Investing in our common stock involves a high degree of risk.
−Removed: You should consider carefully the risks and uncertainties described below, together with the other information included in this Annual Report on Form 10-K.
+Added: You should consider carefully the risks and uncertainties described below, together with the other information included in this report.
The occurrence of any of the following risks may materially and adversely affect our business, financial condition, results of operations and future prospects.
1 unchanged sentence
Other events that we do not currently anticipate or that we currently deem immaterial may also affect our business, prospects, financial condition and results of operations.
−Removed: Risks Relating to Our Business
+Added: Risk Factor Summary
+Added: The following summarizes the most material risks that make an investment in our common stock risky.
+Added: Business and Economic Risks
The potential loss, delay or non-renewal of our contracts, or the non-payment by our customers for services that we have performed, could adversely affect our results.
+Added: Our backlog may not convert to net revenue at our historical conversion rates.
+Added: Our operating results have historically fluctuated between fiscal quarters and years and may continue to fluctuate in the future, which may adversely affect the market price of our stock.
+Added: Our operating margins could decrease due to increased pricing pressure or other pressures, if we are unable to either achieve efficiencies in our operating expenses or grow revenues at a rate faster than expenses .
+Added: Our customer or therapeutic area concentration may have a material adverse effect on our business, financial condition, results of operations or cash flows.
+Added: We bear financial risk if we underprice our fixed-fee contracts or overrun cost estimates, and our financial results can also be adversely affected by failure to receive approval for change orders or delays in documenting change orders.
+Added: The outbreak of the coronavirus (COVID-19) is materially and adversely affecting our business.
+Added: If we are unable to successfully execute our growth strategies or manage our growth effectively, our results of operations or financial condition could be adversely affected.
+Added: If we are unable to recruit suitable investigators and enroll patients for our customers’ clinical trials, our clinical development business may suffer.
+Added: The failure of third parties to provide us critical support services could materially adversely affect our business, financial condition, results of operations, cash flows or reputation.
+Added: Potential future investments in our customers’ businesses or products could have a negative impact on our financial results.
+Added: Technical and Cybersecurity Risks
+Added: Our business depends on the continued effectiveness and availability of our information systems, including the information systems we use to provide our services to our customers, such as ClinTrak, and failures of these systems may materially limit our operations.
+Added: If the security of confidential information used in connection with our services is breached or otherwise subject to unauthorized access, our reputation and business may be materially harmed.
+Added: International Risks
+Added: Our business is subject to international economic, political and other risks that could negatively affect our results of operations and financial condition.
+Added: Due to the global nature of our business, we may be exposed to liabilities under the Foreign Corrupt Practices Act and various other anti-corruption laws, and any allegation or determination that we violated these laws could have a material adverse effect on our business.
+Added: The United Kingdom’s withdrawal from the European Union may have a negative effect on global economic conditions, financial markets and our business.
+Added: Industry Risks
+Added: Outsourcing trends in the biopharmaceutical industry and changes in aggregate expenditures and R&D budgets could adversely affect our operating results and growth rate.
+Added: We may be affected by healthcare reform and potential additional regulatory reforms, which may adversely impact the biopharmaceutical industry or otherwise reduce the need for our services or negatively impact our profitability.
+Added: Consolidation in the biopharmaceutical industry could lead to a reduction in our revenues.
+Added: If we fail to comply with federal, state and foreign healthcare laws, including fraud and abuse laws, we could face substantial penalties and our business, results of operations, financial condition and prospects could be adversely affected.
+Added: Laws and regulations regarding the protection of personal data could result in increased risks of liability or increased cost to us or could limit our service offerings.
+Added: Our business could be harmed from the loss or suspension of a license or imposition of a fine or penalties under, or future changes in, or interpretations of, the law or regulations of the Clinical Laboratory Improvement Act of 1967, and the Clinical Laboratory Improvement Amendments of 1988 (CLIA), or those of other national, state or local agencies in the U.S.
+Added: and other countries where we operate laboratories.
+Added: The biopharmaceutical industry has a history of patent and other intellectual property litigation, and we might be involved in costly intellectual property lawsuits.
+Added: Actions by regulatory authorities or customers to limit the scope of or withdraw an approved drug, biologic or medical device from the market could result in a loss of revenue.
+Added: If we do not keep pace with rapid technological changes, our services may become less competitive or obsolete.
+Added: Circumstances beyond our control could cause the CRO industry to suffer reputational or other harm that could result in an industry-wide reduction in demand for CRO services, which could harm our business.
+Added: Other Legal, Regulatory, Insurance and Tax Risks
+Added: If we fail to perform our services in accordance with contractual requirements, government regulations and ethical considerations, we could be subject to significant costs or liability and our reputation could be adversely affected.
+Added: Some of our services involve direct interaction with clinical trial patients and operation of a Phase I clinical facility, which could create potential liability that may adversely affect our results of operations and financial condition.
+Added: Our clinical development services could subject us to potential liability that may adversely affect our results of operations and financial condition.
+Added: Our operations involve the use and disposal of hazardous substances and waste which can give rise to liability that could adversely impact our financial condition
+Added: We act as legal representative and/or data representative for some clients.
+Added: Our insurance may not cover all of our indemnification obligations and other liabilities associated with our operations.
+Added: Our effective income tax rate may fluctuate, which may adversely affect our operations, earnings and earnings per share.
+Added: The requirements associated with being a public company require significant company resources and management attention.
+Added: Structural and Organizational Risks
+Added: Our Chief Executive Officer and founder controls a substantial amount of our outstanding common stock and his interests may be different from or conflict with those of our other shareholders.
+Added: We are party to transactions with related persons that may increase the risk of allegations of conflicts of interest, and such allegations may impair our ability to realize the benefits we expect from these transactions.
+Added: General Risks
+Added: If we lose the services of key personnel or are unable to recruit experienced personnel, our business could be adversely affected.
+Added: Our operations might be affected by the occurrence of a natural disaster or other catastrophic event.
+Added: Business and Economic Risks
+Added: The potential loss, delay or non-renewal of our contracts, or the non-payment by our customers for services that we have performed, could adversely affect our results.
We experience termination, cancellation and non-renewals of contracts by our customers in the ordinary course of business, and the number and dollar value of cancellations can vary significantly from year to year.
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As a result, contract terminations, delays and modifications are a regular part of our business.
−Removed: In the event of termination, our contracts often provide for payment to us of fees for services provided up to the point of termination and for close-out activities for winding down the clinical trial, and reimbursement of all non-cancellable expenses.
+Added: In the event of termination, our contracts often provide for payment to us of fees for services provided up to the point of
+Added: termination and for close-out activities for winding down the clinical trial, and reimbursement of all non-cancellable expenses.
These payments may not be sufficient for us to maintain our profit margins or recover our costs , and termination or non-renewal may result in lower resource utilization rates, including with respect to personnel who we are not able to place on another customer engagement.
32 unchanged sentences
Thus, the relationship of backlog to realized revenues is indirect and may vary significantly over time.
−Removed: Additionally, if small and mid-sized biopharmaceutical companies become less able to access capital in the future, we may see a decrease in backlog conversion to net revenue and net new business awards due to project delays or cancellations.
−Removed: These companies have contributed materially to our historical net revenue.
−Removed: If they cannot commit the same or a greater level of capital to our services going forward, our results of operations may suffer.
Our operating results have historically fluctuated between fiscal quarters and years and may continue to fluctuate in the future, which may adversely affect the market price of our stock.
10 unchanged sentences
Our operating results for any particular quarter or year are not necessarily a meaningful indicator of future results and fluctuations in our quarterly or yearly operating results could negatively affect the market price and liquidity of shares of our common stock.
−Removed: Our operating margins could decrease due to increased pricing pressure or other pressures.
+Added: Our operating margins could decrease due to increased pricing pressure or other pressures, if we are unable to either achieve efficiencies in our operating expenses or grow revenues at a rate faster than expenses .
Historically, we have been able to generate the operating margins that we do because of our disciplined, full-service operating model.
2 unchanged sentences
Such changes could result in lower operating margins.
−Removed: Our operating margins and profitability will be adversely affected if we are unable to either achieve efficiencies in our operating expenses or grow revenues at a rate faster than expenses.
−Removed: We operate in a highly competitive environment and experience competitive pricing pressure.
−Removed: To achieve our operating margins over the last three years, we have implemented initiatives to control the rate of growth of our operating expenses.
−Removed: We will continue to utilize these initiatives in the future with a view to offsetting these pricing pressures;
−Removed: however, we cannot be certain that we will be able to achieve the efficiency gains necessary to maintain or grow our operating margins or that the magnitude of our growth in service revenue will be faster than the growth in our operating costs.
−Removed: If we are unable to grow our service revenue at a faster rate than our operating costs, our operating margins will be adversely affected.
−Removed: Our initiatives and any future cost initiatives may also adversely affect us, as they may decrease employee morale or make it more difficult for us to meet operational requirements.
−Removed: If we fail to perform our services in accordance with contractual requirements, government regulations and ethical considerations, we could be subject to significant costs or liability and our reputation could be adversely affected.
−Removed: We contract with biopharmaceutical companies to perform a wide range of services to assist them in bringing new drugs to market.
−Removed: Our services include monitoring clinical trials, data and laboratory analysis, electronic data capture, patient recruitment and other related services.
−Removed: Such services are complex and subject to contractual requirements, government regulations, and ethical considerations.
−Removed: For example, we are subject to regulation by the FDA, and comparable foreign regulatory authorities relating to our activities in conducting pre-clinical studies and clinical trials.
−Removed: Before clinical trials begin in the United States, a drug is tested in pre-clinical trials that must comply with Good Laboratory Practice and other requirements.
−Removed: An applicant must file an IND, which must become effective before human clinical testing may begin.
−Removed: Further, an independent IRB, for each medical center proposing to participate in the clinical trial must review and approve the protocol for the clinical trial.
−Removed: Once initiated, clinical trials must be conducted pursuant to and in accordance with the applicable IND conditions, the requirements of the relevant IRBs, the Federal Food, Drug, and Cosmetic Act and its implementing regulations, including GCP, and other requirements.
−Removed: We are also subject to regulation by the Drug Enforcement Administration, or DEA, which regulates the distribution, recordkeeping, handling, security, and disposal of controlled substances.
−Removed: If we fail to perform our services in accordance with these requirements, regulatory authorities may take action against us or our customers.
−Removed: Such actions may include injunctions or failure of such regulatory authority to grant marketing approval of our customers’ products, imposition of clinical holds or delays, suspension or withdrawal of approvals, rejection of data collected in our clinical trials, license revocation, product seizures or recalls, operational restrictions, civil or criminal penalties or prosecutions, damages or fines.
−Removed: Customers may also bring claims against us for breach of our contractual obligations, and patients in the clinical trials and patients taking drugs approved on the basis of those trials may bring personal injury claims against us.
−Removed: Any such action could have a material adverse effect on our business, financial condition, results of operations, cash flows or reputation.
−Removed: Such consequences could arise if, among other things, the following occur:
−Removed: Improper performance of our services .
−Removed: The performance of clinical development services is complex and time-consuming.
−Removed: For example, we may make mistakes in conducting a clinical trial that could negatively impact or obviate the usefulness of results of the trial or cause the results of the trial to be reported improperly.
−Removed: If the trial results are compromised, we could be subject to significant costs or liability, which could have an adverse impact on our ability to perform our services and our reputation would be harmed.
−Removed: non-compliance generally could result in the termination of ongoing clinical trials or the disqualification of data for submission to regulatory authorities;
−Removed: non-compliance could compromise data from a particular trial, such as failure to verify that adequate informed consent was obtained from patients, which could require us to repeat the trial under the terms of our contract at no further cost to our customer, but at a potentially substantial cost to us;
−Removed: breach of a contractual term could result in liability for damages or termination of the contract.
−Removed: The services we provide in connection with large clinical trials can cost tens of millions of dollars, and while we endeavor to contractually limit our exposure to such risks, improper performance of our services could have a material adverse effect on our financial condition, damage our reputation and result in the cancellation of current contracts by the affected customer or other current customers or failure to obtain future contracts from the affected customer or other current or potential customers.
−Removed: Investigation of customers.
−Removed: From time to time, one or more of our customers are investigated by regulatory authorities or enforcement agencies with respect to regulatory compliance of their clinical trials, programs or the marketing and sale of their drugs.
−Removed: In these situations, we have often provided services to our customers with respect to the clinical trials, programs or activities being investigated, and we are called upon to respond to requests for information by the authorities and agencies.
−Removed: There is a risk that either our customers or regulatory authorities could claim that we performed our services improperly or that we are responsible for clinical trial or program compliance.
−Removed: If our customers or regulatory authorities make such claims against us, we could be subject to significant costs in defending our activities and potential damages, fines or penalties.
−Removed: In addition, negative publicity regarding regulatory compliance of our customers’ clinical trials, programs or products could have an adverse effect on our business and reputation.
−Removed: Insufficient customer funding to complete a clinical trial.
−Removed: As noted above, clinical trials can cost tens of millions of dollars.
−Removed: There is a risk that we may initiate a clinical trial for a customer, and then the customer becomes unwilling or unable to fund the completion of the trial.
−Removed: In such a situation, notwithstanding the customer’s ability or willingness to pay for or otherwise facilitate the completion of the trial, we may be ethically bound to complete or wind down the trial at our own expense.
−Removed: Interactive voice/web response service malfunction.
−Removed: We develop and maintain our own, and also use third-parties to run, interactive voice/web response systems.
−Removed: These systems automatically manage the randomization of patients in a given clinical trial to different treatment arms and regulate the supply of investigational drugs.
−Removed: An error in the design, programming or validation of these systems could lead to inappropriate assignment or dosing of patients which could give rise to patient safety issues, invalidation of the trial or liability claims against us.
−Removed: Furthermore, negative publicity associated with such a malfunction could have an adverse effect on our business and reputation.
−Removed: Additionally, errors in randomization may require us to repeat the trial at no further cost to our customer, but at a substantial cost to us.
−Removed: In addition to the above U.S.
−Removed: laws and regulations, we must comply with the laws of all countries where we do business, including laws governing clinical trials in the jurisdiction where the trials are performed.
−Removed: Failure to comply with applicable requirements could subject us to regulatory risk, liability and potential costs associated with redoing the trials, which could damage our reputation and adversely affect our operating results.
+Added: Our customer or therapeutic area concentration may have a material adverse effect on our business, financial condition, results of operations or cash flows.
+Added: Although we did not have any customer that represented 10% or more of our net revenue during the year ended December 31, 2020, we derive a significant portion of our revenues from a limited number of large customers.
+Added: If any large customer decreases or terminates its relationship with us, our business, financial condition, results of operations or cash flows could be materially adversely affected.
+Added: Also, consolidation in our actual or potential customer base results in increased competition for important market segments and fewer available customer accounts.
+Added: Additionally, conducting multiple clinical trials for different sponsors in a single therapeutic class, involving similar drugs, biologics or medical devices, may adversely affect our business if some or all of the trials are terminated because of new scientific information or regulatory decisions that affect the products as a class.
+Added: Moreover, even if these trials are not terminated, they may compete with each other, thereby limiting our potential revenue going forward.
We bear financial risk if we underprice our fixed-fee contracts or overrun cost estimates, and our financial results can also be adversely affected by failure to receive approval for change orders or delays in documenting change orders.
7 unchanged sentences
Such underpricing, significant cost overruns or delay in documentation of change orders could have a material adverse effect on our business, results of operations, financial condition or cash flows.
−Removed: If we are unable to successfully execute our growth strategies, our results of operations or financial condition could be adversely affected.
+Added: The outbreak of the coronavirus (COVID-19) is materially and adversely affecting our business.
+Added: On March 11, 2020, the World Health Organization declared the coronavirus COVID-19 outbreak to be a pandemic.
+Added: This pandemic has resulted in increased travel restrictions and caused the shutdown of many businesses in countries in which we operate.
+Added: While we continue to operate globally, the level of activity at each of our locations varies depending on the local governmental requirements and guidelines.
+Added: Our office staff are effectively working in the office or remotely and our labs are fully operational with modifications made to ensure the safety of our employees.
+Added: The diversion of resources to treat COVID-19 patients has significantly impacted the operations at most of the investigative sites where patients in our clinical trials are recruited and treated.
+Added: This has resulted in reduced trial starts and slowed new business awards, each of which results in decreased revenues.
+Added: Depending on the duration of the disruption, ongoing studies may be cancelled and some of our clients may lack the funding to complete trials which are extended due to slowed recruitment of patients.
+Added: We work with many smaller clients with limited financial resources and market disruptions may make raising additional funds difficult for those clients.
+Added: Travel restrictions and business closures have also impacted study participants and clinical sites which affects our ability to efficiently provide clinical trial services.
+Added: As a result, we are working with our customers to develop solutions to limit disruption to clinical trials while following required regulatory guidelines and maintaining quality to ensure the health and well-being of study participants.
+Added: These include alternative assessment methods such as virtual monitoring visits.
+Added: The COVID-19 outbreak had a significant adverse effect on fiscal year 2020 and we believe that the outbreak will have a continued adverse impact on our results of operations in the future.
+Added: In connection with this expected adverse impact, we have also evaluated our headcount needs in a number of geographies and implemented some staff reductions where appropriate.
+Added: As we cannot predict the duration or scope of the pandemic, the future financial impact on our results of operations and financial condition cannot be reasonably estimated, but the impact will likely be material.
+Added: If we are unable to successfully execute our growth strategies or manage our growth effectively, our results of operations or financial condition could be adversely affected.
Our key growth strategies include:
3 unchanged sentences
If we are unable to successfully continue our organic growth, continue to maintain our margins, increase our capture of the clinical development market, deepen existing and develop new relationships with our core customer segment, pursue complementary and non-transformative acquisitions or attract additional large pharmaceutical company customers, our future business, reputation, results of operations and financial condition could be adversely affected.
−Removed: If we lose the services of key personnel or are unable to recruit experienced personnel, our business could be adversely affected.
−Removed: Our success substantially depends on the collective performance, contributions and expertise of our senior management team, including August J.
−Removed: Troendle, our Chief Executive Officer and founder, and other key personnel including qualified management, professional, scientific and technical operating staff.
−Removed: There is significant competition for qualified personnel in the biopharmaceutical services industry, particularly for those with higher educational degrees, such as a medical or nursing degree, a Ph.D., or an equivalent degree, and our industry generally tends to experience relatively high levels of employee turnover.
−Removed: If any of our key employees were to join a competitor or to form a competing company, some of our customers might choose to use the services of that competitor or new company instead of our own.
−Removed: Furthermore, customers or other companies seeking to develop in-house capabilities may hire some of our senior management or other key employees.
−Removed: The departure of any key contributor, the payment of increased compensation to attract and retain qualified personnel or our inability to continue to identify, attract and retain qualified personnel or replace any departed personnel in a timely fashion may impact our ability to grow our business and compete effectively in our industry and may negatively affect our business, financial condition, results of operations, cash flows or reputation.
+Added: The nature and pace of our growth introduces risks associated with quality control and customer dissatisfaction due to delays in performance or other problems.
+Added: In addition, foreign operations involve the additional risks of assimilating differences in foreign business practices, hiring and retaining qualified personnel and overcoming language barriers.
+Added: Failure to manage growth effectively could have a material adverse effect on our business.
+Added: If we are unable to recruit suitable investigators and enroll patients for our customers’ clinical trials, our clinical development business may suffer.
+Added: The recruitment of investigators and patients for clinical trials is essential to our business.
+Added: Investigators are typically located at hospitals, clinics or other sites and supervise the administration of the investigational drug, biologic or device to patients during the course of a clinical trial.
+Added: Patients typically include people from the communities in which the clinical trials are conducted.
+Added: Our clinical development business could be adversely affected if we are unable to attract suitable and willing investigators or patients for clinical trials on a consistent basis.
+Added: For example, if we are unable to engage investigators to conduct clinical trials as planned or enroll sufficient patients in clinical trials, we may need to expend additional funds to obtain access to resources or else be compelled to delay or modify the clinical trial plans.
+Added: These considerations might result in additional costs to us or otherwise adversely impact the progress of a clinical trial, our being unable to successfully achieve our projected development timelines, or potentially even lead to the termination of ongoing clinical trials or development of a product.
+Added: The failure of third parties to provide us critical support services could materially adversely affect our business, financial condition, results of operations, cash flows or reputation.
+Added: We depend on third parties for support services vital to our business.
+Added: Such support services include, but are not limited to, laboratory services, third-party transportation and travel providers, technology providers, freight forwarders and customs brokers, drug depots and distribution centers, suppliers or contract manufacturers of drugs for patients participating in clinical trials and providers of licensing agreements, maintenance contracts or other services.
+Added: In addition, we also rely on third-party CROs and other contract clinical personnel for clinical services either in regions where we have limited resources, or in cases where demand cannot be met by our internal staff.
+Added: The failure of any of these third parties to adequately provide us critical support services could have a material adverse effect on our business, financial condition, results of operations, cash flows or reputation.
+Added: Potential future investments in our customers’ businesses or products could have a negative impact on our financial results.
+Added: We have in the past and may in the future enter into arrangements with our customers or other drug, biologic or medical device companies in which we take on payment risk by making strategic investments in our customers or other drug companies, providing flexible payment terms or fee financing to customers or other companies, or entering into other risk sharing arrangements on trial execution.
+Added: Our financial results would be adversely affected if the amount realized from any such risk sharing arrangement was less than the value of our services under the contract related to such arrangement.
+Added: Technical and Cybersecurity Risks
Our business depends on the continued effectiveness and availability of our information systems, including the information systems we use to provide our services to our customers, such as ClinTrak, and failures of these systems may materially limit our operations.
5 unchanged sentences
excessive costs, excessive delays or other deficiencies in systems development and deployment.
−Removed: The materialization of any of these risks may impede the processing of data, the delivery of databases and services and the day-to-day management of our business and could result in the corruption, loss or unauthorized disclosure of proprietary, confidential or other data.
+Added: The materialization of any of these risks may impede the processing of data, the delivery of databases and services and the day-to-day management of our business and could result in the corruption, loss or unauthorized disclosure of
+Added: proprietary, confidential or other data.
While we have disaster recovery plans in place, they might not adequately protect us in the event of a system failure.
1 unchanged sentence
Corruption or loss of data may result in the need to repeat a trial at no cost to the customer, but at significant cost to us, or result in the termination of a contract or damage to our reputation.
−Removed: Moreover, regulatory authorities may impose requirements on the use of electronic
−Removed: records and signatures for regulatory purposes.
+Added: Moreover, regulatory authorities may impose requirements on the use of electronic records and signatures for regulatory purposes.
For example, FDA’s regulations at 21 CFR Part 11 establish the criteria pursuant to which the FDA will consider electronic records and signatures to be trustworthy, reliable, and generally equivalent to paper records and handwritten signatures.
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Any such shortcoming may require us to make substantial further investments in our IT platform, which could adversely affect our financial results.
−Removed: Finally, long-term disruptions in the infrastructure caused by events such as natural disasters, the outbreak of war, the escalation of hostilities and acts of terrorism, particularly involving cities in which we have offices, could adversely affect our business.
−Removed: As our business continues to expand globally, these types of risks may be further increased by instability in the geopolitical climate of certain regions, underdeveloped and less stable utilities and communications infrastructure and other local and regional factors.
−Removed: Although we carry property and business interruption insurance, our coverage might not be adequate to compensate us for all losses that may occur.
Unauthorized disclosure of sensitive or confidential data, whether through system failure or breaches or employee negligence, fraud or misappropriation, could damage our reputation and cause us to lose customers.
11 unchanged sentences
Several recent, highly publicized data security breaches at other companies have heightened consumer awareness of this issue and may embolden individuals or groups to target our systems or those of our strategic partners or enterprise customers.
−Removed: Our business could be harmed if we are unable to manage our growth effectively.
−Removed: We believe that sustained growth places a strain on human, operational and financial resources.
−Removed: To manage our growth, we must continue to attract and retain qualified management, professional, scientific and technical operating personnel and to improve our operating and administrative systems.
−Removed: We believe that maintaining and enhancing both personnel and our systems at reasonable cost are instrumental to our success.
−Removed: We cannot assure you that we will be able to attract and retain qualified operating personnel due to competitiveness in the industry around hiring.
−Removed: Additionally, we cannot assure you that we will be able to enhance our current technology or obtain new technology that will enable our systems to keep pace with developments and the needs of our customers.
−Removed: The nature and pace of our growth introduces risks associated with quality control and customer dissatisfaction due to delays in performance or other problems.
−Removed: In addition, foreign operations involve the additional risks of assimilating differences in foreign business practices, hiring and retaining qualified personnel and overcoming language barriers.
−Removed: Failure to manage growth effectively could have a material adverse effect on our business.
−Removed: Our customer or therapeutic area concentration may have a material adverse effect on our business, financial condition, results of operations or cash flows.
−Removed: Although we did not have any customer that represented 10% or more of our net revenue during the year ended December 31, 2019, we derive a significant portion of our revenues from a limited number of large customers.
−Removed: For the year ended December 31, 2019, we derived 28.8% and 7.0% of our net revenue from our top 10 customers and our largest customer, respectively.
−Removed: In addition, approximately 31.3% and 8.5% of our backlog, as of December 31, 2019, was concentrated among our top 10 customers and our largest customer by backlog concentration, respectively.
−Removed: Moreover, 8.5% of our backlog, as of December 31, 2019, was concentrated with our largest customer by net revenue.
−Removed: If any large customer decreases or terminates its relationship with us, our business, financial condition, results of operations or cash flows could be materially adversely affected.
−Removed: Also, consolidation in our actual or potential customer base results in increased competition for important market segments and fewer available customer accounts.
−Removed: Additionally, conducting multiple clinical trials for different sponsors in a single therapeutic class, involving similar drugs, biologics or medical devices, may adversely affect our business if some or all of the trials are terminated because of new scientific information or regulatory decisions that affect the products as a class.
−Removed: Moreover, even if these trials are not terminated, they may compete with each other, thereby limiting our potential revenue going forward.
+Added: International Risks
Our business is subject to international economic, political and other risks that could negatively affect our results of operations and financial condition.
33 unchanged sentences
or other governments may seek to hold us liable for FCPA violations or violations of other anti-corruption laws committed by companies in which we invest or that we acquired or will acquire.
−Removed: In the past, we have had net losses and we may report net losses in the future, which could negatively impact our ability to achieve or sustain profitability.
−Removed: In the past, we have had net losses and we cannot assure you that we will achieve or sustain profitability on a quarterly or annual basis in the future.
−Removed: If we cannot maintain profitability, the value of our stock price may be impacted.
−Removed: Our effective income tax rate may fluctuate, which may adversely affect our operations, earnings and earnings per share.
−Removed: Our effective income tax rate is influenced by our projected profitability in the various taxing jurisdictions in which we operate.
−Removed: The global nature of our business increases our tax risks.
−Removed: In addition, for various reasons, revenue authorities in many of the jurisdictions in which we operate are known to have become more active in their tax collection activities.
−Removed: Changes in the distribution of profits and losses among taxing jurisdictions may have a significant impact on our effective income tax rate, which in turn could have an adverse effect on our net income and earnings per share.
−Removed: The application of tax laws in various taxing jurisdictions, including the United States, is subject to interpretation, and tax authorities in various jurisdictions may have diverging and sometimes conflicting interpretations of the application of tax laws.
−Removed: Changes in tax laws or tax rulings, in the United States or other tax jurisdictions in which we operate, could materially impact our effective tax rate.
−Removed: Factors that may affect our effective income tax rate include, but are not limited to:
−Removed: the requirement to exclude from our quarterly worldwide effective income tax calculations losses in jurisdictions where no income tax benefit can be recognized;
−Removed: actual and projected full year pre-tax income, including differences between actual and anticipated income before taxes in various jurisdictions;
−Removed: changes in tax laws, or in the interpretation or application of tax laws, in various taxing jurisdictions;
−Removed: audits or other challenges by taxing authorities;
−Removed: the establishment of valuation allowances against a portion or all of certain deferred income tax assets if we determined that it is more likely than not that future income tax benefits will not be realized;
−Removed: changes in the relative mix and size of clinical trials and staffing levels in various tax jurisdictions.
−Removed: These changes may cause fluctuations in our effective income tax rate that could adversely affect our results of operations and cause fluctuations in our earnings and earnings per share.
−Removed: Governmental authorities may question our intercompany transfer pricing policies or change their laws in a manner that could increase our effective tax rate or otherwise harm our business.
−Removed: company doing business in international markets through subsidiaries, we are subject to foreign tax and intercompany pricing laws, including those relating to the flow of funds between the parent and subsidiaries.
−Removed: Tax authorities in the United States and in foreign markets closely monitor our corporate structure and how we account for intercompany fund transfers.
−Removed: If tax authorities challenge our corporate structure, transfer pricing mechanisms or intercompany transfers, our operations may be negatively impacted and our effective tax rate may increase.
−Removed: Tax rates vary from country to country and if regulators determine that our profits in one jurisdiction should be increased, we might not be able to fully utilize all foreign tax credits that are generated, which would increase our effective tax rate.
−Removed: Additionally, the Organization for Economic Cooperation and Development, or OECD, has issued certain proposed guidelines regarding base erosion and profit sharing.
−Removed: Once these guidelines are formally adopted by the OECD, it is possible that separate taxing jurisdictions may also adopt some form of these guidelines.
−Removed: In such case, we may need to change our approach to intercompany transfer pricing in order to maintain compliance under the new rules.
−Removed: Our effective tax rate may increase or decrease depending on the current location of global operations at the time of the change.
−Removed: Finally, we might not always be in compliance with all applicable customs, exchange control, Value Added Tax and transfer pricing laws despite our efforts to be aware of and to comply with such laws.
−Removed: In such case, we may need to adjust our operating procedures and our business could be adversely affected.
−Removed: If we are unable to recruit suitable investigators and enroll patients for our customers’ clinical trials, our clinical development business may suffer.
−Removed: The recruitment of investigators and patients for clinical trials is essential to our business.
−Removed: Investigators are typically located at hospitals, clinics or other sites and supervise the administration of the investigational drug, biologic or device to patients during the course of a clinical trial.
−Removed: Patients typically include people from the communities in which the clinical trials are conducted.
−Removed: Our clinical development business could be adversely affected if we are unable to attract suitable and willing investigators or patients for clinical trials on a consistent basis.
−Removed: For example, if we are unable to engage investigators to conduct clinical trials as planned or enroll sufficient patients in clinical trials, we may need to expend additional funds to obtain access to resources or else be compelled to delay or modify the clinical trial plans, which may result in additional costs to us.
−Removed: These considerations might result in our being unable to successfully achieve our projected development timelines, or potentially even lead to the termination of ongoing clinical trials or development of a product.
−Removed: Our clinical development services could subject us to potential liability that may adversely affect our results of operations and financial condition.
−Removed: Our business involves the testing of new drugs, biologics and medical devices on patients in clinical trials.
−Removed: Our involvement in the clinical trial and development process creates a risk of liability for personal injury to or death of patients, particularly for those with life-threatening illnesses, resulting from adverse reactions to the products administered during testing or after regulatory approval.
−Removed: For example, we may be sued in the future by individuals alleging personal injury due to their participation in clinical trials and seeking damages from us under a variety of legal theories.
−Removed: If we are required to pay damages or incur defense costs in connection with any personal injury claim that is outside the scope of indemnification agreements we have with our customers, if any indemnification agreement is not performed in accordance with its terms or if our liability exceeds the amount of any applicable indemnification limits or available insurance coverage, our business, financial condition, results of operations, cash flows or reputation could be materially and adversely affected.
−Removed: We might also not be able to obtain adequate insurance or indemnification for these types of risks at reasonable rates in the future.
−Removed: We also contract with institutions and physicians to serve as investigators in conducting clinical trials.
−Removed: Investigators are typically located at hospitals, clinics or other sites and supervise the administration of the investigational products to patients during the course of a clinical trial.
−Removed: If the investigators or study staff commit errors or make omissions during a clinical trial that result in harm to trial patients, or patients suffer harm with a delayed onset after a clinical trial is completed and the product has obtained regulatory approval, claims for personal injury or products liability damages may result.
−Removed: Additionally, if the investigators engage in fraudulent or negligent behavior, trial data may be compromised, which may require us to repeat the clinical trial or subject us to liability or regulatory action.
−Removed: We do not believe we are legally responsible for the medical care rendered by such third party investigators, and we would vigorously defend any claims brought against us.
−Removed: However, it is possible we could be found liable for claims with respect to the actions of third party investigators and the institutions at which clinical trials may be conducted.
−Removed: Some of our services involve direct interaction with clinical trial patients and operation of a Phase I clinical facility, which could create potential liability that may adversely affect our results of operations and financial condition.
−Removed: We operate a facility where Phase I clinical trials are conducted, which ordinarily involve testing an investigational drug, biologic or medical device on a limited number of individuals to evaluate its safety, determine a safe dosage range and identify side effects.
−Removed: Failure to operate such a facility and clinical trials in accordance with FDA, DEA and other applicable regulations could result in disruptions to our operations.
−Removed: Additionally, we face risks associated with adverse events resulting from the administration of such drugs, biologics and medical devices and the professional malpractice of medical care providers.
−Removed: We also directly employ nurses and other trained employees who assist in implementing the testing involved in our clinical trials, such as drawing blood from subjects.
−Removed: Any professional malpractice or negligence by such investigators, nurses or other employees could potentially result in liability to us in the event of personal injury to or death of a subject in clinical trials.
−Removed: This liability, particularly if it were to exceed the limits of any indemnification agreements and insurance coverage we may have, may adversely affect our financial condition, results of operations and reputation.
−Removed: Our insurance may not cover all of our indemnification obligations and other liabilities associated with our operations.
−Removed: We maintain insurance designed to provide coverage for ordinary risks associated with our operations and our ordinary indemnification obligations, which we believe to be customary for our industry.
−Removed: The coverage provided by such insurance may not be adequate for all claims we may make or may be contested by our insurance carriers.
−Removed: If our insurance is not adequate or available to pay liabilities associated with our operations, or if we are unable to purchase adequate insurance at reasonable rates in the future, our business, financial condition, results of operations or cash flows may be materially adversely impacted.
−Removed: Exchange rate fluctuations may have a material adverse effect on our business, financial condition, results of operations or cash flows.
−Removed: As a large portion of our net revenue and expenses are denominated in currencies other than the U.S.
−Removed: dollar and our financial statements are reported in U.S.
−Removed: dollars, changes in foreign currency exchange rates could significantly affect our financial condition, results of operations and cash flows.
−Removed: The revenue and expenses of our foreign operations are generally denominated in local currencies and translated into U.S.
−Removed: dollars for financial reporting purposes.
−Removed: Accordingly, exchange rate fluctuations will affect the translation of foreign results into U.S.
−Removed: dollars for purposes of reporting our consolidated results.
−Removed: We are subject to foreign currency transaction risk for fluctuations in exchange rates during the period of time between the consummation and cash settlement of a transaction.
−Removed: We earn revenue from our service contracts over a period of several months and, in some cases, over several years.
−Removed: Accordingly, exchange rate fluctuations during such periods may affect our profitability with respect to such contracts.
−Removed: Additionally, the majority of our global contracts are denominated in U.S.
−Removed: dollars or Euros, while the currency used to fund our operating costs in foreign countries is denominated in various different currencies.
−Removed: Fluctuations in the exchange rates of the currencies we use to contract with our customers and the currencies in which we incur cost to complete those contracts can have a significant impact on our results of operations.
−Removed: We may limit these risks through exchange rate fluctuation provisions stated in our service contracts.
−Removed: We have not, however, mitigated all of our foreign currency transaction risk, and we may experience fluctuations in financial results from our operations outside the United States and foreign currency transaction risk associated with our service contracts.
−Removed: Our relationships with existing or potential customers who are in competition with each other may adversely impact the degree to which other customers or potential customers use our services, which may adversely affect our results of operations.
−Removed: The biopharmaceutical industry is fragmented and highly competitive, with companies each seeking to persuade payors, providers and patients that their drug therapies are more cost-effective than competing therapies marketed or being developed by competing firms.
−Removed: In addition to the adverse competitive interests that biopharmaceutical companies have with each other, these companies also have adverse interests with respect to drug selection, coverage and reimbursement with other participants in the healthcare industry, including payors and providers.
−Removed: Biopharmaceutical companies also compete to be first to the market with new drug therapies.
−Removed: We regularly provide services to biopharmaceutical companies who compete with each other, and we sometimes provide services to such customers regarding competing drugs in development.
−Removed: Our existing or future relationships with our biopharmaceutical customers may deter other biopharmaceutical customers from using our services or, in certain instances, may result in our customers seeking to place limits on our ability to serve their competitors and other industry participants.
−Removed: In addition, our further expansion into the broader healthcare market may adversely impact our relationships with biopharmaceutical customers, and such customers may elect not to use our services, reduce the scope of services that we provide to them or seek to place restrictions on our ability to serve customers in the broader healthcare market with interests that are adverse to theirs.
−Removed: Any loss of customers or reductions in the level of revenues from a customer could have a material adverse effect on our business, financial condition, results of operations or cash flows.
−Removed: If we are unable to successfully integrate potential future acquisitions, our business, financial condition, results of operations and cash flows could be adversely affected.
−Removed: We anticipate that a portion of our future growth may come from targeted acquisitions to expand our current capabilities and service offerings.
−Removed: The success of any acquisition will depend upon, among other things, our ability to effectively integrate acquired personnel, operations, products and technologies into our business and to retain the key personnel and customers of our acquired businesses.
−Removed: In addition, we may be unable to identify suitable acquisition opportunities or obtain any necessary financing on commercially acceptable terms.
−Removed: We may also spend time and money investigating and negotiating with potential acquisition targets but not complete the transaction.
−Removed: Any acquisition could involve other risks, including, among others, the assumption of additional liabilities and expenses, difficulties and expenses in connection with integrating the acquired companies and achieving the expected benefits, issuances of potentially dilutive securities or interest-bearing debt, loss of key employees of the acquired companies, transaction expenses, diversion of management’s attention from other business concerns and, with respect to the acquisition of international companies, the inability to overcome differences in international business practices, language and customs.
−Removed: Our failure to successfully integrate potential future acquisitions could have an adverse effect on our business, financial condition, results of operations and cash flows.
−Removed: We have a significant amount of goodwill and intangible assets on our balance sheet, and our results of operations may be adversely affected if we fail to realize the full value of our goodwill and intangible assets.
−Removed: Our goodwill was recorded in connection with Cinven’s acquisition of us in 2014.
−Removed: In accordance with US GAAP, goodwill and indefinite lived intangible assets are not amortized, but are subject to a periodic impairment evaluation.
−Removed: We assess the realizability of our indefinite lived intangible assets and goodwill annually and conduct an interim evaluation whenever events or changes in circumstances, such as operating losses or a significant decline in earnings associated with the acquired business or asset, indicate that these assets may be impaired.
−Removed: In addition, we review long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets might not be recoverable.
−Removed: If indicators of impairment are present, we evaluate the carrying value in relation to estimates of future discounted cash flows.
−Removed: Our ability to realize the value of the goodwill and intangible assets will depend on the future cash flows of our businesses.
−Removed: The carrying amount of the goodwill could be impaired if there is a downturn in our business or our industry or other factors that affect the fair value of our business, in which case a charge to earnings would become necessary.
−Removed: If we are not able to realize the value of the goodwill and intangible assets, we may be required to incur material charges relating to the impairment of those assets.
−Removed: Our operations involve the use and disposal of hazardous substances and waste which can give rise to liability that could adversely impact our financial condition.
−Removed: We conduct activities that have involved, and may continue to involve, the controlled use of hazardous materials and the creation of hazardous substances, including medical waste and other highly regulated substances.
−Removed: As a result, our operations pose the risk of accidental contamination or injury caused by the release of these materials and/or the creation of hazardous substances, including medical waste and other highly regulated substances.
−Removed: In the event of such an accident, we could be held liable for damages and cleanup costs which, to the extent not covered by existing insurance or indemnification, could harm our business.
−Removed: In addition, other adverse effects could result from such liability, including reputational damage resulting in the loss of additional business from certain customers.
−Removed: The failure of third parties to provide us critical support services could materially adversely affect our business, financial condition, results of operations, cash flows or reputation.
−Removed: We depend on third parties for support services vital to our business.
−Removed: Such support services include, but are not limited to, laboratory services, third-party transportation and travel providers, technology providers, freight forwarders and customs brokers, drug depots and distribution centers, suppliers or contract manufacturers of drugs for patients participating in clinical trials and providers of licensing agreements, maintenance contracts or other services.
−Removed: In addition, we also rely on third-party CROs and other contract clinical personnel for clinical services either in regions where we have limited resources, or in cases where demand cannot be met by our internal staff.
−Removed: The failure of any of these third parties to adequately provide us critical support services could have a material adverse effect on our business, financial condition, results of operations, cash flows or reputation.
−Removed: We have only a limited ability to protect our intellectual property rights, and these rights are important to our success.
−Removed: Our success depends, in part, upon our ability to develop, use and protect our proprietary methodologies, analytics, systems, technologies and other intellectual property.
−Removed: Existing laws of the various countries in which we provide services or solutions offer only limited protection of our intellectual property rights, and the protection in some countries may be very limited.
−Removed: We rely upon a combination of trade secrets, confidentiality policies, nondisclosure, invention assignment and other contractual arrangements, and copyright, trademark and trade secret laws, to protect our intellectual property rights.
−Removed: These laws are subject to change at any time and certain agreements may not be fully enforceable, which could further restrict our ability to protect our innovations.
−Removed: Our intellectual property rights may not prevent competitors from independently developing services similar to or duplicative of ours.
−Removed: Further, the steps we take in this regard might not be adequate to prevent or deter infringement or other misappropriation of our intellectual property by competitors, former employees or other third parties, and we might not be able to detect unauthorized use of, or take appropriate and timely steps to enforce, our intellectual property rights.
−Removed: Enforcing our rights might also require considerable time, money and oversight, and we may not be successful in enforcing our rights.
The United Kingdom’s withdrawal from the European Union may have a negative effect on global economic conditions, financial markets and our business.
−Removed: In June 2016, a majority of voters in the United Kingdom (UK) elected to withdraw from the European Union, or the EU, in a national referendum (commonly referred to as Brexit).
−Removed: The UK left the EU on January 31, 2020, which has initiated an 11-month transition period by which the UK is to leave the single market and customs union.
−Removed: The withdrawal has created significant uncertainty about the future relationship between the UK and the EU.
−Removed: The withdrawal by the UK has also given rise to calls for the governments of other EU member states to consider withdrawal.
−Removed: These developments, or the perception that any of them could occur, have had and may continue to have a material adverse effect on global economic conditions and the stability of global financial markets, and may significantly reduce global market liquidity and restrict the ability of key market participants to operate in certain financial markets.
−Removed: The withdrawal has also created uncertainty with regard to the regulation of data protection in the UK.
−Removed: In particular, it is unclear how the UK’s withdrawal will affect the UK’s enactment of the European General Data Protection Regulation, and how data transfers to and from the UK will be regulated following any transition period.
−Removed: The UK’s withdrawal may have adverse practical or operational implications on our business.
−Removed: Any of these factors could depress economic activity and restrict our access to capital, which could have a material adverse effect on our business, financial condition and results of operations and reduce the price of our common stock.
−Removed: Due to the fact that we have operations located within the UK, Brexit could negatively impact our operations resulting primarily from (a) operational disruptions due to changes in the manner in which people and products are moved between the UK and EU following Brexit;
−Removed: (b) changes in the regulatory regime governing in clinical trials in the UK once the UK is no longer under umbrella EU scheme;
−Removed: and (c) potential price increases for supplies purchased by our UK businesses from companies located in the EU or elsewhere.
+Added: The United Kingdom left the EU on January 31, 2020.
+Added: The withdrawal (known as “Brexit”) has created significant uncertainty about the future relationship between the United Kingdom and the EU, including with respect to the laws and regulations that will apply as the United Kingdom determines which EU laws to replace or replicate to facilitate the withdrawal.
+Added: and the EU reached a free trade agreement on December 24, 2020, which included regulatory and customs cooperation mechanisms, as well as provisions supporting open and fair competition.
+Added: Under the trade agreement, the U.K.
+Added: is free to set its own trade policy and can negotiate with other countries that do not currently have free trade deals with the EU.
+Added: Although the full impact of the trade agreement is uncertain, it is possible that the recent changes to the trading relationship between the U.K.
+Added: and the EU due to the trade agreement could result in increased cost of goods imported into and exported from the U.K., which may decrease the profitability of our operations.
+Added: Brexit could also adversely affect European and worldwide economic and market conditions and could contribute to instability in global financial markets.
+Added: Due to the fact that we have operations located within the U.K., Brexit could negatively impact our operations resulting primarily from (a) operational disruptions due to changes in the manner in which people and products are moved between the U.K.
+Added: (b) changes in the regulatory regime governing in clinical trials in the U.K;
+Added: and (c) potential price increases for supplies purchased by our U.K.
+Added: businesses from companies located in the EU or elsewhere.
Further, due to Brexit, the value of the British Pound Sterling incurred significant fluctuations.
−Removed: Additionally, further actions related to Brexit may occur in the future.
−Removed: If the value of the British Pound Sterling continues to incur similar fluctuations, unfavorable exchange rate changes may negatively affect the value of our operations and businesses located in the UK, as translated to our reporting currency, the United States Dollar, in accordance with US GAAP, which may impact the revenue and earnings we report.
+Added: Further actions related to Brexit may occur in the future.
+Added: If the value of the British Pound Sterling continues to incur similar fluctuations, unfavorable exchange rate changes may negatively affect the value of our operations and businesses located in the U.K., as translated to our reporting currency, the United States Dollar, in accordance with US GAAP, which may impact the revenue and earnings we report.
For more information with respect to Exchange Rate risk applicable to us, please see Part 2 Item 7A.
"Market Risk Disclosures" elsewhere in this Annual Report on Form 10-K.
−Removed: Continued fluctuations in the British Pound Sterling may also result in the imposition of price adjustments by EU-based suppliers to our UK businesses, as those suppliers seek to compensate for the changes in value of the British Pound Sterling as compared to the European Euro.
+Added: Continued fluctuations in the British Pound Sterling may also result in the imposition of price adjustments by EU-based suppliers to our U.K.
+Added: businesses, as those suppliers seek to compensate for the changes in value of the British Pound Sterling as compared to the European Euro.
Any of these results could have a material adverse effect on the business, revenues and financial condition of our UK and European operations.
−Removed: Potential future investments in our customers’ businesses or products could have a negative impact on our financial results.
−Removed: We have in the past and may in the future enter into arrangements with our customers or other drug, biologic or medical device companies in which we take on payment risk by making strategic investments in our customers or other drug companies, providing flexible payment terms or fee financing to customers or other companies, or entering into other risk sharing arrangements on trial execution.
−Removed: Our financial results would be adversely affected if the amount realized from any such risk sharing arrangement was less than the value of our services under the contract related to such arrangement.
−Removed: We act as legal representative and/or data representative for some clients.
−Removed: We act as the legal representative and/or the data representative for certain clients in certain jurisdictions.
−Removed: As we believe that acting as legal representative and/or data representative of clients exposes us to a higher risk of liability, this service is provided subject to our policy and requires certain preconditions to be met.
−Removed: The preconditions relate to obtaining specific insurance commitments and indemnities from the client to cover the nature of the exposure.
−Removed: However, there is no guarantee that the specific insurance will be available and provide cover or that a client will fulfil its obligations in relation to their indemnity.
−Removed: Our operations might be affected by the occurrence of a natural disaster or other catastrophic event.
−Removed: We depend on our customers, investigators, laboratories and other facilities for the continued operation of our business.
−Removed: Although we have contingency plans in place for natural disasters or other catastrophic events, these events, including terrorist attacks, pandemic flu, hurricanes, floods and ice and snow storms, could nevertheless disrupt our operations or those of our customers, investigators and collaboration partners, which could also affect us.
−Removed: Even though we carry business interruption insurance policies and typically have provisions in our contracts that protect us in certain events, we might suffer losses as a result of business interruptions that exceed the coverage available under our insurance policies or for which we do not have coverage.
−Removed: Any natural disaster or catastrophic event affecting us or our customers, investigators or collaboration partners could have a significant negative impact on our operations and financial performance.
−Removed: Changes in accounting standards may adversely affect our financial statements.
−Removed: From time to time the Financial Accounting Standards Board, or FASB, and SEC issue new or revised guidance that we are required to adopt.
−Removed: It is possible that future accounting standards may require changes to our current accounting treatment and may require us to make changes to our accounting systems and processes.
−Removed: These changes could have a material impact on our business, results of operations and financial condition.
−Removed: See Note 2 to our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K for details regarding recently implemented accounting standards and recently issued accounting pronouncements and the potential impact they may have on the Company.
−Removed: Risks Relating to Our Industry
+Added: Industry Risks
Outsourcing trends in the biopharmaceutical industry and changes in aggregate expenditures and R&D budgets could adversely affect our operating results and growth rate.
9 unchanged sentences
All of these events could adversely affect our business, financial condition, cash flows or results of operations.
−Removed: We face intense competition in many areas of our business and, if we do not compete effectively, our business may be harmed.
−Removed: The CRO industry is highly competitive.
−Removed: We often compete for business with other CROs as well as internal development departments at some of our customers, some of which could be considered large CROs in their own right.
−Removed: We also compete with universities and teaching hospitals.
−Removed: Some of these competitors have greater financial resources and a wider range of service offerings over a greater geographic area than we do.
−Removed: If we do not compete successfully, our business will suffer.
−Removed: The industry is highly fragmented, with numerous smaller specialized companies and a handful of full-service companies with global capabilities similar to ours.
−Removed: Increased competition has led to price and other forms of competition, such as acceptance of less favorable contract terms, which could adversely affect our operating results.
−Removed: In recent years, our industry has experienced consolidation.
−Removed: This trend is likely to produce more competition from the resulting larger companies.
−Removed: Further, certain of our key competitors are private and, therefore, they do not contend with the cost pressures of being a public company.
−Removed: We compete with both large CROs and mid-sized CROs, and have increasingly faced more competition from larger CROs.
−Removed: Our ability to continue to grow and perform effectively will directly impact our success against our competitors.
−Removed: In addition, there are few barriers to entry for smaller specialized companies considering entering the industry.
−Removed: Because of their size and focus, small CROs might compete effectively against larger companies such as us, especially in lower cost geographic areas, which could have a material adverse effect on our business.
We may be affected by healthcare reform and potential additional regulatory reforms, which may adversely impact the biopharmaceutical industry or otherwise reduce the need for our services or negatively impact our profitability.
86 unchanged sentences
As a result, the willingness of biopharmaceutical companies to outsource R&D services to CROs could diminish and our business could thus be harmed materially by events outside our control.
−Removed: Risks Relating to Indebtedness
−Removed: We may utilize our debt capacity and undertake additional obligations.
−Removed: Incurring such debt or undertaking such additional obligations could further exacerbate the risks to our financial condition.
−Removed: Although we currently have no debt outstanding, we have in the past used borrowings under our credit facility to fund operations and to repurchase Medpace common shares.
−Removed: We may utilize our debt capacity under our Credit Facility to continue to do so in the future.
−Removed: Furthermore, if we fail to comply with the credit facility requirements, we may be in default.
−Removed: Upon an event of default, if the credit agreement is not amended or the event of default is not waived, the lender could declare all amounts outstanding, together with accrued interest, to be immediately due and payable.
−Removed: If this happens, we may not be able to make those payments or borrow sufficient funds from alternative sources to make those payments.
−Removed: Even if we were to obtain additional financing, that financing may be on unfavorable terms.
−Removed: Interest rate fluctuations may affect our results of operations and financial condition.
−Removed: Because our Line of Credit in our existing Credit Facility is subject to variable-rate interest, fluctuations in interest rates could have a material effect on our business should we utilize the Line of Credit.
−Removed: As a result, we may incur higher interest costs if interest rates increase.
−Removed: These higher interest costs could have a material adverse impact on our financial condition and the levels of cash we maintain for working capital.
−Removed: We may become dependent upon our lenders for financing to execute our business strategy and meet our liquidity needs.
−Removed: If our lenders are unable to fund borrowings under their credit commitments or we are unable to borrow, it could negatively impact our business.
−Removed: During periods of volatile credit markets, there is risk that any lenders, even those with strong balance sheets and sound lending practices, could fail or refuse to honor their legal commitments and obligations under existing credit commitments, including but not limited to, extending credit up to the maximum permitted by a credit facility.
−Removed: If our lenders are unable to fund borrowings under their revolving credit commitments or we are unable to borrow (such as having insufficient capacity under our borrowing base), it could be difficult in such environments to obtain sufficient liquidity to meet our operational needs.
−Removed: Changes in the method of determining London Interbank Offered Rate ("LIBOR"), or the replacement of LIBOR with an alternative reference rate, may adversely affect interest expense related to outstanding debt.
−Removed: Amounts drawn under our Credit Facility may bear interest rates in relation to LIBOR, depending on our selection of repayment options.
−Removed: On July 27, 2017, the Financial Conduct Authority (“FCA”) in the UK announced that it would phase out LIBOR as a benchmark by the end of 2021.
−Removed: It is unclear whether new methods of calculating LIBOR will be established such that it continues to exist after 2021.
−Removed: Federal Reserve is considering replacing U.S.
−Removed: dollar LIBOR with a newly created index called the Broad Treasury Financing Rate, calculated with a broad set of short-term repurchase agreements backed by treasury securities.
−Removed: If LIBOR ceases to exist, we may need to renegotiate the Credit Facility and may not able to do so with terms that are favorable to us.
−Removed: The overall financial market may be disrupted as a result of the phase-out or replacement of LIBOR.
−Removed: Disruption in the financial market or the inability to renegotiate the Credit Facility with favorable terms could have a material adverse effect on our business, financial position, and operating results.
−Removed: Downgrades of our credit ratings could adversely affect us.
−Removed: We can be adversely affected by downgrades of our credit ratings because ratings are a factor influencing our ability to access capital and the terms of any new indebtedness, including covenants and interest rates.
−Removed: Our customers and vendors may also consider our credit profile when negotiating contract terms, and if they were to change the terms on which they deal with us, it could have a material adverse effect on our business, results of operations, cash flows, and financial condition.
−Removed: Risks Relating to Ownership of Our Common Stock
+Added: Other Legal, Regulatory, Insurance and Tax Risks
+Added: If we fail to perform our services in accordance with contractual requirements, government regulations and ethical considerations, we could be subject to significant costs or liability and our reputation could be adversely affected.
+Added: We contract with biopharmaceutical companies to perform a wide range of services to assist them in bringing new drugs to market.
+Added: Our services include monitoring clinical trials, data and laboratory analysis, electronic data capture, patient recruitment and other related services.
+Added: Such services are complex and subject to contractual requirements,
+Added: government regulations, and ethical considerations.
+Added: For example, we are subject to regulation by the FDA, and comparable foreign regulatory authorities relating to our activities in conducting pre-clinical studies and clinical trials.
+Added: Before clinical trials begin in the United States, a drug is tested in pre-clinical trials that must comply with Good Laboratory Practice and other requirements.
+Added: An applicant must file an IND, which must become effective before human clinical testing may begin.
+Added: Further, an independent IRB, for each medical center proposing to participate in the clinical trial must review and approve the protocol for the clinical trial.
+Added: Once initiated, clinical trials must be conducted pursuant to and in accordance with the applicable IND conditions, the requirements of the relevant IRBs, the Federal Food, Drug, and Cosmetic Act and its implementing regulations, including GCP, and other requirements.
+Added: We are also subject to regulation by the Drug Enforcement Administration, or DEA, which regulates the distribution, recordkeeping, handling, security, and disposal of controlled substances.
+Added: If we fail to perform our services in accordance with these requirements, regulatory authorities may take action against us or our customers.
+Added: Such actions may include injunctions or failure of such regulatory authority to grant marketing approval of our customers’ products, imposition of clinical holds or delays, suspension or withdrawal of approvals, rejection of data collected in our clinical trials, license revocation, product seizures or recalls, operational restrictions, civil or criminal penalties or prosecutions, damages or fines.
+Added: Customers may also bring claims against us for breach of our contractual obligations, and patients in the clinical trials and patients taking drugs approved on the basis of those trials may bring personal injury claims against us.
+Added: Any such action could have a material adverse effect on our business, financial condition, results of operations, cash flows or reputation.
+Added: Such consequences could arise if, among other things, the following occur:
+Added: Improper performance of our services .
+Added: The performance of clinical development services is complex and time-consuming.
+Added: For example, we may make mistakes in conducting a clinical trial that could negatively impact or obviate the usefulness of results of the trial or cause the results of the trial to be reported improperly.
+Added: If the trial results are compromised, we could be subject to significant costs or liability, which could have an adverse impact on our ability to perform our services and our reputation would be harmed.
+Added: non-compliance generally could result in the termination of ongoing clinical trials or the disqualification of data for submission to regulatory authorities;
+Added: non-compliance could compromise data from a particular trial, such as failure to verify that adequate informed consent was obtained from patients, which could require us to repeat the trial under the terms of our contract at no further cost to our customer, but at a potentially substantial cost to us;
+Added: breach of a contractual term could result in liability for damages or termination of the contract.
+Added: The services we provide in connection with large clinical trials can cost tens of millions of dollars, and while we endeavor to contractually limit our exposure to such risks, improper performance of our services could have a material adverse effect on our financial condition, damage our reputation and result in the cancellation of current contracts by the affected customer or other current customers or failure to obtain future contracts from the affected customer or other current or potential customers.
+Added: Investigation of customers.
+Added: From time to time, one or more of our customers are investigated by regulatory authorities or enforcement agencies with respect to regulatory compliance of their clinical trials, programs or the marketing and sale of their drugs.
+Added: In these situations, we have often provided services to our customers with respect to the clinical trials, programs or activities being investigated, and we are called upon to respond to requests for information by the authorities and agencies.
+Added: There is a risk that either our customers or regulatory authorities could claim that we performed our services improperly or that we are responsible for clinical trial or program compliance.
+Added: If our customers or regulatory authorities make such claims against us, we could be subject to significant costs in defending our activities and potential damages, fines or penalties.
+Added: In addition, negative publicity regarding regulatory compliance of our customers’ clinical trials, programs or products could have an adverse effect on our business and reputation.
+Added: Insufficient customer funding to complete a clinical trial.
+Added: As noted above, clinical trials can cost tens of millions of dollars.
+Added: There is a risk that we may initiate a clinical trial for a customer, and then the customer becomes unwilling or unable to fund the completion of the trial.
+Added: In such a situation, notwithstanding the customer’s ability or willingness to pay for or otherwise facilitate the completion of the trial, we may be ethically bound to complete or wind down the trial at our own expense.
+Added: Interactive voice/web response service malfunction.
+Added: We develop and maintain our own, and also use third-parties to run, interactive voice/web response systems.
+Added: These systems automatically manage the randomization of patients in a given clinical trial to different treatment arms and regulate the supply of investigational drugs.
+Added: An error in the design, programming or validation of these systems could lead to inappropriate assignment or dosing of patients which could give rise to patient safety issues, invalidation of the trial or liability claims against us.
+Added: Furthermore, negative publicity associated with such a malfunction could have an adverse effect on our business and reputation.
+Added: Additionally, errors in randomization may require us to repeat the trial at no further cost to our customer, but at a substantial cost to us.
+Added: In addition to the above U.S.
+Added: laws and regulations, we must comply with the laws of all countries where we do business, including laws governing clinical trials in the jurisdiction where the trials are performed.
+Added: Failure to comply with applicable requirements could subject us to regulatory risk, liability and potential costs associated with redoing the trials, which could damage our reputation and adversely affect our operating results.
+Added: Some of our services involve direct interaction with clinical trial patients and operation of a Phase I clinical facility, which could create potential liability that may adversely affect our results of operations and financial condition.
+Added: We operate a facility where Phase I clinical trials are conducted, which ordinarily involve testing an investigational drug, biologic or medical device on a limited number of individuals to evaluate its safety, determine a safe dosage range and identify side effects.
+Added: Failure to operate such a facility and clinical trials in accordance with FDA, DEA and other applicable regulations could result in disruptions to our operations.
+Added: Additionally, we face risks associated with adverse events resulting from the administration of such drugs, biologics and medical devices and the professional malpractice of medical care providers.
+Added: We also directly employ nurses and other trained employees who assist in implementing the testing involved in our clinical trials, such as drawing blood from subjects.
+Added: Any professional malpractice or negligence by such investigators, nurses or other employees could potentially result in liability to us in the event of personal injury to or death of a subject in clinical trials.
+Added: This liability, particularly if it were to exceed the limits of any indemnification agreements and insurance coverage we may have, may adversely affect our financial condition, results of operations and reputation.
+Added: Our clinical development services could subject us to potential liability that may adversely affect our results of operations and financial condition.
+Added: Our business involves the testing of new drugs, biologics and medical devices on patients in clinical trials.
+Added: Our involvement in the clinical trial and development process creates a risk of liability for personal injury to or death of patients, particularly for those with life-threatening illnesses, resulting from adverse reactions to the products administered during testing or after regulatory approval.
+Added: For example, we may be sued in the future by individuals alleging personal injury due to their participation in clinical trials and seeking damages from us under a variety of legal theories.
+Added: If we are required to pay damages or incur defense costs in connection with any personal injury claim that is outside the scope of indemnification agreements we have with our customers, if any indemnification agreement is not performed in accordance with its terms or if our liability exceeds the amount of any applicable indemnification limits or available insurance coverage, our business, financial condition, results of operations, cash flows or reputation could be materially and adversely affected.
+Added: We might also not be able to obtain adequate insurance or indemnification for these types of risks at reasonable rates in the future.
+Added: We also contract with institutions and physicians to serve as investigators in conducting clinical trials If the investigators or study staff commit errors or make omissions during a clinical trial that result in harm to trial patients, or patients suffer harm with a delayed onset after a clinical trial is completed and the product has obtained regulatory approval, claims for personal injury or products liability damages may result.
+Added: Additionally, if the investigators engage in fraudulent or negligent behavior, trial data may be compromised, which may require us to repeat the clinical trial or subject us to liability or regulatory action.
+Added: We do not believe we are legally responsible for the medical care rendered by such third party investigators, and we would vigorously defend any claims brought against us.
+Added: However, it is possible we could be found liable for claims with respect to the actions of third party investigators and the institutions at which clinical trials may be conducted.
+Added: Our operations involve the use and disposal of hazardous substances and waste which can give rise to liability that could adversely impact our financial condition.
+Added: We conduct activities that have involved, and may continue to involve, the controlled use of hazardous materials and the creation of hazardous substances, including medical waste and other highly regulated substances.
+Added: As a result, our operations pose the risk of accidental contamination or injury caused by the release of these materials and/or the creation of hazardous substances, including medical waste and other highly regulated substances.
+Added: In the event of such an accident, we could be held liable for damages and cleanup costs which, to the extent not covered by existing insurance or indemnification, could harm our business.
+Added: In addition, other adverse effects could result from such liability, including reputational damage resulting in the loss of additional business from certain customers.
+Added: We act as legal representative and/or data representative for some clients.
+Added: We act as the legal representative and/or the data representative for certain clients in certain jurisdictions.
+Added: As we believe that acting as legal representative and/or data representative of clients exposes us to a higher risk of liability, this service is provided subject to our policy and requires certain preconditions to be met.
+Added: The preconditions relate to obtaining specific insurance commitments and indemnities from the client to cover the nature of the exposure.
+Added: However, there is no guarantee that the specific insurance will be available and provide cover or that a client will fulfil its obligations in relation to their indemnity.
+Added: Our insurance may not cover all of our indemnification obligations and other liabilities associated with our operations.
+Added: We maintain insurance designed to provide coverage for ordinary risks associated with our operations and our ordinary indemnification obligations, which we believe to be customary for our industry.
+Added: The coverage provided by such insurance may not be adequate for all claims we may make or may be contested by our insurance carriers.
+Added: If our insurance is not adequate or available to pay liabilities associated with our operations, or if we are unable to purchase adequate insurance at reasonable rates in the future, our business, financial condition, results of operations or cash flows may be materially adversely impacted.
+Added: Our effective income tax rate may fluctuate, which may adversely affect our operations, earnings and earnings per share.
+Added: Our effective income tax rate is influenced by our projected profitability in the various taxing jurisdictions in which we operate.
+Added: The global nature of our business increases our tax risks.
+Added: In addition, for various reasons, revenue authorities in many of the jurisdictions in which we operate are known to have become more active in their tax collection activities.
+Added: Changes in the distribution of profits and losses among taxing jurisdictions may have a significant impact on our effective income tax rate, which in turn could have an adverse effect on our net income and earnings per share.
+Added: The application of tax laws in various taxing jurisdictions, including the United States, is subject to interpretation, and tax authorities in various jurisdictions may have diverging and sometimes conflicting interpretations of the application of tax laws.
+Added: Changes in tax laws or tax rulings, in the United States or other tax jurisdictions in which we operate, could materially impact our effective tax rate.
+Added: Factors that may affect our effective income tax rate include, but are not limited to:
+Added: the requirement to exclude from our quarterly worldwide effective income tax calculations losses in jurisdictions where no income tax benefit can be recognized;
+Added: actual and projected full year pre-tax income, including differences between actual and anticipated income before taxes in various jurisdictions;
+Added: changes in tax laws, or in the interpretation or application of tax laws, in various taxing jurisdictions;
+Added: audits or other challenges by taxing authorities;
+Added: changes to intercompany transfer pricing policies or changes in laws within foreign tax jurisdictions
+Added: the establishment of valuation allowances against a portion or all of certain deferred income tax assets if we determined that it is more likely than not that future income tax benefits will not be realized;
+Added: changes in the relative mix and size of clinical trials and staffing levels in various tax jurisdictions.
+Added: These changes may cause fluctuations in our effective income tax rate that could adversely affect our results of operations and cause fluctuations in our earnings and earnings per share.
+Added: The requirements associated with being a public company require significant company resources and management attention.
+Added: We are subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act of 2002, as amended (the “Sarbanes-Oxley Act”), the listing requirements of the securities exchange on which our common stock is traded, and other applicable securities rules and regulations.
+Added: The Exchange Act requires that we file annual, quarterly and current reports with respect to our business and financial condition and maintain effective disclosure controls and procedures and internal control over financial reporting.
+Added: In addition, subsequent rules implemented by the SEC and NASDAQ may also impose various additional requirements on public companies.
+Added: We have incurred, and we will continue to incur, additional legal, accounting and other expenses that we did not previously incur, particularly as we are no longer an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”).
+Added: We have made, and will continue to make, changes to our corporate governance standards, disclosure controls and financial reporting and accounting systems to continue to meet our reporting obligations.
+Added: However, the measures we take may not be sufficient to satisfy our obligations as a public company, which could subject us to delisting of our common stock, fines, sanctions and other regulatory action and potentially civil litigation.
+Added: We are subject to Section 404(b) of the Sarbanes-Oxley Act, which requires that our independent registered public accounting firm provide an attestation report on the effectiveness of our internal control over financial reporting, among other additional requirements.
+Added: Compliance with Section 404 is expensive and time consuming for management and could result in the detection of internal control deficiencies of which we are currently unaware.
+Added: Moreover, if we have a material weakness in our internal controls over financial reporting, we may not detect errors on a timely basis, and our financial statements may be materially misstated.
+Added: We or our independent registered public accounting firm may not be able to conclude on an ongoing basis that we have effective internal controls over financial reporting, which could harm our operating results, cause investors to lose confidence in our reported financial information and cause the trading price of our common stock to fall.
+Added: Any failure to file accurate and timely quarterly and annual reports that we are required to file with the SEC under the Exchange Act could result in sanctions, lawsuits, delisting of our shares from the NASDAQ Global Select Market or other adverse consequences that would materially harm our business.
+Added: Structural and Organizational Risks
Our Chief Executive Officer and founder controls a substantial amount of our outstanding common stock and his interests may be different from or conflict with those of our other shareholders.
7 unchanged sentences
Moreover, Troendle’s share ownership may also adversely affect the trading price for our common stock to the extent investors perceive disadvantages in owning shares of a company with a significant shareholder.
−Removed: Our anti-takeover provisions could prevent or delay a change in control of our company, even if such change in control would be beneficial to our shareholders.
−Removed: Provisions of our amended and restated certificate of incorporation and amended and restated bylaws, as well as provisions of Delaware law could discourage, delay or prevent a merger, acquisition or other change in control of our company, even if such change in control would be beneficial to our shareholders.
−Removed: These provisions include:
−Removed: authorizing the issuance of “blank check” preferred stock that could be issued by our Board to increase the number of outstanding shares and thwart a takeover attempt;
−Removed: establishing a classified Board so that not all members of our Board are elected at one time;
−Removed: the removal of directors only for cause;
−Removed: prohibiting the use of cumulative voting for the election of directors;
−Removed: limiting the ability of shareholders to call special meetings or amend our bylaws;
−Removed: requiring all shareholder actions to be taken at a meeting of our shareholders and not by written consent;
−Removed: establishing advance notice and duration of ownership requirements for nominations for election to the Board or for proposing matters that can be acted upon by shareholders at shareholder meetings.
−Removed: These provisions could also discourage proxy contests and make it more difficult for our shareholders to elect directors of their choosing and cause us to take other corporate actions our shareholders desire.
−Removed: In addition, because our Board is responsible for appointing the members of our management team, these provisions could in turn affect any attempt by our shareholders to replace current members of our management team.
−Removed: In addition, the Delaware General Corporation Law, or the DGCL, to which we are subject, prohibits us, except under specified circumstances, from engaging in any mergers, significant sales of stock or assets or business combinations with any shareholder or group of shareholders who owns at least 15% of our common stock for three years following their becoming the owner of 15% of our common stock.
−Removed: Our non-employee directors may acquire interests and positions that could present potential conflicts with our and our shareholders’ interests .
−Removed: Our non-employee directors make investments in companies and may, from time to time, acquire and hold interests in businesses that compete directly or indirectly with us.
−Removed: Our non-employee directors may also pursue, for their own accounts, acquisition opportunities that may be complementary to our business, and as a result, those acquisition opportunities might not be available to us.
−Removed: Our organizational documents contain provisions renouncing any interest or expectancy held by our non-employee directors in corporate opportunities.
−Removed: Accordingly, the interests of our non-employee directors may supersede ours, causing our non-employee directors and their affiliates to compete against us or to pursue opportunities instead of us, for which we have no recourse.
−Removed: Such actions on the part of our non-employee directors and inaction on our part could have a material adverse effect on our business, financial condition, results of operations and cash flows.
We are party to transactions with related persons that may increase the risk of allegations of conflicts of interest, and such allegations may impair our ability to realize the benefits we expect from these transactions.
6 unchanged sentences
Moreover, any such challenge could result in substantial costs and a diversion of our management’s attention, could have a material adverse effect on our reputation, business and growth and could adversely affect our ability to realize the benefits expected from the transactions, whether or not the allegations have merit or are substantiated.
−Removed: We may issue shares of preferred stock in the future, which could make it difficult for another company to acquire us or could otherwise adversely affect holders of our common stock, which could depress the price of our common stock.
−Removed: Our amended and restated certificate of incorporation authorizes us to issue one or more series of preferred stock.
−Removed: Our Board has the authority to determine the preferences, limitations and relative rights of the shares of preferred stock and to fix the number of shares constituting any series and the designation of such series, without any further vote or action by our shareholders.
−Removed: Our preferred stock could be issued with voting, liquidation, dividend and other rights superior to the rights of our common stock.
−Removed: The potential issuance of preferred stock may delay or prevent a change in control of us, discourage bids for our common stock at a premium to the market price, and materially and adversely affect the market price and the voting and other rights of the holders of our common stock.
−Removed: The provision of our amended and restated certificate of incorporation requiring exclusive venue in the Court of Chancery in the State of Delaware for certain types of lawsuits may have the effect of discouraging lawsuits against our directors and officers.
−Removed: Our amended and restated certificate of incorporation requires, to the fullest extent permitted by law, that (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers or other employees to us or our shareholders, (iii) any action asserting a claim against us arising pursuant to any provision of the DGCL or our amended and restated certificate of incorporation or the bylaws or (iv) any action asserting a claim against us governed by the internal affairs doctrine will have to be brought only in the Court of Chancery in the State of Delaware.
−Removed: Although we believe this provision benefits us by providing increased consistency in the application of Delaware law in the types of lawsuits to which it applies, the provision may have the effect of discouraging lawsuits against our directors and officers.
−Removed: The requirements associated with being a public company require significant company resources and management attention.
−Removed: We are subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act of 2002, as amended (the “Sarbanes-Oxley Act”), the listing requirements of the securities exchange on which our common stock is traded, and other applicable securities rules and regulations.
−Removed: The Exchange Act requires that we file annual, quarterly and current reports with respect to our business and financial condition and maintain effective disclosure controls and procedures and internal control over financial reporting.
−Removed: In addition, subsequent rules implemented by the SEC and NASDAQ may also impose various additional requirements on public companies.
−Removed: We have incurred, and we will continue to incur, additional legal, accounting and other expenses that we did not previously incur, particularly as we are no longer an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”).
−Removed: We have made, and will continue to make, changes to our corporate governance standards, disclosure controls and financial reporting and accounting systems to continue to meet our reporting obligations.
−Removed: However, the measures we take may not be sufficient to satisfy our obligations as a public company, which could subject us to delisting of our common stock, fines, sanctions and other regulatory action and potentially civil litigation.
−Removed: We ceased to be an “emerging growth company” as of the end of the year ended December 31, 2019.
−Removed: We are now subject to Section 404(b) of the Sarbanes-Oxley Act, which requires that our independent registered public accounting firm provide an attestation report on the effectiveness of our internal control over financial reporting, among other additional requirements.
−Removed: Compliance with Section 404 will be expensive and time consuming for management and could result in the detection of internal control deficiencies of which we are currently unaware.
−Removed: Moreover, if we have a material weakness in our internal controls over financial reporting, we may not detect errors on a timely basis, and our financial statements may be materially misstated.
−Removed: We or our independent registered public accounting firm may not be able to conclude on an ongoing basis that we have effective internal controls over financial reporting, which could harm our operating results, cause investors to lose confidence in our reported financial information and cause the trading price of our common stock to fall.
−Removed: Any failure to file accurate and timely quarterly and annual reports that we are required to file with the SEC under the Exchange Act could result in sanctions, lawsuits, delisting of our shares from the NASDAQ Global Select Market or other adverse consequences that would materially harm our business.
−Removed: Our operating results and share price may be volatile, and the market price of our common stock may drop .
−Removed: Our quarterly operating results have fluctuated, and are likely to fluctuate in the future.
−Removed: In addition, securities markets worldwide have experienced, and are likely to continue to experience, significant price and volume fluctuations.
−Removed: This market volatility, as well as general economic, market or political conditions, could subject the market price of shares of our common stock to wide price fluctuations regardless of our operating performance.
−Removed: The public market for our common stock is new and the trading price of shares of our common stock may fluctuate in response to various factors, including:
−Removed: market conditions in the broader stock market or in the healthcare sector;
−Removed: developments affecting biopharmaceutical companies generally or biopharmaceutical research and development outsourcing;
−Removed: actual or anticipated fluctuations in our quarterly financial and operating results;
−Removed: introduction of new products or services by us or our competitors;
−Removed: the public’s reaction to our press releases, our other public announcements and our filings with the SEC;
−Removed: changes in, or failure to meet, earnings estimates or recommendations by research analysts who track our common stock or the stock of other companies in our industries;
−Removed: strategic actions by us, our customers or our competitors, such as acquisitions or restructurings;
−Removed: changes in accounting standards, policies, guidance, interpretations or principles;
−Removed: issuance of new or changed securities analysts’ reports or recommendations or termination of coverage of our common stock by securities analysts;
−Removed: sales, or anticipated sales, of large blocks of our stock;
−Removed: the granting or exercise of employee stock options;
−Removed: volume of trading in our common stock;
−Removed: additions or departures of key personnel;
−Removed: regulatory or political developments;
−Removed: litigation and governmental investigations;
−Removed: changing economic conditions;
−Removed: defaults on our indebtedness;
−Removed: exchange rate fluctuations;
−Removed: the other factors listed in this “Risk Factors” section.
−Removed: These and other factors, many of which are beyond our control, may cause our operating results and the market price and demand for shares of our common stock to fluctuate substantially.
−Removed: While we believe that operating results for any particular quarter are not necessarily a meaningful indication of future results, fluctuations in our quarterly operating results could limit or prevent investors from readily selling their shares and may otherwise negatively affect the market price and liquidity of shares of our common stock.
−Removed: In addition, in the past, when the market price of a stock has been volatile, holders of that stock have sometimes instituted securities class action litigation against the company that issued the stock.
−Removed: If any of our shareholders brought a lawsuit against us, we could incur substantial costs defending the lawsuit.
−Removed: Such a lawsuit could also divert the time and attention of our management from our business, which could have a material adverse effect on our business, financial condition, results of operations and cash flows.
−Removed: Because we have no current plans to pay regular cash dividends on our common stock, our shareholders may not receive any return on investment unless they sell their common stock for a price greater than that which they paid for it.
−Removed: We do not anticipate paying any regular cash dividends on our common stock for the foreseeable future.
−Removed: Any decision to declare and pay dividends in the future will be made at the discretion of our Board and will depend on, among other things, our results of operations, financial condition, cash requirements, contractual restrictions and other factors that our Board may deem relevant.
−Removed: Therefore, any return on investment in our common stock is solely dependent upon the appreciation of the price of our common stock on the open market, which may not occur.
−Removed: We are a holding company and rely on dividends and other payments, advances and transfers of funds from our subsidiaries to meet our obligations and pay any dividends.
−Removed: We have no direct operations and no significant assets other than ownership of 100% of the capital stock of our subsidiaries.
−Removed: Because we conduct our operations through our subsidiaries, we depend on those entities for dividends and other payments to generate the funds necessary to meet our financial obligations, and to pay any dividends with respect to our common stock.
−Removed: Legal and contractual restrictions and the financial condition and operating requirements of our subsidiaries, may limit our ability to obtain cash from our subsidiaries.
−Removed: The earnings from, or other available assets of, our subsidiaries might not be sufficient to pay dividends or make distributions or loans to enable us to pay any dividends on our common stock or other obligations.
−Removed: Any of the foregoing could materially and adversely affect our business, financial condition, results of operations and cash flows.
−Removed: If securities or industry analysts do not publish research or reports about our business, if they adversely change their recommendations regarding our common stock or if our results of operations do not meet their expectations, our share price and trading volume could decline.
−Removed: The trading market for shares of our common stock is influenced by the research and reports that industry or securities analysts publish about us or our business.
−Removed: We do not have any control over these analysts.
−Removed: If one or more of these analysts cease coverage of our company or fail to publish reports on us regularly, we could lose visibility in the financial markets, which in turn could cause our share price or trading volume to decline.
−Removed: Moreover, if one or more of the analysts who cover us downgrade our stock, or if our results of operations do not meet their expectations, our share price could decline.
+Added: General Risks
+Added: If we lose the services of key personnel or are unable to recruit experienced personnel, our business could be adversely affected.
+Added: Our success substantially depends on the collective performance, contributions and expertise of our senior management team, including August J.
+Added: Troendle, our Chief Executive Officer and founder, and other key personnel including qualified management, professional, scientific and technical operating staff.
+Added: There is significant competition for qualified personnel in the biopharmaceutical services industry, particularly for those with higher educational degrees, such as a medical or nursing degree, a Ph.D., or an equivalent degree, and our industry generally tends to experience relatively high levels of employee turnover.
+Added: If any of our key employees were to join a competitor or to form a competing company, some of our customers might choose to use the services of that competitor or new company instead of our own.
+Added: Furthermore, customers or other companies seeking to develop in-house capabilities may hire some of our senior management or other key employees.
+Added: The departure of any key contributor, the payment of increased compensation to attract and retain qualified personnel or our inability to continue to identify, attract and retain qualified personnel or replace any departed personnel in a timely fashion may impact our ability to grow our business and compete effectively in our industry and may negatively affect our business, financial condition, results of operations, cash flows or reputation.
+Added: Our operations might be affected by the occurrence of a natural disaster or other catastrophic event.
+Added: We depend on our customers, investigators, laboratories and other facilities for the continued operation of our business.
+Added: Although we have contingency plans in place for natural disasters or other catastrophic events, these events, including terrorist attacks, pandemic flu, hurricanes, floods and ice and snow storms, could nevertheless disrupt our operations and IT systems or those of our customers, investigators and collaboration partners, which could also affect us.
+Added: Even though we carry business interruption insurance policies and typically have provisions in our contracts that protect us in certain events, we might suffer losses as a result of business interruptions that exceed the coverage available under our insurance policies or for which we do not have coverage.
+Added: Any natural disaster or catastrophic event affecting us or our customers, investigators or collaboration partners could have a significant negative impact on our operations and financial performance.
Unresolved Staff Comments.
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.