What changed in this filing

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Item 1A. Risk Factors

2025-02-19 compared with 2024-02-14 · 78 added, 62 removed, 243 unchanged (37% of the section changed)

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In addition, if any of these third parties were to cease operations or cease doing business with us, we may be unable to replace them at a reasonable cost.

Any failure of a third-party transportation provider to deliver raw materials or finished products in a timely manner could harm our reputation, negatively affect our customer relationships and have a material adverse effect on our financial condition and results of operations.

In addition, an increase in transportation rates and oil and/or fuel surcharges could materially and adversely affect our sales and profitability.

Any failure of a third-party transportation provider to deliver raw materials or finished products in a timely manner could harm our reputation, impact our ability to manufacture and deliver our products, negatively affect our customer relationships and have a material adverse effect on our financial condition and results of operations.

In addition, an increase in transportation rates and oil and/or fuel surcharges could materially and adversely affect financial results, including profitability.

Our reliance on third-party wholesale distribution channels could impact our business.

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Because the techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently or may be designed to remain dormant until a predetermined triggering event and often are not recognized until launched against a target, we may be unable to anticipate these techniques or implement sufficient control measures to defend against these techniques.

The rapid evolution and increased adoption of generative artificial intelligence (AI) is further increasing risks in this area, including by making fraud detection more difficult, particularly with detection devices that use voice recognition or authentication.

Once a security incident is identified, we may be unable to fully remediate or otherwise respond to such an incident in a timely manner, which may cause us to incur remediation or other costs or subject us to demands to pay a ransom fee.

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These upgrades or replacements may not improve our productivity to the levels anticipated and may subject us to inherent costs and risks associated with implementing, replacing, and updating these systems, including potential disruption of our internal control structure, substantial capital expenditures, demands on management time and other risks of delays or difficulties in transitioning to new systems or of integrating new systems into other existing systems.

Our development, integration and use of AI technology in our operations remains in the early phases.

Although we aim to implement AI technology according to responsible procedures and adequate safeguards, our current or future use of AI or machine learning tools in our business operations could expose us to new or additional costs and risks, including the potential introduction of new vulnerabilities or cybersecurity risks within our information technology systems;

the potential inadvertent or unauthorized release of our confidential or proprietary information resulting from the use (whether or not authorized) of AI or machine learning tools by our employees, contractors, agents, representatives, vendors or customers;

the potential loss of our intellectual property rights or our potential infringement of the intellectual property rights of third parties resulting from the use (whether or not authorized) of AI or machine learning tools in our operations;

and potential legal or reputational harms due to insufficient or flawed data, insufficient quality control, or unlawful bias or discrimination associated with the use of AI or machine learning tools.

In addition, the AI tools we may incorporate into certain aspects of our operations may not generate the intended efficiencies and may impact our business results.

Our inability to prevent information technology system disruptions or to mitigate the impact of such disruptions could have an adverse effect on our business.

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However, any of our registered or unregistered intellectual property rights may be subject to challenge or possibly exploited by our competitors or other third parties, which could materially adversely affect our financial position, results of operations, cash flows, and competitive position.

We manufacture our products in jurisdictions outside the United States and are exposed to risks associated with international business operations.

We manufacture and distribute our products in jurisdictions outside the United States and are exposed to risks associated with international business operations, including risks related to potential supply chain disruptions, such as delays, cost fluctuations, and challenges in sourcing materials or components due to geopolitical events, government trade policies, or logistical constraints.

We manufacture our products in the United States, Canada, Chile, and Brazil and sell our products primarily in North America and South America.

We operate a supply chain that involves the shipment of goods from certain international markets to the jurisdictions where we manufacture our products.

Accordingly, we are subject to risks associated with potential disruption caused by changes in political, monetary, economic, and social environments, including civil and political unrest, terrorism, possible expropriation, local labor conditions (including labor disruptions or shortages), changes in laws, regulations, and policies of foreign governments and trade disputes with the United States (including tariffs), and compliance with U.S.

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companies abroad, including tax laws, economic sanctions and enforcement of contract and intellectual property rights.

Steps taken by the U.S.

government to apply new, or increase existing, tariffs on certain products and materials imported into the United States could potentially disrupt our existing supply chains and impose additional costs on our business, including costs with respect to raw materials upon which our business depends.

Additionally, potential retaliatory tariffs imposed by other countries in response to U.S.

trade policies could adversely affect our ability to export products from the United States to key international markets, leading to decreased sales and profitability.

Such retaliatory tariffs could also increase the cost of certain components and materials that we import into the United States, further straining our supply chain and impacting our overall financial performance.

Our international operations and sourcing of materials could be harmed by a variety of factors, including:

• recessionary trends in international markets;

• legal and regulatory changes and the burdens and costs of our compliance with a variety of laws, including but not limited to export controls, import and customs trade restrictions, tariffs (including tariffs applicable to goods imported into the United States from China, Mexico, Canada, Colombia, or other countries), and regulations related to public health matters;

• increases in transportation costs or transportation delays;

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dollar relative to other currencies;

• social and political unrest, geopolitical and military conflicts, terrorism and economic instability.

• social and political unrest, geopolitical and military conflicts or tensions, terrorism and economic instability.

If any of these or other factors were to render the conduct of our business in a particular country undesirable or impractical, our business, financial condition, or results of operations could be materially adversely affected.

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These and other risks associated with corporate strategic transactions we may pursue may be unpredictable and beyond our control and could have a material adverse impact on our financial position, reputation, operating results and cash flows.

The impact of new ongoing or escalated military and geopolitical conflicts and tensions, including the conflict between Russia and Ukraine and the conflict in Israel and the surrounding areas, on the global economy, energy supplies and raw materials may prove to negatively impact our business and operations.

The global economy has been negatively impacted by the ongoing military conflict between Russia and Ukraine.

Furthermore, governments in the United States and several European and Asian countries have imposed export controls on certain products and financial and economic sanctions on certain industry sectors and parties in Russia.

Although we have no operations in Russia or Ukraine, we have experienced shortages in materials and increased costs for transportation, energy, and raw material due in part to the negative impact of the Russia-Ukraine military conflict on the global economy.

The scope and duration of the military conflict in Ukraine is uncertain and hard to predict.

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

Our business could be negatively affected by the impact of new or ongoing military or geopolitical conflicts on international markets and the global economy.

The impact of the ongoing conflict in Israel and surrounding areas and/or escalation thereof and the tensions between the United States and China and between China and Taiwan could include increased volatility in financial and commodity markets, increased energy prices, increased maritime shipping costs, supply chain disruptions, a higher level of general market and macroeconomic instability, and violent protests or political or social unrest in areas outside the immediate conflict area, among other things.

These conflicts and tensions and other military or geopolitical conflicts or tensions that may arise in the future could materially adversely affect our operations, financial position, and results.

Our business, financial condition, and results of operations have been, and may again be, adversely affected by global pandemics or other health emergencies.

The extent to which global pandemics and/or other health emergencies would impact our business, financial condition, cash flows, and results of operations in the future is uncertain and will depend on numerous evolving factors beyond our control.

Global pandemics and/or other health emergencies may have a material adverse effect on our business or our supply of raw materials, production, distribution channels, and customers, including business shutdowns or disruptions for an indefinite period of time, reduced operations, labor shortages and disruptions, restrictions on manufacturing or shipping products or reduced consumer demand.

We are subject to physical, operational, transitional, and financial risks associated with climate change and global, regional, and local weather conditions, and with legal, regulatory, and market responses to climate change.

There has been an increased focus, including from investors, the general public and U.S.

and foreign governmental and nongovernmental authorities, regarding environmental, sustainability, and governance (ESG) matters, including with respect to climate change, greenhouse gas emissions, packaging and waste, sustainable supply chain practices, deforestation, and land, energy, and water use.

This increased awareness with respect to ESG matters, including climate change, may result in more prescriptive reporting requirements with respect to ESG metrics, an expectation that such metrics will be voluntarily disclosed by companies such as ours, and increased pressure to make commitments, set targets, or establish goals, and take action to meet them.

While we have voluntarily provided certain disclosures with respect to various ESG matters, including climate change, we cannot predict whether such disclosures will be considered sufficient by our stakeholders or relevant governmental or nongovernmental authorities.

Additionally, we cannot predict the extent to which any increased monitoring, assessing, or reporting of ESG matters may impact our operations, financial conditions and results.

and foreign governmental and nongovernmental authorities, regarding environmental, social, and governance (ESG) matters, including with respect to climate change, greenhouse gas emissions, packaging and waste, sustainable supply chain practices, deforestation, and land, energy, and water use.

Evolving opinions from these groups with respect to ESG matters may impact reporting requirements with respect to ESG metrics, expectations that such metrics will be voluntarily disclosed by companies such as ours, and opinions as to whether we should make commitments, set targets, or establish goals, and take action to meet them.

While we have voluntarily provided certain disclosures with respect to various ESG matters, including climate change, we cannot predict whether such disclosures will be considered satisfactory by our stakeholders or relevant governmental or nongovernmental authorities.

Additionally, we cannot predict the extent to which a change in monitoring, assessing, or reporting of ESG matters may impact our operations, financial conditions and results.

The unpredictability and frequency of natural disasters such as hurricanes, earthquakes, hailstorms, wildfires, snow, ice storms, the spread of disease, and insect infestations could affect the supply of raw materials or cause variations in their costs, or variations in transportation-related costs.

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Increased restrictions and regulations could increase operating costs and compliance costs or require expenditures on additional technology, all of which could adversely affect our results of operation.

In particular, the State of California recently passed the Climate Corporate Data Accountability Act and the Climate-Related Financial Risk Act which could impose broad climate-related disclosure obligations on certain companies doing business in California, including us, starting in 2026.

In particular, the State of California passed the Climate Corporate Data Accountability Act and the Climate-Related Financial Risk Act which could impose broad climate-related disclosure obligations on certain companies doing business in California, including us, starting in 2026.

Additionally, the State of California recently passed the Voluntary Carbon Market Disclosures Business Regulation Act, which mandates certain disclosures in connection with claims regarding greenhouse gas emissions.

Such disclosure obligations may apply to us.

The SEC has included in its regulatory agenda potential rule-making on climate change disclosures that, if adopted, could significantly increase compliance burdens, associated regulatory costs, and complexity.

The SEC has also recently enacted climate change disclosures that have been voluntarily stayed pending litigation, and, if ultimately implemented, could significantly increase compliance burdens, associated regulatory costs, and complexity.

We believe that we are in compliance in all material respects with existing climate-related regulations and such compliance has not had a material impact on our business;

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If our suppliers or the third parties we rely on for transportation are unable to comply with environmental laws and regulations, we may be unable to meet consumer demands at the same cost or in a timely fashion.

Our reputation may be adversely affected if we are not able to achieve our ESG goals or otherwise meet the expectations of our stakeholders with respect to ESG matters.

Our reputation may be adversely affected if we are not able to achieve our ESG priorities or otherwise meet the expectations of our stakeholders with respect to ESG matters.

We strive to deliver shared value through our business.

Our diverse group of stakeholders hold us accountable to ensure we continue to demonstrate progress with respect to industry-specific ESG priorities.

From time to time, we announce certain aspirations and goals relevant to our priority ESG matters.

We periodically publish information about our ESG priorities, strategies, goals, targets and progress on our corporate website and in public filings and update our ESG reporting from time to time.

Achievement of these aspirations, targets, plans and goals is subject to risks and uncertainties, many of which are outside of our control, and it is possible that we may not reach all our ESG goals or certain of our stakeholders might not be satisfied with our efforts.

Certain challenges we face in meeting our ESG objectives are also captured within our ESG reporting contained on our website, which is not incorporated by reference into and does not form any part of this annual report on Form 10-K or our other filings with the SEC.

Perceived failures or delays in meeting our ESG goals could adversely affect public perception of our business, employee morale or customer or stakeholder support, and may negatively impact our financial condition and results of operations.

Our business, financial condition, and results of operations have been, and may again be, adversely affected by global pandemics or other health emergencies.

The impact of new or ongoing military and geopolitical conflicts, including the conflict between Russia and Ukraine and the conflict in Israel and the surrounding areas, on the global economy, energy supplies and raw materials is uncertain, but may prove to negatively impact our business and operations.

The global economy has been negatively impacted by the ongoing military conflict between Russia and Ukraine.

The scope and duration of the military conflict in Ukraine is uncertain, rapidly changing and hard to predict.

Our business could be negatively affected by the impact of new or ongoing military or geopolitical conflicts on international markets and the global economy.

The specific impact of the conflict in Israel and surrounding areas remains uncertain, but could include increased volatility in financial and commodity markets, increased energy prices, a higher level of general market and macroeconomic instability, and violent protests or social unrest in areas outside the immediate conflict area, among other things.

This conflict and other military or geopolitical conflicts that may arise in the future could materially adversely affect our operations, financial position, and results.

From time to time, we announce certain aspirations and priorities relevant to ESG matters.

We periodically publish information about our ESG priorities, strategies, and progress on our corporate website and in public filings.

Achievement of these priorities and strategies is subject to risks and uncertainties, many of which are outside of our control, and it is possible that we may not achieve all our ESG priorities or certain of our stakeholders might not be satisfied with our efforts regarding ESG matters.

Certain challenges we face in meeting our ESG priorities are also captured within our voluntary sustainability report contained on our website, which is not incorporated by reference into and does not form any part of this annual report on Form 10-K or our other filings with the SEC.

Perceived failures or delays in meeting our ESG priorities could adversely affect public perception of our business, employee morale or customer or stakeholder support, and may negatively impact our financial condition and results of operations.

INDUSTRY RISK FACTORS

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economy or of any regional or local economy in which we operate, could adversely affect consumer spending, result in decreased demand for our products, and adversely affect our business.

Unfavorable changes in single-family housing starts and increased interest rates on major renovations or new home construction during the year ended December 31, 2023, negatively impacted our results of operations for the same period.

If conditions in the overall housing market or in a specific market or submarket worsen in the future beyond our current expectations, such changes could continue to have a material adverse effect on our financial position, results of operations, and cash flows.

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We have a high degree of product concentration in OSB, which is subject to commodity pricing and associated price volatility.

OSB accounted for about 43%, 57%, and 65% of our North American net sales in 2023, 2022, and 2021, respectively, and we expect OSB sales to continue to account for a substantial portion of our revenues and profits in the future.

OSB accounted for about 43% of our North American net sales in each of 2024 and 2023, and 57% in 2022.

We expect OSB sales to continue to account for a substantial portion of our revenues and profits in the future.

The concentration of our business in the OSB market further increases our sensitivity to commodity pricing and price volatility.

Historical prices for our commodity products have been volatile, and we, like other participants in the building products industry, have limited influence over the timing and extent of price changes for our products.

Commodity product pricing is significantly affected by the relationship between supply and demand in the building products industry.

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Demand is affected by the state of the economy in general and a variety of other factors, including the level of new residential construction activity, home repair and remodeling activity and changes in the availability and cost of mortgage financing.

In this competitive environment, with so many variables beyond our control, we cannot guarantee that pricing for our OSB products will not decline from current levels.

In this competitive environment, with many variables beyond our control, we cannot guarantee that pricing for our OSB products will not decline from current levels.

Decreases in pricing for OSB products may have a material adverse effect on our financial position, liquidity, results of operations, and cash flows.

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Resin product costs are influenced by changes in the prices or availability of raw materials used to produce resins, primarily petroleum products, as well as demand for and availability of resin products and their chemical precursors.

Although we have been able to largely recover raw material price increases in the Siding product prices, we are unable to determine to what extent, if any, we will be able to pass any future Siding raw material cost increases through to our customers through product price increases.

OSB product prices are largely driven by the ratio of overall OSB demand to industry capacity.

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Moreover, changes to the environmental laws and regulations to which we are subject and the enactment of new environmental laws, regulations, or other requirements, including with respect to greenhouse gas emissions or climate change, may cause us to incur increased and unexpected compliance costs or impose restrictions on our ability to manufacture our products or operate our business.

In addition, there has historically been a lack of consistent climate legislation, which has created and continues to create economic and regulatory uncertainty.

In addition, there has historically been, and there continues to be, a lack of consistent climate legislation, which has created and continues to create economic and regulatory uncertainty.

Our failure to comply with applicable environmental laws and regulations and permit requirements could result in civil or criminal fines or penalties or enforcement actions, including regulatory or judicial orders enjoining or curtailing operations or requiring corrective measures, installation of pollution control equipment, or remedial actions, as well as reputational harm.

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Investigations undertaken in connection with these activities may lead to discoveries of contamination that must be remediated, and closures of facilities may trigger compliance requirements that are not applicable to operating facilities.

Consequently, we cannot guarantee that existing or future circumstances or developments with respect to contamination will not require significant expenditures by us.

Consequently, we cannot guarantee that existing or future circumstances or developments with respect to contamination will not require significant expenditures by us or have significant adverse impact on our operations.

We are subject to various environmental, product liability, and other legal proceedings, matters, and claims.

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The incurring of costs in excess of our contingency reserves could have a material adverse effect on our business, financial condition, and results of operations.

Regulatory and statutory changes applicable to us or our customers, including changes in effective tax rates or tax law, could adversely affect our financial condition and results of operations.

We, and many of our customers, are subject to various national, state and local laws, rules, and regulations .

Changes in any of these laws, rules, or regulations could result in additional compliance costs, seizures, confiscations, recalls or monetary fines, any of which could prevent or inhibit the manufacture, dis tribution and sale of our products.

We are also subject to periodic examination of our income tax returns by the Internal Revenue Service and other tax authorities.

We regularly assess the likelihood of adverse outcomes resulting from these examinations to determine the adequacy of our provision for income taxes.

There can be no assurance that the outcomes from these examinations will not have a material adverse effect on our business, financial condition, and results of operations, or that our provision for income taxes will be sufficient.

We are also exposed to changes in tax law, as well as any future regulations issued and changes in interpretations of tax laws, which can impact our current and future years' tax provisions.

For example, the Organization for Economic Cooperation and Development (OECD), Canada and various other countries have committed to enacting substantial changes to numerous long-standing tax principles impacting how large multinational enterprises are taxed in an effort to limit perceived base erosion and profit shifting incentives.

In particular, the OECD’s Pillar Two initiative provides for a 15% global minimum tax applied on a country-by-country basis, with a recommended effective date for most provisions of January 1, 2024.

Many countries (including countries in which we operate) have enacted or begun the process of enacting laws based on the Pillar Two initiative.

To the extent that these proposals are implemented in any jurisdictions in which we operate, these developments could negatively impact our effective tax rate as well as increase the tax compliance and reporting costs related to such requirements.

The effect of any other tax law changes or regulations and interpretations, as well as any additional tax legislation in the U.S.

or other jurisdictions in which we operate, could have a material adverse effect on our business, financial condition, and results of operations.

In addition, our products and markets are subject to extensive and complex local, state, federal, and foreign statutes, ordinances, rules, and regulations.

These mandates, including building design and safety and construction standards and zoning requirements, affect the cost, selection, and quality requirements of building components, such as the structural panel and siding products that we manufacture and sell, and often provide broad discretion to governmental authorities as to the types and quality specifications of products used in new home construction and repair and remodeling projects.

Compliance with these standards and changes in such statutes, ordinances, rules, and regulations may increase the costs of manufacturing our products or may reduce the demand for certain of our products in the affected geographical areas or product markets.

Conversely, a decrease in product safety standards could reduce demand for our more modern products if less expensive alternatives that do not meet higher standards were to become available for use in the affected geographical areas or product markets.

All or any of these changes could have a material adverse effect on our business, financial condition, and results of operations.

We are subject to the U.S.

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or foreign authorities could also have an adverse impact on our reputation, business, financial condition, and results of operations.

Regulatory and statutory changes applicable to us or our customers, including changes in effective tax rates or tax law, could adversely affect our financial condition and results of operations.

We, and many of our customers, are subject to various national, state and local laws, rules, and regulations .

We are also subject to periodic examination of our income tax returns by the Internal Revenue Service and other tax authorities.

We regularly assess the likelihood of adverse outcomes resulting from these examinations to determine the adequacy of our provision for income taxes.

We are also exposed to changes in tax law, as well as any future regulations issued and changes in interpretations of tax laws, which can impact our current and future years' tax provisions.

For example, Canada, Brazil and various other countries have enacted or committed to enacting substantial changes to numerous long-standing tax principles impacting how large multinational enterprises are taxed in an effort to limit perceived base erosion and profit shifting incentives.

In particular, the Organization for Economic Cooperation and Development (OECD) has developed an Inclusive Framework on Base Erosion and Profit Shifting, including Pillar Two model rules applicable to large multinational corporations which would establish a global per-country minimum tax of 15%.

While the United States has not enacted legislation to adopt Pillar Two and it is uncertain if it will do so in the future, certain countries in which we operate have enacted such legislation.

Specifically, the Canadian government enacted legislation in 2024 implementing aspects of the OECD’s minimum tax rules effective in the 2024 fiscal year and released draft legislation proposed to implement further aspects effective for the 2025 fiscal year.

In addition, in 2024, the Brazilian National Congress approved legislation implementing a tax measure to take effect in the 2025 fiscal year that is largely aligned with certain aspects of the OECD’s minimum tax rules under the Pillar Two framework.

No other jurisdictions in which LP operates have enacted Pillar Two legislation at this time.

At this time, we do not expect Pillar Two legislation to have a material impact on our effective tax rate or our consolidated results of operations, financial position, or cash flows.

The Company will continue to monitor future developments to determine any potential impact in the countries in which it operates.

The effect of any other tax law changes or regulations and interpretations, as well as any additional tax legislation in the U.S.

or other jurisdictions in which we operate, could have a material adverse effect on our business, financial condition, and results of operations.

In addition, our products and markets are subject to extensive and complex local, state, federal, and foreign statutes, ordinances, rules, and regulations.

All or any of these changes could have a material adverse effect on our business, financial condition, and results of operations.

FINANCIAL RISK FACTORS

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Inflationary pressures have resulted in increases in the cost of certain raw materials, and other supplies necessary for the production of our products, and such increases may continue to impact us in the future and expose us to risks associated with significant levels of cost inflation.

If we are unable to increase our prices to offset the effects of inflation, our business, operating results, and financial condition could be materially and adversely affected.

If we are unable to increase our prices to offset the effects of inflation, our business, operating results, and financial condition could continue to be materially and adversely affected.

Warranty claims relating to our products and exceeding our warranty reserves could have a material adverse effect on our business.

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Covenants and events of default in our debt instruments could limit our ability to undertake certain types of transactions and adversely affect our liquidity.

Our Credit Agreement (as defined herein) and the indenture governing our 2029 Senior Notes (as defined herein) contain a number of restrictive covenants that impose operating and financial restrictions on us and may limit our ability to engage in acts that may be in our long-term best interests, including, among others, restrictions on our ability to incur indebtedness, grant liens to secure indebtedness, engage in sale and leaseback transactions and merge or consolidate or sell all or substantially all of our assets.

Our Credit Agreement (as defined below) and the indenture governing our 2029 Senior Notes (as defined below) contain a number of restrictive covenants that impose operating and financial restrictions on us and may limit our ability to engage in acts that may be in our long-term best interests, including, among others, restrictions on our ability to incur indebtedness, grant liens to secure indebtedness, engage in sale and leaseback transactions, and merge or consolidate or sell all or substantially all of our assets.

In addition, restrictive covenants in our Credit Agreement require us to maintain specified financial ratios and satisfy other financial condition tests.

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A payment default or an acceleration following an event of default under our Credit Agreement or our indenture governing our 2029 Senior Notes could trigger an event of default under the other indebtedness obligation, as well as any other debt to which a cross-acceleration or cross-default provision applies, which could result in the principal of and the accrued and unpaid interest on all such debt becoming due and payable ahead of schedule.

In addition, an event of default under our Credit Agreement could permit the lenders under our Amended Credit Facility (as defined herein) to terminate all commitments to extend further credit under that facility.

In addition, an event of default under our Credit Agreement could permit the lenders under our Amended Credit Facility (as defined below) to terminate all commitments to extend further credit under that facility.

Furthermore, if we were unable to repay any amounts due and payable under our Amended Credit Facility, those lenders could proceed against the collateral granted to them to secure that indebtedness, to the extent any such collateral is granted thereunder.

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Changes in interest rates may adversely affect our earnings and cash flows.

Pursuant to the Amended Credit Facility effective in November 2022, our senior indebtedness transitioned from bearing interest at a variable interest rate using a London Interbank Offered Rate (LIBOR) benchmark to one that uses a Term SOFR Rate, a forward-looking term rate currently published by CME Group Benchmark Administration Limited (CBA) based upon the Secured Overnight Financing Rate (SOFR) as a benchmark rate.

SOFR is the preferred alternative rate for LIBOR that has been identified by the Alternative Reference Rates Committee (ARRC), a U.S.-based group convened by the Federal Reserve and the Federal Reserve Bank of New York.

Pursuant to the Amended Credit Facility effective in November 2022, our senior indebtedness transitioned from bearing interest at a variable interest rate using a London Interbank Offered Rate (LIBOR) benchmark to one that uses a Term SOFR Rate, a forward-looking term rate currently published by CME Group Benchmark Administration Limited based upon the Secured Overnight Financing Rate (SOFR) as a benchmark rate.

SOFR is the preferred alternative rate for LIBOR that has been identified by the Alternative Reference Rates Committee, a U.S.-based group convened by the Federal Reserve and the Federal Reserve Bank of New York.

SOFR is calculated based on short-term repurchase agreements, backed by U.S.

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Our cash, cash equivalents and investments could be adversely affected if the financial institutions in which we hold our cash, cash equivalents and investments fail.

We regularly maintain cash balances at third-party financial institutions in excess of the Federal Deposit Insurance Corporation (FDIC) insurance limit.

We regularly maintain cash balances at third-party financial institutions in excess of the Federal Deposit Insurance Corporation insurance limit.

If certain banks and financial institutions enter receivership or become insolvent in the future in response to financial conditions affecting the banking system and financial markets, our ability to access our existing cash, cash equivalents and investments may be threatened and could have a material adverse effect on our business and financial condition.

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These risks include but are not limited to the following, in addition to the other risks described above:

• the effects of global economic uncertainty or recession, including the impact of the COVID-19 pandemic and the responses of governmental authorities thereto;

• changes in general and global economic conditions, including impacts from rising inflation, supply chain disruptions, new, ongoing, or escalated geopolitical or military conflicts or tensions including the conflict between Russia and Ukraine, the conflict in Israel and the surrounding areas, tensions between the United States and China and tensions between China and Taiwan, and global pandemics and/or health emergencies;

• compliance with a wide variety of health and safety laws and regulations and changes to such laws and regulations;

• the exertion of influence over us, individually or collectively, by a few entities with concentrated ownership of our stock;

• new or modified legislation related to health care;

• new or modified legislation related to health care, data privacy, climate change or cybersecurity;

• compliance with Section 404 of the Sarbanes-Oxley Act of 2002, including the potential impact of compliance failures;

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

What changed 10-K

Item 1A. Risk Factors