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Financial report summary
?Risks
- Specific Risks Related to Our Business and Solutions
- We may incur operating losses in the future and we may not be able to sustain profitability.
- Our business is dependent upon the broad adoption of our solutions and procedures by hospitals, physicians and patients.
- The market for our solutions is highly competitive and our competitors may have longer operating histories, more established products and greater resources than we do.
- We face a number of manufacturing risks that may adversely affect our manufacturing abilities.
- We depend on a limited number of single source suppliers and third-party contract manufacturers, which makes us vulnerable to supply shortages and price fluctuations.
- The use, misuse or off-label use of our solutions may result in enforcement action by the FDA or injuries that lead to product liability suits or regulatory action, either of which could be expensive, divert management’s attention and harm our reputation and business.
- We may not be able to maintain adequate levels of third-party coverage and reimbursement or third parties may rescind or modify their coverage or delay payments related to our solutions.
- If the quality of our solutions does not meet the expectations of physicians or patients, then our brand and reputation or our business could be adversely affected.
- Our long-term growth depends on our ability to enhance our solutions, expand our indications and develop and commercialize additional new solutions in a timely manner and if we fail to do so we may be unable to grow our business.
- We may be unable to manage the anticipated growth of our business.
- We currently operate our business, including manufacturing most of our solutions, primarily out of a site in Irvine, California, and we may experience delays in production or an increase in costs if this facility is damaged or becomes inoperable.
- Our ability to utilize our net operating loss carryforwards and research and development carryforwards may be limited.
- We may not be able to achieve or maintain satisfactory pricing and margins for our solutions.
- We manufacture and sell solutions that are used in a limited number of procedures and there is a limited total addressable market for our solutions.
- Changes in public health insurance coverage and government reimbursement rates for our solutions could affect the adoption of our solutions and our future revenue.
- Cost-containment efforts or consolidation in the industry of our customers, purchasing groups and governmental organizations could have a material adverse effect on our sales and profitability.
- We may require additional capital to finance our planned operations, which may not be available to us on acceptable terms or at all. In addition, the terms of our current or future financing arrangements may limit our ability to operate our business as planned.
- We have made and continue to make acquisitions, investments, joint ventures and divestitures that involve numerous risks and uncertainties.
- 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.
- We depend on our senior management team and the loss of one or more key employees or an inability to attract and retain highly skilled employees will negatively affect our business, financial condition and results of operations.
- We have acquired, and may in the future acquire, other companies or technologies, which could fail to result in a commercial product or net sales, divert our management’s attention, result in additional dilution to our stockholders and otherwise disrupt our business.
- We may enter into collaborations, in-licensing arrangements, joint ventures, strategic alliances or partnerships with third parties that may not result in the development of commercially viable products or product improvements or the generation of significant future revenue.
- Failure to protect our information systems and information technology infrastructure against cybersecurity incidents, cybersecurity threats, service interruptions, or data corruption could materially disrupt our operations and adversely affect our business and operating results.
- Changes in and actual or perceived failures to comply with applicable data privacy, security and protection laws, regulations, standards and contractual obligations may adversely affect our business, operations and financial performance.
- As we expand internationally, it will increasingly expose us to market, regulatory, political, operational, financial and economic risks associated with doing business outside of the United States.
- We could be adversely affected by violations of the FCPA and similar worldwide anti-bribery laws and any investigation, and the outcome of any investigation, by government agencies of possible violations by us of the FCPA could have a material adverse effect on our business.
- Performance issues, service interruptions or price increases by our shipping carriers could negatively affect our business, financial condition and results of operations and harm our reputation and the relationship between us and the hospitals we work with.
- Taxing authorities may successfully assert that we should have collected or in the future should collect sales and use, gross receipts, value added or similar taxes and may successfully impose additional obligations on us.
- A pandemic, epidemic or outbreak of an infectious disease could adversely affect our business.
- Our business may be adversely affected by unfavorable macroeconomic conditions.
- Risks Related to Government Regulation
- Our solutions and operations are subject to extensive government regulation and oversight in the United States and in foreign countries.
- We may not receive, or may be delayed in receiving, the necessary clearances, certifications or approvals for our future solutions or modifications to our current solutions, and failure to timely obtain necessary clearances, certifications or approvals for our future solutions or modifications to our current solutions would adversely affect our ability to grow our business.
- Our solutions may cause or contribute to adverse medical events or be subject to failures or malfunctions that we are required to report to the FDA and foreign regulatory authorities, and if we fail to do so, we would be subject to sanctions that could negatively affect our reputation, business, financial condition and results of operations. The discovery of serious safety issues with our solutions, or a recall of our solutions either voluntarily or at the direction of the FDA or another governmental authority, could have a negative impact on us.
- Our solutions must be manufactured in accordance with federal, state and foreign regulations, and we could be forced to recall our devices or terminate production if we fail to comply with these regulations.
- Failure to comply with post-marketing regulatory requirements could subject us to enforcement actions, including substantial penalties, and might require us to recall or withdraw a device from the market.
- If we do not obtain and maintain international regulatory registrations, clearances, approvals or certifications for our solutions, we will be unable to market and sell our solutions outside of the United States.
- Interim, “top-line” and preliminary data from our clinical trials that we announce or publish from time to time may change as more patient data become available and are subject to audit and verification procedures that could result in material changes in the final data.
- Legislative or regulatory reforms in the United States or the EU may make it more difficult or costly for us to obtain regulatory clearances, approvals or certifications for our solutions or to manufacture, market or distribute our solutions after clearance, approval or certification is obtained.
- The clinical study process is lengthy and expensive with uncertain outcomes. Results of earlier studies may not be predictive of future clinical trial results, or the safety or efficacy profile for such solutions.
- We are subject to certain federal, state and foreign fraud and abuse laws and physician payment transparency laws that could subject us to substantial penalties. Additionally, any challenge to or investigation into our practices under these laws could cause adverse publicity and be costly to respond to, and thus could harm our business.
- Risks Related to Our Intellectual Property
- Our success will depend on our, and any of our current and future licensors’, ability to obtain, maintain and protect our intellectual property rights.
- Obtaining and maintaining patent protection depends on compliance with various procedural, document submission, fee payment and other requirements imposed by governmental patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements.
- We may become a party to intellectual property litigation or administrative proceedings that could be costly and could interfere with our ability to market our solutions.
- We may not be able to protect our intellectual property rights throughout the world.
- We may be subject to claims that we or our employees have misappropriated the intellectual property of a third party, including trade secrets or know-how, or are in breach of non-competition or non-solicitation agreements with our competitors.
- Risks Related to Ownership of Our Common Stock
- The price of our common stock may fluctuate substantially or may decline regardless of our operating performance and you could lose all or part of your investment.
- Provisions in our corporate charter documents and under Delaware law could make an acquisition of us more difficult and may prevent attempts by our stockholders to replace or remove our current management.
- Our amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware will be the sole and exclusive forum for substantially all disputes between us and our stockholders, which could limit our stockholders’ abilities to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.
- Because we do not anticipate paying any cash dividends on our capital stock in the foreseeable future, capital appreciation, if any, will be your sole source of gain.
- Securities analysts may publish unfavorable research or reports about our business or may publish no information at all, which could cause our stock price or trading volume to decline.
Management Discussion
- Revenue. Revenue increased $110.2 million, or 28.7%, to $493.6 million during the year ended December 31, 2023, compared to $383.5 million during the year ended December 31, 2022. The increase in revenue was primarily due to an increase in the number of products sold as we expanded our sales territories globally, opened new accounts and achieved deeper penetration of our products into existing accounts, and introduced new products.
- Cost of Goods Sold and Gross Margin. Cost of goods sold increased $14.6 million, or 32.7%, to $59.1 million during the year ended December 31, 2023, compared to $44.5 million during the year ended December 31, 2022. This increase was due to the increase in the number of products sold and additional manufacturing overhead costs to support anticipated future growth.
- Gross Margin. Gross margin for the year ended December 31, 2023 decreased to 88.0%, compared to 88.4% for the year ended December 31, 2022.