3 unchanged sentences
If any of the risks or uncertainties described below or any additional risks and uncertainties actually occur, our business, results of operations and financial condition could be materially and adversely affected.
−Removed: Risks Related to Our Business
−Removed: Our revenue is primarily generated from our Flexitouch system and we are therefore highly dependent on only one product.
+Added: Risks Related to Our Business, Operations and Strategy
+Added: The COVID-19 pandemic has adversely affected, and we expect that it will continue to adversely affect, our business, financial condition and results of operations.
+Added: The COVID-19 pandemic, and efforts taken to address the pandemic, have negatively impacted the global economy and our business, and are expected to continue to have negative effects.
+Added: The pandemic has caused us to modify many of our business practices, but we cannot assure you that those modifications will be successful in mitigating the negative impacts of COVID-19.
+Added: As described elsewhere in this report, as a result of the COVID-19 pandemic, a number of healthcare facilities and clinics have restricted access to their clinicians, reduced patient consultations and treatments, or closed temporarily due to the pandemic.
+Added: We have seen adverse impacts as it relates to the decline in the number of patients that healthcare facilities and clinics are able to treat due to enhanced safety protocols.
+Added: Further, due to the impact of COVID-19, patient recruitment for our clinical studies involving our products and clinical outcomes has been suspended.
+Added: Further, the extent to which the COVID-19 pandemic will impact our business, financial condition and results of operations in the future will depend on future developments, which are highly uncertain and cannot be predicted, including, but not limited to, the duration, spread, severity, and impact of the COVID-19 pandemic, the effects of the COVID-19 pandemic on our clinician customers and their patients, our suppliers and our payers, and the remedial actions and stimulus measures adopted by governmental authorities, and to what extent normal economic and operating conditions can resume.
+Added: Even after the COVID-19 pandemic has subsided, we may continue to experience adverse impacts to our business as a result of any related economic recession or depression that has occurred or may occur in the future.
+Added: The potential negative impacts of the COVID-19 pandemic on us include, but are not limited to:
+Added: ● further reduced demand for our products;
+Added: ● reductions in coverage or reimbursement of our products by payers;
+Added: ● our inability to effectively conduct patient demonstrations and trainings;
+Added: ● continued restricted access to clinicians, further reduced patient consultations and treatments, and additional or further closures of healthcare facilities and clinics;
+Added: ● high absenteeism by our staff, prescribers and/or patients;
+Added: ● disruptions to our supply chain;
+Added: ● limitations on the ability of our workforce to perform their duties effectively;
+Added: ● disruptions in the timely delivery of our products to patients;
+Added: ● increased risks of phishing, ransomware and other cybersecurity attacks;
+Added: ● delayed reviews and approvals by the U.S.
+Added: Food and Drug Administration;
+Added: ● increased unemployment rates in the U.S., which may lead to a reduced number of patients with available insurance coverage, resulting in a reduction in the demand for our products;
+Added: ● significant stock market volatility, resulting in extreme price and volume fluctuations;
+Added: ● our inability to focus on or expend resources toward the expansion of our business;
+Added: ● continued adverse impact on liquidity or sources of capital.
+Added: Given the evolving health, economic, social and governmental impacts of the COVID-19 pandemic, the potential impact that the COVID-19 pandemic could have on us remains uncertain, but it could have a material adverse effect on our business, financial condition and results of operations.
+Added: Our revenue is primarily generated from our Flexitouch system and we are therefore highly dependent on one product.
Our Flexitouch system accounted for 88% and 90% of our revenue for the years ended December 31, 2020 and 2019, respectively.
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In the United States, no uniform policy of coverage and reimbursement for our products exists among third-party payers.
−Removed: Therefore, reimbursement for our products can differ significantly from payer to payer and our products are not universally covered by third-
−Removed: party commercial payers.
+Added: Therefore, reimbursement for our products can differ significantly from payer to payer and our products are not universally covered by third-party commercial payers.
In addition, payers, including Medicare, continually review existing technologies for continued coverage and can, without notice, deny or reverse coverage for existing products.
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If we are unable to satisfy any new preauthorization requirements or adjust to any future new restrictions on our products, third-party coverage and reimbursement may be limited in the future, which could have an adverse impact on our business.
−Removed: patent protection covering various aspects of our Flexitouch system expired in 2017, and thus may subject us to increased competition and reduce or eliminate our opportunity to generate product revenue.
−Removed: patents covering various aspects of our Flexitouch system expired in 2017.
−Removed: Given the expiration of these patents, third parties may be permitted to incorporate aspects of our Flexitouch system into their products or create substantially similar or generic versions of our Flexitouch system.
−Removed: This could subject us to increased competition from products attempting to replicate our technology.
−Removed: Moreover, these competitors could sell their competing products for a substantially lower price, which could substantially limit our opportunity to increase or maintain revenue from our Flexitouch system and, in fact, our revenue could be substantially reduced, causing a material adverse effect on our business.
If we are unable to expand, manage and maintain our direct sales and marketing organizations, we may not be able to generate anticipated revenue.
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If our direct sales force fails to adequately promote, market and sell our products, our sales may suffer.
−Removed: Our direct sales force has grown from three representatives in March 2005 to a team of over 240 people as of December 31, 2019.
In order to generate future sales growth, we will need to expand the size and geographic scope of our direct sales organization.
Accordingly, our future success will depend largely on our ability to continue to hire, train, retain and motivate skilled sales personnel with significant technical knowledge of lymphedema and chronic venous insufficiency.
−Removed: Because the competition for their services is high, we cannot assure you we will be able to hire and retain additional personnel on favorable or commercially reasonable terms, if at all.
+Added: Because the competition for their services is high, we cannot be certain we will be able to hire and retain additional personnel on favorable or commercially reasonable terms, if at all.
Failure to hire or retain qualified sales personnel would prevent us from building awareness of our solutions, expanding our business and generating additional sales.
−Removed: If we are unable to expand our sales and marketing capabilities, we may not be able to effectively commercialize our products, which could have an adverse impact on our business.
+Added: If we are unable to expand our sales and marketing capabilities,
+Added: we may not be able to effectively commercialize our products, which could have an adverse impact on our business.
+Added: Physicians and payers may require additional clinical studies prior to prescribing our products or to providing or maintaining coverage and reimbursement for our products.
+Added: Any subsequent clinical studies that are conducted and published may not be positive or consistent with our existing data, which would adversely affect the rate of adoption of our products.
+Added: Our success depends in large part on the medical and third-party payer community's acceptance of our products as being useful in treating patients with lymphedema or chronic venous insufficiency.
+Added: While the results of our studies collectively indicate a favorable safety and efficacy profile, the study designs and results may not be viewed as compelling to physicians and insurers.
+Added: In particular, payers and physicians may see limitations in the design and results of the studies because certain studies were not specifically based on our products, involved a limited number of total subjects or subjects outside the control group and made "quality of life"
+Added: conclusions based upon criteria contained in patient questionnaires that required subjective conclusions.
+Added: Certain physicians and insurers may also prefer to see longer-term efficacy data than we have produced or are able to produce.
+Added: If physicians or insurers do not find our data compelling or wish to wait for additional or independently-performed studies, they may choose not to prescribe or to provide coverage and reimbursement for our products.
+Added: We cannot assure you that any data that we or others generate will be consistent with that observed in the existing studies or that results will be maintained beyond the time points studied.
+Added: We also cannot assure you that any data that may be collected will be compelling to the medical community because the data may not be scientifically meaningful or may not demonstrate that our products are attractive alternatives to traditional treatments.
+Added: If subsequent studies are not positive or consistent with our existing data, adoption of our products may suffer and, accordingly, our business could be adversely impacted.
+Added: We utilize third-party, single-source suppliers for some components and materials used in our products, and the loss of any of these suppliers could have an adverse impact on our business.
+Added: We rely on third-party manufacturers and suppliers to supply all components and materials used in our Flexitouch and Entre systems.
+Added: Our ability to supply our products commercially depends, in part, on our ability to obtain components and materials in accordance with our specifications and with regulatory requirements and in sufficient quantities to meet demand for our products.
+Added: Our ability to obtain components and materials may be affected by matters outside our control, including that our suppliers may cancel our arrangements on short notice, we may be relatively less important as a customer to certain suppliers and our suppliers may have disruptions to their operations.
+Added: Further, while so far we have not experienced any significant disruptions in the supply of components and materials to us due to the COVID-19 pandemic, the pandemic may result in such disruptions in the future.
+Added: If we are required to establish additional or replacement suppliers for any of our components or materials, it may not be accomplished quickly and our operations could be disrupted.
+Added: Even if we are able to find replacement suppliers, the replacement suppliers would need to be qualified and may require additional regulatory authority approval, which could result in further delay.
+Added: In the event of a supply disruption, our product inventories may be insufficient to supply our patients.
+Added: If our third-party suppliers fail to deliver the required commercial quantities of materials on a timely basis and at commercially reasonable prices, and we are unable to find one or more replacement suppliers capable of production at a substantially equivalent cost in substantially equivalent volumes and quality on a timely basis, the continued commercialization of our products, the supply of our products to customers and the development of any future products would be delayed, limited or prevented, which could have an adverse impact on our business.
+Added: Consolidation in the healthcare industry could lead to demands for price concessions, which may impact our ability to sell our products at prices necessary to support our current business strategies.
+Added: Healthcare costs have risen significantly over the past decade, which has resulted in or led to numerous cost reform initiatives by legislators, regulators and third-party payers.
+Added: Cost reform has triggered a consolidation trend in the healthcare industry to aggregate purchasing power, which may create more requests for pricing concessions in the future.
+Added: We expect that market demand, government regulation, third-party coverage and reimbursement policies and societal pressures will continue to change the healthcare industry worldwide, resulting in further business consolidations and alliances among our payers, which may exert increasing downward pressure on the prices of our products in the future.
+Added: Changes to the level of Medicare coverage or coverage criteria for our products could have an adverse effect on our business and results of operations.
+Added: Determinations of which products or services will be reimbursed under Medicare can be developed at the national level through a National Coverage Determination, or NCD, by CMS, or at the local level through a Local Coverage Determination, or LCD, by the four regional Medicare Administrative Contractors, which are private contractors that process and pay claims on behalf of CMS for different regions.
+Added: These NCDs and LCDs may be subject to review and revision from time to time, which revisions may not be favorable for coverage of our products.
+Added: For example, an LCD released in December 2015 added restrictive criteria that impacts Medicare coverage of our Flexitouch system and our Entre system for certain patients.
+Added: Additional LCDs, or changes in LCDs for our products, could have adverse effects on our business.
+Added: Further, we believe that a reduction or elimination of coverage or reimbursement of our products by Medicare would likely cause some commercial third-party payers to implement similar reductions in their coverage or reimbursement of our products.
+Added: Given the evolving nature of the healthcare industry and ongoing healthcare cost reforms, we are and will continue to be subject to changes in the level of Medicare coverage for our products, and unfavorable coverage determinations at the national or local level could adversely affect our business and results of operations.
+Added: patent protection covering various aspects of our Flexitouch system expired in 2017, and thus may subject us to increased competition and reduce or eliminate our opportunity to generate product revenue.
+Added: patents covering various aspects of our Flexitouch system expired in 2017.
+Added: Given the expiration of these patents, third parties may be permitted to incorporate aspects of our Flexitouch system into their products or create substantially similar or generic versions of our Flexitouch system.
+Added: This could subject us to increased competition from products attempting to replicate our technology.
+Added: Moreover, these competitors could sell their competing products for a substantially lower price, which could substantially limit our opportunity to increase or maintain revenue from our Flexitouch system and, in fact, our revenue could be substantially reduced, causing a material adverse effect on our business.
Changes in government trade policies, including additional tariffs and the resulting consequences, may have a material adverse impact on our business and results of operations.
−Removed: The United States government has adopted a new approach to trade policy, including in some cases renegotiating or terminating certain existing bilateral or multi-lateral trade agreements.
+Added: The United States government from time to time has adopted new approaches to trade policy, including in some cases renegotiating or terminating certain existing bilateral or multi-lateral trade agreements.
It has also initiated or is considering the imposition of tariffs on certain foreign goods, including certain raw materials that are included in our products, or on our products directly.
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The resulting trade war could have a significant adverse effect on world trade and the world economy.
−Removed: To the extent that trade tariffs and other restrictions imposed by the United States increase the price of, or limit the amount of, the raw materials and products we import into the United States, the costs of our raw materials may be adversely affected and the demand from our customers for products and services may be diminished, which could adversely affect our revenue and profitability.
+Added: To the extent that trade tariffs and other restrictions imposed by the United States increase the price of, or limit the amount of, the raw materials and products we import into the United States,
+Added: the costs of our raw materials may be adversely affected and the demand from our customers for products and services may be diminished, which could adversely affect our revenue and profitability.
In addition, our margins could be significantly impacted.
10 unchanged sentences
● increased sales and marketing costs to increase awareness of our products;
+Added: ● additional expenditures and costs relates to changes in operations in response to the COVID-19 pandemic;
● costs to develop new and enhanced features for current products and research and development costs for new products;
26 unchanged sentences
If our competitors are more successful than us in these matters, our business may be harmed.
−Removed: Physicians and payers may require additional clinical studies prior to prescribing our products or to providing or maintaining coverage and reimbursement for our products.
−Removed: Any subsequent clinical studies that are conducted and published may not be positive or consistent with our existing data, which would adversely affect the rate of adoption of our products.
−Removed: Our success depends in large part on the medical and third-party payer community's acceptance of our products as being useful in treating patients with lymphedema or chronic venous insufficiency.
−Removed: While the results of our studies collectively indicate a favorable safety and efficacy profile, the study designs and results may not be viewed as compelling to physicians and insurers.
−Removed: In particular, payers and physicians may see limitations in the design and results of the studies because certain studies were not specifically based on our products, involved a limited number of total subjects or subjects outside the control group and made "quality of life"
−Removed: conclusions based upon criteria contained in patient questionnaires that required subjective conclusions.
−Removed: Certain physicians and insurers may also prefer to see longer-term efficacy data than we have produced or are able to produce.
−Removed: If physicians or insurers do not find our data compelling or wish to wait for additional or independently-performed studies, they may choose not to prescribe or to provide coverage and reimbursement for our products.
−Removed: We cannot assure you that any data that we or others generate will be consistent with that observed in the existing studies or that results will be maintained beyond the time points studied.
−Removed: We also cannot assure you that any data that may be collected will be compelling to the medical community because the data may not be scientifically meaningful or may not demonstrate that our products are attractive alternatives to traditional
−Removed: If subsequent studies are not positive or consistent with our existing data, adoption of our products may suffer and, accordingly, our business could be adversely impacted.
Our long-term growth depends on our ability to develop and commercialize additional products.
3 unchanged sentences
We may not be successful in developing new products or enhancements to existing products.
+Added: Further, as occurred with the Airwear wrap product that we licensed in October 2018 and terminated in July 2020, we may expend financial, management and operational resources on products that we are not able to successfully commercialize.
Our ability to develop and commercialize additional products or enhancements to existing products will depend on several factors, including our ability to:
10 unchanged sentences
It is difficult to forecast future performance and our financial results may vary from forecasts and may fluctuate from quarter to quarter.
−Removed: Our limited operating history and commercial experience make it difficult for us to predict future performance.
A number of factors over which we have limited control, such as seasonal variations in revenue, may contribute to fluctuations in our financial results.
In the first quarter of each year, when most patients have started a new insurance year and have not yet met their annual out-of-pocket payment obligations, we experience substantially reduced demand for our products.
−Removed: We typically experience higher revenue in the third and fourth quarters when patients have met their annual insurance deductibles, thereby reducing their out-of-pocket costs for our products, and because patients desire to exhaust their flexible spending accounts at year end.
+Added: We typically experience higher revenue in the third and fourth quarters when more patients have met their annual insurance deductibles, thereby reducing their out-of-pocket costs for our products, and because patients desire to exhaust their flexible spending accounts at year end.
This seasonality applies only to purchases and rentals of our products by patients covered by commercial insurance and is not relevant to Medicare, Medicaid or the Veterans Administration, as those payers either do not have plans that have declining deductibles over the course of the plan year and/or do not have plans that include patient deductibles for purchases or rentals of our products.
To the extent that the prevalence of high deductible insurance plans and higher copay and coinsurance plans continue to grow in the private payer market, the seasonal variations in our revenue could become even more pronounced.
+Added: Further, seasonality trends may be significantly different than historical trends as a result of the COVID-19 pandemic and related impacts.
Other factors that may cause fluctuation in our quarterly results or variations from our forecasts include:
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In the event our actual revenue and operating results do not meet our forecasts or the forecasts or estimates of the research analysts that cover us for a particular period, the market price of our common stock may decline substantially.
−Removed: We utilize third-party, single-source suppliers for some components and materials used in our products, and the loss of any of these suppliers could have an adverse impact on our business.
−Removed: We rely on third-party manufacturers and suppliers to supply all components and materials used in our Flexitouch and Entre systems and in our Airwear wrap.
−Removed: Our ability to supply our products commercially depends, in part, on our ability to obtain components and materials in accordance with our specifications and with regulatory requirements and in sufficient quantities to meet demand for our products.
−Removed: Our ability to obtain components and materials may be affected by matters outside our control, including that our suppliers may cancel our arrangements on short notice, we may be relatively less important as a customer to certain suppliers and our suppliers may have disruptions to their operations.
−Removed: If we are required to establish additional or replacement suppliers for any of our components or materials, it may not be accomplished quickly and our operations could be disrupted.
−Removed: Even if we are able to find replacement suppliers, the replacement suppliers would need to be qualified and may require additional regulatory authority approval, which could result in further delay.
−Removed: In the event of a supply disruption, our product inventories may be insufficient to supply our patients.
−Removed: If our third-party suppliers fail to deliver the required commercial quantities of materials on a timely basis and at commercially reasonable prices, and we are unable to find one or more replacement suppliers capable of production at a substantially equivalent cost in substantially equivalent volumes and quality on a timely basis, the continued commercialization of our products, the supply of our products to customers and the development of any future products would be delayed, limited or prevented, which could have an adverse impact on our business.
−Removed: Consolidation in the healthcare industry could lead to demands for price concessions, which may impact our ability to sell our products at prices necessary to support our current business strategies.
−Removed: Healthcare costs have risen significantly over the past decade, which has resulted in or led to numerous cost reform initiatives by legislators, regulators and third-party payers.
−Removed: Cost reform has triggered a consolidation trend in the healthcare industry to aggregate purchasing power, which may create more requests for pricing
−Removed: concessions in the future.
−Removed: We expect that market demand, government regulation, third-party coverage and reimbursement policies and societal pressures will continue to change the healthcare industry worldwide, resulting in further business consolidations and alliances among our payers, which may exert increasing downward pressure on the prices of our products in the future.
−Removed: We may be unable to collect all of our Medicare accounts receivable.
−Removed: At December 31, 2019, we had approximately $7.3 million of accounts receivable for sales of our Flexitouch system to patients covered by Medicare.
−Removed: A portion of the related claims to Medicare are initially denied and enter the appeals process, where many are ultimately reviewed by an Administrative Law Judge.
−Removed: The appeal process can be lengthy, lasting more than a year in most cases.
−Removed: At December 31, 2019, we classified $4.2 million of our Medicare accounts receivable related to Flexitouch system sales as long-term assets on our balance sheet due to the estimated amount of receivables that will be paid more than one year from December 31, 2019, as a result of delays with the Administrative Law Judge appeal process.
−Removed: A significant increase in Medicare denial of submitted claims or an increase in the proportion of Medicare denials that are upheld by an Administrative Law Judge could adversely affect our results of operations or cause us to reduce the carrying value of our Medicare accounts receivable related to Flexitouch system sales.
If physicians fail to properly document medical records for patients using our products, our business could be adversely impacted.
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If our procedures are not sufficient to detect deficiencies in the medical records of patients or such procedures are not updated in a timely manner before claims are submitted to Medicare or other insurers, or if the Medicare program or other insurer disagrees with the way physicians and other clinicians document the medical necessity support for prescribing our products, we could face potential liabilities for submitting claims based on inadequate records, even though those records are prepared and maintained by physicians and other clinicians.
−Removed: Changes to the level of Medicare coverage or coverage criteria for our products could have an adverse effect on our business and results of operations.
−Removed: Determinations of which products or services will be reimbursed under Medicare can be developed at the national level through a National Coverage Determination, or NCD, by CMS, or at the local level through a Local Coverage Determination, or LCD, by the four regional Medicare Administrative Contractors, which are private contractors that process and pay claims on behalf of CMS for different regions.
−Removed: These NCDs and LCDs may be subject to review and revision from time to time, which revisions may not be favorable for coverage of our products.
−Removed: For example, an LCD released in December 2015 added restrictive criteria that impacts Medicare coverage of our Flexitouch system and our Entre system for certain patients.
−Removed: Additional LCDs, or changes in LCDs for our products, could have adverse effects on our business.
−Removed: Further, we believe that a reduction or elimination of coverage or reimbursement of our products by Medicare would likely cause some commercial third-party payers to implement similar reductions in their coverage or reimbursement of our products.
−Removed: Given the evolving nature of the healthcare industry and ongoing healthcare cost reforms, we are and will continue to
−Removed: be subject to changes in the level of Medicare coverage for our products, and unfavorable coverage determinations at the national or local level could adversely affect our business and results of operations.
The size of the market for our products is an estimate, and may be smaller than we believe.
11 unchanged sentences
Successful growth is also dependent upon our ability to implement appropriate financial and management controls, systems and procedures.
−Removed: In order to manage our operations and growth, we will need to continue to improve our operational and management controls, reporting and information technology systems and financial internal control procedures.
+Added: In order to manage our operations and growth, we will need to continue to improve our operational and management controls, reporting and information technology systems
+Added: and financial internal control procedures.
If we are unable to manage our growth effectively, it may be difficult for us to execute our business strategy and there could be an adverse impact on our business.
−Removed: We are currently undergoing a period of significant management transition, which could be disruptive to, or cause uncertainty in, our business and future strategic direction.
−Removed: On January 10, 2020, our Chief Executive Officer, Gerald R.
−Removed: Mattys, notified us of his intention to retire, no later than December 31, 2020.
−Removed: Our Board of Directors is leading a process to identify a successor for Mr.
−Removed: Mattys and has engaged an executive search firm to support the search.
−Removed: This change in our Chief Executive Officer position may be disruptive to, or cause uncertainty in, our business and future strategic direction.
−Removed: If we fail to appoint a successor to Mr.
−Removed: Mattys who has the desired level of experience and expertise in a timely manner, and/or if we fail to ensure a smooth transition and effective transfer of knowledge, our strategic planning and execution could be hindered or delayed, and our ability to attract and retain other key members of senior management could be adversely affected.
−Removed: Any such disruptions or uncertainties could have a material adverse effect on our results of operations, financial condition and the market price of our common stock.
+Added: We may experience a disruption of our business activities due to senior executive transitions.
+Added: Effective June 8, 2020, Daniel L.
+Added: Reuvers became our President and Chief Executive Officer and a member of the Board of Directors, succeeding our long-time Chief Executive Officer Gerald R.
+Added: Recently hired executives may view the business differently than prior members of management, and over time may make changes to our strategic focus, operations, business plans, existing personnel and their responsibilities.
+Added: We can give no assurances that we will be able to properly manage any such shift in focus, or that any changes to our business would ultimately prove successful.
+Added: In addition, effective September 30, 2020, our former Chief Operating Officer, Robert J.
+Added: Folkes, left the Company.
+Added: Leadership transitions and management changes can be inherently difficult to manage and may cause uncertainty or a disruption to our business or may increase the likelihood of turnover in key officers and employees.
+Added: Our success depends in part on having a successful leadership team.
+Added: If we cannot effectively manage leadership transitions and management changes, it could make it more difficult to successfully operate our business and pursue our business goals.
+Added: We can give no assurances that we will be able to retain the services of any of our current executives or other key employees.
+Added: If we do not succeed in attracting well-qualified employees, retaining and motivating existing employees or integrating new executives and employees, our business could be materially and adversely affected.
Our ability to maintain our competitive position depends on our ability to attract, integrate and retain key executives and highly qualified personnel.
4 unchanged sentences
Many of our competitors have greater resources than we have that allows them to offer more competitive remuneration, which could adversely impact our ability to attract and retain experienced executives and other key employees.
−Removed: In addition, our ability to attract
−Removed: and retain key personnel may be adversely affected by the uncertainty associated with our Chief Executive Officer transition.
We carry a "key person"
2 unchanged sentences
Our productivity may be adversely affected if we do not integrate and train our new employees quickly and effectively.
−Removed: Many of our employees have become or will soon become vested in a substantial amount of our common stock or a number of common stock options.
−Removed: Our employees may be more likely to leave us if the shares they own have significantly appreciated in value relative to the original purchase prices of the shares, or if the exercise prices of the options that they hold are significantly below the market price of our common stock.
−Removed: We face the risk of product liability claims that could be expensive, divert management's attention and harm our reputation and business.
−Removed: We may not be able to maintain adequate product liability insurance.
−Removed: Our business exposes us to the risk of product liability claims that are inherent in the testing, manufacturing and marketing of medical devices.
−Removed: This risk exists even if a device is cleared or approved for commercial sale by the FDA and manufactured in facilities licensed and regulated by the FDA or an applicable foreign regulatory authority.
−Removed: Our products are designed to affect, and any future products will be designed to affect, important bodily functions and processes.
−Removed: Any side effects, manufacturing defects, misuse or abuse associated with our products or our products in development could result in patient injury or death.
−Removed: The medical device industry has historically been subject to extensive litigation over product liability claims, and we cannot offer any assurance that we will not face product liability suits.
−Removed: We may be subject to product liability claims if our products cause, or merely appear to have caused, patient injury or death.
−Removed: In addition, an injury that is caused by the activities of our suppliers, such as those who provide us with components and materials, may be the basis for a claim against us.
−Removed: Product liability claims may be brought against us by patients, clinicians or others selling or otherwise coming into contact with our products, among others.
−Removed: If we cannot successfully defend ourselves against product liability claims, we will incur substantial liabilities and reputational harm.
−Removed: In addition, regardless of merit or eventual outcome, product liability claims may result in:
−Removed: ● costs of litigation;
−Removed: ● distraction of management's attention from our primary business;
−Removed: ● the inability to commercialize our existing or new products;
−Removed: ● decreased demand for our products or products in development;
−Removed: ● damage to our business reputation;
−Removed: ● product recalls or withdrawals from the market;
−Removed: ● withdrawal of clinical trial participants;
−Removed: ● substantial monetary awards to patients or other claimants;
−Removed: ● loss of revenue.
−Removed: While we may attempt to manage our product liability exposure by proactively recalling or withdrawing from the market any defective products, any recall or market withdrawal of our products would delay the supply of those products to our clinicians and patients and may impact our reputation.
−Removed: We can provide no assurance that we will be successful in initiating appropriate market recall or market withdrawal efforts that may be required in the future or that these efforts will have the intended effect of preventing product malfunctions and the accompanying product liability that may result.
−Removed: Such recalls and withdrawals may also be used by our competitors to harm our reputation for safety or be perceived by patients as a safety risk when considering the use of our products, either of which could have an adverse impact on our business.
−Removed: In addition, our product liability insurance is subject to deductibles and coverage limitations.
−Removed: Our current product liability insurance may not continue to be available to us on acceptable terms, if at all, and, if available, coverage may not be adequate to protect us against any future product liability claims.
−Removed: If we are unable to obtain insurance at an acceptable cost or on acceptable terms or otherwise protect against potential product liability claims, we could be exposed to significant liabilities.
−Removed: A product liability claim, recall or other claim with respect to uninsured liabilities or for amounts in excess of insured liabilities could have an adverse impact on our business.
Changes in reimbursement coding could impair our ability to receive reimbursement for our products.
20 unchanged sentences
Our insurance for damage to our property and the disruption of our business may not be sufficient to cover all of our potential losses, and this insurance may not continue to be available to us on acceptable terms, or at all.
−Removed: We may be adversely affected by natural disasters and other catastrophic events, and by man-made problems such as terrorism, that could disrupt our business operations.
+Added: We may be adversely affected by natural disasters and other catastrophic events, and by man-made problems such as terrorism or violence, that could disrupt our business operations.
Natural disasters or other catastrophic events may also cause damage or disruption to our operations, including causing delays in completing sales, continuing production or performing other critical functions of our business, which could have an adverse effect on our business, operating results and financial condition.
Our business operations are subject to interruption by natural disasters, fire, power shortages, pandemics and other events beyond our control.
−Removed: In addition, acts of terrorism and other geo-political unrest could cause disruptions in our business or the businesses of our partners or the economy as a whole.
+Added: In addition, acts of terrorism, violence and other geo-political unrest could cause disruptions in our business or the businesses of our partners or the economy as a whole.
In the event of a natural disaster, including a major earthquake, blizzard or hurricane, or a catastrophic event such as a fire, power loss, or telecommunications failure, we may be unable to continue our operations for a period of time in the affected area, which could have an adverse effect on our future operating results.
−Removed: Further, as a result of pandemic outbreaks, including the recent outbreak of respiratory illness caused by a novel coronavirus first identified in China , businesses can be shut down, supply chains can be interrupted, slowed or rendered inoperable and individuals can become ill, quarantined or otherwise unable to work and/or travel due to health reasons or governmental restrictions.
−Removed: Such outbreaks could result in the operations of our third-party manufacturers and suppliers being disrupted or suspended, or could interfere with our supply chain, which could have an adverse effect on our business.
−Removed: See also “ We utilize third-party, single-source suppliers for some components and materials used in our products, and the loss of any of these suppliers could have an adverse impact on our business.” In addition, a significant outbreak of contagious diseases in the human population could result in a widespread health crisis that could adversely affect the economies and financial markets of many countries, resulting in an economic downturn that could affect demand for our products and likely impact our operating results.
We may pursue acquisitions and our potential inability to successfully integrate newly acquired companies or businesses could adversely affect our financial results.
8 unchanged sentences
● liabilities or other problems associated with the acquired business;
+Added: ● failing to achieve the anticipated benefits of the acquisition;
● incurring debt on terms unfavorable to us or that we are unable to repay;
4 unchanged sentences
Fully integrating an acquired company or business into our operations may take a significant amount of time.
−Removed: We cannot assure you that we will be successful in overcoming these risks or any other problems
−Removed: encountered with acquisitions.
+Added: We cannot assure you that we will be successful in overcoming these risks or any other problems encountered with acquisitions.
To the extent we do not successfully avoid or overcome the risks or problems related to any acquisitions, our results of operations and financial condition could be adversely affected.
46 unchanged sentences
Foreign Corrupt Practices Act, regulations of the U.S.
−Removed: Office of Foreign
−Removed: Assets Controls and U.S.
+Added: Office of Foreign Assets Controls and U.S.
anti-money laundering regulations, as well as exposure of our foreign operations to liability under these regulatory regimes;
1 unchanged sentence
If we experience any of these risks, our strategy to expand internationally could be impacted and our future growth could be adversely affected.
−Removed: Our employees, independent contractors, consultants, collaborators and suppliers may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements and insider trading.
−Removed: We are exposed to the risk that our employees and other third parties may engage in fraudulent conduct or other illegal activity.
−Removed: Misconduct by employees and other third parties could include intentional, reckless and/or negligent conduct or disclosure of unauthorized activities to us that violate FDA regulations, including those laws requiring the reporting of true, complete and accurate information to the FDA, manufacturing standards, federal and state healthcare fraud and abuse laws and regulations, or laws that require the reporting of financial information or data accurately.
−Removed: In particular, sales, marketing and business arrangements in the healthcare industry are subject to extensive laws intended to prevent fraud, kickbacks, self-dealing and other abusive practices.
−Removed: These laws and regulations may restrict or prohibit a wide range of pricing, discounting, marketing and promotion, sales commission, customer incentive programs and other business arrangements.
−Removed: Activities subject to these laws also involve the improper use of information obtained in the course of clinical trials, which could result in regulatory sanctions and serious harm to our reputation.
−Removed: It is not always possible to identify and deter employee and other third-party misconduct, and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws.
−Removed: If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business, including the imposition of significant civil, criminal and administrative penalties, damages, monetary fines, disgorgement, possible exclusion from participation in Medicare, Medicaid and other federal healthcare programs, contractual damages, reputational harm, diminished profits and future earnings and curtailment or restructuring of our operations, any of which could adversely affect our ability to operate.
−Removed: A reclassification of our independent contractor home trainers could require us to pay retroactive taxes and penalties, which could have a material adverse effect on our business, financial condition and operating results.
−Removed: We contract with over 560 licensed healthcare practitioners as home trainers, who educate our patients on the proper use of our solutions.
−Removed: Because we consider these licensed practitioners to be independent contractors, as opposed to employees, under federal and applicable state laws, we do not withhold federal or state income or other employment related taxes or make federal or state unemployment tax or Federal Insurance Contributions Act payments.
−Removed: Our contracts with these independent contractors obligate them to pay these taxes.
−Removed: The classification of healthcare practitioners as independent contractors depends on the facts and circumstances of the relationship.
−Removed: Recently, there has been increased focus on the tests and standards related to classifying individuals as employees or independent contractors, including through judicial decisions, legislative proposals and private lawsuits in certain jurisdictions.
−Removed: For example, California recently enacted a law (AB 5), which took effect January 1, 2020.
−Removed: AB 5 significantly limits the types of workers who may be able to be classified as independent contractors under California law, including requiring the worker to perform work that is outside the usual course of the hiring company’s business in order to be classified as an independent contractor.
−Removed: Other state legislatures and Congress are considering, and may enact, laws or regulations narrowing the scope of workers who may be classified as independent contractors.
−Removed: As a result, there is significant uncertainty regarding what the state and federal worker classification regulatory landscape may look like in coming years.
−Removed: In the event federal or state taxing or other regulatory authorities, or a court, were to determine that the healthcare practitioners with whom we contract should be classified as employees, we might be liable for unpaid past taxes and other costs and subject to penalties.
−Removed: We also could, among other things, be required to withhold income taxes, to withhold and pay Social Security, Medicare and similar taxes, to pay
−Removed: unemployment and other related payroll taxes and to provide certain employee benefits, including workers’ compensation coverage and group medical benefits, or be forced to change our business model as it relates to the home trainers to avoid various types of liability exposure associated with worker misclassification claims pursued by governmental agencies or through private legal action.
−Removed: As a result, any determination that the home trainers are our employees could have a material adverse effect on our business, financial condition and results of operations.
−Removed: We may be subject to liabilities related to state income, sales and use taxes, which could adversely affect our financial condition and results of operations and could decrease demand for our products.
−Removed: State income tax and sales and use tax laws, statutes, rules and regulations vary greatly by jurisdiction and are complex and subject to uncertainty.
−Removed: If it is determined that certain of these tax rules apply to us, we could be required to pay substantial tax amounts, and significant penalties and interest for past amounts that may have been due, in addition to taxes going forward.
−Removed: These tax assessments, penalties and interest, and future requirements, may adversely affect our financial condition and results of operations.
−Removed: In addition, the imposition of sales and use taxes on our products going forward would effectively increase the cost of our products to our customers and may adversely affect demand for our products.
−Removed: Our credit facility contains covenants that restrict our business and financing activities, and the property that secures our obligations under the credit facility may be subject to foreclosure.
−Removed: Our revolving credit facility contains a number of restrictions and covenants, which, among other things, restrict our ability to acquire or merge with another entity, dispose of our assets, make investments, loans or guarantees, incur additional indebtedness, create liens or other encumbrances, or pay dividends or make other distributions.
−Removed: The credit facility also requires us to maintain compliance with a maximum leverage ratio and a minimum liquidity covenant.
−Removed: These provisions impose significant operating and financial restrictions on us and may limit our ability to compete effectively, take advantage of new business opportunities or take other actions that may be in our best interests.
−Removed: Our ability to obtain additional or other financing or to dispose of certain assets could also be negatively impacted because we have pledged substantially all of our assets as collateral in connection with the credit facility.
−Removed: Our ability to comply with the provisions under the Credit Agreement may be affected by events beyond our control, and our inability to comply with any of these provisions could result in a default under the Credit Agreement.
−Removed: If such a default occurs, the lenders may elect to declare all borrowings outstanding, together with accrued interest and other fees, to be immediately due and payable, and they would have the right to terminate any commitments they have to provide further borrowings.
−Removed: If we are unable to repay outstanding borrowings when due, the lenders under the Credit Agreement also have the right to proceed against the collateral, including substantially all of our assets, granted to them to secure the indebtedness under that facility.
−Removed: If our indebtedness under the Credit Agreement were to be accelerated, we cannot assure you that our assets would be sufficient to repay in full that indebtedness.
−Removed: The occurrence of any of these events could have a material adverse effect on our business, financial condition, results of operations and liquidity.
−Removed: We have been required to conduct a good faith reasonable country of origin analysis on our potential use of conflict minerals, which has imposed and may impose additional costs on us and could raise reputational and other risks.
−Removed: We are subject to the SEC’s rule regarding disclosure of the use of certain minerals, known as conflict minerals, mined from the Democratic Republic of the Congo and adjoining countries.
−Removed: We have incurred and will continue to incur costs associated with complying with these disclosure requirements, including costs to determine the source of any conflict minerals used in our products.
−Removed: As we continue our due diligence, we may face reputational challenges if we are unable to verify the origins for all metals used in our products through the procedures we have and may continue to implement.
−Removed: We may also encounter challenges in our efforts to satisfy customers that may require all of the components of products purchased to be certified as conflict-free.
−Removed: If we are not able to meet customer requirements, customers may choose to disqualify us as a supplier.
−Removed: Risks Relating to Government Regulation
+Added: Government Regulation, Compliance and Legal Risks
We are subject to extensive federal and state regulation, and if we fail to comply with applicable regulations, we could be required to repay amounts previously received, and could suffer severe criminal or civil sanctions or be required to make significant changes to our operations that could adversely affect our business, financial condition and operating results.
39 unchanged sentences
The premarket approval application process is much more demanding than the 510(k) premarket notification process and requires the payment of significant user fees.
−Removed: A premarket approval application must be supported by valid scientific evidence, which typically requires extensive data to demonstrate the reasonable assurance of safety and effectiveness of the device.
+Added: A premarket approval application must be supported by valid scientific evidence, which typically requires extensive data to demonstrate the reasonable assurance of safety and
+Added: effectiveness of the device.
The approval process involves FDA review of information, including but not limited to, technical, pre-clinical (bench and/or animal), clinical trials, manufacturing and labeling.
10 unchanged sentences
Both the 510(k) and premarket approval processes can be expensive and lengthy and require the payment of significant fees, unless an exemption applies.
−Removed: The FDA's 510(k) clearance process usually takes
−Removed: from approximately three to 12 months, but may take longer.
+Added: The FDA's 510(k) clearance process usually takes from approximately three to 12 months, but may take longer.
The process of obtaining a premarket approval is much more costly and uncertain than the 510(k) clearance process and generally takes from approximately one to five years, or longer, from the time the application is submitted to the FDA until an approval is obtained.
37 unchanged sentences
Regulatory enforcement or inquiries, or other increased scrutiny on us, could affect the perceived safety and efficacy of our products and dissuade patients and clinicians from using our products.
+Added: If clinical studies of our future products do not produce results necessary to support regulatory clearance or approval in the United States or, with respect to our current or future products, elsewhere, we will be unable to expand the indications for or commercialize these products.
+Added: We will likely need to conduct additional clinical studies in the future to support new indications for our products or for clearances of new product lines, or for the approval of the use of our products in some foreign countries.
+Added: Clinical testing can take many years, can be expensive and carries uncertain outcomes.
+Added: The initiation and completion of any of these studies may be prevented, delayed, or halted for numerous reasons.
+Added: Clinical failure can occur at any stage of testing.
+Added: Our clinical studies may produce negative, unanticipated or inconclusive results, and we may decide, or regulators may require us, to conduct additional clinical and non-clinical testing in addition to those we have planned.
+Added: Our failure to adequately demonstrate the safety and efficacy of any of our devices would prevent receipt of regulatory clearance or approval and, ultimately, the commercialization of that device or indication for use.
+Added: Even if our products are cleared in the United States, commercialization of our products in foreign countries would require approval by regulatory authorities in those countries.
+Added: Approval procedures vary among jurisdictions and can involve requirements and administrative review periods different from, and greater than, those in the United States, including additional pre-clinical studies or clinical trials.
+Added: Any of these occurrences could have an adverse impact on our business.
+Added: If the third parties on which we rely to conduct our clinical trials and to assist us with pre-clinical development do not perform as contractually required or expected, we may not be able to obtain regulatory clearance or approval for or commercialize our products.
+Added: We often must rely on third parties, such as contract research organizations, medical institutions, clinical investigators and contract laboratories, to conduct our clinical trials.
+Added: If these third parties do not successfully carry out their contractual duties or regulatory obligations, have difficulty recruiting sufficient subjects for clinical studies or fail to meet expected deadlines, if these third parties need to be replaced, or if the quality or accuracy of the data they obtain is compromised due to the failure to adhere to our clinical protocols or regulatory requirements or for other reasons, our pre-clinical development activities or clinical trials may be extended, delayed, suspended or terminated, and we may not be able to obtain regulatory approval for, or successfully commercialize, our products on a timely basis, if at all, and our business, operating results and prospects may be adversely affected.
+Added: Furthermore, our third-party clinical trial investigators may be delayed in conducting our clinical trials for reasons outside of their control.
+Added: If we fail to comply with state and federal fraud and abuse laws, including anti-kickback, false claims and anti-inducement laws, we could face substantial penalties and our business, operations and financial condition could be adversely affected.
+Added: The Federal Anti-Kickback Statute prohibits, among other things, knowingly and willfully offering, paying, soliciting or receiving remuneration, whether directly or indirectly and overtly or covertly, to induce or in return for purchasing, leasing, ordering, or arranging for the purchase, lease or order of any healthcare item or service reimbursable under Medicare, Medicaid, or other federal financed healthcare programs.
+Added: The statutory exceptions and regulatory safe harbors protecting certain common activities from prosecution are drawn narrowly, and any remuneration to or from a prescriber or purchaser of healthcare products or services may be subject to scrutiny if they do not qualify for an exception or safe harbor.
+Added: Our practices may not in all cases meet all of the criteria for safe harbor protection from anti-kickback liability.
+Added: Federal false claims laws prohibit, in part, any person from knowingly presenting or causing to be presented a false claim for payment to the federal government, or knowingly making or causing to be made a false statement to get a false claim paid.
+Added: The majority of states also have statutes or regulations similar to the Federal Anti-Kickback Statute and Federal False Claims Act, which apply to items or services reimbursed under Medicaid and other state programs, or, in several states, apply regardless of payer.
+Added: These false claims statutes allow any person to bring suit in the name of the government alleging false and fraudulent claims presented to or paid by the government (or other violations of the statutes) and to share in any amounts paid by the entity to the government in fines or settlement.
+Added: Such suits, known as qui tam actions, have increased significantly in the healthcare industry in recent years.
+Added: We were recently served with a qui tam action, which alleges that we
+Added: violated the Federal Anti-Kickback Statute and the Federal False Claims Act.
+Added: See Item 3., “Legal Proceedings,” for additional information regarding this action.
+Added: Sanctions under these federal and state laws may include civil monetary penalties, exclusion of a manufacturer's products from reimbursement under government programs, criminal fines and imprisonment.
+Added: In addition, the ACA, among other things, amended the intent requirement of the Federal Anti-Kickback Statute and criminal healthcare fraud statutes.
+Added: A person or entity does not need to have actual knowledge of this statute or specific intent to violate it.
+Added: In addition, the ACA provides that 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 false claims statutes.
+Added: Because of the breadth of these laws and the narrowness of the safe harbors and exceptions, it is possible that some of our business activities could be subject to challenge under one or more of such laws.
+Added: Such a challenge, regardless of the outcome, could have a material adverse effect on our business, business relationships, reputation, financial condition and results of operations.
+Added: In addition, there has been a recent trend of increased federal and state regulation of payments made to physicians.
+Added: The ACA imposed new reporting and disclosure requirements on device and drug manufacturers for any "transfer of value"
+Added: made or distributed to prescribers and other healthcare providers.
+Added: Device and drug manufacturers are also required to report and disclose any investment interests held by physicians and their immediate family members during the preceding calendar year.
+Added: Failure to submit required information may result in civil monetary penalties of up to an aggregate of $150,000 per year (and up to an aggregate of $1.0 million per year for "knowing failures to report"), for all payments, transfers of value or ownership or investment interests not reported in an annual submission.
+Added: Manufacturers are required to collect data and are required to submit their data reports to CMS for each calendar year by the 90th day of the subsequent calendar year.
+Added: Certain states mandate implementation of compliance programs and/or the tracking and reporting of gifts, compensation and other remuneration to physicians or other healthcare professionals.
+Added: The shifting compliance environment and the need to build and maintain robust and expandable systems to comply with different compliance and/or reporting requirements in multiple jurisdictions increase the possibility that a healthcare company many violate one or more of the requirements.
+Added: The Federal Civil Monetary Penalties Law prohibits, in part, the offering or giving of remuneration to a Medicare or Medicaid beneficiary that the person knows or should know is likely to influence the beneficiary's selection of a particular supplier of items or services reimbursable by a Federal or state governmental program.
+Added: We sometimes offer customers various discounts and other financial incentives in connection with the sales of our products.
+Added: While it is our intent to comply with all applicable laws, the government may find that our marketing activities violate the Civil Monetary Penalties Law.
+Added: If we are found to be in noncompliance, we could be subject to civil money penalties of up to $20,000 for each wrongful act, assessment of three times the amount claimed for each item or service and exclusion from the Federal healthcare programs.
+Added: The scope and enforcement of each of these laws is uncertain and subject to rapid change in the current environment of healthcare reform, especially in light of the lack of applicable precedent and regulations.
+Added: If our operations are found to be in violation of any of the laws described above or any other government regulations that apply to us, we may be subject to penalties, including civil and criminal penalties, damages, fines and the curtailment, restructuring, or restricting of our operations.
+Added: Any penalties, damages, fines, curtailment or restructuring or our operations could harm our ability to operate our business and our financial results.
+Added: Any action against us for violation of these laws, even if we successfully defend against it, could cause us to incur significant legal expenses and divert our management's attention from operation of our business.
+Added: Moreover, achieving and sustaining compliance with applicable federal and state fraud laws may prove costly.
+Added: Failure to maintain the licenses and accreditations necessary to operate under our direct-to-patient and -provider model would adversely affect our business.
+Added: To continue operating our business under our direct-to-patient and -provider model, we must maintain our Durable Medical Equipment certification from the Accreditation Commission for Health Care.
+Added: In May 2008, we became a Durable, Medical Equipment, Prosthetics, Orthotics, and Supplies accredited supplier by the
+Added: Accreditation Commission for Health Care.
+Added: This accreditation status must be renewed every three years through a recredentialing process that includes an on-site review.
+Added: We last renewed our accreditation with our accrediting body in May 2020.
+Added: If we are deemed out of compliance with accreditation standards, our enrollment status in the Medicare program could be jeopardized, up to and including termination.
+Added: In addition to maintaining our Durable Medical Equipment certification from the Accreditation Commission for Health Care, we also must maintain certain state-required licenses.
+Added: If we were found to be noncompliant, we could lose our licensure in that state.
+Added: Losing our licensure could subject us to financial penalties and/or prohibit us from selling our current or future products to patients in such state and our business, financial condition and results of operations could be adversely affected as a result of any such prohibition.
+Added: Our products are currently made available to authorized users of the Department of Veterans Affairs Federal Supply Schedule and if we were no longer eligible to sell our products through such channel, our business may be adversely affected.
+Added: Our Flexitouch and Entre systems are eligible for reimbursement by the Department of Veterans Affairs and included on the Federal Supply Schedule pricing program, established by Section 603 of the Veterans Health Care Act of 1992.
+Added: To be eligible for this program, we must comply with additional laws and requirements applicable to our operations and manufacturing processes.
+Added: If we were to lose eligibility for reimbursement by the Department of Veterans Affairs, our business, financial condition and results of operations could be adversely affected.
If we modify our FDA cleared devices, we may need to seek additional clearances or approvals, which, if not granted, would prevent us from selling our modified products.
7 unchanged sentences
Further in this situation, our products could be subject to recall.
−Removed: Any recall or FDA requirement that we seek additional approvals or clearances could result
−Removed: in significant delays, fines, increased costs associated with modification of a product, loss of revenue and potential operating restrictions imposed by the FDA.
+Added: Any recall or FDA requirement that we seek additional approvals or clearances could result in significant delays, fines, increased costs associated with modification of a product, loss of revenue and potential operating restrictions imposed by the FDA.
The misuse or off-label use of our products may harm our image in the marketplace, result in injuries that lead to product liability suits or result in costly investigations, fines or sanctions by regulatory bodies if we are deemed to have engaged in the promotion of these uses, any of which could be costly to our business.
2 unchanged sentences
We cannot, however, prevent a physician from using our products off-label, when in the physician's independent professional medical judgment, he or she deems it appropriate.
−Removed: The FDA does not restrict or regulate a physician's choice of treatment.
+Added: does not restrict or regulate a physician's choice of treatment.
There may be increased risk of injury to patients if physicians use our products off-label.
4 unchanged sentences
If our products are misused or used with improper technique, we may become subject to costly litigation by our clinicians or their patients.
−Removed: As noted above, we can be subject to lawsuits, whether or not our product is proven to be defective and whether or not our employees have adequately trained the physicians.
−Removed: Similarly, in an effort to decrease costs, physicians may also reuse those of our products that are intended for a single use or may purchase reprocessed products from third-party reprocessors in lieu of purchasing new products from us, which could result in product failure and liability.
−Removed: As described immediately above, product liability claims could divert management's attention from our core business, be expensive to defend and result in sizeable damage awards against us that may not be covered by insurance.
+Added: We can be subject to lawsuits, whether or not our product is proven to be defective and whether or not our employees have adequately trained the physicians.
+Added: Product liability claims could divert management's attention from our core business, be expensive to defend and result in sizeable damage awards against us that may not be covered by insurance.
Our products may cause or contribute to adverse medical events that we are required to report to the FDA, and if we fail to do so, we would be subject to sanctions that would materially harm our business.
29 unchanged sentences
Any of these sanctions could adversely affect our business, financial condition and results of operations.
−Removed: For any products that we sell outside the United States, those products and our operations would also be required to comply with standards set by foreign law, treaties and industrial standards bodies, such as the
−Removed: International Organization for Standardization, or ISO, and domestic regulatory authorities within foreign countries.
+Added: For any products that we sell outside the United States, those products and our operations would also be required to comply with standards set by foreign law, treaties and industrial standards bodies, such as the International Organization for Standardization, or ISO, and domestic regulatory authorities within foreign countries.
Foreign regulatory bodies may evaluate our products or the testing that our products undergo against these or other standards.
2 unchanged sentences
Any of these actions could prevent us from marketing, distributing or selling our products and would likely harm our business.
−Removed: If clinical studies of our future products do not produce results necessary to support regulatory clearance or approval in the United States or, with respect to our current or future products, elsewhere, we will be unable to expand the indications for or commercialize these products.
−Removed: We will likely need to conduct additional clinical studies in the future to support new indications for our products or for clearances of new product lines, or for the approval of the use of our products in some foreign countries.
−Removed: Clinical testing can take many years, can be expensive and carries uncertain outcomes.
−Removed: The initiation and completion of any of these studies may be prevented, delayed, or halted for numerous reasons.
−Removed: Clinical failure can occur at any stage of testing.
−Removed: Our clinical studies may produce negative, unanticipated or inconclusive results, and we may decide, or regulators may require us, to conduct additional clinical and non-clinical testing in addition to those we have planned.
−Removed: Our failure to adequately demonstrate the safety and efficacy of any of our devices would prevent receipt of regulatory clearance or approval and, ultimately, the commercialization of that device or indication for use.
−Removed: Even if our products are cleared in the United States, commercialization of our products in foreign countries would require approval by regulatory authorities in those countries.
−Removed: Approval procedures vary among jurisdictions and can involve requirements and administrative review periods different from, and greater than, those in the United States, including additional pre-clinical studies or clinical trials.
−Removed: Any of these occurrences could have an adverse impact on our business.
−Removed: If the third parties on which we rely to conduct our clinical trials and to assist us with pre-clinical development do not perform as contractually required or expected, we may not be able to obtain regulatory clearance or approval for or commercialize our products.
−Removed: We often must rely on third parties, such as contract research organizations, medical institutions, clinical investigators and contract laboratories, to conduct our clinical trials.
−Removed: If these third parties do not successfully carry out their contractual duties or regulatory obligations, have difficulty recruiting sufficient subjects for clinical studies or fail to meet expected deadlines, if these third parties need to be replaced, or if the quality or accuracy of the data they obtain is compromised due to the failure to adhere to our clinical protocols or regulatory requirements or for other reasons, our pre-clinical development activities or clinical trials may be extended, delayed, suspended or terminated, and we may not be able to obtain regulatory approval for, or successfully commercialize, our products on a timely basis, if at all, and our business, operating results and prospects may be adversely affected.
−Removed: Furthermore, our third-party clinical trial investigators may be delayed in conducting our clinical trials for reasons outside of their control.
Future regulatory actions may adversely affect our ability to sell our products profitably.
11 unchanged sentences
Claims for durable medical equipment, prosthetics, orthotics and supplies, including claims under the DME Competitive Bidding Program, are reduced by 2% based upon whether the date-of-service, or the start date for rental equipment or multi-day supplies, is on or after April 1, 2013.
+Added: This 2% reduction based on the sequestration was suspended in 2020 due to the public health emergency, and Congress recently extended the sequestration moratorium through March 31, 2021, but the 2% reduction will go back into effect at some point.
We expect that additional state and federal healthcare reform measures will be adopted in the future, any of which could limit the amounts that federal and state governments will pay for healthcare products and services, which could result in reduced demand for our products or additional pricing pressures.
32 unchanged sentences
● state law equivalents of each of the above federal laws, such as anti-kickback and false claims laws that may apply to items or services reimbursed by any third-party payer, including commercial insurers;
−Removed: state laws that require device companies to comply with the industry's voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government or otherwise restrict payments that may be made to healthcare providers;
+Added: state laws that require device companies to comply with the industry's voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government or otherwise
+Added: restrict payments that may be made to healthcare providers;
state laws that require device manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures;
17 unchanged sentences
The HITECH Act also increased the civil and criminal penalties that may be imposed against covered entities, business associates and possibly other persons and gave state attorneys general new authority to file civil actions for damages or injunctions in federal courts to enforce the federal HIPAA laws and seek attorney fees and costs associated with pursuing federal civil actions.
−Removed: Additionally, certain states have adopted comparable privacy and security laws and regulations, some of which may be more stringent than HIPAA.
+Added: Additionally, certain states have adopted comparable privacy and data security laws and regulations, some of which may be more stringent than HIPAA.
If we do not comply with existing or new laws and regulations related to patient health information, we could be subject to criminal or civil sanctions.
11 unchanged sentences
We may need to comply with applicable laws in those jurisdictions that regulate the use and disclosure of individually identifiable information.
−Removed: Failure to comply with privacy and security laws and regulations could subject us to substantial penalties and our business, operations and financial condition could be adversely affected.
+Added: Failure to comply with privacy and data security laws and regulations could subject us to substantial penalties and our business, operations and financial condition could be adversely affected.
In addition to the HIPAA and HITECH regulations described above, a number of U.S.
−Removed: states have also enacted data privacy and security laws and regulations that govern the collection, use, disclosure, transfer, storage, disposal, and protection of sensitive personal information, such as social security numbers, medical and financial information and other personal information.
+Added: states have also enacted data privacy and data security laws and regulations that govern the collection, use, disclosure, transfer, storage, disposal, and protection of sensitive personal information, such as social security numbers, medical and financial information and other personal information.
These laws and regulations may be more restrictive and not preempted by U.S.
2 unchanged sentences
territories and all 50 states now have data breach laws that require timely notification to individual victims, and at times regulators, if a company has experienced the unauthorized access or acquisition of sensitive personal data.
−Removed: Other state laws include the California Consumer Privacy Act (“CCPA”), which was signed into law on June 28, 2018 and largely took effect on January 1, 2020.
−Removed: The CCPA, among other things, contains new disclosure obligations for businesses that collect personal information about California residents and affords those individuals new rights relating to their personal information that may affect our ability to use personal information or share it with our business partners.
−Removed: In addition, other states have considered privacy laws like the CCPA, and in October 2019, Nevada enacted a similar but less restrictive privacy law.
+Added: Other state laws contain additional disclosure obligations for businesses that collect personal information about residents and afford those individuals additional rights relating to their personal information that may affect our ability to use personal information or share it with our business partners.
We will continue to monitor and assess the impact of these state laws, which may impose substantial penalties for violations, impose significant costs for investigations and compliance, allow private class-action litigation and carry significant potential liability for our business.
−Removed: If we fail to comply with state and federal fraud and abuse laws, including anti-kickback, false claims and anti-inducement laws, we could face substantial penalties and our business, operations and financial condition could be adversely affected.
−Removed: The Federal Anti-Kickback Statute prohibits, among other things, knowingly and willfully offering, paying, soliciting or receiving remuneration, whether directly or indirectly and overtly or covertly, to induce or in return for purchasing, leasing, ordering, or arranging for the purchase, lease or order of any healthcare item or service reimbursable under Medicare, Medicaid, or other federal financed healthcare programs.
−Removed: The statutory exceptions and regulatory safe harbors protecting certain common activities from prosecution are drawn narrowly, and any remuneration to or from a prescriber or purchaser of healthcare products or services may be subject to scrutiny if they do not qualify for an exception or safe harbor.
−Removed: Our practices may not in all cases meet all of the criteria for safe harbor protection from anti-kickback liability.
−Removed: Federal false claims laws prohibit, in part, any person from knowingly presenting or causing to be presented a false claim for payment to the federal government, or knowingly making or causing to be made a
−Removed: false statement to get a false claim paid.
−Removed: The majority of states also have statutes or regulations similar to the Federal Anti-Kickback Statute and Federal False Claims Act, which apply to items or services reimbursed under Medicaid and other state programs, or, in several states, apply regardless of payer.
−Removed: These false claims statutes allow any person to bring suit in the name of the government alleging false and fraudulent claims presented to or paid by the government (or other violations of the statutes) and to share in any amounts paid by the entity to the government in fines or settlement.
−Removed: Such suits, known as qui tam actions, have increased significantly in the healthcare industry in recent years.
−Removed: We were recently served with a qui tam action, which alleges that we violated the Federal Anti-Kickback Statute and the Federal False Claims Act.
−Removed: See Item 3., “Legal Proceedings,” for additional information regarding this action.
−Removed: Sanctions under these federal and state laws may include civil monetary penalties, exclusion of a manufacturer's products from reimbursement under government programs, criminal fines and imprisonment.
−Removed: In addition, the ACA, among other things, amended the intent requirement of the Federal Anti-Kickback Statute and criminal healthcare fraud statutes.
−Removed: A person or entity does not need to have actual knowledge of this statute or specific intent to violate it.
−Removed: In addition, the ACA provides that 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 false claims statutes.
−Removed: Because of the breadth of these laws and the narrowness of the safe harbors and exceptions, it is possible that some of our business activities could be subject to challenge under one or more of such laws.
−Removed: Such a challenge, regardless of the outcome, could have a material adverse effect on our business, business relationships, reputation, financial condition and results of operations.
−Removed: In addition, there has been a recent trend of increased federal and state regulation of payments made to physicians.
−Removed: The ACA imposed new reporting and disclosure requirements on device and drug manufacturers for any "transfer of value"
−Removed: made or distributed to prescribers and other healthcare providers.
−Removed: Device and drug manufacturers are also required to report and disclose any investment interests held by physicians and their immediate family members during the preceding calendar year.
−Removed: Failure to submit required information may result in civil monetary penalties of up to an aggregate of $150,000 per year (and up to an aggregate of $1.0 million per year for "knowing failures to report"), for all payments, transfers of value or ownership or investment interests not reported in an annual submission.
−Removed: Manufacturers are required to collect data and are required to submit their data reports to CMS for each calendar year by the 90th day of the subsequent calendar year.
−Removed: Certain states mandate implementation of compliance programs and/or the tracking and reporting of gifts, compensation and other remuneration to physicians or other healthcare professionals.
−Removed: The shifting compliance environment and the need to build and maintain robust and expandable systems to comply with different compliance and/or reporting requirements in multiple jurisdictions increase the possibility that a healthcare company many violate one or more of the requirements.
−Removed: The Federal Civil Monetary Penalties Law prohibits, in part, the offering or giving of remuneration to a Medicare or Medicaid beneficiary that the person knows or should know is likely to influence the beneficiary's selection of a particular supplier of items or services reimbursable by a Federal or state governmental program.
−Removed: We sometimes offer customers various discounts and other financial incentives in connection with the sales of our products.
−Removed: While it is our intent to comply with all applicable laws, the government may find that our marketing activities violate the Civil Monetary Penalties Law.
−Removed: If we are found to be in noncompliance, we could be subject to civil money penalties of up to $20,000 for each wrongful act, assessment of three times the amount claimed for each item or service and exclusion from the Federal healthcare programs.
−Removed: The scope and enforcement of each of these laws is uncertain and subject to rapid change in the current environment of healthcare reform, especially in light of the lack of applicable precedent and regulations.
−Removed: If our operations are found to be in violation of any of the laws described above or any other government regulations that apply to us, we may be subject to penalties, including civil and criminal penalties, damages, fines and the curtailment, restructuring, or restricting of our operations.
−Removed: Any penalties, damages, fines, curtailment or restructuring or our operations could harm our ability to operate our business and our financial results.
−Removed: Any action against us for violation of these laws, even if we successfully defend against it, could cause us to incur significant legal expenses and divert our management's attention from operation of our business.
−Removed: Moreover, achieving and sustaining compliance with applicable federal and state fraud laws may prove costly.
−Removed: Failure to maintain the licenses and accreditations necessary to operate under our direct-to-patient and -provider model would adversely affect our business.
−Removed: To continue operating our business under our direct-to-patient and -provider model, we must maintain our Durable Medical Equipment certification from the Accreditation Commission for Health Care.
−Removed: In May 2008, we became a Durable, Medical Equipment, Prosthetics, Orthotics, and Supplies accredited supplier by the Accreditation Commission for Health Care.
−Removed: This accreditation status must be renewed every three years through a recredentialing process that includes an on-site review.
−Removed: We last renewed our accreditation with our accrediting body in May 2017.
−Removed: We are currently in the process of renewing our accreditation.
−Removed: If we are deemed out of compliance with accreditation standards, our enrollment status in the Medicare program could be jeopardized, up to and including termination.
−Removed: In addition to maintaining our Durable Medical Equipment certification from the Accreditation Commission for Health Care, we also must maintain certain state-required licenses.
−Removed: If we were found to be noncompliant, we could lose our licensure in that state.
−Removed: Losing our licensure could subject us to financial penalties and/or prohibit us from selling our current or future products to patients in such state and our business, financial condition and results of operations could be adversely affected as a result of any such prohibition.
−Removed: Our products are currently made available to authorized users of the Department of Veterans Affairs Federal Supply Schedule and if we were no longer eligible to sell our products through such channel, our business may be adversely affected.
−Removed: Our Flexitouch and Entre systems are eligible for reimbursement by the Department of Veterans Affairs and included on the Federal Supply Schedule pricing program, established by Section 603 of the Veterans Health Care Act of 1992.
−Removed: To be eligible for this program, we must comply with additional laws and requirements applicable to our operations and manufacturing processes.
−Removed: If we were to lose eligibility for reimbursement by the Department of Veterans Affairs, our business, financial condition and results of operations could be adversely affected.
+Added: We face the risk of product liability claims that could be expensive, divert management's attention and harm our reputation and business.
+Added: We may not be able to maintain adequate product liability insurance.
+Added: Our business exposes us to the risk of product liability claims that are inherent in the testing, manufacturing and marketing of medical devices.
+Added: This risk exists even if a device is cleared or approved for commercial sale by the FDA and manufactured in facilities licensed and regulated by the FDA or an applicable foreign regulatory authority.
+Added: Our products are designed to affect, and any future products will be designed to affect, important bodily functions and processes.
+Added: Any side effects, manufacturing defects, misuse or abuse associated with our products or our products in development could result in patient injury or death.
+Added: The medical device industry has historically been subject to extensive litigation over product liability claims, and we cannot offer any assurance that we will not face product liability suits.
+Added: We may be subject to product liability claims if our products cause, or merely appear to have caused, patient injury or death.
+Added: In addition, an injury that is
+Added: caused by the activities of our suppliers, such as those who provide us with components and materials, may be the basis for a claim against us.
+Added: Product liability claims may be brought against us by patients, clinicians or others selling or otherwise coming into contact with our products, among others.
+Added: If we cannot successfully defend ourselves against product liability claims, we will incur substantial liabilities and reputational harm.
+Added: In addition, regardless of merit or eventual outcome, product liability claims may result in:
+Added: ● costs of litigation;
+Added: ● distraction of management's attention from our primary business;
+Added: ● the inability to commercialize our existing or new products;
+Added: ● decreased demand for our products or products in development;
+Added: ● damage to our business reputation;
+Added: ● product recalls or withdrawals from the market;
+Added: ● withdrawal of clinical trial participants;
+Added: ● substantial monetary awards to patients or other claimants;
+Added: ● loss of revenue.
+Added: While we may attempt to manage our product liability exposure by proactively recalling or withdrawing from the market any defective products, any recall or market withdrawal of our products would delay the supply of those products to our clinicians and patients and may impact our reputation.
+Added: We can provide no assurance that we will be successful in initiating appropriate market recall or market withdrawal efforts that may be required in the future or that these efforts will have the intended effect of preventing product malfunctions and the accompanying product liability that may result.
+Added: Such recalls and withdrawals may also be used by our competitors to harm our reputation for safety or be perceived by patients as a safety risk when considering the use of our products, either of which could have an adverse impact on our business.
+Added: In addition, our product liability insurance is subject to deductibles and coverage limitations.
+Added: Our current product liability insurance may not continue to be available to us on acceptable terms, if at all, and, if available, coverage may not be adequate to protect us against any future product liability claims.
+Added: If we are unable to obtain insurance at an acceptable cost or on acceptable terms or otherwise protect against potential product liability claims, we could be exposed to significant liabilities.
+Added: A product liability claim, recall or other claim with respect to uninsured liabilities or for amounts in excess of insured liabilities could have an adverse impact on our business.
+Added: Our employees, independent contractors, consultants, collaborators and suppliers may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements and insider trading.
+Added: We are exposed to the risk that our employees and other third parties, in spite of our compliance training and programs, may engage in fraudulent conduct or other illegal activity.
+Added: Misconduct by employees and other third parties could include intentional, reckless and/or negligent conduct or disclosure of unauthorized activities to us that violate FDA regulations, including those laws requiring the reporting of true, complete and accurate information to the FDA, manufacturing standards, federal and state healthcare fraud and abuse laws and regulations, or laws that require the reporting of financial information or data accurately.
+Added: In particular, sales, marketing and business arrangements in the healthcare industry are subject to extensive laws intended to prevent fraud, kickbacks, self-dealing and other abusive practices.
+Added: These laws and regulations may restrict or prohibit a wide range of pricing, discounting, marketing and promotion, sales commission, customer incentive programs and other business arrangements.
+Added: Activities subject to these laws also involve the improper use of information obtained in the course of clinical trials, which could result in regulatory sanctions and serious harm
+Added: to our reputation.
+Added: It is not always possible to identify and deter employee and other third-party misconduct, and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws.
+Added: If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business, including the imposition of significant civil, criminal and administrative penalties, damages, monetary fines, disgorgement, possible exclusion from participation in Medicare, Medicaid and other federal healthcare programs, contractual damages, reputational harm, diminished profits and future earnings and curtailment or restructuring of our operations, any of which could adversely affect our ability to operate.
We may be unable to obtain or maintain international regulatory registrations or approvals for our current or future products and indications, which could adversely impact our business.
11 unchanged sentences
There can be no assurance that violations of environmental, health and safety laws will not occur in the future as a result of human error, accident, equipment failure or other causes.
−Removed: The failure to comply with past, present or future laws could result in the imposition of fines, third-party property
−Removed: damage and personal injury claims, investigation and remediation costs, the suspension of production or a cessation of operations.
+Added: The failure to comply with past, present or future laws could result in the imposition of fines, third-party property damage and personal injury claims, investigation and remediation costs, the suspension of production or a cessation of operations.
We also expect that our operations will be affected by other new environmental and health and safety laws and regulations on an ongoing basis.
Although we cannot predict the ultimate impact of any such new laws and regulations, they will likely result in additional costs, and may require us to change how we manufacture our products, which could have an adverse impact on our business.
−Removed: Risks Related to Our Financial Condition
+Added: Financial Condition, Credit and Tax Risks
+Added: If we fail to maintain proper and effective internal control over financial reporting, our ability to produce accurate and timely financial statements could be impaired, which could harm our operating results, investors' views of us and, as a result, the value of our common stock.
+Added: Pursuant to Section 404 of the Sarbanes-Oxley Act, our management is required to report upon the effectiveness of our internal control over financial reporting, and our independent registered public accounting firm is required to attest to the effectiveness of our internal control over financial reporting.
+Added: The rules governing the standards that must be met for our management and our independent registered public accounting firm to assess our internal control over financial reporting are complex and require significant documentation, testing and possible remediation.
+Added: In connection with our and our independent registered public accounting firm’s
+Added: evaluations of our internal control over financial reporting, we may need to upgrade our systems, including information technology;
+Added: implement additional financial and management controls, reporting systems and procedures;
+Added: and hire additional accounting and finance staff.
+Added: Any failure to implement required new or improved controls, or difficulties encountered in their implementation, could cause us to fail to meet our reporting obligations.
+Added: In addition, any testing by us or our independent registered public accounting firm conducted in connection with Section 404 of the Sarbanes-Oxley Act may reveal deficiencies in our internal control over financial reporting that are deemed to be material weaknesses or that may require prospective or retroactive changes to our financial statements or identify other areas for further attention or improvement.
+Added: Inferior internal controls could also cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of our common stock.
+Added: Internal control deficiencies could also result in a restatement of our financial results in the future.
+Added: We could become subject to stockholder or other third-party litigation, as well as investigations by the SEC, the stock exchange on which our securities are listed, or other regulatory authorities, which could require additional financial and management resources and could result in fines, trading suspensions, payment of damages or other remedies.
We may need substantial additional funding and may be unable to raise capital when needed, which could force us to delay or reduce our commercialization efforts or product development programs.
10 unchanged sentences
● costs associated with any product recall that may occur;
+Added: ● additional expenditures and costs related to changes in operations in response to the COVID-19 pandemic;
● the effect of competing technological and market developments;
2 unchanged sentences
If we raise additional funds by issuing equity securities, our stockholders may experience dilution.
−Removed: Any future debt financing into which we enter may impose upon us covenants that restrict our operations, including limitations on our ability to incur liens or additional debt, pay dividends, repurchase our common stock, make certain investments and engage in certain merger, consolidation or asset sale transactions.
+Added: Any future debt financing into which we enter may impose upon us covenants that restrict our operations, including limitations on our ability to incur liens or additional debt, pay dividends, repurchase our common stock, make
+Added: certain investments and engage in certain merger, consolidation or asset sale transactions.
Any debt financing or additional equity that we raise may contain terms that are not favorable to us or our stockholders.
4 unchanged sentences
Any of these factors could harm our operating results.
+Added: Our credit facility contains covenants that restrict our business and financing activities, and the property that secures our obligations under the credit facility may be subject to foreclosure.
+Added: Our revolving credit facility contains a number of restrictions and covenants, which, among other things, restrict our ability to acquire or merge with another entity, dispose of our assets, make investments, loans or guarantees, incur additional indebtedness, create liens or other encumbrances, or pay dividends or make other distributions.
+Added: The credit facility also requires us to maintain compliance with a maximum leverage ratio and a minimum liquidity covenant.
+Added: These provisions impose significant operating and financial restrictions on us and may limit our ability to compete effectively, take advantage of new business opportunities or take other actions that may be in our best interests.
+Added: Our ability to obtain additional or other financing or to dispose of certain assets could also be negatively impacted because we have pledged substantially all of our assets as collateral in connection with the credit facility.
+Added: Our ability to comply with the provisions under the Credit Agreement may be affected by events beyond our control, and our inability to comply with any of these provisions could result in a default under the Credit Agreement.
+Added: If such a default occurs, the lenders may elect to declare all borrowings outstanding, together with accrued interest and other fees, to be immediately due and payable, and they would have the right to terminate any commitments they have to provide further borrowings.
+Added: If we are unable to repay outstanding borrowings when due, the lenders under the Credit Agreement also have the right to proceed against the collateral, including substantially all of our assets, granted to them to secure the indebtedness under that facility.
+Added: If our indebtedness under the Credit Agreement were to be accelerated, we cannot assure you that our assets would be sufficient to repay in full that indebtedness.
+Added: The occurrence of any of these events could have a material adverse effect on our business, financial condition, results of operations and liquidity.
+Added: A reclassification of our independent contractor trainers could require us to pay retroactive taxes and penalties, which could have a material adverse effect on our business, financial condition and operating results.
+Added: Prior to the inactivation of our independent contractor home trainers in May 2020, we contracted with over 560 licensed healthcare practitioners as home trainers, who educate our patients on the proper use of our solutions.
+Added: We have since reactivated a small number of healthcare practitioners in the same capacity as previously noted.
+Added: Because we consider these licensed practitioners to be independent contractors, as opposed to employees, under federal and applicable state laws, we do not withhold federal or state income or other employment related taxes or make federal or state unemployment tax or Federal Insurance Contributions Act payments.
+Added: Our contracts with these independent contractors obligate them to pay these taxes.
+Added: The classification of healthcare practitioners as independent contractors depends on the facts and circumstances of the relationship.
+Added: Recently, there has been increased focus on the tests and standards related to classifying individuals as employees or independent contractors, including through judicial decisions, legislative proposals and private lawsuits in certain jurisdictions.
+Added: For example, California recently enacted a law (AB 5), which took effect January 1, 2020.
+Added: AB 5 significantly limits the types of workers who may be able to be classified as independent contractors under California law, including requiring the worker to perform work that is outside the usual course of the hiring company’s business in order to be classified as an independent contractor.
+Added: Other state legislatures and Congress are considering, and may enact, laws or regulations narrowing the scope of workers who may be classified as independent contractors.
+Added: As a result, there is significant uncertainty regarding
+Added: what the state and federal worker classification regulatory landscape may look like in coming years.
+Added: In the event federal or state taxing or other regulatory authorities, or a court, were to determine that the healthcare practitioners with whom we contract should be classified as employees, we might be liable for unpaid past taxes and other costs and subject to penalties.
+Added: We also could, among other things, be required to withhold income taxes, to withhold and pay Social Security, Medicare and similar taxes, to pay unemployment and other related payroll taxes and to provide certain employee benefits, including workers’ compensation coverage and group medical benefits, or be forced to change our business model as it relates to the trainers to avoid various types of liability exposure associated with worker misclassification claims pursued by governmental agencies or through private legal action.
+Added: As a result, any determination that the trainers are our employees could have a material adverse effect on our business, financial condition and results of operations.
+Added: We may be subject to liabilities related to state income, sales and use taxes, which could adversely affect our financial condition and results of operations and could decrease demand for our products.
+Added: State income tax and sales and use tax laws, statutes, rules and regulations vary greatly by jurisdiction and are complex and subject to uncertainty.
+Added: If it is determined that certain of these tax rules apply to us, we could be required to pay substantial tax amounts, and significant penalties and interest for past amounts that may have been due, in addition to taxes going forward.
+Added: These tax assessments, penalties and interest, and future requirements, may adversely affect our financial condition and results of operations.
+Added: In addition, the imposition of sales and use taxes on our products going forward would effectively increase the cost of our products to our customers and may adversely affect demand for our products
+Added: We may be unable to collect all of our Medicare accounts receivable.
+Added: At December 31, 2020, we had approximately $14.1 million of accounts receivable for sales of our Flexitouch system to patients covered by Medicare.
+Added: A portion of the related claims to Medicare are initially denied and enter the appeals process, where many are ultimately reviewed by an Administrative Law Judge.
+Added: The appeal process can be lengthy, lasting several years in most cases.
+Added: At December 31, 2020, we classified $9.4 million of our Medicare accounts receivable related to Flexitouch system sales as long-term assets on our balance sheet due to the estimated amount of receivables that will be paid more than one year from December 31, 2020, as a result of delays with the Administrative Law Judge appeal process.
+Added: A significant increase in Medicare denial of submitted claims or an increase in the proportion of Medicare denials that are upheld by an Administrative Law Judge could adversely affect our results of operations or cause us to reduce the carrying value of our Medicare accounts receivable related to Flexitouch system sales.
Risks Related to Our Intellectual Property
7 unchanged sentences
Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions.
−Removed: The legal systems of certain countries do not favor the enforcement of patents and other intellectual property protection, which could make it difficult for us to stop the infringement of our patents generally.
+Added: The legal systems of certain countries do not favor the enforcement of patents and other intellectual property protection, which could make it difficult for us to stop the infringement of
+Added: our patents generally.
Proceedings to enforce our patent rights in foreign jurisdictions could result in substantial costs and divert our efforts and attention from other aspects of our business, could put our patents at risk of being invalidated or interpreted narrowly and our patent applications at risk of not issuing, and could provoke third parties to assert claims against us.
2 unchanged sentences
The patent protection for our products may expire before we are able to maximize their commercial value, which may subject us to increased competition and reduce or eliminate our opportunity to generate product revenue.
−Removed: The patents for our products have varying expiration dates and, when these patents expire, we may be subject to increased competition and we may not be able to recover our development costs or market any of our approved products profitably.
+Added: The patents related to our products have varying expiration dates and, when these patents expire, we may be subject to increased competition and we may not be able to recover our development costs or market any of our approved products profitably.
For instance, many U.S.
8 unchanged sentences
We may incorrectly determine that our products are not covered by a third-party patent.
−Removed: Many patents may cover a marketed product, including but not limited to patents covering the product or portions thereof, methods of use or methods relating to the product, and production processes of or for the
+Added: Many patents may cover a marketed product, including but not limited to patents covering the product or portions thereof, methods of use or methods relating to the product, and production processes of or for the product.
The identification of all patents and their expiration dates relevant to the production and sale of a therapeutic product is extraordinarily complex and requires sophisticated legal knowledge in the relevant jurisdiction.
6 unchanged sentences
While an inadvertent lapse may sometimes be cured by payment of a late fee or by other means in accordance with the applicable rules, there are many situations in which noncompliance can result in abandonment or lapse of the patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction.
−Removed: If we fail to maintain the patents and patent applications directed to our products, our competitors might be able to enter the market earlier than should otherwise have been the case, which may have a material adverse effect on our business.
+Added: If we fail to maintain the patents and patent applications
+Added: directed to our products, our competitors might be able to enter the market earlier than should otherwise have been the case, which may have a material adverse effect on our business.
We may become involved in lawsuits to protect our patents or other intellectual property rights, which could be expensive, time-consuming and ultimately unsuccessful.
15 unchanged sentences
Numerous U.S.
−Removed: and foreign issued patents and
−Removed: pending patent applications owned by third parties exist in the fields in which we are developing and may develop our products.
+Added: and foreign issued patents and pending patent applications owned by third parties exist in the fields in which we are developing and may develop our products.
As the medical device industry expands and more patents are issued, the risk increases that our products may be subject to claims of infringement of the patent rights of third parties.
−Removed: If a third-party claims that we infringe on their products or technology, we could face a number of issues, including:
+Added: If a third-party claims that we infringe on their intellectual property or technology, we could face a number of issues, including:
● infringement and other intellectual property claims which, with or without merit, can be expensive and time-consuming to litigate and can divert management's attention from our core business;
22 unchanged sentences
In addition, litigation or threatened litigation could result in significant demands on the time and attention of our management team, distracting them from the pursuit of other company business.
−Removed: In the event of a successful claim of infringement against us, we may have to pay substantial damages, including treble damages and attorneys' fees for willful infringement, pay royalties,
−Removed: redesign our infringing products or obtain one or more licenses from third parties, which may be impossible or require substantial time and monetary expenditure.
+Added: In the event of a successful claim of infringement against us, we may have to pay substantial damages, including treble damages and attorneys' fees for willful infringement, pay royalties, redesign our infringing products or obtain one or more licenses from third parties, which may be impossible or require substantial time and monetary expenditure.
In addition, the uncertainties associated with litigation could have a material adverse effect on our ability to raise the funds necessary to continue our clinical trials, continue our research programs, license necessary technology from third parties, or enter into development collaborations that would help us bring our products to market.
7 unchanged sentences
patent applications containing a claim not entitled to priority before March 16, 2013, there is a greater level of uncertainty in the patent law.
−Removed: In September 2011, the Leahy-Smith America Invents Act, or the American Invents Act, or AIA, was signed into law.
+Added: In September 2011, the Leahy-Smith America Invents Act, or
+Added: the American Invents Act, or AIA, was signed into law.
The AIA includes a number of significant changes to U.S.
patent law, including provisions that affect the way patent applications will be prosecuted, reviewed after issuance, and may also affect patent litigation.
−Removed: The USPTO is currently developing regulations and procedures to govern administration of the AIA and many of the substantive changes to patent law associated with the AIA.
−Removed: It is not clear what other, if any, impact the AIA will have on the operation of our business.
−Removed: Moreover, the AIA and its implementation could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents, all of which could have a material adverse effect on our business and financial condition.
+Added: The AIA and its implementation could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents, all of which could have a material adverse effect on our business and financial condition.
An important change introduced by the AIA is that, as of March 16, 2013, the United States transitioned to a "first-inventor-to-file"
32 unchanged sentences
To protect this type of information against disclosure or appropriation by competitors, our policy is to require our employees, consultants, contractors and advisors to enter into confidentiality agreements with us.
−Removed: However, current or former employees, consultants, contractors and advisors may unintentionally or willfully disclose our confidential information to competitors, and confidentiality agreements may not provide an
−Removed: adequate remedy in the event of unauthorized disclosure of confidential information.
+Added: However, current or former employees, consultants, contractors and advisors may unintentionally or willfully disclose our confidential information to competitors, and confidentiality agreements may not provide an adequate remedy in the event of unauthorized disclosure of confidential information.
Enforcing a claim that a third-party obtained illegally and is using trade secrets and/or confidential know-how is expensive, time consuming and unpredictable.
9 unchanged sentences
We have received, and may receive in the future, confidential and proprietary information from third parties.
−Removed: In addition, we employ, and may employ in the future, individuals who were previously employed at other medical device companies.
+Added: In addition, we employ, and may employ in the future, individuals who were previously employed at
+Added: other medical device companies.
We may be subject to claims that we or our employees, consultants or independent contractors have inadvertently or otherwise improperly used or disclosed confidential information of these third parties or our employees' former employers.
14 unchanged sentences
Because we rely on third parties to assist with research and development and to manufacture our products, we must, at times, share trade secrets with them.
−Removed: We seek to protect our proprietary technology in part by entering into confidentiality agreements and, if applicable, material transfer agreements, consulting agreements or other similar agreements with our advisors, employees, third-party contractors and consultants,
−Removed: prior to beginning research or disclosing proprietary information.
+Added: We seek to protect our proprietary technology in part by entering into confidentiality agreements and, if applicable, material transfer agreements, consulting agreements or other similar agreements with our advisors, employees, third-party contractors and consultants, prior to beginning research or disclosing proprietary information.
These agreements typically limit the rights of the third parties to use or disclose our confidential information, including our trade secrets.
38 unchanged sentences
As we operate in a single industry, we are especially vulnerable to these factors to the extent that they affect our industry or our products, or to a lesser extent our markets.
−Removed: We do not intend to pay dividends on our common stock, and consequently, your ability to achieve a return on your investment will depend on appreciation, if any, in the price of our common stock.
−Removed: We have never declared or paid any cash dividend on our common stock and do not currently intend to do so for the foreseeable future.
−Removed: We currently anticipate that we will retain future earnings for the development, operation and expansion of our business.
−Removed: In addition, our credit agreement contains terms restricting our ability to pay dividends on our common stock.
−Removed: Any return to stockholders will therefore be limited to any appreciation of their stock.
−Removed: Therefore, the success of an investment in shares of our common stock will depend upon any future appreciation in their value.
−Removed: There is no guarantee that shares of our common stock will appreciate in value or even maintain the price at which our stockholders purchased their shares.
−Removed: If we fail to maintain proper and effective internal control over financial reporting, our ability to produce accurate and timely financial statements could be impaired, which could harm our operating results, investors' views of us and, as a result, the value of our common stock.
−Removed: Pursuant to Section 404 of the Sarbanes-Oxley Act, our management is required to report upon the effectiveness of our internal control over financial reporting, and our independent registered public accounting firm is required to attest to the effectiveness of our internal control over financial reporting.
−Removed: The rules governing the standards that must be met for our management and our independent registered public accounting firm to assess our internal control over financial reporting are complex and require significant documentation, testing and possible remediation.
−Removed: In connection with our and our independent registered public accounting firm’s evaluations of our internal control over financial reporting, we may need to upgrade our systems, including
−Removed: information technology;
−Removed: implement additional financial and management controls, reporting systems and procedures;
−Removed: and hire additional accounting and finance staff.
−Removed: Any failure to implement required new or improved controls, or difficulties encountered in their implementation, could cause us to fail to meet our reporting obligations.
−Removed: In addition, any testing by us or our independent registered public accounting firm conducted in connection with Section 404 of the Sarbanes-Oxley Act may reveal deficiencies in our internal control over financial reporting that are deemed to be material weaknesses or that may require prospective or retroactive changes to our financial statements or identify other areas for further attention or improvement.
−Removed: Inferior internal controls could also cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of our common stock.
−Removed: Internal control deficiencies could also result in a restatement of our financial results in the future.
−Removed: We could become subject to stockholder or other third-party litigation, as well as investigations by the SEC, the stock exchange on which our securities are listed, or other regulatory authorities, which could require additional financial and management resources and could result in fines, trading suspensions, payment of damages or other remedies.
Anti-takeover provisions in our charter documents and under Delaware law could make an acquisition of us, which may be beneficial to our stockholders, more difficult and may prevent attempts by our stockholders to replace or remove our current management.
14 unchanged sentences
The trading market for our common stock depends in part on the research and reports that securities or industry analysts publish about us or our business.
−Removed: If too few securities or industry analysts commence or
−Removed: maintain coverage of our company, the trading price for our common stock would likely be negatively affected.
+Added: If too few securities or industry analysts commence or maintain coverage of our company, the trading price for our common stock would likely be negatively affected.
If one or more of the analysts who cover us downgrade our common stock or publish inaccurate or unfavorable research about our business, the price of our common stock would likely decline.
12 unchanged sentences
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.