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What changed in Envista Holdings Corp's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Envista Holdings Corp's 2023 and 2024 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 2024 report.

+375 added−348 removedSource: 10-K (2025-02-13) vs 10-K (2024-02-15)

Top changes in Envista Holdings Corp's 2024 10-K

375 paragraphs added · 348 removed · 295 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

104 edited+12 added−8 removed90 unchanged
Biggest changeSpecialty Products & Technologies Equipment & Consumables Total Year ended December 31, 2023 Geographical region: North America $ 702.0 $ 610.5 $ 1,312.5 Western Europe 447.7 121.7 569.4 Other developed markets 90.4 36.9 127.3 Emerging markets 402.3 155.0 557.3 Total $ 1,642.4 $ 924.1 $ 2,566.5 Year ended December 31, 2022 Geographical region: North America $ 711.1 $ 655.3 $ 1,366.4 Western Europe 388.9 121.1 510.0 Other developed markets 91.0 38.6 129.6 Emerging markets 407.6 155.5 563.1 Total $ 1,598.6 $ 970.5 $ 2,569.1 2 Acquisitions and Divestitures Our growth strategy contemplates future investments and acquisitions and we continually evaluate potential investments and acquisitions that either strategically fit with our existing portfolio or expand our portfolio into new and attractive business areas.
Biggest changeSpecialty Products & Technologies Equipment & Consumables Total Year ended December 31, 2024 Geographical region: North America $ 684.0 $ 621.3 $ 1,305.3 Western Europe 439.4 106.6 546.0 Other developed markets 86.1 34.2 120.3 Emerging markets 406.9 132.1 539.0 Total $ 1,616.4 $ 894.2 $ 2,510.6 Year ended December 31, 2023 Geographical region: North America $ 702.0 $ 610.5 $ 1,312.5 Western Europe 447.7 121.7 569.4 Other developed markets 90.4 36.9 127.3 Emerging markets 402.3 155.0 557.3 Total $ 1,642.4 $ 924.1 $ 2,566.5 2 Our Business Segments The table below describes the percentage of our total annual sales attributable to each of our segments over each of the three years ended December 31.
Our diversified portfolio of solutions covers a broad range of dentists' clinical needs for diagnosing, treating, and preventing dental conditions as well as improving the aesthetics of the human smile. We offer comprehensive solutions to support implant-based tooth replacements, orthodontic treatments and diagnostic solutions.
Our diversified portfolio of solutions covers a broad range of dentists' clinical needs for preventing, diagnosing, and treating dental conditions as well as improving the aesthetics of the human smile. We offer comprehensive solutions to support implant-based tooth replacements, orthodontic treatments, and diagnostic solutions.
Most of our sales in non-U.S. markets are made by our subsidiaries located outside the U.S., though we also sell directly from the U.S. into non-U.S. markets through various representatives and distributors and, in some cases, directly. In countries with low sales volumes, we generally sell through representatives and distributors.
Most of our sales in non-U.S. markets are made by our subsidiaries located outside the U.S., though we also sell from the U.S. into non-U.S. markets through various representatives and distributors and, in some cases, directly. In countries with low sales volumes, we generally sell through representatives and distributors.
ITEM 1. BUSINESS Overview Envista is a global family of more than 30 trusted dental brands, including Nobel Biocare, Ormco, DEXIS and Kerr united by a shared purpose: to partner with professionals to improve lives by digitizing, personalizing and democratizing oral care. We help our customers deliver the best possible patient care through industry-leading solutions, technologies, and services.
ITEM 1. BUSINESS Overview Envista is a global family of more than 30 trusted dental brands, including Nobel Biocare, Ormco, DEXIS, and Kerr, united by a shared purpose: to partner with professionals to improve lives by digitizing, personalizing and democratizing oral care. We help our customers deliver the best possible patient care through industry-leading dental consumables, solutions, technologies, and services.
Federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the civil False Claims Act. ◦ The federal Civil Monetary Penalties Law prohibits, among other things, the offering or transferring of remuneration to a Medicare or Medicaid beneficiary that the person knows or should know is likely to influence the beneficiary’s selection of a particular supplier of Medicare or Medicaid payable items or services. ◦ The Open Payments Act requires manufacturers of medical devices covered under Medicare, Medicaid or the Children’s Health Insurance Program, subject to specific exceptions, to record payments and other transfers of value to a broad range of healthcare providers (including dentists) and teaching hospitals and to report this data as well as ownership and investments interests held by the physicians described above and their immediate family members to the Department of Health and Human Services (“HHS”) for subsequent public disclosure.
Federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the civil False Claims Act. ◦ The federal Civil Monetary Penalties Law prohibits, among other things, the offering or transferring of remuneration to a Medicare or Medicaid beneficiary that the person knows or should know is likely to influence the beneficiary’s selection of a particular supplier of Medicare or Medicaid payable items or services. ◦ The Open Payments Act requires manufacturers of medical devices covered under Medicare, Medicaid or the Children’s Health Insurance Program, subject to specific exceptions, to record payments and other transfers of value to a broad range of healthcare providers (including dentists) and teaching hospitals and to report this data as well as ownership and investment interests held by the physicians described above and their immediate family members to the Department of Health and Human Services (“HHS”) for subsequent public disclosure.
We have succeeded in emerging markets by harnessing our existing go-to-market infrastructure, building familiarity with local customer needs and regulations, and establishing dedicated locally-based management resources. Our Industry The dental market is large, attractive, and has a number of secular drivers that we believe will support future growth.
We have succeeded in emerging markets by harnessing our existing go-to-market infrastructure, building familiarity with local customer needs and regulations, and establishing dedicated locally-based management resources. 5 Our Industry The dental market is large, attractive, and has a number of secular drivers that we believe will support future growth.
Risk Factors—Risks Related to Laws and Regulations.” 13 Healthcare Reform In the U.S. and certain foreign jurisdictions, there have been, and we expect there will continue to be, a number of legislative and regulatory changes to the healthcare system. For example, there have been numerous political and legal efforts to expand, repeal, replace or modify the U.S.
Risk Factors—Risks Related to Laws and Regulations.” Healthcare Reform In the U.S. and certain foreign jurisdictions, there have been, and we expect there will continue to be, a number of legislative and regulatory changes to the healthcare system. For example, there have been numerous political and legal efforts to expand, repeal, replace or modify the U.S.
Our customers include oral surgeons, prosthodontists and periodontists, prosthodontists, and general dentists. Our Implant-Based Tooth Replacement brands have a long history of innovation, which include both the first documented case of a titanium implant being placed in a human and the introduction of the concept of living bone adhering to an artificial implant (known as osseointegration).
Our customers include oral surgeons, periodontists, prosthodontists, and general dentists. Our Implant-Based Tooth Replacement brands have a long history of innovation, which include both the first documented case of a titanium dental implant being placed in a human and the introduction of the concept of living bone adhering to an artificial implant (known as osseointegration).
We believe our management team will continue to drive growth and profitability in our business in the future. International Operations We are a global dental company. Our products and services are available worldwide, and our principal markets outside the U.S. are in Europe, Asia, the Middle East and Latin America.
We believe our management team will continue to drive growth and profitability in our business in the future. 7 International Operations We are a global dental company. Our products and services are available worldwide, and our principal markets outside the U.S. are in Europe, Asia, the Middle East and Latin America.
The EU regulations were adopted with staggered transitional periods that have since been updated. In February 2023, the European Parliament and European Council adopted legislation that extended the compliance dates for EU MDR to 2027 or 2028, based upon the risk class of the device.
The EU regulations were adopted with staggered transitional periods that have since been updated. In February 2023, the European Parliament and European Council adopted legislation that extended the majority of the compliance dates for EU MDR to 2027 or 2028, based upon the risk class of the device.
In addition, we believe that our future growth depends in part on our ability to continue developing products and sales models that successfully target emerging markets. The manner in which our products and services are sold outside the U.S. differs by business and by region.
We believe that our future growth depends in part on our ability to continue developing products and sales models that successfully target emerging markets. The manner in which our products and services are sold outside the U.S. differs by business and by region.
We will continue to invest in our global commercial footprint and product innovation to grow our strong position in the Implant and Orthodontics markets, both of which are underpenetrated. ▪ Emerging Markets : We are a leading dental product provider in emerging markets (which we have historically defined as developing markets of the world experiencing periods of accelerated growth in gross domestic product and infrastructure, including Eastern Europe, the Middle East, Africa, Latin America and Asia (with the exception of Japan and Australia)) with R&D, product management, operations, regulatory affairs, sales and marketing, and customer service resources focused on these markets.
We will continue to invest in our global commercial footprint and product innovation to grow our strong position in the Implant and Orthodontics markets, both of which are underpenetrated. ▪ Emerging Markets : We are a leading dental product provider in emerging markets (which we have historically defined as developing markets of the world experiencing periods of accelerated growth in gross domestic product and infrastructure, including Eastern Europe, the Middle East, Africa, Latin America and Asia (with the exception of Japan and Australia)) with product management, operations, regulatory affairs, sales and marketing, and customer service resources focused on these markets.
Complying with the EU MDR and the evolving regulatory regimes in the UK and Switzerland requires modifications to our quality management systems, additional resources in certain functions and updates to technical files, among other changes. 12 Other Healthcare Laws In addition to the U.S.
Complying with the EU MDR and the evolving regulatory regimes in the UK and Switzerland requires modifications to our quality management systems, additional resources in certain functions and updates to technical files, among other changes. Other Healthcare Laws In addition to the U.S.
We believe these investments better position us to effectively meet the needs of our customers, particularly the growing Dental Service Organization (“DSO”) segment, which values a comprehensive, end-to-end product offering with the ability to roll out new technologies and procedure-focused trainings at scale. 5 ◦ “ Maintain and Pursue Long-Term Market Leadership ”: As we seek to continue to improve our business and drive increased cash flow, we expect to strategically invest in innovation in order to better serve our customers and accelerate organic growth.
We believe these investments better position us to effectively meet the needs of our customers, particularly the growing Dental Service Organization (“DSO”) segment, which values a comprehensive, end-to-end product offering with the ability to roll out new technologies and procedure-focused trainings at scale. ◦ “ Maintain and Pursue Long-Term Market Leadership ”: As we seek to continue to improve our business and drive increased cash flow, we expect to strategically invest in innovation to better serve our customers and accelerate organic growth.
A person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation. ◦ The Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) prohibits knowingly and willfully (1) executing, or attempting to execute, a scheme to defraud any health care benefit program, including private payors, or (2) falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulent statement in connection with the delivery of or payment for health care benefits, items or services.
A person or entity does not need to have actual knowledge of the statute or specific intent to violate the statute to have committed a violation. ◦ The Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) prohibits knowingly and willfully (1) executing, or attempting to execute, a scheme to defraud any health care benefit program, including private payors, or (2) falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulent statement in connection with the delivery of or payment for health care benefits, items or services.
We conduct R&D activities for the purpose of designing and developing new products and applications that address customer needs and emerging trends, as well as enhancing the functionality, effectiveness, ease of use and reliability of our existing products.
We conduct R&D activities for the purpose of designing and developing new products and applications that address customer and patient needs and emerging trends, as well as enhancing the functionality, effectiveness, ease of use and reliability of our existing products.
Our products include brackets and wires, tubes and bands, archwires, clear aligners, digital orthodontic treatments, retainers, and other orthodontic laboratory products, and are marketed under the Ormco TM , Damon TM , Insignia TM , AOA TM and Spark TM brands.
Our products include brackets and wires, tubes and bands, clear aligners, digital orthodontic treatments, retainers, and other orthodontic laboratory products, and are marketed under the Ormco TM , Damon TM , Insignia TM , AOA TM , and Spark TM brands.
Risk Factors—Risks Related to Laws and Regulations.” 15 Export/Import Compliance We are required to comply with various U.S. export/import control and economic sanctions laws, including the regulations administered by the U.S.
Risk Factors—Risks Related to Laws and Regulations.” Export/Import Compliance We are required to comply with various U.S. export/import control and economic sanctions laws, including the regulations administered by the U.S.
We also produce curing lights and other products including impression materials, burs, and waxes under several brands. Through our Metrex brand, we have a significant position within infection prevention products, which include the CaviWipes and CaviCide TM product lines, and are well positioned in both the dental and general medical market segments.
We also produce curing lights and other products including impression materials, burs, and waxes under several brands. Through our Metrex brand, we have a strong position within infection prevention products, which include the CaviWipes and CaviCide TM product lines, and are well positioned in both the dental and general medical market segments.
We believe strong industry fundamentals and new product solution introductions in this segment will continue to drive substantial growth for us. 3 Implant-Based Tooth Replacements We are a world leader in the field of innovative implant-based tooth replacements offering a full portfolio of solutions that enable dentists to deliver single-tooth to full-mouth restorations.
We believe strong industry fundamentals and new product solution introductions in this segment will continue to drive strong growth for us. Implant-Based Tooth Replacements We are a world leader in the field of innovative implant-based tooth replacements offering a full portfolio of solutions that enable dentists to deliver single-tooth to full-mouth restorations.
Although in the aggregate our intellectual property is important to our operations, we do not consider any single patent, trademark, copyright, trade secret or license to be of material importance to any segment or to the business as a whole. Our products and technologies are protected by over 1,700 granted patents.
Although in the aggregate our intellectual property is important to our operations, we do not consider any single patent, trademark, copyright, trade secret or license to be of material importance to any segment or to the business as a whole. Our products and technologies are protected by over 1,800 granted patents.
Within the global dental products industry, we believe segments such as Implant-Based Tooth Replacements, Orthodontic Solutions, and Diagnostic Solutions will grow at a more rapid pace than the overall market. While both equipment and consumables represent significant expenditures for dental service providers, the sales dynamics for each differ.
Within the global dental products industry, we believe segments such as Implant-Based Tooth Replacements, Orthodontic Solutions, and Diagnostic Solutions will grow at a more rapid pace than the overall market. While both equipment and consumable products represent significant expenditures for dental service providers, the sales dynamics for each differ.
We utilize a number of techniques to address potential disruption in and other risks relating to our supply chain, including in certain cases the use of safety stock, alternative materials and qualification of multiple supply sources. During 2023, we had no raw material shortages that had a material effect on our business.
We utilize a number of techniques to address potential disruption in and other risks relating to our supply chain, including in certain cases the use of safety stock, alternative materials and qualification of multiple supply sources. During 2024, we had no raw material shortages that had a material effect on our business.
Because of the range of the products and services we sell and the variety of markets we serve, we encounter a wide variety of competitors, including well-established regional competitors, competitors who are more specialized than we are in particular markets, as well as larger companies or divisions of larger companies with substantial sales, marketing, research and financial capabilities.
Because of the range of the products and services we sell and the variety of markets we serve, we encounter a wide variety of competitors, including well-established regional competitors, competitors who are more specialized than we are in particular markets or product categories, as well as larger companies or divisions of larger companies with substantial sales, marketing, research and financial capabilities.
The breadth and depth of our product offerings address a broad range of dentists’ clinical needs from consumables to digital equipment solutions. Our catalog of products covers the spectrum from value-focused products to premium brands, allowing providers to fully address patient needs in different market segments.
The breadth and depth of our product offerings address a broad range of dentists’ clinical needs from consumable products to digital equipment solutions. Our catalog of products covers the spectrum from value-focused products to premium brands, allowing providers to fully address patient needs in different market segments.
Similar to the Federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the healthcare fraud statute implemented under HIPAA or specific intent to violate it in order to have committed a violation. ◦ The False Claims Act imposes liability on any person or entity that, among other things, knowingly presents, or causes to be presented, a false or fraudulent claim for payment by a federal health care program, knowingly makes, uses or causes to be made or used, a false record or statement material to a false or fraudulent claim, or knowingly makes a false statement to avoid, decrease or conceal an obligation to pay money to the U.S. federal government.
Similar to the Federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the healthcare fraud statute implemented under HIPAA or specific intent to violate the statute to have committed a violation. 12 ◦ The False Claims Act imposes liability on any person or entity that, among other things, knowingly presents, or causes to be presented, a false or fraudulent claim for payment by a federal health care program, knowingly makes, uses or causes to be made or used, a false record or statement material to a false or fraudulent claim, or knowingly makes a false statement to avoid, decrease or conceal an obligation to pay money to the U.S. federal government.
Failure to comply with these statutory requirements, or mere publication of data breaches pursuant to these statutory requirements, can subject our company to legal, regulatory, and reputational risks, as well as the financial risks that can accompany regulatory investigations and enforcement actions and private litigation.
Failure to comply with these statutory requirements, or mere notification of data breaches pursuant to these statutory requirements, can subject our company to legal, regulatory, and reputational risks, as well as the financial risks that can accompany regulatory investigations and enforcement actions and private litigation.
While a sizable portion of our sales are derived from distributors, most of our marketing and advertising activities are directed towards the end-users of our products. In addition to our marketing efforts, as noted above, we conduct significant training and education programs globally for these end-users to enhance patient access to high-quality dental care.
While a sizable portion of our sales are derived from distributors, most of our marketing and advertising activities are directed towards the end-users of our products, the dental professional. In addition to our marketing efforts, as noted above, we conduct significant training and education programs globally for dental professionals to enhance patient access to high-quality dental care.
Information on our website, including the Sustainability Report, shall not be deemed incorporated by reference into this Form 10-K. Materials Our manufacturing operations employ a wide variety of raw materials, including metallic-based components, electronic components, chemicals, and plastics, and prices of oil and gas also affect our costs for freight and utilities.
Information on our website, including the Sustainability Report, shall not be deemed incorporated by reference into this Annual Report. 10 Materials Our manufacturing operations employ a wide variety of raw materials, including metallic-based components, electronic components, chemicals, and plastics, and prices of oil and gas also affect our costs for freight and utilities.
Entities that are found to be in violation of HIPAA, for example as the result of a breach of unsecured protected health information, a complaint about privacy practices, or an audit by HHS, may be subject to significant civil, criminal and administrative fines and penalties and/or additional reporting and oversight obligations if required to enter into a resolution agreement and corrective action plan with HHS to settle allegations of HIPAA non-compliance.
Entities that are found to be in violation of HIPAA, for example as the result of a breach of unsecured protected health information or for failure to perform a HIPAA risk assessment, a complaint about privacy practices, or an audit by HHS, may be subject to significant civil, criminal and administrative fines and penalties and/or additional reporting and oversight obligations if required to enter into a resolution agreement and corrective action plan with HHS to settle allegations of HIPAA non-compliance.
We believe the heritage and leadership of our well-known brands in the dental products industry enhances our connections with both patients and providers and supports our strong market position. ◦ Attractive portfolio with leadership in key attractive segments .
We believe the heritage and leadership of our well-known brands in the dental products industry enhances our connections with both patients and providers and supports our strong market position. ◦ Premier portfolio with leadership in attractive segments .
For additional information regarding sales, operating profit and identifiable assets by segment, please refer to Note 23 in our Consolidated Financial Statements included elsewhere in this Annual Report. 2023 2022 2021 Specialty Products & Technologies 64% 62% 60% Equipment & Consumables 36% 38% 40% Specialty Products & Technologies Our Specialty Products & Technologies segment develops, manufactures and markets dental implant systems, including regenerative solutions, dental prosthetics and associated treatment software and technologies, as well as orthodontic bracket systems, aligners and lab products.
For additional information regarding sales, operating profit and identifiable assets by segment, please refer to Note 23 in our Consolidated Financial Statements included elsewhere in this Annual Report. 2024 2023 2022 Specialty Products & Technologies 64% 64% 62% Equipment & Consumables 36% 36% 38% Specialty Products & Technologies Our Specialty Products & Technologies segment primarily develops, manufactures and markets dental implant systems, including regenerative solutions, dental prosthetics and associated treatment software and technologies, as well as orthodontic bracket systems, aligners and lab products.
Human Capital Resources As of December 31, 2023, we employed approximately 12,800 persons, of whom approximately 3,000 were employed in the U.S. and approximately 9,800 were employed outside of the U.S. We have collective bargaining arrangements and union contracts in certain countries, particularly in Europe where certain of our employees are represented by unions and/or works councils.
Human Capital Resources As of December 31, 2024, we employed approximately 12,300 persons, of whom approximately 3,000 were employed in the U.S. and approximately 9,300 were employed outside of the U.S. We have collective bargaining arrangements and union contracts in certain countries, particularly in Europe where certain of our employees are represented by unions and/or works councils.
Within our product portfolio, we believe we are one of the largest manufacturers in implants and orthodontics and have one of the largest installed bases of imaging devices.
Within our product portfolio, we believe we are one of the largest and most product diverse manufacturers in implants and orthodontics and have one of the largest installed bases of imaging devices.
Data Privacy and Security Laws As a global manufacturer of medical devices, having access to and processing confidential, personal and/or sensitive data in the course of our business, we are subject to U.S.
Data Privacy and Security Laws As a global manufacturer of medical devices, having access to and processing confidential, personal and/or sensitive data in the course of our business, we are subject to an increasing number of U.S.
The following table presents the Company’s revenues disaggregated by geographical region for the years ended December 31, 2023 and 2022 ($ in millions).
The following table presents the Company’s revenues disaggregated by geographical region for the years ended December 31, 2024 and 2023 ($ in millions).
In combination with the ‘DTX Studio Implant’ and ‘DTX Studio Lab’ software packages, clinicians can use one software ecosystem from image acquisition and diagnosis to treatment planning, implant surgery and restoration planning and placement, as well as collaborate with treatment partners such as other dentists or laboratories on one digital platform.
In combination with the ‘DTX Studio Implant’ and ‘DTX Studio Lab’ software packages, clinicians can use one software ecosystem for image acquisition and diagnosis to treatment planning, implant surgery and restoration planning and placement, as well as for collaboration with treatment partners such as other dentists or laboratories on one digital platform.
EBS encompasses not only lean tools and processes, but also methods for driving innovation, growth and leadership. ◦ Brand leadership with a long track record and strong brand recognition . We built our business around brands with long histories of innovation and strong brand recognition in the dental products market.
EBS encompasses not only lean tools and processes, but also methods for driving innovation, growth and leadership. ◦ Brand leadership with a long track record and strong brand recognition . We built our business around brands with long histories of innovation and quality, and as a result, we enjoy strong brand recognition in the dental products market.
The sale of equipment depends on technological advancements, dentists’ willingness to invest in new technologies, opening of new offices and replacement demand. On the other hand, consumables are more dependent on patient volume.
The sale of equipment depends on technological advancements, dentists’ willingness to invest in new technologies, opening of new offices and replacement demand. On the other hand, consumable products are more dependent on patient volume.
(“Henry Schein”), accounted for approximately 10% of our sales for 2023, 11% of our sales for 2022 and 12% of our sales for 2021. Other than Henry Schein, no single customer accounted for more than 10% of combined sales in 2023, 2022, or 2021.
(“Henry Schein”), accounted for approximately 10% of our sales for 2024 and 2023, and 11% of our sales for 2022. Other than Henry Schein, no single customer accounted for more than 10% of combined sales in 2024, 2023, or 2022.
Communication is at the core of our engagement efforts and we host numerous CEO Forums for all employees, to keep our employees informed and to provide opportunities for employees globally to ask questions to senior management. 10 Community Our employees have a long history of providing support and care in our communities, donating time, resources, and funds to local causes.
Communication is at the core of our engagement efforts and we host numerous global Town Halls for all employees, to keep our employees informed and to provide opportunities for employees globally to ask questions to senior management. Community Our employees have a long history of providing support and care in our communities, donating time, resources, and funds to local causes.
Risk Factors—Risks Related to Our Business” and “Risks Factors—General Risks.” Sales and Distribution Typical customers and end-users of our products include general dentists, dental specialists, dental hygienists, dental laboratories and other oral health professionals, including DSOs, as well as educational, medical and governmental entities and third-party distributors.
Risk Factors—Risks Related to Our Business” and “Risks Factors—General Risks.” Sales and Distribution Typical customers and end-users of our products include dental specialists such as orthodontists, periodontists, implantologists and endodontists, general dentists, dental hygienists, oral surgeons, dental laboratories and other oral health professionals, including DSOs, as well as educational, medical and governmental entities and third-party distributors.
Globally, we offer an Employee Assistance Program to all employees to support the mental health and well-being of employees and their families. Diversity and Inclusion Our strategy to cultivate diversity and inclusion (“D&I”) in the workplace encompasses efforts across our organization, with specific direction from executive leadership.
Globally, we offer an Employee Assistance Program to all employees to support the mental health and well-being of employees and their families. 9 Diversity and Inclusiveness Our strategy to cultivate and maintain diversity and inclusiveness in the workplace encompasses efforts across our organization, with specific direction from executive leadership.
Learning and Development Opportunities We aim to empower our employees to thrive in their current roles, as well as to support employees’ aspirations to move into different roles. We have a promote-from-within culture with opportunities across our operating companies.
Learning and Development Opportunities We aim to empower our employees to thrive in their current roles, as well as to support employees’ aspirations to move into different roles. We strive to promote from within our Company with opportunities across our operating companies.
We are one of the largest global dental products companies, with significant market positions in some of the most attractive segments of the dental products industry. We serve dental professionals in over 130 countries through one of the largest commercial organizations in the dental products industry and through our dealer partners.
We are one of the largest global dental products companies, with strong positions in some of the most attractive segments of the dental products industry. We serve dental professionals in over 130 countries through one of the largest commercial organizations in the dental products industry and through our distribution partners.
Since 2020, we have expanded capacity for our Spark clear aligners and added over 1,000 new employees to our Orthodontic Solutions business. Our research and development (“R&D”) expenditures in our Implant-Based Tooth Replacement business accelerated the development of new implant systems such as N1.
Since 2020, we have expanded capacity for our Spark clear aligners and added over 900 new employees to our Orthodontic Solutions business. Our research and development (“R&D”) expenditures in our Implant-Based Tooth Replacement business accelerated the development of new implant systems.
In 2023, we distributed approximately 40% of our products through third-party distributors. Certain highly technical products, such as dental implant systems, orthodontic appliances, dental laboratory equipment and consumables, and endodontic instruments and materials are typically sold directly to dental professionals and dental laboratories. 8 One customer, Henry Schein, Inc.
In 2024, we distributed approximately 42% of our products through third-party distributors. Certain highly technical products, such as dental implant systems, orthodontic appliances, dental laboratory equipment and consumable products, and endodontic instruments and materials, are typically sold directly to dental professionals and dental laboratories. One customer, Henry Schein, Inc.
Our recent Osteogenics acquisition added innovative regenerative solutions to our portfolio. Since being acquired in 2014, Nobel Biocare has focused on reinvigorating its product offerings and has released over 30 new products. Among these are comprehensive software packages which are used for treatment planning of dental implants and prosthetics treatment planning.
Our Osteogenics acquisition added innovative regenerative solutions that are highly complementary to the implant treatment. Since being acquired in 2014, Nobel Biocare has focused on reinvigorating its product offerings and has released over 30 new products. Among these are comprehensive software packages which are used for treatment planning of dental implants procedures and prosthetics.
We have invested in our Specialty Products & Technology segment, adding manufacturing capacity and personnel to these businesses, with plans for further investment in 2024.
We have invested in our Specialty Products & Technologies segment, adding manufacturing capacity and personnel to these businesses, with plans for further investment in 2025.
Sales from consumables, services and spare parts comprised approximately 69% of segment sales in 2023. 4 Diagnostic Solutions Our Diagnostic Solutions business is focused on dental imaging, X-ray, and intraoral scanner solutions used in dental offices, clinics and hospitals.
Sales from consumable products, services and spare parts comprised approximately 69% of segment sales in 2024. Diagnostic Solutions Our Diagnostic Solutions business is focused on dental imaging, X-ray, and intraoral scanner solutions used in dental offices, clinics and hospitals.
We believe large multi-category manufacturers that provide a broad range of equipment and consumables have more recession-resilient portfolios and can gain meaningful competitive advantage over their peers as larger customers increasingly seek package deals and consolidate suppliers, and digital dentistry adoption creates links between different products in the dental practitioners’ offices.
We believe large multi-category manufacturers that provide a broad range of equipment and consumable products have more recession-resilient portfolios and can gain meaningful competitive advantage over their peers as larger customers increasingly seek the benefits of purchasing the full range of dental products from a single supplier and consolidate suppliers, and digital dentistry adoption creates links between different products in the dental practitioners’ offices.
A predecessor device is referred to as “predicate device.” As a result, FDA clearance requirements may extend the development process for a considerable length of time. Medical devices can be marketed only for the indications for which they are cleared or approved.
As a result, FDA clearance requirements may extend the development process for a considerable length of time. Medical devices can be marketed only for the indications for which they are cleared or approved.
Our products are either classified as Class I or Class II devices in the U.S. Most of our Class II and certain of our Class I devices are marketed pursuant to 510(k) pre-marketing clearances. The FDA also enforces additional regulations regarding the safety of X-ray emitting devices that we currently market.
Most of our Class II and certain of our Class I devices are marketed pursuant to 510(k) pre-marketing clearances. The FDA also enforces additional regulations regarding the safety of X-ray emitting devices that we currently market.
Our internet site and the information contained on or connected to that site are not incorporated by reference into this Form 10-K. 16
Our internet site and the information contained on or connected to that site are not incorporated by reference into this Annual Report. 16
Employee Engagement We conduct an annual employee engagement survey to solicit employees’ input and perspectives on our performance. In 2023, we had a 92% participation rate in this survey, with 76% of respondents reporting feeling engaged at work and 80% believing their managers are leading effectively.
Employee Engagement We conduct employee engagement surveys to solicit employees’ input and perspectives on our performance. In 2024, we had a 94% participation rate in this survey, with 72% of respondents reporting feeling engaged at work and 80% believing their managers are leading effectively.
We typically market these products directly to end-users through our commercial organization, and 88% of our 2023 sales for this segment were direct sales. In 2023, our Specialty Products & Technologies segment generated $1.6 billion of sales, representing year-over-year sales and core sales increase of 2.7% and 2.9%, respectively.
We typically market these products directly to end-users through our commercial organization, and 84% of our 2024 sales for this segment were direct sales. In 2024, our Specialty Products & Technologies segment generated $1.6 billion of sales, representing year-over-year sales and core sales decrease of 1.6% and 0.9%, respectively.
Equipment & Consumables Our Equipment & Consumables segment develops, manufactures and markets dental equipment and supplies used in dental offices, including digital imaging systems, software and other visualization/magnification systems; endodontic systems and related products; restorative materials, rotary burs, impression materials, bonding agents and cements; and infection prevention products. In 2023, our Equipment & Consumables segment generated $0.9 billion of sales.
Equipment & Consumables Our Equipment & Consumables segment primarily develops, manufactures, and markets dental equipment and supplies used in dental offices, including digital imaging systems, software, and other visualization/magnification systems; endodontic systems and related products; restorative materials and instruments, rotary burs, impression materials, bonding agents and cements; and infection prevention products.
Individual states in the U.S. have also become increasingly active in implementing regulations designed to control product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures and, in some cases, mechanisms to encourage importation from other countries and bulk purchasing.
Individual states in the U.S. have also become increasingly active in implementing regulations designed to control product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures and, in some cases, mechanisms to encourage importation from other countries and bulk purchasing. 13 Coverage and Reimbursement Dental procedures and products are often paid for out-of-pocket.
We believe enhanced connectivity amongst different types of dental imaging/diagnostic equipment and integration with downstream treatment planning and treatment delivery solutions will further improve dental workflows and lead to better treatment outcomes. We believe digitalization and connectivity will continue to drive high growth in this area.
We believe enhanced connectivity amongst different types of dental imaging/diagnostic equipment and integration with downstream treatment planning and treatment delivery solutions will further improve dental workflows and lead to better treatment outcomes.
In 2023, we generated 51% of our sales in North America, 22% of our sales in Western Europe, 22% of our sales in emerging markets and 5% of our sales in other developed markets.
In 2024, we generated 52% of our sales in North America, 22% of our sales in Western Europe, 21% of our sales in emerging markets and 5% of our sales in other developed markets.
The determination as to whether or not a modification could significantly affect the device’s safety or effectiveness is initially left to the manufacturer using available FDA guidance; however, the FDA may review this determination to evaluate the regulatory status of the modified product at any time and may require the manufacturer to cease marketing and recall the modified device until 510(k) clearance or PMA approval is obtained.
The determination as to whether or not a modification could significantly affect the device’s safety or effectiveness is initially left to the manufacturer using available FDA guidance; however, the FDA may review this determination to evaluate the regulatory status of the modified product at any time and may require the manufacturer to cease marketing and recall the modified device until 510(k) clearance or PMA approval is obtained. 11 Any medical devices we manufacture and distribute are subject to pervasive and continuing regulation by the FDA and certain state agencies.
Any medical devices we manufacture and distribute are subject to pervasive and continuing regulation by the FDA and certain state agencies. These include product listing and establishment registration requirements, which help facilitate FDA inspections and other regulatory actions. As a medical device manufacturer, all of our manufacturing facilities are subject to inspection on a routine basis by the FDA.
These include product listing and establishment registration requirements, which help facilitate FDA inspections and other regulatory actions. As a medical device manufacturer, all of our manufacturing facilities are subject to inspection on a routine basis by the FDA.
We intend to drive shareholder value by deploying capital to acquire or invest in other businesses that strategically fit into or extend our product offering into new or attractive adjacent markets - the Intraoral Scanner Business and Osteogenics acquisitions in 2022 are examples of this strategy in action.
We intend to drive shareholder value by deploying capital to acquire or invest in other businesses that strategically fit into or extend our product offering into new or attractive adjacent markets - the Osteogenics acquisition in 2022 is an example of this strategy in action.
Competition Although our businesses generally operate in highly competitive markets, our competitive position cannot be determined accurately in the aggregate or by segment because none of our competitors offer all of the same product and service lines and serve all of the same markets as we do.
We believe digitalization and connectivity will continue to drive high growth in this area. 6 Competition Although our businesses generally operate in highly competitive markets, our competitive position cannot be determined accurately in the aggregate or by segment because none of our competitors offer all of the same product and service lines and serve all of the same markets as we do.
We evaluate and manage risks relating to our human capital strategy as part of our enterprise risk management program. 9 Core Values We endeavor to embody our values in everything we do and in our various programs and initiatives: • C ustomer Centricity • I nnovation • R espect • C ontinuous Improvement • L eadership Compensation and Benefits Program Our compensation programs and practices are designed to attract employees, motivate and reward performance, drive growth and support retention.
Core Values We endeavor to embody our CIRCLe values in everything we do and in our various programs and initiatives: • C ustomer Centricity • I nnovation • R espect • C ontinuous Improvement • L eadership Compensation and Benefits Program Our compensation programs and practices are designed to attract employees, motivate and reward performance, drive growth and support retention.
In 2023, 66% of segment sales were derived from North America, 13% from Western Europe, 4% from other developed markets, and 17% from emerging markets. We distribute our Equipment & Consumables segment products primarily through our channel partners, representing approximately 88% of sales in this segment in 2023.
In 2024, our Equipment & Consumables segment generated $0.9 billion of sales. In 2024, 69% of segment sales were derived from North America, 12% from Western Europe, 4% from other developed markets, and 15% from emerging markets. We distribute our Equipment & Consumables segment products primarily through our channel partners, representing approximately 88% of sales in this segment in 2024.
For a discussion of the environmental laws and regulations that our operations, products and services are subject to and other environmental contingencies, please refer to Note 15 to our Consolidated Financial Statements included in this Annual Report.
In addition, certain of our products are regulated by the U.S. Environmental Protection Agency and comparable state regulatory agencies. For a discussion of the environmental laws and regulations that our operations, products and services are subject to and other environmental contingencies, please refer to Note 15 to our Consolidated Financial Statements included in this Annual Report.
In 2023, we generated total sales of $2.6 billion, of which approximately 85% were derived from sales of consumables, services and spare parts.
In 2024, we generated total sales of $2.5 billion, of which approximately 85% were derived from sales of consumable products, services, and spare parts.
Our executive officer team has extensive dental and healthcare industry experience and a proven track record of applying EBS to execute on our strategic and operational goals. Under their leadership, we have undertaken a significant transformation to better position our business for organic and inorganic growth and diversify our sales globally.
Our executive officer team has extensive global dental and healthcare industry experience and a proven track record of applying core principles of EBS as a continuous improvement approach to execute on our strategic and operational goals. Under their leadership, we have undertaken several key initiatives to better position our business for organic and inorganic growth.
Our Board of Directors reviews human capital matters at each quarterly meeting, including periodic updates on succession planning, leadership development, talent acquisition and retention, diversity and inclusion, employee engagement, total rewards, and culture of the Company, among other topics. The Compensation Committee of the Board of Directors oversees our executive and equity compensation programs.
Our Board of Directors is actively engaged in overseeing our people and culture strategy and reviews human capital matters at each quarterly meeting, including periodic updates on succession planning, leadership development, talent acquisition and retention, diversity and inclusiveness, employee engagement, total rewards, and culture of the Company, among other topics.
We also maintain educational and consulting relationships with dental associations around the world. Research and Development Innovation is a core part of our strategy and our R&D expenditure has been approximately $294 million since 2021.
We also maintain educational and consulting relationships with dental associations around the world. Research and Development Innovation is a core part of our strategy.
The type of marketing authorization is generally linked to the classification of the device. The FDA classifies medical devices into one of three classes (Class I, II or III) based on the degree of risk the FDA determines to be associated with a device and the level of regulatory control deemed necessary to ensure the device’s safety and effectiveness.
The FDA classifies medical devices into one of three classes (Class I, II or III) based on the degree of risk the FDA determines to be associated with a device and the level of regulatory control deemed necessary to ensure the device’s safety and effectiveness. Our products are either classified as Class I or Class II devices in the U.S.
We also offer a comprehensive education system to fully train our clinical customers from basic to the most advanced movements, with the goal of enhancing patient access to high-quality dental care. Customers of our Orthodontic Solutions are primarily orthodontists.
We also offer a comprehensive education system to fully train our clinical customers on the use of our products to address the full range of treatments from basic to the most advanced, with the goal of enhancing patient access to high-quality dental care.
In 2023, 43% of segment sales were derived from North America, 27% from Western Europe, 6% from other developed markets, and 24% from emerging markets. Sales of consumables, services and spare parts comprised 94% of segment sales in 2023.
In 2024, 42% of segment sales were derived from North America, 27% from Western Europe, 5% from other developed markets, and 26% from emerging markets. Sales of consumable products, services and spare parts comprised 94% of segment sales in 2024.
Our clear aligner system, Spark, is designed for mild to complex malocclusion and is made with TruGEN™ and TruGEN XR™, the latest generation of aligner material. It is designed to deliver higher sustained force retention for efficiency and a high level of transparency for aesthetics. Spark aligners are also designed with polished, scalloped edges to enhance patient comfort.
Customers of our Orthodontic Solutions business are primarily orthodontists. 3 Our clear aligner system, Spark, is designed for mild to complex malocclusion and is made with TruGEN™ and TruGEN XR™, the latest generation of aligner materials. It is designed to deliver higher sustained force retention for efficiency and a high level of transparency for aesthetics.
We regularly review our compensation structure to ensure that we remain competitive, reward top performance, as well as to ensure internal equity. We partner with independent third-party experts to conduct annual pay assessments. Our most recent pay equity review demonstrated that we had maintained 99% gender pay equity in the U.S. and 99% race/ethnicity pay equity in the U.S.
We regularly review our compensation structure to ensure that we remain competitive, reward top performance, as well as to ensure internal equity. We partner with independent third-party experts to conduct annual pay assessments.
For a discussion of the risks related to the need to develop and commercialize new products and product enhancements, please refer to “Item 1A. Risk Factors—Risks Related to Our Business.” Customer-sponsored R&D was not significant in 2023, 2022 or 2021. Intellectual Property We own numerous patents, trademarks, copyrights, trade secrets and licenses to intellectual property owned by others.
Risk Factors—Risks Related to Our Business.” Customer-sponsored R&D was not significant in 2024, 2023, or 2022. Intellectual Property We own numerous patents, trademarks, copyrights, trade secrets and licenses to intellectual property owned by others.
The U.S. and the Greater China region represent key growth drivers for this industry. In the U.S., implant penetration far lags other developed markets such as Germany, Spain and Italy. In China, the prevalence of severe tooth loss is higher than in the U.S., while implant penetration is far below the U.S.
Key Solutions Within the Dental Products Industry ◦ Implant-Based Tooth Replacements : The implant industry is large and enjoys higher margins and growth than the overall dental products market. The U.S. and the Greater China region represent key growth drivers for this industry. In the U.S., implant penetration far lags other developed markets such as Germany, Spain and Italy.
In addition, the Secretary of HHS is required to perform periodic audits to ensure covered entities (and their business associates, as that term is defined under HIPAA) comply with the applicable HIPAA requirements, increasing the likelihood that a HIPAA violation will result in an enforcement action. 14 In addition to the federal HIPAA regulations, most states also have laws that protect the confidentiality and security of sensitive personal information, and a minority of states explicitly include health information within the scope of the law.
In addition, the Secretary of HHS is required to perform periodic audits to ensure covered entities (and their business associates, as that term is defined under HIPAA) comply with the applicable HIPAA requirements, increasing the likelihood that a HIPAA violation will result in an enforcement action.
We expect generally improving economic trends and increased consumer disposable income in emerging markets, as well as advancements in technological innovation that reduces complexity and cost and increases efficiency, will help drive penetration of dental care in these under-served markets. 6 Key Solutions Within the Dental Products Industry ◦ Implant-Based Tooth Replacements : The implant industry is significant and enjoys higher margins and growth than the overall dental products market.
We expect generally improving economic trends and increased consumer disposable income in emerging markets, as well as advancements in technological innovation that reduces complexity and cost and increases efficiency, will help drive penetration of dental care in these under-served markets.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeRisk Factors Summary The following is a summary of the principal risks that could adversely affect our business, operations and financial results: • Conditions in the global economy, especially with respect to the particular markets we serve and the volatility of the financial markets may adversely affect our business and financial statements. • International economic, political, legal compliance and business factors could negatively affect our financial statements. • Significant developments or uncertainties stemming from trade policies could adversely affect our business. • Our growth could suffer if the markets into which we sell our products and services decline. • Our financial results are subject to fluctuations in the cost and availability of commodities. • If we cannot adjust our manufacturing capacity or the purchases required for our manufacturing activities to reflect changes in market conditions and customer demand, our profitability may suffer. • If we suffer loss to our facilities, supply chains, distribution systems or information technology systems due to catastrophe or other events, our operations could be seriously harmed. • The manufacture of many of our products is a highly exacting and complex process. • A significant disruption in, or breach in security of, our information technology systems or data or violation of data privacy laws could adversely affect our business, reputation and financial statements. • Data privacy and security laws relating to the handling of personal information (including personal health information) are evolving across the world and may be drafted, interpreted or applied in a manner that results in increased costs, legal claims, fines against us, reputational damage or impedes delivery. • Our growth depends in part on the timely development and commercialization, and customer acceptance, of new and enhanced products and services based on technological innovation. • Our ability to attract, develop and retain our key personnel is critical to our success • Any inability to consummate acquisitions at our historical rate and at appropriate prices, and to make appropriate investments that support our long-term strategy, could negatively impact our growth rate and stock price. • Our acquisition of businesses, investments, joint ventures and other strategic relationships could negatively impact our financial statements. • The indemnification provisions of acquisition agreements by which we have acquired companies may not fully protect us and as a result we may face unexpected liabilities. • Divestitures or other dispositions could negatively impact our business, and contingent liabilities from businesses that we or our predecessors have sold could adversely affect our financial statements. • Inventories maintained by our distributors and customers may fluctuate from time to time. • We are dependent upon a limited number of distributors for a significant portion of our sales. • If we do not or cannot adequately protect our intellectual property, or if third parties infringe our intellectual property rights, we may suffer competitive injury or expend significant resources enforcing our rights. • Third parties may claim that we are infringing or misappropriating their intellectual property rights and we could suffer significant litigation expenses, losses or licensing expenses or be prevented from selling products or services. • Defects and unanticipated use or inadequate disclosure with respect to our products or services (including software), or allegations thereof, could adversely affect our business, reputation and financial statements. • Our restructuring and site consolidation actions could have long-term adverse effects on our business. • Climate related risks and regulations may have an impact on our business. • We have outstanding indebtedness of approximately $1.5 billion as of February 9, 2024, and in the future we may incur additional indebtedness. • We may not be able to generate sufficient cash to service all of our indebtedness. 17 • We may be unable to raise the funds necessary to repurchase the convertible notes for cash following a fundamental change, or to pay any cash amounts due upon conversion. • The conditional conversion feature of the convertible notes, if triggered, may adversely affect our financial condition and operating results. • The capped call transactions may affect the value of the convertible notes and our common stock. • We are subject to counterparty risk with respect to the capped calls transactions. • Our variable rate indebtedness exposes us to interest rate volatility. • The industries that we serve have undergone, and are in the process of undergoing, significant changes in an effort to reduce costs. • We face intense competition. • Changes in governmental regulations may reduce demand for our products or services or increase our expenses. • Certain of our businesses are subject to extensive regulation by the FDA and comparable agencies of other countries. • Off-label marketing or misleading advertising of our products could result in substantial penalties. • Certain modifications to our products may require new 510(k) clearances or other marketing authorizations and may require us to recall or cease marketing our products. • Our operations, products and services expose us to the risk of environmental, health and safety liabilities. • Our businesses are subject to extensive regulation. • The price of our common stock may continue to be volatile. • Certain provisions in our governing documents and of Delaware law may prevent or delay an acquisition of us, which could decrease the trading price of our common stock. • Our governing documents contain exclusive forum provisions for certain types of actions and proceedings. • Conversion of the convertible notes may dilute the ownership interest of our stockholders. • The issuance or sale of shares of our common stock, or rights to acquire shares of our common stock, could depress the trading price of our common stock and the convertible notes. • We have recognized substantial impairment charges for our goodwill and indefinite-lived intangible assets and may be required to recognize additional impairment charges for our goodwill and other intangible assets in the future. • Foreign currency exchange rates may adversely affect our financial statements. • Changes in tax law relating to multinational corporations could adversely affect our tax position. • We are subject to a variety of litigation and other legal and regulatory proceedings in the course of our business. • Work stoppages, union and works council campaigns and other labor disputes could adversely impact our productivity and results of operations.
Biggest changeRisk Factors Summary The following is a summary of the principal risks that could adversely affect our business, operations and financial results: • Conditions in the global economy, especially with respect to the particular markets we serve and the volatility of the financial markets may adversely affect our business and financial statements. • International economic, political, legal compliance and business factors could negatively affect our financial statements. • Significant developments or uncertainties stemming from trade policies could adversely affect our business. • Our growth could suffer if the markets into which we sell our products and services decline. • Our financial results are subject to fluctuations in the cost and availability of commodities. • If we cannot adjust our manufacturing capacity or the purchases required for our manufacturing activities to reflect changes in market conditions and customer demand, our profitability may suffer, and our reliance upon sole or limited resources of supply for certain materials, components and services could cause production interruptions, delays and inefficiencies. • If we suffer loss to our facilities, supply chains, distribution systems or information technology systems due to a cybersecurity incident, catastrophe or other events, our operations could be seriously harmed. • The manufacture of many of our products is a highly exacting and complex process. • A significant disruption in, or breach in security of, our information technology systems or data or violation of data privacy laws could adversely affect our business, operations, reputation and financial statements. • We currently outsource certain elements of our information technology systems to third-party services providers and their failure to adequately perform their services or attacks to their information systems could have a material adverse impact on our business operations and make our systems vulnerable to attacks. • Data privacy and security laws relating to the handling of personal information (including personal health information) are evolving across the world and may be drafted, interpreted or applied in a manner that results in increased costs, legal claims, fines against us, reputational damage or impedes delivery. • Our growing use of AI systems to automate processes and analyze data poses inherent risks. • Our growth depends in part on the timely development, commercialization, and customer acceptance of new and enhanced products and services based on technological innovation. • Our ability to manage executive leadership transitions and to attract, develop and retain our key personnel is critical to our success. • Any inability to consummate acquisitions at our historical rate and at appropriate prices, and to make appropriate investments that support our long-term strategy, could negatively impact our growth rate and stock price. • Our acquisition of businesses, investments, joint ventures and other strategic relationships could negatively impact our financial statements. • The indemnification provisions of acquisition agreements by which we have acquired companies may not fully protect us and as a result we may face unexpected liabilities. • Divestitures or other dispositions could negatively impact our business, and contingent liabilities from businesses that we or our predecessors have sold could adversely affect our financial statements. • Inventories maintained by our distributors and customers may fluctuate from time to time. • We are dependent upon a limited number of distributors for a significant portion of our sales. • If we do not or cannot adequately protect our intellectual property, or if third parties infringe our intellectual property rights, we may suffer competitive injury or expend significant resources enforcing our rights. • Third parties may claim that we are infringing or misappropriating their intellectual property rights and we could suffer significant litigation expenses, losses or licensing expenses or be prevented from selling products or services. 17 • Defects and unanticipated use or inadequate disclosure with respect to our products or services (including software), or allegations thereof, could adversely affect our business, reputation and financial statements. • Our restructuring and site consolidation actions could have long-term adverse effects on our business. • Climate related risks and regulations may have an impact on our business. • We have outstanding indebtedness of approximately $1.4 billion as of February 7, 2025, and in the future, we may incur additional indebtedness. • We may not be able to generate sufficient cash to service all of our indebtedness. • We may be unable to raise the funds necessary to repurchase the convertible notes for cash following a fundamental change, or to pay any cash amounts due upon conversion. • The conditional conversion feature of the convertible notes, if triggered, may adversely affect our financial condition and operating results. • The capped call transactions may affect the value of the convertible notes and our common stock. • We are subject to counterparty risk with respect to the capped calls transactions. • Our variable rate indebtedness exposes us to interest rate volatility. • The industries that we serve have undergone, and are in the process of undergoing, significant changes in an effort to reduce costs. • We face intense competition. • Changes in governmental regulations may reduce demand for our products or services or increase our expenses. • Certain of our businesses are subject to extensive regulation by the FDA and comparable agencies of other countries. • Off-label marketing or misleading advertising of our products could result in substantial penalties. • Certain modifications to our products may require new 510(k) clearances or other marketing authorizations and may require us to recall or cease marketing our products. • Our operations, products and services expose us to the risk of environmental, health and safety liabilities. • Our businesses are subject to extensive regulation. • The price of our common stock may continue to be volatile. • Certain provisions in our governing documents and of Delaware law may prevent or delay an acquisition of us, which could decrease the trading price of our common stock. • Our governing documents contain exclusive forum provisions for certain types of actions and proceedings. • Conversion of the convertible notes may dilute the ownership interest of our stockholders. • The issuance or sale of shares of our common stock, or rights to acquire shares of our common stock, could depress the trading price of our common stock and the convertible notes. • We have recognized substantial impairment charges for our goodwill and indefinite-lived intangible assets and may be required to recognize additional impairment charges for assets in the future. • Changes in accounting standards and subjective assumptions, estimates and judgements by management related to complex accounting matters could significantly affect our financial results or financial condition. • Foreign currency exchange rates may adversely affect our financial statements. • Changes in tax law relating to multinational corporations could adversely affect our tax position. • We are subject to a variety of litigation and other legal and regulatory proceedings in the course of our business. • Work stoppages, union and works council campaigns and other labor disputes could adversely impact our productivity and results of operations. 18 Risks Related to Our Business Conditions in the global economy, especially with respect to the particular markets we serve and the volatility of the financial markets may adversely affect our business and financial statements.
Our international business (and particularly our business in emerging markets) is subject to risks that are customarily encountered in non-U.S. operations, including: ◦ interruption in the transportation of materials to us and finished goods to our customers; ◦ differences in terms of sale, including payment terms; ◦ local product preferences and product requirements; ◦ changes in a country’s or region’s political or economic conditions, such as the devaluation of particular currencies; ◦ trade protection measures, sanctions, increased trade barriers, imposition of significant tariffs on imports or exports, embargoes and import or export restrictions and requirements; ◦ regulatory requirements, including, without limitation, anti-bribery, anti-corruption and laws pertaining to the accuracy of our internal books and records; ◦ unexpected changes in laws or regulatory requirements, including changes in tax laws; ◦ capital controls and limitations on ownership and on repatriation of earnings and cash; ◦ the potential for nationalization of enterprises; ◦ changes in medical reimbursement policies and programs; ◦ limitations on legal rights and our ability to enforce such rights; ◦ difficulty in staffing and managing widespread operations; ◦ differing labor regulations; ◦ difficulties in implementing restructuring actions on a timely or comprehensive basis; ◦ differing protection of intellectual property; ◦ greater uncertainty, risk, expense and delay in commercializing products in certain foreign jurisdictions, including with respect to product and other regulatory approvals; and ◦ other factors beyond our control, such as terrorism, war, natural disasters and pandemics.
Our international business (and particularly our business in emerging markets) is subject to risks that are customarily encountered in non-U.S. operations, including: ◦ interruption in the transportation of materials to us and finished goods to our customers; ◦ differences in terms of sale, including payment terms; ◦ local product preferences and product requirements; ◦ changes in a country’s or region’s political or economic conditions, such as the devaluation of particular currencies; ◦ trade protection measures, sanctions, increased trade barriers, imposition of significant tariffs on imports or exports, embargoes and import or export restrictions and requirements; 19 ◦ regulatory requirements, including, without limitation, anti-bribery, anti-corruption and laws pertaining to the accuracy of our internal books and records; ◦ unexpected changes in laws or regulatory requirements, including changes in tax laws; ◦ capital controls and limitations on ownership and on repatriation of earnings and cash; ◦ the potential for nationalization of enterprises; ◦ changes in medical reimbursement policies and programs; ◦ limitations on legal rights and our ability to enforce such rights; ◦ difficulty in staffing and managing widespread operations; ◦ differing labor regulations; ◦ difficulties in implementing restructuring actions on a timely or comprehensive basis; ◦ differing protection of intellectual property; ◦ greater uncertainty, risk, expense and delay in commercializing products in certain foreign jurisdictions, including with respect to product and other regulatory approvals; and ◦ other factors beyond our control, such as terrorism, war, natural disasters and pandemics.
Acquisitions, investments, joint ventures and strategic relationships involve a number of financial, accounting, managerial, operational, legal, compliance and other risks and challenges, including the following, any of which could adversely affect our business and financial statements: ◦ Any business, technology, service or product that we acquire or invest in could under-perform relative to our expectations and the price that we paid or not perform in accordance with our anticipated timetable, or we could fail to operate any such business profitably. ◦ We may incur or assume significant debt in connection with our acquisitions, investments, joint ventures or strategic relationships, which could also cause a deterioration of our credit ratings, result in increased borrowing costs and interest expense and diminish our future access to the capital markets. ◦ Acquisitions, investments, joint ventures or strategic relationships could cause our financial results to differ from our own or the investment community’s expectations in any given period, or over the long-term. ◦ Pre-closing and post-closing earnings charges could adversely impact operating results in any given period, and the impact may be substantially different from period to period. ◦ Acquisitions, investments, joint ventures or strategic relationships could create demands on our management, operational resources and financial and internal control systems that we are unable to effectively address. ◦ We have in the past and could in the future experience difficulty in integrating personnel, operations and financial and other controls and systems and retaining key employees and customers. ◦ We may be unable to achieve cost savings or other synergies anticipated in connection with an acquisition, investment, joint venture or strategic relationship. ◦ We may assume unknown liabilities, known contingent liabilities that become realized, known liabilities that prove greater than anticipated, internal control deficiencies or exposure to regulatory sanctions resulting from the acquired company’s or investee’s activities and the realization of any of these liabilities or deficiencies may increase our expenses, adversely affect our financial position or cause us to fail to meet our public financial reporting obligations. ◦ In connection with acquisitions and joint ventures, we often enter into post-closing financial arrangements such as purchase price adjustments, earn-out obligations and indemnification obligations, which may have unpredictable financial results. ◦ As a result of our acquisitions and investments, we have recorded significant goodwill and other assets on our balance sheet and if we are not able to realize the value of these assets, or if the fair value of our investments declines, we may be required to incur impairment charges. ◦ We may have interests that diverge from those of our joint venture partners or other strategic partners and we may not be able to direct the management and operations of the joint venture or other strategic relationship in the manner we believe is most appropriate, exposing us to additional risk. 27 ◦ Investing in or making loans to early-stage companies often entails a high degree of risk, and we may not achieve the strategic, technological, financial or commercial benefits we anticipate; we may lose our investment or fail to recoup our loan; or our investment may be illiquid for a greater-than-expected period of time.
Acquisitions, investments, joint ventures and strategic relationships involve a number of financial, accounting, managerial, operational, legal, compliance and other risks and challenges, including the following, any of which could adversely affect our business and financial statements: ◦ Any business, technology, service or product that we acquire or invest in could under-perform relative to our expectations and the price that we paid or not perform in accordance with our anticipated timetable, or we could fail to operate any such business profitably. ◦ We may incur or assume significant debt in connection with our acquisitions, investments, joint ventures or strategic relationships, which could also cause a deterioration of our credit ratings, result in increased borrowing costs and interest expense and diminish our future access to the capital markets. ◦ Acquisitions, investments, joint ventures or strategic relationships could cause our financial results to differ from our own or the investment community’s expectations in any given period, or over the long-term. ◦ Pre-closing and post-closing earnings charges could adversely impact operating results in any given period, and the impact may be substantially different from period to period. ◦ Acquisitions, investments, joint ventures or strategic relationships could create demands on our management, operational resources and financial and internal control systems that we are unable to effectively address. ◦ We have in the past and could in the future experience difficulty in integrating personnel, operations and financial and other controls and systems and retaining key employees and customers. ◦ We may be unable to achieve cost savings or other synergies anticipated in connection with an acquisition, investment, joint venture or strategic relationship. 28 ◦ We may assume unknown liabilities, known contingent liabilities that become realized, known liabilities that prove greater than anticipated, internal control deficiencies or exposure to regulatory sanctions resulting from the acquired company’s or investee’s activities and the realization of any of these liabilities or deficiencies may increase our expenses, adversely affect our financial position or cause us to fail to meet our public financial reporting obligations. ◦ In connection with acquisitions and joint ventures, we often enter into post-closing financial arrangements such as purchase price adjustments, earn-out obligations and indemnification obligations, which may have unpredictable financial results. ◦ As a result of our acquisitions and investments, we have recorded significant goodwill and other assets on our balance sheet and if we are not able to realize the value of these assets, or if the fair value of our investments declines, we may be required to incur impairment charges. ◦ We may have interests that diverge from those of our joint venture partners or other strategic partners and we may not be able to direct the management and operations of the joint venture or other strategic relationship in the manner we believe is most appropriate, exposing us to additional risk. ◦ Investing in or making loans to early-stage companies often entails a high degree of risk, and we may not achieve the strategic, technological, financial or commercial benefits we anticipate; we may lose our investment or fail to recoup our loan; or our investment may be illiquid for a greater-than-expected period of time.
The above factors can have the effect of: ◦ reducing demand for our products and services (in this Annual Report, references to products and services also includes software), limiting the financing available to our customers and suppliers, increasing order cancellations and resulting in longer sales cycles and slower adoption of new technologies; ◦ increasing the difficulty in collecting accounts receivable and the risk of excess and obsolete inventories; ◦ increasing price competition in our served markets; 18 ◦ supply interruptions, which could disrupt our ability to produce our products; ◦ increasing the risk of impairment of goodwill and other long-lived assets, and the risk that we may not be able to fully recover the value of other assets such as real estate and tax assets; ◦ increasing the risk that counterparties to our contractual arrangements will change their terms of sale, become insolvent or otherwise unable to fulfill their contractual obligations which, in addition to increasing the risks identified above, could result in preference actions against us; and ◦ adversely impacting market sizes.
The above factors can have the effect of: ◦ reducing demand for our products and services (in this Annual Report, references to products and services also includes software), limiting the financing available to our customers and suppliers, increasing order cancellations and resulting in longer sales cycles and slower adoption of new technologies; ◦ increasing the difficulty in collecting accounts receivable and the risk of excess and obsolete inventories; ◦ increasing price competition in our served markets; ◦ supply interruptions, which could disrupt our ability to produce our products; ◦ increasing the risk of impairment of goodwill and other long-lived assets, and the risk that we may not be able to fully recover the value of other assets such as real estate and tax assets; ◦ increasing the risk that counterparties to our contractual arrangements will change their terms of sale, become insolvent or otherwise unable to fulfill their contractual obligations which, in addition to increasing the risks identified above, could result in preference actions against us; and ◦ adversely impacting market sizes.
Our second amended and restated certificate of incorporation provides that unless our board of directors otherwise determines, the state courts in the State of Delaware or, if no state court located within the State of Delaware has jurisdiction, the federal court for the District of Delaware, will be the sole and exclusive forum for any derivative action or proceeding brought on behalf of us, any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers, employees or stockholders to us or our stockholders, any action asserting a claim arising pursuant to any provision of the DGCL or our second amended and restated certificate of incorporation or third amended and restated bylaws, or any action asserting a claim governed by the internal affairs doctrine.
Our second amended and restated certificate of incorporation, as amended, provides that unless our board of directors otherwise determines, the state courts in the State of Delaware or, if no state court located within the State of Delaware has jurisdiction, the federal court for the District of Delaware, will be the sole and exclusive forum for any derivative action or proceeding brought on behalf of us, any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers, employees or stockholders to us or our stockholders, any action asserting a claim arising pursuant to any provision of the DGCL or our second amended and restated certificate of incorporation, as amended, or third amended and restated bylaws, or any action asserting a claim governed by the internal affairs doctrine.
In addition to the environmental, health, safety, health care, medical device, anticorruption, data privacy and other regulations noted elsewhere in this Annual Report, our businesses are subject to extensive regulation by U.S. and non-U.S. governmental and self-regulatory entities at the supranational, federal, state, local and other jurisdictional levels, including laws governing payments to government officials, bribery, fraud, kickbacks and false claims, pricing, sales and marketing practices, conflicts of interest, competition, employment practices and workplace behavior, export and import compliance, economic and trade sanctions, money laundering and data privacy. 37 We cannot provide assurance that our internal controls and compliance systems will always protect us from acts committed by our employees, agents or business partners (or of businesses we acquire or partner with) that would violate U.S. and/or non-U.S. laws, In particular, the U.S.
In addition to the environmental, health, safety, health care, medical device, anticorruption, data privacy and other regulations noted elsewhere in this Annual Report, our businesses are subject to extensive regulation by U.S. and non-U.S. governmental and self-regulatory entities at the supranational, federal, state, local and other jurisdictional levels, including laws governing payments to government officials, bribery, fraud, kickbacks and false claims, pricing, sales and marketing practices, conflicts of interest, competition, employment practices and workplace behavior, export and import compliance, economic and trade sanctions, money laundering and data privacy. 39 We cannot provide assurance that our internal controls and compliance systems will always protect us from acts committed by our employees, agents or business partners (or of businesses we acquire or partner with) that would violate U.S. and/or non-U.S. laws - In particular, the U.S.
Sustained geopolitical tensions could lead to long-term changes in global trade and supply chains, and decoupling of global trade networks, which could have a material adverse effect on our business and growth prospects. 20 Our growth could suffer if the markets into which we sell our products and services decline, do not grow as anticipated or experience cyclicality.
Sustained geopolitical tensions could lead to long-term changes in global trade and supply chains, and decoupling of global trade networks, which could have a material adverse effect on our business and growth prospects. Our growth could suffer if the markets into which we sell our products and services decline, do not grow as anticipated or experience cyclicality.
Sustained inflation, rising interest rates, slower global economic growth, threatened or actual recessions, continuing supply chain disruptions, geopolitical tensions, actual or anticipated default on sovereign debt, volatility in the currency and credit markets, consumer confidence, high levels of unemployment or underemployment (and a corresponding increase in the uninsured and underinsured population), reduced levels of capital expenditures, changes or anticipation of potential changes in government trade, fiscal, tax and monetary policies, changes in capital requirements for financial institutions, government deficit reduction and budget negotiation dynamics, sequestration, austerity measures, social or political unrest, the impact of the COVID-19 pandemic and other challenges that affect the global economy have previously and may continue to adversely affect us and our distributors, customers and suppliers.
Sustained inflation, increases in interest rates, slower global economic growth, threatened or actual recessions, continuing supply chain disruptions, geopolitical tensions, actual or anticipated default on sovereign debt, volatility in the currency and credit markets, consumer confidence, high levels of unemployment or underemployment (and a corresponding increase in the uninsured and underinsured population), reduced levels of capital expenditures, changes or anticipation of potential changes in government trade, fiscal, tax and monetary policies, changes in capital requirements for financial institutions, government deficit reduction and budget negotiation dynamics, sequestration, austerity measures, social or political unrest, the impact of the COVID-19 pandemic and other challenges that affect the global economy have previously and may continue to adversely affect us and our distributors, customers and suppliers.
Even if we successfully defend against claims of infringement or misappropriation, we may incur significant costs and diversion of management attention and resources, which could adversely affect our business and financial statements. 29 Defects and unanticipated use or inadequate disclosure with respect to our products or services (including software), or allegations thereof, could adversely affect our business, reputation and financial statements.
Even if we successfully defend against claims of infringement or misappropriation, we may incur significant costs and diversion of management attention and resources, which could adversely affect our business and financial statements. Defects and unanticipated use or inadequate disclosure with respect to our products or services (including software), or allegations thereof, could adversely affect our business, reputation and financial statements.
If Henry Schein or any other key distributor or channel partner significantly reduces the volume of products purchased from us, it would have an adverse effect on our consolidated financial statements. 28 Our key distributors and other channel partners typically have valuable relationships with customers and end-users.
If Henry Schein or any other key distributor or channel partner significantly reduces the volume of products purchased from us, it would have an adverse effect on our consolidated financial statements. Our key distributors and other channel partners typically have valuable relationships with customers and end-users.
Our second amended and restated certificate of incorporation and third amended and restated bylaws contain, and Delaware law contains, provisions that are intended to deter coercive takeover practices and inadequate takeover bids and to encourage prospective acquirers to negotiate with our board of directors rather than to attempt an unsolicited takeover not approved by our board of directors.
Our second amended and restated certificate of incorporation, as amended, and third amended and restated bylaws contain, and Delaware law contains, provisions that are intended to deter coercive takeover practices and inadequate takeover bids and to encourage prospective acquirers to negotiate with our board of directors rather than to attempt an unsolicited takeover not approved by our board of directors.
Any such improper actions or allegations of such acts could damage our reputation and subject us to civil or criminal investigations in the U.S. and in other jurisdictions and related stockholder lawsuits, could lead to substantial civil and criminal, monetary and non-monetary penalties and could cause us to incur significant legal and investigatory fees.
Any such improper acts or allegations of such acts could damage our reputation and subject us to civil or criminal investigations in the U.S. and in other jurisdictions and related stockholder lawsuits, could lead to substantial civil and criminal, monetary and non-monetary penalties and could cause us to incur significant legal and investigatory fees.
The industries that we serve have undergone, and are in the process of undergoing, significant changes in an effort to reduce costs, including the following: ◦ Governmental and private health care providers and payors around the world are increasingly utilizing managed care for the delivery of health care services, centralizing purchasing, limiting the number of vendors that may participate in purchasing programs, forming group purchasing organizations and integrated health delivery networks and pursuing consolidation to improve their purchasing leverage and using competitive bid processes to procure health care products and services. 33 ◦ Certain of our customers, and the end-users to whom our customers supply products, rely on government funding of and reimbursement for health care products and services and research activities.
The industries that we serve have undergone, and are in the process of undergoing, significant changes in an effort to reduce costs, including the following: ◦ Governmental and private health care providers and payors around the world are increasingly utilizing managed care for the delivery of health care services, centralizing purchasing, limiting the number of vendors that may participate in purchasing programs, forming group purchasing organizations and integrated health delivery networks and pursuing consolidation to improve their purchasing leverage and using competitive bid processes to procure health care products and services. 35 ◦ Certain of our customers, and the end-users to whom our customers supply products, rely on government funding of and reimbursement for health care products and services and research activities.
Data localization laws have also been passed or are under consideration in several countries (such as China and Russia), which require personal information relating to their citizens to be maintained on local servers and impose additional data transfer restrictions.
Data residency and localization laws have also been passed or are under consideration in several countries (such as China and Russia), which require personal information relating to their citizens to be maintained on local servers and impose additional data transfer restrictions.
For a discussion of risks pertaining to the dental amalgam sold by us, see “Item 1. Business—Regulatory Matters—Medical Device Regulations.” Our restructuring and site consolidation actions could have long-term adverse effects on our business.
For a discussion of risks pertaining to the dental amalgam sold by us, see “Item 1. Business—Regulatory Matters—Medical Device Regulations.” 31 Our restructuring and site consolidation actions could have long-term adverse effects on our business.
Certain provisions in our second amended and restated certificate of incorporation, our third amended and restated bylaws, the Indentures governing the Notes, and of Delaware law, may prevent or delay an acquisition of us, which could decrease the trading price of our common stock.
Certain provisions in our second amended and restated certificate of incorporation, as amended, our third amended and restated bylaws, the Indentures governing the Notes, and of Delaware law, may prevent or delay an acquisition of us, which could decrease the trading price of our common stock.
Stock markets in general have experienced volatility recently that has often been unrelated to the operating performance of a particular company. These broad market fluctuations may adversely affect the trading price of our common stock.
Stock markets in general have experienced volatility that has often been unrelated to the operating performance of a particular company. These broad market fluctuations may adversely affect the trading price of our common stock.
The supply chains for our businesses could also be disrupted by supplier capacity constraints, bankruptcy or exiting of the business for other reasons, decreased availability of key raw materials or commodities and external events such as natural disasters, pandemic health issues and restrictions, war, terrorist actions, cyberattacks, widespread protests and civil unrest, governmental actions and legislative or regulatory changes.
The supply chains for our businesses could also be disrupted by supplier capacity constraints, bankruptcy or exiting of the business for other reasons, work stoppages, decreased availability of key raw materials or commodities and external events such as natural disasters, pandemic health issues and restrictions, war, terrorist actions, cyberattacks, widespread protests and civil unrest, governmental actions and legislative or regulatory changes.
A significant disruption in, or breach in security of, our information technology systems or data or violation of data privacy laws could adversely affect our business, reputation and financial statements.
A significant disruption in, or breach in security of, our information technology systems or data or violation of data privacy laws could adversely affect our business, operations, reputation and financial statements.
While we believe we have substantially compliant programs and controls in place satisfying the above laws and requirements, such compliance imposes additional costs on us and the requirements are sometimes unclear. 35 To varying degrees, these regulators require us to comply with laws and regulations governing the development, testing, manufacturing, labeling, marketing, distribution and post-marketing surveillance of our products.
While we believe we have substantially compliant programs and controls in place satisfying the above laws and requirements, such compliance imposes additional costs on us and the requirements are sometimes unclear. 37 To varying degrees, these regulators require us to comply with laws and regulations governing the development, testing, manufacturing, labeling, marketing, distribution and post-marketing surveillance of our products.
Certain of our U.S. and non-U.S. employees are subject to collective labor arrangements. We are subject to potential work stoppages, union and works council campaigns and other labor disputes, any of which could adversely impact our financial statements and business, including our productivity and reputation. 42 ITEM 1B. UNRESOLVED STAFF COMMENTS Not applicable.
Certain of our U.S. and non-U.S. employees are subject to collective labor arrangements. We are subject to potential work stoppages, union and works council campaigns and other labor disputes, any of which could adversely impact our financial statements and business, including our productivity and reputation. 44 ITEM 1B. UNRESOLVED STAFF COMMENTS Not applicable.
If these competitors’ products capture significant market share or decrease market prices overall, this could have an adverse effect on our financial statements. 34 Risks Related to Laws and Regulations Changes in governmental regulations may reduce demand for our products or services or increase our expenses.
If these competitors’ products capture significant market share or decrease market prices overall, this could have an adverse effect on our financial statements. 36 Risks Related to Laws and Regulations Changes in governmental regulations may reduce demand for our products or services or increase our expenses.
Although these export controls and sanctions did not have a material impact on our financial position or results of operations as of and for the year ended December 31, 2023, the outcome and future impacts of the conflict and governmental responses thereto remain highly uncertain.
Although these export controls and sanctions did not have a material impact on our financial position or results of operations as of and for the year ended December 31, 2024, the outcome and future impacts of the conflict and governmental responses thereto remain highly uncertain.
Any of these events could significantly harm our business and results of operations and cause our stock price to decline. 36 Certain modifications to our products may require new 510(k) clearances or other marketing authorizations and may require us to recall or cease marketing our products.
Any of these events could significantly harm our business and results of operations and cause our stock price to decline. 38 Certain modifications to our products may require new 510(k) clearances or other marketing authorizations and may require us to recall or cease marketing our products.
Any or all of these problems could result in the loss of customers, provide an opportunity for competing products to gain market acceptance and otherwise adversely affect our financial statements. If we suffer loss to our facilities, supply chains, distribution systems or information technology systems due to catastrophe or other events, our operations could be seriously harmed.
Any or all of these problems could result in the loss of customers, provide an opportunity for competing products to gain market acceptance and otherwise adversely affect our financial statements. If we suffer loss to our facilities, supply chains, distribution systems or information technology systems due to a cybersecurity incident, catastrophe or other events, our operations could be seriously harmed.
Compliance with the varying data privacy regulations across the U.S. and around the world have required significant expenditures and may require additional expenditures and changes in our products or business models that increase complexity and competition.
Compliance with the varying data privacy regulations across the U.S. and around the world is complex and have required significant expenditures and may require additional expenditures and changes in our products or business models that increase complexity and competition.
Any of these risks could negatively affect our financial statements, business, growth rate, competitive position, results of operations and financial condition. 19 For example, we generate approximately 10% of our annual sales from Greater China. Accordingly, our business, financial condition and results of operations may be adversely influenced by evolving political, economic and social conditions in China generally.
Any of these risks could negatively affect our financial statements, business, growth rate, competitive position, results of operations and financial condition. For example, we generate approximately 9% of our annual sales from Greater China. Accordingly, our business, financial condition and results of operations may be adversely influenced by evolving political, economic and social conditions in China generally.
Any such regulatory changes could have a significant effect on our operating and financial decisions, including those involving capital expenditures to reduce emissions and comply with other regulatory requirements. Risks Related to Our Indebtedness We have outstanding indebtedness of approximately $1.5 billion, and in the future we may incur additional indebtedness.
Any such regulatory changes could have a significant effect on our operating and financial decisions, including those involving capital expenditures to reduce emissions and comply with other regulatory requirements. 32 Risks Related to Our Indebtedness We have outstanding indebtedness of approximately $1.4 billion, and in the future, we may incur additional indebtedness.
For example, China has implemented volume-based procurement policies, a series of centralized reforms instituted in China on both a national and regional basis that has resulted in significant price cuts for medical and dental consumables. Global economic uncertainty or deterioration can also adversely impact government funding and reimbursement.
For example, China has implemented volume-based procurement policies, a series of centralized reforms instituted in China on both a national and regional basis that has resulted in significant price cuts for medical and dental consumable products. Global economic uncertainty or deterioration can also adversely impact government funding and reimbursement.
As of December 31, 2023, none of the conditions allowing the Note holders to convert the 2028 Convertible Notes was satisfied. As a result, as of December 31, 2023, the 2028 Convertible Notes are classified as a non-current liability. As of December 31, 2023, one of the conditions allowing the Note holders to convert the 2025 Convertible Notes was satisfied.
As of December 31, 2024, none of the conditions allowing the Note holders to convert the 2028 Convertible Notes was satisfied. As a result, as of December 31, 2024, the 2028 Convertible Notes are classified as a non-current liability. As of December 31, 2024, one of the conditions allowing the Note holders to convert the 2025 Convertible Notes was satisfied.
Historically, a substantial portion of our sales had come from a limited number of distributors, particularly Henry Schein, which accounted for approximately 10% of our sales in 2023 and 11% of our sales in 2022. It is anticipated that Henry Schein will continue to be the largest contributor to our sales for the foreseeable future.
Historically, a substantial portion of our sales had come from a limited number of distributors, particularly Henry Schein, which accounted for approximately 10% of our sales in 2024 and 2023. It is anticipated that Henry Schein will continue to be the largest contributor to our sales for the foreseeable future.
We may also experience less demand for our products if we are unable to engineer these to enable our customers to comply with their obligations under data privacy laws.
We may also experience less demand for our products if we are unable to enable our customers to comply with their obligations under data privacy laws.
As a result, as of December 31, 2023, the 2025 Convertible Notes are classified as a current liability. 32 The existing capped call transactions we entered into in connection with the 2025 Notes may affect the value of the Notes and our common stock.
As a result, as of December 31, 2024, the 2025 Convertible Notes are classified as a current liability. The existing capped call transactions we entered into in connection with the 2025 Notes may affect the value of the Notes and our common stock.
For example, China has implemented volume-based procurement policies, a series of centralized reforms instituted in China on both a national and regional basis that has resulted in significant price cuts for medical and dental consumables.
For example, China has implemented volume-based procurement policies, a series of centralized reforms instituted in China on both a national and regional basis that has resulted in significant price cuts for medical and dental consumable products.
The California Privacy Rights Act, which went into effect on January 1, 2023, significantly amended the CCPA and imposed additional data protection obligations on covered businesses, including additional consumer rights processes, limitations on data uses, new audit requirements for higher risk processing, and opt outs for certain uses of sensitive data.
The CPRA, which went into effect on January 1, 2023, significantly amended the CCPA and imposed additional data protection obligations on covered businesses, including additional consumer rights processes, limitations on data uses, new audit requirements for higher risk processing, and opt outs for certain uses of sensitive data.
International economic, political, legal, compliance and business factors could negatively affect our financial statements. In 2023, 53% of our sales were derived from customers outside the U.S. In addition, many of our manufacturing operations, suppliers and employees are located outside the U.S.
International economic, political, legal, compliance and business factors could negatively affect our financial statements. In 2024, 52% of our sales were derived from customers outside the U.S. In addition, many of our manufacturing operations, suppliers and employees are located outside the U.S.
From our IPO through February 9, 2024, the sales price of our common stock as reported by the NYSE has ranged from a low sales price of $10.08 on March 19, 2020 to a high sales price of $52.03 on March 29, 2022.
From our IPO through February 7, 2025, the sales price of our common stock as reported by the NYSE has ranged from a low sales price of $10.08 on March 19, 2020 to a high sales price of $52.03 on March 29, 2022.
Business —Regulatory Matters.” Ensuring that our internal operations and business arrangements with third parties comply with applicable healthcare laws and regulations will involve substantial costs.
Business —Regulatory Matters.” Ensuring that our internal operations and business arrangements with third parties comply with applicable healthcare laws and regulations involves substantial costs.
Based on the annual revisions for 2023, penalties for HIPAA violations can range from $137 to $2.067 million dollars per violation, with a maximum fine of $2.067 million for identical violations during a calendar year. In 2018, a nation-wide health benefit company paid $16 million to HHS following a data breach.
Based on the annual revisions for 2024, penalties for HIPAA violations can range from $141 to $2.134 million dollars per violation, with a maximum fine of $2.134 million for identical violations during a calendar year. In 2018, a nation-wide health benefit company paid $16 million to HHS following a data breach.
Factors that may cause the market price of our common stock to fluctuate, some of which may be beyond our control, include: ◦ our quarterly or annual earnings, or those of other companies in our industry; ◦ actual or anticipated fluctuations in our operating results; ◦ changes in earnings estimated by securities analysts or our ability to meet those estimates; ◦ the operating and stock price performance of other comparable companies; ◦ changes to the regulatory and legal environment in which we operate; ◦ macroeconomic conditions and the economic impact of the COVID-19 pandemic, inflation and rising interest rates and global conflicts, including the Russia-Ukraine war and the Israel-Hamas war; ◦ unusual events such as significant acquisitions by us and our competitors, divestitures, litigation, regulatory actions and other factors, including factors unrelated to our operating performance; ◦ announcements by us or our competitors of new products or technological innovation; ◦ overall market fluctuations and domestic and worldwide economic conditions; and 38 ◦ other factors described in these “Risk Factors” and elsewhere in this Annual Report.
Factors that may cause the market price of our common stock to fluctuate, some of which may be beyond our control, include: ◦ our quarterly or annual earnings, or those of other companies in our industry; ◦ actual or anticipated fluctuations in our operating results; ◦ changes in earnings estimated by securities analysts or our ability to meet those estimates; ◦ the operating and stock price performance of other comparable companies; ◦ changes to the regulatory and legal environment in which we operate; ◦ macroeconomic conditions, inflation, interest rates, fluctuating foreign currency exchange rates, slow economic growth, continuing supply chain disruptions, and global conflicts, including the Russia-Ukraine war and the Israel-Hamas war; ◦ unusual events such as significant acquisitions by us and our competitors, divestitures, litigation, regulatory actions and other factors, including factors unrelated to our operating performance; ◦ announcements by us or our competitors of new products or technological innovation; 40 ◦ overall market fluctuations and domestic and worldwide economic conditions; and ◦ other factors described in these “Risk Factors” and elsewhere in this Annual Report.
However, these provisions will apply even if the offer may be considered beneficial by some stockholders and could delay or prevent an acquisition that our board of directors determines is in the best interests of us and our stockholders. These provisions may also prevent or discourage attempts to remove and replace incumbent directors.
However, these provisions will apply even if the offer may be considered beneficial by some stockholders and could delay or prevent an acquisition that our board of directors determines is in the best interests of us and our stockholders.
Our second amended and restated certificate of incorporation designates the state courts in the State of Delaware or, if no state court located within the State of Delaware has jurisdiction, the federal court for the District of Delaware, as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, which could discourage lawsuits against us and our directors, officers, employees and stockholders.
These provisions may also prevent or discourage attempts to remove and replace incumbent directors. 41 Our second amended and restated certificate of incorporation, as amended, designates the state courts in the State of Delaware or, if no state court located within the State of Delaware has jurisdiction, the federal court for the District of Delaware, as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, which could discourage lawsuits against us and our directors, officers, employees and stockholders.
Violation of state privacy, security, and breach notification laws can trigger significant monetary penalties. In addition, certain states’ privacy, security, and data breach laws, including, for example, the CCPA include private rights of action that may expose us to private litigation regarding our privacy and security practices and significant damages awards or settlements in civil litigation.
Certain of the states’ privacy, security, and data breach laws, including, for example, the CCPA, include private rights of action that may expose us to private litigation regarding our privacy and security practices and significant damages awards or settlements in civil litigation.
For example, our corporate headquarters and many of our operations, including certain of our manufacturing facilities, are located in California, which is prone to earthquakes and wildfires, in addition to the other risks discussed above.
For example, our corporate headquarters and many of our operations, including certain of our manufacturing facilities, are located in California, which is prone to earthquakes and wildfires, in addition to the other risks discussed above. In January 2025, several wildfires impacted Los Angeles County.
As of February 9, 2024, we had outstanding indebtedness of approximately $1.5 billion, including approximately $904.8 million under our Second Amended Credit Agreement, $487.2 million under our 2028 Convertible Notes, $115.4 million under our 2025 Convertible Notes (together with the 2028 Convertible Notes, the “Notes”), and had an additional $750.0 million of borrowing capacity under the revolving credit facility pursuant to the Second Amended Credit Agreement, with the ability to request further increases to the revolving credit facility up to the greater of consolidated EBITDA or $525.0 million.
As of February 7, 2025, we had outstanding indebtedness of approximately $1.4 billion, including approximately $793.6 million under our Second Amended Credit Agreement, $489.9 million under our 2028 Convertible Notes, $116.1 million under our 2025 Convertible Notes (together with the 2028 Convertible Notes, the “Notes”), and had an additional $750.0 million of borrowing capacity under the revolving credit facility pursuant to the Second Amended Credit Agreement, with the ability to request further increases to the revolving credit facility up to the greater of consolidated EBITDA or $525.0 million.
We are currently implementing significant restructuring and site consolidation activities across our businesses to adjust our cost structure and to increase our operational efficiency, and we may engage in similar activities in the future.
We continue to implement significant restructuring and site consolidation and centralization activities across our businesses to adjust our cost structure and to increase our operational efficiency, and we may engage in similar activities in the future.
These exclusive forum provisions may limit the ability of our stockholders to bring a claim in a judicial forum that such stockholders find favorable for disputes with us or our directors or officers, which may discourage such lawsuits against us and our directors, officers, employees and stockholders. 40 Conversion of the Notes may dilute the ownership interest of our stockholders or may otherwise depress the prices of our common stock.
These exclusive forum provisions may limit the ability of our stockholders to bring a claim in a judicial forum that such stockholders find favorable for disputes with us or our directors or officers, which may discourage such lawsuits against us and our directors, officers, employees and stockholders.
We may be unable to maintain a level of cash flows from operating activities sufficient to permit us to pay the principal and interest on our indebtedness. 31 If our cash flows and capital resources are insufficient to fund our debt service obligations, we could face substantial liquidity problems and could be forced to reduce or delay investments and capital expenditures, or to dispose of material assets or operations, alter our dividend policy (if we pay dividends in the future), seek additional debt or equity capital or restructure or refinance our indebtedness.
If our cash flows and capital resources are insufficient to fund our debt service obligations, we could face substantial liquidity problems and could be forced to reduce or delay investments and capital expenditures, or to dispose of material assets or operations, alter our dividend policy (if we pay dividends in the future), seek additional debt or equity capital or restructure or refinance our indebtedness.
Further, all 50 states and the District of Columbia have adopted data breach notification laws that impose, in varying degrees, an obligation to notify affected persons and/or state regulators in the event of a data breach or compromise, including when their personal information has or may have been accessed by an unauthorized person. 24 Some state breach notification laws may also impose physical and electronic security requirements regarding the safeguarding of personal information, such as social security numbers and bank and credit card account numbers.
Further, all 50 states and the District of Columbia have adopted data breach notification laws that impose, in varying degrees, an obligation to notify affected persons and/or state regulators in the event of a data breach or compromise, including when their personal information has or may have been accessed by an unauthorized person.
As a result, the tax laws in the U.S. and other countries in which we do business could change on a prospective or retroactive basis, and any such changes could adversely affect our business and financial statements.
As a result, the tax laws in the U.S. and other countries in which we do business could change on a prospective or retroactive basis, and any such changes could adversely affect our business and financial statements. 43 We are subject to a variety of litigation and other legal and regulatory proceedings in the course of our business that could adversely affect our business and financial statements.
Data privacy and security laws relating to the handling of personal information (including personal health information) are evolving across the world and may be drafted, interpreted or applied in a manner that results in increased costs, legal claims, fines against us, reputational damage or impedes delivery.
Our outsourcing relationships with third-parties involve access to certain of our sensitive information which may expose us to enhanced risks, attacks, and disruptions. 24 Data privacy and security laws relating to the handling of personal information (including personal health information) are evolving across the world and may be drafted, interpreted or applied in a manner that results in increased costs, legal claims, fines against us, reputational damage or impedes delivery.
The Capped Calls are expected generally to reduce the potential dilution upon any conversion of the 2025 Convertible Notes and/or offset any cash payments we are required to make in excess of the principal amount of converted 2025 Convertible Notes, as the case may be, with such reduction and/or offset subject to a cap.
The Capped Calls are expected generally to reduce the potential dilution upon any conversion of the 2025 Convertible Notes and/or offset any cash payments we are required to make in excess of the principal amount of converted 2025 Convertible Notes, as the case may be, with such reduction and/or offset subject to a cap. 34 In connection with establishing their hedges of the Capped Calls, the option counterparties or their affiliates entered into various derivative transactions with respect to our common stock.
Moreover, we may not succeed in implementing present or future restructuring activities, site consolidation, or cost reduction activities. Realizing the anticipated benefits from these initiatives, if any benefits are achieved at all, may take several years, and we may be unable to achieve our targeted cost efficiencies and gross margin improvements.
Realizing the anticipated benefits from these initiatives, if any benefits are achieved at all, may take several years, and we may be unable to achieve our targeted cost efficiencies and gross margin improvements.
If we are unable to fully recover higher commodity costs through price increases or offset these increases through cost reductions, or if there is a time delay between the increase in costs and our ability to recover or offset these costs, our margins and profitability could decline and our financial statements could be adversely affected.
If we are unable to fully recover higher commodity costs through price increases or offset these increases through cost reductions, or if there is a time delay between the increase in costs and our ability to recover or offset these costs, our margins and profitability could decline and our financial statements could be adversely affected. 21 If we cannot adjust our manufacturing capacity or the purchases required for our manufacturing activities to reflect changes in market conditions and customer demand, our profitability may suffer.
Business—Regulatory Matters.” Our ability to attract, develop and retain our key personnel is critical to our success. Our success depends to a significant extent upon the continued service of our executive officers and key management and technical personnel and on our ability to continue to attract, retain, and develop qualified personnel. The competition for these employees is intense.
Our success depends to a significant extent upon the continued service of our executive officers and key management and technical personnel and on our ability to continue to attract, retain, and develop qualified personnel. The competition for these employees is intense. The loss of the services of key personnel could have a material adverse effect on our operating results.
The conversion of some or all of the Notes may dilute the ownership interests of our stockholders.
Conversion of the Notes may dilute the ownership interest of our stockholders or may otherwise depress the prices of our common stock. The conversion of some or all of the Notes may dilute the ownership interests of our stockholders.
In addition, some of our software products and services incorporate information technology that may house personal data and some products or software we sell to customers may connect to our systems for maintenance or other purposes. 22 These systems, products and services (including those we acquire through business acquisitions) may be materially impacted and/or disrupted by information security incidents.
In addition, some of our software products and services incorporate information technology that may house personal data and some products or software we sell to customers may connect to our systems for maintenance or other purposes.
Vulnerabilities may be introduced from the use of artificial intelligence by us, our customers, suppliers and other business partners and third-party providers. Like most multinational corporations, our information technology systems have been subject to computer viruses, malicious codes, unauthorized access and other cyberattacks, and we expect the sophistication and frequency of such attacks to continue to increase.
Like most multinational corporations, our information technology systems have been subject to computer viruses, malicious codes, unauthorized access and other cyberattacks, and we expect the sophistication and frequency of such attacks to continue to increase.
Any of the cyberattacks, breaches or other disruptions or damage described above could interrupt our operations or the operations of our customers, suppliers, partners or distributors; prevent order placement and fulfillment; delay production and shipments; result in theft of our and our customers’ intellectual property and trade secrets; damage customer, patient, business partner and employee relationships; harm our reputation; result in defective products or services; or lead to legal or regulatory claims, proceedings, liability and/or penalties.
Additionally, if our business relationship with a third-party provider of information technology systems or services is negatively affected, or if one of our providers were to terminate its agreement with us without adequate notice, we would suffer a significant business disruption. 23 Any of the cyberattacks, breaches or other disruptions or damage described above could interrupt our operations or the operations of our customers, suppliers, partners or distributors; prevent order placement and fulfillment; delay production and shipments; result in theft of our and our customers’ intellectual property and trade secrets; damage customer, patient, business partner and employee relationships; harm our reputation; result in defective products or services; or lead to legal or regulatory claims, proceedings, liability and/or penalties.
In accordance with generally accepted accounting principles, we periodically assess these assets to determine if they are impaired. The valuation models used to determine the fair value of goodwill or indefinite-lived intangible assets are dependent upon various assumptions and reflect management’s best estimates.
The valuation models used to determine the fair value of goodwill or indefinite-lived intangible assets are dependent upon various assumptions and reflect management’s best estimates.
Even if we successfully innovate and develop new and enhanced products and services, we may incur substantial costs in doing so, and our profitability may suffer.
Even if we successfully innovate and develop new and enhanced products and services, we may incur substantial costs in doing so, and our profitability may suffer. Further, if we are unable to decrease our costs associated with our Specialty Products & Technologies segment, we may be unable to improve our profitability.
As the fair value of these reporting units and indefinite-lived intangible assets approximate carrying value as of December 31, 2023, any further decline in key assumptions could result in additional impairment in future periods.
We conducted our annual goodwill and indefinite-lived intangibles impairment test during the fourth quarter of 2024 and did not identify any indicators of further impairment charges. As the fair value of these reporting units and indefinite-lived intangible assets approximate carrying value as of December 31, 2024, any further decline in key assumptions could result in additional impairment in future periods.
The inability to successfully transition key management roles could have a material adverse effect on our operating results. 26 Any inability to consummate acquisitions at our historical rate and at appropriate prices, and to make appropriate investments that support our long-term strategy, could negatively impact our growth rate and stock price.
Any inability to consummate acquisitions at our historical rate and at appropriate prices, and to make appropriate investments that support our long-term strategy, could negatively impact our growth rate and stock price.
As cyber threats and regulatory requirements continue to evolve, we may be required to expend significant capital and other resources to protect against the threat of security breaches or to mitigate and alleviate problems caused by security incidents, including unauthorized access to protected health information and personal information stored in our information systems, and the introduction of computer viruses or other malicious software programs to our systems.
We may also be required to incur significant expense to respond to, contain or mitigate, and remediate problems caused by security incidents, including unauthorized access to protected health information and personal information stored in our information systems, and the introduction of computer viruses or other malicious software programs to our systems.
In addition, we conduct our operations through our subsidiaries. Accordingly, repayment of our indebtedness will depend on the generation of cash flow by our subsidiaries, including certain international subsidiaries, and their ability to make such cash available to us, by dividend, debt repayment or otherwise.
Accordingly, repayment of our indebtedness will depend on the generation of cash flow by our subsidiaries, including certain international subsidiaries, and their ability to make such cash available to us, by dividend, debt repayment or otherwise. Our subsidiaries may not have any obligation to pay amounts due on our indebtedness or to make funds available for that purpose.
The third-party insurance coverage that we maintain will vary from time to time in both type and amount depending on cost, availability and our decisions regarding risk retention, and may be unavailable or insufficient to protect us against such losses.
The third-party insurance coverage that we maintain will vary from time to time in both type and amount depending on cost, availability and our decisions regarding risk retention, and may be unavailable or insufficient to protect us against such losses. 22 The manufacture of many of our products is a highly exacting and complex process, and if we directly or indirectly encounter problems manufacturing products, our reputation, business and financial statements could suffer.
We generally sell our products and services in an industry that is characterized by rapid technological changes, frequent new product introductions and changing industry standards. If we do not develop innovative new and enhanced products and services on a timely basis, our offerings will become obsolete over time and our competitive position and financial statements will suffer.
If we do not develop innovative new and enhanced products and services on a timely basis, our offerings will become obsolete over time and our competitive position and financial statements will suffer.
Each subsidiary is a distinct legal entity and, under certain circumstances, legal, tax and contractual restrictions may limit our ability to obtain cash from our subsidiaries. In the event that we do not receive distributions from our subsidiaries, we may be unable to make required principal and interest payments on our indebtedness.
Our subsidiaries may not be able to, or may not be permitted to, make adequate distributions to enable us to make payments in respect of our indebtedness. Each subsidiary is a distinct legal entity and, under certain circumstances, legal, tax and contractual restrictions may limit our ability to obtain cash from our subsidiaries.
There can be no assurance that our distributors and customers will maintain levels of inventory in accordance with our predictions or past history, or that the timing of distributors’ or customers’ inventory build or liquidation will be in accordance with our predictions or past history.
There can be no assurance that our distributors and customers will maintain levels of inventory in accordance with our predictions or past history, or that the timing of distributors’ or customers’ inventory build or liquidation will be in accordance with our predictions or past history. 29 We are dependent upon a limited number of distributors for a significant portion of our sales, and loss of a key distributor could result in a loss of a significant amount of our sales.
Our failure to obtain or maintain intellectual property rights that convey competitive advantage, adequately protect our intellectual property or detect or prevent circumvention or unauthorized use of such property and the cost of enforcing our intellectual property rights could adversely impact our business, including our competitive position, and financial statements.
Our failure to obtain or maintain intellectual property rights that convey competitive advantage, adequately protect our intellectual property or detect or prevent circumvention or unauthorized use of such property and the cost of enforcing our intellectual property rights could adversely impact our business, including our competitive position, and financial statements. 30 Third parties may claim that we are infringing or misappropriating their intellectual property rights and we could suffer significant litigation expenses, losses or licensing expenses or be prevented from selling products or services.
The effects of climate-related risks could also impair the availability and cost of certain products, commodities and energy (including utilities), which in turn may impact our ability to procure goods or services required for the operation of our business at the quantities and levels we require. 30 In addition, the increasing concern over climate change has resulted and may continue to result in more regional, federal, and/or global legal and regulatory requirements relating to climate change, including regulating greenhouse gas emissions, alternative energy policies and sustainability initiatives.
The effects of climate-related risks could also impair the availability and cost of certain products, commodities and energy (including utilities), which in turn may impact our ability to procure goods or services required for the operation of our business at the quantities and levels we require.
Additionally, in connection with the ongoing conflict between Russia and Ukraine, governments including the U.S., United Kingdom, and those of the European Union have imposed export controls on certain products and financial and economic sanctions on certain industry sectors and parties in Russia which has triggered retaliatory sanctions by the Russian government and its allies.
It is difficult to predict what further trade-related actions governments may take, which may include trade restrictions and additional or increased tariffs and export controls imposed on short notice, and we may be unable to quickly and effectively react to or mitigate such actions. 20 Additionally, in connection with the ongoing conflict between Russia and Ukraine, governments including the U.S., United Kingdom, and those of the European Union have imposed export controls on certain products and financial and economic sanctions on certain industry sectors and parties in Russia which has triggered retaliatory sanctions by the Russian government and its allies.
The manufacture of many of our products is a highly exacting and complex process, and if we directly or indirectly encounter problems manufacturing products, our reputation, business and financial statements could suffer. The manufacture of many of our products is a highly exacting and complex process, due in part to strict regulatory requirements.
The manufacture of many of our products is a highly exacting and complex process, due in part to strict regulatory requirements.
In either case, and in other cases, our obligations under the Notes and the Indentures could increase the cost of acquiring us or otherwise discourage a third party from acquiring us or removing incumbent management, including in a transaction that holders of our securities may view as favorable. 39 In addition, because we have not chosen to be exempt from Section 203 of the Delaware General Corporation Law (the “DGCL”), this provision could also delay or prevent a change of control that you may favor.
In either case, and in other cases, our obligations under the Notes and the Indentures could increase the cost of acquiring us or otherwise discourage a third party from acquiring us or removing incumbent management, including in a transaction that holders of our securities may view as favorable.
This may require significantly more resources for compliance and increase the risk of regulatory enforcement and private litigation with respect to our privacy and security practices.
In addition, as federal, state and local governments consider adopting new privacy and security legislation, our operations may be subject to different standards in different geographical regions. This may require significantly more resources for compliance and increase the risk of regulatory enforcement and private litigation with respect to our privacy and security practices.
Further, these activities may cause employees or third parties to raise claims against us, potentially resulting in additional costs and/or causing delays in implementation. In addition, delays in implementing planned restructuring activities, site consolidation or other productivity improvements, unexpected costs or failure to meet targeted improvements may diminish the operational or financial benefits we expect to realize from such actions.
In addition, delays in implementing planned restructuring activities, site consolidation, centralization or other productivity improvements, unexpected costs or failure to meet targeted improvements may diminish the operational or financial benefits we expect to realize from such actions. Moreover, we may not succeed in implementing present or future restructuring activities, site consolidation, centralization, or cost reduction activities.
Prolonged inflation may also reduce or delay orders for our products and for certain products we may be unable to satisfy demand, both of which could adversely impact our sales and results of operations. 21 In addition, some of our businesses purchase certain materials, components and services from sole or limited source suppliers for reasons of quality assurance, regulatory requirements, cost effectiveness, availability or uniqueness of design.
In addition, some of our businesses purchase certain materials, components and services from sole or limited source suppliers for reasons of quality assurance, regulatory requirements, cost effectiveness, availability or uniqueness of design.
In addition, government enforcement actions can be costly and interrupt the regular operation of our business, and data breaches or violations of data privacy laws can result in fines, reputational damage and civil lawsuits, any of which may adversely affect our business, reputation and financial statements. 25 Our growth depends in part on the timely development and commercialization, and customer acceptance, of new and enhanced products and services based on technological innovation.
In addition, government enforcement actions can be costly and interrupt the regular operation of our business, and data breaches or violations of data privacy laws can result in fines, reputational damage and civil lawsuits, any of which may adversely affect our business, reputation and financial statements. 26 Our growing use of AI systems to automate processes and analyze data poses inherent risks.
The loss of the services of key personnel could have a material adverse effect on our operating results. In addition, there could be a material adverse effect on us should the turnover rates for key personnel increase significantly or if we are unable to continue to attract qualified personnel.
In addition, there could be a material adverse effect on us should the turnover rates for key personnel increase significantly or if we are unable to continue to attract qualified personnel. Over the past fiscal year, there have been changes to our executive leadership team. These leadership transitions along with other senior management changes may be inherently difficult to manage.
The instruments that may govern our indebtedness in the future may restrict our ability to dispose of assets and may restrict the use of proceeds from those dispositions. We may not be able to consummate those dispositions or to obtain proceeds in an amount sufficient to meet any debt service obligations when due.
The instruments that may govern our indebtedness in the future may restrict our ability to dispose of assets and may restrict the use of proceeds from those dispositions.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

7 edited+6 added−2 removed1 unchanged
Biggest changeTo date, no attempted cyberattack or other attempted intrusion on our information technology networks has resulted in a material adverse impact on our business strategy, results of operations or financial condition. There can be no assurance that future incidents will not materially affect us, including our business strategy, results of operations or financial condition. Please refer to “Item 1A.
Biggest changeThere can be no assurance that future incidents will not materially affect us, including our business strategy, results of operations or financial condition. Please refer to “Item 1A. Risk Factors—Risks Related to Our Business” for further detail about the material cybersecurity risks we face.
Our GSIRP is a cross functional plan that documents the details and decision-making process required during a response to a security incident, as well as the reporting protocol with clear escalation timelines and responsibilities. We test our GSIRP with tabletop exercises administered by a third party security consultant.
We also maintain a Global Security Incident Response Plan (“GSIRP”) to guide our response in the event of a cyberattack or other form of network penetration. Our GSIRP is a cross functional plan that documents the details and decision-making processes required during a response to a security incident, as well as the reporting protocol with escalation timelines and responsibilities.
Our Senior Director of Information Security has prior experience as a chief information security officer and over 25 years of experience in Technology and Security. Our security team also includes members who maintain industry security certificates. Our team is additionally supported by third parties to assist in the operations of our program, compliance audits and security penetration testing.
The team focuses on developing and implementing strategies, processes and response plans to protect the confidentiality, integrity, and availability of our assets. Our Senior Director of Information Security has prior experience as a chief information security officer and over 25 years of experience in Technology and Security. Our security team also includes members who maintain industry security certificates.
The Audit Committee of our Board of Directors has the responsibility of exercising oversight with respect to our cybersecurity risk management and risk controls.
Our team is additionally supported by third parties to assist in the operations of our program, compliance audits and security penetration testing. Our Board of Directors oversees our enterprise risk management program. The Audit Committee of our Board of Directors has the responsibility of exercising oversight with respect to our cybersecurity risk management and risk controls.
ITEM 1C. CYBERSECURITY We are committed to protecting our information assets and systems. We have an enterprise-wide information security program designed to identify, protect against, detect, and respond to and manage reasonably foreseeable cybersecurity risks and threats. We have installed privacy/security protection systems and devices on our network in an attempt to prevent cyberthreats and other unauthorized access to information.
We have installed privacy/security protection systems and devices on our network in an attempt to prevent cyberthreats and other unauthorized access to information.
We evaluate and manage risks relating to cybersecurity as part of our overall enterprise risk management program. We perform an annual assessment across the Company to identify and review potential risks. Risks are prioritized based on threat models to improve cybersecurity throughout the Company. Our Board of Directors oversees our enterprise risk management program.
We perform an annual assessment across the Company to identify and review potential risks. Risks are prioritized based on threat models to improve cybersecurity throughout the Company. Cybersecurity Governance Our Senior Director of Information Security reports to our Chief Information Officer and is responsible for leading our enterprise-wide information security team.
We also maintain cyber liability insurance to help mitigate potential liabilities resulting from cyber issues. Like most multinational corporations, our information technology systems have been subject to computer viruses, malicious codes, unauthorized access and other cyberattacks, and we expect the sophistication and frequency of such attacks to continue to increase.
Board members receive periodic presentations on cybersecurity topics from our Chief Information Officer and external experts as part of the Board’s continuing education on topics that impact public companies. 45 Material Cybersecurity Risks, Threats, and Incidents Like most multinational corporations, our information technology systems have been subject to computer viruses, malicious codes, unauthorized access and other cyberattacks, and we expect the sophistication and frequency of such attacks to continue to increase.
Removed
We have adopted a comprehensive Information Security Policy applicable to all of our employees and business partners. We also maintain a Global Security Incident Response Plan (“GSIRP”) to ensure we remain prepared in the event of a cyberattack or other form of network penetration.
Added
ITEM 1C. CYBERSECURITY Risk Management and Strategy We are committed to taking action to protect our information assets and systems. We have an enterprise-wide information security program designed to identify, protect against, detect, and respond to and manage reasonably foreseeable cybersecurity risks and threats, including those associated with our use of third-party service providers.
Removed
Risk Factors—Risks Related to Our Business” for further detail about the material cybersecurity risks we face. Our Senior Director of Information Security reports to our Chief Information Officer and is responsible for leading our enterprise-wide information security team. The team focuses on developing and implementing strategies, processes and response plans to protect the confidentiality, integrity, and availability of our assets.
Added
Additionally, we conduct security risk assessments prior to engaging third party suppliers and other vendors and business partners to validate that they maintain appropriate safeguards to protect our and their information systems in connection with services they provide. This risk assessment is heightened with respect to vendors or business partners that have access to our critical systems and information.
Added
We have adopted an Information Security Policy applicable to all of our employees and business partners. We provide security awareness education and training for our employees annually, conduct regular internal “phishing” testing and mandatory training for “clickers,” and publish internal alerts to highlight any emerging or urgent security threats.
Added
We test our GSIRP with tabletop exercises administered by a third party security consultant. We leverage the standards set by the National Institute of Standards and Technology (“NIST”) Cybersecurity Framework as well as industry best practices to measure our security posture and manage risk.
Added
We also maintain cyber liability insurance to help mitigate potential liabilities resulting from cyber issues, although our insurer may deny coverage for a future claim or our insurance coverage may be insufficient to cover all losses from a cyberattack. We evaluate and manage risks relating to cybersecurity as part of our overall enterprise risk management program.
Added
For example, during the second half of 2023, one of our largest distributors experienced a cybersecurity incident which impacted their ability to place orders and consequently impacted the timing of orders received. This incident, however, as well as other cyberattacks to date, did not have a material impact on our business strategy, results of operations or financial condition.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeParticularly outside the U.S., facilities often serve more than one business segment and may be used for multiple purposes, such as administration, sales, manufacturing, warehousing and/or distribution. 43 We consider our facilities suitable and adequate for the purposes for which they are used and do not anticipate difficulty in renewing existing leases as they expire or in finding alternative facilities.
Biggest changeThese facilities cover approximately 2.5 million square feet, of which approximately 0.5 million square feet are owned and approximately 2.0 million square feet are leased. Particularly outside the U.S., facilities often serve more than one business segment and may be used for multiple purposes, such as administration, sales, manufacturing, warehousing and/or distribution.
ITEM 2. PROPERTIES Our corporate headquarters are located in Brea, California in a facility that we lease. As of December 31, 2023, our facilities included approximately 33 significant office, research and development, manufacturing and distribution facilities.
ITEM 2. PROPERTIES Our corporate headquarters are located in Brea, California in a facility that we lease. As of December 31, 2024, our facilities included approximately 32 significant office, research and development, manufacturing and distribution facilities.
Thirteen of these facilities are located in the U.S. in six states and 20 are located outside the U.S. in 12 other countries, primarily in Europe and to a lesser extent in Asia, the rest of North America, Latin America and the Middle East.
Thirteen of these facilities are located in the U.S. in six states and 19 are located outside the U.S. in 13 other countries, primarily in Europe and to a lesser extent in Asia, the rest of North America, Latin America and the Middle East.
We believe our properties and equipment have been well-maintained. Please refer to Note 8 to our Consolidated Financial Statements for additional information with respect to our lease commitments.
We consider our facilities suitable and adequate for the purposes for which they are used and do not anticipate difficulty in renewing existing leases as they expire or in finding alternative facilities. We believe our properties and equipment have been well-maintained. Please refer to Note 8 to our Consolidated Financial Statements for additional information with respect to our lease commitments.
Removed
These facilities cover approximately 2.6 million square feet, of which approximately 0.6 million square feet are owned and approximately 2.0 million square feet are leased.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeHowever, in the event of unexpected further developments, it is possible that the ultimate resolution of these matters, or other similar matters, if unfavorable, may be materially adverse to our financial position, results of operations or cash flows. For additional information, please see Note 15 to our Consolidated Financial Statements. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 44 PART II
Biggest changeHowever, in the event of unexpected further developments, it is possible that the ultimate resolution of these matters, or other similar matters, if unfavorable, may be materially adverse to our financial position, results of operations or cash flows. For additional information, please see Note 15 to our Consolidated Financial Statements. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 46 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changePerformance Graph Table September 18, 2019 December 31, 2019 December 31, 2020 December 31, 2021 December 31, 2022 December 31, 2023 Envista Holdings Corporation $ 100 $ 106 $ 121 $ 161 $ 120 $ 86 S&P 500 Index $ 100 $ 108 $ 128 $ 165 $ 135 $ 170 S&P 500 Health Care Index $ 100 $ 113 $ 126 $ 156 $ 150 $ 151 45 Dividend Policy We have no present intention to pay cash dividends on our common stock.
Biggest changePerformance Graph Table December 31, 2019 2020 2021 2022 2023 2024 Envista Holdings Corporation $ 100 $ 114 $ 152 $ 114 $ 81 $ 65 S&P 500 Index $ 100 $ 118 $ 152 $ 125 $ 158 $ 197 S&P 500 Health Care Index $ 100 $ 111 $ 138 $ 133 $ 134 $ 135 47 Dividend Policy We have no present intention to pay cash dividends on our common stock.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Information with Respect to our Common Stock Our common stock is listed on the New York Stock Exchange, or NYSE, and trades under the symbol “NVST.” The number of holders of record of our common stock as of February 9, 2024 was 18.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Information with Respect to our Common Stock Our common stock is listed on the New York Stock Exchange, or NYSE, and trades under the symbol “NVST.” The number of holders of record of our common stock as of February 7, 2025 was 18.
The graph assumes $100 was invested in each of our common stock, the S&P 500 Index, and the S&P Health Care Index as of the market close on September 18, 2019. The S&P 500 Stock Index and the S&P Health Care Index are included for comparative purposes only.
The graph assumes $100 was invested in each of our common stock, the S&P 500 Index, and the S&P Health Care Index as of the market close on December 31, 2019. The S&P 500 Stock Index and the S&P Health Care Index are included for comparative purposes only.
The following graph shows a comparison of cumulative total stockholder return, calculated on a dividend-reinvested basis, for the Company, the S&P 500 Index and the S&P Health Care Index from September 18, 2019, the first day our stock traded on the NYSE, through December 31, 2023.
The following graph shows a comparison of cumulative total stockholder return, calculated on a dividend-reinvested basis, for the Company, the S&P 500 Index and the S&P Health Care Index from December 31, 2019 through December 31, 2024.

Item 7. Management's Discussion & Analysis

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

83 edited+25 added−28 removed70 unchanged
Biggest changeWe continue to generate substantial cash from operating activities and believe that our operating cash flow and other sources of liquidity are sufficient to allow us to manage our capital structure on a short-term and long-term basis and continue investing in existing businesses and consummating strategic acquisitions. 56 Following is an overview of our cash flows and liquidity, which includes the cash flows of the KaVo Treatment Unit and Instrument Business for the years ended December 31, 2022 and 2021: Overview of Cash Flows and Liquidity Year Ended December 31, ($ in millions) 2023 2022 2021 Net cash provided by operating activities $ 275.7 $ 182.7 $ 361.6 Payments for additions to property, plant and equipment (58.2) (75.7) (54.7) Proceeds from sales of property, plant and equipment 6.1 3.3 11.6 Proceeds from sale of equity investment 10.7 — — Acquisitions, net of cash acquired — (696.2) (2.1) Proceeds from sale of KaVo Treatment Unit and Instrument Business — 73.9 312.5 Proceeds from the settlement of derivative financial instruments 1.6 56.0 11.4 All other investing activities (22.6) (18.6) (16.0) Net cash (used in) provided by investing activities $ (62.4) $ (657.3) $ 262.7 Proceeds from issuance of convertible notes due 2028 $ 500.2 $ — $ — Debt issuance costs related to issuance of convertible notes due 2028 (13.8) — — Principal paid related to exchange of convertible notes due 2025 (401.2) — — Proceeds from borrowing 323.5 0.3 — Repayments of borrowing (288.8) (0.5) (475.7) Debt issuance costs related to other borrowings (4.5) — (2.3) Proceeds from revolving line of credit — 124.0 — Repayment of revolving line of credit — (124.0) — Proceeds from stock option exercises 11.3 21.8 19.5 Tax withholding payment related to net settlement of equity awards (7.9) (9.1) (7.2) All other financing activities 0.1 — 0.1 Net cash provided by (used in) financing activities $ 118.9 $ 12.5 $ (465.6) Operating Activities Cash flows from operating activities can fluctuate significantly from period-to-period due to working capital needs and the timing of payments for income taxes, restructuring activities, pension funding and other items impacting cash flows.
Biggest changeWe continue to generate substantial cash from operating activities and believe that our operating cash flow and other sources of liquidity are sufficient to allow us to manage our capital structure on a short-term and long-term basis and continue investing in existing businesses and consummating strategic acquisitions. 57 Following is an overview of our cash flows and liquidity, which includes the cash flows of the KaVo Treatment Unit and Instrument Business for the year ended December 31, 2022 as discussed in Note 3 to our Consolidated Financial Statements elsewhere in this Annual Report on Form 10-K: Overview of Cash Flows and Liquidity Year Ended December 31, ($ in millions) 2024 2023 2022 Net cash provided by operating activities $ 336.5 $ 275.7 $ 182.7 Payments for additions to property, plant and equipment $ (33.8) $ (58.2) $ (75.7) Purchases of investments held in rabbi trust (32.8) — — Proceeds from sale of investments held in rabbi trust 9.3 — — Proceeds from sales of property, plant and equipment 0.1 6.1 3.3 Proceeds from sale of equity investment 0.4 10.7 — Acquisitions, net of cash acquired — — (696.2) Proceeds from sale of KaVo Treatment Unit and Instrument Business — — 73.9 Proceeds from the settlement of derivative financial instruments 2.5 1.6 56.0 All other investing activities (0.3) (22.6) (18.6) Net cash used in investing activities $ (54.6) $ (62.4) $ (657.3) Proceeds from stock option exercises $ 2.4 $ 11.3 $ 21.8 Tax withholding payment related to net settlement of equity awards (5.3) (7.9) (9.1) Proceeds from issuance of convertible notes due 2028 — 500.2 — Debt issuance costs related to issuance of convertible notes due 2028 — (13.8) — Principal paid related to exchange of convertible notes due 2025 — (401.2) — Proceeds from borrowing — 323.5 0.3 Repayments of borrowing (100.0) (288.8) (0.5) Debt issuance costs related to other borrowings — (4.5) — Proceeds from revolving line of credit — — 124.0 Repayment of revolving line of credit — — (124.0) All other financing activities (0.8) 0.1 — Net cash (used in) provided by financing activities $ (103.7) $ 118.9 $ 12.5 Operating Activities Cash flows from operating activities can fluctuate significantly from period-to-period due to working capital needs and the timing of payments for income taxes, restructuring activities, pension funding and other items impacting cash flows.
We exclude the effect of currency translation from core sales because currency translation is not under our control, is subject to volatility and can obscure underlying business trends. 51 RESULTS OF OPERATIONS The following discussion and analysis of our consolidated statements of earnings should be read along with our Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K.
We exclude the effect of currency translation from core sales because currency translation is not under our control, is subject to volatility and can obscure underlying business trends. RESULTS OF OPERATIONS The following discussion and analysis of our consolidated statements of earnings should be read along with our Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K.
Refer to Notes 2, 3 and 9 to our Consolidated Financial Statements for a description of our policies relating to acquisitions, goodwill and acquired intangibles. We review goodwill and identified intangible assets for impairment whenever events or changes in circumstances indicate that the related carrying amounts may not be recoverable.
Refer to Notes 2 and 9 to our Consolidated Financial Statements for a description of our policies relating to acquisitions, goodwill and acquired intangibles. We review goodwill and identified intangible assets for impairment whenever events or changes in circumstances indicate that the related carrying amounts may not be recoverable.
The New Senior Credit Facilities mature on August 31, 2028, and are subject to an earlier maturity date of 91 days prior to the maturity date of the 2028 Convertible Notes, if more than $250.0 million of such notes are outstanding at that time.
The Senior Credit Facilities mature on August 31, 2028, and are subject to an earlier maturity date of 91 days prior to the maturity date of the 2028 Convertible Notes, if more than $250.0 million of such notes are outstanding at that time.
Selling, general and administrative (“SG&A”) expenses consist of, among other things, the costs of selling, marketing, promotion, advertising and administration (including business technology, facilities, legal, finance, human resources, business development and procurement) and amortization expense for intangible assets that have been acquired through business combinations. Also included in SG&A are productivity improvement and restructuring expenses related to our administrative operations.
Selling, general and administrative (“SG&A”) expenses consist of, among other things, the costs of selling, marketing, promotion, advertising and administration (including business technology, facilities, legal, finance, human resources, business development and procurement) and amortization expense for intangible assets that have been acquired through business combinations. Also included are productivity improvement and restructuring expenses related to our SG&A.
As a global provider of dental consumables, equipment and services, our operations are affected by worldwide, regional and industry-specific economic and political factors. Given the broad range of dental products, software and services provided and geographies served, we do not use any indices other than general economic trends to predict our overall outlook.
As a global provider of dental consumable products, equipment and services, our operations are affected by worldwide, regional and industry-specific economic and political factors. Given the broad range of dental products, software and services provided and geographies served, we do not use any indices other than general economic trends to predict our overall outlook.
Financial Statements and Supplementary Data - Notes to Consolidated Financial Statements - Note 16 - Debt and Credit Facilities” and “-Note 8 - Leases.” Off-Balance Sheet Arrangements Guarantees and Related Instruments The following table sets forth, by period due or year of expected expiration, as applicable, a summary of our off-balance sheet commitments as of December 31, 2023.
Financial Statements and Supplementary Data - Notes to Consolidated Financial Statements - Note 16 - Debt and Credit Facilities” and “-Note 8 - Leases.” Off-Balance Sheet Arrangements Guarantees and Related Instruments The following table sets forth, by period due or year of expected expiration, as applicable, a summary of our off-balance sheet commitments as of December 31, 2024.
For additional information on our credit risk from customers, please refer to “Item 1. Business.” Our businesses perform credit evaluations of our customers’ financial conditions as appropriate and also obtain collateral or other security when appropriate. Commodity Price Risk For a discussion of risks relating to commodity prices, refer to “Item 1A.
For additional information on our credit risk from customers, please refer to “Item 1. Business.” Our businesses perform credit evaluations of our customers’ financial conditions as appropriate and also obtain collateral or other security when appropriate. Commodity Price Risk For a discussion of risks relating to commodity prices, refer to “Item 1A. Risk Factors—Risks Related to Our Business.”.
The reduction in value is primarily due to significant increases in discount rates utilized in valuing these reporting units, adverse macroeconomic factors such as higher cost of borrowing and inflationary pressures, geopolitical factors, and lower forecast of operating results which contributed to reduced expectation of future cash flows.
The reduction in value was primarily due to significant increases in discount rates utilized in valuing these reporting units, adverse macroeconomic factors such as higher cost of borrowing and inflationary pressures, geopolitical factors, and lower forecast of operating results which contributed to reduced expectation of future cash flows.
Please refer to Note 2 to our Consolidated Financial Statements included in this Annual Report for information regarding derivative financial instruments and discussion of exposures to foreign currency and foreign currency-denominated debt. 60 Interest Rate Risk Certain of our borrowings are at variable rates of interest, which may expose us to interest rate risk.
Please refer to Note 2 to our Consolidated Financial Statements included in this Annual Report for information regarding derivative financial instruments and discussion of exposures to foreign currency and foreign currency-denominated debt. 61 Interest Rate Risk Certain of our borrowings are at variable rates of interest, which may expose us to interest rate risk.
Discussion of 2021 items and year-to-year comparisons between 2022 and 2021 are not included in this Form 10-K, and can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.
Discussion of 2022 items and year-to-year comparisons between 2023 and 2022 are not included in this Form 10-K, and can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.
For example, China has implemented volume-based procurement (“VBP”) policies, a series of centralized reforms instituted in China on both a national and regional basis that has resulted in significant price cuts for medical and dental consumables. Industry Trends We operate in the large and growing global dental products industry.
For example, China has implemented volume-based procurement (“VBP”) policies, a series of centralized reforms instituted in China on both a national and regional basis that has resulted in significant price cuts for medical and dental consumable products. Industry Trends We operate in the large and growing global dental products industry.
You should read the following discussion in conjunction with the sections entitled “Envista Holdings Corporation Audited Consolidated Financial Statements” included in this Annual Report on Form 10-K. This section of the Form 10-K generally discusses 2023 and 2022 items and year-to-year comparisons between 2023 and 2022.
You should read the following discussion in conjunction with the sections entitled “Envista Holdings Corporation Audited Consolidated Financial Statements” included in this Annual Report on Form 10-K. This section of the Form 10-K generally discusses 2024 and 2023 items and year-to-year comparisons between 2024 and 2023.
While we are experiencing volatility in sales from this region, Russia’s invasion of Ukraine did not have a material impact on our overall financial position or results of operations as of and for the years ended December 31, 2023 and 2022.
While we are experiencing volatility in sales from this region, Russia’s invasion of Ukraine did not have a material impact on our overall financial position or results of operations as of and for the years ended December 31, 2024 and 2023.
Amount of Commitment Expiration per Period ($ in millions) Total Less Than One Year 1-3 Years 4-5 Years More Than 5 Years Guarantees and related instruments $ 12.8 $ 6.6 $ 5.3 $ 0.2 $ 0.7 Guarantees consist primarily of outstanding standby letters of credit and bank guarantees.
Amount of Commitment Expiration per Period ($ in millions) Total Less Than One Year 1-3 Years 4-5 Years More Than 5 Years Guarantees and related instruments $ 12.6 $ 6.6 $ 5.4 $ 0.2 $ 0.4 Guarantees consist primarily of outstanding standby letters of credit and bank guarantees.
As of December 31, 2023, we had no borrowings outstanding under the revolving credit facility and we had the ability to incur an additional $750.0 million of indebtedness in direct borrowings under the revolving credit facility. As of December 31, 2023, we were in compliance with all of our debt covenants.
As of December 31, 2024, we had no borrowings outstanding under the revolving credit facility and we had the ability to incur an additional $750.0 million of indebtedness in direct borrowings under the revolving credit facility. As of December 31, 2024, we were in compliance with all of our debt covenants.
The intangible asset impairment charge related to certain indefinite-lived trade names within the Specialty Products & Technologies segment. The reduction in the intangible value is primarily due to higher discount rates and reduction in projected cash flows as discussed above.
The intangible asset impairment charge related to certain indefinite-lived trade names within the Specialty Products & Technologies segment. The reduction in the intangible value was primarily due to higher discount rates and reduction in projected cash flows as discussed above.
We also test goodwill and intangible assets with indefinite lives at least annually for impairment. Determining whether an impairment loss occurred requires various valuation approaches, including making a comparison of the carrying amount to the sum of discounted cash flows expected to be generated by the asset.
We also test goodwill and intangible assets with indefinite lives at least annually for impairment. Determining whether an impairment loss occurred requires valuation analyses, including making a comparison of the carrying amount to the sum of discounted cash flows expected to be generated by the asset.
For a description of our outstanding debt as of December 31, 2023, refer to Note 16 to our Consolidated Financial Statements in this Annual Report on Form 10-K.
For a description of our outstanding debt as of December 31, 2024, refer to Note 16 to our Consolidated Financial Statements in this Annual Report on Form 10-K.
Actual results may differ materially from these estimates and judgments. 61 We believe the following accounting estimates are most critical to an understanding of our financial statements.
Actual results may differ materially from these estimates and judgments. 62 We believe the following accounting estimates are most critical to an understanding of our financial statements.
A 10% depreciation in major currencies relative to the U.S. dollar as of December 31, 2023 would have reduced equity by approximately $253 million. Credit Risk We are exposed to potential credit losses in the event of nonperformance by counterparties to our financial instruments. Financial instruments that potentially subject us to credit risk primarily consist of receivables from customers.
A 10% depreciation in major currencies relative to the U.S. dollar as of December 31, 2024 would have reduced equity by approximately $214 million. Credit Risk We are exposed to potential credit losses in the event of nonperformance by counterparties to our financial instruments. Financial instruments that potentially subject us to credit risk primarily consist of receivables from customers.
The following table sets forth, by period due or year of expected expiration, as applicable, a summary of purchase obligations as of December 31, 2023.
The following table sets forth, by period due or year of expected expiration, as applicable, a summary of purchase obligations as of December 31, 2024.
With leading brand names, innovative technology and significant market positions, we are a leading worldwide provider of a broad range of solutions to support implant-based tooth replacements, orthodontic treatments, and diagnostic solutions, as well as general dental consumables, equipment and services, and are dedicated to driving technological innovations that help dental professionals improve clinical outcomes and enhance productivity.
With leading brand names, innovative technology and strong market positions, we are a leading worldwide provider of a broad range of solutions to support implant-based tooth replacements, orthodontic treatments, and diagnostic solutions, as well as general dental consumable products, equipment and services, and are dedicated to driving technological innovations that help dental professionals improve clinical outcomes and enhance productivity.
As of February 9, 2024, we believe that we have sufficient sources of liquidity to satisfy our cash needs over the next 12 months and beyond, including our cash needs in the United States. 58 Purchase Obligations The Company’s purchase obligations primarily consist of agreements to purchase goods or services that are enforceable and legally binding and that specify all significant terms, including fixed or minimum quantities to be purchased, fixed, minimum or variable price provisions and the approximate timing of the transaction.
As of February 7, 2025, we believe that we have sufficient sources of liquidity to satisfy our cash needs over the next 12 months and beyond, including our cash needs in the United States. 59 Purchase Obligations The Company’s purchase obligations primarily consist of agreements to purchase goods or services that are enforceable and legally binding and that specify all significant terms, including fixed or minimum quantities to be purchased, fixed, minimum or variable price provisions and the approximate timing of the transaction.
The excess of the estimated fair value over carrying value (expressed as a percentage of carrying value for the asset) for the remaining intangible asset was approximately 25%.
The excess of the estimated fair value over carrying value (expressed as a percentage of carrying value for the asset) for the remaining intangible asset was approximately 41%.
Our research and development, manufacturing, sales, distribution, service and administrative facilities are located in more than 30 countries across North America, Asia, Europe, the Middle East and Latin America. During 2023, 53% of our sales were derived from customers outside the United States.
Our research and development, manufacturing, sales, distribution, service and administrative facilities are located in more than 30 countries across North America, Asia, Europe, the Middle East and Latin America. During 2024, 52% of our sales were derived from customers outside the United States.
Based on this hypothetical 10% decrease, the excess of the estimated fair value over carrying value (expressed as a percentage of carrying value for the intangible asset) for the intangible asset was approximately 13%. For the two trade names impaired, the application of a hypothetical 10% decrease in fair value would result in an additional impairment of approximately $30 million.
Based on this hypothetical 10% decrease, the excess of the estimated fair value over carrying value (expressed as a percentage of carrying value for the intangible asset) for the intangible asset was approximately 27%. For the two trade names impaired, the application of a hypothetical 10% decrease in fair value would result in an additional impairment of approximately $20 million.
We help our customers deliver the best possible patient care through industry-leading solutions, technologies, and services.
We help our customers deliver the best possible patient care through industry-leading dental consumables, solutions, technologies, and services.
We have a variable rate 2028 Term Loan for $530.0 million and a 2028 Euro Term Loan for €350.0 million as of December 31, 2023. We have from time to time entered into interest rate swap agreements to manage our interest rate risk, however we do not have any interest rate swap agreements as of December 31, 2023.
We have a variable rate 2028 Term Loan for $430.0 million and a 2028 Euro Term Loan for €350.0 million as of December 31, 2024. We have from time to time entered into interest rate swap agreements to manage our interest rate risk, however we do not have any interest rate swap agreements as of December 31, 2024.
INCOME TAXES For the Years Ended December 31, 2023 2022 2021 Effective tax rate (82.5) % 16.2 % (3.5) % Our effective tax rate for the year ended December 31, 2023 was (82.5)% compared to 16.2% in 2022.
INCOME TAXES For the Years Ended December 31, 2024 2023 2022 Effective tax rate (3.1) % (82.5) % 16.2 % Our effective tax rate for the year ended December 31, 2024 was (3.1)% compared to (82.5)% in 2023.
References to the non-GAAP measure of core sales (also referred to as core revenues or sales/revenues from existing businesses) refer to sales calculated according to GAAP, but excluding: • sales from acquired businesses; • sales from discontinued products; and • the impact of currency translation. We exclude sales from acquired businesses in order to provide accurate year over year comparisons.
References to the non-GAAP measure of core sales (also referred to as core revenues or sales/revenues from existing businesses) refer to sales calculated according to GAAP, but excluding: • sales from acquired businesses for one year from the acquisition date; • sales from discontinued products; and • the impact of currency translation. 52 We exclude sales from acquired businesses in order to provide accurate year over year comparisons.
The excess of the estimated fair value over carrying value (expressed as a percentage of carrying value for the respective reporting unit) for the five reporting units not impaired, ranged from approximately 15% to approximately 147%, and zero for the three reporting units with impairments.
The excess of the estimated fair value over carrying value (expressed as a percentage of carrying value for the respective reporting unit) for the three reporting units not impaired, ranged from approximately 38% to approximately 88%, and zero for the five reporting units with impairments.
A 100 basis point increase in the interest rate related to our 2028 Term Loan and our 2028 Euro Term Loan would have increased interest expense by $6.2 million for 2023. Currency Exchange Rate Risk We face transactional exchange rate risk from transactions with customers in countries outside the United States and from intercompany transactions between affiliates.
A 100 basis point increase in the interest rate related to our 2028 Term Loan and our 2028 Euro Term Loan would have increased interest expense by $8.0 million for 2024. Currency Exchange Rate Risk We face transactional exchange rate risk from transactions with customers in countries outside the United States and from intercompany transactions between affiliates.
We believe we are a leader in dental R&D, with $294.4 million of R&D expenditures since 2021 and a track record of product innovation, business development and commercialization. We continue transforming our portfolio by investing in our Implant-Based Tooth Replacement and Orthodontic Solutions businesses and also making investments in emerging markets, critical to our growth strategy.
We believe we are a leader in dental R&D, with a track record of product innovation, business development and commercialization. 50 We continue transforming our portfolio by investing in our Implant-Based Tooth Replacement and Orthodontic Solutions businesses and also making investments in emerging markets, critical to our growth strategy.
Amount of Commitment Expiration per Period ($ in millions) Total Less Than One Year 1-3 Years 4-5 Years More Than 5 Years Purchase Obligations $ 63.9 $ 60.0 $ 3.2 $ 0.7 $ — For a description of our remaining contractual obligations, such as debt and leases see “Item 8.
Amount of Commitment Expiration per Period ($ in millions) Total Less Than One Year 1-3 Years 4-5 Years More Than 5 Years Purchase Obligations $ 96.6 $ 87.7 $ 8.9 $ — $ — For a description of our remaining contractual obligations, such as debt and leases see “Item 8.
Specialty Products & Technologies Selected Financial Data For the Years Ended December 31, ($ in millions) 2023 2022 2021 Sales $ 1,642.4 $ 1,598.6 $ 1,507.8 Operating profit 232.1 268.6 272.3 Operating profit as a % of sales 14.1 % 16.8 % 18.1 % 54 GAAP Reconciliation Sales and Core Sales Growth 2023 vs. 2022 2022 vs. 2021 Total sales growth (GAAP) 2.7 % 6.0 % Less the impact of: Acquisitions (1.1) % (1.1) % Currency exchange rates 1.3 % 4.2 % Core sales growth (non-GAAP) 2.9 % 9.1 % Sales Sales and core sales growth for the year ended December 31, 2023 increased 2.7% and 2.9%%, respectively, compared to the comparable period in 2022.
Specialty Products & Technologies Selected Financial Data For the Years Ended December 31, ($ in millions) 2024 2023 2022 Sales $ 1,616.4 $ 1,642.4 $ 1,598.6 Operating profit 89.9 232.1 268.6 Operating profit as a % of sales 5.6 % 14.1 % 16.8 % GAAP Reconciliation Sales and Core Sales Growth 2024 vs. 2023 2023 vs. 2022 Total sales growth (GAAP) (1.6) % 2.7 % Less the impact of: Acquisitions — % (1.1) % Currency exchange rates 0.7 % 1.3 % Core sales growth (non-GAAP) (0.9) % 2.9 % Sales Sales and core sales growth for the year ended December 31, 2024 decreased 1.6% and 0.9%, respectively, compared to the comparable period in 2023.
Based on this hypothetical 10% decrease, the excess of the estimated fair value over carrying value (expressed as a percentage of carrying value for the respective reporting unit) for the five reporting units not impaired, ranged from approximately 4% to approximately 122%.
Based on this hypothetical 10% decrease, the excess of the estimated fair value over carrying value (expressed as a percentage of carrying value for the respective reporting unit) for the three reporting units not impaired, ranged from approximately 24% to approximately 69%.
Business Performance During the year ended December 31, 2023, our sales decreased 0.1%, while core sales decreased 0.4% as compared to the comparable period of 2022. The impact of foreign currency exchange rates reduced sales in the year ended December 31, 2023, by 0.9% compared to the comparable period of 2022.
Business Performance During the year ended December 31, 2024, our sales decreased 2.2%, while core sales decreased 1.5% as compared to the comparable period of 2023. The impact of foreign currency exchange rates reduced sales in the year ended December 31, 2024, by 0.7% compared to the comparable period of 2023.
Years Ended December 31, % Change % Change ($ in millions) 2023 2022 2021 2023/2022 2022/2021 Sales $ 2,566.5 100.0% $ 2,569.1 100.0% $ 2,508.9 100.0% (0.1) % 2.4 % Cost of sales 1,126.0 43.9% 1,094.3 42.6% 1,082.4 43.1% 2.9 % 1.1 % Gross profit 1,440.5 56.1% 1,474.8 57.4% 1,426.5 56.9% (2.3) % 3.4 % Operating costs: SG&A expenses 1,056.9 41.2% 1,055.5 41.1% 1,019.8 40.6% 0.1 % 3.5 % R&D expenses 93.8 3.7% 100.1 3.9% 100.5 4.0% (6.3) % (0.4) % Goodwill and intangible asset impairment 258.3 10.1% — —% — —% NM — % Operating profit 31.5 1.2% 319.2 12.4% 306.2 12.2% (90.1) % 4.2 % Nonoperating (expense) income: Other (expense) income, net (23.0) (0.9)% 3.1 0.1% 2.4 0.1% NM 29.2 % Interest expense, net (63.4) (2.5)% (38.4) (1.5)% (54.1) (2.2)% 65.1 % (29.0) % (Loss) income before income taxes (54.9) (2.1)% 283.9 11.1% 254.5 10.1% (119.3) % 11.6 % Income tax expense (benefit) 45.3 1.8% 45.9 1.8% (9.0) (0.4)% (1.3) % NM (Loss) income from continuing operations (100.2) (3.9)% 238.0 9.3% 263.5 10.5% (142.1) % (9.7) % Income from discontinued operations, net of tax — —% 5.1 0.2% 77.0 3.1% (100.0) % (93.4) % Net (loss) income $ (100.2) (3.9)% $ 243.1 9.5% $ 340.5 13.6% (141.2) % (28.6) % Effective tax rate (82.5) % 16.2 % (3.5) % NM - Non-meaningful percentage change related to year-to-year comparisons Business Segments Sales by business segment were as follows ($ in millions): For the Years Ended December 31, 2023 2022 2021 Specialty Products & Technologies $ 1,642.4 $ 1,598.6 $ 1,507.8 Equipment & Consumables 924.1 970.5 1,001.1 Total $ 2,566.5 $ 2,569.1 $ 2,508.9 52 GAAP Reconciliation Sales and Core Sales Growth 2023 vs. 2022 2022 vs. 2021 Total sales growth (GAAP) (0.1) % 2.4 % Less the impact of: Acquisitions (1.2) % (1.8) % Currency exchange rates 0.9 % 3.5 % Core sales growth (non-GAAP) (0.4) % 4.1 % Sales and core sales growth for the year ended December 31, 2023 decreased 0.1% and 0.4%, respectively, compared to the comparable period in 2022.
Years Ended December 31, % Change % Change ($ in millions) 2024 2023 2022 2024/2023 2023/2022 Sales $ 2,510.6 100.0% $ 2,566.5 100.0% $ 2,569.1 100.0% (2.2) % (0.1) % Cost of sales 1,137.9 45.3% 1,126.0 43.9% 1,094.3 42.6% 1.1 % 2.9 % Gross profit 1,372.7 54.7% 1,440.5 56.1% 1,474.8 57.4% (4.7) % (2.3) % Operating costs: SG&A expenses 1,158.0 46.1% 1,056.9 41.2% 1,055.5 41.1% 9.6 % 0.1 % R&D expenses 99.1 3.9% 93.8 3.7% 100.1 3.9% 5.7 % (6.3) % Goodwill and intangible asset impairment 1,153.8 46.0% 258.3 10.1% — —% NM NM Operating (loss) profit (1,038.2) (41.4)% 31.5 1.2% 319.2 12.4% NM (90.1) % Nonoperating (expense) income: Other (expense) income, net (0.1) —% (23.0) (0.9)% 3.1 0.1% (99.6) % NM Interest expense, net (46.4) (1.8)% (63.4) (2.5)% (38.4) (1.5)% (26.8) % 65.1 % (Loss) income before income taxes (1,084.7) (43.2)% (54.9) (2.1)% 283.9 11.1% NM (119.3) % Income tax expense 33.9 1.4% 45.3 1.8% 45.9 1.8% (25.2) % (1.3) % (Loss) income from continuing operations (1,118.6) (44.6)% (100.2) (3.9)% 238.0 9.3% NM (142.1) % Income from discontinued operations, net of tax — —% — —% 5.1 0.2% — % (100.0) % Net (loss) income $ (1,118.6) (44.6)% $ (100.2) (3.9)% $ 243.1 9.5% NM (141.2) % Effective tax rate (3.1) % (82.5) % 16.2 % NM - Non-meaningful percentage change related to year-to-year comparisons 53 Business Segments Sales by business segment were as follows ($ in millions): For the Years Ended December 31, 2024 2023 2022 Specialty Products & Technologies $ 1,616.4 $ 1,642.4 $ 1,598.6 Equipment & Consumables 894.2 924.1 970.5 Total $ 2,510.6 $ 2,566.5 $ 2,569.1 GAAP Reconciliation Sales and Core Sales Growth 2023 vs. 2024 2023 vs. 2022 Total sales growth (GAAP) (2.2) % (0.1) % Less the impact of: Acquisitions — % (1.2) % Currency exchange rates 0.7 % 0.9 % Core sales growth (non-GAAP) (1.5) % (0.4) % Sales and core sales growth for the year ended December 31, 2024 decreased 2.2% and 1.5%, respectively, compared to the comparable period in 2023.
Approximately $134.5 million of the goodwill impairment charge related to our Specialty Products & Technologies segment and $77.8 million related to our Equipment & Consumables segment.
Approximately $707.8 million of the goodwill impairment charge related to our Specialty Products & Technologies segment and $252.7 million related to our Equipment & Consumables segment.
R&D expenses as a percentage of sales for the year ended December 31, 2023, was consistent with the comparable period in 2022. 53 Goodwill and intangible asset impairment for the year ended December 31, 2023 consisted of a $212.3 million goodwill charge and a $46.0 million intangible asset charge.
R&D expenses as a percentage of sales for the year ended December 31, 2024, was consistent with the comparable period in 2023. Goodwill and intangible asset impairment for the year ended December 31, 2024 of $1,153.8 million consisted of a $960.5 million goodwill charge and a $193.3 million intangible asset charge.
While repatriation of some cash held outside the United States may be restricted by local laws, most of our foreign cash could be repatriated to the United States.
While repatriation of some cash held outside the United States may be restricted by local laws, most of our foreign cash could be repatriated to the United States. In early 2025, we transferred approximately $320 million in international cash to the United States.
This cross-currency contract effectively converts a portion of our U.S. dollar senior term loan facilities to obligations denominated in euros and will partially offset the impact of changes in currency rates on foreign currency denominated net investments.
This cross-currency contract effectively converts a portion of our U.S. dollar senior term loan facilities to obligations denominated in euros and will partially offset the impact of changes in currency rates on foreign currency denominated net investments. On December 23, 2024, this cross-currency swap derivative contract was extended for an additional three years and will mature in January 2028.
For the three impaired reporting units, the application of a hypothetical 10% decrease in fair value would result in an additional impairment of approximately $251 million. 62 For indefinite-lived intangible assets, we used the relief from royalty method to estimate the fair value.
For the five impaired reporting units, the application of a hypothetical 10% decrease in fair value would result in an additional impairment of approximately $289 million. As part of our second quarter assessment, we also reviewed our indefinite-lived intangible assets for impairment and used the relief from royalty method to estimate the fair value of such assets.
For the purposes of identifying and measuring impairment, long-lived assets are grouped with other assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. We did not record any impairment loss for finite-lived intangible assets in 2023, 2022 and 2021.
For the purposes of identifying and measuring impairment, long-lived assets are grouped with other assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities.
For goodwill, we used a combination of techniques, including an income approach and a market-based approach in performing our annual goodwill impairment test to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value amount.
As part of our second quarter evaluation, we used the income approach in performing our goodwill impairment test in order to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value amount.
While many of our products are considered necessary by patients regardless of the economic environment, certain products and services that support discretionary dental procedures may be more susceptible to changes in economic conditions.
Dental costs are largely out-of-pocket for the consumer and thus utilization rates can vary significantly depending on economic growth. While many of our products are considered necessary by patients regardless of the economic environment, certain products and services that support discretionary dental procedures may be more susceptible to changes in economic conditions.
The proceeds from the Second Amended Credit Agreement were used to repay outstanding indebtedness for the senior term loan facility due 2024 (the “2024 Term Loan”) and the senior euro term loan facility due 2024 (the “2024 Euro Term Loan”).
The proceeds from the Second Amended Credit Agreement were used to repay outstanding indebtedness for the senior term loan facility due 2024 (the “2024 Term Loan”) and the senior euro term loan facility due 2024 (the “2024 Euro Term Loan”). Additionally, we paid fees aggregating approximately $5.2 million in connection with the Second Amended Credit Agreement.
Cash and Cash Requirements As of December 31, 2023, $940.0 million of cash and cash equivalents were held on deposit with financial institutions. Of this amount, $261.6 million was held within the United States and $678.4 million was held outside of the United States.
Cash and Cash Requirements As of December 31, 2024, $1,069.1 million of cash and cash equivalents were held on deposit with financial institutions. Of this amount, $218.3 million was held within the United States and $850.8 million was held outside of the United States.
The increase in interest expense for the year ended December 31, 2023 as compared to the comparable period of 2022 was primarily due to higher interest rates on our variable rate term borrowings and increased borrowing during the year ended December 31, 2023.
The de crease i n interest expense for the year ended December 31, 2024 as compared to the comparable period of 2023 was primarily due to higher returns on cash and cash equivalents and lower variable rate term borrowings and interest rates.
OTHER (EXPENSE) INCOME, NET Other (expense) income, net for the year ended December 31, 2023 consists primarily of $29.0 million of inducement and other expenses associated with the Notes Exchanges, offset by $2.5 million of net periodic benefit costs and $3.6 million net gain on equity investments.
Other expenses, net for the year ended December 31, 2023 consists primarily of $29.0 million of inducement and other expenses associated with the Notes Exchanges, offset by a $3.6 million net gain on investments. INTEREST COSTS AND FINANCING Interest costs were $ 46.4 mil lion and $63.4 million for the years ended December 31, 2024 and 2023, respectively.
On a year-over-year basis, currency exchange rates negatively impacted reported sales by 0.9% for the year ended December 31, 2023 compared to the comparable period of 2022, primarily due to the strengthening of the U.S. dollar against most major currencies.
Exchange rate fluctuations in emerging markets may also directly affect our customers’ ability to buy our products in these geographic markets. On a year-over-year basis, currency exchange rates negatively impacted reported sales by 0.7% for the year ended December 31, 2024 compared to 2023, primarily due to the strengthening of the U.S. dollar against most major currencies.
Capital expenditures are made primarily for increasing capacity, replacing equipment, supporting new product development and improving information technology systems. 57 Net cash used in investing activities wa s $62.4 million during the year ended December 31, 2023, as compared to net cash used in investing activities of $657.3 millio n for the comparable period in 2022, the decrease is primarily due to the prior year period reflecting cash paid with respect to acquisitions, partially offset by the proceeds from the sale of the KaVo Treatment Unit and Instrument Business along with proceeds received from settlement of derivatives.
Capital expenditures are made primarily for increasing capacity, replacing equipment, supporting new product development and improving information technology systems. 58 Net cash used in investing activities wa s $54.6 million during the year ended December 31, 2024, as compared to net cash used in investing activities of $62.4 millio n for the comparable period in 2023.
OPERATING EXPENSES For the Years Ended December 31, ($ in millions) 2023 2022 2021 Selling, general and administrative expenses $ 1,056.9 $ 1,055.5 $ 1,019.8 Research and development expenses $ 93.8 $ 100.1 $ 100.5 Goodwill and intangible asset impairment $ 258.3 $ — $ — SG&A as a % of sales 41.2 % 41.1 % 40.6 % R&D as a % of sales 3.7 % 3.9 % 4.0 % SG&A expenses as a percentage of sales for the year ended December 31, 2023, was consistent with the comparable period in 2022.
OPERATING EXPENSES For the Years Ended December 31, ($ in millions) 2024 2023 2022 Selling, general and administrative expenses $ 1,158.0 $ 1,056.9 $ 1,055.5 Research and development expenses $ 99.1 $ 93.8 $ 100.1 Goodwill and intangible asset impairment $ 1,153.8 $ 258.3 $ — SG&A as a % of sales 46.1 % 41.2 % 41.1 % R&D as a % of sales 3.9 % 3.7 % 3.9 % 54 The increase in SG&A expenses as a percentage of sales for the year ended December 31, 2024, as compared to the comparable period of 2023, was primarily due to higher sales and marketing investments, increased compensation, increased bad debt, higher restructuring costs, and higher legal settlement costs, partially offset by a decrease in amortization of intangible assets.
Our significant assumptions in the discounted cash flow models vary amongst, and are specific to, each reporting unit which include, but are not limited to, discount rates, revenue growth rates, and operating margin assumptions. The discounted cash flow model requires judgments and assumptions about projected sales growth, future operating margins, discount rates and terminal values.
The income approach uses a discounted cash flow model with inputs developed using both internal and market-based data. Our significant assumptions in the discounted cash flow models vary amongst, and are specific to, each reporting unit which include, but are not limited to, discount rates, revenue growth rates, and operating margin assumptions.
Our 2023 annual impairment analysis for indefinite-lived intangible assets, indicated that the fair value of two of our three trade names did not exceed their carrying value and consequently resulted in a $46.0 million impairment charge.
The reduction in value is primarily due to a reduction in projected cash flows as discussed above. 63 Our impairment analysis for indefinite-lived intangible assets at June 28, 2024 indicated that the fair value of two of our three trade names did not exceed their carrying value and consequently resulted in a $101.1 million impairment charge.
SPECIALTY PRODUCTS & TECHNOLOGIES Our Specialty Products & Technologies segment primarily develops, manufactures and markets dental implant systems, including regenerative products, dental prosthetics and associated treatment software and technologies, as well as orthodontic bracket systems, aligners and lab products.
The change in the effective rate was primarily due to larger nondeductible impairment charges for goodwill in the current year compared to the prior year. 55 SPECIALTY PRODUCTS & TECHNOLOGIES Our Specialty Products & Technologies segment primarily develops, manufactures and markets dental implant systems, including regenerative products, dental prosthetics and associated treatment software and technologies, as well as orthodontic bracket systems, aligners and lab products.
COST OF SALES AND GROSS PROFIT MARGIN For the Years Ended December 31, ($ in millions) 2023 2022 2021 Cost of sales $ 1,126.0 $ 1,094.3 $ 1,082.4 Gross profit margin 56.1 % 57.4 % 56.9 % The increase in cost of sales during the year ended December 31, 2023, as compared to the comparable period in 2022, was primarily due to unfavorable product mix and higher costs due to the impact of foreign currency exchange rates, partially offset by the absence of the amortization of the fair value adjustments related to acquired inventory as part of our acquisitions, and by period-over-period savings associated with productivity improvements.
COST OF SALES AND GROSS PROFIT MARGIN For the Years Ended December 31, ($ in millions) 2024 2023 2022 Cost of sales $ 1,137.9 $ 1,126.0 $ 1,094.3 Gross profit margin 54.7 % 56.1 % 57.4 % The increase in cost of sales and decrease in gross profit margin during the year ended December 31, 2024, as compared to the comparable period in 2023, was primarily driven by unfavorable product mix, the impairment of certain long-lived assets and lower period-over-period savings associated with productivity improvements.
Equipment & Consumables Selected Financial Data For the Year Ended December 31, ($ in millions) 2023 2022 2021 Sales $ 924.1 $ 970.5 $ 1,001.1 Operating profit 156.3 172.4 153.8 Operating profit as a % of sales 16.9 % 17.8 % 15.4 % GAAP Reconciliation Sales and Core Sales Growth 2023 vs. 2022 2022 vs. 2021 Total sales growth (GAAP) (4.8) % (3.1) % Less the impact of: Acquisitions (1.5) % (2.8) % Currency exchange rates 0.4 % 2.5 % Core sales growth (non-GAAP) (5.9) % (3.4) % 55 Sales Sales and core sales growth for the year ended December 31, 2023 decreased 4.8% and 5.9%, respectively, compared to the comparable period in 2022.
EQUIPMENT & CONSUMABLES Our Equipment & Consumables segment primarily develops, manufactures and markets dental equipment and supplies used in dental offices, including digital imaging systems, software and other visualization/magnification systems; endodontic systems and related consumable products; restorative materials and instruments, rotary burs, impression materials, bonding agents and cements and infection prevention products. 56 Equipment & Consumables Selected Financial Data For the Year Ended December 31, ($ in millions) 2024 2023 2022 Sales $ 894.2 $ 924.1 $ 970.5 Operating profit 152.3 156.3 172.4 Operating profit as a % of sales 17.0 % 16.9 % 17.8 % GAAP Reconciliation Sales and Core Sales Growth 2024 vs. 2023 2023 vs. 2022 Total sales growth (GAAP) (3.2) % (4.8) % Less the impact of: Acquisitions — % (1.5) % Currency exchange rates 0.6 % 0.4 % Core sales growth (non-GAAP) (2.6) % (5.9) % Sales Sales and core sales growth for the year ended December 31, 2024 decreased 3.2% and 2.6%, respectively, compared to the comparable period in 2023.
For additional information regarding our products, including descriptions of our products, refer to “Item 1. Business—Business Segments.” 49 Costs and Expenses and Other Cost of sales consists primarily of cost of materials, facilities and other infrastructure used to manufacture our products and shipping and handling costs attributable to delivering our products to our customers.
Business—Business Segments.” Costs and Expenses and Other Cost of sales consists primarily of cost of materials, facilities and other infrastructure used to manufacture our products and shipping and handling costs attributable to delivering our products to our customers. Also included in cost of sales are productivity improvement and restructuring expenses related to our manufacturing operations.
Our operations and results can be affected by the rate and extent to which appropriate acquisition opportunities are available, acquired businesses are effectively integrated and anticipated synergies or cost savings are achieved. During the year ended December 31, 2022, we completed two acquisitions.
Our operations and results can be affected by the rate and extent to which appropriate acquisition opportunities are available, acquired businesses are effectively integrated and anticipated synergies or cost savings are achieved. Non-GAAP Measures In order to establish period-to-period comparability, we include the non-GAAP measure of core sales in this report.
Net cash provided by operating activities was $275.7 million during the year ended December 31, 2023, as compared to net cash provided by operating activities of $182.7 million in 2022, primarily due to lower transaction related costs along with lower incentive compensation payments during the year ended December 31, 2023.
Net cash provided by operating activities was $336.5 million during the year ended December 31, 2024, as compared to net cash provided by operating activities of $275.7 million in 2023. The increase is primarily due to better overall working capital management and tax payments.
There are inherent uncertainties related to these assumptions and our judgment in applying them to the analysis of goodwill impairment. Our annual goodwill impairment analysis in 2023 indicated that the fair value of three of our eight reporting units did not exceed their carrying values and consequently resulted in a $212.3 million impairment charge.
Our goodwill impairment analysis at June 28, 2024 indicated that the fair value of five of our eight reporting units did not exceed their carrying values and consequently resulted in a $960.5 million impairment charge.
NEW ACCOUNTING STANDARDS For a discussion of the new accounting standards impacting us, refer to Note 2 to our Consolidated Financial Statements in this Annual Report on Form 10-K. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The information required by this item is included under “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
NEW ACCOUNTING STANDARDS For a discussion of the new accounting standards impacting us, refer to Note 2 to our Consolidated Financial Statements in this Annual Report on Form 10-K.
The cost reduction initiatives we have taken and will continue to undertake in the future allow us to further invest in this growth strategy, which in turn we believe should improve our margins. 48 Our continued investment in Spark, our clear aligner system, has led to increased manufacturing capacity and continues to gain market adoption as orthodontists and their patients see the benefits of the clear, stain resistant and comfortable design.
Our continued investment in Spark, our clear aligner system, has led to increased manufacturing capacity and continues to gain market adoption as orthodontists and their patients see the benefits of the clear, stain resistant and comfortable design. We believe that Spark will provide growth opportunities for our Orthodontic Solutions business over the next several years.
Additionally, sales for the year ended December 31, 2023 were also positively impacted by the acquisition of Osteogenics. Operating Profit Operating profit margin was 14.1% for the year ended December 31, 2023, as compared to an operating profit margin of 16.8% for the comparable period of 2022.
Operating Profit Operating profit margin was 17.0% for the year ended December 31, 2024, as compared to an operating profit margin of 16.9% for the comparable period of 2023.
During the year ended December 31, 2023, our products were sold in more than 130 countries and 53% of our sales were to customers outside of the United States. We seek to manage our foreign exchange risk, in part, through our operations, including managing same-currency sales in relation to same-currency costs and same-currency assets in relation to same-currency liabilities.
We seek to manage our foreign exchange risk, in part, through our operations, including managing same-currency sales in relation to same-currency costs and same-currency assets in relation to same-currency liabilities.
Risk Factors—Risks Related to Our Business.” CRITICAL ACCOUNTING ESTIMATES Management’s discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with GAAP.
At December 31, 2024, there were no open derivative or hedging instruments for future purchases of raw materials or commodities. CRITICAL ACCOUNTING ESTIMATES Management’s discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with GAAP.
Sales growth increased by 4.3% due to higher volume on a period-over-period basis, partially offset by a decrease in sales price of 1.4% in part due to the VBP program. The increase in sales is primarily due to growth in Europe and China, partially offset by lower demand from North America.
A decrease in sales volume driven by channel inventory realignment negatively impacted sales by 4.8% on a period-over-period basis, partially offset by an increase in sales price of 2.2%. Geographically, sales for the year ended December 31, 2024 decreased primarily due to lower demand from Europe and China, partially offset by Russia and North America.
Financing Activities and Indebtedness Net cash provided by financing activities was $118.9 million during the year ended December 31, 2023, compared to $12.5 million for the comparable period of 2022, primarily due to higher net borrowings during 2023 partially offset by lower proceeds from stock option exercises as compared to the prior year.
Net cash used in financing activities was $103.7 million during the year ended December 31, 2024, compared to net cash provided by financing activities of $118.9 million for the comparable period of 2023 and was primarily due to a repayment of $100.0 million of the 2028 Term Loan during 2024 compared to net borrowings during 2023.
We intend to satisfy any short-term liquidity needs that are not met through operating cash flow and available cash primarily through our revolving credit facility.
For a description of our outstanding debt as of December 31, 2024, refer to Note 16 to our Consolidated Financial Statements in this Annual Report on Form 10-K. We intend to satisfy any short-term liquidity needs that are not met through operating cash flow and available cash primarily through our revolving credit facility.
Furthermore, we review the carrying amounts of other finite-lived intangible assets whenever events or circumstances indicate that the carrying amounts of an asset may not be recoverable. Impairment indicators include, among other conditions, cash flow deficits, historic or anticipated declines in revenue or operating profit, and adverse legal or regulatory developments.
Impairment indicators include, among other conditions, cash flow deficits, historic or anticipated declines in revenue or operating profit, and adverse legal or regulatory developments.
As a result of our annual indefinite-lived intangible impairment test during 2023, we recorded an impairment charge of $46.0 million related to certain indefinite-lived trade names within the Specialty Products & Technologies segment. The reduction in value is primarily due to higher discount rates and reduction in projected cash flows as discussed above.
As a result of our indefinite-lived intangible asset impairment test at June 28, 2024, we recorded an impairment charge of $101.1 million related to certain indefinite-lived trade names within the Specialty Products & Technologies segment.
Operating Profit Operating profit margin was 16.9% for the year ended December 31, 2023, as compared to an operating profit margin of 17.8% for the comparable period of 2022. The decrease in operating profit margin was primarily due to lower sales, and unfavorable sales price, offset by period-over-period savings associated with productivity improvements and decreased amortization of intangible assets.
Geographically, sales for the year ended December 31, 2024 decreased primarily due to lower demand in North America and Europe, partially offset by Russia. Operating Profit Operating profit margin was 5.6% for the year ended December 31, 2024, as compared to an operating profit margin of 14.1% for the comparable period of 2023.
Israel-Hamas War In response to the attacks in Israel and the subsequent hostilities, we continue to monitor the social, political, and economic environment in Israel and in the region for any impact to our operations. Revenue generated from Israel is approximately $13.0 million annually. We also maintain a production facility in Israel related to our Alpha-Bio Tech Implant brand.
Israel-Hamas War and Related Conflict In response to the attacks in Israel and the related hostilities and despite the recent ceasefire agreement and hostage deal, we continue to monitor the social, political, and economic environment in Israel and in the region for any impact to our operations.
The decrease was primarily due to unfavorable product mix and a decrease in sales price, higher costs due to the impact of foreign currencies and investments in our long-term growth initiatives, partially offset by an increase in sales volume and by period-over-period savings associated with productivity improvements.
The decrease in operating profit margin was primarily due to lower sales, including the impact from changes to the revenue deferral related to our clear aligner treatment plans, the impairment of certain long-lived assets, unfavorable product mix, lower period-over-period savings associated with productivity improvements, higher bad debt costs, and our investment in our long-term growth initiatives.
While we have experienced some volatility in the region, the Israel-Hamas War has not had a material impact on our business. Components of Sales and Costs and Expenses Sales Our sales are primarily derived from the sale of dental consumables, equipment and services to third-party distributors and end-users.
We maintain a production facility in Israel related to our Alpha-Bio Tech Implant brand. While we have experienced some volatility in the region, the Israel-Hamas War and related hostilities have not had a material impact on our business.
An increase in sales volume positively impacted sales growth by 0.7% on a period-over-period basis, offset by a decrease in sales price of 1.1%. The decrease in sales is driven by lower demand from North America, partially offset by higher demand in Europe.
The decrease in sales volume was primarily driven by channel inventory realignment, and changes to revenue deferral related to our aligner treatment plans which negatively impacted sales by 2.2% on a period-over-period basis, partially offset by an increase in sales price of 0.7%.
Our reporting units are the financial components of operating segments which constitute businesses for which discrete financial information is available and regularly reviewed by segment management. We estimate the fair values for our reporting units by using various valuation methods, including a discounted cash flow model with inputs developed using both internal and market-based data.
There are inherent uncertainties related to these assumptions and our judgment in applying them to the analysis of goodwill impairment. Our reporting units are the financial components of operating segments which constitute businesses for which discrete financial information is available and regularly reviewed by segment management.
Additionally, we paid fees aggregating approximately $5.2 million in connection with the Second Amended Credit Agreement. 59 2028 Convertible Notes On August 10, 2023, we issued the 2028 Convertible Notes due on August 15, 2028, unless earlier repurchased, redeemed or converted.
The Company repaid $100.0 million of the 2028 Term Loan during the year ended December 31, 2024. 60 2028 Convertible Notes On August 10, 2023, we issued the 2028 Convertible Notes due on August 15, 2028, unless earlier repurchased, redeemed or converted.

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