Xtant Medical Holdings (XTNT) risk factors, FY2024 10-K

Risks Related to Our Continuing Losses, Outstanding Indebtedness, Need for Additional Financing and Financial Condition

1. 01We have incurred significant losses, expect to continue to incur losses, and despite our focused goal to obtain profitability, we may never achieve or sustain profitability
2. 02We may need additional financing to satisfy our anticipated future liquidity requirements, which financing may not be available on favorable terms, or at all, at the time it is needed and which could reduce our operational and strategic flexibility
3. 03Any of these factors could materially and adversely affect our business, financial condition, and operating results. In addition, we may incur additional indebtedness, and if we do, the risks related to our business and our ability to service our indebtedness would increase
4. 04Our Credit Agreements involve additional risks that may adversely affect our liquidity, results of operations, and financial condition

Risks Related to Our Business

1. 05Our growth initiatives designed to increase our revenue and scale may not be successful and involve risks
2. 06A substantial portion of our revenue is conducted through independent sales agents and distributors who we do not control
3. 07If we are unable to innovate, develop, introduce, market, sell and license new products and technologies, we may experience a decrease in market share or revenue if our products become obsolete, and our business and operating results would suffer
4. 08Our dependence on key suppliers of raw materials puts us at risk of interruptions in the availability of our products, which could reduce our sales and adversely affect our operating results and harm our reputation
5. 09Biologics products are inherently difficult and time-consuming to manufacture. We have experienced and could continue to experience manufacturing issues, which could negatively impact our business and results of operations
6. 10Our biologics business is highly dependent on the availability of human donors and placentas. Any disruptions could cause our customers to seek alternative providers or technologies and harm our business and operating results
7. 11Persistent inflation, tariffs and supply chain disruptions in the past have resulted in and in the future could result in delayed product launches, lost revenue, higher costs and decreased profit margins
8. 12Our recently entered into license agreements to manufacture and commercially sell in the United States certain of our products and using the trademarks associated therewith and any similar agreements we may enter into may not result in significant revenue
9. 13Our prior acquisitions and any future acquisitions or business combinations we complete involve a number of risks, the occurrence of which could adversely affect our business, reputation, operating results and financial condition
10. 14We operate in certain markets outside the United States that are subject to political, economic, and social instability and require management attention and financial resources and expose us to additional risks
11. 15Negative publicity concerning methods of tissue recovery and screening of donor tissue in our industry could reduce demand for our biologics products and impact the supply of available donor tissue
12. 16We are highly dependent on the continued availability of our facilities and would be harmed if they were unavailable for any prolonged period of time
13. 17We may be party to product liability litigation that could be expensive, and our insurance coverage may not be adequate in a catastrophic situation
14. 18Our quarterly operating results are subject to substantial fluctuations, and you should not rely on them as an indication of our annual or future results
15. 19We may be required to incur impairment and other charges resulting from the impairment of goodwill or other intangible assets recorded in connection with acquisitions
16. 20Fluctuations in foreign currency exchange rates could result in declines in our earnings and changes in our foreign currency translation adjustments
17. 21Our ability to deduct interest is limited
18. 22A shift in performing more procedures in ambulatory surgical centers from hospitals would likely reduce the prices of our products and margins
19. 23Our business, operating results and financial condition may be materially adversely affected by the spread of infectious diseases

Risks Related to Governmental Regulation

1. 24Our clinical trials involve risk and expense and may fail to demonstrate competent and reliable evidence of the safety and effectiveness of our products, which in the case of product in development would prevent or delay their commercialization
2. 25We are subject, directly and indirectly, to federal and state healthcare fraud and abuse laws, false claims laws, and physician payment transparency laws. Failure to comply with these laws may subject us to substantial penalties
3. 26U.S. governmental regulation could restrict the use of our tissue products or our procurement of tissue
4. 27Modifications to our products may require new regulatory clearances or approvals, and if we market modified products without obtaining necessary approvals or certifications, we may be required to recall or cease marketing our products until clearances or approvals are obtained
5. 28Our manufacturing operations are required to comply with the FDA’s and other governmental authorities’ laws and regulations regarding the manufacture and production of medical devices, which is costly and could subject us to enforcement action
6. 29The use, misuse or off-label use of our products may harm our image in the marketplace or result in injuries that lead to product liability suits, which could be costly to our business or result in FDA sanctions if we are deemed to have engaged in improper promotion of our products
7. 30If our products cause or contribute to a death or serious injury, or malfunction in certain ways, we will be subject to medical device reporting regulations, which can result in voluntary corrective actions or agency or other governmental enforcement actions
8. 31Any future product recall or voluntary market withdrawal of a product due to defects, enhancements and modifications or other reasons would significantly increase our costs
9. 32If we or our suppliers fail to comply with regulations pertaining to human cells, tissues, and cellular and tissue-based products or are deemed to be biological products requiring approval of a BLA prior to being marketed, these products could be subject to withdrawal from the market or other enforcement action
10. 33Loss of AATB accreditation would have a material adverse effect on us
11. 34Federal regulatory reforms may adversely affect our business and our ability to sell our products
12. 35Our revenues depend upon prompt and adequate coverage and reimbursement from public and private insurers and national health systems

Risks Related to Human Capital Management

1. 36We have limited staffing and are dependent upon key employees

Risks Related to Intellectual Property

1. 37If we lose any future intellectual property lawsuits, a court could require us to pay significant damages or prevent us from selling our products
2. 38If our patents and other intellectual property rights do not adequately protect our products, we may lose market share to our competitors and be unable to operate our business profitably
3. 39We may not be able to obtain or protect our proprietary rights relating to our products without resorting to costly and time-consuming litigation

Risks Related to Information Technology, Cybersecurity and Data Protection

1. 40We are dependent on various information technology (“IT”) systems, and failures of, interruptions to, or unauthorized tampering with those systems could have a material adverse effect on our business

Risks Related to Our Controlled Company Status

1. 41We are a “controlled company” within the meaning of the NYSE American rules and rely on exemptions from various corporate governance requirements that provide protection to stockholders of other companies

Risks Related to Our Common Stock

1. 42Shares of our common stock are equity securities and are subordinate to our outstanding indebtedness
2. 43Our inability to comply with the continued listing requirements of the NYSE American could result in our common stock being delisted, which could affect its market price and liquidity and reduce our ability to raise capital
3. 44The market price of our common stock is extremely volatile, which may affect our ability to raise capital in the future and may subject the value of the investment of our stockholders to sudden decreases
4. 45Our actual operating results may differ significantly from our guidance, which could cause the market price of our common stock to decline
5. 46We may issue additional common stock resulting in stock ownership dilution
6. 47The sale or availability for sale of substantial amounts of our common stock or other equity securities could adversely affect the market price of our common stock
7. 48If securities analysts stop publishing research or reports about us or our business, or if they downgrade our common stock, the trading volume and market price of our common stock could decline
8. 49Anti-takeover provisions in our organizational documents and agreements may discourage or prevent a change in control, even if a sale of the Company could be beneficial to our stockholders, which could cause our stock price to decline and prevent attempts by our stockholders to replace or remove our current management
9. 50Our Board of Directors is authorized to issue and designate shares of our preferred stock without stockholder approval
10. 51Our Charter designates the Court of Chancery of the State of Delaware as the exclusive forum for certain litigation that may be initiated by our stockholders, which could limit the ability of our stockholders to obtain a favorable judicial forum for disputes with us
11. 52We have never paid dividends and do not expect to do so in the foreseeable future
12. 53Worldwide economic and market conditions, including with respect to financial institutions, and social unrest could adversely affect our revenue, liquidity, financial condition, or results of operations
13. 54Climate change, or legal, regulatory or market measures to address climate change, may materially adversely affect our financial condition and business operations
14. 55Changes in accounting standards, policies, or assumptions utilized in determining accounting estimates could adversely affect our financial statements, including our operating results and financial condition
15. 56Scrutiny and evolving expectations from customers, regulators, investors, and other stakeholders with respect to our environmental, social and governance practices may impose additional costs on us or expose us to new or additional risks