Establishment Labs Holdings (ESTA) risk factors, FY2025 10-K

Risks Related to the Development and Commercialization of Our Products

1. 01We have a limited operating history in the United States and may face difficulties encountered by companies early in their commercialization in competitive and rapidly evolving markets87% rewritten
2. 02Implants in September 2024, and as such, we have a limited operating history in the United States upon which to evaluate our business and forecast our future net sales and operating resultsNew
3. 03In recent years, we have incurred significant costs in connection with the research and development of Motiva Implants, the Mia Femtech technology, and our other product candidates, products and services
4. 04Changes in funding or disruptions at the FDA and other government agencies caused by funding shortages could prevent those agencies from performing normal business functions on which the operation of our business may rely, which could negatively impact our business38% rewritten
5. 05Any future distribution or commercialization agreements we may enter into with respect to our current or planned products may place the development of these products outside our control or may otherwise be on terms unfavorable to us
6. 06If we are unable to educate clinicians on the safe, effective and appropriate use of our products and designed surgeries, we may experience unsatisfactory patient outcomes, negative publicity and increased claims of product liability and may be unable to achieve our expected growth43% rewritten
7. 07have a material adverse effect on our business, financial condition, results of operations and growth prospectsNew

Risks Related to Our Business, Industry and Operations

1. 08We have incurred losses to date, and our ability to achieve and maintain profitability depends on the commercial success of our Motiva Implants58% rewritten
2. 09Unfavorable global economic and political conditions, including slower growth or recession, inflation, decreases in consumer spending power or confidence or trade wars, have in the past, and could in the future, adversely affect our business, financial condition or results of operations53% rewritten
3. 10If our available cash resources and anticipated cash flow from operations are insufficient to satisfy our liquidity requirements, we may seek to sell equity or convertible debt securities, enter into a credit facility or another form of third-party funding, or seek other debt financing35% rewritten
4. 11Our business depends on maintaining our brand and ongoing customer demand for our products and services, and a significant reduction in sentiment or demand could affect our results of operations28% rewritten
5. 12If we fail to compete effectively against our competitors, many of whom have greater resources than we have, our revenues and results of operations may be negatively affected
6. 13Pricing pressure from customers and our competitors may impact our ability to sell our products at prices necessary to support our current business strategies and future expansion
7. 14We expect to increase the size of our organization in certain jurisdictions and functions; as a result, we may encounter difficulties in managing our growth, which could disrupt our operations and/or increase our net losses
8. 15We may be subject to substantial warranty or product liability claims or other litigation in the ordinary course of business that may adversely affect our business, financial condition and operating results
9. 16Counterfeit products may be represented as ours, which could compete with our genuine products and may also expose us to risks associated with adverse events and product liability
10. 17The loss of members of our executive management team or other employees, or other turnover in our management team, could adversely affect our business31% rewritten
11. 18integrating these businesses, as well as identifying and controlling risks associated with the past operations of these businesses, we may incur significant costs, receive penalties or other sanctions from various regulatory agencies and/or incur significant diversions of management time and attentionNew
12. 19We have significant exposure to the economic and political situations in emerging market countries, and developments in these countries could materially impact our financial results or our business more generally
13. 20Adverse developments affecting the financial services industry, such as actual events or concerns involving liquidity, defaults, or non-performance by financial institutions or transactional counterparties, could adversely affect our liquidity and financial performance
14. 21Our results of operations have been in the past, and could be in the future, adversely affected by fluctuations in currency rates26% rewritten
15. 22Continued international expansion of our business will expose us to business, regulatory, political, operational, financial, economic and environmental risks associated with doing business internationally74% rewritten
16. 23and exclusion or debarment from government contracting. Also, the failure to comply with applicable legal and regulatory obligations could result in the disruption of our shipping, marketing and sales activitiesNew
17. 24Environment, social and governance (ESG) matters may create additional risks and costsNew
18. 25Any disruption at our existing facilities could adversely affect our business and operating results
19. 26We may be required to record a significant charge to earnings if our goodwill or other intangible assets become impairedNew
20. 27Fluctuations in insurance costs, availability and future insurance requirements could adversely affect our profitability or our risk management profile

Risks Related to Manufacturing and Other Third-Party Relationships

1. 28Our operations involve hazardous materials and we and third parties with whom we contract must comply with environmental laws and regulations, which can be expensive and restrict how we do business and could expose us to liability if our use of such hazardous materials causes injury
2. 29We rely on third parties to conduct certain components of our clinical studies, and those third parties may not perform satisfactorily, including failing to meet deadlines for the completion of such studies, which could interfere with or delay our ability to obtain regulatory approval or commercialize our products70% rewritten
3. 30Various factors outside our direct control, including the reliance on single-source suppliers, may adversely affect manufacturing and supply of our Motiva Implants and other products
4. 31Our results of operations could be materially harmed if we are unable to accurately forecast customer demand for our products and manage our inventoryNew

Risks Related to Public Health Crises

1. 32Pandemics, epidemics, or other public health crises may adversely affect our business and financial results in the future

Risks Related to Intellectual Property and Data Security

1. 33If we are unable to protect the confidentiality of our trade secrets, the value of our technology could be materially adversely affected, harming our business and competitive position
2. 34Our success depends significantly on our ability to obtain and maintain patent and other intellectual property protection in the United States and in other countries
3. 35Obtaining 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
4. 36If we fail to comply with our obligations in our intellectual property agreements, we could lose intellectual property rights that are important to our business
5. 37Our information systems, or those used by third parties which we rely on, may fail, be impacted by cybersecurity incidents, suffer other security incidents or be vulnerable to other forms of attack or damage
6. 38The use of artificial intelligence technology by our employees or business partners could result in misuse or loss of proprietary information, violation of laws and regulations, or damage to our reputation and credibilityNew
7. 39Our failure to adequately protect personal information in compliance with evolving legal requirements could harm our business26% rewritten

Risks Related to Regulatory and Political Environment

1. 40Once commercialized, modifications to our marketed products may require new 510(k) clearances or approval of PMA supplements, or equivalent steps in other countries, or may require us to cease marketing or recall the modified products until certification, clearances or regulatory approvals are obtained31% rewritten
2. 41serious safety issues with our products, or a recall of our products either voluntarily or at the direction of the FDA or another governmental authority, could have a negative impact on usNew
3. 42Additionally, the U.K.’s withdrawal from the EU and the end of the mutual recognition and related trade facilitating effects for medical devices between the EU and Switzerland in May 2021 have added certain costs and complexities to the shipment and sales of our products in those countries25% rewritten
4. 43Our products, such as Motiva Implants, may in the future be subject to product recalls that could harm our reputation, business and financial results
5. 44The medical technology industry is complex and intensely regulated at the federal, state, and local levels, and government authorities may determine that we have failed to comply with applicable laws or regulations
6. 45Our relationship with customers, patients and third party payors will be subject to applicable anti-kickback, fraud and abuse, and other healthcare laws and regulations, which could expose us to criminal sanctions, civil penalties, damages, reputational harm and diminished profits and future earnings42% rewritten
7. 46Healthcare reform measures could hinder or prevent our planned products’ commercial success
8. 47The coverage and reimbursement status of newly-approved products is uncertain. Failure to obtain or maintain adequate coverage and reimbursement for new or current products could limit our ability to market those products and decrease our ability to generate revenue

Risks Related to Taxation

1. 48Tax authorities may disagree with our positions and conclusions regarding certain tax positions, resulting in unanticipated costs, taxes or non-realization of expected benefits
2. 49We are a multinational organization faced with increasingly complex tax issues in many jurisdictions, and changes in tax laws or their application to the operation of our business could adversely impact our operating results and our business
3. 50in the valuation of our deferred tax assets or liabilities, the effectiveness of our tax planning strategies, or changes in tax laws or their interpretation. Such changes could have an adverse impact on our financial conditionNew
4. 51Our ability to use net operating losses to offset future taxable income and certain other tax attributes may be subject to certain limitations
5. 52U.S. holders of our common shares may suffer adverse tax consequences if we are characterized as a passive foreign investment company
6. 53If a United States person is treated as owning at least 10% of our common shares, such holder may be subject to adverse U.S. federal income tax consequences
7. 54Discontinuation of preferential tax treatments we currently enjoy or other unfavorable changes in tax law could result in additional compliance obligations and costs

Risks Related to Ownership of Our Securities

1. 55Our share price may be volatile, and purchasers of our securities could incur substantial losses40% rewritten

Risks Related to Being a British Virgin Islands Company

1. 56Rights of shareholders under British Virgin Islands law differ from those under U.S. law, and, accordingly, you may have fewer protections as a shareholder
2. 57British Virgin Islands companies may not be able to initiate shareholder derivative actions, thereby depriving shareholders of one avenue to protect their interests
3. 58British Virgin Islands law differs from the laws in effect in the United States, and U.S. investors may have difficulty enforcing civil liabilities against us, our directors or members of senior management
4. 59The laws of the British Virgin Islands provide limited protection for minority shareholders, so minority shareholders will have limited or no recourse if they are dissatisfied with the conduct of our affairs
5. 60Provisions in our amended and restated memorandum and articles of association and under British Virgin Islands law could make an acquisition of us more difficult and may prevent attempts by our shareholders to replace or remove our current management