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What changed in Pulmonx Corp's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Pulmonx Corp's 2024 and 2025 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 2025 report.

+351 added−331 removedSource: 10-K (2026-03-10) vs 10-K (2025-02-25)

Top changes in Pulmonx Corp's 2025 10-K

351 paragraphs added · 331 removed · 283 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

63 edited+15 added−10 removed207 unchanged
Biggest changePMA supplements often require submission of the same type of information as an initial PMA application, except that the supplement is limited to information needed to support any changes from the device covered by the approved PMA application and may or may not require as extensive technical or clinical data or the convening of an advisory panel, depending on the nature of the proposed change. 20 Table of Contents In approving a PMA application, as a condition of approval, the FDA may also require some form of post-approval study (“PAS”) or post-market surveillance, whereby the applicant conducts a follow-up study or follows certain patient groups for a number of years and makes periodic reports to the FDA on the clinical status of those patients when necessary to protect the public health or to provide additional or longer-term safety and effectiveness data for the device.
Biggest changeIn approving a PMA application, as a condition of approval, the FDA may also require some form of post-approval study (“PAS”) or post-market surveillance, whereby the applicant conducts a follow-up study or follows certain patient groups for a number of years and makes periodic reports to the FDA on the clinical status of those patients when necessary to protect the public health or to provide additional or longer-term safety and effectiveness data for the device.
In clinical trials, in the incidence rate of pneumothorax in patients treated with the Zephyr 13 Table of Contents Valve is between 18% and 34%. In the LIBERATE Study, 17% of the pneumothorax events required no intervention and resolved on their own.
In clinical trials, the incidence rate of pneumothorax in patients treated with the Zephyr 13 Table of Contents Valve is between 18% and 34%. In the LIBERATE Study, 17% of the pneumothorax events required no intervention and resolved on their own.
Commercial payors typically base coverage decisions on reviews of clinical evidence presented in published peer-reviewed medical literature. A majority of our patients are Medicare-eligible beneficiaries. Without a national coverage determination (“NCD”) or a local coverage determination (“LCD”), Medicare claims are processed by Medicare Administrative Contractors 15 Table of Contents (“MACs”), which assess coverage under Medicare’s reasonable and necessary standard.
Commercial payors typically base coverage decisions on reviews of clinical evidence presented in published peer-reviewed medical literature. 15 Table of Contents A majority of our patients are Medicare-eligible beneficiaries. Without a national coverage determination (“NCD”) or a local coverage determination (“LCD”), Medicare claims are processed by Medicare Administrative Contractors (“MACs”), which assess coverage under Medicare’s reasonable and necessary standard.
In addition, the advertising and promotion of medical devices in the EU is subject to the national laws of the individual EU Member States that implemented the MDD, the AIMD and that apply the MDR, Directive 2006/114/EC concerning misleading and comparative advertising, and Directive 2005/29/EC on unfair commercial practices, as well as other national legislation of individual EU Member States governing the advertising and promotion of medical devices.
In addition, the advertising and promotion of medical devices in the EU is subject to EU laws and the national laws of the individual EU Member States that implemented the MDD, the AIMD and that apply the MDR, Directive 2006/114/EC concerning misleading and comparative advertising, and Directive 2005/29/EC on unfair commercial practices, as well as other national legislation of individual EU Member States governing the advertising and promotion of medical devices.
If our operations are found to be in violation of any of the federal, state and foreign laws described below or any other current or future fraud and abuse or other healthcare laws and regulations that apply to us, we may be subject to significant penalties, including significant criminal, civil, and administrative penalties, damages, fines, imprisonment for individuals, additional oversight and reporting obligations, exclusion from participation in government programs, such as Medicare and 24 Table of Contents Medicaid, imprisonment, contractual damages, reputation harm and disgorgement and we could be required to curtail or cease our operations.
If our operations are found to be in violation of any of the federal, state and foreign laws described below or any other current or future fraud and 24 Table of Contents abuse or other healthcare laws and regulations that apply to us, we may be subject to significant penalties, including significant criminal, civil, and administrative penalties, damages, fines, imprisonment for individuals, additional oversight and reporting obligations, exclusion from participation in government programs, such as Medicare and Medicaid, imprisonment, contractual damages, reputation harm and disgorgement and we could be required to curtail or cease our operations.
These include: • the FDA’s QSR, which requires manufacturers, including their suppliers, to follow stringent design, testing, control, documentation and other quality assurance procedures during all aspects of the manufacturing process; • labeling regulations and FDA prohibitions against the promotion of products for uncleared, unapproved or off-label uses; • medical device reporting regulations, which require that manufacturers report to the FDA if their device may have caused or contributed to a death or serious injury or malfunctioned in a way that would likely cause or contribute to a death or serious injury if the malfunction were to recur; • medical device recalls, which require that manufacturers report to the FDA any recall of a medical device, provided the recall was initiated to either reduce a risk to health posed by the device, or to remedy a violation of the FDCA caused by the device that may present a risk to health; and • post-market surveillance regulations, which apply when necessary to protect the public health or to provide additional safety and effectiveness data for the device.
These include: • the FDA’s QMSR, which requires manufacturers, including their suppliers, to follow stringent design, testing, control, documentation and other quality assurance procedures during all aspects of the manufacturing process; • labeling regulations and FDA prohibitions against the promotion of products for uncleared, unapproved or off-label uses; • medical device reporting regulations, which require that manufacturers report to the FDA if their device may have caused or contributed to a death or serious injury or malfunctioned in a way that would likely cause or contribute to a death or serious injury if the malfunction were to recur; • medical device recalls, which require that manufacturers report to the FDA any recall of a medical device, provided the recall was initiated to either reduce a risk to health posed by the device, or to remedy a violation of the FDCA caused by the device that may present a risk to health; and • post-market surveillance regulations, which apply when necessary to protect the public health or to provide additional safety and effectiveness data for the device.
We make available on our website at www.pulmonx.com, free of charge, copies of these reports and other information as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. All SEC filings are also available at the SEC’s website at www.sec.gov. 29 Table of Contents
We make available on our website at www.pulmonx.com, free of charge, copies of these reports and other information as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. All SEC filings are also available at the SEC’s website at www.sec.gov. 30 Table of Contents
As of December 31, 2024, we had 10 registered trademarks, some of which apply to multiple countries, and several pending trademark applications in various countries. We also rely, in part, upon unpatented trade secrets, know-how and continuing technological innovation, and licensing arrangements, to develop and maintain our competitive position.
As of December 31, 2025, we had 10 registered trademarks, some of which apply to multiple countries, and several pending trademark applications in various countries. We also rely, in part, upon unpatented trade secrets, know-how and continuing technological innovation, and licensing arrangements, to develop and maintain our competitive position.
The UK Medicines and Healthcare products Regulatory Agency (‘‘MHRA’’) has established transitional provisions to recognize the acceptance of certain CE marked medical devices on the market in Great Britain until June 30, 2028 or June 30, 2030, depending on the type of device and its classification, at the latest.
The UK Medicines and Healthcare products Regulatory Agency (“MHRA”) has established transitional provisions to recognize the acceptance of certain CE marked medical devices on the market in Great Britain until June 30, 2028 or June 30, 2030, depending on the type of device and its classification, at the latest.
Apart from low risk medical devices (Class I with no measuring function and which are not sterile), in relation to which the manufacturer may issue an EC Declaration of Conformity based on a self-assessment of the conformity of its products with the GSPRs, a conformity assessment procedure requires the intervention of a Notified Body, which is an organization designated by a Competent Authority of an EEA country to conduct conformity assessments.
Apart from low risk medical devices (Class I with no measuring function and which are not sterile), in relation to which the manufacturer may issue an EC Declaration of Conformity based on a self-assessment of the conformity of its products with the GSPRs, a conformity assessment procedure requires the intervention of a Notified Body, which is 21 Table of Contents an organization designated by a Competent Authority of an EEA country to conduct conformity assessments.
(“Spiration”) (later acquired by Olympus Medical Systems Corp.). Since both companies were developing products in the same field, they entered into this agreement to minimize the risk of intellectual property disputes in the future and their associated cost. When we acquired Emphasys in 2009, we became the successor-in-interest to Emphasys’ rights under the Spiration Cross-License.
(“Spiration”) (later acquired by Olympus Medical Systems Corp.). Since both companies were developing products in the same field, they entered into this agreement 17 Table of Contents to minimize the risk of intellectual property disputes in the future and their associated cost. When we acquired Emphasys in 2009, we became the successor-in-interest to Emphasys’ rights under the Spiration Cross-License.
For those devices we are placing on the market in accordance 22 Table of Contents with the transitional provisions of the MDR (the Zephyr System, the AeriSeal System and the Chartis Console (for which we have received a CE certificate under the MDR and are transitioning to the MDR)), we intend to complete conformity assessment procedures in accordance with the MDR prior to the expiration of our existing CE Certificate(s) of Conformity issued by our Notified Body BSI on the basis of the MDD, in accordance with the transitional provisions of the MDR.
For those devices we are placing on the market in accordance with the transitional provisions of the MDR (the Zephyr System, the AeriSeal System and the Chartis Console (for which we have received a CE certificate under the MDR and are transitioning to the MDR)), we intend to complete conformity assessment procedures in accordance with the MDR prior to the expiration of our existing CE Certificate(s) of Conformity issued by our Notified Body BSI on the basis of the MDD, in accordance with the transitional provisions of the MDR.
In most countries, including the United States, the patent term is generally 20 years from the earliest claimed filing date of a nonprovisional patent application in the applicable country. Our patents expire between 2025 and 2042.
In most countries, including the United States, the patent term is generally 20 years from the earliest claimed filing date of a nonprovisional patent application in the applicable country. Our patents expire between 2026 and 2042.
If successfully developed and approved, the AeriSeal System could further expand the addressable market of our solution. 16 Table of Contents Competition Our industry is highly competitive and subject to rapid change from the introduction of new products and technologies and other activities of industry participants. We are positioning our solution as an alternative to existing treatments of severe emphysema.
If successfully developed and approved, the AeriSeal System could further expand the addressable market of our solution. Competition Our industry is highly competitive and subject to rapid change from the introduction of new products and technologies and other activities of industry participants. We are positioning our solution as an alternative to existing treatments of severe emphysema.
To ensure we can attract, retain and develop high performing teams, we offer competitive, market-based salaries and an annual cash bonus program. Additionally, to further align the interests of our 28 Table of Contents employees with those of our shareholders, employees in most of the countries where we operate have the opportunity to have an ownership interest in our company.
To ensure we can attract, retain and develop high performing teams, we offer competitive, market-based salaries and an annual cash bonus program. Additionally, to further align the interests of our employees with those of our shareholders, employees in most of the countries where we operate have the opportunity to have an ownership interest in our company.
Under the agreement, each company non-exclusively licensed the other party to make, have made (solely for such 17 Table of Contents other party), sell, offer for sale, import and export specific products under their respective patent portfolio at that time that covers such products or a method of use thereof.
Under the agreement, each company non-exclusively licensed the other party to make, have made (solely for such other party), sell, offer for sale, import and export specific products under their respective patent portfolio at that time that covers such products or a method of use thereof.
We are currently placing our medical devices on the market in accordance with the MDR, as well as the stringent requirements of the transitional provisions of the MDR, which, among other conditions, requires continuous compliance with the requirements of the MDD, as applicable to our products, and the guidance of the European Commission’s Medical Devices Coordination Group.
We are 22 Table of Contents currently placing our medical devices on the market in accordance with the MDR, as well as the stringent requirements of the transitional provisions of the MDR, which, among other conditions, requires continuous compliance with the requirements of the MDD, as applicable to our products, and the guidance of the European Commission’s Medical Devices Coordination Group.
In addition, over 150 scientific articles have been published on the clinical use of Zephyr Valves, including multiple meta-analyses, review articles, cost-effectiveness analyses and risk-benefit analyses.
In addition, over 200 scientific articles have been published on the clinical use of Zephyr Valves, including multiple meta-analyses, review articles, cost-effectiveness analyses and risk-benefit analyses.
The federal government has used the FCA to assert liability on the basis of kickbacks, or in instances in which manufacturers have provided billing or coding advice to providers that the government considered to be inaccurate. In these cases, the manufacturer faces liability for “causing” a false claim.
The federal government has used the FCA to assert liability on the basis of kickbacks, or in 25 Table of Contents instances in which manufacturers have provided billing or coding advice to providers that the government considered to be inaccurate. In these cases, the manufacturer faces liability for “causing” a false claim.
The CONVERT Trial data demonstrates that the AeriSeal System is safe and effective in occluding small airways and/or collateral air channels, allowing patients with collateral ventilation to undergo, and benefit from, treatment with Zephyr Valves with 77.6% of patients converted from CV+ to CV-.
The CONVERT Trial data demonstrates that the AeriSeal System is safe and effective in occluding small airways and/or collateral air channels, allowing patients with collateral ventilation to undergo, and 16 Table of Contents benefit from, treatment with Zephyr Valves with 77.6% of patients converted from CV+ to CV-.
In addition, companies that would not otherwise be subject to HIPAA may become 23 Table of Contents contractually obligated to follow HIPAA requirements through agreements with Covered Entities and Business Associates, and some of our customers may require us to agree to these provisions.
In addition, companies that would not otherwise be subject to HIPAA may become contractually obligated to follow HIPAA requirements through agreements with Covered Entities and Business Associates, and some of our customers may require us to agree to these provisions.
Bribery of foreign public officials also falls within the scope of the Bribery Act. An individual found in violation of the Bribery Act, faces 26 Table of Contents imprisonment of up to ten years. In addition, the individual can be subject to an unlimited fine, as can commercial organizations for failure to prevent bribery.
Bribery of foreign public officials also falls within the scope of the Bribery Act. An individual found in violation of the Bribery Act, faces imprisonment of up to ten years. In addition, the individual can be subject to an unlimited fine, as can commercial organizations for failure to prevent bribery.
In certain circumstances, we may be considered a Business Associate and be responsible for implementing reasonable administrative, physical and technical safeguards as required by HIPAA, including, among other things, maintaining Business Associate Agreements with our customers and our subcontractors that have access to protected health information on our behalf.
In certain circumstances, we may be considered a Business Associate and be responsible for implementing reasonable 23 Table of Contents administrative, physical and technical safeguards as required by HIPAA, including, among other things, maintaining Business Associate Agreements with our customers and our subcontractors that have access to protected health information on our behalf.
Intellectual Property We rely on a combination of patent, copyright, trademark and trade secret laws and confidentiality and invention assignment agreements to protect our intellectual property rights. As of December 31, 2024, we had 34 patent families in force worldwide.
Intellectual Property We rely on a combination of patent, copyright, trademark and trade secret laws and confidentiality and invention assignment agreements to protect our intellectual property rights. As of December 31, 2025, we had 31 patent families in force worldwide.
Our solution, which is comprised of the Zephyr Endobronchial Valve (“Zephyr Valve”), the Chartis Pulmonary Assessment System (“Chartis System”) and the LungTraX Platform (which is called the StratX Platform in international markets), is designed to treat severe emphysema patients who, despite medical management, are still profoundly symptomatic and either do not want or are ineligible for surgical approaches.
Our solution, which is comprised of the Zephyr Endobronchial Valve (“Zephyr Valve”), the Chartis Pulmonary Assessment System (“Chartis System”) and the LungTraX Platform, is designed to treat severe emphysema patients who, despite medical management, are still profoundly symptomatic and either do not want or are ineligible for surgical approaches.
The Notified Body issues a CE Certificate of Conformity following successful completion of a conformity assessment 21 Table of Contents procedure conducted in relation to the medical device and its manufacturer and their conformity with the GSPRs.
The Notified Body issues a CE Certificate of Conformity following successful completion of a conformity assessment procedure conducted in relation to the medical device and its manufacturer and their conformity with the GSPRs.
We value a variety of perspectives and experiences. We continue to create an inclusive culture where differences drive innovation. Talent and Compensation Philosophy We are committed to attracting the best talent available, while providing our employees with challenging work in a fast-paced environment.
We value diverse perspectives and experiences and continue to build an inclusive culture where differences drive innovation. Talent and Compensation Philosophy We are committed to attracting the best talent available, while providing our employees with challenging work in a fast-paced environment.
In addition, the federal government has prosecuted companies under the FCA in connection with off-label promotion of 25 Table of Contents products.
In addition, the federal government has prosecuted companies under the FCA in connection with off-label promotion of products.
We file electronically with the U.S. Securities and Exchange Commission, or SEC, our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended.
Securities and Exchange Commission, or SEC, our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended.
The MDR includes transitional provisions, amended by Regulation (EU) 2023/603.
The MDR includes transitional provisions, amended by Regulation (EU) 2023/607.
Human Capital Management Employees, Talent Management & Development As of December 31, 2024, we had a total of 291 full time employees, with 226 employees in the U.S., 54 in Europe, and 11 in Asia Pacific. None of our employees are represented by a labor union or are a party to a collective bargaining agreement.
Human Capital Management Employees, Talent Management & Development As of December 31, 2025, we had a total of 296 full time employees, with 229 employees in the U.S., 56 in Europe, and 11 in Asia Pacific. None of our employees are represented by a labor union or are a party to a collective bargaining agreement.
Our manufacturing facility is an FDA-registered medical device establishment. Government Regulation United States Food and Drug Administration (“FDA”) Our products and operations are subject to extensive and ongoing regulation by the FDA under the Federal Food, Drug, and Cosmetic Act of 1938 and its implementing regulations (“FDCA”), as well as other federal and state regulatory bodies in the United States.
Government Regulation United States Food and Drug Administration (“FDA”) Our products and operations are subject to extensive and ongoing regulation by the FDA under the Federal Food, Drug, and Cosmetic Act of 1938 and its implementing regulations (“FDCA”), as well as other federal and state regulatory bodies in the United States.
Payment for Zephyr Valve is expected to, on average, be sufficient to cover costs of the procedure. If a patient is positive for collateral ventilation following an assessment by the Chartis System, the patient is typically discharged the same day and the procedure therefore billed as an outpatient procedure.
If a patient is positive for collateral ventilation following an assessment by the Chartis System, the patient is typically discharged the same day and the procedure therefore billed as an outpatient procedure. The national average payment for this procedure is sufficient to cover costs of the procedure.
These products are sterilized using ethylene oxide at a qualified sterilization supplier in Los Angeles, California. In the United States, we generally ship products from our third-party logistics provider in Memphis, Tennessee and our facilities in Redwood City to our direct sales territory managers, who deliver these products to our hospital customers.
These products are sterilized using ethylene oxide or E-beam at qualified sterilization suppliers in California. In the United States, we generally ship products from our third-party logistics provider in Memphis, Tennessee or our facilities in Redwood City to our direct sales territory managers, who deliver these products to our hospital customers.
Each employee receives and agrees to follow the Company’s Code of Business Conduct and Ethics. Employees are encouraged to discuss any related concerns with management or report concerns anonymously through an Ethics Hotline.
Code of Business Conduct and Business Ethics We are dedicated to conducting our business consistent with the highest standard of business ethics. Each employee receives and agrees to follow the Company’s Code of Business Conduct and Ethics. Employees are encouraged to discuss any related concerns with management or report concerns anonymously through an Ethics Hotline.
For the year ended December 31, 2024, we generated 96% of our revenue from markets where we sell directly.
For the year ended December 31, 2025, we generated 95% of our revenue from markets where we sell directly.
The software of each of these third-party service providers has received either 510(k) approval or successfully underwent a conformity assessment procedure with a Notified Body and was subsequently CE Marked in accordance with applicable legislation governing medical devices.
The third-party software used in this service has received either 510(k) clearance or successfully underwent a conformity assessment procedure with a Notified Body and was subsequently CE Marked in accordance with applicable legislation governing medical devices.
One single MS‐DRG payment is intended to cover all hospital costs associated with treating a patient during his or her hospital stay, while physician charges associated with performing medical procedures are reimbursed to physicians through a different payment system based on the codes they submit.
One single MS‐DRG payment covers all hospital costs associated with treating a patient during his or her hospital stay. Physician charges associated with performing medical procedures are reimbursed to physicians through a different payment system based on the codes they submit. Payment for Zephyr Valve is expected to, on average, be sufficient to cover costs of the procedure.
As of December 31, 2024, we had rights to 71 issued United States patents, 11 pending United States patent applications, 114 issued foreign patents and 13 pending foreign patent applications. Our most material foreign patents issued and patent applications pending are in the European Union (“EU”), France, Germany, Japan and the United Kingdom.
As of December 31, 2025, we had rights to 72 issued United States patents, 6 pending United States patent applications, 93 issued foreign patents and 7 pending foreign patent applications. Our most material foreign patents issued and patent applications pending are in the European Union (“EU”), France, Germany, Japan and the United Kingdom.
Generally, clinical trials for a 19 Table of Contents significant risk device may begin once the IDE application is approved by the FDA and the study protocol and informed consent are approved by appropriate IRBs at the clinical trial sites.
The IDE application must be approved in advance by the FDA for a specified number of subjects. Generally, clinical trials for a significant risk device may begin once the IDE application is approved by the FDA and the study protocol and informed consent are approved by appropriate IRBs at the clinical trial sites.
We generated revenue of $83.8 million, with a gross margin of 74.0% and a net loss of $56.4 million, for the year ended December 31, 2024 compared to revenue of $68.7 million, with a gross margin of 73.9% and a net loss of $60.8 million, for the year ended December 31, 2023.
We generated revenue of $90.5 million, with a gross margin of 74.2% and a net loss of $54.0 million, for the year ended December 31, 2025 compared to revenue of $83.8 million, with a gross margin of 74.0% and a net loss of $56.4 million, for the year ended December 31, 2024.
Our European Union Notified Body and Great Britain approved body, British Standards Institute (“BSI”), monitors compliance with the European Union Medical Devices Directive (Council Directive 93/42/EEC) (“MDD”), the Medical Device Regulation (Regulation (EU) 2017/745) (“MDR”), and the UK Medical Devices Regulations 2002 requirements through both annual scheduled audits and periodic unannounced audits of our manufacturing facilities as well as our contract third-party suppliers’ facilities. 18 Table of Contents Our quality management system in our Redwood City manufacturing facility is currently ISO 13485:2016 certified and licensed by the California Department of Public Health (“CDPH”) Food and Drug Branch.
Our European Union Notified Body and Great Britain approved body, British Standards Institute (“BSI”), monitors compliance with the European Union Medical Devices Directive (Council Directive 93/42/EEC) (“MDD”), the Medical Device Regulation (Regulation (EU) 2017/745) (“MDR”), and the UK Medical Devices Regulations 2002 requirements 18 Table of Contents through both annual scheduled audits and periodic unannounced audits of our manufacturing facilities as well as our contract third-party suppliers’ facilities.
For example, the CCPA imposes obligations on covered businesses to provide specific disclosures related to a business’s collecting, using and disclosing personal data and to respond to certain requests from California residents related to their personal data.
For example, the CCPA applies to personal data of consumers, business representatives, and employees who are California residents, and requires covered businesses to provide specific disclosures related to a business’s collecting, using and disclosing personal data and to respond to certain requests from California residents related to their personal data.
The national average payment for this procedure is sufficient to cover costs of the procedure. If a patient receives Zephyr Valves, there is no separate reimbursement for the Chartis System procedure; rather, the provider receives payment for the endobronchial valve procedures as described above.
If a patient receives Zephyr Valves, there is no separate reimbursement for the Chartis System procedure; rather, the provider receives payment for the endobronchial valve procedures as described above. The national Medicare average payment for physicians performing the endobronchial valve procedure is generally consistent with other complex bronchoscopic procedures.
The implementation of the Affordable Care Act in the United States, for example, has changed healthcare financing and delivery by both governmental and private insurers substantially, and affected medical device manufacturers significantly. There have been executive, judicial and congressional challenges, and a number of health reform measures that have impacted certain aspects of the Affordable Care Act.
The implementation of the Affordable Care Act in the United States, for example, has changed healthcare financing and delivery by both governmental and private insurers substantially, and affected medical device manufacturers significantly.
International Laws Outside the United States, interactions between medical device companies and healthcare professionals are also governed by strict laws, such as national anti-bribery laws of European countries, national sunshine rules, regulations, industry self-regulation codes of conduct and physicians’ codes of professional conduct.
International Laws Outside the United States, interactions between medical device companies and healthcare professionals are also governed by strict laws, such as national anti-bribery laws of European countries, national sunshine rules, regulations, industry self-regulation codes of conduct and physicians’ codes of professional conduct. 26 Table of Contents In Europe, various countries have adopted anti-bribery laws providing for severe consequences in the form of criminal penalties and significant fines for individuals or companies committing a bribery offense.
As of December 31, 2024, we had an accumulated deficit of $467.6 million. We currently generate most of our revenue from the sales of Zephyr Valves and delivery catheters. We also generate a smaller amount of our revenue from our Chartis System, which is comprised of sales of the balloon catheters, usage fees and sales of the Chartis console.
As of December 31, 2025, we had an accumulated deficit of $521.6 million. We currently generate most of our revenue from the sales of Zephyr Valves and delivery catheters.
We believe that there will continue to be proposals by legislators at both the federal and state levels, regulators and third-party payors to reduce costs while expanding individual healthcare benefits.
Supreme Court’s Loper Bright decision greatly reduced judicial deference to regulatory agencies, which could increase successful legal challenges to federal regulations affecting our operations. We believe that there will continue to be proposals by legislators at both the federal and state levels, regulators and third-party payors to reduce costs while expanding individual healthcare benefits.
Additional instruments are currently scheduled to follow in 2025 and 2026 to introduce new pre-market requirements including international reliance, and further enhancements to the regulations. Our devices were regulated under MDD prior to Brexit and are subject to the UK Medical Devices Regulations 2002.
Further updated regulations are scheduled to follow in the course of 2026. Our devices were regulated under MDD prior to Brexit and are subject to the UK Medical Devices Regulations 2002.
In addition, states within the United States and other jurisdictions where we do business have enacted or are considering enacting similar data privacy laws. The CCPA and GDPR are examples of the increasingly stringent and evolving regulatory frameworks related to personal data processing and that increase our compliance obligations and exposure for any non-compliance.
The CCPA and GDPR are examples of the increasingly stringent and evolving regulatory frameworks related to personal data processing and that increase our compliance obligations and exposure for any non-compliance.
The IDE application must be supported by appropriate data, such as animal and laboratory testing results, showing that it is safe to test the device in humans and that the testing protocol is scientifically sound. The IDE application must be approved in advance by the FDA for a specified number of subjects.
If the device presents a “significant risk” to human health, as defined by the FDA, the sponsor must submit an IDE application to the FDA and obtain IDE approval prior to commencing the human clinical trials. 19 Table of Contents The IDE application must be supported by appropriate data, such as animal and laboratory testing results, showing that it is safe to test the device in humans and that the testing protocol is scientifically sound.
Reimbursement from commercial payors is typically based on a similar methodology but rates vary depending on the procedure performed, the hospital, the commercial payor, contract terms and other factors. The ICD-10 PCS procedure codes that best describe our procedure map to the MS-DRG classifications for Major Chest Procedures, depending on co-morbidities and complications.
Reimbursement from commercial payors is typically based on a similar methodology but rates vary depending on the procedure performed, the hospital, the commercial payor, contract terms and other factors.
According to the World Health Organization, COPD is the fourth leading cause of death worldwide, causing 3.5 million deaths in 2021, approximately 5% of all global deaths.
Our Market Opportunity Overview of COPD and Emphysema COPD refers to a group of lung diseases characterized by obstruction of airflow that interferes with normal breathing. According to the World Health Organization, COPD is the fourth leading cause of death worldwide, causing 3.5 million deaths in 2021, approximately 5% of all global deaths.
The outcome of HTA regarding specific medical device will often influence the pricing and reimbursement status granted to these products by the competent authorities of individual EU Member States. On January 31, 2018, the European Commission adopted a proposal for a regulation on health technologies assessment.
The outcome of HTA regarding specific medical device will often influence the pricing and reimbursement status granted to these products by the competent authorities of individual EU Member States. On January 12, 2025, Regulation No 2021/2282 on Health Technology Assessment (HTA Regulation), entered into application through a phased implementation. Select high-risk medical devices came into scope in 2026.
In Europe, various countries have adopted anti-bribery laws providing for severe consequences in the form of criminal penalties and significant fines for individuals or companies committing a bribery offense. Violations of these anti-bribery laws, or allegations of such violations, could have a negative impact on our business, results of operations and reputation.
Violations of these anti-bribery laws, or allegations of such violations, could have a negative impact on our business, results of operations and reputation.
Available Information We were incorporated in the state of California on December 26, 1995 as Pulmonx and reincorporated in the state of Delaware on December 4, 2013. Our website address is www.pulmonx.com. Information found on, or accessible through, our website is not a part of, and is not incorporated into, this Annual Report on Form 10-K.
Information found on, or accessible through, our website is not a part of, and is not incorporated into, this Annual Report on Form 10-K. We file electronically with the U.S.
Medical devices which meet all requirements of the EU MDR may be placed on the market until June 30, 2030. Manufacturers of medical devices located outside the UK, including manufacturers of CE marked medical devices, need to appoint a UK Responsible Person before the devices may be placed on the UK market.
Manufacturers of medical devices located outside the UK, including manufacturers of CE marked medical devices, need to appoint a UK Responsible Person before the devices may be placed on the UK market. The UK government has introduced, with the first regulations strengthening post-market surveillance requirements having come into force June 16, 2025.
US federal and state consumer protection laws may require us to publish statements that accurately and fairly describe how we handle personal data and choices individuals may have about the way we handle their personal data. European data protection laws, including the GDPR, impose strict compliance obligations on entities for processing personal data, including health data.
Also, the CCPA provides for civil penalties and a private right of action for data breaches that may include an award of statutory damages. US federal and state consumer protection laws may require us to publish statements that accurately and fairly describe how we handle personal data and choices individuals may have about the way we handle their personal data.
We believe that we have good relations with our employees. We believe that our employees are the foundation of our business and we are committed to the development and retention of our workforce. Code of Business Conduct and Business Ethics We are dedicated to conducting our business consistent with the highest standard of business ethics.
We believe that we have good relations with our employees and that they are the foundation 28 Table of Contents of our business. We are committed to the development and retention of our workforce through ongoing training and development programs, and career growth opportunities.
The Regulation is intended to boost cooperation among EU Member States in assessing health technologies, including new medical devices, and providing the basis for cooperation at EU level for joint clinical assessments in these areas. In December 2021 the HTA Regulation was adopted and entered into force on January 11, 2022. It began to apply on January 12, 2025.
The HTA Regulation is intended to boost cooperation among Member States in assessing health technologies, including new medical devices new medical devices. The Regulation establishes a framework for EU-level joint clinical assessments and increased cooperation among Member States on clinical aspect of health technology evaluation.
For example, the Budget Control Act of 2011, among other things, included reductions to CMS payments to providers of 2% per fiscal year, which went into effect on April 1, 2013 and, due to subsequent legislative amendments to the statute, will remain in effect until 2032 unless additional congressional action is taken.
In addition, other legislative changes have been proposed and adopted since the Affordable Care Act was enacted. These changes include aggregate reductions to Medicare payments to providers of 2% per fiscal year, which began in 2013 and will remain in effect until 2032 unless additional Congressional action is taken.
MS‐DRG classifications calibrate payment for groups of services based on the severity of a patient’s illness and clinical cohesiveness of care.
The ICD-10 PCS procedure codes that best describe our procedure map to the MS-DRG classifications for Major Chest Procedures, while management of co-morbidities and complications during the hospital stay impacts specific MS-DRG placement within the MS-DRG grouping. MS‐DRG classifications calibrate payment for groups of services based on the severity of a patient’s illness, costs and clinical cohesiveness of care.
We are committed to protecting our employees everywhere we operate and we comply with applicable health and safety laws and regulations. We strictly prohibit any violent or threatening behavior on our premises or during any work-related activities.
We comply with applicable health and safety laws and regulations and maintain workplace safety programs. Employees complete annual safety training and we maintain emergency preparedness protocols across our locations. We are committed to protecting our employees everywhere we operate and comply with applicable health and safety laws and regulations.
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The LungTraX Platform, while used to identify patients eligible for treatment with Zephyr Valves, has not independently generated any revenue for us. Our Market Opportunity Overview of COPD and Emphysema COPD refers to a group of lung diseases characterized by obstruction of airflow that interferes with normal breathing.
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We also generate a smaller amount of our revenue from our Chartis System, which is comprised of sales of the balloon catheters, usage fees and sales of the Chartis console, and from our LungTraX Platform, which is used to identify patients potentially eligible for treatment with Zephyr Valves.
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The national Medicare average payment for physicians performing the endobronchial valve procedure is generally consistent with other complex bronchoscopic procedures.
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Our quality management system in our Redwood City manufacturing facility is currently ISO 13485:2016 certified and licensed by the California Department of Public Health (“CDPH”) Food and Drug Branch. Our manufacturing facility is an FDA-registered medical device establishment.
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If the device presents a “significant risk” to human health, as defined by the FDA, the sponsor must submit an IDE application to the FDA and obtain IDE approval prior to commencing the human clinical trials.
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PMA supplements often require submission of the same type of information as an initial PMA application, except that the supplement 20 Table of Contents is limited to information needed to support any changes from the device covered by the approved PMA application and may or may not require as extensive technical or clinical data or the convening of an advisory panel, depending on the nature of the proposed change.
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The UK government plans on introducing new legislation governing medical devices which they have indicated is to be delivered though secondary legislation. The first piece of legislation was laid in 2024 and updates post-market surveillance requirements.
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Medical devices which meet all requirements of the EU MDR may be placed on the market until June 30, 2030. However, the government has indicated that it intends to launch a consultation (that was penciled in for late 2025 but has not yet commenced) on proposals to indefinitely recognize CE marked medical devices.
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Also, the CCPA provides for civil penalties and a private right of action for data breaches that may include an award of statutory damages.
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In addition, states within the United States and other jurisdictions where we do business have enacted or are considering enacting similar data privacy laws. Numerous U.S. states have enacted comprehensive privacy laws that impose certain obligations on covered businesses, including providing specific disclosures in privacy notices and affording residents with certain rights concerning their personal data.
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In addition, the California Privacy Rights Act of 2020 (“CPRA”), which became effective January 1, 2023, expands the CCPA by, among other things, giving California residents the ability to limit use of certain sensitive personal data, along with establishing restrictions on personal data retention and a new California Privacy Protection Agency to implement and enforce the new law.
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European data protection laws, including the GDPR, impose strict compliance obligations on entities for processing personal data, including health data.
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For example, on August 16, 2022, the Inflation Reduction Act of 2022 (“IRA”) was signed into law, which among other things, extends enhanced subsidies for individuals purchasing health insurance coverage in Affordable Care Act marketplaces through plan year 2025.
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Stark Law The federal physician self-referral prohibition, commonly known as the Stark Law, prohibits, among other things, physicians who have a financial relationship, including an investment, ownership or compensation relationship with an entity, from referring Medicare and Medicaid patients to that entity for designated health services, which include clinical laboratory services, unless an exception applies.
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The IRA also eliminates the “donut hole” under the Medicare Part D program beginning in 2025 by significantly lowering the beneficiary maximum out-of-pocket cost and through a newly established manufacturer discount program.
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Similarly, entities may not bill Medicare, Medicaid or any other party for services furnished pursuant to a prohibited referral.
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It is possible that the Affordable Care Act will be subject to judicial or congressional challenges in the future, including congressional legislation to modify or replace the Affordable Care Act or elements of the Affordable Care Act.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

154 edited+39 added−20 removed614 unchanged
Biggest changeWe may experience a number of events that could adversely affect the costs, timing or successful completion of our clinical trials, including: • we may be required to submit an IDE application to the FDA, or comparable foreign applications, which must become effective prior to commencing human clinical trials, and the FDA or comparable foreign regulatory authorities may reject our application and notify us that we may not begin investigational trials; • regulators and other comparable foreign regulatory authorities may disagree as to the design or implementation of our clinical trials; • regulators, IRBs, ethics committees or other reviewing bodies may not authorize us or our investigators to commence a clinical trial, or to conduct or continue a clinical trial at a prospective or specific trial site; • we may not reach agreement on acceptable terms with prospective contract research organizations (“CROs”) and clinical trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites; • clinical trials may produce negative or inconclusive results, and we may decide, or regulators may require us, to conduct additional clinical trials or abandon product development programs; • the number of subjects or patients required for clinical trials may be larger than we anticipate, enrollment in these clinical trials may be insufficient or slower than we anticipate, and the number of clinical trials being conducted at any given time may be high and result in fewer available patients for any given clinical trial, or patients may drop out of these clinical trials at a higher rate than we anticipate; • our third-party contractors, including those manufacturing products or conducting clinical trials on our behalf, may fail to comply with regulatory requirements or meet their contractual obligations to us in a timely manner, or at all; 68 Table of Contents • we might have to suspend, vary or terminate clinical trials for various reasons, including a finding that the subjects are being exposed to unacceptable health risks; • we may have to amend clinical trial protocols or conduct additional studies to reflect changes in regulatory requirements or guidance, which we may be required to submit to an IRB, ethics committee or regulatory authority for re-examination; • regulators, IRBs, ethics committees, or other parties may require or recommend that we or our investigators suspend, vary or terminate clinical research for various reasons, including safety signals or noncompliance with regulatory requirements; • the cost of clinical trials may be greater than we anticipate; • clinical sites may not adhere to the clinical protocol or may drop out of a clinical trial; • we may be unable to recruit a sufficient number of clinical trial sites; • regulators, IRBs, ethics committees or other reviewing bodies may fail to approve or subsequently find fault with our manufacturing processes or facilities of third-party supplier with which we enter into agreement for clinical and commercial supplies, the supply of devices or other materials necessary to conduct clinical trials may be insufficient, inadequate or not available at an acceptable cost, or we may experience interruptions in supply; • approval policies or regulations of the FDA or applicable foreign regulatory authorities may change in a manner rendering our clinical data insufficient for approval; and • our current or future products may have undesirable side effects or other unexpected characteristics.
Biggest changeWe may experience a number of events that could adversely affect the costs, timing or successful completion of our clinical trials, including: 70 Table of Contents • we may be required to submit an IDE application to the FDA, or comparable foreign applications, which must become effective prior to commencing human clinical trials, and the FDA or comparable foreign regulatory authorities may reject our application and notify us that we may not begin investigational trials; • regulators and other comparable foreign regulatory authorities may disagree as to the design or implementation of our clinical trials; • regulators, IRBs, ethics committees or other reviewing bodies may not authorize us or our investigators to commence a clinical trial, or to conduct or continue a clinical trial at a prospective or specific trial site; • we may not reach agreement on acceptable terms with prospective contract research organizations (“CROs”) and clinical trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites; • clinical trials may produce negative or inconclusive results, and we may decide, or regulators may require us, to conduct additional clinical trials or abandon product development programs; • the number of subjects or patients required for clinical trials may be larger than we anticipate, enrollment in these clinical trials may be insufficient or slower than we anticipate, and the number of clinical trials being conducted at any given time may be high and result in fewer available patients for any given clinical trial, or patients may drop out of these clinical trials at a higher rate than we anticipate; • our third-party contractors, including those manufacturing products or conducting clinical trials on our behalf, may fail to comply with regulatory requirements or meet their contractual obligations to us in a timely manner, or at all; • we might have to suspend, vary or terminate clinical trials for various reasons, including a finding that the subjects are being exposed to unacceptable health risks; • we may have to amend clinical trial protocols or conduct additional studies to reflect changes in regulatory requirements or guidance, which we may be required to submit to an IRB, ethics committee or regulatory authority for re-examination; • regulators, IRBs, ethics committees, or other parties may require or recommend that we or our investigators suspend, vary or terminate clinical research for various reasons, including safety signals or noncompliance with regulatory requirements; • the cost of clinical trials may be greater than we anticipate; • clinical sites may not adhere to the clinical protocol or may drop out of a clinical trial; • we may be unable to recruit a sufficient number of clinical trial sites; • regulators, IRBs, ethics committees or other reviewing bodies may fail to approve or subsequently find fault with our manufacturing processes or facilities of third-party supplier with which we enter into agreement for clinical and commercial supplies, the supply of devices or other materials necessary to conduct clinical trials may be insufficient, inadequate or not available at an acceptable cost, or we may experience interruptions in supply; • approval policies or regulations of the FDA or applicable foreign regulatory authorities may change in a manner rendering our clinical data insufficient for approval; and • our current or future products may have undesirable side effects or other unexpected characteristics. 71 Table of Contents Patient enrollment in clinical trials and completion of patient follow-up depend on many factors, including the size of the patient population, the nature of the trial protocol, the proximity of patients to clinical sites, the eligibility criteria for the clinical trial, patient compliance, competing clinical trials and clinicians’ and patients’ perceptions as to the potential advantages of the product being studied in relation to other available therapies, including any new treatments that may be approved for the indications we are investigating.
Although there are currently various mechanisms that may be used to transfer personal data from the EEA and UK to the United States in compliance with law, such as the EEA and UK’s standard contractual clauses, the UK’s International Data Transfer Agreement / Addendum, and the EU-U.S.
Although there are currently various mechanisms that may be used to transfer personal data from the EEA and UK to the United States in compliance with law, such as the EEA standard contractual clauses, the UK’s International Data Transfer Agreement / Addendum, and the EU-U.S.
Federal and state healthcare laws and regulations that may affect our ability to conduct business, include, without limitation: • federal and state laws and regulations regarding billing and claims payment applicable to our solution and regulatory agencies enforcing those laws and regulations; • the federal Anti-Kickback Statute, which prohibits, among other things, any person or entity from knowingly and willfully offering, soliciting, receiving or providing remuneration, directly or indirectly, in exchange for or 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; • the federal false claims laws, including the FCA, which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, false claims, or knowingly using false statements, to obtain payment from the federal government; • federal criminal laws that prohibit executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters; • the federal Physician Payments Sunshine Act, created under the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 (collectively, the “Affordable Care Act”) and its implementing regulations, which requires certain manufacturers of drugs, medical devices, biologicals and medical supplies for which payment is available under Medicare, 62 Table of Contents Medicaid, or the Children’s Health Insurance Program to report annually to CMS, information related to payments or other transfers of value made to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), other health care professionals (such as physician assistants and nurse practitioners) and teaching hospitals, as well as information regarding ownership and investment interests held by physicians and their immediate family members; • federal consumer protection and unfair competition laws, which broadly regulate marketplace activities and activities that potentially harm consumers; • HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act (“HITECH”), and its implementing regulations, which impose certain requirements relating to the privacy, security and transmission of individually identifiable health information on covered entities, including certain healthcare providers, health plans and healthcare clearinghouses, and their respective Business Associates that create, receive, maintain or transmit individually identifiable health information for or on behalf of a Covered Entity as well as their covered subcontractors; HIPAA also created criminal liability for, among other things, knowingly and willfully falsifying or concealing a material fact or making a materially false statement in connection with the delivery of or payment for healthcare benefits, items or services; • the Federal Drug & Cosmetic Act, which prohibits, among other things, the adulteration or misbranding of drugs, biologics and medical devices; • the federal physician self-referral prohibition, commonly known as the Stark Law, which prohibits, among other things, physicians who have a financial relationship, including an investment, ownership or compensation relationship with an entity, from referring Medicare and Medicaid patients to that entity for designated health services, which include clinical laboratory services, unless an exception applies.
Federal and state healthcare laws and regulations that may affect our ability to conduct business, include, without limitation: 64 Table of Contents • federal and state laws and regulations regarding billing and claims payment applicable to our solution and regulatory agencies enforcing those laws and regulations; • the federal Anti-Kickback Statute, which prohibits, among other things, any person or entity from knowingly and willfully offering, soliciting, receiving or providing remuneration, directly or indirectly, in exchange for or 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; • the federal false claims laws, including the FCA, which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, false claims, or knowingly using false statements, to obtain payment from the federal government; • federal criminal laws that prohibit executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters; • the federal Physician Payments Sunshine Act, created under the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 (collectively, the “Affordable Care Act”) and its implementing regulations, which requires certain manufacturers of drugs, medical devices, biologicals and medical supplies for which payment is available under Medicare, Medicaid, or the Children’s Health Insurance Program to report annually to CMS, information related to payments or other transfers of value made to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), other health care professionals (such as physician assistants and nurse practitioners) and teaching hospitals, as well as information regarding ownership and investment interests held by physicians and their immediate family members; • federal consumer protection and unfair competition laws, which broadly regulate marketplace activities and activities that potentially harm consumers; • HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act (“HITECH”), and its implementing regulations, which impose certain requirements relating to the privacy, security and transmission of individually identifiable health information on covered entities, including certain healthcare providers, health plans and healthcare clearinghouses, and their respective Business Associates that create, receive, maintain or transmit individually identifiable health information for or on behalf of a Covered Entity as well as their covered subcontractors; HIPAA also created criminal liability for, among other things, knowingly and willfully falsifying or concealing a material fact or making a materially false statement in connection with the delivery of or payment for healthcare benefits, items or services; • the Federal Drug & Cosmetic Act, which prohibits, among other things, the adulteration or misbranding of drugs, biologics and medical devices; • the federal physician self-referral prohibition, commonly known as the Stark Law, which prohibits, among other things, physicians who have a financial relationship, including an investment, ownership or compensation relationship with an entity, from referring Medicare and Medicaid patients to that entity for designated health services, which include clinical laboratory services, unless an exception applies.
While the number of hospitals incorporating our solution has increased in recent years, there is a significant group of hospitals and physicians who have not yet adopted our solution, and additional hospitals and physicians may choose not to adopt our solution for a number of reasons, including: • inadequate recruiting or training of talented sales force in existing and new markets to facilitate outreach and further adoption and awareness of Zephyr Valve; • lack of experience with our solution and the Zephyr Valve as a treatment alternative; • the failure of key opinion leaders to continue to provide recommendations regarding the Zephyr Valve, or to assure physicians, patients and healthcare payors of the benefits of the Zephyr Valve as an attractive alternative to other treatment options; • perceived inadequacy of evidence supporting clinical benefits or cost-effectiveness of our solution over existing alternatives; • a perception among some physicians of patients’ inability to tolerate the procedure required to implant our solution; • liability risks generally associated with the use of new products and procedures; • the training required to use new products; • lack of availability of adequate third-party payor coverage or reimbursement; • access to hospital bidding processes; • a decrease or delay in the number of procedures performed using our solution as a result of a public health crisis; • competing products and alternatives; and 32 Table of Contents • introduction of other novel alternative therapies to treat severe emphysema.
While the number of hospitals incorporating our solution has increased in recent years, there is a significant group of hospitals and physicians who have not yet adopted our solution, and additional hospitals and physicians may choose not to adopt our solution for a number of reasons, including: • inadequate recruiting or training of talented sales force in existing and new markets to facilitate outreach and further adoption and awareness of Zephyr Valve; • lack of experience with our solution and the Zephyr Valve as a treatment alternative; • the failure of key opinion leaders to continue to provide recommendations regarding the Zephyr Valve, or to assure physicians, patients and healthcare payors of the benefits of the Zephyr Valve as an attractive alternative to other treatment options; • perceived inadequacy of evidence supporting clinical benefits or cost-effectiveness of our solution over existing alternatives; • a perception among some physicians of patients’ inability to tolerate the procedure required to implant our solution; • liability risks generally associated with the use of new products and procedures; • the training required to use new products; • lack of availability of adequate third-party payor coverage or reimbursement; • access to hospital bidding processes; • a decrease or delay in the number of procedures performed using our solution as a result of a public health crisis; • competing products and alternatives; and 33 Table of Contents • introduction of other novel alternative therapies to treat severe emphysema.
Our commercialization efforts will depend on the efforts of our management and sales team, our third-party suppliers, physicians and hospitals, and general economic conditions, among other factors, including the following: • the effectiveness of our marketing and sales efforts in the United States and internationally; • our success in educating physicians and patients about the benefits, administration and use of the Zephyr Valves; • the acceptance by physicians, patients and payors of the safety and effectiveness of the Zephyr Valves, including the long-term data; • our third-party suppliers’ ability to supply the components of the Zephyr Valves in a timely manner, in accordance with our specifications and in compliance with applicable regulatory requirements, and to remain in good standing with regulatory agencies; • the impact of any public health crisis on our business, financial condition and results of operations; 30 Table of Contents • the availability, perceived advantages, relative cost, relative safety and relative efficacy of alternative and competing therapies; • our ability to obtain, maintain and enforce our intellectual property rights in and to the Zephyr Valves; • the emergence of competing technologies and other adverse market developments, and our need to enhance the Zephyr Valves or develop new products to maintain market share in response to such competing technologies or market developments; • our ability to raise additional capital on acceptable terms, or at all, if needed to support the commercialization of the Zephyr Valves; and • our ability to achieve and maintain compliance with all regulatory requirements applicable to the Zephyr Valves.
Our commercialization efforts will depend on the efforts of our management and sales team, our third-party suppliers, physicians and hospitals, and general economic conditions, among other factors, including the following: • the effectiveness of our marketing and sales efforts in the United States and internationally; • our success in educating physicians and patients about the benefits, administration and use of the Zephyr Valves; • the acceptance by physicians, patients and payors of the safety and effectiveness of the Zephyr Valves, including the long-term data; • our third-party suppliers’ ability to supply the components of the Zephyr Valves in a timely manner, in accordance with our specifications and in compliance with applicable regulatory requirements, and to remain in good standing with regulatory agencies; • the impact of any public health crisis on our business, financial condition and results of operations; 31 Table of Contents • the availability, perceived advantages, relative cost, relative safety and relative efficacy of alternative and competing therapies; • our ability to obtain, maintain and enforce our intellectual property rights in and to the Zephyr Valves; • the emergence of competing technologies and other adverse market developments, and our need to enhance the Zephyr Valves or develop new products to maintain market share in response to such competing technologies or market developments; • our ability to raise additional capital on acceptable terms, or at all, if needed to support the commercialization of the Zephyr Valves; and • our ability to achieve and maintain compliance with all regulatory requirements applicable to the Zephyr Valves.
We are also subject to numerous other risks relating to our manufacturing capabilities, including: • quality and reliability of components, sub-assemblies and materials that we source from third-party suppliers, that are required to meet our quality specifications, many of whom are our single source suppliers for the products they supply; • our inability to secure components, sub-assemblies and materials in a timely manner, in sufficient quantities or on commercially reasonable terms; • our inability to maintain compliance with quality system requirements or pass regulatory quality inspections; • disruptions in our production schedule and ability to manufacture and assemble products; • our failure to increase production capacity or volumes to meet demand; • our inability to design or modify production processes to enable us to produce future products efficiently or implement changes in current products in response to design or regulatory requirements; and • difficulty identifying and qualifying, and obtaining new regulatory approvals, for alternative suppliers for components in a timely manner. 39 Table of Contents These risks are likely to be exacerbated by our limited experience with our current products and manufacturing processes.
We are also subject to numerous other risks relating to our manufacturing capabilities, including: • quality and reliability of components, sub-assemblies and materials that we source from third-party suppliers, that are required to meet our quality specifications, many of whom are our single source suppliers for the products they supply; • our inability to secure components, sub-assemblies and materials in a timely manner, in sufficient quantities or on commercially reasonable terms; • our inability to maintain compliance with quality system requirements or pass regulatory quality inspections; • disruptions in our production schedule and ability to manufacture and assemble products; • our failure to increase production capacity or volumes to meet demand; • our inability to design or modify production processes to enable us to produce future products efficiently or implement changes in current products in response to design or regulatory requirements; and • difficulty identifying and qualifying, and obtaining new regulatory approvals, for alternative suppliers for components in a timely manner. 40 Table of Contents These risks are likely to be exacerbated by our limited experience with our current products and manufacturing processes.
For example, European regulators enacted a stringent AI regulation, and we expect other jurisdictions will adopt similar laws. Additionally, certain privacy laws extend rights to consumers (such as the right to delete certain personal data) and regulate automated decision making, which may be incompatible with our use of AI/ML.
For example, European regulators enacted a stringent AI regulation, and we expect other jurisdictions will adopt similar laws. Additionally, certain privacy laws extend rights to consumers (such as the right to delete certain personal data) and regulate automated decision making, which may be incompatible with our use of AI.
The market price of our common stock may be highly volatile and may fluctuate or decline substantially as a result of a variety of factors, some of which are beyond our control or are related in complex ways, including: • actual or anticipated fluctuations in our financial condition and results of operations; • variance in our financial performance from expectations of securities analysts or investors; • the degree to which securities or industry analysts publish research or reports about our business; • changes in the pricing we offer our customers; • changes in our projected operating and financial results; • changes in laws or regulations applicable to our solution; • announcements by us or our competitors of significant business developments, acquisitions, or new offerings; • publicity associated with issues related to our solution; • our involvement in litigation; • future sales of our common stock or other securities, by us or our stockholders; • changes in senior management or key personnel; • the trading volume of our common stock; • changes in the anticipated future size and growth rate of our market; • general economic, regulatory, and market conditions, including inflation, high interest rates, economic recessions or economic slowdowns; • changes in the structure of healthcare payment systems; and • developments or disputes concerning our intellectual property or other proprietary rights.
The market price of our common stock may be highly volatile and may fluctuate or decline substantially as a result of a variety of factors, some of which are beyond our control or are related in complex ways, including: • actual or anticipated fluctuations in our financial condition and results of operations; • variance in our financial performance from expectations of securities analysts or investors; • the degree to which securities or industry analysts publish research or reports about our business; 86 Table of Contents • changes in the pricing we offer our customers; • changes in our projected operating and financial results; • changes in laws or regulations applicable to our solution; • announcements by us or our competitors of significant business developments, acquisitions, or new offerings; • publicity associated with issues related to our solution; • our involvement in litigation; • future sales of our common stock or other securities, by us or our stockholders; • changes in senior management or key personnel; • the trading volume of our common stock; • changes in the anticipated future size and growth rate of our market; • general economic, regulatory, and market conditions, including inflation, high interest rates, economic recessions or economic slowdowns; • changes in the structure of healthcare payment systems; and • developments or disputes concerning our intellectual property or other proprietary rights.
Outside of clinical trials, patients treated with the Zephyr Valve have also experienced serious complications, including pneumothoraces and death related to the Zephyr Valve. 34 Table of Contents Serious complications as a result of treatment with Zephyr Valves, and any increase in the rate of complications in or outside of clinical trials, could cause doctors, hospitals and patients to limit adoption of our solution and subject us to costly litigation, require us to pay substantial amounts of money to patients, delay, negatively impact or end our opportunity to receive or maintain regulatory approval to market our products, or require us to suspend or abandon our commercialization efforts, which may negatively impact adoption as well as our business, financial condition and results of operations.
Outside of clinical trials, patients treated with the Zephyr Valve have also experienced serious complications, including pneumothoraces and death related to the Zephyr Valve. 35 Table of Contents Serious complications as a result of treatment with Zephyr Valves, and any increase in the rate of complications in or outside of clinical trials, could cause doctors, hospitals and patients to limit adoption of our solution and subject us to costly litigation, require us to pay substantial amounts of money to patients, delay, negatively impact or end our opportunity to receive or maintain regulatory approval to market our products, or require us to suspend or abandon our commercialization efforts, which may negatively impact adoption as well as our business, financial condition and results of operations.
Our amended and restated certificate of incorporation and amended and restated bylaws include provisions that: • authorize our board of directors to issue, without further action by the stockholders, shares of undesignated preferred stock with terms, rights, and preferences determined by our board of directors that may be senior to our common stock; • require that any action to be taken by our stockholders be effected at a duly called annual or special meeting and not by written consent; • specify that special meetings of our stockholders can be called only by our board of directors, the chairperson of our board of directors, or our chief executive officer; • establish an advance notice procedure for stockholder proposals to be brought before an annual meeting, including proposed nominations of persons for election to our board of directors; • establish that our board of directors is divided into a number of classes, with each class serving staggered terms; • prohibit cumulative voting in the election of directors; • provide that our directors may be removed for cause only upon the vote of the holders of a majority of our outstanding shares of common stock; • provide that vacancies on our board of directors may be filled only by a majority of directors then in office, even though less than a quorum; and • require the approval of our board of directors or the holders of at least a majority of our outstanding shares of common stock to amend our bylaws and certain provisions of our certificate of incorporation.
Our amended and restated certificate of incorporation and amended and restated bylaws include provisions that: • authorize our board of directors to issue, without further action by the stockholders, shares of undesignated preferred stock with terms, rights, and preferences determined by our board of directors that may be senior to our common stock; • require that any action to be taken by our stockholders be effected at a duly called annual or special meeting and not by written consent; • specify that special meetings of our stockholders can be called only by our board of directors, the chairperson of our board of directors, or our chief executive officer; • establish an advance notice procedure for stockholder proposals to be brought before an annual meeting, including proposed nominations of persons for election to our board of directors; 88 Table of Contents • establish that our board of directors is divided into a number of classes, with each class serving staggered terms; • prohibit cumulative voting in the election of directors; • provide that our directors may be removed for cause only upon the vote of the holders of a majority of our outstanding shares of common stock; • provide that vacancies on our board of directors may be filled only by a majority of directors then in office, even though less than a quorum; and • require the approval of our board of directors or the holders of at least a majority of our outstanding shares of common stock to amend our bylaws and certain provisions of our certificate of incorporation.
Among other things, the GDPR sets out extensive compliance requirements, including providing detailed disclosures about how personal data is collected and processed, demonstrating that an appropriate legal basis is in place to justify data processing activities; granting various rights for data subjects in regard to their personal data, such as the right to delete certain personal data, as well as enhancing pre-existing rights (e.g., data subject access requests); introducing the obligation to notify data protection regulators or supervisory authorities 72 Table of Contents (and in certain cases, affected individuals) of significant data breaches; imposing limitations on retention of personal data; maintaining a record of data processing; complying with the principle of accountability and the obligation to demonstrate compliance through policies, procedures, training and audit; and expanding the definition of personal data to include coded data and requiring changes to informed consent practices, as well as more detailed notices for clinical trial subjects and investigators.
Among other things, the GDPR sets out extensive compliance requirements, including providing detailed disclosures about how personal data is collected and processed, demonstrating that an appropriate legal basis is in place to justify data processing activities; granting various rights for data subjects in regard to their personal data, such as the right to delete certain personal data, as well as enhancing pre-existing rights (e.g., data subject access requests); introducing the obligation to notify data protection regulators or supervisory authorities (and in certain cases, affected individuals) of significant data breaches; imposing limitations on retention of personal data; maintaining a record of data processing; complying with the principle of accountability and the obligation to demonstrate compliance through policies, procedures, training and audit; and expanding the definition of personal data to include coded data and requiring changes to informed consent practices, as well as more detailed notices for clinical trial subjects and investigators.
Our employees and personnel use generative AI technologies to perform their work, and the disclosure and use of personal data in generative AI technologies is subject to various privacy laws and other privacy obligations. Governments have passed and are likely to pass additional laws regulating generative AI.
Our employees and personnel use generative AI (“AI”) technologies to perform their work, and the disclosure and use of personal data in generative AI technologies is subject to various privacy laws and other privacy obligations. Governments have passed and are likely to pass additional laws regulating generative AI.
Similarly, entities may not bill Medicare, Medicaid or any other party for services furnished pursuant to a prohibited referral; • 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, and state and foreign laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts; and • similar healthcare laws and regulations in the European Union, the UK and other jurisdictions, including national anti-bribery laws of European countries and national rules, regulations, industry self-regulation codes reporting requirements detailing interactions with and payments to healthcare providers and laws governing the privacy and security of certain protected information, such as personal data under the General Data Protection Regulation (“GDPR”).
Similarly, entities may not bill Medicare, Medicaid or any other party for services furnished pursuant to a prohibited referral; • 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, and state and foreign laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts; and 65 Table of Contents • similar healthcare laws and regulations in the European Union, the UK and other jurisdictions, including national anti-bribery laws of European countries and national rules, regulations, industry self-regulation codes reporting requirements detailing interactions with and payments to healthcare providers and laws governing the privacy and security of certain protected information, such as personal data under the General Data Protection Regulation (“GDPR”).
The degree of future protection for our proprietary rights is uncertain, and we cannot ensure that: • any of our patents, or any of our pending patent applications, if issued, will include claims having a scope sufficient to protect our products; • any of our pending patent applications will issue as patents; • we will be able to successfully commercialize our products on a substantial scale, if approved, before our relevant patents we may have expire; • we were the first to make the inventions covered by each of our patents and pending patent applications; • we were the first to file patent applications for these inventions; • others will not develop similar or alternative technologies that do not infringe our patents; any of our patents will be found to ultimately be valid and enforceable; • any patents issued to us will provide a basis for an exclusive market for our commercially viable products, will provide us with any competitive advantages or will not be challenged by third parties; • we will develop additional proprietary technologies or products that are separately patentable; or • our commercial activities or products will not infringe upon the patents of others.
The degree of future protection for our proprietary rights is uncertain, and we cannot ensure that: • any of our patents, or any of our pending patent applications, if issued, will include claims having a scope sufficient to protect our products; • any of our pending patent applications will issue as patents; • we will be able to successfully commercialize our products on a substantial scale, if approved, before our relevant patents we may have expire; • we were the first to make the inventions covered by each of our patents and pending patent applications; • we were the first to file patent applications for these inventions; 81 Table of Contents • others will not develop similar or alternative technologies that do not infringe our patents; any of our patents will be found to ultimately be valid and enforceable; • any patents issued to us will provide a basis for an exclusive market for our commercially viable products, will provide us with any competitive advantages or will not be challenged by third parties; • we will develop additional proprietary technologies or products that are separately patentable; or • our commercial activities or products will not infringe upon the patents of others.
The FDA, comparable foreign regulatory authorities and Notified Bodies can delay, limit or deny clearance, certification or approval of a device for many reasons, including: • our inability to demonstrate to the satisfaction of the FDA, the applicable regulatory authority or Notified Body that our products are safe or effective for their intended uses; • the disagreement of the FDA or the applicable foreign regulatory authority or Notified Body with the design or implementation of our clinical trials or the interpretation of data from pre-clinical studies or clinical trials; • serious and unexpected adverse device effects experienced by participants in our clinical trials; • the data from our pre-clinical studies and clinical trials may be insufficient to support clearance, certification or approval, where required; • our inability to demonstrate that the clinical and other benefits of the device outweigh the risks; • the manufacturing process or facilities we use may not meet applicable requirements; and • the potential for approval policies or regulations of the FDA or applicable foreign regulatory authorities to change significantly in a manner rendering our clinical data or regulatory filings insufficient for clearance, certification or approval.
The FDA, comparable foreign regulatory authorities and Notified Bodies can delay, limit or deny clearance, certification or approval of a device for many reasons, including: • our inability to demonstrate to the satisfaction of the FDA, the applicable regulatory authority or Notified Body that our products are safe or effective for their intended uses; • the disagreement of the FDA or the applicable foreign regulatory authority or Notified Body with the design or implementation of our clinical trials or the interpretation of data from pre-clinical studies or clinical trials; • serious and unexpected adverse device effects experienced by participants in our clinical trials; • the data from our pre-clinical studies and clinical trials may be insufficient to support clearance, certification or approval, where required; • our inability to demonstrate that the clinical and other benefits of the device outweigh the risks; 61 Table of Contents • the manufacturing process or facilities we use may not meet applicable requirements; and • the potential for approval policies or regulations of the FDA or applicable foreign regulatory authorities to change significantly in a manner rendering our clinical data or regulatory filings insufficient for clearance, certification or approval.
These obligations may make it harder for us to conduct our business using AI/ML, lead to regulatory fines or penalties, require us to change our business practices, retrain our AI/ML, or prevent or limit our use of AI/ML.
These obligations may make it harder for us to conduct our business using AI, lead to regulatory fines or penalties, require us to change our business practices, retrain our AI, or prevent or limit our use of AI.
Further, we cannot provide assurance that any data that we or others may generate in the future will be consistent with that observed in our existing clinical studies. 36 Table of Contents If we fail to retain marketing and sales personnel and, as we grow, fail to increase our marketing and sales capabilities or develop broad awareness of our solution in a cost-effective manner, we may not be able to generate revenue growth.
Further, we cannot provide assurance that any data that we or others may generate in the future will be consistent with that observed in our existing clinical studies. 37 Table of Contents If we fail to retain marketing and sales personnel and, as we grow, fail to increase our marketing and sales capabilities or develop broad awareness of our solution in a cost-effective manner, we may not be able to generate revenue growth.
If any court were to find either exclusive-forum provision in our amended and restated certificate of incorporation to be inapplicable or unenforceable, we may incur further significant additional costs associated with resolving the dispute in other jurisdictions, which could seriously harm our business. 87 Table of Contents ITEM 1B. UNRESOLVED STAFF COMMENTS None.
If any court were to find either exclusive-forum provision in our amended and restated certificate of incorporation to be inapplicable or unenforceable, we may incur further significant additional costs associated with resolving the dispute in other jurisdictions, which could seriously harm our business. 90 Table of Contents ITEM 1B. UNRESOLVED STAFF COMMENTS None.
Our failure to comply with applicable regulatory requirements could result in enforcement action by any such agency and authority, which may include any of the following sanctions: • adverse publicity, warning letters, fines, injunctions, consent decrees and civil penalties; 59 Table of Contents • repair, replacement, refunds, recall or seizure of our products; • operating restrictions, partial suspension or total shutdown of production; • denial of our requests for regulatory clearance, certification or premarket approval of new products or services, new intended uses or modifications to existing products or services; • withdrawal of regulatory clearance, certification or premarket approvals that have already been granted; or • criminal prosecution.
Our failure to comply with applicable regulatory requirements could result in enforcement action by any such agency and authority, which may include any of the following sanctions: • adverse publicity, warning letters, fines, injunctions, consent decrees and civil penalties; • repair, replacement, refunds, recall or seizure of our products; • operating restrictions, partial suspension or total shutdown of production; • denial of our requests for regulatory clearance, certification or premarket approval of new products or services, new intended uses or modifications to existing products or services; • withdrawal of regulatory clearance, certification or premarket approvals that have already been granted; or • criminal prosecution.
If we are required to change suppliers due to any change in or termination of our relationships with these third parties, or if our suppliers are unable to obtain the materials they need to produce our products at consistent prices or at all, we may lose sales, experience manufacturing or other delays, incur increased costs or otherwise experience impairment 38 Table of Contents to our customer relationships.
If we are required to change suppliers due to any change in or termination of our relationships with these third parties, or if our suppliers are unable to obtain the materials they need to produce our products at consistent prices or at all, we may lose sales, experience manufacturing or other delays, incur increased costs or otherwise experience impairment 39 Table of Contents to our customer relationships.
Our manufacturing and design processes and those of our third-party suppliers are required to comply with the FDA’s QSR and the European Union MDR, including Quality Management System requirements, both of which cover procedures and documentation of the design, testing, production, control, quality assurance, labeling, packaging, storage and shipping of Zephyr Valves, the AeriSeal System, the Chartis Catheter and the Chartis Console.
Our manufacturing and design processes and those of our third-party suppliers are required to comply with the FDA’s QMSR and the European Union MDR, including Quality Management System requirements, both of which cover procedures and documentation of the design, testing, production, control, quality assurance, labeling, packaging, storage and shipping of Zephyr Valves, the AeriSeal System, the Chartis Catheter and the Chartis Console.
Our amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware (or, if the Court of Chancery of the State of Delaware lacks subject matter jurisdiction, any state court located within 86 Table of Contents the State of Delaware or, if all such state courts lack subject matter jurisdiction, the federal district court for the District of Delaware) is the sole and exclusive forum for the following types of actions or proceedings under Delaware statutory or common law for: • any derivative action or proceeding brought on our behalf; • any action asserting a breach of fiduciary duty; • any action asserting a claim against us arising under the Delaware General Corporation Law; • our amended and restated certificate of incorporation or our amended and restated bylaws; and • any action asserting a claim against us that is governed by the internal-affairs doctrine.
Our amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware (or, if the Court of Chancery of the State of Delaware lacks subject matter jurisdiction, any state court located within the State of Delaware or, if all such state courts lack subject matter jurisdiction, the federal district court for the District of Delaware) is the sole and exclusive forum for the following types of actions or proceedings under Delaware statutory or common law for: • any derivative action or proceeding brought on our behalf; • any action asserting a breach of fiduciary duty; • any action asserting a claim against us arising under the Delaware General Corporation Law; • our amended and restated certificate of incorporation or our amended and restated bylaws; and • any action asserting a claim against us that is governed by the internal-affairs doctrine.
When prior authorization is not obtained or not allowed, and the procedure is 35 Table of Contents performed and not covered by third-party payors, physicians or hospitals typically directly bill patients enrolled with these third-party payors for the costs and fees associated with the procedures in which our products are used.
When prior authorization is not obtained or not allowed, and the procedure is 36 Table of Contents performed and not covered by third-party payors, physicians or hospitals typically directly bill patients enrolled with these third-party payors for the costs and fees associated with the procedures in which our products are used.
In the event that we breach one or more covenants, our lender may choose to declare an event of default and require that we immediately repay all amounts outstanding, terminate any commitment to extend further credit and foreclose on the collateral granted to it to collateralize such indebtedness.
In the event that we breach one or more covenants, our lenders may choose to declare an event of default and require that we immediately repay all amounts outstanding, terminate any commitment to extend further credit and foreclose on the collateral granted to it to collateralize such indebtedness.
We or the third parties with whom we work have in the past experienced, and may in the future experience, security incidents, or we may be perceived to have experienced, security incidents, we may experience material adverse consequences such as: government enforcement actions that could include investigations, fines, penalties, consent decrees, audits and inspections; additional reporting requirements and/or oversight; temporary or permanent bans on all or some processing of personal data; or orders to destroy or not use personal data.
We or the third parties with whom we work have in the past experienced, and may in the future experience, security incidents, or we may be perceived to have experienced, security incidents, we may experience material adverse consequences such as: government enforcement actions that could include investigations, fines, penalties, consent decrees, audits and inspections; additional reporting requirements and/or oversight; temporary or permanent bans on 42 Table of Contents all or some processing of personal data; or orders to destroy or not use personal data.
Sales of Zephyr Valves and delivery catheters accounted for most of our revenue for the years ended December 31, 2024 and December 31, 2023 and we expect that sales of Zephyr Valves and delivery catheters will continue to account for most of our revenue going forward. We do not know if our solution will be successful over the long term.
Sales of Zephyr Valves and delivery catheters accounted for most of our revenue for the years ended December 31, 2025 and December 31, 2024 and we expect that sales of Zephyr Valves and delivery catheters will continue to account for most of our revenue going forward. We do not know if our solution will be successful over the long term.
Regulations specific to medical devices are wide ranging and govern, among other things: • product design, development, manufacture, and release; • laboratory, pre-clinical and clinical testing, labeling, packaging, storage and distribution; • product safety and efficacy; • premarketing clearance or approval; 58 Table of Contents • service operations; • record keeping; • product marketing, promotion and advertising, sales and distribution; • post-marketing surveillance, including reporting of deaths or serious injuries and recalls and correction and removals; • post-market approval studies; and • product import and export.
Regulations specific to medical devices are wide ranging and govern, among other things: • product design, development, manufacture, and release; • laboratory, pre-clinical and clinical testing, labeling, packaging, storage and distribution; • product safety and efficacy; • premarketing clearance or approval; • service operations; • record keeping; • product marketing, promotion and advertising, sales and distribution; • post-marketing surveillance, including reporting of deaths or serious injuries and recalls and correction and removals; • post-market approval studies; and • product import and export.
This result may negatively impact 33 Table of Contents the perception of patient benefit and safety, and limit adoption of our solution as a treatment for severe emphysema and our products that facilitate the procedure, which will negatively affect our business, financial condition and results of operations.
This result may negatively impact 34 Table of Contents the perception of patient benefit and safety, and limit adoption of our solution as a treatment for severe emphysema and our products that facilitate the procedure, which will negatively affect our business, financial condition and results of operations.
Products in later stages of clinical trials may fail to show the desired safety and efficacy despite having progressed through nonclinical studies and earlier clinical trials. 37 Table of Contents The continuing development of our products depends upon our maintaining strong working relationships with physicians.
Products in later stages of clinical trials may fail to show the desired safety and efficacy despite having progressed through nonclinical studies and earlier clinical trials. 38 Table of Contents The continuing development of our products depends upon our maintaining strong working relationships with physicians.
Although we require our third-party suppliers to supply us with components that meet our specifications and comply with applicable provisions of the FDA’s Quality System Regulation (“QSR”) and other applicable legal and regulatory requirements in our agreements and contracts, and we perform incoming inspection, testing or other acceptance activities to ensure the components meet our requirements, there is a risk that our suppliers will not always act consistent with our best interests, and may not always supply components that meet our requirements or supply components in a timely manner.
Although we require our third-party suppliers to supply us with components that meet our specifications and comply with applicable provisions of the FDA’s Quality Management System Regulation (“QMSR”) and other applicable legal and regulatory requirements in our agreements and contracts, and we perform incoming inspection, testing or other acceptance activities to ensure the components meet our requirements, there is a risk that our suppliers will not always act consistent with our best interests, and may not always supply components that meet our requirements or supply components in a timely manner.
As of December 31, 2024, commercial payors such as Aetna, Humana, and many of the largest Blue Cross Blue Shield plans including Anthem, Health Care Service Corporation, BCBS Michigan, and Highmark have issued positive coverage policies for endobronchial valve procedures.
As of December 31, 2025, commercial payors such as Aetna, Humana, and many of the largest Blue Cross Blue Shield plans including Anthem, Health Care Service Corporation, BCBS Michigan, and Highmark have issued positive coverage policies for endobronchial valve procedures.
We are subject to unannounced inspections by the FDA and the Food and Drug Branch of the CDPH to determine our compliance with the QSR and other regulations at our manufacturing facility, and these inspections may include the manufacturing facilities of our suppliers. We believe that we are in compliance, in all material respects, with the QSR.
We are subject to unannounced inspections by the FDA and the Food and Drug Branch of the CDPH to determine our compliance with the QMSR and other regulations at our manufacturing facility, and these inspections may include the manufacturing facilities of our suppliers. We believe that we are in compliance, in all material respects, with the QMSR.
The changes to the regulatory system implemented in the EU by the MDR include stricter requirements 60 Table of Contents for clinical evidence and pre-market assessment of safety and performance, new classifications to indicate risk levels, requirements for third party testing by Notified Bodies, tightened and streamlined quality management system assessment procedures and additional requirements for the quality management system, additional requirements for traceability of products and transparency as well a refined responsibility of economic operators.
The changes to the regulatory system implemented in the EU by the MDR include stricter requirements for clinical evidence and pre-market assessment of safety and performance, new classifications to indicate risk levels, requirements for third party testing by Notified Bodies, tightened and streamlined quality management system assessment procedures and additional requirements for the quality management system, additional requirements for traceability of products and transparency as well a refined responsibility of economic operators.
To prevent having to litigate claims in multiple jurisdictions and the threat of inconsistent or contrary rulings by different courts, among other considerations, our amended and restated certificate of incorporation further provides that the federal district courts of the United States are the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act.
To prevent having to litigate claims in multiple jurisdictions and the threat of inconsistent or contrary rulings by different courts, among other considerations, our amended and restated certificate of incorporation further provides that the federal district courts of the United States are the 89 Table of Contents exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act.
Misconduct by these parties could include intentional, reckless or negligent conduct or other unauthorized activities that violate the regulations of the FDA and non-U.S. regulators, including those laws requiring the reporting of true, complete and accurate information to such regulators, manufacturing standards, healthcare fraud and abuse laws and regulations in the United States and internationally or laws that require the true, complete and accurate reporting of financial information or data.
Misconduct by these parties could include intentional, reckless or negligent conduct or other unauthorized activities that violate the regulations of the FDA and non-U.S. regulators, 77 Table of Contents including those laws requiring the reporting of true, complete and accurate information to such regulators, manufacturing standards, healthcare fraud and abuse laws and regulations in the United States and internationally or laws that require the true, complete and accurate reporting of financial information or data.
The misuse or off-label use of our solution will harm our image in the marketplace, result in injuries that lead to product liability suits or result in costly investigations and sanctions by regulatory bodies if we are deemed to have engaged in the promotion of these uses, any of which will negatively affect our business, financial condition and results of operations.
The misuse or off-label use of our solution will harm our image in the marketplace, result in injuries that lead to product liability suits or result in costly investigations and sanctions by regulatory bodies if we are deemed to 68 Table of Contents have engaged in the promotion of these uses, any of which will negatively affect our business, financial condition and results of operations.
Our competitors, many of which have substantially greater resources and have made substantial investments in patent portfolios, trade secrets, trademarks, and competing technologies, may have applied for or obtained, or may in the future apply for or obtain, patents or trademarks that will prevent, limit or otherwise interfere with our ability to make, use, sell or export our products or to use our technologies or product names.
Our competitors, many of which have substantially greater resources and have made substantial investments in patent portfolios, trade secrets, trademarks, and competing technologies, may have applied for or obtained, or may in the future apply for or obtain, patents or trademarks that will prevent, limit or otherwise interfere with our ability to make, use, sell or export our 78 Table of Contents products or to use our technologies or product names.
Although we try to ensure that our employees and consultants do not use the intellectual property, proprietary information, know-how or trade secrets of others in their 81 Table of Contents work for us, we may be subject to claims that we or these individuals have, inadvertently or otherwise, misappropriated the intellectual property or disclosed the alleged trade secrets or other proprietary information, of these former employers or competitors.
Although we try to ensure that our employees and consultants do not use the intellectual property, proprietary information, know-how or trade secrets of others in their work for us, we may be subject to claims that we or these individuals have, inadvertently or otherwise, misappropriated the intellectual property or disclosed the alleged trade secrets or other proprietary information, of these former employers or competitors.
We have applied for such an extension 83 Table of Contents however, the applicable authorities, including the FDA and the USPTO in the United States, and any equivalent regulatory authority in other countries, may not agree with our assessment of whether such extensions are available, and may refuse to grant extensions to any patents we obtain, or may grant more limited extensions than we request.
We have applied for such an extension however, the applicable authorities, including the FDA and the USPTO in the United States, and any equivalent regulatory authority in other countries, may not agree with our assessment of whether such extensions are available, and may refuse to grant extensions to any patents we obtain, or may grant more limited extensions than we request.
Additionally, the FDA or comparable foreign regulatory authorities may disagree with our interpretation of the data from our pre-clinical studies and clinical trials, or may find the clinical trial design, conduct or results inadequate to prove safety or efficacy, and may require us to pursue additional pre-clinical studies or clinical trials, which could further delay the clearance, certification or 67 Table of Contents approval of our products.
Additionally, the FDA or comparable foreign regulatory authorities may disagree with our interpretation of the data from our pre-clinical studies and clinical trials, or may find the clinical trial design, conduct or results inadequate to prove safety or efficacy, and may require us to pursue additional pre-clinical studies or clinical trials, which could further delay the clearance, certification or approval of our products.
These fluctuations may occur due to a variety of factors, many of which are outside of our control, including, but not limited to: • the level of demand for our products and any future products, which may vary significantly; • expenditures that we may incur to acquire, develop or commercialize additional products and technologies; • the timing and cost of obtaining regulatory approvals, certification or clearances for planned or future products or indications; • unanticipated pricing pressures; • the rate at which we grow our sales force and the speed at which newly hired salespeople become effective, and the cost and level of investment therein; • our ability to expand the geographic reach of our sales force; • the rate at which treating centers expand procedural capacity as they build a bronchoscopic lung volume reduction program; • the degree of competition in our industry and any change in the competitive landscape of our industry, including consolidation among our competitors or future partners; • coverage and reimbursement policies with respect to our products, and potential future products that compete with our products; • the timing and success or failure of pre-clinical studies or clinical trials for our products or any future products we develop or competing products; • positive or negative coverage in the media or clinical publications of our products or products of our competitors or our industry; 43 Table of Contents • the timing of customer orders or medical procedures using our products and the number of available selling days in any quarterly period, which can be impacted by holidays, the mix of products sold and the geographic mix of where products are sold, including any related foreign currency impact; • seasonality, including possible seasonal slowing of demand for our products in the beginning and end of the year and summer months based on the elective nature of procedures performed using our products, and which may become more pronounced in the future as our business grows; • the impact of a public health crisis on our business, financial condition and results of operations; • the timing and cost of, and level of investment in, research, development, licenses, regulatory approval, commercialization activities, acquisitions and other strategic transactions, or other significant events relating to our products, which may change from time to time; • the cost of manufacturing our products, which may vary depending on the quantity of production and the terms of our agreements with third-party suppliers and manufacturers which are subject to macroeconomic factors including inflation; • the number of patients treated with Zephyr Valves, including the average number of Zephyr Valves used for a patient, pricing, discounts and incentives; and • future accounting pronouncements or changes in our accounting policies.
These fluctuations may occur due to a variety of factors, many of which are outside of our control, including, but not limited to: • the level of demand for our products and any future products, which may vary significantly; • expenditures that we may incur to acquire, develop or commercialize additional products and technologies; • the timing and cost of obtaining regulatory approvals, certification or clearances for planned or future products or indications; • unanticipated pricing pressures; • the rate at which we grow our sales force and the speed at which newly hired salespeople become effective, and the cost and level of investment therein; • our ability to expand the geographic reach of our sales force; • the rate at which treating centers expand procedural capacity as they build a bronchoscopic lung volume reduction program; • the degree of competition in our industry and any change in the competitive landscape of our industry, including consolidation among our competitors or future partners; 44 Table of Contents • coverage and reimbursement policies with respect to our products, and potential future products that compete with our products; • the timing and success or failure of pre-clinical studies or clinical trials for our products or any future products we develop or competing products; • positive or negative coverage in the media or clinical publications of our products or products of our competitors or our industry; • the timing of customer orders or medical procedures using our products and the number of available selling days in any quarterly period, which can be impacted by holidays, the mix of products sold and the geographic mix of where products are sold, including any related foreign currency impact; • seasonality, including possible seasonal slowing of demand for our products in the beginning and end of the year and summer months based on the elective nature of procedures performed using our products, and which may become more pronounced in the future as our business grows; • the impact of a public health crisis on our business, financial condition and results of operations; • the timing and cost of, and level of investment in, research, development, licenses, regulatory approval, commercialization activities, acquisitions and other strategic transactions, or other significant events relating to our products, which may change from time to time; • the cost of manufacturing our products, which may vary depending on the quantity of production and the terms of our agreements with third-party suppliers and manufacturers which are subject to macroeconomic factors including fluctuating inflation and interest rates, as well as tariffs, the threat of new or increased tariffs, trade disputes and escalating trade tensions, and changes in trade agreements; • the number of patients treated with Zephyr Valves, including the average number of Zephyr Valves used for a patient, pricing, discounts and incentives; and • future accounting pronouncements or changes in our accounting policies.
The safety, efficacy, performance and cost-effectiveness of our solution, on a stand-alone basis and relative to competing treatments and 31 Table of Contents services, will determine the willingness of payors to cover the procedure.
The safety, efficacy, performance and cost-effectiveness of our solution, on a stand-alone basis and relative to competing treatments and 32 Table of Contents services, will determine the willingness of payors to cover the procedure.
To the extent we are required to use cash from operations or the proceeds of any future financing to service our indebtedness instead of funding working capital, capital expenditures or other general corporate purposes, we will be less able to plan for, or react to, changes in our business, industry and in the economy generally.
To the extent we are required to use cash from operations or the proceeds of any future financing to service our indebtedness instead of funding working capital, capital expenditures or other general corporate purposes, we will be less able to plan for, or react to, changes in our 48 Table of Contents business, industry and in the economy generally.
This will place us at a competitive disadvantage compared to our competitors that have less indebtedness. In addition, the CIBC Agreement contains, and any agreements evidencing or governing other future indebtedness may contain, certain covenants that limit our ability to engage in certain transactions that may be in our long-term best interests.
This will place us at a competitive disadvantage compared to our competitors that have less indebtedness. In addition, the Perceptive Credit Agreement contains, and any agreements evidencing or governing other future indebtedness may contain, certain covenants that limit our ability to engage in certain transactions that may be in our long-term best interests.
For these reasons, 56 Table of Contents in the event we experience a change of control, we may not be able to utilize a material portion of the NOLs, research and development credit carryforwards or disallowed interest expense carryovers, even if we attain profitability. We may not be able to achieve or maintain satisfactory pricing and margins for our products.
For these reasons, in the event we experience a change of control, we may not be able to utilize a material portion of the NOLs, research and development credit carryforwards or disallowed interest expense carryovers, even if we attain profitability. We may not be able to achieve or maintain satisfactory pricing and margins for our products.
Additionally, as a result of these investigations, healthcare providers and entities may have to agree to additional compliance and reporting requirements as part of a consent decree or corporate integrity agreement. Any such investigation or settlement 63 Table of Contents could increase our costs or otherwise negatively affect our business, financial condition and results of operations.
Additionally, as a result of these investigations, healthcare providers and entities may have to agree to additional compliance and reporting requirements as part of a consent decree or corporate integrity agreement. Any such investigation or settlement could increase our costs or otherwise negatively affect our business, financial condition and results of operations.
Despite our efforts to protect our proprietary rights, unauthorized parties may be able to obtain and use information that we regard as proprietary. In addition, the issuance of a patent does not ensure that it is valid or enforceable, so even if we obtain patents, they may not be valid or enforceable against 78 Table of Contents third parties.
Despite our efforts to protect our proprietary rights, unauthorized parties may be able to obtain and use information that we regard as proprietary. In addition, the issuance of a patent does not ensure that it is valid or enforceable, so even if we obtain patents, they may not be valid or enforceable against third parties.
We are unable to predict the effect that such sales may have on the prevailing market price of our common stock. We do not intend to pay dividends for the foreseeable future and, as a result, your ability to achieve a return on your investment will depend on appreciation in the price of our common stock.
We are unable to predict the effect that such sales may have on the prevailing market price of our common stock. 87 Table of Contents We do not intend to pay dividends for the foreseeable future and, as a result, your ability to achieve a return on your investment will depend on appreciation in the price of our common stock.
Failure to comply with these rules might also make it more difficult for us to obtain certain types of insurance, including director and officer liability insurance, and we might be forced to accept reduced policy limits and coverage or incur substantially higher costs to 85 Table of Contents obtain the same or similar coverage.
Failure to comply with these rules might also make it more difficult for us to obtain certain types of insurance, including director and officer liability insurance, and we might be forced to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage.
Any litigation involving us may result in substantial costs, operationally restrict our business, and may divert management’s attention and resources, which may negatively affect our business, financial condition and results of operations. 45 Table of Contents We face the risk of product liability claims that would be expensive, divert management’s attention and harm our reputation and business.
Any litigation involving us may result in substantial costs, operationally restrict our business, and may divert management’s attention and resources, which may negatively affect our business, financial condition and results of operations. We face the risk of product liability claims that would be expensive, divert management’s attention and harm our reputation and business.
Any of the foregoing consequences will negatively affect our business, financial condition and results of operations. If we modify the Zephyr Valve, we may need to seek additional clearances, certification or approvals, which, if not granted, would prevent us from selling our modified products.
Any of the foregoing consequences will negatively affect our business, financial condition and results of operations. 66 Table of Contents If we modify the Zephyr Valve, we may need to seek additional clearances, certification or approvals, which, if not granted, would prevent us from selling our modified products.
In addition, if we make any substantial changes to medical devices for which we have obtained a CE Certificate of Conformity on the basis of the MDD and which we continue to place on the EU market on the basis of the transitional provisions of the MDR, we will no 64 Table of Contents longer be able to benefit from the transitional provisions of the MDR.
In addition, if we make any substantial changes to medical devices for which we have obtained a CE Certificate of Conformity on the basis of the MDD and which we continue to place on the EU market on the basis of the transitional provisions of the MDR, we will no longer be able to benefit from the transitional provisions of the MDR.
We believe that we are in compliance, in all material respects, with the MDD and MDR, as applicable to our products. We can provide no assurance that we will continue to remain in compliance with the QSR, MDR, and MDD, as applicable to our products.
We believe that we are in compliance, in all material respects, with the MDD and MDR, as applicable to our products. We can provide no assurance that we will continue to remain in compliance with the QMSR, MDR, and MDD, as applicable to our products.
The USPTO and various foreign governmental patent agencies require compliance with a number of procedural, documentary, fee payment and other similar provisions during the patent application process. In addition, periodic maintenance fees on issued patents often must be paid to the USPTO and foreign patent agencies over the lifetime of 80 Table of Contents the patent.
The USPTO and various foreign governmental patent agencies require compliance with a number of procedural, documentary, fee payment and other similar provisions during the patent application process. In addition, periodic maintenance fees on issued patents often must be paid to the USPTO and foreign patent agencies over the lifetime of the patent.
We cannot assure you, however, that our policies and procedures are or will be sufficient or that directors, officers, employees, representatives, consultants and agents have not engaged and will not engage in conduct for which we may be held responsible, nor can we assure you that our business partners have not engaged and will not engage in conduct that could materially affect their ability to perform their contractual obligations to us or even result in our being held liable for such conduct.
We cannot assure 58 Table of Contents you, however, that our policies and procedures are or will be sufficient or that directors, officers, employees, representatives, consultants and agents have not engaged and will not engage in conduct for which we may be held responsible, nor can we assure you that our business partners have not engaged and will not engage in conduct that could materially affect their ability to perform their contractual obligations to us or even result in our being held liable for such conduct.
We are increasingly dependent on complex information technology to manage our infrastructure. Our information systems require an ongoing commitment of significant resources to maintain, protect and enhance our existing systems. Failure to maintain or protect our information systems and data integrity effectively could negatively affect our business, financial condition, and results of operations.
We are increasingly dependent 46 Table of Contents on complex information technology to manage our infrastructure. Our information systems require an ongoing commitment of significant resources to maintain, protect and enhance our existing systems. Failure to maintain or protect our information systems and data integrity effectively could negatively affect our business, financial condition, and results of operations.
If we or our suppliers fail to comply with the FDA’s QSR or the European Union MDR, our manufacturing or distribution operations could be delayed or shut down and our revenue could suffer.
If we or our suppliers fail to comply with the FDA’s QMSR or the European Union MDR, our manufacturing or distribution operations could be delayed or shut down and our revenue could suffer.
Although we are given an opportunity to respond to those rejections, we may be unable to overcome such rejections. In addition, in proceedings before the USPTO and comparable agencies in many foreign jurisdictions, third parties are given an opportunity to oppose pending trademark applications and to seek to cancel registered trademarks.
During trademark registration proceedings, we may receive rejections. Although we are given an opportunity to respond to those rejections, we may be unable to overcome such rejections. In addition, in proceedings before the USPTO and comparable agencies in many foreign jurisdictions, third parties are given an opportunity to oppose pending trademark applications and to seek to cancel registered trademarks.
International sales are subject to a number of risks, including: • difficulties in staffing and managing our international operations; • increased competition as a result of more products and procedures receiving regulatory approval or otherwise free to market in international markets; • longer accounts receivable payment cycles and difficulties in collecting accounts receivable; • reduced or varied protection for intellectual property rights in some countries; • export restrictions, trade regulations and foreign tax laws; • fluctuations in currency exchange rates; • foreign certification and regulatory clearance or approval requirements; • difficulties in developing effective marketing campaigns in unfamiliar foreign countries; • customs clearance and shipping delays; • political, social, and economic instability abroad, including as a result of armed conflict, war or the threat of war, terrorist activity and other security concerns in general; • the impact of public health crises; • preference for locally produced products; • potentially adverse tax consequences, including the complexities of foreign value-added tax systems, tax inefficiencies related to our corporate structure, and restrictions on the repatriation of earnings; 52 Table of Contents • differing payment and reimbursement regimes; • the burdens of complying with a wide variety of foreign laws and different legal standards; and • increased financial accounting and reporting burdens and complexities.
International sales are subject to a number of risks, including: • difficulties in staffing and managing our international operations; • the impacts of tariffs, the threat of new or increased tariffs, trade disputes, escalating trade tensions, and changes in trade agreements; • increased competition as a result of more products and procedures receiving regulatory approval or otherwise free to market in international markets; • longer accounts receivable payment cycles and difficulties in collecting accounts receivable; • reduced or varied protection for intellectual property rights in some countries; • export restrictions, trade regulations and foreign tax laws; • fluctuations in currency exchange rates; 53 Table of Contents • foreign certification and regulatory clearance or approval requirements; • difficulties in developing effective marketing campaigns in unfamiliar foreign countries; • customs clearance and shipping delays; • political, social, and economic instability abroad, including as a result of armed conflict, war or the threat of war, terrorist activity and other security concerns in general; • the impact of public health crises; • preference for locally produced products; • potentially adverse tax consequences, including the complexities of foreign value-added tax systems, tax inefficiencies related to our corporate structure, and restrictions on the repatriation of earnings; • differing payment and reimbursement regimes; • the burdens of complying with a wide variety of foreign laws and different legal standards; and • increased financial accounting and reporting burdens and complexities.
Our use of this technology could result in additional compliance costs, regulatory investigations and actions, and lawsuits. If we are unable to use generative AI, it could make our business less efficient and result in competitive disadvantages. Several jurisdictions around the globe, including Europe and certain U.S. states, have proposed or enacted laws governing AI/machine learning (“ML”).
Our use of this technology could result in additional compliance costs, regulatory investigations and actions, and lawsuits. If we are unable to use generative AI, it could make our business less efficient and result in competitive disadvantages. Several jurisdictions around the globe, including Europe and certain U.S. states, have proposed or enacted laws governing AI technologies.
We continue to make progress 49 Table of Contents with our CONVERT II pivotal trial of the AeriSeal System, a potential product in development for the treatment of severe emphysema patients who are not qualified for Zephyr Valve treatment due to excessive collateral ventilation.
We continue to make progress with our CONVERT II pivotal trial of the AeriSeal System, a potential product in development for the treatment of severe emphysema patients who are not qualified for Zephyr Valve treatment due to excessive collateral ventilation.
If we fail to obtain and maintain necessary regulatory approvals for the Zephyr Valve and related products, or if approvals for future products and indications are delayed or not issued, it will negatively affect our business, financial condition and results of operations.
If we fail to obtain and maintain necessary regulatory approvals for the Zephyr Valve and 60 Table of Contents related products, or if approvals for future products and indications are delayed or not issued, it will negatively affect our business, financial condition and results of operations.
Any of these events will negatively affect our business, financial condition and results of operations and cause our stock price to decline. 66 Table of Contents We may be subject to regulatory or enforcement actions if we engage in improper marketing or promotion of our products.
Any of these events will negatively affect our business, financial condition and results of operations and cause our stock price to decline. We may be subject to regulatory or enforcement actions if we engage in improper marketing or promotion of our products.
In addition, clinical trials that are conducted in countries outside the United States may subject us to further delays and expenses as a result of increased shipment costs, additional regulatory 69 Table of Contents requirements and the engagement of non-U.S.
In addition, clinical trials that are conducted in countries outside the United States may subject us to further delays and expenses as a result of increased shipment costs, additional regulatory requirements and the engagement of non-U.S.
Additionally, the Company launched the LungTraX Platform in 2024 which will involve the processing of more patient PHI in the Company-managed system in our capacity as a Business Associate (as defined by the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”)), the unintended release of which could have additional material adverse impacts on the Company financially and reputationally.
Additionally, the Company launched the LungTraX Platform in 2024 which involves the processing of patient PHI in the Company-managed system in our capacity as a Business Associate (as defined by the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”)), the unintended release of which could have additional material adverse impacts on the Company financially and reputationally.
If we fail to comply with these laws, we could be subject to civil or criminal penalties, other remedial 55 Table of Contents measures and legal expenses, which could negatively affect our business, financial condition and results of operations.
If we fail to comply with these laws, we could be subject to civil or criminal penalties, other remedial measures and legal expenses, which could negatively affect our business, financial condition and results of operations.
Further changes in federal, state, local and third-party payor regulations or policies may negatively affect our business, financial condition and results of operations. Actions by agencies regulating insurance or changes in other laws, regulations, or policies may also negatively affect our business, financial condition and results of operations.
Further changes in federal, state, local and third-party payor regulations or policies may negatively 62 Table of Contents affect our business, financial condition and results of operations. Actions by agencies regulating insurance or changes in other laws, regulations, or policies may also negatively affect our business, financial condition and results of operations.
This report could be classified by the FDA or comparable foreign regulatory authorities as a device recall which could lead to increased scrutiny by the FDA, other foreign regulatory authorities and our customers regarding the quality and safety of our solutions.
This report could be classified by the FDA or comparable foreign regulatory 72 Table of Contents authorities as a device recall which could lead to increased scrutiny by the FDA, other foreign regulatory authorities and our customers regarding the quality and safety of our solutions.
The CCPA also provides for civil penalties for violations (up to $7,500 per intentional violation), as well as a private right of action for certain data breaches that is expected to increase data breach litigation.
The CCPA also provides for civil penalties for violations (up to $7,500 per intentional violation), as well as a private right of action for certain data 74 Table of Contents breaches that is expected to increase data breach litigation.
Based on our current planned operations, we expect our cash, cash equivalents and short-term marketable securities will enable us to fund our operating expenses for at least the next twelve months. We have based this estimate on assumptions that may prove to be wrong, and we could use our capital resources sooner than we currently expect.
Based on our current planned operations, we expect our cash and cash equivalents will enable us to fund our operating expenses for at least the next twelve months. We have based this estimate on assumptions that may prove to be wrong, and we could use our capital resources sooner than we currently expect.
The overall rate of smoking among the U.S. adult population 44 Table of Contents has been steadily declining from 42.4% in 1965 to 11.6% in 2022 and there are increased efforts to decrease the rate of smoking globally.
The overall rate of smoking among the U.S. adult population has been steadily declining from 42.4% in 1965 to 11.6% in 2022 and there are increased efforts to decrease the rate of smoking globally.
Inventory levels in excess of customer demand may result in 42 Table of Contents inventory write-downs or write-offs, which would cause our gross margin to be adversely affected and could impair the strength of our brand.
Inventory levels in excess of customer demand may result in inventory write-downs or write-offs, which would cause our gross margin to be adversely affected and could impair the strength of our brand.
A product liability claim, 46 Table of Contents recall or other claim with respect to uninsured liabilities or for amounts in excess of insured liabilities could negatively affect our business, financial condition and results of operations.
A product liability claim, recall or other claim with respect to uninsured liabilities or for amounts in excess of insured liabilities could negatively affect our business, financial condition and results of operations.
The pursuit of potential acquisitions may divert the attention of management and cause us to incur various costs and expenses in identifying, investigating and pursuing suitable acquisitions, whether or not they are consummated.
The pursuit of potential acquisitions may divert the attention of management and cause us to incur various costs and expenses in identifying, investigating and pursuing suitable 56 Table of Contents acquisitions, whether or not they are consummated.
If we modify our products, we may need to apply for additional regulatory approvals or certification before we are permitted to sell the modified product. In addition, we may not continue to meet the quality and safety standards 70 Table of Contents required to maintain the authorizations or certification that we have received.
If we modify our products, we may need to apply for additional regulatory approvals or certification before we are permitted to sell the modified product. In addition, we may not continue to meet the quality and safety standards required to maintain the authorizations or certification that we have received.
Further, individuals or other relevant stakeholders could sue us for our actual or 41 Table of Contents perceived failure to comply with our security obligations, including, without limitation, in class action litigation. Security incidents could also result in indemnity obligations, negative publicity and financial loss.
Further, individuals or other relevant stakeholders could sue us for our actual or perceived failure to comply with our security obligations, including, without limitation, in class action litigation. Security incidents could also result in indemnity obligations, negative publicity and financial loss.
We may not be able to attract or retain qualified engineers and medical researchers in the future due to the competition for qualified personnel. We have from time to time experienced, and we expect to continue to experience, difficulty in hiring and retaining employees with appropriate 51 Table of Contents qualifications.
We may not be able to attract or retain qualified engineers and medical researchers in the future due to the competition for qualified personnel. We have from time to time experienced, and we expect to continue to experience, difficulty in hiring and retaining employees with appropriate qualifications.
We currently focus our international sales and marketing efforts in Australia, Austria, Belgium, China, Denmark, France, Germany, Ireland, Italy, Japan, the Netherlands, South Korea, Spain, Switzerland and the United Kingdom.
We currently focus our international sales and marketing efforts in Australia, Austria, Belgium, China, Denmark, France, Germany, Ireland, Italy, Japan, the Netherlands, Spain, Sweden, Switzerland and the United Kingdom.
Even an unsuccessful challenge or investigation into our practices could cause adverse publicity and be costly to respond to. In December 2022, we received a civil investigative demand (“CID”) from the U.S. Department of Justice, Civil Division in connection with an investigation under the Anti-Kickback Statute and False Claims Act (the “Investigation”).
Even an unsuccessful challenge or investigation into our practices could cause adverse publicity and be costly to respond to. In December 2022, we received a civil investigative demand (“CID”) from the U.S. Department of Justice, Civil Division (“USDOJ”) in connection with an investigation under the False Claims Act.
Compliance with applicable regulatory requirements regarding the export of our products may create delays in the introduction of our products in international markets or, in some cases, prevent the export of our products to some countries altogether.
Compliance with applicable regulatory requirements regarding the export of our products may create delays in the introduction of our products in international markets 59 Table of Contents or, in some cases, prevent the export of our products to some countries altogether.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeWe work with third-parties from time to time to assist us to identify, assess, and manage risks from cybersecurity threats, including, for example, professional services firms, including outside legal counsel, cybersecurity consultants, and cybersecurity software providers.
Biggest changeWe work with third-parties from time to time to assist us to identify, assess, and manage risks from cybersecurity threats, including, for example, professional services firms, including outside legal counsel and penetration testing firms. We use certain third-party service providers to perform a variety of functions that help us operate our business, such as application providers and hosting companies.
When incidents are identified, these members of management are responsible for determining whether such incidents are material and may escalate material incidents to the Audit Committee and/or investors, based on the particular circumstances. The Audit Committee receives periodic updates from management concerning the Company’s significant cybersecurity threats, risks, and the processes the Company has implemented to address them.
When material incidents are identified, these members of management are responsible for determining whether such incidents are material and may escalate material incidents to the Audit Committee and/or investors, based on the particular circumstances. The Audit Committee receives periodic updates from management concerning the Company’s significant cybersecurity threats, risks, and the processes the Company has implemented to address them.
See Part I, Item 1A, “Risk Factors” for a description of the risks from cybersecurity threats that may materially affect the Company and how they may do so, including the risk factor titled, If our information technology systems or data, or those of third parties with whom we work, are or were compromised, we could experience adverse impacts resulting from such compromise, including, but not limited to, interruptions to our operations such as to our LungTraX Platform services or our clinical trials, claims that we breached our data protection obligations, harm to our reputation, business operations, and financial condition, as well as a loss of customers or sales. 88 Table of Contents Governance Our board of directors address the Company’s cybersecurity risk management as part of its general oversight function.
For a description of the risks from cybersecurity threats that may materially affect the Company and how they may do so, see Part I, Item 1A, “Risk Factors” for a description of the risks from cybersecurity threats that may materially affect the Company and how they may do so, including the risk factor titled, If our information technology systems or data, or those of third parties with whom we work, are or were compromised, we could experience adverse impacts resulting from such compromise, including, but not limited to, interruptions to our operations such as to our LungTraX Platform services or our clinical trials, claims that we breached our data protection obligations, harm to our reputation, business operations, and financial condition, as well as a loss of customers or sales. 91 Table of Contents Governance Our board of directors addresses the Company’s cybersecurity risk management as part of its general oversight function.
Our cybersecurity risk assessment and management processes are implemented and maintained by certain members of Company management, including the Senior Director of Information Technology, who has worked in various roles responsible for securing networks and application systems, the Chief Executive Officer, the General Counsel, and the Chief Financial Officer.
Our cybersecurity risk assessment and management processes are implemented and maintained by certain members of Company management, including the Senior Director of Information Technology, who has worked in various roles responsible for securing networks and application systems, the Cloud Security Engineering Manager, the Chief Executive Officer, the Chief Technology Officer, the General Counsel, and the Chief Operating Officer and Chief Financial Officer and Chief Operation Officer.
Our assessment, identification and management of material risks from cybersecurity threats are integrated into the Company’s overall risk management processes. We rely on a multidisciplinary team, including our information technology department, legal department, management, engineering operations, and third-party service providers (the “Security Function”) to help assess, identify and manage the Company’s cybersecurity threats and risks.
Our assessment, identification and management of material risks from cybersecurity threats are integrated into the Company’s overall risk management processes. We rely on a multidisciplinary team, including our Chief Technology Officer, information technology department, legal department, security management, and engineering operations, (the “Security Function”) to help assess, identify and manage the Company’s cybersecurity threats and risks.
Depending on the environment, we implement and maintain various technical, physical, and organizational measures, processes, standards, and policies designed to manage and mitigate material risks from cybersecurity threats to our Information Systems and Data, including, for example, an incident response plan, risk assessments, incident detection and response, vulnerability management, encryption of data, network security controls, data segregation, access controls, physical security, systems monitoring, employee training, cybersecurity insurance, and asset management, tracking and disposal.
Depending on the environment, systems and data at issue, we implement and maintain various technical, physical, and organizational measures, processes, standards, and policies designed to manage and mitigate material risks from cybersecurity threats to our Information Systems and Data, including, for example, an incident response plan, risk assessments, incident detection and response, vulnerability management processes, disaster recovery/business continuity processes, encryption of data, network security controls, data segregation, access controls, physical security, systems monitoring, vendor risk management processes, employee training, penetration testing, cybersecurity insurance, dedicated cybersecurity staff, and asset management, tracking and disposal.
Various members of the Security Function monitor and evaluate our cybersecurity threat environment using various methods including, for example, using manual and automated tools, subscribing to reports and services that identify cybersecurity threats, analyzing reports of threats and threat actors, conducting scans of the threat environment, and evaluating threats reported to us.
Various members of the Security Function monitor and evaluate our cybersecurity threat environment using various methods including, for example, using manual and automated tools, subscribing to reports and services that identify cybersecurity threats, analyzing reports of threats and threat actors, conducting scans of the threat environment, evaluating threats reported to us, audits, conducting threat assessments, conducting vulnerability assessments to identify vulnerabilities, use of external intelligence feeds, and internal tabletop and incident response exercises.
Removed
We use certain third-party service providers to perform a variety of functions that help us operate our business, such as application providers, hosting companies, contract research organizations, distributors, and supply chain resources.
Removed
As of December 31, 2024, the Company has not identified any risks from cybersecurity threats that have materially affected or are reasonably likely to materially affect the Company, including our business strategy, results of operations or financial condition, but there can be no assurance that any such risk will not materially affect the Company in the future.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeHolders of Common Stock As of February 14, 2025, there were approximately 126 holders of record of our common stock. The actual number of stockholders is greater than this number of holders of record and includes stockholders who are beneficial owners but whose shares are held in the street name by brokers and other nominees.
Biggest changeHolders of Common Stock As of March 3, 2026, there were approximately 115 holders of record of our common stock. The actual number of stockholders is greater than this number of holders of record and includes stockholders who are beneficial owners but whose shares are held in the street name by brokers and other nominees.

Item 7. Management's Discussion & Analysis

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

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Biggest changeCash used in operating activities was primarily a result of the net loss of $60.8 million, a decrease in lease liabilities of $3.2 million due to lease payments, an increase in accounts receivable of $3.1 million due to revenue growth and the timing of payments from our customers, net accretion of discounts on marketable securities of $1.0 million, and a decrease in accounts payable of $0.3 million due to timing of payments to our vendors, partially offset by an increase in accrued liabilities of $3.2 million due to increased accrued incentive compensation expense associated with the achievement of performance objectives, a decrease in inventory of $0.9 million, stock-based compensation expense of $22.1 million, non-cash lease expense of $2.7 million, depreciation and amortization expense of $1.5 million and write-down of inventory of $0.5 million.
Biggest changeThis was partially offset by stock-based compensation expense of $21.2 million, non-cash lease expense of $1.4 million, a decrease in accounts receivable of $1.1 million primarily due to the timing of payments from our customers, depreciation and amortization expense of $1.1 million, a decrease in prepaid expenses and other current assets of $0.8 million primarily due to the timing of payments to our vendors, an increase in accounts payable of $0.3 million due to the timing of payments to our vendors, and an increase in income taxes payable of $0.2 million.
We seek to maintain higher levels of inventory to protect ourselves from supply interruptions and have an established distribution system for both U.S. and international customers. Table of Contents To date, we have financed our operations primarily through the sale of equity securities, debt financing arrangements and sales of our products.
We seek to maintain higher levels of inventory to protect ourselves from supply interruptions and have an established distribution system for both U.S. and international customers. Table of Contents To date, we have financed our operations primarily through the sale of our products, the sale of equity securities, and debt financing arrangements.
Interest income is predominantly derived from investing surplus cash in money market funds and marketable securities. Other Income (Expense), Net Other income (expense), net primarily consists of foreign currency exchange gains and losses.
Interest income is predominantly derived from investing surplus cash in money market funds and marketable securities. Other Income, Net Other income, net primarily consists of foreign currency exchange gains and losses.
This is partially offset by stock-based compensation expense of $23.0 million, an increase in accounts payable of $2.3 million due to timing of payments to our vendors, a non-cash impairment charge of $1.7 million related to certain previously capitalized software development costs recorded in the second quarter of 2024, depreciation and amortization expense of $1.5 million and non-cash lease expense of $1.8 million.
This was partially offset by stock-based compensation expense of $23.0 million, an increase in accounts payable of $2.3 million due to timing of payments to our vendors, a non-cash impairment charge of $1.7 million related to certain previously capitalized software development costs recorded in the second quarter of 2024, depreciation and amortization expense of $1.5 million and non-cash lease expense of $1.8 million.
No single customer accounted for more than 10% of our revenue during the years ended December 31, 2024 and December 31, 2023. Revenue from sales of our products fluctuates based on volume of cases (procedures performed), the average number of Zephyr Valves used for a patient, pricing, discounts, incentives and mix of U.S. and international sales.
No single customer accounted for more than 10% of our revenue during the years ended December 31, 2025 and December 31, 2024. Revenue from sales of our products fluctuates based on volume of cases (procedures performed), the average number of Zephyr Valves used for a patient, pricing, discounts, incentives and mix of U.S. and international sales.
Our estimates are based on our knowledge of current events and actions we may undertake in the future and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources.
Our estimates Table of Contents are based on our knowledge of current events and actions we may undertake in the future and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources.
We also intend to continue helping physicians in their outreach to patients and other healthcare providers. These efforts require significant investment by our marketing and sales organization, and vary depending upon the physician’s practice specialization, and personal preferences and geographic location of physicians, pulmonary rehabilitation Table of Contents centers and patients.
We also intend to continue helping physicians in their outreach to patients and other healthcare providers. These efforts require significant investment by our marketing and sales organization, and vary depending upon the physician’s practice specialization, and personal preferences and geographic location of physicians, pulmonary rehabilitation centers and patients.
Cash Flows from Financing Activities Net cash provided by financing activities in the year ended December 31, 2024 of $1.4 million primarily relates to proceeds from issuance of common stock under the employee stock purchase plan of $1.2 million and proceeds from exercise of common stock options of $0.2 million, offset by repayment of debt under the Credit Agreement of $0.1 million.
Net cash provided by financing activities in the year ended December 31, 2024 of $1.4 million primarily relates to proceeds from issuance of common stock under the employee stock purchase plan of $1.2 million and proceeds from exercise of common stock options of $0.2 million, partially offset by repayment of debt under the Credit Agreement of $0.1 million.
Cash Flows from Investing Activities Net cash provided by investing activities in the year ended December 31, 2024 was $17.5 million consisting of proceeds from maturities of marketable securities of $46.8 million, offset by purchases of marketable securities of $27.9 million and purchases of property and equipment of $1.4 million.
Net cash provided by investing activities in the year ended December 31, 2024 was $17.5 million consisting of proceeds from maturities of marketable securities of $46.8 million, partially offset by purchases of marketable securities of $27.9 million and purchases of property and equipment of $1.4 million.
Table of Contents Research and Development Research and development expenses consist of costs incurred to further our research and development activities and include compensation costs, stock-based compensation, engineering and research expenses, clinical trials and related expenses, regulatory expenses, manufacturing expenses incurred to build products for testing, allocated facilities costs, consulting fees and other expenses incurred to sustain our overall research and development programs.
Research and Development Research and development expenses consist of costs incurred to further our research and development activities and include compensation costs, stock-based compensation, engineering and research expenses, clinical trials and related expenses, regulatory expenses, manufacturing expenses incurred to build products for testing, allocated facilities costs, consulting fees and other expenses incurred to sustain our overall research and development programs.
Management believes that the Company’s existing cash, cash equivalents and marketable securities will allow the Company to continue its operations for at least the next 12 months from the date of the issuance of our consolidated financial statements.
Management believes that the Company’s existing cash and cash equivalents will allow the Company to continue its operations for at least the next 12 months from the date of the issuance of our consolidated financial statements.
We employ both direct and distributor-based sales models, with 96% of our revenue generated in markets where we sell directly for the year ended December 31, 2024. In the United States, our solution is reimbursed based on established Category I Current Procedural Terminology (“CPT”) and ICD-10 Procedure Coding System (“PCS”) codes and associated APC and MS-DRG payment groupings.
We employ both direct and distributor-based sales models, with 95% of our revenue generated in markets where we sell directly for the year ended December 31, 2025. In the United States, our solution is reimbursed based on established Category I Current Procedural Terminology (“CPT”) and ICD-10 Procedure Coding System (“PCS”) codes and associated APC and MS-DRG payment groupings.
If we raise additional capital through collaborations agreements, licensing arrangements or marketing and distribution arrangements, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or grant licenses that Table of Contents may not be favorable to us.
If we raise additional capital through collaborations agreements, licensing arrangements or marketing and distribution arrangements, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or grant licenses that may not be favorable to us.
We believe we will meet longer-term expected future cash requirements and obligations through a combination of available cash, cash equivalents and marketable securities, debt financings, and access to other public or private equity offerings. We have based these estimates on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we expect.
We believe we will meet longer-term expected future cash requirements and obligations through a combination of available cash and cash equivalents, debt financings, and access to other Table of Contents public or private equity offerings. We have based these estimates on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we expect.
The financial terms of these contracts are subject to negotiations and may vary from contract to contract and may result in uneven payment flow.
The financial terms of these contracts are subject to negotiations and may vary from contract to contract Table of Contents and may result in uneven payment flow.
Our cash outflows for capital expenditures were $1.4 million during the year ended December 31, 2024 and $0.8 million during the year ended December 31, 2023, and we expect to maintain the level of expenditures in the future in support of our commercial infrastructure, sales force and other commercialization efforts.
Our cash outflows for capital expenditures were $0.5 million during the year ended December 31, 2025 and $1.4 million during the year ended December 31, 2024, and we expect to maintain the level of expenditures in the future in support of our commercial infrastructure, sales force and other commercialization efforts.
Liquidity and Capital Resources; Plan of Operation To date, we have financed our operations primarily through our IPO, private placements of equity securities, debt financing arrangements and sales of our products.
Liquidity and Capital Resources; Plan of Operation To date, we have financed our operations primarily through sales of our products, our initial public offering, private placements of equity securities, and debt financing arrangements.
Table of Contents As of December 31, 2024, there was $37.9 million of unrecognized compensation costs related to non-vested common stock options and restricted stock units, expected to be recognized over a weighted-average period of 2.4 years. Income Taxes Our major tax jurisdictions are the United States and California, Switzerland and Neuchâtel.
As of December 31, 2025, there was $30.6 million of unrecognized compensation costs related to non-vested common stock options and restricted stock units, expected to be recognized over a weighted-average period of 2.4 years. Income Taxes Our major tax jurisdictions are the United States and California, Switzerland and Neuchâtel.
Material Cash Requirements Our net cash operating expenditures were $31.5 million during the year ended December 31, 2024 and $37.6 million during the year ended December 31, 2023, and we intend to continue to make investments in the development of our products, including ongoing research and development programs.
Material Cash Requirements Our net cash operating expenditures were $32.4 million during the year ended December 31, 2025 and $31.5 million during the year ended December 31, 2024, and we intend to continue to make investments in the development of our products, including ongoing research and development programs.
Our solution, which is comprised of the Zephyr Valve, the Chartis System and the LungTraX Platform, is designed to treat severe emphysema patients who, despite medical management, are still profoundly symptomatic and either do not want or are ineligible for surgical approaches. In 2018, we received pre-market approval from the FDA for the Zephyr Valve, following its “Breakthrough Technology” designation.
Our solution, which is comprised of the Zephyr Valve, the Chartis System and the LungTraX Platform, is designed to treat severe emphysema patients who, despite medical management, are still profoundly symptomatic and either do not want or are ineligible for surgical approaches. In 2018, we received pre-market approval (“PMA”) from the U.S.
Significant judgment is required to determine our provision for income taxes and income tax assets and liabilities, including evaluating uncertainties in the application of accounting principles, complex tax laws, or variances between our actual and anticipated operating results. Therefore, actual income taxes could materially vary from these estimates. We provide for income taxes under the asset and liability method.
Significant judgment is required to determine our provision for income taxes and income tax assets and liabilities, including evaluating uncertainties in the application of accounting principles, complex tax laws, or variances Table of Contents between our actual and anticipated operating results. Therefore, actual income taxes could materially vary from these estimates.
Interest income decreased by $0.5 million, or 9.1%, to $5.1 million during the year ended December 31, 2024 compared to $5.6 million during the year ended December 31, 2023. The decrease was primarily due to a lower balance of cash, cash equivalents, and marketable securities, which resulted in reduced returns on these assets.
Interest income decreased by $2.4 million, or 47.6%, to $2.7 million during the year ended December 31, 2025 compared to $5.1 million during the year ended December 31, 2024. The decrease was primarily due to a lower balance of cash, cash equivalents, and marketable securities, which resulted in reduced returns on these assets.
We also generate a smaller amount of our revenue from our Chartis System, which is comprised of sales of the balloon catheters, usage fees and sales of the Chartis console. The LungTraX Platform, which is used to identify patients eligible for treatment with Zephyr Valves, has not independently generated any revenue for us.
We also generate a smaller amount of our revenue from our Chartis System, which is comprised of sales of the balloon catheters, usage fees and sales of the Chartis console, and from our LungTraX Platform, which is used to help identify patients potentially eligible for treatment with Zephyr Valves.
These decreases were offset by a non-cash impairment Table of Contents charge of $1.7 million related to certain previously capitalized software development costs recorded in the second quarter of 2024.
These increases were offset by a non-cash impairment charge of $1.9 million related to certain previously capitalized software development costs recorded in the second quarter of 2024.
Lastly, we may undertake additional expenses to further expand our commercial organization and efforts, enhance our research and development efforts and pursue product expansion opportunities. As of December 31, 2024, we had cash, cash equivalents and marketable securities of $101.5 million.
Lastly, we may undertake additional expenses to further expand our commercial organization and efforts, enhance our research and development efforts and pursue product expansion opportunities. As of December 31, 2025, we had cash and cash equivalents of $69.8 million.
The Zephyr Valve is commercially available in numerous countries globally. We have established reimbursement in major markets in North America, Europe and Asia Pacific and the Zephyr Valve has been included in treatment guidelines for COPD worldwide.
Food and Drug Administration (“FDA”) for the Zephyr Valve following its Breakthrough Device designation. The Zephyr Valve is commercially available in numerous countries globally. We have established reimbursement in major markets in North America, Europe and Asia Pacific and the Zephyr Valve has been included in treatment guidelines for COPD worldwide.
Other Income (Expense), Net Other income (expense), net increased by $0.9 million to $0.3 million during the year ended December 31, 2024, compared to $(0.7) million during the year ended December 31, 2023, primarily due to foreign currency exchange gains.
Other Income, Net Other income, net increased by $0.5 million to $0.8 million during the year ended December 31, 2025, compared to $0.3 million during the year ended December 31, 2024, primarily due to foreign currency exchange gains.
The sale of products in international markets increased by $4.6 million to $27.3 million during the year ended December 31, 2024, compared to $22.8 million for the year ended December 31, 2023. The increase in revenue reflects continued growth of Zephyr Valve procedure volumes in the United States and in international markets.
The sale of products in international markets increased by $6.2 million to $33.5 million during the year ended December 31, 2025, compared to $27.3 million for the year ended December 31, 2024. The increase in revenue reflects continued growth of Zephyr Valve procedure volumes.
Recent and expected working and other capital requirements include Table of Contents amounts related to future lease payments for operating lease obligations, which totaled $31.3 million at December 31, 2024, with $2.6 million expected to be paid within the next 12 months, and amounts related to future short-term and long-term debt which totaled $43.2 million, with $6.3 million expected to be paid within the next 12 months.
Recent and expected working and other capital requirements include amounts related to future lease payments for operating lease obligations, which totaled $29.7 million at December 31, 2025, with $3.0 million expected to be paid within the next 12 months, and amounts related to future short-term and long-term debt which totaled $42.5 million, with $3.0 million expected to be paid within the next 12 months.
Net cash provided by financing activities in the year ended December 31, 2023 of $21.4 million primarily relates to proceeds of $20.0 million from borrowing under the Amended and Restated CIBC Agreement, proceeds from issuance of common stock under the employee stock purchase plan of $1.2 million and proceeds from exercise of common stock options of $0.3 million, partially offset by repayment of debt under the Credit Agreement of $0.1 million.
Cash Flows from Financing Activities Net cash provided by financing activities in the year ended December 31, 2025 of $0.8 million primarily relates to proceeds from issuance of common stock under the employee stock purchase plan of $0.8 million and proceeds from exercise of common stock options of $0.2 million, partially offset by repayment of debt under the Credit Agreement of $0.1 million and payment of debt issuance cost of $0.1 million.
The sale of products in the United States increased by $10.5 million to $56.5 million during the year ended December 31, 2024, compared to $45.9 million for the year ended December 31, 2023.
The sale of products in the United States increased by $0.6 million to $57.0 million during the year ended December 31, 2025, compared to $56.5 million for the year ended December 31, 2024.
Interest Expense and Income Interest expense increased by $0.3 million, or 8.5%, to $3.5 million during the year ended December 31, 2024, compared to $3.2 million during the year ended December 31, 2023, primarily due to higher interest rates.
Interest Expense and Income Interest expense decreased by $0.4 million, or 10.0%, to $3.2 million during the year ended December 31, 2025, compared to $3.5 million during the year ended December 31, 2024, primarily due to lower interest rates.
Summary Statement of Cash Flows The following table sets forth the primary sources and uses of cash and cash equivalents for the period presented below: Years Ended December 31, 2024 2023 (in thousands) Net cash (used in) provided by: Operating activities $ (31,537) $ (37,610) Investing activities 17,476 (2,007) Financing activities 1,363 21,400 Effect of exchange rate changes on cash and cash equivalents 76 34 Net decrease in cash, cash equivalents and restricted cash $ (12,622) $ (18,183) Table of Contents Cash Flows from Operating Activities Net cash used in operating activities was $31.5 million for the year ended December 31, 2024.
Summary Statement of Cash Flows The following table sets forth the primary sources and uses of cash and cash equivalents for the period presented below: Years Ended December 31, 2025 2024 (in thousands) Net cash (used in) provided by: Operating activities $ (32,376) $ (31,537) Investing activities 30,482 17,476 Financing activities 833 1,363 Effect of exchange rate changes on cash and cash equivalents (92) 76 Net decrease in cash, cash equivalents and restricted cash $ (1,153) $ (12,622) Cash Flows from Operating Activities Net cash used in operating activities was $32.4 million for the year ended December 31, 2025.
We generated revenue of $83.8 million, with a gross margin of 74.0% and a net loss of $56.4 million, for the year ended December 31, 2024 compared to revenue of $68.7 million, with a gross margin of 73.9% and a net loss of $60.8 million, for the year ended December 31, 2023.
We generated revenue of $90.5 million, with a gross margin of 74.2% and a net loss of $54.0 million, for the year ended December 31, 2025 compared to revenue of $83.8 million, with a gross margin of 74.0% and a net loss of $56.4 million, for the year ended December 31, 2024.
The decrease in research and development expenses was primarily due to a decrease of $1.8 million in professional services and other expenses in support of product development, a decrease of $0.2 million in personnel-related expenses including stock-based compensation, and a decrease of $0.1 million in costs associated with our clinical trials, including fees paid to contract research organizations and testing expenses.
The increase in research and development expenses was primarily due to an increase of $2.2 million in costs associated with our clinical trials, including fees paid to clinical research organizations, an increase of $0.8 million in payroll and personnel-related expenses, and an increase of $0.7 million in services and other expenses in support of product development.
Deferred income tax assets are reduced, as necessary, by a valuation allowance when management determines it is more likely than not that some or all of the tax benefits will not be realized.
Deferred tax assets and liabilities are measured using the enacted tax rates and laws that will be in effect when such items are expected to reverse. Deferred income tax assets are reduced, as necessary, by a valuation allowance when management determines it is more likely than not that some or all of the tax benefits will not be realized.
The value of inventories not expected to be realized in cash, sold or consumed during the next 12 months are classified as long-term inventory.
The value of inventories not expected to be realized in cash, sold or consumed during the next 12 months are classified as long-term inventory. We consider forecasted demand and other expected usage of inventory on hand when estimating long-term inventory.
Based on our current planned operations, we expect that our cash, cash equivalents and marketable securities will enable us to fund our operating expenses for at least 12 months from the issuance of our financial statements as of and for the year ended December 31, 2024.
Based on our current planned operations and the refinancing of debt described in the section titled “Subsequent Events⸺Perceptive Credit Agreement” in the notes to our consolidated financial statements, we expect that our cash and cash equivalents will enable us to fund our operating expenses for at least 12 months from the issuance of our financial statements as of and for the year ended December 31, 2025.
Net cash used in investing activities in the year ended December 31, 2023 was $2.0 million consisting of purchases of marketable securities of $46.2 million and purchases of property and equipment of $0.8 million partially offset by proceeds from maturities of marketable securities of $45.0 million.
Cash Flows from Investing Activities Net cash provided by investing activities in the year ended December 31, 2025 was $30.5 million consisting of proceeds from maturities of marketable securities of $36.6 million, partially offset by purchases of marketable securities of $5.7 million and purchases of property and equipment of $0.5 million.
In order to grow our business, we will need to continue to make significant investments in training and educating hospitals, physicians and patients on the advantages of our solution for the treatment of severe emphysema.
In order to grow our business, we will need to continue to make significant investments in Table of Contents training and educating hospitals, physicians and patients on the advantages of our solution for the treatment of severe emphysema. We are also working to improve the efficiency of our commercial initiatives for treating centers to accelerate patient identification and treatment conversion.
Net cash used in operating activities was $37.6 million for the year ended December 31, 2023.
Table of Contents Net cash used in operating activities was $31.5 million for the year ended December 31, 2024.
Research and Development Expenses Research and development expenses decreased by $0.5 million, or 2.8%, to $17.6 million during the year ended December 31, 2024, compared to $18.1 million during the year ended December 31, 2023.
Gross margin was 74.2% during the year ended December 31, 2025, compared to 74.0% during the year ended December 31, 2024. Research and Development Expenses Research and development expenses increased by $1.9 million, or 10.9%, to $19.5 million during the year ended December 31, 2025, compared to $17.6 million during the year ended December 31, 2024.
Selling, General and Administrative Expenses Selling, general and administrative expenses increased by $7.5 million, or 8.0%, to $102.1 million during the year ended December 31, 2024 compared to $94.6 million during the year ended December 31, 2023.
Table of Contents Selling, General and Administrative Expenses Selling, general and administrative expenses decreased by $0.8 million, or 0.8%, to $101.3 million during the year ended December 31, 2025 compared to $102.1 million during the year ended December 31, 2024.
As of December 31, 2024, we had cash, cash equivalents and marketable securities of $101.5 million, an accumulated deficit of $467.6 million, and $37.2 million outstanding under the CIBC Loan and Credit Agreement, net of debt discount and debt issuance costs.
As of December 31, 2025, we had cash and cash equivalents of $69.8 million, an accumulated deficit of $521.6 million, and $37.1 million outstanding under the Amended and Restated CIBC Credit Agreement (as defined below), net of debt discount and debt issuance costs.
We intend to continue to make significant investments in our sales and marketing organization throughout the United States, Europe and Asia Pacific.
We have also made significant investments in clinical studies to demonstrate the safety and efficacy of the Zephyr Valve and to support regulatory submissions. We intend to continue to make significant investments in our sales and marketing organization throughout the United States, Europe and Asia Pacific.
The increase in selling, general and administrative expenses was primarily due to an increase of $3.9 million in advertising and marketing related expenses, an increase of $2.2 million in payroll and personnel-related expenses including stock-based compensation for our sales, marketing and administrative personnel, and an increase of $1.0 million in travel and conference related expenses.
The decrease in selling, general and administrative expenses was primarily due to a decrease of $2.5 million in payroll and personnel-related expenses for our sales, marketing and administrative personnel, a decrease of $0.4 million in professional services consulting expenses, and a decrease of $0.3 million in facilities and other expenses, offset by an increase of $2.4 million in advertising and marketing related expenses.
As of December 31, 2024, we had an accumulated deficit of $467.6 million, cash, cash equivalents and marketable securities of $101.5 million, and $37.2 million of outstanding term loans and credit agreements, net of debt discount and debt issuance costs. We have invested heavily in product development.
As of December 31, 2025, we had an accumulated deficit of $521.6 million, cash and cash equivalents of $69.8 million, and $37.1 million of outstanding term loans and credit agreements, net of debt discount and debt issuance costs. We have invested heavily in product development. Our research and development activities have been centered on driving continuous improvements to our solution.
Cost of Goods Sold and Gross Margin Cost of goods sold increased by $3.9 million, or 21.6%, to $21.8 million during the year ended December 31, 2024, compared to $17.9 million during the year ended December 31, 2023.
Cost of Goods Sold and Gross Margin Cost of goods sold increased by $1.6 million, or 7.2%, to $23.4 million during the year ended December 31, 2025, compared to $21.8 million during the year ended December 31, 2024. The increase was mainly due to an increase in the number of products sold.
Table of Contents Results of Operations: Comparison of the Years Ended December 31, 2024 and December 31, 2023 The following table summarizes our results of operations for the period indicated: Years Ended December 31, 2024 2023 $ Change % Change (in thousands, except percentages) Revenue $ 83,789 $ 68,675 $ 15,114 22.0 % Costs of goods sold 21,788 17,923 3,865 21.6 % Gross profit 62,001 50,752 11,249 22.2 % Operating expenses: Research and development 17,570 18,080 (510) (2.8) % Selling, general and administrative 102,135 94,607 7,528 8.0 % Total operating expenses 119,705 112,687 7,018 6.2 % Loss from operations (57,704) (61,935) 4,231 (6.8) % Interest income 5,061 5,568 (507) (9.1) % Interest expense (3,507) (3,232) (275) 8.5 % Other income (expense), net 256 (673) 929 (138.0) % Net loss before tax (55,894) (60,272) 4,378 (7.3) % Income tax expense 500 571 (71) (12.4) % Net loss $ (56,394) $ (60,843) $ 4,449 (7.3) % Revenue Revenue increased by $15.1 million, or 22.0%, to $83.8 million during the year ended December 31, 2024, compared to $68.7 million during the year ended December 31, 2023.
Table of Contents Results of Operations: Comparison of the Years Ended December 31, 2025 and December 31, 2024 The following table summarizes our results of operations for the period indicated: Years Ended December 31, 2025 2024 $ Change % Change (in thousands, except percentages) Revenue $ 90,497 $ 83,789 $ 6,708 8.0 % Costs of goods sold 23,358 21,788 1,570 7.2 % Gross profit 67,139 62,001 5,138 8.3 % Operating expenses: Research and development 19,491 17,570 1,921 10.9 % Selling, general and administrative 101,311 102,135 (824) (0.8) % Total operating expenses 120,802 119,705 1,097 0.9 % Loss from operations (53,663) (57,704) 4,041 (7.0) % Interest income 2,651 5,061 (2,410) (47.6) % Interest expense (3,155) (3,507) 352 (10.0) % Other income, net 790 256 534 208.6 % Net loss before tax (53,377) (55,894) 2,517 (4.5) % Income tax expense 626 500 126 25.2 % Net loss $ (54,003) $ (56,394) $ 2,391 (4.2) % Revenue Revenue increased by $6.7 million, or 8.0%, to $90.5 million during the year ended December 31, 2025, compared to $83.8 million during the year ended December 31, 2024.
The loan principal is being repaid in twelve equal installments, paid semi-annually, which began in March of 2022. Interest expense was immaterial during the years ended December 31, 2024 and December 31, 2023. Pulmonx International Sàrl repaid $0.1 million and $0.1 million to the lender during the years ended December 31, 2024 and December 31, 2023, respectively.
The COVID-19 Credit Agreement currently bears interest at a rate of 1.5% per year, payable at the end of each calendar quarter. The loan principal is being repaid in twelve equal installments, paid semi-annually, which began in March of 2022. Interest expense was immaterial during the years ended December 31, 2025 and December 31, 2024.
Current income tax expense or benefit represents the amount of income taxes expected to be payable or refundable for the current year. Deferred income tax assets and liabilities arise due to differences between when assets or liabilities are recognized for tax purposes and when they are recognized for financial reporting purposes.
Deferred income tax assets and liabilities arise due to differences between when assets or liabilities are recognized for tax purposes and when they are recognized for financial reporting purposes. Net operating losses and credit carryforwards are also deferred tax assets.
Credit Agreemen t In May 2020, Pulmonx International Sàrl, our wholly owned subsidiary, received 0.5 million Swiss Francs ($0.5 million U.S. dollar equivalent) from a COVID-19 Credit Agreement under a Swiss Federal Government program. The COVID-19 Credit Agreement currently bears interest at a rate of 1.5% per year, payable at the end of each calendar quarter.
See the section entitled “Subsequent Events⸺Perceptive Credit Agreement” in the notes to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K Credit Agreement In May 2020, Pulmonx International Sàrl, our wholly owned subsidiary, received 0.5 million Swiss Francs ($0.5 million U.S. dollar equivalent) from a COVID-19 Credit Agreement under a Swiss Federal Government program.
Removed
Our research and development activities have been centered on driving continuous improvements to our solution. We have also made significant investments in clinical studies to demonstrate the safety and efficacy of the Zephyr Valve and to support regulatory submissions.
Added
Subsequent to December 31, 2025, on March 2, 2026 (the “Closing Date”) the Company entered into a Credit Agreement and Guaranty (the “Credit Agreement”) and a Security Agreement (the “Security Agreement”), with Perceptive Credit Holdings V, LP (“Perceptive”), as the initial lender, administrative agent and collateral agent.
Removed
The increase was mainly due to an increase in the number of products sold and increased manufacturing costs as we invested to support anticipated growth. Gross margin was 74.0% during the year ended December 31, 2024, compared to 73.9% during the year ended December 31, 2023.
Added
The Perceptive Credit Agreement provides for a senior secured term loan facility in an aggregate principal amount of up to $60.0 million (the “Loan Facility”). On the Closing Date, the Company borrowed an initial loan under the Credit Agreement in an aggregate principal amount of $40.0 million.
Removed
CIBC Loan In February 2020, we executed a Loan and Security Agreement with Canadian Imperial Bank of Commerce (“CIBC”), which we subsequently amended in April 2020 and December 2020 (as amended, the “CIBC Agreement”).
Added
The Loan Facility permits the Company to borrow up to an additional $20 million, in two additional equal tranches.
Removed
The CIBC Agreement originally provided us with the ability to borrow up to $32.0 million in debt financing (“CIBC Loan”) consisting of $17.0 million advanced at the closing of the agreement (“Tranche A”), with the option to draw up to an additional $8.0 million (“Tranche B”) and an additional financing tranche (“Tranche C”) of up to $7.0 million on or prior to February 20, 2022.
Added
The first $10.0 million tranche becomes available if the Company reaches at least $92.5 million in revenue for any trailing twelve-month period ending as of the end of last day of any fiscal quarter through, and including, the fiscal quarter ending September 30, 2027, and the second $10.0 million tranche becomes available if the Company reaches at least $100.0 million in revenue for any trailing twelve-month period ending as of the end of last day of any fiscal quarter through, and including, the fiscal quarter ending December 31, 2027.
Removed
Neither Tranche B nor Tranche C was drawn before the option expired.
Added
The Loan Facility has a maturity date of March 2, 2031 (the “Maturity Date”). The Loan Facility accrues interest, payable monthly in arrears, at an annual rate equal to the sum of (a) an applicable margin of 7.00% (the “Applicable Margin”) plus (b) the greater of (i) one-month term SOFR and (ii) 3.75%.
Removed
In March 2021, we entered into an Amended and Restated Loan and Security Agreement with CIBC (as amended, the “Amended and Restated CIBC Agreement”) which, among other things, extended the loan maturity date of the CIBC Loan from March 15, 2022 to February 20, 2025, and modified certain financial covenants.
Added
Upon the occurrence and during the continuance of an event of default under the Credit Agreement, the Applicable Margin will increase by an additional 3.00% per annum at Perceptive’s election (retroactive to the date of such event of default), or automatically in the case of a payment or bankruptcy event of default.
Removed
In October 2021, we entered into a Second Amendment to the Amended and Restated CIBC Agreement, which extended the interest only period of the loan from 24 months to 36 months. Under the amended terms, principal repayment would begin in February 2023.
Added
The Credit Agreement contains certain representations and warranties, affirmative covenants, negative covenants, and events of default that are customarily required for similar financings.
Removed
In October 2022, we entered into a Third Amendment to the Amended and Restated CIBC Agreement (the “Third Amendment”), which, among other things, extended the maturity date to October 31, 2027; provided a commitment for a new $20.0 million tranche of term loans that may be drawn at our option through October 31, 2023, subject to Table of Contents the satisfaction of certain conditions; and provided for a new interest only period of 24 months from the signing date of the Third Amendment, with the possibility of an additional extension of such interest only period of up to 12 months, subject to satisfaction of certain conditions.
Added
In addition, the Credit Agreement contains financial covenants requiring the Company to (i) at all times prior to the Maturity Date, maintain minimum Liquidity (as defined in the Credit Agreement) of at least $4.0 million and (ii) as of each calculation date set forth in the Credit Table of Contents Agreement, maintain Revenue (as defined in the Credit Agreement) that is not less than the amounts specified in the Credit Agreement.
Removed
In February 2023, we drew $20.0 million of the Amended Tranche B which has the same interest rate and repayment terms as Tranche A of the CIBC Loan. In May 2024, as a result of satisfying certain conditions set forth in the Third Amendment, we extended the interest-only period of the CIBC Loan from 24 months to 36 months.
Added
The occurrence of an event of default under the Credit Agreement could result in, among other things, the declaration that all outstanding principal and interest thereunder are immediately due and payable in whole or in part.
Removed
Principal repayment will begin in November 2025. There was no change to the loan interest rate, maturity date, or other terms of the loan. The loans provided under the Amended and Restated CIBC Agreement bear interest at a floating rate equal to 1.0% above the Wall Street Journal Prime Rate at any time.
Added
In connection with the Company’s entry into the Loan Facility, on March 2, 2026, the Company repaid all outstanding indebtedness under the Amended and Restated Loan and Security Agreement, dated March 29, 2021, as amended (the “Amended and Restated CIBC Agreement”), among the Company and the Canadian Imperial Bank of Commerce, as lender, and terminated all its obligations and commitments thereunder.
Removed
The loans are collateralized by substantially all of our assets, including cash and cash equivalents, accounts receivable, intellectual property and equipment. We may prepay the loans, subject to certain conditions.
Added
Pulmonx International Sàrl repaid $0.1 million and $0.1 million to the lender during the years ended December 31, 2025 and December 31, 2024, respectively.
Removed
The Amended and Restated CIBC Agreement contains financial covenants that require us to maintain minimum cash and minimum revenue amounts, and the Amended and Restated CIBC Agreement contains other customary restrictive covenants, representations and warranties, events of default and other customary terms and conditions.
Added
Cash used in operating activities was primarily a result of the net loss of $54.0 million, a decrease in accrued liabilities of $2.3 million primarily due to payment of incentive compensation in the first quarter of fiscal year 2025, associated with the achievement of performance objectives under the fiscal year 2024 incentive plan, a decrease in lease liabilities of $1.0 million due to lease payments, an increase in inventories of $0.8 million largely due to an increase in raw materials, and net accretion of discounts on marketable securities of $0.4 million.
Removed
We paid $0.5 million fees to the lender and third parties which is reflected as a discount on the loans provided under the Amended and Restated CIBC Agreement and is being accreted over the life of the loan using the effective interest method.
Added
We provide for income taxes under the asset and liability method. Current income tax expense or benefit represents the amount of income taxes expected to be payable or refundable for the current year.
Removed
During the years ended December 31, 2024 and December 31, 2023, we recorded interest expense related to debt discount and debt issuance costs of CIBC Loan of $0.1 million and less than $0.1 million, respectively. Interest expense on the CIBC Loan amounted $3.5 million and $3.2 million during the years ended December 31, 2024 and December 31, 2023, respectively.
Removed
Net operating losses and credit carryforwards are also deferred tax assets. Deferred tax assets and liabilities are measured using the enacted tax rates and laws that will be in effect when such items are expected to reverse.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

6 edited+1 added−1 removed6 unchanged
Biggest changeWe bill most direct sales outside of the United States in local currencies, which are mostly comprised of the Swiss franc, the Euro, the British pound, and the Australian dollar. Operating expenses related to these sales are largely denominated in the same respective currency, thereby limiting our transaction risk exposure.
Biggest changeRevenue from sales outside of the United States represented 37.0% and 32.6% of our total revenue for the years ended December 31, 2025 and December 31, 2024, respectively. We bill most direct sales outside of the United States in local currencies, which are mostly comprised of the Swiss franc, the Euro, the British pound, and the Australian dollar.
A 10% change in weighted average foreign currency exchange rates would have changed our revenues and operating expenses for the year ended December 31, 2023 by approximately $2.3 million and $1.9 million, respectively, with a net impact of $0.4 million on our net income.
A 10% change in weighted average foreign currency exchange rates would have changed our revenues and operating expenses for the year ended December 31, 2025 by approximately $3.3 million and $2.1 million, respectively, with a net impact of $1.2 million on our net income.
We therefore believe that the risk of a significant impact on our operating income from foreign currency fluctuations is not significant. The risk of a significant impact on our operating income from foreign currency fluctuations will further diminish as revenue from sales to customers in the United States increases and represents a greater proportion of total revenues.
The risk of a significant impact on our operating income from foreign currency fluctuations will further diminish as revenue from sales to customers in the United States increases and represents a greater proportion of total revenues.
Interest-earning money market funds carry a degree of interest rate risk; however, historical fluctuations in interest income have not been significant. We had outstanding debt of $36.9 million under the CIBC Agreement with an annual effective interest rate of 9.0% as of December 31, 2024.
Interest-earning money market funds carry a degree of interest rate risk; however, historical fluctuations in interest income have not been significant. We had outstanding debt of $36.9 million under the Amended and Restated CIBC Agreement with an annual effective interest rate of 8.2% as of December 31, 2025.
Interest Rate Risk We are exposed to interest rate risks related to our cash, cash equivalents and borrowings. We had cash and cash equivalents of $70.9 million as of December 31, 2024, which consist of cash and money market funds. We held cash in foreign banks of approximately $5.8 million at December 31, 2024 that was not federally insured.
Interest Rate Risk We are exposed to interest rate risks related to our cash, cash equivalents and borrowings. We had cash and cash equivalents of $69.8 million as of December 31, 2025, which consist of cash and money market funds. We held cash in foreign banks of approximately $13.4 million at December 31, 2025 that was not federally insured.
In the ordinary course of business, we may enter into contractual arrangements to reduce Table of Contents our exposure to interest rate risks. We believe that a 10% change in interest rates would not have a significant impact on our consolidated financial statements.
In the ordinary course of business, we may enter into contractual arrangements to reduce our exposure to interest rate risks. We believe that a 10% change in interest rates would not have a significant impact on our consolidated financial statements. Foreign Currency Exchange Risk We operate in countries other than the United States and are exposed to foreign currency risks.
Removed
Foreign Currency Exchange Risk We operate in countries other than the United States and are exposed to foreign currency risks. Revenue from sales outside of the United States represented 32.6% and 33.1% of our total revenue for the year ended December 31, 2024 and 2023, respectively.
Added
Operating expenses related to these sales are largely denominated in the same respective currency, thereby limiting our transaction risk exposure. We therefore believe that the risk of a significant impact on our operating income from Table of Contents foreign currency fluctuations is not significant.

Other LUNG 10-K year-over-year comparisons