Globus Medical (GMED) risk factors, FY2024 10-K

Risks Related to Our Business and Our Industry

1. 01Our sales and operating results may be negatively affected and we may not grow if we are unable to compete successfully
2. 02The increasing utilization of artificial intelligence (“AI”) in the medical device and healthcare industries presents novel obstacles and risks to our business
3. 06To be commercially successful, we must convince surgeons and hospitals that our products are an attractive alternative to our competitors’ products and that our Enabling Technologies and Musculoskeletal Solutions products are an attractive alternative to existing surgical treatments of musculoskeletal disorders
4. 07the time commitment that may be required for training
5. 08Pricing pressure from our competitors and our customers may impact our ability to sell our products at prices necessary to support our current business strategies
6. 09If our hospital and other healthcare provider customers are unable to obtain adequate coverage and reimbursement for their purchases of our Musculoskeletal Solutions products, we may not be able to sell our Musculoskeletal Solutions products at prices necessary to maintain our profitability or at all
7. 10If we are unable to maintain and expand our network of direct sales representatives and independent distributors, we may not be able to generate anticipated sales
8. 11with the surgeons they serve. If our direct sales representatives or independent distributors fail to adequately promote, market and sell our products, our sales could significantly decrease
9. 12We operate in a very competitive business environment and if we are unable to compete successfully against our existing or potential competitors, our sales and operating results may be negatively affected and we may not grow
10. 13Many of our current and potential competitors are major medical device companies that have substantially greater financial, technical and marketing resources than we do, and they may succeed in developing products that would render our products obsolete or non-competitive
11. 14greater ability to cross-sell their products or to incentivize hospitals or surgeons to use their products
12. 15We are dependent on a limited number of third-party suppliers, and the loss of any of these suppliers, or their inability to provide us with an adequate supply of products or materials in a timely manner, could harm our business
13. 16PODs are medical device distributors that are owned, directly or indirectly, by physicians. These physicians derive a proportion of their revenue from selling or arranging for the sale of medical devices for use in procedures at hospitals that agree to purchase from or through the POD
14. 17Our business could suffer if we lose the services of key members of our senior management, key advisors or personnel
15. 18The safety and efficacy of our products is not yet supported by long-term clinical data, which could limit sales, and our products might therefore prove to be less safe and effective than initially thought
16. 19If we do not enhance our existing product offerings and introduce new products through our research and development and product development efforts, we may be unable to effectively compete
17. 20obtain the necessary regulatory clearances or approvals for new products or product enhancements
18. 21We may seek to grow our business through acquisitions of or investments in new or complementary businesses, products or technologies, and the failure to manage acquisitions or investments, or the failure to integrate them with our existing business, could have a material adverse effect on us
19. 22increased legal and accounting compliance costs
20. 23We are required to maintain high levels of inventory, which could consume a significant amount of our resources and reduce our cash flows
21. 24We rely on information technology systems and network infrastructure to operate and manage our business, if we experience a breach, cyber-attack or other disruption to these systems or data, our business, results of operations and financial condition could be adversely affected
22. 25We are subject to data privacy laws and our failure to comply with them could subject us to substantial liabilities
23. 26If we experience significant disruptions in our information technology systems, our business, results of operations and financial condition could be adversely affected
24. 27our research and development data
25. 28computer systems, or Internet, telecommunications or data network failures
26. 29The increasing utilization of AI in the medical device and healthcare industries presents novel obstacles and risks to our business
27. 30Consolidation in the healthcare industry could lead to demands for price concessions or to the exclusion of some suppliers from certain of our markets, which could have an adverse effect on our business, results of operations or financial condition
28. 31If our Enabling Technologies products require significant amounts of service after sale or we receive a significant number of warranty claims, our costs may increase and our financial results may be adversely affected
29. 32We experience long and variable capital sales cycles for our Enabling Technologies products, which may cause fluctuations in our financial results
30. 33Our IONM business exposes us to risks inherent with the sale of services

Risks Related to our Legal and Regulatory Environment

1. 03We are subject to environmental laws and regulations that can impose significant costs and expose us to potential financial liabilities
2. 34Our medical device products and operations are subject to extensive governmental regulation both in the U.S. and abroad, and our failure to comply with applicable requirements could cause our business to suffer
3. 35product import and export
4. 36the manufacturing process or facilities we use may not meet applicable requirements
5. 37Modifications to our products may require new 510(k) or de novo clearances, HDEs, PMAs or PMA supplements, or may require us to cease marketing or recall the modified products until clearances or approvals are obtained
6. 38Our HCT/P products are subject to extensive government regulation and our failure to comply with these requirements could cause our business to suffer
7. 39If we or our suppliers fail to comply with the FDA’s good manufacturing practice regulations and similar international regulations, this could impair our ability to market our products in a cost-effective and timely manner
8. 40Any of these sanctions could have a material adverse effect on our reputation, business, results of operations and financial condition
9. 41A recall of our products, either voluntarily or at the direction of the FDA or another governmental authority, or the discovery of serious safety issues with our products, could have a significant adverse impact on us
10. 42We may be subject to enforcement action if we engage in the off-label promotion of our products
11. 43Governmental regulation and limited sources and suppliers could restrict our procurement and use of tissue
12. 44Negative publicity concerning methods of tissue recovery and screening of donor tissue in our industry could reduce demand for our regenerative biologics products and impact the supply of available donor tissue
13. 45We are subject to environmental laws and regulations that can impose significant costs and expose us to potential financial liabilities
14. 46We or our suppliers may be the subject of claims for non-compliance with FDA regulations in connection with the processing, manufacturing or distribution of our proposed allograft or other regenerative biologics implants and products
15. 47We and our distributor sales representatives might be subject to claims for failing to comply with U.S. federal, state, local and foreign fraud and abuse laws, including anti-kickback laws and other anti-referral laws

Risks Related to our International Operations

1. 04Our results of operations could suffer if we are unable to manage our planned international expansion effectively
2. 48We may fail to obtain or maintain foreign regulatory approvals to market our products in other countries
3. 49We are subject to risks associated with our non-U.S. operations
4. 50Our results of operations could suffer if we are unable to manage our planned international expansion effectively
5. 51political, social and economic instability and increased security concerns
6. 52These risks may limit or disrupt our expansion, restrict the movement of funds or result in the deprivation of contractual rights or the taking of property by nationalization or expropriation without fair compensation
7. 53We are subject to risks arising from currency exchange rate fluctuations on our international transactions and translation of local currency results into U.S. dollars, which could adversely affect our profitability

Risks Relating to the Integration of NuVasive

1. 05Integrating the NuVasive business into Globus may be more difficult, costly or time-consuming than expected and the Company may fail to realize the anticipated benefits of the NuVasive Merger, which may adversely affect the Company’s business results and negatively affect the value of the Company’s common stock
2. 78Integrating the NuVasive business into Globus may be more difficult, costly or time-consuming than expected and the Company may fail to realize the anticipated benefits of the NuVasive Merger, which may adversely affect the Company’s business results and negatively affect the value of the Company’s common stock
3. 79effecting actions that may be required in connection with obtaining regulatory or other governmental approvals
4. 80The Company expects to incur substantial expenses related to the integration of NuVasive and may be unable to realize the anticipated synergies, which could adversely affect the Company’s business, financial condition and results of operations
5. 81Certain contractual counterparties may seek to modify contractual relationships with the Company, which could have an adverse effect on the Company’s business and operations
6. 82The Company may be exposed to increased litigation, which could have an adverse effect on the Company’s business and operations

Risks Related to our Financial Results and Need for Financing

1. 54We will need to generate significant sales to remain profitable
2. 55We may be unable to grow our revenue or earnings as anticipated, which may have a material adverse effect on our results of operations
3. 56Our quarterly and annual operating results may fluctuate significantly
4. 57our ability to expand the geographic reach of our sales and marketing efforts
5. 58We have a significant amount of outstanding indebtedness, and our financial condition and results of operations could be adversely affected if we do not effectively manage our liabilities
6. 59The availability of funding under existing credit arrangements may be limited, and our cash and cash equivalents are subject to volatility
7. 60Our future capital needs are uncertain and we may need to raise funds in the future, and such funds may not be available on acceptable terms or at all
8. 61unanticipated general and administrative expenses
9. 62Our existing revolving credit facility contains restrictive covenants that may limit our operating flexibility

Risks Related to our Intellectual Property and Potential Litigation

1. 63Our ability to protect our intellectual property and proprietary technology is uncertain
2. 64The medical device industry is characterized by patent litigation and we could become subject to litigation that could be costly, result in the diversion of management’s time and efforts, require us to pay damages, and/or prevent us from marketing our existing or future products
3. 65attempt to obtain a license to the relevant intellectual property from third parties, which may not be available on reasonable terms or at all
4. 66We may be subject to damages resulting from claims that we, our employees or our independent distributors have wrongfully used or disclosed alleged trade secrets, proprietary or confidential information of our competitors or are in breach of non-competition or non-solicitation agreements with our competitors
5. 67We may incur product liability losses and insurance coverage may be inadequate or unavailable to cover these losses

Risks Related to the Ownership of our Class A Common Stock

1. 68Because of their significant stock ownership, our Executive Chairman, our chief executive officer, our other executive officers, and our directors and principal stockholders will be able to exert control over us and our significant corporate decisions
2. 69We are a “controlled company” within the meaning of the New York Stock Exchange Rules, and we take, and intend to continue to take, advantage of exemptions from certain corporate governance requirements
3. 70Our Board is authorized to issue and designate shares of our preferred stock in additional series without stockholder approval
4. 71Our amended and restated certificate of incorporation and amended and restated bylaws contain other provisions that could delay or prevent a change of control of our company or changes in our Board that our stockholders might consider favorable
5. 72If we do not successfully implement our business strategy, our business and results of operations will be adversely affected
6. 73If we fail to properly manage our anticipated growth, our business could suffer
7. 74Fluctuations in insurance cost and availability could adversely affect our profitability or our risk management profile
8. 75We are exposed to the credit risk of some of our customers, which could result in material losses
9. 76Tariff policies and potential countermeasures could increase our costs and disrupt our global supply chain, which could negatively impact the results of our operations
10. 77We could be negatively affected by the widespread outbreak of a communicable disease, or any other public health crisis that results in disruptions to hospitals and other healthcare facilities