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What changed in TELEFLEX INC's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of TELEFLEX INC's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+246 added−240 removedSource: 10-K (2024-02-23) vs 10-K (2023-02-23)

Top changes in TELEFLEX INC's 2023 10-K

246 paragraphs added · 240 removed · 184 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

49 edited+4 added−6 removed93 unchanged
Biggest changeThe 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 a healthcare company may violate one or more of the requirements, resulting in increased compliance costs that could adversely impact our results of operations. 9 Further, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act (collectively, the “Affordable Care Act”), imposed regulatory mandates and other measures designed to contain the cost of healthcare, in addition to annual reporting and disclosure requirements on device manufacturers for any “transfer of value” made or distributed to physicians or teaching hospitals.
Biggest changeFurther, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act (collectively, the “Affordable Care Act”), imposes regulatory mandates and other measures designed to contain the cost of healthcare, in addition to annual reporting and disclosure requirements on device manufacturers for any “transfer of value” made or distributed to physicians or teaching hospitals.
Each of these categories and the key products sold therein are described in more detail below. 5 Vascular Access: Our Vascular Access product category offers devices that facilitate a variety of critical care therapies and other applications with a focus on helping reduce vascular-related complications.
Each of these categories and the key products sold therein 5 are described in more detail below. Vascular Access: Our Vascular Access product category offers devices that facilitate a variety of critical care therapies and other applications with a focus on helping reduce vascular-related complications.
Powell was Senior Vice President and Chief Financial Officer. He joined Teleflex in August 2011 as Senior Vice President, Global Finance. Prior to joining Teleflex, Mr. Powell served as Chief Financial Officer and Treasurer of Tomotherapy Incorporated, a medical device company, from June 2009 until 13 June 2011.
Powell was Senior Vice President and Chief Financial Officer. He joined Teleflex 13 in August 2011 as Senior Vice President, Global Finance. Prior to joining Teleflex, Mr. Powell served as Chief Financial Officer and Treasurer of Tomotherapy Incorporated, a medical device company, from June 2009 until June 2011.
In addition, we have developed an EHS program 12 focused in the areas of training our personnel with respect to, deploying and auditing global EHS standards as well as other programs to engage our employees on EHS initiatives. ENVIRONMENTAL We are subject to various environmental laws and regulations both within and outside the U.S.
In addition, we have developed an EHS program focused in the areas of training our personnel with respect to, deploying and auditing global EHS standards as well as other programs to engage our employees on EHS initiatives. ENVIRONMENTAL We are subject to various environmental laws and regulations both within and outside the U.S.
We offer employees health, welfare and retirement benefits and have implemented policies addressing paid time off, flexible work schedules, employee assistance, parental leave and family benefits, among others. In 2021, we performed an in-depth pay equity analysis on the pay practices within our organization.
We offer employees health, welfare and retirement benefits and have implemented policies addressing paid time off, flexible work schedules, employee assistance, parental leave and family benefits, among others. In 2021 and 2023, we performed an in-depth pay equity analysis on the pay practices within our organization.
A device that is not exempt from premarket review and is not eligible for 510(k) clearance or de novo authorization is categorized as Class III and must follow the PMA approval pathway, which requires proof of 7 the safety and effectiveness of the device to the FDA’s satisfaction.
A device that is not exempt from premarket review and is not eligible for 510(k) clearance or de novo authorization is categorized as Class III and must follow the PMA approval pathway, which requires proof of the safety and effectiveness of the device to the FDA’s satisfaction.
A device that is not eligible for the 510(k) process because there is no predicate device may be reviewed by the FDA through the de novo process (the process for granting marketing authorization when no substantially equivalent device exists) if the FDA agrees it is a low to moderate risk device.
A device that is not eligible for the 510(k) process because there is no predicate device may be reviewed by the FDA through the de novo process (the process for 7 granting marketing authorization when no substantially equivalent device exists) if the FDA agrees it is a low to moderate risk device.
If the FDA were to find that we or certain of our suppliers have failed to comply with applicable regulations, it could institute a wide variety of enforcement actions, ranging from issuance of a warning or untitled letter to more severe sanctions, such as product recalls or seizures, civil penalties, consent decrees, injunctions, criminal prosecution, operating restrictions, partial suspension or total shutdown of production, refusal to permit importation or exportation, refusal to grant, or delays in granting, clearances or approvals or withdrawal or suspension of existing clearances or approvals.
If the FDA were to find that we or one or more of our suppliers have failed to comply with applicable regulations, it could institute a wide variety of enforcement actions, ranging from issuance of a warning or untitled letter to more severe sanctions, such as product recalls or seizures, civil penalties, consent decrees, injunctions, criminal prosecution, operating restrictions, partial suspension or total shutdown of production, refusal to permit importation or exportation, refusal to grant, or delays in granting, clearances or approvals or withdrawal or suspension of existing clearances or approvals.
Our management team places significant focus and attention to matters affecting our people, particularly our commitment to our Core Values, capability development, total rewards and diversity, as well as how each employee experiences our culture.
Our management team places significant focus and attention on matters affecting our people, particularly our commitment to our Core Values, capability development, total rewards and diversity, as well as how each employee experiences our culture.
As we continue to review our commitments to environmental sustainability, we have initiated programs to track and lower our consumption of energy, water and gas as well as reduce waste and the use of hazardous materials.
As we continue to 12 review our commitments to environmental sustainability, we have initiated programs to track and lower our consumption of energy, water and gas as well as reduce waste and the use of hazardous materials.
Many of our catheters provide antimicrobial and antithrombogenic protection technology that have been shown to reduce the risk of catheter related bloodstream infections and microbial colonization and thrombus accumulation on catheter surfaces. Our intraosseous access systems are designed for the delivery of medications and fluids when intravenous access is difficult to obtain in emergent, urgent or medically necessary cases.
Many of our catheters provide antimicrobial and antithrombogenic protection technology that has been shown to reduce the risk of catheter related bloodstream infections and microbial colonization and thrombus accumulation on catheter surfaces. Our intraosseous access systems are designed for the delivery of medications and fluids when intravenous access is difficult to obtain in emergent, urgent or medically necessary cases.
The following charts depict the percentage of net revenues for the years ended December 31, 2022, 2021 and 2020 derived from each of our end markets: GOVERNMENT REGULATION We are subject to comprehensive government regulation both within and outside the U.S. relating to the development, manufacture, sale and distribution of our products. Regulation of Medical Devices in the U.S.
The following charts depict the percentage of net revenues for the years ended December 31, 2023, 2022 and 2021 derived from each of our end markets: GOVERNMENT REGULATION We are subject to comprehensive government regulation both within and outside the U.S. relating to the development, manufacture, sale and distribution of our products. Regulation of Medical Devices in the U.S.
The following charts depict our net revenues by reportable operating segment as a percentage of our total consolidated net revenues for the years ended December 31, 2022, 2021 and 2020: OUR PRODUCTS Our product categories within our geographic segments include vascular access, anesthesia, interventional, surgical, interventional urology, respiratory and urology.
The following charts depict our net revenues by reportable operating segment as a percentage of our total consolidated net revenues for the years ended December 31, 2023, 2022 and 2021: OUR PRODUCTS Our product categories within our geographic segments include vascular access, anesthesia, interventional, surgical, interventional urology, respiratory and urology.
We have implemented a talent management process that provides regular coaching check-ins between employees and their managers to review the employee’s developmental objectives and career progression. We also regularly review our talent portfolio and succession plans to ensure we can deliver on our company strategy.
We have a clear talent management process that provides regular coaching check-ins between employees and their managers to review the employee’s developmental objectives and career progression. We also regularly review our talent portfolio and succession plans to ensure we can deliver on our company strategy.
Devices that previously satisfied EU MDD requirements can continue to be marketed in the EU, subject to certain limitations, until the expiration of their current EU MDD certifications, which may be no later than May 2024, but certain EU MDR requirements went into effect for such devices in May 2021.
Devices that previously satisfied EU MDD requirements can continue to be marketed in the EU, subject to certain limitations, until the expiration of their current EU MDD certifications, originally to be no later than May 2024, but certain EU MDR requirements went into effect for such devices in May 2021.
The sponsor of a clinical trial must comply with and conduct the study in accordance with the applicable federal regulations, including FDA’s requirements for investigational device exemptions (“IDE”) requirements and good clinical practice (“GCP”).
The sponsor of a clinical trial must comply with and conduct the study in accordance with the applicable federal regulations, including the FDA’s requirements for investigational device exemption (“IDE”) requirements and good clinical practice (“GCP”).
Our commercial organization comprises 24% of the global employee base. The remaining 18% of employees work in various corporate functions, based in each of our locations. We believe our employees are a significant differentiating factor and play a critical role in our ability to deliver on our commitments to patients and execute our strategy to our customers and shareholders.
Our commercial organization comprises 27% of the global employee base. The remaining 19% of employees work in various corporate functions, based in each of our locations. We believe our employees are a significant differentiating factor and play a critical role in our ability to deliver on our commitments to patients and execute our strategy to our customers and shareholders.
INFORMATION ABOUT OUR EXECUTIVE OFFICERS The names and ages of our executive officers and the positions and offices held by each such officer are as follows: Name Age Positions and Offices with Company Liam J. Kelly 56 Chairman, President and Chief Executive Officer Thomas E. Powell 61 Executive Vice President and Chief Financial Officer Cameron P.
INFORMATION ABOUT OUR EXECUTIVE OFFICERS The names and ages of our executive officers and the positions and offices held by each such officer are as follows: Name Age Positions and Offices with Company Liam J. Kelly 57 Chairman, President and Chief Executive Officer Thomas E. Powell 62 Executive Vice President and Chief Financial Officer Cameron P.
We are committed to conducting pay equity analyses on a regular, periodic basis to ensure we continue to align to our commitments and Core Values. Environmental, Health and Safety Our Environmental Health and Safety (EHS) vision is to protect the safety and health of Teleflex personnel and the environments in which we operate.
We conduct pay equity analyses on a regular, periodic basis to ensure we continue to align to our commitments and Core Values. Environmental, Health and Safety Our Environmental Health and Safety (EHS) vision is to protect the safety and health of Teleflex personnel and the environments in which we operate.
As part of that analysis on our compensation programs, no systemic gender bias was identified globally and within the United States, no systemic ethnicity bias was identified. We continue to explore where we can expand our pay equity analyses for every jurisdiction in which we operate.
As part of that analysis on our compensation programs, no systemic gender bias was identified and within the United States, no systemic ethnicity bias was identified. We continue to explore where we can expand our pay equity analyses in the jurisdictions in which we operate.
Hicks 58 Corporate Vice President, Human Resources and Communications Daniel V. Logue 49 Corporate Vice President, General Counsel and Secretary Jay White 49 Corporate Vice President and President, Global Commercial James Winters 50 Corporate Vice President, Manufacturing and Supply Chain Mr.
Hicks 59 Corporate Vice President, Human Resources and Communications Daniel V. Logue 50 Corporate Vice President, General Counsel and Secretary Jay White 50 Corporate Vice President and President, Global Commercial James Winters 51 Corporate Vice President, Manufacturing and Supply Chain Mr.
We have and will continue to expend resources to construct, maintain, operate, and improve our facilities across the globe for environmental, health, safety and sustainability of our operations.
We have and will continue to expend resources to construct, maintain, operate, and improve our facilities across the globe for environmental, health, safety and sustainability of our operations for the protection and benefit of our employees and others.
Our research and development efforts support our strategic objectives to provide innovative new, safe and effective products that enhance clinical value by reducing infections, improving patient and clinician safety, enhancing patient outcomes and enabling less invasive procedures.
RESEARCH AND DEVELOPMENT We are engaged in both internal and external research and development. Our research and development efforts support our strategic objectives to provide innovative new, safe and effective products that enhance clinical value by reducing infections, improving patient and clinician safety, enhancing patient outcomes and enabling less invasive procedures.
Those regulatory requirements include, but are not limited to, the following: • device listing and establishment registration; • adherence to the Quality System Regulation (“QSR”), which requires stringent design, testing, control, documentation, complaint handling and other quality assurance procedures; • labeling, including advertising and promotion, requirements; • prohibitions against the promotion of off-label uses or indications; • adverse event and malfunction reporting (Medical Device Reports or "MDRs"); • post-approval restrictions or conditions, potentially including post-approval clinical trials or other required testing; • post-market surveillance requirements; • the FDA’s recall authority, whereby it can require or request the recall of products from the market; and • reporting and documentation of voluntary corrections or removals.
Those regulatory requirements include, but are not limited to, the following: • device listing and establishment registration; • adherence to the Quality System Regulation (“QSR”), which requires stringent design, testing, control, documentation, complaint handling and other quality assurance procedures; • labeling, including advertising and promotion, requirements; • unique device identifier (“UDI”) requirements for device labels, packaging, and, for certain reusable devices, direct marking of certain reusable devices and for submission of information to FDA’s Global Unique Device Identification Database (“GUDID”); • prohibitions against the promotion of off-label uses or indications; • adverse event and malfunction reporting (Medical Device Reports or "MDRs"); • post-approval restrictions or conditions, potentially including post-approval clinical trials or other required testing; • post-market surveillance requirements; • the FDA’s recall authority, whereby it can require or request the recall of products from the market; and • reporting and documentation of voluntary corrections or removals.
HUMAN CAPITAL As of December 31, 2022, we employed approximately 15,500 employees, including 4,000 employees in the U.S. and 11,500 employees in 32 other countries around the world. Our global supply chain employees make up 58% of the total employee population and are located primarily in Mexico, Malaysia and the Czech Republic.
HUMAN CAPITAL As of December 31, 2023, we employed approximately 14,500 employees, including 4,000 employees in the U.S. and 10,500 employees in 34 other countries around the world. Our global supply chain employees make up 54% of the total employee population and are located primarily in Mexico, Malaysia and the Czech Republic.
The second and final phase of the Respiratory business divestiture will occur once we transfer certain additional manufacturing assets to Medline and is expected to occur prior to the end of 2023. See "Our Products" below and Note 4 to the consolidated financial statements included in this Annual Report on Form 10-K for additional information.
The second and final phase of the Respiratory business divestiture was completed in December 2023 with the transfer of certain additional manufacturing assets to Medline. See "Our Products" below and Note 4 to the consolidated financial statements included in this Annual Report on Form 10-K for additional information.
NeoTract was a medical device company that developed and commercialized the UroLift System, a minimally invasive medical device for treating lower urinary tract symptoms due to benign prostatic hyperplasia, or BPH.
NeoTract was a medical device company that developed and commercialized the UroLift System, a minimally invasive medical device for treating lower urinary tract symptoms due to benign prostatic 4 hyperplasia, or BPH. Vascular Solutions was a medical device company that developed and marketed clinical products for use in minimally invasive coronary and peripheral vascular procedures.
The UroLift System involves the placement of permanent implants, typically through a transurethral outpatient procedure, that hold the prostate lobes apart to relieve compression on the urethra without cutting, heating or removing prostate tissue. Our Interventional Urology product portfolio is most heavily weighted in our Americas segment.
The UroLift System involves the placement of permanent implants, typically through a transurethral outpatient procedure, that hold the prostate lobes apart to relieve compression on the urethra without cutting, heating or removing prostate tissue.
DEI initiatives in Teleflex are supported by our Global DEI Council, composed of senior leadership from across the organization, and our four Regional DEI Councils in each the US & Canada, LATAM, EMEA, and APAC.
DEI initiatives in Teleflex are supported by our Global DEI Council, composed of senior leadership from across the organization, and our four Regional DEI Councils in each of our U.S. & Canada, Latin America, EMEA, and Asia Pacific regions.
These types of kits are generally regulated as combination products within the Center for Devices and Radiological Health ("CDRH") under the device regulations because the device provides the primary mode of action of the kit.
Certain of our medical devices are sold in kits that include a drug component, such as lidocaine. These types of kits are generally regulated as combination products within the Center for Devices and Radiological Health ("CDRH") under the device regulations because the device provides the primary mode of action of the kit.
Although these have been of value and are expected to continue to be of value in the future, we do not consider any single patent or trademark, except for the Teleflex name and the Arrow and UroLift brands, to be essential to the operation of our business.
Although these have been of value and are expected to continue to be of value in the future, we do not consider any single patent or trademark, except for the Teleflex name and the Arrow and UroLift brands, to be essential to the operation of our business. 10 SUPPLIERS AND MATERIALS Materials used in the manufacture and sterilization of our products are purchased from a large number of suppliers in diverse geographic locations.
These efforts are supported through engaging and partnering with local organizations, educational institutions and recruiting firms for a variety of opportunities in Teleflex including vacancies, co-op placements and internships. In partnering with local organizations, we are better able to address how we can best serve and support marginalized populations in our communities.
We continue our efforts to cultivate a diverse workforce that reflects the communities in which we work and serve. These efforts are supported through engaging and partnering with local organizations, educational institutions and recruiting firms for a variety of opportunities in Teleflex including vacancies, co-op placements and internships.
Our products offer a method for vascular access that can be administered quickly and effectively in the hospital and pre-hospital environments and include the EZ-IO Intraosseous Vascular Access System and Arrow FAST1 Sternal Intraosseous Infusion System.
Our products offer a method for vascular access that can be administered quickly and effectively in the hospital and pre-hospital environments and include the EZ-IO Intraosseous Vascular Access System and Arrow FAST1 Sternal Intraosseous Infusion System. Interventional: Our Interventional product category offers devices that facilitate a variety of applications to diagnose and deliver treatment of coronary and peripheral vascular disease.
Respiratory: Our respiratory products are used in a variety of care settings and primarily consist of humidification and oxygen therapy products.
Our Interventional Urology product portfolio is most heavily weighted in our Americas segment. Respiratory: Our respiratory products are used in a variety of care settings and primarily consist of humidification and oxygen therapy products.
The Respiratory business divestiture included products marketed under the Hudson RCI brand name that comprised oxygen therapy products, aerosol therapy products, spirometry products and ventilation management products. 6 Urology: Our urology product portfolio provides bladder management for patients in the hospital and individuals in the home care markets.
This product category previously included aerosol therapy, spirometry 6 and ventilation management products, as well as certain other oxygen therapy products, all of which were included in the Respiratory business divestiture. Urology: Our urology product portfolio provides bladder management for patients in the hospital and individuals in the home care markets.
Our ERG footprint extends to each of our four regions, providing our people with employee-driven communities that focus on initiatives such as supporting working parents & caregivers, coordinating mentorship and development opportunities, promoting cultural awareness and understanding, and connecting employees with shared experiences, interests or backgrounds. 11 We continue our efforts to cultivate a diverse workforce that reflects the communities in which we work and serve.
Within our Regional DEI Councils, each of our Employee Resources Groups (ERGs) are represented by a member of their leadership committee to share the progress, knowledge, and initiatives from their respective ERG. 11 Our ERG footprint extends to each of our four regions, providing our people with employee-driven communities that focus on initiatives such as supporting working parents and caregivers, coordinating mentorship and development opportunities, promoting cultural awareness and understanding, and connecting employees with shared experiences, interests or backgrounds.
Our portfolio of existing products and products under development consists primarily of Class I and Class II medical devices, most of which require 510(k) clearance by the U.S. Food and Drug Administration ("FDA") for sale in the U.S., and some of which are exempt from the requirement to obtain 510(k) clearance.
Food and Drug Administration ("FDA") for sale in the U.S., and some of which are exempt from the requirement to obtain 510(k) clearance.
SUPPLIERS AND MATERIALS Materials used in the manufacture and sterilization of our products are purchased from a large number of suppliers in diverse geographic locations. We are not dependent on any single supplier for a substantial amount of the materials used, the components supplied and the sterilization services provided for our overall operations.
We are not dependent on any single supplier for a substantial amount of the materials used, the components supplied and the sterilization services provided for our overall operations. Most of the materials, components and sterilization services we utilize are available from multiple sources, and where practical, we attempt to identify alternative suppliers.
Vascular Solutions was a medical device company that developed and marketed clinical products for use in minimally invasive coronary and peripheral vascular procedures. 4 In 2021, we divested certain product lines within our global respiratory product portfolio to Medline Industries, Inc. (“Medline”) (the "Respiratory business divestiture"). We completed the initial phase of the Respiratory business divestiture on June 28, 2021.
In 2021, we divested certain product lines within our global respiratory product portfolio to Medline Industries, Inc. (“Medline”) (the "Respiratory business divestiture"). We completed the initial phase of the Respiratory business divestiture on June 28, 2021.
Some illustrative and notable highlights of our new hires from the January to December 2022 period are as follows: • At 58%, females made up the majority of our new hires globally; • Of the 5,654 total global hires, 51% were aged 20-29, followed by 24% aged 30-39 and 12% aged 40-49; and • In the US, approximately 50% of our new hires represented minority ethnicities including Black (23%), Asian (13%), and Hispanic (10%) Talent Management, Development and Learning We are committed to providing our employees with opportunities for growth, development, and career advancement and to building a high-performance culture that supports our Core Values throughout the employee lifecycle.
Some illustrative and notable highlights of our new hires from the January to December 2023 period are as follows: • At 55%, females made up the majority of our new hires globally; • Of the 3,812 total global hires, 44% were aged 20-29, followed by 28% aged 30-39 and 15% aged 40-49; and • In the US, approximately 50% of our new hires represented minority ethnicities including Black (24%), Asian (12%), and Hispanic (9%).
Our hemostatic products accelerate the body's natural clotting cascade and are used in trauma situations where bleeding is difficult to control. The portfolio consists of external hemostats used by first responders, interventional products used in the catheter lab, and trauma products used by trauma surgeons, which are branded under our QuikClot trade name.
The portfolio consists of external hemostats used by first responders, interventional products used in the catheter lab, and trauma products used by trauma surgeons, which are branded under our QuikClot trade name. Surgical: Our Surgical product category consists of single-use and reusable devices designed for use in a variety of surgical procedures.
Clinical benefits of our products include increased vein and artery access, post-procedure closure, and increased support during complex medical procedures. Our primary product offerings consist of a portfolio of Arrow branded intra-aortic balloon pumps and catheters, GuideLiner, Turnpike and TrapLiner catheters, the MANTA Vascular Closure device and Arrow OnControl powered bone biopsy system.
Our primary product offerings consist of a portfolio of Arrow branded intra-aortic balloon pumps and catheters, GuideLiner, Turnpike and TrapLiner catheters, the MANTA Vascular Closure device and Arrow OnControl powered bone biopsy system. Anesthesia: Our Anesthesia product category is comprised of airway, pain management and hemostatic product lines that support hospital, emergency medicine and military channels.
Our key products include laryngoscopes, supraglottic airways, endotracheal tubes and atomization devices, which are branded under our LMA, Rusch and MAD trade names. Our pain management product line includes epidurals, catheters and disposable pain pumps for regional anesthesia, designed to improve patients’ post-operative pain experience, which are branded under our Arrow trade name.
Our pain management product line includes epidurals, catheters and disposable pain pumps for regional anesthesia, designed to improve patients’ post-operative pain experience, which are branded under our Arrow trade name. Our hemostatic products accelerate the body's natural clotting cascade and are used in trauma situations where bleeding is difficult to control.
Interventional: Our Interventional product category offers devices that facilitate a variety of applications to diagnose and deliver treatment via the vascular system of the body. These products primarily consist of a variety of coronary catheters, structural heart support devices, peripheral intervention products and mechanical circulatory support platform used by interventional cardiologists, interventional radiologists and vascular surgeons.
These products primarily consist of a variety of coronary catheters, structural heart support devices, peripheral intervention products and mechanical circulatory support platform used by interventional cardiologists, interventional radiologists and vascular surgeons. Clinical benefits of our products include increased vein and artery access, post-procedure closure, and increased support during complex medical procedures.
Our research and development initiatives focus on developing these products for both existing and new therapeutic applications, as well as developing enhancements to, and product line extensions of, existing products. During 2022 we introduced several product line extensions and six new products.
Our research and development initiatives focus on developing these products for both existing and new therapeutic applications, as well as developing enhancements to, and product line extensions of, existing products. Our portfolio of existing products and products under development consists primarily of Class I and Class II medical devices, most of which require 510(k) clearance by the U.S.
Most 10 of the materials, components and sterilization services we utilize are available from multiple sources, and where practical, we attempt to identify alternative suppliers. However, our ability to establish alternate sources of supply of materials and sterilization services may be delayed due to FDA and other regulatory authority requirements regarding the manufacture and sterilization of our products.
However, our ability to establish alternate sources of supply of materials and sterilization services may be delayed due to FDA and other regulatory authority requirements regarding the manufacture and sterilization of our products. Volatility in commodity prices, and freight costs, can have a significant impact on the cost of producing and supplying certain of our products.
Anesthesia: Our Anesthesia product category is comprised of airway, pain management and hemostatic product lines that support hospital, emergency medicine and military channels. Our airway management products and related devices are designed to enable use of standard and advanced anesthesia techniques in both pre-hospital emergency and hospital settings.
Our airway management products and related devices are designed to enable use of standard and advanced anesthesia techniques in both pre-hospital emergency and hospital settings. Our key products include laryngoscopes, supraglottic airways, endotracheal tubes and atomization devices, which are branded under our LMA, Rusch and MAD trade names.
We collect and regularly review several measures of the diversity within our global workforce.
In partnering with local organizations, we are better able to address how we can best serve and support marginalized populations in our communities. We collect and regularly review several measures of diversity within our global workforce.
Surgical: Our Surgical product category consists of single-use and reusable products designed to provide surgeons with devices for use in a variety of surgical procedures. These products primarily consist of metal and polymer ligation clips, fascial closure surgical systems used in laparoscopic surgical procedures, percutaneous surgical systems and other surgical instruments.
These products primarily consist of metal and polymer ligating clips, fascial closure surgical systems used in laparoscopic surgical procedures, percutaneous surgical systems, a powered bariatric stapler, and other surgical instruments used in Ear, Nose and Throat and Cardio-Vascular and Thoracic procedures. Our significant surgical brands include Weck, MiniLap, Pleur-Evac, Deknatel, KMedic, Pilling and Titan SGS.
Removed
Our significant surgical brands include Weck, MiniLap, Pleur-Evac, Deknatel, KMedic and Pilling. In 2022, we expanded our product portfolio with the acquisition of Standard Bariatrics, Inc. (“Standard Bariatrics”) and the Titan SGS brand, a powered stapling technology for bariatric surgery.
Added
In 2023, we expanded our product portfolio with the acquisition of Palette Life Sciences AB (“Palette”), which adds a portfolio of hyaluronic acid gel-based products primarily utilized in the treatment of urological diseases, including Barrigel, a rectal spacing product used in connection with radiation therapy treatment of prostate cancer.
Removed
The FDA has issued final regulations regarding the Unique Device Identification (“UDI”) System, which requires manufacturers to label or mark certain medical devices and/or their packaging with unique identifiers. Although the FDA expects that the UDI System will help track products during recalls and improve patient safety, it has required us to make changes to our manufacturing and labeling.
Added
We will need to obtain new certifications under the EU MDR for medical devices previously authorized under the EU MDD. As a result, Teleflex will incur expenditures in connection with the new registration of medical devices that previously had been registered under the MDD.
Removed
The UDI System was implemented in stages based on device risk, with the first requirements having taken effect in September 2014 and the last in December 2022. Certain of our medical devices are sold in kits that include a drug component, such as lidocaine.
Added
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 a 9 healthcare company may violate one or more of the requirements, resulting in increased compliance costs that could adversely impact our results of operations.
Removed
Volatility in commodity prices, and freight costs, can have a significant impact on the cost of producing and supplying certain of our products. RESEARCH AND DEVELOPMENT We are engaged in both internal and external research and development.
Added
Talent Management, Development and Learning We are committed to providing our employees with opportunities for growth, development, and career advancement and to building a high-performance culture that supports our Core Values throughout the employee lifecycle.
Removed
Within our Regional DEI Councils, each of our Employee Resources Groups (ERGs) are represented by a member of their leadership committee to share the progress, knowledge, and initiatives from their respective ERG.
Removed
For example, in response to the risks associated with the COVID-19 pandemic, we have expended resources to implement various safety measures, including implementing social distancing protocols and expanding personal protective equipment availability and usage, across our facilities globally in an effort to protect the health and safety of our employees and others.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

54 edited+13 added−11 removed137 unchanged
Biggest changeWe 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.
Biggest changeFurthermore, 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.
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; • 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; 21 • the impact of the United Kingdom's departure from the European Union, commonly referred to as "Brexit"; • public health epidemics; • difficulties in the protection of intellectual property; and • unsettled political and economic conditions and possible terrorist attacks against American interests.
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; • 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; • the impact of the United Kingdom's departure from the European Union, commonly referred to as "Brexit"; • public health epidemics; • difficulties in the protection of intellectual property; and • unsettled political and economic conditions and possible terrorist attacks against American interests.
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 false claims laws which, among other things, prohibit individuals or entities from knowingly presenting, or causing to be presented, false or fraudulent claims 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 false claims laws which may apply to items or services reimbursed by any third-party payor, including commercial insurers.
The laws that may affect our ability to operate include: 16 • 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 false claims laws which, among other things, prohibit individuals or entities from knowingly presenting, or causing to be presented, false or fraudulent claims 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 false claims laws which may apply to items or services reimbursed by any third-party payor, including commercial insurers.
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.
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; 25 • restrict us from pursuing business opportunities; and • place us at a disadvantage compared to competitors that have less indebtedness.
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.
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 20 • created an independent payment advisory board that will submit recommendations to reduce Medicare spending if projected Medicare spending exceeds a specified growth rate.
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 difficulty preventing fraud, 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.
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 difficulty preventing fraud, have disputes with customers, physicians and other health care professionals, be subject to regulatory sanctions or penalties, incur 24 expenses, lose revenues or suffer other adverse consequences.
We could also experience negative effects on our results of operations and financial condition from acquisition-related charges, amortization of intangible assets, asset 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.
We could also 19 experience negative effects on our results of operations and financial condition from acquisition-related charges, amortization of intangible assets, asset 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.
There can be no assurance that we will be able to successfully develop 14 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.
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.
If, at the expiration or earlier termination of the swap agreements, the U.S. dollar to euro exchange rate has 26 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 euro 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).
If, at the expiration or earlier termination of the swap agreements, the U.S. dollar to euro exchange rate 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 euro 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).
Our internal 24 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.
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.
Product liability, warranty and recall costs may have a material adverse effect on our business, financial condition, results of operations and cash flows. 19 Volatility in domestic and global financial markets 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.
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 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.
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.
To the extent we enter 26 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.
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.
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, 15 if at all.
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 15 additional clinical or other data, and expend more time and effort, in obtaining future product clearances or approvals.
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.
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. 23 Our failure to maintain strong relationships with physicians and other health care professionals could adversely affect us.
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. Our failure to maintain strong relationships with physicians and other health care professionals could adversely affect us.
The reported information is made 17 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.
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.
While both plants are currently operating normally, should their operations be suspended or adversely affected, our ability to provide affected 18 products to our customers could be impaired if we are unable to utilize alternate facilities and sources for sterilization services.
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.
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.
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, 21 distributors or other agents.
Our obligations under the Senior Notes 27 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.
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.
Although our sales into Russia did not constitute a material portion of our total revenue in 2022, 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.
Although our sales into Russia did not constitute a material portion of our total revenue in 2023, 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.
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 Quality System Regulation ("QSR"), which requires, among other things, periodic audits, design controls, quality control testing and documentation procedures, as well as complaint evaluations and investigation.
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.
These and other impacts of the COVID-19 pandemic, or other pandemics or epidemics, 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.
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.
A reduction or interruption in manufacturing or distribution, or our inability to secure suitable alternative sources of raw materials or components, 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.
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.
In addition, for the years ended December 31, 2022, 2021 and 2020, 36%, 37% and 38%, respectively, of our net revenues (based on the Teleflex entity generating the sale) were derived from operations outside the U.S.
In addition, for the years ended December 31, 2023, 2022 and 2021, 37%, 36% and 37%, respectively, of our net revenues (based on the Teleflex entity generating the sale) were derived from operations outside the U.S.
However, 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. Moreover, on December 14, 2018, the U.S.
However, 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.
In addition, on October 10, 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.
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.
As of December 31, 2022, 9% 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.
As of December 31, 2023, 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.
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. 22 Many of our products have significant plastic resin content.
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.
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 and changes in tax laws.
Our effective tax rate may, however, differ from the estimated amount 22 due to numerous factors, including a change in the mix of our profitability from country to country.
As of December 31, 2022, 2.8 million shares of our common stock were reserved for issuance upon the exercise of stock options. 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.
As of December 31, 2023, 3.9 million shares of our common stock were reserved for issuance upon the exercise of stock options. 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.
In addition, a significant portion of our non-U.S. revenues are derived from sales to third party distributors. As of December 31, 2022, approximately 75% of our full-time employees were employed in countries outside of the U.S., and approximately 55% of our net property, plant and equipment was located outside the U.S.
In addition, a significant portion of our non-U.S. revenues are derived from sales to third party distributors. As of December 31, 2023, 72% of our full-time employees were employed in countries outside of the U.S., and 58% of our net property, plant and equipment was located outside the U.S.
As of December 31, 2022, we accrued $44.0 million of contingent consideration related to completed business combinations, most of which related to Standard Bariatrics. 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.
As of December 31, 2023, we accrued $39.5 million of contingent consideration related to completed business combinations, most of which related to Standard Bariatrics Inc. 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 20 Financial Condition and Results of Operations included in this Annual Report on Form 10-K.
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.
Such effects depend on various factors, including, but not limited, to: the occurrence, spread, duration and severity of any subsequent wave or waves of outbreaks, including the emergence and spread of variants of the COVID-19 virus; governmental, business and individuals’ actions that have been and continue to be taken in response to the pandemic (including restrictions on travel, transport and workforce pressures, and deferrals or 16 postponements of elective procedures); the impact of the pandemic and actions taken in response 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 when the COVID-19 pandemic 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 pandemic.
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.
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.
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.
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.
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. 23 Our technology is important to our success, and our failure to protect our intellectual property rights could put us at a competitive disadvantage.
As of December 31, 2022, we had outstanding approximately 46.9 million shares of our common stock, options to purchase 1.2 million shares of our common stock (of which approximately 1.0 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 three years), performance stock units covering a maximum of 62,927 shares of our common stock (which may vest in early 2023, depending on our performance with regard to specified financial measures and market performance of our common stock compared to designated public companies) and 123 shares of our common stock to be distributed from our deferred compensation plan.
As of December 31, 2023, we had outstanding approximately 47.0 million shares of our common stock, options to purchase 1.3 million shares of our common stock (of which approximately 1.0 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 three years), performance stock units covering a maximum of 85,772 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 120 shares of our common stock to be distributed from our deferred compensation plan.
Should we experience such difficulties, our business, cash flows and results of operations could be adversely affected. 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.
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.
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.
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, 2023, we had total consolidated indebtedness of $1.8 billion.
As of December 31, 2022, we had total consolidated indebtedness of $1.7 billion. 25 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.
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.
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 punitive damages.
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 punitive damages.
In addition, 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. To date, we have not experienced any significant disruptions to our business or operations in connection with these initiatives.
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.
However, as we continue our efforts to 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.
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.
Any additional regulatory restrictions on the emission of ethylene oxide by sterilization facilities might 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.
Failure of our contract sterilizers to achieve compliance with the final rule by the 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.
Under our cross-currency swap agreements, a meaningful decline in the U.S. dollar to euro exchange rate could have a material adverse effect on our cash flows. In 2018 and 2019, we entered into cross-currency swap agreements with several financial institutions to hedge against the effect of variability in the U.S. dollar to euro exchange rate.
Under our cross-currency swap agreements, a meaningful decline in the U.S. dollar to euro exchange rate could have a material adverse effect on our cash flows.
However, these effects could have an adverse impact on our liquidity, capital resources, operations and business and those of the third parties on which we rely, and such impact could be material.
However, these effects could have an adverse impact on our liquidity, capital resources, operations and business 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.
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.
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. 18 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.
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 competitive products and enhance existing products. Our product development efforts may require us to make substantial investments.
We also face competition from providers of alternative medical therapies, such as pharmaceutical companies. 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 14 manufacture new products and enhance existing products.
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.
We rely on the patent, trademark, copyright and trade secret laws of the U.S. and other countries to protect our proprietary rights.
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. Our results of operations and financial condition may be adversely affected by public health epidemics, including the ongoing COVID-19 global health pandemic.
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.
Our failure to successfully develop and market new products or enhance existing products could have a material adverse effect on our business, financial condition and results of operations. 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.
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.
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 seriously ill patients.
In particular, our medical device products are often used in surgical and intensive care settings for procedures involving seriously ill patients. In addition, many of our products are designed to be implanted in the human body for varying periods of time.
We are subject to risks associated with public health threats, such as the recent and ongoing COVID-19 pandemic. The COVID-19 pandemic significantly impacted economic activity and markets around the world and negatively impacted our operations, financial performance and cash flows.
As with COVID-19, 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.
Subsequently, on September 13, 2021, the EPA issued an information collection request to commercial sterilization facilities to gather additional information and data about ethylene oxide sterilization processes and emissions. The EPA has indicated it expects to issue proposed regulations for commercial sterilizers in the near term.
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.
Removed
The ability of our customers to obtain coverage and reimbursement for our products is important to our business.
Added
Our product development efforts may require us to make substantial investments.
Removed
These effects continue, and their impact going forward is uncertain because the trajectory and nature of the pandemic remain uncertain and difficult to predict.
Added
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.
Removed
With respect to our company, the COVID-19 pandemic has had, and may continue to have, an impact on our operations, financial performance and financial condition in several ways, including, but not limited to, those discussed below: • It has caused and may continue to cause disruptions in our manufacturing operations globally, which are subject to governmental or regulatory actions taken in response to COVID-19.
Added
In addition, we currently are in 17 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.
Removed
These actions could impact our ability, or that of our employees or suppliers, to perform our and their respective responsibilities and obligations relative to the conduct of our business and create a risk to our ability to manufacture our products in a timely manner, or at all. • The effects of the pandemic have caused, and could in the future continue to cause, disruptions in our workforce and our global supply chain.
Added
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.
Removed
These disruptions, or our failure to respond to them, could increase manufacturing or distribution costs or cause further delays in delivering, or an inability to deliver, products to our customers. • The effects of the pandemic have resulted, and could in the future continue to result, in lower revenues in certain of our product categories.
Added
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.
Removed
During the fourth quarter of the year ended December 31, 2019, operations at the Smyrna facility were suspended by state and local officials due to issues associated with the facility's use of ethylene oxide in its sterilization operations, but have since reopened.
Added
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. According to the terms of an August 2023 consent decree entered by the U.S.
Removed
In December 2020, the New Mexico Attorney General initiated legal proceedings involving the Santa Teresa facility, alleging that its operations have resulted in impermissible ethylene oxide emissions.
Added
District Court for the District of Columbia, the EPA must issue the final rule by March 1, 2024, and contract sterilizers are anticipated to have 18 months to come into compliance.
Removed
Among other things, the attorneys general stated that the current EPA standard for ethylene oxide fails to adequately protect workers and communities, and that the use of ethylene oxide, particularly in the medical device sterilization industry, must be reduced.
Added
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.
Removed
On December 12, 2019, the EPA issued an Advance Notice of Proposed Rulemaking to solicit information and request comments that will aid in the EPA’s future revisions of the regulations concerning ethylene oxide omissions.
Added
While several recent legal challenges to the Affordable Care Act have been unsuccessful, further challenges may be mounted in the future.
Removed
For additional information regarding our acquisitions, see Note 4 to the consolidated financial statements included in this Annual Report on Form 10-K. 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.
Added
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 Pillar Two global minimum tax, which will likely impact the amount of taxes that multinational companies such as Teleflex pay in the future.
Removed
District Court for the Northern District of Texas ruled that the individual mandate provision of the Affordable Care Act is unconstitutional and the remainder of the act is invalid, although the Court stayed its ruling pending appeal.
Added
Various countries have already enacted or are in the process of incorporating the Pillar Two framework within their tax laws.
Added
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.
Added
In 2019 and 2023, we entered into cross-currency swap agreements with several financial institutions to hedge against the effect of variability in the U.S. dollar to euro exchange rate; the 2023 swap agreements were entered into following the maturation in October 2023 of cross-currency swap agreements we entered into in 2018.

Item 2. Properties

Properties — owned and leased real estate

3 edited+0 added−0 removed1 unchanged
Biggest changeOur major facilities (those with 50,000 or greater square feet) at December 31, 2022 are as follows: Location Primary use Square Footage Owned or Leased Olive Branch, MS Distribution warehouse 627,000 Leased Kamunting, Malaysia Manufacturing 286,000 Owned Nuevo Laredo, Mexico Manufacturing 277,000 Leased Tecate, Mexico Manufacturing 172,000 Owned Chihuahua, Mexico Manufacturing 153,000 Owned Maple Grove, MN Manufacturing 129,000 Owned Morrisville, NC Office administration 121,000 Leased Zdar Nad Sazauou, Czech Republic Manufacturing 108,000 Owned Trenton, GA Manufacturing 102,000 Owned Chihuahua, Mexico Manufacturing 100,000 Leased Hradec Kralove, Czech Republic Manufacturing 92,000 Owned Chelmsford, MA Manufacturing 91,000 Leased Kulim, Malaysia Manufacturing 90,000 Owned Kernen, Germany Manufacturing 86,000 Leased Jaffrey, NH Manufacturing 81,000 Owned Kamunting, Malaysia Manufacturing 77,000 Leased Pleasanton, CA Manufacturing 76,000 Leased Chihuahua, Mexico Manufacturing 63,000 Owned Reading, PA Engineering and research 63,000 Leased Limerick, Ireland Manufacturing 59,000 Owned Wayne, PA Office administration 58,000 Leased Mansfield, MA Manufacturing 57,000 Leased Plymouth, MN Manufacturing 55,000 Leased Bad Liebenzell, Germany Manufacturing 53,000 Leased Operations in each of our business segments are conducted at locations both in and outside of the U.S.
Biggest changeIn general, our facilities meet current operating requirements for the activities currently conducted within the facilities. 28 Our major facilities (those with 50,000 or greater square feet) at December 31, 2023 are as follows: Location Primary use Square Footage Owned or Leased Olive Branch, MS Distribution warehouse 627,000 Leased Kamunting, Malaysia Manufacturing 286,000 Owned Tecate Mexico Manufacturing 172,000 Owned Chihuahua, Mexico Manufacturing 153,000 Owned Maple Grove, MN Manufacturing 129,000 Owned Morrisville, NC Office administration 121,000 Leased Zdar Nad Sazauou, Czech Republic Manufacturing 108,000 Owned Trenton, GA Manufacturing 102,000 Owned Chihuahua, Mexico Manufacturing 100,000 Leased Hradec Kralove, Czech Republic Manufacturing 92,000 Owned Chelmsford, MA Manufacturing 91,000 Leased Kulim, Malaysia Manufacturing 90,000 Owned Jaffrey, NH Manufacturing 81,000 Owned Kamunting, Malaysia Manufacturing 77,000 Leased Pleasanton, CA Office administration 76,000 Leased Nuevo Laredo, Mexico Manufacturing 71,000 Leased Chihuahua, Mexico Manufacturing 63,000 Owned Reading, PA Engineering and research 63,000 Leased Limerick, Ireland Manufacturing 58,000 Owned Mansfield, MA Manufacturing 57,000 Leased Plymouth, MN Manufacturing 55,000 Leased Wayne, PA Office administration 52,000 Leased Operations in each of our business segments are conducted at locations both in and outside of the U.S.
In addition to the properties listed above, we own or lease approximately 700,000 square feet of additional warehousing, manufacturing and office space worldwide.
In addition to the properties listed above, we own or lease approximately 650,000 square feet of additional warehousing, manufacturing and office space worldwide.
ITEM 2. PROPERTIES We own or lease approximately 90 properties consisting of manufacturing plants, engineering and research centers, distribution warehouses, offices and other facilities. We believe that the properties are maintained in good operating condition and are suitable for their intended use. In general, our facilities meet current operating requirements for the activities currently conducted within the facilities.
ITEM 2. PROPERTIES We own or lease approximately 90 properties consisting of manufacturing plants, engineering and research centers, distribution warehouses, offices and other facilities. We believe that the properties are maintained in good operating condition and are suitable for their intended use.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−0 removed3 unchanged
Biggest changeAs of December 31, 2022 and 2021, we accrued liabilities of $0.5 million and $0.2 million respectively, in connection with these matters, representing our best estimate of the cost within the range of 28 estimated possible loss that will be incurred to resolve these matters.
Biggest changeAs of December 31, 2023 and 2022, we accrued liabilities of $0.8 million and $0.5 million respectively, in connection with these matters, representing our best estimate of the cost within the range of estimated possible loss that will be incurred to resolve these matters.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

2 edited+1 added−1 removed2 unchanged
Biggest changeITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock is listed on the New York Stock Exchange under the symbol “TFX.” As of February 21, 2023, we had 367 holders of record of our common stock.
Biggest changeITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock is listed on the New York Stock Exchange under the symbol “TFX.” As of February 20, 2024, we had 353 holders of record of our common stock.
The annual changes for the five-year period shown on the graph are based on the assumption that $100 had been invested in Teleflex common stock and each index on December 31, 2017 and that all dividends were reinvested.
The annual changes for the five-year period shown on the graph are based on the assumption that $100 had been invested in Teleflex common stock and each index on December 31, 2018 and that all dividends were reinvested.
Removed
MARKET PERFORMANCE Company / Index 2017 2018 2019 2020 2021 2022 Teleflex Incorporated 100.00 104.45 152.76 167.66 134.31 102.59 S&P 500 Index 100.00 95.62 125.72 148.85 191.58 156.88 S&P 500 Healthcare Equipment & Supply Index 100.00 114.24 148.06 175.90 210.90 166.35
Added
MARKET PERFORMANCE Company / Index 2018 2019 2020 2021 2022 2023 Teleflex Incorporated 100.00 146.26 160.52 128.59 98.23 98.70 S&P 500 Index 100.00 131.49 155.68 200.37 164.08 207.21 S&P 500 Healthcare Equipment & Supply Index 100.00 129.60 153.97 184.61 145.61 159.51

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

69 edited+43 added−37 removed69 unchanged
Biggest changeThe restructuring charges listed in the table primarily consist of termination benefits. 2022 2021 2022 Restructuring plan $ 15.5 $ — Respiratory divestiture plan 0.6 2.7 2021 Restructuring plan — 7.4 2019 Footprint realignment plan (1.0) 0.3 2018 Footprint realignment plan 2.1 2.5 Other restructuring programs 1.6 2.1 Impairment charges (1) 1.5 6.7 Total $ 20.3 $ 21.7 (1) For the year ended December 31, 2022, we recorded impairment charges of $1.5 million related to our decision to abandon certain assets.
Biggest changeThe restructuring charges listed in the table primarily consist of termination benefits. 2023 2022 2023 Restructuring plan $ 12.5 $ — 2023 Footprint Realignment Plan 1.5 — 2022 Restructuring plan 3.1 15.5 Respiratory divestiture plan (0.9) 0.6 Other restructuring programs (0.6) 2.7 Impairment charges (1) — 1.5 Total $ 15.6 $ 20.3 (1) For the year ended December 31, 2022, we recorded impairment charges of $1.5 million related to our decision to abandon certain assets. 34 Interest income and expense 2023 2022 Interest expense $ 85.1 $ 54.3 Average interest rate on debt during the year 4.4 % 2.8 % Interest income $ (12.8) $ (0.9) The increase in interest expense for the year ended December 31, 2023 compared to the prior year was primarily due to a higher average interest rate resulting from increases in interest rates associated with our variable interest rate debt instruments and an increase in average debt outstanding.
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 41 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.
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.
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.
Goodwill and other indefinite-lived intangible assets are not amortized; we test these 41 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.
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 40 asset.
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.
At our option, loans under the Credit Agreement will bear interest at a rate equal to adjusted Term 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.
At our option, loans under the Credit Agreement will bear interest at a rate equal to adjusted Term Secured Overnight Lending Rate (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.
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 37 investments in non-guarantor subsidiaries and any related activity are excluded from the 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.
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 30 patient and provider safety and reducing total procedural costs.
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.
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, after completing the 42 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.
Subject to certain exceptions, 39 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.
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.
In addition, we may continue to explore opportunities to expand the size of our business and improve 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 terminating the distributor relationship (in some instances, particularly in Asia, the conversions involve our acquisition or termination of a master distributor and the continued sale of our products through sub-distributors).
In addition, we may continue to explore opportunities to expand the size of our business and improve 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 terminating the distributor relationship (in some instances, the conversions involve our acquisition or termination of a master distributor and the continued sale of our products through sub-distributors).
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 7.9 years.
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 7.0 years.
As of December 31, 2022 and 2021, 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.
As of December 31, 2023 and 2022, 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.
As of December 31, 2022, 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, 2023, 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.
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, 2022, we were in compliance with the covenants and none of the termination events had occurred.
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, 2023, we were in compliance with the covenants and none of the termination events had occurred.
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 Ireland. Germany and France. The ultimate outcome of these examinations could result in increases or decreases to our recorded tax liabilities, which would affect our financial results.
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 and Italy. The ultimate outcome of these examinations could result in increases or decreases to our recorded tax liabilities, which would affect our financial results.
We primarily design, develop, manufacture and supply medical devices used by hospitals and healthcare providers for common diagnostic and therapeutic procedures in critical care and surgical applications. Approximately 95% 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.
We primarily design, develop, manufacture and supply medical devices used by hospitals and healthcare providers for common diagnostic and therapeutic 30 procedures in critical care and surgical applications. Approximately 94% 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.
The plan is substantially complete and as a result, we expect future restructuring expenses associated with the plan, if any, to be immaterial. The following table provides information regarding restructuring charges we have incurred with respect to each of our restructuring programs, as well as impairment charges, for the years ended December 31, 2022, 2021, and 2020.
The plan is substantially complete and as a result, we expect future restructuring expenses associated with the plan, if any, to be immaterial. The following table provides information regarding restructuring charges we have incurred with respect to each of our restructuring programs, as well as impairment charges, for the years ended December 31, 2023 and 2022.
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 2022.
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 2023.
As of December 31, 2022, we were in compliance with the covenants in the Credit Agreement. 2027 and 2028 Senior Notes As of December 31, 2022, the outstanding principal amount of our 2027 Notes and 2028 Notes (collectively the "Senior Notes") was $500 million, respectively.
As of December 31, 2023, we were in compliance with the covenants in the Credit Agreement. 2027 and 2028 Senior Notes As of December 31, 2023, the outstanding principal amount of our 2027 Notes and 2028 Notes (collectively the "Senior Notes") was $500 million, respectively.
Loss on extinguishment of debt 2022 2021 Loss on extinguishment of debt $ 0.5 $ 13.0 During the year ended December 31, 2022 we recognized a $0.5 million loss on extinguishment of debt due to the write off of unamortized deferring financing costs related to the amendment of our senior credit facility.
Loss on extinguishment of debt 2023 2022 Loss on extinguishment of debt $ — $ 0.5 During the year ended December 31, 2022 we recognized a $0.5 million loss on extinguishment of debt due to the write off of unamortized deferring financing costs related to the amendment of our senior credit facility.
There were no changes to the underlying methods used in 2022 as compared to the valuations of our reporting units in the past several years.
There were no changes to the underlying methods used in 2023 as compared to the valuations of our reporting units in the past several years.
We and the counterparties have agreed to effect the exchange through a net settlement. As a result, we may be required to pay (or be entitled to receive) an amount equal to the difference, on the expiration or earlier termination dates, between the U.S. dollar equivalent of the €653.1 million notional amount and the $750 million notional amount.
We and the counterparties have agreed to effect the exchange through a net settlement. As a result, we may be required to pay (or be entitled to receive) an amount equal to the difference, on the expiration or earlier termination dates, between 37 the U.S. dollar equivalent of the €693.9 million notional amount and the $750 million notional amount.
The acquisition was financed using borrowings under our revolving credit facility and cash on hand. See Note 4 to the consolidated financial statements included in this report for additional information.
The acquisition was financed using borrowings under our revolving credit facility and cash on hand. See Note 4 to the consolidated financial statements included in this Annual Report on Form 10-K for additional information.
Overdue loans will bear interest at the rate otherwise applicable to such loans plus 2.00%. At December 31, 2022, we had $148.3 million in borrowings outstanding and $0.9 million in outstanding standby letters of credit under our $1.0 billion revolving credit facility.
Overdue loans will bear interest at the rate otherwise applicable to such loans plus 2.00%. At December 31, 2023, we had $262.0 million in borrowings outstanding and $0.9 million in outstanding standby letters of credit under our $1.0 billion revolving credit facility.
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 $91.5 million and $143.2 million at December 31, 2022 and 2021, respectively, relates principally to the uncertainty of the utilization of tax loss and credit carryforwards in various jurisdictions.
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 $95.7 million and $91.5 million at December 31, 2023 and 2022, respectively, relates principally to the uncertainty of the utilization of tax loss and credit carryforwards in various jurisdictions.
All dollar amounts in tables are presented in millions unless otherwise noted. For a discussion of our results of operations comparison for 2021 and 2020, refer to our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 filed on March 1, 2022.
All dollar amounts in tables are presented in millions unless otherwise noted. For a discussion of our results of operations comparison for 2022 and 2021, refer to our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 filed on February 23, 2023.
We determined the fair value of the contingent consideration liabilities related to the Standard Bariatrics acquisition, which represented most of our contingent consideration liabilities at December 31, 2022, using a Monte Carlo valuation approach, which simulates future revenues during the earn out-period using management's best estimates.
We determined the fair value of the contingent consideration liabilities related to the Palette and Standard Bariatrics acquisitions, which represented most of our contingent consideration liabilities at December 31, 2023, using a Monte Carlo valuation approach, which simulates future revenues during the earn out-period using management's best estimates.
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 $47.1 million and $42.7 million at December 31, 2022 and 2021, respectively.
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 $54.3 million and $47.1 million at December 31, 2023 and 2022, respectively.
If, at the expiration or earlier termination of the swap agreements, the U.S. dollar to euro exchange rate has increased or declined by 10% from the rate in effect at the inception of these agreements, we would receive from or be required to pay to the counterparties an aggregate of approximately $75.0 million in respect of the notional settlement.
If, at the expiration or earlier termination of the swap agreements, the U.S. dollar to euro exchange rate has increased or decreased by 10% from the rate in effect at the inception of these agreements, we would either receive an aggregate payment of approximately $34.4 million from the counterparties or be required to make an aggregate payment of approximately $75 million to the counterparties in respect of the notional settlement.
As of December 31, 2022, we had $48.5 million in current assets and $11.9 million in non-current assets related to the fair value of our cross-currency swap agreements. The swap agreements entail risk that the counterparties will not fulfill their obligations under the agreements.
As of December 31, 2023, we had $16.5 million in current assets and $31.3 million in non-current liabilities related to the fair value of our cross-currency swap agreements. The swap agreements entail risk that the counterparties will not fulfill their obligations under the agreements.
Gain on sale of assets and business 2022 2021 Gain on sale of assets and business $ 6.5 $ 91.2 During the year ended December 31, 2022, we recognized a gain related to a sale of a building. During the year ended December 31, 2021, we recognized a gain related to the Respiratory business divestiture.
Gain on sale of assets and business 2023 2022 Gain on sale of assets and business $ 4.4 $ 6.5 During the year ended December 31, 2023, we recognized a gain related to the second phase of the Respiratory divestiture. During the year ended December 31, 2022, we recognized a gain related to a sale of a building.
OEM operating profit for the year ended December 31, 2022 increased $9.2 million, or 16.3%, compared to the prior year, which was primarily attributable to an increase in gross profit resulting from higher sales volume, partially offset by an increase in general and administrative expenses.
OEM operating profit for the year ended December 31, 2023 increased $20.8 million, or 31.9%, compared to the prior year, which was primarily attributable to an increase in gross profit resulting from price increases and higher sales, partially offset by higher research and development expenses.
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. 36 Of our $292.0 million of cash and cash equivalents at December 31, 2022, $256.9 million was held at non-U.S. subsidiaries.
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.
Asia Asia net revenues for the year ended December 31, 2022 increased $8.5 million, or 2.9%, compared to the prior year, which was primarily attributable to a $30.1 million increase in sales volumes of existing products, partially offset by $23.7 million of unfavorable fluctuations in foreign currency exchange rates.
Asia Asia net revenues for the year ended December 31, 2023 increased $40.6 million, or 13.2%, compared to the prior year, which was primarily attributable to a $25.5 million increase in sales volume of existing products and an $18.8 million increase in sales of new products, partially offset by unfavorable fluctuations in foreign currency exchange rates.
See "Restructuring and impairment charges" within "Result of Operations" above as well as Note 4 to the consolidated financial statements included in this Annual Report on Form 10-K for additional information on these charges.
We did not record any impairment charges related to intangible assets during the years ended December 31, 2023 and December 31, 2022. See "Restructuring and impairment charges" within "Result of Operations" above as well as Note 4 to the consolidated financial statements included in this Annual Report on Form 10-K for additional information on these charges.
The fair value of consideration transferred was $211.8 million, which included cash payments of $173.0 million and $38.8 million in estimated fair value of contingent consideration. The contingent consideration liability represents the estimated fair value of our obligations, under the acquisition agreement, to make three milestone payments up to $130 million, in aggregate, if certain commercial milestones are met.
The fair value of consideration transferred was $621.9 million, consisting of net cash payments of $594.9 million and $27.0 million in estimated fair value of contingent consideration. The contingent consideration liability represents the estimated fair value of our obligations, under the acquisition agreement, to make two milestone payments up to $50 million, in aggregate, if certain commercial milestones are met.
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.
For additional information regarding our indebtedness, see Note 10 to the consolidated financial statements included in this Annual Report on Form 10-K. 40 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.
On June 28, 2021, we completed the initial phase of the Respiratory business divestiture, pursuant to which we received cash proceeds of $259 million. The second phase of the Respiratory business divestiture will occur once we transfer certain additional manufacturing assets to Medline.
On June 28, 2021, we completed the initial phase of the Respiratory business divestiture, pursuant to which we received cash proceeds of $259.0 million.
The more significant judgments and assumptions used in the valuation of intangible assets may include revenue growth rates, royalty rate, discount rate, attrition rate, and EBITDA margin. Each of these factors and assumptions can significantly impact the value of the intangible asset. We did not record any impairment charges related to intangible assets during the year ended December 31, 2022.
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 EBITDA margin. Each of these factors and assumptions can significantly impact the value of the intangible asset.
The increases in selling, general and administrative costs were partially offset by favorable fluctuations in foreign currency exchange rates. 32 Research and development 2022 2021 Research and development $ 153.8 $ 130.8 Percentage of revenues 5.5 % 4.7 % Research and development expenses increased $23.0 million for the year ended December 31, 2022, compared to the prior year, which was primarily attributable to European Union Medical Device Regulation ("EU MDR") related costs and higher project spend within certain of our product portfolios.
Research and development 2023 2022 Research and development $ 154.4 $ 153.8 Percentage of revenues 5.2 % 5.5 % Research and development expenses increased $0.6 million for the year ended December 31, 2023, compared to the prior year, which was primarily attributable to higher project spend within certain of our product portfolios and expenses incurred by Standard Bariatrics, partially offset by lower expenses related to the European Union Medical Device Regulation related costs.
Cash Flows The following table provides a summary of our cash flows for the periods presented: Year Ended December 31, 2022 2021 Cash flows from continuing operations provided by (used in): Operating activities $ 342.8 $ 652.1 Investing activities (259.4) 156.7 Financing activities (217.5) (715.8) Cash flows provided by (used in) discontinued operations 0.8 (0.7) Effect of exchange rate changes on cash and cash equivalents (19.8) (23.1) (Decrease) increase in cash and cash equivalents $ (153.1) $ 69.2 Cash Flow from Operating Activities Net cash provided by operating activities from continuing operations was $342.8 million during 2022, and $652.1 million during 2021.
See "Financing Arrangements" below as well as Note 10 and Note 11 to the consolidated financial statements included in this Annual Report on Form 10-K for further information related to our borrowings and financial instruments. 38 Cash Flows The following table provides a summary of our cash flows for the periods presented: Year Ended December 31, 2023 2022 Cash flows from continuing operations provided by (used in): Operating activities $ 511.7 $ 342.8 Investing activities (621.2) (259.4) Financing activities 38.5 (217.5) Cash flows (used in) provided by discontinued operations (1.0) 0.8 Effect of exchange rate changes on cash and cash equivalents 2.8 (19.8) Decrease in cash and cash equivalents $ (69.2) $ (153.1) Cash Flow from Operating Activities Net cash provided by operating activities from continuing operations was $511.7 million during 2023, and $342.8 million during 2022.
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.
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. 43 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.
Under the terms of the cross-currency swap agreements, we notionally exchanged in the aggregate $750 million for €653.1 million. The swap agreements, which begin to expire in October 2023, are designated as net investment hedges and require an exchange of the notional amounts upon expiration or the earlier termination of the agreements.
The 2023 Cross-currency swap agreements, which expire on October 4, 2025, are designated as net investment hedges and require an exchange of the notional amounts upon expiration or the earlier termination of the agreements.
Segment Results Segment Net Revenues Year Ended December 31 % Increase/(Decrease) 2022 2021 2022 vs 2021 Americas $ 1,653.7 $ 1,659.3 (0.3) EMEA 558.4 606.8 (8.0) Asia 306.3 297.8 2.9 OEM 272.6 245.7 11.0 Segment Net Revenues $ 2,791.0 $ 2,809.6 (0.7) Segment Operating Profit Year Ended December 31, % Increase/(Decrease) 2022 2021 2022 vs 2021 Americas $ 452.0 $ 424.2 6.6 EMEA 42.5 94.9 (55.2) Asia 82.8 84.6 (2.2) OEM 65.4 56.2 16.3 Segment Operating Profit (1) $ 642.7 $ 659.9 (2.6) (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.
We continue to evaluate the impact the laws will have on our consolidated results of operations, but based on legislation currently enacted, we do not expect the laws to have a material effect on our consolidated financial statements. 35 Segment Results Segment Net Revenues Year Ended December 31, % Increase/(Decrease) 2023 2022 2023 vs 2022 Americas $ 1,715.4 $ 1,653.7 3.7 EMEA 586.2 558.4 5.0 Asia 346.9 306.3 13.2 OEM 326.0 272.6 19.6 Segment Net Revenues $ 2,974.5 $ 2,791.0 6.6 Segment Operating Profit Year Ended December 31, % Increase/(Decrease) 2023 2022 2023 vs 2022 Americas $ 453.1 $ 452.0 0.2 EMEA 52.2 42.5 22.9 Asia 90.1 82.8 8.8 OEM 86.2 65.4 31.9 Segment Operating Profit (1) $ 681.6 $ 642.7 6.1 (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.
We remeasure our contingent consideration liabilities each reporting period and recognize the change in the liabilities' fair value within selling, general and administrative expenses in our consolidated statement of income.
We remeasure our contingent consideration liabilities each reporting period and recognize the change in the liabilities' fair value within selling, general and administrative expenses in our consolidated statement of income. As of December 31, 2023 and 2022, we accrued $39.5 million and $44.0 million of contingent consideration, respectively, related to completed business combinations.
OEM OEM net revenues for the year ended December 31, 2022 increased $26.9 million, or 11.0% compared to the prior year which was primarily attributable to a $21.7 million increase in sales volumes of existing products and price increases, partially offset by unfavorable fluctuations in foreign currency exchange rates.
Asia operating profit for the year ended December 31, 2023 increased $7.3 million, or 8.8%, compared to the prior year, which was primarily attributable to an increase in gross profit resulting from higher sales, partially offset by unfavorable fluctuations in foreign currency exchange rates and an increase in sales expenses to support higher sales. 36 OEM OEM net revenues for the year ended December 31, 2023 increased $53.4 million, or 19.6%, compared to the prior year, which was primarily attributable to a $28.3 million increase in sales volume of existing products and price increases.
Restructuring and impairment charges 2022 Restructuring plan On November 15, 2022, we initiated a strategic restructuring plan designed to improve operating performance and position the organization to deliver long-term durable growth by creating efficiencies that align with our high growth strategic objectives (the “2022 restructuring plan”).
We expect to begin realizing plan-related savings in 2024 and expect to achieve annual pre-tax savings of $2 million to $4 million once the plan is fully implemented. 2022 Restructuring plan In November 2022, we initiated a strategic restructuring plan designed to improve operating performance and position the organization to deliver long-term durable growth by creating efficiencies that align with our high growth strategic objectives (the “2022 Restructuring plan”).
Summarized financial information for the Parent and Guarantor Subsidiaries (collectively, the “Obligor Group”) as of and for the year ended December 31, 2022 as follows: Year Ended December 31, 2022 Obligor Group Intercompany Obligor Group (excluding intercompany) Net revenue $ 1,983.0 $ 196.5 $ 1,786.5 Cost of goods sold 1,208.6 323.3 885.3 Gross profit 774.4 (126.8) 901.2 Income from continuing operations 292.7 125.4 167.3 Net income 292.4 125.4 167.0 December 31, 2022 Obligor Group Intercompany Obligor Group (excluding intercompany) Total current assets $ 878.3 $ 110.5 $ 767.8 Total assets 3,420.3 1,510.9 1,909.4 Total current liabilities 882.9 627.9 255.0 Total liabilities 3,168.0 712.3 2,455.7 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, 2022 are used by the Parent Company and each of its subsidiaries in connection with the summarized financial information presented above.
Summarized financial information for the Parent and Guarantor Subsidiaries (collectively, the “Obligor Group”) as of and for the year ended December 31, 2023 is as follows: Year Ended December 31, 2023 Obligor Group Intercompany Obligor Group (excluding intercompany) Net revenue $ 2,128.2 $ 262.5 $ 1,865.7 Cost of goods sold 1,363.3 366.4 996.9 Gross profit 764.9 (103.9) 868.8 Income from continuing operations 260.7 181.9 78.8 Net income 259.5 181.9 77.6 December 31, 2023 Obligor Group Intercompany Obligor Group (excluding intercompany) Total current assets $ 927.9 $ 222.1 $ 705.8 Total assets 3,500.2 1,720.4 1,779.8 Total current liabilities 1,131.4 872.2 259.2 Total liabilities 5,120.8 2,877.1 2,243.7 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, 2023 are used by the Parent Company and each of its subsidiaries in connection with the summarized financial information presented above.
EMEA EMEA net revenues for the year ended December 31, 2022 decreased $48.4 million, or 8.0%, compared to the prior year, which was primarily attributable to $63.9 million of unfavorable fluctuations in foreign currency exchange rates, partially offset by an increase in sales volumes of existing products.
EMEA EMEA net revenues for the year ended December 31, 2023 increased $27.8 million, or 5.0%, compared to the prior year, which was primarily attributable to $12.1 million in favorable fluctuations in foreign currency exchange rates, price increases and an increase in sales of new products.
The effective income tax rate for 2021 reflects tax expense associated with the Respiratory business divestiture. Additionally, the effective tax rates for both 2022 and 2021 reflect a net 34 excess tax benefit related to share-based compensation and a tax benefit from research and development tax credits.
The effective income tax rates for both 2023 and 2022 reflect tax expense resulting from a U.S. law effective in 2022 requiring capitalization of certain research and development expenditures. Additionally, the effective income tax rates for both 2023 and 2022 reflect a net excess tax benefit related to share-based compensation and a tax benefit from research and development tax credits.
We estimate that we will incur aggregate pre-tax restructuring and restructuring related charges in connection with the Respiratory divestiture plan of $24 million to $30 million and substantially all of these charges will result in cash outlays.
We estimate that we will incur $15 million to $19 million in aggregate pre-tax restructuring and restructuring related charges in connection with the 2023 restructuring plan. We expect this plan will be substantially completed by the end of 2024.
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.
If the transaction is determined to be an asset acquisition rather than a business combination, a contingent consideration liability is recognized when the specified objective is deemed probable and is estimable. 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.
Cash Flow from Financing Activities Net cash used in financing activities from continuing operations was $217.5 million during 2022, which primarily consisted of a net reduction in borrowings of $140.3 million resulting from payments made against our senior credit facility and $63.8 million in dividend payments.
Cash Flow from Financing Activities Net cash provided by financing activities from continuing operations was $38.5 million during 2023, which primarily consisted of $101.3 million in net proceeds from borrowings resulting from a $600 million draw on our Senior Credit facility to fund the acquisition of Palette, partially offset by payments against the Senior Credit facility.
Gross profit 2022 2021 Gross profit $ 1,531.1 $ 1,549.6 Percentage of revenues 54.9 % 55.2 % For the year ended December 31, 2022, gross margin decreased 30 basis points, or 0.5%, compared to the prior year period primarily due to continued cost inflation from macro-economic factors, specifically, logistics and distribution, raw materials and labor costs, partially offset by price increases and favorable fluctuations in foreign currency exchange rates.
The increase in sales of new products and the decrease in sales of volumes of existing products primarily reflect the conversion to the next generation of an existing product. 32 Gross profit 2023 2022 Gross profit $ 1,646.9 $ 1,531.1 Percentage of revenues 55.4 % 54.9 % For the year ended December 31, 2023, gross margin increased 50 basis points, or 0.9%, compared to the prior year period, primarily due to price increases, benefits from cost improvement initiatives and lower logistics and distribution related costs, partially offset by continued cost inflation from macro-economic factors, specifically with respect to raw materials, and an unfavorable impact on manufacturing productivity due to constraints in raw material supply.
Senior credit facility On November 4, 2022, we amended and restated our existing credit agreement by entering into a Third Amended and Restated Credit Agreement (the “Credit Agreement”) which provides for a five-year revolving credit facility of $1.0 billion and a term loan facility of $500.0 million.
The following is a reconciliation of free cash flow to the most comparable GAAP measure. 2023 2022 Net cash provided by operating activities from continuing operations $ 511.7 $ 342.8 Less: Capital expenditures 91.5 79.2 Free cash flow $ 420.2 $ 263.6 39 Financing Arrangements Senior credit facility On November 4, 2022, we amended and restated our existing credit agreement by entering into a Third Amended and Restated Credit Agreement (the “Credit Agreement”) which provides for a five-year revolving credit facility of $1.0 billion and a term loan facility of $500.0 million.
For a discussion of our cash flow comparison for 2021 and 2020, refer to our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 filed on March 1, 2022. Free Cash Flow Free cash flow is a non-GAAP financial measure and is calculated by subtracting capital expenditures from cash provided by operating activities from continuing operations.
Net cash provided by financing activities for the year also reflects $63.9 million in dividend payments. For a discussion of our cash flow comparison for 2022 and 2021, refer to our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 filed on February 23, 2023.
The plan is substantially complete and as a result, we expect future restructuring expenses associated with the plan, if any, to be immaterial. 2018 Footprint realignment plan In May 2018, we initiated a restructuring plan involving the relocation of certain European manufacturing operations to existing lower-cost locations, the outsourcing of certain European distribution operations and related workforce reductions (the "2018 Footprint realignment plan").
The plan is substantially complete and as a result, we expect future restructuring expenses associated with the plan, if any, to be immaterial.
Additionally, we expect to incur $22 million to $28 million in aggregate capital expenditures under the plan. 2019 Footprint realignment plan In February 2019, we initiated a restructuring plan primarily involving the relocation of certain manufacturing operations to existing lower-cost locations and related workforce reductions (the “2019 Footprint realignment plan").
We expect to begin realizing plan-related savings in 2024 and expect to achieve annual pre-tax savings of $29 million to $35 million once the plan is fully implemented. 2023 Footprint Realignment Plan In September 2023, we initiated 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 (the "2023 Footprint realignment plan").
We estimate that we will incur aggregate pre-tax restructuring and restructuring related charges in connection with the 2022 restructuring plan of $39 million to $48 million. We estimate that $26 million to $32 million of these charges will result in cash outlays, most of which are expected to be made in 2023.
We estimate that we will incur $11 million to $15 million in aggregate pre-tax restructuring and restructuring related charges in connection with the 2023 Footprint Realignment plan. We expect this plan will be substantially completed by the end of 2027.
Americas Americas net revenues for the year ended December 31, 2022 decreased $5.6 million, or 0.3%, compared to the prior year, which was primarily attributable to a $192.9 million decrease in sales volume of existing products and, to a lesser extent, a net decrease in sales volumes attributed to the Respiratory business divestiture.
Americas Americas net revenues for the year ended December 31, 2023 increased $61.7 million, or 3.7%, compared to the prior year, which was primarily attributable to a $125.1 million increase in sales of new products, price increases and net revenues generated by the acquired Palette and Standard Bariatrics businesses, partially offset by a $114.5 million decrease in sales volume of existing products.
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. We have entered into cross-currency swap agreements with different financial institution counterparties to hedge against the effect of variability in the U.S. dollar to euro exchange rate.
Of our $222.8 million of cash and cash equivalents at December 31, 2023, $196.7 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.
Comparison of 2022 and 2021 Revenues 2022 2021 Net Revenues $ 2,791.0 $ 2,809.6 Net revenues for the year ended December 31, 2022 decreased by $18.6 million, or 0.7%, compared to the prior year, primarily due to a $124.5 million decrease in sales volumes of existing products, $97.0 million of unfavorable fluctuations in foreign currency exchange rates and, to a lesser extent, a net decrease in sales volumes attributed to the Respiratory business divestiture.
Comparison of 2023 and 2022 Revenues 2023 2022 Net Revenues $ 2,974.5 $ 2,791.0 Net revenues for the year ended December 31, 2023 increased by $183.5 million, or 6.6%, compared to the prior year, primarily due to a $149.2 million increase in sales of new products, price increases and net revenues generated by the acquired Palette and Standard Bariatrics businesses, partially offset by a $61.0 million decrease in sales volume of existing products.
Our receipt of $15.0 million in additional cash proceeds is contingent upon the transfer of these manufacturing assets and is expected to occur prior to the end of 2023. We plan to recognize the contingent consideration, and any gain on sale resulting from the second phase of the divestiture, when it becomes realizable.
On December 4, 2023, we completed the second and final phase of the Respiratory business divestiture with the transfer of certain additional manufacturing assets to Medline resulting in $15.0 million in additional cash proceeds and the recognition of a gain on sale of $4.4 million.
Cash Flow from Investing Activities Net cash used in investing activities from continuing operations was $259.4 million during 2022, primarily consisted of $198.4 million in net payments for businesses and intangibles acquired and $79.2 million of capital expenditures.
Cash Flow from Investing Activities Net cash used in investing activities from continuing operations was $621.2 million during 2023, which primarily consisted of $603.9 million in net payments for businesses and intangibles acquired, primarily related to the Palette acquisition, and $91.4 million of capital expenditures, partially offset by $63.1 million in net interest proceeds on swaps designated as net investment hedges and $15.0 million in proceeds from the second phase of the Respiratory divestiture.
As a result of the dynamic nature of each of these factors, we cannot accurately predict the extent or duration of the impacts on our business.
Due to the dynamic nature of the macroeconomic and other factors discussed above, we cannot accurately predict the extent, duration, or our ability to offset the impact of these factors or the related effects on our business, results of operations, financial condition and cash flows.
Selling, general and administrative 2022 2021 Selling, general and administrative $ 863.7 $ 860.1 Percentage of revenues 30.9 % 30.6 % Selling, general and administrative expenses increased $3.6 million for the year ended December 31, 2022, compared to the prior year.
Selling, general and administrative 2023 2022 Selling, general and administrative $ 929.9 $ 863.7 Percentage of revenues 31.3 % 30.9 % Selling, general and administrative expenses increased $66.2 million for the year ended December 31, 2023, compared to the prior year period, primarily due to higher sales expenses across certain of our product portfolios, higher operating expenses incurred by the acquired Palette and Standard Bariatrics businesses, higher performance related employee benefit costs, higher transaction costs stemming from our acquisition of Palette and higher IT related costs.
Americas operating profit for the year ended December 31, 2022 increased $27.8 million, or 6.6%, compared to the prior year, which was primarily attributable to lower performance related employee-benefit expenses, a decrease in contingent consideration expense and lower general and administrative expenses.
Americas operating profit for the year ended December 31, 2023 increased $1.1 million, or 0.2%, compared to the prior year, which was primarily attributable to an increase in gross profit resulting from higher sales and price increases and a decrease in contingent consideration expense resulting from changes in the estimated fair value of our contingent consideration liabilities, partially offset by an increase in sales expenses to support higher sales and an increase in operating expenses incurred by the acquired Palette and Standard Bariatrics businesses.
EMEA operating profit for the year ended December 31, 2022 decreased $52.4 million, or 55.2%, compared to the prior year, which was primarily attributable to unfavorable fluctuations in foreign currency exchange rates and an increase in EU MDR costs within research and development. 35 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.
EMEA operating profit for the year ended December 31, 2023 increased $9.7 million, or 22.9%, compared to the prior year, which was primarily attributable to lower expenses related to the European Union Medical Device Regulation within research and development expenses and favorable fluctuations in foreign currency exchange rates, partially offset by an increase in sales expenses to support higher sales.
Taxes on income from continuing operations 2022 2021 Effective income tax rate 18.6 % 13.3 % The effective income tax rate for 2022 reflects tax expense resulting from a deferred charge relating to the 2022 Restructuring Plan and tax expense resulting from a U.S. law effective in 2022 requiring capitalization of certain research and development expenditures.
Additionally, the effective income tax rate for 2023 reflects a tax benefit associated with the TRIP pension settlement charge. The effective income tax rate for 2022 reflects tax expense resulting from a deferred charge relating to the 2022 Restructuring Plan.
Removed
Acquisitions On June 13, 2022, we acquired a privately-owned catheter company for an initial cash payment of $22.8 million. Under the terms of the acquisition agreement, we may become obligated to make additional cash payments of up to $26.2 million if certain commercial and revenue goals are met.
Added
Acquisition On October 10, 2023, we completed the acquisition of Palette, a privately held medical device company that sells a portfolio of hyaluronic acid gel-based products primarily utilized in the treatment of urology diseases including a rectal spacing product used in connection with radiation therapy treatment of prostate cancer.
Removed
The acquisition, which complements our interventional product portfolio, principally consisted of a proprietary catheter design and other related intellectual property. On September 27, 2022, we completed the acquisition of Standard Bariatrics, Inc., a privately-held medical device company that commercialized a powered stapling technology for bariatric surgery that complements our surgical product portfolio.
Added
Pension termination In May 2023, our Board of Directors approved the termination of the Teleflex Incorporated Retirement Income Plan (the “TRIP”), a U.S. defined benefit plan, effective as of August 1, 2023.
Removed
Economic factors impacting our business The residual effects from the COVID-19 pandemic continue to impact global economic conditions, which have affected our financial results and global operations, as well as our contractors, suppliers, customers and other business partners. Consequently, we have experienced increased levels of overall cost inflation and challenges within our supply chain.
Added
The TRIP is subject to the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), and is intended to be tax-qualified under Section 401(a) of the Internal Revenue Code of 1986, as amended (“Code”).
Removed
Constraints on the supply of specific raw materials used to manufacture our products have and continue to impact delivery times and have resulted in an increased level of backorders.
Added
Participation in and accrual of benefits under the TRIP have been frozen since 2012, and, as of December 31, 2023, the TRIP assets exceeded the liabilities.
Removed
Moreover, pandemic related measures, as well as staffing shortages at healthcare facilities stemming from the pandemic, have and 31 continue to result in varying levels of reduced demand within certain of our segments and product lines due to lower elective procedure volumes compared to pre-pandemic levels.
Added
In June 2023, we notified participants of our intent to terminate the TRIP and requested a determination letter from the Internal Revenue Services (“IRS”) stating that the TRIP satisfies the requirements, in form, to be tax-qualified under Code Section 401(a) upon termination.
Removed
We continue to monitor the macro-economic impacts stemming from the COVID-19 pandemic, as well as ongoing geopolitical conflicts, that have contributed to material and services inflation and exchange rate volatility, as well as trade and tariff activity.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

6 edited+1 added−1 removed4 unchanged
Biggest changeYear of Maturity 2023 2024 2025 2026 2027 Thereafter Total Fixed rate debt $ — $ — $ — $ — $ 500 $ 500.0 $ 1,000.0 Average interest rate — % — % — % — % 4.625 % 4.250 % 4.438 % Variable rate debt $ 87.5 $ 12.5 $ 25.0 $ 25.0 $ 573.3 $ — $ 723.3 Average interest rate 5.206 % 5.798 % 5.798 % 5.798 % 5.798 % — % 5.726 % A change of 1.0% in variable interest rates would increase or decrease annual interest expense by $7.2 million based on our outstanding debt as of December 31, 2022.
Biggest changeYear of Maturity 2024 2025 2026 2027 2028 Thereafter Total Fixed rate debt $ — $ — $ — $ 500.0 $ 500.0 $ — $ 1,000.0 Average interest rate — % — % — % 4.625 % 4.250 % — % 4.438 % Variable rate debt $ 87.5 $ 25.0 $ 25.0 $ 687.0 $ — $ — $ 824.5 Average interest rate 6.392 % 6.706 % 6.706 % 6.706 % — % — % 6.673 % A change of 1.0% in variable interest rates would increase or decrease annual interest expense by $8.2 million based on our outstanding debt as of December 31, 2023. 44 Foreign Currency Risk The global nature of our operations exposes us to foreign currency risks.
We also are exposed to changes in the market trading price of our common stock as it influences the valuation of stock options and their effect on earnings. 43 Interest Rate Risk We are exposed to changes in interest rates as a result of our borrowing activities and our cash balances.
We also are exposed to changes in the market trading price of our common stock as it influences the valuation of stock options and their effect on earnings. Interest Rate Risk We are exposed to changes in interest rates as a result of our borrowing activities and our cash balances.
A sensitivity analysis of changes in fair value of these contracts outstanding as of December 31, 2022, while not predictive in nature, indicated that a hypothetical 10% increase/decrease in the value of the U.S. dollar against all currencies would increase/decrease the fair value of these contracts by $68.2 million, the majority of which relates to the cross-currency interest rate swap contracts.
A sensitivity analysis of changes in fair value of these contracts outstanding as of December 31, 2023, while not predictive in nature, indicated that a hypothetical 10% increase/decrease in the value of the U.S. dollar against all currencies would increase the fair value of these contracts by $63.7 million and decrease the fair value of these contracts by $61.6 million, respectively, the majority of which relates to the cross-currency interest rate swap contracts.
Our principal currency exposures relate to the Euro, Chinese Renminbi, Mexican Peso, Malaysia Ringgit, Czech Koruna, Canadian Dollar, and British Pound. We utilize foreign currency forward exchange contracts and cross-currency interest rate swap contracts to attempt to minimize our exposure to these risks. Gains and losses on these contracts substantially offset losses and gains on the underlying hedged transactions.
Our principal currency exposures relate to the Euro, Chinese Renminbi, Mexican Peso, Malaysia Ringgit, Swedish Krona, Canadian Dollar, Czech Koruna, and British Pound. We utilize foreign currency forward exchange contracts and cross-currency interest rate swap contracts to attempt to minimize our exposure to these risks.
The table below provides information regarding the interest rates by year of maturity for our fixed and variable rate debt obligations. Variable interest rates on December 31, 2022 were determined using a base rate of the one-month LIBOR rate plus the applicable spread.
The table below provides information regarding the interest rates by year of maturity for our fixed and variable rate debt obligations. Variable interest rates on the revolving credit facility and the term loan facility on December 31, 2023 were determined using a base rate of the adjusted Term SOFR plus the applicable spread.
As of December 31, 2022, the total notional amount for the foreign currency forward exchange contracts and cross-currency interest rates swap contracts, expressed in U.S. dollars, was $337.7 million and $750.0 million, respectively.
Gains and losses on these contracts substantially offset losses and gains on the underlying hedged transactions. As of December 31, 2023, the total notional amount for the foreign currency forward exchange contracts and cross-currency interest rates swap contracts, expressed in U.S. dollars, was $429.1 million and $770.0 million, respectively.
Removed
Foreign Currency Risk The global nature of our operations exposes us to foreign currency risks.
Added
The variable interest rate on the accounts receivable securitization facility was based on Bloomberg Short-Term Bank Yield Index plus the applicable spread.

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