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What changed in Anika Therapeutics, Inc.'s 10-K — 2022 vs 2023

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

+223 added−278 removedSource: 10-K (2024-03-15) vs 10-K (2023-03-16)

Top changes in Anika Therapeutics, Inc.'s 2023 10-K

223 paragraphs added · 278 removed · 173 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

47 edited+10 added−11 removed126 unchanged
Biggest changeThese products include Tactoset Injectable Bone Substitute, an HA-enhanced injectable bone repair therapy designed to treat insufficiency fractures and for augmenting hardware fixation, such as suture anchors, and Hyalofast, a biodegradable support for human bone marrow mesenchymal stem cells used for cartilage regeneration and as an adjunct for microfracture surgery.
Biggest changeThese products include: Tactoset Injectable Bone Substitute, an HA-enhanced injectable bone repair therapy designed to treat insufficiency fractures and for augmenting hardware fixation, such as suture anchors; Integrity Implant System, or Integrity, an HA-based scaffold with bone and tendon fixation components and arthroscopic delivery instruments that is designed to protect an injured tendon and promote healing in rotator cuff repair and other tendon procedures and received clearance by the FDA in August 2023 for commercial use in the United States and initiated limited market release in November 2023; and Hyalofast, a biodegradable support for human bone marrow mesenchymal stem cells used for cartilage regeneration and as an adjunct for microfracture surgery.
Some of the principal factors that may affect our ability to compete in our target markets include: ● The quality and breadth of our continued development of our product portfolio; ● Our ability to complete successful clinical studies and obtain FDA marketing and foreign regulatory clearances/approvals; ● Our ability to successfully source raw materials and components from suppliers at price points that are in-line with our financial objectives, as well as deliver them on schedule to meet the needs of our operational and commercial organizations; ● Our ability to continue to build our commercial infrastructure, integrate our sales channels and execute our sales strategies; ● The execution by our key partners of their commercial strategies for our products and our ability to manage our relationships with those key partners; ● Our ability to recruit and retain skilled employees; and ● The availability of capital resources to fund strategic activities related to the significant expansion of our business or product portfolio, including through acquisitions of third parties or certain assets.
Some of the principal factors that may affect our ability to compete in our target markets include: ● The quality and breadth of our continued development of our product portfolio; ● Our ability to complete successful clinical studies and obtain FDA marketing and foreign regulatory clearances/approvals; ● Our ability to successfully source raw materials and components from suppliers at price points that are in-line with our financial objectives, as well as deliver them on schedule to meet the needs of our operational and commercial organizations; ● Our ability to continue to strengthen our commercial infrastructure, integrate our sales channels and execute our sales strategies; ● The execution by our key partners of their commercial strategies for our products and our ability to manage our relationships with those key partners; ● Our ability to recruit and retain skilled employees; and ● The availability of capital resources to fund strategic activities related to the significant expansion of our business or product portfolio, including through acquisitions of third parties or certain assets.
Food and Drug Administration, or the FDA, in 2023 on next steps for U.S. regulatory approval. In parallel, we are exploring the potential to advance Cingal through commercial partnerships in the U.S. and select Asian markets. These efforts will inform next steps, including if and how to proceed with another clinical trial in the United States.
Food and Drug Administration, or the FDA, on next steps for U.S. regulatory approval. In parallel, we are exploring the potential to advance Cingal through commercial partnerships in the U.S. and select Asian markets. These efforts will inform next steps, including if and how to proceed with another clinical trial in the United States.
In early 2020, we expanded our overall technology platform, product portfolio, and significantly expanded our commercial infrastructure, especially in the United States, through our strategic acquisitions of Parcus Medical, LLC, or Parcus Medical, a sports medicine and instrumentation solutions provider, and Arthrosurface, Inc., or Arthrosurface, a company specializing in bone preserving partial and total joint replacement solutions.
In early 2020, we expanded our overall technology platform, product portfolio, and significantly increased our commercial infrastructure, especially in the United States, through our strategic acquisitions of Parcus Medical, LLC, or Parcus Medical, a sports medicine and instrumentation solutions provider, and Arthrosurface, Inc., or Arthrosurface, a company specializing in bone preserving partial and total joint replacement solutions.
The steps for obtaining FDA approval of an NDA to market a drug in the United States include: 13 ● completion of preclinical laboratory tests, animal studies and formulation studies under the FDA’s Good Laboratory Practices regulations; ● submission to the FDA of an Investigational New Drug Application, or IND, for human clinical testing, which must become effective before human clinical trials may begin and Institutional Review Board, or IRB, approval at each clinical site before the trials may be initiated; ● performance of adequate and well-controlled clinical trials in accordance with Good Clinical Practices to establish the safety and efficacy of the product for each indication; ● submission to the FDA of a user fee (unless a fee waiver applies) and an NDA, which contains detailed information about the Chemistry, Manufacturing and Control, or CMC, for the product, reports of the outcomes and full data sets of the preclinical testing and clinical trials, and proposed labeling and packaging for the product; ● satisfactory review of the contents of the NDA by the FDA, including the satisfactory resolution of any questions raised during the review; ● satisfactory completion of an FDA advisory committee review, if applicable; ● satisfactory completion of an FDA inspection of the manufacturing facility or facilities at which the product is produced to assess compliance with current Good Manufacturing Practices, or cGMP, regulations, to assure that the facilities, methods and controls are adequate to ensure the product’s identity, strength, quality and purity; and ● FDA approval of the NDA including agreement on post-marketing commitments, if applicable.
None of our products are currently approved under an NDA. 13 The steps for obtaining FDA approval of an NDA to market a drug in the United States include: ● completion of preclinical laboratory tests, animal studies and formulation studies under the FDA’s Good Laboratory Practices regulations; ● submission to the FDA of an Investigational New Drug Application, or IND, for human clinical testing, which must become effective before human clinical trials may begin and Institutional Review Board, or IRB, approval at each clinical site before the trials may be initiated; ● performance of adequate and well-controlled clinical trials in accordance with Good Clinical Practices to establish the safety and efficacy of the product for each indication; ● submission to the FDA of a user fee (unless a fee waiver applies) and an NDA, which contains detailed information about the Chemistry, Manufacturing and Control, or CMC, for the product, reports of the outcomes and full data sets of the preclinical testing and clinical trials, and proposed labeling and packaging for the product; ● satisfactory review of the contents of the NDA by the FDA, including the satisfactory resolution of any questions raised during the review; ● satisfactory completion of an FDA advisory committee review, if applicable; ● satisfactory completion of an FDA inspection of the manufacturing facility or facilities at which the product is produced to assess compliance with current Good Manufacturing Practices, or cGMP, regulations, to assure that the facilities, methods and controls are adequate to ensure the product’s identity, strength, quality and purity; and ● FDA approval of the NDA including agreement on post-marketing commitments, if applicable.
Since the acquisitions, we integrated our U.S. commercial organization, including cross training our sales team to sell the consolidated Joint Preservation and Restoration product portfolio. Within this framework, we employ selling models that seek to maximize the benefit for our company and customers, including in certain instances, contracts with group purchasing organizations and certain fixed-price delivery models.
Following the acquisitions, we integrated our U.S. commercial organization, including cross training our sales team to sell the consolidated Joint Preservation and Restoration product portfolio. Within this framework, we employ selling models that seek to maximize the benefit for our company and customers, including in certain instances, contracts with group purchasing organizations and certain fixed-price delivery models.
We anticipate that we will continue to commit significant resources to research and development activities, primarily for new product development, regulatory compliance, scale-up manufacturing activities, and pre-clinical and clinical activities.
We anticipate that we will continue to commit resources to research and development activities, primarily for new product development, regulatory compliance, scale-up manufacturing activities, and pre-clinical and clinical activities.
Internationally, we market our OA Pain Management products directly through a worldwide network of commercial distributors. ● Cingal, our novel, next-generation, single-injection OA Pain Management product consisting of our proprietary cross-linked HA material combined with a fast-acting steroid, designed to provide both short- and long-term pain relief.
Internationally, we market our OA Pain Management products directly through a worldwide network of commercial distributors. ● Cingal, our novel, next-generation, non-opioid, single-injection OA Pain Management product consisting of our proprietary cross-linked HA material combined with a fast-acting steroid, designed to provide both short- and long-term pain relief.
Tactoset is commercialized principally in the United States, whereas Hyalofast is currently available outside the United States in over 30 countries within Europe, South America, Asia, and certain other international markets. In the United States, Hyalofast is a pipeline product under a pivotal Investigational Device Exemption, or IDE, clinical trial and is not available for commercial sale.
Tactoset and Integrity are commercialized principally in the United States, whereas Hyalofast is currently available outside the United States in over 30 countries within Europe, South America, Asia, and certain other international markets. In the United States, Hyalofast is a pipeline product under a pivotal Investigational Device Exemption, or IDE, clinical trial and is not available for commercial sale.
The cost of ongoing compliance with such environmental regulations does not have a material effect on our operations. 18 Seasonality Our OA Pain Management and Non-Orthopedic product families are generally less seasonal in nature due to the nature of our product mix and sales channels and strategies.
The cost of ongoing compliance with such environmental regulations does not have a material effect on our operations. 18 Seasonality Our OA Pain Management and Non-Orthopedic product families are generally less seasonal in nature due to the nature of our product mix and sales channels and order strategies of our customers.
With our expanded commercial infrastructure as a result of the Parcus Medical and Arthrosurface acquisitions, we sell our Joint Preservation and Restoration family directly to clinicians, including hospitals and ASCs, through our Anika sales team and large network of independent third-party distributors.
With our expanded commercial infrastructure as a result of the Parcus Medical and Arthrosurface acquisitions, we sell our Joint Preservation and Restoration family directly to clinicians, including hospitals and ASCs, through a hybrid approach with our Anika sales team and large network of independent third-party distributors.
The TCA includes specific provisions concerning pharmaceuticals, which include the mutual recognition of GMP, inspections of manufacturing facilities for medicinal products and GMP documents issued, but does not foresee wholesale mutual recognition of UK and EU pharmaceutical regulations.
The TCA includes specific provisions concerning pharmaceuticals, which include the mutual recognition of GMP, inspections of manufacturing facilities for medicinal products and GMP documents issued but does not provide for wholesale mutual recognition of UK and EU pharmaceutical regulations.
Many of our competitors also compete against us in securing relationships with collaborators for their research and development, manufacturing and supply, and distribution and commercialization programs. We compete with other market participants primarily on the efficacy of our products, our products’ reputation for safety, and the breadth of our overall product portfolio.
Many of our competitors also compete against us in securing relationships with collaborators for their research and development and commercialization programs. We compete with other market participants primarily on the efficacy of our products, our products’ reputation for safety, and the breadth of our overall product portfolio.
Medical device companies therefore compete for a limited number of qualified applicants to fill specialized positions. This requires competitive compensation and benefits packages and an attractive culture in order to attract and retain skilled employees to support the growth and success of the company. As of December 31, 2022, we employed 345 full-time employees in the United States and Europe.
Medical device companies therefore compete for a limited number of qualified applicants to fill specialized positions. This requires competitive compensation and benefits packages and an attractive culture in order to attract and retain skilled employees to support the growth and success of the company. As of December 31, 2023, we employed 357 full-time employees in the United States and Europe.
At present, Great Britain has implemented EU legislation on the marketing, promotion and sale of medicinal products through the Human Medicines Regulations 2012 (as amended) (under the Northern Ireland Protocol, the EU regulatory framework will continue to apply in Northern Ireland).
At present, Great Britain has implemented EU legislation on the marketing, promotion and sale of medicinal products through the Human Medicines Regulations 2012 (as amended) (under the Northern Ireland Protocol, the EU regulatory framework continues to apply in Northern Ireland).
Beginning in 2021, we made a commitment to comply with key elements of the MassBio CEO Pledge for a More Equitable and Inclusive Life Science Industry. We are working on a multi-year approach at providing the key deliverables to meet our commitment.
Beginning in 2021, we made a commitment to comply with key elements of the MassBio CEO Pledge for a More Equitable and Inclusive Life Science Industry. We continue to work on a multi-year approach at providing the key deliverables to meet our commitment.
We believe our future success will be driven by our: ● Decades of experience in HA-based regenerative solutions and early intervention orthopedics combined under new seasoned leadership with a strong financial foundation for future investment in meaningful solutions for our customers and their patients; ● Utilizing HA-based technology and manufacturing expertise to provide new and differentiated solutions for the faster growing joint preservation and regenerative medicine markets; ● Robust network of stakeholders in our target markets that will allow us to identify evolving unmet patient treatment needs; ● Prioritized investment in a differentiated pipeline of regenerative solutions, bone preserving implants and sports medicine solutions; ● Global commercial expertise, which we will leverage to drive growth across our product portfolio, including an intentional site of care focus in ASCs in the United States and continued international expansion; ● Pursuit of strategic inorganic growth opportunities, including potential partnerships and smaller acquisitions and technology licensing, by leveraging our strong financial foundation and operational capabilities; and ● Energized and experienced team focused on strong values, talent, and culture. 8 Products OA Pain Management Our OA Pain Management product family consists of: ● Monovisc and Orthovisc, our single- and multi-injection, HA-based viscosupplement product offerings indicated to provide pain relief from OA conditions solely for use in the knee.
We believe our future success will be driven by our: ● Over 30 years of experience in HA-based regenerative solutions and early intervention orthopedics combined under new seasoned leadership with a strong financial foundation for future investment in meaningful solutions for our customers and their patients; ● Utilizing HA-based technology and manufacturing expertise to provide new and differentiated solutions in next generation OA Pain Management and regenerative solutions markets; ● Robust network of stakeholders in our target markets to identify evolving unmet patient treatment needs; ● Prioritized investment in differentiated pipeline of regenerative solutions, bone preserving implants and sports medicine solutions; ● Global commercial expertise, which we will leverage to drive growth across our product portfolio, including an intentional site of care focus in ASCs in the United States and continued international expansion; ● Opportunity to pursue strategic inorganic growth opportunities, including potential partnerships and smaller acquisitions, technology licensing, and leveraging our strong financial foundation and operational capabilities; and ● Energized and experienced team focused on strong values, talent, and culture. 8 Products OA Pain Management Our OA Pain Management product family consists of: ● Monovisc and Orthovisc, our single- and multi-injection, HA-based viscosupplement product offerings indicated to provide pain relief from OA conditions solely for use in the knee.
In addition, to assess employee perceptions in areas such as inclusion, professional development/training, reward/recognition, equity, engagement and overall organizational satisfaction, we conduct company-wide employee engagement surveys using an external survey platform. Our management team evaluates the results and identifies potential opportunities for improvement.
In addition, to assess employee perceptions in areas such as inclusion, professional development/training, reward/recognition, equity, engagement and overall organizational satisfaction, we conduct company-wide employee engagement surveys using an external survey platform. Our management team evaluates and measures the results with prior periods and peer data and identifies potential opportunities for improvement.
CE marking a device involves working with a Notified Body (or in some cases, for the lowest risk class devices, the manufacturer can self-certify) to demonstrate that the device meets all applicable requirements of the EU medical devices legislation and that the Quality Management System is compliant.
CE marking a device involves working with a notified body (or in some cases, for the lowest risk class devices, the manufacturer can self-certify) to demonstrate that the device meets all applicable general safety and performance requirements of the EU medical devices legislation, including that the manufacturer’s Quality Management System is compliant with such requirements.
If the FDA agrees that the device is substantially equivalent, it will grant 510(k) clearance to commercially market the device. If the FDA determines that the device is ‘‘not substantially equivalent’’ to a predicate device, the device is automatically designated as a Class III device.
If the FDA agrees that the device is substantially equivalent, it will grant 510(k) clearance to commercially market the device. If the FDA determines that the device is ”not substantially equivalent” to a predicate device, the device is automatically designated as a Class III device.
Our development focus for OA Pain Management will continue to be on bringing Cingal, our next-generation, single-injection HA-based viscosupplement product combined with a fast-acting steroid, to the U.S. market. In 2022, we completed a third Phase III clinical trial for Cingal, which achieved its primary endpoint. We will engage with the U.S.
Our development focus for OA Pain Management will continue to be on bringing Cingal, our next-generation, non-opioid, single-injection HA-based OA pain product combined with a fast-acting steroid, to the U.S. market. In 2022, we completed a third Phase III clinical trial for Cingal, which achieved its primary endpoint. We have been actively engaging with the U.S.
While we rely on our patent and trademark portfolio to provide us with competitive advantages as it relates to our existing and future product lines, it is not our sole source of protection in the development and manufacture of our products.
While we rely on our patent and trademark portfolio to provide us with competitive advantages as it relates to our existing and future product lines, it is not our sole source of protection.
These products often are used to treat patients with OA progression beyond where our OA Pain Management products can allow the patients to retain an active lifestyle when early surgical intervention becomes preferable. 9 We currently commercialize our Joint Preservation and Restoration products principally by selling to hospitals and ASCs, through an independent network of sales representatives and distributors.
These products often are used to treat patients with OA progression beyond where our OA Pain Management products can allow the patients to retain an active lifestyle when early surgical intervention becomes preferable. 9 We currently commercialize our Joint Preservation and Restoration products in the United States by selling to hospitals and ASCs, through an independent network of sales representatives and distributors, and utilize our distributor network for sales in certain international markets.
These products include Hyalobarrier, an anti-adhesion barrier indicated for use after abdominal-pelvic surgeries, Hyalomatrix, used for the treatment of complex wounds such as burns and ulcers, as well as products used in connection with the treatment of ears, nose and throat disorders, and ophthalmic products, including injectable, high molecular weight HA products such as Anikavisc and Nuvisc, used as viscoelastic agents in ophthalmic surgical procedures such as cataract extraction and intraocular lens implantation.
These products include: Hyvisc, our high molecular weight injectable HA veterinary product for the treatment of joint dysfunction in horses due to non-infectious synovitis associated with equine OA; Hyalobarrier, an anti-adhesion barrier indicated for use after abdominal-pelvic surgeries; Hyalomatrix, used for the treatment of complex wounds such as burns and ulcers, as well as products used in connection with the treatment of ears, nose and throat disorders, and ophthalmic products, including injectable, high molecular weight HA products such as Anikavisc and Nuvisc, used as viscoelastic agents in ophthalmic surgical procedures such as cataract extraction and intraocular lens implantation.
Outside of the United States, we principally market and sell our products using a worldwide network of commercial partners, along with a small number of direct sales representatives, to provide a solid foundation for future revenue growth and territorial expansion.
Outside of the United States, we market and sell our products using a worldwide network of commercial partners to provide a solid foundation for future revenue growth and territorial expansion.
Our X-Twist Fixation System, launched in September of 2022 for limited use and fully launched in early 2023 for broad market use in the United States and certain international markets, is a platform of knotless and knotted suture anchors designed for soft tissue repairs in the shoulder and other extremities. ● Arthrosurface Joint Solutions .
Our X-Twist Fixation System using PEEK (Polyetheretherketone) material, was fully launched in early 2023 for broad market use in the United States and certain international markets, is a platform of knotless and knotted suture anchors designed for soft tissue repairs in the shoulder and other extremities.
These include enhancements to existing regenerative solutions such as our fast-growing Tactoset Injectable Bone Substitute, which received an additional 510(k) clearance in 2021 for hardware augmentation, along with new soft tissue fixation and extremities products like our X-Twist Fixation System that achieved 510(k) clearance from the FDA in 2022 (with a limited market launch that began in September 2022) and our RevoMotion Reverse Shoulder Arthroplasty System, which received 510(k) clearance in 2021 (with a limited market launch that began in early 2023), as well as continued progress on a regenerative solution product targeted at rotator cuff repair utilizing our proprietary solid HA technology.
These include enhancements to existing regenerative solutions such as our fast-growing Tactoset Injectable Bone Substitute, which received an additional 510(k) clearance in 2021 for hardware augmentation, along with new soft tissue fixation and extremities products like our X-Twist Fixation System that received 510(k) clearance from the FDA in 2022 and our RevoMotion reverse shoulder arthroplasty system, which received 510(k) clearance in 2021, as well as our Integrity Implant System, a regenerative HA-based patch product targeted at rotator cuff repair that received 510(k) clearance in August 2023 and is now in limited market release.
Satisfaction of the FDA approval requirements for drugs typically takes several years and the actual time required may vary substantially based on the type, complexity and novelty of the product. None of our products are currently approved under an NDA.
Satisfaction of the FDA approval requirements for drugs typically takes several years and the actual time required may vary substantially based on the type, complexity and novelty of the product.
We adjusted attendance policies to encourage those who may be ill to stay home. To further protect our on-site employees, we have provided personal protective equipment and cleaning supplies.
We have established safety policies and protocols, and we regularly update our employees with respect to any changes. We also have adjusted attendance policies to encourage those who may be ill to stay home. To further protect our on-site employees, we have provided personal protective equipment and cleaning supplies.
These effects have included periodic restrictions on the performance of elective surgical procedures throughout the U.S. and global markets, the unavailability of physicians and/or changes to their treatment prioritizations, reductions in the levels of healthcare facility staffing and, in certain instances, the willingness or ability of patients to seek treatment.
Our Joint Preservation and Restoration business can be impacted by periodic restrictions on the performance of elective surgical procedures throughout the U.S. and global markets, the unavailability of physicians and/or changes to their treatment prioritizations, reductions in the levels of healthcare facility staffing and, in certain instances, and the willingness or ability of patients to seek treatment.
In Joint Preservation and Restoration, procedure volumes are normally higher in the fourth quarter due to several factors including the satisfaction by patients of insurance deductible limits and the time of year patients prefer to have elective procedures. The ongoing effects of the COVID-19 pandemic have also somewhat changed the historic seasonality of our Joint Preservation and Restoration business.
In Joint Preservation and Restoration, procedure volumes are normally higher in the fourth quarter due to several factors including the satisfaction by patients of insurance deductible limits and the time of year patients prefer to have elective procedures.
This pivotal trial has a two-year follow-up protocol before regulatory submission. Intellectual Property We seek patent and trademark protection for our key technologies, products and product improvements, both in the U.S. and in select foreign countries. When determined appropriate, we enforce and plan to enforce and defend our patent and trademark rights.
Intellectual Property We seek patent and trademark protection for our key technologies, products and product improvements, both in the U.S. and in select foreign countries. When determined appropriate, we enforce and plan to enforce and defend our patent and trademark rights.
These products span multiple joints including OVOMotion with Inlay Glenoid for the shoulder, WristMotion wrist arthroplasty system, as well as foot and ankle, and knee products generally intended to restore a patient’s natural anatomy and movement.
These products span multiple joints including OVOMotion with Inlay Glenoid for the shoulder, WristMotion wrist arthroplasty system, as well as foot and ankle, and knee products generally intended to restore a patient’s natural anatomy and movement. Our recently launched RevoMotion Reverse Shoulder Arthroplasty System, is a differentiated reverse shoulder implant system addressing the largest portion of the shoulder replacement market.
Our materiality assessment was a research-intensive and stakeholder-inclusive process and included guidance and insight from external advisors, and crucial feedback from key internal and external stakeholders, including investors, customers, suppliers, employees and our board of directors.
The initial step in our ESG journey included the completion of a “materiality assessment” based on the Sustainability Accounting Standards Board, or SASB, framework. Our materiality assessment was a research-intensive and stakeholder-inclusive process and included guidance and insight from external advisors, and crucial feedback from key internal and external stakeholders, including investors, customers, suppliers, employees, and our board of directors.
In order to communicate with respect to these important topics in a manner that is engaging to our team, we utilize a variety of channels.
We believe that our employees’ understanding of how their work contributes to our overall strategy and performance is key to our success. In order to communicate with respect to these important topics in a manner that is engaging to our team, we utilize a variety of channels.
Cingal is CE marked and for several years has been sold outside the United States directly in over 35 countries through our network of distributors. In the United States, Cingal is a pipeline product not yet approved for commercial sale; for additional information please see the section captioned “Item 1.
Cingal is CE marked and for several years has been sold outside the United States directly in over 35 countries through our network of distributors.
We also made significant progress in 2022 on our clinical trial to support approval in the United States for Hyalofast, our single stage, off the shelf, cartilage repair therapy, currently sold only outside the United States. To date, we have enrolled 199 of the 200 patients targeted in the trial.
We also launched our X-Twist Biocomposite, the bioabsorbable version of the X-Twist Fixation System, in early 2024. In addition, we made significant progress in 2023 on our clinical trial to support approval in the United States for Hyalofast, our single stage, off the shelf, cartilage repair therapy, currently sold only outside the United States.
“ Our operations are located in areas impacted by the COVID-19 pandemic, and those operations have been, and may continue to be, adversely affected by the COVID-19 pandemic ”, and “ Our global supply chain may be materially adversely impacted due to the COVID-19 pandemic. ” Research and Development Our research and development efforts consist of the development of new medical applications for our technology platforms, including new implant designs, the development of intellectual property with respect to our technology platforms and new products, the management of clinical trials for certain product candidates, the preparation and processing of applications for regulatory clearances and approvals, and process development and scale-up manufacturing activities for our existing and new product development initiatives.
Research and Development Our research and development efforts consist of the development of new medical applications that address true unmet needs that leverage our technology platforms, including new implant designs, the development of intellectual property with respect to our technology platforms and new products, the management of clinical trials for certain product candidates, the preparation and processing of applications for regulatory clearances and approvals, and process development and scale-up manufacturing activities for our existing and new product development initiatives.
However, we rely on a small number of suppliers for certain key raw materials and a small number of suppliers for certain other materials, components, parts and disposables required for the manufacturing and delivery of these products.
However, we rely on a small number of suppliers for certain key raw materials and other components, parts and disposables required for the manufacturing and delivery of these products, Any prolonged interruption of operations or significant reduction in the capacity or performance capability of any of our manufacturing facilities, or with any of our key suppliers, could have a material adverse effect on our operations.
The timing for this transition has been extended from no later than May 26, 2024 to December 2027 or December 2028, depending on device classification, provided certain conditions are met with regard to the new regulation, one of which being that all submissions are filed by May 26, 2024.
The timing for this transition has been extended from no later than May 26, 2024 to December 2027 or December 2028, depending on device classification, provided certain conditions are met with regard to compliance with the EU MDR, including compliance with the requirements under the EU MDR in respect of post-market surveillance, vigilance and registration and that an agreement for conformity assessment under the EU MDR for the device by a notified body under the EU MDR has been enacted to be filed by May 26, 2024.
The EU’s Medical Device Directive, or MDD, has been replaced by the EU Medical Device Regulation, or EU MDR, enacted in 2017, and which became effective on May 26, 2021.
The EU’s Medical Devices Directive, or MDD, has been replaced by the EU Medical Devices Regulation (Regulation (EU) No 2017/745), or EU MDR, and which became effective on May 26, 2021. Medical devices lawfully placed on the market pursuant to a certification issued under the MDD may continue to be marketed during a transitional period.
We will continue to assess and update our ESG initiatives as our business grows and as we implement processes and improvements over time. Human Capital Management We believe that creating a diverse, talented, and inclusive workplace is a central aspect to our culture, employee recruitment, retention and engagement, innovation, operational excellence and overall performance.
Human Capital Management We believe that creating a diverse, talented, and inclusive workplace is a central aspect to our culture, employee recruitment, retention and engagement, innovation, operational excellence and overall performance. In turn, this culture and drive for performance is an important factor in our ability to attract and retain key talent.
These include all-employee town hall meetings with senior management, regular email updates from our chief executive officer and other key members of the executive team, as well as presentations to our employees by invited clinicians, who use our products, participate and share their experiences from a customer’s perspective.
These include all-employee town hall meetings led by senior management, hosted monthly information sessions known as Knowledge Boosters, regular email and intranet updates from our chief executive officer and other key members of the executive team.
Manufacturers may choose to use the UKCA mark on a voluntary basis until June 30, 2023. UCKA marking will, however, not be recognized in the EU. The rules for placing medical devices on the market in Northern Ireland, which is part of the United Kingdom, differ from those in the rest of the United Kingdom.
Manufacturers may choose to use the UKCA mark on a voluntary basis prior to such dates. UCKA marking will, however, not be recognized in the EU.
The MHRA will only register devices where the manufacturer or their United Kingdom Responsible Person has a registered place of business in the United Kingdom. By July 1, 2023, in Great Britain, all medical devices will require a UKCA (UK Conformity Assessed) mark but CE marks issued by EU notified bodies will remain valid until December 2024.
The MHRA will only register devices where the manufacturer or their United Kingdom Responsible Person has a registered place of business in the United Kingdom.
This framework integrates our six key corporate values: People, Quality, Integrity, Accountability, Innovation and Teamwork. The initial step in our ESG journey included the completion of a “materiality assessment” based on the Sustainability Accounting Standards Board, or SASB, framework.
Environmental, Social and Governance In 2021, we began a process to develop a foundational Environmental, Social and Governance, or ESG, framework for our organization. This framework integrates our six key corporate values: People, Quality, Integrity, Accountability, Innovation and Teamwork.
For 2022, 2021, and 2020, research and development expenses were $28.2 million, $27.3 million and $23.4 million, respectively. The increase in 2022 was primarily due to costs to ensure compliance with growing regulatory requirements globally and new product development in our research and development pipeline.
The increase in 2023 was primarily due to costs to ensure compliance with growing regulatory requirements globally, such as EU MDR, as well as new product development in our research and development pipeline, led by Integrity, which received FDA clearance in August 2023 and was launched with first surgeries in rotator cuff repair and other tendon procedures in November 2023.
Removed
Business—Research and Development.” ● Hyvisc, our high molecular weight injectable HA veterinary product for the treatment of joint dysfunction in horses due to non-infectious synovitis associated with equine OA. Joint Preservation and Restoration Our Joint Preservation and Restoration product family, consists of: ● Regenerative Solutions .
Added
In the United States, Cingal is a pipeline product in which we are awaiting feedback from the FDA on proposed non-clinical next steps for U.S. regulatory approval; for additional information please see the section captioned “Item 1. Business—Research and Development.” Joint Preservation and Restoration Our Joint Preservation and Restoration product family, consists of: ● Regenerative Solutions .
Removed
Our recently launched RevoMotion Reverse Shoulder Arthroplasty System (limited launch beginning early 2023), is a differentiated reverse shoulder implant system addressing the largest portion of the shoulder replacement market.
Added
X-Twist Biocomposite, the bioabsorbable version of the X-Twist fixation system, received FDA clearance in August 2023 and launched in early 2024. ● Arthrosurface Joint Solutions .
Removed
The downstream effects of the COVID-19 pandemic has impacted our supply chain as the companies that produce our products, product components or otherwise support our manufacturing processes, the distribution centers where we manage our inventory, or the operations of our logistics and other service providers, including third parties that sterilize and store our products, are disrupted, temporarily close or experience worker shortages or expanded lead-times for deliveries for a sustained period of time.
Added
For 2023, 2022, and 2021, research and development expenses were $32.7 million, $28.2 million and $27.3 million, respectively.
Removed
Any prolonged interruption of operations or significant reduction in the capacity or performance capability of any of our manufacturing facilities, or with any of our key suppliers, could have a material adverse effect on our operations. For additional information on the impact of the COVID-19 pandemic on our manufacturing operations, please refer to the section captioned “Item 1A.
Added
We have fully enrolled the 200 patients targeted in the trial. This pivotal trial has a two-year follow-up protocol expected to be achieved in early 2025 before regulatory submission is completed.
Removed
EU MDR requirements will phase in on a product-by-product basis as certifications issued under the MDD lapse and will require all products to undergo review and approval under these new regulations.
Added
We are targeting to file the first module as part of a modular PMA in 2024 which is the first step in seeking FDA approval for Hyalofast in the U.S. The final module of the PMA will be filed in 2025 once the clinical data becomes available to be submitted to the FDA.
Removed
The impact of seasonality on our business could continue to evolve based on factors such as patient behavior and attitudes towards vacations, the emergence of COVID-19 variants, and supply chain and staffing challenges. Environmental, Social and Governance In 2021, we began a process to develop a foundational Environmental, Social and Governance, or ESG, framework for our organization.
Added
CE marks issued by EU notified bodies to place medical devices on the market in the EU will remain valid in the UK up until June 30, 2028 (for CE marks issued under the EU MDD) or June 30, 2030 (for CE marks issued under the EU MDR), following which a UK Conformity Assessed (“UKCA”) mark will be required to place a device on the Great Britain market.
Removed
In turn, this culture and drive for performance is an important factor in our ability to attract and retain key talent.
Added
The EU regulatory framework on medical devices continues to apply in Northern Ireland under the Northern Ireland Protocol and medical devices in Northern Ireland may either carry an EU CE mark or a UK and Northern Ireland CE mark (“CE UKNI”), although devices bearing the CE UKNI marking will not be accepted on the EU market.
Removed
We expect to continue to add employees in 2023 and beyond as we grow our business. We believe that our employees’ understanding of how their work contributes to our overall strategy and performance is key to our success.
Added
We will continue to assess and update our ESG initiatives as our business grows and as we implement processes and improvements over time. In 2023, we committed to evaluate ways to reduce our carbon footprint in its contribution to the Paris Climate agreement which seeks to limit global warming to 1.5 o C and to achieve carbon neutrality by 2050.
Removed
As a result of employee feedback, we have established an employee communications taskforce chartered with improving communications and employee engagement across the business and introduced new e-learning programs to expand employee development.
Added
The first step in our process was to establish a baseline for greenhouse gas, GHG, emissions by measuring Scope 1 and Scope 2 emissions across our global operations for 2022, and we continued to monitor our emissions in 2023, with Scope 1 = 1559 mtCO2e and Scope 2 = 2085 mtCO2e.
Removed
As a result of the COVID-19 pandemic, we augmented certain of our normal business practices to ensure that we promote health and safety for our employees. A cross functional COVID-19 Pandemic Task Force was put in place since the start of the pandemic. We established safety policies and protocols, and we regularly update our employees with respect to any changes.
Added
We are a low greenhouse gas, GHG, emitter due to our relatively small operational footprint. We are committed to evaluating carbon reduction opportunities over the coming years in-line with our business priorities.
Removed
Additionally, we engaged a third-party firm to conduct a proactive facility assessment and upgraded our air filtration systems to be more effective against COVID-19 transmission, thus enhancing the safety of our workforce while on the job.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

58 edited+10 added−36 removed205 unchanged
Biggest changeThis includes the European Union, or EU, GDPR, as well as other national data protection legislation in force in relevant EU member states (including the GDPR in such form as incorporated into the law of England and Wales, Scotland and Northern Ireland by virtue of the European Union (Withdrawal) Act 2018 and any regulations thereunder and the UK Data Protection Act 2018, or UK GDPR.
Biggest changeThis includes the European Union, or EU, GDPR, and the United Kingdom, or UK, equivalent of the same (the UK GDPR, together with the EU GDPR, referred to as the GDPR), as well as other national data protection legislation in force in relevant European Economic Area, or EEA, Member States and the UK (including the UK Data Protection Act 2018), which governs the collection, use, storage, disclosure, transfer, or other processing of personal data (including health data processed in the context of clinical trials): (i) regarding individuals in the EEA and UK; and/or (ii) carried out in the context of the activities of our establishment in any EEA Member State or the UK.
A significant portion of our OA Pain Management revenues are derived from a small number of customers, the loss of which could materially adversely affect our business, financial condition and results of operations. We have historically derived most of our OA Pain Management revenues from a small number of customers who resell our products to end-users.
A significant portion of our OA Pain Management revenues are derived from a small number of customers, the loss of which could materially adversely affect our business, financial condition and results of operations. We have historically derived most of our revenues from a small number of customers who resell our products to end-users.
As Mitek accounts for a large percentage of our yearly revenue and has unilateral decision-making authority over in-market activities, including end-user pricing and discounts, reimbursement strategy, and overall promotion strategy, actions taken by Mitek could impact our ability to predict and generate revenue and have a material impact on our business, financial condition, and results of operations.
As Mitek accounts for a large percentage of our revenue and has unilateral decision-making authority over in-market activities, including end-user pricing and discounts, reimbursement strategy, and overall promotion strategy, actions taken by Mitek could impact our ability to predict and generate revenue and have a material impact on our business, financial condition, and results of operations.
These risks include: ● The impact of recessions, inflation and other economic conditions in economies, including the impact of the COVID-19 pandemic, outside the United States; ● Instability of foreign economic, political, and labor conditions; ● Fluctuations in foreign currency exchange rates relative to the U.S. dollar; ● Unfavorable labor regulations applicable to our European operations, such as severance and the unenforceability of non-competition agreements in the European Union; ● The impact of strikes, work stoppages, work slowdowns, grievances, complaints, claims of unfair labor practices, or other collective bargaining disputes; ● Difficulties in complying with restrictions imposed by regulatory or market requirements, tariffs, or other trade barriers or by U.S. export laws; ● Imposition of government controls limiting the volume of international sales; ● Longer accounts receivable payment cycles; ● Potentially adverse tax consequences, including, if required or applicable, difficulties transferring funds generated in non-U.S. jurisdictions to the United States in a tax efficient manner; ● Difficulties in protecting intellectual property, especially in international jurisdictions; ● Difficulties in managing international operations; and ● Burdens of complying with a wide variety of foreign laws, including the EU MDR and GDPR among others.
These risks include: ● The impact of recessions, inflation and other economic conditions in economies outside the United States; ● Instability of foreign economic, political, and labor conditions; ● Fluctuations in foreign currency exchange rates relative to the U.S. dollar; ● Unfavorable labor regulations applicable to our European operations, such as severance and the unenforceability of non-competition agreements in the European Union; ● The impact of strikes, work stoppages, work slowdowns, grievances, complaints, claims of unfair labor practices, or other collective bargaining disputes; ● Difficulties in complying with restrictions imposed by regulatory or market requirements, tariffs, or other trade barriers or by U.S. export laws; ● Imposition of government controls limiting the volume of international sales; ● Longer accounts receivable payment cycles; ● Potentially adverse tax consequences, including, if required or applicable, difficulties transferring funds generated in non-U.S. jurisdictions to the United States in a tax efficient manner; ● Difficulties in protecting intellectual property, especially in international jurisdictions; ● Difficulties in managing international operations; and ● Burdens of complying with a wide variety of foreign laws, including the EU MDR and GDPR among others.
Any compromise to our information security or that of our third party service providers or contractors could result in an interruption in our operations, the unauthorized publication of our confidential business or proprietary information, the unauthorized release, use, disclosure and/or dissemination of customer, vendor, or employee data, the violation of privacy and/or data protection laws, including under the GDPR, in the European Union or the United Kingdom, or other laws and exposure to litigation, any of which could harm our business and operating results. 26 We may face circumstances in the future that will result in impairment charges, including, but not limited to, goodwill impairment and in-process research and development charges.
Any compromise to our information security or that of our third-party service providers or contractors could result in an interruption in our operations, the unauthorized publication of our confidential business or proprietary information, the unauthorized release, use, disclosure and/or dissemination of customer, vendor, or employee data, the violation of privacy and/or data protection laws, including under the GDPR, in the European Union or the United Kingdom, or other laws and exposure to litigation, any of which could harm our business and operating results. 26 We may face circumstances in the future that will result in impairment charges, including, but not limited to, goodwill impairment, intangible assets impairment and in-process research and development charges.
While we have taken steps to comply with the GDPR and UK GDPR, and implementing legislation in applicable EU member states and the UK, including by seeking to establish appropriate lawful bases for the various processing activities we carry out, reviewing our security procedures and those of our service providers, and entering into data processing agreements with relevant service providers we cannot be certain that our efforts to achieve and remain in compliance have been, and/or will continue to be, fully successful.
While we have taken steps to comply with the GDPR, and implementing legislation in applicable EEA member states and the UK, including by seeking to establish appropriate lawful bases for the various processing activities we carry out, reviewing our security procedures and those of our service providers, and entering into data processing agreements with relevant service providers we cannot be certain that our efforts to achieve and remain in compliance have been, and/or will continue to be, fully successful.
Those provisions could have the effect of discouraging a third party from pursuing a non-negotiated takeover of our company at a price considered attractive by many stockholders and could have the effect of preventing or delaying a potential acquirer from acquiring control of our company. 38 If securities or industry analysts do not publish or cease publishing research or reports about us, our business, or our market, or if they adversely change their recommendations regarding our stock, our stock price and trading volume could decline.
Those provisions could have the effect of discouraging a third party from pursuing a non-negotiated takeover of our company at a price considered attractive by many stockholders and could have the effect of preventing or delaying a potential acquirer from acquiring control of our company. 36 If securities or industry analysts do not publish or cease publishing research or reports about us, our business, or our market, or if they adversely change their recommendations regarding our stock, our stock price and trading volume could decline.
If the fair value of any of our long-lived assets, including those that we acquired in the acquisitions of Arthrosurface and Parcus Medical, decrease as a result of an economic slowdown, a downturn in the markets where we sell products and services, a downturn in our financial performance or future outlook, or other reasons, we may be required to record an impairment charge on such assets.
If the fair value of any of our long-lived assets, including those that we acquired in the acquisitions of Arthrosurface and Parcus Medical, decrease as a result of an economic slowdown, a downturn in the markets where we sell products and services, a downturn in our stock price, financial performance or future outlook, or other reasons, we may be required to record an impairment charge on such assets.
The GDPR and UK GDPR are wide-ranging in scope and impose numerous additional requirements on companies that process personal data, including imposing special requirements in respect of the processing of health and other sensitive data, requiring that consent of individuals to whom the personal data relates is obtained in certain circumstances, requiring additional disclosures to individuals regarding data processing activities, requiring that safeguards are implemented to protect the security and confidentiality of personal data, creating mandatory data breach notification requirements in certain circumstances, requiring data protection impact assessments for high risk processing and requiring that certain measures (including contractual requirements) are put in place when engaging third-party processors.
The GDPR is wide-ranging in scope and imposes numerous additional requirements on companies that process personal data, including imposing special requirements in respect of the processing of health and other sensitive data, requiring that consent of individuals to whom the personal data relates is obtained in certain circumstances, requiring additional disclosures to individuals regarding data processing activities, requiring that safeguards are implemented to protect the security and confidentiality of personal data, creating mandatory data breach notification requirements in certain circumstances, requiring data protection impact assessments for high risk processing and requiring that certain measures (including contractual requirements) are put in place when engaging third-party processors.
We may need to raise capital in the future depending on numerous factors, including: ● Market acceptance of our existing and future products; ● The success and sales of our products under various distributor agreements and other appropriate commercial strategies, including the ability of our partners to achieve third party reimbursement for our products; ● The successful commercialization of products in development through appropriate commercial models and marketing channels; ● Progress in our product development efforts; ● The magnitude and scope of such product development efforts; ● Any potential acquisitions of products, technologies, or businesses; ● Progress with preclinical studies, clinical trials, and product approvals and clearances by the FDA and other agencies; ● Requirement to conduct additional preclinical studies and clinical trials for future products; ● The cost and timing of our efforts to manage our manufacturing capabilities and related costs; ● The cost of filing, prosecuting, defending, and enforcing patent claims and other intellectual property rights and the cost of defending any other legal proceeding; ● Competing technological and market developments; ● The development of strategic alliances for the marketing of certain of our products; ● The terms of such strategic alliances, including provisions (and our ability to satisfy such provisions) that provide upfront and/or milestone payments to us; ● The cost of maintaining adequate inventory levels to meet current and future product demand; and ● Further expanding our business in international markets.
We may need to raise capital in the future depending on numerous factors, including: ● Market acceptance of our existing and future products; ● The success and sales of our products under various distributor agreements and other appropriate commercial strategies, including the ability of our partners to achieve third party reimbursement for our products; ● The successful commercialization of products in development through appropriate commercial models and marketing channels; ● Progress in our product development efforts; ● The magnitude and scope of such product development efforts; ● Any potential acquisitions of products, technologies, or businesses; ● Progress with preclinical studies, clinical trials, and product approvals and clearances by the FDA and other agencies; ● Requirement to conduct additional preclinical studies and clinical trials for future products; ● The cost and timing of our efforts to manage our manufacturing capabilities and related costs; ● Expanding our manufacturing capacity to support growing demand for our products and add redundancies to our manufacturing process; ● The cost of filing, prosecuting, defending, and enforcing patent claims and other intellectual property rights and the cost of defending any other legal proceeding; ● Competing technological and market developments; ● The development of strategic alliances for the marketing of certain of our products; ● The terms of such strategic alliances, including provisions (and our ability to satisfy such provisions) that provide upfront and/or milestone payments to us; ● The cost of maintaining adequate inventory levels to meet current and future product demand; and ● Further expanding our business in international markets.
We experience quarterly fluctuations in our product sales as a result of multiple factors, many of which are outside of our control including our arrangement with Mitek which performs most of the downstream sales and marketing activities to customers and end-users for Monovisc and Orthovisc in the United States.
We experience quarterly fluctuations in our product sales as a result of multiple factors, many of which are outside of our control including our arrangements with Mitek which performs most of the downstream sales and marketing activities to customers and end-users for Monovisc and Orthovisc in the United States.
For example, for the manufacture of Arthrosurface joint solutions products, we engage a single third-party organization as a contract manufacturer. This contract manufacturer has noted that there could be lead times up to a year or more to deliver certain products.
For example, for the manufacture of Arthrosurface joint solutions products, we engage a single third-party organization as a contract manufacturer. This contract manufacturer has noted that there could be lead times up to a year or more to deliver product.
In the EU and the UK, data protection authorities may impose large penalties for violations of the data protection laws, including potential fines of up to €20 million (£17.5 million in the UK) or 4% of annual global revenue, whichever is greater.
In the EEA and the UK, data protection authorities may impose large penalties for violations of the data protection laws, including potential fines of up to €20 million (£17.5 million in the UK) or 4% of annual global revenue, whichever is greater.
Currently, we rely mainly on Standard Contractual Clauses approved by the European Commission, or SCCs, to legitimize transfers of personal data out of the EU and International Transfer Agreements approved in the UK for transfers of personal data out of the UK, however, there continue to be concerns about whether the SCCs and other mechanisms will face additional legal challenges.
Currently, we rely mainly on Standard Contractual Clauses approved by the European Commission, or SCCs, to legitimize transfers of personal data out of the EEA and International Transfer Agreements approved the UK for transfers of personal data out of the UK, however, there continue to be concerns about whether the SCCs and other international transfer mechanisms will face additional legal challenges.
The GDPR and the UK GDPR also provide individuals with various rights in respect of their personal data. The GDPR and UK GDPR define personal data to include pseudonymized or coded data and requires different informed consent practices and more detailed notices for clinical trial participants and investigators than applies to clinical trials conducted in the United States.
The GDPR also provide individuals with various rights in respect of their personal data. The GDPR defines personal data to include pseudonymized or coded data and requires different informed consent practices and more detailed notices for clinical trial participants and investigators than applies to clinical trials conducted in the United States.
For example, California has enacted the California Consumer Privacy Act, or the CCPA, which became effective on January 1, 2020. The CCPA gives California residents expanded rights to access and delete their personal information, opt out of certain personal information sharing and receive detailed information about how their personal information is used.
For example, California enacted the California Consumer Privacy Act, or the CCPA. This law, which became effective on January 1, 2020 gives California residents expanded rights to access and delete their personal information, opt out of certain personal information sharing and receive detailed information about how their personal information is used.
Customers of any companies or technologies that we acquire may, in response to the consummation of the acquisitions, delay or defer purchasing decisions, which could adversely affect the success of our acquired businesses.
Customers of any companies we acquire may, in response to the consummation of the acquisitions, delay or defer purchasing decisions, which could adversely affect the success of our acquired businesses.
Since we manufacture our products for sale worldwide, our business is subject to risks associated with doing business internationally. During 2022, 2021, and 2020, 24%, 23%, and 21%, respectively, of our product sales were to international customers. We continue to be subject to a variety of risks, which could cause fluctuations in the results of our international and domestic operations.
Since we manufacture our products for sale worldwide, our business is subject to risks associated with doing business internationally. During 2023, 2022, and 2021, 26%, 24%, and 23%, respectively, of our product sales were to international customers. We continue to be subject to a variety of risks, which could cause fluctuations in the results of our international and domestic operations.
We cannot guarantee the success of any additional future clinical trials for Cingal. Because the results of any additional clinical trials, or other unforeseen future developments, could have a substantial negative impact on the timeline for and the cost associated with a potential Cingal regulatory approval, our overall business condition, financial results, and competitive position could be affected.
Because the results of any additional clinical trials, or other unforeseen future developments, could have a substantial negative impact on the timeline for and the cost associated with a potential Cingal regulatory approval, our overall business condition, financial results, and competitive position could be affected.
We rely on a small number of suppliers for certain key raw materials and a small number of suppliers for a number of other materials required for the manufacturing and delivery of our products, and disruption could materially adversely affect our business, financial condition, and results of operations.
We rely on a small number of suppliers for certain key raw materials and components for the manufacturing and delivery of our products, and disruption could materially adversely affect our business, financial condition, and results of operations.
Approvals for certain of our currently marketed products could be curtailed or withdrawn as a result of the implementation of the EU MDR, and acquiring approvals for new products could be more challenging and costly. The EU MDR requires all devices to undergo review and approval for compliance to EU MDR.
Approvals for certain of our currently marketed products could be curtailed or withdrawn as a result of the implementation of the EU MDR, and acquiring approvals for new products could be more challenging and costly. The EU MDR requires all devices to undergo review and approval for compliance to EU MDR by the expiry of a transitional period.
Beginning in 2019, and with our expanded commercial infrastructure, as a result of the Parcus Medical and Arthrosurface acquisitions in 2020, we now sell our Joint Preservation and Restoration family of products directly to customers, including hospitals and ASCs, through our direct Anika sales team and large network of independent third-party distributors.
Beginning in 2019, and with our expanded commercial infrastructure, as a result of the Parcus Medical and Arthrosurface acquisitions, we sold and marketed our Joint Preservation and Restoration family of products directly to customers, including hospitals and ASCs, through our direct Anika sales team and large network of independent third-party distributors.
In addition, perceived uncertainties as to our future direction, strategy or leadership created as a consequence of activist stockholder initiatives may result in the loss of potential business opportunities, harm our ability to attract new investors, customers, and employees, and cause our stock price to experience periods of volatility or stagnation.
In addition, perceived uncertainties as to our future direction, strategy or leadership created as a consequence of activist stockholder initiatives may result in the loss of potential business opportunities, harm our ability to attract new investors, customers, and employees, and cause our stock price to experience periods of volatility or stagnation. ITEM 1B. UNRESOLVED STAFF COMMENTS None.
Products we intend to continue marketing will require substantial submissions to be made to the notified bodies no later than May 26, 2024, for the MDR extension timelines to apply.
Products we intend to continue marketing will require substantial submissions to be made to the notified bodies for a conformity assessment under the EU MDR no later than May 26, 2024, for the MDR extension timelines to apply.
We are working diligently to complete integration activities, minimize employee disruptions and improve manufacturing and operations processes and communication as we continue to integrate the Arthrosurface and Parcus Medical businesses. It has been more challenging than anticipated to effectively and timely complete our integration goals.
We are working diligently to complete integration activities, minimize employee disruptions and improve production and communication as we continue to integrate Arthrosurface and Parcus Medical. It has been more challenging than anticipated to effectively and timely complete our integration goals.
We have highlighted to investors increased volatility and uncertainty in the global macroeconomic environment and the changing dynamics associated with staffing shortages, supply chain disruption, inflation and other direct and indirect impacts of the COVID pandemic. These actions, as well as general investor uncertainty, could create volatility and unpredictability in our stock price.
We have highlighted to investors increased volatility and uncertainty in the global macroeconomic environment and the changing dynamics associated with staffing shortages, supply chain disruption and inflation. These actions, as well as general investor uncertainty, could create volatility and unpredictability in our stock price.
These laws are not consistent, and compliance in the event of a widespread data breach is costly and burdensome. In many jurisdictions, enforcement actions and consequences for non-compliance with protection, privacy and information security laws and regulations are rising.
Many of these laws require businesses to notify data breaches to the regulators and/or data subjects. These laws are not consistent, and compliance in the event of a widespread data breach is costly and burdensome. In many jurisdictions, enforcement actions and consequences for non-compliance with protection, privacy and information security laws and regulations are rising.
EU Member States have adopted implementing national laws to implement the GDPR which may partially deviate from the GDPR and the competent authorities in the EU Member States may interpret GDPR obligations slightly differently from country to country, so that we do not expect to operate in a uniform legal landscape in the EU.
In addition, EEA Member States have adopted implementing national laws to implement the GDPR which may partially deviate from the GDPR and the competent authorities in the EEA Member States may interpret GDPR obligations slightly differently from country to country, so that we do not expect to operate in a uniform legal landscape in the EEA and UK with respect to data protection regulations.
As we expand the scale of our business activities, any changes in the U.S. and non-U.S. taxation of such activities may increase our effective tax rate and harm our business, financial condition, and results of operations.
As we expand the scale of our business activities, any changes in the U.S. and non-U.S. taxation of such activities may impact our effective tax rate, result in higher tax payments and harm our business, financial condition, cash flows and results of operations.
The effects of the CCPA are potentially significant and may require us to modify our data collection or processing practices and policies and to incur substantial costs and expenses in an effort to comply and increase our potential exposure to regulatory enforcement and/or litigation.
The effects of the CCPA are potentially significant and, should we begin to process personal information concerning California residents may require us to modify our data collection or processing practices and policies and to incur substantial costs and expenses in an effort to comply and increase our potential exposure to regulatory enforcement and/or litigation.
In 2019, we began the design of our third Phase III clinical trial to enable us to evaluate our full-scale Phase III clinical trial design, including patient and site selection criteria, and increase the probability of success for the Phase III trial.
In 2019, we began the design of our third Phase III clinical trial to enable us to evaluate our full-scale Phase III clinical trial design, including patient and site selection criteria, and increase the probability of success for the Phase III trial. In 2022, we completed this third Phase III clinical trial, which achieved its primary endpoint.
The CCPA provides for civil penalties for violations, as well as a private right of action for data breaches that is expected to increase data breach litigation.
It also provides for civil penalties for violations, as well as a private right of action for data breaches that are expected to increase data breach litigation.
Many of these customers are significantly larger companies than us. In 2022, Mitek accounted for 43% of our total revenue.
Many of these customers are significantly larger companies than us. In 2023, Mitek, accounted for 45% of our revenue.
After discussions, the FDA indicated that an additional Phase III clinical trial would be necessary to support U.S. marketing approval for Cingal.
After discussions with the FDA, it was determined that an additional Phase III clinical trial would most likely be necessary to support U.S. marketing approval for Cingal.
These could include, but may not be limited to, the following: 28 ● Delayed access to deposits or other financial assets or the uninsured loss of deposits or other financial assets; ● Delayed or lost access to, or reductions in borrowings available under revolving existing credit facilities or other working capital sources and/or delays, inability or reductions in the company’s ability to refund, roll over or extend the maturity of, or enter into new credit facilities or other working capital resources; ● Potential or actual breach of contractual obligations that require the Company to maintain letters of credit or other credit support arrangements; ● Potential or actual breach of financial covenants in our credit agreements or credit arrangements; ● Potential or actual cross-defaults in other credit agreements, credit arrangements or operating or financing agreements; or ● Termination of cash management arrangements and/or delays in accessing or actual loss of funds subject to cash management arrangements.
These could include, but may not be limited to, the following: ● Delayed access to deposits or other financial assets or the uninsured loss of deposits or other financial assets; ● Delayed or lost access to, or reductions in borrowings available under revolving existing credit facilities or other working capital sources and/or delays, inability or reductions in the company’s ability to refund, roll over or extend the maturity of, or enter into new credit facilities or other working capital resources; ● Potential or actual breach of contractual obligations that require the Company to maintain letters of credit or other credit support arrangements; ● Potential or actual breach of financial covenants in our credit agreements or credit arrangements; ● Potential or actual cross-defaults in other credit agreements, credit arrangements or operating or financing agreements; or ● Termination of cash management arrangements and/or delays in accessing or actual loss of funds subject to cash management arrangements. 28 Risks Related to Our Commercialization Activities Our license agreements with Mitek provide substantial control of Monovisc and Orthovisc in the United States to Mitek, and Mitek ’ s actions could have a material impact on our business, financial condition and results of operations.
In February 2023, Caligan Partners LP, or Caligan, indicated that it intends to consider all available options, including nominating a slate of directors for election to the board of directors at our 2023 annual meeting of stockholders.
In February 2023, Caligan Partners LP, or Caligan, indicated that it intended to consider all available options, including nominating a slate of directors for election to the board of directors at our 2023 annual meeting of stockholders. In April 2023, we entered into a Cooperation Agreement (the “Cooperation Agreement”) with Caligan.
The original compliance date of May 26, 2024 is being reconsidered in response to concerns raised about notified body capacity and the ability for devices to be re-certified within such time period. The European Commission’s proposal is to December 2027 or December 2028, depending on the risk class of the device.
The original expiry date of May 26, 2024 has been extended to December 2027 or December 2028 for certain devices, depending on the risk class of the device, in response to concerns raised about notified body capacity and the ability for devices to be re-certified within the original time period.
There can be no assurance that we will be successful in hiring or retaining the personnel we require. The failure to hire and retain such personnel could have a material adverse effect on our business, financial condition, and results of operations. We may require additional capital in the future.
The failure to hire and retain such personnel could have a material adverse effect on our business, financial condition, and results of operations. We may require additional capital in the future.
The COVID-19 pandemic has impacted, and the lingering effects of the pandemic may continue to impact, our supply chain as the companies that produce our products, product components or otherwise support our manufacturing processes, the distribution centers where we manage our inventory, or the operations of our logistics and other service providers, including third parties that sterilize and store our products, are, or may be disrupted, temporarily closed or experience worker shortages for a sustained period of time.
We continue to see impacts on our supply chain as the companies that produce our products, product components or otherwise support our manufacturing processes, the distribution centers where we manage our inventory, or the operations of our logistics and other service providers, including third parties that sterilize and store our products, were disrupted, temporarily closed or experienced worker shortages for a sustained period of time during and following the global pandemic or due to other supply chain disruptions.
In addition a California ballot initiative, the California Privacy Rights Act, or CPRA, was passed in November 2020. As of January 1, 2023, the CPRA imposes additional obligations on companies covered by the legislation and will significantly modify the CCPA, including by expanding consumers’ rights with respect to certain sensitive personal information.
In addition, the California Privacy Rights Act, or CPRA, which became effective on January 1, 2023, imposes additional obligations on companies covered by the legislation and significantly modifies the CCPA, including by expanding consumers’ rights with respect to certain sensitive personal information.
Some observers have noted that the CCPA could mark the beginning of a trend toward more stringent privacy legislation in the United States, which could increase our potential liability and adversely affect our business. New consumer privacy laws enter into force in Connecticut, Colorado, Virginia and Utah in 2023.
Some observers have noted that the CCPA could mark the beginning of a trend toward more stringent privacy legislation in the United States, which could increase our potential liability and adversely affect our business. New consumer privacy laws similar to the CCPA have been passed in a number of states and many other states have proposed new privacy laws.
The CPRA also creates a new state agency that will be vested with authority to implement and enforce the CCPA, as modified by the CPRA.
The CPRA also created a new state agency that was vested with authority to implement and enforce the CCPA.
We cannot predict what other health care programs and regulations will ultimately be implemented at the federal or state level or the effect that any future legislation or regulation in the United States may have on our business.
We cannot predict what other health care programs and regulations will ultimately be implemented at the federal or state level or the effect that any future legislation or regulation in the United States may have on our business There can be no assurance that third-party coverage will be available or that reimbursement will be adequate for any products or services developed by us or procedures using our products or services.
If activist stockholder activities, such as those by Caligan or other stockholders, ensue, our business could be adversely affected, as responding to proxy contests and reacting to other actions by activist stockholders can be costly and time-consuming, disrupt our operations and divert the attention of management and our board of directors.
If Caligan solicits proxies for its candidates or proceeds with other similar types of actions, our business could be adversely affected. Responding to such actions by activist stockholders can be costly and time-consuming, disrupt our operations and divert the attention of management and our board of directors.
Significantly, the GDPR and the UK GDPR impose strict rules on the transfer of personal data out of the EU or the UK to the U.S. or other regions that have not been deemed to offer “adequate” privacy protections.
We are required to apply GDPR standards to any clinical trials that our EEA and UK established businesses carry out anywhere in the world. Significantly, the GDPR impose strict rules on the transfer of personal data out of the EEA or the UK to the U.S. or other regions that have not been deemed to offer “adequate” privacy protections.
Any inability to transfer personal data from the EU to the U.S. in compliance with data protection laws may impede our ability to conduct trials and may adversely affect our business and financial position.
Any inability to transfer personal data from the EEA to the U.S. in compliance with data protection laws may impede our ability to conduct trials and may adversely affect our business and financial position. The GDPR increases our responsibilities and may increase our liability in relation to personal data that we process where such processing is subject to the GDPR.
Given the breadth and depth of changes in data protection obligations, complying with the GDPR and UK GDPR and similar laws’ requirements are rigorous and time intensive and require significant resources and a review of our technologies, systems and practices, as well as those of any third-party service providers, contractors or consultants that process or transfer personal data. 24 In the United States, numerous federal and state laws and regulations, including federal health information privacy laws, state data breach notification laws, state health information privacy laws and federal and state consumer protection laws that govern the collection, use, disclosure and protection of health-related and other personal information could apply to our operations or the operations of our collaborators and third-party providers.
Given the breadth and depth of changes in data protection obligations, complying with the GDPR and similar laws’ requirements are rigorous and time intensive and require significant resources and a review of our technologies, systems and practices, as well as those of any third-party service providers, contractors or consultants that process or transfer personal data.
In addition, many jurisdictions around the world have adopted legislation that regulates how businesses operate online and enforces information security, including measures relating to privacy, data security and data breaches. Many of these laws require businesses to notify data breaches to the regulators and/or data subjects.
In addition to these comprehensive laws and proposals, several other states have passed or proposed more limited privacy laws focused on particular privacy issues. In addition, many jurisdictions around the world have adopted legislation that regulates how businesses operate online and enforces information security, including measures relating to privacy, data security and data breaches.
If a group purchasing organization excludes us from being one of their suppliers, our net sales could be adversely impacted. We expect that market demand, government regulation, third-party reimbursement policies, and societal pressures will continue to change the worldwide healthcare industry, which may exert further downward pressure on the prices of our products.
We expect that market demand, government regulation, third-party reimbursement policies, and societal pressures will continue to change the worldwide healthcare industry, which may exert further downward pressure on the prices of our products and limit our access to sell our products and services to customers.
The risk of our being found in violation of these laws is increased by the fact that the interpretation and enforcement of them is not entirely clear.
The risk of our being found in violation of these laws is increased by the fact that the interpretation and enforcement of them is not entirely clear. Efforts to ensure that our business arrangements with third parties will comply with applicable healthcare laws and regulations will involve substantial costs.
We are highly dependent on the members of our management, operations, commercial and technical staff, the loss of one or more of whom could have a material adverse effect on us. We have experienced a number of management changes in recent years, and there can be no assurances that any future management changes will not adversely affect our business.
Our business is dependent upon hiring and retaining qualified management, operations and technical personnel. We are highly dependent on the members of our management, operations and technical staff, the loss of one or more of whom could have a material adverse effect on us.
As of December 31, 2022, we had long-lived assets in the amount of $130.2 million.
As of December 31, 2023, we had long-lived assets in the amount of $58.4 million, including property and equipment of $46.2 million, intangible assets of $4.6 million and goodwill of $7.6 million.
We recorded an impairment to goodwill in 2020 and a reduction in the fair value of contingent consideration in connection with the acquisitions that was driven in part by the significant effect that COVID-19 has had on the business industry.
We recorded an impairment to goodwill in 2020 and to intangible assets in 2023 and a reduction in the fair value of contingent consideration in connection with the acquisitions that was driven in part by slower than expected revenue growth with these businesses that have impacted near-term cash flows.
We will engage with the FDA in the first half of 2023 on next steps for U.S. regulatory approval. In parallel, we are exploring the potential to advance Cingal through commercial partnerships in the U.S. and select Asian markets. These efforts will inform next steps, including if and how to proceed with another clinical trial in the United States.
These efforts will inform next steps, including if and how to proceed with another clinical trial in the United States. We cannot guarantee the success of any additional future clinical trials for Cingal.
We believe that our future success will depend in large part upon our ability to attract and retain technical and highly skilled executive, managerial, professional, and technical personnel. We face significant competition for such personnel from competitive companies, research and academic institutions, government entities, and other organizations.
We have experienced a number of management changes in recent years, and there can be no assurances that any future management changes will not adversely affect our business. We believe that our future success will depend in large part upon our ability to attract and retain technical and highly skilled executive, managerial, professional, and technical personnel.
There can be no assurance that third party coverage will be available or that reimbursement will be adequate for any products or services developed by us or procedures using our products or services. Outside the United States, the success of our products is also dependent in part upon the availability of reimbursement and health care payment systems.
Outside the United States, the success of our products is also dependent in part upon the availability of reimbursement and health care payment systems. Domestic and international reimbursement laws and regulations may change from time to time.
Impairment charges could have a negative impact on our results of operations and financial position, as well as on the market price of our common stock. Our business is dependent upon hiring and retaining qualified management, operations, commercial and technical personnel.
Impairment charges could have a negative impact on our results of operations and financial position, as well as on the market price of our common stock. During the year ended December 31, 2023, we recorded an impairment charge of $62.2 million on intangible assets related to the acquisitions of Arthrosurface and Parcus Medical.
In 2020 the first patient was enrolled in the pilot study and in 2022, we completed this third Phase III clinical trial, which achieved its primary endpoint. Together with previous clinical studies, Cingal has demonstrated superiority over each of its active ingredients and placebo over 26 weeks for long-acting pain relief.
Together with previous clinical studies, Cingal has demonstrated superiority over each of its active ingredients and placebo over 26 weeks for long-acting pain relief. We have been engaging with the FDA on next steps for U.S. regulatory approval. In parallel, we are exploring the potential to advance Cingal through commercial partnerships in the U.S. and select Asian markets.
Removed
We are required to apply GDPR and UK GDPR standards to any clinical trials that our EU and UK established businesses carry out anywhere in the world.
Added
If a group purchasing organization excludes us from being one of their suppliers, our net sales could be adversely impacted.
Removed
The GDPR and UK GDPR have increased our responsibilities and may increase our liability in relation to personal data that we process where such processing is subject to the GDPR and UK GDPR.
Added
Although the EU GDPR and the UK GDPR currently impose substantially similar obligations, it is possible that over time the UK GDPR could become less aligned with the EU GDPR, particularly with the UK plans to reform the country’s data protection legal framework in its Data Reform Bill introduced into the UK legislative process.
Removed
In addition, many other states have proposed new privacy laws, some of which are similar to the above discussed recently passed laws.
Added
The potential of the respective provisions and enforcement of the EU GDPR and UK GDPR further diverging in the future creates additional regulatory challenges and uncertainties for us.
Removed
In addition, the UK has announced plans to reform the country’s data protection legal framework in its Data Reform Bill, but these have been put on hold. Efforts to ensure that our business arrangements with third parties will comply with applicable healthcare laws and regulations will involve substantial costs.
Added
The lack of clarity on future UK laws and regulations and their interaction with EU laws and regulations could add legal risk, uncertainty, complexity and compliance cost to the handling of European personal data and our privacy and data security compliance and could require us to amend our processes and procedures to implement different compliance measures for the UK and the EEA. 24 In the United States, numerous federal and state laws and regulations, including federal health information privacy laws, state data breach notification laws, state health information privacy laws and federal and state consumer protection laws that govern the collection, use, disclosure and protection of health-related and other personal information could apply to our operations or the operations of our collaborators and third-party providers.
Removed
Risks Related to Our Commercialization Activities Our license agreements with Mitek provide substantial control of Monovisc and Orthovisc in the United States to Mitek, and Mitek ’ s actions could have a material impact on our business, financial condition and results of operations.
Added
We continue to engage with our employees on a regular basis to limit voluntary employee turnover. We face significant competition for such personnel from competitive companies, research and academic institutions, government entities, and other organizations. There can be no assurance that we will be successful in hiring or retaining the personnel we require.
Removed
Domestic and international reimbursement laws and regulations may change from time to time.
Added
For example, under Section 174 of the Code, in taxable years beginning after December 31, 2021, expenses that are incurred for research and development in the U.S. will be capitalized and amortized, which may have an adverse effect on our cash flow.
Removed
This proposal has been approved by the Council of the European Union, and is awaiting publication in the Official Journal to be made effective, which is expected to occur in March 2023.
Added
We also are conducting our clinical trial to support approval in the United States for Hyalofast, our single-stage, off-the-shelf, cartilage repair therapy, currently sold only outside the United States. We have fully enrolled the 200 patients targeted in the trial. This pivotal trial has a two-year follow-up protocol expected to be achieved in early 2025 before regulatory submission is completed.
Removed
Risks Related to the COVID-19 Pandemic Our operations are located in areas impacted by the COVID-19 pandemic, and those operations have been, and may continue to be, adversely affected by the COVID-19 pandemic. The coronavirus has impacted the social and economic framework globally.
Added
We are targeting to file the first module as part of a modular PMA in 2024 which is the first step in seeking FDA approval for Hyalofast in the U.S. The final module of the PMA will be filed in 2025 once the clinical data becomes available to be submitted to the FDA.
Removed
Our administrative, research and development, and manufacturing operations are principally performed at our U.S. facilities in Massachusetts and Florida. Though our Italian operations represent a relatively small percentage of our consolidated business, we conduct commercial activity, product development, sales, logistics, inventory management and supply chain activities, and other services in our office in Padova, Italy.
Added
The acquisition of these two companies and the related investment in the business have contributed to our net loss in recent years.
Removed
Our business operations in the United States and Italy are subject to potential business interruptions arising from protective measures that have been or may be taken by Italian, U.S., Massachusetts and Florida regulators and other government agencies due to COVID-19 or its variants.
Added
Pursuant to the Cooperation Agreement, we agreed to increase the size of our board of directors to eight directors and appointed Mr. Gary Fischetti as an independent Class III director. On March 6, 2024, Caligan nominated two directors for election to our board of directors at our 2024 annual meeting of stockholders.
Removed
Business disruptions elsewhere in the world could also negatively affect the sources and availability of components and materials that are essential to the operation of our business in both the United States and Italy.
Removed
Our commercial day-to-day operations have been, and may in the future be, significantly impacted by cancellations or delays of elective procedures in hospitals and ASCs, and timelines associated with certain clinical studies and research and development programs have been delayed.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeSee Note 9, Leases, to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K for additional information regarding our specific leaseholds.
Biggest changeSee Note 8, Leases, to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K for additional information regarding our specific leaseholds.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeITEM 3. LEGAL PROCEEDINGS We are involved from time-to-time in various legal proceedings arising in the normal course of business. Although the outcomes of these legal proceedings are inherently difficult to predict, we do not expect the resolution of these proceedings to have a material adverse effect on our financial position, results of operations, or cash flows.
Biggest changeITEM 3. LEGAL PROCEEDINGS We are involved from time-to-time in various legal proceedings arising in the normal course of business. Although the outcomes of these legal proceedings are inherently difficult to predict, we do not expect the resolution of these proceedings to have a material adverse effect on our financial position, results of operations, or cash flows. ITEM 4.
Removed
On October 21, 2021, we received notice that the former unitholders of Parcus Medical had filed a request for arbitration regarding the earnout provisions agreed to in the Parcus Medical Merger Agreement. We have engaged in the arbitration process and do not anticipate a resolution during the first half of 2023.
Added
MINE SAFETY DISCLOSURES Not applicable. 38 PART II
Removed
We are unable to estimate the potential liability with respect to this matter at this time. There are numerous factors that make it difficult to estimate reasonably possible loss or range of loss at this stage of the matter, including the significant number of legal and factual issues still to be resolved in the arbitration process.
Removed
We intend to vigorously defend against the claims, and we believe that we have strong defenses to the claims asserted. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 39 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

2 edited+6 added−2 removed3 unchanged
Biggest changeMARKET FOR REGISTRANT ’ S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Common Stock Information Our common stock has traded on the NASDAQ Global Select Market since November 25, 1997, under the symbol “ANIK.” At December 31, 2022, the closing price per share of our common stock was $29.60 as reported on the NASDAQ Global Select Market, and there were 111 holders of record.
Biggest changeMARKET FOR REGISTRANT ’ S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Common Stock Information Our common stock has traded on the NASDAQ Global Select Market since November 25, 1997, under the symbol “ANIK.” At December 31, 2023, the closing price per share of our common stock was $22.66 as reported on the NASDAQ Global Select Market, and there were 110 holders of record.
Performance Graph Set forth below is a graph comparing the total returns of our company, the NASDAQ Composite Index, and the NASDAQ Biotechnology Index. The graph assumes $100 is invested on December 31, 2017, in our common stock and each of the indices. Past performance is not indicative of future results.
Performance Graph Set forth below is a graph comparing the total returns of our company, the NASDAQ Composite Index, and the NASDAQ Biotechnology Index. The graph assumes $100 is invested on December 31, 2018, in our common stock and each of the indices. Past performance is not indicative of future results.
Removed
Dec-17 Dec-18 Dec-19 Dec-20 Dec-21 Dec-22 Anika Therapeutics, Inc. $ 100.00 $ 62.34 $ 96.18 $ 83.95 $ 66.46 $ 54.91 NASDAQ Composite Index $ 100.00 $ 96.12 $ 129.97 $ 186.69 $ 226.63 $ 151.61 NASDAQ Biotechnology Index $ 100.00 $ 90.68 $ 112.81 $ 141.78 $ 140.88 $ 125.52 40 Issuer Purchases of Equity Securities On May 2, 2019, we announced that our Board of Directors approved a $50.0 million share repurchase program with $30.0 million to be utilized for an accelerated share repurchase program, which was completed in January 2020, and $20.0 million reserved for open market repurchases which represents the maximum value of shares that may yet be purchased.
Added
Dec-18 Dec-19 Dec-20 Dec-21 Dec-22 Dec-23 Anika Therapeutics, Inc. $ 100.00 $ 154.27 $ 134.66 $ 106.61 $ 88.07 $ 67.42 NASDAQ Composite Index $ 100.00 $ 135.23 $ 194.24 $ 235.78 $ 157.74 $ 226.24 NASDAQ Biotechnology Index $ 100.00 $ 124.41 $ 156.36 $ 155.37 $ 138.42 $ 143.60 39 Issuer Purchases of Equity Securities In April 2023, we agreed to establish a share repurchase program for an aggregate purchase price of $20.0 million.
Removed
No open market repurchases were made during the years ended December 31, 2021 and 2022. Securities Authorized for Issuance Under Equity Compensation Plans For information regarding securities authorized for issuance under our employee stock-based compensation plans, see Part III. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters . ITEM 6. [RESERVED]
Added
Of the $20.0 million, the first $5.0 million was to be effected through an accelerated stock repurchase program, the second $5.0 million was to be purchased in the open market and the remaining $10.0 million was to be purchased in the open market subject to positive cash flow.
Added
On May 12, 2023, we entered into an accelerated share repurchase agreement with Bank of America, N.A., or Bank of America, pursuant to a Fixed Dollar Accelerated Share Repurchase Transaction, or ASR Agreement, to purchase $5.0 million of shares of its common stock.
Added
During the second quarter of 2023, 158,983 shares were delivered to us, constituting the initial delivery of shares and representing 80% of the then estimated total number of shares expected to be repurchased under the ASR Agreement.
Added
In July 2023, we received the remaining 29,046 additional shares at a final settlement price based on the average purchase price of $26.59 per share. Securities Authorized for Issuance Under Equity Compensation Plans For information regarding securities authorized for issuance under our employee stock-based compensation plans, see Part III. Item 12.
Added
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters . ITEM 6. [RESERVED]

Item 7. Management's Discussion & Analysis

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

62 edited+22 added−53 removed64 unchanged
Biggest changeThe following is a reconciliation of adjusted net income (loss) to net income (loss) for the years ended December 31, 2022 and 2021, respectively: Years Ended December 31, 2022 2021 Net (loss) income $ (14,859 ) $ 4,134 Product rationalization charges, tax effected 2,410 1,830 IPR&D impairment, tax effected - 448 Acquisition related intangible asset amortization, tax effected 5,386 5,386 Acquisition related inventory step up, tax effected - 4,810 Change in fair value of contingent consideration, tax effected - (16,979 ) Adjusted net loss $ (7,063 ) $ (371 ) The following is a reconciliation of adjusted EPS to diluted earnings (loss) per share for the years ended December 31, 2022 and 2021, respectively (in thousands, expect per share data): Years Ended December 31, 2022 2021 Diluted (loss) earnings per share $ (1.02 ) $ 0.28 Product rationalization charges, tax effected 0.17 0.13 IPR&D impairment, tax effected - 0.03 Acquisition related intangible asset amortization, tax effected 0.36 0.37 Acquisition related inventory step up - 0.33 Change in fair value contingent consideration, tax effected - (1.16 ) Adjusted diluted loss per share $ (0.49 ) $ (0.02 ) Adjusted net loss in 2022, increased by $6.7 million as compared to 2021.
Biggest changeThe following is a reconciliation of adjusted net income to net loss for the years ended December 31, 2023 and 2022, respectively: Years Ended December 31, 2023 2022 Net loss $ (82,667 ) $ (14,859 ) Product rationalization charges, tax effected 725 2,410 Arbitration settlement, tax effected 3,148 - Acquisition related intangible asset amortization, tax effected 6,926 5,386 Impairment of intangible assets, tax effected 60,250 - Discontinuation of software development project, tax effected 4,333 - Costs of shareholder activism, tax effected 2,938 - Adjusted net loss $ (4,347 ) $ (7,063 ) The following is a reconciliation of adjusted diluted loss per share to diluted loss per share for the years ended December 31, 2023 and 2022, respectively (in thousands, expect per share data): Years Ended December 31, 2023 2022 Diluted loss per share $ (5.64 ) $ (1.02 ) Product rationalization charges, tax effected 0.05 0.17 Arbitration settlement, tax effected 0.21 - Acquisition related intangible asset amortization, tax effected 0.47 0.36 Impairment of intangible assets, tax effected 4.11 - Discontinuation of software development project, tax effected 0.30 - Costs of shareholder activism, tax effected 0.20 - Adjusted diluted loss per share $ (0.30 ) $ (0.49 ) Adjusted net loss in 2023 was $4.3 million, a decrease of $2.7 million as compared to 2022.
We define adjusted net income (loss) as our net income (loss) excluding amortization and depreciation of acquired assets, the impact of inventory fair-value step up on cost of revenue, changes in the fair value of contingent consideration, as well as certain impairment charges, including impairment related to IPR&D assets and non-cash product rationalization charges, each on a tax effected basis.
We define adjusted net loss as our net loss excluding amortization and depreciation of acquired assets, the impact of inventory fair-value step up on cost of revenue, changes in the fair value of contingent consideration, as well as certain impairment charges, including impairment related to IPR&D assets and non-cash product rationalization charges, each on a tax effected basis.
During 2022, the consideration allocated to material rights was not significant. We receive payments from our customers based on billing schedules established in each contract. Up-front payments and fees are recorded as deferred revenue upon receipt or when due, and may require deferral of revenue recognition to a future period until we perform our obligations under these arrangements.
During 2023, the consideration allocated to material rights was not significant. We receive payments from our customers based on billing schedules established in each contract. Up-front payments and fees are recorded as deferred revenue upon receipt or when due and may require deferral of revenue recognition to a future period until we perform our obligations under these arrangements.
GAAP diluted earnings per share excluding the above adjustments to net income (loss) used in calculating adjusted net income (loss), each on a per share and tax effected basis.
GAAP diluted earnings per share excluding the above adjustments to net loss used in calculating adjusted net loss, each on a per share and tax effected basis.
Concentration of Risk We have historically derived the majority of our revenue from a small number of customers, most of whom resell our products to end-users and are significantly larger companies than us. For the year ended December 31, 2022, Mitek accounted for 43% of revenue, as compared to 45% in prior year.
Concentration of Risk We have historically derived the majority of our revenue from a small number of customers, most of whom resell our products to end-users and are significantly larger companies than us. For the year ended December 31, 2023, Mitek accounted for 45% of revenue, as compared to 43% in prior year.
Revenue from our OA Pain Management product family increased 9% for the year ended December 31, 2022, as compared to prior year, due primarily to higher international sales on recovery from the initial impact of the COVID-19 pandemic, favorable ordering patterns and growth in adoption of our products globally.
Revenue from our OA Pain Management product family increased 8% for the year ended December 31, 2022, as compared to prior year, due primarily to higher international sales on recovery from the initial impact of the COVID-19 pandemic, favorable ordering patterns and growth in adoption of our products globally.
Based on sensitivity analysis performed on key assumptions at November 30, 2022, a 10% decrease in valuation multiples or a 10% increase in the weighted average cost of capital assumption would not have resulted in a fair value below the reporting unit’s carrying value.
Based on sensitivity analysis performed on key assumptions at November 30, 2023, a 10% decrease in valuation multiples or a 10% increase in the weighted average cost of capital assumption would not have resulted in a fair value below the reporting unit’s carrying value.
Actual results may differ from our estimates if past experience or other assumptions do not turn out to be substantially accurate. 52 We have identified the policies below as critical to our business operations and the understanding of our results of operations.
Actual results may differ from our estimates if past experience or other assumptions do not turn out to be substantially accurate. 51 We have identified the policies below as critical to our business operations and the understanding of our results of operations.
Contractual Obligations and Other Commercial Commitments The table below summarizes our non-cancelable operating leases, purchase commitments, and contractual obligations related to future periods which are not reflected in our consolidated balance sheet at December 31, 2022.
Contractual Obligations and Other Commercial Commitments The table below summarizes our non-cancelable operating leases, purchase commitments, and contractual obligations related to future periods which are not reflected in our consolidated balance sheet at December 31, 2023.
When using the qualitative method in 2022, we considered several factors, including the following: ● the amount by which the fair value of the reporting unit exceeded its carrying value as of the date of the most recent quantitative impairment analysis, which indicated there would need to be substantial negative developments in the markets in which the reporting unit operates for there to be potential impairment; ● the carrying value of the reporting unit as of the assessment date compared to their previously calculated fair value as of the date of the most recent quantitative impairment analysis; ● the current forecasts as compared to the forecasts included in the most recent quantitative impairment analysis; ● public information from competitors and other industry information to determine if there were any significant adverse trends in our competitors' businesses; ● changes in the value of major U.S. stock indices that could suggest declines in overall market stability that could impact the valuation of our reporting unit; ● whether there had been any significant increases in the weighted-average cost of capital rates for the reporting unit, which could materially lower our prior valuation conclusions under a discounted cash flow approach. 55 Significant assumptions utilized in the impairment analysis included valuation multiple with respect to revenue and weighted-average cost of capital.
We used the quantitative method in 2023, we considered several factors, including the following: ● the amount by which the fair value of the reporting unit exceeded its carrying value as of the date of the most recent quantitative impairment analysis, which indicated there would need to be substantial negative developments in the markets in which the reporting unit operates for there to be potential impairment; ● the carrying value of the reporting unit as of the assessment date compared to their previously calculated fair value as of the date of the most recent quantitative impairment analysis; ● the current forecasts as compared to the forecasts included in the most recent quantitative impairment analysis; ● public information from competitors and other industry information to determine if there were any significant adverse trends in our competitors' businesses; ● changes in the value of major U.S. stock indices that could suggest declines in overall market stability that could impact the valuation of our reporting unit; ● whether there had been any significant increases in the weighted-average cost of capital rates for the reporting unit, which could materially lower our prior valuation conclusions under a discounted cash flow approach. 53 Significant assumptions utilized in the impairment analysis included valuation multiple with respect to revenue and weighted-average cost of capital.
We are committed to leading in high opportunity spaces within orthopedics, including OA, pain management, regenerative solutions, sports medicine and Arthrosurface joint solutions (previously Bone Preserving Joint Solutions). We have thirty years of global expertise developing, manufacturing and commercializing products based on our HA technology platform.
We are committed to leading in high opportunity spaces within orthopedics, including OA pain management, regenerative solutions, sports medicine and Arthrosurface joint solutions. We have thirty years of global expertise developing, manufacturing and commercializing products based on our HA technology platform.
We continue to generate cash from operating activities, and we believe that our operating cash flows, cash currently on our balance sheet and availability under our credit facility will be sufficient to allow us to continue to invest in our existing business, to manage our capital structure on a short and long-term basis, and to meet our anticipated operating cash needs.
We believe that our operating cash flows, cash currently on our balance sheet and availability under our credit facility will be sufficient to allow us to continue to invest in our existing business, to manage our capital structure on a short and long-term basis, and to meet our anticipated operating cash needs.
Revenue from our Joint Preservation and Restoration product family increased 4% for the year ended December 31, 2022, as compared to prior year, due to improving elective procedure volumes and rapidly growing commercial adoption of our newest products. 44 Revenue from our Non-Orthopedic product family decreased 18% for the year ended December 31, 2022, as compared to prior year, primarily due to timing of distributor sales as well as last-time purchases of legacy products during 2021.
Revenue from our Joint Preservation and Restoration product family increased 4% for the year ended December 31, 2022, as compared to prior year, due to improving elective procedure volumes and rapidly growing commercial adoption of our newest products. 48 Revenue from our Non-Orthopedic product family decreased 2% for the year ended December 31, 2022, as compared to prior year, primarily due to timing of distributor sales as well as last-time purchases of legacy products during 2021.
For a discussion of our liquidity and capital resources as of December 31, 2021, and our cash flow activities for the fiscal year ended December 31, 2021, see “Part II, Item 7.
For a discussion of our liquidity and capital resources as of December 31, 2022, and our cash flow activities for the fiscal year ended December 31, 2022, see “Part II, Item 7.
The remaining goodwill as of December 31, 2022 pertains to the legacy Anika reporting unit, as the goodwill with respect to the Parcus Medical and Arthrosurface reporting unit was fully impaired in 2020.
The remaining goodwill as of December 31, 2023 pertains to the legacy Anika reporting unit, as the goodwill with respect to the Parcus Medical and Arthrosurface reporting unit was fully impaired in 2020.
Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our annual report on Form 10-K for the fiscal year ended December 31, 2021, filed with the SEC on March 10, 2022, which is incorporated by reference in this Report.
Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our annual report on Form 10-K for the fiscal year ended December 31, 2022, filed with the SEC on March 16, 2023, which is incorporated by reference in this Report.
These arrangements may include the grant of certain licenses, performance of development services, and the supply of product. Our largest such customer, Mitek, represented 43% of total revenues for the year ended December 31, 2022. We recognize revenue from product sales when the customer obtains control of our product, which typically occurs upon shipment to the customer.
These arrangements may include the grant of certain licenses, performance of development services, and the supply of product. Our largest such customer, Mitek, represented 45% of total revenues for the year ended December 31, 2023. We recognize revenue from product sales when the customer obtains control of our product, which typically occurs upon shipment to the customer.
The benefit from income taxes was $1.7 million for the year ended December 31, 2021, resulting in an effective tax rate of (70.4%).
Income Taxes The benefit from income taxes was $3.9 million for the year ended December 31, 2022, resulting in an effective tax rate of 20.7%. The benefit from income taxes was $1.7 million for the year ended December 31, 2021, resulting in an effective tax rate of (70.4%).
See Note 13, Revenue by Product Family, by Significant Customer and by Geographic Location; Geographic Information , to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K for information regarding significant customers. Liquidity and Capital Resources We require cash to fund our operating activities and to make capital expenditures and other investments in the business.
See Note 12, Revenue and Geographic Information; Geographic Information , to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K for information regarding significant customers. Liquidity and Capital Resources We require cash to fund our operating activities and to make capital expenditures and other investments in the business.
Amounts are recorded as accounts receivable when our right to consideration is unconditional. Deferred revenue was $0 and $1.0 million as of December 31, 2022 and 2021, respectively. 54 Generally, customer contracts contain Free on Board, or FOB, or Ex-Works shipping point terms where the customer pays the shipping company directly for all shipping and handling costs.
Amounts are recorded as accounts receivable when our right to consideration is unconditional. There was no deferred revenue as of December 31, 2023 and 2022, respectively. 52 Generally, customer contracts contain Free on Board, or FOB, or Ex-Works shipping point terms where the customer pays the shipping company directly for all shipping and handling costs.
Some of these limitations are: 46 • adjusted EBITDA excludes depreciation and amortization, and, although these are non-cash expenses, the assets being depreciated or amortized may have to be replaced in the future, the cash requirements for which are not reflected in adjusted EBITDA; • we exclude stock-based compensation expense from adjusted EBITDA although (a) it has been, and will continue to be for the foreseeable future, a significant recurring expense for our business and an important part of our employee compensation strategy and (b) if we did not pay out a portion of our compensation in the form of stock-based compensation, the cash salary and bonus expense included in operating expenses likely would be higher, which would affect our cash position; • we exclude acquisition related expenses, including transaction costs and other related expenses, amortization and depreciation of acquired assets in recent acquisitions, and the impact of inventory fair-value step up on cost of goods sold; • we exclude certain impairment charges, including impairment related to In-Process Research and Development, or IPR&D, assets, certain product rationalization charges, the impact of COVID-19 and changing regulatory requirements; • we exclude goodwill impairment charges and changes in the fair value of contingent consideration; • the expenses and other items that we exclude in our calculation of adjusted EBITDA may differ from the expenses and other items, if any, that other companies may exclude from adjusted EBITDA when they report their operating results; • adjusted EBITDA does not reflect changes in, or cash requirements for, working capital needs; • adjusted EBITDA does not reflect provision for (benefit from) income taxes or the cash requirements to pay taxes; and • adjusted EBITDA does not reflect historical cash expenditures or future requirements for capital expenditures or contractual commitments.
Some of these limitations are: 45 • adjusted EBITDA excludes depreciation and amortization, and, although these are non-cash expenses, the assets being depreciated or amortized may have to be replaced in the future, the cash requirements for which are not reflected in adjusted EBITDA; • we exclude stock-based compensation expense from adjusted EBITDA although (a) it has been, and will continue to be for the foreseeable future, a significant recurring expense for our business and an important part of our employee compensation strategy and (b) if we did not pay out a portion of our compensation in the form of stock-based compensation, the cash salary and bonus expense included in operating expenses likely would be higher, which would affect our cash position; • we exclude acquisition related expenses, including transaction costs and other related expenses, amortization and depreciation of acquired assets in recent acquisitions, and the impact of inventory fair-value step up on cost of goods sold; • we exclude certain impairment charges, including impairment related to intangible assets, certain product rationalization charges; • we exclude goodwill impairment charges and changes in the fair value of contingent consideration;’ • we exclude certain other non-recurring costs, such as the arbitration settlement with Parcus Medical, costs associated with shareholder activism, and discontinuation of a software project; • the expenses and other items that we exclude in our calculation of adjusted EBITDA may differ from the expenses and other items, if any, that other companies may exclude from adjusted EBITDA when they report their operating results; • adjusted EBITDA does not reflect changes in, or cash requirements for, working capital needs; • adjusted EBITDA does not reflect provision for (benefit from) income taxes or the cash requirements to pay taxes; and • adjusted EBITDA does not reflect historical cash expenditures or future requirements for capital expenditures or contractual commitments.
For the foreseeable future, we expect to continue to invest substantial resources in research and development for new products and clinical trials as well as continued investment in our commercial infrastructure to support our growth strategy. These costs will be funded with a combination of cash on hand and cash expected to be generated from future operations.
For the foreseeable future, we expect to continue to invest in research and development for new products and clinical trials to support our growth strategy. These costs will be funded with a combination of cash on hand and cash expected to be generated from future operations.
Adjusted gross profit for the year ended December 31, 2021 was $98.1 million, or 66% of revenue. The increase in adjusted gross profit for the year ended December 31, 2022 as compared to 2021, primarily resulted from the growth of revenue.
Adjusted gross profit for the year ended December 31, 2022 was $103.0 million, or 66% of revenue. The increase in adjusted gross profit for the year ended December 31, 2023 as compared to 2022, primarily resulted from the growth of revenue.
Business” of this Annual Report on Form 10-K. 43 Results of Operations Year ended December 31, 2022 compared to year ended December 31, 2021 Statement of Operations Detail Years Ended December 31, 2022 2021 $ Change % Change (in thousands, except percentages) Revenue $ 156,236 $ 147,794 $ 8,442 6 % Cost of revenue 62,660 64,851 (2,191 ) (3% ) Gross profit 93,576 82,943 10,633 13 % Gross margin 60 % 56 % Operating expenses: Research & development 28,182 27,327 855 3 % Selling, general & administrative 84,794 74,096 10,698 14 % Change in fair value of contingent consideration - (21,095 ) 21,095 (100% ) Total operating expenses 112,976 80,328 32,648 41 % (Loss) income from operations (19,400 ) 2,615 (22,015 ) (842% ) Interest and other expense, net 654 (188 ) 842 (448% ) (Loss) income before income taxes (18,746 ) 2,427 (21,173 ) (872% ) Benefit from income taxes (3,887 ) (1,707 ) (2,180 ) 128 % Net (loss) income $ (14,859 ) $ 4,134 $ (18,993 ) (459% ) Revenue The following table presents revenue by product family for fiscal years 2022 and 2021 (dollars in thousands): Years Ended December 31, 2022 2021 $ Change % Change OA Pain Management $ 97,887 $ 89,503 $ 8,384 9 % Joint Preservation and Restoration 50,402 48,588 1,814 4 % Non-Orthopedic 7,947 9,703 (1,756 ) (18% ) $ 156,236 $ 147,794 $ 8,442 6 % Revenue for the year ended December 31, 2022 was $156.2 million, an increase of $8.4 million, or 6%, compared to the prior year.
The decrease in adjusted net loss and adjusted diluted loss per share for the period was primarily due to higher revenues and improved operating performance during the year. 47 Results of Operations Year ended December 31, 2022 compared to year ended December 31, 2021 Statement of Operations Detail Year Ended December 31, 2022 2021 $ Change % Change (in thousands, except percentages) Revenue $ 156,236 $ 147,794 $ 8,442 6 % Cost of revenue 62,660 64,851 (2,191 ) (3 %) Gross profit 93,576 82,943 10,633 13 % Gross margin 60 % 56 % Operating expenses: Research & development 28,182 27,327 855 3 % Selling, general & administrative 84,794 74,096 10,698 14 % Change in fair value of contingent consideration - (21,095 ) 21,095 (100 %) Total operating expenses 112,976 80,328 32,648 41 % (Loss) income from operations (19,400 ) 2,615 (22,015 ) (842 %) Interest and other expense, net 654 (188 ) 842 (448 %) (Loss) income before income taxes (18,746 ) 2,427 (21,173 ) (872 %) Benefit from income taxes (3,887 ) (1,707 ) (2,180 ) 128 % Net (loss) income $ (14,859 ) $ 4,134 $ (18,993 ) (459 %) Revenue The following table presents product revenue by product family for fiscal years 2022 and 2021 (dollars in thousands): Years Ended December 31, 2022 2021 $ Change % Change OA Pain Management $ 91,984 $ 85,084 $ 6,900 8 % Joint Preservation and Restoration 50,402 48,588 1,814 4 % Non-Orthopedic 13,850 14,122 (272 ) (2 %) $ 156,236 $ 147,794 $ 8,442 6 % Revenue for the year ended December 31, 2022 was $156.2 million, an increase of $8.4 million, or 6%, compared to the prior year.
We regularly evaluate the ability to realize the value of inventory based on a combination of factors including, but not limited to, historical usage rates, forecasted sales or usage, product end of life dates, and estimated current or future market values.
We regularly evaluate the ability to realize the value of inventory based on a combination of factors including, but not limited to, historical usage rates, forecasted sales or usage, product end of life dates, and estimated current or future market values. Inventory needs and alternative usage avenues are explored within these processes to mitigate inventory exposure.
Summary of Cash Flows (in thousands): Years Ended December 31, 2022 2021 2020 Cash provided by (used in) Operating activities $ 4,409 $ 8,397 $ 13,065 Investing activities (7,486 ) (3,118 ) (71,264 ) Financing activities (4,852 ) (6,779 ) (3,774 ) Effect of exchange rate changes on cash (130 ) 69 327 Net decrease in cash and cash equivalents $ (8,059 ) $ (1,431 ) $ (61,646 ) 51 The following changes contributed to the net change in cash and cash equivalents from 2021 to 2022.
Summary of Cash Flows (in thousands): Years Ended December 31, 2023 2022 2021 Cash provided by (used in) Operating activities $ (1,788 ) $ 4,409 $ 8,397 Investing activities (5,427 ) (7,486 ) (3,118 ) Financing activities (6,324 ) (4,852 ) (6,779 ) Effect of exchange rate changes on cash 79 (130 ) 69 Net decrease in cash and cash equivalents $ (13,460 ) $ (8,059 ) $ (1,431 ) 50 The following changes contributed to the net change in cash and cash equivalents from 2022 to 2023.
Purchase commitments relate primarily to non-cancellable inventory commitments and capital expenditures entered in the normal course of business: Payments due by period (in thousands) Less than More than Total 1 year 1 - 3 years 3 - 5 years 5 years Operating Leases $ 39,924 $ 3,170 $ 6,121 $ 5,403 $ 25,230 Year Ended December 31, 2022 $ 39,924 $ 3,170 $ 6,121 $ 5,403 $ 25,230 We also have purchase orders and commitments for materials and other day-to-day business requirements in which there are no material commitments greater than one year.
Purchase commitments relate primarily to non-cancellable inventory commitments and capital expenditures entered in the normal course of business: Payments due by period (in thousands) Less than More than Total 1 year 1 - 3 years 3 - 5 years 5 years Operating Leases $ 36,983 $ 3,131 $ 5,979 $ 4,972 $ 22,901 Year Ended December 31, 2023 $ 36,983 $ 3,131 $ 5,979 $ 4,972 $ 22,901 We also have purchase orders and commitments for materials and other day-to-day business requirements in which there are no material commitments greater than one year.
Business— Research and Development ” in this Annual Report on Form 10-K. Selling, General and Administrative Selling, general and administrative, or SG&A, expenses for the year ended December 31, 2022 were $84.8 million, an increase of $10.7 million, or 14%, as compared to the prior year.
Selling, General and Administrative Selling, general and administrative, or SG&A, expenses for the year ended December 31, 2022 were $84.8 million, an increase of $10.7 million, or 14%, as compared to the prior year.
Adjusted EBITDA We present information below with respect to adjusted EBITDA, which we define as our net income (loss) excluding interest and other income, net, income tax benefit (expense), depreciation and amortization, stock-based compensation, product rationalization charges, and acquisition-related expenses.
Adjusted EBITDA We present information below with respect to adjusted EBITDA, which we define as our net loss excluding interest and other income, net, income tax benefit, depreciation and amortization, stock-based compensation, product rationalization charges, and other non-recurring expenses. Adjusted EBITDA is not prepared in accordance with U.S.
Also included in research and development expenses are clinical costs. We completed a third Phase III clinical trial for Cingal in 2022, which achieved its primary endpoint, and made significant progress in completing enrollment in our Hyalofast clinical trial. For additional information on our research and development activities, please see the section captioned “Part I. Item 1.
Also included in research and development expenses are clinical costs. We completed a third Phase III clinical trial for Cingal in 2022, which achieved its primary endpoint, and made significant progress in completing enrollment in our Hyalofast clinical trial.
We believe our success will be driven by our: ● Decades of experience in HA-based regenerative solutions and early intervention orthopedics combined under new seasoned leadership with a strong financial foundation for future investment in meaningful solutions for our customers and their patients; 41 ● Robust network of stakeholders in our target markets to identify evolving unmet patient treatment needs; ● Prioritized investment in differentiated pipeline of regenerative solutions, bone preserving implants and sports medicine products; ● Leveraging our global commercial expertise to drive growth across the portfolio, with an intentional site of care focus on ASCs in the United States; ● Opportunity to pursue strategic inorganic growth opportunities, including potential partnerships and smaller acquisitions, technology licensing, and leveraging our strong financial foundation and operational capabilities; and ● Energized and experienced team focused on strong values, talent, and culture.
We believe our success will be driven by our: ● Decades of experience in HA-based regenerative solutions and early intervention orthopedics combined under new seasoned leadership with a strong financial foundation for future investment in meaningful solutions for our customers and their patients; ● Utilizing HA-based technology and manufacturing expertise to provide new and differentiated solutions for the growing joint preservation and regenerative medicine markets; 40 ● Introducing key HA-based products into the US market upon FDA approval/clearance, such as Cingal, Hyalofast and the Integrity Implant System, our arthroscopic patch system for rotator cuff repair; ● Robust network of stakeholders in our target markets to identify evolving unmet patient treatment needs; ● Prioritized investment in differentiated pipeline of regenerative solutions, bone preserving implants and sports medicine products; ● Global commercial expertise which we will leverage to drive growth across our product portfolio, including an intentional site of care focus on ambulatory surgical centers in the United States and continued international expansion; ● Opportunity to pursue strategic inorganic growth opportunities, including potential partnerships and smaller acquisitions, technology licensing, and leveraging our strong financial foundation and operational capabilities; ● Pursuit of strategic inorganic growth opportunities, including potential partnerships and smaller acquisitions and technology licensing, by leveraging our strong financial foundation and operational capabilities; and ● Energized and experienced team focused on strong values, talent, and culture.
Selling, General and Administrative Selling, general and administrative, or SG&A, expenses for the year ended December 31, 2021 were $74.1 million, an increase of $14.0 million, or 23%, as compared to the prior year.
Selling, General and Administrative Selling, general and administrative, or SG&A, expenses for the year ended December 31, 2023 were $95.9 million, an increase of $11.0 million, or 13%, as compared to the prior year.
Accordingly, we determined it was not more likely than not that the fair value of the legacy Anika reporting unit is less than its carrying amount and thus goodwill was not impaired as of November 30, 2022.
Accordingly, we determined it was not more likely than not that the fair value of the legacy Anika reporting unit is less than its carrying amount and thus goodwill was not impaired as of November 30, 2023. Long-Lived Assets Long-lived assets primarily include property and equipment and intangible assets with finite lives.
Joint Preservation and Restoration Our Joint Preservation and Restoration product family consists of: (a) our portfolio of over 150 bone preserving joint technology products, including partial joint replacement, joint resurfacing, and minimally invasive and bone sparing implants, designed to treat upper and lower extremity orthopedic conditions caused by trauma, injury and arthritic disease; (b) our line of sports medicine solutions used to repair and reconstruct damaged ligaments and tendons due to sports injuries, trauma and disease; and (c) our orthopedic regenerative solutions products, including Hyalofast and Tactoset.
Joint Preservation and Restoration Our Joint Preservation and Restoration product family consists of: (a) our portfolio of orthopedic regenerative solutions products utilizing HA, including Integrity, our new arthroscopic regenerative patch system for rotator cuff repair and other tendon procedures, Tactoset products, and Hyalofast outside of the United States in over 30 countries; (b) our line of sports medicine solutions used to repair and reconstruct damaged ligaments and tendons due to sports injuries, trauma and disease; and (c) our Arthrosurface portfolio of bone preserving joint technologies, including partial joint replacement, joint resurfacing, and minimally invasive and bone sparing implants, designed to treat upper and lower extremity orthopedic conditions caused by trauma, injury and arthritic disease.
The increase in our effective rate for the year ended December 31, 2022 as compared to the year ended December 31, 2021 is primarily due to the change in fair value of contingent consideration and the release of the valuation allowance related to the net deferred tax assets in Italy during 2021.
The increase in our effective rate for the year ended December 31, 2022 as compared to the year ended December 31, 2021 is primarily due to the change in fair value of contingent consideration and the release of the valuation allowance related to the net deferred tax assets in Italy during 2021. 49 Net Income (Loss) For the year ended December 31, 2022, net loss was $14.9 million, or $1.02 per diluted share, compared to net income of $4.1 million, or $0.28 per diluted share, for the prior year.
The benefit from income taxes was $4.6 million for the year ended December 31, 2020, resulting in an effective tax rate of 16.2%.
The benefit from income taxes was $3.9 million for the year ended December 31, 2022, resulting in an effective tax rate of 20.7%.
These acquisitions, have ignited the transformation of our company by augmenting our HA-based OA pain management and regenerative products with a broad suite of products and capabilities focused on early intervention joint preservation primarily in upper and lower extremities such as shoulder, foot/ankle, knee and hand/wrist.
These acquisitions augmented our HA-based OA pain management and regenerative products with a broad suite of products and capabilities focused on early intervention joint preservation primarily in upper and lower extremities such as shoulder, foot/ankle, knee and hand/wrist. As we look towards the future, our business is positioned to capture value within our target market of joint preservation.
For a detailed discussion on the application of these and other accounting policies, see Note 2 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
For a detailed discussion on the application of these and other accounting policies, see Note 2 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K. Revenue Recognition – General Pursuant to ASC 606, we recognize revenue when a customer obtains control of promised goods or services.
Cash, cash equivalents, and investments aggregated $86.3 million and $94.4 million, and working capital totaled $141.6 million and $138.7 million, at December 31, 2022 and 2021, respectively.
Cash, cash equivalents, and investments aggregated $72.9 million and $86.3 million, and working capital totaled $132.2 million and $141.6 million, at December 31, 2023 and 2022, respectively.
The following is a reconciliation of adjusted gross profit to gross profit for the years ended December 30, 2022 and 2021, respectively: Years Ended December 31, 2022 2021 Gross profit $ 93,576 $ 82,943 Product rationalization charges 3,199 2,445 Acquisition related intangible asset amortization 6,240 6,248 Acquisition related inventory step up - 6,465 Adjusted gross profit $ 103,015 $ 98,101 Adjusted gross margin 66 % 66 % Adjusted gross profit for the year ended December 31, 2022 increased $4.9 million to $103.0 million representing 66% of revenue.
The following is a reconciliation of adjusted gross profit to gross profit for the years ended December 31, 2023 and 2022, respectively: Years Ended December 31, 2023 2022 Gross profit $ 103,088 $ 93,576 Product rationalization charges 748 3,199 Acquisition related intangible asset amortization 6,244 6,240 Adjusted gross profit $ 110,080 $ 103,015 Adjusted gross margin 66 % 66 % Adjusted gross profit for the year ended December 31, 2023 increased $7.1 million to $110.1 million representing 66% of revenue.
Net Income (Loss) For the year ended December 31, 2022, net loss was $14.9 million, or $1.02 per diluted share, compared to net income of $4.1 million, or $0.28 per diluted share, for the prior year.
Net Loss For the year ended December 31, 2023, the net loss was $82.7 million, or $5.64 per basic and diluted loss per share, compared to a net loss of $14.9 million, or $1.02 per basic and diluted share, for the prior year.
There are a number of limitations related to the use of adjusted EBITDA rather than net income (loss), which is the nearest U.S. GAAP equivalent.
GAAP, and should not be considered in isolation of, or as an alternative to, measures prepared in accordance with U.S. GAAP. There are a number of limitations related to the use of adjusted EBITDA rather than net income (loss), which is the nearest U.S. GAAP equivalent.
Inventory needs and alternative usage avenues are explored within these processes to mitigate inventory exposure When recorded, inventory write-downs are intended to reduce the carrying value of inventory to its net realizable value. If actual demand for our products deteriorates, or if market conditions are less favorable than those projected, additional inventory write-downs may be required.
When recorded, inventory write-downs are intended to reduce the carrying value of inventory to its net realizable value. If actual demand for our products deteriorates, or if market conditions are less favorable than those projected, additional inventory write-downs may be required. Other long-term assets include inventory expected to remain on hand beyond one year.
Other long-term assets include inventory expected to remain on hand beyond one year. Goodwill and In-Process Research and Development Goodwill is the amount by which the purchase price of acquired net assets in a business combination exceeded the fair values of net identifiable assets on the date of acquisition.
Goodwill Goodwill is the amount by which the purchase price of acquired net assets in a business combination exceeded the fair values of net identifiable assets on the date of acquisition.
The increase in net income and diluted earnings per share was primarily due to increased revenue, reduction in the fair value of contingent consideration and the absence of goodwill impairment charges, partially offset by higher operating expenses primarily driven by increased spending to expand our commercial capability in the United States and development of new products and clinical trial activity.
The decrease in net income and diluted earnings per share was primarily due to the net of tax benefit of $17.0 million recorded in 2021 related to the reduction in fair value of contingent consideration, as well as higher operating expenses in 2022 primarily driven by increased spending to expand our commercial capability and development of new products, partially offset by higher revenues and favorable gross profit in 2022.
There was no change in adjusted gross margin for the year ended December 31, 2022 as compared to 2021, as the benefits of higher revenue and related production volumes were offset by increased costs and the continued impact of global supply chain and staffing challenges that arose following the COVID-19 pandemic.
There was no change in adjusted gross margin for the year ended December 31, 2023 as compared to 2022, as the benefits of higher revenue and related production volumes were offset by increased supply chain costs due to inflationary pressures and a higher proportion of international sales in which product margins are generally lower.
The decrease in net income and diluted earnings per share was primarily due to the net of tax benefit of $17.0 million recorded in 2021 related to the reduction in fair value of contingent consideration, as well as higher operating expenses in 2022 primarily driven by increased spending to expand our commercial capability and development of new products, partially offset by higher revenues and favorable gross profit in 2022. 45 Non-GAAP Financial Measures We present certain information with respect to adjusted gross profit and adjusted gross margin, adjusted Earnings Before Interest, Tax, Depreciation and Amortization, or EBITDA, adjusted net income, adjusted diluted earnings per share or adjusted Earnings Per Share, or EPS, which are financial measures not based on any standardized methodology prescribed by accounting principles generally accepted in the United States, or GAAP, and is not necessarily comparable to similarly titled measures presented by other companies.
The $67.8 million increase in the net loss was due to the $62.2 million pre-tax impairment charge on intangible assets recorded in the fourth quarter of 2023 and $13.0 million in pre-tax expenses associated with other non-recurring costs earlier in 2023. 44 Non-GAAP Financial Measures We present certain information with respect to adjusted gross profit and adjusted gross margin, adjusted Earnings Before Interest, Tax, Depreciation and Amortization, or EBITDA, adjusted net income, adjusted diluted earnings per share or adjusted Earnings Per Share, or EPS, which are financial measures not based on any standardized methodology prescribed by accounting principles generally accepted in the United States, or GAAP, and is not necessarily comparable to similarly titled measures presented by other companies.
The results of the interim and annual impairment tests indicated that the estimated fair value of this reporting unit was less than its carrying value. Consequently, a non-cash goodwill impairment charge of $42.5 million was recorded in 2020. There were no goodwill impairment charges during 2021.
The results of these impairment tests indicated that the estimated fair value of this reporting unit was less than its carrying value. Consequently, a non-cash impairment of intangible assets charge of $62.2 million was recorded in the quarter ended December 31, 2023.
Gross Profit and Margin Gross profit for the year ended December 31, 2021 was $82.9 million, or gross margin of 56%, as compared with $69.0 million, or gross margin of 53%, for the year ended December 31, 2020.
Gross Profit and Margin Gross profit for the year ended December 31, 2023 was $103.1 million, or gross margin of 62%, as compared with $93.6 million, or gross margin of 60%, for the year ended December 31, 2022.
Capital expenditures totaled $7.5 million, $5.1 million, and $1.6 million for 2022, 2021 and 2020, respectively. Financing Activities Cash used in financing activities was $4.9 million, $6.8 million and $3.8 million for 2022, 2021 and 2020. The change in 2022 was primarily due to lower payments of contingent consideration compared to 2021.
Financing Activities Cash used in financing activities was $6.3 million, $4.9 million and $6.8 million for 2023, 2022 and 2021, respectively. The change in 2023 was primarily due to $5.0 million used to fund an accelerated stock repurchase program completed during 2023.
As of December 31, 2022, and 2021, there were no outstanding borrowings, and we are in compliance with the terms of the credit facility.
Subject to certain conditions, we may request up to an additional $75.0 million for a maximum aggregate commitment of $150.0 million. As of December 31, 2023, and 2022, there were no outstanding borrowings, and we are in compliance with the terms of the credit facility.
The following is a reconciliation of adjusted EBITDA to net income (loss) for the years ended December 31, 2022 and 2021 respectively: Years Ended December 31, 2022 2021 Net (loss) income $ (14,859 ) $ 4,134 Interest and other expense, net (654 ) 188 Benefit from income taxes (3,887 ) (1,707 ) Depreciation and amortization 7,340 7,169 Stock-based compensation 14,315 11,085 Product rationalization charges 3,199 2,445 IPR&D impairment - 600 Acquisition related intangible asset amortization 7,147 7,148 Acquisition related inventory step up - 6,465 Change in fair value of contingent consideration - (21,095 ) Adjusted EBITDA $ 12,601 $ 16,432 Adjusted EBITDA for year ended December 31, 2022, decreased $3.8 million as compared to 2021.
The following is a reconciliation of adjusted EBITDA to net loss for the years ended December 31, 2023 and 2022 respectively: Years Ended December 31, 2023 2022 Net loss $ (82,667 ) $ (14,859 ) Interest and other expense, net (2,312 ) (654 ) Benefit from income taxes (2,660 ) (3,887 ) Depreciation and amortization 7,069 7,340 Stock-based compensation 15,243 14,315 Product rationalization charges 748 3,199 Arbitration settlement 3,250 - Acquisition related intangible asset amortization 7,148 7,147 Impairment of intangible assets 62,190 - Discontinuation of software development project 4,473 - Costs of shareholder activism 3,033 - Adjusted EBITDA $ 15,515 $ 12,601 Adjusted EBITDA for year ended December 31, 2023 was $15.5 million, an increase of $2.9 million as compared to 2022.
As of December 31, 2022, there was no contingent consideration for Parcus Medical or Arthrosurface. 53 Revenue Recognition – General Pursuant to ASC 606, we recognize revenue when a customer obtains control of promised goods or services. The amount of revenue that is recorded reflects the consideration that we expect to receive in exchange for those goods or services.
The amount of revenue that is recorded reflects the consideration that we expect to receive in exchange for those goods or services.
As of December 31, 2022, we do not expect that any additional milestones associated with the Parcus Medical and Arthrosurface acquisitions to be achieved. Income Taxes The benefit from income taxes was $3.9 million for the year ended December 31, 2022, resulting in an effective tax rate of 20.7%.
The decline in fair value was primarily due to lower growth expectations for future revenue and related cash flows related the Parcus Medical and Arthrosurface reporting unit. Income Taxes The benefit from income taxes was $2.7 million for the year ended December 31, 2023, resulting in an effective tax rate of 3.1%.
The decrease in adjusted EBITDA was primarily due to an increase in operating expenses largely attributable to expansion of our commercial capability in the United States and an increase in product development costs, partially offset by an increase in revenue. 47 Adjusted Net Income (Loss) and Adjusted EPS We present information below with respect to adjusted net income (loss) and adjusted EPS.
The increase in adjusted EBITDA was primarily due to an increase in revenue and adjusted gross profit as well as a slower ramp up of commercial spending in 2023 and overall spending control. 46 Adjusted Net Loss and Adjusted EPS We present information below with respect to adjusted net loss and adjusted EPS.
Risk Factors” of this Annual Report on Form 10-K for additional information with respect to the risks faced by our business in light of the COVID-19 pandemic.
For additional information regarding our business, please refer to “Item 1. Business” of this Annual Report on Form 10-K.
Revenue from our OA Pain Management product family increased 8% for the year ended December 31, 2021, as compared to prior year, due primarily to partial recovery from the initial impact of the COVID-19 pandemic on sales volumes and related strategic partner ordering patterns.
Revenue from our OA Pain Management product family increased 11% for the year ended December 31, 2023, as compared to prior year, due to a global sales growth of our Monovisc single injection pain product and favorable ordering patterns, as well as continued double-digit international growth of our Cingal next generation non-opioid single injection pain product.
The increase in revenue was primarily driven by partial recovery from the initial impact of the COVID-19 pandemic on sales volumes and related strategic partner ordering patterns as well as from growing commercial adoption of new products.
The increase in revenue was driven by growing global commercial adoption of our products as well as our introduction of new products in recent years.
The increase in gross profit for the year ended December 31, 2021, primarily resulted from revenue growth and lower amortization of inventory step up costs related to the Arthrosurface and Parcus Medical acquisitions.
The increase in gross profit for the year ended December 31, 2023, primarily resulted from higher revenue growth, improved manufacturing efficiency and lower product rationalization charges. This increase was partially offset by higher costs due to inflationary pressures for raw materials and freight charges.
The increase was also due in part to the inclusion of full year results from Parcus Medical and Arthrosurface which were acquired in the first quarter of 2020. 49 Revenue from our non-orthopedic product family increased 20% for the year ended December 31, 2021, as compared to the prior year, primarily due to the timing of distributor sales as well as due to higher revenues from legacy products during the first quarter.
Revenue from our Joint Preservation and Restoration product family increased 9% for the year ended December 31, 2023, as compared to prior year, due to commercial adoption of our newest products, such as X-Twist, and higher international sales. 43 Revenue from our Non-Orthopedic product family decreased 29% for the year ended December 31, 2023, as compared to prior year, primarily due to lower sales to veterinary customers due to timing of ordering patterns and lower sales following last-time-buys in 2022 associated with termination of certain legacy distributor contracts.
Operating Activities Cash provided by operating activities was $4.4 million, $8.4 million, $13.1 million for 2022, 2021 and 2020. The change in 2022 was primarily attributable to an increase in operating spending largely attributable to expansion of our commercial capability in the United States and an increase in product development costs, partially offset by an increase in product sales.
Operating Activities Cash (used in) provided by operating activities was $(1.8) million, $4.4 million and $8.4 million for 2023, 2022 and 2021, respectively.
Research and Development Research and development expenses for the year ended December 31, 2021 were $27.3 million, an increase of $3.9 million, or 17%, as compared to the prior year, primarily due to product development activities associated with the development of new product candidates in our research and development pipeline, execution of the third Cingal Phase III clinical study and Hyalofast clinical trial.
Research and Development Research and development expenses for the year ended December 31, 2023 were $32.7 million, an increase of $4.5 million, or 16%, as compared to the prior year, primarily due to increased costs to ensure compliance with growing regulatory requirements globally, such as EU MDR, as well as new product development associated with our research and development pipeline, led by Integrity, which received FDA clearance in August 2023 and was launched with first surgeries in rotator cuff repair and other tendon procedures in November 2023.
Removed
As we look towards the future, our business is positioned to capture value within our target market of joint preservation.
Added
Key Developments during the Year Ended December 31, 2023 ● Strengthening Leadership Position in OA Pain Management o Achieved record annual revenues of $101.9 million in OA Pain Management with single-injection Monovisc, multi-injection Orthovisc and Cingal outside the U.S.; Increasing leading U.S. market share position. o Cingal, Anika’s next generation non-opioid single-injection HA-based osteoarthritis pain product, continued strong double-digit growth outside the U.S. o Awaiting FDA feedback on proposed non-clinical next steps regarding Cingal U.S. regulatory approval following a Type C meeting with the FDA in early 2023 and success in meeting its latest Phase III Pivotal primary endpoint in 2022. ● Advancing a Highly Differentiated Portfolio of HA-Based Regenerative Solutions o Successfully completed over 100 cases with the Integrity Implant System, Anika’s HA-based regenerative rotator cuff patch system, following the limited market release in late November 2023; on-track for full market release in mid-2024. o Fully enrolled Hyalofast , Anika’s HA off-the-shelf single-stage cartilage repair product, Phase III clinical trial; modular PMA submission with break-through device designation commencing in 2024; final PMA module filing expected in 2025 with product launching by 2026. ● Launched Key Products in Sports Medicine and Arthrosurface Joint Solutions o X-Twist Biocomposite Fixation System launched in the first quarter of 2024, compliments the PEEK version launched in early 2023. o RevoMotion Reverse Shoulder Arthroplasty System full market release in September 2023. 41 Products OA Pain Management Our OA Pain Management product family consists of Monovisc and Orthovisc, our injectable, HA-based OA Pain Management offerings that are indicated to provide pain relief from osteoarthritis conditions; and Cingal, our novel, next-generation, single-injection OA Pain Management product consisting of our proprietary cross-linked HA material combined with a fast-acting steroid.
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For additional information regarding our business, please refer to “Item 1. Business” of this Annual Report on Form 10-K. Key Developments during the Year Ended December 31, 2022 o Strengthened #1 U.S. market share position for 2022 in OA Pain Management with single-injection Monovisc and multi-injection Orthovisc (SmartTRAK 2022 data).
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Cingal is our next generation fast-acting, long-lasting, non-opioid, clinically proven osteoarthritis pain product which is designed to provide both short- and long-term pain relief, through at least six months. It is currently sold outside the United States in over 35 countries. In 2022, we completed a third Phase III clinical trial for Cingal, which achieved its primary endpoint.
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In August 2022, DePuy Mitek extended our license and supply agreement for Orthovisc for another 5-year term through December 2028. o Continued accelerated growth of Tactoset, Anika’s regenerative solution for insufficiency fractures and soft tissue hardware augmentation, with multiple planned 510(k)s targeting further expansion. o Cingal, Anika’s next generation, non-opioid, single-injection HA-based product combined with fast-acting steroid, successfully achieved its primary endpoint in a third Phase III clinical trial, Cingal 19-01, which demonstrated the superiority of Cingal over steroid alone, for OA pain relief at 26 weeks.
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Cingal is currently not approved for commercial use in the United States. We have been actively engaging with the U.S. Food and Drug Administration, or the FDA, on next steps for U.S. regulatory approval.
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Together with previous studies, Cingal has shown superiority over each of its active ingredients and placebo, consistently demonstrating strong and durable pain relief in OA patients.
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Non-Orthopedic also includes Hyvisc, our high molecular weight injectable HA veterinary product approved for the treatment of joint dysfunction in horses due to non-infectious synovitis associated with equine OA. Hyvisc was previously reported in the OA Pain Management product family but has been reclassified to the Non-Orthopedic product family beginning in 2023.
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Engaging with the FDA regarding next steps for U.S. regulatory approval and exploring the potential to advance Cingal through commercial partnerships in the U.S. and select Asian markets. o Submitted multiple 510(k)s for a new innovative HA-based regenerative rotator cuff system, which will further build upon Anika's growing and differentiated shoulder portfolio. o Hyalofast has been designated as a Breakthrough Device by the FDA, allowing prioritized interaction and review.
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Business” of this Annual Report on Form 10-K. 42 Results of Operations Year ended December 31, 2023 compared to year ended December 31, 2022 Statement of Operations Detail Year Ended December 31, 2023 2022 $ Change % Change (in thousands, except percentages) Revenue $ 166,662 $ 156,236 $ 10,426 7 % Cost of revenue 63,574 62,660 914 1 % Gross profit 103,088 93,576 9,512 10 % Gross margin 62 % 60 % Operating expenses: Research & development 32,690 28,182 4,508 16 % Selling, general & administrative 95,847 84,794 11,053 13 % Impairment of intangible assets 62,190 - 62,190 - Total operating expenses 190,727 112,976 77,751 69 % Loss from operations (87,639 ) (19,400 ) (68,239 ) 352 % Interest and other expense, net 2,312 654 1,658 254 % Loss before income taxes (85,327 ) (18,746 ) (66,581 ) 355 % Benefit from income taxes (2,660 ) (3,887 ) 1,227 (32 %) Net loss $ (82,667 ) $ (14,859 ) $ (67,808 ) 456 % Revenue The following table presents revenue by product family for fiscal years 2023 and 2022 (dollars in thousands): Years Ended December 31, 2023 2022 $ Change % Change OA Pain Management $ 101,927 $ 91,984 $ 9,943 11 % Joint Preservation and Restoration 54,879 50,402 4,477 9 % Non-Orthopedic 9,856 13,850 (3,994 ) (29 %) $ 166,662 $ 156,236 $ 10,426 7 % Revenue for the year ended December 31, 2023 was $166.7 million, an increase of $10.5 million, or 7%, compared to the prior year.
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Approaching full enrollment in pivotal Phase III clinical trial with 199 of 200 subjects enrolled. Company expects to be on track to file for a Premarket Approval (PMA) with the FDA in 2025. o Completed development of RevoMotion Reverse Shoulder Arthroplasty System, with limited market release initiated and first surgeries performed in Q1 2023.
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Effective January 1, 2023, we began to report revenue from product sales to veterinary customers within the Non-Orthopedic product family whereas such revenue had historically been reported within the OA Pain Management revenue product family for the prior period year ended December 31, 2022.
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RevoMotion’s differentiated bone preserving design expands Anika’s shoulder arthroplasty portfolio in the over $800 million U.S. reverse shoulder market and offers the industry’s smallest diameter threaded glenoid baseplate. o Received 510(k) clearance and launched new X-Twist Fixation System, Anika’s cornerstone suture anchor system, with full market launch in early 2023 following successful limited launch in the second half of 2022.
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Revenue from product sales to veterinary customers amounted to $4.2 million and $5.9 million for 2023 and 2022, respectively, with the 2022 revenue reclassified to Non-Orthopedic to conform to current presentation.
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X-Twist is a key addition to Anika’s portfolio and is uniquely positioned to address the needs of surgeons performing high volume soft tissue repair procedures such as rotator cuff repair and ankle stabilization surgeries. 42 Impact of COVID-19 Pandemic In March 2020, the World Health Organization declared the spread of the COVID-19 virus a pandemic.
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For additional information on our research and development activities, please see the section captioned “Part I. Item 1. Business— Research and Development ” in this Annual Report on Form 10-K.
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This pandemic caused an economic downturn globally, which created volatility in our results due to the worldwide cancellation or delay of elective procedures, staffing shortages and supply chain disruptions, as well as the impact on timelines associated with certain clinical studies. Please see the section captioned “Part I. Item 1A.
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The increase in SG&A expenses for the year ended December 31, 2023 was primarily due to $13.0 million of non-recurring costs related to the Parcus Medical unitholder arbitration settlement, shareholder activism, discontinuation of a software development project and other non-recurring corporate costs.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeApproximately $8.6 million of our revenue was denominated in foreign currencies (primarily the Euro) for the year ended December 31, 2022. Gains and losses arising from transactions denominated in foreign currencies are primarily related to intercompany accounts that have been determined to be temporary in nature and cash, accounts payable, and accounts receivable denominated in non-functional currencies.
Biggest changeGains and losses arising from transactions denominated in foreign currencies are primarily related to intercompany accounts that have been determined to be temporary in nature and cash, accounts payable, and accounts receivable denominated in non-functional currencies.
Unfavorable fluctuations in exchange rates would have a negative impact on our financial statements. The impact of currency exchange rate fluctuations related to our international subsidiaries on our financial statements were insignificant in 2022. We recognize foreign currency gains or losses arising from our operations in the period incurred. 56
Unfavorable fluctuations in exchange rates would have a negative impact on our financial statements. The impact of currency exchange rate fluctuations related to our international subsidiaries on our financial statements were insignificant in 2023. We recognize foreign currency gains or losses arising from our operations in the period incurred. 54
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Approximately $12.8 million of our revenue was denominated in foreign currencies (primarily the Euro and UK pound sterling) for the year ended December 31, 2023.

Other ANIK 10-K year-over-year comparisons