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Our production tooling is relatively expensive, with each "module," which consists of an automated assembly machine and the molds and molding machines that mold the components, costing several million dollars.
−Removed: Most of the modules are for the Clave product family.
+Added: The modules are utilized for certain products.
If the demand for these products changes significantly, which could happen with the loss of customers or a change in product mix, it may be necessary for us to recognize an impairment charge for the value of the production tooling because its cost may not be recovered through production of saleable product, which could adversely affect our financial condition.
1 unchanged sentence
We expect to order semi-automated or fully automated assembly machines for certain products in 2025.
−Removed: If we do not achieve significant sales of these new/transitioned products, it might be necessary for us to recognize an impairment charge for the value of the production tooling because its costs may not be recovered through production of saleable product, which could adversely affect our financial condition.
−Removed: Product development requires substantial investment that may be difficult for us to fund and may be challenging to
−Removed: recover through commercial product sales.
+Added: If we do not achieve significant sales of these new/transitioned products, it might be necessary for us to recognize an impairment charge for the value of the production
+Added: tooling because its costs may not be recovered through production of saleable product, which could adversely affect our financial condition.
+Added: Product development requires substantial investment that may be difficult for us to fund and may be challenging to recover through commercial product sales.
Innovations generally require a substantial investment in product development before we can determine their commercial viability, and we may not have the financial resources necessary to fund these innovations.
−Removed: Even if we succeed in creating new product candidates from these innovations, we may still fail to successfully commercially such products.
+Added: Even if we succeed in creating new product candidates from these innovations, we may still fail to successfully commercialize such products.
The success of new medical device products depends on several factors, including our ability to anticipate and meet customers' or patients' needs, obtain timely regulatory approvals, clearances or certifications, and manufacture quality products in an economic and timely manner.
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Crude oil and natural gas prices have been volatile in recent years.
−Removed: Crude oil markets have historically been affected by political uncertainty in the Middle East and more recently, by the conflict in the Ukraine.
−Removed: As the current conflict in the Middle East continues to develop and geopolitical tensions rise in the region or globally, there is no assurance that crude oil supplies will not be interrupted or crude oil prices will not rise in the future.
+Added: Crude oil markets have historically been affected by political uncertainty in the Middle East and more recently, by the conflict in Ukraine.
+Added: As the current conflict in the Middle East and Ukraine continues and geopolitical tensions rise in the region or globally, there is no assurance that crude oil supplies will not be interrupted or crude oil prices will not rise in the future.
New laws or regulations adopted in response to climate change could also increase energy costs as well as the costs of certain raw materials and components.
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Our ability to recover these increased costs may depend upon our ability to raise prices on our products.
−Removed: In the past, we have rarely raised
−Removed: prices and it is uncertain that we would be able to raise them to recover higher prices from our suppliers.
+Added: In certain cases, we may be unable to pass along increased costs to our customers if they are under long-term fixed price contracts.
+Added: In the past, we have rarely raised prices and it is uncertain that we would be able to raise them to recover higher prices from our suppliers.
Our inability to raise prices in those circumstances, or to otherwise recover these costs, could have an adverse effect on our profitability.
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Heightened inflation, higher interest rates and foreign currency rate fluctuations as a result of global macroeconomic and geopolitical conditions have had and could in the future have a material adverse effect on our operations.
−Removed: Global macroeconomic conditions and geopolitical tensions, such as the conflicts in Eastern Europe and the Middle East, and resulting impacts therefrom, for example, heightened inflation, higher interest rates and capital costs, and currency rate fluctuations have resulted in, and may continue to result in, increased raw material costs, higher shipping costs, higher labor costs, and global supply chain disruptions.
−Removed: In 2022, we experienced these supply chain disruptions, increased raw material costs and shipping costs, as prices on several commodities, including oil and gas, increased as a result of the conflict in the Ukraine and its impact on the global economy.
−Removed: Although these costs were less volatile in 2023, we may continue to experience these inflationary increases in our manufacturing costs and operating expenses, including higher materials and labor costs, as well as negative impacts on our operating results from the strengthening of the U.S.
+Added: Global macroeconomic conditions and geopolitical tensions and resulting impacts therefrom, for example, heightened inflation, higher interest rates and capital costs, and currency rate fluctuations have resulted in, and may continue to result in, increased raw material costs, higher shipping costs, higher labor costs, and global supply chain disruptions.
+Added: In 2022, we experienced these supply chain disruptions, increased raw material costs and shipping costs, as prices on several commodities, including oil and gas, increased as a result of the conflict in Ukraine and its impact on the global economy.
+Added: Although these costs were less volatile in 2023 and 2024, we may continue to experience these inflationary increases in our manufacturing costs and operating expenses, including higher materials and labor costs, as well as negative impacts on our operating results from the strengthening of the U.S.
dollar relative to foreign currencies weakening exchange rates.
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Our products are purchased by hospitals, physicians and other healthcare providers that typically bill various third-party payors, such as governmental programs, private insurance plans and managed care plans, for the healthcare services and products provided to their patients.
−Removed: The ability of our customers to obtain appropriate coverage and reimbursement for healthcare
−Removed: services and products from third-party payors is critical because it affects the kinds of products customers purchase and the prices they are willing to pay.
+Added: The ability of our customers to obtain appropriate coverage and reimbursement for healthcare services and products from third-party payors is critical because it affects the kinds of products customers purchase and the prices they are willing to pay.
Because there is often no separate reimbursement for supplies used in surgical procedures, the additional cost associated with the use of our products can affect the profit margin of the hospital or surgery center where the procedure is performed.
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Further, any decline in the amount payors are willing to reimburse our customers could make it difficult for existing customers to continue using or to adopt our products and could create additional pricing pressure for us.
−Removed: If we are forced to lower the price we charge for our products, our gross margins will decrease, which could have a material adverse effect on our business, financial condition and results of operations and impair our ability to grow our business.
+Added: If we are forced to lower the price we charge for our products or if the costs to manufacture our products exceeds the price at which we are able to sell our products, our gross margins will decrease, which could have a material adverse effect on our business, financial condition and results of operations and impair our ability to grow our business.
Third-party payors are developing increasingly sophisticated methods of controlling healthcare costs.
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Payors continually review new and existing technologies for possible coverage and can, without notice, deny or reverse coverage for new or existing products and procedures.
−Removed: There can be no assurance that third-party payor policies will provide coverage for procedures in which our products are used.
+Added: There can be no assurance that third-party payor policies will provide coverage for
+Added: procedures in which our products are used.
If we are not successful in reversing existing non-coverage policies, or if third-party payors that currently cover or reimburse our products and related procedures reverse or limit their coverage in the future, or if other third-party payors issue similar policies, this could have a material adverse effect on our business.
−Removed: Further, we believe that future coverage and reimbursement may be subject to increased restrictions, such as
−Removed: additional prior authorization requirements.
+Added: Further, we believe that future coverage and reimbursement may be subject to increased restrictions, such as additional prior authorization requirements.
Third-party coverage and reimbursement for procedures using our products or any of our products in development for which we may receive regulatory approval or certification may not be available or adequate, which could have an adverse effect on our business, financial condition and results of operations and impair our ability to grow our business.
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Any of these results would adversely affect our future results of operations.
−Removed: Disruptions at the FDA, other government agencies or notified bodies caused by funding shortages or global health concerns could hinder their ability to hire, retain, or deploy key leadership and other personnel, or otherwise prevent new or modified products from being developed, cleared, approved, certified, or commercialized in a timely manner, or at all, which could negatively impact our business.
−Removed: The ability of the FDA, foreign regulatory authorities and notified bodies to review and approve or certify new products can be affected by a variety of factors, including government budget and funding levels, statutory, regulatory and policy changes, a government agency's ability to hire and retain key personnel and accept the payment of user fees, and other events that may otherwise affect the government's ability to perform routine functions.
+Added: Disruptions at the FDA, other government agencies or notified bodies caused by funding shortages, global health concerns, or personnel turnover could hinder their ability to hire, retain, or deploy key leadership and other personnel, or otherwise prevent new or modified products from being developed, cleared, approved, certified, or commercialized in a timely manner, or at all, which could negatively impact our business.
+Added: The ability of the FDA, foreign regulatory authorities and notified bodies to review and approve or certify new products can be affected by a variety of factors, including government budget and funding levels, statutory, regulatory and policy changes, a government agency's ability to hire and retain key leadership and other personnel and accept the payment of user fees, and other events that may otherwise affect the government's ability to perform routine functions.
Average review times at the FDA, other government agencies, foreign regulatory authorities and notified bodies have fluctuated in recent years as a result.
In addition, government funding of other government agencies that fund research and development activities is subject to the political process, which is inherently fluid and unpredictable.
−Removed: For example, over the last several years, the U.S.
+Added: For example, in recent years, the U.S.
government has shut down several times and certain regulatory agencies, such as the FDA, have had to furlough critical FDA employees and stop critical activities.
One such shut down was as a result of COVID-19, the FDA postponed most inspections of domestic and foreign manufacturing facilities at various points.
−Removed: Even though the FDA has resumed standard inspection operations, any resurgence of the virus or comparable health concerns may lead to future inspectional or administrative delays.
If a prolonged government shutdown occurs, or if a global health concern prevents the FDA, other regulatory authorities or notified bodies from conducting their regular inspections, audits, reviews, or other regulatory activities, it could significantly impact the ability of the FDA or other regulatory authorities or notified bodies to timely review and process our regulatory submissions, which could have a material adverse effect on our business.
−Removed: For instance, in the EU, notified bodies must be officially designated to certify products and services in accordance with the EU Medical Devices Regulation.
−Removed: Their designation process, which is significantly stricter under the new Regulation, has experienced considerable delays as a result of COVID-19.
+Added: For instance, in the European Union ("EU"), notified bodies must be officially designated to certify products and services in accordance with the EU Medical Devices Regulation.
+Added: Their designation process, which is significantly stricter under the new Regulation, has experienced considerable delays.
Despite a recent increase in designations, the current number of notified bodies designated under the new Regulation remains significantly lower than the number of notified bodies designated under the previous regime.
The current designated notified bodies are therefore facing a backlog of requests as a consequence of which review times have lengthened.
−Removed: This situation may impact the way we are conducting our business in the EU and the EEA and the ability of our notified body to timely review and process our regulatory submissions and perform its audits.
+Added: This situation may impact the way we are conducting our business in the EU and the European Economic Area ("EEA") and the ability of our notified body to timely review and process our regulatory submissions and perform its audits.
Failure to protect our information technology systems against security breaches, service interruptions, or misappropriation of data could disrupt operations, compromise sensitive data, and expose us to liability, possibly causing our business and reputation to suffer.
−Removed: We depend heavily on information technology infrastructure and systems to achieve our business objectives.
+Added: We collect and maintain information in digital form that is necessary to conduct our business, and we depend heavily on information technology infrastructure and systems to achieve our business objectives.
+Added: In the ordinary course of our business, we collect, store and transmit large amounts of confidential information, including intellectual property, proprietary business information, preclinical and clinical trial data, and personal information (collectively, “Confidential Information”) of customers
+Added: and our employees and contractors.
+Added: It is critical that we do so in a secure manner to maintain the confidentiality and integrity of such Confidential Information.
Any incident that impairs or compromises this infrastructure, including security breaches, malicious attacks or more general service interruptions, could impede our ability to process orders, manufacture and ship product in a timely manner, protect sensitive data and otherwise carry on business in the normal course.
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Despite the implementation of security measures, our information technology systems, and those of third parties on which we rely, are vulnerable to attack, interruption and damage from, among others, computer viruses, malware (e.g.
−Removed: ransomware), malicious code, natural disasters, terrorism, war, telecommunication and electrical failures, hacking, cyber-attacks or cyber-intrusions over the Internet, phishing and other social engineering schemes, human error, theft or misuse by persons inside our organization, or persons with access to systems inside our organization, fraud, denial or degradation of service attacks and sophisticated nation-state and nation-state-supported actors or similar disruptive problems.
+Added: ransomware), misconfigurations, “bugs” or other vulnerabilities, malicious code, natural disasters, terrorism, war, telecommunication and electrical failures, hacking, cyber-attacks or cyber-intrusions over the Internet, phishing and other social engineering schemes, human error, theft or misuse by persons inside our organization, or persons with access to systems inside our organization, fraud, denial or degradation of service attacks and sophisticated nation-state and nation-state-supported actors or similar disruptive problems.
+Added: We have also outsourced elements of our information technology infrastructure, and as a result a number of third-party vendors may or could have access to our confidential information.
The risk of a security breach or disruption, particularly through cyber-attacks or cyber-intrusion, including by computer hackers, foreign governments, and cyber terrorists, has generally increased as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased.
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Even if identified, we may be unable to adequately investigate or remediate incidents or breaches due to attackers increasingly using tools and techniques that are designed to circumvent controls, to avoid detection, and to remove or obfuscate forensic evidence.
+Added: There can also be no assurance that our and our third-party service providers’, strategic partners’, contractors’, consultants’, CROs’ and collaborators’ cybersecurity risk management program and processes, including policies, controls or procedures, will be fully implemented, complied with or effective in protecting our systems, networks and Confidential Information.
We and certain of our service providers have been in the past and may from time to time in the future be subject to cyberattacks and security incidents.
1 unchanged sentence
Any such security breach may compromise information stored on our networks or those of third parties on which we rely and may result in significant data losses or theft of personally identifiable information.
−Removed: Any compromise of our security could result in a violation of applicable security, privacy or data protection, consumer and other laws, regulatory or other governmental investigations, enforcement actions, and legal and financial exposure, including potential contractual liability.
+Added: Any compromise of our security could result in a violation of applicable security, privacy or data protection, consumer and other laws, legal claims and proceedings (such as class actions), regulatory or other governmental investigations, enforcement actions, disruption of our internal operations, and financial exposure, including potential contractual liability, fines and penalties, negative reputational impacts that cause us to lose existing or future customers, and/or significant incident response, system restoration or remediation and future compliance costs.
A number of proposed and enacted federal, state and international laws and regulations obligate companies to notify individuals of security breaches involving particular personally identifiable information, which could result from breaches experienced by us or by third parties, including collaborators, vendors, contractors or other organizations with which we expect to form strategic relationships.
Any such compromise could also result in damage to our reputation and a loss of confidence in our security and privacy or data protection measures.
−Removed: In addition, a cybersecurity attack could result in other negative consequences, including disruption of our internal operations, increased cybersecurity protection costs, lost revenue, regulatory actions or litigations.
Any of these effects could materially and adversely affect our business, financial condition and results of operations.
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The public equity market can be highly volatile, and we have experienced significant volatility in the price of our common stock in the past.
−Removed: We believe that factors such as quarter-to-quarter fluctuations in financial results, differences between stock analysts’ expectations and actual quarterly and annual results, new product introductions by us or our competitors, acquisitions or divestitures, changing regulatory environments, litigation, changes in healthcare reimbursement policies, sales or the perception in the market of possible sales of common stock by insiders, market rumors, general macroeconomic trends (including as a result of pandemics or other health outbreaks, geopolitical tensions and uncertainties including as a result of the current conflicts in Eastern Europe and the Middle East) and substantial product orders could contribute to the volatility in the price of our common stock.
+Added: We believe that factors such as quarter-to-quarter fluctuations in financial results, differences between stock analysts’ expectations and actual quarterly and annual results, new product introductions by us or our competitors, acquisitions or divestitures, changing regulatory environments, litigation, changes in healthcare reimbursement policies, sales or the perception in the market of possible sales of common stock by insiders, market rumors, general macroeconomic trends (including as a result of pandemics or other health outbreaks, geopolitical tensions and uncertainties) and substantial product orders could contribute to the volatility in the price of our common stock.
Most of our common stock is held by, or included in accounts managed by, institutional investors or managers.
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Any of such adverse impacts from these or other climate-related events may also adversely affect our reputation, business, or financial performance.
−Removed: The increasing focus on environmental sustainability and social initiatives could increase our costs, harm our reputation and adversely impact our financial results.
−Removed: There has been increasing public focus by investors, patients, environmental activists, the media and governmental and nongovernmental organizations on a variety of environmental, social and other sustainability matters.
−Removed: We may experience pressure to make commitments relating to sustainability matters that affect us, including the design and implementation of specific risk mitigation strategic initiatives relating to sustainability.
−Removed: Expectations regarding the management of ESG initiatives continues to evolve rapidly.
+Added: The increasing focus on sustainability and environmental, social and governance ("ESG") initiatives could increase our costs, harm our reputation and adversely impact our financial results.
+Added: There has been increasing public focus by investors, patients, the media, governmental and nongovernmental organizations and other stakeholders on a variety of sustainability and ESG matters.
+Added: We may experience pressure to make commitments relating to sustainability matters that affect us, including the design and implementation of risk mitigation strategies related to sustainability.
+Added: Expectations regarding the management of ESG initiatives also continue to evolve rapidly.
While we may from time to time engage in various initiatives (including but not limited to voluntary disclosures, policies or goals) to improve our ESG profile or respond to stakeholder expectations, we cannot guarantee that these initiatives will have the desired effect.
−Removed: If we are not effective in addressing environmental, social and other sustainability matters affecting our business, or setting and meeting relevant sustainability goals, our reputation and financial results may suffer.
−Removed: In addition, even if we are effective at addressing such concerns, we may experience increased costs as a result of executing upon our sustainability goals that may not be offset by any benefit to our reputation, which could have an adverse impact on our business and financial condition.
−Removed: In addition, various regulatory authorities have imposed, and may continue to impose, mandatory substantive and/or disclosure requirements with respect to ESG matters.
−Removed: For example, we and/or certain of our subsidiaries or affiliates may be
−Removed: subject to the requirements of the European Union Corporate Sustainability Reporting Directive (and its implementing laws and regulations and other European Union directives or European Union and European Union member state regulations, various disclosure requirements (such as information on greenhouse gas emissions, climate risks, use of offsets, and emissions reduction claims) from the State of California, the SEC’s climate disclosure proposal, if finalized, as well as the International Sustainability Standards Board’s sustainability and climate disclosure standards, to the extent adopted by jurisdictions in which we operate, among other regulations or requirements.
−Removed: Operating in more than one jurisdiction is likely to make our compliance with ESG and sustainability-related rules more complex and expensive, and potentially expose us to greater levels of legal risks associated with our compliance.
−Removed: Our failure to comply with any applicable rules or regulations could lead to penalties and adversely impact our reputation, customer attraction and retention, access to capital and employee retention.
−Removed: Such ESG matters may also impact our suppliers and customers, which may augment or cause additional impacts on our business, financial condition, or results of operations.
+Added: If we are not effective in addressing the sustainability and ESG matters affecting our business, or setting and meeting relevant goals, our reputation and financial results may suffer.
+Added: In addition, even if we are effective at addressing such matters, we may experience increased costs as a result of executing upon our sustainability and ESG goals that may not be offset by any benefit to our reputation, which could have an adverse impact on our business, operations and financial condition.
+Added: In addition, we operate in various jurisdictions that have adopted or proposed laws and regulations related to sustainability and ESG reporting.
+Added: For example, we and our subsidiaries may be subject to the European Union’s Corporate Sustainability Reporting Directive, which requires in scope entities to provide detailed reporting on various climate change and sustainability topics.
+Added: California’s Climate Corporate Data Accountability Act, Climate-Related Financial Risk Act, both of which are being challenged in federal courts, and Voluntary Carbon Market Disclosures Act would require third-party assurance of greenhouse gas emissions information for certain entities, climate-related financial risk reporting and disclosures regarding carbon reduction claims.
+Added: The SEC’s climate disclosure rule, if it is enforced by the current administration and survives its current federal court challenge, would require new climate-related disclosures in SEC filings and audited financial statements.
+Added: We may also be subject to the International Sustainability Standards Board’s sustainability and climate disclosure standards, to the extent adopted by jurisdictions in which we operate, among other regulations or requirements.
+Added: Operating in more than one jurisdiction is likely to make our compliance with sustainability and ESG rules more complex and expensive, and potentially expose us to greater levels of legal risks associated with our compliance.
+Added: Our failure to comply with any
+Added: applicable rules or regulations could lead to penalties and adversely impact our reputation, customer attraction and retention, access to capital and employee retention.
+Added: Such sustainability and ESG matters may also impact our suppliers and customers, which may augment or cause additional impacts on our business, financial condition, or results of operations.
Business and Operating Risks
Damage to, or interruptions at, any of our manufacturing facilities or our suppliers' facilities could impair our ability to produce our products.
−Removed: A severe weather event, including climate change-related severe weather or disasters, other natural or man-made disaster, or any other significant disruption, such as global epidemics/pandemics, the impact of war or political instability (such as the conflicts in Eastern Europe and the Middle East), work stoppages, labor shortages and similar interruptions affecting our manufacturing facilities or our suppliers and logistics partners could materially and adversely impact our business, financial condition and results of operations.
+Added: A severe weather event, including climate change-related severe weather or disasters, other natural or man-made disasters, or any other significant disruption, such as global epidemics/pandemics, the impact of war or political instability, work stoppages, labor shortages and similar interruptions affecting our manufacturing facilities or our suppliers and logistics partners could materially and adversely impact our business, financial condition and results of operations.
For example, the impact of COVID-19 caused us to temporarily shut down some of our facilities in 2021.
1 unchanged sentence
Our Salt Lake City facility also produces other components on which our manufacturing operations in Ensenada, Mexico and Costa Rica rely.
−Removed: Our IV Solutions are manufactured at our manufacturing facility in Austin, Texas and in past years also by a third party manufacturer, Pfizer, in Rocky Mount, North Carolina or our suppliers’ facilities.
+Added: Our IV Solutions are manufactured at our manufacturing facility in Austin, Texas or our suppliers’ facilities.
We also operate various other manufacturing facilities in the U.S., Mexico, Italy and Czech Republic.
If our facilities or our suppliers' facilities are inoperable, for even a short period of time, it could adversely affect our ability to manufacture and distribute our products in a timely or cost-effective manner, and our ability to make product sales.
−Removed: For example, during July 2023, Pfizer's Rocky Mount, North Carolina facility sustained damage and destroyed inventory as a result of a tornado, which resulted in minor delayed shipments of certain products.
Furthermore, our facilities and the equipment we use to perform our manufacturing processes could be unavailable or costly and time-consuming to repair or replace.
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The price and supply of these materials may be impacted or disrupted for reasons beyond our control including supplier shutdowns, transportation delays, inflationary pricing pressures, work stoppages, labor shortages, extreme weather events, geopolitical developments, global economic uncertainty or downturns, sanctions and trade restrictions, and other governmental regulatory actions.
−Removed: Furthermore, our contract manufacturers
−Removed: could require us to move to another one of their production facilities.
+Added: Furthermore, our contract manufacturers could require us to move to another one of their production facilities.
We have experienced, and may continue to experience, significant challenges to our global transportation channels and other aspects of the global supply chain network, including the cost and availability of raw materials and components due to shortages and resulting cost inflation.
−Removed: If we encounter delays or difficulties in securing these components, materials or services and, if we cannot then obtain an acceptable substitute on a timely basis, our commercial operations could be interrupted, and we could experience an adverse effect on our results of operations and financial condition , and.
+Added: If we encounter delays or difficulties in securing these components, materials or services and, if we cannot then obtain an acceptable substitute on a timely basis, our commercial operations could be interrupted, and we could experience an adverse effect on our results of operations and financial condition.
Additionally, any performance failure on the part of our suppliers could delay the development and manufacture of our products, which could have a material adverse effect on our business.
Due to the highly competitive nature of the healthcare industry and the cost controls of our customers and third-party payors, as well as entering into long-term fixed price contracts, we may be unable to pass along cost increases for any key components or raw materials through higher prices to our customers.
−Removed: If the cost of key components or raw materials increases and we are unable to fully recover those increased costs through price increases or offset these increases through other cost reductions, we could experience an adverse effect on our results of operations and financial condition.
+Added: If the cost of key components or raw materials increases and we are unable to fully recover those increased costs through price
+Added: increases or offset these increases through other cost reductions, we could experience an adverse effect on our results of operations and financial condition.
We may not be successful in achieving expected operating efficiencies or expense reductions associated with cost reduction and restructuring efforts and may experience a decline in our profitability, business disruptions or other adverse consequences to our business as a result.
6 unchanged sentences
The credit agreement governing our Senior Secured Credit Facilities contains, among other things, certain customary restrictive covenants that limit our ability to incur additional indebtedness and liens, merge with other companies or consummate certain changes of control, acquire other companies, make certain investments, pay dividends, enter into certain transactions with affiliates, and transfer or dispose of assets as well as financial covenants.
−Removed: While we have not previously breached and are not currently in breach of these or any other covenants contained in our credit agreement, our ability to comply with these covenants may be affected by events beyond our control, including health crises and global pandemics, other geopolitical events, such as the conflicts in Eastern Europe and the Middle East, supply chain interruptions or general economic environment, including high inflation and interest rates.
+Added: While we have not previously breached and are not currently in breach of these or any other covenants contained in our credit agreement, our ability to comply with these covenants may be affected by events beyond our control, including health crises and global pandemics, other geopolitical events, supply chain interruptions or general economic environment, including high inflation and interest rates.
These covenants could also limit our ability to seek capital through the incurrence of new indebtedness or, if we are unable to meet our obligations, require us to repay any outstanding amounts with sources of capital we may otherwise use to fund our business.
1 unchanged sentence
Significant sales through distributors expose us to risks that could have a material effect on our results of operations.
−Removed: For the year ended December 31, 2023 and 2022, business from one distributor, Medline, accounted for approximately 16% and 15% of our consolidated revenues, respectively.
+Added: For the years ended December 31, 2024 and 2023, business from a single distributor accounted for approximately 18% and 16% of our consolidated revenues, respectively.
We may rely on one or more key distributors for a product, and the loss of these distributors could reduce our revenue.
2 unchanged sentences
Legal, Compliance, and Regulatory Risks
−Removed: Actual or perceived failures to comply with foreign, federal, and state data privacy and security laws, regulations and standards may adversely affect our business, operations and financial performance.
−Removed: We are subject to various federal, state and foreign laws that govern the collection, use, disclosure, retention and security of personal information, including patient health information.
−Removed: The global data protection landscape is rapidly evolving, and implementation standards and enforcement practices are likely to remain uncertain for the foreseeable future.
−Removed: evolution may create uncertainty in our business, affect our or our collaborators', service providers' and contractors' ability to operate in certain jurisdictions or to collect, store, transfer, use and share personal information, necessitate the acceptance of more onerous obligations in our contracts, result in liability or impose additional costs on us.
−Removed: In the U.S., numerous federal and state laws and regulations could apply to our operations or the operations of our partners, including state data breach notification laws, federal and state health information privacy laws, and federal and state consumer protection laws and regulations (e.g.
−Removed: Section 5 of the Federal Trade Commission Act (the "FTC Act")).
−Removed: For example, the privacy, security and breach notification rules promulgated under the Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, and regulations implemented thereunder (collectively ("HIPAA") establish a set of national privacy and security standards for the protection of protected health information ("PHI") by health plans, health care clearinghouses and certain health care providers, called covered entities, and the business associates with whom such covered entities contract for services that involve creating, receiving, maintaining or transmitting PHI, as well as their covered subcontractors.
−Removed: HIPAA also requires covered entities to provide individuals with certain rights with respect to their PHI, and requires covered entities to enter into a written business associate contract or other arrangement with the business associate that establishes specifically what the business associate has been engaged to do and requires the business associate to comply with the requirements of HIPAA.
−Removed: HIPAA requires the notification of patients, and other compliance actions, in the event of a breach of unsecured PHI.
−Removed: If notification to patients of a breach is required, such notification must be provided without unreasonable delay and in no event later than 60 calendar days after discovery of the breach.
−Removed: In addition, if the PHI of 500 or more individuals is improperly used or disclosed, we would be required to report the improper use or disclosure to the U.S.
−Removed: Department of Health and Human Services ("HHS") which would post the violation on its website, and to the media.
−Removed: Penalties for failure to comply with a requirement of HIPAA vary significantly depending on the nature of violation and could include civil monetary or criminal penalties.
−Removed: HIPAA authorizes state attorneys general to file suit on behalf of their residents for violations.
−Removed: Courts are able to award damages, costs and attorneys’ fees related to violations of HIPAA in such cases.
−Removed: While HIPAA does not create a private right of action allowing individuals to file suit against us in civil court for violations of HIPAA, its standards have been used as the basis for duty of care cases in state civil suits such as those for negligence or recklessness in the misuse or breach of PHI.
−Removed: Certain states have also adopted privacy and security laws and regulations, some of which may be more stringent than HIPAA.
−Removed: Such laws and regulations will be subject to interpretation by various courts and other governmental authorities, thus creating potentially complex compliance issues for us and our future customers and strategic partners.
−Removed: For example, California enacted the California Consumer Privacy Act of 2018 (the "CCPA"), which went into effect on January 1, 2020.
−Removed: The CCPA applies to certain businesses that collect personal information from California residents.
−Removed: The CCPA gives California residents expanded rights to access and delete their personal information, opt out of certain personal information sharing and receive detailed information about how their personal information is used by requiring covered companies to provide new disclosures to California consumers (as that term is broadly defined) and provide such consumers new ways to opt-out of certain sales of personal information.
−Removed: The CCPA provides for civil penalties for violations, as well as a private right of action for data breaches that is expected to increase data breach litigation.
−Removed: Although there are limited exemptions for health-related information, including PHI maintained by covered entities and business associates, the CCPA may increase our compliance costs and potential liability.
−Removed: Further, the California Privacy Rights Act ("CPRA") generally went into effect on January 1, 2023, and imposes additional data protection obligations on covered businesses, including additional consumer rights processes, limitations on data uses, new audit requirements for higher risk data, and opt outs for certain uses of sensitive data.
−Removed: It also created a new California data protection agency authorized to issue substantive regulations and could result in increased privacy and information security enforcement.
−Removed: Additional compliance investment and potential business process changes may be required.
−Removed: Similar laws have passed in other states, and are continuing to be proposed at the state and federal level, reflecting a trend toward more stringent privacy legislation in the U.S.
−Removed: The enactment of such laws could have potentially conflicting requirements that would make compliance challenging.
−Removed: In addition, the CCPA has prompted a number of proposals for new federal and state privacy legislation that, if passed, could increase our potential liability, increase our compliance costs and adversely affect our business.
−Removed: If we fail to comply with applicable laws and regulations we could be subject to penalties or sanctions, including criminal penalties if we knowingly obtain or disclose individually identifiable health information from a covered entity in a manner that is not authorized or permitted by HIPAA or applicable state laws.
−Removed: Furthermore, the FTC and many state attorneys general continue to enforce federal and state consumer protection laws against companies for online collection, use, dissemination and security practices that appear to be unfair or deceptive.
−Removed: For example, according to the FTC, failing to take appropriate steps to keep consumers' personal information secure can constitute unfair acts or practices in or affecting commerce in violation of Section 5(a) of the FTC Act.
−Removed: The FTC expects a company's data security measures to be reasonable and appropriate in light of the sensitivity and volume of consumer information it holds, the size and complexity of its business, and the cost of available tools to improve security and reduce vulnerabilities.
−Removed: Foreign data protection laws, including the General Data Protection Regulation (the "GDPR"), which became effective in May 2018, and EU and EEA member state data protection legislation, may also apply to health-related and other personal data obtained outside of the U.S.
−Removed: The GDPR imposes strict requirements for processing the personal data of individuals within the EEA or in the context of our activities within the EEA.
−Removed: The GDPR has and will continue to increase compliance burdens on us, including by mandating potentially burdensome documentation requirements and granting certain rights to individuals to control how we collect, use, disclose, retain and process data about them.
−Removed: Fines for non-compliance with the GDPR are significant - the greater of €20 million or 4% of global turnover.
−Removed: In addition to fines, a breach of the GDPR may result in regulatory investigations, reputational damage, orders to cease/ change our data processing activities, enforcement notices, assessment notices (for a compulsory audit) and/ or civil claims (including class actions).
−Removed: The GDPR provides that EU and EEA member states may impose further obligations relating to the processing of genetic, biometric or health data, which could limit our ability to collect, use and share personal data, or could cause our compliance costs to increase, ultimately having an adverse impact on our business.
−Removed: Among other requirements, the GDPR regulates transfers of personal data subject to the GDPR to third countries that have not been found to provide adequate protection to such personal data, including the United States, and the efficacy and longevity of current transfer mechanisms between the European Economic Area, or the EEA, and the United States remains uncertain.
−Removed: Case law from the Court of Justice of the European Union (“CJEU”) states that reliance on the standard contractual clauses - a standard form of contract approved by the European Commission as an adequate personal data transfer mechanism - alone may not necessarily be sufficient in all circumstances and that transfers must now be assessed on a case-by-case basis.
−Removed: On October 7, 2022, President Biden signed an Executive Order on ‘Enhancing Safeguards for United States Signals Intelligence Activities’ which introduced new redress mechanisms and binding safeguards to address the concerns raised by the CJEU in relation to data transfers from the EEA to the United States and which formed the basis of the new EU-US Data Privacy Framework (“DPF”), as released on December 13, 2022.
−Removed: The European Commission adopted its Adequacy Decision in relation to the DPF on July 10, 2023, rendering the DPF effective as a GDPR transfer mechanism to U.S.
−Removed: entities self-certified under the DPF.
−Removed: The DPF also introduced a new redress mechanism for EU citizens which addresses a key concern in the previous CJEU judgments and may mean transfers under standard contractual clauses are less likely to be challenged in future.
−Removed: We currently rely on the EU standard contractual clauses and the UK Addendum to the EU standard contractual clauses and the UK International Data Transfer Agreement and the DPF as relevant to transfer personal data outside the EEA and the UK, including to the United States, with respect to both intragroup and third party transfers.
−Removed: We expect the existing legal complexity and uncertainty regarding international personal data transfers to continue as supervisory authorities issue further guidance on personal data export mechanisms, including circumstances where the SCCs cannot be used, and/or start taking enforcement action.
−Removed: In particular, we expect the DPF Adequacy Decision to be challenged and international transfers to the United States and to other jurisdictions more generally to continue to be subject to enhanced scrutiny by regulators.
−Removed: We could suffer additional costs, complaints and/or regulatory investigations or fines, and/or if we are otherwise unable to transfer personal data between and among countries and regions in which we operate, it could affect the manner in which we provide our services, the geographical location or segregation of our relevant systems and operations, and could adversely affect our financial results.
−Removed: Further, from January 1, 2021, companies have to comply with the GDPR and also the UK GDPR, which, together with the amended UK Data Protection Act 2018, retains the GDPR in UK national law.
−Removed: The UK GDPR mirrors the fines under the GDPR, e.g.
−Removed: fines up to the greater of €20 million (£17.5 million) or 4% of global turnover.
−Removed: On October 12, 2023, the UK Extension to the DPF came into effect (as approved by the UK Government), as a UK GDPR data transfer mechanism to U.S.
−Removed: entities self-certified under the UK Extension to the DPF.
−Removed: The European Commission has adopted an adequacy decision in favor of the UK, enabling data transfers from EU member states to the UK without additional safeguards.
−Removed: However, the UK adequacy decision will automatically expire in June 2025 unless the European Commission re-assesses and renews/extends that decision, and remains under review by the Commission during this period.
−Removed: In September 2021, the UK government launched a consultation on its proposals for wide-ranging reform of UK data protection laws following Brexit and the response to this consultation was published in June 2022.
−Removed: There is a risk that any material changes which are made to the UK data protection regime could result in the European Commission reviewing the UK adequacy decision, and the UK losing its adequacy decision if the European Commission deems the UK to no longer provide adequate protection for personal data.
−Removed: The relationship between the UK and the EU in relation to certain aspects of data protection law remains unclear, and it is unclear how UK data protection laws and regulations will develop in the medium to longer term, and how data transfers to and from the UK will be regulated in the long term.
−Removed: We are subject to certain fraud and abuse and transparency laws, which, if violated, could subject us to substantial penalties.
−Removed: Additionally, any challenge to or investigation into our practices under these laws could cause adverse publicity and be costly to respond to, and thus could harm our business.
−Removed: There are numerous U.S.
−Removed: federal and state, as well as foreign, laws pertaining to healthcare fraud and abuse, including anti-kickback, false claims and transparency laws regarding payments and other transfers of value made to physicians and other
−Removed: licensed healthcare professionals.
−Removed: Our business practices and relationships with providers are subject to scrutiny under these laws.
−Removed: The healthcare laws and regulations that may affect our ability to operate include, but are not limited to:
−Removed: • the federal Anti-Kickback Statute, which prohibits, among other things, persons and entities from knowingly and willfully soliciting, offering, receiving or providing remuneration, directly or indirectly, in cash or in kind, to induce either the referral of an individual or furnishing or arranging for a good or service, for which payment may be made, in whole or in part, under federal healthcare programs, such as Medicare and Medicaid.
−Removed: A person or entity does not need to have actual knowledge of the statute or specific intent to violate it to have committed a violation.
−Removed: government has interpreted this law broadly to apply to the marketing and sales activities of manufacturers;
−Removed: • the federal civil and criminal false claims laws, including the federal civil False Claims Act, which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, claims for payment from Medicare, Medicaid or other federal healthcare programs that are false or fraudulent.
−Removed: Private individuals can bring False Claims Act "qui tam" actions, on behalf of the government and such individuals, commonly known as "whistleblowers," may share in amounts paid by the entity to the government in fines or settlement.
−Removed: Moreover, the government may assert that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the federal civil False Claims Act;
−Removed: • the federal Civil Monetary Penalties Law, which prohibits, among other things, offering or transferring remuneration to a federal healthcare beneficiary that a person knows or should know is likely to influence the beneficiary’s decision to order or receive items or services reimbursable by the government from a particular provider or supplier;
−Removed: • the federal Physician Sunshine Act, which require certain applicable manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program ("CHIP") to report annually to the U.S.
−Removed: Department of Health and Human Services' CMS information related to payments and other transfers of value to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), certain other healthcare providers (physician assistants, nurse practitioners, clinical nurse specialists, anesthesiologist assistants, certified registered nurse anesthetists, anesthesiology assistants and certified nurse midwives, and teaching hospitals), and applicable manufacturers and GPOs, to report annually ownership and investment interests held by physicians and their immediate family members;
−Removed: • HIPAA, which created additional federal criminal statutes that prohibit, among other things, executing a scheme to defraud any healthcare benefit program and making false statements relating to healthcare matters.
−Removed: Similar to the federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it to have committed a violation;
−Removed: • analogous state and foreign 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 or patients;
−Removed: state laws that require device companies to comply with the industry’s voluntary compliance guidelines and the applicable compliance guidance promulgated by the federal government or otherwise restrict payments that may be made to healthcare providers and other potential referral sources;
−Removed: state laws that require device manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures;
−Removed: consumer protection and unfair competition laws, which broadly regulate marketplace activities and activities that potentially harm customers;
−Removed: and state laws related to insurance fraud in the case of claims involving private insurers.
−Removed: These laws and regulations, among other things, constrain our business, marketing and other promotional activities by limiting the kinds of financial arrangements, including sales programs, we may have with hospitals, physicians or other potential purchasers of our products.
−Removed: Due to the breadth of these laws, the narrowness of statutory exceptions and regulatory safe harbors available, and the range of interpretations to which they are subject, it is possible that some of our current or future practices might be challenged under one or more of these laws.
−Removed: To enforce compliance with the healthcare regulatory laws, certain enforcement bodies have recently increased their 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.
−Removed: Responding to investigations can be time-and resource-consuming and can divert management's attention from the business.
−Removed: Additionally, as a result of these investigations, healthcare providers and entities may have to agree to additional compliance and reporting requirements as part of a consent decree or corporate integrity agreement.
−Removed: Any such investigation or settlement could increase our costs or otherwise have an adverse effect on our business.
−Removed: Even an unsuccessful challenge or investigation into our practices could cause adverse publicity, and be costly to respond to.
−Removed: If our operations are found to be in violation of any of the healthcare laws or regulations described above or any other healthcare regulations that apply to us, we may be subject to penalties, including administrative, civil and criminal penalties, damages, fines, exclusion from participation in government healthcare programs, such as Medicare and Medicaid, imprisonment, contractual damages, reputational harm, disgorgement and the curtailment or restructuring of our operations.
−Removed: Healthcare regulation and reform measures could adversely affect our revenue and financial condition.
−Removed: Our profitability and operations are subject to risks relating to changes in government and private reimbursement programs and policies and changes in legal requirements in the U.S.
−Removed: and in the world.
−Removed: There have been, and we expect there will continue to be, a number of legislative and regulatory changes to the healthcare system that could affect our future revenues and profitability in the U.S.
−Removed: Federal and state lawmakers regularly propose and, at times, enact legislation that results in significant changes to the healthcare system, some of which are intended to contain or reduce the costs of medical products and services.
−Removed: For example, in 2010, the ACA was signed into law introducing comprehensive health insurance and healthcare reforms in the U.S.
−Removed: The ACA, among other things, provided incentives to programs that increase the federal government's comparative effectiveness research, and implemented payment system reforms including a national pilot program on payment bundling to encourage hospitals, physicians and other providers to improve the coordination, quality and efficiency of certain healthcare services through bundled payment models.
−Removed: Additionally, the ACA has expanded eligibility criteria for Medicaid programs and created a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical effectiveness research, along with funding for such research.
−Removed: We anticipate there will continue to be proposals by legislators at both the federal state and foreign levels, regulators and commercial payors to reduce costs while expanding individual healthcare benefits.
−Removed: The ultimate implementation of any healthcare reform legislation and any new laws and regulations, and its impact on us, is impossible to predict, particularly in light of the new presidential administration.
−Removed: Any significant reforms made to the healthcare system in the U.S., or in other jurisdictions, may have an adverse effect on our financial condition and results of operations.
−Removed: On December 13, 2021, Regulation No 2021/2282 on Health Technology Assessment (“HTA”) amending Directive 2011/24/EU, was adopted.
−Removed: While the Regulation entered into force in January 2022, it will only begin to apply from January 2025 onwards, with preparatory and implementation-related steps to take place in the interim.
−Removed: Once applicable, it will have a phased implementation depending on the concerned products.
−Removed: The Regulation intends to boost cooperation among EU member states in assessing health technologies, including certain high-risk medical devices, and provide the basis for cooperation at the EU level for joint clinical assessments in these areas.
−Removed: It will permit EU member states to use common HTA tools, methodologies, and procedures across the EU, working together in four main areas, including joint clinical assessment of the innovative health technologies with the highest potential impact for patients, joint scientific consultations whereby developers can seek advice from HTA authorities, identification of emerging health technologies to identify promising technologies early, and continuing voluntary cooperation in other areas.
−Removed: Individual EU member states will continue to be responsible for assessing non-clinical (e.g., economic, social, ethical) aspects of health technology, and making decisions on pricing and reimbursement.
−Removed: Our business could be materially and adversely affected if we fail to defend and enforce our patents or other proprietary rights, if our products are found to infringe patents or other proprietary rights owned by others or if the cost to protect our patents or other proprietary rights becomes excessive or as our patents expire.
−Removed: We rely on a combination of patents, trademarks, copyrights, trade secrets, business methods, software and nondisclosure agreements to protect our proprietary intellectual property.
−Removed: Our efforts to protect our intellectual and proprietary rights may not be sufficient.
−Removed: Further, there is no assurance that patents pending will issue or that the protection from patents which have issued or may issue in the future will be broad enough to prevent competitors from introducing similar devices, that such patents, if challenged, will be upheld by the courts or that we will be able to prove infringement and damages in litigation.
−Removed: We generally have multiple patents covering various features of a product, and as each patent expires, the protection afforded by that patent is no longer available to us, even though protection of features that are covered by other unexpired patents may continue to be available to us.
−Removed: The loss of patent protection on certain features of our products may make it possible for others to manufacture and sell products with features identical or similar to ours, which could adversely affect our business.
−Removed: If we fail to develop and successfully launch new products prior to the expiration of patents for our existing products, our sales and profits with respect to those products could decline significantly.
−Removed: We may not be able to develop and successfully launch more advanced replacement products before these and other patents expire.
−Removed: In addition, our ability to enforce and protect our intellectual property rights may be limited in certain countries outside of the U.S., which could make it easier for competitors to obtain market position in such countries by utilizing technologies that are similar to those developed by us.
−Removed: If others choose to manufacture and sell products similar to or substantially the same as our products, it could have a material adverse effect on our business through loss of unit volume or price erosion, or both, and could adversely affect our ability to secure new business.
−Removed: There has been substantial litigation regarding patent and other intellectual property rights in the medical device industry.
−Removed: We have in the past faced and may in the future face patent infringement claims.
−Removed: Patent infringement litigation, which may be necessary to enforce patents issued to us or to defend ourselves against claimed infringement of the rights of others, can be expensive and may involve a substantial commitment of our resources which may divert resources from other uses.
−Removed: Adverse determinations in litigation or settlements could subject us to significant liabilities to third parties, could require us to seek licenses from third parties, could prevent us from manufacturing and selling our products or could fail to prevent competitors from manufacturing products similar to ours.
−Removed: Any of these results could materially and adversely affect our business.
−Removed: From time to time we become aware of newly issued patents on medical devices, which we review to evaluate any infringement risk.
−Removed: We are aware of a number of patents that have been issued to others.
−Removed: While we believe these patents will not affect our ability to market our products, there is no assurance that these or other issued or pending patents might not interfere with our right or ability to manufacture and sell our products.
−Removed: Our ability to market our products in the U.S.
−Removed: and other countries may be adversely affected if our products fail to comply with the applicable requirements of the FDA and regulatory agencies in other countries.
+Added: Our ability to market, distribute and sell our products in the U.S.
+Added: and other countries may be adversely affected if our products fail to comply with the existing laws and regulations, and applicable requirements of the FDA, governmental agencies in other countries, and notified bodies.
We and our products are subject to extensive regulation in the U.S.
18 unchanged sentences
Under the 510(k) process, the manufacturer must submit to the FDA a pre-market notification, demonstrating that the device is "substantially equivalent," as defined in the FDC Act, to a legally marketed predicate device.
−Removed: To be "substantially equivalent," the proposed device must have the same intended use as the predicate device, and either have the same technological characteristics as the predicate device or have different technological characteristics and not raise different questions of safety or effectiveness than the predicate device.
+Added: To be "substantially equivalent," the proposed device must have the same intended use as the predicate device, and either have
+Added: the same technological characteristics as the predicate device or have different technological characteristics and not raise different questions of safety or effectiveness than the predicate device.
If the manufacturer is unable to demonstrate substantial equivalence to FDA's satisfaction, or if there is no available predicate device, then the manufacturer may be required to seek approval through the PMA application process, which is generally more costly and time consuming than the 510(k) process.
9 unchanged sentences
The FDA enforces these regulatory requirements through periodic unannounced inspections.
−Removed: Even after we have obtained the proper regulatory clearance or approval to market a product, we have ongoing responsibilities under FDA
−Removed: regulations and applicable foreign laws and regulations.
+Added: Even after we have obtained the proper regulatory clearance or approval to market a product, we have ongoing responsibilities under FDA regulations and applicable foreign laws and regulations.
The FDA, state and foreign regulatory authorities have broad enforcement powers.
+Added: In addition, new and changing laws, regulations, executive orders and other governmental actions, particularly from the new presidential administration, may also create uncertainty about how laws and regulations will be interpreted and applied.
+Added: Regulatory changes and other actions that materially affect our business may be announced with little or no advance notice, and we may be unable to effectively mitigate all adverse impacts from such measures.
+Added: Differing interpretations of such legal obligations can expose us to significant fines, government investigations, litigation and reputational harm.
+Added: If we are found to have violated laws, regulations, or executive orders, it could materially adversely affect our business, reputation, results of operations and financial condition.
We do not know whether we will pass or be found compliant in any future inspections by FDA or other regulatory authorities.
27 unchanged sentences
If we are unable to comply with QMSR, once effective, or with any other changes in the laws or regulations enforced by FDA or comparable regulatory authorities, we may be subject to enforcement action, which could have an adverse effect on our business, financial condition and results of operations.
−Removed: For instance, the EU landscape concerning medical devices recently evolved.
+Added: In addition, the EU landscape concerning medical devices recently evolved.
On May 26, 2021, the EU Medical Devices Regulation became applicable and repealed and replaced the EU Medical Devices Directive.
Unlike directives, which must be implemented into the national laws of the EU member states, regulations are directly applicable (i.e., without the need for adoption of EU member state laws implementing them) in all EU member states and are intended to eliminate current differences in the regulation of medical devices among EU member states.
−Removed: In accordance with its recently extended transitional provisions, both (i) devices lawfully placed on the market pursuant to the EU Medical Devices Directive prior to May 26, 2021 and (ii) legacy devices lawfully placed on the EU market after May 26, 2021 in accordance with the EU Medical Devices Regulation transitional provisions may generally continue to be made available on the market or put into service, provided that the requirements of the transitional provisions are fulfilled.
−Removed: However, even in this case, manufacturers must comply with a number of new or reinforced requirements set forth in the EU Medical Devices Regulation with regard to registration of economic operators and of devices, post-market surveillance, market surveillance and vigilance requirements.
−Removed: Subject to the transitional provisions and in order to sell our products in EU member states, our products must comply with the general safety and performance requirements of the EU Medical Devices Regulation, which repeals and replaces EU Medical Devices Directive.
+Added: In accordance with its recently extended transitional provisions, both (i) devices lawfully placed on the market pursuant to the EU Medical Devices Directive prior to May 26, 2021 and (ii) legacy devices lawfully placed on the EU market after May 26, 2021 in accordance with the EU Medical Devices Regulation transitional provisions may generally continue to be made available on the market or put into service, provided that the requirements of the transitional provisions are fulfilled as may be assessed by the notified body.
+Added: However, even in this case, manufacturers must comply with a number of new or reinforced requirements set forth in the EU Medical Devices Regulation with regard to registration of economic operators and of devices, post-market surveillance, market surveillance and vigilance requirements and comply with the requirements of the notified body.
+Added: Subject to the transitional provisions and in order to sell our products in EU member states, our products must comply with the general safety and performance requirements of the EU Medical Devices Regulation, which repeals and replaces the EU Medical Devices Directive.
All medical devices placed on the market in the EU must meet the general safety and performance requirements laid down in Annex I to the EU Medical Devices Regulation including the requirement that a medical device must be designed and manufactured in such a way that, during normal conditions of use, it is suitable for its intended purpose.
Medical devices must be safe and effective and must not compromise the clinical condition or safety of patients, or the safety and health of users and – where applicable – other persons, provided that any risks which may be associated with their use constitute acceptable risks when weighed against the benefits to the patient and are compatible with a high level of protection of health and safety, taking into account the generally acknowledged state of the art.
−Removed: Compliance with these requirements is a prerequisite to be able to affix the CE mark to our products, without which they cannot be sold or marketed in the EU.
+Added: Compliance with these requirements is a prerequisite to be able to affix the European Conformity ("CE") mark to our products, without which
+Added: they cannot be sold or marketed in the EU.
See – Government Regulation.
6 unchanged sentences
The aforementioned EU rules are generally applicable in the EEA.
−Removed: Non-compliance with the above requirements would also prevent us from selling our products in these three countries.
+Added: Non-compliance with the above requirements including as determined by a notified body would also prevent us from selling our products in these geographies.
The rules applicable in Great Britain differ from the EEA as a result of Brexit.
−Removed: Following the transitional periods whereby existing CE marks continue to be recognized in Great Britain, affixing the UKCA mark is expected to become a prerequisite to be able to place products on the market in Great Britain, without which they cannot be sold or marketed in Great Britain.
−Removed: This might cause increased regulatory burden to our business.
+Added: On June 26, 2022, the Medicines and Healthcare Products Regulatory Agency (“MHRA”) published its response to a 10-week consultation on the future regulation of medical devices in the United Kingdom (“UK”).
+Added: The MHRA proposes amendments to the UK Medical Devices Regulations 2002 (which are based on EU legislation, primarily the EU Medical Devices Directive), in particular to create new access pathways to support innovation, create an innovative framework for regulating software and artificial intelligence as medical devices, reform in vitro diagnostic regulation, and foster sustainability through the reuse and remanufacture of medical devices.
+Added: The MHRA has stated that it continues its intention to implement the proposals from such consultation through secondary legislation.
+Added: In addition, on November 14, 2024, the MHRA launched a new consultation on proposals to update the regulatory framework for medical devices in Great Britain, covering four topics, namely (1) a new international reliance scheme to enable swifter market access for certain devices that have already been approved in a comparable regulator country;
+Added: (2) the new UK Conformity Assessed (“UKCA”) mark and, in particular, proposals to remove the requirement to place such UKCA marking on devices;
+Added: (3) conformity assessment procedures for in vitro diagnostic devices;
+Added: and (4) maintaining in UK law certain pieces of “assimilated” EU law which are due to sunset in 2025.
+Added: The MHRA consultation was opened until January 5, 2025, and it is expected that secondary legislation implementing the proposals would be introduced in 2025.
+Added: The divergence of the new UK rules from EU law could adversely affect or delay our ability to obtain approval for our products in the UK, which could adversely affect our ability to grow our business.
See “Part 1, Item 1.
−Removed: Government Regulation - Regulation of Medical Devices in the European Union - Brexit.”
+Added: Government Regulation - Regulation of Medical Devices in the European Union – Brexit and the UK Regulatory Framework.”
If we or our comp onent manufacturers fail to comply with the FDA's Quality System Regulation or Good Manufacturing Practice regulations or other requirements, our manufacturing operations could be interrupted, and our product sales and operating results could suffer.
−Removed: In the United States, we and some of our component manufacturers are required to comply with regulatory requirements known as the FDA's QSR, a complex regulatory scheme which covers the procedures and documentation of the design, testing, production, control, quality assurance, inspection, complaint handling, recordkeeping, management review, labeling, packaging, sterilization, storage and shipping of our device products.
+Added: In particular, if we are unable to resolve or close-out the Warning Letter dated October 1, 2021, received by Smiths Medical ASD, Inc.
+Added: from the Minneapolis, Minnesota Facility following a February to March 2021 inspection, we could suffer significant sanctions which may impact our ability to sell products globally.
+Added: In the United States, we and some of our component manufacturers are required to comply with regulatory requirements known as the FDA's QSR, a complex regulatory scheme which currently covers the procedures and documentation of the design, testing, production, control, quality assurance, inspection, complaint handling, recordkeeping, management review, labeling, packaging, sterilization, storage and shipping of our device products.
The QSR applies to the manufacture of medical device components and finished medical devices.
2 unchanged sentences
Although we believe our manufacturing facilities and those of our critical component suppliers are in compliance with the QSR requirements, and with other applicable cGMPs for our products, we cannot provide assurance that any future inspection will not result in adverse findings.
−Removed: For example, on October 1, 2021, Smiths Medical received a Warning Letter from the FDA following an inspection of
−Removed: Smiths Medical’s Minneapolis, Minnesota Facility on March 30, 2021.
+Added: For example, on October 1, 2021, Smiths Medical received a Warning Letter from the FDA following an inspection of Smiths Medical’s Minneapolis, Minnesota Facility during February to March 30, 2021.
The Warning Letter cited, among other things, failures to comply with FDA's medical device reporting requirements and failures to comply with applicable portions of the QSR.
There is no guarantee that we will be able to successfully resolve the issues identified in the Warning Letter or do so in a timely manner or that similar compliance issues will not be identified in a future FDA inspection.
−Removed: If our manufacturing facilities or those of any of our component suppliers are found to be in violation of applicable laws and regulations, or we or our suppliers have significant noncompliance issues or fail to timely and adequately respond to any adverse inspectional observations or product safety issues, or if any corrective action plan that we or our suppliers propose in response to observed deficiencies is not sufficient, the FDA or foreign regulatory authorities could take enforcement action, including any of the following sanctions:
+Added: If we are unable to resolve the Warning Letter, we may be subject to the sanctions listed below.
+Added: If our manufacturing facilities or those of any of our component suppliers are found to be in violation of applicable laws and regulations, or we or our suppliers have significant noncompliance issues or fail to timely and adequately respond to any adverse inspectional observations or product safety issues, or if any corrective action plan that we or our suppliers propose
+Added: in response to observed deficiencies is not sufficient, the FDA or foreign regulatory authorities could take enforcement action, including any of the following sanctions:
• untitled letters or warning letters;
14 unchanged sentences
Distribution of our products in other countries may be subject to regulation in those countries, and there is no assurance that we will obtain necessary approvals or certifications in countries in which we want to introduce our products.
+Added: Actual or perceived failures to comply with foreign, federal, and state data privacy and security laws, regulations and standards may adversely affect our business, operations and financial performance.
+Added: We are subject to various federal, state and foreign laws that govern the collection, use, disclosure, retention and security of personal information, including patient health information and information that we may collect in connection with clinical trials.
+Added: The global data protection landscape is rapidly evolving, and implementation standards and enforcement practices are likely to remain uncertain for the foreseeable future.
+Added: This evolution may create uncertainty in our business, affect our or our collaborators', service providers' and contractors' ability to operate in certain jurisdictions or to collect, store, transfer, use and share personal information, necessitate the acceptance of more onerous obligations in our contracts, result in liability or impose additional costs on us.
+Added: In the U.S., numerous federal and state laws and regulations could apply to our operations or the operations of our partners, including state data breach notification laws, federal and state health information privacy laws, and federal and state consumer protection laws and regulations (e.g.
+Added: Section 5 of the Federal Trade Commission Act (the "FTC Act")).
+Added: For example, the privacy, security and breach notification rules promulgated under the Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, and regulations implemented thereunder (collectively ("HIPAA") establish a set of national privacy and security standards for the protection of protected health information ("PHI") by health plans, health care clearinghouses and certain health care providers, called covered entities, and the business associates with whom such covered entities contract for services that involve creating, receiving, maintaining or transmitting PHI, as well as their covered subcontractors.
+Added: HIPAA also requires covered entities to provide individuals with certain rights with respect to their PHI, and requires covered entities to enter into a written business associate contract or other arrangement with the business associate that establishes specifically what the business associate has been engaged to do and requires the business associate to comply with the requirements of HIPAA.
+Added: HIPAA requires the notification of patients, and other compliance actions, in the event of a breach of unsecured PHI.
+Added: If notification to patients of a breach is required, such notification must be provided without unreasonable delay and in no event later than 60 calendar days after discovery of the breach.
+Added: In addition, if the PHI of 500 or more individuals is improperly used or disclosed, we would be required to report the improper use or disclosure to the U.S.
+Added: Department of Health and Human Services ("HHS") which would post the violation on its website, and to the media.
+Added: Penalties for failure to comply with a requirement of HIPAA vary significantly depending on the nature of violation and could include civil monetary or criminal penalties.
+Added: HIPAA authorizes state attorneys general to file suit on behalf of their residents for violations.
+Added: Courts are able to award damages, costs and attorneys’ fees related to violations of HIPAA in such cases.
+Added: While HIPAA does not create a private right of action allowing individuals to file suit against us in civil court for violations of HIPAA, its standards have been used as the basis for duty of care cases in state civil suits such as those for negligence or recklessness in the misuse or breach of PHI.
+Added: Certain states have also adopted privacy and security laws and regulations, which govern the privacy, processing and protection of health-related and other personal information.
+Added: Such laws and regulations will be subject to interpretation by various courts and other governmental authorities, thus creating potentially complex compliance issues for us and our future customers and strategic partners.
+Added: For example, California enacted the California Consumer Privacy Act of 2018 (the "CCPA"), as amended by the California Privacy Rights Act (collectively, the CCPA) requires covered businesses that process the personal information of California residents to, among other things:
+Added: (i) provide certain disclosures to California residents regarding the business’s collection, use, and disclosure of their personal information;
+Added: (ii) receive and respond to requests from California residents to access, delete, and correct their personal information, or to opt out of certain disclosures of their personal information;, and (iii) enter into specific contractual provisions with service providers that process California resident personal information on the business’s behalf.
+Added: Additional compliance investment and potential business process changes may be required.
+Added: Similar laws have passed in other states, and are continuing to be proposed at the state and federal level, reflecting a trend toward more stringent privacy legislation in the U.S.
+Added: The enactment of such laws could have potentially conflicting requirements that would make compliance challenging.
+Added: If we fail to comply with applicable laws and regulations we could be subject to penalties or sanctions, including criminal penalties if we knowingly obtain or disclose individually identifiable health information from a covered entity in a manner that is not authorized or permitted by HIPAA or applicable state laws.
+Added: Furthermore, the FTC and many state attorneys general continue to enforce federal and state consumer protection laws against companies for online collection, use, dissemination and security practices that appear to be unfair or deceptive.
+Added: For example, according to the FTC, failing to take appropriate steps to keep consumers' personal information secure can constitute unfair acts or practices in or affecting commerce in violation of Section 5(a) of the FTC Act.
+Added: The FTC expects a company's data security measures to be reasonable and appropriate in light of the sensitivity and volume of consumer information it holds, the size and complexity of its business, and the cost of available tools to improve security and reduce vulnerabilities.
+Added: Additionally, federal and state consumer protection laws are increasingly being applied by FTC and states’ attorneys general to regulate the collection, use, storage, and disclosure of personal or personally identifiable information, through websites or otherwise, and to regulate the presentation of website content.
+Added: Foreign data protection laws, including the General Data Protection Regulation (the "GDPR"), which became effective in May 2018, and EU and EEA member state data protection legislation, may also apply to health-related and other personal data obtained outside of the U.S.
+Added: The GDPR imposes strict requirements for processing the personal data of individuals within the EEA or in the context of our activities within the EEA.
+Added: The GDPR has and will continue to increase compliance burdens on us, including by mandating potentially burdensome documentation requirements and granting certain rights to individuals to control how we collect, use, disclose, retain and process data about them.
+Added: Fines for non-compliance with the GDPR are significant - the greater of €20 million or 4% of global turnover.
+Added: In addition to fines, a breach of the GDPR may result in regulatory investigations, reputational damage, orders to cease/ change our data processing activities, enforcement notices, assessment notices (for a compulsory audit) and/ or civil claims (including class actions).
+Added: The GDPR provides that EU and EEA member states may impose further obligations relating to the processing of genetic, biometric or health data, which could limit our ability to collect, use and share personal data, or could cause our compliance costs to increase, ultimately having an adverse impact on our business.
+Added: Among other requirements, the GDPR regulates transfers of personal data subject to the GDPR to third countries that have not been found to provide adequate protection to such personal data, including the United States, and the efficacy and longevity of current transfer mechanisms between the European Economic Area, or the EEA, and the United States remains uncertain.
+Added: Case law from the Court of Justice of the European Union (“CJEU”) states that reliance on the standard contractual clauses - a standard form of contract approved by the European Commission as an adequate personal data transfer mechanism - alone may not necessarily be sufficient in all circumstances and that transfers must now be assessed on a case-by-case basis.
+Added: On July 10, 2023, the European Commission adopted its Adequacy Decision in relation to the new EU-US Data Privacy Framework (“DPF”), rendering the DPF effective as a GDPR transfer mechanism to U.S.
+Added: entities self-certified under the DPF.
+Added: We expect the existing legal complexity and uncertainty regarding international personal data transfers to continue as supervisory authorities issue further guidance on personal data export mechanisms, including circumstances where the SCCs cannot be used, and/or start taking enforcement action.
+Added: In particular, we expect the DPF Adequacy Decision to be challenged and international transfers to the United States and to other jurisdictions more generally to continue to be subject to enhanced scrutiny by regulators.
+Added: We could suffer additional costs, complaints and/or regulatory investigations or fines, and/or if we are otherwise unable to transfer personal data between and among countries and regions in which we operate, it could affect the
+Added: manner in which we provide our services, the geographical location or segregation of our relevant systems and operations, and could adversely affect our financial results.
+Added: Further, from January 1, 2021, companies have to comply with the GDPR and also the UK GDPR, which, together with the amended UK Data Protection Act 2018, retains the GDPR in UK national law.
+Added: The UK GDPR mirrors the fines under the GDPR, e.g.
+Added: fines up to the greater of €20 million (£17.5 million) or 4% of global turnover.
+Added: On October 12, 2023, the UK Extension to the DPF came into effect (as approved by the UK Government), as a data transfer mechanism from the UK to U.S.
+Added: entities self-certified under the DPF.
+Added: As we continue to expand into other foreign countries and jurisdictions, we may be subject to additional laws and regulations that may affect how we conduct business.
+Added: We are subject to certain fraud and abuse and transparency laws, which, if violated, could subject us to substantial penalties.
+Added: Additionally, any challenge to or investigation into our practices under these laws could cause adverse publicity and be costly to respond to, and thus could harm our business.
+Added: There are numerous U.S.
+Added: federal and state, as well as foreign, laws pertaining to healthcare fraud and abuse, including anti-kickback, false claims and transparency laws regarding payments and other transfers of value made to physicians and other licensed healthcare professionals.
+Added: Our business practices and relationships with providers are subject to scrutiny under these laws.
+Added: The healthcare laws and regulations that may affect our ability to operate include, but are not limited to:
+Added: • the federal Anti-Kickback Statute, which prohibits, among other things, persons and entities from knowingly and willfully soliciting, offering, receiving or providing remuneration, directly or indirectly, in cash or in kind, to induce either the referral of an individual or furnishing or arranging for a good or service, for which payment may be made, in whole or in part, under federal healthcare programs, such as Medicare and Medicaid.
+Added: A person or entity does not need to have actual knowledge of the statute or specific intent to violate it to have committed a violation.
+Added: government has interpreted this law broadly to apply to the marketing and sales activities of manufacturers;
+Added: • the federal civil and criminal false claims laws, including the federal civil False Claims Act, which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, claims for payment from Medicare, Medicaid or other federal healthcare programs that are false or fraudulent.
+Added: Private individuals can bring False Claims Act "qui tam" actions, on behalf of the government and such individuals, commonly known as "whistleblowers," may share in amounts paid by the entity to the government in fines or settlement.
+Added: Moreover, the government may assert that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the federal civil False Claims Act;
+Added: • the federal Civil Monetary Penalties Law, which prohibits, among other things, offering or transferring remuneration to a federal healthcare beneficiary that a person knows or should know is likely to influence the beneficiary’s decision to order or receive items or services reimbursable by the government from a particular provider or supplier;
+Added: • the federal Physician Sunshine Act, which require certain applicable manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program ("CHIP") to report annually to the U.S.
+Added: Department of Health and Human Services' CMS information related to payments and other transfers of value to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), certain other healthcare providers (physician assistants, nurse practitioners, clinical nurse specialists, anesthesiologist assistants, certified registered nurse anesthetists, anesthesiology assistants and certified nurse midwives, and teaching hospitals), and applicable manufacturers and GPOs, to report annually ownership and investment interests held by physicians and their immediate family members;
+Added: • HIPAA, which created additional federal criminal statutes that prohibit, among other things, executing a scheme to defraud any healthcare benefit program and making false statements relating to healthcare matters.
+Added: Similar to the federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it to have committed a violation;
+Added: • analogous state and foreign 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 or patients;
+Added: state laws that require device companies to comply with the industry’s voluntary compliance guidelines and the applicable compliance guidance promulgated by the federal government or otherwise restrict payments that may be made to healthcare providers and other potential referral sources;
+Added: state laws that require device manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures;
+Added: consumer protection and unfair competition laws, which broadly regulate marketplace activities and activities that potentially harm customers;
+Added: and state laws related to insurance fraud in the case of claims involving private insurers.
+Added: These laws and regulations, among other things, constrain our business, marketing and other promotional activities by limiting the kinds of financial arrangements, including sales programs, we may have with hospitals, physicians or other potential purchasers of our products.
+Added: Due to the breadth of these laws, the narrowness of statutory exceptions and regulatory safe harbors available, and the range of interpretations to which they are subject, it is possible that some of our current or future practices might be challenged under one or more of these laws.
+Added: To enforce compliance with the healthcare regulatory laws, certain enforcement bodies have recently increased their 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.
+Added: Responding to investigations can be time-and resource-consuming and can divert management's attention from the business.
+Added: Additionally, as a result of these investigations, healthcare providers and entities may have to agree to additional compliance and reporting requirements as part of a consent decree or corporate integrity agreement.
+Added: Any such investigation or settlement could increase our costs or otherwise have an adverse effect on our business.
+Added: Even an unsuccessful challenge or investigation into our practices could cause adverse publicity, and be costly to respond to.
+Added: If our operations are found to be in violation of any of the healthcare laws or regulations described above or any other healthcare regulations that apply to us, we may be subject to penalties, including administrative, civil and criminal penalties, damages, fines, exclusion from participation in government healthcare programs, such as Medicare and Medicaid, imprisonment, contractual damages, reputational harm, disgorgement and the curtailment or restructuring of our operations.
+Added: Healthcare regulation and reform measures could adversely affect our revenue and financial condition.
+Added: Our profitability and operations are subject to risks relating to changes in government and private reimbursement programs and policies and changes in legal requirements in the U.S.
+Added: and in the world.
+Added: There have been, and we expect there will continue to be, a number of legislative and regulatory changes to the healthcare system that could affect our future revenues and profitability in the U.S.
+Added: Federal and state lawmakers regularly propose and, at times, enact legislation that results in significant changes to the healthcare system, some of which are intended to contain or reduce the costs of medical products and services.
+Added: For example, in 2010, the ACA was signed into law introducing comprehensive health insurance and healthcare reforms in the U.S.
+Added: The ACA, among other things, provided incentives to programs that increase the federal government's comparative effectiveness research, and implemented payment system reforms including a national pilot program on payment bundling to encourage hospitals, physicians and other providers to improve the coordination, quality and efficiency of certain healthcare services through bundled payment models.
+Added: Additionally, the ACA has expanded eligibility criteria for Medicaid programs and created a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical effectiveness research, along with funding for such research.
+Added: We anticipate there will continue to be proposals by legislators at both the federal state and foreign levels, regulators and commercial payors to reduce costs while expanding individual healthcare benefits.
+Added: The ultimate implementation of any healthcare reform legislation and any new laws and regulations, and its impact on us, is impossible to predict, particularly in light of the new presidential administration.
+Added: Any significant reforms made to the healthcare system in the U.S., or in other jurisdictions, may have an adverse effect on our financial condition and results of operations.
+Added: On December 13, 2021, Regulation No 2021/2282 on Health Technology Assessment (“HTA”) amending Directive 2011/24/EU, was adopted.
+Added: While the Regulation entered into force in January 2022, it only began to apply from January 2025 onwards, with preparatory and implementation-related steps that took place in the interim.
+Added: Once applicable, it will have a phased implementation depending on the concerned products.
+Added: The Regulation intends to boost cooperation among EU member states in assessing health technologies, including certain high-risk medical devices, and provide the basis for cooperation at the EU level for joint clinical assessments in these areas.
+Added: It will permit EU member states to use common HTA tools, methodologies, and procedures across the EU, working together in four main areas, including joint clinical assessment of the innovative health technologies with the highest potential impact for patients, joint scientific consultations whereby developers can seek advice from HTA authorities, identification of emerging health technologies to identify promising technologies early, and continuing voluntary cooperation in other areas.
+Added: Individual EU member states will continue to be responsible for assessing non-clinical (e.g., economic, social, ethical) aspects of health technology, and making decisions on pricing and reimbursement.
+Added: Our business could be materially and adversely affected if we fail to defend and enforce our patents or other proprietary rights, if our products are found to infringe patents or other proprietary rights owned by others or if the cost to protect our patents or other proprietary rights becomes excessive or as our patents expire.
+Added: We rely on a combination of patents, trademarks, copyrights, trade secrets, business methods, software and nondisclosure agreements to protect our proprietary intellectual property.
+Added: Our efforts to protect our intellectual and proprietary rights may not be sufficient.
+Added: Further, there is no assurance that patents pending will issue or that the protection from patents
+Added: which have issued or may issue in the future will be broad enough to prevent competitors from introducing similar devices, that such patents, if challenged, will be upheld by the courts or that we will be able to prove infringement and damages in litigation.
+Added: We generally have multiple patents covering various features of a product, and as each patent expires, the protection afforded by that patent is no longer available to us, even though protection of features that are covered by other unexpired patents may continue to be available to us.
+Added: The loss of patent protection on certain features of our products may make it possible for others to manufacture and sell products with features identical or similar to ours, which could adversely affect our business.
+Added: If we fail to develop and successfully launch new products prior to the expiration of patents for our existing products, our sales and profits with respect to those products could decline significantly.
+Added: We may not be able to develop and successfully launch more advanced replacement products before these and other patents expire.
+Added: In addition, our ability to enforce and protect our intellectual property rights may be limited in certain countries outside of the U.S., which could make it easier for competitors to obtain market position in such countries by utilizing technologies that are similar to those developed by us.
+Added: If others choose to manufacture and sell products similar to or substantially the same as our products, it could have a material adverse effect on our business through loss of unit volume or price erosion, or both, and could adversely affect our ability to secure new business.
+Added: There has been substantial litigation regarding patent and other intellectual property rights in the medical device industry.
+Added: We have in the past faced and may in the future face patent infringement claims.
+Added: Patent infringement litigation, which may be necessary to enforce patents issued to us or to defend ourselves against claimed infringement of the rights of others, can be expensive and may involve a substantial commitment of our resources which may divert resources from other uses.
+Added: Adverse determinations in litigation or settlements could subject us to significant liabilities to third parties, could require us to seek licenses from third parties, could prevent us from manufacturing and selling our products or could fail to prevent competitors from manufacturing products similar to ours.
+Added: Any of these results could materially and adversely affect our business.
+Added: From time to time we become aware of newly issued patents on medical devices, which we review to evaluate any infringement risk.
+Added: We are aware of a number of patents that have been issued to others.
+Added: While we believe these patents will not affect our ability to market our products, there is no assurance that these or other issued or pending patents might not interfere with our right or ability to manufacture and sell our products.
The misuse or off-label use of our products may harm our reputation in the marketplace, result in injuries that lead to product liability suits or result in costly investigations, fines or sanctions by regulatory bodies if we are deemed to have engaged in the promotion of these uses, any of which could be costly to our business.
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If the FDA or any foreign regulatory authorities determine that our promotional materials or training constitute promotion of an off-label use, it could request that we modify our training or promotional materials or subject us to regulatory or enforcement actions, including the issuance or imposition of an untitled letter, which is used for violators that do not necessitate a warning letter, injunction, seizure, civil fine or criminal penalties.
−Removed: It is also possible that enforcement authorities might take action under other regulatory authority, such as false claims laws, if they consider our business activities to constitute promotion of an off-label use, which could result in significant penalties, including, but not limited to, criminal, civil
−Removed: and administrative penalties, damages, fines, disgorgement, exclusion from participation in government healthcare programs and the curtailment of our operations.
+Added: It is also possible that enforcement authorities might take action under other regulatory authority, such as false claims laws, if they consider our business activities to constitute promotion of an off-label use, which could result in significant penalties, including, but not limited to, criminal, civil and administrative penalties, damages, fines, disgorgement, exclusion from participation in government healthcare programs and the curtailment of our operations.
In addition, physicians may misuse our products or use improper techniques if they are not adequately trained, potentially leading to injury and an increased risk of product liability.
22 unchanged sentences
If we fail to comply with our reporting obligations, the FDA or foreign regulatory authorities could take action, including warning letters, untitled letters, administrative actions, criminal prosecution, imposition of civil monetary penalties, revocation of our device clearances, approvals or certifications, seizure of our products or delay in clearance, approval, or certification of future products.
−Removed: The FDA and foreign regulatory bodies have the authority to require the recall of commercialized products in the event of material deficiencies or defects in design or manufacture of a product or in the event that a product poses an unacceptable
−Removed: risk to health.
+Added: The FDA and foreign regulatory bodies have the authority to require the recall of commercialized products in the event of material deficiencies or defects in design or manufacture of a product or in the event that a product poses an unacceptable risk to health.
The FDA’s authority to require a recall must be based on a finding that there is reasonable probability that the device could cause serious injury or death.
2 unchanged sentences
Product defects or other errors may occur in the future.
−Removed: For example, on June 26, 2020, Smiths Medical ASD initiated Class 1 recalls of a Medfusion Syringe Pump.
−Removed: We can provide no assurance that our efforts to work with the FDA to complete the Class 1 recall, and ultimately close, this product recall will be accomplished in a timely manner, or at all.
−Removed: In addition, the costs associated with conducting and closing this recall or any other product recalls, including any liabilities we may incur, could have a material adverse effect on our business, financial condition and results of operations.
+Added: For example, in June 2024, Smiths Medical ASD initiated Class 1 recalls with respect to certain tracheostomy tube kits, and, in May 2024, Smiths Medical
+Added: ASD initiated Class 1 recalls for certain paraPAC plus ventilators.
+Added: We can provide no assurance that our efforts to work with the FDA to complete, and ultimately close, these product recalls, and any recalls that may occur in the future, will be accomplished in a timely manner, or at all.
+Added: In addition, the costs associated with conducting and closing these or any other product recalls, including any liabilities we may incur, could have a material adverse effect on our business, financial condition and results of operations.
Depending on the corrective action we take to redress a product's deficiencies or defects, the FDA or foreign regulatory agencies may require, or we may decide, that we will need to obtain new clearances, approvals or certifications for the device before we may market or distribute the corrected device.
7 unchanged sentences
Geographic Risks
+Added: Significant changes in U.S.
+Added: trade, tax or other policies that restrict imports or increase import tariffs for certain countries, particularly Mexico, can escalate trade wars and could have a meaningful adverse effect on our results of operations.
+Added: A significant amount of our products are manufactured outside of the U.S.
+Added: In certain years, the U.S.
+Added: government has initiated substantial changes in U.S.
+Added: trade policy and U.S.
+Added: trade agreements, including the initiation of tariffs on certain foreign goods.
+Added: In response to these tariffs, certain foreign governments, including Canada, China and Mexico, have retaliated imposing tariffs on certain U.S.
+Added: In January 2025, the current administration issued executive orders imposing additional tariffs on imported goods from Canada, Mexico, and China and in response Canada immediately announced similar tariffs on U.S.
+Added: Imposed tariffs and retaliatory responses to these and further trade measures could prevent or make it difficult and will be more costly for us to import goods.
+Added: They could also potentially disrupt our existing supply chains and impose additional costs on our business, including, without limitation, costs with respect to raw materials upon which our business depends.
+Added: The most significant potential impact to us is the additional tariffs on Mexican imports, which could result in a meaningful impact to our results of operations due to our manufacturing facilities in Mexico.
+Added: Increased tariffs could require us to increase our prices, which likely could decrease demand for our products, and in certain cases we may be unable to pass along increased costs to our customers if they are under long-term fixed price contracts.
+Added: Additionally, we are subject to income taxes in the U.S.
+Added: and numerous foreign jurisdictions.
+Added: Any significant changes in current tax policies could have a material adverse effect on our results of operations.
Our operations may be adversely impacted by our exposure to risks related to foreign currency exchange rates.
11 unchanged sentences
Accordingly, changes in foreign currency exchange rates have adversely affected and may continue to adversely affect our results of operations.
−Removed: During 2023, we recorded $5.9 million in foreign exchange losses due to the volatility of foreign exchange rates such as the strengthening of the Mexican Peso which impacted margins and the devaluation of the Argentine Peso.
+Added: During 2024, we recorded $9.8 million in foreign exchange losses due to the volatility of foreign exchange rates later in the year such as the strengthening of the US dollar relative to most of our selling currencies in foreign jurisdictions which impacted margins and the devaluation of the Argentine Peso.
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” for a further discussion of the financial impact of exchange rate fluctuations on our results of operations.
5 unchanged sentences
We attempt to mitigate a portion of foreign currency exchange rate risks through foreign currency hedging.
−Removed: Our hedging activities, however, may not sufficiently offset the adverse financial impact caused by unfavorable movement in foreign currency exchange rates
−Removed: applicable to our business, and such exchange rate impacts could materially adversely affect our financial condition or results of operations.
+Added: Our hedging activities, however, may not sufficiently offset the adverse financial impact caused by unfavorable movement in foreign currency exchange rates applicable to our business, and such exchange rate impacts could materially adversely affect our financial condition or results of operations.
See “Item 7A.
Quantitative and Qualitative Disclosures About Market Risk.”
−Removed: Any significant changes in U.S.
−Removed: trade, tax or other policies that restrict imports or increase import tariffs could have a material adverse effect on our results of operations.
−Removed: A significant amount of our products are manufactured outside of the U.S.
−Removed: government has recently initiated substantial changes in U.S.
−Removed: trade policy and U.S.
−Removed: trade agreements, including the initiation of tariffs on certain foreign goods.
−Removed: In response to these tariffs, certain foreign governments, including China, have instituted or are considering imposing tariffs on certain U.S.
−Removed: For example, in 2018, the U.S.
−Removed: imposed tariffs on steel and aluminum as well as on goods imported from China and certain other countries, which has resulted in retaliatory tariffs by China and other countries.
−Removed: Additional tariffs imposed by the U.S.
−Removed: on a broader range of imports, or further retaliatory trade measures taken by other countries in response, could prevent or make it difficult for us to obtain the components needed for new products which would affect our sales.
−Removed: Increased tariffs would require us to increase our prices which likely would decrease customer and consumer demand for our products.
−Removed: Additionally, we are subject to income taxes in the U.S.
−Removed: and numerous foreign jurisdictions.
−Removed: Any significant changes in current U.S.
−Removed: trade, tax or other policies could have a material adverse effect on our results of operations.
International sales pose additional risks related to competition with larger international companies and established local companies and higher credit risk.
50 unchanged sentences
• different labor regulations or work stoppages or strikes;
−Removed: • changing geopolitical conditions arising from political instability and any actual or anticipated military or political conflicts (such as the conflict in Ukraine and in the Middle East);
+Added: • changing geopolitical conditions arising from political instability and any actual or anticipated military or political conflicts;
• economic instability in other parts of the world and the impact on interest rates, inflation and the credit worthiness of our customers in foreign countries, such as the devaluation of the Argentine Peso;
+Added: • tariffs on products imported to the U.S.;
• uncertainties regarding judicial systems and procedures;
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The Smiths Medical acquisition completed in January 2022 has resulted in organizational changes and an increase in size to our business.
−Removed: If we fail to effectively manage this growth and change to our business in a manner that preserves our reputation with customers and the key aspects of our corporate culture, our business, financial condition and results of operations could be harmed.
+Added: If we fail to effectively complete the integration of our business in a manner that preserves our reputation with customers and the key aspects of our corporate culture, our business, financial condition and results of operations could be harmed.
The Smiths Medical acquisition has resulted in significant growth in our personnel and operations, adding approximately 6,700 employees to our headcount at the time of acquisition.
−Removed: Our total headcount as of December 31, 2023 is approximately 14,000 employees.
+Added: Our total headcount as of December 31, 2024 was approximately 15,000 employees.
We have incurred and continue to incur significant expenditures and the allocation of management time to assimilate the Smiths Medical employees in a manner that preserves the key aspects of our corporate culture, including a focus on strong customer satisfaction, but there can be no assurance that we will be successful in our efforts.
−Removed: If we do not effectively integrate, train and manage our combined employee base and maintain strong customer relationships, our corporate culture could be undermined, the quality of our products and customer service could suffer, and our reputation could be harmed, each of which could adversely impact our business, financial condition and results of operations.
+Added: If we do not effectively integrate, train and manage our combined employee base and maintain strong customer
+Added: relationships, our corporate culture could be undermined, the quality of our products and customer service could suffer, and our reputation could be harmed, each of which could adversely impact our business, financial condition and results of operations.
The Smiths Medical acquisition was a significant acquisition for us and the product offerings within Smiths Medical are not product offerings that we previously offered.
13 unchanged sentences
Achieving the anticipated benefits and the potential benefits underlying our reasons for the Smiths Medical business acquisition will depend on successful integration of the businesses.
−Removed: Because of the significance of the Smiths Medical business acquisition to us, our failure to successfully integrate the Smiths Medical business with that of our own could have a material adverse impact on our business, financial condition and results of operations.
−Removed: The actual impact of the Smiths Medical acquisition on our financial results may be worse than the assumptions we have used.
−Removed: We have made certain assumptions relating to the impact on our financial results of the Smiths Medical acquisition.
−Removed: These assumptions relate to numerous matters, including the acquisition costs, transaction and integration costs, and other financial and strategic risks of the acquisition.
−Removed: If one or more of these assumptions are incorrect, it could have an adverse effect on our business and operating results, and the perceived benefits from the acquisition may not be realized.
−Removed: For example, our vascular access product sales have been less than anticipated because of supply chain constraints prior to the closing of the acquisition which resulted in elevated back orders and eventual customer losses.
+Added: Because of the significance of the Smiths Medical business acquisition to us, our failure to successfully complete the integration of the Smiths Medical business with that of our own could have a material adverse impact on our business, financial condition and results of operations.
If we are unable to effectively manage our internal growth or growth through acquisitions of companies, assets or products, our financial performance may be adversely affected.
11 unchanged sentences
The increasing burdens on our management resources and financial controls resulting from internal growth and acquisitions could adversely affect our operating results.
−Removed: In addition, acquisitions may involve a number of special risks in
−Removed: addition to the difficulty of integrating cultures and operations and the diversion of management’s attention, including adverse short-term effects on our reported operating results, dependence on retention, hiring and training of key personnel, risks associated with unanticipated problems or legal liabilities, and amortization of acquired intangible assets, some or all of which could materially and adversely affect our operations and financial performance.
−Removed: For the Smiths Medical acquisition, we used a significant portion of our cash on hand and incurred a substantial amount of debt to finance the cash consideration portion and certain other amounts paid in connection with the Smiths Medical acquisition, which could adversely affect our business, including by restricting our ability to engage in additional transactions or incur additional indebtedness.
−Removed: At December 31, 2023 and 2022, we had $254.7 million and $213.5 million of cash, cash equivalents and investment securities on hand, respectively, which was significantly less in each case than the approximately $571.9 million of cash, cash equivalents and investment securities we had as of December 31, 2021, primarily as a result of the use of existing cash to partially fund the Smiths Medical acquisition.
+Added: In addition, acquisitions may involve a number of special risks in addition to the difficulty of integrating cultures and operations and the diversion of management’s attention, including adverse short-term effects on our reported operating results, dependence on retention, hiring and training of key personnel, risks associated with unanticipated problems or legal liabilities, and amortization of acquired intangible assets, some or all of which could materially and adversely affect our operations and financial performance.
+Added: For the Smiths Medical acquisition, we used a significant portion of our cash on hand and incurred a substantial amount of debt to finance the cash consideration portion and certain other amounts paid in connection with the Smiths Medical
+Added: acquisition, which could adversely affect our business, including by restricting our ability to engage in additional transactions or incur additional indebtedness.
+Added: At December 31, 2024 and 2023, we had $308.6 million and $254.7 million of cash, cash equivalents and investment securities on hand, respectively, which was significantly less in each case than the balances maintained prior to the Smiths Medical acquisition.
Although our management believes that we continue to have sufficient access to cash to meet our business objectives and capital needs, we currently have a decreased availability of cash, cash equivalents and investment securities and expect to continue to have such decreased availability of cash for the foreseeable future which could constrain our ability to grow our business.
6 unchanged sentences
See “Business and Operating Risks - The agreements governing our debt contain a number of restrictive covenants which limit our flexibility in operating our business, finance future operations or pursue our business strategies .
−Removed: We have and may continue to acquire businesses, form strategic alliances or make investments in businesses or technologies.
+Added: We have and may continue to acquire businesses, form strategic alliances, enter into joint ventures or make investments in businesses or technologies.
Such transactions or investments could result in unforeseen operating difficulties or expenditures and require significant management resources, charges or write-downs that could adversely impact our business and operating results.
−Removed: We have and may continue to seek to supplement our internal growth through acquisitions of complementary businesses, technologies, services, or products, as well as investments and strategic alliances.
+Added: We have and may continue to seek to supplement our internal growth through acquisitions of complementary businesses, technologies, services, or products, as well as investments, joint ventures and strategic alliances.
We compete for those opportunities with others including our competitors, some of which have greater financial or operational resources than we do.
1 unchanged sentence
Such transactions are inherently risky, and the integration of any newly-acquired business requires significant effort and management attention that otherwise would be available for ongoing development of our other businesses.
−Removed: The success of any acquisition, investment or alliance 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.
+Added: The success of any acquisition, investment, joint venture or alliance 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.
Integration of an acquired business also may disrupt our ongoing operations and require management resources that we would otherwise focus on developing our existing business.
1 unchanged sentence
We invested significant time and resources into the HIS integration in order to achieve the anticipated benefits of the transaction, and we have been and continue to do the same with the Smiths Medical integration.
−Removed: In addition, any acquisition could result in the incurrence of debt, contingent liabilities or future write-offs of intangible assets or goodwill, any of which could have a material adverse effect on our financial condition, results of operations
−Removed: and cash flows.
−Removed: We may also experience losses related to investments in other companies, which could have an adverse effect on our results of operations and financial condition.
+Added: More recently, in November 2024, we entered into a purchase agreement (the “Agreement”) with Otsuka to form a joint venture (the “Joint Venture”) for our IV Solutions product line.
+Added: With Otsuka expected to have a 60% equity interest, we will be a minority holder with a 40% equity interest.
+Added: The failure to complete this transaction or, if completed, for the Joint Venture to meet our performance and financial expectations could adversely impact our ability to meet internal forecasts and expectations.
+Added: Additionally, pursuant to the terms of the Agreement, we will not have sole decision-making authority with matters related to the Joint Venture, or have the ability exert control over the actions of Otsuka, which could result in impasses on decisions or decisions made by our partners, which we may be unable to resolve in a manner that will be favorable to us.
+Added: Further, Otsuka may have economic or business interests that are, or may become, inconsistent with our interests.
+Added: Acquisitions, investments, joint ventures and alliances involve numerous risks and uncertainties, including, without limitation, the failure to identify suitable acquisition candidates and partners, the ability to complete the transaction on acceptable terms and conditions, the incurrence of liabilities greater than anticipated or operating results that are less than anticipated, the inability to realize the projected value, and the inability to realize projected synergies, the incurrence of debt, contingent liabilities or future write-offs of intangible assets or goodwill, any of which could have a material adverse effect on our financial condition, results of operations and cash flows.
+Added: We may also experience losses related to investments in other
+Added: companies, which could have an adverse effect on our results of operations and financial condition.
As such, there can be no assurance that any past or future transactions or investments will be successful.
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.