biote (BTMD) risk factors, FY2024 10-K

Risks Related to Our Industry and Business

1. 01Our success depends upon whether the Biote Method and our Biote-branded dietary supplements attain significant market acceptance among clinics, practitioners and their patients
2. 02Outsourcing facilities that produce bioidentical hormone pellets that we offer training on in the Biote Method and failure by those parties to adequately perform their obligations could harm our business
3. 03logistics carrier disruptions or increased costs that are beyond our control
4. 04We and Biote-certified practitioners and Biote-partnered clinics are reliant on AnazaoHealth Corporation, Right Value Drug Stores, LLC, and Asteria Health to support the manufacturing of bioidentical hormones for prescribers
5. 05Biote-certified practitioners and Biote-partnered clinics are concentrated in certain geographic regions, which makes us sensitive to regulatory, economic, environmental and competitive conditions in those regions
6. 06The frequency of use by practitioners and clinics of the Biote Method may not increase at the rate that we anticipate or at all
7. 07Adoption of the Biote Method depends upon appropriate practitioner training, and inadequate training may lead to negative patient outcomes and adversely affect our business
8. 08The continuing development of the Biote Method depends upon our maintaining strong working relationships with Biote-certified practitioners and other medical personnel
9. 09We believe our long-term value as a company will be greater if we focus on growth, which may negatively impact our results of operations in the near term
10. 10We face significant competition, and if we are unable to compete effectively, we may not be able to achieve or maintain expected levels of market penetration and market share, which could have a material adverse effect on our business, financial condition and results of operations
11. 11greater financial and human resources for development, sales and marketing and patent prosecution of our offerings
12. 12obtain, maintain, enforce and defend our intellectual property rights and operate our business without infringing, misappropriating or otherwise violating the intellectual property rights of others
13. 13We have limited history of providing the Biote Method to practitioners in the hormone optimization space, which may make it difficult for an investor to evaluate the success of our business to date and to assess our future viability
14. 14Our quarterly results may fluctuate significantly and may not fully reflect the underlying performance of our business
15. 15the timing of expenses related to the development or acquisition of technologies or businesses and potential future charges for impairment of goodwill or intangibles from acquired companies
16. 16If we are unable to attract and retain executive officers, key employees and other qualified personnel, or are unable to attract and retain contracts with Biote-certified practitioners, our ability to compete could be harmed
17. 17The healthcare industry is highly regulated, and government authorities may determine that we have failed to comply with applicable laws, rules or regulations
18. 18damage to our reputation, and revenue losses. We also rely on vendors to process payment card data, who may be subject to PCI DSS, and our business may be negatively affected if our vendors are fined or suffer other consequences as a result of PCI DSS noncompliance
19. 19We plan to expand our operations to new markets outside the United States, creating a variety of operational challenges
20. 20In addition, due to potential costs from any international expansion efforts and potentially higher supplier costs outside of the United States, our international operations may operate with a lower margin profile. As a result, our margins may fluctuate as we expand our operations internationally
21. 21We may not be able to achieve or maintain satisfactory pricing and margins for our training and the Biote Method or the Biote-branded dietary supplements we sell
22. 22The size of the markets for our current and future offerings has not been established with precision and may be smaller than we estimate
23. 23Our forecasted operating and financial results rely upon assumptions and analyses developed by us. If these assumptions and analyses prove to be incorrect, our actual operating and financial results may be significantly below our forecasts
24. 24regulatory, legislative and political changes
25. 25If our estimates or judgments relating to our critical accounting policies prove to be incorrect, our results of operations could be adversely affected
26. 26Off-label promotion may result in civil and criminal fines and other penalties, as well as product liability suits, which could be costly to our business
27. 27Certain direct and indirect subsidiaries of Biote entered into that certain credit agreement which contains affirmative, negative and financial covenants that may limit its flexibility in operating its businesses
28. 28Product liability lawsuits against us could cause us to incur substantial liabilities and to limit commercialization of any products that we offer or may develop
29. 29the inability to commercialize any methods, training, or products that we may develop
30. 30As we engage in or consider strategic transactions, we may not realize expected business or financial benefits and the acquisitions could prove difficult to integrate, impact our liquidity, increase our expenses and present significant distractions to our management
31. 31Our insurance policies are expensive and only protect us from some business risks, which will leave us exposed to significant uninsured liabilities
32. 32Extreme weather conditions, natural disasters, and other catastrophic events, including those caused by climate change, could negatively impact our results of operations and financial condition
33. 33Adverse developments affecting the financial services industry, such as actual events or concerns involving liquidity, defaults or non-performance by financial institutions could adversely affect our results of operations and financial condition
34. 34Market and economic conditions may negatively impact our business, financial condition and stock price

Risks Related to Intellectual Property

1. 35affected. If we are not able to maintain freedom to operate for our products from third-party intellectual property rights, our ability to commercialize products may be limited unless we secure a license to such rights
2. 36Our success depends in part on our ability to obtain and maintain patent and other intellectual property protection in the United States and other countries with respect to our Biote-branded dietary supplements
3. 37We may become a party to intellectual property litigation or administrative proceedings that could be costly and could interfere with our ability to sell and market the Biote Method and our Biote-branded dietary supplements
4. 38If we are unable to protect the confidentiality of our other proprietary information, our business and competitive position may be harmed
5. 39We may be subject to claims challenging our intellectual property
6. 40If our trademarks and trade names are not adequately protected, then we may not be able to build brand recognition in our markets and our business may be adversely affected

Risks Related to Regulation

1. 41Compounded preparations and the compounding pharmacy industry are subject to regulatory scrutiny, which may impair our growth and sales
2. 42If a compounded drug formulation provided through a compounding pharmacy or an outsourcing facility leads to patient injury or death or results in a product recall, we may be exposed to significant liabilities and reputational harm
3. 43Failure to comply with the FDCA and analogous state laws and regulations can result in administrative, civil, criminal penalties
4. 44If we fail to comply with FDA or state regulations governing our Biote-branded dietary supplements, our business could suffer
5. 45If we fail to comply with FDA regulations governing our medical device products, our business could suffer
6. 46If the products recommended as part of training in the Biote Method are not covered by third-party and government payors we could see decreased demand for our training and support services
7. 47We will continue to incur, significant increased expenses and administrative burdens as a public company, which could negatively impact our business, financial condition and results of operations
8. 48Management, including our Chief Executive Officer and our Chief Financial Officer, assessed the effectiveness of our internal control over financial reporting as of December 31, 2024, and concluded that we did not maintain effective internal control over financial reporting
9. 49We recently restated our financial statements for certain prior periods, which resulted in unanticipated costs
10. 50and September 30, 2022 to reflect a reduction in our basic and diluted income (loss) per common share, as a pro rata portion of gain (loss) from changes in fair value of the warrant and earnout liabilities attributed to noncontrolling interests of Holdings
11. 51The market price of our common stock is volatile and may fluctuate substantially, and you could lose all or part of your investment
12. 52general economic and political conditions such as recessions, interest rates, fuel prices, international currency fluctuations and acts of war or terrorism
13. 53If we are unable to maintain our listing on Nasdaq, it could become more difficult to sell our Class A common stock in the public market

Risks Related to Ownership of Our Securities

1. 54Because there are no current plans to pay cash dividends on our Class A common stock for the foreseeable future, you may not receive any return on investment unless you sell our Class A common stock for a price greater than that which you paid for it
2. 55We may require additional capital to support business growth, and if capital is not available to us or is available only by diluting existing stockholders, our business, operating results and financial condition may suffer
3. 56Anti-takeover provisions contained in the Charter and Bylaws, as well as provisions of Delaware law, could impair a takeover attempt
4. 57We may be subject to periodic claims and litigation that could result in unexpected expenses and could ultimately be resolved against us

Risks Related to our Organizational Structure

1. 58Our only material asset is our ownership interest in Holdings, and accordingly we depend on distributions from Holdings to pay distributions, dividends on our Class A common stock, taxes and other expenses, and make any payments required to be made by us under the Tax Receivable Agreement (the “TRA”)
2. 59In certain cases, payments under the TRA may exceed the actual tax benefits we realize
3. 60In certain cases, payments under the TRA may be accelerated or significantly exceed the actual benefits we realize in respect of the tax attributes subject to the TRA
4. 61We may not be able to realize all or a portion of the tax benefits that are expected to result from the acquisition of Retained Holdings Units from Biote Members

Risks Related to Taxes

1. 62Unanticipated changes in effective tax rates or adverse outcomes resulting from examination of our income or other tax returns could adversely affect our financial condition and results of operations
2. 63lower than anticipated future earnings in jurisdictions where we have lower statutory tax rates and higher than anticipated future earnings in jurisdictions where we have higher statutory tax rates
3. 64Increases in our income tax rates, changes in tax laws or disagreements with tax authorities may adversely affect our business, financial condition or results of operations