Patterson Companies (PDCO) Financial Report Summaries

Risks

• We are dependent on our suppliers and exposed to the risks of their businesses, because we generally do not manufacture the products we sell.
• Disruption to our distribution capabilities, including service issues with our third-party shippers, could materially adversely affect our results.
• Customer retention and business development depend heavily on our relationships with our sales representatives and service technicians, who interact directly with our customers, and the technological products and services we offer.
• Sales of private label products entail additional risks, including the risk that such sales could adversely affect our relationships with suppliers.
• Changes in supplier rebates or other purchasing incentives could negatively affect our business.
• The products we sell are subject to market and technological obsolescence and our customers’ willingness to replace existing equipment depends upon new product introductions by manufacturers, which are out of our control.
• Our failure to successfully innovate and develop new and enhanced software and e-services products could negatively affect our business.
• Patterson’s continued success depends on positive perceptions of Patterson’s reputation.
• Illicit human use of pharmaceutical products we distribute could adversely affect human health and safety, our reputation and our business.
• Risks inherent in acquisitions and dispositions could offset the anticipated benefits, and we may face difficulty in efficiently and effectively integrating acquired businesses.
• Turnover or loss of key personnel or highly skilled employees, including executive officers, could disrupt our operations and any inability to attract and retain personnel could harm our business.
• Risks generally associated with information systems, software products and cybersecurity attacks could adversely affect our results of operations.
• Our growing use of AI systems to automate processes and analyze data poses inherent risks.
• Wide-spread public health concerns have, and may in the future, adversely affect our animal health and dental businesses, as we experienced with the COVID-19 pandemic.
• Our business and operations are subject to risks related to climate change.
• Our credit agreements contain restrictive covenants and additional limits and our other debt instruments contain cross-default provisions, which limit our business and financing activities.
• Our governing documents, other documents to which we are a party, and Minnesota law may discourage takeovers and business combinations that our shareholders might prefer.
• The dental and animal health supply markets are highly competitive, and we may not be able to compete successfully.
• The dental and animal health supply markets are consolidating, including vertical integration in the production animal market, and we may not be able to compete successfully.
• The formation or expansion of GPOs, provider networks and buying groups may place us at a competitive disadvantage.
• Our animal health segment is exposed to the risks of the production animal business, including changes in consumer demand, the cyclical livestock market, weather conditions and the availability of natural resources, and other factors outside our control, as well as risks of the companion animal business, including the possibility of disease adversely affecting the pet population.
• Our dental segment is exposed to the risks of the health care industry, including changes in demand due to political, economic and regulatory influences, and other factors outside our control.
• Increased OTC and e-commerce sales of products we sell could adversely affect our business.
• We are subject to a variety of litigation and governmental inquiries and investigations.
• If we fail to comply with laws and regulations relating to health care fraud or other laws and regulations, we could suffer penalties or be required to make significant changes to our operations.
• Change and uncertainty in the health care industry could materially adversely affect our business.
• Failure to comply with existing and future U.S. and foreign laws and regulatory requirements, including those governing the distribution of pharmaceuticals and controlled substances, could subject us to claims or otherwise harm our business.
• If we fail to comply with evolving laws and regulations relating to confidentiality of sensitive personal information or standards in electronic health records or transmissions, we could be required to make significant product changes, or incur substantial liabilities.
• Tax legislation could materially adversely affect our financial results and tax liabilities.
• Our international operations are subject to inherent risks that could adversely affect our business.
• Uncertain macro-economic conditions, including inflationary pressure, could materially adversely affect demand for dental and animal health products and services.