Osi Systems (OSIS) risk factors, FY2025 10-K

Business and Industry Risks

1. 01If operators of, or algorithms installed on, our security and inspection systems fail to detect weapons, explosives or other devices or materials that are used to commit a crime, terrorist act or other mass casualty event, we could be exposed to product and professional liability and related claims for which we may not have adequate insurance coverage
2. 02The loss of certain of our customers, including government agencies that can modify or terminate agreements more easily than other commercial customers with which we contract, the failure to continue to diversify our customer base or the non-renewal of certain material contracts could have a negative effect on our reputation and could have a material adverse effect on our business, financial condition and results of operations
3. 03Our acquisition and alliance activities could result in disruption of our ongoing business and other operational difficulties, unrecoverable costs, and other negative consequences, any of which could adversely impact our financial condition and results of operations
4. 04Substantial declines in crude oil prices or extended periods of low crude oil prices may adversely affect our business, financial condition, and results of operations
5. 05Unfavorable currency exchange rate fluctuations could adversely affect our financial results
6. 06U.S. budgeting process disruptions could reduce government spending, which could adversely impact our revenues, earnings, cash flows and financial condition
7. 07We face aggressive competition in each of our operating divisions. If we do not compete effectively, our business will be harmed
8. 08Healthcare cost containment pressures and legislative or regulatory reforms may affect our ability to sell our products profitably
9. 09Consolidation in the healthcare industry could have a material and adverse effect on our revenues and results of operations
10. 10Technological advances and evolving regulatory standards could reduce our future product sales, which could cause our revenues to grow more slowly or decline
11. 11Certain of our government contracts are dependent upon our employees obtaining and maintaining required security clearances, as well as our ability to obtain security clearances for the facilities in which we perform sensitive government work
12. 12We could be subject to changes in tax rates, the adoption of new U.S. or international tax legislation, or exposure to additional tax liabilities
13. 13The conflict between Russia and Ukraine and the related implications may negatively impact our operations
14. 14We cannot predict the consequences of current or future geopolitical events, but they may adversely affect the markets in which we operate and our results of operations

Operational Risks

1. 15As a U.S. Government contractor, we are subject to extensive Federal procurement rules and regulations as well as contractual obligations that are unique to doing business with the U.S. Government. Non-compliance with any such rules, regulations or contractual obligations could negatively affect current programs, potential awards and our ability to do business with the U.S. Government in the future
2. 16Due to the competitive process to obtain contracts and the likelihood of protests, we may be unable to achieve or sustain revenue growth and profitability
3. 17Our revenues are dependent on orders of security and inspection systems, turnkey security screening solutions and patient monitoring and cardiology and remote monitoring systems, which may have lengthy and unpredictable sales cycles
4. 18If we do not introduce new products in a timely manner, our products could become obsolete and our operating results would suffer
5. 19Increased prices for, and interruptions in our ability to purchase, raw materials and subcomponents may adversely affect our profitability
6. 20We contract with third parties that may be unable to fulfill contracts on time
7. 21We accumulate excess quantities or elevated inventory levels from time to time
8. 22Economic, political, legal, operational and other risks associated with international sales and operations could adversely affect our financial performance
9. 23There are inherent risks associated with operations in Mexico
10. 24Our operations are vulnerable to interruption or loss due to natural disasters, epidemics or pandemics such as COVID-19, terrorist acts and other events beyond our control, which could adversely impact our operations
11. 25Any 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 that leads to corrective actions, could have a material adverse impact on us
12. 26We rely on third parties and our own systems for interaction with our customers and suppliers and employees, and a failure of a key information technology system, process or site or any other failure or interruption in the services provided by these third parties or our own systems could have a material adverse impact on our ability to conduct business
13. 27We could suffer a loss of revenue and increased costs, exposure to significant liability, reputational harm, and other serious negative consequences if we sustain cyber-attacks or other data security breaches that disrupt our operations or result in the dissemination of proprietary or confidential information about us or our customers, suppliers, or other third parties; our products and services may be subject to potential cyber-attacks or other information technology vulnerabilities
14. 28Delays, costs, and disruptions that result from upgrading, integrating and maintaining the security of our information and technology networks and systems could materially and adversely affect us
15. 29Our inability to successfully manage the implementation of a company-wide enterprise resource planning (“ERP”) system could adversely affect our operating results
16. 30Our credit facility contains provisions that could restrict our ability to finance our future operations or engage in other business activities that may be in our interest
17. 31Shares of our common stock issuable upon conversion of the 2.25% Convertible Senior Notes due 2029 (the “2029 Notes”) may dilute the ownership interest of our stockholders or may adversely affect the market price of our common stock
18. 32Our indebtedness (including the 2029 Notes) could limit the cash flow available for our operations, expose us to risks that could adversely affect our business, financial condition and results of operations and impair our ability to satisfy our debt obligations, including the 2029 Notes
19. 33We may be unable to raise the funds necessary to repurchase the 2029 Notes for cash following a fundamental change, or to pay the cash amounts due upon conversion, and our other indebtedness may limit our ability to repurchase the 2029 Notes or pay cash upon their conversion
20. 34Provisions in the Note Indenture could delay or prevent an otherwise beneficial takeover of us
21. 35The accounting method for the 2029 Notes could adversely affect our reported financial condition and results

Legal and Regulatory Risks

1. 36The Support Anti-terrorism by Fostering Effective Technologies Act of 2002 (SAFETY Act) may not shield us against legal claims we may face following an act of terrorism
2. 37Our patient monitoring, cardiology and remote monitoring, and connected care systems could give rise to product liability claims and product recall events that could materially and adversely affect our financial condition and results of operations
3. 38Our global operations expose us to legal compliance risks related to certain anti-bribery and anti-corruption laws
4. 39We are subject to import and export controls that could subject us to liability or impair our ability to compete in international markets
5. 40We are facing an increasingly complex international regulatory environment which is constantly changing and if we fail to comply with international regulatory requirements, or are unable to comply with changes to such requirements, our financial performance may be harmed
6. 41Substantial government regulation in the United States and abroad may restrict our ability to sell our patient monitoring, cardiology and remote monitoring, and connected care systems, and failure to comply with such laws and regulations may have a material adverse impact on our business
7. 42Legislative or regulatory reforms such as the EU Medical Devices Regulation may make it more difficult and costly for us to obtain certification, regulatory clearance, or approval of any future products and to manufacture, market, and distribute our products after certification, clearance, or approval is obtained
8. 43We may be subject to fines, penalties, injunctions, or other enforcement actions if we are determined to be promoting the use of our products for unapproved or “off label” uses, resulting in damage to our reputation and business
9. 44Our failure to comply with federal, state, and foreign laws and regulations relating to our healthcare business could have a material and adverse effect on our business
10. 45Evolving expectations around corporate responsibility practices, specifically related to environmental, social and governance (“ESG”) matters, may expose us to reputational and other risks

General Risks

1. 46Significant inflation and increasing interest rates could materially and adversely affect our business and financial results
2. 47Our insurance coverage may be inadequate to cover all significant risk exposures
3. 48We are involved in various litigation matters, which could have a material adverse effect on our business, financial condition or operating results