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Should a supply disruption result in our inability to obtain especially high margin drugs and compound components necessary for patient care, our consolidated financial statements could be negatively impacted.
−Removed: The COVID-19 pandemic has led to a constrained supply environment, which could result in higher costs to procure, and the potential unavailability of, critical personal protection equipment, pharmaceuticals and medical supplies.
−Removed: As of December 31, 2022, we have not experienced a significant impact in the availability of supplies due to the COVID-19 pandemic.
A shortage of qualified registered nursing staff, pharmacists and other professionals could adversely affect our ability to attract, train and retain 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 have faced 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.
−Removed: In either case, such circumstances could cause operating costs to increase and our profitability to decline.
+Added: In addition, where labor shortages arise in markets in which we operate, we have faced higher costs to attract personnel and we have had 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.
+Added: In either case, such circumstances cause operating costs to increase and our profitability to decline.
Finally, if we expand our operations into geographic areas where healthcare providers historically have unionized or unionization occurs in our existing geographic areas, negotiating collective bargaining agreements may have a negative effect on our ability to timely and successfully recruit qualified personnel and on our financial results.
If we are unable to attract, train and retain nursing staff, pharmacists and other professionals, the quality of our services may decline and we could lose patients and referral sources, which could have a material adverse effect on our business and consolidated financial condition, results of operations and cash flows.
−Removed: Introduction of new drugs or accelerated adoption of existing lower margin drugs could adversely affect our revenues and profitability when prescribers prescribe these drugs for their patients or they are mandated by Third-Party Payers.
+Added: Introduction of new drugs, accelerated adoption of existing lower margin drugs or withdrawal of existing drugs could adversely affect our revenues and profitability when prescribers prescribe these drugs for their patients or they are mandated by Third-Party Payers.
The pharmaceutical industry pipeline of new drugs includes many drugs that over the long term may replace older, more expensive therapies.
As a result of such older drugs losing patent protection and being replaced by generic substitutes, new and less expensive delivery methods (such as when an infusion or injectable drug is replaced with an oral drug) or additional products that are added to a therapeutic class, increase price competition among competing manufacturers’ products in that therapeutic category.
+Added: We have experienced a decrease in revenue and net income as a result of the withdrawal from the market of a drug related to the treatment of pre-term labor and the introduction of an oral alternative drug related to the treatment of ALS.
In such cases, manufacturers have the ability to increase drug acquisition costs or lower the selling price of replaced products.
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trade regulations, including those of the U.S.
−Removed: Federal Trade Commission (“FTC”);
+Added: Federal Trade Commission (“FTC”), the U.S.
Foreign Corrupt Practices Act (the “FCPA”) and similar anti-corruption laws in connection with the services provided by certain of our contractors;
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Such changes may require extensive system and operational changes, be difficult to implement, increase our operating costs and require significant capital expenditures.
−Removed: Untimely, our noncompliance with applicable laws and regulations could result in the imposition of civil and criminal penalties that could adversely affect the continued operation of our business, including:
+Added: Ultimately, our noncompliance with applicable laws and regulations could result in the imposition of civil and criminal penalties that could adversely affect the continued operation of our business, including:
suspension of payments from government programs;
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Federal actions and legislation may reduce reimbursement rates from governmental payers and adversely affect our results of operations.
−Removed: In recent years, Congress has passed legislation reducing payments to health-care providers.
+Added: In recent years, Congress has passed legislation reducing payments to healthcare providers.
The Budget Control Act of 2011, as amended, requires automatic spending reductions to reduce the federal deficit, including Medicare spending reductions of up to 2% per fiscal year that extend through 2027.
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The 21st Century Cures Act (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.
−Removed: In addition, from time to time, CMS revises the reimbursement systems used to reimburse health care providers, which may result in reduced Medicare payments.
+Added: In addition, from time to time, CMS revises the reimbursement systems used to reimburse healthcare providers, which may result in reduced Medicare payments.
For the year ended December 31, 2023, 12% of our revenue was derived from reimbursement by direct federal and state programs such as Medicare and Medicaid.
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Title II of this measure, known as the Drug Supply Chain Security Act (“DSCSA”), established requirements in November 2013 to facilitate the tracing of prescription drug products through the pharmaceutical supply distribution chain.
−Removed: These requirements included a ten-year timeline culminating in the building of "an electronic, interoperable system to identify and trace certain prescription drugs as they are distributed in the United States.” The law’s track and trace requirements are applicable to manufacturers, wholesalers, repackagers and dispensers (e.g., pharmacies) of prescription drugs.
−Removed: The Company is currently materially compliant with DSCSA, and intends to be materially compliant with the final milestone requirement of receiving or exchanging transaction information (with specific product identifiers for each package) and transaction statements electronically by the effective date in November 2023.
−Removed: These regulatory measures, future FDA DSCSA regulatory measures and the potential for increased FDA DSCSA enforcement could increase pharmacy costs.
+Added: These requirements included a 10-year timeline culminating in the building of "an electronic, interoperable system to identify and trace certain prescription drugs as they are distributed in the United States.” The law’s track and trace requirements are applicable to manufacturers, wholesalers, repackagers and dispensers (e.g., pharmacies) of prescription drugs.
+Added: The Company is currently materially compliant with the DSCSA provisions currently in effect.
+Added: The Company also expects to be materially compliant with the additional provisions of DSCSA, which requires the electronic receipt and exchange of transaction information (with specific product identifiers for each package) and transaction statements, by the November 2023 effective date.
+Added: These regulatory measures, future DSCSA regulatory measures and the potential for increased DSCSA enforcement by the FDA could increase pharmacy costs.
Noncompliance with these regulations could have an adverse impact on our reputation and profitability.
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Increases in interest rates may directly impact the amount of interest we are required to pay and reduce earnings accordingly.
−Removed: In addition, developments in tax policy, such as the disallowance of tax deductions for interest paid on outstanding indebtedness, could have an adverse effect on our liquidity and our business, financial conditions and results of operations.
+Added: In addition, developments in tax policy, such as the disallowance of tax deductions for interest paid on outstanding indebtedness, could have an adverse effect on our liquidity and our business, financial condition and results of operations.
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.
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Any failure to make payments of interest and principal on our outstanding indebtedness on a timely basis would likely result in a reduction of our credit rating, which would also harm our ability to incur additional indebtedness.
−Removed: If our cash flows and capital resources are insufficient to fund our debt service obligations, we may be required to reduce or delay capital expenditures, sell assets, seek additional capital or seek to restructure or refinance our indebtedness.
+Added: If our cash flow and capital resources are insufficient to fund our debt service obligations, we may be required to reduce or delay capital expenditures, sell assets, seek additional capital or seek to restructure or refinance our indebtedness.
Any refinancing of our indebtedness could be at higher interest rates and may require us to comply with more onerous covenants.
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In the absence of such cash flow and resources, we could face substantial liquidity problems and might be required to sell material assets or operations to attempt to meet our debt service obligations.
−Removed: The financing documents governing our First Lien Term Loan, ABL Facility (as defined herein) and our Senior Notes restrict our ability to conduct asset sales and/or use the proceeds from asset sales.
+Added: The financing documents governing our First Lien Term Loan, Revolver Facility (as defined herein) and our Senior Notes restrict our ability to conduct asset sales and/or use the proceeds from asset sales.
We may not be able to consummate these asset sales to raise capital or sell assets at prices and on terms that we believe are fair and any proceeds that we do receive may not be adequate to meet any debt service obligations then due.
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Risks Relating to Our Common Stock
−Removed: As of December 31, 2022, Walgreens Boots Alliance, Inc.
−Removed: (“Walgreens”) is our largest stockholder and has the ability to exercise influence over decisions requiring our stockholders’ approval.
−Removed: On December 17, 2021, Madison Dearborn Partners transferred control of HC I to Walgreens.
−Removed: As of December 31, 2022, Walgreens controls approximately 14.4% of our common stock through its control of HC I.
−Removed: As a result, Walgreens has the ability to exercise influence over decisions requiring approval of our stockholders, including the election of directors, amendments to our certificate of incorporation and approval of significant corporate transactions, such as a merger or change in control of the Company.
Provisions of our corporate governance documents could make an acquisition of us more difficult and may prevent attempts by our stockholders to replace or remove our current management, even if beneficial to our stockholders.
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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 and adversely affecting the market price and the voting and other rights of the holders of our common stock.
+Added: We cannot guarantee that our stock repurchase program will be fully implemented or that it will enhance long-term stockholder value.
+Added: We cannot guarantee that our stock repurchase program will be fully implemented or that it will enhance long-term stockholder value.
+Added: In February 2023, the Board of Directors approved a new stock repurchase program authorizing the repurchase of up to $250 million of our common stock.
+Added: In December 2023, the Board of Directors approved an increase to its stock repurchase program authorization from $250 million to $500 million.
+Added: The repurchase program does not have an expiration date, and we are not obligated to repurchase a specified number or dollar value of shares, on any particular timetable or at all.
+Added: There can be no assurance that we will repurchase stock at favorable prices.
+Added: The repurchase program may be suspended or terminated at any time and, even if fully implemented, may not enhance long-term stockholder value.
General Risk Factors
−Removed: The COVID-19 pandemic and other potential pandemic events could adversely impact our business, results of operations, cash flows and financial position.
−Removed: The COVID-19 pandemic has significantly impacted, and may continue to severely impact, the global economy.
−Removed: COVID-19 has persisted as a significant public health concern and impacted the general economy and consumer behaviors.
−Removed: The impacts of the pandemic are unpredictable and volatile, with varying impacts to business operations.
−Removed: We are closely monitoring the impact of the COVID-19 pandemic on all aspects of our business, including how it is impacting our patients, workforce, suppliers, vendors, referral sources, and Third-Party Payers.
−Removed: The Company has been disrupted by both positive and negative referral patterns and experienced challenges in our staffing and our ability to procure personal protection equipment and key drugs.
−Removed: The COVID-19 pandemic has caused significant volatility, uncertainty and economic disruption, which may adversely affect our business operations and may materially and adversely affect our results of operations, cash flow and financial position.
−Removed: The situation is changing rapidly considering the impacts of new variants of the COVID-19 virus, public health guidance, and regulatory mandates and additional consequences may arise for which we are not currently aware.
−Removed: 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:
−Removed: the severity and duration of the pandemic;
−Removed: the potential of new virus variants;
−Removed: governmental, business and other actions;
−Removed: the promotion of social distancing and the adoption of shelter-in-place orders affecting our referral sources;
−Removed: the impacts of the pandemic on our supply chain;
−Removed: the impact of the pandemic on economic activity;
−Removed: the health of, and the effect of the pandemic on, our workforce;
−Removed: any impairment in value of our tangible or intangible assets that could be recorded as a result of a weaker economic condition;
−Removed: and the effect on our internal controls including those over financial reporting.
−Removed: 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.
−Removed: Other factors including reduced employment pools, federal subsidies offered in response to the COVID-19 pandemic and other government regulations exacerbated staffing challenges, and created increased labor shortages.
−Removed: An overall or prolonged labor shortage, lack of skilled labor, increased turnover or continued labor inflation could have a material adverse impact on our business, results of operations, liquidity or cash flow.
−Removed: In addition, we cannot predict the impact that COVID-19 or other potential pandemic events will have on our patients, suppliers, vendors, and Third-Party Payers and on each of their financial conditions;
−Removed: however, any material effect on these parties could adversely impact our business.
−Removed: The impact of COVID-19 or other potential pandemic events may also exacerbate other risks, any of which could have a material effect on us.
−Removed: The situation continues to be uncertain and additional impacts may arise for which we are not currently aware.
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.
+Added: We employ pharmacists, dieticians, nurses and other healthcare professionals.
We are subject to liability for negligent acts, omissions, or injuries occurring at any of our clinics or caused by any of our employees.
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Similarly, if we settle such legal proceedings, it may affect how we operate our business.
−Removed: Commitments and Contingencies , of the consolidated financial statements included in Item 8 of this Annual Report for a description of material proceedings pending against the Company.
+Added: See Note 14, Commitments and Contingencies , of the consolidated financial statements included in Item 8 of this Annual Report for a description of material proceedings pending against the Company.
We believe that these proceedings are without merit and, to the extent they are not already concluded, we intend to contest them vigorously.
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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 property liability, cyber liability, clinical trials liability, crime liability, auto liability, workers’ compensation, employers’ liability, executive liability policies (employment practices liability, fiduciary liability, directors’ and officers’ liability), umbrella/excess liability 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 or at all.
+Added: Claims made against us will be subject to the terms, conditions and exclusions of the insurance policies we maintain.
+Added: Any claims made against us, regardless of their merit or eventual outcome, could damage our reputation and business.
Our insurance coverage also includes fire, property damage and general liability with varying limits.
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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.
+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 healthcare coverage programs in which we participate, including Medicare, Medicaid, and other federal or state assistance plans.
Government programs could also slow or temporarily suspend payments, negatively impacting our cash flow and increasing our working capital needs and interest payments.
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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: The general levels of inflation and specific inflationary pressures that we have experienced in areas such as labor, transportation and medical supplies may continue to persist due to events outside of our control, for example, COVID-19, supply chain disruptions, and the broader macro-economic environment.
+Added: The general levels of inflation and specific inflationary pressures that we have experienced in areas such as labor, transportation and medical supplies may continue to persist due to events outside of our control, for example, the COVID-19 pandemic and other potential pandemic events, supply chain disruptions, and the broader macro-economic environment.
The sustained or continued rise of inflation may adversely impact our business operations, financial condition and results of operations.
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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.
+Added: The Company relies on its information systems to provide security for processing, transmitting, and storing confidential information about patients, customers, and personnel, such as names, addresses and other individually identifiable information protected by HIPAA and other privacy laws.
Cyber incidents can result from deliberate attacks or unintentional events.
−Removed: Cyber-attacks are increasingly more common, including in the health care industry.
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.
+Added: Compliance with changes in privacy and information security laws and with rapidly evolving industry standards may result in the Company incurring significant expense due to increased investment in technology and the development of new operational processes.
We have not experienced any known attacks on our information technology systems that compromised any confidential information.
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In addition, changes in pricing terms charged by our technology vendors may adversely affect our financial performance.
+Added: We use, and may continue to expand our use of, machine learning and artificial intelligence (“AI”) technologies to deliver our services and operate our business.
+Added: If we fail to successfully integrate AI into our platform and business processes, or if we fail to keep pace with rapidly evolving AI technological developments, including attracting and retaining talented AI developers and programmers, we may face a competitive disadvantage.
+Added: At the same time, the use or offering of AI technologies may result in new or expanded risks and liabilities, including enhanced government or regulatory scrutiny, litigation, compliance issues, ethical concerns, confidentiality, reputational harm and security risks.
+Added: It is not possible to predict all of the risks related to the use of AI and changes in laws, rules, directives, and regulations governing the use of AI may adversely affect our ability to develop and use AI or subject us to legal liability.
+Added: The cost of complying with laws and regulations governing AI could be significant and would increase our operating expenses, which could adversely affect our business, financial condition and results of operations.
+Added: Further, market demand and acceptance of AI technologies are uncertain, and we may be unsuccessful in efforts to further incorporate AI into our processes.
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.
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Similarly, such events could impact key suppliers or vendors, disrupting the services or materials they provide to us.
+Added: Climate change, or legal, regulatory or market measures to address climate change, could adversely affect our business and results of operations.
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 patients’ homes.
−Removed: 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.