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YoY shift: Lean -
Year-over-year tone shift - average net-tone change across Risk Factors and MD&A vs the prior 10-K. This filing is -0.15pp more bearish 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
-0.15pp
Flat
Net-tone change vs last year's 10-K.
MD&A
-0.16pp
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
divestitures+8
adversely+3
unable+3
closing+3
restructuring+1
Positive rising
leading+2
strong+1
improve+1
enhanced+1
satisfying+1
Risk Factors (Item 1A)
11,799 words
ITEM 1A. RISK FACTORS
In addition to the other information set forth in this Annual Report on Form 10-K, you should carefully consider the following factors which could have a material adverse effect on our business, financial condition, results of operations, cash flows or stock price. The risks below are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also adversely affect our business, financial condition, results of operations or stock price.
Risks Relating to our Business and Operations
We face strong competition. Our failure to successfully develop and market new products could adversely affect our business.
The medical device industry is highly competitive. We compete with many domestic and foreign medical device companies ranging from small start-up enterprises that might sell only a single or limited number of competitive products or compete only in a specific market segment, to companies that are larger and more established than us, have a broad range of competitive products, participate in numerous markets and have access to significantly greater financial and marketing resources than we do. We also face competition from providers of alternative medical therapies, such as pharmaceutical companies.
Language change vs prior 10-K
MD&A (Item 7) - words with the biggest YoY frequency increase
Negative rising
divestitures+16
discontinued+11
unfavorable+5
restructuring+4
delayed+4
Positive rising
favorable+7
effective+2
gain+1
enhancing+1
beautiful+1
MD&A (Item 7)
11,248 words
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Overview
We are a global provider of medical technology products focused on enhancing clinical benefits, improving patient and provider safety and reducing total procedural costs. We primarily design, develop, manufacture and supply medical devices used by hospitals and healthcare providers supporting high-acuity emergent procedures. Substantially all of our net revenues come from single-use medical devices. We market and sell our products
worldwide through a combination of our direct sales force and distributors. Because our products are used in numerous markets and for a variety of procedures, we are not dependent upon any one end-market or procedure. We are focused on achieving consistent, sustainable and profitable growth by increasing our market share and improving our operating efficiencies.
We evaluate our portfolio of products and businesses on an ongoing basis to ensure alignment with our overall objectives. Based on our evaluation, we may seek to optimize utilization of our facilities through restructuring initiatives designed to further reduce our cost base and our competitive position. In addition, we may continue to explore to expand the size of our business and our margins through a combination of acquisitions and distributor to direct sales conversions, which generally involve our elimination of a distributor from the sales channel, either by acquiring the distributor or the distributor relationship (in some instances, the conversions involve our acquisition or of a master distributor and the continued sale of our products through sub-distributors). Our distributor to direct sales conversions are designed to facilitate product pricing and more direct access to the end users of our products within the sales channel. Further, we may identify to expand our margins through strategic of existing businesses and product lines that no longer meet our objectives.
In addition, the medical device industry is characterized by extensive product research and development and rapid technological advances. The future success of our business will depend, in part, on our ability to design and manufacture new products and enhance existing products. Our product development efforts may require us to make substantial investments. There can be no assurance that we will be able to successfully develop new products, enhance existing products or achieve market acceptance of our products, due to, among other things, our inability to identify viable new products; maintain sufficient liquidity to fund our investments in research and development and product acquisitions; obtain adequate intellectual property protection; gain market acceptance of new products; or successfully obtain regulatory approvals.
In addition, our competitors currently may be developing, or may develop in the future, products that provide better features, clinical outcomes or economic value than those that we currently offer or subsequently develop. Our failure to successfully develop and market new products or enhance existing products, and to compete successfully with others in the medical device industry, could have a material adverse effect on our business, financial condition and results of operations.
Finally, we are susceptible to industry consolidation among competitors and vertical integration by customers. Larger competitors resulting from consolidations may have certain advantages over us, including, but not limited to: substantially greater financial and other resources with which to withstand adverse economic or market conditions and pursue development, engineering, manufacturing, marketing and distribution of their products; presence in key markets; patent protection; and greater name recognition. In addition, we may be at a competitive disadvantage to our peers if we fail to identify attractiveopportunities to consolidate with larger or smaller companies to expand our business. Consolidation among our competitors and integration among our customers could erode our market share, negatively impact our capacity to compete and require us to restructure our operations, any of which would have a material adverse effect on our business.
Our customers depend on third party coverage and reimbursements, and the failure of healthcare programs to provide sufficient coverage and reimbursement for our medical products could adversely affect us.
The ability of our customers to obtain coverage and reimbursement for our products is important to our business. Demand for many of our existing and new medical products is, and will continue to be, affected by the extent to which government healthcare programs and private health insurers reimburse our customers for patients’ medical expenses in the countries where we do business. Even when we develop or acquire a promising new product, demand for the product may be limited unless reimbursement approval is obtained from private and government third party payors. Internationally, healthcare reimbursement systems vary significantly. In some countries, medical centers are constrained by fixed budgets, regardless of the volume and nature of patient treatment. Other countries require application for, and approval of, government or third party reimbursement. Without both favorable coverage determinations by, and the financial support of, government and third party insurers, the market for many of our medical products would be adversely affected. In this regard, we cannot be sure that third party payors will maintain the current level of coverage and reimbursement to our customers for use of our existing products. Adverse coverage determinations, including reductions in the amount of reimbursement,
could harm our business by discouraging customers’ selection of, and reducing the prices they are willing to pay for, our products.
In addition, as a result of their purchasing power, third party payors have implemented and are continuing to implement cost cutting measures such as seeking discounts, price reductions or other incentives from medical products suppliers and imposing limitations on coverage and reimbursement for medical technologies and procedures. These trends could compel us to reduce prices for our products and could cause a decrease in the size of the market or a potential increase in competition that could negatively affect our business, financial condition and results of operations.
Moreover, the growing trend in the United States and other countries toward limiting healthcare expenses through cost containment measures may continue to exert downward pressure on our product pricing. Governments in the markets in which we do business have used a variety of mechanisms to control healthcare costs, such as price controls, collective purchasing, and the imposition of competitive bidding and tenders. For example, China has implemented regional and national programs for volume-based procurement of medical device products designed to reduce healthcare costs, which require manufacturers to meet specific quality, quantity and pricing requirements to be awarded tenders. Volume-based procurement and similar programs in China and other countries are likely to have an adverse impact on future results due to reduced pricing.
We are subject to extensive government regulation, which may require us to incur significant expenses to ensure compliance. Our failure to comply with those regulations could have a material adverse effect on our business, results of operations, financial condition and cash flows.
Our products are medical devices and are subject to extensive regulation in the U.S. by the FDA and by comparable government agencies in other countries. The regulations govern, among other things, the development, design, clinical testing, premarket clearance and approval, manufacturing, labeling, importing and exporting and sale and marketing of many of our products. Moreover, these regulations are subject to future change.
In the U.S., before we can market a new medical device, or a new use of, or claim for, or significant modification to, an existing product, we generally must first receive either 510(k) clearance or de novo authorization or approval of a premarket approval application, or PMA, from the FDA. Similarly, most major markets for medical devices outside the U.S. also require clearance, approval, authorization or compliance with certain standards before a product can be commercially marketed. In the EU, the EU MDR went into effect in May 2021 and includes significant additional pre- and post-market requirements. The process of obtaining regulatory clearances and approvals to market a medical device, particularly from the FDA and certain foreign government authorities, can be costly and time consuming, and clearances and approvals might not be granted for new products on a timely basis, if at all. In addition, once a device has been cleared or approved, a new clearance or approval may be required before the device may be modified or its labeling changed. Furthermore, the FDA or a foreign government authority may make its review and clearance or approval process more rigorous, which could require us to generate additional clinical or other data, and expend more time and effort, in obtaining future product clearances or approvals. The regulatory clearance and approval process may result in, among other things, delayed realization of product revenues, substantial additional costs or limitations on indicated uses of products, any one of which could have a material adverse effect on our financial condition and results of operations. Even after a product has received marketing approval or clearance, such product approval or clearance can be withdrawn or limited due to unforeseenproblems with the device or issues relating to its application, or the FDA or a foreign government authority may change the classification of a product, which could require additional clinical studies and new marketing submissions.
Failure to comply with applicable regulations could lead to adverse effects on our business, which could include:
• partial suspension or total shutdown of manufacturing;
• product shortages;
• delays in product manufacturing;
• warning or untitled letters;
• fines or civil penalties;
• delays in or restrictions on obtaining new regulatory clearances or approvals;
• withdrawal or suspension of required clearances, approvals or licenses;
• product seizures or recalls;
• injunctions;
• criminalprosecution;
• advisories or other field actions;
• operating restrictions; and
• prohibitions against exporting of products to, or importing products from, countries outside the U.S.
We could be required to expend significant financial and human resources to remediate failures to comply with applicable regulations and quality assurance guidelines. In addition, civil and criminalpenalties, including exclusion under Medicaid or Medicare, could result from certain regulatory violations. Any one or more of these events could have a material adverse effect on our business, financial condition and results of operations.
Medical devices are cleared or approved for one or more specific intended uses and performance claims must be adequately substantiated. Promoting a device for a use outside of the cleared or approved intended use or population, that is, an off-label use, or making false, misleading or unsubstantiatedclaims could result in government enforcement action.
Furthermore, our facilities are subject to periodic inspection by the FDA and other federal, state and foreign government authorities, which require manufacturers of medical devices to adhere to certain regulations, including the FDA’s QSR, which requires, among other things, periodic audits, design controls, quality control testing and documentation procedures, as well as complaint evaluations and investigation. In addition, any facilities assembling kits that include drug components and are registered as drug repackaging establishments are also subject to current good manufacturing practices requirements for drugs. The FDA also requires the reporting of certain adverse events and product malfunctions and requires the reporting of certain recalls or other field safety corrective actions for medical devices. Issues identified through such inspections and reports may result in FDA enforcement action through any of the actions discussed above. Moreover, issues identified through such inspections and reports may require significant resources to resolve.
We are subject to healthcare fraud and abuse laws, regulation and enforcement; our failure to comply with those laws could have a material adverse effect on our results of operations and financial condition.
We are subject to healthcare fraud and abuse regulation and enforcement by the federal government and the governments of those states and foreign countries in which we conduct our business. The laws that may affect our ability to operate include:
• the federal healthcare anti-kickback statute, which, among other things, prohibits persons from knowingly and willfully offering or paying remuneration, one purpose of which is to induce either the referral of an individual for, or the purchase, order or recommendation of, any good or service for which payment may be made under federal healthcare programs such as Medicare and Medicaid, or soliciting payment for such referrals, purchases, orders and recommendations;
• federal falseclaims laws which, among other things, prohibit individuals or entities from knowingly presenting, or causing to be presented, false or fraudulentclaims for payment from the federal government, including Medicare, Medicaid or other third-party payors;
• the federal Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), which prohibits schemes to defraud any healthcare benefit program and false statements relating to healthcare matters; and
• state law equivalents of each of the above federal laws, such as anti-kickback and falseclaims laws which may apply to items or services reimbursed by any third-party payor, including commercial insurers.
If our operations are found to be in violation of any of these laws or any other government regulations, we may be subject to penalties, including civil and criminalpenalties, damages, fines, the curtailment or restructuring of our operations, the exclusion from participation in federal and state healthcare programs and imprisonment of personnel, any of which could adversely affect our ability to operate our business and our financial results. The risk of our being found to have violated these laws is increased by the fact that many of them have not been fully interpreted by the regulatory authorities or the courts, and their provisions are open to a variety of interpretations.
Further, the Affordable Care Act, through the Physician Payments Sunshine Act, imposes annual reporting and disclosure requirements on device manufacturers for any “transfer of value” made or distributed to physicians or teaching hospitals, physician assistants, nurse practitioners, clinical nurse specialists, certified registered nurse anesthetists (including anesthesiology assistants) and certified nurse-midwives. The reported information is made publicly available in a searchable format. In addition, device manufacturers are required to report and disclose any ownership or investment interests held by physicians and their immediate family members during the preceding calendar year. Failure to submit required information may result in civil monetary penalties for each payment, transfer of value or ownership or investment interests not reported in an annual submission, up to an aggregate of
$150,000 per year (and up to an aggregate of $1 million per year for “knowing failures”), as adjusted annually for inflation.
There are also certain states, including Connecticut, Massachusetts, and Vermont, that require device manufacturers to track and report payments or transfers of value provided to certain health care providers and health care entities. In addition, some states, such as California, Connecticut, Nevada and Massachusetts, mandate implementation of compliance programs that include restrictions on certain interactions and items of value that may be provided to health care providers, as well as the tracking and reporting of certain items of value, compensation for consulting and other services, and other remuneration to healthcare providers. Further, we are subject to a law in Vermont that imposes a ban on providing certain items of value and payments to health care providers. The shifting commercial compliance environment and the need to build and maintain robust and expandable systems to comply with the different compliance and/or reporting requirements among a number of jurisdictions increases the possibility that we may inadvertentlyviolate one or more of the requirements, resulting in increased compliance costs that could adversely impact our results of operations.
We may not be successful in achieving expected operating efficiencies and sustaining or improving operating expense reductions, and may experience business disruptions associated with restructuring, facility consolidations, realignment, cost reduction and other strategic initiatives.
Over the past several years we have implemented a number of restructuring, realignment and cost reduction initiatives, including facility consolidations, organizational realignments and reductions in our workforce, and we may engage in similar efforts in the future. While we have realized some efficiencies from these initiatives, we may not realize the benefits of these or future initiatives to the extent we anticipated, particularly with respect to initiatives involving contingencies that are not completely within our control, such as the completion of acquisitions or divestitures. Further, such benefits may be realized later than expected, and the ongoing difficulties in implementing these measures may be greater than anticipated, which could cause us to incur additional costs or result in business disruptions. In addition, if these measures are not successful or sustainable, we may be compelled to undertake additional restructuring, realignment and cost reduction efforts, which could result in significant additional charges. Moreover, if our restructuring, realignment and cost reduction efforts prove ineffective, our ability to achieve our strategic and business plan goals may be adversely affected.
As part of our efforts to increase operating efficiencies, we have implemented a number of initiatives over the past several years to consolidate our enterprise resource planning, or ERP, systems. In addition, we currently are in the early stages of a multi-year phased conversion to upgrade our global ERP system to mitigate the risks associated with our vendor's planned end of support for the current version of our existing ERP system. This conversion will represent a substantial undertaking and require the investment of significant personnel and financial resources. To date, we have not experienced any significant disruptions to our business or operations in connection with these initiatives. However, as we continue our efforts to upgrade and further consolidate our ERP systems, we could experience business disruptions, which could adversely affect customer relationships and divert the attention of management away from daily operations. In addition, any delays in the implementation of these initiatives could cause us to incur additional unexpected costs. Should we experience such difficulties, our business, cash flows and results of operations could be adversely affected.
The strategic transformation that we are currently implementing may not have the intended results and may be harmful to our business.
In February 2025, we announced our intention to undertake a strategic transformation of the organization. In accordance with this strategy, on December 9, 2025, with the simultaneous execution of definitive agreements to sell our Acute Care and Interventional Urology businesses to Intersurgical® Ltd and the OEM business to Montagu and Kohlberg (collectively referred to as the "Strategic Divestitures"). The combined transaction total of Strategic Divestitures is $2.0 billion in cash, consisting of expected proceeds of approximately $1.5 billion for our OEM business and $530 million for our Acute Care and Interventional Urology businesses. Both transactions, which were approved by our Board of Directors, remain subject to certain closing adjustments, customary regulatory approvals and other closing conditions and are expected to be completed in the second half of 2026.
However, we can make no assurance that the announced transactions will be consummated on the timeframe contemplated or at all. We will face significant challenges in connection with first consummating, and then managing our business following the Strategic Divestitures. These challenges include, without limitation, obtaining the regulatory approvals necessary for, and satisfying the closing conditions to, the transactions, and the diversion of management’s attention from ongoing business concerns to completing the transactions. Then, both in the period before the transactions are consummated and thereafter, when we are operating a modified business, we may face
challenges in attracting, retaining and motivating key management and other employees; retaining existing, or attracting new, business and operational relationships, including with customers, distributors, suppliers, employees and other counterparties; maintaining our relationships with regulators; and potential negative reactions from the financial markets.
Moreover, we have incurred, and will continue to incur, significant expenses in connection with the Strategic Divestitures. These expenses may be higher than currently anticipated or may not yield a discernible benefit if either or both of the Strategic Divestitures is not completed on schedule or at all. In addition, the anticipated benefits of the Strategic Divestitures and our post-transaction business focus are based on a number of assumptions, some of which may prove incorrect, and we cannot predict with certainty when the expected benefits will occur, or the extent to which they will be achieved. For instance, in the first quarter of 2026 we committed to a multi-year restructuring plan intended to eliminate stranded costs and improve our long‑term cost structure. However, even if both of the Strategic Divestitures are completed, we may not achieve some or all of the anticipated strategic, financial, operational or other benefits in the expected timeframe, or at all, which could adversely impact our business, results of operations or financial condition.
Further, our enhanced reliance in the wake of the disposition of the Acute Care, Interventional Urology and OEM businesses on a smaller suite of existing products and on future products may pose risks to our growth, and following the transactions, we will be a less diversified company than we are today, with a more limited business. If the financial contribution from remaining legacy products and other products that we may acquire or develop in the future fails to replace lost contribution from the Acute Care, Interventional Urology and OEM businesses, or otherwise fail to meet expectations, our business, cash flows and results of operations could be adversely affected. We may be more vulnerable to changing market conditions, which could have a material adverse effect on our business, financial condition and results of operations. In addition, our diversification of revenues, costs and cash flows will diminish, such that our results of operations, cash flows, working capital, effective tax rate and financing requirements may be subject to increased volatility, and our ability to fund capital expenditures and investments, pay dividends and meet debt obligations and other liabilities may be diminished. In addition, we may experience difficulty accessing, or reduced access to, the capital markets or increased cost of borrowings, including as a result of a credit rating downgrade. Further, until the market has fully analyzed the value of our newly focused company, the price of our common stock may experience volatility, and our common stock may not match some holders’ investment strategies or meet the minimum criteria for inclusion in stock market indices or portfolios, which could cause certain investors to sell their shares, which could in turn lead to declines in the trading price of such stock.
Disruptions in sterilization of our products or regulatory initiatives further restricting the use of ethylene oxide in sterilization facilities could adversely affect our results of operations and financial condition.
Many of our products require sterilization prior to sale. A common method for sterilizing medical products involves the use of ethylene oxide, which is listed as a hazardous air pollutant under the Clean Air Act, as amended, and emissions of which are regulated by the U.S. Environmental Protection Agency ("EPA") and other regulatory authorities. Companies in the sterilization industry may face private litigation that could result in financial difficulties that could ultimately make it difficult or undesirable for such companies to continue in the sterilization business. In addition, sterilization activities are subject to substantial governmental oversight and attention that could disrupt their operations. One of our contract sterilizers, Sterigenics U.S., LLC, uses ethylene oxide in its sterilization process, including at its facilities in Smyrna, Cobb County, Georgia and Santa Teresa, New Mexico, which have sterilized some of our vascular and surgical products. In recent years, Sterigenics' operations at both its Smyrna and Santa Teresa facilities have been subject to legal proceedings related to the facilities' use of ethylene oxide in their sterilization operations. While both plants are currently operating normally, should their operations be suspended or adversely affected, our ability to provide affected products to our customers could be impaired if we are unable to utilize alternate facilities and sources for sterilization services.
In addition, in 2019, the attorneys general of 15 states and the District of Columbia sent a letter to the EPA urging that the EPA promptly propose and finalize stricter standards for ethylene oxide emissions. Subsequently, the EPA solicited information and comments from the public on proposed revisions to regulations regarding ethylene oxide emissions and collected information from commercial sterilizers about ethylene oxide sterilization processes and emissions. In April 2023, the EPA released a proposed rule under the Clean Air Act that would require commercial sterilizers to install pollution control equipment to reduce ethylene oxide emissions and implement methods to continuously monitor emissions and report results to the EPA. In April 2024, the EPA issued the final version of the rule, establishing new standards for ethylene oxide emissions for commercial sterilizers. Sterilizers must comply with the new standards by April 6, 2026, or April 5, 2027, depending on certain characteristics of existing operations, or upon startup for new operations. Failure of our contract sterilizers to achieve compliance with
the final rule by the applicable deadline would significantly impair our ability to provide sufficient quantities of sterilized products to our customers and compel us to seek sterilization alternatives that do not entail the use of ethylene oxide. We cannot assure that we would be able to identify such alternatives. In the event we were to experience any disruptions in our ability to sterilize our products, whether due to capacity constraints or regulatory or other impediments (including, among other things, regulatory initiatives directed generally to sterilization facilities that utilize ethylene oxide), or we are unable to transition to alternative facilities in a timely or cost effective manner in the event one or more of the facilities we use is affected, we could experience a material adverse impact with respect to our results of operations and financial condition.
A significant portion of our U.S. revenues is derived from sales to distributors, and “destocking” activity by these distributors can adversely affect our revenues and results of operations.
A significant portion of our revenues in the U.S. is derived from sales to distributors, which, in turn, sell our products to hospitals and other health care institutions. From time to time, these distributors may decide to reduce their levels of inventory with regard to certain of our products, a practice we refer to as “destocking.” A distributor's decision to reduce inventory levels with respect to our products may be based on a number of factors, such as distributor expectations regarding demand for a particular product, distributor buying decisions (including decisions to purchase competing products), changes in distributor policies regarding the maintenance of inventory levels, economic conditions and other factors. Following such instances of reduced purchases, distributors may revert to previous purchasing levels; nevertheless, we cannot assure that distributors will, in fact, increase purchases of our products in this manner. A decline in the level of product purchases by our U.S. distributors in the future could have a material adverse effect on our revenues and results of operations during a reporting period, and an extended decline in such product purchases could have a longer term material adverse effect.
We may incur material losses and costs as a result of product liability and warranty claims, as well as product recalls, any of which may adversely affect our results of operations and financial condition. Furthermore, our reputation as a medical device company may be damaged if one or more of our products are, or are alleged to be, defective.
Our businesses expose us to potential product liability risks related to the design, manufacture, labeling and marketing of our products. In particular, our medical device products are often used in surgical and intensive care settings for procedures involving seriouslyill patients. In addition, many of our products are designed to be implanted in the human body for varying periods of time. Product defects or inadequate disclosure of product-related risks with respect to products we manufacture or sell could result in patient injury or death. Product liability and warranty claims often involve very large or indeterminate amounts, including punitivedamages. The magnitude of potential losses from product liability lawsuits may remain unknown for substantial periods of time, and the related legal defense costs may be significant. We could experience material warranty or product liability losses in the future and incur significant costs to defend these claims.
In addition, if any of our products are, or are alleged to be, defective, we may voluntarily conduct, or be required by regulatory authorities to conduct, a recall of that product. In the event of a recall, we may lose sales and be exposed to individual or class-action litigationclaims. Moreover, negative publicity regarding a quality or safety issue, whether accurate or inaccurate, could harm our reputation, decrease demand for our products, lead to product withdrawals or impair our ability to successfully launch and market our products in the future. Product liability, warranty and recall costs may have a material adverse effect on our business, financial condition, results of operations and cash flows.
Volatility in domestic and global financial markets, including inflation, interest rate fluctuations, and global supply chain disruptions, could adversely impact our results of operations, financial condition and liquidity.
We are subject to risks arising from adverse changes in general domestic and global economic conditions, including inflation, interest rate fluctuations, and supply chain disruptions. The economic slowdown and disruption of credit markets that occurred several years ago led to recessionary conditions and depressed levels of consumer and commercial spending, resulting in reductions, delays or cancellations of purchases of our products and services. We cannot predict the duration or extent of any economic recovery or the extent to which our customers will return to more typical spending behaviors. The continuation in a number of markets of weak economic growth, constricted credit, public sector austerity measures in response to public budget deficits and foreign currency volatility, particularly with respect to the euro, could have a material adverse effect on our results of operations, financial condition and liquidity.
Although we maintain allowances for doubtful accounts to cover the estimated losses which may occur when customers cannot make their required payments, we cannot assure that the loss rate will not increase in the future given the volatility in the worldwide economy. If our allowance for doubtful accounts is insufficient to address receivables we ultimately determine are uncollectible, we would be required to incur additional charges, which could materially adversely affect our results of operations. Moreover, our inability to collect outstanding receivables could adversely affect our financial condition and cash flow from operations.
In addition, adverse economic and financial market conditions may result in future impairment charges with respect to our goodwill and other intangible assets, which would not directly affect our liquidity but could have a material adverse effect on our reported financial results.
Our strategic initiatives, including acquisitions, may not produce the intended growth in revenue and operating income, which could have a material adverse effect on our operating results.
In addition to the strategic transformation we announced in February 2025, our strategic initiatives include making significant investments designed to achieve revenue growth and to enable us to meet or exceed margin improvement targets. If we do not achieve the expected benefits from these investments or otherwise fail to execute on our strategic initiatives, we may not achieve the growth improvement we are targeting, and our results of operations may be adversely affected.
In addition, as part of our strategy for growth, we have made, and may continue to make, acquisitions and divestitures and enter into strategic alliances such as joint ventures and joint development agreements. However, we may not be able to identify suitable acquisition candidates, complete acquisitions or integrate acquisitions successfully, and our joint ventures or strategic alliances may not prove to be successful. In this regard, acquisitions involve numerous risks, including difficulties in the integration of acquired operations, technologies, services and products and the diversion of management’s attention from other business concerns. Moreover, the products and technologies that we acquire may not be successful or may require us to devote significantly greater development, marketing and other resources, as well as significantly greater investments, than we anticipated. We could also experience negative effects on our results of operations and financial condition from acquisition-related charges, amortization of intangible assets, asset and goodwill impairment charges and other matters that could arise in connection with the acquisition of a company or business, including matters related to internal control over financial reporting and regulatory compliance, as well as the short-term effects of increased costs on results of operations. Although our management will endeavor to evaluate the risks inherent in any particular transaction, there can be no assurance that we will identify all such risks or the magnitude of the risks. In addition, prior acquisitions have resulted, and future acquisitions could result, in the incurrence of substantial additional indebtedness and expenditures. Future acquisitions may also result in potentially dilutive issuances of equity securities. There can be no assurance that difficulties encountered in connection with acquisitions will not have a material adverse effect on our business, financial condition and results of operations.
In connection with certain of our completed acquisitions, we have agreed to pay consideration that is contingent upon the achievement of specified objectives, such as receipt of regulatory approval, commercialization of a product or achievement of sales targets. As of the acquisition date, we record a contingent liability representing the estimated fair value of the contingent consideration we expect to pay. On a quarterly basis, we reassess these obligations and, in the event our estimate of the fair value of the contingent consideration changes, we record increases or decreases in the fair value as an adjustment to operating earnings, which could have a material impact on our results of operations. As of December 31, 2025, we accrued $50.2 million of contingent consideration related to completed business combinations, most of which related and Palette. In addition, actual payments may differ materially from the amount of the contingent liability, which could have a material impact on our results of operations, cash flows and liquidity. For information regarding assumptions related to our contingent consideration liabilities, see “Critical Accounting Policies and Estimates” under Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations included in this Annual Report on Form 10-K. For additional information regarding our acquisitions, see Note 4 to the consolidated financial statements included in this Annual Report on Form 10-K.
Our results of operations and financial condition may be adversely affected by public health epidemics or pandemics, as occurred with respect to the recent COVID-19 epidemic and pandemic.
We are subject to risks associated with public health threats, such as the recent COVID-19 epidemic and pandemic. Such events could significantly impact economic activity and markets around the world and, as a result, have negative effects on our operations, financial performance and cash flows. Such effects would depend on various factors, including, but not limited, to: the occurrence, spread, duration and severity of any outbreaks;
governmental, business and individuals’ actions that may be taken in response to an epidemic or pandemic (including restrictions on travel, transport and workforce pressures, and deferrals or postponements of elective procedures); the impact of such a crisis, and actions taken in response thereto, on global and regional economies, travel and economic activity; the availability of federal, state, local or non-U.S. funding programs; general economic uncertainty in key global markets and financial market volatility; global economic conditions and levels of economic growth; and the timing and pace of recovery as such a crisis subsides, which could be impacted by a number of factors, including limited provider capacity to perform procedures using our products that were deferred as a result of the epidemic or pandemic.
These and other impacts of epidemics or pandemics could have the effect of heightening many of the other risks described herein. We might not be able to predict or respond to all impacts on a timely basis to prevent near- or long-term adverse impacts to our results. However, these effects could have an adverse impact on our liquidity, capital resources, operations, business results and those of the third parties on which we rely, and such impact could be material.
Health care reform may have a material adverse effect on our industry and our business.
Political, economic and regulatory developments have effected fundamental changes in the healthcare industry. The Affordable Care Act substantially changed the way health care is financed by both government and private insurers. It also encouragesimprovements in the quality of health care products and services and significantly impacts the U.S. pharmaceutical and medical device industries. Among other things, the Affordable Care Act:
• established a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in and conduct comparative clinical effectiveness research;
• implemented payment system reforms, including a national pilot program to encourage hospitals, physicians and other providers to improve the coordination, quality and efficiency of certain health care services through bundled payment models; and
• created an independent payment advisory board that will submit recommendations to reduce Medicare spending if projected Medicare spending exceeds a specified growth rate.
We cannot predict at this time the full impact of other healthcare reform measures that may be adopted in the future on our financial condition, results of operations and cash flows. In this regard, several legislative initiatives to repeal and replace the Affordable Care Act have been proposed, but not adopted, since its passage. U.S. tax legislation adopted in December 2017 and commonly referred to as the Tax Cuts and Jobs Act ("TCJA") eliminated the individual mandate under the Affordable Care Act, which has resulted in increased uncertainty regarding insurance premium prices for participants in insurance exchanges under the act, and may have other effects. While several recent legal challenges to the Affordable Care Act have been unsuccessful, further challenges may be mounted in the future. The nature and effect of any modification or repeal of, or legislative substitution for, the Affordable Care Act, or any court decision regarding the act's validity, is uncertain, and we cannot predict the effect that any of these events would have on the longer-term viability of the act, or on our financial condition, results of operations or cash flows.
We are subject to risks associated with our non-U.S. operations.
We have significant manufacturing and distribution facilities, research and development facilities, sales personnel and customer support operations in a number of countries outside the U.S., including Belgium, the Czech Republic, Ireland, Malaysia and Mexico. In addition, a significant portion of our non-U.S. revenues are derived from sales to third party distributors. As of December 31, 2025, 76% of our full-time employees were employed in countries outside of the U.S., and on a continuing operations basis, 70% of our net property, plant and equipment was located outside the U.S. In addition, for the years ended December 31, 2025, 2024 and 2023, 41%, 36% and 35%, respectively, of our net revenues from continuing operations (based on the Teleflex entity generating the sale) were derived from operations outside the U.S.
Our international operations are subject to risks inherent in doing business outside the U.S., including:
• exchange controls, currency restrictions and fluctuations in currency values;
• trade protection measures, tariffs and other duties, especially in light of trade disputes between the U.S. and several foreign countries, including China;
• potentially costly and burdensome import or export requirements;
• laws and business practices that favor local companies;
• changes in foreign medical reimbursement policies and procedures;
• impacts on pricing due to national and regional tenders, including volume-based procurement practices and government-imposed payback provisions;
• subsidies or increased access to capital for firms that currently are or may emerge as competitors in countries in which we have operations;
• substantial non-U.S. tax liabilities, including potentially negative consequences resulting from changes in tax laws;
• restrictions and taxes related to the repatriation of non-U.S. earnings;
• differing labor regulations;
• additional U.S. and foreign government controls or regulations;
• public health epidemics;
• difficulties in the protection of intellectual property; and
• unsettled political and economic conditions and possible terrorist attacks against American interests.
In addition, the U.S. Foreign Corrupt Practices Act (the “FCPA”) prohibits companies and their intermediaries from making improper payments to non-U.S. officials for the purpose of obtaining or retaining business. Similar anti-bribery laws are in effect in several foreign jurisdictions. The FCPA also imposes accounting standards and requirements on publicly traded U.S. corporations and their foreign affiliates, which, among other things, are intended to prevent the diversion of corporate funds to the payment of bribes and other improper payments to government officials, and to prevent the establishment of “off the books” slush funds from which such improper payments can be made. Because of the predominance of government-sponsored health care systems around the world, many of our customer relationships outside of the U.S. are with government entities and are therefore subject to such anti-bribery laws. Our policies mandate compliance with these anti-bribery laws. However, we operate in many parts of the world that have experienced government corruption to some degree. Despite meaningful measures that we undertake to facilitate lawful conduct, which include training and compliance programs and internal control policies and procedures, we may not always prevent reckless or criminal acts by our employees, distributors or other agents. In addition, we may be exposed to liability due to pre-acquisition conduct of employees, distributors or other agents of businesses or operations we acquire. Violations of anti-bribery laws, or allegations of such violations, could disrupt our operations, involve significant management distraction and have a material adverse effect on our business, financial condition, results of operations and cash flows. We also could be subject to severepenalties and other adverse consequences, including criminal and civil penalties, disgorgement of profits, imposition of a court-appointed or compliance monitor, debarment from participation in U.S. government contracts, substantial expenditures related to further enhancements to our procedures, policies and controls, personnel changes and other remedial actions, as well as harm to our reputation.
Furthermore, we are subject to the export controls and economic embargo rules and regulations of the U.S., including the Export Administration Regulations and trade sanctions againstembargoed countries, which are administered by the Office of Foreign Assets Control within the Department of the Treasury, as well as other laws and regulations administered by the Department of Commerce. These regulations limit our ability to market, sell, distribute or otherwise transfer our products or technology to prohibited countries or persons. While we train our employees and contractually obligate our distributors to comply with these regulations, we cannot assure that a violation will not occur, whether knowingly or inadvertently. Failure to comply with these rules and regulations may result in substantial civil and criminalpenalties, including fines and the disgorgement of profits, the imposition of a court-appointed monitor, the denial of export privileges and debarment from participation in U.S. government contracts, any of which could have a material adverse effect on our international operations or on our business, results of operations, financial condition and cash flows.
Additionally, in connection with the ongoing conflict between Russia and Ukraine, the U.S. government has imposed enhanced export controls on certain products and sanctions on certain industry sectors and parties in Russia. Although our sales into Russia did not constitute a material portion of our total revenue in 2025, further escalation of geopolitical tensions, including as a result of the imposition of additional economic sanctions, could have a broader impact that expands into other markets where we do business, which could adversely affect our business and/or our supply chain, business partners or customers in the broader region.
Finally, with respect to tariffs and trade disputes, the Trump administration has proposed or enacted tariffs and substantial changes to trade policies, which could adversely affect our business. For example, the Trump administration has imposed tariffs on certain foreign products, that in the past have resulted in and may result in future retaliatory tariffs on U.S. goods and products. We cannot predict what additional actions may ultimately be taken by the U.S. or other governments with respect to tariffs or trade relations, what products may be subject to such actions (including subject to U.S. export control restrictions), or what actions may be taken by the other
countries in retaliation, or the impact, if any, that any policy changes could have on our business. Any of the foregoing could have a material adverse effect on our financial condition, results of operations or cash flows.
Future material impairments to the value of our goodwill or other intangible assets would negatively affect our operating results.
Goodwill and intangible assets represent a significant portion of our assets. Goodwill is the excess of cost, or carrying value, over the fair market value of net assets acquired in business combinations. We test annually during the fourth quarter for any goodwill impairment, and also test in periods where changes in circumstances indicate that the carrying value of our goodwill assets may not be recoverable. Impairment charges could result from adverse changes to our earnings forecasts, our strategic goals, or broader macroeconomic conditions. If, due to such adverse changes, we are required to write down all or a significant part of our goodwill, our operating results would be negatively affected.
Foreign currency exchange rate, commodity price and interest rate fluctuations may adversely affect our results.
We are exposed to a variety of market risks, including the effects of changes in foreign currency exchange rates, commodity prices and interest rates. Products manufactured in, and sold into, foreign markets represent a significant portion of our operations. Our consolidated financial statements reflect translation of financial statements denominated in non-U.S. currencies to U.S. dollars, our reporting currency, as well as the foreign currency exchange gains and losses resulting from the remeasurement of assets and liabilities and from transactions denominated in currencies other than the primary currency of the country in which the entity operates, which we refer to as "non-functional currencies." A strengthening or weakening of the U.S. dollar in relation to the foreign currencies of the countries in which we sell or manufacture our products, such as the euro, will affect our U.S. dollar-reported revenue and income. Although we have entered into forward contracts with several major financial institutions to hedge a portion of our monetary assets and liabilities and projected cash flows denominated in non-functional currencies in order to reduce the effects of currency rate fluctuations, changes in the relative values of currencies may, in some instances, have a significant effect on our results of operations.
Many of our products have significant plastic resin content. We also use quantities of other commodities, such as aluminum and steel. Increases in the prices of these commodities could increase the costs of our products and services. We may not be able to pass on these costs to our customers, particularly with respect to those products we sell under group purchase agreements, which could have a material adverse effect on our results of operations and cash flows.
Increases in interest rates may adversely affect the financial health of our customers and suppliers, thereby adversely affecting their ability to buy our products and supply the components or raw materials we need. In addition, our borrowing costs have been adversely affected by recent interest rate increases and could be further affected if interest rates continue to increase. Any of these events could have a material adverse effect on our financial condition, results of operations and cash flows.
Fluctuations in our effective tax rate and changes to tax laws may adversely affect us.
As a global company, we are subject to taxation in numerous countries, states and other jurisdictions. Our effective tax rate is derived from a combination of applicable tax rates in the various countries, states and other jurisdictions in which we operate. In preparing our financial statements, we estimate the amount of tax that will become payable in each of these jurisdictions. Our effective tax rate may, however, differ from the estimated amount due to numerous factors, including a change in the mix of our profitability from country to country. Further, many countries continue to consider changes in their tax laws by implementing new initiatives such as the Organization for Economic Co-operation and Development’s (the "OECD") Pillar Two global minimum tax, which will likely impact the amount of taxes that multinational companies such as Teleflex pay in the future. Various countries have already enacted or are in the process of incorporating the Pillar Two framework within their tax laws. While we continue to monitor these changes and their potential implications, the aggressive nature of the timeline set by the OECD for adoption of this framework, the lack of detailed guidance provided to date and the complexities surrounding its implementation may mean that all implications for business may not have been fully analyzed or understood before rules are finalized. Any of these factors could cause us to experience an effective tax rate significantly different from previous periods or our current expectations, which could have an adverse effect on our business, financial condition, results of operations and cash flows.
An interruption in our manufacturing or distribution operations or our supply of raw materials may adversely affect our business.
Many of our key products are manufactured at or distributed from single locations, and the availability of alternate facilities is limited. If operations at one or more of our facilities is suspended due to natural disasters or other events, including, without limitation, those due to climate change, we may not be able to timely manufacture or distribute one or more of our products at previous levels or at all. Furthermore, our ability to establish replacement facilities or to substitute suppliers may be delayed due to regulations and requirements of the FDA and other regulatory authorities regarding the manufacture of our products. In addition, in the event of delays or cancellations in shipments of raw materials by our suppliers, we may not be able to timely manufacture or supply the affected products at previous levels or at all. The manufacture of our products is highly exacting and complex, due in part to strict regulatory requirements. Problems in the manufacturing process, including equipment malfunction, failure to follow specific protocols and procedures, defective raw materials and environmental factors, could lead to delays in product releases, product shortages, unanticipated costs, lost revenues and damage to our reputation. A failure to identify and address manufacturing problems prior to the release of products to our customers may also result in quality or safety issues. A reduction or interruption in manufacturing or distribution, or our inability to secure suitable alternative sources of raw materials or components or finished goods used in our kits, could have a material adverse effect on our business, results of operations, financial condition and cash flows.
Our ability to attract, train, develop and retain key employees is important to our success.
Our success depends, in part, on our ability to continue to retain key personnel, including our executive officers and other members of our senior management team. Our success also depends, in part, on our ability to attract, train, develop and retain other key employees, including research and development, sales, marketing and operations personnel. We may experience difficulties in retaining executives and other employees due to many factors, including the intense competition for skilled personnel in our industry, fluctuations in global economic and industry conditions, changes in our organizational structure, our restructuring initiatives, competitors’ hiring practices and the effectiveness of our compensation programs.
Our inability to attract, train, develop and retain such personnel could have an adverse effect on our business, results of operations, financial condition and cash flows.
We could be adversely affected by our ongoing CEO transition.
On January 8, 2026, we announced that Stuart Randle, a member of our board of directors, has been appointed Interim President and Chief Executive Officer, succeeding our prior Chairman, President and CEO, and that Dr. Stephen Klasko, at that time our Lead Director, has been named Chairman of the Board. We also announced that the board has engaged a leading executive search firm to assist in a comprehensive search process to identify a permanent CEO. There are a number of risks associated with a CEO transition, any of which may harm us. The market for such positions is competitive, and qualified individuals are in high demand. If we are unable to identify a strong candidate for the position, or if our replacement CEO, interim or permanent, is unsuccessful at leading our company or is unable to articulate and execute our strategy and vision, it could have a material adverse effect on our business, financial condition, results of operations and cash flows. With the change in leadership, there is a risk to retention of other members of our senior management team, as well as to continuity of business initiatives, plans, and strategies through the transition period and if we are unable to execute an orderly transition, our business may be adversely affected.
Our failure to maintain strong relationships with physicians and other health care professionals could adversely affect us.
We depend on our ability to maintain strong working relationships with physicians and other healthcare professionals in connection with research and development for some of our products. We rely on these professionals to provide us with considerable knowledge and advice regarding the development and use of these products. Physicians assist us as researchers, product consultants, inventors and public speakers. If we fail to maintain our working relationships with physicians and, as a result, no longer have the benefit of their knowledge and advice, our products may not be developed in a manner that is responsive to the needs and expectations of the professionals who use and support our products, which could have a material adverse effect on our business, financial condition, results of operations and cash flows.
Our technology is important to our success, and our failure to protect our intellectual property rights could put us at a competitive disadvantage.
We rely on the patent, trademark, copyright and trade secret laws of the U.S. and other countries to protect our proprietary rights. Although we own numerous U.S. and foreign patents and have submitted numerous patent applications, we cannot be assured that any pending patent applications will issue, or that any patents, issued or pending, will provide us with any competitive advantage or will not be challenged, invalidated or circumvented by third parties. In addition, we rely on confidentiality and non-disclosure agreements with employees and take other measures to protect our know-how and trade secrets. The steps we have taken may not prevent unauthorized use of our technology by competitors or other persons who may copy or otherwise obtain and use these products or technology, particularly in foreign countries where the laws may not protect our proprietary rights to the same extent as in the U.S. We cannot assure that current and former employees, contractors and other parties will not breach their confidentiality agreements with us, misappropriate proprietary information, copy or otherwise obtain and use our information and proprietary technology without authorization or otherwise infringe on our intellectual property rights. Our inability to protect our proprietary technology could adversely affect our business, financial condition, results of operations and cash flows. Moreover, there can be no assurance that others will not independently develop know-how and trade secrets comparable to ours or develop better technology than our own, which could reduce or eliminate any competitive advantage we have developed.
Our products or processes may infringe the intellectual property rights of others, which may cause us to pay unexpectedlitigation costs or damages or prevent us from selling our products.
We cannot be certain that our products do not and will not infringe issued patents or other intellectual property rights of third parties. We may be subject to legal proceedings and claims in the ordinary course of our business, including claims of allegedinfringement of the intellectual property rights of third parties. Any such claims, whether or not meritorious, could result in litigation and divert the efforts of our personnel. If we are found liable for infringement, we may be compelled to enter into licensing agreements (which may not be available on acceptable terms or at all) or to pay damages or cease making or selling certain products. We may need to redesign some of our products or processes to avoid future infringement liability. Any of the foregoing events could be detrimental to our business.
Other pending and future litigation may involve significant costs and adversely affect our business.
We are party to various lawsuits and claims arising in the normal course of business involving, among other things, contracts, intellectual property, acquisitions and divestitures, import and export regulations, and employment and environmental matters. The defense of these lawsuits may divert our management’s attention and may involve significant legal expenses. In addition, we may be required to pay damage awards or settlements, or become subject to injunctions or other equitable remedies, that could have a material adverse effect on our financial condition and results of operations. While we do not believe that any litigation in which we are currently engaged would have such an adverse effect, the outcome of litigation, including regulatory matters, is often difficult to predict, and we cannot assure that the outcome of pending or future litigation will not have a material adverse effect on our business, financial condition, results of operations or cash flows.
Disruption of critical information systems or material breaches in the security of our systems may adversely affect our business and customer relationships.
We rely on information technology systems to process, transmit, and store electronic information in our day-to-day operations. We also rely on our technology infrastructure, among other functions, to enable us to interact with customers and suppliers, fulfill orders, generate invoices, collect and make payments, ship products, provide support to customers, fulfill contractual obligations and otherwise perform business functions. Our internal information technology systems, as well as those systems maintained by third-party providers, may be subjected to computer viruses or other malicious codes, unauthorized access attempts, and cyber-attacks, any of which could result in data leaks or otherwise compromise our confidential or proprietary information and disrupt our operations. Cyber-attacks are becoming more sophisticated and frequent, and in some cases have caused significant harm. Although we have taken numerous measures to protect our information systems and enhance data security, we cannot assure that these measures will prevent security breaches that could have a significant impact on our business, reputation and financial results. If we fail to monitor, maintain or protect our information technology systems and data integrity effectively or fail to anticipate, plan for or manage significant disruptions to these systems, we could, among other things, lose customers, have difficultypreventingfraud, have disputes with customers, physicians and other health care professionals, be subject to regulatory sanctions or penalties, incur expenses, lose revenues or suffer other adverse consequences. Any of these events could have a material adverse effect on our business, results of operations, financial condition or cash flows.
Our operations expose us to the risk of material environmental and health and safety liabilities.
We are subject to numerous foreign, federal, state and local environmental protection and health and safety laws governing, among other things:
• the generation, storage, use and transportation of hazardous materials;
• emissions or discharges of substances into the environment;
• the impacts of industrial operations on climate change; and
• the health and safety of our employees.
These laws and regulations are complex, change frequently and have tended to become more stringent over time. We cannot provide assurance that our costs of complying with current or future environmental protection and health and safety laws, or our liabilities arising from past or future releases of, or exposures to, hazardous substances, which may include claims for personal injury or cleanup, will not exceed our estimates or will not adversely affect our financial condition and results of operations.
The effects of climate change or legal, regulatory or market measures intended to address climate change could adversely affect our business, results of operations, financial condition and cash flows.
Risks associated with climate change are subject to increasing societal, regulatory and political focus in the U.S. and globally. While the effects of climate change in the near- and long-term are difficult to predict, shifts in weather patterns caused by climate change are expected to increase the frequency, severity and duration of certain adverse weather conditions and natural disasters, such as hurricanes, tornadoes, earthquakes, wildfires, droughts, extreme temperatures or flooding, which could cause more significant business and supply chain interruptions, damage to our products and facilities as well as the infrastructure of hospitals, medical care facilities and other customers, reduced workforce availability, increased costs of raw materials and components, increased liabilities, and decreased revenues than what we have experienced in the past from such events. In addition, increased public concern over climate change could result in new legal or regulatory requirements designed to mitigate the effects of climate change, which could include the adoption of more stringent environmental laws and regulations or stricter enforcement of existing laws and regulations, which could result in increased compliance burdens and costs to meet the regulatory obligations as well as adverse impacts on raw material sourcing, manufacturing operations and the distribution of our products. These include the new climate-related disclosure requirements and similar regulations established by California, the EU, and other international regulatory bodies concerning, among other things, sustainability, environmental protection, hazardous substance control, and the measuring and reporting of environmental data such as greenhouse gas emissions. Any such developments could have a material adverse effect on our business, results of operations, financial condition and cash flows.
Our workforce covered by collective bargaining and similar agreements could cause interruptions in our provision of products and services.
As of December 31, 2025, 6% of our employees in the U.S. and in other countries were covered by union contracts or collective bargaining arrangements. It is likely that a portion of our workforce will remain covered by collective bargaining and similar agreements for the foreseeable future. Strikes or work stoppages could occur that would adversely impact our relationships with our customers and our ability to conduct our business.
Risks Relating to our Financing Arrangements
Our substantial indebtedness could adversely affect our business, financial condition or results of operations.
As of December 31, 2025, we had total consolidated indebtedness of $2.7 billion.
Our substantial level of indebtedness increases the risk that we may be unable to generate cash sufficient to satisfy our debt obligations. It could also have significant effects on our business. For example, it could:
• increase our vulnerability to general adverse economic and industry conditions;
• require us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness, thereby reducing the availability of our cash flow to fund capital expenditures, research and development efforts and other general corporate expenditures;
• limit our ability to borrow additional funds for general corporate purposes;
• limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate;
• restrict us from pursuing business opportunities; and
• place us at a disadvantage compared to competitors that have less indebtedness.
If we do not generate sufficient cash flow from operations or if future borrowings are not available to us in an amount sufficient to pay our indebtedness when due or to fund our other liquidity needs, we may be forced to refinance all or a portion of our indebtedness, sell assets, reduce or delay capital expenditures, or seek to raise additional capital.
We may not be able to effect any of these actions on commercially reasonable terms or at all. Our ability to refinance our indebtedness will depend on our financial condition at the time, the restrictions in the instruments governing our outstanding indebtedness and other factors, including market conditions.
Our inability to generate sufficient cash flow to satisfy our debt service obligations, or to refinance or restructure our obligations on commercially reasonable terms or at all, could have a material adverse effect on our business, financial condition and results of operations.
Our debt agreements impose restrictions on our business, which could prevent us from pursuing business opportunities and taking other desirable corporate actions, and may adversely affect our ability to respond to changes in our business and manage our operations.
Our senior credit agreement and the indentures governing our 4.625% senior notes due 2027 (the "2027 Notes") and our 4.25% Senior Notes due 2028 (the "2028 Notes" and, together with the 2027 Notes, the "Senior Notes") contain covenants that, among other things, impose significant restrictions on our business. The restrictions that these covenants place on us and our restricted subsidiaries collectively include limitations on our and their ability to, among other things, incur additional indebtedness or issue preferred stock or otherwise disqualified stock; create liens; pay dividends, make investments or make other restricted payments; sell assets; merge, consolidate, sell or otherwise dispose of all or substantially all of our assets; and enter into transactions with our affiliates.
In addition, our senior credit agreement also contains financial covenants, including covenants requiring maintenance of a consolidated leverage ratio, a secured leverage ratio and a consolidated interest coverage ratio, calculated in accordance with the terms of the senior credit agreement. A breach of any covenants under any one or more of our debt agreements could result in a default, which if not cured or waived, could result in the acceleration of all of our debt. In addition, any debt agreements we enter into in the future may further limit our ability to enter into certain types of transactions.
Under our cross-currency swap agreements, a meaningful decline in the U.S. dollar to certain exchange rates could have a material adverse effect on our cash flows.
We have entered into cross-currency swap agreements with several financial institutions to hedge against the effect of variability in the U.S. dollar to certain exchange rates. The swap agreements require an exchange of the notional amounts between us and the counterparties upon expiration or earlier termination of the agreements. If, at the expiration or earlier termination of the swap agreements, the U.S. dollar to certain exchange rates has declined from the rate in effect on the execution date, we are required to pay the counterparties an amount equal to the excess of the U.S. dollar value over the principal amount (we and the counterparties have agreed to a net settlement with regard to the exchange of the notional amounts at the date of expiration or earlier termination of the agreements). In the event of a significant decline in the U.S. dollar to certain exchange rates, our payment obligations to the counterparties could have a material adverse effect on our cash flows. In this regard, if, at the expiration or earlier termination of our swap agreements, the U.S. dollar to Euro or to Swiss Franc exchange rates have declined by 10% from the rate in effect at the inception of our agreements, we would be required to pay approximately $100 million or $60 million, respectively, to the counterparties in respect of the notional settlement. To the extent we enter into additional cross-currency swap agreements, a decline in the relevant exchange rates could further adversely affect our cash flows.
Risks Relating to Ownership of our Common Stock
We may issue additional shares of our common stock or instruments convertible into our common stock, which could cause the price of our common stock to decline.
We are not restricted from issuing additional shares of our common stock or other instruments convertible into our common stock. As of December 31, 2025, we had outstanding approximately 44.2 million shares of our common stock, options to purchase 1.3 million shares of our common stock (of which approximately 0.9 million were vested as of that date), restricted stock units covering 0.2 million shares of our common stock (which are expected to vest over the next four years), performance stock units covering a maximum of 148,807 shares of our common stock (which are expected to vest over the next three years and depend on our performance with regard to specified
financial measures and market performance of our common stock compared to designated public companies) and 38 shares of our common stock to be distributed from our deferred compensation plan. As of December 31, 2025, 3.2 million shares of our common stock remained available for future issuance under our 2023 Stock Incentive Plan. We cannot predict the size of future issuances or the effect, if any, that they may have on the market price for our common stock.
If we issue additional shares of our common stock or instruments convertible into our common stock, such issuances may materially and adversely affect the price of our common stock. Furthermore, our issuance of shares upon the exercise of some or all of the outstanding stock options, as well as the vesting of restricted stock units and some or all of the performance stock units will dilute the ownership interests of existing stockholders, and the subsequent sale in the public market of such shares of our common stock could adversely affect prevailing market prices of our common stock.
We may not pay dividends on our common stock in the future.
Holders of our common stock are entitled to receive dividends only as our board of directors may declare out of funds legally available for such payments. The declaration and payment of future dividends to holders of our common stock will be at the discretion of our board of directors and will depend upon many factors, including our financial condition, earnings, requirements under covenants in our debt instruments, legal requirements and other factors as our board of directors deems relevant. We cannot assure that our cash dividend will not be reduced or eliminated in the future.
Certain provisions of our corporate governing documents, Delaware law and our Senior Notes could discourage, delay, or prevent a merger or acquisition.
Provisions of our certificate of incorporation and bylaws could impede a merger, takeover or other business combination involving us or discourage a potential acquirer from making a tender offer for our common stock. For example, our certificate of incorporation authorizes our board of directors to determine the number of shares in a series, the consideration, dividend rights, liquidation preferences, terms of redemption, conversion or exchange rights and voting rights, if any, of unissued series of preferred stock, without any vote or action by our stockholders. Thus, our board of directors can authorize and issue shares of preferred stock with voting or conversion rights that could adversely affect the voting or other rights of holders of our common stock. We are also subject to Section 203 of the Delaware General Corporation Law, which imposes restrictions on mergers and other business combinations between us and any holder of 15% or more of our common stock. These provisions could have the effect of delaying or deterring a third party from acquiring us even if an acquisition might be in the best interest of our stockholders, and accordingly could reduce the market price of our common stock.
Certain provisions in the indentures governing the Senior Notes could make it more difficult or more expensive for a third party to acquire us. Upon an acquisition event that constitutes a “change of control,” as defined in the indentures governing the Senior Notes, coupled with a downgrade in the ratings of the Senior Notes, holders of such notes will have the right to require us to purchase their notes in cash. Our obligations under the Senior Notes could increase the cost of acquiring us or otherwise discourage a third party from acquiring us or removing incumbent management, and accordingly could cause a reduction in the market price of our common stock.
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divestitures
Recent Strategic Actions
In February 2025, we announced our intention to undertake a strategic transformation of the organization. In accordance with this strategy, on December 9, 2025, we announced that we entered into definitive agreements to sell our Acute Care and Interventional Urology (also referred to as "IU") businesses to Intersurgical® Ltd and our OEM business to Montagu and Kohlberg (collectively referred to as the "Strategic Divestitures"). The combined total consideration from the Strategic Divestitures is $2.0 billion in cash, consisting of expected proceeds of approximately $1.5 billion for our OEM business and $530 million for our Acute Care and IU businesses. Both transactions, which were approved at the same time by our Board of Directors, remain subject to certain closing adjustments, customary regulatory approvals and other closing conditions and are expected to be completed in the second half of 2026. We expect to receive net after‑tax proceeds of approximately $1.8 billion upon the completion of both sales. We intend to use the net proceeds primarily to return capital to shareholders through share repurchases and pay down debt, enhancing our financial flexibility to support our growth strategy.
In connection with the Strategic Divestitures, we have negotiated transition services agreements and other arrangements intended to govern ongoing activities between Teleflex and the respective buyers following the closing dates of the transactions, including interim operating model arrangements and manufacturing and supply services. Although the material terms of these agreements have been substantially determined, they remain subject to finalization and execution. We expect to complete and execute these agreements at the close of each transaction.
The Strategic Divestitures represent a single plan to exit certain product categories that, in aggregate, meet accounting requirements to be classified as discontinued operations and held for sale as of December 31, 2025. Information provided herein is presented on a continuing operations basis to reflect the impact of the Strategic Divestitures, unless otherwise indicated. For additional information regarding the Strategic Divestitures, refer to Note 5 to the consolidated financial statements included in this Annual Report on Form 10-K.
On January 8, 2026, we announced the departure of our Chairman, President and Chief Executive Officer, Liam J. Kelly, and the appointment of Stuart A. Randle as Interim President and Chief Executive Officer. In connection with Mr. Kelly’s departure as President and Chief Executive Officer, the Board appointed Stephen K. Klasko, M.D., a current independent director who had been serving as our Lead Director, to serve as the independent Chair of the Board.
Acquisition of BIOTRONIK Vascular Intervention business
On February 24, 2025, we executed a definitive agreement to acquire substantially all of the Vascular Intervention business of BIOTRONIK SE & Co. KG (the “VI Business”). The acquisition adds a broad suite of coronary and peripheral medical devices, such as drug-coated balloons, stents, and balloon catheters, which complement our interventional product portfolio.
On June 30, 2025, the first day of the third fiscal quarter of 2025, we completed the acquisition of the VI business for a net initial cash payment of €704.3 million, or $825.2 million, subject to certain working capital and other customary adjustments. Borrowings under the delayed draw term loan, discussed in Note 11 and within the Liquidity and Capital Resources section below, and our revolving credit facility were utilized to finance the
acquisition, inclusive of transaction-related costs and other associated requirements.
Concurrent with the execution of the agreement to acquire the VI Business, we entered into foreign exchange derivative contracts with an aggregate notional value of €700 million to hedge economically against the foreign currency exposure associated with the cash consideration needed to complete the acquisition. These forward contracts were settled on June 30, 2025, concurrent with the completion of our acquisition. The settlement of the forward currency contracts resulted in proceeds and a recognized gain of $82.2 million.
In connection with the acquisition, we also entered into several ancillary agreements with BIOTRONIK SE & Co. KG to help facilitate business continuity and the integration of the business. These agreements primarily relate to transition support and distribution services and have varying durations extending up to 36 months.
For additional information regarding the acquisition of the VI Business, refer to Note 4 to the consolidated financial statements included in this Annual Report on Form 10-K.
Impairment considerations
We test the recoverability of long-lived assets whenever events or circumstances indicate the carrying value of an asset may not be recoverable. During the first quarter of 2025, we identified indicators of a potential impairment related to the long-lived assets associated with our Titan SGS asset group, which primarily consists of intangible assets. The indicators of a potential impairment primarily arose from lower than expected sales of our Titan SGS product line and anticipated continuing reduced demand for bariatric surgery procedures in future periods, driven by the growing adoption of GLP-1 products. We performed a recoverability test, utilizing an updated long-term forecast reflecting higher uncertainty of revenue growth in future periods compared to previous estimates, and concluded that the undiscounted cash flows of the Titan SGS product line exceeded the carrying value of the related assets by approximately 10%. Accordingly, no impairment was recognized during the first quarter of 2025 related to the Titan SGS asset group. During the second quarter of 2025, the Titan SGS product line performed largely in line with the forecast used in the first quarter 2025 recoverability test.
During the third quarter of 2025, we identified additional indicators of a potential impairment related to the Titan SGS asset group due to lower than expected sales growth during the period and a further downward revision to sales forecasts compared to the forecast utilized in our first quarter 2025 impairment analysis. As a result, in connection with the preparation of the financial statements for the third quarter of 2025, we performed a recoverability test and as a result, we determined that the carrying value of the asset group was not fully recoverable. We subsequently recognized an impairment charge of $100.0 million, representing the amount by which the carrying value of the asset group exceeded its estimated fair value, as determined utilizing the income approach. After the recognition of the impairment charge, the remaining carrying value of the intangible assets of the Titan SGS asset group was $25.1 million as of the end of the third quarter of 2025. Despite the downward revision to sales forecasts, we continue to anticipate revenue growth from the Titan SGS asset group in future periods.
See the "Results of Operations" section below for information on impairment considerations associated with discontinued operations.
Italian payback measure
In 2015, the Italian parliament enacted legislation that, among other things, imposed a “payback” measure on medical device companies that supply goods and services to the Italian National Healthcare System. Under the measure, companies are required to make payments to the Italian government if medical device expenditures in a given year exceed regional expenditure ceilings established for that year. The payment amounts are calculated based on the amount by which the regional ceilings for the given year were exceeded. In response to decrees issued by the Italian Ministry of Health, in the fourth quarter of 2022 the various Italian regions issued invoices to medical device companies, including Teleflex, under the payback measure seeking payment with respect to excess expenditures for the years 2015 through 2018. Following the issuance of the invoices, we and numerous other medical device companies filed appeals with the Italian administrative courts challenging the enforceability of the payback measure, primarily on the basis that the law was unconstitutional. The Italian administrative courts referred the question regarding the constitutionality of the law to the Italian Constitutional Court, which in July 2024, issued a ruling upholding the law as constitutional. In August 2025, the Italian parliament enacted a modification to the previously enacted legislation that reduced the payment amounts due from the affected companies, including Teleflex, to approximately 25% of the amounts originally invoiced for the years 2015 through 2018. Payment of the reduced amount precludes the pursuit of further legal action related to the obligation to pay the amounts relating to
such years. During the third quarter of 2025, we remitted payment to the related regions to settle the years 2015 through 2018. As a result of the modification in the legislation, along with an adjustment to our calculation of the reserves related to years 2019 through 2025, we recognized a $23.7 million decrease in our reserve during the third quarter of 2025. The decrease in our reserve resulted in a corresponding increase to revenue for the year ended December 31, 2025, of which $9.0 million pertains to prior periods within continuing operations. As of December 31, 2025, our reserve related to this matter was $19.4 million.
Economic and other factors impacting our business
The healthcare industry has been, and may continue to be, adversely affected by government-led initiatives intended to reduce healthcare product costs, such as China’s volume-based procurement programs, which have impacted and may further impact our results. These initiatives have also affected, and may continue to affect, the demand for our products.
Our operations, supply chain, contractors, suppliers, customers and other business partners are impacted by various global macroeconomic factors. During 2025, we experienced a general stabilization in overall cost inflation however, recently enacted U.S. tariffs and accompanying retaliatory measures adversely impacted results, primarily due to higher import costs associated with our operations in the European Union, as well as to products manufactured in Mexico that are not currently compliant with the United States-Mexico-Canada Agreement (USMCA). We also continue to monitor the impacts stemming from currency exchange rate fluctuations, changes in interest rates driven by monetary policy decisions of central banks as well as ongoing geopolitical conflicts.
We have implemented various measures designed to mitigate the future impacts of these factors impacting our business, which include tariff specific measures such as supply chain optimization strategies, adjustments to chain-of-custody protocols, and increasing the proportion of USMCA-compliant products in our portfolio, in addition to pricing actions. Nevertheless, additional changes to proposed or enacted tariffs, including those resulting from the February 2026 ruling from the U.S. Supreme Court and any related developments that may follow from it, could materially impact our business, including gross margins and cash flows. The ultimate effect of tariffs and trade policy changes on our results of operations and cash flows will depend on several factors, including the timing, scale, scope, and nature of any tariffs or policies implemented, as well as any associated retaliatory measures.
Given the dynamic nature of these macroeconomic and other factors, we cannot accurately predict the extent or duration of their impact, or our ability to offset such effects on our business, results of operations, financial condition, and cash flows.
Results of Operations
As used in this discussion, "new products" are products for which commercial sales have commenced within the past 36 months, and “existing products” are products for which commercial sales commenced more than 36 months ago. Discussion of results of operations items that reference the effect of one or more acquired businesses (except to the extent noted below with respect to acquired distributors) generally reflects the impact of the acquisitions within the first 12 months following the date of the acquisition. In addition to increases and decreases in the per unit selling prices of our products to our customers, our discussion of the impact of product price increases and decreases also reflects the impact on the pricing of our products resulting from any elimination of distributors, either through acquisition or termination of the distributor, from the sales channel. All dollar amounts in tables are presented in millions unless otherwise noted.
Revenues
Net Revenues
Net revenues for the year ended December 31, 2025 increased by $293.2 million, or 17.2%, compared to the prior year, primarily due to net revenues of $202.4 million generated by the acquired VI Business, a $35.7 million increase in sales volumes of existing products and $24.2 million in sales of new products. The increases in net revenues were also impacted by a $15.2 million net favorable impact from adjustments to our reserves related to the Italian payback measure, driven by the $9.0 million favorable adjustment pertaining to amounts reserved for prior years, recognized in the current period compared to an unfavorable adjustment of $6.2 million in the prior period, also pertaining to amounts reserved for prior years.
Net revenues for the year ended December 31, 2024 decreased by $12.9 million, or 0.8%, compared to the prior year, primarily due to a $75.7 million decrease from the 2023 expiration of the manufacturing and supply transition agreement ("MSA") associated with our 2021 Respiratory business divestiture and, to a lesser extent, the unfavorable impact from an increase in our reserves related to the Italian payback measure. The decrease in net revenues was partially offset by a $33.5 million contribution from price increases and $28.4 million in sales of new products.
Gross profit
Gross profit
Percentage of revenues
For the year ended December 31, 2025, gross margin decreased 480 basis points, or 7.9%, compared to the prior year, primarily due to the adverse impact from the amortization of the step-up in carrying value of inventory and intangible assets recognized in connection with the VI Business acquisition, the adverse impact from recently enacted tariffs, an increase in logistics and distribution costs and continued cost inflation from macro-economic factors, specifically with respect to labor and raw materials. The decrease in gross margin was partially offset by the favorable impact from a decrease in our reserves related to the Italian payback measure.
For the year ended December 31, 2024, gross margin increased 30 basis points, or 0.5%, compared to the prior year, primarily due to the favorable impact on gross margin of the 2023 expiration of the MSA associated with our 2021 Respiratory business divestiture, and price increases. The increase in gross margin was partially offset by the unfavorable impact from an increase in our reserves related to the Italian payback measure, cost inflation from macro-economic factors, specifically with respect to labor and raw materials and unfavorable fluctuations in foreign currency exchange rates.
Selling, general and administrative
Selling, general and administrative
Percentage of revenues
Selling, general and administrative expenses increased $45.7 million for the year ended December 31, 2025, compared to the prior year, primarily attributable to $92.2 million in operating, integration and amortization expenses associated with the acquired VI Business, the impact of unfavorable fluctuations in foreign currency exchange rates related to operating activities and higher IT related costs, primarily driven by our ongoing development of a new ERP solution. The increases in selling, general and administrative expenses were partially offset by an $82.2 million benefit from non-designated foreign currency forward contracts designed to hedge against the cash consideration for the VI Business.
Selling, general and administrative expenses increased $51.8 million for the year ended December 31, 2024, compared to the prior year, primarily due to a benefit recognized in the prior year period resulting from decreases in the estimated fair value of our contingent consideration liabilities, whereas, in the current period, we recognized an expense due to increases in these liabilities and higher IT related costs that were primarily driven by our implementation of a new ERP solution.
Research and development
Research and development
Percentage of revenues
Research and development expenses increased $35.8 million for the year ended December 31, 2025, compared to the prior year, which was primarily attributable to expenses incurred by the acquired VI Business.
Research and development expenses decreased $4.6 million for the year ended December 31, 2024, compared to the prior year, which was primarily attributable to lower European Union Medical Device Regulation related costs, partially offset by higher project spend within certain product categories.
Pension settlement charge
Pension settlement charge
During the year ended December 31, 2024, we recognized net pre-tax settlement charges of $132.7 million related to our plan to terminate the Teleflex Incorporated Retirement Income Plan (the "TRIP") resulting from our purchase of a group annuity contract to provide participants, beneficiaries, and alternate payees the full value of their benefit under the plan.
During the year ended December 31, 2023, we recognized a pre-tax settlement charge of $45.2 million stemming from payments to eligible participants who elected a lump sum distribution under our plan to terminate the TRIP.
Restructuring charges, separation costs and impairment charges
VI Business integration plan
During the fourth quarter of 2025, we initiated the "VI Business integration plan," a restructuring plan related to the integration of the VI Business into Teleflex. The plan encompasses the realignment of the global sales force and certain administrative functions, including workforce reductions, and the relocation of certain manufacturing operations to existing lower-cost locations. These actions are expected to be substantially completed by the end of 2028. We estimate that we will incur aggregate pre-tax restructuring and restructuring related charges in connection with the VI Business integration plan of $36 million to $44 million. We expect all the restructuring and restructuring related charges will result in future cash outlays, of which an estimated $10 million to $13 million are expected to occur during 2026. Additionally, we expect to incur $5 million to $7 million in aggregate capital expenditures under the VI Business integration plan, which are expected to be incurred mostly between 2026 and 2027. We expect to achieve annual pre-tax savings of $24 million to $30 million in connection with the VI Business integration plan once it is fully implemented and we expect to begin realizing a portion of these plan-related savings in 2026.
2024 Restructuring plan
In 2024, we initiated the "2024 restructuring plan," a strategic restructuring plan that was aimed at optimizing operations, reducing costs and enhancingefficiencies across our business lines and includes the relocation of select office administrative operations. The plan is substantially complete and as a result, we expect future restructuring expenses associated with the plan to be immaterial.
2024 Footprint realignment plan
In 2024, we initiated the "2024 Footprint realignment plan," encompassing several strategic restructuring initiatives. These initiatives primarily included the relocation of select manufacturing operations to existing lower-cost locations, the optimization of specific product portfolios through targeted rationalization efforts, the relocation of certain integral product development and manufacturing support functions, the optimization of certain supply chain activities and related workforce reductions. The plan is substantially complete and as a result, we expect future restructuring expenses associated with the plan to be immaterial.
2023 Footprint realignment plan
In 2023, we initiated the "2023 Footprint realignment plan," a restructuring plan primarily involving the relocation of certain manufacturing operations to existing lower-cost locations, the outsourcing of certain manufacturing processes and related workforce reductions. We estimate that we will incur aggregate pre-tax restructuring and restructuring related charges in connection with the plan of $9 million to $12 million. These actions are expected to be substantially completed by the end of 2027. We expect to achieve annual pretax savings in connection with the 2023 Footprint realignment plan of $2 million to $4 million once the plan is fully implemented.
The following table provides information regarding restructuring charges we have incurred with respect to each of our restructuring programs, separation costs and impairment charges for the years ended December 31, 2025, 2024, and 2023. The restructuring charges listed in the table primarily consist of termination benefits.
VI Business integration plan
2024 Restructuring plan
2024 Footprint realignment plan
2023 Footprint realignment plan
Other restructuring programs
Total restructuring charges
Asset impairment charges (1)
Separation costs (2)
Total restructuring charges, separation costs and impairment charges
(1) For the year ended December 31, 2025, we recognized asset impairment charges of $100.0 million related to our Titan SGS asset group and $8.1 million in connection with the cessation of occupancy at a leased facility. For the year ended December 31, 2024, we recorded impairment charges totaling $7.8 million related to a decrease in the carrying value of an equity investment and an impairment of a portion of our operating lease assets stemming from our cessation of occupancy of a specific facility.
(2) Represents expenses related to the Strategic Divestitures, including activities to prepare the businesses for divestiture and maintain continuity through the separation process.
Strategic Divestituresrestructuring plan
During the first quarter of 2026, in connection with the Strategic Divestitures, we initiated a multi-year restructuring plan intended to align our global organizational structure and supply chain infrastructure amongst our remaining businesses. The plan is designed to eliminate stranded costs, streamline global operations, and improve our long-term cost structure, primarily through workforce reductions and capital assets rationalization. These actions, some of which we expect to occur upon exit of the transition services agreements and other arrangements negotiated in connection with the Strategic Divestitures, are expected to be substantially completed by mid-2028. We estimate that we will incur aggregate pre-tax restructuring and restructuring related charges in connection with the plan of $31 million to $37 million. We expect substantially all the restructuring and restructuring related charges to result in future cash outlays, of which, an estimated $15 million to $19 million are expected to occur during 2026. We expect to achieve annual pre-tax savings of $48 million to $52 million in connection with the Strategic Divestituresrestructuring plan once it is fully implemented and we expect to begin realizing a portion of these plan-related savings in 2026.
Interest expense
Interest expense
Average interest rate on debt during the year
The increase in interest expense for the year ended December 31, 2025, compared to the prior year was primarily due to an increase in the average outstanding debt balance stemming from new borrowings utilized to fund the VI Business acquisition, partially offset by a lower average interest rate resulting from decreases in interest rates associated with our variable interest rate debt instruments.
The decrease in interest expense for the year ended December 31, 2024, compared to the prior year was primarily due to a decrease in our average outstanding debt balance.
Gain on sale of assets and business
Gain on sale of assets and business
During the year ended December 31, 2023, we recognized a gain related to the second phase of the Respiratory divestiture.
Taxes on income from continuing operations
Effective income tax rate
The effective income tax rate for 2025 reflects a tax benefit associated with the impairment of the Titan SGS asset group. The effective income tax rate for 2025 also reflects nontaxable favorable adjustments incurred in relation to foreign currency exchange rates, largely stemming from non-designated foreign currency forward contracts designed to hedge against the cash consideration for the VI Business acquisition.
Tax benefits were recognized in both 2024 and 2023 related to the pension settlement charge recognized in connection with the termination of the TRIP. The effective income tax rate for 2023 reflects the impact of deferred charges resulting from a legal entity rationalization, the impact of a non-taxable contingent consideration adjustment recognized in connection with a decrease in the estimated fair value of our contingent consideration liabilities and a tax expense resulting from a deferred charge relating to the 2022 Restructuring Plan.
On July 4, 2025, the One Big Beautiful Bill (“OBBB”) Act was signed into law. The OBBB permanently extends several key provisions of the Tax Cuts and Jobs Act, including 100 percent bonus depreciation, domestic research cost expensing, and makes substantive modifications to the international tax framework. The legislation contains multiple effective dates, with certain provisions effective in 2025 and others phased in through 2027. The OBBB did not have a material impact on our 2025 results of operations. We continue to evaluate the impact of the OBBB's provisions that take effect in future years.
A significant number of jurisdictions, including EU member states, have enacted legislation to establish a 15% global minimum tax in accordance with both the established Pillar Two framework and guidance subsequently published by the Organization for Economic Co-operation and Development (the "OECD"). On January 5th, 2026, the OECD/G20 released the Side-by-Side package ("SbS"), implemented as administrative guidance and modifying the operation of Pillar Two rules. The SbS package introduces simplifications and new safe harbors for U.S. and other multinational companies where domestic and international tax systems meet robust requirements to coexist with Pillar 2. Such safe harbor would fully exempt U.S.-parented groups from the application of two of the three Pillar 2 top up taxes.
The SbS package is expected to be available for fiscal years beginning on or after January 1, 2026. However, the safe harbors are not self‑executing and require domestic legislation by each Inclusive Framework member, subject to local legislative processes and timelines, as well as potential European Union ("EU") guidance related to the EU Minimum Tax Directive. We continue to monitor ongoing developments and assess the potential impact of the SbS package on our 2026 results of operations and future cash tax obligations.
The SbS package also extends the current Transitional Country-by-Country Reporting (CbCR) Safe Harbor by one year, through the end of fiscal year 2027.
Discontinued operations
(Loss) income from discontinued operations
The decrease in income from discontinued operations for the year ended December 31, 2025 compared to the prior year was driven by higher impairment charges in the current year, including those related to the valuation allowance on the disposal group and the Acute Care and IU North America goodwill impairments, and separation costs related to Strategic Divestitures.
The decrease in income from discontinued operations for the year ended December 31, 2024, compared to the prior year was primarily driven by a $240.0 million non-tax deductible goodwill impairment charge related to the Interventional Urology North America reporting unit, partially offset by an increase in gross profit driven by increased intra-aortic balloon pump sales.
For additional information regarding the Strategic Divestitures and discontinued operations, refer to Note 5 to the consolidated financial statements included in this Annual Report on Form 10-K.
Segment Results
Segment Net Revenues
Year Ended December 31,
% Increase/(Decrease)
Americas
EMEA
Asia
Segment Net Revenues
Segment Operating Profit
Year Ended December 31,
% Increase/(Decrease)
Americas
EMEA
Asia
Segment Operating Profit (1)
(1) See Note 18 to the consolidated financial statements included in this Annual Report on Form 10-K for a reconciliation of segment operating profit to our consolidated income from continuing operations before interest, loss on extinguishment of debt and taxes.
Americas
Americas net revenues for the year ended December 31, 2025 increased $122.3 million, or 10.6%, compared to the prior year, which was primarily attributable to net revenues of $49.0 million generated by the acquired VI Business, a $39.0 million increase in sales volumes of existing products, sales of new products and, to a lesser extent, price increases.
Americas net revenues for the year ended December 31, 2024 decreased $23.8 million, or 2.0%, compared to the prior year, which was primarily attributable to a $75.7 million decrease due to the 2023 expiration of the MSA associated with our 2021 Respiratory business divestiture. The decrease in net revenues was partially offset by $24.4 million in sales of new products, price increases and, to a lesser extent, an increase in sales volume of existing products.
Americas operating profit for the year ended December 31, 2025 increased $42.7 million, or 10.0%, compared to the prior year, which was primarily attributable to an increase in gross profit as a result of higher revenue from our legacy businesses as well as revenues generated by the acquired VI Business. The increase in operating profit was partially offset by the adverse impact from the amortization of the step-up in carrying value of inventory and intangible assets recognized in connection with the VI Business acquisition and an increase in contingent consideration expense resulting from changes in the estimated fair value of our contingent consideration liabilities.
Americas operating profit for the year ended December 31, 2024 decreased $34.5 million, or 7.5%, compared to the prior year, which was primarily attributable to an increase in contingent consideration expense resulting from changes in the estimated fair value of our contingent consideration liabilities, partially offset by decreases in sales expenses.
EMEA
EMEA net revenues for the year ended December 31, 2025 increased $132.1 million, or 38.8%, compared to the prior year, which was primarily attributable to net revenues of $102.3 million generated by the acquired VI Business and a $15.2 million net favorable impact from adjustments to our reserves related to the Italian payback measure, driven by the $9.0 million favorable adjustment pertaining to amounts reserved for prior years, recognized in the current period compared to an unfavorable adjustment of $6.2 million in the prior period, also pertaining to amounts reserved for prior years. The increases in net revenues were also impacted, to a lesser extent, by favorable fluctuations in foreign currency exchange rates.
EMEA net revenues for the year ended December 31, 2024 increased $23.3 million, or 7.3%, compared to the prior year, which was primarily attributable to a $13.2 million contribution from price increases, an $11.5 million increase in sales volumes of existing products and, to a lesser extent, an increase in sales of new products. The
increase in net revenues was partially offset by the unfavorable impact from an increase in our reserves related to the Italian payback measure.
EMEA operating profit for the year ended December 31, 2025 decreased $36.3 million, or 71.4%, compared to the prior year, which was primarily attributable to the adverse impact from the amortization of the step-up in carrying value of inventory and intangible assets recognized in connection with the VI Business acquisition, as well as higher operating and integration costs of the acquired business and unfavorable fluctuations in foreign currency exchange rates. The decreases in operating profit were partially offset by an increase in gross profit as a result of an increase in revenues generated by the VI Business Acquisition, the net favorable impact from adjustments in our reserves related to the Italian payback measure and favorable product mix.
EMEA operating profit for the year ended December 31, 2024 increased $17.1 million, or 50.8%, compared to the prior year, which was primarily attributable to lower research and development expenses related to the European Union Medical Device Regulation and an increase in gross profit resulting from higher sales and price increases. The increase in operating profit was partially offset by an increase in sales expenses to support higher sales.
Asia
Asia net revenues for the year ended December 31, 2025 increased $38.8 million, or 19.2%, compared to the prior year, which was primarily attributable to net revenues of $51.1 million generated by the acquired VI Business, partially offset by price decreases primarily due to the implementation of volume-based procurement programs in China.
Asia net revenues for the year ended December 31, 2024 decreased $12.4 million, or 5.8%, compared to the prior year, which was primarily attributable to a $9.1 million decrease in sales volumes of existing products and $3.8 million of unfavorable fluctuations in foreign currency exchange rates.
Asia operating profit for the year ended December 31, 2025 decreased $29.8 million, or 65.1%, compared to the prior year, which was primarily attributable to a decrease in gross profit that was primarily attributed to the adverse impact from the amortization of the step-up in carrying value of inventory and intangible assets recognized in connection with the VI Business acquisition, price decreases and unfavorable product mix, partially offset by gross profit generated from higher sales resulting from the acquired VI Business. The decrease in operating profit was also impacted by operating and integration costs incurred by the acquired VI Business.
Asia operating profit for the year ended December 31, 2024 decreased $18.7 million, or 29.0%, compared to the prior year, which was primarily attributable to a decrease in gross profit resulting from lower sales and unfavorable impact from product mix, in addition to an increase in research and development and sales expenses.
Liquidity and Capital Resources
We assess our liquidity in terms of our ability to generate cash to fund our operating, investing and financing activities. Our principal source of liquidity is our cash flows provided by operating activities. Our cash flows provided by operating activities are reduced by cash used to, among other things, fulfill contractual obligations for minimum lease payments under noncancellable operating leases, which often extend beyond one year; the weighted average remaining lease term of our operating lease portfolio is 5.5 years. Our cash flows provided by operating activities are also reduced by cash used for unconditional legally binding commitments to purchase goods or services (i.e., purchase obligations), which are primarily related to inventory expected to be purchased within one year.
Other significant factors that affect our overall management of liquidity include contractual obligations such as scheduled principal and interest payments with respect to outstanding indebtedness and tax obligations. We may also be obligated to make payments for contingent consideration due to past acquisitions, the timing and amount of which may be uncertain, and the magnitude of which can vary from year to year. Other significant factors that affect our liquidity include certain actions controlled by management, such as capital expenditures, acquisitions, and dividends. Additionally, our liquidity may be affected by the Strategic Divestitures, including obligations under our interim operating model agreements with the buyers, share repurchases and debt repayment requirements pursuant to the terms of our debt agreements. See Note 11, Note 13 and Note 16 to the consolidated financial statements included in this Annual Report on Form 10-K for additional information.
We believe our cash flow from operations, available cash and cash equivalents and borrowings under our revolving credit facility (which is provided for under the Credit Agreement) and accounts receivable securitization
facility will enable us to fund our operating requirements, capital expenditures and debt obligations for the next 12 months and the foreseeable future.
Of our $378.6 million of cash and cash equivalents at December 31, 2025, $208.0 million was held at non-U.S. subsidiaries. We manage our worldwide cash requirements by monitoring the funds available among our subsidiaries and determining the extent to which we can access those funds on a cost effective basis.
On July 30, 2024, the Board of Directors authorized a share repurchase program for up to $500 million of our common stock. On February 28, 2025, we executed an accelerated share repurchase agreement for $300 million of our common stock, representing the remainder of the share repurchase program approved by the Board of Directors in 2024. Under this agreement, 1,725,253 shares of common stock, representing 80% of the $300 million aggregate, were delivered and included in treasury stock during the three months ended March 30, 2025. The initial shares received were calculated based on a price per share of $139.11, which was the closing share price of our common stock on February 27, 2025. Final settlement under the agreement occurred on April 9, 2025, at which time we received 493,150 additional shares of common stock. The total shares received were calculated based on a price per share of $135.23, which was based on volume-weighted average prices of our common stock during the accelerated share repurchase period less a discount.
On August 18, 2025, we executed two separate term cross-currency swap agreements set to expire on August 20, 2030 and August 20, 2032, respectively, to hedge against the effect of variability in the U.S. dollar to Swiss Franc (CHF) exchange rate, (the "2025 Cross-currency swap agreements"). Each of the 2025 Cross-currency swap agreements had a notional principal amount of $300 million and were designated as a net investment hedge. The 2025 Cross-currency swap agreements expiring in 2030 include six different financial institution counterparties and notionally exchanged $300 million for CHF 242.4 million at an annual interest rate of 3.15%. The 2025 Cross-currency swap agreements expiring in 2032 include four different financial institution counterparties and notionally exchanged $300 million for CHF 242.5 million at an annual interest rate of 3.02%.
On September 30, 2025, early in the fourth quarter and prior to the original October 4, 2025 maturity date, we terminated the 2023 Cross-currency swap agreements and executed new cross-currency swap agreements with five financial institution counterparties. Under these new cross-currency swap agreements, which mature in March 2026, we notionally exchanged $500 million at an annual interest rate of 4.63% for €474.7 million at an annual interest rate of 2.77%. Further, the zero cost foreign exchange collar contract associated with the 2023 Cross-currency swap agreements matured in October 2025.
On December 9, 2025, the Board of Directors authorized a share repurchase program for up to $1.0 billion of our common stock. The timing, price and actual number of shares of common stock that may be repurchased under the share repurchase authorization will depend on a variety of factors, including price, market conditions and corporate and regulatory requirements. The repurchases may occur in open market transactions, transactions structured through investment banking institutions, in privately negotiated transactions, by direct purchases of common stock or a combination of the foregoing, and the timing and amount of stock repurchased will depend on market and business conditions, applicable legal and credit requirements and other corporate considerations. The authorization of the repurchase program does not constitute a binding obligation to acquire any specific amount of common stock, and the repurchase program may be suspended or discontinued at any time.
We may at any time, from time to time, repurchase our outstanding debt securities in open market purchases, via tender offers or in privately negotiated transactions, exchange transactions or otherwise, at such price or prices as we deem appropriate. Such purchases or exchanges, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors and may be commenced or suspended at any time.
Summarized Financial Information – Obligor Group
The 2027 Notes are issued by Teleflex Incorporated (the “Parent Company”), and payment of the Parent Company's obligations under the 2027 Notes is guaranteed, jointly and severally, by an enumerated group of the Parent Company’s subsidiaries (each, a “Guarantor Subsidiary” and collectively, the “Guarantor Subsidiaries”). The guarantees are full and unconditional, subject to certain customary release provisions. Each Guarantor Subsidiary is directly or indirectly 100% owned by the Parent Company.
Summarized financial information for the Parent and Guarantor Subsidiaries (collectively, the “Obligor Group”) as of and for the year ended December 31, 2025 is as follows:
Year Ended December 31, 2025
Obligor Group
Intercompany
Obligor Group (excluding intercompany)
Net revenue
Cost of goods sold
Gross profit
Income from continuing operations
Net income
December 31, 2025
Obligor Group
Intercompany
Obligor Group (excluding intercompany)
Total current assets
Total assets
Total current liabilities
Total liabilities
The same accounting policies as described in Note 1 to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2025 are used by the Parent Company and each of its subsidiaries in connection with the summarized financial information presented above. The Intercompany column in the table above represents transactions between and among the Obligor Group and non-guarantor subsidiaries (i.e., those subsidiaries of the Parent Company that have not guaranteed payment of the 2027 Notes). Obligor investments in non-guarantor subsidiaries and any related activity are excluded from the financial information presented above.
See "Financing Arrangements" below, as well as Note 11 and Note 12 to the consolidated financial statements included in this Annual Report on Form 10-K, for further information related to our borrowings and financial instruments.
Cash Flows
The following table provides a summary of our cash flows for the periods presented:
Year Ended December 31,
Cash flows from continuing operations provided by (used in):
Operating activities
Investing activities
Financing activities
Cash flows provided by (used in) discontinued operations
Effect of exchange rate changes on cash, cash equivalents and restricted cash equivalents
Increase (decrease) in cash, cash equivalents and restricted cash equivalents
Cash Flow from Operating Activities
Net cash provided by operating activities from continuing operations was $96.7 million during 2025 and $301.9 million during 2024. The $205.2 million decrease was primarily attributable to unfavorable operating results and working capital. The unfavorable changes in working capital were primarily driven by a net increase in accounts receivable resulting from an increase in receivables associated with the VI Business (as we did not acquire certain trade receivables) and the prior period inflow from proceeds received from the TRIP termination included within prepaid expenses and other assets. Net cash provided by operating activities from continuing operations was also unfavorably impacted by recently enacted tariffs and acquisition and integration expenses associated with the VI Business.
Net cash provided by operating activities from continuing operations was $301.9 million during 2024, and $206.1 million during 2023. The $95.8 million increase was primarily attributable to a decrease in cash outflows from inventories as we continued to moderate our inventory levels and surplus plan assets from the TRIP termination included within prepaid expenses and other assets. The increase in net cash provided from operating activities was partially offset by higher tax payments.
Cash Flow from Investing Activities
Net cash used in investing activities from continuing operations was $812.7 million during 2025, which primarily consisted of $831.9 million in net payments for businesses and intangibles acquired, primarily related to the VI Business acquisition, and $95.2 million of capital expenditures. These outflows were partially offset by $82.2 million in proceeds from the settlement of foreign currency forward contracts executed to hedge economically against the foreign currency exposure associated with the VI Business acquisition, $21.1 million in net proceeds on swaps designated as net investment hedges and $9.4 million in insurance settlement proceeds.
Net cash used in investing activities from continuing operations was $63.4 million during 2024, which primarily consisted of $90.4 million in capital expenditures, partially offset by $27.2 million in net proceeds on swaps designated as net investment hedges.
Cash Flow from Financing Activities
Net cash provided by financing activities from continuing operations was $611.5 million during 2025, which primarily consisted of $987.0 million in net proceeds from borrowings under our Senior Credit Facility, $300.0 million in repurchases of our common stock under the accelerated share repurchase agreement, $60.3 million in dividend payments, and contingent consideration payments of $15.5 million.
Net cash used in financing activities from continuing operations was $421.9 million during 2024, which primarily consisted of $200.0 million in repurchases of our common stock under the accelerated share repurchase agreement, a $161.5 million reduction in net borrowings under our Senior Credit Facility and $63.5 million in dividend payments.
Cash Flow from discontinued operations
Net cash provided from discontinued operations was $207.5 million during 2025 and $297.9 million during 2024. The $90.4 million decrease was primarily attributable to unfavorable operating results.
Net cash provided from discontinued operations was $297.9 million during 2024, compared to net cash used of $344.0 million during 2023. The $641.9 million increase was primarily attributable to higher net cash flows from investing activities due to the 2023 acquisition of Palette Life Sciences AB and higher net cash flows from operating activities due to favorable operating results.
For additional information regarding the Strategic Divestitures, refer to Note 5 to the consolidated financial statements included in this Annual Report on Form 10-K.
Financing Arrangements
Senior credit facility
Concurrent with the execution of the agreement to acquire the VI Business, we entered into an amendment to our Third Amended and Restated Credit Agreement (the “Credit Agreement”) on February 24, 2025, which, among other things, (a) provides for a delayed draw term loan facility in an aggregate principal amount of $500 million, to be available to be drawn on the date on which we consummate the VI Business acquisition and (b) permits us to borrow up to $550 million under the revolving facility provided for under the Credit Agreement on a limited condition basis on the date on which the VI Business acquisition is consummated. Borrowings under the delayed draw term loan are to bear interest at a rate per annum equal to the applicable margin plus, at our option, either (1) the highest of (i) the “Prime Rate” in the U.S. last quoted by The Wall Street Journal, (ii) 0.50% above the greater of the federal funds rate and the rate comprised of both overnight federal funds and overnight euro transactions denominated in U.S. dollars and (iii) 1.00% above the Term SOFR Rate for a one month interest period, plus an applicable margin ranging from 0.125% to 1.00%, in each case subject to adjustments based on our total net leverage ratio or (2) a Term Secured Overnight Financing Rate (“SOFR”) rate (which includes a credit spread adjustment of 10 basis points). The applicable margin for borrowings under the delayed draw term loan range from 1.125% to 2.00% for SOFR borrowings and from 0.125% to 1.00% for base-rate borrowings, in each case, depending on, at our election,
either (x) our public corporate family rating or (y) our consolidated total net leverage ratio, in each case, based on the most recently ended fiscal quarter. The obligations under the delayed draw term loan will be guaranteed and secured on the same basis as the facilities provided for under the Credit Agreement. The delayed draw term loan will not amortize and will mature on the earlier of (x) the date that is two years after the date on which such loans are funded and (y) the maturity date for the revolving facility provided for under the Credit Agreement.
Subsequently, on June 24, 2025, we executed a further amendment to the Credit Agreement, increasing the aggregate principal amount of the delayed term loan facility by $200 million. After giving effect to the amendment, the delayed draw term loan facility provides for an aggregate amount of delayed draw term loan commitments of $700 million. On June 30, 2025, the first day of the third fiscal quarter of 2025, we drew $700 million under the delayed draw term loan facility in addition to $140 million of borrowings under our revolving credit facility to fund the VI Business acquisition, inclusive of transaction-related costs and other associated requirements.
At our option, loans under the Credit Agreement will bear interest at a rate equal to adjusted SOFR plus an applicable margin ranging from 1.125% to 2.00% or at an alternate base rate, which is defined as the highest of (i) the “Prime Rate” in the U.S. last quoted by The Wall Street Journal, (ii) 0.50% above the greater of the federal funds rate and the rate comprised of both overnight federal funds and overnight eurodollar transactions denominated in Dollars and (iii) 1.00% above the Term SOFR Rate for a one month interest period, plus an applicable margin ranging from 0.125% to 1.00%, in each case subject to adjustments based on our total net leverage ratio. Overdue loans will bear interest at the rate otherwise applicable to such loans plus 2.00%.
At December 31, 2025, we had $425.0 million in borrowings outstanding and $5.1 million in outstanding standby letters of credit under our $1.0 billion revolving credit facility. The maturity date of the revolving credit facility and the term loan facility under the Credit Agreement is November 4, 2027.
The Credit Agreement contains customary representations and warranties and covenants that, in each case, subject to certain exceptions, qualifications and thresholds, (a) place limitations on us and our subsidiaries regarding the incurrence of additional indebtedness, additional liens, fundamental changes, dispositions of property, investments and acquisitions, dividends and other restricted payments, transactions with affiliates, restrictive agreements, changes in lines of business and swap agreements, and (b) require us and our subsidiaries to comply with sanction laws and other laws and agreements, to deliver financial information and certain other information and give notice of certain events, to maintain their existence and good standing, to pay their other obligations, to permit the administrative agent and the lenders to inspect their books and property, to use the proceeds of the Credit Agreement only for certain permitted purposes and to provide collateral in the future. Subject to certain exceptions, we are required to maintain a maximum total net leverage ratio of 4.50 to 1.00. We are further required to maintain a minimum interest coverage ratio of 3.50 to 1.00. As of December 31, 2025, we were in compliance with the covenants in the Credit Agreement.
2027 and 2028 Senior Notes
As of December 31, 2025, the outstanding principal amount of our 2027 Notes and 2028 Notes (collectively the "Senior Notes") was $500 million, respectively. The indenture governing the Senior Notes contains covenants that, among other things and subject to certain exceptions, limit or restrict our ability, and the ability of our subsidiaries, to create liens; consolidate, merge or dispose of certain assets; and enter into sale leaseback transactions. The obligations under the Senior Notes are fully and unconditionally guaranteed, jointly and severally, by each of our existing and future 100% owned domestic subsidiaries that are a guarantor or other obligor under the Credit Agreement and by certain of our other 100% owned domestic subsidiaries. As of December 31, 2025, we were in compliance with all of the terms of our Senior Notes.
Accounts receivable securitization
We have an accounts receivable securitization facility under which we sell an undivided interest in domestic accounts receivable for consideration of up to $75 million to a commercial paper conduit. As of December 31, 2025 and 2024, we borrowed the maximum amount available of $75 million under this facility. This facility is utilized to provide increased flexibility in funding short term working capital requirements. The agreement governing the accounts receivable securitization facility contains certain covenants and termination events. An occurrence of an event of default or a termination event under this facility may give rise to the right of our counterparty to terminate this facility. As of December 31, 2025, we were in compliance with the covenants and none of the termination events had occurred.
For additional information regarding our indebtedness, see Note 11 to the consolidated financial statements included in this Annual Report on Form 10-K.
Critical Accounting Policies and Estimates
The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ materially from the amounts derived from those estimates and assumptions.
We have identified the following as critical accounting estimates, which are defined as those that are reflective of significant judgments and uncertainties, are the most pervasive and important to the presentation of our financial condition and results of operations and could potentially result in materially different results under different assumptions and conditions. The following discussion should be considered in conjunction with the description of our accounting policies in Note 1 to the consolidated financial statements in this Annual Report on Form 10-K.
Inventory Utilization
Inventories are valued at the lower of cost or net realizable value. Factors utilized in the determination of estimated net realizable value and whether a reserve is required include (i) current sales data and historical return rates, (ii) estimates of future demand, (iii) competitive pricing pressures, (iv) new product introductions, (v) product expiration dates, and (vi) component and packaging obsolescence.
We review the net realizable value of inventory each reporting period and adjust as necessary. We regularly compare inventory quantities on hand against historical usage or forecasts related to specific items in order to evaluate obsolescence and excessive quantities. In assessing historical usage, we also qualitatively assess business trends to evaluate the reasonableness of using historical information in estimating future usage. Our inventory reserve was $37.2 million and $32.0 million at December 31, 2025 and 2024, respectively.
Long-Lived Assets
We assess the remaining useful life and recoverability of long-lived assets whenever events or circumstances indicate the carrying value of an asset may not be recoverable. For example, such an assessment may be initiated if, as a result of a change in expectations, we believe it is more likely than not that the asset will be sold or disposed of significantly before the end of its useful life or if an adverse change occurs in the business employing the asset. Significant judgments in this area involve determining whether such events or circumstances have occurred and determining the appropriate asset group requiring evaluation. The recoverability evaluation is based on various analyses, including undiscounted cash flow projections, which involve significant management judgment. Any impairmentloss, if indicated, equals the amount by which the carrying amount of the asset exceeds the estimated fair value of the asset.
Goodwill and Other Intangible Assets
Intangible assets include indefinite-lived assets (such as goodwill, certain trade names and in-process research and development ("IPR&D"), as well as finite-lived intangibles (such as trade names that do not have indefinite lives, customer relationships, intellectual property, distribution rights and non-competition agreements) and are, generally, obtained through acquisition. Intangible assets acquired in a business combination are measured at fair value and we allocate any excess purchase price over the fair value of the net tangible and intangible assets acquired in a business combination to goodwill. Considerable management judgment is necessary in making the assumptions used in the estimated fair value of intangible assets acquired in a business combination.
The costs of finite-lived intangibles are amortized to expense over their estimated useful life. Determining the useful life of an intangible asset requires considerable judgment as different types of intangible assets typically will have different useful lives. Goodwill and other indefinite-lived intangible assets are not amortized; we test these assets annually for impairment during the fourth quarter, using the first day of the quarter as the measurement date, or earlier upon the occurrence of certain events or substantive changes in circumstances that indicate an impairment may have occurred. Such conditions may include an economic downturn in a geographic market or a change in the assessment of future operations.
Goodwill
Goodwill impairment assessments are performed at a reporting unit level. For purposes of this assessment, our reporting units are our operating segments, or, in certain cases, a business one level below our operating segments. Our identified reporting units did not change as a result of our Strategic Divestitures. As the fair values of our reporting units are more likely than not greater than the carrying values, no impairment was recorded as a result of the annual goodwill impairment testing performed during the fourth quarter of 2025. See Note 5 to the consolidated financial statements in this Annual Report on Form 10-K for additional information regarding impairment considerations related to discontinued operations.
In applying the goodwill impairment test, we may assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. Qualitative factors may include, but are not limited to, macroeconomic conditions, industry conditions, the competitive environment, changes in the market for our products and services, regulatory and political developments, and entity specific factors such as strategies and financial performance. If, after completing the qualitative assessment, we determine it is more likely than not that the fair value of a reporting unit is less than its carrying value, we proceed to a quantitative impairment test described below. Alternatively, we may test goodwill for impairment through the quantitative impairment test without conducting the qualitative analysis.
Under a quantitative impairment test we compare the fair value of a reporting unit to the carrying value. We estimate the fair value using a combination of the income approach, which is based on discounted cash flows derived from projected future earnings, and the market approach, which utilizes revenue and EBITDA multiples of comparable businesses observed in actual transactions or other market data. If the fair value of the reporting unit exceeds the carrying value, there is no impairment. If the reporting unit carrying value exceeds the fair value, we recognize an impairmentloss based on the amount the carrying value of the reporting unit exceeds its fair value.
The more significant judgments and assumptions in determining fair value using in the Income Approach include (1) the amount and timing of expected future cash flows, which are based primarily on our estimates of future sales, operating income, industry trends and the regulatory environment of the individual reporting units, (2) the expected long-term growth rates of revenue and EBITDA for each of our reporting units, which approximate the expected long-term growth rate of the global economy and of the medical device industry, and (3) the discount rates that are used to estimate the present value of the future cash flows, which are based on an assessment of the risk inherent in the future cash flows of the respective reporting units along with various market based inputs. The more significant judgments and assumptions used in the Market Approach include (1) the determination of appropriate revenue and EBITDA multiples used to estimate a reporting unit’s fair value and (2) the selection of appropriate comparable companies to be used for purposes of determining those multiples. There were no changes to the underlying methods used in 2025 as compared to the valuations of our reporting units in the past several years.
Our expected future growth rates estimated for purposes of the goodwill impairment test are based on our estimates of future sales, operating income and cash flow and are consistent with our internal budgets and business plans, which reflect a modest amount of core revenue growth coupled with the successful launch of new products each year; the effect of these growth indicators more than offset volume losses from products that are expected to reach the end of their life cycle. Changes in assumptions underlying the Income Approach could cause a reporting unit's carrying value to exceed its fair value. While we believe our assumed growth rates of sales and cash flows are reasonable, the possibility remains that the revenue growth of a reporting unit may not be as high as expected, and, as a result, the estimated fair value of that reporting unit may decline. In this regard, if our strategy and new products are not successful and we do not achieve anticipated core revenue growth in the future with respect to a reporting unit, the goodwill in the reporting unit may become impaired and, in such case, we may incur material impairment charges. Moreover, changes in revenue and EBITDA multiples in actual transactions from those historically present could result in an assessment that a reporting unit’s carrying value exceeds its fair value, in which case we also may incur material impairment charges.
Other Intangible Assets
Intangible assets are assets acquired that lack physical substance and that meet the specified criteria for recognition apart from goodwill. Management tests indefinite-lived intangible assets for impairment annually, and more frequently if events or changes in circumstances indicate that an impairment may have occurred. Similar to the goodwill impairment test process, we may assess qualitative factors to determine whether it is more likely than not that the fair value of an indefinite-lived intangible asset is less than its carrying value. If, after completing the qualitative assessment, we determine it is more likely than not that the fair value of the indefinite-lived intangible asset is greater than its carrying amount, the asset is not impaired. If we conclude it is more likely than not that the
fair value of the indefinite-lived intangible asset is less than the carrying value, we then proceed to a quantitative impairment test, which consists of a comparison of the fair value of the intangible asset to its carrying amount. Alternatively, we may elect to forgo the qualitative analysis and test the indefinite-lived intangible asset for impairment through the quantitative impairment test.
In connection with intangible assets acquired in a business combination and quantitative impairment tests, we determine the estimated fair value using various methods under the Income Approach. The more significant judgments and assumptions used in the valuation of intangible assets may include revenue growth rates, royalty rate, obsolescence factor, distributor margin, discount rates, attrition rate, and operating margins. Each of these factors and assumptions can significantly impact the value of the intangible asset.
During 2025, we recognized a $100.0 million impairment charge related to our Titan SGS asset group, which consisted primarily of intangible assets. See "Restructuring charges, separation costs and impairment charges" within "Result of Operations" above as well as Note 9 to the consolidated financial statements included in this Annual Report on Form 10-K for additional information.
Income Taxes
Our annual provision for income taxes and determination of the deferred tax assets and liabilities require management to assess uncertainties, make judgments regarding outcomes and utilize estimates. The difficulties inherent in such assessments, judgments and estimates are particularly challenging because we conduct a broad range of operations around the world, subjecting us to complex tax regulations in numerous international jurisdictions. As a result, we are at times subject to tax audits, disputes with tax authorities and potential litigation, the outcome of which is uncertain. In connection with its estimates of our tax assets and liabilities, management must, among other things, make judgments about the outcome of these uncertain matters.
Deferred tax assets and liabilities are measured and recorded using currently enacted tax rates that are expected to apply to taxable income in the years in which differences between the financial statement carrying amounts of existing assets and liabilities and their tax bases are recovered or settled. The likelihood of a material change in our expected realization of these assets is dependent on future taxable income, our ability to use foreign tax credit carryforwards and carrybacks, final U.S. and non-U.S. tax settlements, changes in tax law, and the effectiveness of our tax planning strategies in the various relevant jurisdictions. While management believes that its judgments and interpretations regarding income taxes are appropriate, significant differences in actual experience may require future adjustments to our tax assets and liabilities, which could be material.
In assessing the realizability of our deferred tax assets, we evaluate positive and negative evidence and use judgments regarding past and future events, including results of operations and available tax planning strategies that could be implemented to realize the deferred tax assets. Based on this assessment, we determine when it is more likely than not that all or some portion of our deferred tax assets may not be realized, in which case we apply a valuation allowance to offset the amount of such deferred tax assets. To the extent facts and circumstances change in the future, adjustments to the valuation allowances may be required. The valuation allowance for deferred tax assets of $88.7 million and $88.4 million at December 31, 2025 and 2024, respectively, relates principally to the uncertainty of the utilization of tax loss and credit carryforwards in various jurisdictions.
Significant judgment is required in determining income tax provisions and in evaluating tax positions. We establish additional provisions for income taxes when, despite the belief that tax positions are supportable, there remain certain positions that do not meet the minimum probability threshold, which is a tax position that is more likely than not to be sustained upon examination by the applicable taxing authority. In the normal course of business, we are examined by various federal, state and non-U.S. tax authorities. We regularly assess the potential outcomes of these examinations and any future examinations for the current or prior years in determining the adequacy of our provision for income taxes. We adjust the income tax provision, the current tax liability and deferred taxes in any period in which we become aware of facts that necessitate an adjustment. We are currently under examination in Germany, the United States and Sweden. The ultimate outcome of these examinations could result in increases or decreases to our recorded tax liabilities, which would affect our financial results. See Note 16 to the consolidated financial statements in this Annual Report on Form 10-K for additional information regarding our uncertain tax positions.
New Accounting Standards
See Note 2 to the consolidated financial statements included in this Annual Report on Form 10-K for a discussion of recently issued accounting standards, including estimated effects, if any, of the adoption of those standards on our consolidated financial statements.
