−Removed: Investors should carefully consider the following risk factors.
+Added: Investors should carefully consider the following Company-specific and general risk factors.
+Added: Company-Specific Risk Factors
Our revenue and profitability will decline if the pharmaceutical industry undergoes certain changes, including limiting or discontinuing research, development, production and marketing of the pharmaceuticals that are compatible with the services we provide.
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In addition, our competitive position could be adversely affected by any inability to obtain access to new biotech pharmaceutical products.
−Removed: Delays in reimbursement may adversely affect our liquidity, cash flows and operating results.
−Removed: The reimbursement process for the services we provide is complex, resulting in delays between the time we bill for a service and receipt of payment that can be significant.
−Removed: Reimbursement and procedural issues often require us to resubmit claims multiple times and respond to multiple administrative requests before payment is remitted.
−Removed: The collection of accounts receivable is challenging, and requires constant focus and involvement by management and ongoing enhancements to information systems and billing center operating procedures.
−Removed: While management believes that our controls and processes are satisfactory, there can be no assurance that collections of accounts receivable will continue at historical rates.
−Removed: The risks associated with Third Party Payers and the inability to collect outstanding accounts receivable could have a material adverse effect on our liquidity, cash flows and operating results.
−Removed: We are subject to pricing pressures and other risks involved with Third Party Payers.
−Removed: Competition to provide healthcare services, efforts by traditional Third Party Payers to contain or reduce healthcare costs, and the increasing influence of managed care payers such as health maintenance organizations, has resulted in reduced rates of reimbursement for home infusion and specialty pharmacy services.
−Removed: Changes in reimbursement policies of governmental Third Party Payers, including policies relating to Medicare, Medicaid and other federal and state funded programs, could reduce the amounts reimbursed to our customers for our products and, in turn, the amount these customers would be willing to pay for our products and services, or could directly reduce the amounts payable to us by such payers.
−Removed: Pricing pressures by Third Party Payers may continue, and these trends may adversely affect our business.
−Removed: Also, continued growth in managed care plans has pressured healthcare providers to find ways of becoming more cost competitive.
−Removed: MCOs have grown substantially in terms of the percentage of the population they cover and in terms of the portion of the healthcare economy they control.
−Removed: MCOs have continued to consolidate to enhance their ability to influence the delivery of healthcare services and to exert pressure to control healthcare costs.
−Removed: A rapid concentration of revenue derived from individual managed care payers could harm our business.
If we are unable to maintain relationships with existing patient referral sources, our business and consolidated financial condition, results of operations, and cash flows could be materially adversely affected.
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Our growth and profitability depends, in part, on our ability to establish and maintain close working relationships with these patient referral sources, and to increase awareness and acceptance of the benefits of home infusion by our referral sources and their patients.
−Removed: Our loss of, or failure to maintain, existing
−Removed: relationships or our failure to develop new referral relationships could have a material adverse effect on our business and consolidated financial condition, results of operations, and cash flows.
+Added: Our loss of, or failure to maintain, existing relationships or our failure to develop new referral relationships could have a material adverse effect on our business and consolidated financial condition, results of operations, and cash flows.
Changes in industry pricing benchmarks could adversely affect our financial performance.
Our contracts generally use certain published benchmarks to establish pricing for the reimbursement of prescription medications we dispense.
−Removed: These benchmarks include AWP, wholesale acquisition cost, and average manufacturer price.
+Added: These benchmarks include AWP, wholesale acquisition cost, ASP and average manufacturer price.
Many of our contracts utilize the AWP benchmark.
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Without a suitable pricing benchmark in place, many of our contracts will have to be modified and could potentially change the economic structure of our agreements.
−Removed: Pending and future litigation could subject us to significant monetary damages and/or require us to change our business practices.
−Removed: We employ pharmacists, dieticians, nurses and other health care professionals.
−Removed: We are subject to liability for negligent acts, omissions, or injuries occurring at one of these clinics or caused by one of our employees.
−Removed: We are subject to risks relating to asserted claims, litigation and other proceedings in connection with our operations.
−Removed: We are or may face claims or become a party to a variety of legal actions that affect our business, including breach of contract actions, employment and employment discrimination-related suits, employee benefit claims, stockholder suits and other securities laws claims, and tort claims.
−Removed: Due to the nature of our business, we, through our employees and caregivers who provide services on our behalf, may be the subject of medical malpractice claims.
−Removed: A court could find these individuals should be considered our agents, and, as a result, we could be held liable for their acts or omissions.
−Removed: We may incur substantial expenses in defending such claims or litigation, regardless of merit, and such claims or litigation could result in a significant diversion of the efforts of our management personnel.
−Removed: Successful claims against us may result in monetary liability or a material disruption in the conduct of our business.
−Removed: Similarly, if we settle such legal proceedings, it may affect how we operate our business.
−Removed: See Item 3 for a description of material proceedings pending against us.
−Removed: We believe that these suits are without merit and, to the extent not already concluded, intend to contest them vigorously.
−Removed: However, an adverse outcome in one or more of these suits may have a material adverse effect on our consolidated results of operations, consolidated financial position, and/or consolidated cash flow from operations, or may require us to make material changes to our business practices.
−Removed: We may be subject to liability claims for damages and other expenses that are not covered by insurance.
−Removed: As a result of operating in the home infusion industry, our business entails an inherent risk of claims, losses and potential lawsuits alleging incidents involving our employees that are likely to occur in a patient’s home.
−Removed: We maintain professional liability insurance to provide coverage to us and our subsidiaries against these risks.
−Removed: A successful product or professional liability claim in excess of our insurance coverage could harm our consolidated financial statements.
−Removed: Various aspects of our business may subject us to litigation and liability for damages.
−Removed: For example, a prescription drug dispensing error could result in a patient receiving the wrong or incorrect amount of medication, leading to personal injury or death.
−Removed: Our business and consolidated financial statements could suffer if we pay damages or defense costs in connection with a claim that is outside the scope of any applicable contractual indemnity or insurance coverage.
−Removed: Our insurance coverage also includes fire, property damage and general liability with varying limits.
−Removed: We cannot assure that the insurance we maintain will satisfy claims made against us or that insurance coverage will continue to be available to us at commercially reasonable rates, in adequate amounts or on satisfactory terms.
−Removed: Any claims made against us, regardless of their merit or eventual outcome, could damage our reputation and business.
−Removed: Pressures relating to downturns in the economy could adversely affect our business and consolidated financial statements.
−Removed: Medicare and other federal and state payers account for a portion of our revenues.
−Removed: During economic downturns and periods of stagnant or slow economic growth, federal and state budgets are typically negatively affected, resulting in reduced reimbursements or delayed payments by the federal and state government health care coverage programs in which we participate, including Medicare, Medicaid, and other federal or state assistance plans.
−Removed: Government programs could also slow or temporarily suspend payments, negatively impacting our cash flow and increasing our working capital needs and interest
−Removed: We have seen, and believe we will continue to see, Medicare and state Medicaid programs institute measures aimed at controlling spending growth, including reductions in reimbursement rates.
−Removed: Higher unemployment rates and significant employment layoffs and downsizings may lead to lower numbers of patients enrolled in employer-provided plans.
−Removed: Adverse economic conditions could also cause employers to stop offering, or limit, healthcare coverage, or modify program designs, shifting more costs to the individual and exposing us to greater credit risk from patients or the discontinuance of therapy.
−Removed: Acquisitions, strategic investments and strategic relationships involve certain risks.
−Removed: We may pursue acquisitions, strategic investments in, or strategic relationships with businesses and technologies.
−Removed: Acquisitions may entail numerous risks, including difficulties in assessing values for acquired businesses, intangible assets and technologies, difficulties in the assimilation of acquired operations and products, diversion of management’s attention from other business concerns, assumption of unknown material liabilities of acquired companies, amortization of acquired intangible assets which could reduce future reported earnings, and potential loss of clients or key employees of acquired companies.
−Removed: We may not be able to successfully fully integrate the operations, personnel, services or products that we have acquired or may acquire in the future.
−Removed: Strategic investments may also entail some of the risks described above.
−Removed: If these investments are unsuccessful, we may need to incur charges against earnings.
−Removed: We may also pursue a number of strategic relationships.
−Removed: These relationships and others we may enter into in the future may be important to our business and growth prospects.
−Removed: We may not be able to maintain these relationships or develop new strategic alliances.
Changes in our relationships with pharmaceutical suppliers, including changes in drug availability or pricing, could adversely affect our business and financial results.
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Most of the manufacturers of the pharmaceuticals we sell have the right to cancel their supply contracts with us without cause and after giving only minimal notice.
−Removed: Any changes to these relationships, including, but not limited, to loss of a manufacturer relationship, drug shortages or changes in pricing, could have an adverse effect on our business and financial results.
+Added: Any changes to these relationships, including, but not limited to, the loss of a manufacturer relationship, drug shortages or changes in pricing, could have an adverse effect on our business and financial results.
Some pharmaceutical manufacturers attempt to limit the number of preferred distributors that may market certain of their pharmaceutical products.
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Adverse developments with respect to this trend could have a material adverse effect on our financial condition and results of operations.
−Removed: A disruption in supply could adversely impact our business.
+Added: A disruption in pharmaceutical and medical supply could adversely impact our business.
For the year ended December 31, 2020, approximately 70% of our pharmaceutical and medical supply purchases are from three vendors.
2 unchanged sentences
Should a supply disruption result in the inability to obtain especially high margin drugs and compound components necessary for patient care, our consolidated financial statements could be negatively impacted.
+Added: The COVID-19 pandemic has led to a constrained supply environment which could result in higher cost to procure, and potential unavailability of, critical personal protection equipment, pharmaceuticals and medical supplies.
+Added: As of December 31, 2020 we have not experienced a significant impact in the availability of supplies from the COVID-19 pandemic.
A shortage of qualified registered nursing staff, pharmacists and other professionals could adversely affect our ability to attract, train and retrain qualified personnel and could increase operating costs.
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We may not be successful in any of these areas.
−Removed: In addition, where labor shortages arise in markets in which we operate, we may face higher costs to attract personnel, and we may have to provide them with more attractive benefit packages than originally anticipated or are being paid in other
−Removed: markets where such shortages do not exist at the time.
+Added: In addition, where labor shortages arise in markets in which we operate, we may face higher costs to attract personnel, and we may have to provide them with more attractive benefit packages than originally anticipated or are being paid in other markets where such shortages do not exist at the time.
In either case, such circumstances could cause our profitability to decline.
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This could negatively impact our revenues and/or margins.
−Removed: Failure to develop new services or adapt to changes and trends within the industry may adversely affect our business.
+Added: Failure to develop new services or adapt to changes and trends within the healthcare industry may adversely affect our business.
We operate in a highly competitive environment.
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Our failure to anticipate or appropriately adapt to changes in the industry could negatively impact our competitive position and adversely affect our business and results of operations.
−Removed: Cybersecurity risks could compromise our information and expose us to liability, which may harm our ability to operate effectively and may cause our business and reputation to suffer.
−Removed: Cybersecurity refers to the combination of technologies, processes and procedures established to protect information technology systems and data from unauthorized access, attack, or damage.
−Removed: We rely on our information systems to provide security for processing, transmission and storage of confidential information about our patients, customers and personnel, such as names, addresses and other individually identifiable information protected by HIPAA and other privacy laws.
−Removed: Cyber incidents can result from deliberate attacks or unintentional events.
−Removed: Cyber-attacks are increasingly more common, including in the health care industry.
−Removed: The regulatory environment surrounding information security and privacy is increasingly demanding, with the frequent imposition of new and changing requirements.
−Removed: Compliance with changes in privacy and information security laws and with rapidly evolving industry standards may result in our incurring significant expense due to increased investment in technology and the development of new operational processes.
−Removed: We have not experienced any known attacks on our information technology systems that compromised any confidential information.
−Removed: We maintain our information technology systems with safeguard protection against cyber-attacks including passive intrusion protection, firewalls and virus detection software.
−Removed: However, these safeguards do not ensure that a significant cyber-attack could not occur.
−Removed: Although we have taken steps to protect the security of our information systems and the data maintained in those systems, it is possible that our safety and security measures will not prevent the systems’ improper functioning or damage or the improper access or disclosure of personally identifiable information such as in the event of cyber-attacks.
−Removed: Security breaches, including physical or electronic break-ins, computer viruses, attacks by hackers and similar breaches can create system disruptions or shutdowns or the unauthorized use or disclosure of confidential information.
−Removed: If personal information or protected health information is improperly accessed, tampered with or disclosed as a result of a security breach, we may incur significant costs to notify and mitigate potential harm to the affected individuals, and we may be subject to sanctions and civil or criminal penalties if we are found to be in violation of the privacy or security rules under HIPAA or other similar federal or state laws protecting confidential personal information.
−Removed: In addition, a security breach of our information
−Removed: systems could damage our reputation, subject us to liability claims or regulatory penalties for compromised personal information and could have a material adverse effect on our business, financial condition, and results of operations.
−Removed: Our business is dependent on the services provided by third party information technology vendors.
−Removed: Our information technology infrastructure includes hosting services provided by third parties.
−Removed: While we believe these third parties are high-performing organizations with secure platforms and customary certifications, they could suffer a security breach or business interruption which in turn could impact our operations negatively.
−Removed: In addition, changes in pricing terms charged by our technology vendors may adversely affect our financial performance.
Changes in future business conditions could cause business investments and/or recorded goodwill to become impaired, and our financial condition and results of operations could suffer if there is an impairment of goodwill.
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Because of the significance of our goodwill, any future impairment could result in material non-cash charges to our results of operations, which could have an adverse effect on our financial condition and results of operations.
−Removed: Failure to maintain effective internal control over our financial reporting could have an adverse effect on our ability to report our financial results on a timely and accurate basis.
−Removed: Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934 (the “Exchange Act”), and is required to evaluate the effectiveness of these controls and procedures on a periodic basis and publicly disclose the results of these evaluations and related matters in accordance with the requirements of Section 404 of the Sarbanes-Oxley Act of 2002.
−Removed: Effective internal control over financial reporting is necessary for us to provide reliable financial reports, to help mitigate the risk of fraud and to operate successfully.
−Removed: Any failure to implement and maintain effective internal controls could result in material weaknesses or material misstatements in our consolidated financial statements.
−Removed: If we fail to maintain effective internal control over financial reporting, or our independent registered public accounting firm is unable to provide us with an unqualified attestation report on our internal control, we may be required to take corrective measures or restate the affected historical financial statements.
−Removed: In addition, we may be subjected to investigations and/or sanctions by federal and state securities regulators, and/or civil lawsuits by security holders.
−Removed: Any of the foregoing could also cause investors to lose confidence in our reported financial information and in us and would likely result in a decline in the market price of our stock and in our ability to raise additional financing if needed in the future.
−Removed: Acts of God such as major weather disturbances could disrupt our business.
−Removed: We operate in a network of prescribers, providers, patients and facilities that can be negatively impacted by local weather disturbances and other force majeure events.
−Removed: For example, in anticipation of major weather events, patients with impaired health may be moved to alternate sites.
−Removed: After a major weather event, availability of electricity, clean water and transportation can impact our ability to provide service in the home.
−Removed: Similarly, such events could impact key suppliers or vendors, disrupting the services or materials they provide us.
−Removed: In addition, acts of God and other force majeure events may cause a reduction in our business or increased costs, such as increased costs in our operations as we incur overtime charges or redirect services to other locations, delays in our ability to work with payers, hospitals, physicians and other strategic partners on new business initiatives, and disruption to referral patterns as patients are moved out of facilities affected by such events or are unable to return to sites of service in the home.
−Removed: An outbreak of a pandemic or epidemic disease could adversely affect our financial performance.
−Removed: An outbreak of a pandemic or epidemic disease could result in a general economic downturn, supply chain disruption, and/or a compromise in the ability of our clinicians to access patients, any of which, or a combination of which, could have a material adverse effect on our business and financial results.
A significant change in, or noncompliance with, governmental regulations and other legal requirements could have a material adverse effect on our reputation and profitability.
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We use, disclose and otherwise process personally identifiable information, including health information, making us subject to HIPAA and other federal and state privacy and security regulations and failure to comply with those regulations or to adequately secure the information we hold could result in significant liability or reputational harm and, in turn, have a material adverse effect on our patient base and revenue.
−Removed: We are also governed by federal and state laws of general applicability, including laws regulating matters of working conditions, health and safety and equal employment opportunity and other labor and employment matters as well as employee benefit, competition and antitrust matters.
+Added: We are also governed by federal and state laws of general applicability, including laws regulating matters of working conditions, health and safety and equal employment opportunity and other labor and employment matters as well as employee benefit, competition, antitrust, taxation and escheatment matters.
In addition, we could have significant exposure if we are found to have infringed another party’s intellectual property rights.
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However, there is substantial uncertainty regarding its net effect and its future.
−Removed: The Affordable Care Act has been subject to legislative and
−Removed: regulatory changes and court challenges.
+Added: The Affordable Care Act has been subject to legislative and regulatory changes and court challenges.
Effective January 2019, Congress eliminated the financial penalty associated with the individual mandate to maintain health insurance coverage.
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The Affordable Care Act provides for material reductions in the growth of Medicare program spending.
−Removed: More recently, the Cures Act significantly reduced the amount paid by Medicare for drug costs, while delaying the implementation of a clinical services payment, although Congress also passed a temporary transitional service payment that takes effect January 1, 2019.
+Added: More recently, the Cures Act significantly reduced the amount paid by Medicare for drug costs, while delaying the implementation of a clinical services payment, although Congress also passed a temporary transitional service payment that took effect January 1, 2019.
In addition, from time to time, CMS revises the reimbursement systems used to reimburse health care providers, which may result in reduced Medicare payments.
9 unchanged sentences
Current or future healthcare reform and deficit reduction efforts, changes in other laws or regulations affecting government healthcare programs, changes in the administration of government healthcare programs and changes by Third Party Payers could have a material, adverse effect on our financial position and results of operations.
+Added: Delays in reimbursement may adversely affect our liquidity, cash flows and operating results.
+Added: The reimbursement process for the services we provide is complex, resulting in delays between the time we bill for a service and receipt of payment that can be significant.
+Added: Reimbursement and procedural issues often require us to resubmit claims multiple times and respond to multiple administrative requests before payment is remitted.
+Added: The collection of accounts receivable is challenging, and requires constant focus and involvement by management and ongoing enhancements to information systems and billing center operating procedures.
+Added: While management believes that our controls and processes are satisfactory, there can be no assurance that collections of accounts receivable will continue at historical rates.
+Added: The risks associated with Third Party Payers and the inability to collect outstanding accounts receivable could have a material adverse effect on our liquidity, cash flows and operating results.
+Added: We are subject to pricing pressures and other risks involved with Third Party Payers.
+Added: Competition to provide healthcare services, efforts by traditional Third Party Payers to contain or reduce healthcare costs, and the increasing influence of managed care payers such as health maintenance organizations, has resulted in reduced rates of reimbursement for home infusion and specialty pharmacy services.
+Added: Changes in reimbursement policies of governmental Third Party Payers, including policies relating to Medicare, Medicaid and other federal and state funded programs, could reduce the amounts reimbursed to our customers for our products and, in turn, the amount these customers would be willing to pay for our products and services, or could directly reduce the amounts payable to us by such payers.
+Added: Pricing pressures by Third Party Payers may continue, and these trends may adversely affect our business.
+Added: Also, continued growth in managed care plans has pressured healthcare providers to find ways of becoming more cost competitive.
+Added: MCOs have grown substantially in terms of the percentage of the population they cover and in terms of the portion of the healthcare economy they control.
+Added: MCOs have continued to consolidate to enhance their ability to influence the delivery of healthcare services and to exert pressure to control healthcare costs.
+Added: A rapid concentration of revenue derived from individual managed care payers could harm our business.
We face periodic reviews and billing audits by governmental and private payers, and these audits could have adverse findings that may negatively impact our business.
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Furthermore, we cannot predict the overall impact of increased scrutiny on compounding pharmacies.
+Added: Our ability to use net operating loss carryforwards to offset future taxable income for U.S.
+Added: federal tax purposes is subject to limitation and risk that could further limit our ability to utilize our net operating losses.
+Added: federal income tax law, a corporation’s ability to utilize its net operating losses (“NOLs”) to offset future taxable income may be significantly limited if it experiences an “ownership change” as defined in Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”).
+Added: In general, an ownership change will occur if there is a cumulative change in a corporation’s ownership by “5-percent shareholders” that exceeds 50 percentage points over a rolling three-year period.
+Added: A corporation that experiences an ownership change will generally be subject to an annual limitation on the use of its pre-ownership change NOLs equal to the value of the corporation immediately before the ownership change, multiplied by the long-term tax-exempt rate (subject to certain adjustments).
+Added: At December 31, 2020, we had U.S.
+Added: federal NOLs of approximately $577.9 million, of which $139.8 million are expected to expire unutilized due to limitations under Section 382 of the Code.
+Added: We also had $600.1 million of cumulative gross state NOL carryforwards available to offset future taxable income in various states.
+Added: Any limitation to our annual use of NOLs could require us to pay a greater amount of U.S.
+Added: federal (and in some cases, state) income taxes, which could reduce our after-tax income from operations for future taxable years and adversely impact our financial condition.
+Added: At December 31, 2020, we maintained a full valuation allowance against all of our net U.S.
+Added: federal and state deferred tax assets with the exception of $0.4 million of estimated state NOLs.
+Added: Risks Relating to Our Indebtedness
Our existing indebtedness could adversely affect our business and growth prospects.
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Further, our credit agreements and indenture contain customary affirmative and negative covenants and certain restrictions on operations that could impose operating and financial limitations and restrictions on us, including restrictions on our ability to enter into particular transactions and to engage in other actions that we may believe are advisable or necessary for our business.
−Removed: Our term loan facility is also subject to mandatory prepayments in certain
−Removed: circumstances and requires a prepayment of a certain percentage of our excess cash flow.
+Added: Our term loan facility is also subject to mandatory prepayments in certain circumstances and requires a prepayment of a certain percentage of our excess cash flow.
This excess cash flow payment, and future required prepayments, will reduce our cash available for investment in our business.
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In such an event, we may not have sufficient assets to repay all of our indebtedness.
−Removed: The transition from the London Interbank Offered Rate (“LIBOR”) could negatively affect our interest rates and results of operations.
−Removed: In 2017, the U.K.
−Removed: Financial Conduct Authority announced that it intends to phase out LIBOR by the end of 2021.
−Removed: In addition, other regulators have suggested reforming or replacing other benchmark rates.
−Removed: The discontinuation, reform, or replacement of LIBOR or any other benchmark rates may result in fluctuating interest rates that may have a negative impact on our interest expense and our profitability.
−Removed: Continuing to combine businesses between BioScrip and Option Care may be more difficult, costly or time-consuming than expected and the anticipated benefits and cost savings of the Merger may not continue to be realized.
−Removed: The continuing success of the Merger, including anticipated benefits and cost savings, depend, in part, on our ability to successfully combine and integrate both businesses.
−Removed: Integration of the businesses following the Merger is a complex, costly and time-consuming process.
−Removed: If we experience difficulties with the continued integration process, the anticipated benefits of the Merger may not continue to be realized fully or at all, or may take longer to realize than expected.
−Removed: These integration matters could have an adverse effect for an
−Removed: undetermined period after completion of the Merger.
−Removed: In addition, the actual cost savings of the Merger could be less than anticipated.
−Removed: Our future results may be adversely impacted if we do not effectively manage our expanded operations.
−Removed: Following the completion of the Merger, the size of our combined business is significantly larger than the size of either Option Care or BioScrip’s respective businesses prior to the Merger.
−Removed: Our ability to successfully manage this expanded business depends, in part, upon management’s ability to manage the integration of two discrete companies, as well as the increased scale and scope of the combined business with its associated increased costs and complexity.
−Removed: There can be no assurances that we will be successful or that we will realize the expected operating efficiencies, cost savings and other benefits currently anticipated from the Merger.
+Added: Risks Relating to Our Common Stock
We are a “controlled company” within the meaning of the rules of Nasdaq and, as a result, qualify for and rely on, exemptions from certain corporate governance standards, which limit the presence of independent directors on our board of directors or board committees.
−Removed: Following the Merger, approximately 81% of the outstanding shares of our common stock is held by HC Group Holdings I, LLC.
+Added: As of December 31, 2020, approximately 64% of the outstanding shares of our common stock is held by HC Group Holdings I, LLC.
As a result, we are a “controlled company” for purposes of the Nasdaq listing rules and are exempt from certain governance requirements otherwise required by Nasdaq, including requirements that:
4 unchanged sentences
Accordingly, you will not have the same protections afforded to stockholders of companies that are subject to all of the corporate governance requirements of the Nasdaq.
−Removed: A significant portion of our total outstanding shares are restricted from immediate resale but may be sold into the market in the near future.
+Added: A significant portion of our total outstanding shares may be sold into the market in the near future.
This could cause the market price of our common stock to drop significantly, even if our business is doing well.
−Removed: The shares of our common stock issued in the Merger to HC Group Holdings I, LLC as Merger consideration, or approximately 81% of the outstanding shares of our common stock as of December 31, 2019, are generally eligible for resale subject to a 12-month lockup period beginning on the Merger Date.
−Removed: The market price of our common stock could decline as a result of sales of a large number of shares of our common stock in the market after the expiration of the lockup period or even the perception that these sales could occur.
+Added: The shares of our common stock issued in the Merger to HC Group Holdings I, LLC as Merger consideration, or approximately 64% of the outstanding shares of our common stock as of December 31, 2020, are generally eligible for resale.
+Added: The market price of our common stock could decline as a result of sales of a large number of shares of our common stock in the market or even the perception that these sales could occur.
+Added: Subsequent to December 31, 2020, HC Group Holdings I, LLC completed a secondary offering of 17,250,000 shares of common stock.
+Added: Following the offering, HC Group Holdings I, LLC holds approximately 54% of the Company’s common stock.
As of December 31, 2020, Madison Dearborn Partners is our largest stockholder, controlling approximately 64% of our common stock, and has the ability to exercise significant influence over decisions requiring our stockholders’ approval.
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The potential issuance of preferred stock may delay or prevent a change in control, discouraging bids for our common stock at a premium to the market price, and materially adversely affect the market price and the voting and other rights of the holders of our common stock.
+Added: General Risk Factors
+Added: The recent COVID-19 pandemic and other potential pandemic events could adversely impact our business operations, results of operations, cash flows and financial position.
+Added: In December 2019, a novel strain of coronavirus (COVID-19) was reported in Wuhan, China.
+Added: The World Health Organization has declared COVID-19 a pandemic and public health emergency of international concern.
+Added: In March 2020, the President of the United States declared a State of National Emergency due to the COVID-19 outbreak.
+Added: Other countries affected by the outbreak took similar measures.
+Added: Consequently, the COVID-19 pandemic has had a material impact on the U.S.
+Added: and global economies.
+Added: We are closely monitoring the impact of the COVID-19 pandemic on all aspects of our business, including how it will impact our patients, teammates, suppliers, vendors, referral sources, and third party payers.
+Added: The COVID-19 pandemic has created significant volatility, uncertainty and economic disruption, which may adversely affect our business operations and may materially and adversely affect our results of operations, cash flows and financial position.
+Added: While we cannot predict the impact that COVID-19 will have on our patients, suppliers, vendors, and third party payers and each of their financial conditions, we believe the following factors could lead to a material adverse impact on the Company’s business:
+Added: • Variability in acute therapy patient referrals from hospitals based on changes in hospital-based procedures and treatment patterns;
+Added: • Variability in chronic therapy patient referrals based on disruptions in the diagnosis of chronic conditions requiring infusion therapy;
+Added: • Inefficiencies in clinical labor expenses and higher labor costs from staffing disruptions and availability, potential overtime due to inefficient clinical staffing and utilization of contract labor;
+Added: • Higher costs to procure, and potential unavailability of, critical personal protection equipment, pharmaceuticals and medical supplies given a constrained supply environment;
+Added: • Heightened operational risks from an extended period of remote work arrangements, which could strain our business continuity plans, including but not limited to cybersecurity risks, and could impair our ability to manage our business.
+Added: The situation is changing rapidly and additional consequences may arise that we are not aware of currently.
+Added: The extent to which the COVID-19 pandemic impacts us will depend on numerous evolving factors and future developments that we are not able to predict, including:
+Added: the severity and duration of the outbreak;
+Added: governmental, business and other actions;
+Added: the promotion of social distancing and the adoption of shelter-in-place orders affecting our referral sources;
+Added: the impacts on our supply chain;
+Added: the impact of the pandemic on economic activity;
+Added: the health of and the effect on our workforce;
+Added: any impairment in value of our tangible or intangible assets which could be recorded as a result of a weaker economic conditions;
+Added: and the potential effects on our internal controls including those over financial reporting as a result of changes in working environments such as shelter-in-place and similar orders that are applicable to our teammates.
+Added: In addition, if the pandemic continues to create disruptions or turmoil in the credit or financial markets, or impacts our credit ratings or stock price, it could adversely affect our ability to access capital on favorable terms and continue to meet our liquidity needs, all of which are highly uncertain and cannot be predicted.
+Added: In addition, we cannot predict the impact that COVID-19 will have on our patients, suppliers, vendors, and third party payers, and each of their financial conditions;
+Added: however, any material effect on these parties could adversely impact us.
+Added: The impact of COVID-19 may also exacerbate other risks, any of which could have a material effect on us.
+Added: This situation is changing rapidly and additional impacts may arise that we are not aware of currently.
+Added: Pending and future litigation could subject us to significant monetary damages and/or require us to change our business practices.
+Added: We employ pharmacists, dieticians, nurses and other health care professionals.
+Added: We are subject to liability for negligent acts, omissions, or injuries occurring at one of these clinics or caused by one of our employees.
+Added: We are subject to risks relating to asserted claims, litigation and other proceedings in connection with our operations.
+Added: We are or may face claims or become a party to a variety of legal actions that affect our business, including breach of contract actions, employment and employment discrimination-related suits, employee benefit claims, stockholder suits and other securities laws claims, and tort claims.
+Added: Due to the nature of our business, we, through our employees and caregivers who provide services on our behalf, may be the subject of medical malpractice claims.
+Added: A court could find these individuals should be considered our agents, and, as a result, we could be held liable for their acts or omissions.
+Added: We may incur substantial expenses in defending such claims or litigation, regardless of merit, and such claims or litigation could result in a significant diversion of the efforts of our management personnel.
+Added: Successful claims against us may result in monetary liability or a material disruption in the conduct of our business.
+Added: Similarly, if we settle such legal proceedings, it may affect how we operate our business.
+Added: See Item 3 for a description of material proceedings pending against us.
+Added: We believe that these suits are without merit and, to the extent not already concluded, intend to contest them vigorously.
+Added: However, an adverse outcome in one or more of these suits may have a material adverse effect on our consolidated results of operations, consolidated financial position, and/or consolidated cash flow from operations, or may require us to make material changes to our business practices.
+Added: We may be subject to liability claims for damages and other expenses that are not covered by insurance.
+Added: As a result of operating in the home infusion industry, our business entails an inherent risk of claims, losses and potential lawsuits alleging incidents involving our employees that are likely to occur in a patient’s home.
+Added: We maintain professional liability insurance to provide coverage to us and our subsidiaries against these risks.
+Added: A successful product or professional liability claim in excess of our insurance coverage could harm our consolidated financial statements.
+Added: Various aspects of our business may subject us to litigation and liability for damages.
+Added: For example, a prescription drug dispensing error could result in a patient receiving the wrong or incorrect amount of medication, leading to personal injury or death.
+Added: Our business and consolidated financial statements could suffer if we pay damages or defense costs in connection with a claim that is outside the scope of any applicable contractual indemnity or insurance coverage.
+Added: Our insurance coverage also includes fire, property damage and general liability with varying limits.
+Added: We cannot assure that the insurance we maintain will satisfy claims made against us or that insurance coverage will continue to be available to us at commercially reasonable rates, in adequate amounts or on satisfactory terms.
+Added: Any claims made against us, regardless of their merit or eventual outcome, could damage our reputation and business.
+Added: Pressures relating to downturns in the economy could adversely affect our business and consolidated financial statements.
+Added: Medicare and other federal and state payers account for a portion of our revenues.
+Added: During economic downturns and periods of stagnant or slow economic growth, federal and state budgets are typically negatively affected, resulting in reduced reimbursements or delayed payments by the federal and state government health care coverage programs in which we participate, including Medicare, Medicaid, and other federal or state assistance plans.
+Added: Government programs could also slow or temporarily suspend payments, negatively impacting our cash flow and increasing our working capital needs and interest payments.
+Added: We have seen, and believe we will continue to see, Medicare and state Medicaid programs institute measures aimed at controlling spending growth, including reductions in reimbursement rates.
+Added: Higher unemployment rates and significant employment layoffs and downsizings may lead to lower numbers of patients enrolled in employer-provided plans.
+Added: Adverse economic conditions could also cause employers to stop offering, or limit, healthcare coverage, or modify program designs, shifting more costs to the individual and exposing us to greater credit risk from patients or the discontinuance of therapy.
+Added: Acquisitions, strategic investments and strategic relationships involve certain risks.
+Added: We may pursue acquisitions, strategic investments in, or strategic relationships with businesses and technologies.
+Added: Acquisitions may entail numerous risks, including difficulties in assessing values for acquired businesses, intangible assets and technologies, difficulties in the assimilation of acquired operations and products, diversion of management’s attention from other business concerns, assumption of unknown material liabilities of acquired companies, amortization of acquired intangible assets which could reduce future reported earnings, and potential loss of clients or key employees of acquired companies.
+Added: We may not be able to successfully fully integrate the operations, personnel, services or products that we have acquired or may acquire in the future.
+Added: Strategic investments may also entail some of the risks described above.
+Added: If these investments are unsuccessful, we may need to incur charges against earnings.
+Added: We may also pursue a number of strategic relationships.
+Added: These relationships and others we may enter into in the future may be important to our business and growth prospects.
+Added: We may not be able to maintain these relationships or develop new strategic alliances.
+Added: Cybersecurity risks could compromise our information and expose us to liability, which may harm our ability to operate effectively and may cause our business and reputation to suffer.
+Added: Cybersecurity refers to the combination of technologies, processes and procedures established to protect information technology systems and data from unauthorized access, attack, or damage.
+Added: We rely on our information systems to provide security for processing, transmission and storage of confidential information about our patients, customers and personnel, such as names, addresses and other individually identifiable information protected by HIPAA and other privacy laws.
+Added: Cyber incidents can result from deliberate attacks or unintentional events.
+Added: Cyber-attacks are increasingly more common, including in the health care industry.
+Added: The regulatory environment surrounding information security and privacy is increasingly demanding, with the frequent imposition of new and changing requirements.
+Added: Compliance with changes in privacy and information security laws and with rapidly evolving industry standards may result in our incurring significant expense due to increased investment in technology and the development of new operational processes.
+Added: We have not experienced any known attacks on our information technology systems that compromised any confidential information.
+Added: We maintain our information technology systems with safeguard protection against cyber-attacks including passive intrusion protection, firewalls and virus detection software.
+Added: However, these safeguards do not ensure that a significant cyber-attack could not occur.
+Added: Although we have taken steps to protect the security of our information systems and the data maintained in those systems, it is possible that our safety and security measures will not prevent the systems’ improper functioning or damage or the improper access or disclosure of personally identifiable information such as in the event of cyber-attacks.
+Added: Security breaches, including physical or electronic break-ins, computer viruses, attacks by hackers and similar breaches can create system disruptions or shutdowns or the unauthorized use or disclosure of confidential information.
+Added: If personal information or protected health information is improperly accessed, tampered with or disclosed as a result of a security breach, we may incur significant costs to notify and mitigate potential harm to the affected individuals, and we may be subject to sanctions and civil or criminal penalties if we are found to be in violation of the privacy or security rules under HIPAA or other similar federal or state laws protecting confidential personal information.
+Added: In addition, a security breach of our information systems could damage our reputation, subject us to liability claims or regulatory penalties for compromised personal information and could have a material adverse effect on our business, financial condition, and results of operations.
+Added: Our business is dependent on the services provided by third party information technology vendors.
+Added: Our information technology infrastructure includes hosting services provided by third parties.
+Added: While we believe these third parties are high-performing organizations with secure platforms and customary certifications, they could suffer a security breach or business interruption which in turn could impact our operations negatively.
+Added: In addition, changes in pricing terms charged by our technology vendors may adversely affect our financial performance.
+Added: Failure to maintain effective internal control over our financial reporting could have an adverse effect on our ability to report our financial results on a timely and accurate basis.
+Added: Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934 (the “Exchange Act”), and is required to evaluate the effectiveness of these controls and procedures on a periodic basis and publicly disclose the results of these evaluations and related matters in accordance with the requirements of Section 404 of the Sarbanes-Oxley Act of 2002.
+Added: Effective internal control over financial reporting is necessary for us to provide reliable financial reports, to help mitigate the risk of fraud and to operate successfully.
+Added: Any failure to implement and maintain effective internal controls could result in material weaknesses or material misstatements in our consolidated financial statements.
+Added: If we fail to maintain effective internal control over financial reporting, or our independent registered public accounting firm is unable to provide us with an unqualified attestation report on our internal control, we may be required to take corrective measures or restate the affected historical financial statements.
+Added: In addition, we may be subjected to investigations and/or sanctions by federal and state securities regulators, and/or civil lawsuits by security holders.
+Added: Any of the foregoing could also cause investors to lose confidence in our reported financial information and in us and would likely result in a decline in the market price of our stock and in our ability to raise additional financing if needed in the future.
+Added: Acts of God such as major weather disturbances could disrupt our business.
+Added: We operate in a network of prescribers, providers, patients and facilities that can be negatively impacted by local weather disturbances and other force majeure events.
+Added: For example, in anticipation of major weather events, patients with impaired health may be moved to alternate sites.
+Added: After a major weather event, availability of electricity, clean water and transportation can impact our ability to provide service in the home.
+Added: Similarly, such events could impact key suppliers or vendors, disrupting the services or materials they provide us.
+Added: In addition, acts of God and other force majeure events may cause a reduction in our business or increased costs, such as increased costs in our operations as we incur overtime charges or redirect services to other locations, delays in our ability to work with payers, hospitals, physicians and other strategic partners on new business initiatives, and disruption to referral patterns as patients are moved out of facilities affected by such events or are unable to return to sites of service in the home.
+Added: The transition from the London Interbank Offered Rate (“LIBOR”) could negatively affect our interest rates and results of operations.
+Added: In 2017, the U.K.
+Added: Financial Conduct Authority announced that it intends to phase out LIBOR by the end of 2021.
+Added: In addition, other regulators have suggested reforming or replacing other benchmark rates.
+Added: The discontinuation, reform, or replacement of LIBOR or any other benchmark rates may result in fluctuating interest rates that may have a negative impact on our interest expense and our profitability.
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.