What changed in this filing

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Item 1A. Risk Factors

2022-08-12 compared with 2021-08-17 · 177 added, 118 removed, 437 unchanged (40% of the section changed)

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• Consolidation in the health care industry could have an adverse effect on our revenues and results of operations.

 Our business, financial condition and results of operations could be harmed by the effects of the COVID-19 pandemic.

• Our business, financial condition and results of operations could continue to be harmed by the effects of the COVID-19 pandemic or similar public health crises.

• We are subject to various risks relating to international activities that could affect our overall profitability.

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• If our SaaS products fail to perform properly or if we fail to develop enhancements, we could lose customers, become subject to service performance or warranty claims and our market share could decline.

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• If there are interruptions or performance problems associated with our technology or infrastructure, our existing SaaS customers may experience service outages, and our new customers may experience delays in the deployment of our platforms.

• If we are unable to support our continued growth, our business could suffer.

 If a natural or man-made disaster strikes our manufacturing facilities, we will be unable to manufacture our products for a substantial amount of time and our sales and profitability will decline.

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• Climate change and related natural disasters, or other events beyond our control, could negatively impact our business operations and financial condition.

Risks Related to Non-Compliance with Laws, Regulations and Healthcare Industry Shifts

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• Failure to comply with anti-kickback and fraud regulations could result in substantial penalties and changes in our business operations.

 Our use and disclosure of individually identifiable information, including health information, is subject to federal, state and foreign privacy and security regulations, and our failure to comply with those regulations or to adequately secure the information we hold could result in significant liability or reputational harm.

• Our use and disclosure of personal information, including health information, is subject to federal, state and foreign privacy and security regulations, and our failure to comply with those regulations or to adequately secure the information we hold could result in significant liability or reputational harm.

• Our business activities are subject to extensive regulation, and any failure to comply could have a material adverse effect on our business, financial condition, or results of operations.

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• Our quarterly operating results are subject to fluctuation for a variety of reasons.

 Delaware law and provisions in our charter and could make it difficult for another company to acquire us.

• Delaware law and provisions in our charter could make it difficult for another company to acquire us.

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If we are forced to reduce our prices because of consolidation in the health care industry, our revenues may decrease and our consolidated earnings, financial condition, and/or cash flows may suffer.

Our business, financial condition and results of operations could be harmed by the effects of the COVID-19 pandemic.

We are subject to risks related to the global pandemic associated with COVID-19, which have had an adverse impact on certain aspects of our business.

Specifically, diagnostic pathways for sleep apnea treatment, including physician practices, HME suppliers and sleep clinics, have been impacted and, in some instances, been required , to temporarily close due to governments’ “ shelter-in-place ” orders , quarantines or similar orders or restrictions enacted to control the spread of COVID-19 .

In some countries, new patients are prescribed sleep apnea treatment through hospitals that are directing their resources to critical care, including COVID-19 treatment.

Although certain governments have begun to reduce or remove COVID-19 restrictions to varying degrees, we cannot predict the impact that will have on diagnostic and prescription pathways and demand for our products designed to treat sleep apnea.

Furthermore, we cannot predict the extent, speed and effectiveness of worldwide containment and vaccination efforts and the impact of these factors will have on our employees, customers, vendors and patients.

While we have experienced increased demand for our respiratory care products due to the nature of COVID-19, we do not expect the same level of demand to continue as vaccination programs expand and infection rates decline globally.

Decreases in future demand may result in excess inventory, which we may be unable to sell.

Furthermore, due to governments’ varying restrictions on international and domestic travel, access to labor for our manufacturing facilities could be adversely impacted.

Our SaaS business has also been affected by COVID-19 and measures taken to control the spread of COVID-19.

Some of our existing and potential SaaS customers are HME distributors and have been impacted by the same temporary business closures noted above.

We also have existing and potential SaaS customers that operate care facilities and are either receiving and treating patients infected with COVID-19 or have implemented significant measures to safeguard their facilities against a potential COVID-19 outbreak.

Given these challenging business conditions, businesses may be deterred from adopting new or changing SaaS platforms, which may adversely impact our ability to engage new customers for our SaaS businesses, or expand the services used by existing customers.

Our business, financial condition and results of operations could continue to be harmed by the effects of the COVID-19 pandemic or similar public health crises.

We are subject to risks associated with public health threats, including the global COVID-19 pandemic, which have had and may continue to have an adverse impact on certain aspects of our business.

The extent to which the COVID-19 pandemic and measures taken in response thereto impact our business, results of operations, and financial condition will depend on future developments which are highly uncertain and are difficult to predict.

These developments include, but are not limited to, future resurgences of the virus and its variants, actions taken to contain the virus or address its impact, and the timing, distribution, and efficacy of vaccines and other treatments.

Although there is still substantial uncertainty associated with the COVID-19 pandemic, we believe the global demand for ventilators and other respiratory support devices used to treat COVID-19 patients has largely been met.

In most markets, diagnostic pathways for sleep apnea treatment, including physician practices, HME distributors, and sleep clinics have largely recovered towards pre-pandemic levels.

Likewise, within our SaaS business we have observed stabilizing patient flow in out-of-hospital care settings impacted by COVID-19.

The COVID-19 pandemic has continued to impact the global supply chain, primarily through constraints on raw materials and electronic components.

These constraints on raw materials and electronic components are also impacting companies outside of our direct industry, which is resulting in a competitive supply environment causing higher costs, requiring us to commit to minimum purchase obligations as well as make upfront payments to our suppliers.

Further, we are being allocated certain components from our suppliers, particularly semiconductor chips, and we are thus being forced to allocate our outbound products to our customers.

These disruptions have impacted and may continue to impact our ability to

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We currently utilize third parties to, among other things, manufacture components and materials for our devices.

Disruptions relating to the COVID-19 pandemic, including current shelter-in-place orders, could prevent employees, suppliers, distributors, and others from accessing manufacturing facilities and from transporting our products or the components required to manufacture our products.

Further, worldwide supply chain disruption relating to the COVID-19 pandemic has resulted in component shortages that have and may continue to impact our ability to manufacture our devices.

If either we or any third-party parties in the supply chain for materials used in the production of our devices continue to be adversely impacted by the restrictions resulting from the COVID-19 pandemic, our supply chain may be disrupted, limiting our ability to manufacture our devices.

These disruptions may, among other things, impact our ability to produce and supply products in quantities necessary to satisfy customer demand, which could negatively impact our results of operations .

Health regulatory agencies globally may also experience disruptions in their operations as a result of the COVID-19 pandemic.

Any delay or de-prioritization of our product development activities or delay in regulatory review resulting from such disruptions could materially affect our results of operations.

We are also competing with participants in other industries, like the automobile industry for example, for essential inputs for our products, which may result in higher prices or scarcity of supply.

In addition to existing travel restrictions, countries may continue to close borders, impose prolonged quarantines, and restrict travel, which have disrupted and may continue to disrupt our ability to move our product by air and sea.

While we expect COVID-19 to negatively impact certain aspects of our business, given the rapid and evolving nature of the virus and the uncertainty about its impact on society and the global economy, we cannot predict the extent to which it will affect our global operations.

produce and supply products in quantities necessary to satisfy customer demand, which could negatively impact our results of operations.

Additionally, we have observed a reduction in both inbound and outbound transportation capacity as a result of port closures and delays associated with the pandemic, which is causing longer lead times in receiving raw materials into and distributing finished goods out of our manufacturing facilities, as well as increased freight costs.

These highly competitive and constrained supply chain conditions are increasing our cost of sales, which has and may continue to adversely impact our profitability.

Given the ongoing uncertainty regarding the duration and extent of the COVID-19 pandemic, we are uncertain as to the duration and extent of constraint on our supply chain.

While we expect COVID-19 may continue to negatively impact certain aspects of our business, given the rapid and evolving nature of the virus and the uncertainty about its impact on society and the global economy, we cannot predict the extent to which it will affect our global operations.

Furthermore, future public health crises are possible and could involve some or all of the risks discussed above.

We are subject to various risks relating to international activities that could affect our overall profitability.

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• fluctuations in currency exchange rates;

• economic conditions such as inflation or recession;

• tariffs and other trade barriers;

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• the impact of public health epidemics/pandemics on the global economy, such as COVID-19 that has spread globally;

• the impact of global geopolitical tensions and/or conflicts;

• changes in trade policies and in U.S.

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• the modification or introduction of other governmental policies with potentially adverse effects;

• limitations on our ability under local laws to protect our intellectual property.

In December 2021, the United States adopted the Uyghur Forced Labor Prevention Act (“UFLPA”) which creates a rebuttable presumption that any goods, wares, articles, and merchandise mined, produced, or manufactured in whole or in part in the Xinjiang Uyghur Administrative Region of China or that are produced by certain entities are prohibited from importation into the United States and are not entitled to entry.

These import restrictions came into effect in June 2022.

Additionally, the military conflict between Russia and Ukraine has resulted in the implementation of sanctions by the U.S.

and other governments against Russia and has caused significant volatility and disruptions to the global markets.

While we are not presently aware of any direct impacts these restrictions have had on our suppliers’ supply chains, disruptions resulting from the conflict in Ukraine and the UFLPA may materially and negatively impact our suppliers’ ability to obtain a sufficient supply of raw materials necessary to meet the quantity and/or timing of our product demands.

Further, it is not possible to predict the short- and long-term implications of this conflict, which could include but are not limited to further sanctions, uncertainty about economic and political stability, increases in inflation rate and energy prices, cyber-attacks, supply chain challenges and adverse effects on currency exchange rates and financial markets.

We are continuing to monitor the situation in China, Ukraine, and globally as well as assess its potential impact on our business.

Although our sales into Russia and Ukraine did not constitute a material portion of our total revenue in 2022, further escalation of geopolitical tensions, or new geopolitical tensions, could have a broader impact that expands into other markets where we

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do business, which could adversely affect our business and/or our supply chain, business partners or customers in the broader region.

Any of the above factors may have a material adverse effect on our ability to increase or maintain our non-U.S.

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Any of these could have a material adverse impact on our business, financial condition, and results of operations.

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We are subject to potential product liability claims that may exceed the scope and amount of our insurance coverage, which would expose us to liability for uninsured claims.

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• third-parties will be issued patents that may prevent the sale of our products or require us to license and pay fees or royalties in order for us to be able to market some of our products;

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• third-parties may assert patents and other intellectual property rights against our suppliers, causing interruption in supply of components or other essential inputs.

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Our leverage and debt service obligations could adversely affect our business.

As of June 30, 2021, our total consolidated debt was $0.7 billion and we may incur additional indebtedness in the future.

As of June 30, 2022, our total consolidated debt was $0.8 billion and we may incur additional indebtedness in the future, including as a result of our pending acquisition of MEDIFOX DAN, which is expected to close during our fiscal year 2023.

Our indebtedness could have adverse consequences, including:

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• limiting our ability to compete and our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate;

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• limiting our ability to borrow additional funds for working capital, capital expenditure, acquisitions and general corporate or other purposes;

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We purchase configured components for our devices from various suppliers, including some who are single-source suppliers for us.

Disruptions to our suppliers, including disruptions in connection with COVID-19, may limit our ability to manufacture our devices in a timely or cost-effective manner, which could result in a significant reduction in sales and profitability.

Disruptions to our suppliers, including disruptions in connection with COVID-19 and its variants, may limit our ability to manufacture our devices in a timely or cost-effective manner, which could result in a significant reduction in sales and profitability.

We cannot assure you that a replacement supplier would be able to configure its components for our devices on a timely basis or, in the alternative, that we would be able to reconfigure our devices to integrate the replacement part.

A reduction or halt in supply while a replacement supplier reconfigures its components, or while we reconfigure our devices for the replacement part, would limit our ability to manufacture our devices in a timely or cost-effective manner, which could result in a significant reduction in sales and profitability.

A reduction, delay or halt in supply while a replacement supplier reconfigures its components, or while we reconfigure our devices for the replacement part, would limit our ability to manufacture our devices in a timely or cost-effective manner, which could result in a significant reduction in sales and profitability.

We cannot assure you that our inventories would be adequate to meet our production needs during any prolonged interruption of supply.

In particular, a global semiconductor supply shortage is having wide-ranging effects across multiple industries, and it has impacted suppliers that incorporate semiconductors into the parts they supply to us.

The semiconductor supply shortage has had, and will continue to have, an adverse impact on lead times and device production.

High demand and shortages of supply have adversely affected and could materially adversely affect our ability to obtain sufficient quantities of semiconductors

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and electronic components on commercially reasonable terms or at all.

While we have entered into agreements for the supply of many components, there can be no assurance we will be able to extend or renew these agreements on similar terms or that suppliers will fulfill their commitments under existing agreements.

Furthermore, in order to secure such necessary components, we may be obligated to purchase them at prices that are higher than those available in the current market and/or may incur significant price increases from these suppliers in the future.

In addition, we may be required to commit to greater purchase volumes and/or make prepayments to our suppliers.

Extended lead times and decreased availability of key components may also cause an adverse effect on our financial condition or results of operations.

Delays in our ability to produce and deliver our devices could cause our customers to purchase alternative products from our competitors.

If component shortages continue, we will continue to experience supply interruption and/or may incur significant price increases from these suppliers.

Additionally, increases in product demand, including in response to a recent product recall by one of our competitors, Philips, have resulted and could continue to result in shipment delays, higher costs for materials and components, and increased expenditures for freight and other expenses, which have and could continue to negatively impact our profit margins.

Although historically we have generally been able to secure additional supply or take other actions to mitigate supply disruptions, as the impact of the global shortages in key components, including semiconductors, impacts many industries worldwide, and particularly our supply chain, we could experience a material adverse effect on our business, results of operations, and financial condition.

In addition, in order to secure such necessary components, we may be obligated to purchase them at prices that are higher than those available in the current market.

In response to the global semiconductor supply shortage, we have recently expanded our global offering of devices to include Card-to-Cloud (C2C) versions of our prior model AirSense 10 and AirCurve 10 offerings that do not incorporate a communications module.

We introduced C2C models to address the growing backlog of patients waiting for therapy with ResMed devices.

Because C2C devices do not include communications capability they involve a more manual workflow for our customers, and may face resistance in the market as the backlog of patients waiting for treatment is reduced.

The C2C offering, while appropriate in the short term, also may not be consistent with our long term strategy of connecting all devices with AirView.

Additionally, increases in product demand, including in response to a product recall by one of our competitors, Philips, have resulted and could continue to result in shipment delays, higher costs for materials and components, and increased expenditures for freight and other expenses, which have and could continue to negatively impact our profit margins.

If supply constraints continue, our ability to meet demand and our corresponding ability to sell affected products may be materially reduced.

We may have to allocate or prioritize orders for our devices, and our failure to timely deliver desirable products to meet demand may harm relationships with our customers.

We have and may continue to be required to allocate or prioritize orders for our devices, and our failure to timely deliver desirable products to meet demand may harm relationships with our customers.

We are increasingly dependent on information technology systems and infrastructure.

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In addition, significant implementation issues may arise as we continue to consolidate and outsource certain computer operations and application support activities.

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Actual or attempted breaches of security, unauthorized disclosure of information, denial of service attacks or the perception that personal and/or other sensitive or confidential information in our possession is not secure, could result in a material loss of business, substantial legal liability or significant harm to our reputation.

We receive, collect, process, use and store a large amount of information from our clients, our patients and our own employees, including personally identifiable, protected health and other sensitive and confidential information.

Despite the implementation of security measures, our internal computer and information technology systems and those of our vendors and customers are vulnerable to attack and damage from computer viruses, malware, denial of service attacks, unauthorized access, or other harm, including from threat actors seeking to cause disruption to our business.

We face risks related to the protection of information that we maintain—or engage a third-party to maintain on our behalf—including unauthorized access, acquisition, use, disclosure, or modification of such information.

Cyberattacks are increasing in their frequency, sophistication and intensity and have become increasingly difficult to detect.

Cyberattacks could include the deployment of harmful malware, ransomware, denial-of-service attacks, social engineering and other means to affect service reliability and threaten the confidentiality, integrity and availability of information.

A material cyberattack or security incident could cause interruptions in our operations and could result in a material disruption of our business operations, damage to our reputation, financial condition, results of operations, cash flows and prospects.

We receive, collect, process, use and store a large amount of information from our clients, our patients and our own employees, including personal information, protected health and other sensitive and confidential information.

This data is often accessed by us through transmissions over public and private networks, including the Internet.

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We have implemented security measures, technical controls and contractual precautions designed to identify, detect and prevent unauthorized access, alteration, use or disclosure of our clients’, patients’ and employees’ data.

However, the techniques used in these attacks change frequently and may be difficult to detect for periods of time and we may face difficulties in anticipating and implementing adequate preventative measures.

As a result of the COVID-19 pandemic, we may face increased cybersecurity risks due to our reliance on internet technology and the number of our employees who are working remotely, which may create additional opportunities for cybercriminals to exploit vulnerabilities.

However, the techniques used in these attacks change frequently and may be difficult to detect for periods

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of time and we may face difficulties in anticipating and implementing adequate preventative measures.

We may face increased cybersecurity risks due to our reliance on internet technology and the number of our employees who are working remotely, which may create additional opportunities for cybercriminals to exploit vulnerabilities.

Beyond external criminal activity, systems that access or control access to our services and databases may be compromised as a result of human error, fraud or malice on the part of employees or third parties, or may result from accidental technological failure.

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We also face risks associated with security breaches affecting third parties that conduct business with us or our clients and others who interact with our data.

While we maintain insurance that covers certain security and privacy breaches, we may not carry appropriate insurance or maintain sufficient coverage to compensate for all potential liability.

While we maintain insurance that covers certain security incidents, we may not carry appropriate insurance or maintain sufficient coverage to compensate for all potential liability.

We are subject to diverse laws and regulations relating to data privacy and security, including HIPAA and European data privacy laws.

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Part of our growth strategy includes acquiring businesses consistent with our commitment to innovation in developing products for the diagnosis and treatment of sleep apnea and respiratory care as well as our SaaS business.

For example, we acquired MatrixCare in November 2018 and Propeller Health in January 2019.

The success of our acquisitions will depend, in part, on our ability to successfully integrate the business and operations of the acquired companies.

For example, we acquired MatrixCare in November 2018, Propeller Health in January 2019, and in June 2022 we signed a definitive agreement to acquire MEDIFOX DAN which is expected to close during our fiscal year 2023.

The MEDIFOX DAN acquisition remains subject to regulatory clearances and other customary closing conditions and should the acquisition fail to close, we will not realize the benefits that we expect to receive from the acquisition.

Moreover, the success of our acquisitions will depend, in part, on our ability to successfully integrate the business and operations of the acquired companies.

Additionally, our management may have their attention diverted while trying to integrate these businesses.

If we are not able to successfully integrate the operations, we may not realize the anticipated benefits of the acquisitions fully or at all, or may take longer to realize than expected.

Acquisitions involve numerous risks and could create unforeseen operating difficulties and expenditures.

There can be no assurance that any of the acquisitions we make will be successful or will be, or will remain, profitable.

Moreover, we have recorded intangible assets, including goodwill, in connection with our acquisitions.

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Consequently, we may be required to record a significant charge to earnings in the financial statements during the period in which any impairment of intangible assets is determined.

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Our business depends on our ability to market effectively to dealers of home healthcare products and sleep clinics.

We market our products primarily to home healthcare dealers and to sleep clinics that diagnose OSA and other sleep disorders, as well as to non-sleep specialist physician practices that diagnose and treat sleep disorders.

We market our products primarily to home healthcare dealers and to sleep clinics that diagnose OSA and other sleep

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disorders, as well as to non-sleep specialist physician practices that diagnose and treat sleep disorders.

We believe that these groups play a significant role in determining which brand of product a patient will use.

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The costs incurred in addressing and correcting any material defects or errors in our software and expanding our infrastructure and architecture in order to accommodate increased demand for our products and solutions may be substantial and could adversely affect our operating results.

Further, if we fail to innovate or adequately invest in new technologies, we could lose our competitive position in the markets that we serve.

To the extent that we fail to introduce new and innovative products, or such products are not accepted in the market or suffer significant delays in development, our financial results may suffer.

An inability, for technological or other reasons, to successfully develop and introduce new products on a timely basis could reduce our growth rate or otherwise have an adverse effect on our business.

If there are interruptions or performance problems associated with our technology or infrastructure, our existing SaaS customers may experience service outages, and our new customers may experience delays in the deployment of our platforms.

We depend on services from various third parties as well as our own technical operations infrastructure to distribute our SaaS products via the Internet.

If a service provider fails to provide sufficient capacity to support our platform or otherwise experiences service outages, such failure could interrupt our customers’ access to our service, which could adversely affect their perception of our platform's reliability and our revenues.

If a service provider fails to provide sufficient capacity to support our

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platform or otherwise experiences service outages, such failure could interrupt our customers’ access to our service, which could adversely affect their perception of our platform's reliability and our revenues.

Any disruptions in these services, including as a result of actions outside of our control, would significantly impact the continued performance of our SaaS products.

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Any loss of the right to use any of these services could result in decreased functionality of our SaaS products until equivalent technology is either developed by us or, if available from another provider, is identified, obtained and integrated into our infrastructure.

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To meet our business needs, we must maintain sufficient excess capacity in our operations infrastructure to ensure that our SaaS products are accessible.

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If we fail to manage our growth effectively and efficiently, our costs could increase faster than our revenues and our business results could suffer.

If a natural or man-made disaster strikes our manufacturing facilities, we will be unable to manufacture our products for a substantial amount of time and our sales and profitability will decline.

Climate change and related natural disasters, or other events beyond our control, could negatively impact our business operations and financial condition.

Natural disasters and other business disruptions could adversely affect our business and financial condition, and global climate change could result in certain types of natural disasters occurring more frequently or with more intense effects.

The impacts of climate change may include physical risks (such as frequency and severity of extreme weather conditions), social and human effects (such as population dislocations or harm to health and well-being), compliance costs and transition risks, shifts in market trends and other adverse effects.

Such impacts may disrupt parties in our supply chain, our customers, and our operations.

For example, if a natural disaster strikes our manufacturing facilities, we will be unable to manufacture our products for a substantial amount of time and our sales and profitability will decline.

Our facilities and the manufacturing equipment we use to produce our products would be costly to replace and could require substantial lead-time to repair or replace.

The facilities may be affected by natural or man-made disasters, including COVID-19 that has spread globally, and in the event they were affected by a disaster, we would be forced to rely on third-party manufacturers.

In the event our facilities were affected by natural or man-made disasters, we could be forced to rely on third-party manufacturers.

Although we believe we possess adequate insurance for the disruption of our business from causalities, such insurance may not be sufficient to cover all of our potential losses and may not continue to be available to us on acceptable terms, or at all.

In addition, the increasing concern over climate change has resulted and may continue to result in more legal and regulatory requirements designed to mitigate the effects of climate change on the environment, including regulating greenhouse gas emissions, alternative energy policies and sustainability initiatives.

If such laws or regulations are more stringent than current legal or regulatory requirements, we may experience increased compliance burdens and costs to meet the regulatory obligations.

Further, there may be increasing scrutiny and changing expectations from the market and other stakeholders with respect to Environmental, Social and Governance (ESG) practices.

Any such regulatory changes or increased market expectations could also have a significant effect on our operating and financial decisions, including those involving capital expenditures to reduce emissions and comply with other regulatory requirements or stakeholder expectations.

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Risks Related to Non-Compliance with Laws, Regulations and Healthcare Industry Shifts

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In addition, on January 2, 2013, the American Taxpayer Relief Act of 2012, was signed into law, which, among other things, further reduced Medicare payments to several providers, including hospitals, and increased the statute of limitations period for the government to recover overpayments to providers from three to five years.

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The full impact on our business of the ACA and other new laws is uncertain.

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These third-party payers are increasingly challenging the prices charged for medical products and services and can, without notice, deny coverage for our products or treatments that may include the use of our products.

Therefore, even if a product is approved for marketing, we cannot make assurances that coverage and reimbursement will be available for the product, that the reimbursement amount will be adequate or that the reimbursement amount, even if initially adequate, will not be subsequently reduced.

Therefore, even if a product is approved for marketing, we cannot

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make assurances that coverage and reimbursement will be available for the product, that the reimbursement amount will be adequate or that the reimbursement amount, even if initially adequate, will not be subsequently reduced.

For example, in some markets, such as Spain, France and Germany, government coverage and reimbursement are currently available for the purchase or rental of our products but are subject to constraints such as price controls or unit sales limitations.

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In addition to adopting new bidding processes, CMS expanded the product categories included in competitive bidding to include non-invasive ventilators.

However, d ue to the COVID-19 pandemic, CMS removed NIVs from Round 2021 of the DMEPOS Competitive Bidding Program.

However, due to the COVID-19 pandemic, CMS removed NIVs from Round 2021 of the DMEPOS Competitive Bidding Program.

CPAP, and respiratory assist devices, and related supplies and accessories, which had been included in prior rounds of competitive bidding, were included in the 15 remaining product categories that were bid for in Round 2021.

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If changes are made to this program in the future, it could affect amounts being recovered by our customers.

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With respect to Medicare reimbursement, the Protecting Medicare and American Farmers From Sequester Cuts Act was signed into law Dec 10, 2021.

The law extended the 2% Medicare sequester moratorium through March 31, 2022, adjusted the sequester to 1% between April 1, 2022, and June 30, 2022 and reinstated the full 2% sequestration cut beginning July 1, 2022.

The reduction in payment to healthcare providers is to the calculated Medicare payment after the approved amount is determined, and the deductible and coinsurance are applied, and not the 20% coinsurance owed by the patient.

Further, the law eliminated the potential for an additional 4% Medicare sequester in 2022 due to statutory pay-as-you-go (PAYGO) requirement for one year.

These additional cuts will take effect in 2023 after adjournment of the first session of the 117th Congress.

In addition, our products are the subject of periodic studies by third party agencies, including the Agency for Healthcare Research and Quality in the United States, intended to review the comparative effectiveness of different treatments of the same illness.

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Failure to comply with anti-kickback and fraud regulations could result in substantial penalties and changes in our business operations.

Although in the United States we do not provide healthcare services, submit claims for third-party reimbursement, or receive payments directly from Medicare, Medicaid or other third-party payors for our products, we are subject to healthcare fraud and abuse regulation and enforcement by federal, state and foreign governments, which could significantly impact our business.

We are subject to healthcare fraud and abuse regulation and enforcement by federal, state and foreign governments, which could significantly impact our business.

We also are subject to foreign fraud and abuse laws, which vary by country.

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In the United States, the laws that may affect our ability to operate include, but are not limited to:

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state laws that require device manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures.

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The scope and enforcement of these laws are uncertain and subject to rapid change in the current environment of healthcare reform, especially in light of the lack of applicable precedent and regulations.

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Responding to investigations can be time-and resource-consuming and can divert management’s attention from the business.

Additionally, as a result of these types of investigations, healthcare providers and entities may face litigation or have to agree to settlements that can include monetary penalties and onerous compliance and reporting requirements as part of a consent decree or corporate integrity agreement.

Additionally, as a result of these types of investigations, healthcare providers and entities may face litigation or have to agree to

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settlements that can include monetary penalties and onerous compliance and reporting requirements as part of a consent decree or corporate integrity agreement.

Any such investigation or settlement could increase our costs or otherwise have an adverse effect on our business.

If our operations are found to be in violation of any of the laws described above or any other governmental regulations that apply to us now or in the future, we may be subject to penalties, including civil and criminal penalties, damages, fines, disgorgement, exclusion from governmental health care programs, additional compliance and reporting obligations, imprisonment and the curtailment or restructuring of our ope rations, any of which could adversely affect our ability to operate our business and our financial results.

If our operations are found to be in violation of any of the laws described above or any other governmental regulations that apply to us now or in the future, we may be subject to penalties, including civil and criminal penalties, damages, fines, disgorgement, exclusion from governmental health care programs, additional compliance and reporting obligations, imprisonment and the curtailment or restructuring of our operations, any of which could adversely affect our ability to operate our business and our financial results.

In December 2019, we entered into a settlement agreement with the U.S.

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The costs associated with compliance with the CIA, or any liability or consequences associated with its breach, could have an adverse effect on our operations, liquidity and financial condition.

Our use and disclosure of individually identifiable information, including health information, is subject to federal, state and foreign privacy and security regulations, and our failure to comply with those regulations or to adequately secure the information we hold could result in significant liability or reputational harm.

The privacy and security of personally identifiable information stored, maintained, received or transmitted electronically is a major issue in the U.S.

Our use and disclosure of personal information, including health information, is subject to federal, state and foreign privacy and security regulations, and our failure to comply with those regulations or to adequately secure the information we hold could result in significant liability or reputational harm.

The privacy and security of personal information whether stored, maintained, received or transmitted electronically or in paper form is a major issue in the U.S.

While we strive to comply with all applicable privacy and security laws and regulations, as well as our own posted privacy policies, legal standards for privacy, including but not limited to “unfairness” and “deception,” as enforced by the FTC and state attorneys general, continue to evolve and any failure or perceived failure to comply may result in proceedings or actions against us by government entities or others, or could cause us to lose audience and customers, which could have a material adverse effect on our business.

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Numerous foreign, federal and state laws and regulations govern collection, dissemination, use and confidentiality of personally identifiable health information, including (i) state privacy and confidentiality laws (including state laws requiring disclosure of breaches);

and (iii) European and other foreign data protection laws, including the GDPR.

and (iii) European and other foreign data protection laws, including the EU GDPR and the UK GDPR.

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HIPAA establishes a set of national privacy and security standards for the protection of individually identifiable health information, or protected health information, by health plans, healthcare clearinghouses and healthcare providers that submit certain covered transactions electronically, or covered entities, and their “business associates,” which are persons or entities that perform certain services for, or on behalf of, a covered entity that involve creating, receiving, maintaining or transmitting protected health information, as well as their covered subcontractors.

entities that perform certain services for, or on behalf of, a covered entity that involve creating, receiving, maintaining or transmitting protected health information, as well as their covered subcontractors.

Certain portions of our business, such as the cloud-based software digital health applications, are subject to HIPAA as a business associate of our covered entity clients.

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The CCPA gives California residents expanded rights to access and delete their personal information, opt out of certain personal information sharing and receive detailed information about how their personal information is used by requiring covered companies to provide new disclosures to California consumers (as that term is broadly defined) and provide such consumers new ways to opt-out of certain sales of personal information.

The CCPA includes civil penalties for violations, as well as a private right of action for data breaches that is expected to increase data breach litigation.

The CCPA includes civil penalties for violations, as well as a private right of action for data breaches.

Although the law includes limited exceptions, including for “protected health information” maintained by a covered entity or business associate, it may regulate or impact our processing of personal information depending on the context.

CCPA’s implementation standards and enforcement practices are likely to remain uncertain for the foreseeable future, and the CCPA may increase our compliance costs and potential liability.

Further, the California Privacy Rights Act, or CPRA, was recently passed in California and not only revises but expands upon CCPA.

The CPRA will impose additional data protection obligations on covered businesses, including additional consumer rights processes, limitations on data uses, new audit requirements for higher risk data, and opt outs for certain uses of sensitive data.

The CCPA may increase our compliance costs and potential liability.

Further, the California Privacy Rights Act, or CPRA, which becomes effective on January 1, 2023, superseding the CCPA, will impose additional data protection obligations on covered businesses, including additional consumer rights processes, limitations on data uses, new audit requirements for higher risk data, and opt outs for certain uses of sensitive data.

It will also create a new California data protection agency authorized to issue substantive regulations and could result in increased privacy and information security enforcement.

The majority of the provisions will go into effect on January 1, 2023, will supersede the CCPA, and additional compliance investment and potential business process changes may be required.

In the event that we are subject to or affected by HIPAA, the CCPA, the CPRA or other domestic privacy and data protection law, any liability from failure to comply with the requirements of these laws could adversely affect our financial condition.

Several additional US states have implemented comprehensive data privacy laws, which will become effective starting in January 1, 2023.

If we are subject to or affected by HIPAA, the CCPA, the CPRA or other domestic privacy and data protection law, any liability from failure to comply with the requirements of these laws could adversely affect our financial condition.

In addition to these comprehensive data protection laws, to date, at least three states have adopted laws specifically regulating the collection, use, storage, and disclosure of biometrics, and additional states may seek to regulate—and/or restrict the use of—biometrics in the future.

Certain of our products use, or permit the use of, information that could be classified as a biometric under these or other laws.

If we are subject to or affected by these or other laws, we may be required to modify the way in which we make available our product or certain features of our product.

We also may be required to implement additional practices or processes or otherwise invest our resources to comply with these and other regulations.

If we are unable to comply with these laws, or if these laws require us to change our products or services, we may encounter liability that could adversely affect our financial condition.

We are also subject to laws and regulations in non-U.S.

countries covering data privacy and the protection of health-related and other personal information.

For example, EU member states and other jurisdictions have adopted data protection laws and regulations, which impose significant compliance obligations.

Laws and regulations in these jurisdictions apply broadly to the collection, use, storage, disclosure and security of personal information that identifies or may be used to identify an individual, such as names, contact information, and sensitive personal data such as health data.

For example, EU member states, the United Kingdom, and other jurisdictions have adopted data protection laws and regulations, which impose significant compliance obligations.

Laws and regulations in these jurisdictions apply broadly to the collection, use, storage, disclosure and security of personal information that identifies or

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may be used to identify an individual, such as names, contact information, and sensitive personal data such as health data.

These laws and regulations are subject to frequent revisions and differing interpretations and have generally become more stringent over time.

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The GDPR imposes several stringent requirements for controllers and processors of personal data, and increased our obligations, for example, by imposing higher standards for obtaining consent from individuals to process their personal data, requiring more robust disclosures to individuals, strengthening individual data rights, shortening timelines for data breach notifications, limiting retention periods and secondary use of information (including for research purposes), increasing requirements pertaining to health data and pseudonymized (i.e., key-coded) data and imposing additional obligations when we contract with third party processors in connection with the processing of the personal data.

The GDPR also imposes strict rules on the transfer

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of personal data out of the EEA, including to the United States, and recent legal developments in Europe have created complexity and uncertainty regarding such transfers of personal data from the EEA to the United States.

For example, on July 16, 2020, the Court of Justice of the European Union, or CJEU, invalidated the EU-US Privacy Shield Framework, or Privacy Shield, under which personal data could be transferred from the EEA to United States entities that had self-certified under the Privacy Shield scheme.

While the CJEU upheld the adequacy of the standard contractual clauses (a standard form of contract approved by the European Commission as an adequate personal data transfer mechanism, and potential alternative to the Privacy Shield), the CJEU ruled that the underlying data transfers must be assessed on a case-by-case basis by the data controller to determine whether the personal data will be adequately protected.

As a result, on June 4, 2021 the European Commission published a decision adopting an updated set of new standard contractual clauses designed to address issues identified by the CJEU.

Existing data transfers that rely on the old standard contractual clauses can continue to be used until December 27, 2022 and the use of the new standard contractual clauses will still need to be assessed on a case-by-case basis taking into account the legal regime applicable in the destination country, in particular applicable surveillance laws and rights of individuals.

The exact scope and applicability of the new standard contractual clauses is currently unclear, particularly regarding transfers to parties outside the EEA who are already subject to the GDPR.

We are awaiting further clarification from the European Commission and therefore the full scope of application of the standard contractual clauses remains subject to review and change as we get a better understanding from the European Commission and national regulators .

European data protection law provides that EEA member states may make their own further laws and regulations limiting the processing of genetic, biometric or health data, which could limit our ability to use and share personal data or could cause our costs could increase, and harm our business and financial condition.

The GDPR and other similar regulations impose additional conditions in order to satisfy such consent for electronic marketing, such as a prohibition on pre-checked tick boxes and bundled consents, thereby requiring customers to affirmatively consent for a given purpose through separate tick boxes or other affirmative action.

Failure to comply with the requirements of GDPR and the applicable national data protection and marketing laws of the EEA member states may result in fines of up to €20,000,000 or up to 4% of the total worldwide annual turnover of the preceding financial year, whichever is higher, and other administrative penalties as well as individual claims for compensation .

In addition, from January 1, 2021, we have had to comply with the GDPR and United Kingdom GDPR, which, together with the amended United Kingdom Data Protection Act 2018, retains the GDPR in United Kingdom national law.

The United Kingdom GDPR mirrors the fines under the GDPR, i.e.

, fines up to the greater of £17.5 million or 4% of global turnover.

The relationship between the United Kingdom and the EU in relation to certain aspects of data protection law remains unclear, and it is unclear how United Kingdom data protection laws and regulations will develop in the medium to longer term.

On June 28, 2021, the European Commission adopted an adequacy decision in favor of the United Kingdom, enabling data transfers from EU member states to the United Kingdom without additional safeguards.

However, the United Kingdom adequacy decision will automatically expire in June 2025 unless the European Commission renews or extends that decision and remains under review by the Commission during this period.

The GDPR also imposes strict rules on the transfer of personal data out of the EEA, including to the United States, and recent legal developments in Europe have created complexity regarding such transfers of personal data from the EEA to the United States.

For example, the European Commission and the United Kingdom have adopted new standard contractual clauses under which entities may transfer personal data from the European Union and the United Kingdom, which we may be required to implement.

We must evaluate such data transfers on a case-by-case basis to ensure continued permissibility under current law and consistent with the new standard contractual clauses.

European data protection law provides that EEA member states may make their own further laws and regulations limiting the processing of genetic, biometric or health data, which could limit our ability to use and share personal data or could cause our costs to increase, and harm our business and financial condition.

Failure to comply with the requirements of GDPR and the applicable national data protection and marketing laws of the EEA member states may result in fines of up to €20.0 million or up to 4% of the total worldwide annual turnover of the preceding financial year, whichever is higher, and other administrative penalties as well as individual claims for compensation.

EU Member States and the UK also have established laws pertaining to electronic monitoring, which could require us to take additional compliance measures.

Failure to comply with such laws may subject us to penalties.

The United Kingdom also has adopted its version of the General Data Protection Regulation (“UK GDPR”).

The United Kingdom GDPR mirrors the fines under the GDPR, i.e., fines up to the greater of £17.5 million or 4% of global turnover.

Compliance with these and any other applicable privacy and data security laws and regulations is a rigorous and time-intensive process, and we may be required to put in place additional mechanisms ensuring compliance with the new data protection rules.

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Such failures could have a material adverse effect on our financial condition and operations.

If the third parties we work with violate applicable laws, contractual obligations or suffer a security breach, such violations may also put us in breach of our obligations under privacy laws and regulations and/or could in turn have a material adverse effect on our business.

If the third parties we work with violate applicable laws, contractual obligations or suffer a security incident, such violations may also put us in breach of our obligations under privacy laws and regulations and/or could in turn have a material adverse effect on our business.

Our business activities are subject to extensive regulation, and any failure to comply could have a material adverse effect on our business, financial condition, or results of operations.

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Any recall or other regulatory action could increase our costs, damage our reputation, affect our ability to supply customers with the quantity of products they require and materially affect our operating results.

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Certain of our products and services include the use of artificial intelligence (AI), which is intended to enhance the operation of our products and services.

The FTC recently has issued a report expressing a concern regarding AI and bias across industry sectors, including in the healthcare space, and has suggested that such bias could lead to unfair and deceptive practices, among other concerns.

Any changes to our ability to use AI or concerns about bias could require us to modify our products and services or could have other negative financial impact on our business.

Product sales, introductions or modifications may be delayed or canceled as a result of FDA regulations or similar foreign regulations, which could cause our sales and profits to decline.

Unless a product is exempt, before we can market or sell a new medical device in the United States, we must obtain FDA clearance or approval, which can be a lengthy and time-consuming process.

Unless a product is exempt, before we can

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market or sell a new medical device in the United States, we must obtain FDA clearance or approval, which can be a lengthy and time-consuming process.

We generally receive clearance from the FDA to market our products in the United States under Section 510(k) of the Federal Food, Drug, and Cosmetic Act or our products are exempt from the Section 510(k) clearance process.

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or foreign regulatory agencies.

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We are subject to substantial regulation related to quality standards applicable to our manufacturing and quality processes.

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Significant government regulation also exists in Canada, Japan, Europe, and other countries in which we conduct business.

As a device manufacturer, we are required to register with the FDA and are subject to periodic inspection by the FDA for compliance with the FDA’s Quality System Regulation requirements, which require manufacturers of medical devices to adhere to certain regulations, including testing, quality control and documentation procedures.

As a device manufacturer, we are required to register with the FDA and are

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subject to periodic inspection by the FDA for compliance with the FDA’s Quality System Regulation requirements, which require manufacturers of medical devices to adhere to certain regulations, including testing, quality control and documentation procedures.

In addition, the federal Medical Device Reporting regulations require us to provide information to the FDA whenever there is evidence that reasonably suggests that a device may have caused or contributed to a death or serious injury or, if a malfunction were to occur, could cause or contribute to a death or serious injury.

Compliance with applicable regulatory requirements is subject to continual review and is rigorously monitored through periodic inspections by the FDA.

In the European Community, we are required to maintain certain ISO certifications in order to sell our products and must undergo periodic inspections by notified bodies to obtain and maintain these certifications.

In the European Union, we are required to maintain certain ISO certifications in order to sell our products and must undergo periodic inspections by notified bodies to obtain and maintain these certifications.

Failure to comply with current governmental regulations and quality assurance guidelines could lead to temporary manufacturing shutdowns, product recalls or related field actions, product shortages or delays in product manufacturing.

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Any of these events could significantly harm our business and results of operations and cause our stock price to decline.

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Laws regulating consumer contacts could adversely affect our business operations or create liabilities.

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Our use of outbound contacts may be restricted by existing laws, or by laws, regulations, or regulatory decisions that may be adopted in the future.

Similarly, certain data privacy laws, including CCPA, and subsequently CPRA, and the GDPR require disclosure of our privacy practices to consumers.

Similarly, certain data privacy laws, including CCPA, and

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subsequently CPRA, and the GDPR require disclosure of our privacy practices to consumers.

If we are found to have violated these laws or regulations, we may be subjected to substantial fines, penalties, or liabilities to consumers.

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We regularly assess the potential outcomes of examinations by tax authorities in determining the adequacy of our provision for income taxes.

We are under audit by the Australian Taxation Office (the “ATO”) for the years 2009 to 2018 (the “Audit Period”).

The audits primarily involve a transfer pricing dispute in which the ATO asserts we should have paid additional Australian taxes on income derived from our Singapore operations.

The ATO issued Notices of Amended Assessments for the tax years 2009 to 2013 seeking a total of $266.0 million, consisting of $151.7 million in additional income tax and $114.3 million in penalties and interest.

The 2014 to 2018 periods are still under audit and we have not yet received any Notices of Amended Assessments relative to those periods.

We are engaged in advanced discussions with the ATO to settle the dispute for the entire Audit Period.

Given the stage of those discussions, during the year ended June 30, 2021, we recorded $395.3 million of gross unrecognized tax benefits, including $47.5 million of accrued interest and penalties.

This amount reflects our estimate of the potential tax liability and is subject to change.

Included in the balance of uncertain tax positions as of June 30, 2021 were $248.7 million of net unrecognized tax benefits that, if recognized, would reduce the effective income tax rate in future periods.

This amount represents the $395.3 million of gross unrecognized tax, adjusted for tax credits and deductions of $146.6 million.

If the matter were to progress to litigation, we continue to believe we are more likely than not to be successful in defending our position.

If we are not successful in litigation, we will be required to pay some or all of the additional income tax, accrued interest and penalties, including potential additional amounts relating to the 2014 to 2018 periods.

The timing and resolution of the ATO audits are inherently uncertain, and the amounts we might ultimately pay or receive in credits and deductions, if any, upon resolution of issues raised by the ATO may differ materially from the amounts accrued.

Although it is expected that the amount of unrecognized tax benefits may change in the next 12 months, an estimate of the range of the possible change cannot be made.

Outside the ATO audit describe above, tax years 2017 to 2020 remain subject to future examination by the major tax jurisdictions in which we are subject to tax.

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On September 19, 2021, we concluded the settlement agreement with the Australian Taxation Office (“ATO”) in relation to the previously disclosed transfer pricing dispute for the tax years 2009 through 2018 (“ATO settlement”).

The ATO settlement fully resolved the dispute for all prior years, with no admission of liability and provides clarity in relation to certain future taxation principles.

The final net impact of the ATO settlement was $238.7 million, which represents a gross amount of $381.7 million, including interest and penalties of $48.1 million, and adjustments for credits and deductions of $143.0 million.

As a result of the ATO settlement and due to movements in foreign currencies, we recorded a benefit of $14.1 million within other comprehensive income, and a $4.1 million reduction of tax credits, which was recorded to income tax expense.

As a result of the ATO settlement, we reversed our previously recorded uncertain tax position.

On September 28, 2021, we remitted final payment to the ATO of $284.8 million, consisting of the agreed settlement amount of $381.7 million less prior remittances made to the ATO of $96.9 million.

Tax years 2018 to 2021 remain subject to future examination by the major tax jurisdictions in which we are subject to tax.

Any final assessment resulting from tax audits may result in material changes to our past or future taxable income, tax payable or deferred tax assets, and may require us to pay penalties and interest that could materially adversely affect our financial results.

Risks Related to the Securities Markets and Ownership of Our Common Stock

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Global economic conditions could make it difficult for us, our customers and our suppliers to accurately forecast and plan future business activities.

Adverse economic conditions could cause customers to reduce or delay their purchases, which could impact our revenue, our ability to manage inventory levels, collect customer receivables, and potentially decrease our profitability.

Adverse economic conditions, including inflation and higher interest rates, could cause customers to reduce or delay their purchases, which could impact our revenue, our ability to manage inventory levels, collect customer receivables, and potentially decrease our profitability.

In addition, prevailing economic conditions could constrain the supply of components used in the manufacturing of our products, which may result in higher costs and impact our ability to meet customer demand.

We cannot predict the timing, strength, or duration of any economic slowdown, or the speed of any subsequent economic recovery.

We cannot predict the timing, strength, or duration of any economic

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slowdown, or the speed of any subsequent economic recovery.

If the economy or markets in which we operate were to deteriorate, our business, financial condition, and results of operations may be adversely affected.

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Fluctuations in our quarterly operating results may cause the market price of our common stock to fluctuate.

Delaware law and provisions in our charter and could make it difficult for another company to acquire us.

Delaware law and provisions in our charter could make it difficult for another company to acquire us.

Provisions of our certificate of incorporation may have the effect of delaying or preventing changes in control or management which might be beneficial to us or our security holders.

In particular, our board of directors has the authority to issue up to 2,000,000 shares of preferred stock and to determine the price, rights, preferences, privileges and restrictions, including voting rights, of those shares without further vote or action by the stockholders.

In particular, our board of directors has the authority to issue up to 2.0 million shares of preferred stock and to determine the price, rights, preferences, privileges and restrictions, including voting rights, of those shares without further vote or action by the stockholders.

The rights of the holders of our common stock will be subject to, and may be adversely affected by, the rights of the holders of any preferred stock that may be issued in the future.

The issuance of preferred stock may have the effect of delaying, deferring or preventing a change in control, may discourage bids for our common stock at a premium over the market price of our common stock and may adversely affect the market price of our common stock and the voting and other rights of the holders of our common stock.

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ITEM 1B UNRESOLVED STAFF COMMENTS

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

What changed 10-K

Item 1A. Risk Factors