Certara (CERT) risk factors, FY2025 10-K

Risks Related to Our Industry

1. 01Deceleration in, or resistance to, the acceptance of model-informed biopharmaceutical discovery and development by regulatory authorities or academic institutions could damage our reputation or reduce the demand for our products and services
2. 02We compete in a competitive and highly fragmented market
3. 03Changes or delays in government regulation, executive action or administrative decision-making relating to the biopharmaceutical industry have decreased and could continue to decrease the need for some of the services we provide21% rewritten
4. 04Reduction in R&D spending by our customers for a variety of reasons, including due to lack of funding, as well as delays in the drug discovery and development process, have reduced and may continue to reduce demand for our products and services and negatively impact our results of operations and financial condition58% rewritten
5. 05Finally, disruptions at the FDA and other regulatory authorities may arise from public health emergencies or other unforeseen events. In such an event, FDA review timelines could be extended, and regulatory authorities outside the United States may adopt comparable restrictions or experience similar delaysNew
6. 06Consolidation within the biopharmaceutical industry may reduce the pool of potential customers for our products and services or reduce the number of licenses for our software products

Risks Related to Our Business

1. 07Our continued revenue growth depends on our ability to successfully increase our customer base, expand our relationships and the products and services we provide to our existing customers, and enter new markets and expand geographies48% rewritten
2. 08fully pay for our services, or they may terminate or decrease the scope of projects for which they use our products and services, which could adversely impact our revenuesNew
3. 09We depend on highly qualified personnel and may not be able to retain these employees or recruit additional qualified personnel, which could harm our business
4. 10If our independent contractors are characterized as employees, we could be subject to material adverse effects on our business and employment and withholding liabilities
5. 11Delays or defects in the release of new or enhanced software or other biosimulation tools may result in increased cost to us, delayed market acceptance of our products, diminished demand for our products, delayed or lost revenue, and liability
6. 12If our existing customers do not renew their software licenses, do not buy additional solutions from us or renew at lower prices, our business and operating results will suffer41% rewritten
7. 13We have government customers and have received government grants, which subject us to risks including early termination, audits, investigations, sanctions, or penalties88% rewritten
8. 14Acquisitions could also result in dilutive issuances of equity securities or the incurrence of debt, which could adversely affect our operating results. In addition, if an acquired business fails to meet our expectations, our business, financial condition and results of operations may suffer
9. 15Our estimated addressable market is subject to inherent challenges and uncertainties. If we have overestimated the size of our addressable market or the various markets in which we operate, our future growth opportunities may be limited67% rewritten
10. 16Adverse global economic conditions could have a negative effect on our business, results of operations and financial condition and liquidity48% rewritten
11. 17We are subject to economic, political and other risks associated with the operation of a global business that could negatively affect our business, results of operations and financial condition58% rewritten
12. 18on customer confidence and spending, make our products or services less competitive, or otherwise have an adverse impact on our business, operating results and financial conditionNew
13. 19Our failure to comply with trade compliance and economic sanctions laws and regulations of the United States and other applicable international jurisdictions could materially adversely affect our reputation and results of operations
14. 20Current and future litigation against us, which may arise in the ordinary course of our business, could be costly and time consuming to defend
15. 21Our insurance coverage may not be sufficient to avoid material impact on our financial position resulting from claims or liabilities against us, and we may not be able to obtain insurance coverage on attractive terms, or at all, in the future
16. 22If we fail to perform our services in accordance with contractual requirements, regulatory standards and ethical considerations, we could be liable for significant costs or penalties and our reputation could be harmed
17. 23We derive a significant percentage of our revenues from a key group of customers, and the loss of one or more of our major customers could materially and adversely affect our business, results of operations and/or financial condition
18. 24We expect to devote substantial financial resources to our ongoing and planned activities, including the continued investment in our biosimulation software platform and strategic partnerships and acquisitions
19. 25Our bookings might not accurately predict our future revenue, and we might not realize all or any part of the anticipated revenue reflected in our bookings48% rewritten
20. 26Our business may be subject to risks arising from catastrophic events, including natural disasters, significant or extreme weather events, outbreaks of war or terrorism, epidemic diseases, pandemics, and public health crises
21. 27Evolving corporate governance and public disclosure regulations and expectations, including with respect to sustainability matters, could expose us to risks

Risks Related to Intellectual Property, Information Technology and Data Privacy

1. 28We rely on third-party providers of cloud-based infrastructure to host our software solutions. Any disruption in the operations of these third-party providers, limitations on capacity or interference with our use could adversely affect our business, financial condition, reputation and results of operations42% rewritten
2. 29If our cybersecurity measures are breached or unauthorized or unlawful access to customer or other proprietary data occurs, our solutions may be perceived as not being secure, customers may reduce the use of or stop using our solutions and/or we may incur significant liabilities55% rewritten
3. 30unavailability of critical data and confidential or proprietary information (our own or that of third parties, including information about our customers and employees) and the disruption of business operationsNew
4. 31We are subject to numerous privacy and cybersecurity laws and related contractual requirements, and our failure to comply with those obligations could cause us significant harm, including financial losses and reputational harm
5. 32Data privacy and security laws and regulations often govern the handling of information about individuals, including personal health information, and require the use of standard contracts, privacy and security standards and other administrative simplification provisions
6. 33The GDPR and the UK GDPR regulate our processing of personal data and imposes stringent requirements. Failure to comply with the GDPR or UK GDPR may result in fines up to the greater of €20 million or 4.0% of worldwide gross annual revenue and applies to services providers such as us under each of GDPR and UK GDPR43% rewritten
7. 34Some of our software solutions utilize third-party open source software, and any failure to comply with the terms of one or more of these open source licenses could adversely affect our business, subject us to litigation and create potential liability
8. 35We may be unable to adequately enforce or defend our ownership and use of our intellectual property and other proprietary rights
9. 36Third parties may initiate legal proceedings alleging that we are infringing, misappropriating or otherwise violating their intellectual property rights, the outcome of which would be uncertain and could have a material adverse effect on the success of our business
10. 37If we fail to comply with certain healthcare laws, including fraud and abuse laws, we could face substantial penalties and our business, results of operations, financial condition and prospects could be adversely affected

Risks Related to Our Indebtedness

1. 38Our indebtedness could materially adversely affect our financial condition and our ability to operate our business, react to changes in the economy or industry or pay our debts and meet our obligations under our debt and could divert our cash flow from operations to debt payments24% rewritten
2. 39Restrictive covenants governing our Credit Agreement may restrict our ability to pursue our business strategies, and failure to comply with any of these restrictions could result in acceleration of our debt33% rewritten
3. 40immediately due and payable and terminate any commitments to extend further credit. If we were unable to repay those amounts, the lenders under our Credit Agreement could proceed against the collateral granted to them to secure that indebtednessNew

Risks Related to our Financial Statements and Results

1. 41Impairment of goodwill or other intangible assets may adversely impact future results of operations
2. 42Our ability to use our net operating losses (“NOLs”) and R&D tax credit carryforwards to offset future taxable income may be subject to certain limitations40% rewritten

Risks Related to Ownership of Our Common Stock

1. 43The market price of our common stock has been and may continue to be volatile, and may decline regardless of our operating performance, which could cause the value of your investment to declineNew
2. 44Future sales, or the perception of future sales, of our common stock by us or our existing stockholders in the public market could cause the market price for our common stock to decline
3. 45Arsenal holds a substantial amount of our outstanding common stock, and its interests may be different than the interests of other holders of our common stock