What changed in this filing

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Item 1. Business

2022-03-01 compared with 2021-03-01 · 193 added, 156 removed, 414 unchanged (46% of the section changed)

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Our first product was a specialized control syringe used to inject contrast solution into a patient’s arteries for a diagnostic cardiac procedure called an

Since that time, our sales, products and product lines have expanded substantially, both through internal research and development projects and through strategic acquisitions.

Since that time, our products and product lines have expanded substantially, both through internal research and development projects and through strategic acquisitions.

Business Strategy

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COVID-19 Pandemic

During the last year, the COVID-19 pandemic has had a pervasive impact on our business, suppliers, customers, employees, families and communities.

Because of the global nature of the pandemic, authorities have implemented numerous measures designed to contain the virus, including travel bans and restrictions, border closures, quarantines, shelter-in-place orders, business limitations and shutdowns.

Notwithstanding the challenges we faced during the past year, we responded to adjust to changes in demand for various products.

We also responded to the needs of governmental and other entities to obtain swabs used in COVID-19 testing kits.

In addition, we quickly implemented stringent safety protocols to promote the safety of our employees in the workplace while producing essential medical products.

In March 2020, we put into place temperature screening stations, work-at-home policies for non-operations employees, restrictions to permit only “business critical” visitors in our facilities, social-distancing standards, face mask requirements and restrictions on business travel.

The COVID-19 response by hospitals and healthcare professionals has placed a severe strain on healthcare systems around the world.

Many of our hospital customers have been prioritizing their efforts on their COVID-19 response and have diverted focus and resources away from their normal operations and restricted access to their sites in efforts to contain the spread of the virus.

The prioritization of COVID-19 treatment and containment has presented us with unique operational challenges, including delays in purchasing decisions by customers, obstacles to our ability to market, deliver and service our products, and disruptions and delays in our logistics and supply chain.

We refer you to “Management’s Discussion and Analysis of Financial Position and Results of Operations” for a more detailed discussion of the potential impact of the COVID-19 pandemic and associated economic disruptions, and the actual operational and financial impacts that we have experienced to date.

During the last two years, the COVID-19 pandemic has had an unsteady but significant impact on our business, suppliers, customers, employees, families and communities.

Measures designed to contain the virus, including travel bans and restrictions, border closures, quarantines, shelter-in-place orders, business limitations and shutdowns continued through the year.

In addition, we continued to execute, and enhance, protocols to promote the safety of our employees in the workplace while producing essential medical products.

In efforts to contain the spread of the virus, many of our hospital customers prioritized their efforts on their COVID-19 response, diverting their focus and resources away from their normal operations and restricting access to their sites.

In 2021, these restrictions were generally reduced, and we were able to achieve the highest annual revenue in the history of the Company.

However, lingering effects continue, including unpredictable freight and other logistical expenses and obstacles, and the responses of government authorities and our customers vary from region to region.

Please refer to the discussion of the risks and uncertainties associated with the COVID-19 pandemic under the heading “ The COVID-19 pandemic has negatively impacted our business and operations around the world and may continue to materially and adversely impact our business, operations and financial results .” set forth below in Item 1A “Risk Factors.”

We design, develop, market and manufacture, through our own operations and contract manufacturers, medical products that offer a high level of quality, value and safety to our customers, as well as the patients they serve.

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interventional nephrology;

orthopaedic spine surgery;

orthopedic spine surgery;

interventional oncology;

outpatient access centers;

pain management;

breast cancer surgery, outpatient access centers;

intensive care;

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and interventional gastroenterology.

The success of our products is enhanced by the extensive experience of our management team in the healthcare industry, our experienced direct sales force and distributors, our ability to provide custom procedural solutions such as kits, trays and procedural packs at the request of our customers, and our dedication to offering facility-unique solutions in the markets we serve worldwide.

and procedural packs at the request of our customers, and our dedication to offering facility-unique solutions in the markets we serve worldwide.

We conduct our business through two operating segments:

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For information relating to our operating segments and product categories, see Note 13 to our consolidated financial statements set forth in Item 8 of this report and Management’s Discussion and Analysis set forth in Item 7 of this report.

We revised these product categories during 2020 and reported historical revenue under these revised product categories for the years ended December 31, 2019, 2018, and 2017 in a Current Report on Form 8-K, filed with the SEC on April 3, 2020.

The following sections describe our principal product offerings by reporting segment and product category.

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Our peripheral intervention products include product offerings in the following product portfolios:

access (peripheral), angiography, biopsy, drainage, delivery systems, embolotherapy, and intervention (peripheral).

access (peripheral), angiography, drainage, delivery systems, embolotherapy, and intervention (peripheral).

The principal product offerings in our access (peripheral) portfolio include our:

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(“Bluegrass Vascular”);

● Merit Wrapsody ™ Endoprosthesis, a cell-impermeable endoprosthesis which is designed to maintain long-term vessel patency in patients with obstructions in the dialysis outflow circuit (this device is not currently available for use in the United States).

The products in our angiography portfolio are used to identify blockages and other disease states in the blood vessel.

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● Extensive line of Merit Laureate® Hydrophilic Guide Wires, a smooth-surface guide wire designed to minimize friction and promote rapid catheter exchanges;

● Our newest offering of Merit SplashWire hydrophilic Steerable Guide Wires, combining optimum lubricity, exceptional torque response and enhanced visibility;

● Performa® and Impress® Diagnostic Catheters, a catheter offering designed for traversing difficult to access peripheral blood vessels;

● Performa Vessel Sizing Catheters for vessel measurement.

We offer an extensive line of soft tissue biopsy products and accessories.

The principal product offerings in our biopsy portfolio include our soft tissue core needle biopsy and accessory products including our innovative CorVocet® Biopsy System for soft tissue biopsy procedures, designed to cut a full-core of tissue, providing large specimens for pathological examination.

We offer a broad line of drainage products.

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The principal product offerings in our delivery systems portfolio include our:

● SwiftNINJA® Steerable Microcatheter, an advanced microcatheter with a 180-degree articulating tip, sold through our exclusive worldwide distribution agreement (excluding Japan) with Sumitomo Bakelite Co., Ltd.;

● Merit Maestro® and Merit Pursue™ Microcatheters, small microcatheters designed for pushability and trackability through small and tortuous vessels;

● True Form™ Reshapable Guide Wire, designed to be shaped and reshaped multiple times, reducing the need for multiple guide wires.

● True Form™ Reshapable Guide Wire, designed to be reshaped multiple times, reducing the need for multiple guide wires.

Our embolotherapy products treat disease by blocking or slowing the flow of blood into the arteries or delivering chemotherapy drugs in the treatment of primary and metastatic liver cancer.

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● Embosphere® Microspheres, a highly studied, round embolic for consistent and predictable results;

● Quadrasphere® Microspheres, soft embolics with a consistent cross-sectional diameter for predictable, flow-directed targeting.

● HepaSphere® Microspheres, soft embolics with a consistent cross-sectional diameter for predictable, flow-directed targeting.

The products in our intervention (peripheral) portfolio are chiefly used to remove blood clots, retrieve foreign bodies in blood vessels and assist with placing balloons and stents to treat arterial disease.

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● ClariVein® Specialty Infusion Catheter which is designed for controlled 360-degree dispersion of physician specified agents to the peripheral vasculature;

● Advocate™ Percutaneous Transluminal Angioplasty (“PTA”) Catheter and Dynamis AV™ PTA Dilatation Catheter, a line of catheters that treat failing or thrombosed dialysis fistulae;

● Dynamis AV™ PTA Dilatation Catheter, a line of balloon catheters that facilitates the opening of blockages located in the arteriovenous system of dialysis patients;

● Q50X®, Q50® and Q50 Plus Stent Graft Balloon Catheters, a line of catheters that treat abdominal and thoracic endovascular aortic repair procedures and reinterventions;

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Our spine product line includes the following product portfolios:

vertebral augmentation, radiofrequency ablation, and bone biopsy systems.

augmentation, radiofrequency ablation, and bone biopsy systems.

Our primary product offerings in the vertebral augmentation and radiofrequency ablation portfolios include our:

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● Arcadia™ Steerable and straight balloons, designed to achieve controlled, precise, targeted cavity creation in vertebral augmentation procedures;

● StabiliT® MX Vertebral Augmentation System, which uses our insufflation devices to deliver bone cement.

● StabiliT® MX Vertebral Augmentation System, which uses our inflation devices to deliver bone cement.

The bone biopsy systems portfolio contains a full offering of manual bone biopsy products, including our Madison™, Huntington™, Kensington™, Preston™ and Westbrook™ biopsy products.

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Our oncology products are dedicated to the accurate diagnosis and localization of breast and soft tissue tumors and the innovative treatment of early-stage breast cancer.

We also offer an extensive line of soft tissue biopsy products and accessories.

Our primary product offerings in our oncology portfolio include our:

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The principal product offerings in our hemostasis portfolio include our Prelude SYNC EVO™ and PreludeSYNC Distal™ Radial Compression devices, designed to reduce and stop blood flow after radial access procedures, and the SafeGuard® Pressure Assisted Device which provides hemostasis after femoral procedures.

The principal product offerings in our intervention (cardiac) portfolio include a full line of inflation devices and hemostasis valves, including the BasixCompak™, basixTOUCH™, basixALPHA™ (added in late 2020), Blue Diamond™ and DiamondTouch™ inflation devices and the PhD™ Hemostasis Valve, the latest addition to our hemostasis valve portfolio.

The principal product offerings in our intervention (cardiac) portfolio include a full line of inflation devices and hemostasis valves, including the BasixCompak™, basixTOUCH™, Blue Diamond™ and DiamondTouch™ inflation devices and the PhD™ Hemostasis Valve, the latest addition to our hemostasis valve portfolio.

Custom Procedural Solutions

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● Dual Cap® Disinfection Protection System and Medallion ® syringes;

● Cultura™ swab and collection system (including vials with viral transport media), introduced May 2020 in response to the COVID-19 pandemic;

● Manifold Kits;

● Trays and Packs.

The Cultura™ swab and collection system (including vials with viral transport media) was introduced in May 2020 in response to the COVID-19 pandemic.

Demand for and revenue from the Cultura swab appear to have peaked in 2020.

Because this product was introduced to address demand for swabs used to test for COVID-19 and that demand has now significantly decreased, we have seen a significant drop in sales of this product and are no longer actively promoting it.

We provide coating services for medical tubes and wires under OEM brands in addition to many of the products identified above.

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Traditionally, as part of our product sales and marketing efforts, we attend major medical conventions throughout the world pertaining to our target markets and invest in market development including physician training, peer-to-peer education, and patient outreach.

Due to the various restrictions imposed in response to the COVID-19 pandemic, during 2020 most medical conventions in which we have participated transitioned to virtual meetings.

Due to the various restrictions imposed in response to the COVID-19 pandemic, during 2020 and 2021 most medical conventions in which we have participated were virtual meetings.

Additionally, we work closely with major healthcare facilities and physicians involving our primary target markets in the areas of training, therapy awareness programs, clinical studies and ongoing product research and development.

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Sales of our products in the U.S.

accounted for approximately 57%, 58% and 56% of our net sales for the years ended December 31, 2020, 2019 and 2018, respectively.

accounted for 57%, 57% and 58% of our net sales for the years ended December 31, 2021, 2020 and 2019, respectively.

In the U.S., we have a dedicated, direct sales organization primarily focused on selling to end-user physicians, hospitals and alternate site facilities (e.g., office-based labs), major buying groups and integrated healthcare networks.

Internationally, we employ sales representatives and contract with independent dealer organizations and custom procedure tray manufacturers to distribute our products worldwide, including territories in Europe, the Middle East, Africa, Asia, Oceania, Central and South America, Mexico and Canada.

In 2020, our international sales declined approximately 1.3% below our 2019 international sales and accounted for approximately 43% of our net sales.

In 2021, our international sales grew 12.6% over our 2020 international sales and accounted for 43% of our net sales.

Our largest non-U.S.

market is China, which represented approximately 12% of our net sales in 2020 and reported net sales of approximately $113.2 million, $113.3 million, and $92.7 million for the years ended December 31, 2020, 2019 and 2018, respectively.

market is China, which represented 13% of our net sales in 2021 and reported net sales of $138.2 million, $113.2 million, and $113.3 million for the years ended December 31, 2021, 2020 and 2019, respectively.

We maintain a distribution center and administrative office in Beijing.

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We use the “modified direct” sales approach in China, employing sales personnel throughout China who work with our distributors to promote the clinical advantages of our products to clinicians and other decision makers at hospitals.

In 2020, we experienced a significant disruption of our busines throughout the world as a result of the COVID-19 pandemic, and many medical procedures that use our products were delayed or canceled.

While the full impact of the COVID-19 pandemic is still unknown at this time, if the reduction in medical procedures continues or declines, we will continue to see a material adverse impact on our global operations, as well as our overall financial condition.

For further discussion of risks and uncertainties associated with the COVID-19 pandemic, please refer to disclosure under the heading “ The COVID-19 pandemic has negatively impacted our business and operations around the world and may continue to materially and adversely impact our business, operations and financial results .” set forth in Item 1A “Risk Factors”.

Beginning in 2020, we experienced a significant disruption of our business throughout the world as a result of the COVID-19 pandemic, and t his disruption continued through 2021.

We are unable to calculate the full impact of the COVID-19 pandemic on our business, and we are unable to predict whether we will continue to be affected by it, but we have seen a material adverse impact on our global operations and financial condition, primarily in 2020.

However, in 2021, we saw significant growth in global sales compared to 2020 as the demand for our products increased when many of the medical procedures delayed from 2020 were performed and the restrictions put in place in response to the pandemic were generally reduced.

For further discussion of the risks and uncertainties associated with the COVID-19 pandemic, please refer to disclosure under the heading “ The COVID-19 pandemic has negatively impacted our business and operations around the world and may continue to materially and adversely impact our business, operations and financial results .” set forth in Item 1A “Risk Factors.”

In Europe, the Middle East and Africa (“EMEA), we have both direct and modified direct sales operations.

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Hospitals and acute care facilities in the U.S.

purchase our products through our direct sales force, distributors, OEM partners, or custom procedure

tray manufacturers who assemble and combine our products in custom kits and packs.

purchase our products through our direct sales force, distributors, OEM partners, or custom procedure tray manufacturers who assemble and combine our products in custom kits and packs.

Outside the U.S., hospitals and acute care facilities generally purchase our products through our direct sales force, or, in the absence of a sales force, through independent distributors or OEM partners.

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We continue to develop new products and make improvements to our existing products utilizing many different sources.

Our Chief Executive Officer and our Executive Vice President of Global Research & Development work closely with our sales and marketing teams to incorporate feedback from physicians and clinicians in the field, which can lead to innovative new products and improvements to our existing products.

In 2021, our Chief Executive Officer and our Executive Vice President of Global Research & Development worked closely with our sales and marketing teams to incorporate feedback from physicians and clinicians in the field, which contributed to innovative new products and improvements to our existing products.

In 2021, we completed projects that resulted in the newest additions to our product lineup:

SCOUT Mini Reflector, Temno Elite™, OneVac™ Evacuated Drainage Bottle, Siege 027 and the BlueFire Infiltration System.

Currently, we have research and development facilities in California, Texas, Utah, Ireland, France, and Singapore.

Manufacturing

We manufacture many of our products utilizing our proprietary technology and our expertise in plastic injection and insert molding.

We manufacture many of our products using our proprietary technology and our expertise in plastic injection and insert molding.

We generally contract with third parties for the tooling of our molds, but we design and own most of our molds.

We utilize our experience in injection and insert molding technologies in the manufacture of most of the custom components used in our products.

We have received International Standards Organization (“ISO”) 13485:2016 certification for our facilities in California, Virginia, Texas, Utah, Ireland, France, Mexico, The Netherlands and Singapore.

We have also received ISO 9001:2015 certification for our coatings facility in Venlo, The Netherlands and our Merit Sensor Systems, Inc.

(“Merit Sensors”) facility in South Jordan, Utah.

Merit Sensors develops and markets silicon pressure sensors to a range of enterprises and presently supplies the sensors we utilize in our digital inflation devices and blood pressure sensors.

Given the specialization of our manufacturing personnel and processes in our Utah and Ireland facilities, we possess the capability to strategically shift the manufacture of more technologically advanced products to those facilities and utilize the manufacturing capacity of our other facilities for more commoditized products.

We have also received various International Standards Organization (“ISO”) certifications for many of our facilities;

for further details, please refer to Item 1.

“Business - Sustainability” below.

Merit Sensor Systems, Inc.

(“Merit Sensors”) develops and markets silicon pressure sensors to a range of enterprises and presently supplies the sensors we use in our digital inflation devices and blood pressure sensors.

Given the specialization of our manufacturing personnel and processes in our Utah and Ireland facilities, we possess the capability to strategically shift the manufacture of more technologically advanced products to those facilities and use the manufacturing capacity of our other facilities for more commoditized products.

The actual determination of manufacturing location will be based upon multiple factors, including technological capabilities, market demand, acquisition and integration activities and economic and competitive conditions.

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“Properties.”

We have distribution centers located in Virginia, Utah, Canada, Brazil, The Netherlands, United Kingdom (“UK”), South Africa, Russia, South Korea, India, New Zealand, Japan, China and Australia.

We ship our products through distribution centers located in Virginia, Utah, Canada, Brazil, The Netherlands, United Kingdom (“UK”), South Africa, Russia, South Korea, India, New Zealand, Japan, China and Australia.

The medical products industry is highly competitive.

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We compete globally in several market areas, including radiology;

diagnostic and interventional cardiology;

diagnostic and

interventional cardiology;

interventional radiology;

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and interventional gastroenterology.

The principal competitive factors in the markets in which our products are sold are quality, price, value, device features, customer service, breadth of line, and customer relationships.

The principal competitive factors in the markets in which our products are sold are quality, price, value, product features, customer service, breadth of line, and customer relationships.

We believe our products have achieved market acceptance primarily due to the quality of materials and workmanship of our products, clinical outcomes, their innovative design, our willingness to customize our products to fit customer needs, and our prompt attention to customer requests.

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We believe we are a market leader in the U.S.

for control syringes, waste-disposal systems, tubing and manifolds.

for control syringes, radar localization, waste-disposal systems, embolic beads, tubing and manifolds.

Although we believe our recent and planned additions to these product lines will help us compete even more effectively in both the U.S.

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Raw materials essential to our business are generally purchased worldwide and are normally available in quantities adequate to meet the needs of our business.

Where there are exceptions, the temporary unavailability of those raw materials would not likely have a material adverse effect on our financial results.

Where there are exceptions, the temporary unavailability of those raw materials has not historically had a material adverse effect on our financial results;

however, current fluctuations and uncertainties in supply chain, transportation logistics, and freight expenses could result in disruptions in our operations and materially impact our financial results.

Proprietary Rights and Litigation

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and international patents and patent applications.

This number decreased in 2021 because we abandoned certain patents that were expected to expire before we could obtain regulatory approval and commercialize the related products.

As a result, we were able to avoid paying the significant annuities and maintenance and prosecution fees required to keep those patents alive.

Additionally, we hold exclusive and non-exclusive licenses to a variety of third-party technologies covered by patents and patent applications.

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and foreign countries.

See “Products” above.

“Business - Products” above.

The duration of our trademark registrations varies from country to country;

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and foreign trademark registrations and trademark applications.

We increased our trademark applications in 2021 in an effort to protect our trademark rights in jurisdictions outside the U.S.

There is substantial litigation regarding patents and other intellectual property rights in the medical device industry.

At any given time, we may be involved as either a plaintiff or a defendant, as well as a counter-claimant or counter-defendant, in patent, trademark, and other intellectual property infringement actions.

If a court rules against us in any intellectual property litigation we could be subject to significant liabilities, be forced to seek licenses from third parties, or be prevented

from marketing certain products.

If a court rules against us in any intellectual property litigation we could be subject to significant liabilities, be forced to seek licenses from third parties, or be prevented from marketing certain products.

In addition, intellectual property litigation is costly and may consume significant time of employees and management.

DOJ Settlement and Corporate Integrity Agreement .

On October 13, 2020, we entered into a Settlement Agreement with the United States Department of Justice (“DOJ”) to fully resolve the DOJ’s investigation into past marketing transactions and practices.

The DOJ asserted that we provided benefits, allegedly in the form of patient referrals advertising assistance, practice development, practice support, and educational grants to induce healthcare providers to purchase and use our products in medical procedures performed on federal healthcare program beneficiaries, in violation of the Anti-Kickback Statute, 42 U.S.C.

§1320a-7b(b), and caused the submission of false claims under the False Claims Act, 31 U.S.C.

§3729 (as further described in the Settlement Agreement, the “Covered Conduct”).

We denied the allegations but determined that a settlement was in the best interests of our company moving forward.

Under the Settlement Agreement and related agreements, we agreed to make settlement payments in the aggregate amount of $18.0 million plus interest.

In total, we paid approximately $18.7 million in settlement payments, interest and additional expenses associated with the Settlement Agreement, including fees paid to settle claims of the relator’s counsel.

In exchange, the DOJ, the Office of the Inspector General of the U.S.

Department of Health and Human Services (‘OIG”), the Defense Health Agency (“DHA”), on behalf of the TRICARE Program, and the relator named therein agreed to release us from liability arising from the Covered Conduct.

The settlement was also conditioned upon our entering into a Corporate Integrity Agreement (“CIA”) with the OIG.

Under the CIA, the OIG will not exclude us from participating in federal health care programs if we comply with the obligations set forth therein.

The CIA imposes compliance, monitoring, reporting, certification, oversight and training obligations on the Company, certain of which have previously been implemented.

The CIA requires, among other matters, that we (i) maintain a Compliance Officer, a Compliance Committee, board review and oversight of certain federal healthcare compliance matters, compliance programs, and disclosure programs;

(ii) establish robust compliance policies and procedures to meet the requirements of all federal health care programs and the U.S.

Corporate Integrity Agreement .

In October 2020, we entered into a Corporate Integrity Agreement (“CIA”) with the Office of Inspector General (“OIG”), a five-year agreement that was a condition of our settlement with the United States Department of Justice (“DOJ”).

The CIA subjects us to certain compliance, monitoring, reporting, certification, oversight and training obligations.

The CIA requires, among other matters, that we (i) maintain a compliance officer, a compliance committee, board review and oversight of certain federal healthcare compliance matters and compliance and disclosure programs;

(ii) establish compliance policies and procedures to meet the requirements of all federal health care programs and the U.S.

Food and Drug Administration (“FDA”) ;

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and (viii) report or disclose certain events and physician payments.

Our failure to comply with our obligations under the CIA could result in monetary penalties and the Company being excluded from participating in federal health care programs.

The foregoing descriptions of the Settlement Agreement and the CIA are qualified in their entirety by the full terms of the Settlement Agreement and the Corporate Integrity Agreement, which are attached as Exhibit 10.47 and Exhibit 10.48 hereto, respectively, and incorporated herein by reference.

We recently completed our first reporting year under the CIA and are in the process of implementing certain recommendations made by the independent review organization.

Our failure to comply with our obligations under the CIA could result in monetary penalties and our exclusion from participation in federal health care programs.

The foregoing description of the CIA is qualified in their entirety by the full terms of the CIA, which is attached as Exhibit 10.46 hereto and incorporated herein by reference.

Regulatory Approvals .

Our products and operations are global and are subject to regulations by the U.S.

Food and Drug Administration (“FDA”) and various other federal and state agencies, as well as by foreign governmental agencies.

These agencies enforce laws and regulations that control the design, development, testing, clinical trials, manufacturing, labeling, storage advertising, marketing and distribution, and market surveillance of our medical products.

Our products and operations are global and are subject to regulations by the FDA and various other federal and state agencies, as well as by foreign governmental agencies.

These agencies enforce laws and regulations that control the design, development, testing, clinical trials, manufacturing, labeling, storage, advertising, marketing, distribution, and post-market surveillance of our medical products.

The time required to obtain approval by the FDA and other foreign governmental agencies can be lengthy and the requirements may differ.

In particular, marketing of medical devices in the European Union (“EU”) is subject to compliance with Council Devices Directive 93/92/EEC, as amended (“MDD”).

In May 2017, the EU adopted Regulation (EU) 2017/745 (“MDR”), which will repeal and replace the MDD with effect from May 26, 2021.

Under transitional provisions, medical devices with notified body certificates issued under the MDD prior to May 26, 2021 may continue to be placed on the market for the remaining validity of the certificate, until May 26, 2024 at the latest.

After the expiry of any applicable transitional period, only devices that have been CE marked under the MDR may be placed on the market

While we are preparing to comply with these new regulations, there may be some products that we will discontinue or postpone introduction in the EU or which may not be fully compliant at the time the transitional period expires because of a number of factors, including changing business strategies, cost of obtaining MDR certification, availability of necessary data and the capacity of Notified Bodies.

The MDR includes increasingly stringent requirements in multiple areas, such as pre-market clinical evidence (some of which are now in effect), review of high-risk devices, labeling and post-market surveillance.

In particular, in May 2017, the EU adopted Regulation (EU) 2017/745 (“MDR”), which replaced Council Directive 93/92/EEC (“MDD”) as of May 26, 2021.

After the expiry of any applicable transitional period, only devices that have been CE marked under the MDR may be placed on the market in the EU.

We are preparing to comply with these new regulations before the transitional period expires.

However, there will be products that we will instead choose to discontinue or postpone introduction in the EU.

This decision will depend on a number of factors, including changing business strategies, timing and cost of obtaining MDR certification, availability of necessary data and the capacity of Notified Bodies.

The MDR includes increasingly stringent requirements in multiple areas, such as pre-

market clinical evidence, review of high-risk devices, labeling and post-market surveillance.

Under the MDR, pre-market clinical data will now be required to obtain CE Mark approval for high-risk, new and modified medical devices.

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Delays in receipt of or failure to receive such approvals, the loss of previously received approvals, or the failure to comply with existing or future regulatory requirements could have a material adverse effect on our business, financial condition or results of operations.

In May 2020, we received the CE mark for the Merit Wrapsody™ Endovascular Stent Graft System, and we are pursuing regulatory approval in the U.S.

In May 2020, we received the CE mark for the Merit Wrapsody Endoprosthesis, and we are pursuing regulatory approval in the U.S.

and elsewhere.

We are conducting a large, multinational pivotal human clinical trial of the Wrapsody™ Stent Graft which is required to obtain approval from the FDA and some international regulatory agencies.

We are conducting a large, multinational pivotal human clinical trial of the Wrapsody Endoprosthesis, which is required for us to obtain approval from the FDA and some international regulatory agencies.

Human clinical trials of a medical device are often required for regulatory clearance or approval for devices and are expensive, time-consuming and uncertain.

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Our failure or the failure of our suppliers to maintain compliance with these requirements could result in the shutdown of our manufacturing operations or the recall of our products, or could restrict our ability to obtain new product approvals or certificates from the FDA that are necessary for export of our products to foreign countries.

Any of these results would have a material adverse effect on our business.

Any of these results could have a material adverse effect on our business.

If one of our suppliers fails to maintain compliance with our quality requirements, we may have to qualify a new supplier and could experience manufacturing delays as a result.

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Any article that appears to be in violation of the FDCA may be refused admission and a notice of detention and hearing may be issued.

If the FDA ultimately refuses admission, the CBP may issue a notice for redelivery and assess liquidated damages for up to three times the value of the lot.

If the FDA ultimately refuses admission, the CBP may issue a notice for redelivery and assess

liquidated damages for up to three times the value of the lot.

Additionally, the laws of the U.S.

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Under these laws and regulations, as well as other export control laws, customs laws, sanctions laws and other laws governing our operations, various government agencies may require export licenses and may seek to impose modifications to business practices, including cessation of business activities in sanctioned countries or with sanctioned persons or entities.

With the U.S.

and other countries exploring export sanctions in response to military exercises and escalating tensions in certain parts of the world, any such export restrictions may affect the company’s business in certain regions of the world.

Additional Post-Market Requirements.

Medical device manufacturers are also subject to other post-market requirements in multiple jurisdictions, including product listing, establishment registration, Unique Device Identification (“UDI”), reports of corrections and removals and other requirements.

Medical Device Reporting required by the FDA, medical device vigilance reporting requirements under the MDD and MDR, and similar regulations in other foreign markets, require manufacturers to report to the FDA or an equivalent foreign regulatory body any incident in which their device may have caused or contributed to a death or serious injury, or has malfunctioned in a way that would likely cause or contribute to a death or serious injury if the malfunction of the device or a similar device were to recur.

As a medical device manufacturer, we are subject to other post-market requirements in multiple jurisdictions, including (i) product listing, (ii) establishment registration, (iii) Unique Device Identification (“UDI”), and (iv) reports of corrections and removals.

We are also subject to regulations that require manufacturers to report to the FDA, or an equivalent foreign regulatory body, any incident in which their device may have caused or contributed to a death or serious injury, or has malfunctioned in a way that would likely cause or contribute to a death or serious injury if the malfunction of the device or a similar device were to recur.

Our obligation to report a complaint is triggered on the date on which we become aware of an adverse event and the nature of the event.

If we fail to comply with our reporting obligations or other post-market requirements, the FDA could issue warning letters or untitled letters, take administrative actions, commence criminal prosecution, impose civil monetary penalties, revoke our device approvals or clearances, seize our products, or delay the approval or clearance of our future products.

Other regulatory authorities could take similar actions within their jurisdictions.

The FDA regularly inspects companies to determine compliance with the QSRs and other post-market requirements.

Failure to comply with statutory requirements and the FDA’s regulations can result in an FDA Form 483 (which is issued by the FDA at the conclusion of an inspection when an investigator has observed any conditions that may constitute violations), public warning letters, monetary penalties against a company or its officers and employees, suspension or withdrawal of regulatory approvals, operating restrictions, total or partial suspension of production, injunctions, product recalls, product detentions, import refusals, refusal to provide export certificates, seizure of products and/or criminal prosecution.

Other regulatory authorities, including EU Notified Bodies, regularly audit companies to determine compliance with ISO 13485 and their respective regulations.

They may take similar actions as the FDA within their jurisdictions.

The FDA also regularly inspects companies to determine compliance with the QSRs and other post-market requirements.

Please refer to our discussion of the risks and uncertainties associated with these post-market requirements under the heading “ Our products may cause or contribute to adverse medical events that we are required to report to the FDA or other governmental authorities, and if we fail to do so, we may be subject to sanctions that may materially harm our business.

” set forth in Item 1A “Risk Factors.”

Reimbursement.

Our products are generally used in medical procedures that are covered and reimbursed by governmental payers, such as Medicare, and/or private health plans.

In general, these third-party payers cover a medical device and/or related procedure only when the payer determines that healthcare outcomes are supported by medical evidence and the device or procedure is medically necessary for the diagnosis or treatment of the patient’s illness or injury.

Even if a device

has received clearance or approval for marketing by the FDA or a similar foreign regulatory agency, there is no certainty that third-party payers will cover and reimburse for the cost of the device and related procedures.

In general, these third-party payers cover a medical device and/or related procedure in which the device is used only when the payer determines that healthcare outcomes are supported by medical evidence and the device and procedure is medically necessary for the diagnosis or treatment of the patient’s illness or injury.

Even if a device has received clearance or approval for marketing by the FDA or, for uses outside of the U.S., a similar foreign regulatory agency, there is no certainty that third-party payers will cover and reimburse for the cost of the device and/or related procedures involving the use of the device.

Because of increasing cost-containment pressures, some private payers in the U.S.

and government payers in foreign countries may also condition payment on the cost-effectiveness of the device or procedure.

and government payers in foreign countries may also condition payment on the cost-effectiveness of the device and/or procedure.

Even if coverage is available, third-party payers may place restrictions on the circumstances in which they provide coverage or may offer reimbursement that is not sufficient to cover the cost of our products.

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Anti-Corruption Laws.

Anti-corruption laws are in place in the U.S.

and in many jurisdictions throughout the world.

In the U.S., the Foreign Corrupt Practices Act (the “FCPA”) prohibits offering, paying, or promising to pay anything of value to foreign officials for the purpose of obtaining or maintaining an improper business advantage.

Our international operations are subject to the Foreign Corrupt Practices Act (the “FCPA”), the U.K.

Bribery Act and other foreign anti-corruption laws.

The FCPA prohibits offering, paying, or promising to pay

anything of value to foreign officials for the purpose of obtaining or maintaining an improper business advantage.

The FCPA also requires that we maintain fair and accurate books and records and devise and maintain an adequate system of internal accounting controls.

Among other requirements to implement compliance, we train our U.S.

and international employees, and to train and monitor foreign third parties with whom we contract, e.g., distributors, to ensure compliance with these anti-corruption laws.

In certain countries, the individuals and entities that we regularly interact with may meet the definition of a foreign government official for purposes of the FCPA.

As part of our compliance program, we train our U.S.

and international employees, and we also train and monitor foreign third parties with whom we contract (e.g., distributors), to comply with the FCPA and other anti-corruption laws.

Failing to comply with the FCPA or any other anti-corruption law could result in fines, penalties or other adverse consequences.

As we expand our operations in China and other jurisdictions internationally, we are increasing the scope of our compliance programs to address the risks relating to the potential for violations of the FCPA and other anti-corruption laws.

Our compliance programs will need to include policies addressing not only the FCPA, but also the provisions of a variety of anti-corruption laws in multiple foreign jurisdictions, including China, provisions relating to books and records that apply to us as a public company, and include effective training for our personnel and relevant third parties.

As we expand our international operations, we continue to increase the scope of our compliance programs to match the risks relating to the potential for violations of the FCPA and other anti-corruption laws.

Our compliance program includes (i) policies addressing not only the FCPA, but also the provisions of a variety of anti-corruption laws in multiple foreign jurisdictions, (ii) provisions relating to books and records that apply to us as a public company, and (iii) effective training for our personnel and relevant third parties.

Transparency Laws.

Physician Payment Sunshine Act, and similar state laws, also include annual reporting and disclosure requirements for device manufacturers aimed at increasing the transparency of the interactions between device manufacturers and healthcare providers.

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A party’s failure to fully satisfy the obligations of a regulatory “safe harbor” provision may result in increased scrutiny by government enforcement authorities.

Government officials continue their vigorous enforcement efforts on the sales and marketing activities of pharmaceutical, medical device and other healthcare companies, including the pursuit of cases against individuals or entities that allegedly offered unlawful inducements to potential or existing customers to procure their business.

Settlements of these government cases have involved significant fines and penalties and, in some instances, criminal pleas.

In addition to the federal Anti-Kickback Statute, many states have their own anti-kickback laws.

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In some states, these anti-kickback laws apply with respect to all payers, including commercial health insurance companies.

Settlements of these government cases have involved significant fines and penalties and, in some instances, criminal proceedings.

False Claims Laws.

The False Claims Act prohibits any person from knowingly presenting, or causing to be presented, a false claim for payment to the federal government or knowingly making, or causing to be made, a false statement to get a

false claim paid.

Manufacturers can be held liable under false claims laws, even if they do not submit claims to the government, if they are found to have caused submission of false claims.

The False Claims Act also includes whistleblower provisions that allow private citizens to bring suit against an entity or individual on behalf of the U.S.

The False Claims Acts prohibit any person from knowingly presenting, or causing to be presented, a false claim for payment to the federal government or knowingly making, or causing to be made, a false statement to get a claim paid.

The Civil False Claims Act can be violated without actual knowledge and only requires reckless disregard or deliberate ignorance, while the Criminal False Claims Act requires a higher knowledge standard of actual knowledge and intent to violate.

Manufacturers can be held liable under the False Claims Acts, even if they do not submit claims to the government, if they are found to have caused the submission of false claims (e.g., by third parties such as healthcare providers).

The Civil False Claims Act also includes whistleblower provisions that allow private citizens to bring suit against an entity or individual on behalf of the U.S.

and to recover a portion of any monetary recovery.

Many of the recent, highly publicized settlements in the healthcare industry relating to sales and marketing practices have been cases brought under the False Claims Act.

Many of the recent, highly publicized settlements in the healthcare industry relating to sales and marketing practices have been cases brought under the Civil False Claims Act.

Most states also have adopted statutes or regulations similar to the federal laws, which apply to items and services reimbursed under Medicaid and other state programs.

Sanctions under the Federal Claims Act and state laws may include civil monetary penalties, exclusion of a manufacturer’s products from reimbursement under government programs, criminal fines and imprisonment.

Patient Protection and Affordable Care Act.

The Patient Protection and Affordable Care Act (“Affordable Care Act”) has changed the way healthcare in the U.S.

is financed by both governmental and private insurers and has significantly affected the medical device industry.

This law contains a number of provisions, including provisions governing enrollment in federal healthcare programs, reimbursement, comparative effectiveness research, and enhancements to fraud and abuse requirements and enforcement.

However, the long-term viability of the Affordable Care Act, and its impact on our business and results of operations, remains uncertain.

Any legislative and executive initiatives may significantly change the scope and impact of the Affordable Care Act and, in turn, the medical device industry.

Sanctions under the federal False Claims Acts and similar state laws may include civil monetary penalties, treble damages, criminal fines and/or imprisonment.

Labor Standards Laws.

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The Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), the Health Information Technology for Economic and Clinical Health Act (the “HITECH Act”), and accompanying rules, require certain entities, referred to as “covered entities” (including most healthcare providers and health plans), to comply with established standards, including standards regarding the privacy and security of protected health information (“PHI”).

Many state laws also regulate the use and disclosure of health information and require notification in the event of breach of such information.

The EU has adopted a single EU privacy regulation, the General Data Protection Regulation (“GDPR”), which went into effect May 25, 2018.

The GDPR extends the scope of the EU data protection law to all companies processing personal data in the context of the activities of an establishment of a controller or a processor in the EU, regardless of whether the processing takes place in the EU or not.

Many state laws also regulate the use and disclosure of health information and require notification in the event of a breach of such information.

The EU has adopted a single EU privacy regulation, the General Data Protection Regulation (“GDPR”).

The GDPR can have an extraterritorial scope and, in particular, applies to the processing of personal data in the context of the activities of an establishment of a company (controller or a processor) in the EU, regardless of whether the processing takes place in the EU or not.

In addition, it applies to the processing of personal data of data subjects who are in the EU by a controller or processor not established in the EU, where the processing activities are related to:

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The GDPR provides for a harmonization of the data protection regulations throughout the EU.

It imposes a strict data protection compliance regime with severe penalties of up to the greater of 4% of worldwide sales or €20 million and includes new rights such as the “portability” of personal data.

It imposes a strict data protection compliance regime with severe penalties of up to the greater of 4% of the total worldwide annual turnover of the preceding financial year or €20 million (whichever is higher) and includes new rights such as the “portability” of personal data.

Although the GDPR applies across the EU without a need for local implementing legislation, it contains a number of opener clauses enabling the EU Member States to provide for additional legislation.

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We have implemented changes to our business practices to comply with the GDPR.

We post on our websites our privacy policies and practices regarding the collection, use and disclosure of user data.

Any failure, or perceived failure, by us to comply with our posted privacy policies or with any applicable regulatory requirements or orders, or privacy, data protection, information security or consumer protection-related privacy laws and regulations in one or more jurisdictions, could result in proceedings or actions against us by governmental entities or others, including class action privacy litigation in certain jurisdictions, subject us to significant fines, penalties, judgments and negative publicity, require us to change our business practices, increase the costs and complexity of compliance, and adversely affect our business.

As a consequence of Brexit, the GDPR no longer directly applies in the UK.

However, the UK Data Protection Act 2018 remains in force, which incorporates the GDPR into UK legislation with some minor amendments to take account of the UK's departure from the EU.

Thus, we remain subject to the applicable provisions of the GDPR in the UK.

The People’s Republic of China has introduced a comprehensive personal information protection regime by establishing a unified, cross-sector legislation, as the EU does with the GDPR.

This legislation, called the Personal Information Protection Law (“PIPL”), went into effect on November 1, 2021, and has many aspects that are similar to the GDPR.

The PIPL sets rules for the processing activities such as collection, use, sharing, transfer, and disclosure of personal information in China.

It also applies to the personal information processing activities outside of China if relevant business operators (a) aim at providing products or services to individuals in China;

or (b) engage in analyzing and evaluating the behavior of individuals in China.

Among others, the PIPL requires companies as personal information processors (which can be viewed as equivalent to data controllers under the GDPR) to obtain informed consents from the data subjects for the processing activities of their personal information, and separate consents under certain circumstances such as cross-border transfer of personal information.

The PIPL also requires storage of personal information locally in China if the company is certified as a critical information infrastructure operator (“CIIO”) or processing personal information exceeding a certain volume threshold.

Further, the PIPL grants statutory rights to data subjects, such as the right to information, the right to withdraw consents, the right of data portability, and the right to refuse automated decision-making.

In addition, the PIPL also imposes a number of new administrative requirements on the personal information processors, including, among others, designating a data protection officer if certain conditions are met, signing data processing agreements with entrusted processors (which can be viewed as equivalent to data processors under the GDPR), preparing data breach notices, conducting a personal information impact assessment as required, and obtaining regulatory approval for certain cross-border data transfer activities.

Violations of the PIPL may incur severe penalties, including a fine of up to RMB 50 million or 5% of the company's annual turnover in the preceding year, revocation of the company’s license to do business in China, and personal liabilities for company executives.

As the PIPL is new and relevant implementation rules are to be finalized

and released, we are in the process of implementing changes to our business practices to comply with the PIPL while monitoring further developments in the law.

We post on our websites our privacy notices, policies and practices regarding the collection, use and disclosure of user data.

Any failure, or perceived failure, by us to comply with our posted privacy notices or policies or with any applicable regulatory requirements or orders, or privacy, data protection, information security or consumer protection-related privacy laws and regulations in one or more jurisdictions could result in proceedings or actions against us by governmental entities or others, including class action privacy litigation in certain jurisdictions, subject us to significant fines, penalties, judgments and negative publicity, require us to change our business practices, increase the costs and complexity of compliance, and adversely affect our business.

Data protection, privacy and information security have become the subject of increasing public, media and legislative concern.

For example, California’s Consumer Protection Act went into effect on January 1,

2020, giving consumers the right to demand certain information and actions from companies who collect personal information.

This enhanced scrutiny and legal requirements could results in costly compliance efforts and potentially result in fines, harm to reputation, or other consequences.

For example, California’s Consumer Protection Act went into effect on January 1, 2020, giving consumers the right to demand certain information and actions from companies who collect personal information.

This enhanced scrutiny and legal requirements could result in costly compliance efforts and potentially result in fines, harm to reputation, or other consequences.

If our customers were to reduce their use of our products and services as a result of these concerns, our business could be materially harmed.

As noted above, we are also subject to the possibility of security and privacy breaches, which themselves may result in a violation of these privacy laws.

After the recent Brexit deal between the UK and the EU, the GDPR no longer directly applies in the UK.

However, the UK Data Protection Act 2018 will remain in force, which incorporates the GDPR into UK legislation with some minor amendments to take account of the UK's departure from the EU.

Thus, we have to continue to comply with the GDPR (including as it applies in the UK).

Further, there is a four-month transition period beginning January 1, 2021 with regard to data transfers from the European Economic Area to the UK, which will be automatically extended by two months if neither the UK nor the EU objects.

After this period, if the European Commission does not adapt an adequacy decision in respect of the UK, it will be necessary to implement appropriate safeguards such as standard contractual clauses or binding corporate rules in order to enable data transfers to the UK.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was signed into law.

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companies to defer the employer’s portion of social security taxes between March 27, 2020 and December 31, 2020 and pay such taxes in two installments in 2021 and 2022.

As permitted by the CARES Act, we have deferred payment of the employer’s portion of social security payroll tax payments.

As permitted by the CARES Act we have deferred payment of the employer’s portion of social security payroll tax payments and made a payment equal to one half of the deferred amount during the year ended December 31, 2021.

Our worldwide sales have not historically reflected a significant degree of seasonality;

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Sustainability

We take our responsibility to conduct our business in a sustainable manner seriously and have identified both risks and opportunities related to our sustainability program, as we strive for continued growth and profitability.

In recent years, the sustainability of our business has become a key focus of our management team.

Under the oversight of our Board of Directors, we have created a cross-functional Corporate Sustainability Council that is driving long-term Environment, Social and Governance (“ESG”) goals across our enterprise.

These efforts have included proactive actions to address both risks and opportunities related to our sustainability program, as we strive for continued growth and profitability.

The majority of our products are disposable medical devices and are generally disposed of after a single use due primarily to the risks of exposing patients to bloodborne pathogens capable of transmitting disease or other potentially infectious materials.

Additionally, repeated sterilization to address such risks is not possible because it may adversely affect the quality of the plastic used in many of our products and result in the failure of our product to function properly if used in multiple medical procedures.

Additionally, repeated sterilization to address such risks is not possible because it may adversely affect the quality of the materials used in many of our products and result in the failure of our product to function properly if used in multiple medical procedures.

Consequently, many of our used products will likely end up in a medical waste disposal facility at the end of their usefulness.

Despite this obstacle, we continue to look for opportunities to deliver sustainable, long-term growth of our business.

We continue to look for opportunities to deliver sustainable, long-term growth of our business.

Our sustainability practices are an integral component of our business strategy, and our sustainability activities are reviewed and approved by senior management and our Board of Directors.

By assessing our sustainability opportunities, w e have developed areas of focus where we are positioned to make a positive impact.

These include programs designed to reduce waste, improve efficiency, and protect the environment including our:

• ISO 14001 certification – we have achieved this certification at many of our facilities with a continued goal of achieving this certification at all our manufacturing facilities in 2021 (ISO 14001 is the international standard that specifies requirements for an effective environmental management system);

• ISO 45001 certification – our goal is to achieve this certification at all our manufacturing facilities within the next 12 to 18 months (ISO 45001 is the international standard that specifies requirements for an effective safety management system);

• ISO 50001 certification – we have achieved this certification at our Galway facility, and our goal is to achieve ISO 50001 certification at all our manufacturing facilities within the next 12 to 18 months (ISO 50001 is the international standard that specifies requirements for an effective energy management system);

• employee gardens that promote pollination and provide farm-to-table nutrition for our employees at our headquarters in South Jordan, Utah;

These include programs designed to reduce waste, improve efficiency, reduce greenhouse gas emissions, and protect the environment.

Our sustainability values in action include:

• achievement of ISO 14001 certification at eight of our largest manufacturing facilities with a continued goal of achieving this certification at all our manufacturing and major distribution facilities (ISO 14001 is the international standard that specifies requirements for an effective environmental management system);

• achievement of ISO 45001 certification at five of our eight largest manufacturing facilities, and our goal is to achieve this certification at all our manufacturing facilities in 2023 (ISO 45001 is the international standard that specifies requirements for an effective safety management system);

• achievement of ISO 50001 certification at our Galway and Singapore facilities, and our goal is to achieve ISO 50001 certification at all our manufacturing facilities by the end of 2023 (ISO 50001 is the international standard that specifies requirements for an effective energy management system);

• establishment and support of employee gardens that promote pollination and provide farm-to-table nutrition for our employees at our headquarters in South Jordan, Utah;

• transition to re-usable pallets and methods to move products in bulk containers, reducing intra-company shipping materials;

• reduction in packaging materials by reducing film thickness and using original product packaging where possible;

• transition from paper to electronic work orders in our manufacturing facilities worldwide, which we expect to reduce our paper usage by at least 2.8 million pieces and 20,000 plastic sleeves annually;

• reduction in packaging materials by implementing product family packaging reviews to consolidate shipments by better understanding our customers’ purchasing practices—these reviews often allow us to increase quantities per box, eliminate the usage of intermediate packaging, reducing film thickness and use original product packaging where possible;

• transition from paper work orders to electronic work orders through our internally designed eWorq program—at full completion, this project will save millions of pieces of paper and thousands of plastic sleeves annually—currently we are working to implement this program at our largest manufacturing facilities in South Jordan, Utah and Tijuana, Mexico during 2022, with plans to continue the roll-out to other sites thereafter;

• expansion of recycling programs where our employees recycle materials, including food waste, paper, cardboard, food and beverage containers, scrap metal, and pallets, and re-use of our plastic scrap waste leftover from our manufacturing process of our molded parts;

• investment in a line of fully compostable “to-go” containers made from plant starch and sugarcane, and our program to transition to reusable dishes and cutlery at all our cafeterias;

• car charging stations and car-pooling preferential parking to incentivize employees to reduce their carbon footprint;

• efficient heating and cooling systems that operate on variable efficiency drives, increasing our energy efficiency at our headquarters in South Jordan, Utah and our transition to Light Emitting Diode (“LED”) lighting in our manufacturing facilities;

• environmental tracking system at our world-wide facilities to facilitate monthly reporting and accountability for energy, water, waste, recycling, and other scope 1, 2, and 3 emissions metrics.

In 2020 we provided in-kind donations of our medical devices to support two medical or humanitarian missions, and we worked closely with a local Utah university to donate product for use in their educational and instructional programs.

The COVID-19 pandemic caused disruptions to our operations and the operations of the non-profit organizations to which we typically donate, which hindered our ability to provide this type of support at the same levels we have in the past, but we plan on continuing and expanding this practice in 2021.

To learn more about our sustainability programs and accomplishments, please visit www.merit.com/about/corporate-sustainability/.

• placement of free car charging stations for employees who have transitioned to electric vehicles;

• installation of efficient heating and cooling systems that operate on variable efficiency drives, increasing our energy efficiency at our headquarters in South Jordan, Utah and our transition to Light Emitting Diode (“LED”) lighting in our manufacturing facilities;

• operation of an environmental tracking system at our world-wide facilities to facilitate monthly reporting and accountability for energy, water, waste, recycling, and scope 1, 2, and 3 greenhouse gas emissions metrics—this system supports our 2030 operational sustainability goals.

To learn more about our sustainability programs and accomplishments, you may visit www.merit.com/about/corporate-sustainability/;

however, the information on this website is not, and will not be deemed, a part of this report or incorporated into any other filings we make with the SEC.

Human Capital Management

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In the U.S., we are an equal opportunity/affirmative action employer committed to making employment decisions without regard to race, religion, ethnicity or national origin, gender, sexual orientation, gender identity or expression, age, disability, protected veteran status or any other characteristics protected by law.

As a result, over 50% of our U.S.

population identifies as non-white.

Over 50% of our U.S.

employee population identifies as non-white.

To further promote a culture of inclusion, during 2021 we started the Women’s Leadership Initiative (“WLI”), our first ever affinity group led by women and open to all Merit employees.

The WLI contributes to our long-term strategies by promoting a culture of diversity, equity and inclusion through (i) sponsoring professional development activities focused on overcoming barriers and restraints to the advancement of women’s careers, (ii) facilitating external interactions with organizations and thought leaders, and (iii) providing resources focused on improving diversity, equity, and inclusion.

Employee Engagement.

The engagement of our workforce is critical to delivering on our competitive strategy, and we place high importance on informed and engaged employees.

We communicate frequently and transparently with our employees through a variety of communication methods, including video and written communications, town hall meetings, and our company intranet, and we acknowledge individual contributions to Merit by celebrating milestones of service in

five-year increments.

As a result of the COVID-19 pandemic, we also further strengthened our communication platforms.

We communicate frequently with our employees through a variety of communication methods, including video and written communications, town hall meetings, and our company intranet, and we acknowledge individual contributions to Merit by celebrating milestones of service in five-year increments.

As a result of the COVID-19 pandemic, we strengthened our communication platforms.

Our employee communications during the pandemic have kept our employees informed on critical priorities, important actions being taken by management in response to the pandemic, and continued efforts to protect employee health, safety and well-being.

In addition, the human resource team expanded with the hiring of a Senior Director of Internal Communications, to specifically focus on improving employee communications.

Compensation and Benefits.

Because our mission is to create innovative medical devices that improve lives, we aim to hire and develop employees who want to build something special through hard work, team effort, and commitment.

That is why we provide all our employees with competitive benefit packages and strive to provide the most cost-effective medical benefits and wellness programs.

As a result of our focus on competitive health and wellness benefits, we have achieved our seventh consecutive year of zero health care plan cost increases for our U.S.

employees who participate in our group healthcare plans.

Our benefits include competitive pay, annual incentive awards and bonus opportunities, healthcare and retirement benefits, an Employee Stock Purchase Plan, paid time off and sick leave, paid parental leave, flexible work schedules, remote working opportunities, and a wellness program.

Talent Development.

In 2021, we hired our first ever Vice President of Global HR Operations to focus on global programs around employee performance, development and engagement.

To improve employee performance, we have begun building out a global performance management program which will be officially launched in 2023 alongside our new human resources information system.

Employee development programs are being executed at different regional and local levels with a focus on management and leadership development.

We have also invested time and resources to strengthen employee engagement.

For example, we have partnered with Gallup, a global research and worldwide leader on the topic of engagement, to support efforts in understanding our employee sentiment worldwide.

To accomplish this, we are developing a program for surveying employees on a regular basis and creating manager action plans based on the feedback of those surveys.

Our employees are actively involved in their communities and supporting causes.

At our headquarters, we provide an onsite garden where employees take part in growing and distributing produce to employees and to the local community.

Employees also actively support causes by raising awareness and funds for non-profit organizations.

Areas that our employees have supported in recent years include Breast Cancer Awareness Month, Heart Health Month, children’s charities and supporting those in need.

In 2021, we resumed our support of humanitarian missions and medical education conferences, albeit in a limited fashion considering restrictions imposed in light of the COVID-19 pandemic.

We were able to partner with the Heineman-Robicsek Medical Outreach group to provide critical products to support its medical mission to Belize.

As the world continues to move forward considering the new normal presented by the COVID-

19 pandemic, we are anxious to resume our historical volume of support for bringing healthcare to underserved areas of the globe.

Wellness is at the foundation of creating a positive employee experience.

At our company headquarters in Utah, we have an onsite medical clinic available for our employees and their families where we provide preventative and general medical care.

The clinic also currently provides employees with COVID-19 vaccination shots, boosters, and testing.

In addition, we have a Chief Wellness Officer dedicated to designing programs and initiatives that support the physical, emotional, and mental health of our employees.

This year, we launched a wellness committee and created a “Get Healthy” wellness program available to all sites across the globe.

Programs include providing health information from health and nutrition experts, newsletters with wellness and nutrition tips, and activities promoting health and wellbeing such as walking groups.

Some programs include suicide prevention awareness, on-site diabetes screenings, immunizations, lifestyle modification to prevent diseases, tobacco cessation, breast cancer awareness, and our Smart Choice meal program designed by our onsite nutritionist and chef to provide free heart healthy meals to employees in our Utah headquarters.

COVID-19 Response;

Health and Safety.

During the COVID-19 pandemic, the majority of our operations employees have continued to work from our facilities, where we have adopted health screening, implemented social distancing and personal protective equipment requirements, enhanced cleaning and sanitation procedures, and modified workspaces to reduce the potential for disease transmission.

During the COVID-19 pandemic, the majority of our manufacturing employees have continued to work from our facilities, where we have adopted health screening, implemented social distancing and personal protective equipment requirements, enhanced food service, cleaning and sanitation procedures, and modified workspaces to reduce the potential for disease transmission, and implemented a COVID-19 vaccine mandate for our U.S.

Most employees who do not require access to our facility to perform their work have been working from home during the pandemic, without a significant impact to productivity.

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We have developed and continue to implement a continuing cyber awareness training program which is designed to increase awareness of cybersecurity threats throughout our company and reduce the risk of human error.

As part of that training, we conduct phishing testing on all our employees with e-mail access and emphasize information security through events held each year during our Cyber Awareness Month .

We conduct periodic phishing testing on all our employees with e-mail access and emphasize information security in training events and programs we host throughout the year .

We have established controls and procedures to escalate enterprise-level issues, including cybersecurity matters, to the appropriate management levels within our organization and our Board of Directors, or members or committees thereof, as appropriate.

Our Board of Directors has delegated to its Audit Committee specific oversight responsibility for enterprise risk management, including our approach to managing cybersecurity risk.

Our Board of Directors is responsible for enterprise risk management, including our approach to managing cybersecurity risk, and has delegated oversight responsibility to its Audit Committee.

The Audit Committee regularly reviews information security risks and receives reports from our Chief Technology Officer and other members of the Company’s management regarding those risks.

Under our framework, cybersecurity issues are analyzed by subject matter experts for potential financial, operational, and reputational risks, based on, among other factors, the nature of the matter and breadth of impact.

Matters determined to present potential material impacts to the Company’s financial results, operations, and/or reputation are immediately reported by management to our Board of Directors or the Audit Committee, as appropriate, in accordance with our escalation framework.

Matters determined to present potential material impacts to the Company’s financial results, operations, and/or reputation are immediately reported by management to our Board of Directors or its Audit Committee, as appropriate, in accordance with our escalation framework.

In addition, we have established procedures to ensure that management responsible for overseeing the effectiveness of disclosure controls is informed in a timely manner of known cybersecurity risks and incidents that may materially impact our operations and that timely public disclosure is made as appropriate.

We maintain insurance coverage that may, subject to policy terms and conditions, cover certain aspects of cybersecurity risks;

We maintain cyber insurance coverage that may, subject to policy terms, conditions and limitations, cover certain aspects of cybersecurity risks;

however, such insurance coverage may be unavailable or insufficient to cover all losses or all types of claims that may arise in the continually evolving area of cyber risk.

During the last three years, we have not experienced a material security breach and, as a result, we have not incurred any material expenses from such a breach.

Furthermore, during such time, we have not been penalized or paid any amount under any information security breach settlement.

Recent Developments

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What changed 10-K

Item 1. Business