15.
Contingencies

Legal Proceedings

The Company is subject to various routine legal proceedings and claims incidental to its business.

U.S. Department of Justice Subpoena

As previously reported, in August 2022, the Company received a subpoena from the U.S. Attorney’s Office for the District of Massachusetts (DOJ), seeking production of documents related to sales, marketing, and promotional practices, including as pertain to DEXYCU®, which the Company commercialized from 2019 to 2023.

The Company has been cooperating fully with the government in connection with this matter, which stems from a sealed qui tam complaint filed in the U.S. District Court for the District of Massachusetts. The DOJ investigation relates to the False Claims Act and the Anti-Kickback Statute, and has focused on certain of the Company’s sales, marketing and promotional practices, including sampling practices, as pertain to DEXYCU during the period for which the Company commercialized this product.

As previously disclosed, the Company has been in discussions with the DOJ regarding a possible negotiated resolution. In the first quarter of 2026, the Company reached an agreement in principle with the DOJ to settle these matters for a payment of approximately $4.7 million plus interest (exclusive of attorneys’ fees payable by the Company to counsel for relators in the qui tam action which are expected to be at or about $0.2 million), with such agreement in principle subject to our reaching an agreement in principle with the Office of Inspector General of the Department of Health and Human Services (HHS). Under ASC 450, the Company recorded an approximately $4.7 million litigation contingency liability for this matter in its consolidated balance sheets as of December 31, 2025 based on the status of settlement discussions with the DOJ as of that date. As of December 31, 2024, the contingent liability amount related to this matter was not determinable, and accordingly, the Company did not record a liability as of that date.

On February 26, 2026, the Company reached an agreement in principle with HHS to resolve matters related to the DOJ investigation on terms to include the Company entering into a corporate integrity agreement and HHS agreeing not to seek the Company’s exclusion from participation in Medicare, Medicaid, or other federal health care programs.

The agreements in principle are subject to negotiation, completion and execution of appropriate documents resolving these matters, including a settlement agreement and a corporate integrity agreement, which are expected to be finalized in the first half of 2026, and the final approval of the respective parties. There is no guarantee that the Company will be able to reach final agreement with DOJ or HHS. If the Company is not able to conclude a final resolution with the U.S. government, the DOJ may elect to proceed against the Company and seek damages in excess of the agreed in principle settlement amount, which potential liability cannot be reasonably estimated. Should a negotiated resolution of these matters not be achieved, the Company intends to defend itself vigorously.

Historical Timeline

Fiscal YearFiled
2025Mar 5, 2026Showing above
2024Mar 6, 2025
2023Mar 8, 2024
2022Mar 10, 2023
2021Mar 14, 2022
2020Mar 12, 2021
2019Mar 16, 2020
2018Sep 18, 2018
2017Sep 13, 2017
2016Sep 13, 2016

About Commitments Disclosures

Commitments and contingencies disclosures catalog a company's off-balance-sheet obligations and legal exposures — purchase commitments, guarantee arrangements, pending litigation, and regulatory proceedings. These items represent potential future cash outflows that may not appear as liabilities on the balance sheet until they become probable and estimable.

Key signals: litigation reserves and disclosed loss ranges quantify management's estimate of legal exposure, but unquantified "reasonably possible" losses often represent the larger risk. Watch for changes in language around pending cases — shifts from "remote" to "reasonably possible" or increases in estimated loss ranges signal deteriorating outcomes. Unconditional purchase obligations and take-or-pay contracts create fixed cost structures that reduce operational flexibility. Guarantee arrangements for subsidiaries or joint ventures can create cascading obligations. Compare the total commitment schedule against projected free cash flow to assess whether the company can meet its obligations without additional financing.