What changed in this filing

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Item 1A. Risk Factors

2025-11-10 compared with 2025-08-11 · 147 added, 74 removed, 90 unchanged (71% of the section changed)

5 unchanged sentences

Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may impair our business operations.

we provide in supplemental form the material changes to our risk factors that occurred during the past quarter.

Our risk factors disclosed

in Part I, Item 1A, of our Annual Report on Form 10-K for the year ended December 31, 2024, provide additional disclosure for these supplemental

risks and are incorporated herein by reference.

we provide in supplemental form the material changes to our risk factors as previously disclosed in Part I, Item 1A, of our Annual Report

on Form 10-K for the year ended December 31, 2024.

Our risk factors disclosed in the Annual Report on Form 10-K provide additional disclosure

for these supplemental risks and are incorporated herein by reference.

at the FDA, CMS, the SEC, and other government agencies resulting from the U.S.

government shutdown and reported staffing reductions

could adversely affect our operations, regulatory interactions, and access to capital.

prolonged or repeated shutdown of the U.S.

federal government, or other significant disruptions to the operations of federal agencies,

could adversely affect our business, financial condition, and results of operations.

government shutdown that began on October

1, 2025 has caused many federal agencies to scale back operations and furlough portions of their workforce.

Certain agencies that are

important to our business, including the U.S.

Department of Health and Human Services (“HHS”) and its operating divisions

such as the Centers for Medicare & Medicaid Services (“CMS”) and the FDA, and the SEC, may experience resource

constraints or temporary delays in certain activities as a result of the shutdown or related funding limitations.

Any such disruptions

could delay the FDA’s review and processing of submissions, the CMS’s issuance of reimbursement guidance, or the SEC’s

review of our filings, which could in turn affect our ability to develop, market, and sell our products or raise capital in a timely

addition, reports of staffing and budget reductions at HHS and its agencies earlier in 2025 have created further uncertainty regarding

the federal government’s capacity to carry out regulatory and policy functions.

In March 2025, the Secretary of HHS announced a

departmental reorganization and reduction-in-force initiative that included workforce adjustments at the FDA and other HHS components.

Although the precise scope and timing of these changes remain uncertain, further reductions in agency staffing or funding could limit

the government’s ability to provide timely guidance, review regulatory submissions, or issue reimbursement decisions.

proposed future budget constraints for HHS could affect CMS’s ability to update coverage and payment policies, which may influence

healthcare providers’ adoption of our products.

changes to the operations, priorities, or funding of these agencies—whether resulting from shutdowns, staffing reductions, or shifting

policy directives—could cause additional delays or disruptions.

If the FDA, CMS, or other agencies are unable to maintain adequate

staffing or operational continuity, it could result in increased regulatory uncertainty, slower review and approval timelines, or reimbursement

decisions that negatively affect utilization of our products by healthcare providers.

addition, continued or future government shutdowns or funding freezes could negatively affect broader economic conditions, including

volatility in the capital markets and reduced liquidity, which could make it more difficult for us to access capital or maintain adequate

financing for our operations.

If these disruptions persist or worsen, our business, financial condition, results of operations, and ability

to execute our strategic plans could be materially and adversely affected.

sell our proprietary formulations primarily through pharmaceutical compounding facilities we own, and our results of operations may be

negatively impacted if such facilities do not comply with regulatory requirements or lose their licenses.

currently have two Imprimis compounding facilities in New Jersey.

We have developed “ImprimisRx” as a uniform brand for

our compounding pharmaceutical business.

As we have in the past purchased and operated certain pharmaceutical compounding businesses

and pharmacies and subsequently divested or sold those associated assets, we may pursue similar strategies in the future.

things considered, we may experience difficulties implementing and/or executing on our compounding pharmacy strategy, including

difficulties that arise as a result of our lack of experience, and we may be unsuccessful and our plans may change materially.

have experienced delays and increased costs in relation to expansion efforts;

may not be able to satisfy applicable federal licensing, state board of pharmacy licensing

and other requirements for any of our pharmacy businesses in a timely manner or at all;

to federal and state pharmacy regulations may restrict compounding operations or make them

may be unable to achieve or maintain a sufficient physician and patient customer base to

sustain our pharmacy operations;

acceptance of compounding pharmacies generally may be curtailed or delayed;

may not be able to enter into licensing or other arrangements with third-party pharmacies

or outsourcing facilities when desired, on acceptable terms, or at all.

ImprimisRx subsidiary completed an in-person meeting with the FDA in October 2025 regarding its efforts to remediate certain deficiencies

at its New Jersey site.

At the FDA meeting, ImprimisRx presented, among other data, its safety record, which includes an

adverse event (ADE) rate of approximately 2 per million units, which is meaningfully better than known ADE rates for FDA-approved products.

FDA ultimately decided to allow ImprimisRx to continue with its remediation efforts on a voluntary basis.

Additionally, Imprimis is currently

subject to an administrative accusation by the California State Board of Pharmacy relating to certain alleged regulatory compliance matters.

ImprimisRx is actively engaged in discussions with the California Board of Pharmacy regarding a resolution to the administrative action

and the potential denial of ImprimisRx’s 503B out-of-state outsourcing facility renewal application.

Although the loss of the California

nonresident outsourcing facility pharmacy license would restrict sales and dispensing of our compounded products in that state and would

reduce revenues from the affected state, we believe that, based on our current concentration of sales and geographic diversification,

such loss would not be material to our consolidated statement of operations.

Nevertheless, if additional states were to take similar

actions, or if broader or longer-term restrictions were imposed, the cumulative effect could be material .

all our efforts to expand pharmacy operations will involve significant costs and other resources, which we may not be able to afford

and may disrupt our other operations and distract management and employees from the other aspects of our business.

As a result, our business

could materially suffer if we are unable to further develop a group of unified compounding facilities and, even if we are successful,

we may be unable to generate sufficient revenue to recover our costs.

federal government could pursue enforcement actions against us to the extent we are unable to demonstrate compliance with cGMPs and other

required regulations, the effects of which could be costly to us and could result in adverse consequences to our business.

2017, the FDA issued a MedWatch notification regarding a curcumin emulsion and two adverse events that had been associated with the use

of these emulsions by prescribing physicians.

We issued a press release on August 7, 2017, clarifying certain facts regarding the notice

which outlined our belief that the adverse events associated with the two patients occurred due to an allergic reaction caused by the

products being inappropriately administered and obtained by the prescribing physician, and our use of curcumin and excipients in our curcumin

emulsion formulation met regulatory standards required for dispensing of the curcumin emulsion.

In September 2017, the FDA released a

letter confirming that the alleged misuse of certain ingredients in our curcumin emulsions was due to mislabeling by the underlying supplier

and not of our own misdoing.

August 2017, the FDA issued a MedWatch notification regarding a curcumin emulsion and two adverse events that had been associated with

the use of these emulsions by prescribing physicians.

We issued a press release on August 7, 2017, clarifying certain facts regarding

the notice which outlined our belief that the adverse events associated with the two patients occurred due to an allergic reaction caused

by the products being inappropriately administered and obtained by the prescribing physician, and our use of curcumin and excipients

in our curcumin emulsion formulation met regulatory standards required for dispensing of the curcumin emulsion.

In September 2017, the

FDA released a letter confirming that the alleged misuse of certain ingredients in our curcumin emulsions was due to mislabeling by the

underlying supplier and not of our own misdoing.

We no longer compound curcumin emulsion products.

in December 2017, we were issued a warning letter from the FDA alleging that, in its interpretation of our public communications, we had

made false or misleading claims and omitted risk and side effect information regarding certain of our ophthalmology-focused compounded

We immediately performed a full review of our public communications referenced in the warning letter and responded to the

FDA in January 2018;

notwithstanding our continued belief that our public communications were not, in fact, false and misleading, we remained

in communication with the FDA and took steps to address the items outlined in the FDA letter.

The Company received another warning letter

from the FDA in June 2022 related to our alleged marketing activities.

We immediately responded to the warning letter and the FDA sent

the Company notice in January 2023 that our corrective actions appear adequate.

2019, our New Jersey-based outsourcing facility (“NJOF”) was issued a warning letter related to an April 2017 inspection and

our use of certain active pharmaceutical ingredients in our compounded medications.

During September 2020 through January 2021, our New

Jersey based outsourcing facility was inspected by the FDA (the “2020 Inspection”) and certain observations were made by the

FDA in a Form 483.

Five observations made during the 2020 Inspection were considered repeat observations from a 2017 FDA inspection.

addition, during the 2020 inspection, the FDA noted that we were compounding drugs for which there is no change that produces a clinical

difference for an individual patient, as determined by a prescribing practitioner between a compounded drug and the comparable approved

We have responded to the FDA regarding all of their observations from the 2020 Inspection, including providing documentation from

prescribing clinicians that indicate a clinical difference between our compounded drugs and the comparable approved drugs, while also

committing to amend our order process to collect “medical necessity/clinical difference” information for each order of our

compounded drugs on a go-forward basis.

was inspected in August 2022 and received a Form 483 with several observations from the FDA.

In May 2023, our pharmacy received a warning

letter related to the inspection that occurred in August 2022.

The warning letter indicated that our corrective actions from the inspection

had appeared to be adequate;

however, the FDA could not fully evaluate the adequacy of our actions because we did not include sufficient

information or supporting documentation.

As an example, we stated that smoke studies related to airflow in our laminar airflow hoods had

been redone to satisfy FDA requirements, however, we did not provide the FDA with supporting documentation (such as smoke study protocol,

updated detailed report and/or videos).

Separately, in December 2017, we were

issued a warning letter from the FDA alleging that, in its interpretation of our public communications, we had made false or misleading

claims and omitted risk and side effect information regarding certain of our ophthalmology-focused compounded medications.

We immediately

performed a full review of our public communications referenced in the warning letter and responded to the FDA in January 2018;

notwithstanding

our continued belief that our public communications were not, in fact, false and misleading, we remained in communication with the FDA

and took steps to address the items outlined in the FDA letter.

The Company received another warning letter from the FDA in June 2022

related to our alleged marketing activities.

We immediately responded to the warning letter and the FDA sent the Company notice in January

2023 that our corrective actions appear adequate.

In June 2019, our New Jersey-based outsourcing facility (“NJOF”) was issued

a warning letter related to an April 2017 inspection and our use of certain active pharmaceutical ingredients in our compounded medications.

During September 2020 through January 2021, our New Jersey based outsourcing facility was inspected by the FDA (the “2020 Inspection”)

and certain observations were made by the FDA in a Form 483.

Five observations made during the 2020 Inspection were considered repeat

observations from a 2017 FDA inspection.

In addition, during the 2020 inspection, the FDA noted that we were compounding drugs for which

there is no change that produces a clinical difference for an individual patient, as determined by a prescribing practitioner between

a compounded drug and the comparable approved drug.

We have responded to the FDA regarding all of their observations from the 2020 Inspection,

including providing documentation from prescribing clinicians that indicate a clinical difference between our compounded drugs and the

comparable approved drugs, while also committing to amend our order process to collect “medical necessity/clinical difference”

information for each order of our compounded drugs on a go-forward basis.

Our pharmacy was inspected in August 2022 and received a Form

483 with several observations from the FDA.

In May 2023, our pharmacy received a warning letter related to the inspection that occurred

in August 2022.

The warning letter indicated that our corrective actions from the inspection had appeared to be adequate;

FDA could not fully evaluate the adequacy of our actions because we did not include sufficient information or supporting documentation.

As an example, we stated that smoke studies related to airflow in our laminar airflow hoods had been redone to satisfy FDA requirements,

however, we did not provide the FDA with supporting documentation (such as smoke study protocol, updated detailed report and/or videos).

We have responded to this warning letter and provided the FDA with additional information requested.

March 2024 through April 2024, NJOF was inspected by the FDA (the “2024 Inspection”), and the FDA issued a Form 483 with five

observations.

Since January 2025, we engaged in separate but related discussions with the federal government regarding the NJOF quality

system and the 2024 Inspection.

NJOF voluntarily recalled certain products and provided regular updates to the FDA regarding its remediation

activities and other commitments, including Project Beagle.

From March 2024 through April 2024,

NJOF was inspected by the FDA (the “2024 Inspection”), and the FDA issued a Form 483 with five observations.

Since January

2025, we engaged in separate but related discussions with the federal government regarding the NJOF quality system and the 2024 Inspection.

NJOF voluntarily recalled certain products and provided regular updates to the FDA regarding its remediation activities and other commitments,

including Project Beagle.

The government has notified us that these discussions are now closed.

regulatory actions could increase scrutiny and could create negative publicity on us as a company.

As part of our commitment to actively

work with regulators, at times, we have become aware of concerns related to certain formulations, and as a result, discontinued compounding

certain drug formulations in an attempt to help mitigate potential regulatory risk.

For other reasons, including, but not limited to,

the following, physicians may be unwilling to prescribe or patients may be unwilling to use our compounded formulations:

legal prohibitions

on our ability to discuss the efficacy or safety of our formulations with potential users to the extent applicable data is available;

our pharmacy operations are primarily operating on a cash-pay basis and reimbursement may or may not be available from third-party payors,

including the government Medicare and Medicaid programs;

and certain formulations are not required to be prepared and are not presently

being prepared in a manufacturing facility governed by cGMP requirements.

These factors and any future regulatory action could continue

to limit our production, and our ability to dispense and distribute our compounded products, which would negatively affect sales of our

compounded products.

Future regulatory actions could increase

scrutiny and could create negative publicity on us as a company.

As part of our commitment to actively work with regulators, at times,

we have become aware of concerns related to certain formulations, and as a result, discontinued compounding certain drug formulations

in an attempt to help mitigate potential regulatory risk.

For other reasons, including, but not limited to, the following, physicians

may be unwilling to prescribe or patients may be unwilling to use our compounded formulations:

legal prohibitions on our ability to discuss

the efficacy or safety of our formulations with potential users to the extent applicable data is available;

our pharmacy operations are

primarily operating on a cash-pay basis and reimbursement may or may not be available from third-party payors, including the government

Medicare and Medicaid programs;

and certain formulations are not required to be prepared and are not presently being prepared in a manufacturing

facility governed by cGMP requirements.

These factors and any future regulatory action could continue to limit our production, and our

ability to dispense and distribute our compounded products, which would negatively affect sales of our compounded products.

sales depend on coverage and reimbursement from government and commercial third-party payers, and pricing and reimbursement pressures

70 unchanged sentences

If one or more rounds of tariffs are enacted, we could experience:

input costs that we may be unable to pass through to customers under existing supply and reimbursement arrangements, compressing

gross margins;

input costs that we may be unable to pass through to customers under existing supply and

reimbursement arrangements, compressing gross margins;

delays or shortages if overseas suppliers elect to redirect shipments to non-U.S.

customers to avoid tariff exposure;

measures by foreign governments that could hinder our ability to procure specialized equipment or to out-license our products abroad;

to avoid tariff exposure;

● Retaliatory

measures by foreign governments that could hinder our ability to procure specialized equipment

or to out-license our products abroad;

● Working-capital

pressure, as we may need to build additional safety stock or advance-pay duties before goods clear U.S.

pressure, as we may need to build additional safety stock or advance-pay duties before goods

we are evaluating mitigation strategies—including dual-sourcing, qualifying U.S.

3 unchanged sentences

cost inflation or supply disruptions could adversely affect our financial condition, results of operations and cash flows.

Unregistered Sales of Equity Securities and Use of Proceeds

Defaults Upon Senior Securities

Mine Safety Disclosures

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-Q

Item 1A. Risk Factors