Item 1A. Risk Factors
In addition to the other information set forth in this annual report other documents we filed with the SEC, you should carefully consider the following factors which could materially affect our business, financial condition or results of operations in future periods . The risks and uncertainties described below are those that we have identified as material , but these are not the only risks and uncertainties facing us. Our business is also subject to general risks and uncertainties that affect many other companies, such as market conditions, economic conditions, geopolitical events, changes in laws, regulations or accounting rules, fluctuations in interest rates, terrorism, wars or conflicts, major health concerns, natural disasters or other disruptions of expected business conditions. Additional risks and uncertainties not currently known to us or that we currently believe are immaterial also may impair our business, including our results of operations, liquidity and financial condition.
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Business and Strategic Risks
Conditions in the global economy, the markets we serve, and financial markets may adversely affect our business, financial statements, and access to capital markets.
Our business is sensitive to general economic conditions, market disruptions and uncertainties. We have been affected, and may continue to be affected, by elevated interest rates, reduced levels of capital expenditures in the industries we serve, inflation in domestic and international markets, and labor availability constraints. In addition, recent and any further significant developments or changes in international trade, national laws or policies to protect or promote domestic interests or address foreign competition (including the imposition of further tariffs); slow or disrupted global economic growth; increases in inflation; changes or uncertainty regarding governmental trade, fiscal, tax and monetary policies; volatility in the currency, credit and capital markets; high levels of unemployment or underemployment; changes in capital or liquidity requirements for financial institutions; government deficit reduction efforts and budget negotiation dynamics; sequestration or government shutdowns; austerity measures; sovereign debt defaults; and other conditions that negatively affect the global economy could adversely affect us and our distributors, customers and suppliers, including by:
reducing demand for our products and services, limiting the financing available to our customers and suppliers, increasing order cancellations and resulting in longer sales cycles and slower adoption of new technologies;
increasing our costs and otherwise reducing profits realized from sales made in areas where unfavorable trade conditions exist;
increasing the difficulty of collecting accounts receivable and the risk of excess and obsolete inventories;
increasing price competition in our served markets;
interrupting our supply chains, which could disrupt our ability to produce our products;
increasing the risk of impairment of goodwill and other long-lived assets, and the risk that we may not be able to fully recover the value of other assets such as tax assets;
increasing the risk that counterparties to our contractual arrangements will become insolvent or otherwise unable to fulfill their contractual obligations, which could increase the risks identified above; and
adversely impacting market sizes and growth rates.
If growth in the global economy or in any of the markets we serve slows for a significant period, if economic conditions deteriorate significantly, or if economic improvements do not benefit the markets in which we operate, our business, results of operations and financial results could be adversely affected. We cannot predict the likelihood, duration or severity of any market disruption or adverse economic conditions. See “Our international operations subject us to a wide range of risks” for further information.
Our international operations subject us to a wide range of risks.
We operate on a global scale, and our international operations expose us to risks that may be more significant than those we face in the United States. These risks include, among others:
fluctuations in foreign currency exchange rates, which may affect reported results from operations as well as actual costs;
trade protection measures, embargoes and import or export restrictions and compliance requirements;
differing protection of intellectual property, technology and data in foreign jurisdictions, including the risk that our products will be counterfeited;
disruptions or delays in the transportation of materials to us and finished goods to our customers;
differences in sales terms and business practices, including longer payment terms than are typical in the United States;
local product preferences and product requirements;
differing laws or regulatory requirements, including labor, employment and tax laws, and unexpected changes thereto;
capital controls and limitations on ownership, as well as limitations on the repatriation of earnings and cash;
changes in political, economic, or social conditions in countries where we operate, including economic instability or geopolitical tensions;
difficulty staffing and managing geographically dispersed operations;
difficulties implementing restructuring actions in a timely or comprehensive manner;
greater uncertainty, cost, risk, and delay in commercializing products in certain foreign jurisdictions, including in connection with required regulatory approvals.
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International business risks have adversely affected our business and financial statements in the past, and may do so again in the future. A deterioration in diplomatic relations or trade tensions between the United States and any country in which we conduct business could adversely affect our operations and profitability. In fiscal year 2026, we generated approximately 8% of our sales from operations in China and 45% of our sales from other non-U.S. countries, primarily in Europe. Accordingly, political, economic, legal, regulatory, compliance, social and business conditions in these countries generally can adversely influence our business and financial results.
Global trade tensions have resulted in tariffs on materials we import and on products we export, which have increased, and may continue to increase, our costs and delay certain customer orders. These tariffs could reduce demand for our products and services and disrupt our supply chains. These effects could adversely impact our total revenues and profitability. Further, considerable uncertainty exists regarding the long-term effects of fiscal and monetary policies pursued domestically and internationally. Uncertainty or adverse changes to conditions in markets we serve, or in the laws, regulations or policies of foreign governments, can adversely affect economic growth of countries where we make significant sales, or of the particular industries in which we participate, and can adversely affect our business and financial statements.
Our international operations are also subject to the U.S. Foreign Corrupt Practices Act and similar anti-corruption laws in other jurisdictions. Global enforcement of anti-corruption laws has increased in some countries in recent years. Any alleged or actual violations of these laws may subject us to government investigations, significant criminal or civil penalties and other liabilities, and could negatively affect our business, reputation and financial condition.
Our growth could suffer if the markets into which we sell our products and services decline, do not grow as anticipated or experience volatility.
Our growth depends in part on the growth of the markets which we serve, and visibility into these markets is limited, particularly in those where we sell through distributors. Our revenues and profits depend substantially on the volume and timing of orders received, which are difficult to forecast. A decline or lower-than-expected growth in our served markets could diminish demand for our products and services, which would adversely affect our financial results.
Demand for certain of our products is influenced by customers’ capital spending budgets, the availability of government research funding, interest rates, and broader matters of public policy and government budget dynamics. Demand for our products and services is sensitive to changes in customer order patterns, which may be affected by announced price changes, marketing or promotional programs, new product introductions, changes in distributor or customer inventory levels, product life cycles, economic cycles or other factors. Any of these factors could adversely affect our growth and results of operations in any given period.
We face competition and if we are unable to compete effectively, we may experience reduced demand for our products and services and a loss of market share, which could result in decreased revenues. Even if we compete effectively, competitive pressures may require us to reduce prices or offer other concessions, which could decrease our profit margins.
The markets for our current and potential products are competitive. Because of the breadth of our product and service offerings and the variety of markets we serve, we compete against a wide range of competitors, including several that possess larger sales forces and greater capital resources.
To compete effectively, we must maintain strong relationships with existing key customers, establish relationships with new customers, continue to develop new products and services, enhance and protect our brand, and expand into new and higher-growth markets. Failure to compete effectively or pricing pressures resulting from competition may adversely impact our results of operations.
Industry consolidation and shifts in customer behavior could adversely affect our results of operations.
Shifts in the industries we serve may limit future demand for our products and negatively affect our financial performance. Such changes may include mergers within key industries, which could increase our reliance on fewer, larger customers or suppliers; changes in customers' regulatory environments or prevailing industry practices that could reduce demand for our products; increased price competition for key products; and the introduction of new competing products that may result in reduced or discontinued customer orders.
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Our growth depends in part on the timely development, commercialization, and customer acceptance of new and enhanced products and services based on technological innovation.
Our growth depends on the acceptance of our products and services in the marketplace, market penetration achieved by the companies to which we sell, and our ability to introduce and commercialize new and innovative products that meet the needs of the markets we serve. We can offer no assurance that we will be able to continue to introduce new and enhanced products, that the products we introduce, or have introduced, will achieve broad market acceptance, or that our direct sales team or independent distributors will successfully penetrate existing or new markets. Failure to accurately anticipate customer needs and preferences; develop viable, differentiated and competitive technologies; commercialize new products and services in a timely and cost-effective manner; protect related intellectual property and obtain required regulatory approvals, could adversely affect our growth, results of operations, and financial condition.
We may also invest heavily in research and development initiatives that do not result in significant revenues. Even if we successfully develop new and enhanced products and services, we may incur substantial costs in doing so, and our profitability may suffer as a result.
Our success depends on our ability to recruit, retain and motivate skilled employees, and changes to our management team may not provide the benefits we expect.
Our success depends largely upon the continued service of our employees and our ability to attract, retain and motivate personnel, some of whom work in competitive labor markets. The market for highly skilled workers and leaders, particularly in the areas of manufacturing, science, technology and management, is extremely competitive, and expectations from qualified talent in many areas of the labor market have recently evolved and escalated. Loss of key personnel or an inability to hire qualified employees could materially adversely affect our business and financial statements, disrupt manufacturing activities, impede our ability to meet compliance requirements, increase backlog, or inhibit strategic growth.
In March 2026, we announced a transition in our Chief Executive Officer ("CEO") position, effective in April 2026. Leadership transitions, including changes in executive management, can be disruptive and may result in uncertainty among employees, customers and other business partners. Such transitions may also divert management attention from day‑to‑day operations and strategic initiatives, affect our ability to attract and retain key personnel, or delay or disrupt the execution of our business strategies.
In addition, changes in executive leadership may lead to shifts in strategic priorities, business practices, or organizational culture that could be difficult to implement effectively or may not produce the desired results. While our Board of Directors and management team are actively managing the CEO transition and have taken steps to promote continuity and stability, there can be no assurance that the transition will be executed successfully or that our business performance will not be adversely affected.
Adverse changes in our relationships with, or the financial condition, performance, or purchasing patterns of, distributors and other channel partners could adversely affect our business, results of operations, and financial condition.
We sell a significant number of products to distributors and other channel partners that have valuable relationships with end customers and end users. Some of these distributors and other partners also sell or utilize our competitors’ products or compete with us directly. Adverse changes in our relationships with these distributors and other partners, adverse developments in their financial condition, performance or purchasing patterns, or consolidation among distributors could adversely affect our business and financial statements. We do not directly control the actions of our distributors. Our distributors may fail to comply with export laws or the terms of their distribution agreements, which could expose us to legal, financial or reputational risks and adversely affect our business and financial statements.
Uncertainties related to the use of artificial intelligence ( “ AI ” ) in our business may result in harm to our business and reputation.
Our use of AI technologies is at an early stage. Ineffective, inadequate or premature use of AI could result in unintended consequences, including competitive harm, regulatory penalties, legal liability, loss or misuse of intellectual property, disclosure of confidential or proprietary information, data privacy or cybersecurity incidents, or brand or reputational harm. In addition, if we fail to successfully deploy AI in our business activities, products, or services, or fail to keep pace with technological advancements and competitors that may more effectively adopt AI, our competitiveness, growth prospects and financial performance could be adversely affected. We may also incur significant costs in evaluating or implementing AI technologies, and such investments may not result in anticipated benefits or returns.
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Operational Risks
Geopolitical pressures in the markets in which we operate may adversely affect our financial results.
Geopolitical events and conflicts may adversely impact macroeconomic conditions and could have a material adverse impact on our financial results. The ultimate impact of military conflicts, such as those involving Iran, Russia and Ukraine, and Israel and neighboring regions, is highly unpredictable. In particular, disruptions to global trade routes or energy shipments, including through the Strait of Hormuz, could result in volatility in fuel prices, heightened inflationary pressures, and strain on global supply chains. We do not sell into countries with applicable sanctions, such as Iran and Russia. Our transactions in foreign countries currently involved in geopolitical conflicts have historically been immaterial. This does not mean, however, that our business is unaffected by geopolitical events.
In addition, trade tensions, including between China and the U.S., could negatively affect fuel prices, inflation, global supply chains and other macroeconomic conditions. These impacts could materially harm our business by adversely affecting global economic growth, disrupting discretionary spending patterns, and generally reducing demand for our products and services. Our sales to China have been significant in previous periods.
We cannot predict the impact that global conflicts or tensions may have on future financial results.
A significant disruption in, or breach in security of, our information technology systems or data could adversely affect our business, reputation and financial statements.
We rely on information technology systems, some of which are provided, hosted or managed by third parties, to process, transmit and store electronic information, including sensitive data such as confidential business information and personally identifiable data relating to employees, customers, and other business partners. These systems also support a variety of critical business processes and activities, including receiving and fulfilling orders, billing, collecting and making payments, shipping products, providing services and support to customers and fulfilling contractual obligations. Errors, defects, security issues or other vulnerabilities in our systems, third-party systems, or in the interaction of third-party systems with our technology could disrupt our operations or otherwise harm our business.
Our information technology systems (including those acquired through business acquisitions) may be damaged, disrupted or shut down due to cyberattacks, including hacking, malware, ransomware, or other malicious activity; human error or malfeasance; power outages; hardware failures; telecommunication or utility failures; catastrophes; or other unforeseen events. In such circumstances, our system redundancy and other disaster recovery measures may be ineffective or inadequate. Cyberattacks may also target hardware, software and information stored in or transmitted by certain of our products and our systems after products have been purchased and incorporated into third-party products, processes, facilities or infrastructure.
Our information technology systems have been subject to computer viruses, malicious code, unauthorized access and other cyber incidents, and we expect the scale, sophistication and frequency of such attacks to continue to increase. Unauthorized tampering, adulteration of or interference with our products may adversely affect product performance or safety, and may result in data loss, product recalls, field actions, or reputational harm. In addition, the rapid evolution and increased adoption of AI, including by malicious actors, may further increase the complexity and severity of cybersecurity risks.
Any cyber incident, system failure, other disruption or damage could interrupt our operations or those of our customers and business partners; delay production and shipments; result in the loss, theft, or unauthorized disclosure of intellectual property, trade secrets, personal data, or other confidential information; damage our reputation and relationships with customers, business partners, and employees; or result in defective products or services, legal claims and proceedings, regulatory investigations, fines, penalties, or increased costs related to remediation and security enhancements. Any of these could adversely affect our business, reputation and financial results.
Further, a significant number of our employees work remotely, which may increase our exposure to cybersecurity risks. Any failure to maintain reliable information technology systems, exercise appropriate controls, or comply with data privacy and security requirements can result in adverse regulatory consequences, business consequences and litigation.
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Disruptions in our supply chains, increases in costs, or manufacturing inefficiencies could adversely affect our financial results. In addition, our reliance upon sole or limited sources of supply for certain materials, components and services could cause production interruptions, delays and inefficiencies.
Our financial results depend on the availability, quality and timely delivery of materials, components, services and labor required for our operations.
We source materials, components and equipment from third-party suppliers, and in certain cases rely on sole or limited suppliers due to quality considerations, regulatory requirements, cost effectiveness, availability, or unique design specifications. If our suppliers experience financial, operational or other difficulties, or if they extend lead times, limit supply availability, increase prices, or fail to meet our quality or delivery requirements, we may be unable to obtain sufficient quantities of materials or components on a timely basis, and we may be unable to quickly establish or qualify replacement sources, which could delay product shipments and revenue recognition. Our supply chains may also be disrupted by external events beyond our control, including natural disasters, public health crises, armed conflicts, terrorist actions, trade restrictions or tariffs, or legislative or regulatory changes. Any of these factors could result in production interruptions, extended lead times, manufacturing inefficiencies, or inability to continue offering certain products and services, any of which could adversely affect our business and financial results.
In addition, due to competitive pressures, customer cost-containment efforts, and the terms of certain contracts we are party to, we may not be able to fully or timely pass along increased costs for materials, labor or transportation through to customers. When we are unable to offset higher supply and labor costs through pricing actions or cost reductions, our margins and profitability can decline and our business and financial statements can be adversely affected.
Our revenues and other operating results depend on our ability to manufacture and assemble products in sufficient quantities and in a timely manner. Because we cannot always immediately adapt our production capacity and related cost structures in response to changing market conditions, periods of reduced demand may result in underutilized capacity and margin pressure, while periods of increased demand may strain production capabilities. Any failure to effectively manage our supply chains, manufacturing capacity, or cost structure could materially and adversely affect our results of operations and financial condition.
We may be unable to efficiently manage our growth as a larger and more geographically diverse organization.
Our strategic acquisitions and the organic expansion of our commercial operations have increased the scope and complexity of our business. As a result, we face challenges inherent in efficiently managing a more complex organization with an expanded employee base over multiple geographic regions, including the need to implement and maintain appropriate systems, policies, benefit structures, internal controls, and compliance programs. If we are unable to effectively manage and integrate our growing and geographically diverse operations (including from a cultural perspective), our ability to execute our business strategy and maintain operational efficiency could be negatively impacted, which could adversely affect our operating results and financial statements.
Cost reduction or efficiency initiatives may not achieve anticipated benefits and may involve higher-than-expected transition or implementation costs.
We periodically undertake initiatives intended to improve efficiency, reduce costs, or better align our cost structure with our operating needs. These initiatives may include changes to staffing levels, operating processes, or organizational structures. Such initiatives involve significant judgment and assumptions and may not achieve anticipated cost savings or other benefits within expected timeframes, or at all. In addition, these initiatives may result in higher than expected costs, including severance, consulting, implementation, or transition costs, and may cause operational disruption, loss of institutional knowledge, or reduced employee morale, which could adversely affect our business, results of operations, and financial position.
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The life sciences, pharmaceutical, healthcare and related industries we serve have undergone, and continue to undergo, significant changes in an effort to reduce costs, which could adversely affect our financial results.
Participants in the life sciences, healthcare and related industries have implemented, and continue to implement, significant cost-containment initiatives. Some end users of our products rely, directly or indirectly, on healthcare-related government funding, reimbursement, or research support. Legislative, regulatory, and policy developments such as the U.S. Patient Protection and Affordable Care Act as amended by the Health Care and Education Affordability Reconciliation Act, healthcare austerity measures in other countries, and other healthcare reform initiatives have reduced, and may further reduce, the amount of government funding or reimbursement available to our customers or to end users of our products and services and/or the volume of medical procedures that rely on our products and services. For example, the Inflation Reduction Act of 2022 includes provisions related to drug price negotiations, inflationary rebates and government-established pricing, with varying implementation dates and scopes. Penalties could be imposed on manufacturers who fail to adhere to the government's interpretation of these requirements. Further, changes in U.S. federal or state administrations and in healthcare policies and priorities may result in reforms or actions that unfavorably impact industries we serve and our business.
These and other factors, including market demand dynamics, government regulations, third-party insurance coverage and reimbursement policies, and societal pressures have changed and may continue to change how healthcare is delivered, reimbursed and funded. As a result, participants in the industries we serve may purchase fewer of our products and services, reduce the amount they are willing to pay for our products or services, experience reduced reimbursement and funding, delay or limit the adoption rate of new technologies, or require us to incur higher compliance or operating costs. Any of the factors described above could adversely affect our business and financial results.
The manufacture of many of our products is a highly exacting and complex process, and if we directly or indirectly encounter problems manufacturing products, our reputation, business and financial results could suffer.
The manufacture of many of our products is a highly exacting and complex process, due in part to strict regulatory requirements. Manufacturing issues may arise for a variety of reasons, including equipment malfunctions, contamination, failure to follow specific protocols and procedures, defects or variability in raw materials, natural disasters, or other environmental or external factors. If such issues are not identified prior to product release, they could result in recalls, field actions, or product liability exposure. In addition, due to the time required to approve and license certain regulated manufacturing facilities and stringent oversight by the FDA and similar regulating authorities, alternative manufacturing capacity may not be available on a timely basis to replace disrupted production. Any manufacturing problems could result in significant costs, regulatory or legal liability, lost revenues, loss of market share, negative publicity, and damage to our reputation, which could reduce demand for our products and adversely affect our financial results.
Changes to dialysis methods and equipment capabilities may decrease demand for our renal care products and negatively impact our business, results of operations, and financial condition.
Our Dialyguard product line accounts for approximately 30% of the revenues and one-third of gross profit margin associated with our Calibration Solutions division. The majority of revenues in our Dialyguard business are associated with products used in dialysis clinics, while a smaller portion of our sales relate to in-home care. Ongoing technological advancements, including the development of dialysis machines with integrated dialysis calibration capabilities and shifts toward home-based treatments, have and may continue to adversely affect demand for our renal care products.
Violation of data privacy laws could adversely affect our business, reputation and financial statements.
If we are unable to maintain reliable information technology systems and appropriate controls to comply with global data privacy and security requirements and prevent data breaches, we may suffer adverse regulatory, business and legal consequences. As a multinational organization, we are subject to data privacy and security laws, regulations, and customer-imposed requirements in numerous jurisdictions due to our access to and processing of confidential, personal and other sensitive data in the course of our business. For example, the European Union’s General Data Protection Regulation imposes strict requirements on how we collect, process and protect personal data, including, among other things, obligations to provide prompt notice of data breaches to data subjects and supervisory authorities, and significant fines for non-compliance. Data privacy laws in other jurisdictions, such as California and Colorado, also impose data privacy obligations. Government enforcement actions can be costly, disruptive to our operations, and time consuming, and data breaches or violations of data privacy laws can result in fines, civil litigation, or reputational harm, any of which may adversely affect our business and financial statements. In addition, compliance with evolving and increasingly complex data privacy regulations around the world may require significant expenditures and may require changes in our products or business models, which could reduce revenues or increase costs.
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If we suffer loss to our facilities, supply chains, distribution systems or information technology systems due to a catastrophic event, our operations could be seriously harmed.
Our facilities, supply chains, distribution systems and information technology systems are subject to the risk of catastrophic loss from events such as fires, floods, earthquakes, hurricanes, pandemics or other public health crises, armed conflicts, terrorism, or other natural or human-made disasters. A catastrophic event affecting any of these assets or systems could disrupt our operations, delay production and shipments, result in defective products or services, damage customer relationships and our reputation and expose us to legal liability, as well as significant repair or replacement expenses. In addition, our insurance coverage with respect to natural disasters and other catastrophic events is limited, is subject to deductible and coverage limits, and may be unavailable or insufficient to protect us against such losses. As a result, any such event could materially and adversely affect our business, results of operations, and financial statements.
Climate change, as well as legal or regulatory measures and stakeholder expectations related to climate change and sustainability, may negatively affect our business and financial results, and any actions we take or fail to take in response to such matters could damage our reputation.
Climate change resulting from increased concentrations of carbon dioxide and other greenhouse gases in the atmosphere could present risks to our operations. Physical risks resulting from acute events, such as hurricanes, tornados, wildfires or flooding, or from chronic changes, such as droughts, heat waves or rising sea levels, could adversely impact our facilities and operations, including the availability of employees who support our operations, and could disrupt our supply chains and distribution systems. In addition, concern over climate change can result in new or additional legal, regulatory or reporting requirements designed to reduce greenhouse gas emissions, mitigate environmental impacts, limit or tax the use of carbon-based energy, or increase climate-related disclosures and stakeholder information requests. Compliance with additional legal or regulatory requirements may increase our costs or disrupt the sourcing, manufacture or distribution of our products, which may adversely affect our business and financial statements. Failure to comply with applicable legal or regulatory requirements (such as the regulations in certain jurisdictions relating to false or misleading claims regarding sustainability practices), could result in regulatory action, litigation, reputational harm, or financial penalties. Further, if we fail to meet stakeholder expectations regarding sustainability practices and climate-related disclosures or if we fail to respond adequately to customer requests for such information, investor confidence could be adversely affected, our ability to do business with certain customers could be limited, and our reputation could be harmed.
Acquisition Risks
Any inability to consummate acquisitions at our historical rate and at appropriate prices could negatively impact our growth rate and stock price.
Our ability to grow revenues, earnings and cash flows at or above our historic rates depends in part upon our ability to successfully identify acquisition targets, consummate acquisitions on favorable terms, successfully integrate acquired businesses, and realize anticipated synergies. We may not be able to consummate acquisitions at the pace or scale achieved in the past, which could adversely impact our growth rate and stock price. Promising acquisitions are difficult to identify and execute for a number of reasons, including high valuations, competition among prospective buyers, the availability of affordable funding in the capital markets, and the need to satisfy applicable closing conditions and obtain applicable antitrust and other regulatory approvals on acceptable terms. In addition, changes in regulatory requirements, instability in the credit or capital markets, or global events that restrict travel or other activities necessary to evaluate, negotiate or complete acquisitions could adversely impact our ability to pursue and consummate acquisitions.
The indemnification provisions of acquisition agreements by which we have acquired companies may not fully protect us, which could result in unexpected liabilities.
Certain acquisition agreements by which we have acquired companies require the former owners to indemnify us against certain liabilities related to the operation of the acquired business before the acquisition. In most cases, however, the liability of the former owners is limited, and certain former owners may be unable to meet their indemnification obligations. We cannot guarantee that indemnification provisions will protect us fully or at all, and as a result we may face unexpected liabilities and may be required to bear the costs associated with such liabilities, which could adversely impact our business, results of operations, and financial condition.
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Future strategic transactions or acquisitions may require us to seek additional financing, which we may not be able to secure on favorable terms, or at all.
We actively evaluate potential strategic acquisitions, and completing such transactions may require us to obtain additional financing. We may not be able to secure such financing on favorable terms, or at all. In addition, future acquisitions may require the issuance of equity securities, which may result in dilution to our stockholders, or the issuance of debt securities, which may increase our financial risks and impose limits on our operations.
Legal, Regulatory, Compliance, and Reputational Risks
Changes in trade policies, tariffs, or industrial policies may increase our costs, disrupt our supply chain, or adversely affect demand for our products.
The U.S. has announced and implemented tariffs on imports from a wide range of countries, which in turn has prompted retaliatory tariffs and other countermeasures by a number of countries. These actions have resulted in an evolving and uncertain trade environment, with tariffs and related measures being imposed, modified, suspended, or replaced over time. In February 2026, the U.S. Supreme Court ruled that the International Emergency Economic Powers Act, which the U.S. administration relied on to impose certain tariffs, does not authorize the imposition of tariffs. In response, the U.S. administration announced plans to implement new tariffs under alternative statutory authority. The full impact of the U.S. Supreme Court’s ruling and the U.S. administration’s response remain uncertain; as of the date of this annual report, a number of tariffs issued by the United States and other countries remain in effect. These tariffs increase the costs of imported supplies and components, which has required us to implement surcharges and/or increase the prices of certain of our finished goods, which can adversely impact demand for our products and our competitive positioning, resulting in lower revenues. In addition, whenever we are unable to fully recover higher costs, or whenever there is a time delay between the increase in costs and our ability to recover these costs, our margins and profitability are adversely affected. The U.S. may implement additional tariffs or other trade measures in the future, and further retaliatory actions by other countries may follow.
In addition, certain governments have implemented policies to induce “re-shoring” of supply chains, reduce reliance on imported supplies and promote national production. For example, the Chinese government has issued a series of policies in the past several years to promote the development and use of local medical devices. These types of policies may reduce demand for our products and adversely affect our financial results.
We are subject to extensive and evolving regulatory requirements that affect the approval, manufacture, marketing and commercialization of our products.
The process of obtaining and maintaining required regulatory approvals for our products and operations is lengthy, expensive and uncertain. We can offer no assurance that regulatory delays will not occur, which could adversely affect our ability to introduce new products on a timely basis. Regulatory agencies also periodically inspect our manufacturing facilities to assess compliance with “good manufacturing practices” and can subject products that have been approved to additional testing and surveillance programs.
Certain of our products are medical devices and other regulated products subject to oversight by the FDA, other U.S. federal and state authorities, and comparable agencies in foreign jurisdictions. We cannot guarantee that we will be able to obtain regulatory clearances, such as FDA 510(k) clearances, for new products or for modifications to, or additional indications or uses of, existing products within anticipated timeframes or at all. Even when such approvals are obtained, they may be time-consuming, costly and subject to restrictions. Regulatory requirements and approval processes may also change and could require the withdrawal of products from the market until new or amended clearances are obtained.
The global regulatory environment has become increasingly complex and unpredictable. Several countries have adopted new regulatory frameworks for medical devices in recent years, and others have expanded existing requirements. In addition, our products and operations are often subject to the rules of industrial standards bodies such as the International Standards Organization. Failure to obtain or maintain required certifications or to comply with applicable standards could limit our ability to sell certain products or services and otherwise adversely affect our business and financial condition.
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Compliance with applicable laws, regulations and standards involves substantial costs. We and our representatives may at times be subject to reviews, inspections or investigations. If government authorities conclude that our business practices or products do not comply with current or future statutes, regulations, agency guidance or case law, we could be subject to, among other things, fines, expenses, injunctions, civil penalties, product recalls or seizures, total or partial suspension of production, failure to receive 510(k) device clearances, withdrawal of marketing approvals, reputational damage, business disruption, loss of customers, disbarment from selling to certain government agencies, criminal prosecutions and other adverse effects. Defending against any such actions can be costly and time-consuming and may require significant personnel resources. Even if we are successful in defending against any such actions brought against us, our business may be negatively affected.
Evolving cybersecurity regulations, including the European Union ’ s Cyber Resilience Act, may increase our compliance costs and require changes to our products and processes.
Governments and regulatory authorities around the world are enacting and proposing new cybersecurity‑related laws and regulations that impose obligations on manufacturers of products with digital elements. In particular, the European Union’s Cyber Resilience Act (“CRA”) establishes mandatory cybersecurity requirements applicable to certain hardware and software products sold in the European Union, including requirements relating to secure product design, vulnerability management, incident reporting and lifecycle support. Certain reporting obligations under the CRA are expected to begin in calendar year 2026, with broader product conformity requirements phased in thereafter.
Compliance with the CRA and similar cybersecurity regulations may require us to modify the design, development, documentation, maintenance and support of certain products, enhance internal processes and controls, and devote additional resources to cybersecurity risk management, monitoring and reporting. These laws and regulations may also increase our compliance and operational costs, expose us to regulatory scrutiny, or limit our ability to market or sell certain products in affected jurisdictions if compliance requirements are not met in a timely manner.
The interpretation and implementation of the CRA and other evolving cybersecurity regulations continue to develop, and regulatory expectations may change over time. Failure to comply with applicable cybersecurity laws and regulations could result in enforcement actions, fines, product restrictions, recalls, reputational harm, or other adverse consequences, any of which could materially adversely affect our business, results of operations, or financial condition.
Off-label marketing of our products could result in substantial penalties.
Even where our products are approved by regulators, the FDA and other regulatory agencies strictly regulate the promotional claims that may be made about approved or cleared products. Regulatory clearances permit us to market products only for the uses indicated on the labeling cleared by the regulator. Although we may seek additional label indications or expanded uses, regulators may deny such requests, require additional supporting data, or impose limitations on product use as a condition of clearance.
If regulators determine that we have marketed our products for, or that our business activities promote, off-label uses, we can be subject to enforcement actions, including fines, injunctions, criminal or civil penalties, disgorgement, or curtailment of our operations. Any such actions could significantly harm our business, results of operations and financial condition.
Certain modifications to our products may require new 510(k) clearances or other marketing authorizations and may require us to recall or cease marketing our products.
Regulatory requirements govern not only the claims that may be made about approved products, but also whether changes to those products require additional regulatory review or clearance. Manufacturers may be required to notify the FDA of certain modifications to 510(k) cleared devices. Manufacturers must determine whether product modifications require new clearances, and the FDA may review and disagree with the manufacturer’s determinations. We have made product modifications in the past and may do so in the future. If regulators disagree with our determinations regarding whether product modifications or new features require additional clearances, we may be required to cease marketing or to recall modified products until we obtain clearance, and we may be subject to significant regulatory fines or penalties.
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Changes in governmental regulations or regulatory enforcement may reduce demand for our products or services or increase our expenses.
Beyond product approvals and compliance obligations, changes in regulation can also affect consumer demand and our cost structure. We and our customers must comply with federal, state and other regulations, including those governing health and safety, food and drug oversight, privacy, and electronic communications. We develop, configure and market our products and services to meet customer needs created by these regulations. These regulations are complex, change frequently, have tended to become more stringent over time and may be inconsistent across jurisdictions.
Significant changes in applicable regulations, or in the interpretation or application thereof, could reduce demand for our products and services, increase our costs of compliance or production, delay the introduction of new or modified products, or restrict our existing activities.
Potential product liability suits against us, product defects, unanticipated use or inadequate disclosure related to our products or services could adversely affect our business, reputation, results of operations, and financial condition.
Manufacturing or design defects in, unanticipated use of, safety or quality issues (or the perception of such issues) with respect to, or inadequate disclosure of risks relating to our products and services, including items that we source from third parties, can lead to personal injury, property damage or other liability. These events could lead to recalls or safety alerts, the removal of products or services from the market, and product liability or similar claims against us. Recalls, removals and product liability and similar claims, regardless of their validity or ultimate outcome, can result in significant costs, negative publicity and reputational harm that could reduce demand for our products and services. In addition, our product liability insurance may be insufficient to cover all costs or liabilities arising from defects in our products or otherwise.
We are subject to lawsuits, investigations and regulatory proceedings that could result in significant costs, penalties, or liabilities.
We have been, and in the future may become, a defendant in lawsuits and regulatory proceedings. Such litigation and regulatory proceedings could include, among others, claims for damages arising out of the use of products or services and claims relating to intellectual property, employment, tax, commercial disputes, breach of contract, product liability, marketing, insurance coverage, competition and sales practices, environmental matters, product retirement, personal injury, or acquisition- or divestiture-related matters, as well as regulatory investigations or enforcement actions. We may also become subject to lawsuits as a result of liabilities retained from, or representations, warranties or indemnities provided in connection with, businesses we no longer operate.
These matters may involve claims for compensatory, punitive or consequential damages, as well as injunctive relief. Defending such matters may require significant management time and expense, and may result in damages, settlements or equitable remedies that could adversely affect our operations and financial results. In addition, any insurance or indemnification rights available to us may be insufficient or unavailable to protect us against such losses.
Developments in legal or regulatory proceedings in any given period may require us to record or adjust loss contingency estimates in our financial statements or to make cash payments in connection with settlements or judgments, which could adversely affect our financial results in that period. We cannot make assurances that our liabilities in connection with litigation and other regulatory proceedings will not exceed our estimates or adversely affect our financial results and business. Please see Note 13. “Commitments and Contingencies” of the Notes to Consolidated Financial Statements contained in Item 8. Financial Statements and Supplementary Data for additional discussion.
Our reputation, ability to do business and prepare financial statements may be impaired by improper conduct by any of our employees, agents or business partners.
We cannot provide assurance that our internal controls, policies and compliance systems will always be effective in preventing or detecting improper conduct by our employees, agents or business partners, including those of businesses we acquire. Such conduct could include violations of U.S. and non-U.S. laws and regulations relating to, among other things, payments to government officials, bribery, fraud, kickbacks and false claims, pricing, sales and marketing practices, conflicts of interest, competition, export and import compliance, anti-money laundering requirements and data privacy. Any such violations could result in reputational harm, regulatory investigations or enforcement actions, civil or criminal penalties, disruption to our operations, and increased compliance costs, and could impair our ability to conduct business or prepare accurate financial statements.
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If we do not adequately protect our intellectual property, if third parties infringe our intellectual property rights, or if we or our customers are alleged to infringe upon others ’ intellectual property rights, we may suffer competitive injury or expend significant resources enforcing or defending our rights.
We own patents, trademarks, copyrights, trade secrets and other intellectual property, which in the aggregate are important to our business. However, the intellectual property rights we obtain may not be sufficiently broad or otherwise may not provide us a significant competitive advantage, and patents may not be issued for pending or future patent applications. In addition, the measures we take to maintain and protect our intellectual property may not prevent it from being challenged, invalidated, circumvented or designed-around, particularly in countries where intellectual property rights are less developed or enforced, particularly China. In some circumstances, enforcement may be unavailable due to an infringer’s dominant intellectual property position or for other business reasons, or countries may require compulsory licensing of our intellectual property.
We also rely on nondisclosure and noncompetition agreements with employees, consultants and other parties to protect, in part, our trade secrets and other proprietary rights. There can be no assurance that these agreements will not be breached, that we will have adequate remedies for any breach, that others will not independently develop substantially equivalent proprietary information or that third parties will not otherwise gain access to our trade secrets or other proprietary rights.
In addition, we or our customers may be alleged to infringe upon the intellectual property of third parties. Any failure to obtain or maintain intellectual property rights that convey competitive advantages, adequately protect our intellectual property, prevent circumvention or unauthorized use of such property, or limit the costs of enforcing our intellectual property rights or defending against infringement claims could adversely impact our competitive position and results of operations.
We are subject to export and import control laws and regulations that could impair our ability to compete in international markets or subject us to liability if we violate such laws and regulations.
We are subject to U.S. export controls and economic sanctions laws and regulations that restrict the shipment or provision of certain products and services to specified countries, governments, and persons. While we take precautions to prevent our products and services from being exported or provided in violation of these laws, we cannot guarantee that the precautions we take will prevent violations in all cases.
If we are found to have violated applicable laws or regulations, we could be subject to substantial fines and penalties, including penalties imposed on the individuals involved. We may also suffer from reputational harm, loss of access to certain markets, or other adverse consequences, any of which could harm our business, financial condition, and results of operations.
Compliance with export control and sanctions regulations can be time-consuming and may result in the delay or loss of sales opportunities or impose additional costs. Changes in export or import regulations, economic sanctions or related legislation, or change in the countries, governments, persons or technologies targeted by such regulations, could restrict our ability to export or sell certain products to existing or potential customers in affected jurisdictions.
We are subject to laws and regulations governing government contracts.
We have agreements relating to the sale of our products and services to government entities, and as such, we are subject to laws and regulations applicable to government contracts. We may also be subject to reviews or investigations relating to our compliance with applicable government contract requirements. Failure to comply with applicable laws and regulations or with the terms of our government contracts could result in suspension or termination of government contracts, criminal, civil or administrative penalties, or debarment from future government contracts.
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Financial and Tax Risks
Foreign currency exchange rates may adversely affect our financial statements.
As a global company with substantial operations outside the U.S., we conduct transactions in currencies other than the U.S. dollar, which exposes us to foreign currency exchange rate risk and may adversely affect our financial statements. A weakening of the U.S. dollar can increase the cost of materials, products, labor and services that we purchase or incur outside of the United States. Conversely, a strengthening of the U.S. dollar can increase the effective price of our products sold in foreign markets, which can adversely affect demand or may require us to lower our prices.
In addition, certain of our businesses invoice customers in currencies other than their functional currency, and changes in exchange rates between the invoicing currency and the functional currency may result in unfavorable remeasurement effects.
The revenues and expenses of our non-U.S. businesses are also translated into U.S. dollars for financial reporting purposes, and fluctuations in exchange rates may result in unfavorable translation effects.
We do not enter into hedging arrangements to mitigate our exposure to foreign currency exchange rate fluctuations, which may increase the impact of such fluctuations on our results of operations and financial condition.
The loss of key customers, or reductions in their demand for our products and services, could have a significant adverse effect on our revenues, results of operations, and financial position.
Certain of our reporting segments sell products and services to customers who individually comprise greater than 10% of segment revenues. As a result, our business, financial condition or results of operations could be adversely affected by the loss of any such customer or by a reduction in their purchases of our products and services due to downturns in their business, changes in their business strategies, reduced capital spending, unfavorable macroeconomic conditions, or other factors beyond our control.
If we fail to maintain an effective system of internal controls, we may not be able to accurately report financial results or prevent fraud. If we identify a material weakness in our internal control over financial reporting, our ability to meet our reporting obligations, investor confidence in our financial reporting, our operating results, and the trading price of our stock could be negatively affected.
Under Section 404 of the Sarbanes-Oxley Act of 2002 (“SOX”) and rules promulgated by the SEC, we are required to maintain effective internal control over financial reporting, to conduct an annual comprehensive evaluation of those internal controls, and to have our independent registered public accounting firm attest to and report on their effectiveness. We have in the past, and could in the future, identify material weaknesses or other deficiencies in our internal control over financial reporting. If we fail to maintain effective internal controls or to comply with SOX requirements, our ability to meet our reporting obligations could be adversely affected, and investor confidence in our financial reporting could be harmed. Negative impacts could also include one or more of the following:
restatement of previously filed financial statements;
failure to meet our reporting deadlines, which could also result in default under our outstanding debt agreements;
restrictions in our ability to access capital markets;
increased costs and the diversion of management time and resources to remediate material weakness;
declines in the trading price of our common stock.
Failure to comply with reporting requirements could also subject us to investigations, sanctions or enforcement actions by the SEC, the Nasdaq Stock Market or other regulatory authorities. If we fail to remediate material weaknesses or otherwise maintain effective internal controls, we could be subject to regulatory scrutiny, civil or criminal penalties or shareholder litigation. In addition, failure to maintain adequate internal controls could result in financial statements that do not accurately reflect our operating results or financial condition.
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We may be required to recognize impairment losses for our goodwill and other intangible assets.
As of March 31, 2026, the net carrying value of our goodwill and other intangible assets was $270.2 million. In accordance with generally accepted accounting principles, we periodically evaluate these assets for impairment. We have recorded impairment losses in the past and may be required to do so again in the future. A variety of factors could trigger an impairment assessment or result in an impairment charge in the future, including adverse industry or economic trends or conditions, disruptions to our business, loss of key customers, the imposition of major tariffs, strategic shifts in our business, difficulties effectively integrating acquired businesses, unexpected or significant changes in planned use of our assets, changes in our organizational or reporting structure, divestitures, market capitalization declines, increases in our weighted average cost of capital, or unfavorable changes to our cash flow forecasts or other valuation assumptions. The determination of whether goodwill or other intangible assets are impaired requires the use of significant estimates and assumptions, including Level 3 inputs, which are inherently subjective and involve a high degree of judgment. If actual results differ from the assumptions used in these impairment analyses, we may be required to recognize impairment charges in the future. Any such losses relating to asset impairments would adversely affect our reported income from operations and net income in the periods recognized.
Changes in accounting standards and subjective assumptions, estimates and judgments by management related to complex accounting matters could affect our reported financial results.
Generally accepted accounting principles and related accounting pronouncements, implementation guidelines, and interpretations are complex and require the use of significant assumptions, estimates and judgments by management. These standards apply to a wide range of matters relevant to our business, including revenue recognition, asset impairment, inventories, business combinations, intangible assets and leases. Changes in accounting standards or their interpretation, or changes in the assumptions, estimates, or judgments we use in applying those standards, could significantly affect our reported financial performance or financial condition.
Changes in our tax rates or exposure to additional income tax liabilities or assessments could affect our profitability. In addition, audits by tax authorities could result in additional tax payments for prior periods.
We are subject to income taxes in the U.S. and in various non-U.S. jurisdictions. Due to changes in tax laws and regulations, changes in the interpretation of such laws (including regulations and interpretations pertaining to the One Big Beautiful Bill Act (“OBBBA”)), the inherent ambiguity and complexity of tax laws, the subjectivity of factual interpretations, the complexity of our intercompany arrangements, uncertainties regarding the geographic mix of earnings in any particular period, and other factors, our estimates of our effective tax rate and income tax assets and liabilities may be incorrect. As a result, our financial statements could be adversely affected, and such impacts vary significantly from period-to-period.
In addition, the amount of income taxes we pay is subject to ongoing audits by U.S. federal, state and local tax authorities and by non-U.S. tax authorities. If audited results differ from our estimates or recorded reserves, we may be required to make additional tax payments or record unfavorable adjustments to our tax liabilities, which could adversely affect our financial results. Any further significant changes to tax laws or tax system in the United States or in other jurisdictions, including changes to the taxation of international income, could adversely affect our financial results.
Changes in tax law relating to multinational corporations could adversely affect our tax position.
Legislative bodies and government agencies in the U.S. and other countries, as well as the Organization for Economic Co-operation and Development (“OECD”), have increasingly focused on issues related to the taxation of multinational corporations. One example is in the area of “base erosion and profit shifting,” for which the OECD has released several components of its comprehensive plan that have been adopted and expanded by many taxing authorities to address perceived tax abuse and inconsistencies among tax jurisdictions. As a result, tax laws and regulations in the U.S. and other jurisdictions in which we operate could change on a prospective or retroactive basis. Any such changes could increase our tax liabilities, adversely affect our effective tax rate, or otherwise negatively affect our business and financial results.
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Our business is subject to sales tax in numerous states.
The application of indirect taxes, such as sales taxes, is a complex and evolving issue. A company is required to collect and remit state sales taxes from certain of its customers if that company is determined to have “nexus” in a particular state. The determination of nexus varies by state and often requires knowledge of each jurisdiction’s tax case law. The application and implementation of existing, new or future laws could expand the jurisdictions in which we are required to collect and remit sales taxes. If any taxing authority determines that we have established nexus in jurisdictions where we have not previously collected or remitted sales taxes, we could be subject to additional tax liabilities, interest and penalties, which could have an adverse effect on our financial results.
Servicing our debt will require a significant amount of cash, and deterioration in our financial performance or in global credit market conditions could adversely affect our ability to obtain financing or to fund our existing debt obligations.
We have a Credit Facility under which we have incurred significant indebtedness and under which we could borrow additional amounts at any time, thereby incurring more debt. Our ability to make required payments of principal and interest or to refinance the Credit Facility upon maturity will depend on our future performance and market conditions, both of which are subject to economic, financial, competitive, and other factors beyond our control.
Our indebtedness and related debt service obligations could have negative consequences, including requiring us to dedicate significant cash flow from operations to the payment of principal and interest, reducing our flexibility in planning for or responding to changes in our business or market conditions, and exposing us to interest rate risk on our variable rate debt.
A default under the agreements governing our indebtedness, or a failure to make required payments when due, could have a material adverse effect on our business, results of operations, and financial condition. If repayment of indebtedness were to be accelerated after any applicable notice or grace periods following a default, we may not have sufficient funds to repay the indebtedness as required. In addition, the cost and availability of credit are subject to changes in the global economic environment, and deterioration in credit market conditions could adversely affect our ability to obtain financing, or the terms associated with debt financing may be unfavorable, which could negatively affect our results of operations.
Additional stock issuances could result in significant dilution to our stockholders.
We may issue additional equity securities to raise capital, make acquisitions, or support other strategic initiatives. In addition, we may issue equity securities in connection with equity incentive awards, including stock options, or future convertible debt instruments. We rely on equity-based compensation as an important tool in recruiting and retaining employees. The issuance of additional equity securities, including as a result of equity-based compensation awards, could result in substantial dilution to our stockholders and, as a result, declines in our stock price.
The market price of our common stock may be volatile, which may subject us to securities class action litigation or cause shareholders to lose part or all of their investment.
The trading price of our common stock may be volatile and could fluctuate significantly in response to various factors, many of which are beyond our control, including:
general economic, industry and market conditions;
actions by institutional or other large stockholders;
the depth and liquidity of the market for our common stock;
volume and timing of orders for our products;
developments generally affecting life sciences tools companies;
announcements of new products or product enhancements by us or our competitors;
changes in earnings estimates or recommendations by securities analysts;
investor perceptions of us and our business, including changes in market valuations of life sciences tools companies generally; and
our results of operations and financial performance.
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In addition, the stock market in general, the Nasdaq Stock Market, and the market for securities of companies in and serving the pharmaceutical healthcare and medical device industries have experienced substantial price and volume volatility that is often unrelated to the operating performance of individual companies. As such, the market price of our common stock may decline even if our business, results of operations, or prospects have not changed. Securities class action lawsuits are frequently commenced against companies that experience significant volatility in the market price of their securities. We may become involved in such litigation in the future, which could result in substantial costs and the diversion of management’s attention and resources.
Failure to maintain appropriate corporate responsibility practices and disclosures could result in reputational harm, a loss of customer and investor confidence, and adverse business and financial results.
Governments, investors, customers and employees have increasingly focused on corporate responsibility practices and related disclosures, and expectations in this area continue to evolve. While we monitor the applicable standards and emerging reporting requirements, failure to maintain appropriate corporate responsibility practices and disclosures that meet stakeholder expectations may result in reputational harm, loss of investor confidence, reduced market valuation, and difficulty attracting or retaining customers and employees. Any of these outcomes could adversely affect our business, results of operations, and financial condition.
