What changed in this filing

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Item 1A. Risk Factors

2026-08-13 compared with 2025-08-08 · 224 added, 187 removed, 547 unchanged (43% of the section changed)

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Risks Related to Our Business and Industry

• Our inability to compete with new and existing technology to treat OSA successfully may harm our business.

• Our inability to compete with new and existing technology may harm our business.

• Consolidation in the healthcare industry and healthcare payment reform could have an adverse effect on our revenues 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.

• We are subject to potential professional services liability claims due to our recent acquisition of VirtuOx, which may exceed the scope and amount of our insurance coverage, which would expose us to liability for uninsured claims.

• Our intellectual property may not protect our products, and/or our products may infringe on the intellectual property rights of third parties.

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

• We are subject to new areas of direct healthcare oversight by federal government agencies due to our acquisition of VirtuOx.

• We are subject to new areas of direct healthcare oversight by federal government agencies due to our acquisitions of VirtuOx and Noctrix.

Risks Related to Manufacturing, IT Systems, Commercial Operations and Plans for Future Growth

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• Actual or attempted breaches of security, unauthorized disclosure of information, attacks which reduce availability of systems such as denial of service, 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 may not be able to realize the anticipated benefits from acquisitions, which could adversely affect our operating results.

• Failure to identify, execute, and integrate acquired businesses into our operations successfully, or challenges related to the Company's strategic initiatives, including divestitures.

• If we are unable to support our continued growth or achieve expected operating efficiencies, our business could suffer.

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

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• Our business depends on our ability to effectively educate and engage dealers of home healthcare products, sleep clinics and physicians, health care providers, and patients regarding the benefits of our products, software solutions and services.

• The success of our software offerings depends substantially on customers entering, renewing, upgrading and expanding their agreements for cloud services, term licenses, and maintenance and support agreements with us.

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• Government and private insurance plans may not adequately reimburse our customers for our products, which could result in reductions in sales or selling prices for our products.

• We are subject to various risks relating to our compliance with fraud and abuse laws and transparency laws relating to our interactions with our customers, healthcare providers, and patients, which could subject us to government investigation, litigation, or other penalties to the extent our activities or relationships are found not to comply or could otherwise cause us to incur significant costs to defend our actions, and could result in substantial fines, penalties, harm our reputation in the market, divert our management’s attention, or result in changes in our business operations that could harm our ability to successfully market and sell our products and services.

• We are subject to various risks relating to our compliance with fraud and abuse laws and transparency laws relating to our interactions with our customers, healthcare providers, other referral sources and patients, which could subject us to government investigation, litigation, or other penalties to the extent our activities or relationships are found not to comply or could otherwise cause us to incur significant costs to defend our actions, and could result in substantial fines, penalties, harm our reputation in the market, divert our management’s attention, or result in changes in our business operations that could harm our ability to successfully market and sell our products and services.

• Our use and disclosure of personal information, including health information, is subject to federal, state and foreign privacy, artificial intelligence, data, biometrics and security regulations, and our failure to comply with those regulations or to adequately secure the information we hold could result in significant liability, regulatory investigations, legal actions, 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.

• Our use of artificial intelligence in certain products, software solutions and business operations may expose us to operational, regulatory and reputational risks that could adversely affect our business, financial condition and results of operations.

• 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.

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

• Tax laws, regulations, and enforcement practices are evolving, are aggressively pursued in some jurisdictions, and may cause expense as well as management distraction, which may result in a material adverse effect on our results of operations, cash flows and financial position.

• We are subject to ongoing tax audits by local tax authorities, some of which are aggressively pursuing taxes on discontinued local operations.

• Sustainability and corporate governance issues are constantly evolving, leading to distraction and expense, and may have an adverse effect on our business, financial condition and results of operations and reputation.

• Income tax laws, regulations, and enforcement practices in various jurisdictions are evolving and, as a result, tax authorities are aggressively pursuing taxpayers.

This may result in expense as well as management distraction, which may result in a material adverse effect on our results of operations, cash flows and financial position.

• We are subject to ongoing tax audits by various local tax authorities, some of which are aggressively pursuing taxes on transferred or discontinued local operations.

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• Sustainability and corporate governance issues are constantly evolving, leading to additional investment and expense, and may have an adverse effect on our business, financial condition and results of operations and reputation.

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

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Risks Related to Our Business and Industry

Our inability to compete with new and existing technology to treat OSA successfully may harm our business.

Our inability to compete with new and existing technology may harm our business.

The geographic markets for our products, which encompass Sleep and Breathing Health products and Residential Care Software offerings, are highly competitive and are characterized by frequent product improvements and evolving technology, and new therapies, including existing and new pharmaceuticals.

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For example, certain pharmaceutical treatments, such as GLP-1s currently approved to treat diabetes and for weight loss, may enhance patient health, lower the occurrence of obesity, or potentially reduce the severity or existence of OSA.

For Residential Care Software, the demand for business management software is highly competitive, rapidly evolving, subject to changing technology, with low barriers to entry, shifting customer needs, increased use of AI and frequent introductions of new products and services.

Many prospective customers have invested substantial personnel and financial resources to create, implement and integrate their current business management software into their operations and, therefore, may be reluctant or unwilling to change from their current in-house solution or provider to one of our platforms or products.

For Residential Care Software, the demand for business management software is highly competitive, rapidly evolving and characterized by changing technologies, with low barriers to entry, shifting customer needs, increasing adoption of artificial intelligence, or AI, and frequent introductions of new products and services.

Rapid advances in AI, including generative AI and autonomous software agents, may fundamentally change how healthcare providers manage administrative, operational and clinical workflows.

Customers also increasingly expect AI-enabled capabilities to be incorporated into software offerings, requiring us to make significant investments in research and development, data infrastructure, cybersecurity, regulatory compliance and AI governance to remain competitive.

In addition, many prospective customers have invested substantial personnel and financial resources to implement and integrate their existing business management software and may therefore be reluctant to switch to one of our platforms or products.

If we are unable to successfully innovate, develop, acquire or integrate capabilities that meet evolving customer expectations, or if competitors offer superior solutions, demand for our software offerings, competitive position, financial condition and results of operations could be adversely affected.

Additionally, some of our competitors, including those described above, have greater financial, research and development, manufacturing and marketing resources than we do.

The past several years have seen a trend towards consolidation in the healthcare industry and in the geographic markets for our products.

Industry consolidation could result in greater competition if our competitors combine their resources, if our competitors are acquired by other companies with greater resources than ours, or if our competitors become affiliated with customers of ours.

The healthcare space is attractive to many companies, particularly new entrants interested in developing digital health models to compete with offerings of more established companies like us.

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Consolidation in the healthcare industry and healthcare payment reform could have an adverse effect on our revenues and results of operations.

Many HME providers, durable medical equipment (DME) suppliers, and residential health providers are consolidating, which may result in greater concentration of purchasing power.

Numerous initiatives and reforms by legislators, regulators, and third-party payors to curb the rising cost of healthcare have catalyzed a consolidation of aggregate purchasing power where we sell our products and services.

Some HME providers, durable medical equipment (DME) suppliers, third-party payors and residential health providers are also consolidating or forming strategic alliances.

As the healthcare industry consolidates, competition to provide goods and services to industry participants may become more intense.

These industry participants may try to use their market power to negotiate price concessions or volume reductions for medical devices and components produced by us.

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

We expect that market demand, government regulation and third-party coverage and reimbursement policies will continue to change the worldwide healthcare industry, resulting in further business consolidations and alliances among our customers, which may increase competition and exert downward pressure on the prices of our products and services which may adversely impact our business, results of operations, financial condition, and cash flows.

Global macroeconomic conditions, including the direct and indirect effects of inflation, supply chain disruptions, reciprocal tariffs, and fluctuations in foreign currency exchange rates, could adversely affect our operations and profitability.

Global economic conditions, geopolitical instability, the impact of tariffs and trade wars on our suppliers, and other macroeconomic factors, including inflation, supply chain disruptions, such as recent shipping disruptions in the Red Sea, interest rate and foreign currency rate fluctuations, and volatility in the capital markets could negatively impact our business, financial condition, and results of operations.

The growth of our business and demand for our products and services are affected by changes in the health of the overall global economy.

Deterioration in the global economic environment may cause decreased demand for our products and services which could result in lower product sales, services

Global economic conditions, geopolitical instability, the impact of tariffs and trade wars on our suppliers,

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revenue, lower prices for our products, or reduced reimbursement rates by third-party payors, while increasing the cost of operating our business.

and other macroeconomic factors, including inflation, supply chain disruptions, such as recent shipping disruptions, interest rate and foreign currency rate fluctuations, and volatility in the capital markets could negatively impact our business, financial condition, and results of operations.

The growth of our business and demand for our products and services are affected by changes in the health of the overall global economy.

Deterioration in the global economic environment may cause decreased demand for our products and services which could result in lower product sales, services revenue, lower prices for our products, or reduced reimbursement rates by third-party payors, while increasing the cost of operating our business.

Macroeconomic conditions may impact our global supply chain, primarily through constraints on or increased cost of acquiring raw materials and electronic components.

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We sell our products in many countries, and we also source many components and materials for our products from and manufacture our products in various countries.

Recently, the U.S.

government imposed significant tariffs, as well as increases to existing tariffs, impacting a wide variety of goods across multiple countries and indicated that additional tariffs may be imposed in the near future.

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While tariffs and other retaliatory trade measures imposed by other countries on U.S.

goods and services have not yet had a significant impact on our business or results of operations, we cannot predict further developments, and such existing or future tariffs could have a material adverse effect on results of our operations, financial position and cash flows.

goods and services have not had a significant impact on our business or results of operations, we cannot predict further developments, and such existing or future tariffs could have a material adverse effect on results of our operations, financial position and cash flows.

Global economic conditions may impact foreign currency exchange rates relative to the U.S.

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These developments include, but are not limited to, actions taken to contain outbreaks or address their impact, the timing, distribution, and efficacy of treatments, and the imposition of government lockdowns, quarantine and physical distancing requirements.

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

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and sell a significant portion of our products outside the U.S.

Sales in combined Europe, Asia and other regions accounted for approximately 36% and 36% of our net revenues in the

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years ended June 30, 2025 and June 30, 2024, respectively.

Sales in Rest of World regions accounted for approximately 37% and 36% of our net revenues in the years ended June 30, 2026 and June 30, 2025, respectively.

Our sales and operations outside of the U.S.

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and other governments against Russia and has caused significant volatility and disruptions globally.

The conflict between Israel and Iran may lead to fluctuations in oil prices and global economic instability, resulting in higher supply and transportation costs.

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 Iran and 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.

Conflicts in the Middle East have led to fluctuations in oil prices and global economic instability, resulting in higher supply and transportation costs.

While we are not presently aware of any direct impacts these restrictions have had on our suppliers’ supply chains, disruptions resulting from conflicts in Iran and 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 global 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.

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We, our competitors, or other third parties may also conduct clinical trials involving our commercially sold products.

Clinical trials are very expensive and difficult to design and implement, in part because they are subject to rigorous regulatory requirements.

The clinical trial process is also time consuming.

Furthermore, failure can occur at any stage of the trials, and we could encounter problems that cause us to abandon or repeat clinical trials.

The results of clinical trials may be unfavorable or

Clinical trials are very

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inconsistent with previous findings or could identify safety signals associated with our products.

expensive and difficult to design and implement, in part because they are subject to rigorous regulatory requirements.

The clinical trial process is also time consuming.

Furthermore, failure can occur at any stage of the trials, and we could encounter problems that cause us to abandon or repeat clinical trials.

The results of clinical trials may be unfavorable or inconsistent with previous findings or could identify safety signals associated with our products.

Current or future clinical trials may not meet primary endpoints, may reveal disadvantages of our products and solutions for various countries we address, or could generate unfavorable or inconsistent clinical data.

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We are subject to potential product liability claims as a result of the design, manufacture and marketing of medical devices.

Any product liability claim brought against us, with or without merit, could result in the increase of our product liability insurance rates.

Any product liability claim brought against us, with or without merit, could result in an increase of our product liability insurance rates.

In addition, we would have to pay any amount awarded by a court outside of our policy limits.

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We may also be affected by the product recalls and other risks associated with the products of our competitors if customers and patients are uncertain if issues affecting our competitors may also affect us.

We are subject to potential professional services liability claims due to our recent acquisition of VirtuOx, which may exceed the scope and amount of our insurance coverage, which would expose us to liability for uninsured claims.

As an independent diagnostic testing facility, VirtuOx operates in the diagnostic services business, which exposes us to claims alleging malpractice.

While VirtuOx engages physicians to interpret its diagnostic tests on an independent contractor basis and therefore, may be able to shed malpractice liability to the extent that those professional interpretations are incorrect, most likely a harmed patient or healthcare provider will bring claims against both VirtuOx and its interpreting physicians and VirtuOx could be held liable.

Any professional liability claim brought against us, with or without merit, could result in an increase of our malpractice liability insurance rates.

In addition, we would have to pay any amount awarded by a court or jury outside of our policy limits.

Our insurance policies have various exclusions, and thus we may be subject to a malpractice liability claim for which we have no insurance coverage, requiring us to pay the entire amount of any award.

We cannot assure that our insurance coverage will be adequate or that all claims brought against us will be covered by our insurance and we cannot assure that we will be able to obtain insurance in the future on terms acceptable to us or at all.

A successful malpractice liability claim brought against us in excess of our insurance coverage, if any, may require us to pay substantial amounts, which could harm our business.

Our intellectual property may not protect our products, and/or our products may infringe on the intellectual property rights of third parties.

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We face the risks that:

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• third parties will infringe our intellectual property rights;

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If we become involved in any intellectual property litigation, we may be required to pay substantial damages, including but not limited to treble damages, attorneys’ fees and costs, for past infringement, or could be at risk for an injunction if it is ultimately determined that our products infringe a third party’s intellectual property rights.

Even if infringement claims

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against us are without merit, defending a lawsuit takes significant time, may be expensive and may divert management’s attention from other business matters.

Even if infringement claims against us are without merit, defending a lawsuit takes significant time, may be expensive and may divert management’s attention from other business matters.

In addition, a license may not be available at all or on commercially viable terms, and we may not be able to redesign our products to avoid infringement.

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If we fail to source, develop and retain key employees, our business may suffer.

Our ability to compete effectively depends on our ability to source and retain key employees, including people in senior management, sales, marketing, technology, and research and development positions.

Competition for top talent in the healthcare, technology and Residential Care Software industries can be intense.

Our ability to compete effectively depends on our ability to source and retain key employees, including people in senior management, sales, marketing, technology, and research and development.

Competition for top talent in the healthcare and health technology industries can be intense.

Our ability to source and retain such talent will depend on many factors, including hiring practices of our competitors, compensation and benefits, flexibility regarding virtual and hybrid work arrangements, work location, work environment, industry economic conditions, and corporate culture.

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

As of June 30, 2025, our total consolidated debt was $0.7 billion and we may incur additional indebtedness in the future.

As of June 30, 2026, our total outstanding debt was $660 million and we may incur additional indebtedness in the future.

Our indebtedness could have adverse consequences, including:

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Our debt service obligations will require us to use a portion of our operating cash flow to pay interest and principal in indebtedness, which could impede our growth.

Our ability to make payments on, and to refinance, our indebtedness, and to fund capital expenditures will depend on our ability to generate cash in the future.

Our ability to make payments on, and to refinance, our indebtedness, and to fund the future expansion of our business will depend on our ability to generate cash in the future.

This is subject to general economic, financial, competitive, legislative, regulatory, and other factors, many of which are beyond our control.

We are subject to new areas of direct healthcare oversight by federal government agencies due to our acquisition of VirtuOx.

In May 2025, we acquired VirtuOx, a software-enabled IDTF and provider of technology solutions to facilitate in-home and remote testing services for sleep, respiratory, cardiac, and other health conditions across the U.S.

As a Medicare-enrolled IDTF, VirtuOx is subject to laws, regulations and policy pertaining to its Medicare enrollment, state Medicaid participation, and direct billing of both governmental and commercial insurance programs.

These laws include but are not limited to the federal Anti-Kickback Statute, the federal civil and criminal False Claims Acts, the Civil Monetary Penalty Law’s beneficiary inducement prohibition, and their state law equivalents.

VirtuOx is also subject to HIPAA as a covered entity, which requires additional compliance efforts to meet all provisions under the HIPAA Privacy Rule and applicable requirements under the Electronic Standard Transactions Rule.

We are subject to new areas of direct healthcare oversight by federal government agencies due to our acquisitions of VirtuOx and Noctrix.

In 2025, we acquired VirtuOx, a software-enabled independent diagnostic testing facility, or IDTF, and provider of technology solutions to facilitate in-home and remote testing services for sleep, respiratory, cardiac, and other health conditions across the U.S.

Additionally, in June 2026, we acquired Noctrix, a DME supplier and manufacturer of a neurostimulation FDA-cleared device to treat restless legs syndrome.

As a Medicare-enrolled IDTF, VirtuOx, and as a

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Medicare-enrolled DME supplier, Noctrix, are each subject to laws, regulations and policies pertaining to their Medicare enrollment, state Medicaid participation, and direct billing of both governmental and commercial insurance programs.

These laws include but are not limited to the federal Anti-Kickback Statute, the Stark Law, the federal civil and criminal False Claims Acts, the Civil Monetary Penalty Law’s beneficiary inducement prohibition, and their state law equivalents.

Additionally, VirtuOx may be subject to state laws prohibiting the corporate practice of medicine, due to its engagements of healthcare professionals for the provision of medical services.

Both VirtuOx and Noctrix are also subject to HIPAA as covered entities, which requires additional compliance efforts to meet all provisions under the HIPAA Privacy Rule and applicable requirements under the Electronic Standard Transactions Rule.

As Resmed has historically only been subject to HIPAA as a business associate, these additional compliance requirements will require new policies, procedures, and data processing protocols, as well as the dedication of additional privacy, security and compliance personnel to ensure compliance with HIPAA.

Further, VirtuOx’s direct billing status increases its risk relative to Resmed under the healthcare fraud and abuse laws and false claims laws.

IDTFs, in particular, have extensive Medicare participation, billing and documentation requirements that will require additional compliance and legal resources to ensure that ongoing operations comply with applicable laws.

Further, VirtuOx and Noctrix's direct billing statuses increase their risk relative to Resmed under the healthcare fraud and abuse laws and false claims laws.

IDTFs and DMEs, in particular, have extensive Medicare participation, billing and documentation requirements that will require additional compliance and legal resources to ensure that ongoing operations comply with applicable laws.

Both entity types are also subject to heightened governmental scrutiny due to the belief that fraudulent actions and claims for services are more prevalent in the IDTF and DME industries, leading to a higher volume of payor denials, audits, and investigations.

If we become the subject of a government investigation, payor audit, or whistleblower lawsuit based on an allegation of noncompliance with one or more of these requirements, we risk potential refund of overpayments, financial penalties for violations, potential removal of participation in federal, state, and/or commercial payor programs, negative publicity, loss of public trust, and diversion of management’s time, attention and resources.

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In the event that a violation is found, or we are forced to resolve a dispute with a governmental entity, our revenue, reputation, strategic goals, and business operations could suffer.

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Risks Related to Manufacturing, IT Systems, Commercial Operations and Plans for Future Growth

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We are increasingly dependent on information technology systems and infrastructure.

Failed, substandard or delayed efforts to improve our IT System infrastructure may result in disruption to our business or materially increased costs.

Failed, substandard or delayed efforts to improve our IT System infrastructure may result in disruption to our business or materially

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increased costs.

We rely on information technology systems and infrastructure, including technologies and services provided by third parties, to support our business processes and activities, products and customers.

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

Cyberattacks could include the deployment of harmful

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

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.

Such cyberattacks increasingly exploit AI and machine-learning techniques—ranging from generative-AI phishing and deep-fake impersonations to automated vulnerability discovery, adaptive malware and large-scale credential-stuffing campaigns—each of which can evolve rapidly to evade traditional security controls.

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

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

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We cannot assure that our third-party service providers with access to our, or our customers, patients and/or employees’ personally identifiable and other sensitive or confidential information will not experience actual or attempted security breaches, which could have a negative effect on our business.

We may not be able to realize the anticipated benefits from acquisitions, which could adversely affect our operating results.

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 related breathing health as well as our Residential Care Software business.

The success of our acquisitions depends, in part, on our ability to successfully identify, acquire and integrate the business and operations of the target companies.

Additionally, our management may have attention diverted while trying to integrate acquisitions.

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

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

As noted above, our acquisition of VirtuOx involves the undertaking of additional risk areas and the investment of additional resources and personnel to manage that risk.

It is possible that our return on investment is not realized given our investment of such additional

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

Failure to identify, execute, and integrate acquired businesses into our operations successfully, or challenges related to the Company's strategic initiatives, including divestitures.

As part of our strategy to develop and identify new solutions and technologies and optimize our portfolio of products, we have completed several acquisitions and investments and may make additional acquisitions, investments, or divestitures in the future.

Our integration of the operations of acquired businesses, or a divestiture of part of our existing businesses, including the separation of our MatrixCare business, requires significant efforts, including the coordination of information technologies, research and development, sales and marketing, operations, manufacturing, and finance.

These efforts result in additional expenses, and our management may have attention diverted while trying to integrate acquisitions.

In addition, the cumulative effect of simultaneously executing multiple transactions may increase operational complexity and heighten execution and timing risks.

Our ability to realize the anticipated benefits of acquisitions depends not only on the successful integration of acquired businesses, but also on our ability to identify appropriate acquisition targets, evaluate their strategic fit and long‑term value, accurately assess risks and liabilities, and negotiate and complete transactions on acceptable terms.

Our acquisitions may involve the undertaking of additional risk areas and the investment of additional resources and personnel to manage that risk.

In addition, we cannot be certain that the businesses we acquire will become profitable or remain profitable.

We also could experience negative effects on our business, results of operations, financial condition, and cash flows from acquisition-related charges, and amortization of intangible assets.

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

At least on an annual basis, we must evaluate whether facts and circumstances demonstrate any impairment of the value of acquired intangible assets.

The qualitative and quantitative analysis used to test goodwill is dependent upon various considerations and assumptions, including macroeconomic conditions, industry and market characteristics, projections of acquired companies’ future revenue, discount rates, and expectations of future cash flows.

While we have made such assumptions in good faith and believe them to be reasonable, the assumptions may turn out to be materially inaccurate, including for reasons beyond our control.

Changes in such assumptions may cause a change in circumstances demonstrating that the carrying value of intangible assets may be impaired.

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.

We evaluate goodwill for impairment annually and other acquired intangible assets whenever events or changes in circumstances indicate that their carrying values may not be recoverable.

Our impairment assessments require significant judgments and assumptions, including those related to macroeconomic conditions, industry and market trends, projected revenues and cash flows, and discount rates.

If actual results differ from these assumptions or market conditions change, we may be required to record material impairment charges that could adversely affect our results of operations.

These effects, combined with transaction costs, retention or separation‑related expenses, and potential delays in realizing anticipated synergies or strategic benefits, may place pressure on earnings or cash flows.

In addition, expected strategic benefits from any planned or completed divestiture, including the separation of our MatrixCare business, may not be realized or may take longer to realize than expected, and there can be no assurance that disputes will not arise under transition service, or other agreements that have or may be executed as part of a divestiture.

Challenges associated with executing these transactions may materially adversely affect our business, results of operations, financial condition, and cash flows.

If we are unable to support our continued growth or achieve expected operating efficiencies, our business could suffer.

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Our ability to manage our growth effectively depends on our ability to implement and improve our financial and management information systems on a timely basis and to effect other changes in our business including the ability to monitor and improve manufacturing systems, and implement information technology, and quality and regulatory compliance systems, among others.

Unexpected difficulties during upgrades, expansion, the failure to attract and retain qualified employees, the failure to successfully replace or upgrade our management information systems, the failure to manage costs or our inability to respond effectively to growth or plan for future expansion could cause our growth to slow or stop.

Unexpected difficulties during upgrades, expansion, the failure to successfully replace or upgrade our management information systems, the failure to manage costs or our inability to respond effectively to growth or plan for future expansion could cause our growth to slow or stop.

We continually assess opportunities for improved operational efficiency and to better align expenses with revenues, while preserving our ability to make investments in research and development projects, product and technology acquisitions and our people, which we believe is important to our long-term success.

As a result of these assessments, there have been, and may in the future be, restructuring activities, realignment of strategies and cost reduction initiatives.

These measures could yield unintended consequences, such as distraction of our management and employees, reduced employee productivity, business disruption, and inability to attract or retain key personnel, which could negatively affect our business.

These measures could

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yield unintended consequences, such as distraction of our management and employees, reduced employee productivity, business disruption, and inability to attract or retain key personnel, which could negatively affect our business.

Moreover, our restructuring and optimization initiatives could incur additional costs which impact our operating results.

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Any interruption in production capability could require us to make substantial capital expenditures to fill customer orders, which could negatively affect our profitability and financial condition.

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

Our business depends on our ability to effectively educate and engage dealers of home healthcare products, sleep clinics and physicians, health care providers, and patients regarding the benefits of our products, software solutions and services.

We market our products and services primarily to HME providers, sleep clinics, and physicians that diagnose OSA and other sleep disorders, as well as to non-sleep specialist physician practices that diagnose and treat sleep disorders in the course of providing primary care to patients.

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We cannot assure that physicians will continue to prescribe our products or recommend our services, or that HME providers or patients will not substitute competing products when a prescription specifying our products has been written.

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We have expanded our marketing activities in some areas to target the population with a predisposition to sleep-disordered breathing as well as primary care physicians and various medical specialists.

We cannot assure that these marketing efforts will be successful in increasing awareness or sales of our products and services.

Additionally, as our business increasingly includes digital health solutions and patient-facing technologies, our ability to educate, engage and support patients throughout their therapy journey has become increasingly important.

If we are unable to effectively engage patients through our digital platforms, educational initiatives or other programs, or if patients do not adopt or continue to use these offerings as intended, patient satisfaction, therapy adherence and demand for certain of our products and services could be adversely affected.

The success of our software offerings depends substantially on customers entering, renewing, upgrading and expanding their agreements for cloud services, term licenses, and maintenance and support agreements with us.

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If our software 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 sales could decline.

Our Residential Care Software operations are dependent upon our ability to prevent system interruptions and, as we continue to grow, we will need to devote additional resources to improving our infrastructure to maintain the performance of our products and solutions.

The applications underlying our Residential Care Software products are inherently complex and may contain material defects or errors, which may cause disruptions in availability or other performance problems.

Our software solutions operations are dependent upon our ability to prevent system interruptions and, as we continue to grow, we will need to devote additional resources to improving our infrastructure to maintain the performance of our products and solutions.

The applications underlying our software solutions products are inherently complex and may contain material defects or errors,

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which may cause disruptions in availability or other performance problems.

We have from time to time found defects in our products and may discover additional defects in the future that could result in data unavailability, unauthorized access to, loss, corruption or other harm to our customers’ data.

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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.

In addition, our software products and digital health solutions increasingly rely on interoperability with third-party technologies and platforms, and other connected health technologies.

Changes to these technologies or platforms, including modifications to technical standards, application programming interfaces, operating systems, security requirements or commercial terms, could require significant development resources, delay product enhancements, reduce interoperability or negatively affect the functionality or adoption of our products and services.

In addition, if we are unable to establish, maintain or expand strategic technology partnerships or integrations that support our digital ecosystem, our ability to compete effectively and deliver connected care solutions could be adversely affected.

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

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Design and mechanical errors, spikes in usage volume and failure to follow system protocols and procedures could cause our systems to fail, resulting in interruptions in our Residential Care Software products.

Any interruptions or delays in our service, whether caused by our products, or as a result of third-party

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error, our own error, natural disasters or security breaches, whether accidental or willful, could harm our relationships with customers and cause our revenue to decrease and/or our expenses to increase.

Any interruptions or delays in our service, whether caused by our products, or as a result of third-party error, our own error, natural disasters or security breaches, whether accidental or willful, could harm our relationships with customers and cause our revenue to decrease and/or our expenses to increase.

Any of the above circumstances or events may harm our reputation, cause customers to terminate their agreements, impair our ability to obtain contract renewals from existing customers, impair our ability to grow our customer base, result in the expenditure of significant financial, technical and engineering resources, subject us to financial penalties and liabilities under our service level agreements, and otherwise harm our business, results of operations and financial condition.

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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 (including due to regulatory changes), shifts in market trends (including customer preference for sustainably produced or reusable products) and other adverse effects.

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well-being), compliance costs and transition risks (including due to regulatory changes), shifts in market trends (including customer preference for sustainably produced or reusable products) and other adverse effects.

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

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More recently, the Consolidated Appropriations Act of 2024 (CAA) was signed into law in March 2024.

Among other things, the CAA reduced by half the 3.37% reduction to 2023’s Medicare Physician Fee Schedule conversion factor that had been in place since January 1, 2024, increasing the conversion factor to $33.32 for services furnished between March 9 and December 31, 2024.

Among other things, the CAA reduced by half the 3.37% reduction to 2023’s Medicare Physician Fee Schedule (PFS) conversion factor that had been in place since January 1, 2024, increasing the conversion factor to $33.32 for services furnished between March 9 and December 31, 2024.

On November 1, 2024, CMS issued a rule finalizing changes for Medicare payments under the PFS and other Medicare Part B policies, effective on or after January 1, 2025.

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This amounts to an estimated CY 2025 PFS conversion factor of $32.35, resulting in lower Medicare payments to Part B suppliers.

Notably, however, the One Big Beautiful Bill Act, includes a 1-year, 2.5% increase to the PFS for 2026, which temporarily addresses the 2025 payment cuts.

Additionally, the Medicare telehealth flexibilities under the COVID-19 public health emergency are set to expire at the end of 2025.

Without Congressional action, Medicare will no longer cover most telehealth services furnished to beneficiaries in their home or to individuals residing in urban areas after the end of the year which could have an adverse impact on rates of diagnosis of OSA.

On July 4, 2025 the One Big Beautiful Bill Act was signed into law and provided a 1-year, 2.5% statutory payment update under the PFS for CY 2026.

CMS subsequently finalized the CY 2026 PFS, which incorporates that statutory update together with other payment adjustments and policy changes.

Future Medicare physician payment rates remain subject to annual CMS rulemaking and potential legislative action, and we cannot predict the extent to which future changes may affect payments for services furnished under the Medicare program.

Additionally, pursuant to the Consolidated Appropriations Act of 2026, many of the temporary Medicare telehealth flexibilities, including the waiver of geographic and originating site restrictions for certain telehealth services, have been extended through December 31, 2027.

Certain telehealth flexibilities applicable to behavioral health services have been made permanent.

Congress or CMS may modify these policies through future legislation or rulemaking, and we cannot predict whether the temporary flexibilities will be further extended, modified, or allowed to expire.

In 2022, the VA proposed an adjustment through regulation to amend the previously adopted schedule of VA ratings for sleep apnea.

Specifically, the proposed rule would remove in its entirety the current 30% disability rating for veterans exhibiting excessive daytime sleepiness and replace it with a 10% disability rating for veterans with a sleep apnea diagnosis with incomplete relief (as determined by a sleep study) with treatment including a CPAP machine, and further, remove the automatic 50% disability rating for veterans with a documented need for a CPAP machine (50% disability would instead require that the veteran have a sleep apnea diagnosis with ineffective treatment, as determined by a sleep study, or who is unable to use treatment due to comorbid conditions, without end-organ damage).

The VA has not yet changed its ratings criteria, but it could happen this year.

The VA has not yet finalized these proposed revisions, and the current rating criteria remains in effect, but should this proposal, or another similar proposal to limit disability ratings be adopted, fewer veterans may pursue treatment of sleep apnea using CPAP or more veterans would claim ineffective treatment with CPAP to obtain a higher rating.

If the changes are implemented, veterans who were rated for sleep apnea before the change in criteria will be grandfathered and retain their rating.

However, all veterans filing new claims on and after the change in ratings criteria would be evaluated under the new criteria.

The VA has not yet adopted these changes to the disability ratings system for sleep apnea but should this proposal, or another similar proposal to limit disability ratings be adopted, fewer veterans may pursue treatment of sleep apnea using CPAP or more veterans would claim ineffective treatment with CPAP to obtain the higher rating.

On June 9, 2025, CMS released long-awaited Medicare guidance on coverage and reimbursement for respiratory assist devices with bi-level capacity and mechanical ventilators when used in the home for the treatment of chronic respiratory failure consequent to COPD;

a new CMS national coverage determination is expected in September 2025.

Although national reimbursement criteria may ease existing reimbursement uncertainty over these items for this indication, it is unclear how national coverage criteria and associated documentation requirements will impact providers and suppliers who invoice Medicare directly;

third-party payors may also follow suit in implementing similar policies.

The VA may finalize, modify, or withdraw the proposed revisions through a future final rule, the timing and substance of which remain uncertain.

On June 9, 2025, CMS finalized a National Coverage Determination (NCD) entitled “Noninvasive Positive Pressure Ventilation (NIPPV) in the Home for the Treatment of Chronic Respiratory Failure (CRF) Consequent to Chronic Obstructive Pulmonary Disease (COPD).” The NCD establishes a uniform national coverage criteria for Respiratory Assist Devices (RADs) with bi-level capacity, with or without a backup rate feature, and for the first time, Home Mechanical Ventilators (HMVs) for patients with chronic respiratory failure (CRF) consequent to COPD.

CMS subsequently issued implementation guidance on August 21, 2025 instructing Medicare contractors to process claims under the NCD effective June 9, 2025.

Although the NCD establishes national coverage criteria that may reduce reimbursement uncertainty and replace previously applicable local coverage determination (LCD) policies for this indication, it also imposes specific clinical qualification, documentation, and ongoing patient monitoring requirements.

The extent to which these national coverage criteria and associated operational requirements will affect providers, suppliers, utilization of these products, or reimbursement by other third-party payors remains uncertain.

On July 4, 2025, President Trump signed the budget reconciliation bill (entitled “One Big Beautiful Bill Act”, referred to herein as the “Bill”) to meet spending targets aimed at funding the Trump Administration’s domestic priorities that includes significant changes to the Medicaid program.

A July 21, 2025 estimate by the Congressional Budget Office (CBO) indicates that the bill will reduce the federal deficit by $366 billion over the next 10 years, due to decreased direct spending.

Earlier June 2025 CBO preliminary estimates also showed that the Medicaid provisions of the bill would reduce Medicaid spending by approximately $1 trillion and would increase the number of people without health insurance by at least 11.8 million by 2034.

Some key proposed changes to the Medicaid Program include, but are not limited to:

work requirements;

cost sharing of up to $35 per service on expansion adults who exceed the official poverty threshold;

stricter eligibility requirements for non-U.S.

requirements for states to conduct eligibility redeterminations at least every 6 months for Medicaid expansion adults;

and prohibitions on states from establishing any new provider taxes or from increasing the rates of existing taxes, among other changes.

Decreased federal funding and stricter eligibility requirements may result in more restrictive Medicaid programs at the state level and less individuals eligible for coverage, which could have an adverse impact on the number of individuals who seek to use our products and services.

Among other things, the Bill includes changes to Medicaid eligibility and enrollment requirements, provider taxes, and state-directed payment policies that are intended to reduce federal Medicaid spending over time.

According to the Congressional Budget Office (CBO), the Bill is projected to reduce

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federal spending on Medicaid and Marketplace coverage by approximately $1.1 trillion over the 2025-2034 period, increase the federal deficit by approximately $3.4 trillion on a conventional scoring basis over the same period, and result in approximately 10 million additional uninsured individuals by 2034.

CBO has also estimated that, after accounting for macroeconomic effects, the Bill could increase federal deficits by approximately $4.

trillion over the budget window.

In February 2026, the CBO projected that federal health programs will cost over $26 trillion through 2036, projected to grow in size from less than $2 trillion today to over $3 trillion by 2036.

Medicare spending is projected to nearly double over the next decade, while the cost of Medicaid and the Children’s Health Insurance Program (CHIP) will grow a projected 36% and ACA subsidies by 33%.

Finally, Medicare’s Hospital Insurance Trust Fund is projected to become insolvent in 2040, highlighting the continuing fiscal pressures facing the Medicare program.

Future legislative and other governmental actions to curb this projected spending could include stricter eligibility requirements and more restrictive Medicaid programs at the state level, leaving fewer individuals eligible for coverage, which could have an adverse impact on the number of individuals who seek to use our products and services.

Despite the ACA going into effect over a decade ago, there have been numerous legal and Congressional challenges to the law’s provisions and the effects of certain provisions has made compliance costly.

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The ACA as well as other federal and/or state healthcare reform measures that may be adopted in the future, singularly or in the aggregate, could have a material adverse effect on our business, financial condition and results of operations.

We cannot predict the timing, scope, or effect of future legislation, rulemaking, or other governmental actions affecting the U.S.

health care system.

Government and private insurance plans may not adequately reimburse our customers for our products, which could result in reductions in sales or selling prices for our products.

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A development negatively affecting reimbursement stems from the Medicare competitive bidding program mandated by the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA).

Under the program, our customers who provide services must compete to offer products in designated competitive bidding areas, or CBAs.

The competitive bidding program is currently on temporary pause;

however, CMS could restart the program as part of further cost-cutting measures.

Under the program, our customers

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who provide services must compete to offer products in designated competitive bidding areas, or CBAs.

The DMEPOS Competitive Bidding Program (CBP) remains in a temporary gap period following the expiration of Round 2021 contracts for off-the-shelf (OTS) back braces and OTS knee braces on December 31, 2023.

Following the CY 2026 final rule and related program implementation activities, CMS is currently preparing for Round 2028, which is structured as a nationwide Remote Item Delivery (RID) Competitive Bidding Program covering seven (7) specified product categories.

CPAP and other respiratory devices are not included in Round 2028, set to begin January 1, 2028.

CMS could make changes to the program as part of further cost-cutting measures.

We cannot predict the status or impact the competitive bidding program and the developments in the competitive bidding program will have on our business and financial condition.

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

With respect to our recent acquisition of Noctrix, we may realize reductions in both reimbursement rates and coverage for the restless legs syndrome device, due to Noctrix not yet having a national or local coverage determination.

To the extent that any Medicare administrative contractor decides that the restless legs syndrome product is not medically necessary or has not met applicable coverage criteria, claims for products could be denied and overpayments could be assessed.

Further, any future coverage determination could implement more restrictive coverage requirements, including potential noncoverage entirely.

As a new product, we cannot predict how the Medicare Program and its contractors will view the Noctrix device and its efficacy in the treatment of restless legs syndrome.

If more restrictive coverage is implemented, our Noctrix revenues could be reduced.

In addition, our products are the subject of periodic studies by third party agencies, including the Agency for Healthcare Research and Quality (AHRQ) and the Institute for Clinical and Economic Review (ICER) in the U.S., intended to review the comparative effectiveness of different treatments of the same illness.

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Although the results of comparative effectiveness studies are not intended to mandate any reimbursement policies for public or private payors, it is not clear what, if any, effect such research will have on the sales of our products.

To date, the AHRQ assessment has not impacted CMS or private payor

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reimbursement.

To date, the AHRQ assessment has not impacted CMS or private payor reimbursement.

Decreases in third-party reimbursement for our products or a decision by a third-party payor to not cover our products as a result of a third-party study could have a material adverse effect on our sales, results of operations and financial condition.

We are subject to various risks relating to our compliance with fraud and abuse laws and transparency laws relating to our interactions with our customers, healthcare providers, and patients, which could subject us to government investigation, litigation, or other penalties to the extent our activities or relationships are found not to comply or could otherwise cause us to incur significant costs to defend our actions, and could result in substantial fines, penalties, harm our reputation in the market, divert our management’s attention, or result in changes in our business operations that could harm our ability to successfully market and sell our products and services.

We are subject to various risks relating to our compliance with fraud and abuse laws and transparency laws relating to our interactions with our customers, healthcare providers, other referral sources and patients, which could subject us to government investigation, litigation, or other penalties to the extent our activities or relationships are found not to comply or could otherwise cause us to incur significant costs to defend our actions, and could result in substantial fines, penalties, harm our reputation in the market, divert our management’s attention, or result in changes in our business operations that could harm our ability to successfully market and sell our products and services.

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

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government has interpreted this law broadly to apply to the marketing and sales activities of manufacturers and distributors like us.

Violations of the federal Anti-Kickback Statute may result in significant civil monetary penalties for each violation, plus up to three times the remuneration involved, plus potential exclusion from participation in Federal healthcare programs.

Violations of the federal Anti-Kickback Statute may result in significant civil monetary penalties for each violation, plus up to three times the remuneration involved, plus potential exclusion from

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participation in Federal healthcare programs.

Violations of the Federal Anti-Kickback Statute can also result in significant criminal penalties and imprisonment;

• the Federal Physician Self-Referral Law, or the Stark Law, 42 U.S.C.

1395nn, is a strict liability statute that prohibits a physician (or an immediate family member of a physician) who has a financial relationship with an entity from referring patients to that entity for certain designated health services, or DHS, payable by Medicare (and in some cases, Medicaid), unless an exception applies.

The Stark Law also prohibits such an entity from presenting or causing to be presented a claim to Medicare for DHS provided pursuant to a prohibited referral, and requires the timely refund of collections related to any such prohibited claims.

Accordingly, the Stark Law is a strict liability statute with which we must comply with respect to our Noctrix operations.

While VirtuOx does not currently bill for any DHS and is therefore not subject to the Stark Law, Noctrix, as a DME supplier, is currently subject to the law.

Therefore, we must ensure that Noctrix’s financial relationships with referring physicians meet applicable Stark Law exceptions.

Violations of the Stark Law constitute overpayments that must be refunded to the Medicare Program.

Noncompliance with the Stark Law may result in significant civil monetary penalties for each violation, plus up to three times the remuneration involved, plus potential exclusion from participation in Federal healthcare programs.

Violations of the Stark Law can also form the basis for a False Claims Act action;

• federal civil and criminal false claims laws, including the False Claims Act, and civil monetary penalty laws, that prohibit, among other things, knowingly presenting, or causing to be presented, claims for payment or approval to the federal government that are false or fraudulent, knowingly making a false statement material to an obligation to pay or transmit money or property to the federal government or knowingly concealing or knowingly and improperly avoiding or decreasing an obligation to pay or transmit money or property to the federal government.

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In addition, the government may assert that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the federal civil False Claims Act.

Violations of the Stark Law can also constitute a false or fraudulent claim for purposes of the False Claims Act, if the requisite intent is established.

Violations can result in debarment, suspension or exclusion from participation in government healthcare programs, including Medicare and Medicaid.

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As a medical device manufacturer, the beneficiary inducement prohibition under the Civil Monetary Penalties Law did not directly apply to us (unless we engaged in activities that influenced a Medicare or Medicaid beneficiary to select a particular provider, practitioner or supplier);

however, following our acquisition of VirtuOx, a Medicare supplier, we are directly subject to the beneficiary inducement prohibition if we provide any remuneration to a Medicare or Medicaid beneficiary that is intended to or that we should know would be likely to influence that beneficiary to select VirtuOx as their supplier.

however, following our acquisitions of VirtuOx and Noctrix, each Medicare suppliers, we are directly subject to the beneficiary inducement prohibition if we provide any remuneration to a Medicare or Medicaid beneficiary that is intended to or that we should know would be likely to influence that beneficiary to select VirtuOx or Noctrix as their supplier.

• HIPAA, which created federal criminal laws that prohibit executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters.

A person or entity does not need to have actual knowledge of these statutes or specific intent to violate them to have committed a violation;

• the federal Physician Sunshine Act requirements under the ACA, which impose reporting and disclosure requirements on device and drug manufacturers for any “transfer of value” made or distributed by certain manufacturers of drugs, devices, biologics, and medical supplies to physicians (including doctors, dentists, optometrists, podiatrists and chiropractors), teaching hospitals, non-physician practitioners such as nurse practitioners, physician assistants, clinical nurse specialists, certified nurse anesthetists, anesthesiology assistants and certified nurse midwives, and ownership and investment interests held by physicians and their immediate family members;

• federal consumer protection and unfair competition laws, which broadly regulate marketplace activities and activities that potentially harm customers;

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manufacturers of drugs, devices, biologics, and medical supplies to physicians (including doctors, dentists, optometrists, podiatrists and chiropractors), teaching hospitals, non-physician practitioners such as nurse practitioners, physician assistants, clinical nurse specialists, certified nurse anesthetists, anesthesiology assistants and certified nurse midwives, and ownership and investment interests held by physicians and their immediate family members;

• federal consumer protection and unfair competition laws, which broadly regulate marketplace activities and activities that potentially harm customers;

• state and foreign law equivalents of each of the above federal laws, such as state anti-kickback and false claims laws that may apply to items or services reimbursed by any third-party payor, including commercial insurers;

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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 healthcare 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.

Department of Justice and the U.S.

Attorneys’ Offices for the District Court of South Carolina, the Southern District of California, the Northern District of Iowa and the Eastern District of New York.

The agreement resolved five lawsuits originally brought by whistleblowers under the qui tam provisions of the False Claims Act and allegations that we:

(a) provided DME companies with free telephone call center services and other free patient outreach services that enabled these companies to order resupplies for their patients with sleep apnea, (b) provided sleep labs with free and below-cost positive airway pressure masks and diagnostic machines, as well as free installation of these machines, (c) arranged for, and fully guaranteed the payments due on, interest-free loans that DME supplies acquired from third-party financial institutions for the purchase of our equipment, and (d) provided non-sleep specialist physicians free home sleep testing devices referred to as “ApneaLink.” We agreed with the government to civilly resolve these matters for a payment of $39.5 million ($37.5 million to the federal government and $2 million to the various states) and we incurred additional fees and administrative costs that typically accompany such a resolution amounting to $1.1 million.

The specific allegations and the resolution of those allegations are contained in the Company’s settlement agreement with the adverse parties.

The total final costs relating to these matters were $40.6 million.

Contemporaneous with the civil settlement, we also entered into a five-year Corporate Integrity Agreement, or CIA, with the Department of Health and Human Services Office of Inspector General, or OIG.

The CIA required, among other things, that we implement additional controls around our product pricing and sales and that we conduct internal and external monitoring of our arrangements with referrals sources.

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

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.

Most of the obligations of the CIA expired on December 18, 2024.

Absent an inquiry for additional materials from the OIG, we expect to close out the CIA shortly after the end of fiscal year 2025.

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On May 11, 2022, VirtuOx entered into a civil settlement of $3.2M and agreed to a five-year CIA with the OIG which resolved allegations that, from January 2016 to December 2020, the company violated the False Claims Act by falsely identifying the place of service for certain services it performed to obtain a higher rate of reimbursement from Medicare and further, that the company administered overnight pulse oximetry tests and, at times, also billed Medicare for single determination pulse oximetry tests (commonly referred to as an oxygen “spot check”) for the same patient when the only test performed was the overnight test.

On May 11, 2022, VirtuOx entered into a civil settlement of $3 million and agreed to a five-year CIA with the OIG which resolved allegations that, from January 2016 to December 2020, the company violated the False Claims Act by falsely identifying the place of service for certain services it performed to obtain a higher rate of reimbursement from Medicare and further, that the company administered overnight pulse oximetry tests and, at times, also billed Medicare for single determination pulse oximetry tests (commonly referred to as an oxygen “spot check”) for the same patient when the only test performed was the overnight test.

Under the CIA, VirtuOx must retain an outside expert to perform annual claims reviews that address the place of service identified on the claim.

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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, collectively referred to as “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.

VirtuOx is a covered entity under HIPAA and is required to comply in all respects with the Privacy Rule, Security Rule, Breach Notification Rule, and Electronic Standard Transactions Rule.

Both Noctrix and VirtuOx are covered entities under HIPAA and are required to comply in all respects with the Privacy Rule, Security Rule, Breach Notification Rule, and Electronic Standard Transactions Rule.

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

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If a breach affects fewer than 500 individuals, the covered entity must log it and notify HHS at least annually.

Breach notification obligations under

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business associate agreements often have shorter notification timeframes which we are required to abide by contractually.

Breach notification obligations under business associate agreements often have shorter notification timeframes which we are required to abide by contractually.

We could also face contractual liability if we fail to meet our obligations under our business associate agreements.

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FTC has taken enforcement actions against companies that have used online tracking tools either in a misleading or deceptive manner.

In response to this new area of enforcement, we have been assessing our websites and applications to assess any online tracking and to ensure compliance with privacy and security standards.

In response to this new area of enforcement, we have been assessing our websites and applications to

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assess any online tracking and to ensure compliance with privacy and security standards.

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

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The GDPR also imposes strict rules on the transfer of personal data out of the EEA or UK and legal developments continue to create complexity regarding such transfers of personal data from the EEA and UK to the U.S.

For example, the European Commission and UK standard contractual clauses under which entities may transfer personal data from the European Union and the UK require us to evaluate such data transfers on a case-by-case basis to ensure

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continued permissibility under current law and consistent with the standard contractual clauses.

GDPR provides that EEA member states and the UK 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.

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

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

The UK GDPR mirrors the fines under the EU GDPR, i.e., fines up to the greater of approximately £18 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 data protection rules.

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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.

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.

AI innovation presents risks and challenges that could impact our business.

AI algorithms may be flawed.

Datasets may be insufficient or contain biased information.

Ineffective AI development and deployment practices could subject us to competitive harm, regulatory action, increased cyber risks and legal liability, including under new AI regulations in the European Union.

The FTC 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.

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Our use of artificial intelligence in certain products, software solutions and business operations may expose us to operational, regulatory and reputational risks that could adversely affect our business, financial condition and results of operations.

We increasingly incorporate artificial intelligence, or AI, including machine learning, into certain products, software solutions and business processes to enhance patient engagement, support clinical workflows and improve operational efficiencies.

AI-enabled features may not perform as intended and could produce inaccurate, inconsistent or unintended outputs.

If our AI-enabled products or services fail to perform as expected, are perceived as unreliable, or do not gain market acceptance, our reputation, competitive position and operating results could be adversely affected.

The legal and regulatory framework governing AI continues to evolve globally.

New or changing laws, regulations or industry standards may increase our compliance obligations, require modifications to existing products, delay product introductions or enhancements, or increase development and operating costs.

In addition, our AI capabilities depend on access to appropriate data, technology infrastructure and specialized personnel.

If we are unable to responsibly develop, deploy and maintain AI-enabled technologies, our business, financial condition and results of operations could be materially adversely affected

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.

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We have modified some of our Section 510(k) approved products without submitting new Section 510(k) notices, which we do not believe were required.

However, if the FDA

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disagrees with us and requires us to submit new Section 510(k) notifications for modifications to our existing products, we may be required to stop marketing the products while the FDA reviews the Section 510(k) notification.

However, if the FDA disagrees with us and requires us to submit new Section 510(k) notifications for modifications to our existing products, we may be required to stop marketing the products while the FDA reviews the Section 510(k) notification.

Any new product introduction or existing product modification could be subjected to a lengthier, more rigorous FDA examination process.

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Some of these proposals have not yet been finalized or adopted, although the FDA may work with Congress to implement such proposals through legislation.

Accordingly, it is unclear the extent to which any proposals, if adopted, could impose additional regulatory requirements on us that could delay our ability to obtain new 510(k) clearances, increase the costs of compliance, or restrict our ability to maintain our current clearances, or otherwise create competition that may negatively affect our business.

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compliance, or restrict our ability to maintain our current clearances, or otherwise create competition that may negatively affect our business.

The FDA’s ongoing review of the 510(k) program may make it more difficult for us to make modifications to our previously cleared products, either by imposing stricter requirements on when a manufacturer must submit a new 510(k) for a modification to a previously cleared product, or by applying more onerous review criteria to such submissions.

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Significant government regulation also exists in Canada, Japan, Europe, Australia, China, 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 QSR requirements, which require manufacturers of medical devices to adhere to certain regulations, including testing, quality control and documentation procedures.

For example, on January 31, 2024, the FDA issued a final rule to amend and replace the QSR, which sets forth the FDA's current good manufacturing practice requirements for medical devices, to align more closely with the International Organization for Standardization standards.

Specifically, this final rule, which the FDA expects to go into effect on February 2, 2026, establishes the QMSR, which among other things, incorporates by reference the quality management

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system requirements of ISO 13485:2016.

Although the FDA has stated that the standards contained in ISO 13485:2016 are substantially similar to those set forth in the QSR, and although our quality system is currently designed to comply with ISO standards in connection with our device certifications, it is unclear the extent to which this final rule, once effective, could impose additional or different regulatory requirements on us that could increase the costs of compliance or otherwise negatively affect our business.

If we are unable to comply with QMSR, once effective, or with any other new or existing laws or regulations enforced by FDA or comparable regulatory authorities, we may be subject to enforcement action, which could have an adverse effect on our business, financial condition and results of operations.

In February 2026, the FDA implemented the Quality Management System Regulation (QMSR), which replaces the prior FDA Quality System Regulation in setting forth the current good manufacturing practice (cGMP) requirements for medical devices, and incorporates ISO 13485 into U.S.

The QMSR introduces changes to documentation, terminology, and inspection approaches, including expanded FDA visibility into internal audit, supplier oversight, and management review activities.

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 QMSR, requirements, which require manufacturers of medical devices to adhere to certain regulations, including testing, quality control and documentation procedures.

It remains unclear the extent to which the QMSR may impose additional or different regulatory requirements on us.

Compliance may require ongoing updates to our processes, systems, and training, and failure to maintain compliance could result in regulatory actions, product recalls, or delays in approvals, which could adversely affect our business, financial condition, and results of operations.

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.

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In addition, government funding of other government agencies that fund research and development activities is subject to the political process, which is inherently fluid and unpredictable.

Agency restructuring, changes in appropriations, reductions in force and other disruptions at the FDA and other agencies may slow the time necessary for medical devices or modifications to cleared or approved medical devices to be reviewed and/or approved by necessary government agencies, which would adversely affect our business.

For example, over the last several years, including for 35 days beginning on December 22, 2018, the U.S.

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be reviewed and/or approved by necessary government agencies, which would adversely affect our business.

For example, over the last several years, including for 43 days beginning on October 1, 2025, the U.S.

government has shut down several times and certain regulatory agencies, such as the FDA, have had to furlough critical FDA employees and stop critical activities.

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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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Tax laws, regulations, and enforcement practices are evolving, are aggressively pursued in some jurisdictions, and may cause expense as well as management distraction, which may result in a material adverse effect on our results of operations, cash flows and financial position.

Income tax laws, regulations, and enforcement practices in various jurisdictions are evolving and, as a result, tax authorities are aggressively pursuing taxpayers.

This may result in expense as well as management distraction, which may result in a material adverse effect on our results of operations, cash flows and financial position.

Tax laws, regulations, and enforcement practices in various jurisdictions may be subject to significant changes in enforcement priorities due to economic, political, and other conditions.

Developments in relevant tax laws, regulations, and administrative and enforcement practices, even if eventually unsubstantiated, could have a material adverse effect on our operating results, our financial position and cash flows and could impact the tax treatment of our past or future earnings.

There are many transactions that occur during the ordinary course of conducting a global business subject to varying tax laws for which the ultimate tax determination is uncertain, and significant judgment is required in evaluating and estimating our provision and accruals for taxes.

Developments in relevant tax laws, regulations, and administrative and enforcement practices, even if eventually unsubstantiated, could have a material adverse effect on our operating results, our financial position and cash flows and could change the income tax impact to our past or future earnings.

There are many transactions that occur during the ordinary course of operating a global business subject to varying tax laws for which the ultimate tax determination is uncertain, and significant judgment is required in evaluating and estimating our provision and accruals for income taxes.

Governments are increasingly focused on ways to increase tax revenues, particularly from multinational corporations, which may lead to an increase in audit activity and aggressive positions taken by tax authorities.

Furthermore, due to shifting global economic and political conditions, tax policies and rates in various jurisdictions may be subject to significant change.

Furthermore, due to shifting global economic and political conditions, income tax policies and rates in various jurisdictions may be subject to significant change.

For example, in calendar year 2022, the U.S.

passed the Inflation Reduction Act, which made a several changes to the Internal Revenue Code of 1986, as amended, or the IRC, including a 15% corporate minimum tax on adjusted financial statement income for companies whose average adjusted net income for any consecutive three-year period beginning after December 31, 2022 exceeds $1.0 billion.

passed the Inflation Reduction Act, which made a several changes to the Internal Revenue Code of 1986, as amended, or the IRC, including a 15% corporate minimum income tax on adjusted financial statement income for companies whose average adjusted net income for any consecutive three-year period beginning after December 31, 2022 exceeds $1.0 billion.

While we do not anticipate any materially adverse impacts to our effective tax rate, we cannot provide any assurances that these provisions will not have a materially adverse impact on our effective tax rate.

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On July 4, 2025, the One Big Beautiful Bill Act was signed into law modifying IRC Section 174 to reinstate the deduction for research and development expenditures where such activities are performed within the U.S.

The Bill also introduces new provisions allowing for the immediate deduction of certain capital expenditures, which may have an impact on our future tax payments.

We are in the process of evaluating the future impact of the Bill to our consolidated financial statements.

The Bill also introduces new provisions allowing for the immediate deduction of certain capital expenditures, which may have an impact on our future tax

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As additional guidance is made available, we will continue evaluating the future impact of the Bill to our consolidated financial statements.

Additionally, while several countries, including the U.S.

and other members of the Organization for Economic Co-operation and Development, or OECD, have reached agreement on a global minimum tax initiative, or Pillar Two, on June 28, 2025, the G7 issued a joint statement in which its members agreed that Pillar Two will operate alongside the U.S.

system of tax and proposed that U.S.-parented multinational groups would not be subject to the income inclusion rules and undertaxed profits rules of Pillar Two.

The remaining OECD countries are likely to consider changes to existing and proposed tax laws to align with the recommendations and guidelines proposed by G7.

However, enactment or inconsistent application of such tax laws could increase our tax obligations in countries where we do business.

We have assessed the impact of the laws in effect as of June 30, 2025 and anticipate that the Pillar Two minimum tax may impact our effective tax rate in fiscal year 2026.

We cannot provide any assurances that there will not be a material impact on our effective tax rate in future years because of evolving tax legislation.

We are subject to ongoing tax audits by various local tax authorities, some of which are aggressively pursuing taxes on discontinued local operations.

Our income tax returns are based on calculations and assumptions that require significant judgement and are subject to audit by various tax authorities.

In addition, the calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax laws.

and other members of the Organization for Economic Co-operation and Development, or OECD, have reached agreement on a global minimum income tax initiative, or Pillar Two, on January 1, 2026, the OECD released the Side-by-Side, or SbS, Package, which exempts U.S.-headquartered multinational enterprises from Pillar Two’s income inclusion and undertaxed profit rules for tax years beginning on or after January 1, 2026.

Many of the remaining OECD countries are in the process of implementing the SbS package in local legislation to align with the OECD.

likely to consider changes to existing and proposed tax laws to align with the recommendations and guidelines proposed by G7.

However, enactment or inconsistent application of such tax laws could increase our tax obligations in countries where we operate.

We have assessed the impact of the laws in effect as of June 30, 2026, and the Pillar Two minimum tax had a material impact on our income tax expense and cash flows during the fiscal year ended June 30, 2026 and may continue to impact our effective tax rate in fiscal year 2027.

We are subject to ongoing tax audits by various local tax authorities, some of which are aggressively pursuing taxes on transferred or discontinued local operations.

Our income tax returns are based on calculations and assumptions that require significant judgment and are subject to audit by various tax authorities.

In addition, the calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax laws, including current and evolving government policies that encourage the establishment or relocation of certain activities, such as manufacturing, research and development, information technologies, and other business operations in their jurisdictions.

As a result, companies must carefully consider commercial and related tax impacts in those jurisdictions, which may increase time-consuming and costly tax compliance, as well as responses to inquiries, examinations and audits.

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

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Although we believe our tax positions are appropriate, any final assessment arising 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.

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Sustainability and corporate governance issues are constantly evolving, leading to additional investment and expense, and may have an adverse effect on our business, financial condition and results of operations and reputation.

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Our adoption of certain standards or mandated compliance to certain requirements could necessitate additional expense and investments that could impact our profitability.

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

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• timing of regulatory clearances and approvals;

• costs associated with acquiring and integrating new businesses, technologies and product offerings;

• costs associated with acquiring and integrating new businesses, technologies and product offerings, as well as executing strategic initiatives;

• timing of orders by distributors;

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The board of directors reviews these matters periodically and may, at any time and for any reason, decide to decrease, suspend or discontinue dividends, reduce or pause share repurchases, or redirect available cash toward alternative uses—such as strategic acquisitions, organic growth initiatives or other corporate purposes.

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Among the factors the board of directors considers are our operating results, cash-flow generation, future funding requirements, prevailing economic and market conditions, legal and regulatory constraints under applicable corporate law, and the overall balance between returning capital to shareholders and investing for long-term growth.

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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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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