Kestra Medical Technologies (KMTS) risk factors, FY2025 10-K

Risks Related to Our Business

1. 01We have a limited operating history, which may make it difficult for you to evaluate our current business and its likelihood of success and viability. If we are unable to manage our business and any fluctuations in our business effectively, our business and growth prospects could be materially and adversely affected
2. 02the introduction and market acceptance of new, more effective or less expensive competing products and technologies
3. 03the scope, prioritization and number of our research and development initiatives
4. 04We generate revenue primarily from the lease of our ASSURE WCD as part of our Cardiac Recovery System platform, and we are therefore highly dependent on our ASSURE WCD for our continued success
5. 05Our business is dependent upon healthcare providers, hospitals and patients adopting our solutions, and if we fail to obtain and maintain broad adoption, our business would be adversely affected
6. 06the time commitment that may be required to gain familiarity with and establish the infrastructure, including billing processes, required to adopt our products
7. 07neither experimental nor investigational
8. 08Our operating results fluctuate significantly and may not fully reflect the underlying performance of our business
9. 09advances and trends in new technologies and industry standards
10. 10If we are unable to manage the anticipated growth of our business, our future revenue and operating results may be harmed
11. 11Our clinical study initiatives may be complex, lengthy, expensive and carry uncertain outcomes. Future trials and studies by us or others may fail to replicate positive results observed to date
12. 12our current or future products may have undesirable side effects or other unexpected characteristics
13. 13We have limited experience supplying our ASSURE WCD in quantities and providing services on a broad scale that is both commercially successful and meets clinical needs, and production or service delays or shortfalls may occur, which could adversely affect our business
14. 14to increase our revenue significantly and scale our services, we will be required to attract, hire, train and retain qualified personnel
15. 15We depend on a limited number of third-party suppliers and contract manufacturers to manufacture and recondition our ASSURE WCD and its components, which could make us vulnerable to supply shortages and price fluctuations that could harm our business
16. 16delays in delivery by our suppliers due to changes in demand from us or their other customers and consequently, our inability to fulfill our contractual obligations to deliver our products to our end-users
17. 17If our suppliers’ manufacturing facilities become damaged or inoperable, or if they are required to vacate a facility, they may be unable to manufacture our products or we may experience delays in production or an increase in costs, which could adversely affect our results of operations
18. 18Performance issues, service interruptions or price increases by our shipping carriers could adversely affect our business and harm our reputation and ability to provide our services on a timely basis
19. 19If we are unable to support demand for our current or future products or services, our business could suffer
20. 20If we are unable to successfully expand our sales and customer service resources, including hiring and retaining relevant personnel, and adequately address our customers’ needs, it could negatively impact our profitability and market acceptance of our ASSURE WCD and other products we may develop in the future
21. 21If the ASSURE WCD is not effective or if we or our competitors receive negative publicity about the effectiveness of WCDs, then our brand and reputation could suffer and our business could be adversely impacted
22. 22Billing for our products is complex, and we must dedicate substantial time and resources to the billing process
23. 23incorrect or missing patient history, indications or billing information
24. 24If our competitors are able to develop or market products and services that are more effective, or gain greater acceptance in the marketplace, than any products and services we develop, our commercial opportunities will be reduced or eliminated
25. 25larger patent portfolios and other intellectual property rights
26. 26regulatory status and speed to market
27. 27recruitment and retention of a qualified and experienced sales force
28. 28Our marketing and sales practices, as well as our interactions with healthcare providers, may entail risks that could result in significant liability, require us to change our business practices and restrict our operations in the future
29. 29Our ability to compete depends on our ability to innovate successfully
30. 30Due to the significant resources required for the development of our products, we may expend our limited resources to pursue the development and commercialization of select products and fail to capitalize on other products that may be more profitable or for which there is a greater likelihood of success
31. 31Our outstanding debt may affect our ability to operate our business and secure additional financing in the future
32. 32We depend on our senior management team and the loss of one or more key employees or an inability to attract and retain highly skilled employees could harm our business
33. 33We are subject to complex and rapidly evolving laws, regulations, rules, and standards relating to data privacy and security, and our failure to comply with such laws, regulations, rules and standards could adversely affect our business, financial condition, results of operations and prospects
34. 34diversion of management attention from pursuing our business strategy
35. 35We bear the risk of warranty claims on our products
36. 36increased legal and accounting compliance costs
37. 37Consolidation among commercial payors could result in payors eliminating coverage or demanding price concessions, which may affect our ability to offer our products at prices necessary to support our current business strategies
38. 38Our management team has limited experience managing a public company
39. 39Additionally, these material weaknesses could result in a misstatement of substantially all of the financial statement accounts and disclosures that would result in a material misstatement to our annual or interim consolidated financial statements that would not be prevented or detected
40. 40We intend to evaluate current and projected resource needs on a regular basis and hire additional qualified resources as needed. Our ability to maintain qualified and adequate resources to support the Company and our projected growth will be a critical component of our internal control environment
41. 41We are subject to risks from legal and arbitration proceedings that may prevent us from pursuing our business activities or require us to incur additional costs in defending against claims or paying damages
42. 42Our estimates relating to our market and forecasts of market growth are based on a number of complex assumptions and estimates that may prove to be inaccurate, and even if the markets in which we compete achieve the forecasted growth, our business may not increase at similar rates, if at all
43. 43Macroeconomic conditions could materially adversely affect our business, financial condition, results of operations and prospects
44. 44We may be subject to additional taxes if our transfer pricing arrangements are challenged or we fail to establish tax residency in Ireland
45. 45Taxing authorities may disagree with and may challenge our tax positions. If our tax positions are not sustained in the event of such challenge, we could be required to pay additional taxes, interest, penalties or other costs which could impact our results of operations and financial condition
46. 46challenges to the transfer pricing policies related to our structure
47. 47If we are required to reclassify independent contractors as employees, we may incur additional costs and taxes which could adversely affect our business, financial condition, results of operations and prospects

Risks Related to Our Intellectual Property

1. 48attempt to obtain a license to the relevant intellectual property from third parties, which may not be available on reasonable terms or at all, or from third parties who may attempt to license rights that they do not have
2. 49In the event of a successful claim against us for infringement, misappropriation or other violation of third-party intellectual property rights, we may have to pay substantial damages
3. 50We may be subject to claims challenging the inventorship of our patents and other intellectual property
4. 51We may become involved in litigation or administrative proceedings related to intellectual property, including litigation to protect, enforce or defend the validity of our intellectual property
5. 52Our efforts to obtain intellectual property protection and the intellectual property rights we obtain may be inadequate, and our business may be adversely affected as a result
6. 53If we are unable to protect the confidentiality of our trade secrets and other proprietary information, our business and competitive position may be harmed
7. 54We may be subject to claims that our employees, consultants or independent contractors have wrongfully used or disclosed confidential information or alleged trade secrets of third parties or competitors or are in breach of non-competition or non-solicitation agreements with our competitors or their former employers
8. 55If our trademarks and trade names are not adequately protected, we may not be able to build name recognition in our markets and our business may be adversely affected
9. 56Changes in U.S. or foreign patent law or their interpretations could diminish the value of patents in general, thereby impairing our ability to protect our existing and future products
10. 57Obtaining 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 if we fail to comply with these requirements
11. 58Intellectual property rights do not necessarily address all potential threats
12. 59we cannot assure that our commercial activities or products will not infringe the intellectual property rights of others; and
13. 60We include technology in our products that is licensed to us by third parties. Any loss of our rights to this technology could prevent us from selling our products
14. 61Disputes regarding our current licensing arrangements may have an adverse effect on our business

Risks Related to Government Regulation

1. 62Changes in the regulatory environment may make it more difficult and costly for us to manufacture, market or distribute our products, or to obtain approval for any future products
2. 63If we fail to comply with healthcare and other governmental regulations, we could face substantial penalties and our business, results of operations and financial condition could be adversely affected
3. 64the federal physician self-referral prohibition, commonly known as the Stark Law; and
4. 65Our team members, consultants and commercial partners may engage without our awareness in misconduct or other improper activities, including non-compliance with regulatory standards and requirements despite any policies we may have in place to prevent such misconduct, and we may be found liable for their actions
5. 66post-marketing surveillance, including reporting of deaths or serious injuries, recalls, corrections and removals
6. 67the manufacturing process or facilities we use may not meet applicable requirements; and
7. 68Material modifications to our ASSURE WCD or any future products may require new PMAs, 510(k) clearances, CE Marks or other premarket approvals or may require us to recall or cease marketing our products and services until clearances are obtained
8. 69If we or our suppliers fail to comply with the federal, state and international regulations, our operations could be delayed or shut down and our revenue could suffer
9. 70If we do not obtain international regulatory registrations, clearances, certifications or approvals for our products, we will be unable to market and offer our products outside of the United States
10. 71Healthcare reform measures could hinder or prevent the commercialization of our products and our ability to achieve profitability
11. 72the availability of capital
12. 73If we fail to maintain required licenses, certifications, or accreditation, or if we do not fully comply with requirements to provide notice to or obtain approval from regulatory authorities due to changes in our ownership structure or operation, it could adversely impact our operations
13. 74Compliance with environmental laws and regulations could be expensive, and failure to comply with these laws and regulations could subject us to significant liability
14. 75Our products contain third-party open source software components and failure to comply with the terms of the underlying open source software licenses could restrict our ability to sell our products, affect our ability to protect our proprietary information and subject us to possible litigation

Risks Related to Ownership of Our Common Shares

1. 76Bain Capital has significant influence over us, and its interests may conflict with ours or yours
2. 77We are an emerging growth company and a smaller reporting company, and our compliance with the reduced reporting and disclosure requirements applicable to emerging growth companies and smaller reporting companies could make our common shares less attractive to investors
3. 78Our share price may be volatile, and its market price may decline disproportionately in response to developments that are unrelated to our operating performance
4. 79developments in our industry
5. 80We may be a passive foreign investment company, which could result in adverse U.S. federal income tax consequences to United States Holders
6. 81A sale of a substantial number of shares of our common shares may cause the price of our common shares to decline
7. 82We are a Bermuda company, and it may be difficult for you to enforce judgments against us or our directors and executive officers
8. 83Bermuda law differs from the laws in effect in the United States and may afford less protection to our shareholders
9. 84There are regulatory limitations on the ownership and transfer of our common shares
10. 85We have anti-takeover provisions in our amended and restated bye-laws that may discourage a change of control, even if an acquisition would be beneficial to our shareholders, and may prevent attempts by our shareholders to replace or remove our current management
11. 86the ability of our Board of Directors to determine the powers, preferences and rights of preference shares and to cause us to issue the preference shares without shareholder approval
12. 87Our amended and restated bye-laws provide that the Supreme Court of Bermuda or the federal district courts of the United States are the exclusive forum for certain types of lawsuits and this may have the effect of discouraging lawsuits against our directors and officers
13. 88We have historically not paid cash dividends and do not expect to pay cash dividends in the foreseeable future, and, as a result, any return on investment may be limited to the value of our shares
14. 89Future securities issuances could result in significant dilution to our shareholders and impair the market price of our common shares
15. 90We incur increased costs as a result of operating as a public company, and our management is required to devote substantial time to compliance with our public company responsibilities and corporate governance practices
16. 91If we are unable to implement and maintain effective internal control over financial reporting, investors may lose confidence in the accuracy and completeness of our reported financial information, and the market price of our common shares may be negatively affected
17. 92If securities or industry analysts do not publish research or reports about our business, or publish negative reports about our business, our share price and trading volume could decline