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What changed in ALLURION TECHNOLOGIES, INC.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of ALLURION TECHNOLOGIES, INC.'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.

+369 added−439 removedSource: 10-K (2026-03-30) vs 10-K (2025-03-27)

Top changes in ALLURION TECHNOLOGIES, INC.'s 2025 10-K

369 paragraphs added · 439 removed · 269 edited across 4 sections

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

167 edited+58 added−130 removed538 unchanged
Biggest changeWe also compete with companies that make weight loss drugs and other weight loss solutions outside the medical device industry. • If our competitors are able to develop and market products, whether medical devices or otherwise, that are safer, more effective, easier to use, or more readily adopted by patients and health care providers, our commercial opportunities will be reduced or eliminated. • Our current international operations and any expansion of our business internationally expose us to business, regulatory, political, operational, financial, and economic risks associated with doing business internationally. • We depend on a limited number of single source suppliers to manufacture components, sub-assemblies, and materials, which makes us vulnerable to supply shortages and price fluctuations. • The regulatory approval process is expensive, time consuming, and uncertain, and may prevent us from obtaining approvals for the commercialization of the Allurion Balloon or other products. • Even if we receive regulatory approval for the Allurion Balloon in the United States and elsewhere, we will be subject to ongoing regulatory obligations and continued regulatory review, which may result in significant additional expense and subject us to penalties if we fail to comply with applicable regulatory requirements. • If patients using our products experience adverse events or other undesirable side effects, regulatory authorities could withdraw or modify our regulatory approvals, which would adversely affect our reputation and commercial prospects and/or result in other significant negative consequences. 29 • The medical device industry is characterized by patent litigation and we could become subject to adversarial proceedings or litigation that could be costly, result in the diversion of management’s time and efforts, result in a loss of our intellectual property, require us to pay damages, or prevent us from marketing our existing or future products. • If we are not able to obtain and maintain intellectual property protection for our products and technologies, if the scope of our patents is not sufficiently broad, if our patents are invalidated, or if competitors gain broader patent protection, we may not be able to effectively maintain our market leading technology position. • We have incurred net operating losses in the past and expect to incur net operating losses for the foreseeable future. • We have a significant amount of debt, which may affect our ability to operate our business and secure additional financing in the future. • We may need additional funds to support our operations, and such funding may not be available to us on acceptable terms, or at all, which would force us to delay, reduce, or suspend our planned development and commercialization efforts.
Biggest changeAs a result, we expect that our success will depend on the ability and willingness of health care providers to adopt self-pay practice management infrastructure and of patients to pay out-of-pocket for treatment with our products. • Changes in coverage and reimbursement for obesity treatments and procedures could affect the adoption of the Allurion Program and our future revenues. • The misuse or off-label use of our products may 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 could be costly to our business. • We depend on a limited number of single source suppliers to manufacture components, sub-assemblies, and materials, which makes us vulnerable to supply shortages and price fluctuations. • The failure of third parties to meet their contractual, regulatory, and other obligations could adversely affect our business. 31 • Even with regulatory approval for the Allurion Balloon in the United States and elsewhere, we will be subject to ongoing regulatory obligations and continued regulatory review, which may result in significant additional expense and subject us to penalties if we fail to comply with applicable regulatory requirements. • The regulatory approval process is expensive, time consuming, and uncertain, and may prevent us from obtaining approvals for the commercialization of the Allurion Smart Capsule or other products. • If patients using our products experience adverse events or other undesirable side effects, regulatory authorities could withdraw or modify our regulatory approvals, which would adversely affect our reputation and commercial prospects and/or result in other significant negative consequences. • The medical device industry is characterized by patent litigation and we could become subject to adversarial proceedings or litigation that could be costly, result in the diversion of management’s time and efforts, result in a loss of our intellectual property, require us to pay damages, or prevent us from marketing our existing or future products. • If we are not able to obtain and maintain intellectual property protection for our products and technologies, if the scope of our patents is not sufficiently broad, if our patents are invalidated, or if competitors gain broader patent protection, we may not be able to effectively maintain our market leading technology position. • We have incurred net operating losses in the past and expect to incur net operating losses for the foreseeable future, and there is substantial doubt about our ability to continue as a going concern. • We have a significant amount of debt, which may affect our ability to operate our business and secure additional financing in the future. • We may need additional funds to support our operations, and such funding may not be available to us on acceptable terms, or at all, which would force us to delay, reduce, or suspend our planned development and commercialization efforts.
Doing business in other countries outside the United States involves a number of other risks, including: • compliance with the free zone regime regulations under which we and our partners operate; • different regulatory requirements for device approvals in international markets; • multiple, conflicting and changing laws and regulations such as tariffs and tax laws, export and import restrictions, and other regulatory requirements and governmental approvals, permits and licenses; • potential failure by us or our distributors to obtain and/or maintain regulatory approvals for the sale or use of our products in various countries; 40 • difficulties in managing global operations; • logistics and regulations associated with shipping products, including infrastructure conditions and transportation delays; • limits on our ability to penetrate international markets if our distributors do not execute successfully; • governmental price controls, differing reimbursement regimes, and other market regulations; • financial risks, such as longer payment cycles and difficulty enforcing contracts and collecting accounts receivable; • reduced protection for intellectual property rights, or lack of such rights in certain jurisdictions, forcing more reliance on our trade secrets, if available; • economic weakness, political and economic instability (including wars, terrorism and political unrest, such as attacks on commercial ships by Houthi rebels), outbreak of disease, boycotts, curtailment of trade, and other business restrictions; • failure to comply with the Foreign Corrupt Practices Act (the “FCPA”), including its books and records provisions and its anti-bribery provisions, by failing to maintain accurate information and control over sales activities and distributors’ activities; • compliance with tax, employment, immigration and labor laws; • taxes, including withholding of payroll taxes; • currency fluctuations, which could result in increased operating expenses and reduced revenue, and other obligations incident to doing business in another country; • workforce uncertainty in countries where labor unrest is more common than in the United States; • production shortages resulting from any events affecting raw material supply or manufacturing capabilities abroad; and • business and shipping interruptions resulting from natural or other disasters including earthquakes, volcanic activity, hurricanes, floods and fires, or other events outside our control.
Doing business in other countries outside the United States involves a number of other risks, including: • compliance with the free zone regime regulations under which we and our partners operate; • different regulatory requirements for device approvals in international markets; • multiple, conflicting and changing laws and regulations such as tariffs and tax laws, export and import restrictions, and other regulatory requirements and governmental approvals, permits and licenses; • potential failure by us or our distributors to obtain and/or maintain regulatory approvals for the sale or use of our products in various countries; • difficulties in managing global operations; • logistics and regulations associated with shipping products, including infrastructure conditions and transportation delays; • limits on our ability to penetrate international markets if our distributors do not execute successfully; • governmental price controls, differing reimbursement regimes, and other market regulations; • financial risks, such as longer payment cycles and difficulty enforcing contracts and collecting accounts receivable; • reduced protection for intellectual property rights, or lack of such rights in certain jurisdictions, forcing more reliance on our trade secrets, if available; • economic weakness, political and economic instability (including wars, terrorism and political unrest, such as attacks on commercial ships by Houthi rebels), outbreak of disease, boycotts, curtailment of trade, and other business restrictions; • failure to comply with the Foreign Corrupt Practices Act (the “FCPA”), including its books and records provisions and its anti-bribery provisions, by failing to maintain accurate information and control over sales activities and distributors’ activities; • compliance with tax, employment, immigration and labor laws; • taxes, including withholding of payroll taxes; • currency fluctuations, which could result in increased operating expenses and reduced revenue, and other obligations incident to doing business in another country; 40 • workforce uncertainty in countries where labor unrest is more common than in the United States; • production shortages resulting from any events affecting raw material supply or manufacturing capabilities abroad; and • business and shipping interruptions resulting from natural or other disasters including earthquakes, volcanic activity, hurricanes, floods and fires, or other events outside our control.
These sales, or the perception in the market that the holders of a large number of shares of our common stock intend to sell shares, could increase the volatility of the market price of our common stock or result in a significant decline in the public trading price of our common stock.
These sales, or the perception in the market that the holders of a large number of shares of our common stock intend to sell shares, could increase the volatility of the market price of our common stock or result in a significant decline in the public trading price of our common stock.
The fair value of such warrants is remeasured on a quarterly basis with changes in the estimated fair value recorded in Other (expense) income on the consolidated statement of operations and comprehensive loss.
The fair value of such warrants is remeasured on a quarterly basis with changes in the estimated fair value recorded in Other income (expense) on the consolidated statement of operations and comprehensive loss.
For example: • it is possible that one or more of our pending patent applications will not become an issued patent or, if issued, that the patent(s) claims will have sufficient scope to protect all of our planned products, provide us with commercially viable patent protection or provide us with any competitive advantages; • if our pending applications issue as patents, they may be challenged by third parties as invalid or unenforceable under U.S. or foreign laws; • we may not successfully commercialize all of our planned products, if approved, before our relevant patents expire; 56 • we may not be the first to make the inventions covered by each of our patents and pending patent applications; or • we may not develop additional proprietary technologies or products that are separately patentable.
For example: • it is possible that one or more of our pending patent applications will not become an issued patent or, if issued, that the patent(s) claims will have sufficient scope to protect all of our planned products, provide us with commercially viable patent protection or provide us with any competitive advantages; • if our pending applications issue as patents, they may be challenged by third parties as invalid or unenforceable under U.S. or foreign laws; • we may not successfully commercialize all of our planned products, if approved, before our relevant patents expire; • we may not be the first to make the inventions covered by each of our patents and pending patent applications; or • we may not develop additional proprietary technologies or products that are separately patentable.
We are also subject to standard event of default provisions under the Revenue Interest Financing Agreement, Additional RIFA and the Amended Note Purchase Agreement, that, if triggered, would allow the debt to be accelerated, which could significantly deplete our cash resources, cause us to raise additional capital at unfavorable terms, require us to sell portions of our business or result in us becoming insolvent.
We are also subject to standard event of default provisions under the Revenue Interest Financing Agreement, Additional RIFA and the Amended Note Purchase Agreement, that, if triggered, would allow the 64 debt to be accelerated, which could significantly deplete our cash resources, cause us to raise additional capital at unfavorable terms, require us to sell portions of our business or result in us becoming insolvent.
If we identify additional material weaknesses in our internal control over financial reporting, if we are unable to comply with the requirements of Section 404 in a timely manner, if we are unable to assert that our internal control over financial reporting is effective or, once required, if our independent registered public accounting firm is unable to attest that our internal 71 control over financial reporting is effective, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our common stock could decrease.
If we identify additional material weaknesses in our internal control over financial reporting, if we are unable to comply with the requirements of Section 404 in a timely manner, if we are unable to assert that our internal control over financial reporting is effective or, once required, if our independent registered public accounting firm is unable to attest that our internal control over financial reporting is effective, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our common stock could decrease.
Regardless of merit or eventual outcome, liability claims may result in: • decreased demand for any products we may develop; • injury to our reputation and significant negative media attention; • withdrawal of patients from clinical trials or cancellation of trials; • significant costs to defend the related litigation and distraction to our management team; • substantial monetary awards to plaintiffs; • loss of revenue; and • the inability to commercialize any products that we may develop.
Regardless of merit or eventual outcome, liability claims may result in: • decreased demand for any products we may develop; • injury to our reputation and significant negative media attention; • withdrawal of patients from clinical trials or cancellation of trials; • significant costs to defend the related litigation and distraction to our management team; 44 • substantial monetary awards to plaintiffs; • loss of revenue; and • the inability to commercialize any products that we may develop.
Any such challenge, if successful, could limit patent protection for our technology and products and/or materially harm our business. 55 Even if the patent applications we rely on issue as patents, they may not issue in a form that will provide us with any meaningful protection, prevent competitors from competing with us or otherwise provide us with any competitive advantage.
Any such challenge, if successful, could limit patent protection for our technology and products and/or materially harm our business. Even if the patent applications we rely on issue as patents, they may not issue in a form that will provide us with any meaningful protection, prevent competitors from competing with us or otherwise provide us with any competitive advantage.
In such cases, we may decide that the more prudent course of action is to simply monitor the situation or initiate or seek some other non-litigious action or solution. Concurrently with an infringement litigation, third parties may also be able to challenge the validity of our patents before administrative bodies in the United States or abroad.
In such cases, we may decide that the more prudent course of action is to simply monitor the situation or initiate or seek some other non-litigious action or solution. 56 Concurrently with an infringement litigation, third parties may also be able to challenge the validity of our patents before administrative bodies in the United States or abroad.
For example, on November 7, 2024, Christopher Geberth, our former Chief Financial Officer, notified us of his decision to resign effective as of November 13, 2024, to pursue other interests. These types of 42 changes in our management team could cause retention and morale concerns among current employees, as well as operational risks.
For example, on November 7, 2024, Christopher Geberth, our former Chief Financial Officer, notified us of his decision to resign effective as of November 13, 2024, to pursue other interests. These types of changes in our management team could cause retention and morale concerns among current employees, as well as operational risks.
In addition, any amortization or charges resulting from the costs of acquisitions could increase our expenses. 43 If changes in the economy and/or consumer spending, consumer preference and other trends reduce consumer demand for our products, our sales and profitability would suffer. We are subject to the risks arising from adverse changes in general economic and market conditions.
In addition, any amortization or charges resulting from the costs of acquisitions could increase our expenses. If changes in the economy and/or consumer spending, consumer preference and other trends reduce consumer demand for our products, our sales and profitability would suffer. We are subject to the risks arising from adverse changes in general economic and market conditions.
If third parties have filed prior patent applications on inventions claimed in our patents or applications that were filed on or before March 15, 2013, an interference proceeding in the U.S. can be initiated by such third parties to determine who was the first to invent any of the subject matter covered by the patent claims of our applications.
If third parties have filed prior patent applications on inventions claimed in our patents or applications that were filed on or before March 15, 2013, an interference proceeding in the U.S. can be initiated by such third parties to determine 53 who was the first to invent any of the subject matter covered by the patent claims of our applications.
Our likely collaborators for any distribution, marketing, licensing or other collaboration arrangements include large and mid-size medical device and diagnostic companies, regional and national medical device and diagnostic companies, and distribution or group purchasing organizations. We will have limited control over the amount and timing of resources that our collaborators dedicate to the development or commercialization of our products.
Our likely collaborators for any distribution, marketing, licensing, manufacturing, or other collaboration arrangements include large and mid-size medical device and diagnostic companies, regional and national medical device and diagnostic companies, and distribution or group purchasing organizations. We will have limited control over the amount and timing of resources that our collaborators dedicate to the development or commercialization of our products.
Although many of these health care providers are accustomed to selling cash-pay services in their practices, some are primarily accustomed to providing services that are reimbursed by third-party payors. As a result, these health care providers may 31 need to augment their administrative staff and billing procedures to address the logistics of a self-pay practice.
Although many of these health care providers are accustomed to selling cash-pay services in their practices, some are primarily accustomed to providing services that are reimbursed by third-party payors. As a result, these health care providers may need to augment their administrative staff and billing procedures to address the logistics of a self-pay practice.
If we must remedy such violations, we or the Contracted Telehealth Groups may be required to modify business operations and services in a manner that undermines our ability to retain or acquire new customers, or we—or our Contracted Telehealth Groups—may be subject to fines or other burdensome enforcement actions that may result in our termination of operations in certain jurisdictions.
If we must remedy such violations, we or the Contracted Telehealth Groups may be required to modify business operations and services in a manner that undermines our ability to retain or acquire new customers, or we—or our Contracted Telehealth Groups—may be 49 subject to fines or other burdensome enforcement actions that may result in our termination of operations in certain jurisdictions.
Although there are limited exemptions for clinical trial data under the CCPA, the CCPA and other similar laws could impact our business activities depending on how such laws are interpreted and the types of personal information that we handle. Similar legislation has been proposed or adopted in many other states.
Although there are limited exemptions for clinical trial data under the CCPA, the CCPA and other similar laws could impact our business activities depending on how such laws are interpreted and the types of personal information that we handle. 62 Similar legislation has been proposed or adopted in many other states.
State laws are changing rapidly and there is discussion in the U.S. Congress of a new comprehensive federal data privacy law to which we may likely become subject, if enacted. Aspects of these new and 64 emerging state privacy laws and regulations, as well as their interpretation and enforcement, are dynamic and evolving.
State laws are changing rapidly and there is discussion in the U.S. Congress of a new comprehensive federal data privacy law to which we may likely become subject, if enacted. Aspects of these new and emerging state privacy laws and regulations, as well as their interpretation and enforcement, are dynamic and evolving.
Reductions in spending on our products, delays in purchasing decisions, failure to complete the Allurion Program, and inability to attract new customers, as well as pressure for extended billing terms or pricing discounts, would limit our ability to grow our business and negatively affect our operating results and financial condition.
Reductions in spending on our products, delays in purchasing decisions, failure to complete the Allurion Program, and inability to attract new customers, as well as 43 pressure for extended billing terms or pricing discounts, would limit our ability to grow our business and negatively affect our operating results and financial condition.
In addition, competitors with greater financial resources than ours could acquire other companies to gain enhanced name recognition and market share, as well as new technologies or products that could effectively compete with our existing and future products, which may cause our revenues to decline and harm our business.
In 39 addition, competitors with greater financial resources than ours could acquire other companies to gain enhanced name recognition and market share, as well as new technologies or products that could effectively compete with our existing and future products, which may cause our revenues to decline and harm our business.
In addition, our ability to complete the restructuring plans and achieve the anticipated benefits from the plans within the expected time frame, or at all, are subject to successful execution of management’s estimates and assumptions and may vary materially from our expectations, including as a result of factors that are beyond our control.
In addition, our ability to achieve the anticipated benefits from the restructuring plans within the expected time frame, or at all, are subject to successful execution of management’s estimates and assumptions and may vary materially from our expectations, including as a result of factors that are beyond our control.
Such litigation, if instituted against us, could result in substantial costs and diversion of management’s attention and resources, which could adversely affect our business, financial condition, results of operations and growth prospects. We do not intend to pay cash dividends for the foreseeable future.
Such litigation, if instituted against us, could result in substantial costs and diversion of management’s attention and resources, which could adversely affect our business, financial condition, results of operations and growth prospects. 67 We do not intend to pay cash dividends for the foreseeable future.
Our ability to successfully market the Allurion Balloon and our other current and future product and service offerings depends on numerous factors, including but not limited to: • acceptance of the Allurion Balloon as safe and effective by patients, caregivers and the medical community; • an acceptable safety profile of the Allurion Balloon in markets where we have obtained regulatory approvals; • successful completion of remediation programs to resume sales of the Allurion Balloon in any country that suspends sales of our products; • outcomes of current and future clinical trials of, and trials involving, the Allurion Balloon; • whether key thought leaders in the medical community accept that such clinical trials are sufficiently meaningful to influence their or their patients’ choices of product; • maintenance of our existing regulatory approvals and expansion of the geographies in which we have regulatory approvals; • establishment and maintenance of commercially viable processes at a scale sufficient to meet anticipated demand at an adequate cost of manufacturing, and that are compliant with ISO 13485 Quality Management System requirements and/or good manufacturing practice requirements, as set forth in the FDA’s QSR and other international regulations; • our success in educating health care providers and patients about the benefits, administration and use of the Allurion Balloon; • the availability, perceived advantages, relative cost, relative safety and relative efficacy of alternative and competing treatments; 30 • the willingness of patients to pay out-of-pocket for the Allurion Balloon and/or Allurion VCS in the absence of coverage and reimbursement for such treatment; • the success of our internal sales and marketing organization and the sales forces of our distributors; and • continued demand for weight loss using balloon products, which may be adversely affected by events involving our products or those of our competitors, among other things.
Our ability to successfully market the Allurion Smart Capsule and our other current and future product and service offerings depends on numerous factors, including but not limited to: • acceptance of the Allurion Smart Capsule as safe and effective by patients, caregivers and the medical community; • an acceptable safety profile of the Allurion Smart Capsule in markets where we have obtained regulatory approvals; • successful completion of remediation programs to resume sales of the Allurion Smart Capsule in any country that suspends sales of our products; • outcomes of current and future clinical trials of, and trials involving, the Allurion Smart Capsule; • whether key thought leaders in the medical community accept that such clinical trials are sufficiently meaningful to influence their or their patients’ choices of product; • maintenance of our existing regulatory approvals and expansion of the geographies in which we have regulatory approvals; • establishment and maintenance of commercially viable processes at a scale sufficient to meet anticipated demand at an adequate cost of manufacturing, and that are compliant with ISO 13485 Quality Management System requirements and/or good manufacturing practice requirements, as set forth in the FDA’s QSR and other international regulations; 33 • our success in educating health care providers and patients about the benefits, administration and use of the Allurion Smart Capsule; • the availability, perceived advantages, relative cost, relative safety and relative efficacy of alternative and competing treatments; • the willingness of patients to pay out-of-pocket for the Allurion Smart Capsule and/or Allurion VCS in the absence of coverage and reimbursement for such treatment; • the success of our internal sales and marketing organization and the sales forces of our distributors; and • continued demand for weight loss using balloon products, which may be adversely affected by events involving our products or those of our competitors, among other things.
There may be significant pressure on the U.S. government and international governmental bodies to limit the scope of patent protection both inside and outside the U.S. for disease treatments that prove successful, as a matter of public policy regarding worldwide health concerns.
There may be significant pressure on the U.S. government and international governmental bodies to limit the scope of patent protection both inside and outside the U.S. for disease treatments that prove 54 successful, as a matter of public policy regarding worldwide health concerns.
Even if we are successful in defending against these claims, litigation could result in substantial costs and could be a distraction to management. Any litigation or the threat thereof may adversely affect our ability to hire employees or contract with independent sales representatives.
Even if we are successful in defending 55 against these claims, litigation could result in substantial costs and could be a distraction to management. Any litigation or the threat thereof may adversely affect our ability to hire employees or contract with independent sales representatives.
While we typically require employees, consultants and contractors who may develop intellectual property on our behalf to execute agreements assigning such intellectual property to us, we may be unsuccessful in obtaining execution of assignment 57 agreements with each party who in fact develops intellectual property that we regard as our own.
While we typically require employees, consultants and contractors who may develop intellectual property on our behalf to execute agreements assigning such intellectual property to us, we may be unsuccessful in obtaining execution of assignment agreements with each party who in fact develops intellectual property that we regard as our own.
If there are significant employee reductions at the FDA or a prolonged government shutdown occurs, it could significantly impact the ability of the FDA to timely 47 review and process our regulatory submissions, which could have a material adverse effect on our business.
If there are significant employee reductions at the FDA or a prolonged government shutdown occurs, it could significantly impact the ability of the FDA to timely review and process our regulatory submissions, which could have a material adverse effect on our business.
Even if we are successful in defending against intellectual property claims, litigation or other legal proceedings relating to such claims may cause us to incur significant expenses, and could distract our technical and management personnel from their normal responsibilities.
Even if we are successful in defending against intellectual property claims, litigation or other legal proceedings relating to such claims may cause us to incur significant expenses, and could distract our technical and management personnel from their 52 normal responsibilities.
Moreover, if the relevant laws and regulations change, or are interpreted and applied in a manner that is inconsistent with our data practices or the operation of our products, we may need to expend resources in order to change our business operations, data 63 practices, or the manner in which our products operate.
Moreover, if the relevant laws and regulations change, or are interpreted and applied in a manner that is inconsistent with our data practices or the operation of our products, we may need to expend resources in order to change our business operations, data practices, or the manner in which our products operate.
These laws, regulations and standards are subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies.
These laws, regulations and standards are subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and 68 governing bodies.
Consequently, competitors may use our technologies in jurisdictions where we have not obtained patent protection to develop 59 their own products and, further, may export otherwise infringing products to territories where we have patent protection but where enforcement is not as strong as in the United States.
Consequently, competitors may use our technologies in jurisdictions where we have not obtained patent protection to develop their own products and, further, may export otherwise infringing products to territories where we have patent protection but where enforcement is not as strong as in the United States.
Market acceptance of our products could be negatively impacted by many factors, including: • the unwillingness of patients to pay out-of-pocket for the Allurion Program in the absence of coverage and reimbursement for such program; 32 • the failure of our products to achieve and maintain wide acceptance among patients who are obese and overweight, their health care providers, third-party payors and key opinion leaders in the weight loss treatment community; • lack of evidence supporting the safety, ease-of-use or other perceived benefits of the Allurion Balloon over competitive products or other currently available weight loss treatment alternatives; • perceived risks or uncertainties, or actual adverse events or other undesirable side effects, associated with the use of our gastric balloon, or components thereof, or of similar products or technologies of our competitors; • any adverse legal action, including products liability litigation, against us or our competitors relating to the Allurion Balloon or similar products or technologies; • the withdrawal or modification of any regulatory approvals for our products; and • results of clinical studies relating to the Allurion Balloon or similar competitive products.
Market acceptance of our products could be negatively impacted by many factors, including: • the unwillingness of patients to pay out-of-pocket for the Allurion Program in the absence of coverage and reimbursement for such program; • the failure of our products to achieve and maintain wide acceptance among patients who are obese and overweight, their health care providers, third-party payors and key opinion leaders in the weight loss treatment community; • lack of evidence supporting the safety, ease-of-use or other perceived benefits of the Allurion Smart Capsule over competitive products or other currently available weight loss treatment alternatives; • perceived risks or uncertainties, or actual adverse events or other undesirable side effects, associated with the use of our gastric balloon, or components thereof, or of similar products or technologies of our competitors; • any adverse legal action, including products liability litigation, against us or our competitors relating to the Allurion Smart Capsule or similar products or technologies; • the withdrawal or modification of any regulatory approvals for our products; and • results of clinical studies relating to the Allurion Smart Capsule or similar competitive products.
The Loper decision could result in additional legal challenges to regulations and guidance issued by federal agencies, including the FDA, on which we rely. Any such legal challenges, if successful, could have a material impact on our business.
The Loper decision could result in additional legal challenges to regulations and 48 guidance issued by federal agencies, including the FDA, on which we rely. Any such legal challenges, if successful, could have a material impact on our business.
For example, some states limit the modality through which telehealth services are delivered, such as requiring synchronous (i.e. “live”) communication or curtailing 50 asynchronous (or “store-and-forward”) communication for certain telehealth services (e.g., prescribing certain types of medications).
For example, some states limit the modality through which telehealth services are delivered, such as requiring synchronous (i.e. “live”) communication or curtailing asynchronous (or “store-and-forward”) communication for certain telehealth services (e.g., prescribing certain types of medications).
In addition to increasing uncertainty with regard to our ability to obtain future patents, this combination of events has created uncertainty with respect to 54 the value of patents, once obtained. Depending on decisions by the U.S. Congress, the federal courts and the U.S.
In addition to increasing uncertainty with regard to our ability to obtain future patents, this combination of events has created uncertainty with respect to the value of patents, once obtained. Depending on decisions by the U.S. Congress, the federal courts and the U.S.
In connection with the audit of our consolidated financial statements as of and for the years ended December 31, 2024 and 2023, we identified material weaknesses in our internal control over financial reporting that we are currently working to remediate, which relate to: (a) insufficient segregation of duties in the financial statement close process; (b) a lack of sufficient levels of staff with public company and technical accounting experience to maintain proper control activities and perform risk assessment and monitoring activities; and (c) insufficient information systems controls, including access and change management controls.
In connection with the audit of our consolidated financial statements as of and for the years ended December 31, 2025 and 2024, we identified material weaknesses in our internal control over financial reporting that we are currently working to remediate, which relate to: (a) insufficient segregation of duties in the financial statement close process; (b) a lack of sufficient levels of staff with public company and technical accounting experience to maintain proper control activities and perform risk assessment and monitoring activities; and (c) insufficient information systems controls, including access and change management controls.
Any future collaboration agreements (including with respect to product distribution or commercialization) we may enter into with respect to our current or future products may place the development or commercialization of such products outside our control, or may otherwise be on terms unfavorable to us.
Any future collaboration agreements (including with respect to product manufacturing, distribution, or commercialization) we may enter into with respect to our current or future products may place the development or commercialization of such products outside our control, or may otherwise be on terms unfavorable to us.
HIPAA imposes limitations on the use and disclosure of an individual’s protected health information by certain health care providers, health care clearinghouses, and health insurance plans, collectively referred to as covered entities, that involve the creation, use, maintenance or disclosure of protected health information.
HIPAA imposes limitations on the use and disclosure of an individual’s protected health information by certain health care providers, health care clearinghouses, and health insurance plans, collectively referred to 60 as covered entities, that involve the creation, use, maintenance or disclosure of protected health information.
The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable.
The JOBS Act provides that a company can elect to opt out of the 69 extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable.
Economic and political developments in the emerging markets, including economic crises, currency inflation, or political instability, have had in the past, and may have in the future, a material adverse effect on our financial condition and results of operations.
Economic and political developments in the emerging markets, including economic crises, currency inflation, or political instability, have 45 had in the past, and may have in the future, a material adverse effect on our financial condition and results of operations.
Therefore, it is generally 58 considered easier for a competitor or third party to have a U.S. patent invalidated in a USPTO post-grant review or inter partes review proceeding than invalidated in a litigation in a U.S. federal court.
Therefore, it is generally considered easier for a competitor or third party to have a U.S. patent invalidated in a USPTO post-grant review or inter partes review proceeding than invalidated in a litigation in a U.S. federal court.
Like the EU GDPR, the UK GDPR restricts personal data transfers outside the United Kingdom to countries not regarded by the United Kingdom as providing adequate protection. The United Kingdom government has confirmed that personal data transfers from the United Kingdom to the EEA remain free flowing.
Like the EU GDPR, the UK GDPR restricts personal data transfers outside the United 61 Kingdom to countries not regarded by the United Kingdom as providing adequate protection. The United Kingdom government has confirmed that personal data transfers from the United Kingdom to the EEA remain free flowing.
We also intend, now and in the future, to 44 continue to improve our operational, financial and management controls and reporting systems and procedures, which may require additional personnel and capital investments and will increase our costs.
We also intend, now and in the future, to continue to improve our operational, financial and management controls and reporting systems and procedures, which may require additional personnel and capital investments and will increase our costs.
In assessing our business prospects, you should consider the various risks and difficulties frequently encountered by companies early in their commercialization in competitive markets, particularly companies that develop and sell medical devices.
In assessing our business prospects, you should consider the various risks and difficulties 32 frequently encountered by companies early in their commercialization in competitive markets, particularly companies that develop and sell medical devices.
Any 66 failure to raise the funds necessary to support our operations may force us to delay, reduce or suspend our planned clinical trials, research and development programs, or other commercialization efforts .
Any failure to raise the funds necessary to support our operations may force us to delay, reduce or suspend our planned clinical trials, research and development programs, or other commercialization efforts .
The securities markets in general, and the market for biotechnology and medical device companies in particular, have experienced extreme volatility that has often been unrelated to the operating performance of particular companies.
The securities markets in general, and the market for biotechnology and medical device companies in particular, have experienced extreme volatility that has often been unrelated to the operating performance of 66 particular companies.
Because our Board is responsible for appointing the members of our management team, these provisions 73 could in turn affect any attempt by our stockholders to replace current members of our management team.
Because our Board is responsible for appointing the members of our management team, these provisions could in turn affect any attempt by our stockholders to replace current members of our management team.
The implementation of cost-containment measures or other healthcare reforms 49 may prevent us from being able to generate revenue, attain profitability, or commercialize our products.
The implementation of cost-containment measures or other healthcare reforms may prevent us from being able to generate revenue, attain profitability, or commercialize our products.
In many cases, such an inadvertent lapse can be cured by payment of a late fee or by other means in accordance with the applicable rules.
In 58 many cases, such an inadvertent lapse can be cured by payment of a late fee or by other means in accordance with the applicable rules.
You may not be able to resell your shares at an attractive price due to a number of factors, including the following: • our ability to successfully commercialize, and realize revenues from sales of, the Allurion Balloon and other products and services; • the success of competitive products or technologies; • results of clinical trials of the Allurion Balloon or other current or future products or those of our competitors; 67 • regulatory or legal developments in the U.S. and other countries, especially changes in laws or regulations applicable to our products; • introductions and announcements of new products by us, our commercialization partners, or our competitors, and the timing of these introductions or announcements; • actions taken by regulatory agencies with respect to our products, clinical trials, manufacturing processes or sales and marketing terms; • variations in our financial results or those of companies that are perceived to be similar to us; • the success of our efforts to acquire or in-license additional products or planned products; • developments concerning our collaborations, including but not limited to those with our sources of manufacturing supply and our commercialization partners; • developments concerning our ability to bring our manufacturing processes to scale in a cost-effective manner; • announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures or capital commitments; • developments or disputes concerning patents or other proprietary rights, including patents, litigation matters and our ability to obtain patent protection for our products; • our ability or inability to raise additional capital and the terms on which we raise it; • the recruitment or departure of key personnel; • changes in the structure of health care payment systems; • market conditions in the medical device, pharmaceutical and biotechnology sectors; • actual or anticipated changes in earnings estimates or changes in securities analyst recommendations regarding our common stock, other comparable companies or our industry generally; • trading volume of our common stock; • guidance or projections, if any, that we provide to the public, any changes in this guidance or projections or our failure to meet this guidance or projections; • sales of our common stock by us or our stockholders; • general economic and political conditions such as recessions, interest rates, fuel prices, trade wars, pandemics (such as COVID-19), currency fluctuations, geopolitical conflicts, and acts of war or terrorism; • the effects of natural disasters, terrorist attacks and the spread and/or abatement of infectious diseases, including with respect to potential operational disruptions, labor disruptions, increased costs, and impacts to demand related thereto; and • the other risks described in this “ Risk Factors ” section.
You may not be able to resell your shares at an attractive price due to a number of factors, including the following: • our ability to successfully commercialize, and realize revenues from sales of, the Allurion Smart Capsule and other products and services; • the success of competitive products or technologies; • results of clinical trials of the Allurion Smart Capsule or other current or future products or those of our competitors; • regulatory or legal developments in the U.S. and other countries, especially changes in laws or regulations applicable to our products; • introductions and announcements of new products by us, our commercialization partners, or our competitors, and the timing of these introductions or announcements; • actions taken by regulatory agencies with respect to our products, clinical trials, manufacturing processes or sales and marketing terms; • variations in our financial results or those of companies that are perceived to be similar to us; • the success of our efforts to acquire or in-license additional products or planned products; • developments concerning our collaborations, including but not limited to those with our sources of manufacturing supply and our commercialization partners; • developments concerning our ability to bring our manufacturing processes to scale in a cost-effective manner; • announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures or capital commitments; • developments or disputes concerning patents or other proprietary rights, including patents, litigation matters and our ability to obtain patent protection for our products; • our ability or inability to raise additional capital and the terms on which we raise it; • the recruitment or departure of key personnel; • changes in the structure of health care payment systems; • market conditions in the medical device, pharmaceutical and biotechnology sectors; • actual or anticipated changes in earnings estimates or changes in securities analyst recommendations regarding our common stock, other comparable companies or our industry generally; • trading volume of our common stock; • guidance or projections, if any, that we provide to the public, any changes in this guidance or projections or our failure to meet this guidance or projections; • sales of our common stock by us or our stockholders; • general economic and political conditions such as recessions, interest rates, fuel prices, trade wars, pandemics (such as COVID-19), currency fluctuations, geopolitical conflicts, and acts of war or terrorism; • the effects of natural disasters, terrorist attacks and the spread and/or abatement of infectious diseases, including with respect to potential operational disruptions, labor disruptions, increased costs, and impacts to demand related thereto; • limited liquidity for our securities on the national exchange on which they are traded; and • the other risks described in this “ Risk Factors ” section.
We remain responsible for ensuring that each of our clinical trials is conducted in accordance with the general investigational plan and 45 protocols for the trial.
We remain responsible for ensuring that each of our clinical trials is conducted in accordance with the general investigational plan and protocols for the trial.
If we are approved by the FDA to market our products in the U.S., we could be subject to health care fraud and abuse, transparency, and patient privacy regulation by both the federal government and the states in which we conduct our business. For more information, see the section entitled “ Business – Other U.S.
Now we are approved by the FDA to market our products in the U.S., we could be subject to health care fraud and abuse, transparency, and patient privacy regulation by both the federal government and the states in which we conduct our business. For more information, see the section entitled “ Business – Other U.S.
While the ANSM has since lifted its suspension following our completion of a remediation plan, other regulatory authorities may in the future take action with respect to our products, and there is no guarantee that we will be able to successfully implement a remediation plan or other remedial measures to the satisfaction of any such regulatory authority, and we could be delayed or prevented from resuming sales of the Allurion Balloon in the affected territory as a result.
While the ANSM has since lifted its suspension following our completion of a remediation plan, other regulatory authorities may in the future take action with respect to our products, and there is no guarantee that we will be able to successfully implement a remediation plan or other remedial measures to the satisfaction of any such regulatory authority, and we could be delayed or prevented from resuming sales of the Allurion Smart Capsule in the affected territory as a result.
In connection with the Business Combination, we assumed our Public Warrants to purchase up to 750,383 shares of our common stock (which were originally issued as warrants to purchase shares of Compute Health Class A common stock in connection with Compute Health’s IPO) and Rollover Warrants to purchase up to 14,589 shares of our common stock (which were originally issued as warrants to purchase shares of Legacy Allurion Common Stock and Legacy Allurion Preferred Stock).
In connection with the Business Combination, we assumed our Public Warrants to purchase up to 750,383 shares of our common stock (which were originally issued as warrants to purchase shares of Compute Health Class A common stock in connection with Compute Health’s IPO) and Rollover Warrants to purchase up to 14,380 shares of our common stock (which were originally issued as warrants to purchase shares of Legacy Allurion Common Stock and Legacy Allurion Preferred Stock).
While we instituted cost reduction initiatives in recent years and are directing our efforts to become EBITDA positive in 2026, we expect to continue to incur significant sales and marketing and R&D expenses to operate our business and perform clinical research related to, among other things, the effects of the combination of the Allurion Balloon and GLP-1 therapy on muscle mass and long-term GLP-1 adherence .
While we instituted cost reduction initiatives in recent years and are directing our efforts to become EBITDA positive in 2026, we expect to continue to incur significant sales and marketing and R&D expenses to operate our business and perform clinical research related to, among other things, the effects of the combination of the Allurion Smart Capsule and GLP-1 therapy on muscle mass and long-term GLP-1 adherence .
The decision by a patient to elect to undergo treatment with the Allurion Balloon may be influenced by a number of additional factors, such as: • the success of any sales and marketing programs, including direct-to-consumer marketing efforts, that we, or any third parties we engage, undertake; • the extent to which health care providers offer the Allurion Balloon to their patients; • the extent to which the Allurion Balloon satisfies patient expectations; • the cost, safety, comfort, tolerability, ease of use, and effectiveness of the Allurion Program as compared to other treatments; and • general consumer confidence, which may be impacted by economic and political conditions.
The decision by a patient to elect to undergo treatment with the Allurion Smart Capsule may be influenced by a number of additional factors, such as: • the success of any sales and marketing programs, including direct-to-consumer marketing efforts, that we, or any third parties we engage, undertake; • the extent to which health care providers offer the Allurion Smart Capsule to their patients; • the extent to which the Allurion Smart Capsule satisfies patient expectations; 35 • the cost, safety, comfort, tolerability, ease of use, and effectiveness of the Allurion Program as compared to other treatments; and • general consumer confidence, which may be impacted by economic and political conditions.
In addition, our expenses or tax-related costs may increase in greater measure than our revenues, negatively impacting our operating results. 33 Furthermore, our sales force may operate independently with limited day-to-day oversight from management.
In addition, our expenses or tax-related costs may increase in greater measure than our revenues, negatively impacting our operating results. 36 Furthermore, our sales force may operate independently with limited day-to-day oversight from management.
We do not promote the Allurion Balloon for uses outside of approved or cleared indications for use, known as “off-label uses.” We cannot, however, prevent a health care provider from using our product off-label, when in the health care provider’s independent professional medical judgment he or she deems it appropriate.
We do not promote the Allurion Smart Capsule for uses outside of approved or cleared indications for use, known as “off-label uses.” We cannot, however, prevent a health care provider from using our product off-label, when in the health care provider’s independent professional medical judgment he or she deems it appropriate.
If health care providers and/or patients do not perceive our products to be competitive in features, efficacy and safety when compared to other products in the market, or if demand for the Allurion Balloon or for weight loss procedures and programs in general decreases, we may fail to achieve sales levels that provide for future profitability.
If health care providers and/or patients do not perceive our products to be competitive in features, efficacy and safety when compared to other products in the market, or if demand for the Allurion Smart Capsule or for weight loss procedures and programs in general decreases, we may fail to achieve sales levels that provide for future profitability.
Moreover, if patients fail to disclose medical conditions or to follow the pre- and post-placement instructions, medication program, and dietary guidelines in connection with their treatment with the Allurion Balloon, there is the risk of injury. Such patients may also fail to achieve their desired results, which could harm our image in the marketplace.
Moreover, if patients fail to disclose medical conditions or to follow the pre- and post-placement instructions, medication program, and dietary guidelines in connection with their treatment with the Allurion Smart Capsule, there is the risk of injury. Such patients may also fail to achieve their desired results, which could harm our image in the marketplace.
A withdrawal from the market in a country, and the risks identified by the applicable regulatory authority, could negatively affect the market acceptance of the Allurion Balloon . We depend on our senior management team and the loss of one or more key employees or an inability to attract and retain highly skilled employees could harm our business.
A withdrawal from the market in a country, and the risks identified by the applicable regulatory authority, could negatively affect the market acceptance of the Allurion Smart Capsule . We depend on our senior management team and the loss of one or more key employees or an inability to attract and retain highly skilled employees could harm our business.
Undesirable side effects caused by the Allurion Balloon could: cause us, the FDA or other applicable regulatory authorities to interrupt, delay or halt clinical trials, result in more restrictive labeling than originally required, cause the FDA to subsequently withdraw or modify our PMA should we receive approval, or result in the delay, denial or withdrawal of regulatory approval by other regulatory authorities.
Undesirable side effects caused by the Allurion Smart Capsule could: cause us, the FDA or other applicable regulatory authorities to interrupt, delay or halt clinical trials, result in more restrictive labeling than originally required, cause the FDA to subsequently withdraw or modify our PMA should we receive approval, or result in the delay, denial or withdrawal of regulatory approval by other regulatory authorities.
Adverse changes in the economy, including from heightened inflation, higher interest rates, and geopolitical conflicts such as the Russia-Ukraine war and the Israel-Hamas war, may cause consumers to reassess their spending choices and reduce the demand for elective treatments and could have an adverse effect on consumer spending.
Adverse changes in the economy, including from heightened inflation, higher interest rates, and geopolitical conflicts such as the Russia-Ukraine war, the Israel-Hamas war, and the Israel/United States - Iran war may cause consumers to reassess their spending choices and reduce the demand for elective treatments and could have an adverse effect on consumer spending.
If we are unable to provide an adequate training program with respect to the Allurion Balloon, product misuse may occur that could lead to serious adverse events. Many health care providers may be unfamiliar with such treatments or find it more complex than competitive products or alternative treatments.
If we are unable to provide an adequate training program with respect to the Allurion Smart Capsule, product misuse may occur that could lead to serious adverse events. Many health care providers may be unfamiliar with such treatments or find it more complex than competitive products or alternative treatments.
The failure to do so could have a material adverse effect on our business, financial condition, results of operations and growth prospects. Manufacturing of the Allurion Balloon requires capital expenditures and a highly-skilled workforce. There is a significant lead time to build and certify a new manufacturing facility.
The failure to do so could have a material adverse effect on our business, financial condition, results of operations and growth prospects. Manufacturing of the Allurion Smart Capsule requires capital expenditures and a highly-skilled workforce. There is a significant lead time to build and certify a new manufacturing facility.
The marketing, sale and use, misuse or off-label use of the Allurion Balloon and our other current and future products could lead to the filing of product liability claims against us if someone alleges that our products failed to perform as designed or caused significant adverse events in patients.
The marketing, sale and use, misuse or off-label use of the Allurion Smart Capsule and our other current and future products could lead to the filing of product liability claims against us if someone alleges that our products failed to perform as designed or caused significant adverse events in patients.
Any of these events could prevent us from achieving or maintaining market acceptance of the Allurion Balloon and could substantially increase the costs of commercializing our product and significantly impact our ability to successfully commercialize our product and generate product sales. Health care reform measures could hinder or prevent our planned products’ commercial success.
Any of these events could prevent us from achieving or maintaining market acceptance of the Allurion Smart Capsule and could substantially increase the costs of commercializing our product and significantly impact our ability to successfully commercialize our product and generate product sales. Health care reform measures could hinder or prevent our planned products’ commercial success.
We expect that our future financial results will depend primarily on our success in launching, selling and supporting the Allurion Balloon and other products that are part of our weight loss platform. This will require us to be successful in a range of activities, including manufacturing, marketing, and selling the Allurion Balloon.
We expect that our future financial results will depend primarily on our success in launching, selling and supporting the Allurion Smart Capsule and other products that are part of our weight loss platform. This will require us to be successful in a range of activities, including manufacturing, marketing, and selling the Allurion Smart Capsule.
Furthermore, our direct sales personnel may not effectively sell our products. We currently engage in direct sales efforts in 19 countries. We must hire, retain and motivate a significant number of sales and marketing personnel in order to support our existing operations and any future growth in these and other new countries.
Furthermore, our direct sales personnel may not effectively sell our products. We currently engage in direct sales efforts in approximately 20 countries. We must hire, retain and motivate a significant number of sales and marketing personnel in order to support our existing operations and any future growth in these and other new countries.
We may also be subject to liability for a misunderstanding of, or inappropriate reliance upon, the information we provide. If we cannot successfully defend ourselves against claims that the Allurion Balloon or our other current or future products caused injuries, we may incur substantial liabilities.
We may also be subject to liability for a misunderstanding of, or inappropriate reliance upon, the information we provide. If we cannot successfully defend ourselves against claims that the Allurion Smart Capsule or our other current or future products caused injuries, we may incur substantial liabilities.
If we are unable to do so, we may not achieve our expected growth and may be subject to risks and liabilities. In addition to educating health care providers on the clinical benefits of the Allurion Balloon, we must also train health care providers on the safe and appropriate use of the Allurion Balloon.
If we are unable to do so, we may not achieve our expected growth and may be subject to risks and liabilities. In addition to educating health care providers on the clinical benefits of the Allurion Smart Capsule, we must also train health care providers on the safe and appropriate use of the Allurion Smart Capsule.
Our financial performance will be materially harmed if we cannot generate significant customer demand for the Allurion Balloon. Changes in coverage and reimbursement for obesity treatments and procedures could affect the adoption of the Allurion Program and our future revenues.
Our financial performance will be materially harmed if we cannot generate significant customer demand for the Allurion Smart Capsule. Changes in coverage and reimbursement for obesity treatments and procedures could affect the adoption of the Allurion Program and our future revenues.
We believe that our reliance on distributors improves the economics of our business, as we do not carry the high fixed costs of a large direct sales force in many of the countries in which the Allurion Balloon is commercially available.
We believe that our reliance on distributors improves the economics of our business, as we do not carry the high fixed costs of a large direct sales force in many of the countries in which the Allurion Smart Capsule is commercially available.
As such, there is a learning process involved for health care providers to become proficient in the use of our products and it may take several procedures for a health care provider to be able to use the Allurion Balloon comfortably.
As such, there is a learning process involved for health care providers to become proficient in the use of our products and it may take several procedures for a health care provider to be able to use the Allurion Smart Capsule comfortably.
Although we believe our current facilities will give us adequate manufacturing capacity to meet demand for at least the next two years, we have, in the past, been unable to fill all incoming orders to meet growing demand. If we obtain FDA approval, we intend to rely on our existing manufacturing facilities to supply products in the United States.
Although we believe our current facilities will give us adequate manufacturing capacity to meet demand for at least the next two years, we have, in the past, been unable to fill all incoming orders to meet growing demand. Having received FDA approval, we intend to rely on our existing manufacturing facilities to supply products in the United States.
Any of these could impair the trading price of our common stock and adversely impact our results. The effectiveness and safety of the Allurion Balloon depends critically on our ability to educate health care providers on its safe and proper use.
Any of these could impair the trading price of our common stock and adversely impact our results. The effectiveness and safety of the Allurion Smart Capsule depends critically on our ability to educate health care providers on its safe and proper use.
If we are unable to prevent disclosure of the intellectual property related to our technologies to third parties, we may not be able to establish or maintain a competitive advantage in our market, which would harm our ability to protect our rights and have an adverse effect on our business.
If we are unable to prevent disclosure of the intellectual property related to our technologies to third parties, we may not be able to establish or maintain a competitive advantage in our market, which would harm our ability to protect our rights and have an adverse effect on our business. 57 We may not be able to protect or enforce our intellectual property rights throughout the world.
Market acceptance and adoption of the Allurion Balloon depends on educating health care providers on its safe and appropriate use, as well as the cost, safety, comfort, tolerability, ease of use, and effectiveness of the Allurion Program compared to other treatments.
Market acceptance and adoption of the Allurion Smart Capsule depends on educating health care providers on its safe and appropriate use, as well as the cost, safety, comfort, tolerability, ease of use, and effectiveness of the Allurion Program compared to other treatments.
For example, on August 6, 2024, the ANSM suspended sales of the Allurion Balloon in France due to adverse events, and we withdrew the Allurion Balloon from the French market, pending implementation of a remediation plan.
For example, on August 6, 2024, the ANSM suspended sales of the Allurion Smart Capsule in France due to adverse events, and we withdrew the Allurion Smart Capsule from the French market, pending implementation of a remediation plan.
In addition, we are required to comply with regulations regarding the manufacture of the Allurion Balloon, which include requirements related to quality control and quality assurance as well as the corresponding maintenance of records and documentation.
In addition, we are required to comply with regulations regarding the manufacture of the Allurion Smart Capsule, which include requirements related to quality control and quality assurance as well as the corresponding maintenance of records and documentation.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeWith the input of the InfoSec Committee, our CISO may provide periodic updates to the Board on matters related to cybersecurity as needed . Ite m 2. Properties.
Biggest changeOur CISO was responsible for the day-to-day oversight of the assessment and management of our information security program and cybersecurity risks. 76 The Board also engages in oversight of cybersecurity risks. With the input of the InfoSec Committee, our CISO may provide periodic updates to the Board on matters related to cybersecurity as needed . Ite m 2. Properties.
Further, we have adopted written information security policies and procedures, including an incident response plan, which is designed to establish our processes for identifying, responding to, and recovering from cybersecurity incidents. We have also implemented a process to assess and review the cybersecurity practices of certain third-party vendors and service providers, including through the use of vendor security questionnaires.
Further, we have adopted written information security policies and procedures, including an incident response plan, which is designed to establish our processes for identifying, responding to, and recovering from cybersecurity incidents. We have also historically implemented a process to assess and review the cybersecurity practices of certain third-party vendors and service providers, including through the use of vendor security questionnaires.
Additionally, the Company’s employees go through cybersecurity awareness training covering topics such as general cybersecurity best practices, phishing, data protection, password protection, and network security. We have not identified any cybersecurity incidents or threats that have materially affected us or are reasonably likely to materially affect us, including our business strategy, results of operations or financial condition.
Additionally, the Company’s employees have gone through cybersecurity awareness training covering topics such as general cybersecurity best practices, phishing, data protection, password protection, and network security. We have not identified any cybersecurity incidents or threats that have materially affected us or are reasonably likely to materially affect us, including our business strategy, results of operations or financial condition.
However, like other companies in our industry, we and our third-party vendors may, from time to time, experience threats and security incidents that could effect our information or systems. For more information, please see the section entitled "Risk Factors" .
However, like other companies in our industry, we and our third-party vendors may, from time to time, experience threats and security incidents that could affect our information or systems. For more information, please see the section entitled "Risk Factors" .
The InfoSec Committee meets on a monthly basis to provide oversight of the Company's information security management system ("ISMS"), review the performance and effectiveness of the ISMS, and review and discuss the direction of the Company’s cybersecurity program, among other responsibilities. The committee also performs an annual audit to ensure Allurion's ISMS is effectively implemented and maintained.
The InfoSec Committee met on a monthly basis to provide oversight of the Company's information security management system ("ISMS"), review the performance and effectiveness of the ISMS, and review and discuss the direction of the Company’s cybersecurity program , among other responsibilities. The committee also historically performed an annual audit to ensure Allurion's ISMS is effectively implemented and maintained.
Item 1C. Cybersecurity. Cyber Risk Management and Strategy We recognize the importance of assessing, identifying, and managing risks from cybersecurity threats. We have implemented a cybersecurity risk management program in accordance with our risk profile, which is informed by and incorporates elements of recognized industry standards.
Item 1C. Cybersecurity. Cyber Risk Management and Strategy We recognize the importance of assessing, identifying, and managing risks from cybersecurity threats. We have implemented a cybersecurity risk management program scoped in accordance with our risk profile and our financial condition. This program is informed by and incorporates elements of recognized industry standards.
Our corporate headquarters are located in Natick, Massachusetts, where we lease approximately 9,900 square feet of office space pursuant to a lease agreement that commenced on June 15, 2016 and expires on November 30, 2025.
Our corporate headquarters are located in Natick, Massachusetts, where we lease approximately 9,900 square feet of office space pursuant to a lease agreement that commenced on June 15, 2016 and expires on February 28, 2028.
Governance Related to Cybersecurity Risks Our cybersecurity risk management program is managed by our Information Security Management Committee (the “InfoSec Committee”).
Governance Related to Cybersecurity Risks Our cybersecurity risk management program has historically been managed by our Information Security Management Committee (the “InfoSec Committee”).
Our cybersecurity risk management strategy is guided by both internal cybersecurity risk assessments and third-party information security audits. We leverage the support of third-party information technology and security providers as part of our cybersecurity risk management program, including for penetration testing.
Our cybersecurity risk management strategy has historically been guided by both internal cybersecurity risk assessments and third-party information security audits. We have historically leveraged the support of third-party information technology and security providers as part of our cybersecurity risk management program, including for penetration testing.
The InfoSec Committee is currently made up of a cross-disciplinary team, including the Company’s acting Chief Information Security Officer (CISO), Chief Legal Officer, VP of People, Senior Director of R&D & Engineering, VP of Global Marketing, Medical Affairs and our Senior Corporate Counsel.
The InfoSec Committee has historically been made up of a cross-disciplinary team, including the Company’s then Chief Information Security Officer (CISO), Chief Legal Officer, VP of People, and senior members from the Company’s R&D & Engineering, Global Marketing, and Medical Affairs teams.
Additionally, we lease approximately 10,200 square feet of manufacturing space in Natick, Massachusetts pursuant to a lease agreement that commenced on January 8, 2018 and expires on February 28, 2028. We also lease approximately 1,870 square feet of manufacturing space in Natick, Massachusetts pursuant to a lease agreement that commenced on July 1, 2021 and expires on March 31, 2025.
We also lease approximately 10,200 square feet of manufacturing space in Natick, Massachusetts pursuant to a lease agreement that commenced on January 8, 2018 and expires on February 28, 2028. We also lease approximately 9,800 square feet of warehouse space in Hudson, Massachusetts pursuant to a lease agreement that commenced on February 11, 2022 and expired on February 28, 2026.
Outside of the United States, we lease approximately 292 square meters of office space in Paris, France, which represents our largest sales office. We believe that our existing facilities are suitable and adequate for our needs.
We believe that our existing facilities are suitable and adequate for our needs.
Removed
Our acting CISO, who is also our VP of Software Engineering, is responsible for the day-to-day oversight of the assessment and management of our information security program and cybersecurity risks. The individual who is currently in this role has approximately 25 years of experience in information technology. The Board also engages in oversight of cybersecurity risks.
Removed
We also lease approximately 12,700 square feet of office space for research and development in Natick, Massachusetts pursuant to a lease 78 agreement that commenced on January 10, 2020 and expires on March 31, 2028.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeRegardless of outcome, such proceedings or claims can have an adverse impact on us because of defense and settlement costs, diversion of resources and other factors, and there can be no assurances that favorable outcomes will be obtained. It em 4. Mine Safety Disclosures. Not applicable. 79 PA RT II Ite m 5.
Biggest changeRegardless of outcome, such proceedings or claims can have an adverse impact on us because of defense and settlement costs, diversion of resources and other factors, and there can be no assurances that favorable outcomes will be obtained.
Sales of Unregistered Securities and Purchases by the Issuer and Affiliated Purchasers All sales of unregistered securities by us during the year ended December 31, 2024 have been previously disclosed. There were no purchases of our common stock by the Company or any affiliated purchaser during the quarter ended December 31, 2024. Use of Proceeds Not applicable.
Sales of Unregistered Securities and Purchases by the Issuer and Affiliated Purchasers All sales of unregistered securities by us during the year ended December 31, 2025 have been previously disclosed. There were no purchases of our common stock by the Company or any affiliated purchaser during the quarter ended December 31, 2025. Use of Proceeds Not applicable.
The Company's public warrants to purchase 0.056818 shares of our common stock at $202.50 per share trade on the New York Stock Exchange under the symbol "ALUR WS." Holders As of March 14, 2025, there were 197 record holders of our common stock and 1 record holder of our Public Warrants.
The Company's public warrants to purchase 0.056818 shares of our common stock at $202.50 per share trade on the New York Stock Exchange under the symbol "ALUR WS." Holders As of March 17, 2026, there were 179 record holders of our common stock and 1 record holder of our Public Warrants.
Added
On August 12, 2025, Vanderbilt University Medical Center (“Vanderbilt”) filed a complaint against us in the United States District Court for the Middle District of Tennessee, captioned Vanderbilt University Medical Center v. Allurion Technologies, Inc., d/b/a Allurion.
Added
Vanderbilt’s complaint alleges that we breached the Clinical Trial Agreement, dated June 30, 2022, by and between us and Vanderbilt, related to the clinical trial for the Allurion Balloon by failing to reimburse medical expenses incurred in treating a patient enrolled in such trial at Vanderbilt. Vanderbilt is seeking damages of approximately $2.5 million.
Added
We intend to defend against such claims vigorously, but we cannot be sure that we will be successful in prevailing in such proceeding or that it will not incur material costs in defending against such allegations. It em 4. Mine Safety Disclosures. Not applicable. 77 PA RT II Ite m 5.

Item 7. Management's Discussion & Analysis

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

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Biggest changeNon-cash charges consisted of $16.1 million for termination of convertible note side letters, a $12.7 million provision for uncollectible accounts, $8.4 million of stock-based compensation expense, a $3.9 million loss on extinguishment of debt for our 2021 Term Loan, $3.8 million related to the change in fair value of our convertible debt, $2.2 million related to the change in fair value of the Revenue Interest Financing and PIPE Conversion Option, $2.1 million of non-cash interest expense primarily related to the amortization of debt discount associated with our outstanding debt arrangements, $1.7 million of mark to market adjustments related to our derivative liabilities, $1.2 million of debt issuance costs associated with the Revenue Interest Financing, $0.8 million of lease expense, and $0.7 million of depreciation and amortization expense.
Biggest changeNon-cash charges consisted of a $9.1 million loss on the change in fair value of our Revenue Interest Financing and PIPE Conversion Option, a $3.6 million of loss related to the change in fair value of our convertible debt, $3.1 million of stock-based compensation expense, a $2.8 million provision for uncollectible accounts, a $1.2 million provision for inventory, $1.5 million of issuance costs associated with warrants recorded at fair value, $1.0 million of depreciation and amortization expense, $0.7 million of non-cash lease expense, $0.7 million loss on the extinguishment of our Fortress Term Loan, and $0.4 million change in fair value of RTW Share Obligation.
Amended Note Purchase Agreement On April 16, 2024, we received $48.0 million in gross proceeds from the Amended Note Purchase Agreement with RTW, which proceeds were used to repay all outstanding principal, accrued and unpaid interest and other obligations with respect to the Fortress Term Loan.
Note Purchase Agreement On April 16, 2024, we received $48.0 million in gross proceeds from the Amended Note Purchase Agreement with RTW, which proceeds were used to repay all outstanding principal, accrued and unpaid interest and other obligations with respect to the Fortress Term Loan.
Changes in the estimated fair value of the contingent earn-out consideration are recorded in Other (expense) income in the consolidated statements of operations and are reflected in the period in which they are identified. Changes in the estimated fair value of the contingent earn-out consideration may materially impact or cause volatility in our operating results.
Changes in the estimated fair value of the contingent earn-out consideration are recorded in Other income (expense) in the consolidated statements of operations and are reflected in the period in which they are identified. Changes in the estimated fair value of the contingent earn-out consideration may materially impact or cause volatility in our operating results.
We account for the PIPE Conversion Option as a freestanding financial instrument that qualifies for derivative liability accounting in accordance with ASC 815, Derivatives and Hedging .
We account for the PIPE Conversion Option as a freestanding financial instrument that qualifies for derivative liability accounting in accordance with ASC 815, Derivatives and Hedging ("ASC 815").
Subsequent changes in fair value of the derivative liability are recognized as a gain or loss as a component of Other (expense) income in the consolidated statements of operations.
Subsequent changes in fair value of the derivative liability are recognized as a gain or loss as a component of Other income (expense) in the consolidated statements of operations.
This non-cash income was partially offset by a $14.3 million loss on the change in fair value of our Revenue Interest Financing and PIPE Conversion Option, an $8.7 million loss on the extinguishment of our Fortress Term Loan, $3.1 million of stock-based compensation expense, a $2.2 million provision for inventory, $1.5 million of non-cash interest expense, $1.4 million of debt issuance costs associated with debt at fair value, a $1.4 million provision for uncollectible accounts, $1.0 million of depreciation and amortization expense, $0.9 million of issuance costs associated with warrants recorded at fair value, and $0.8 million of non-cash lease expense.
This non-cash income was partially offset by an $8.7 million loss on the extinguishment of our Fortress Term Loan, a $4.8 million loss on the change in fair value of our Revenue Interest Financing and PIPE Conversion Option, $3.1 million of stock-based compensation expense, a $2.2 million provision for inventory, $1.5 million of non-cash interest expense, $1.4 million of debt issuance costs associated with debt at fair value, a $1.4 million provision for uncollectible accounts, $1.0 million of depreciation and amortization expense, $0.9 million of issuance costs associated with warrants recorded at fair value, and $0.8 million of non-cash lease expense.
July 2024 Public Offering and Concurrent Private Placement On July 1, 2024, we received $15.2 million in net proceeds from the issuance of 576,261 shares of common stock and 662,701 July 2024 Public Offering Warrants and $2.5 million in net proceeds from the sale and issuance of 2,260,159 shares of Series A Preferred Stock (as converted to 90,407 shares of common stock following the Series A Stockholder Approval and Reverse Stock Split) and 90,407 Private Placement Warrants in the July 2024 Private Placement, in each case at an offering price of $30.00 per share and accompanying warrant.
July 2024 Public Offering and Concurrent Private Placement On July 1, 2024, we received $15.2 million in net proceeds from the issuance of 576,261 shares of Common Stock and 662,701 warrants to purchase Common Stock, and $2.5 million in net proceeds from the sale and issuance of 2,260,159 shares of Series A Preferred Stock (as converted to 90,407 shares of Common Stock following the Series A Stockholder Approval and Reverse Stock Split) and 90,407 private placement warrants to purchase Common Stock, in each case at an offering price of $30.00 per share and accompanying warrant.
Our financial results, including our gross margins, may fluctuate from period to period based on the timing of orders, fluctuations in foreign currency exchange rates, and the number of available selling days in a particular period, which can be impacted by a number of factors, such as holidays or days of severe inclement weather in a particular geography, the mix of products sold, and the geographic mix of where products are sold.
Our financial results, including our gross margins, may fluctuate from period to period based on the timing of orders, fluctuations in foreign currency exchange rates, and the number of available selling days in a particular period, which can be impacted by a number of factors, such as holidays or days of severe 81 inclement weather in a particular geography, the mix of products sold, and the geographic mix of where products are sold.
The MCSM utilizes a combination of observable (Level 2) and unobservable (Level 3) inputs which include the trading price and volatility of the underlying common stock, expected term, risk-free interest rates, and expected date of a qualifying event. The determination of the fair value of these 92 financial instruments is complex and highly judgmental due to the significant estimation required.
The MCSM utilizes a combination of observable (Level 2) and unobservable (Level 3) inputs which include the trading price and volatility of the underlying common stock, expected term, risk-free interest rates, and expected date of a qualifying event. The determination of the fair value of these financial instruments is complex and highly judgmental due to the significant estimation required.
Further, on October 22, 2024, funds affiliated with RTW provided notice to the Company of their election under the Amended and Restated RTW Side Letter to surrender 30,000 shares of common stock of the Company representing $7.5 million in consideration for an additional Revenue Interest Financing Agreement.
Further, on October 22, 2024, funds affiliated with RTW provided notice to the Company of their election under the Amended and Restated RTW Side Letter (as amended) to surrender 30,000 shares of Common Stock of the Company representing $7.5 million in consideration for an additional Revenue Interest Financing Agreement.
Accordingly, on October 30, 2024, the Company and the funds affiliated with RTW entered into the Additional Revenue Interest Financing Agreement. The Additional Revenue Interest Financing Agreement has substantially identical terms and conditions as the RIFA Amendment, except that the amount of financing provided under the Additional Revenue Interest Financing Agreement is equal to the conversion amount of $7.5 million.
Accordingly, on October 30, 2024, the Company and the funds affiliated with RTW entered into the New RIFA. The New RIFA has substantially identical terms and conditions as the RIFA Amendment, except that the amount of financing provided under the Additional Revenue Interest Financing Agreement is equal to the conversion amount of $7.5 million.
The Revenue Interest Financing Agreement accounted for under the FVO election is a debt host financial instrument containing embedded features wherein the entire financial instrument is initially measured at its issue-date estimated fair value and then subsequently remeasured at estimated fair value on a recurring basis at each reporting period date.
The Revenue Interest Financing Agreement accounted for under the FVO election is a debt host financial instrument containing embedded features wherein the entire financial instrument is initially measured at its issue-date estimated fair value and then subsequently remeasured at 90 estimated fair value on a recurring basis at each reporting period date.
Cost of Revenue Cost of revenue consists primarily of costs that are closely correlated or directly related to the delivery of our products, including material costs, labor costs, and depreciation expense for fixed assets . 84 Operating Expenses Sales and Marketing Expenses Sales and marketing expenses consist primarily of salaries and related expenses (including commissions) for our sales and marketing personnel.
Cost of Revenue Cost of revenue consists primarily of costs that are closely correlated or directly related to the delivery of our products, including material costs, labor costs, and depreciation expense for fixed assets . Operating Expenses Sales and Marketing Expenses Sales and marketing expenses consist primarily of salaries and related expenses (including commissions) for our sales and marketing personnel.
Net Cash Provided by Financing Activities Years Ended December 31, 2024 and 2023 During the year ended December 31, 2024, cash provided by financing activities was $20.2 million, consisting of $48.0 million in proceeds from the issuance of convertible notes, $17.7 million in net proceeds from the July 2024 Public Offering, $2.6 million in net proceeds from the July 2024 Private Placement, and $1.0 million of proceeds from our equity line financing, partially offset by $47.7 million repayment of the Fortress Term Loan and a $1.4 million payment of debt issuance costs.
During the year ended December 31, 2024, cash provided by financing activities was $20.2 million, consisting of $48.0 million in proceeds from the issuance of convertible notes, $17.7 million in net proceeds from the July 2024 Public Offering, $2.6 million in net proceeds from the July 2024 Private Placement, and $1.0 million of proceeds from our equity line financing, partially offset by $47.7 million repayment of the Fortress Term Loan and a $1.4 million payment of debt issuance costs.
As of December 31, 2024 we had no variable rate debt outstanding. Foreign Currency Exchange Risk We are exposed to foreign currency risks that arise from normal business operations. These risks include transaction gains and losses associated with transactions denominated in currencies other than a location’s functional currency and the remeasurement of foreign currencies to our U.S. dollar reporting currency.
As of December 31, 2025 we had no variable rate debt outstanding. Foreign Currency Exchange Risk We are exposed to foreign currency risks that arise from normal business operations. These risks include transaction gains and losses associated with transactions denominated in currencies other than a location’s functional currency and the remeasurement of foreign currencies to our U.S. dollar reporting currency.
Our platform, the Allurion Program (the "Allurion Program"), features the world’s first and only swallowable, Procedureless TM intragastric balloon for weight loss (the "Allurion Balloon") and offers artificial intelligence ("AI")-powered remote patient monitoring tools, a proprietary behavior change program, secure messaging and video telehealth that are delivered by the Allurion Virtual Care Suite ("VCS").
Our platform, the Allurion Program (the "Allurion Program"), features the world’s first and only swallowable, Procedureless TM intragastric balloon for weight loss (the "Allurion Smart Capsule") and offers artificial intelligence ("AI")-powered remote patient monitoring tools, a proprietary behavior change program, secure messaging and video telehealth that are delivered by the Allurion Virtual Care Suite ("VCS").
The discussion and analysis should be read together with the consolidated financial statements as of and for the years ended December 31, 2024 and December 31, 2023, included in this Annual Report on Form 10-K. This discussion may contain forward-looking statements based upon current expectations that involve risks and uncertainties.
The discussion and analysis should be read together with the consolidated financial statements as of and for the years ended December 31, 2025 and December 31, 2024, included in this Annual Report on Form 10-K. This discussion may contain forward-looking statements based upon current expectations that involve risks and uncertainties.
We expect to continue to incur net losses for the foreseeable future as we focus on obtaining regulatory approvals for our products in new markets, refining our sales and marketing strategies, and continuing research and development efforts to further enhance our existing products.
We expect to continue to incur operating losses for the foreseeable future as we focus on obtaining regulatory approvals for our products in new markets, refining our sales and marketing strategies, and continuing research and development efforts to further enhance our existing products.
Revenue is generated primarily from the sale of our gastric balloon system, which includes the Allurion Balloon and related accessories. We have provided customers purchasing the Allurion Balloon with an implied license for access to our Allurion VCS software.
Revenue is generated primarily from the sale of our gastric balloon system, which includes the Allurion Smart Capsule and related accessories. We have provided customers purchasing the Allurion Smart Capsule with an implied license for access to our Allurion VCS software.
We believe the Allurion Program is also synergistic in combination with other weight loss therapies, including glucagon-like peptide 1 ("GLP-1") receptor agonists. Our proprietary intragastric balloon, the Allurion Balloon, is swallowed as a capsule under the guidance of a health care provider without surgery, endoscopy, or anesthesia.
We believe the Allurion Program is also synergistic in combination with other weight loss therapies, including glucagon-like peptide 1 ("GLP-1") receptor agonists. Our proprietary intragastric balloon, the Allurion Smart Capsule, is swallowed as a capsule under the guidance of a health care provider without surgery, endoscopy, or anesthesia for placement.
See Note 10, Fair Value Measurements for further information. Change in Fair Value of Earn-out Liabilities The change in fair value of earn-out liabilities consists of the gain or loss recognized upon the mark to market of the contingent earn-out consideration. See Note 10, Fair Value Measurements for further information.
See Note 9, Fair Value Measurements for further information. Change in Fair Value of Earn-out Liabilities The change in fair value of earn-out liabilities consists of the gain or loss recognized upon the mark to market of the contingent earn-out consideration. See Note 9, Fair Value Measurements for further information.
Since we operate as one operating segment, all required financial segment information can be found in the consolidated financial statements. Components of Our Results of Operations Revenue We derive revenue from the sale of the Allurion Balloon to customers, which are either distributors or health care providers.
Since we operate as one operating segment, all required financial segment information can be found in the consolidated financial statements. Components of Our Results of Operations Revenue We derive revenue from the sale of the Allurion Smart Capsule to customers, which are either distributors or health care providers.
In exchange, we are obligated to remit to RTW certain revenue interest payments on all current and future products, digital solutions and services developed, imported, manufactured, marketed, offered for sale, promoted, sold, tested or otherwise distributed by Allurion and its subsidiaries.
In exchange, we are obligated to remit to RTW certain revenue interest payments on all current and future products, digital solutions and services developed, imported, manufactured, marketed, offered for sale, promoted, sold, tested or otherwise distributed by Allurion and its subsidiaries at certain specified rates.
Our ability to generate revenue and achieve cost improvements sufficient to achieve profitability will depend on the successful further development and commercialization of our 81 products and receipt and maintenance of regulatory approvals.
Our ability to generate revenue and achieve cost improvements sufficient to achieve profitability will depend on the successful further development and commercialization of our 79 products and receipt and maintenance of regulatory approvals.
The Allurion Balloon is the foundation of the Allurion Program, a holistic weight loss program that offers patients the opportunity to receive, and clinic and other health care providers the ability to deliver, behavior change assistance through their use of our remote patient support and monitoring tools.
The Allurion Smart Capsule is the foundation of the Allurion Program, a holistic weight loss program that offers patients the opportunity to receive, and clinic and other health care providers the ability to deliver, behavior change assistance through their use of our remote patient support and monitoring tools.
The Revenue Interest Financing Agreement, as subsequently amended by the Omnibus Amendment, is included in Revenue Interest Financing liability on our consolidated balance sheet as of December 31, 2024.
The Revenue Interest Financing Agreement, as subsequently amended by the Omnibus Amendment, is included in Revenue Interest Financing liability on our consolidated balance sheet as of December 31, 2025.
If RTW has not received aggregate revenue interest payments equal to at least 100% of the Investment Amount by December 31, 2027, we must make a cash payment in an amount sufficient to catch RTW up to 100% of the Investment Amount.
If RTW has not received aggregate revenue interest payments equal to at least 100% of the Investment Amount by December 31, 2027, we must make a cash payment in an amount sufficient to catch RTW up to 100% of the Investment Amount. 87 If RTW has not received revenue interest payments equal to at least 240% of the Investment Amount by December 31, 2030, we must make a cash payment in an amount sufficient to catch RTW up to 240% of the Investment Amount.
In addition to its use by Allurion Balloon patients, we believe the VCS can potentially be a platform for optimal long-term follow up after other medical and surgical weight loss interventions in the future.
In addition to its use by Allurion Smart Capsule patients, we believe the VCS can potentially be a platform for optimal long-term follow up after other medical and surgical weight loss interventions in the future.
Non-cash income consisted of $22.9 million of income related to the change in fair value of our earn-out liabilities, $17.0 million of mark to market adjustments related to our warrant liabilities, $8.7 million of income related to the change in fair value of our convertible debt, $3.1 million of interest paid on debt recorded at fair value, and $1.9 million of income related to the 90 change in fair value of our term loan derivative liability.
Non-cash income consisted of $22.9 million of income related to the change in fair value of our earn-out liabilities, $18.1 million of income related to the change in fair value of our convertible debt, $17.0 million of mark to market adjustments related to our warrant liabilities, $3.1 million of interest paid on debt recorded at fair value, and $1.9 million of income related to the change in fair value of our term loan derivative liability.
To the extent we take advantage of such reduced disclosure obligations, it may also make comparison of our financial statements with other public companies difficult or impossible. Ite m 7A. Quantitative and Qualitative Disclosures About Market Risk. Interest Rate Risk We had cash and cash equivalents totaling $15.4 million as of December 31, 2024.
To the extent we take advantage of such reduced disclosure obligations, it may also make comparison of our financial statements with other public companies difficult or impossible. 91 Ite m 7A. Quantitative and Qualitative Disclosures About Market Risk. Interest Rate Risk We had cash and cash equivalents totaling $5.4 million as of December 31, 2025.
Liquidity and Capital Resources Since our inception, we have primarily obtained cash to fund our operations through the sale of common stock and preferred stock, issuance of term loans, and issuance of convertible debt instruments. As of December 31, 2024, we had $15.4 million in cash and cash equivalents.
Liquidity and Capital Resources Since our inception, we have primarily obtained cash to fund our operations through the sale of common stock and preferred stock, issuance of term loans, and issuance of convertible debt instruments. As of December 31, 2025, we had $5.4 million in cash and cash equivalents.
During the year ended December 31, 2024, the effect of an immediate 10% adverse change in foreign exchange rates on foreign-denominated accounts would have had an impact of approximately 6% on revenues and 3% on expenses and would have impacted our net loss by 2%.
During the year ended December 31, 2025, the effect of an immediate 10% adverse change in foreign exchange rates on foreign-denominated accounts would have had an impact of approximately 4% on revenues and 3% on expenses and would have impacted our net loss by 2%.
Change in Fair Value of Warrants The change in fair value of warrants consists of the expense recognized upon the mark to market of our warrant liabilities. Change in Fair Value of Debt The change in fair value of debt consists of the expense recognized upon the mark to market of our convertible debt.
Change in Fair Value of Warrants The change in fair value of warrants consists of the expense recognized upon the mark to market of our warrant liabilities.
See Note 9, Revenue Interest Financing, Side Letter, and PIPE Conversion Option in the notes to our annual consolidated financial statements for the years ended December 31, 2024 and 2023 for additional details regarding the Revenue Interest Financing Agreement.
See Note 8, Revenue Interest Financing, Side Letter, and PIPE Conversion Option in the notes to our annual consolidated financial statements for the years ended December 31, 2025 and 2024 for additional details regarding the Revenue Interest Financing Agreement.
We expect sales and marketing costs to decrease in 2025 as we have implemented cost reduction initiatives, including a reduction in force, and shift our focus of selling and marketing spend on more efficient channels and geographies.
We expect sales and marketing costs to decrease in 2026 as we have implemented cost reduction initiatives, including a reduction in force in Q3 2025, and have shifted our focus of selling and marketing spend on more efficient channels and geographies.
Provision for Income Taxes We recorded a provision for income taxes of $0.7 million and $0.3 million for the years ended December 31, 2024 and 2023, respectively. These provisions for income taxes are due to net income in certain foreign jurisdictions.
Provision for Income Taxes We recorded a provision for income taxes of $0.1 million and $0.7 million for the years ended December 31, 2025 and 2024, respectively. These provisions for income taxes are due to net income in certain foreign jurisdictions.
Net cash provided by changes in our operating assets and liabilities consisted of a net $5.7 million increase in accounts payable, accrued expenses and other current liabilities and a $0.3 million decrease in prepaid expenses, other current and long-term assets, partially offset by a $3.7 million increase in inventory, a $1.3 million increase in accounts receivable, and a $0.8 million decrease in lease liabilities.
Net cash used from changes in our operating assets and liabilities consisted of a net $7.8 million decrease in accounts payable, accrued expenses and other current liabilities, a $0.8 million decrease in our lease liabilities, and a $0.5 million increase in inventory, partially offset by a $0.8 million decrease in accounts receivable and a $0.5 million decrease in prepaid expenses, other current and long-term assets.
January 2025 RTW Private Placement On January 16, 2025, we received $2.5 million in gross proceeds from the issuance of 841,751 shares of common stock to funds affiliated with RTW as a purchase price per share of $2.97.
January 2025 RTW Private Placement On January 16, 2025, we received net proceeds of $2.5 million from the issuance of 841,751 shares of Common Stock to funds affiliated with RTW at a purchase price of $2.97 per share.
Net Cash Used in Investing Activities Years Ended December 31, 2024 and 2023 During the years ended December 31, 2024 and December 31, 2023, cash used in investing activities was $0.6 million and $1.6 million, respectively, consisting of purchases of property and equipment.
Net Cash Used in Investing Activities Years Ended December 31, 2025 and 2024 During the years ended December 31, 2025 and December 31, 2024, cash used in investing activities was zero and $0.6 million, respectively, consisting of purchases of property and equipment.
The decrease in sales and marketing expenses was primarily the result of a $14.0 million 86 decrease in marketing spend driven by a reorganization of our selling and marketing spend focusing on more efficient channels and geographies, a $3.2 million decrease in shipping and logistics expenses, a $1.2 million decrease in meeting expenses, a $1.1 million decrease in travel expenses, a $0.5 million decrease attributable to salaries and related benefit costs due to lower headcount, and a $0.5 million decrease in outside consulting costs.
The decrease in sales and marketing expenses was primarily the result of a $9.9 million decrease attributable to salaries and related benefit costs due to a lower headcount, $3.8 million decrease in marketing spend driven by a reorganization of our selling and marketing spend focusing on more efficient channels and geographies, a $0.5 million decrease in outside consulting costs, a $0.4 million decrease in shipping and logistics expenses, a $0.3 million decrease in travel expenses, and a $0.2 million decrease in facilities expense.
Our Allurion Program products are currently sold in Europe, the Middle East, Africa, Latin America, Canada and the Asia-Pacific region. AllurionMeds is currently only available in the United States. Since our inception, we have incurred significant operating losses.
Our Allurion Program products are currently sold in Europe, the Middle East, Africa, Latin America, Canada and the Asia-Pacific region. Since our inception, we have incurred significant operating losses.
During year ended December 31, 2023, the effect of an immediate 10% adverse change in foreign exchange rates on foreign-denominated accounts would have had an impact of approximately 5% on revenues and 2% on expenses and would have impacted our net loss by less than 1%. 94 Ite m 8. Financial Statements and Supplementary Data.
During year ended December 31, 2024, the effect of an immediate 10% adverse change in foreign exchange rates on foreign-denominated accounts would have had an impact of approximately 6% on revenues and 3% on expenses and would have impacted our net loss by 2%. 92 Ite m 8. Financial Statements and Supplementary Data.
These charges were partially offset by $29.1 million of income related to the change in fair value of our earn-out liabilities, $8.4 million of mark to market adjustments related to our warrant liabilities, and $1.1 million of interest paid on debt recorded at fair value.
These non-cash charges were partially offset by $12.8 million of mark to market adjustments related to our warrant liabilities, $2.4 million of interest paid on debt recorded at fair value, $1.1 million of income related to the change in fair value of our earn-out liabilities, and $0.2 million unrealized exchange loss.
The decrease in revenue was also attributable to selling less or no product to certain distributors and accounts to manage our credit risk.
The decrease was also driven by selling less or no product to certain distributors and accounts to manage our credit risk.
Change in Fair Value of Earn-Out Liabilities The $22.9 million gain attributable to the change in the fair value of earn-out liabilities for the year ended December 31, 2024 was due to the decrease in our stock price from December 31, 2023 to December 31, 2024.
Change in Fair Value of Earn-Out Liabilities The $1.1 million gain attributable to the change in the fair value of earn-out liabilities for the year ended December 31, 2025, compared to the $22.9 million gain for the same period in 2024, was due to the fluctuations in our stock price from December 31, 2024 to December 31, 2025.
Change in Fair Value of Revenue Interest Financing and PIPE Conversion Option The change in fair value of Revenue Interest Financing and PIPE Conversion Option (as defined below) consists of the expense recognized upon the mark to market of the Revenue Interest Financing with RTW and the issuance and mark to market of the PIPE Conversion Option.
Change in Fair Value of Debt The change in fair value of debt consists of the expense recognized upon the mark to market of our convertible debt. 82 Change in Fair Value of Revenue Interest Financing and PIPE Conversion Option The change in fair value of Revenue Interest Financing and PIPE Conversion Option consists of the expense recognized upon the mark to market of the Revenue Interest Financing with RTW and the issuance and mark to market of the PIPE Conversion Option.
Recent Accounting Pronouncements See Note 2, Summary of Significant Accounting Policies in the accompanying notes to our annual consolidated financial statements for the years ended December 31, 2024 and 2023 included in this Annual Report on Form 10-K for a description of recently issued accounting pronouncements that may potentially impact our financial position, results of operations or cash flows. 93 Emerging Growth Company and Smaller Reporting Company We are an emerging growth company, as defined in the Jumpstart Our Business Startups Act (“JOBS Act”).
Recent Accounting Pronouncements See Note 2, Summary of Significant Accounting Policies in the accompanying notes to our annual consolidated financial statements for the years ended December 31, 2025 and 2024 included in this Annual Report on Form 10-K for a description of recently issued accounting pronouncements that may potentially impact our financial position, results of operations or cash flows.
Cash Flows The following table sets forth a summary of cash flows for the periods presented: Years Ended December 31, (In thousands) 2024 2023 Net cash used in operating activities $ (42,300 ) $ (63,982 ) Net cash used in investing activities (611 ) (1,606 ) Net cash provided by financing activities 20,208 95,986 Net increase (decrease) in cash and cash equivalents, and restricted cash $ (22,703 ) $ 30,398 Net Cash Used in Operating Activities Years Ended December 31, 2024 and 2023 During the year ended December 31, 2024, operating activities used $42.3 million of cash, resulting from a net loss of $26.1 million and non-cash income of $17.8 million, partially offset by net cash provided by changes in our operating assets and liabilities of $1.6 million.
Cash Flows The following table sets forth a summary of cash flows for the periods presented: Years Ended December 31, (In thousands) 2025 2024 Net cash used in operating activities $ (28,946 ) $ (42,300 ) Net cash used in investing activities — (611 ) Net cash provided by financing activities 18,970 20,208 Net increase (decrease) in cash and cash equivalents, and restricted cash $ (9,976 ) $ (22,703 ) Net Cash Used in Operating Activities Years Ended December 31, 2025 and 2024 During the year ended December 31, 2025, operating activities used $28.9 million of cash, resulting from a net loss of $28.8 million and net cash used from changes in our operating assets and liabilities of $7.8 million, partially offset by non-cash charges of $7.6 million.
The decrease in revenue was also attributable to selling less or no product to certain distributors and accounts to manage our credit risk. Cost of Revenue Cost of revenue decreased $1.4 million, or 11%, to $10.6 million for the year ended December 31, 2024, compared to the same period in 2023.
The decrease was also driven by selling less or no product to certain distributors and accounts to manage our credit risk. 83 Cost of Revenue Cost of revenue decreased $4.9 million, or 47%, to $5.7 million for the year ended December 31, 2025, compared to the same period in 2024.
We incurred net losses of $26.1 million and $80.6 million for the years ended December 31, 2024 and 2023, respectively. We incurred cash outflows from operating activities of $42.3 million and $64.0 million during the years ended December 31, 2024 and 2023, respectively. As of December 31, 2024, we had an accumulated deficit of $238.9 million.
We incurred operating losses of $30.1 million and $50.2 million for the years ended December 31, 2025 and 2024, respectively. We incurred cash outflows from operating activities of $28.9 million and $42.3 million during the years ended December 31, 2025 and 2024, respectively. As of December 31, 2025, we had an accumulated deficit of $251.0 million.
Financing Arrangements Leavitt Private Placement On February 20, 2025, the Company received approximately $1.4 million in gross proceeds, before deducting the placement agent fees payable by the Company, from the issuance of 267,686 shares of common stock and 535,372 Leavitt Private Placement Warrants at an offering price of $5.23 per share and accompanying warrant.
Leavitt Private Placement On February 20, 2025, we received net proceeds of $1.3 million, from the issuance of 267,686 shares of Common Stock and 535,372 Leavitt Private Placement Warrants at an offering price of $5.23 per share and accompanying warrant.
February 2025 Public Offering and Concurrent Private Placement 88 On February 20, 2025, the Company received approximately $4.7 million in gross proceeds, before deducting the placement agent fees and estimated offering expenses payable by the Company, from the issuance of 900,000 shares of common stock and 1,800,000 February 2025 Common Warrants at an offering price of $5.23 per share and accompanying warrant.
February 2025 Public Offering and Concurrent Private Placement On February 20, 2025, the Company received net proceeds of $3.9 million, from the issuance of 900,000 shares of Common Stock and 1,800,000 February 2025 Warrants at an offering price of $5.23 per share and accompanying warrant.
Change in Fair Value of Revenue Interest Financing and PIPE Conversion Option The $14.3 million loss attributable to the change in fair value of the Revenue Interest Financing and PIPE Conversion Option for the year ended December 31, 2024, compared to the same period in 2023, was primarily due to a $13.1 million loss related to the change in fair value of the Revenue Interest Financing and a $1.8 million loss on PIPE Conversion Option primarily driven by a decrease in the discount rate.
Change in Fair Value of Debt The $3.6 million loss attributable to the change in fair value of debt for the year ended December 31, 2025, compared to the $18.1 million gain for the same period in 2024, was due to mark to market fluctuations in our convertible debt. 84 Change in Fair Value of Revenue Interest Financing and PIPE Conversion Option The $9.1 million loss attributable to the change in fair value of the Revenue Interest Financing and PIPE Conversion Option for the year ended December 31, 2025, compared to the $4.8 million loss for the same period in 2024, was primarily due to mark to market fluctuations in our Revenue Interest Financing during the period driven by a decrease in the discount rate.
Pursuant to the RIFA Amendment, the rate of revenue interest payments to be paid to RTW (the “Royalty Rate”) for net sales less than or equal to $100 million prior to December 31, 2026 was increased from 6% to 12%, and the Royalty Rate on net sales less than or equal to $100 million on or after January 1, 2027 was increased from 10% to 12%, subject to the terms and conditions of the RIFA Amendment.
On April 14, 2024, the Revenue Interest Financing Agreement was amended to, among other things, increase the rate of revenue interest payments to be paid to RTW for net sales less than or equal to $100 million prior to December 31, 2026 was increased from 6% to 12%, and increase the royalty rate on net sales less than or equal to $100 million on or after January 1, 2027 was increased from 10% to 12%.
While our significant accounting policies are described in more detail in Note 2, Summary of Significant Accounting Policies to our audited consolidated financial statements included in this Annual Report on Form 10-K, we believe that the following accounting policies are those most critical to the judgments and estimates used in the preparation of our consolidated financial statements.
While our significant accounting policies are described in more detail in Note 2, Summary of Significant Accounting Policies to our audited consolidated financial statements included in this Annual Report on Form 10-K, we believe that the following accounting policies are those most critical to the judgments and estimates used in the preparation of our consolidated financial statements. 89 Revenue Recognition We account for revenue in accordance with Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (“Topic 606” or “ASC 606”).
January 2025 Public Offering and Concurrent Private Placement On January 27, 2025, we received approximately $7.4 million in gross proceeds, before deducting the placement agent fees and estimated offering expenses payable by the Company, from the issuance of 1,240,000 shares of common stock and 1,240,000 January 2025 Common Warrants at an offering price of $6.00 per share and accompanying warrant.
January 2025 Public Offering and Concurrent Private Placement 86 On January 27, 2025, we received net proceeds of $5.8 million, from the issuance of 1,240,000 shares of Common Stock and 1,240,000 January 2025 Warrants at an offering price of $6.00 per share and accompanying warrant.
Revenue Recognition We account for revenue in accordance with Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (“Topic 606” or “ASC 606”). In accordance with ASC 606, we recognize revenue when control of our products is transferred to our customers in an amount that reflects the consideration we expect to receive in exchange for those products.
In accordance with ASC 606, we recognize revenue when control of our products is transferred to our customers in an amount that reflects the consideration we expect to receive in exchange for those products.
Operating Expenses Sales and Marketing Expenses Sales and marketing expenses decreased $20.9 million, or 45%, to $25.9 million for the year ended December 31, 2024, compared to the same period in 2023.
Operating Expenses Sales and Marketing Expenses Sales and marketing expenses decreased $15.1 million, or 58%, to $10.8 million for the year ended December 31, 2025, compared to the same period in 2024.
The net increase in accounts payable, accrued expenses and other current liabilities was primarily related to increased expenses as well as timing of payments. The increase in accounts receivable was primarily related to the timing of cash collections.
The net decrease in accounts payable, accrued expenses and other current liabilities was primarily related to decreased expenses and timing of payments. The increase in inventory was primarily related to an increase in finished goods and work in progress. The decrease in accounts receivable was the result of an increase in cash collections and decrease in revenue.
Change in Fair Value of Warrants The $17.0 million gain attributable to the change in fair value of warrants for the year ended December 31, 2024, compared to the same period in 2023, was due to mark to market fluctuations in our warrant liabilities due to the decline in value of our common stock during the periods, as well as the issuance of the July 2024 Public Offering Warrants and July 2024 Private Placement Warrants on July 1, 2024, for which there were no comparable mark to market fluctuations in the prior period.
Change in Fair Value of Warrants The $12.8 million gain attributable to the change in fair value of warrants for the year ended December 31, 2025, compared to the $17.0 million gain for the same period in 2024, was due to mark to market fluctuations in our warrant liabilities due to the decline in value of our common stock during the periods.
Based on our recurring losses from operations incurred since inception, the expectation of continuing operating losses for the foreseeable future, and the potential need to raise additional capital to finance our future operations and debt service payments, we have concluded that there is substantial doubt about our ability to continue as a going concern for a period of one year from the date that the consolidated financial statements included in this Annual Report on Form 10-K are issued.
Based on the Company's recurring losses from operations incurred since inception, its expectation of continuing operating losses for the foreseeable future, the potential need to raise additional capital to finance its future operations, and noncompliance with certain financial covenants under its credit facilities, the Company has concluded that there is substantial doubt about its ability to continue as a going concern for a period of one year from the date that the consolidated financial statements included in this Annual Report on Form 10-K are issued. 85 Financing Arrangements Revenue Interest Financing Agreement On August 1, 2023, we received $40.0 million in proceeds from the Revenue Interest Financing Agreement with RTW, which matures in December 2030.
Research and Development Expenses Research and development expenses decreased $10.3 million, or 37%, to $17.4 million for the year ended December 31, 2024, compared to the same period in 2023.
Research and Development Expenses Research and development expenses decreased $9.8 million, or 56%, to $7.6 million for the year ended December 31, 2025, compared to the same period in 2024.
Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards until such time as those standards apply to private companies.
Emerging Growth Company and Smaller Reporting Company We are an emerging growth company, as defined in the Jumpstart Our Business Startups Act (“JOBS Act”). Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards until such time as those standards apply to private companies.
We generated revenue of $32.1 million and $53.5 million for the years ended December 31, 2024 and 2023, respectively, and incurred net losses of $26.1 million and $80.6 million for those same periods, respectively.
We generated revenue of $15.23 million and $32.1 million for the years ended December 31, 2025 and 2024, respectively, and incurred operating losses of $30.1 million and $50.2 million for those same periods, respectively.
Accordingly, on October 30, 2024, the Company and the funds affiliated with RTW entered into the Additional Revenue Interest Financing Agreement. Material Cash Requirements for Known Contractual and Other Obligations Leases We have entered into various non-cancelable operating leases for our corporate office, manufacturing facilities, research and development labs, management office space and certain equipment.
Material Cash Requirements for Known Contractual and Other Obligations Leases We have entered into various non-cancelable operating leases for our corporate office, manufacturing facilities, research and development labs, management office space and certain equipment. The leases have varying terms expiring between 2025 and 2028.
Other Capital Requirements We enter into agreements in the normal course of business with various vendors, which are generally cancelable upon notice. Payments due upon cancellation typically consist only of payments for services provided or expenses incurred, including non-cancelable obligations of service providers, up to the date of cancellation.
Payments due upon cancellation typically consist only of payments for services provided or expenses incurred, including non-cancelable obligations of service providers, up to the date of cancellation.
February 2025 Public Offering and Concurrent Private Placement On February 19, 2025, we entered into a securities purchase agreement (the “February 2025 Securities Purchase Agreement”) with certain accredited investors named therein, pursuant to which we agreed to issue and sell 900,000 shares of common stock (the “February 2025 Offering”), and 1,800,000 accompanying common warrants (the “February 2025 Warrants”) to purchase up to 1,800,000 shares of common stock upon exercise of the February 2025 Common Warrants in a concurrent private placement (the “February 2025 Private Placement”), at an offering price of $5.23 per share and accompanying Common Warrant.
November 2025 Private Placement On November 11, 2025, the Company entered into the November 2025 Securities Purchase Agreement with certain accredited investors named therein, pursuant to which the Company agreed to issue and sell 2,994,012 November 2025 Private Placement Shares and accompanying November 2025 Private Placement Warrants to purchase up to 2,994,012 shares of Common Stock for an aggregate purchase price of approximately $5.0 million at a purchase price of $1.67 per share and accompanying Private Placement Warrant.
January 2025 Public Offering and Concurrent Private Placement On January 24, 2025, we entered into a securities purchase agreement (the “January 2025 Securities Purchase Agreement”) with certain accredited investors named therein, pursuant to which we agreed to issue and sell 1,240,000 shares of common stock (the “January 2025 Offering”) and 1,240,000 accompanying common warrants (the “January 2025 Warrants”) to purchase up to 1,240,000 shares of common stock upon exercise of the January 2025 Common Warrants in a concurrent private placement (the “January 2025 Private Placement”), at an offering price of $6.00 per share and accompanying January 2025 Common Warrant.
Recent Developments November 2025 Securities Purchase Agreement On November 11, 2025, we entered into a securities purchase agreement (the "November 2025 Securities Purchase Agreement") with certain accredited investors named therein, pursuant to which we agreed to issue and sell 2,994,012 shares of our Common Stock and accompanying common warrants to purchase up to 2,994,012 shares of Common Stock (the "November 2025 Private Placement Warrants"), for an aggregate purchase price of approximately $5.0 million at a purchase price of $1.67 per share and accompanying November 2025 Private Placement Warrant.
Gross Profit Gross profit decreased $20.0 million, or 48%, to $21.5 million for the year ended December 31, 2024, compared to the same period in 2023.
General and Administrative Expenses General and administrative expenses decreased $7.0 million, or 25%, to $21.4 million for the year ended December 31, 2025, compared to the same period in 2024.
Chardan Purchase Agreement On December 18, 2023, we entered into the ChEF Purchase Agreement with Chardan.
Accordingly, on October 30, 2024, the Company and the funds affiliated with RTW entered into the New RIFA. Chardan Purchase Agreement On December 18, 2023, we entered into the ChEF Purchase Agreement with Chardan.
The decrease in research and development expenses was the result of a decrease of $6.3 million in costs related to the AUDACITY clinical trial as it nears completion, a $2.9 million decrease attributable to salaries and related benefit costs due to lower headcount, and a $1.2 million decrease in outside consulting costs.
The decrease in research and development expenses was the result of a decrease of $4.7 million in costs related to the AUDACITY clinical trial as the fourth and final module of the PMA was submitted to the FDA in June 2025 and we received FDA approval in February 2026, a $2.7 million decrease attributable to salaries and related benefit costs due to lower headcount, a reduction of $1.7 million of procedure reimbursement costs, a $0.4 million decrease in outside consulting costs, and a $0.2 million decrease in travel expenses.
As of December 31, 2024, $48.0 million of the Notes remains outstanding and is included in convertible notes payable, net of discounts on our consolidated balance sheets. See Note 8, Debt , in the notes to our annual consolidated financial statements for the years ended December 31, 2024 and 2023 for additional details related to the Notes.
See Note 7, Debt , in the notes to our annual consolidated financial statements for the years ended December 31, 2025 and 2024 for additional details related to the Notes.
Other Income (expense), Net Other income (expense), net consists of interest earned on our invested cash balances, which primarily consist of deposit accounts and money market funds, foreign currency transaction gains and losses and expense associated with our Success Fee derivative liability and Fortress Term Loan derivative liability.
Other Income (expense), Net Other income (expense), net consists of interest earned on our invested cash balances, which primarily consist of deposit accounts and money market funds, foreign currency transaction gains and losses and expense recognized upon the mark to market of the Share Obligation liability (as defined in Note 7, Debt , in the accompanying notes to the consolidated financial statements).
Research and Development Costs We are nearing the completion of our U.S. FDA AUDACITY clinical trial and expect our expenses to decrease significantly as we continue to make payments related to the obligations with each clinical trial site. Our clinical trial costs are dependent on, among other things, the size, number, and length of our clinical trial.
Research and Development Costs We have completed our U.S. FDA AUDACITY clinical trial after submitting the fourth and final module of the PMA in June 2025 and receiving FDA approval in February 2026 and expect our expenses to decrease significantly as we continue to make payments related to the obligations with each clinical trial site.
During the year ended December 31, 2023, operating activities used $64.0 million of cash, resulting from a net loss of $80.6 million, partially offset by net cash provided by changes in our operating assets and liabilities of $0.2 million and non-cash charges of $16.4 million.
The decrease in prepaid expenses, other current and long-term assets was primarily related to a decrease in payroll deposits. 88 During the year ended December 31, 2024, operating activities used $42.3 million of cash, resulting from a net loss of $7.2 million and non-cash income of $36.7 million, partially offset by net cash provided by changes in our operating assets and liabilities of $1.6 million.
Loss on Extinguishment of Debt The loss on extinguishment of debt consists of the expense recognized related to the extinguishment of our 2021 Term Loan and Fortress Term Loan.
Loss on Extinguishment of Debt The loss on extinguishment of debt consists of the loss recognized upon the termination of our term loan facility with Fortress Credit Corp. (the "Fortress Term Loan") and RTW Convertible Notes.
See Note 10, Fair Value Measurements, for further information . 85 Results of Operations Comparison of the Years Ended December 31, 2024 and 2023 The following table summarizes our results of operations for the years ended December 31, 2024 and 2023 (in thousands): Years Ended December 31, 2024 2023 Change Revenue $ 32,110 $ 53,467 $ (21,357 ) Cost of revenue 10,607 11,970 (1,363 ) Gross profit 21,503 41,497 $ (19,994 ) Operating expenses: Sales and marketing 25,933 46,857 (20,924 ) Research and development 17,369 27,694 (10,325 ) General and administrative 28,399 46,024 (17,625 ) Total operating expenses: 71,701 120,575 (48,874 ) Loss from operations (50,198 ) (79,078 ) 28,880 Other income (expense): Interest expense (2,264 ) (10,566 ) 8,302 Changes in fair value of warrants 17,024 8,364 8,660 Changes in fair value of debt 8,690 (3,751 ) 12,441 Changes in fair value of Revenue Interest Financing and PIPE conversion option (14,321 ) (2,192 ) (12,129 ) Changes in fair value of earn-out liabilities 22,900 29,050 (6,150 ) Termination of convertible note side letters — (17,598 ) 17,598 Loss on extinguishment of debt (8,713 ) (3,929 ) (4,784 ) Other income (expense), net 1,452 (643 ) 2,095 Total other income (expense): 24,768 (1,265 ) 26,033 Loss before income taxes: (25,430 ) (80,343 ) 54,913 Provision for income taxes: (718 ) (264 ) (454 ) Net loss $ (26,148 ) $ (80,607 ) $ 54,459 Revenue Revenue decreased $21.4 million, or 40%, to $32.1 million for the year ended December 31, 2024, compared to the same period in 2023.
Results of Operations Comparison of the Years Ended December 31, 2025 and 2024 The following table summarizes our results of operations for the years ended December 31, 2025 and 2024 (in thousands): Years Ended December 31, 2025 2024 Change Revenue $ 15,230 $ 32,110 $ (16,880 ) Cost of revenue 5,659 10,607 (4,948 ) Gross profit 9,571 21,503 (11,932 ) Operating expenses: Sales and marketing 10,804 25,933 (15,129 ) Research and development 7,571 17,369 (9,798 ) General and administrative 21,353 28,399 (7,046 ) Total operating expenses: 39,728 71,701 (31,973 ) Loss from operations (30,157 ) (50,198 ) 20,041 Other income (expense): Interest expense — (2,264 ) 2,264 Changes in fair value of warrants 12,800 17,024 (4,224 ) Changes in fair value of debt (3,615 ) 18,090 (21,705 ) Changes in fair value of Revenue Interest Financing and PIPE Conversion Option (9,090 ) (4,771 ) (4,319 ) Changes in fair value of earn-out liabilities 1,059 22,900 (21,841 ) Loss on extinguishment of debt (660 ) (8,713 ) 8,053 Other income (expense), net 982 1,452 (470 ) Total other income (expense): 1,476 43,718 (42,242 ) Loss before income taxes: (28,681 ) (6,480 ) (22,201 ) Provision for income taxes: (74 ) (718 ) 644 Net loss $ (28,755 ) $ (7,198 ) $ (21,557 ) Revenue Revenue decreased $16.9 million, or 53%, to $15.2 million for the year ended December 31, 2025, compared to the same period in 2024.
As of December 31, 2024, we have received $1.0 million in net proceeds from the sale of an aggregate 75,461 shares of our common stock pursuant to the ChEF Purchase Agreement with Chardan. Revenue Interest Financing Agreement On August 1, 2023, we received $40.0 million in proceeds from the Revenue Interest Financing Agreement with RTW, which matures in December 2030.
As of December 31, 2025, we have received $1.8 million in net proceeds from the sales of our Common Stock pursuant to the ChEF Purchase Agreement with Chardan and met the Exchange Cap.
Other Income (Expense), Net The change in Other income (expense), net for the year ended December 31, 2024 compared to the same period in 2023 was a gain of $2.1 million, primarily driven by the $2.0 million write-off of the term loan derivative liability to zero in connection with the termination of the Fortress Term Loan and a $1.4 million gain in interest income, partially offset by a $1.1 million loss related to the Amended Note Purchase Agreement.
Other Income (Expense), Net The change in Other income (expense), net for the year ended December 31, 2025 compared to the same period in 2024 was a loss of $0.5 million, primarily driven by a $0.9 million foreign currency exchange loss and a $0.4 million loss related to the Company's obligation to issue certain shares under the Omnibus Amendment.
We expect general and administrative expenses to decrease in 2025, as we have implemented cost reduction initiatives, including a reduction in force. Other expense (income) Interest Expense Interest expense decreased $8.3 million, or 79%, to $2.3 million for the year ended December 31, 2024, compared to the same period in 2023.
Other expense (income) Interest Expense Interest expense decreased $2.3 million, or 100%, to zero for the year ended December 31, 2025, compared to the same period in 2024. The decrease in interest expense was due the termination of our Fortress Term Loan in April 2024.

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