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How EW rewrote its risk factors

10-K ITEM 1A · FY2024 → FY2025

Text kept

54%

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+970

words, now 7,936

New in FY2025

Business and Operating Risks • Failure to successfully innovate and market products • Unsuccessful clinical trials or procedures • Manufacturing, logistics, or quality problems • Competition • Dependence on key physicians. research institutions, and hospital systems • Public health crises, including pandemics and epidemics • Reliance on vendors, suppliers, and other third parties • Use of, or failure to effectively and timely utilize, emerging technologies, including artificial intelligence (“AI”) • Damage, failure, or interruption of our information technology systems, including due to cybersecurity attacks and breaches • Failure to recruit and retain qualified talent or execute management succession plans • Failure to integrate acquired businesses • Risks associated with the sale of our Critical Care product group Global Macroeconomic and Industry Risks • Risks associated with global economic, political and social conditions • Risks related to our international operations • Inability to obtain government reimbursement or reductions in reimbursement levels • Industry consolidation Legal, Compliance and Regulatory Risks • Inability to protect our intellectual property • Inability to defend against intellectual property claims from third parties • Reduced access and demand for our products as a result of, and compliance with, health care legislation and other government regulations • Risks related to domestic and foreign income and non-income taxes • Risks related to data privacy and security laws • Losses from product liability claims • Use of products in unapproved circumstances • Substantial costs from environmental, health and safety regulations • Climate change • Risks relating to animal-borne illnesses Business and Operating Risks Failure to successfully innovate and develop new and differentiated products in a timely manner and effectively market these products could have a material effect on our prospects.
Without timely innovation and development, our products could be rendered obsolete or less competitive because of the introduction of a competitor's newer technologies or changing customer preferences.
Even if we timely innovate and develop products, our ability to successfully market them could be limited by a number of different factors, including competitive products and pricing, barriers in patient activation (including disease awareness, detection, and diagnosis), restrictive requirements in the U.S. national coverage determination for transcatheter aortic valve replacement procedures, the need for regulatory clearance, restrictions imposed on approved indications, capacity constraints within hospital systems, including staffing shortages and the availability of catheterization laboratories, and uncertainty over third-party reimbursement.
The manufacture and sterilization of many of our products are highly complex due in part to rigorous regulatory requirements.
Quality is extremely important for many reasons, including due to the serious and costly consequences of a product failure.
Problems can arise for a number of reasons, including disruption of facility utilities, equipment malfunction, failure to follow protocols and procedures, raw material problems (including cost volatility and availability), software problems, cybersecurity incidents, or human error.
If any of these manufacturing, logistics, or quality problems arise or if we or one of our suppliers or logistics partners otherwise fail to meet internal quality standards or those of the FDA or other applicable regulatory body, our reputation could be damaged, we could become subject to a safety alert or a recall (whether voluntary or mandated), we could incur product liability and other costs, product approvals and production could be delayed, and our business could otherwise be materially adversely affected.
We have in the past and are continuing to experience constrained procedure volumes and sales for our products because more products, including Edwards’ own products, are competing for the same facilities and staffing within hospitals.
These physicians may assist us as researchers, marketing consultants, product trainers and consultants, inventors, and public speakers.
With multiple new technologies competing for these facilities, including technologies we develop and introduce in both our TAVR and TMTT product groups, a decision by a hospital system, particularly a large hospital system, not to adequately staff or provide facilities necessary to perform procedures using our products, or a decision to use a competitors’ products instead of ours, has in the past and may continue in the future to meaningfully adversely impact our ability to sell our products, resulting in lower sales and revenue than we forecasted, which could have a material adverse effect on our business, financial condition, and results of operations.
We are subject to risks associated with public health crises.
We are subject to risks associated with public health crises, including pandemics and epidemics, the timing and effects of which are highly uncertain and difficult to predict, and could disrupt our business and the hospital systems and supply chains in which we operate and result in material adverse impacts on our business, financial condition, and results of operations.
We experience from time to time, and may continue to experience, supply interruptions due to a variety of factors, including: • General economic conditions that could adversely affect the financial viability of our vendors; • Vendors' election to no longer service or supply medical technology companies, including due to the burdens of applicable quality requirements and regulations or for no reason at all; • The limitation or ban of certain chemicals or other materials used in the manufacture of our products; and • Delays, shortages and price increases due to trade or regulatory embargoes.
A change or addition to our vendors could require significant effort due to the rigorous regulations and requirements of the FDA and other regulatory authorities; it could be difficult to establish additional or replacement sources on a timely basis or at all, which could have a material adverse effect on our business, financial condition, and results of operations.
Our use of, or our failure to effectively and timely utilize, emerging technologies, including AI, could adversely impact our business and financial results.
We use AI and other emerging technologies in various facets of our operations and our business.
The legal and regulatory landscape surrounding AI technologies is rapidly evolving and uncertain.
The rapid advancement of these technologies entails risks, including potential deficiencies in AI-generated information and increased regulatory, cybersecurity, privacy, intellectual property and data-related risks.
Another risk may arise if we are unable to timely utilize AI for technological innovation and business operation efficiency in a manner that is faster and more effective than our competitors.
In addition, compliance with new or changing laws, regulations or industry standards relating to AI may impose significant costs on us and limit our ability to effectively develop, deploy or use AI technologies.
Furthermore, if we are unable to effectively manage the use of AI technologies by our employees and service providers, our confidential information, intellectual property and reputation could be put at risk.
Failure to appropriately respond to this evolving landscape may result in reputational, competitive and business harm as well as litigation and regulatory action and fines, penalties and expenses related thereto.
The operation of our business depends on our information technology systems and the information technology systems of certain of our service providers and suppliers.
Our information technology systems are vulnerable to damage or interruption from earthquakes, fires, floods and other natural disasters, terrorist attacks, power losses, computer system or data network failures or outages, security breaches, and data corruption.
Further, cybersecurity threats and the techniques used in cybersecurity attacks change, develop, and evolve rapidly, including from emerging technologies, such as advanced forms of AI and quantum computing.
Acquired businesses may have liabilities, or be subject to claims, litigation or investigations that we did not anticipate or which exceed our estimates at the time of the acquisition.
We have written down the value of certain acquired assets in the past, and may be required to do so in the future.
We have also previously decided to, and may in the future decide to, dispose of underperforming operations or products or voluntarily cease operations related to a product.
In addition, we have previously been required, and may in the future be required, to record charges or write-downs in connection with acquisitions and divestitures, including charges related to developed technology and/or in-process research and development assets.
We have also been, and may in the future be, party to disputes arising from divestitures or ceased operations related to certain products, which have previously and may in the future result in litigation, liability or reputational harm.
Any of these events could have a material adverse effect on our business, financial condition, and results of operations.
We are subject to risks involved with transferring the Critical Care product group and functioning under interim operating model arrangements, such as increased complexity of operations, including, but not limited to, those related to finance, quality, and information technology, diversion of management’s attention to our business, and additional related risks and costs which can have an adverse effect on our business, financial condition, and results of operations.
Global Macroeconomic and Industry Risks We may be adversely impacted by global economic, political and social conditions.
We conduct extensive global operations and have been impacted and may continue to be negatively impacted by general global economic, political and social conditions, although we cannot predict the extent to which such conditions may negatively impact our business.
These include, but are not limited to, conditions impacting inflation, credit and capital markets, interest rates, tax law, including tax rate and policy changes, factors affecting global economic stability, tariffs and the political environment relating to health care.
Our international operations subject us to certain business risks.
We are from time to time impacted by a variety of risks associated with doing business internationally that can harm our future results, including the following: • trade protection measures, quotas, embargoes, import or export requirements, and duties, tariffs, or surcharges (including existing or potential future tariffs imposed by the U.S. on goods from other countries and tariffs imposed by other countries on U.S. goods); • cultural or other local factors affecting financial terms with customers; • global regulations including those related to health care, labor and environmental, social and governance; military conflict, political unrest, or wars; • scrutiny from governmental bodies regarding the pricing of our products; and • currency exchange rate fluctuations; that is, decreases in the value of the United States dollar to the Euro or the Japanese yen, as well as other currencies in which we transact business, have the effect of increasing our reported sales even when the volume of sales outside of the United States has remained constant.
Department of Commerce recently initiated an investigation under Section 232 of the Trade Expansion Act of 1962, as amended, into (among other things) imports of personal protective equipment, medical consumables and medical equipment (including devices), to determine whether they threaten U.S. national security, which further creates policy uncertainty in terms of tariffs.
The current tariff environment is dynamic, as the U.S. government has imposed, modified and paused tariffs multiple times since the beginning of 2025.
Changes to tariffs and other trade restrictions can be announced at any time with little or no notice.

and 36 more.

Gone since FY2024

Business and Operating Risks • Failure to successfully innovate and market products • Unsuccessful clinical trials or procedures • Manufacturing, logistics, or quality problems • Competition • Dependence on key physicians. research institutions, and hospital systems • Public health crises, including pandemics and epidemics • Reliance on vendors, suppliers, and other third parties • Damage, failure, or interruption of our information technology systems, including due to cybersecurity attacks and breaches • Failure to recruit and retain qualified talent or execute management succession plans • Failure to integrate acquired businesses • Risks associated with the sale of our Critical Care product group Global Economic and Other External Risks • Risks associated with international sales and operations • Inability to obtain government reimbursement or reductions in reimbursement levels • Industry consolidation Legal, Compliance and Regulatory Risks • Inability to protect our intellectual property • Inability to defend against intellectual property claims from third parties • Compliance with government regulations • Risks related to data privacy and security laws • Losses from product liability claims • Use of products in unapproved circumstances • Substantial costs from environmental, health and safety regulations • Climate change • Regulatory actions relating to animal-borne illnesses Business and Operating Risks Failure to successfully innovate and develop new and differentiated products in a timely manner and effectively market these products could have a material effect on our prospects.
Without the timely innovation and development of products, our products could be rendered obsolete or less competitive because of the introduction of a competitor's newer technologies or changing customer preferences.
Even if we timely innovate and develop products, our ability to successfully market them could be constrained by a number of different factors, including competitive products and pricing, barriers in patient activation (including disease awareness, detection, and diagnosis), the need for regulatory clearance, restrictions imposed on approved indications, and uncertainty over third-party reimbursement.
The manufacture and sterilization of many of our products is highly complex due in part to rigorous regulatory requirements.
Quality is extremely important due to the serious and costly consequences of a product failure.
Problems can arise for a number of reasons, including disruption of facility utilities, equipment malfunction, failure to follow protocols and procedures, raw material problems, software problems, cyber incidents, or human error.
If any of these manufacturing, logistics, or quality problems arise or if we or one of our suppliers or logistics partners otherwise fail to meet internal quality standards or those of the FDA or other applicable regulatory body, our reputation could be damaged, we could become subject to a safety alert or a recall, we could incur product liability and other costs, product approvals and production could be delayed, and our business could otherwise be materially adversely affected.
These physicians may assist us as researchers, marketing consultants, product trainers and consultants, inventors, and as public speakers.
With multiple new technologies competing for these facilities, a decision by a hospital system, particularly a large hospital system, not to adequately staff or provide facilities necessary to perform procedures using our products can meaningfully adversely impact our ability to sell our products.
Those limitations could have a material adverse effect on our business, financial condition, and results of operations.
We are subject to risks associated with public health crises, particularly with respect to the pressures that such crises create on the hospital systems and supply chains in which we operate.
We are subject to risks associated with public health crises, including pandemics and epidemics, such as COVID-19.
Other public health crises, including any future epidemics or pandemics, are highly uncertain and difficult to predict, and could result in material adverse impacts on our business, financial condition, and results of operations.
We experience from time to time, and may continue to experience, supply interruptions due to a variety of factors, including: • General economic conditions that could adversely affect the financial viability of our vendors; • Vendors' election to no longer service or supply medical technology companies, including due to the burdens of applicable quality requirements and regulations or for no reason at all; • The limitation or ban of certain chemicals or other materials used in the manufacture of our products; and • Delays or shortages due to trade or regulatory embargoes.
A change or addition to our vendors could require significant effort due to the rigorous regulations and requirements of the FDA and other regulatory authorities; it could be difficult to establish additional or replacement sources on a timely basis or at all, which could have a material adverse effect on our business.
The operation of our business depends on our information technology systems.
Our information technology systems are vulnerable to damage or interruption from earthquakes, fires, floods and other natural disasters, terrorist attacks, power losses, computer system or data network failures, security breaches, and data corruption.
Further, cybersecurity threats and the techniques used in cybersecurity attacks change, develop, and evolve rapidly, including from emerging technologies, such as advanced forms of artificial intelligence ("AI") and quantum computing.
To the extent that the value of these assets decline, we may be required to write down the value of the assets.
We may dispose of these underperforming operations or products or voluntarily cease operations related to a product.
In addition, we may be required to record charges or write-downs in connection with acquisitions and divestitures, including charges related to developed technology and/or in-process research and development assets.
Any of these events could adversely affect our results of operations.
We are subject to risks involved with transferring the Critical Care product group and operating under interim operating model arrangements, such as increased complexity of operations, including, but not limited to, those related to finance, quality, and information technology, diversion of management’s attention to our business, and additional related risks and costs which can have an adverse effect on our business, financial condition, and results of operations.
Global Economic and Other External Risks Because we operate globally, our business is subject to a variety of risks associated with international sales and operations.
Our extensive global operations and business activity as well as the fact that many of our manufacturing facilities and suppliers are outside of the United States expose us to certain financial, economic, political, and other risks, including those listed below.
Domestic and Global Economic Conditions.
We have been impacted and may continue to be negatively impacted by general domestic and global economic conditions, although we cannot predict the extent to which such conditions may negatively impact our business.
These include, but are not limited to, conditions impacting inflation, credit and capital markets, interest rates, tax law, including tax rate and policy changes, factors affecting global economic stability, and the political environment relating to health care.
Health Care Legislation and Other Regulations .
For example, in the United States, continued implementation of the Affordable Care Act and the 21st Century Cures Act, or any future legislation under the new Administration and new Congress, including deficit reduction legislation, could impact medical procedure volumes, reimbursement for our products, and demand for our products or the prices at which we sell our products.
For more information about these laws as they relate to our business, see the section entitled “ Government Regulation and Other Matter s” in Part I, Item 1, “ Business .” In addition, the United States Foreign Corrupt Practices Act, the United Kingdom Bribery Act, and similar laws in other jurisdictions contain prohibitions against bribery and other illegal payments, and make it an offense to fail to have procedures in place that prevent such payments.
Penalties resulting from any violation of these laws could adversely affect us and our business.
We are subject to income taxes in the United States as well as other jurisdictions. • Provision for Income Taxes.
Our income tax provision could also be impacted by changes in excess tax benefits of stock-based compensation, federal and state tax credits, non-deductible expenses, changes in the valuation of deferred tax assets and liabilities and our ability to utilize them, the applicability and creditability of withholding taxes, and effects from acquisitions. • Tax Reform .
The effective dates of implementation, the interactions of tax reforms in multiple jurisdictions, and uncertainty related to dispute resolution mechanisms could impact our provision for income taxes. • Tax Audits .
In addition, we have challenged in the past and may decide in the future to challenge any assessments, if made, and may exercise our right to appeal, which could result in expensive and time-consuming litigation that may ultimately be unsuccessful. • Tax Incentives .
Other economic, political, and social risks.
In addition to the factors enumerated above, we are from time to time impacted by a variety of other factors associated with doing business internationally that can harm our future results, including the following: • trade protection measures, quotas, embargoes, import or export requirements, and duties, tariffs, or surcharges; • cultural or other local factors affecting financial terms with customers; • differing labor regulations; • military conflict, political unrest, or wars; and • currency exchange rate fluctuations; that is, decreases in the value of the United States dollar to the Euro or the Japanese yen, as well as other currencies in which we transact business, have the effect of increasing our reported sales even when the volume of sales outside of the United States has remained constant.
If government and other third-party payors decline to reimburse our customers for our products or impose other cost containment measures to reduce reimbursement levels, our ability to profitably sell our products will be harmed.
The availability of reimbursement affects which products customers purchase and the prices they are willing to pay.

and 16 more.

Sentence-level comparison of Item 1A in the two most recent 10-Ks (FY2024 ↗, FY2025 ↗). A reworded sentence counts as one dropped and one added, so heavy edits read as low “kept”. Headings and page furniture are stripped; nothing is summarised by a model.

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