liquidity.

In addition, holders of our 2026 Notes will have the right to require us to repurchase their 2026 Notes upon the occurrence of a fundamental change (as defined in the indenture, dated as of March 5, 2021, between U.S.

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Our failure to repurchase the 2026 Notes or to pay the cash amounts due upon conversion when required will constitute a default under the Indenture.

A default under the Indenture or the fundamental change itself could also lead to a default under agreements governing our other indebtedness, including our Credit Facilities, which may result in that other indebtedness becoming immediately payable in full.

A default under the Indenture or the fundamental change itself could also lead to a default under agreements governing our other indebtedness, including our Revised Credit Facilities, which may result in that other indebtedness becoming immediately payable in full.

We may not have sufficient funds to satisfy all amounts due under the other indebtedness and the Notes.

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We are continuing to monitor the situation in Ukraine and globally as well as assess its potential impact on our business.

Although our business in Russia accounted for only about 2% of fiscal 2022 net revenue, a significant escalation or further expansion of the conflict's current scope or related disruptions to the global markets could have a material adverse effect on our results of operations.

Although our business in Russia accounted for only about 1% of fiscal 2023 net revenues, a significant escalation or further expansion of the conflict’s current scope or related disruptions to the global markets could have a material adverse effect on our results of operations.

Our international operations are governed by the U.S.

Foreign Corrupt Practices Act, or FCPA, and other similar anti-corruption laws in other countries.

Generally, these laws prohibit companies and their business partners or other intermediaries from making improper payments to foreign governments and gov ernment officials in order to obtain or retain business.

Generally, these laws prohibit companies and their business partners or other intermediaries from making improper payments to foreign governments and government officials in order to obtain or retain business.

Global enforcement of such anti-corruption laws has increased in recent years, including aggressive investigations and enforcement proceedings.

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and European systems of justice.

Further, certain of our intellectual property rights are not registered in China, or if they were, have since expired.

This may permit others to produce copies of products in China that are not covered by currently valid patent registrations.

There is also a risk that such products may be exported from China to other countries.

In order to aggressively protect our intellectual property throughout the world, we have a program of patent disclosures and filings in markets where we conduct significant business.

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We operate in an industry susceptible to significant product liability claims.

Pending and future product liability claims and other litigation may adversely affect our financial condition and results of operations or liquidity, and they also have the potential to damage our reputation, impair our ability to market our products and impact our ability to maintain applicable insurance covera ge on reasonable terms or at all.

Our products are relied upon by medical personnel in connection with the treatment of patients and the collection of blood or blood components from donors.

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Even successful defenses require significant financial and management resources.

Regardless of the merits or eventual outcome, such litigation could have a material adverse effect on our financial condition, results of operations or liquidity an d further could damage our reputation and, therefore, impair our ability to market our products and make applicable insurance coverage more costly or difficult to obtain.

Regardless of the merits or eventual outcome, such litigation could have a material adverse effect on our financial condition, results of operations or liquidity and further could damage our reputation and, therefore, impair our ability to market our products and make applicable insurance coverage more costly or difficult to obtain.

While we believe that our current product liability insurance coverage is sufficient, there is no assurance that such coverage will be adequate to cover incurred liabilities or that we will be able to obtain acceptable product and professional liability coverage in the future.

Additionally, we do not maintain third-party insurance coverage for all categories of potential liability, which increases our exposure to unanticipated c laims and adverse decisions and these losses could have a material adverse effect on our financial condition, results of operations or liquidity.

Additionally, we do not maintain third-party insurance coverage for all categories of potential liability, which increases our exposure to unanticipated claims and adverse decisions and these losses could have a material adverse effect on our financial condition, results of operations or liquidity.

General Risk Factors

Actual or threatened public health emergencies could harm our business.

Our business and operations could be adversely affected by health epidemics that impact the markets and communities in which we, our partners and our clients operate.

The COVID-19 pandemic caused significant disruption to the business and financial markets.

We continue to monitor the potential effects of future health epidemics on our business and operations.

While the spread and impact of COVID-19 has stabilized, there is no guarantee that a future outbreak of this or any other widespread epidemics will not occur, which could have the effect of decreasing demand and/or increasing volatility in demand for our products.

Our success depends on our ability to attract and retain key personnel needed to successfully operate the business and to plan for future executive transitions.

Our ability to recruit and retain key talent will depend on a number of factors, including hiring practices of our competitors, compensation and benefits, work location, work environment, hybrid work environment policies and industry economic conditions.

If we fail to attract and retain key personnel in senior management and other positions, or if our succession planning efforts are not effective, it could have a material adverse effect on our business, financial condition and results of operations.

Our share price has been volatile and may fluctuate, and accordingly, the value of an investment in our common stock may also fluctuate.

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Because the market price of our common stock fluctuates significantly, shareholders may not be able sell their shares at attractive prices.

Share repurchase programs could affect the price of our common stock and increase volatility and may be suspended or terminated at any time, which may result in a decrease in the trading price of our common stock.

We may in the future request that the Board of Directors authorize one or more share repurchase programs.

Under such share repurchase programs, we are generally authorized to repurchase, from time to time, outstanding shares of common stock in accordance with applicable laws both on the open market, including under trading plans established pursuant to Rule 10b5-1 under the Securities Exchange Act of 1934, as amended and in privately negotiated transactions.

Share repurchase programs, including under our existing share repurchase authorization, could affect the price of our common stock and increase volatility and may be suspended or terminated at any time, which may result in a decrease in the trading price of our common stock.

In August 2022, we announced that our Board of Director s had approved a new three-year share repurchase program authorizing the repurchase of up to $300.0 million of outstanding shares of our common stock through August 2025.

Under the share repurchase program, we are authorized to repurchase, from time to time, outstanding shares of common stock in accordance with applicable laws both on the open market, including under trading plans established pursuant to Rule 10b5-1 under the Securities Exchange Act of 1934, as amended and in privately negotiated transactions.

The actual timing, number and value of shares repurchased is determined by us and depends on a number of factors, including market conditions, applicable legal requirements and compliance with the terms of loan covenants.

Such share repurchase programs may be suspended, modified or discontinued at any time and we have no obligation to repurchase any amount of our common stock under the programs.

Repurchases pursuant to a share repurchase program could affect our stock price and increase its volatility.

The share repurchase program may b e suspended, modified or discontinued at any time and we have no obligation to repurchase any amount of our common stock under the programs.

Repurchases pursuant to our share repurchase program could affect our stock price and increase its volatility.

The existence of a share repurchase program could also cause our stock price to be higher than it would be in the absence of such a program and could potentially reduce the market liquidity for our common stock.

There can be no assurance that any share repurchases would enhance shareholder value because the market price of our common stock may decline below the levels at

which we repurchased our common stock.

Although our share repurchase programs are intended to enhance long-term shareholder value, short-term stock price fluctuations could reduce a program’s effectiveness.

There can be no assurance that any share repurchases will enhance shareholder value because the market price of our common stock may decline below the levels at which we repurchased our common stock.

Although our share repurchase program is intended to enhance long-term shareholder value, short-term stock price fluctuations could reduce the program’s effectiveness.

Refer to Note 7, Earnings per Share , to the Consolidated Financial Statements in Item 8 of this Annual Report on Form 10-K for additional information.

Our business could be negatively impacted by corporate responsibility matters.

There has been increased focus from certain regulatory bodies, investors, customers, employees and other stakeholders concerning corporate responsibility matters, including topics identified under the framework of Environmental, Social and Governance (“ESG”).

For example, customer preferences or requirements may be influenced by company progress across various ESG topics related to, among other things, human capital and environmental impact matters.

From time to time, we may announce certain initiatives, including goals, regarding corporate responsibility focus areas for our company.

We may not achieve, or may be perceived as not achieving, against such initiatives, including as a result of changes in our business.

Moreover, the standards by which corporate responsibility efforts and related matters are measured are developing and evolving, and certain areas are subject to assumptions that could change over time.

Any failure, or perceived failure, to achieve against our corporate responsibility initiatives or to establish goals that align with stakeholder expectations could result in declines in our market share and have an adverse impact on our business, financial condition or results of operations.

UNRESOLVED STAFF COMMENTS

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

What changed 10-K

Item 1A. Risk Factors