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YoY shift: Neutral
Year-over-year tone shift - average net-tone change across Risk Factors and MD&A vs the prior 10-K. This filing is 0.03pp more bullish than last year's.
Why YoY instead of absolute: the LM lexicon has ~6.6× more negative words than positive (legal/risk-disclosure language is heavy on hedging), so every 10-K reads bearish on raw tone. Year-over-year change strips that bias and surfaces the actual shift in management's framing.
Tone shift by section
The two components the gauge averages: how Risk Factors and MD&A each shifted in net tone versus last year's 10-K. The headline above is their average, so a green needle over a soft section just means the other section carried it.
Risk Factors
+0.05pp
Flat
Net-tone change vs last year's 10-K.
MD&A
+0.00pp
Flat
Net-tone change vs last year's 10-K.
Per-snippet highlights
Sentence-level sentiment highlighting with category and subcategory filters is coming once the snippet-scoring pipeline lands. For now, dig into the actual section text on the Sections tab.
Language change vs prior 10-K
Risk Factors (Item 1A) - words with the biggest YoY frequency increase
Negative rising
unable+3
adversely+2
unsuccessful+2
disrupt+2
delay+2
Positive rising
collaborative+3
efficiency+2
able+1
profitability+1
greater+1
Risk Factors (Item 1A)
10,166 words
Item 1A. Risk Factors
You should carefully read the following discussion of significant factors, events and uncertainties when evaluating our business and the forward-looking information contained in this Form 10-K. The events and consequences discussed in these risk factors could materially and adversely affect our business, operating results, liquidity or financial condition. While we believe we have identified and discussed below the key risk factors affecting our business, these risk factors do not identify all the risks we face, and there may be additional risks and uncertainties that we do not presently know or that we do not currently believe to be significant that may have a material adverse effect on our business, operating results, liquidity or financial condition in the future.
Operational & Financial Risk Factors
Current macro-economic trends and geopolitical landscape have been adversely affecting, and could continue to adversely affect, our business, results of operations and financial condition due to their impact on the industries in which we and our customers operate, and due to the unknown speed, extent and nature of the reversal of those trends.
Certain global macro-economic trends have been adversely impacting the global economic environment and have contributed towards inflationary pressures on many goods, commodities and services. Although inflation has in several major markets, it remains uneven across regions, and the trajectory of inflation remains uncertain. While some central banks, particularly in emerging markets, have begun lowering interest rates, interest rates remain moderately elevated by historical standards. If interest rates remain elevated for an extended period or if combined with economic or geopolitical
Language change vs prior 10-K
MD&A (Item 7) - words with the biggest YoY frequency increase
Negative rising
divestitures+9
decline+4
unable+3
obsolete+2
force+1
Positive rising
gain+3
collaborative+3
effective+1
improved+1
efficiency+1
MD&A (Item 7)
7,343 words
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis should be read together with our consolidated financial statements, and notes thereto, included in Item 8 of this Form 10-K. Certain statements contained in this discussion may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements involve a number of risks, uncertainties and other factors that could cause actual results to differ materially from those reflected in any forward-looking statements. See "Risk Factors" in Part I, Item 1A and "Forward-Looking Statements." All amounts are in thousands, except share and per share amounts, or as otherwise indicated.
For discussion related to our results of operations and changes in financial condition for fiscal 2024 compared to fiscal 2023, refer to Part II, Item 7. "Management’s Discussion and Analysis of Financial Condition and Results of Operations" ("MD&A") in our fiscal 2024 Form 10-K. Our fiscal 2024 Form 10-K was filed with the SEC on March 27, 2025.
Business Overview
3D Systems Corporation ("3D Systems" or the "Company" or "we," "our" or "us") markets our products and services through subsidiaries in North America and South America ("Americas"), Europe and the Middle East ("EMEA") and Asia Pacific and Oceania ("APAC"). We provide comprehensive 3D printing and digital manufacturing solutions, including 3D printers for plastics and metals, materials, software, and services, including maintenance, advanced manufacturing and applications engineering.
developments, such conditions could increase recessionary risks in individual countries or regions, or globally. These macro-economic trends have been impacting our target markets, our strategic planning, and our results of operations. For example, elevated interest rates and evolving credit conditions continue to tighten financing availability for certain customers which may adversely affect their ability to purchase our products.
While we believe that we are able to withstand the current adverse macro-economic trends, we continue to monitor the situation, assessing further implications for our operations, supply chain, liquidity, cash flow and customer orders, in an effort to mitigate potential new adverse consequences should they arise. However, there is no assurance that we will succeed at doing so.
Current or future downturns could also have a material adverse impact on our business partners’ stability and financial strength. Given uncertainties associated with these trends in the current macro-economic environment, it is difficult to fully assess the magnitude of their effects on our, and our business partners’, business, financial condition and results of operations. The trends associated with the current economic environment may also have the effect of amplifying many of the other risks described herein.
Current political relations could potentially impact trade and tariff restrictions, which could adversely affect our operations, supply chains, and profitability. Changes in trade policies or political relations between countries may result in delays, increased costs, or disruptions in our ability to source materials, manufacture, or distribute products, which could have a material negative impact on our business.
The loss of, continued reduction to, or substantial decline in revenue from larger clients could have a material adverse effect on our revenues, profitability and liquidity.
For the year ended December 31, 2025, two customers within our Healthcare Solutions segment represented 12.2% and 11.4% of our revenue, respectively. For the years ended December 31, 2024 and 2023, one of those customers also represented 16.0% and 15.0% of our revenue, respectively. The further loss of revenue from, deterioration of the financial condition of, or a significant change to the business of these customers could have a material adverse effect on our business, financial condition, and results of operations. Additionally, this exposes us to concentrated credit risk, as a significant portion of our accounts receivable may be from two large customers. If we are unable to collect our receivables, or are required to take additional reserves, our results of operations and cash flow from operations will be adversely affected.
Changes in business conditions may cause our goodwill, intangible assets, long-lived tangible assets, or right-of-use assets to become impaired.
Goodwill is subject to an impairment test on an annual basis and when circumstances indicate that an impairment is more likely than not. Long-lived assets – consisting of tangible assets, intangible assets, and right-of-use assets – are assessed for recoverability and tested for impairment at the asset group level, and testing is required when circumstances indicate that the carrying value of an asset group is not recoverable. Circumstances that may require goodwill to be tested more frequently than the annual impairment test, or indicate that a long-lived asset group is not recoverable, include a significant adverse change in the business climate, current-period operating or cash flow losses combined with a history of operating or cash flow losses, projections or forecasts that demonstrate continuing losses, or a decision to dispose of a business or product line. We face some uncertainty in our business environment due to a variety of challenges, including changes in customer demand and a recent decline in the trading price of our common stock and market capitalization. While we recorded impairment charges of $145.0 million related to goodwill, intangible assets, tangible assets, and right-of-use assets during 2024 and an impairment charge of $302.8 million related to our goodwill during 2023, we may experience additional unforeseen circumstances that adversely affect the value of these assets and trigger an evaluation of their carrying amounts. Future impairments of goodwill, intangible assets, long-lived tangible assets, or right-of-use assets could materially adversely affect our results of operations and financial condition.
Our quarterly results may fluctuate due to the visibility in our sales cycle, which makes planning and inventory management difficult and future financial results less predictable. Our involvement in collaborative arrangements and the related estimates involved in our revenue recognition also may cause fluctuations in our quarterly results.
Our quarterly sales often have reflected a pattern in which a disproportionate percentage of each quarter’s total sales occur towards the end of the quarter, in particular for sales of hardware products. This uneven sales pattern makes predicting net revenue, earnings, cash flow from operations and working capital for each financial period difficult, increases the risk of unanticipated variations in our quarterly results and financial condition, and places pressure on our inventory management and
logistics systems. If predicted demand is substantially greater than orders, there may be excess inventory. Alternatively, if orders substantially exceed predicted demand, we may not be able to fulfill all of the orders received in each quarter and such orders may be canceled. Furthermore, depending on when they occur in a quarter, developments such as an information systems failure, component pricing movements, component shortages or global logistics disruptions could adversely impact our inventory levels and results of operations in a manner that is disproportionate to the number of days in the quarter affected.
In addition, we earn certain of our revenue through collaborative arrangements. We recognize this revenue over time using a cost-to-cost percentage of completion model to measure the progress of the transfer of control. We make estimates impacting the timing of revenue recognition for these projects such as the budget to complete the project and if and when it is appropriate to include milestone payments, which represent variable consideration, in the contract's transaction price. From time to time, the assessment around milestone payments requires management to conclude that it is probable that a significant reversal of the amount of cumulative revenue recognized with respect to a collaborative agreement will not occur as a result of including one or more milestone payments in the arrangement's transaction price. We had a change in estimate for the year ended December 31, 2024, resulting in the reversal of $8.7 million of revenue. Due to the significant judgment involved, our estimates may change again in the future, which could result in additional revenue recognized related to milestone payments to be reversed.
The variety of products that we sell could cause significant quarterly fluctuations in our gross profit margins, and those fluctuations in margins could cause fluctuations in operating income or loss and net income or loss.
We continuously work to expand and improve our products, materials and services offerings, geographic areas in which we operate and the distribution channels we use to reach various target product applications and customers. This variety of products, applications, channels and regions involves a range of gross profit margins that can cause substantial quarterly fluctuations in gross profit and gross profit margins depending upon the mix of product shipments from quarter to quarter. Additionally, the introduction of new products or services may further heighten quarterly fluctuations in gross profit and gross profit margins due to manufacturing ramp-up and start-up costs. We may experience significant quarterly fluctuations in gross profit margins or operating income or loss due to the impact of the mix of products, offerings, geographic areas and distribution channels we use to sell our products, materials and offerings from period to period.
Our products and services may experience quality problems from time to time that can result in decreased sales and operating margin, product returns, product liability, and warranty or other claims that could result in significant expenses and harm to our reputation.
We sell complex hardware and software products, materials and services that can contain undetected design and manufacturing defects or errors when first introduced or as enhancements are released that, despite testing, are not discovered until after the product has been installed and used by customers. Sophisticated software and applications, such as those sold by us, may contain "bugs" that can unexpectedlyinterfere with the software’s intended operation. Defects may also occur in components and products we purchase from third parties. There can be no assurance we will be able to detect and fix all defects in the hardware, software, materials and services we sell. Failure to do so could result in lost revenue, product returns, product liability, delayed market acceptance of those products and services, customer dissatisfaction, claims from distributors, end-users or others, increased end-user service and support costs, and significant warranty claims and other expenses to correct the defects. Additionally, such quality problems may result in a diversion of management time and attention and harm to our reputation.
We also sell end-use parts to customers in the aerospace, medical, and semiconductor industries and 3D printing systems to customers in the aerospace industry, which carry with them a greater potential for liability claimsagainst us. In the case of end-use parts, our sales to customers in the aerospace, medical, and semiconductor industries, in particular, make us more susceptible to product and other liability claims, which characterize operations in those industries. Sales of our 3D printing systems to customers in the aerospace industry similarly carry with them potential liability claims if the parts produced by those systems do not function properly. Any such claims that are not adequately covered by insurance or for which insurance is not available may adversely affect our results of operations and financial condition.
We depend on external vendors and suppliers for the components and spare parts for our 3D printers and for chemicals and packaging used in our materials. Supply and logistical disruptions occur periodically for many of our supply chain partners. If these relationships were to terminate or these or other disruptions, such as extreme weather events, worsen, our business could be disrupted while we locate alternative sources of supply and our expenses may increase.
We purchase components and sub-assemblies for our printers from third-party suppliers that we provide to our customers as spare parts. Additionally, we purchase raw chemicals and packaging that are used in our materials, as well as certain of those materials, from third-party suppliers.
While there are typically several potential suppliers of parts for our products, we currently choose to use only one or a limited number of suppliers for several of these items, including our lasers, materials and certain jetting components. Our reliance on a single or limited number of suppliers involves many risks, including, among others, the following:
• Potential shortages of some key components;
• Disruptions in the operations of these suppliers;
• Product performance shortfalls; and
• Reduced control over delivery schedules, assembly capabilities, quality and costs.
Periodic delays on the inbound supply chain at our partners and our own facilities have also created challenges. We continue to identify alternative solutions, but an inability to source from alternative suppliers in a timely manner could impact on our ability to fulfill demand.
While we believe that, if necessary, we can obtain all the components necessary for our spare parts and materials from other manufacturers, we require any new supplier to become "qualified" pursuant to our internal procedures, which could involve evaluation processes of varying durations. Our spare parts and raw chemicals used in our materials production are subject to various lead times. In addition, at any time, certain suppliers may decide to discontinue production of a part or raw material that we use, or may not have supplies available due to supplier business disruption. Any unanticipated change in the sources of our supplies, or unanticipated supply limitations, could increase production or related costs and consequently reduce margins.
If our forecasts exceed actual orders, we may hold large inventories of slow-moving or unusable parts, which could have an adverse effect on our cash flow, profitability and results of operations. Inversely, we may lose orders if our forecast is low and we are unable to meet demand. There is considerable uncertainty on the business impact from labor and supply limitations on our vendors, suppliers, and partners. If disruptions to global businesses continue or worsen it could have a material adverse effect on our financial condition and results of operations.
Climate-related physical and market risks may disrupt our operations and supply chain, increase our costs, and adversely affect our results of operations and financial condition.
Climate change may increase the frequency and severity of extreme weather events, contribute to higher average temperatures and result in a greater number of extreme heat days. These conditions may disrupt our operations or those of our third-party suppliers, including by damaging or impairing manufacturing facilities, transportation networks, utilities or other infrastructure on which we or our suppliers rely. Such disruptions could interfere with production schedules, delay shipments, limit the availability of key inputs or otherwise adversely affect our ability to operate efficiently.
Sustained higher average temperatures and related chronic climate conditions also may affect the quality of our products during manufacturing, storage or shipment. Despite efforts to monitor and control production and logistics conditions, we may be unable to prevent adverse effects on product quality associated with rising average temperatures or extreme heat. Such impacts could result in increased costs, reduced efficiency, production delays, customer dissatisfaction or other operational challenges.
Rising average temperatures may also increase demand for energy required to heat or cool our manufacturing facilities and those of our suppliers. Increased energy usage or higher energy prices could raise our operating and production costs and affect supply chain efficiency. In addition, climate-related impacts on the cost and availability of raw materials and rare minerals used in our products may require design changes, sourcing adjustments or other operational modifications. These changes could increase costs, extend production timelines, or otherwise adversely affect our business.
We are subject to environmental, health and safety laws and regulations related to our operations and the use of our systems and materials, including requirements imposed due to use of our products by our customers, which could subject us to compliance costs and/or potential liability in the event of non-compliance.
In areas of operations that involve handling hazardous materials, failure to maintain safe working conditions could result in workplace injuries, regulatory penalties, and reputational harm, as well as increased costs related to litigation, insurance, and compliance.
The export of our products internationally subjects us to environmental laws and regulations concerning the import and export of chemicals and hazardous substances such as the United States Toxic Substances Control Act, or TSCA, and the Registration, Evaluation, Authorization and Restriction of Chemical Substances, or REACH. These laws and regulations require the testing
and registration of some chemicals that we ship along with, or that form a part of, our systems and other products. If we fail to comply with these or similar laws and regulations, we may be required to make significant expenditures to reformulate the chemicals that we use in our products and materials or incur costs to register such chemicals to gain and/or regain compliance. Additionally, we could be subject to significant fines or other civil and criminalpenalties should we not achieve such compliance.
We are furthermore subject to extensive environmental, health and safety laws, regulations and permitting requirements in multiple jurisdictions due to our use of chemicals and production of waste materials as part of our operations and in connection with the operation of our systems by our customers. In certain cases, the required compliance with health or safety regulations is imposed by our customers themselves. These laws, regulations and requirements (which include the Directive on Waste Electrical and Electronic Equipment of the European Union (EU) and the EU Directive on Restriction of Use of Certain Hazardous Substances) govern, among other things, the generation, use, storage, registration, handling and disposal of chemicals and waste materials, the presence of specified substances in electrical products, the emission and discharge of hazardous materials into the ground, air or water, the cleanup of contaminated sites, including any contamination that results from spills due to our failure to properly dispose of chemicals and other waste materials and the health and safety of our employees. Under these laws, regulations and requirements, we could also be subject to liability for improper disposal of chemicals and waste materials, including those resulting from the use of our systems and accompanying materials by end-users. These or future laws and regulations could potentially require the expenditure of significant amounts for compliance and/or remediation. Materials may face stricter regulations in end markets on end-of-life treatment, which could increase costs, require product redesign, and, if not managed effectively, negatively impact our brand reputation with customers and investors. If our operations fail to comply with such laws or regulations, we may be subject to fines and other civil, administrative or criminal sanctions, including the revocation of permits and licenses necessary to continue our business activities. In addition, we may be required to pay damages or civil judgments in respect of third-party claims, including those relating to personal injury (including exposure to hazardous substances that we generate, use, store, handle, transport, manufacture or dispose of), property damage or contribution claims. Some environmental laws allow for strict, joint and several liabilities for remediation costs, regardless of fault. We may be identified as a potentially responsible party under such laws. If we fail to comply with any such regulations or are subject to related liability, such developments could have a material adverse effect on our business, financial condition and results of operations.
If we do not generate net cash flow from operations and if we are unable to raise additional capital, our financial condition could be adversely affected and we may be unable to execute our business strategy.
The Company believes it has the financial resources needed to meet its anticipated cash requirements during the next twelve months. Cash requirements for periods beyond the next twelve months will depend on, among other things, the Company's profitability, and its ability to manage working capital requirements, and, if needed, its ability to identify and secure other potential sources to fund future working capital needs and meet capital expenditure requirements.
If we are unable to generate such cash flow, we may be required to adopt one or more alternatives, such as selling assets, divesting businesses, delaying capital expenditures, reducing the scope of our R&D programs, restructuring debt, or obtaining additional debt financing or equity capital on terms that may be onerous or highly dilutive or could include restrictive covenants. Our ability to refinance or otherwise repay our indebtedness may depend on the capital markets and our financial condition at such time, as well as whether we have a sufficient number of shares of authorized common stock available for issuance. We may not be able to engage in any of these activities or engage in these activities on desirable terms, which could result in a default on our debt obligations. In addition, certain of our current debt agreements do, and any of our future debt agreements may, contain restrictive covenants that may prohibit us from adopting any of these alternatives or which may be violated if any such alternatives prove to be unsuccessful.
The indenture agreement governing our 5.875% convertible senior secured notes due 2030 (the "2030 Notes") includes certain financial covenants, including a requirement to maintain at least $20.0 million in qualified cash. As of December 31, 2025, we were in compliance with all of the covenants included in the 2030 Notes’ indenture agreement. However, if we are unable to generate sufficient cash flow in the future, we may be non-compliant which could result in an event of default, making the 2030 Notes, with an outstanding principal balance of $92.0 million as of December 31, 2025, due immediately. See “—Servicing or refinancing our debt may require a significant amount of cash, and we may not have sufficient cash or the ability to raise the funds necessary to settle conversions of the 5.875% convertible senior secured notes due 2030 (the "2030 Notes") and the 0% convertible senior notes due 2026 (the "2026 Notes") (collectively the "Notes") in cash, repay the Notes at maturity, or repurchase the Notes as required following a fundamental change” below.
The lack of additional capital resulting from any inability to generate cash flow from operations or to raise equity or debt financing could force us to substantially curtail or cease operations and would, therefore, have an adverse effect on our business and financial condition. Furthermore, we cannot provide assurance that any necessary funds, if available, would be available on
attractive terms or that they would not have a significantly dilutive effect on our existing stockholders. If our financial condition were to worsen and we become unable to attract additional equity or debt financing or enter into other strategic transactions, we would not be able to execute our business strategy and we could default on our debt obligations, become insolvent or be forced to declare bankruptcy.
Our business could be adversely impacted in the event of a failure of our information technology infrastructure or a successful cyber-attack.
We extensively rely on information technology systems and networks to operate our Company and meet our business objectives. Due to evolving cybersecurity threats, it has and will continue to be difficult to prevent, detect, mitigate, and remediate cybersecurity incidents. We experience cybersecurity threats, threats to our information technology infrastructure, and unauthorized attempts to gain access to our sensitive information. We face threats that vary from those common to most industries, to more advanced and persistentthreats from highly organized adversaries who target us because of the products and services we provide. We also rely on information technology and third-party vendors to support our operations, including our secure processing of personal, confidential, sensitive, proprietary and other types of information. To date, risks from cybersecurity threats, including as a result of previous cybersecurity incidents, have not materially affected us, including our business strategy, results of operations, or financial condition, but we face ongoing risks from cybersecurity threats that may from time to time in the future cause material adverse impacts on our business strategy, results of operations, or financial condition. Despite ongoing efforts to continually improve our and our vendors’ ability to protect against cybersecurity threats and the implementation of various safeguards, including increasing our cyber insurance, regularly conducting Company-wide cybersecurity awareness training, and establishing a dedicated team of personnel to address cyber-based threats, we may not be able to fully protect all information systems, and such incidents may lead to reputational harm, revenue and customer loss, and legal action, among other consequences.
We are subject to numerous laws, regulations, and contractual obligations designed to protect our regulated data, and that of our customers. These include complex and evolving laws, rules, regulations, and standards in many jurisdictions, as well as contractual obligations, relating to cybersecurity and data privacy. Such laws, rules, regulations, and standards pose increasingly complex compliance challenges and potential costs. Any loss of sensitive information and failure to comply with these requirements or other applicable laws and regulations in this area, could result in significant regulatory non-compliance exposure or other penalties and legal liabilities.
We may also need to expend additional resources to adapt our cybersecurity program to the evolving threat landscape and to investigate and remediate vulnerabilities or other identified risks. Given the persistence, sophistication, volume, and novelty of threats we face, we may not be successful in preventing or mitigating cybersecurity threats that could have a material adverse effect on us. The costs related to cybersecurity threats or other disruptions may also not be fully insured or indemnified by other means. Such events could result in the loss of competitive advantages derived from our R&D efforts or other intellectual property, which could result in early obsolescence of our products and services. The occurrence of any of these events could adversely affect our internal operations, the services we provide to our customers, impact our financial results and reputation, or result in litigation, fines, and penalties.
Servicing or refinancing our debt may require a significant amount of cash, and we may not have sufficient cash or the ability to raise the funds necessary to settle conversions of the 5.875% convertible senior secured notes due 2030 ("the 2030 Notes") and the 0% convertible senior notes due 2026 ("the 2026 Notes") (collectively "the Notes") in cash, repay the Notes at maturity, or repurchase the Notes as required following a fundamental change.
As of December 31, 2025, we had approximately $92.0 million and $3.9 million of outstanding principal of the 2030 Notes and 2026 Notes, respectively. Our ability to service or refinance our remaining indebtedness, including the Notes, or to make cash payments in connection with any conversions of the Notes, depends on our future performance, which is subject to economic, financial, competitive, and other factors beyond our control. Our business may not generate cash flow from operations in the future sufficient to service our debt and make necessary capital expenditures. If we are unable to generate such cash flow, we may be required to adopt one or more alternatives, such as selling assets, divesting businesses, delaying capital expenditures, reducing the scope of our R&D programs, restructuring debt, or obtaining additional debt financing or equity capital on terms that may be onerous or highly dilutive or could include restrictive covenants. Our ability to refinance or otherwise repay our indebtedness may depend on the capital markets and our financial condition at such time, as well as whether we have a sufficient number of shares of authorized common stock available for issuance. We may not be able to engage in any of these activities or engage in these activities on desirable terms, which could result in a default on our debt obligations. In addition, certain of our current debt agreements do, and any of our future debt agreements may contain restrictive covenants that may prohibit us from adopting any of these alternatives or which may be violated if any such alternatives prove to be unsuccessful.
The indenture agreements for the Notes contains covenants, events of default and certain other restrictive provisions. In the past, the Company was non-compliant with certain terms of the 2026 Notes’ indenture agreement because it failed to file its Form 10-K for the fiscal year ended December 31, 2023 ("2023 Form 10-K") and its Form 10-Q for the three months ended March 31, 2024 on time. These defaults did not become an event of default under the terms of the 2026 Notes' indenture agreement given that the Company subsequently filed its 2023 Form 10-K and its Form 10-Q for the three months ended March 31, 2024 in August 2024. The Company did not incur any special interest as a result of the defaults, nor did the 2026 Notes become subject to any other actions by the Trustee or the holders. The 2030 Notes' indenture agreement includes certain financial covenants, including a requirement to maintain at least $20.0 million in qualified cash and a minimum of $75.0 million in accounts receivable and inventory, and we may be required to obtain additional sources of liquidity to comply with such covenants. As of December 31, 2025, we were in compliance with all of the covenants included in the Notes’ indenture agreements. However, we can make no such assurance that we will be able to comply with these or other restrictive covenants in the future. Noncompliance with such covenants could result in an event of default and make the 2030 Notes, with an outstanding principal balance of $92.0 million as of December 31, 2025, due immediately, unless we could obtain an amendment or waiver, which may not be available on commercially reasonable terms or otherwise. If this debt were accelerated, we would not have sufficient funds to repay our debt absent a refinancing, and we cannot provide assurance that we would be able to obtain such a refinancing on commercially reasonable terms or at all.
In the event the conditional conversion feature of the Notes is triggered, holders of Notes will be entitled to convert the Notes at any time during specified periods at their option. If one or more holders elect to convert their Notes, we would be required to settle any converted principal through the payment of cash, which could adversely affect our liquidity. In addition, even if holders do not elect to convert their Notes, we could be required under applicable accounting rules to reclassify all or a portion of the outstanding principal of the Notes as a current rather than long-term liability, which would result in a material reduction of our net working capital.
In addition, holders of the Notes have the right to require us to repurchase all or a portion of their Notes upon the occurrence of a fundamental change (as defined in the applicable indenture governing the respective Notes) at a repurchase price equal to 100% of the principal amount of the Notes to be repurchased. Holders of the 2030 Notes also have a one-time put right on June 23, 2028, to require us to repurchase all or a portion of their 2030 Notes for cash at 100% of the principal amount, plus accrued and unpaid interest. If the Notes have not previously been converted or repurchased, we will be required to repay such Notes in cash at maturity.
Our ability to make required cash payments in connection with conversions of the Notes, repurchase the Notes in the event of a fundamental change, or in connection with the holders' put right, or to repay or refinance the Notes at maturity will depend on market conditions and our future performance, which is subject to economic, financial, competitive, and other factors beyond our control. As a result, we may not have enough available cash or be able to obtain financing at the time we are required to repurchase or repay the Notes or pay cash with respect to Notes being converted.
Our operations and business performance could suffer if we are unable to attract and retain senior management or other key employees.
Our success depends largely on our ability to attract, hire, develop, and retain senior management and key employees, such as engineers, scientists, and other key skilled employees supporting our products and services. The engagement and retention of our global teams is dependent on maintaining a culture where our people feel valued, respected, and have equal opportunities for growth and development.
Our senior management team is critical to the leadership of our business operations and the development and execution of our business strategy. When changes occur within senior management or within key employee roles, we are required to manage the continuity of our business, and typically incur incremental costs including search costs, relocation costs, and timing associated with onboarding and knowledge transfer. High demand exists for senior management and other key employees with experience in additive manufacturing and certain technical skills, and there can be no assurance that we will be able to attract and retain such talent. We experience intense competition for qualified talent.
While we aim to design, provide, and administer competitive compensation packages to attract and retain top senior management and key talent and engage in regular succession planning for these positions, larger competitors with more resources available to them can make it difficult for us to successfully compete for key talent. If we cannot attract and retain sufficiently qualified talent, such as engineers, scientists, and other technically skilled employees, or have an adequate succession plan in place, we may be unable to develop, commercialize, and sell new or existing products and services.
Furthermore, increasing competition for critical technical skills in the regions surrounding our facilities could require us to pay more to hire and retain key employees, thereby increasing labor costs.
Business Strategy Risk Factors
We have made, and may make in the future, strategic acquisitions and divestitures that may involve significant risks and uncertainties. We may not realize the anticipated benefits of past or future acquisitions and integration of these acquisitions may disrupt our business and divert management attention. Likewise, our potential future divestitures may be unsuccessful and negatively impact our business.
From time to time, we evaluate acquisition candidates that fit our business objectives. Acquisitions involve certain risks and uncertainties, including, among others, the following:
• The inability to successfullyimprove operating efficiency and reduce costs through our restructuring initiative;
• Difficulty in integrating newly acquired businesses and operations in an efficient and cost-effective manner, which may also impact our ability to realize the potential benefits associated with the acquisition;
• The risk that significant unanticipated costs or other problems associated with integration may be encountered;
• The risk that we do not fully integrate our acquisitions, which could drive greater complexity and higher costs in our business operations;
• The challenges in achieving strategic objectives, cost savings and other anticipated benefits;
• The risk that our marketplaces do not evolve as anticipated and that the technologies acquired do not prove to be those needed to be successful in the marketplaces that we serve;
• The risk that we assume significant liabilities that exceed the limitations of any applicable indemnification provisions or the financial resources of any indemnifying party;
• The inability to maintain a relationship with key customers, vendors and other business partners of the acquired businesses;
• The difficulty in maintaining controls, procedures and policies during the transition and integration;
• The potential loss of key employees of the acquired businesses;
• The risk of diverting management attention from our existing operations;
• Difficulties in coordinating geographically disparate organizations and corporate cultures and integrating management personnel with different business backgrounds;
• The potential failure of the due diligence process to identify significant problems, liabilities or other challenges of an acquired company or technology;
• The risk that we incur significant costs associated with such acquisition activity that may negatively impact our operating results before the benefits of such acquisitions are realized, if at all;
• The entry into marketplaces where we have no or limited direct prior experience and where competitors have stronger marketplace positions;
• The exposure to litigation or other claims in connection with our assuming claims or litigation risks from terminated employees, customers, former shareholders or other third parties; and
• The risk that historical financial information may not be representative or indicative of our results as a combined company.
Historically, we have grown both organically and from acquisitions, and we intend to continue to grow in such manner. Our infrastructure will require, among other things, continued development of our financial and management controls and management information systems, management of our sales channel, continued capital expenditures, the ability to attract and retain qualified management personnel and the training of new personnel. We cannot be sure that our infrastructure, systems, procedures, business processes and managerial controls will be scalable to support the growth in our operations. Any delays in, or problems associated with, implementing, or transitioning to, new or enhanced systems, procedures, or controls to support the requirements of our business and operations and to effectively and efficiently integrate acquired operations may adversely affect our ability to meet customer requirements, manage our product inventory, and record and report financial and management information on a timely and accurate basis. These potential negative effects could prevent us from realizing the benefits of an acquisition transaction or other growth opportunity.
Likewise, we have in the past, and may in the future, divest certain business operations. Divestitures involve a number of risks, including the diversion of management's attention, significant costs and expenses, goodwill and other intangible asset impairment charges, the loss of customer relationships and cash flow, and the disruption of operations in the affected business. Failure to timely complete or consummate a divestiture may negatively affect valuation of the affected business or result in restructuring charges.
In the event of an unsuccessful acquisition or divestiture, our competitive position, revenues, results of operations and financial condition could be adversely affected.
We believe that our future success depends on our ability to deliver products and services that meet changing technology and customer needs.
Our business may be affected by rapid technological change, changes in user and customer requirements and preferences, frequent new product and service introductions embodying new technologies and the emergence of new standards and practices, any of which could render our existing products and proprietary technology obsolete. Accordingly, our ongoing R&D programs are intended to enable us to maintain technological leadership. We believe, to remain competitive, we must continually identify product needs in the market, effectively define product specifications and performance to satisfy market needs, timely launch new products to market, and effectively execute our sales strategy and go-to-market approach. However, there is a risk that we may not be able to:
• Develop or obtain leading technologies useful in our business;
• Enhance our existing products;
• Develop new product, service and technology capabilities that address the increasingly sophisticated and varied needs of prospective customers, particularly in the area of printer speeds, materials functionality and environmental impacts.
• Respond to technological advances and emerging industry standards and practices on a cost-effective and timely basis;
• Recruit or retain key technology employees, or
• Execute sales strategy to effectively meet customer needs.
If we are unable to meet changing technology and customer needs, our competitive position, revenue, results of operations and financial condition could be adversely affected.
The success of our regenerative medicine efforts depends on developing and commercializing products, either ourselves or in conjunction with development partners, that are subject to technical and market risks.
Our regenerative medicine business requires us to develop products that enable the application of additive manufacturing to human organ transplantation and organ models used for drug discovery and development. These initiatives may require significant investment and the technical achievement of viable product candidates may not be achieved. Despite significant investment requirements, our regenerative medicine efforts may result in only nominal revenue with no guarantee of future revenue growth. Our development efforts remain subject to risks including, but not limited to, ongoing funding commitments from our development partners and unanticipated technical or other hurdles to commercialization. Any products developed through our research efforts are subject to safety, regulatory and efficacy risks that may result in delays to commercialization, cause us to incur additional expenses or fail to achieve commercialization. In addition, any products that achieve commercialization and regulatory approval are subject to market risks including reimbursement from third-party payers and competition from existing or new products that aim to address similar indications. In addition, difficulties in our research efforts may lead to disputes with our strategic partners and other third parties, such as the dispute with former shareholders of Volumetric described under the heading "Termination of Volumetric Milestones Related to Potential Earnout Payments" in Note 22 to the consolidated financial statements.
Regulatory, Legislative and Legal Risk Factors
We are subject to U.S. and other anti-corruption laws, trade controls, economic sanctions, privacy regulations, and other similar laws and regulations. Our failure to comply with these laws and regulations could subject us to civil, criminal and administrative penalties and harm our reputation. Changes in U.S. federal administration priorities, policies or interpretations of these laws may increase compliance costs, create uncertainty, or heighten enforcement risk.
Doing business on a worldwide basis requires us to comply with the laws and regulations of the U.S. government and various other foreign jurisdictions. These laws and regulations place restrictions on our operations, trade practices, partners and investments. U.S. federal trade, sanctions, export control and regulatory policies have been subject to increased change and unpredictability in recent years, including the imposition, modification or expansion of tariffs, sanctions, export controls and regulatory requirements, which could adversely affect our business, supply chain, customers and partners.
In particular, our operations are subject to U.S. and foreign anti-corruption and trade control laws and regulations, such as the Foreign Corrupt Practices Act ("FCPA") and United Kingdom Bribery Act (the "Bribery Act"), export controls and economic sanctions programs, including those administered by the U.S. Treasury Department’s Office of Foreign Assets Control
("OFAC"), the State Department's Directorate of Defense Trade Controls ("DDTC") and the Bureau of Industry and Security ("BIS") of the Department of Commerce. U.S. enforcement agencies may increase or shift enforcement priorities, investigative activity, penalties or interpretive guidance. As a result of doing business in foreign countries and with foreign customers, we are exposed to a heightened risk of violating anti-corruption and trade control laws and sanctions regulations.
As part of our business, we may deal with state-owned business enterprises, the employees of which are considered foreign officials for purposes of the FCPA’s prohibition on providing anything of value to foreign officials for the purposes of obtaining or retaining business or securing any improper business advantage. In addition, the provisions of the Bribery Act extend beyond bribery of foreign public officials and also apply to transactions with individuals that a government does not employ. Some of the international locations in which we operate lack a developed legal system and have higher than normal levels of corruption. Our presence outside the U.S., including in Brazil, China, India and developing countries, and our development of new partnerships worldwide, could increase the risk of FCPA, OFAC or Bribery Act violations in the future.
As an exporter, we must comply with various laws and regulations relating to the export of products and technology from the U.S. and other countries having jurisdiction over our operations. In the U.S., these laws include the International Traffic in Arms Regulations ("ITAR") administered by the DDTC, the Export Administration Regulations ("EAR") administered by the BIS and trade sanctions againstembargoed countries and destinations administered by OFAC. Recent and potential future changes in U.S. export control classifications, licensing requirements, country restrictions, and end-use or end-user rules may limit our ability to sell products, delay shipments, increase compliance costs or require changes to our business practices. The EAR governs products, parts, technology and software which present military or weapons proliferation concerns, so-called "dual use" items, and ITAR governs military items listed on the United States Munitions List. Any failures to comply with these laws and regulations could result in fines, adverse publicity and restrictions on our ability to export our products, and repeat failures could carry more significant penalties.
Violations of anti-corruption and trade control laws and sanction regulations are punishable by civil penalties, including fines, denial of export privileges, injunctions, asset seizures, debarment from government contracts and revocations or restrictions of licenses, as well as criminalfines and imprisonment and could harm our reputation, create negative shareholder sentiment and affect our share value. We have established policies and procedures designed to assist our compliance with applicable U.S. and international anti-corruption and trade control laws and regulations, including the FCPA, the Bribery Act and trade controls and sanctions programs administered by OFAC, the DDTC and BIS, and have trained our employees to comply with these laws and regulations. However, there can be no assurance that all of our employees, consultants, agents or other associated persons will not take actions in violation of our policies and these laws and regulations. Additionally, there can be no assurance that our policies and procedures will effectively prevent us from violating these regulations in every transaction in which we may engage or provide a defense to any allegedviolation. In particular, we may be held liable for the actions that our joint venture partners take inside or outside of the United States, even though our partners may not be subject to these laws. Such a violation, even if our policies prohibit it, could have an adverse effect on our reputation, business, financial condition and results of operations. In addition, various state and municipal governments, universities and other investors maintain prohibitions or restrictions on investments in companies that do business with sanctioned countries, persons and entities, which could adversely affect our reputation, business, financial condition and results of operations.
Many governments, regulators, investors, employees, customers, and other stakeholders are increasingly focused on environmental considerations relating to businesses, including climate change and greenhouse gas emissions, as well as use of plastic materials. We monitor new and changing international, federal, and state environmental reporting obligations. As new or increased regulations take effect, these changing requirements may impose significant operational costs to comply, and expand compliance requirements for our products, our operations, and our supply chain, which could negatively impact our competitive position.
In addition, we have operations globally and are subject to various privacy and data protection laws, which encompasses the collection, use, disclosure, and storage of personal information and personally identifiable health information. This requires us to dedicate resources to implement controls and infrastructure to protect personal and health information needed to conduct our business activities. Failure to do so could subject us to potential regulatory fines, penalties, litigation, and could negatively impact our business and reputation.
We are subject to complex government laws and regulations relating to certain product sets and failure to meet the stringent requirements could impact our business operations and financial position.
Our medical device business is subject to extensive global regulations and enforcement, including in the Food and Drug Administration (FDA) in the U.S., and other governmental authorities for which our product is distributed. There are complex approvals for medical devices to be placed on the market, as well as ongoing responsibilities under these regulations. Failure to
comply with the applicable regulation for which the medical device applies could result in corrective actions, recalls, removal of local authority approvals, ceasing business activities, fines, and criminalprosecution.
The costs and burdens of compliance with laws and regulations has been and can, in the future, be significant, and we may face investigations and proceedings from governmental entities or third parties in the future.
In October 2017, we received an administrative subpoena from the BIS requesting the production of records in connection with possible violations of U.S. export control laws, including with regard to our former Quickparts.com, Inc. subsidiary. In addition, while collecting information responsive to the above-referenced subpoena, our internal investigation identified potential violations of the ITAR administered by the DDTC and potential violations of the EAR administered by the BIS. On June 8, 2018 and thereafter, we submitted voluntary disclosures to BIS and DDTC identifying potentially unauthorized exports between 2012 and 2017, including to China, of controlled items including technical data. In February 2023, the Company settled these matters with all three agencies. In February 2026, DTCC approved the Company’s spend of the remaining suspendedpenalty balance, resulting in no further suspendedpenalty due. On February 20, 2026, the DTCC notified the Company that it has closed the settlement agreement based upon the Company’s completion of all required terms. See Note 20,"Commitments and Contingencies," to our consolidated financial statements.
Since 2018, we have implemented new compliance procedures to identify and prevent potential violations of export controls laws, trade sanctions and government contracting laws and regulations and created a Compliance Committee of the Board of Directors to further enhance board oversight of compliance risks. As we continue to implement additional compliance enhancements, we may discover additional potential violations of export controls laws, trade sanctions and/or government contracting laws. If we identify any additional potential violations, we will submit voluntary disclosures to the relevant agencies and cooperate with such agencies on any related investigations. However, if we are found to have violated one or more export control laws, trade sanctions or government contracting laws, we could be subject to various civil or criminalpenalties, significant compliance, litigation, settlement costs or other losses, resulting in a material adverse effect on our business, results of operations and financial condition. We may also be subject to negative publicity related to these matters, which could harm our reputation, reduce demand for our products, solutions and services, result in employee attrition and negatively impact our stock price.
As a result of the delayed filing of our 2023 Form 10-K, our Form 10-Q for the quarter ended March 31, 2024, our Form 10-Q for the quarter ended June 30, 2024, and our Form 10-Q for the quarter ended September 30, 2024, the Company has experienced risks and costs and expects to experience additional risks and costs in the future, including with respect to the SEC's ongoing investigation.
As a result of the circumstances giving rise to the delayed filing of our 2023 Form 10-K, our Form 10-Q for the quarter ended March 31, 2024, our Form 10-Q for the quarter ended June 30, 2024, and the Form 10-Q for the quarter ended September 30, 2024, the Company experienced risks and costs and expects to experience additional risks and costs in the future. The audit of the financial statements included in our 2023 Form 10-K was time-consuming, required the Company to incur additional incremental expenses and affected management’s attention and resources. Further, the measures to strengthen internal controls being implemented continue to require and will likely require in the future greater management time and Company resources to implement and monitor. Although we have now filed our 2023 Form 10-K, our Form 10-Q for the quarter ended March 31, 2024, our Form 10-Q for the quarter ended June 30, 2024, and our Form 10-Q for the quarter ended September 30, 2024, our failure to make these filings in a timely manner has led to further investigation and scrutiny by the SEC, which has been conducting a formal investigation of the Company since April 2022 as a follow on to the previously disclosed SEC voluntary request for documents. Although the Company is currently cooperating with the SEC, the Company cannot predict the ultimate outcome of the SEC’s investigation. Any allegations or adverse findings by the SEC could harm our reputation, negatively impact our stock price and have a material adverse effect on our business, financial condition and results of operations. Moreover, the expense and distraction to management of cooperating with and responding to the SEC could have a material adverse effect on the Company even if the investigation is ultimately closed or resolved in a manner favorable to the Company.
We derive a significant portion of our revenue from business conducted outside the U.S. and are subject to the risks of doing business outside the U.S.
We face many risks inherent in conducting business activities outside the U.S. that, unless managed properly, may adversely affect our profitability, including our ability to collect amounts due from customers. While most of our operations outside the U.S. are conducted in highly developed countries, our operations could be adversely affected by, among others, the following:
• Unexpected changes in laws, regulations and policies of non-U.S. governments relating to investments and operations, as well as U.S. laws affecting the activities of U.S. companies abroad;
• Changes in regulatory requirements, including export controls, tariffs and embargoes, other trade restrictions, competition, environmental, corporate practices and data privacy concerns;
• Political policies, political or civil unrest, terrorism or epidemics and other similar outbreaks;
• Fluctuations in currency exchange rates;
• Limited protection for the enforcement of contract and intellectual property rights in some countries;
• Difficulties in staffing and managing foreign operations;
• Operating in countries with a higher incidence of corruption and fraudulent business practices;
• Potentially adverse changes in taxation;
• The impact of public health epidemics on employees and the global economy; and
• Other factors, depending upon the specific country in which we conduct business.
These uncertainties may make it difficult for us and our customers to accurately plan future business activities and may lead our customers in certain countries to delay purchases of our products and services. More generally, these geopolitical, social and economic conditions could result in increased volatility in global financial markets and economies.
The consequences of terrorism or armed conflicts are unpredictable, and we may not be able to foresee events that could have an adverse effect on our market opportunities or our business. We are uninsured for losses and interruptions caused by terrorism, acts of war and similar events.
We seek to minimize the risks associated with interest rates, foreign exchange rates and commodity prices through regular operating and financing activities. However, our efforts to minimize our exposure to market risks from changes in interest rates, foreign currency exchange rates and commodity prices may prove to be insufficient or unsuccessful.
We may incur substantial costs enforcing or acquiring intellectual property rights and defendingagainst third-party claims as a result of litigation or other proceedings.
In connection with the enforcement of our own intellectual property rights, the acquisition of third-party intellectual property rights or disputes related to the validity or allegedinfringement of third-party intellectual property rights, including patent rights, we have been, and may in the future be, subject to claims, negotiations or complex, protractedlitigation. Intellectual property disputes and litigation may be costly and can be disruptive to our business operations by diverting the attention and energy of management and key technical personnel, and by increasing our costs of doing business. Although we have successfullydefended or resolved past litigation and disputes, we may not prevail in any ongoing or future litigation and disputes, which could adversely affect our results of operations and financial condition.
Third-party intellectual property claims asserted against us could subject us to significant liabilities, require us to enter into royalty and licensing arrangements on unfavorable terms, prevent us from assembling or licensing certain of our products, subject us to injunctions restricting our sale of products, cause severedisruptions to our operations or the marketplaces in which we compete or require us to satisfy indemnification commitments with our customers, including contractual provisions under various license arrangements. In addition, we may incur significant costs in acquiring the necessary third-party intellectual property rights for use in our products. Any of these could seriouslyharm our business, operating results, liquidity and financial condition.
We may not be able to protect our intellectual property rights and confidential information, including our digital content, from third-party infringers or unauthorized copying, use or disclosure.
Although we defend our intellectual property rights and endeavor to combat unlicensed copying and use of our digital content and intellectual property rights through a variety of techniques, preventingunauthorized use or infringement of our rights ("piracy attacks") is inherently difficult. If our intellectual property becomes subject to piracy attacks, our business may be harmed.
Additionally, we endeavor to protect the secrecy of our digital content, confidential information and trade secrets. If unauthorized disclosure of our trade secrets occurs, we could potentially lose trade secret protection. The loss of trade secret protection could make it easier for third parties to compete with our products by copying previously confidential features, which could adversely affect our business, results of operations, revenue and operating margins. We also seek to protect our confidential information and trade secrets through the use of non-disclosure agreements. However, there is a risk that our confidential information and trade secrets may be disclosed or published without our authorization, and in these situations it may be difficult and/or costly for us to enforce our rights.
Changes in, or interpretation of, tax rules and regulations may impact our effective tax rate and future profitability.
We are a U.S. based, multinational company subject to taxation in multiple U.S. and foreign tax jurisdictions. Our future effective tax rates could be adversely affected by changes in statutory tax rates or interpretation of tax rules and regulations in jurisdictions in which we do business, changes in the amount of revenue or earnings in the countries with varying statutory tax rates, or by changes in the valuation of deferred tax assets and liabilities.
In addition, we are subject to audits and examinations of previously filed income tax returns by the Internal Revenue Service and other domestic and foreign tax authorities. We regularly assess the potential impact of such examinations to determine the adequacy of our provision for income taxes and have reserved for potential adjustments that we expect may result from the current examinations. We believe such estimates to be reasonable; however, there is no assurance that the final determination of any examination will not have an adverse effect on our operating results and financial position.
Material weaknesses in our internal control over financial reporting could result in material misstatements in our financial statements not being prevented or detected, which could affect investor confidence in the accuracy and completeness of our financial statements and could negatively impact our stock price and financial condition.
As a public company, we are required to comply with Section 404 of the Sarbanes-Oxley Act. If we fail to abide by the applicable requirements of Section 404, regulatory authorities, such as the SEC, could subject us to sanctions or investigation, and our independent registered public accounting firm may not be able to certify as to the effectiveness of our internal control over financial reporting pursuant to an audit of our internal controls. Even effective internal controls can provide only reasonable assurance with respect to the preparation and fair presentation of financial statements. Accordingly, our internal control over financial reporting may not prevent or detect misstatements because of their inherent limitations, including the possibility of human error, the circumvention or overriding of controls, or fraud.
Management, including our Chief Executive Officer and Interim Chief Financial Officer, assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2025. Based on its assessment, management has concluded that the Company did not maintain effective internal control over financial reporting as of December 31, 2025, due to the following material weaknesses.
We did not design and maintain adequate controls within the revenue process to address the determination of standalone selling price (“SSP”) and allocation of the transaction price to separate performance obligations for revenue accounting. Additionally, we did not design and maintain adequate controls over the accounting treatment for market-based stock compensation awards. The above control deficiencies constitute material weaknesses, either individually or in the aggregate.
As further described in Item 9A, Management's Report on Internal Control over Financial Reporting, remediation actions are underway and are scheduled to be complete within fiscal year 2026. Specifically, we will finalize implementation of our automation tool by documenting control processes and conducting training for our professionals to accurately execute the determination of SSP and allocation of the transaction price. Additionally, we will enhance our controls to support accurate accounting treatment for market-based stock compensation plans.
While we believe our remediation plans should remediate the material weaknesses, we cannot provide assurance of when the material weaknesses will be remediated, nor can we be certain of whether additional actions will be required or the costs of any such actions. Moreover, we cannot provide assurance that additional material weaknesses will not arise in the future. While the material weaknesses discussed in Item 9A, "Management's Report on Internal Control over Financial Reporting", did not result in material misstatements of our annual or interim consolidated financial statements, any failure to remediate the material weaknesses, or the identification of new material weaknesses in our internal control over financial reporting, could result in material misstatements in our financial statements that may continue undetected, negatively impacting the public perception of the Company and our securities and cause us to fail to meet our reporting and financial obligations or incur significant additional costs to remediate the material weaknesses, each of which could negatively affect our stock price, harm our ability to raise capital on favorable terms in the future or otherwise have a negative impact on our financial condition.
Our solutions support advanced applications in two key industry verticals which are our reportable segments: Healthcare Solutions (which includes dental, medical devices, personalized health services and regenerative medicine) and Industrial Solutions (which includes aerospace, defense, transportation and general manufacturing). We have more than 35 years of experience and expertise, which have proven vital to our development of an ecosystem and end-to-end digital workflow solutions that enable customers to optimize product designs, transform workflows, bring innovative products to market and drive new business models.
Recent Developments
2025 Restructuring Plan
In March 2025, the Company authorized the next phase of its multi-faceted cost savings and restructuring initiative (the "2025 Restructuring Plan"). The 2025 Restructuring Plan includes initiatives to deliver sustainable growth and profitability, enabled by a streamlining of both infrastructure and business processes, while consistently investing in core research and development ("R&D") activities to support long-term growth opportunities. Additionally, in May 2025, in response to the uncertain macroeconomic environment, the Company announced an incremental cost reduction initiative focused on labor force reductions to deliver incremental cost savings.
We incurred $8.5 million in severance and terminationbenefit costs related to headcount reductions during the year ended December 31, 2025. These costs were primarily cash charges and were generally recognized when probable and estimable consistent with the Company’s past practices or statutory law. The Company does not expect to incur significant additional restructuring charges in 2026 related to the 2025 Restructuring Plan.
Divestitures
In December 2024, the Company entered into a definitive agreement with Hexagon AB for the sale of its Geomagic software business ("Geomagic"), which was included in our Industrial Solutions segment. On April 1, 2025, the Company completed the sale of Geomagic and received $119.4 million in cash, which reflected applicable purchase price adjustments. The Company recorded a pre-tax gain of $125.7 million from the sale of Geomagic in the year ended December 31, 2025.
In September 2025, the Company entered into a definitive agreement for the sale of its 3DXpert and Oqton businesses to Hubb Global Holdings, LLC. On October 31, 2025, the Company completed the sale of the 3DXpert and Oqton businesses for $3.3 million in cash, which reflected applicable purchase price adjustments, plus a revenue-based royalty receivable which had a present value of $7.1 million.
Neither of these divestitures is presented as discontinued operations in the consolidated financial statements because they do not represent a strategic shift that will have a major impact on the Company's operations.
Background
We earn revenue from the sale of products and services through our Healthcare Solutions and Industrial Solutions segments. The product categories include 3D printers and corresponding materials, digitizers, software licenses, 3D scanners and haptic devices. The majority of materials used in our 3D printers are proprietary. The services categories include maintenance contracts and services on 3D printers, software maintenance, software as a service subscriptions and healthcare solutions services.
Given the relatively high price of certain 3D printers and a corresponding lengthy selling cycle, as well as relatively low unit volume of the higher-priced printers in any particular period, a shift in the timing and concentration of orders and shipments from one period to another can materially affect reported revenue in any given period.
In addition to changes in sales volumes, there are two other primary drivers of changes in revenue from one period to another: (1) the combined effect of changes in product mix and average selling prices and (2) the impact of fluctuations in foreign currencies. As used in this MD&A, the price and mix effects relate to changes in revenue that are not able to be specifically attributed to changes in unit volume or changes in foreign exchange rates.
RESULTS OF OPERATIONS
Comparison of Results of Operations
Year Ended December 31,
(in thousands)
Change
Revenue
Cost of sales
Selling, general and administrative expenses ("SG&A")
Research and development expenses ("R&D")
Asset impairment charges
Loss from operations
Revenue
The following table sets forth changes in our revenue for the year ended December 31, 2025.
(Dollars in thousands)
Products
Services
Total
Revenue — year ended December 31, 2024
Change in revenue:
Volume
Price/mix
Foreign currency translation
Net change
Revenue — year ended December 31, 2025
For the year ended December 31, 2025, revenue decreased $53.2 million, or 12.1%, compared to the year ended December 31, 2024. The decrease in revenue was primarily due to a decline in product revenue of $55.8 million driven by lower materials volume to customers in the dental, service bureaus, and jewelry markets, and the impact of divestitures. Service revenue increased $2.6 million due to increased volume and the impact of foreign currency translation which was partially offset by the impact of the divestitures. Service revenue for the year ended December 31, 2024 was also impacted by an $8.7 million reversal of revenue due to a cumulative catch-up adjustment under a collaboration arrangement as the Company determined that incremental revenue attributable to milestone payments that are contingent upon the achievement of contractual development criteria are no longer probable of being earned.
Cost of sales and gross profit
Year Ended December 31,
Change in Gross Profit
Change in
Gross Profit Margin
(Dollars in thousands)
Gross Profit
Gross Profit Margin
Gross Profit
Gross Profit Margin
Percentage Points
Products
Services
Total
For the year ended December 31, 2025, cost of sales decreased to $255.9 million compared to $275.9 million for the year ended December 31, 2024. This decline was primarily attributable to a lower volume of printer and material sales. Gross profit for the year ended December 31, 2025 decreased $33.1 million, or 20.2%, compared to the year ended December 31, 2024. The decrease in gross profit was primarily due to a combination of lower materials sales volumes and the impact of the divestitures. Gross profit margin decreased to 33.9% for the year ended December 31, 2025 compared to 37.3% for the year ended December 31, 2024, primarily due to the divestitures and lower sales volumes.
Selling, general and administrative expenses
For the year ended December 31, 2025, SG&A decreased $48.8 million, or 23.2%, compared to the year ended December 31, 2024. The year-over-year decline in SG&A was primarily due to:
• $21.3 million decrease in compensation and benefits expense primarily related to lower compensation expense due to the impact of our restructuring actions and lower stock-based compensation expense;
• $19.0 million decrease in third-party service provider and consulting costs due to the increased cost to complete our fiscal 2023 audit during the year ended December 31, 2024, and decreased legal fees; and
• $10.2 million decrease in intangible asset amortization expense due to lower intangible asset balances in 2025 because of the impairment charges assessed during the quarter ended September 30, 2024, as described further below;
• partially offset by a $4.7 million increase due to severance costs associated with our restructuring actions.
Research and development expenses
For the year ended December 31, 2025, R&D decreased $21.4 million, or 24.8%, compared to year ended December 31, 2024. The year-over-year decline in R&D was primarily due to:
• $15.8 million decrease in compensation and benefits expense and other R&D expenses primarily due to improved operating efficiency and cost reductions realized from our restructuring activities.
Asset impairment charges
During the year ended December 31, 2025, the Company recognized a $0.6 million impairment of a right of use asset related to a lease of a facility that was exited as part of its 2025 Restructuring Plan and could not be subleased. The impairment is included within Asset impairment charges in our consolidated statements of operations.
During the year ended December 31, 2024, the Company recognized a goodwill impairment charge of $101.4 million related to the Healthcare Solutions reporting unit. This charge resulted from an interim impairment test performed during the three months ended September 30, 2024, which indicated the reporting unit's carrying value exceeded its fair value due to revised long-range cash flow forecasts prepared during the Company’s annual planning process. The impairment is included within Asset impairment charges in our Consolidated Statements of Operations.
In addition, during the year ended December 31, 2024, the Company recorded an aggregate impairment charge of $42.3 million, within Asset impairment charges in our Consolidated Statements of Operations, as a result of concluding that the carrying value of the primary asset group underlying the Company's core operations exceeded the fair value of the asset group as of September 30, 2024. Of this amount, $31.2 million was allocated to intangible assets, $5.9 million to property and equipment and $5.2 million to right-of-use assets.
Non-operating income
The following table sets forth the components of non-operating income:
Year Ended December 31,
(in thousands)
Change
Foreign exchange gain, net
Interest income
Interest expense
Gain on disposition
Other income, net
Total non-operating income
Foreign exchange gain, net
Foreign exchange gain, net increased by $1.2 million for the year ended December 31, 2025 compared to the year ended December 31, 2024 primarily due to realized and unrealized gains resulting from the settlement of receivables and payables in a currency other than the subsidiaries functional currency.
Interest income
Interest income decreased $3.3 million for the year ended December 31, 2025 compared to the year ended December 31, 2024 due to the Company's lower cash and cash equivalent balances.
Interest expense
Interest expense increased by $2.6 million for the year ended December 31, 2025 compared to the year ended December 31, 2024 primarily due to interest expense related to the 5.875% convertible senior secured notes due 2030 (the "2030 Notes") entered into in the second quarter of 2025.
Gain on disposition
The gain on disposition of $139.6 million for the year ended December 31, 2025 was due to the sale of the Geomagic business on April 1, 2025 ($125.7 million) and the 3DXpert and Oqton businesses on October 31, 2025 ($13.9 million).
Other income, net
Other income, net, decreased $16.6 million for the year ended December 31, 2025 compared to the year ended December 31, 2024 primarily due to a higher gain on the repurchase of debt in the year ended December 31, 2024.
Income Taxes
For the years ended December 31, 2025 and 2024, we reported income tax expense of $14.9 million and $2.2 million, respectively. The Company's effective tax rates for both years were significantly below blended U.S. and foreign jurisdictions' statutory tax rates primarily due to the Company's reported losses and the recognition of a full deferred tax asset valuation allowance in various jurisdictions in both years. Additionally, the year ended December 31, 2025 was impacted by a gain recognized in connection with the divestiture of Geomagic and some foreign return to provision adjustments recorded in the period.
Segment Results
The following table presents the revenue and gross profit amounts reported by each of our segments for the years ended December 31, 2025 and 2024:
Segment Revenue
Segment Gross Profit
Year Ended
Year Ended
(in thousands)
December 31, 2025
December 31, 2024
Change
December 31, 2025
December 31, 2024
Change
Healthcare Solutions
Industrial Solutions
Total Company
Healthcare Solutions
Revenue
For the year ended December 31, 2025, Healthcare Solutions revenue decreased $10.1 million, or 5.3%, compared to the year ended December 31, 2024. This decrease in segment revenue was primarily due to a decline in product revenue of $22.4 million. The decline in product revenue was primarily due to lower material sales in the dental market, driven by lower volumes with a key customer. The decline in product revenue was partially offset by a $12.3 million increase in services revenue driven by higher personalized healthcare solutions revenue and parts manufacturing which was partially offset by a decline in printer services. Service revenue for the year ended December 31, 2024 was impacted primarily by an $8.7 million reversal of revenue due to a cumulative catch-up adjustment under a collaboration arrangement as the Company determined that incremental revenue attributable to milestone payments that are contingent upon the achievement of contractual development criteria are no longer probable of being earned.
Gross Profit
For the year ended December 31, 2025, Healthcare Solutions gross profit decreased $1.7 million, or 2.3%, compared to the year ended December 31, 2024. The decrease in segment gross profit was primarily due to lower sales volumes which was partially offset by favorable price/mix.
Industrial Solutions
Revenue
For the year ended December 31, 2025, Industrial Solutions revenue decreased $43.1 million, or 17.2%, compared to the year ended December 31, 2024. The decrease in revenue was related to a decrease in printer and materials revenue of $33.3 million primarily related to reduced volumes in the service bureaus and jewelry markets and the impact of divestitures, partially offset by increased sales in the aerospace and defense market. Service revenue decreased by $9.8 million primarily due to the impact of divestitures in the year ended December 31, 2025.
Gross Profit
For the year ended December 31, 2025, Industrial Solutions gross profit decreased $31.4 million, or 34.7%, compared to the year ended December 31, 2024. The decrease in segment gross profit was primarily due to the impact of the divestitures, unfavorable price/mix and lower sales volumes.
Liquidity and Capital Resources
The following table sets forth the Company's operating working capital at December 31, 2025, and 2024.
Change
(Dollars in thousands)
December 31, 2025
December 31, 2024
Cash and cash equivalents
Accounts receivable, net
Inventories
Less:
Current operating lease liabilities
Accounts payable
Accrued and other liabilities
Operating working capital
We assess our liquidity in terms of our ability to generate cash to fund our operating, investing and financing activities. In doing so, we review and analyze our current cash on hand, the number of days our sales are outstanding, inventory turns, capital expenditure commitments and accounts payable turns. Our cash requirements primarily consist of funding working capital and capital expenditures. Differences between the amounts of working capital item changes in the cash flow statement and the balance sheet changes for the corresponding items are primarily the result of foreign currency translation adjustments.
At December 31, 2025, cash and cash equivalents totaled $95.6 million and decreased $75.7 million since December 31, 2024. This decrease resulted primarily from the repayment of long-term debt of $170.0 million, cash used in operations of $87.8 million, share repurchases of $15.0 million and capital expenditures of $9.9 million, which were partially offset by proceeds from sales of assets and businesses of $122.7 million and proceeds from borrowings of $92.0 million.
In order to reduce our current debt obligations, in December 2025, the Company entered into separate, privately negotiated agreements with a limited number of existing holders (the "Transaction Participants") of the Company’s 2026 Notes to exchange $30.8 million aggregate principal amount of 2026 Notes held by the Transaction Participants for an aggregate of 16,625 thousand shares of the Company’s common stock, par value $0.001 per share ("the Exchange"). Immediately following the Exchange, $3.9 million in aggregate principal amount of the 2026 Notes remained outstanding. The Exchange was primarily a non-cash transaction.
Cash held outside the U.S. at December 31, 2025 was $33.0 million, or 34.5% of total cash and cash equivalents, compared to $63.8 million, or 37.3% of total cash and cash equivalents at December 31, 2024. As our previously unremitted earnings have been subjected to U.S. federal income tax, we expect any repatriation of these earnings to the U.S. would not incur significant federal and state taxes. However, these dividends are subject to foreign withholding taxes that are estimated to result in the Company incurring tax costs in excess of the cost to obtain cash through other means. Cash equivalents are comprised of funds held in money market instruments and are reported at their current carrying value, which approximates fair value due to the short-term nature of these instruments. We strive to minimize our credit risk by investing primarily in investment grade, liquid instruments and limit exposure to any one issuer depending upon credit quality. See "Cash flow" discussion below.
Cash flow
The Company currently funds its operations, including working capital requirements, capital expenditures and investments by using cash; cash equivalents; cash flow from operations, which can vary widely from quarter to quarter; and financing activities, as necessary. We expect that cash flow from operations, cash and cash equivalents, and other sources of liquidity, such as issuing equity or debt securities, subject to market conditions, will be available and sufficient to meet all our cash requirements over the next twelve months. Cash requirements for periods beyond the next twelve months will depend on, among other things, the Company's profitability and its ability to manage working capital requirements and, if needed, its ability to identify and secure other potential sources to fund future working capital needs and meet capital expenditure requirements. See "Risk Factors—Operational & Financial Risk Factors—If we do not generate net cash flow from operations and if we are unable to raise additional capital, our financial condition could be adversely affected and we may be unable to execute our business strategy."
We are subject to a financial covenant under the 2030 Indenture (as defined below) requiring us to maintain at least $20.0 million in qualified cash. As of December 31, 2025, we were in compliance with the covenants included in the 2030 Indenture. However, if we are unable to generate sufficient cash flow in the future, we may be non-compliant which could result in an event of default making the 2030 Notes, with an outstanding principal balance of $92.0 million as of December 31, 2025, due immediately. See "Risk Factors—Operational & Financial Risk Factors—Servicing or refinancing our debt may require a significant amount of cash, and we may not have sufficient cash or the ability to raise the funds necessary to settle conversions of the 5.875% convertible senior secured notes due 2030 (the "2030 Notes") and the 0% convertible senior notes due 2026 (the "2026 Notes") (collectively the "Notes") in cash, repay the Notes at maturity, or repurchase the Notes as required following a fundamental change."
The following is a summary of the changes in the Company’s cash flows, followed by a brief discussion of these changes:
Year Ended
(in thousands)
December 31, 2025
December 31, 2024
Change
Net cash used in operating activities
Net cash provided by (used in) investing activities
Net cash used in financing activities
Operating Activities
Cash flows used in operating activities were $87.8 million during the year ended December 31, 2025, an increase of $42.9 million, as compared to the year ended December 31, 2024. The year-over-year change in operating cash flows was primarily attributable to the following factors:
• Year-over-year decrease of $56.8 million in operating cash flows from net earnings, net of non-cash items due to unfavorable business performance and restructuring actions.
• The aggregate changes in trade accounts receivable, inventory, and trade accounts payable provided $0.5 million of cash during the year ended December 31, 2025 as compared to providing $3.6 million during the prior year comparable period. The amount of cash flow generated from or used by the aggregate of trade accounts receivable, inventories, and trade accounts payable depends upon how effectively we manage the cash conversion cycle, which generally represents the number of days that elapse from the day we pay for the purchase of raw materials and components to the collection of cash from our customers, and can be significantly impacted by the timing of collections and payments in a period.
• The aggregate change in prepaid expenses, other assets, accrued expenses, and other liabilities used $31.6 million in the year ended December 31, 2025 as compared to providing $2.6 million in the prior year comparable period. The year-over-year changes were driven by the timing of accruals and payments and tax-related amounts.
Investing Activities
Net cash provided by investing activities was $109.0 million during the year ended December 31, 2025, an increase of $128.0 million, as compared to the year ended December 31, 2024, driven primarily by proceeds from the sale of the Geomagic business.
Financing Activities
Net cash used in financing activities was $101.7 million during the year ended December 31, 2025, an increase of $10.4 million, as compared to the year ended December 31, 2024, driven primarily by net repayments of long-term debt of $84.1 million and stock repurchases of $15.0 million in the year ended December 31, 2025 as compared to net repayments of long-term debt of $87.2 million in the year ended December 31, 2024. There were no stock repurchases during the year ended December 31, 2024.
Material Cash Requirements
The Company's material cash requirements consist of the following contractual commitments and other obligations:
Indebtedness
Convertible senior secured notes due 2030
Pursuant to an indenture dated June 23, 2025 (the "2030 Indenture"), the Company issued $92.0 million aggregate principal amount of 5.875% convertible senior secured notes due 2030 (the "2030 Notes") in a private placement to a limited number of qualified institutional buyers. The net proceeds from the 2030 Notes, along with $78.0 million of cash on hand, were used to repurchase an aggregate principal amount of $179.7 million of the Company's outstanding 0% convertible senior notes due 2026 (the "2026 Notes").
The 2030 Notes are senior secured obligations, guaranteed by certain U.S. subsidiaries of the Company (the "Note Parties"), and bear interest semiannually at a rate of 5.875%, payable on June 15 and December 15 of each year, beginning December 15, 2025. The 2030 Notes are secured on a first-priority basis by substantially all assets of the Note Parties, subject to certain exceptions (including with respect to the intellectual property of the Note Parties; provided that, certain breaches by the Company or any of its subsidiaries of the limitation on liens covenant in the 2030 Indenture with respect to liens on its intellectual property will cause the 2030 Notes to automatically become secured by a prior security interest in all the intellectual property of the Note Parties). The 2030 Indenture also includes certain financial covenants, including a requirement for the Note Parties to maintain certain minimum cash, accounts receivable and inventory balances each quarter. Under the original 2030 Indenture, as of the last day of each fiscal quarter, the Note Parties were required to maintain at least $40.0 million in qualified cash and a minimum of $75.0 million in accounts receivable and inventory, and the Company was required to maintain at least $16.8 million in restricted cash until certain conditions were satisfied.
In December 2025, the Company entered into a second supplemental indenture (the "Second Supplemental Indenture") to the 2030 Indenture, where certain restrictions were amended in exchange for cash payments in an aggregate amount of approximately $1.8 million paid to the holders of the 2030 Notes. The Second Supplemental Indenture amended the minimum cash requirement to require the Note Parties to maintain at least $20.0 million in qualified cash as of the last day of each fiscal quarter, removed the restricted cash account covenant and released the related lien on the restricted cash amount.
The initial conversion rate was 445.6328 shares per $1,000 principal amount, equivalent to a conversion price of approximately $2.24 per share, which reflected a 20% premium over the $1.87 closing price of the Company’s common stock on June 17, 2025. The 2030 Notes are set to mature on June 15, 2030, unless earlier redeemed, repurchased, or converted in accordance with their terms.
Prior to March 15, 2030, the 2030 Notes are only convertible upon the occurrence of certain events and will be convertible thereafter at any time until the close of business on the second scheduled trading day immediately preceding the maturity date.
The 2030 Notes are convertible into cash, shares of the Company’s common stock or a combination of cash and shares of common stock, at the election of the Company.
Holders of the 2030 Notes have a one-time put right on June 23, 2028, to require the Company to repurchase all or a portion of their 2030 Notes for cash at 100% of the principal amount, plus accrued and unpaid interest. Additionally, upon a fundamental change (as defined in the 2030 Indenture), holders may require repurchase on the same terms. The Company is required to increase the conversion rate for holders who convert in connection with certain fundamental changes or in connection with a redemption.
On or after June 23, 2028 and prior to the 41 st scheduled trading day immediately preceding the maturity date, the 2030 Notes will be redeemable, in whole or in part, at the Company's option, for cash, provided that the last reported sale price of the Company's common stock has been at least 130% of the conversion price then in effect for a specified period, as described in the 2030 Indenture.
The effective interest rate on the 2030 Notes is 8.6%, inclusive of original issue discounts, commissions, and offering expenses.
Convertible senior notes due 2026
The 2026 Notes were issued pursuant to an indenture dated November 16, 2021 (the "2026 Indenture") between the Company and The Bank of New York Mellon Trust Company, N.A., as trustee (the "Trustee"), in an initial aggregate principal amount of $460.0 million. Although the 2026 Notes do not bear regular interest and their principal does not accrete, they have an annual effective interest rate of 0.594%, reflecting original issue discounts, commissions, and offering expenses. The 2026 Notes had an initial conversion rate of 27.8364 shares of common stock per $1 principal amount of Notes (which is subject to adjustment in certain circumstances). This is equivalent to an initial conversion price of approximately $35.92 per share. The conversion rate is subject to customary adjustments under certain circumstances in accordance with the terms of the 2026 Indenture. The 2026 Notes are scheduled to mature on November 15, 2026, unless earlier redeemed, repurchased, or converted in accordance with their terms.
Prior to August 15, 2026, the 2026 Notes are only convertible upon the occurrence of certain events and will be convertible thereafter at any time until the close of business on the second scheduled trading day immediately preceding the maturity date. Upon conversion, the Company will pay cash for the principal portion of the 2026 Notes being converted and may elect to settle the remainder of its conversion obligation, if any, in excess of the principal amount in cash, shares of the Company’s common stock or a combination of cash and shares of common stock.
The 2026 Notes are redeemable, in whole or in part, for cash at the Company’s option at any time, and from time to time, on or after November 20, 2024 and before the 41 st scheduled trading day immediately preceding the maturity date, but only if the last reported sale price per share of the Company's common stock has been at least 130% of the conversion price then in effect for a specified period of time.
At December 31, 2025, we had $96.0 million of outstanding principal, comprised of $3.9 million of 2026 Notes classified as a current liability and $92.0 million of the 2030 Notes classified as long-term debt. Management may consider pursuing additional long-term financing if it is appropriate in light of cash requirements for operations or strategic opportunities, which could result in higher financing costs.
Purchase Commitments
We have purchase commitments under legally enforceable agreements for goods and services with defined terms as to quantity, price and timing of delivery. The Company has purchase commitments in excess of a year primarily related to printer assemblies, inventory, capital expenditures, and software licenses. As of December 31, 2025, such purchase commitments totaled $15.9 million, with $8.1 million expected to be purchased within the next twelve months.
Leases
The Company had operating and financing lease obligations (inclusive of interest) of $87.5 million at December 31, 2025, primarily related to real estate and equipment leases, of which approximately $17.6 million in payments are expected over the next twelve months. For more information on the Company's leases, refer to the consolidated financial statements in Item 8 of this Form 10-K.
Indemnification
In the normal course of business, we periodically enter into agreements to indemnify customers or suppliers againstclaims of intellectual property infringement made by third parties arising from the use of our products. Historically, costs related to these indemnification provisions have not been significant. We are unable to estimate the maximum potential impact of these indemnification provisions on our future results of operations.
To the extent permitted under Delaware law, we indemnify our directors and officers for certain events or occurrences, when the director or officer is, or was, serving at our request in such capacity, subject to limited exceptions. The maximum potential amount of future payments we could be required to make under these indemnification obligations is unlimited; however, we
have directors’ and officers’ insurance coverage that may enable us to recover future amounts paid, subject to a deductible and to the policy limits. There is no assurance that the policy limits will be sufficient to cover all damages, if any.
Sources of Funding to Satisfy Material Cash Requirements
The Company believes it has the financial resources needed to meet its anticipated cash requirements during the next twelve months. Cash requirements for periods beyond the next twelve months will depend on, among other things, the Company's profitability and its ability to manage working capital requirements, and if needed, its ability to identify and secure other potential sources to fund future working capital needs and meet capital expenditure requirements.
Critical Accounting Estimates
We prepare our consolidated financial statements in accordance with U.S. Generally Accepted Accounting Principles ("GAAP"). In doing so, we make estimates and assumptions that affect the amounts we reported as assets, liabilities, revenues, expenses, gains and losses, as well as related disclosures of contingent assets and liabilities. In some cases, we reasonably could have applied different estimates and/or assumptions and changes in our accounting estimates are reasonably likely to occur from period to period. Accordingly, actual results could differ materially from our estimates. To the extent that there are material differences between our estimates and actual results, our financial condition or results of operations will be affected. We base our estimates on past experience and other assumptions that we believe are reasonable under the circumstances, and we evaluate these estimates on an ongoing basis. We refer to accounting estimates of this type as critical accounting estimates, which we discuss further below. We have reviewed our critical accounting estimates with the Audit Committee of our Board of Directors.
See Note 2 to the consolidated financial statements in Item 8 of this Form 10-K for a summary of our significant accounting policies.
Revenue recognition
Revenue is recognized for the amount of consideration we expect to receive in exchange for products or services when control of those promised products or services is transferred to customers, which generally occurs when the goods have been shipped or delivered to the customer, risk of loss has transferred to the customer, and we have a present right to payment.
We enter into contracts that include various combinations of products and services that are generally capable of being distinct and are accounted for as separate performance obligations. For such arrangements, we allocate revenue to each performance obligation based on its relative standalone selling price ("SSP"). Judgment is required to determine the SSP for each distinct performance obligation in a contract. For the majority of items, we estimate SSP using historical transaction data. We use a range of amounts to estimate SSP when we sell each of the products and services separately and need to determine whether there is a discount to be allocated based on the relative SSP of the various products and services. In instances where SSP is not directly observable, such as when the product or service is not sold separately, we determine the SSP using information that may include market conditions and other observable inputs.
In some circumstances, we have more than one SSP for individual products and services due to the stratification of those products and services by customers, geographic region or other factors. In these instances, we may use information such as the size of the customer and geographic region in determining the SSP. The determination of SSP is an ongoing process, and information is reviewed regularly in order to ensure SSP reflects the most current information or trends.
We enter into collaborative arrangements that we may be required to account for in accordance with Accounting Standards Codification ("ASC") Topic 606, " Revenue from Contracts with Customers ," because our collaboration partner meets the definition of a customer. When these arrangements provide an opportunity for the Company to earn milestone payments based upon the achievement of agreed-upon contract objectives, we must assess if and when it is appropriate to include those milestone payments, which represent variable consideration, in the contract's transaction price. This assessment, which impacts the timing and the amount of revenue recognized under a collaborative arrangement accounted for in accordance with ASC 606, requires management to conclude that it is probable that a significant reversal of the amount of cumulative revenue recognized with respect to a collaborative agreement will not occur as a result of including one or more milestone payments in the arrangement's transaction price, including when any uncertainty associated with the achievement of such milestones is ultimately resolved. The evaluation of when it is appropriate to include amounts earned upon the achievement of milestones in a contract's transaction price requires the application of significant assumptions and judgments, which management reassesses at the end of each reporting period.
See Note 2 and Note 4 to the consolidated financial statements in Item 8 of this Form 10-K for further discussion.
Income taxes
We are subject to income taxes in the U.S. and foreign jurisdictions. Significant judgment is required in evaluating our uncertain tax positions and determining our provision for income taxes.
Although we believe we have adequately reserved for our uncertain tax positions, no assurance can be given that the final tax outcome of these matters will not be different. We adjust these reserves in light of changing facts and circumstances, such as the closing of a tax audit or the refinement of an estimate. To the extent that the final tax outcome of these matters is different than the amounts recorded, such differences will affect the provision for income taxes and the effective tax rate in the period in which such determination is made.
The provision for income taxes includes the effect of reserve provisions and changes to reserves that are considered appropriate, as well as the related net interest and penalties. In addition, we are subject to the continuous examination of our income tax returns by the Internal Revenue Service ("IRS") and other tax authorities which may assert assessments against us. We regularly assess the likelihood of adverse outcomes resulting from these examinations and assessments to determine the adequacy of our provision for income taxes.
See Note 2 and Note 17 to the consolidated financial statements in Item 8 of this Form 10-K for further discussion.
Inventories
Inventories are stated at the lower of cost or net realizable value, with cost being determined using standard costing, which approximates the first-in, first-out method.
We maintain reserves to reduce the value of inventory based on the lower of cost or net realizable value, including allowances for excess and obsolete inventory. These reserves are based on management’s assumptions about and analysis of relevant factors including current levels of orders and backlog, historical and forecasted demand, market conditions and new products or innovations that diminish the value of existing inventories. If actual market conditions deteriorate from those anticipated by management, additional allowances for excess and obsolete inventory could be required and may be material to our results of operations.
See Note 2 to the consolidated financial statements in Item 8 of this Form 10-K for further discussion.
Goodwill & other long-lived assets, including intangible assets
Long-lived assets, including intangible assets
We review long-lived assets (or asset groups), including intangible assets subject to amortization, for impairment whenever events or changes in circumstances indicate that the carrying value of an asset (or asset group) may not be recoverable. We assess the recoverability of the carrying value of assets (or asset groups) held for use based upon a review of undiscounted projected cash flows. Impairmentlosses, where identified, are measured as the excess of the carrying value of a long-lived asset (or asset group) over its estimated fair value, as determined using discounted projected cash flows. Our estimation of discounted projected cash flows requires us to make certain assumptions, including long-term revenue and expense forecasts, profit margins, discount rates and terminal growth rates.
See Note 2, Note 6, Note 7, and Note 10 to the consolidated financial statements in Item 8 of this Form 10-K for discussion of the long-lived asset impairment charges recognized during the years ended December 31, 2024 and 2023.
Goodwill
Goodwill represents the amount by which the purchase price paid to consummate a business combination exceeds the fair value of the identifiable tangible and intangible assets acquired and liabilities assumed in the business combination. Goodwill is required to be assigned to a reporting unit for purposes of subsequent measurement and, as of December 31, 2025 and 2024, all of our reported goodwill was assigned to our Healthcare reporting unit.
We assess goodwill for impairment at least annually and, between annual impairment assessments, when circumstances indicate that there is a likelihood of greater than 50% that the carrying value of a reporting unit, inclusive of any assigned goodwill, exceeds the reporting unit’s fair value. On a forward-looking basis, such circumstances may include (1) a significant and sustained decrease in the trading price of our common stock that may suggest that the fair value of the Company and, accordingly, the fair value of our Healthcare reporting unit has declined, (2) a significant adverse change in the business climate for our Healthcare reporting unit, (3) a significant adverse change in the performance of our Healthcare reporting unit and/or (4) a decision to dispose of a significant portion of our Healthcare reporting unit.
When required to be performed, a quantitative goodwill impairment test compares the carrying value of a reporting unit to its fair value, and a goodwill impairment charge results when the reporting unit’s carrying value exceeds its fair value. The performance of a quantitative goodwill impairment test requires management to apply significant estimates and judgment – particularly to (1) estimate the fair value of the Company and each of our reporting units and (2) determine the carrying value of each of our reporting units, since we do not maintain separate balance sheets for our reporting units.
We estimate the fair value of our reporting units based primarily upon discounted cash flow projections for their underlying operations, which requires us to make significant assumptions regarding estimated cash flows, including long-term revenue and expense forecasts, profit margins, discount rates and terminal growth rates. We develop these assumptions based on the market risks unique to each reporting unit. In addition to the use of discounted cash flow projections, when appropriate, our estimates of the fair values of our reporting units include the results of applying the guideline company valuation method, which is a market approach. The application of the guideline company valuation method requires us to make judgments regarding (1) the appropriate set of comparable publicly traded guideline peer companies for which observable market multiples should be considered and (2) the appropriate multiple(s) to select from the range of multiples that may be observed for those guideline companies. We separately use reasonable and consistent allocation methodologies and approaches to allocate asset and liability balances to our reporting units when an account balance is not directly attributable to a specific reporting unit.
The remaining goodwill assigned to our Healthcare reporting unit could become subject to impairment upon any decrease in the estimated fair value of the Healthcare reporting unit or any increase in the estimated carrying value of the Healthcare reporting unit. Accordingly, over time, the key estimates, assumptions, and judgments that were used to estimate the fair value of our Healthcare reporting unit may change due to factors such as changes in market conditions and/or the actual performance of our Healthcare reporting unit. Similarly, over time, the carrying value of our Healthcare reporting unit could increase due to factors such as capital expenditures and/or the composition of the assets and liabilities of the Company and the underlying process and estimates required to allocate assets and liabilities that are not directly attributable to a specific reporting unit between/amongst our reporting units. Any unfavorable changes to the key estimates, assumptions, judgments or inputs utilized in our most recent quantitative goodwill impairment test – either on an individual basis or in the aggregate – could result in the recognition of impairment charges in the future.
See Note 2 and Note 8 to the consolidated financial statements in Item 8 of this Form 10-K for discussion of the goodwill impairment charges recognized during the years ended December 31, 2024 and 2023. Our annual goodwill impairment test performed for the year ended December 31, 2025 did not result in the recognition of a goodwill impairment charge.
Recent Accounting Pronouncements
See Note 2 to the consolidated financial statements in Item 8 of this Form 10-K for a discussion of recent accounting pronouncements.
