FDA clears Allurion (NYSE: ALUR) obesity balloon as shares move to OTC
Rhea-AI Filing Summary
Allurion Technologies, Inc. describes its business as a metabolically focused weight loss platform built around the Allurion Program, which combines the swallowable Allurion Smart Capsule gastric balloon with an AI-powered Virtual Care Suite for remote monitoring and behavior change.
The company highlights more than 200,000 patients treated across over 50 countries and positions its program as complementary to GLP-1 drugs. It reports FDA PMA approval in the United States for the Allurion Gastric Balloon System for adults with obesity, enabling U.S. commercialization. Recent financing steps include a November 2025 private placement and a February 2026 warrant inducement that raised cash but added new warrants.
Allurion also discloses NYSE minimum market-capitalization non-compliance and ongoing appeals of delisting determinations, with its common stock now trading on the OTC market and plans to seek a higher-tier OTC listing. The company emphasizes a large obesity market opportunity, a broad patent and trademark portfolio, and a strategy focused on global expansion, U.S. launch, and a path to profitability.
Positive
- U.S. PMA approval unlocks a major new market. The FDA approved the Allurion Gastric Balloon System in February 2026 for adults with obesity (BMI 30–40), enabling U.S. commercialization on top of existing sales in more than 50 countries.
- Capital structure and funding enhancements. A November 2025 private placement raised approximately $5.0 million, a February 2026 warrant inducement brought in about $3.1 million, and an exchange deal will convert RTW-held notes and revenue interests into Series B preferred stock.
Negative
- NYSE delisting and shift to OTC trading. In March 2026 the NYSE began delisting proceedings after Allurion failed the $15 million average market-capitalization standard, suspended trading, and moved the stock to the OTC market, which can reduce visibility and liquidity.
Insights
FDA approval and capital raises support growth, but listing risk is elevated.
Allurion now has PMA approval for its Allurion Gastric Balloon System in the U.S., a significant milestone that opens a large new market for its swallowable intragastric balloon and related digital tools. The company frames a U.S. total addressable market of about $10 billion, building on commercial use in over 50 countries.
To fund operations, Allurion entered a $5.0 million private placement in November 2025 and a warrant inducement in February 2026 that generated about $3.1 million while issuing 5,319,130 new warrants at $1.15. It also agreed to exchange debt and revenue interest obligations into Series B preferred stock held by RTW, shifting part of the capital structure toward equity.
The key risk is listing status. The NYSE notified Allurion in March 2026 that its market capitalization fell below the $15 million standard, suspended trading, and began delisting proceedings. Shares now trade on the OTC, and the company is appealing and planning an uplist within the OTC system. Future filings will clarify whether U.S. commercialization and capital-structure changes offset the pressure from reduced exchange visibility and liquidity.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to
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Table of Contents
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PART I |
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Item 1. |
Business |
4 |
Item 1A. |
Risk Factors |
31 |
Item 1B. |
Unresolved Staff Comments |
76 |
Item 1C. |
Cybersecurity |
76 |
Item 2. |
Properties |
76 |
Item 3. |
Legal Proceedings |
77 |
Item 4. |
Mine Safety Disclosures |
77 |
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PART II |
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Item 5. |
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities |
78 |
Item 6. |
[Reserved] |
78 |
Item 7. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
79 |
Item 7A. |
Quantitative and Qualitative Disclosures About Market Risk |
92 |
Item 8. |
Financial Statements and Supplementary Data |
93 |
Item 9. |
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure |
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Item 9A. |
Controls and Procedures |
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Item 9B. |
Other Information |
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Item 9C. |
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections |
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PART III |
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Item 10. |
Directors, Executive Officers and Corporate Governance |
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Item 11. |
Executive Compensation |
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Item 12. |
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters |
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Item 13. |
Certain Relationships and Related Transactions, and Director Independence |
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Item 14. |
Principal Accountant Fees and Services |
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PART IV |
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Item 15. |
Exhibits and Financial Statement Schedules |
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Item 16. |
Form 10-K Summary |
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Cautionary Statement Regarding Forward-Looking Statements
This Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements, which are not purely historical, include, but are not limited to, statements regarding the plans, strategies and prospects, both business and financial, of Allurion Technologies, Inc. (“Allurion”, the "Company", "we", "our", or "us"). Forward-looking statements involve known and unknown risks, uncertainties, assumptions and other factors. Such risks, uncertainties and other factors could cause the actual results, performance or achievements of the Company, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.
Generally, statements that are not historical facts, including statements concerning possible or assumed future actions, business strategies, events, or results of operations, are forward-looking statements. These statements may be preceded by, followed by or include the words “believes”, “estimates”, “expects”, “projects”, “target”, “goal”, “forecasts”, “may”, “will”, “potential”, “should”, “would”, “could”, “future”, “seeks”, “plans”, “predicts”, “propose”, “scheduled”, “anticipates”, “intends”, or similar expressions. Such statements are based on the beliefs and assumptions of the management of Allurion. Although Allurion believes that its plans, intentions and expectations reflected in or suggested by these forward-looking statements are reasonable, Allurion cannot assure you that it will achieve or realize these plans, intentions or expectations.
Forward-looking statements in this Annual Report on Form 10-K include, but are not limited to, statements about the ability of Allurion to:
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We have based the forward-looking statements contained in this Annual Report on Form 10-K primarily on our current expectations and projections about future events and trends that we believe may affect Allurion’s business, financial condition, results of operations, prospects, business strategy, and financial needs. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties, assumptions and other factors described in the section entitled “Risk Factors” beginning on page 31 and elsewhere in this Annual Report on Form 10-K. These risks are not exhaustive. Other sections of this Annual Report on Form 10-K include additional factors that could adversely impact our business and financial performance. Moreover, Allurion operates in very competitive and rapidly changing environments. New risks and uncertainties emerge from time to time and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Annual Report on Form 10-K.
We cannot assure you that the results, events and circumstances reflected in the forward-looking statements will be achieved or occur, and actual results, events or circumstances could differ materially from those described in the forward-looking statements.
In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Annual Report on Form 10-K, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and such statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as may be required under applicable securities laws.
BASIS OF PRESENTATION
In January 2025, we effected a 1-for-25 reverse stock split (the “Reverse Stock Split”) of our common stock, par value $0.0001 per share (“common stock”). As a result, every 25 shares of our issued common stock were combined into one share of our common stock. No fractional shares of our common stock were issued as a result of the Reverse Stock Split. Stockholders who would otherwise have held a fraction of a share of common stock of the Company automatically received an additional fraction of a share of Common Stock to round up to the next whole share. As a result of the Reverse Stock Split, proportionate adjustments were made to the per share exercise price and the number of shares issuable upon the exercise of all outstanding warrants and options to purchase shares of our common stock. Accordingly, unless otherwise noted, all share and per share
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amounts for all periods presented in this Annual Report on Form 10-K have been adjusted retroactively, where applicable, to reflect the Reverse Stock Split. The shares of our common stock retained a par value of $0.0001 per share.
PART I
Item 1. Business.
Unless the context otherwise requires, all references in this section to the “company”, “we”, “us”, or “our” refer to the business of Allurion Technologies, LLC, which was previously known as Allurion Technologies Opco, Inc. (formerly Allurion Technologies, Inc., a Delaware corporation formed in 2009), which is sometimes referred to as Legacy Allurion, and its subsidiaries prior to the consummation of the Business Combination, and to Allurion (formerly known as Allurion Technologies Holdings, Inc., a Delaware corporation formed in 2023) and its subsidiaries after giving effect to the Business Combination.
Overview
Our company is pioneering metabolically healthy weight loss by creating a best-in-class weight loss platform to treat the estimated two billion people globally who are overweight. Our platform, the Allurion Program (the "Allurion Program"), features the world’s first and only swallowable, ProcedurelessTM intragastric balloon for weight loss (the "Allurion Smart Capsule") and offers access to artificial intelligence ("AI")-powered remote patient monitoring tools, a proprietary behavior change program, secure messaging and video telehealth that make up the Allurion Virtual Care Suite (“VCS”). Over 200,000 patients have already been treated commercially with the Allurion Smart Capsule in over 50 countries outside of the United States.
The Allurion Program was designed to achieve metabolically healthy weight loss, which entails losing weight, maintaining that weight loss, and maintaining or increasing muscle mass in the process. Unlike other options that lead to short-term weight loss and muscle wasting, the Allurion Program is intended to deliver longer lasting results while reducing fat and not muscle. We believe the Allurion Program is also synergistic in combination with other weight loss therapies, including glucagon-like peptide 1 ("GLP-1") receptor agonists.
The Allurion Smart Capsule is swallowed as a capsule under the guidance of a health care provider without surgery, endoscopy, or anesthesia. The placement takes approximately 15 minutes during an outpatient visit (though times may vary across different outpatient offices). We believe the proprietary technologies that differentiate the Allurion Smart Capsule enable improved safety and efficacy outcomes. In a prospective, non-randomized, open-label, registry trial, the Allurion Smart Capsule demonstrated significant weight loss and low device- or procedure-related rates of serious adverse events, both of which results we believe compare favorably to that of our competitors.
The VCS is comprised of the following tools to support patients’ weight loss experience, which we believe benefit both patients and health care providers:
In addition to its use by Allurion Smart Capsule patients, we believe the VCS can potentially be a platform for optimal long-term follow-up after other medical and surgical weight loss interventions in the future. We have incorporated a Treatment Tracking and Clinic-Led Onboarding feature into VCS that enables seamless onboarding and management of patients undergoing one or multiple weight loss treatments, including gastric balloons such as the Allurion Smart Capsule, surgery, or medications,
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and in April 2024 launched the VCS in the United States for patients utilizing other weight loss treatments, including anti-obesity medications and bariatric surgery.
We have assembled a broad portfolio of intellectual property related to the Allurion Smart Capsule and the VCS platform. We believe this intellectual property, combined with our proprietary manufacturing processes and the regulatory approvals we have successfully obtained in and outside of the United States, provide us with a strong market position. As of December 31, 2025, we owned or had rights to 23 issued and four pending patents in the United States related to various aspects of our Allurion Smart Capsule such as a swallowable, self-deflating and naturally passing gastric balloon, improvements to the fill and release valves therein, methods for deploying and releasing a gastric balloon within the body, and next generation fill and release valves. In addition, as of December 31, 2025, we had 43 issued and four patents pending outside of the United States. We intend to continue to expand our intellectual property portfolio and invest in protecting new innovations.
To date, most of our revenues have been generated from sales of the Allurion Smart Capsule. We began selling the Allurion Smart Capsule in Europe in January 2016 and have sold in over 50 countries globally outside of the United States. We currently sell our products either via our direct sales force or, in certain countries, distributors.
Recent Developments
November 2025 Securities Purchase Agreement
On November 11, 2025, we entered into a securities purchase agreement (the "November 2025 Securities Purchase Agreement") with certain accredited investors named therein, pursuant to which we agreed to issue and sell 2,994,012 shares of our Common Stock and accompanying common warrants to purchase up to 2,994,012 shares of Common Stock (the "November 2025 Private Placement Warrants"), for an aggregate purchase price of approximately $5.0 million at a purchase price of $1.67 per share and accompanying November 2025 Private Placement Warrant.
Exchange Agreement
On November 11, 2025, we entered into a securities purchase and exchange agreement (the "Exchange Agreement") with certain entities managed by RTW, pursuant to which RTW has agreed to exchange all of the (i) principal amount of convertible senior secured notes (the "Notes"), purchased pursuant to the terms of the Amended Note Purchase Agreement, including interest accrued on the Notes; (ii) Company obligations under the Revenue Interest Financing Agreement; and (iii) Company obligations under the New RIFA (together with the Revenue Interest Financing Agreement, the "RIFAs") for shares of a newly issued class of Series B convertible preferred stock, par value $0.0001 per share ("Series B Preferred Stock") of the Company (the "Exchange"). On December 18, 2025, the Company obtained stockholder approval of the issuance of the Series B Preferred Stock. RTW's obligation to consummate the closing of the Exchange is conditioned upon compliance with the listing requirements of the national securities exchange on which the Common Stock is then listed on.
FDA Approval
On February 20, 2026, the U.S. Food and Drug Administration (“FDA”) granted PMA approval for the Allurion Gastric Balloon System (AGBS), featuring the Allurion Smart Capsule. In the United States, the AGBS is indicated to promote short-term limited weight loss in adult individuals with obesity between the ages of 22 years and 65 years with a body mass index (BMI) ≥ 30 kg/m2 and ≤ 40 kg/m2 who have had at least one unsuccessful attempt at a weight loss program. The residence time for each balloon is variable with an average observed residence time of 15.3 weeks. The AGBS is to be used in conjunction with a moderate intensity lifestyle modification therapy program. The AGBS consists of up to two Allurion Balloons placed during a 10-month period.
Warrant Inducement
On February 24, 2026, Allurion Technologies, Inc. (the “Company”) entered into a warrant exercise inducement offer letter (the “Inducement Letter”) with certain holders (the “Exercising Holders”) of certain of the Company’s: (i) warrants issued in January 2025 to purchase shares of common stock, par value $0.0001 per share (“Common Stock”), with an exercise price of $6.00 per share (the “January 2025 Warrants”); (ii) warrants issued in February 2025 to purchase shares of Common Stock with an exercise price of $5.23 per share (the “February 2025 Warrants”); and (iii) warrants issued in November 2025 to purchase shares of Common Stock with an exercise price of $1.67 per share (the “November 2025 Warrants” and together with the January 2025 Warrants, February 2025 Warrants, the “Existing Warrants”).
Pursuant to the terms of the Inducement Letter, the Company agreed to amend the Existing Warrants by lowering the exercise price of the Existing Warrants to $1.15 per share. Additionally, the Exercising Holders agreed to exercise for cash certain of their Existing Warrants to purchase an aggregate of 2,659,565 shares of Common Stock in exchange for the Company’s agreement to issue to such Exercising Holder new warrants (the “New Warrants”) to purchase up to an aggregate of 5,319,130 shares of Common Stock. The Company received aggregate gross proceeds of approximately $3.1 million from the exercise of
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the Existing Warrants by the Exercising Holders.
Each New Warrant is exercisable into shares of Common Stock at a price per share of $1.15, will initially be exercisable following stockholder approval (the “Initial Exercise Date”), and will expire on the five-year anniversary of the Initial Exercise Date. Subject to limited exceptions, a holder of New Warrants will not have the right to exercise any portion of its New Warrants if the holder (together with such holder’s affiliates, and any persons acting as a group together with such holder or any of such holder’s affiliates) would beneficially own a number of shares of Common Stock in excess of 4.99% (or 9.99% at the Existing Holders’ option).
The Company has engaged Roth Capital Partners, LLC (“Roth”) as its financial advisor in connection with these transactions and will pay Roth a fee equal to 5.0% of its gross proceeds from the exercise of the Existing Warrants. The Company also agreed to pay Roth up to $40,000 for fees and expenses of legal counsel and other out-of-pocket expenses.
NYSE Continued Listing Standards
On March 2, 2026, the Company announced that it received a letter (the “Delisting Notice”) from the staff of the NYSE indicating that the Company does not meet certain of the NYSE's continued listing standards as set forth in the Minimum Market Capitalization Standard. The Company has a right to a review of this determination by a Committee of the Board of Directors of the Exchange (the “Committee”). The Company has appealed this delisting determination.
On March 6, 2026, the NYSE notified the Company that it has determined to commence proceedings to delist the Company’s Common Stock, and warrants to purchase 0.056818 shares of Common Stock, with an exercise price of $202.50 per share of Common Stock, as a result of the Company’s non-compliance with Rule 802.01B of the NYSE Listed Company Manual that requires listing companies to maintain an average global market capitalization of at least $15 million over a period of 30 consecutive trading days. Trading in the Common Stock on the NYSE was suspended after market close on March 6, 2026. The Company has appealed this delisting determination. If the Company is unsuccessful in its appeal, the Company expects the NYSE will file a Form 25 with the SEC, which would result in the delisting of the Company’s Common Stock and Warrants from the NYSE on the tenth day after the Form 25 is filed.
As a result of the suspension in trading and delisting process pending the Company’s appeal, the Common Stock is trading on the OTCID Market. The Company intends to apply to list on a higher-tier market operated by the OTC Market Group, Inc. under its current symbols "ALUR" and “ALUR WS”.
Our Market Opportunity
According to the World Health Organization (“WHO”), over two billion people around the world are overweight and by 2030, one billion people globally will have obesity, defined as a body mass index (“BMI”) of 30 or greater. Likewise, according to WHO, the number of obese adults worldwide has nearly tripled since 1975. The global obesity treatment market is expected to be $54 billion by 2030.
Moreover, according to WHO, obesity is the leading cause of chronic diseases worldwide and leads to a higher risk of cardiovascular disease, type 2 diabetes, infertility, liver disease, and certain cancers. According to McKinsey, the annual global economic impact of obesity is estimated to be over $2 trillion.
We expect the rates of obesity to rise globally as access to calorie-rich foods increases and lifestyles become increasingly sedentary, especially among adolescents. According to WHO, the prevalence of obesity in children and adolescents has increased 10-fold in the past four decades and will fuel higher rates of adult obesity in the decades to come.
Despite the significant medical and economic burden that obesity poses, there remains a significant unmet need for safer, more effective, and more consumer-centric treatments.
Due to their ease of use and wide accessibility, GLP-1s have leap-frogged other therapeutic approaches to treat obesity, but while they have become a popular first-line weight loss therapy, challenges with adherence and long-term efficacy persist. Thirty percent (30%) of patients on GLP-1s discontinue their medication within the first month and 65% discontinue during the first year. The adherence obstacle for GLP-1s is caused by three key factors: side effects, including muscle mass loss, logistical hurdles, and high costs. And, importantly, each of these issues is exacerbated when higher doses are needed to achieve clinically meaningful weight loss. In fact, in 2025, in the United States alone, it is estimated that there are more than 20 million patients that have tried and stopped taking a GLP-1, and this number is expected to grow to 40 million by 2027. We believe that the Allurion Program can serve as an ideal second-line therapy for those tens of millions of GLP-1 "discontinuers". We also believe that there is significant opportunity for the Allurion Program to be used in combination with a low dosed GLP-1, the data from which has shown outsized results in total body weight loss.
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Based on a market research study we conducted with 9,800 consumers in eight countries, where we assessed each participant’s weight, income level, and interest in various weight loss alternatives, we estimate that 4.3% of the population eligible for the Allurion Smart Capsule and interested in treatment would consider the Allurion Program as a treatment for obesity. Furthermore, based on our market research, we estimate that 3% of the adult U.S. population, or approximately 10 million adults, would consider the Allurion Program as a weight loss treatment. We believe this is a $10 billion total addressable market for the Allurion Smart Capsule in the United States.
Current Therapeutic Interventions Used in Weight Loss
Current treatment alternatives for patients who are obese and overweight begin with lifestyle modification, such as diet and exercise. If this course of treatment fails to produce the desired results, as is often the case, physicians may prescribe pharmaceutical therapies, and in patients with more severe obesity, physicians may pursue aggressive bariatric surgical treatments, such as gastric bypass and sleeve gastrectomy. These approaches are associated with concerns around safety, permanence, lifestyle impact, ease of use, cost and compliance issues, as well as the significant weight re-gain associated with such approaches that have limited their adoption.
Lifestyle Modification
Lifestyle modification, which includes diet, exercise and behavior modification delivered either in-person or digitally, is usually prescribed as an initial treatment for a patient who is obese or overweight. However, lifestyle modification alone has generally been ineffective in producing sustainable weight loss in patients with obesity due to poor adherence over an extended period. Many studies have shown that a significant majority of dieters will regain lost weight and many will gain more than they originally lost.
Pharmaceutical Therapy
Pharmaceutical therapy often represents a first option in the treatment of patients with obesity who have failed to achieve weight loss goals through lifestyle modifications alone. Pharmaceutical therapies can have limited effectiveness due to non-adherence and, in most cases, need to be taken for life. In addition, more recent pharmaceutical therapies, commonly known as GLP-1s, require once weekly injections or daily dosing of pills and impose significant financial costs on the patient. Since these drugs are absorbed into the bloodstream, they have been shown to pose significant safety risks and negative systemic side effects, such as adverse gastrointestinal, cardiovascular and central nervous system issues, some of which are serious or life threatening.
Previous studies in patients undergoing GLP-1 therapy have demonstrated reductions in lean mass of approximately 40% as a proportion of total weight lost and have also shown that 30% of patients discontinue GLP-1 therapy within the first month and 65% discontinue before reaching a clinically meaningful health benefit, due in part to side effects, dose escalation required for continued weight loss, and cost.
Bariatric Surgery
Bariatric surgery is a treatment option generally reserved for cases of severe obesity in patients with a BMI greater than 40. Each year, approximately 580,000 people undergo bariatric surgery worldwide. The most common forms of bariatric surgery, gastric bypass and sleeve gastrectomy, promote weight loss by surgically restricting the stomach’s capacity and outlet size. Gastric bypass also affects weight loss by restricting the body’s ability to absorb nutrients. These procedures are highly invasive, inherently risky in a high BMI population, expensive for the patient, and irreversible. Moreover, patients cite fear of complications as the primary reason to not pursue bariatric surgery. Only one percent of patients who qualify for bariatric surgery actually get it.
Bariatric surgery patients are generally required to make significant postoperative lifestyle changes, including strict dietary changes, vitamin supplementation and long-term medical follow-up programs. Side effects of bariatric surgery include a high rate of re-operation, nausea, vomiting, dumping syndrome, dehydration, and even death. Moreover, up to 25% of patients undergoing bariatric surgery will regain all of the weight previously lost as a result of the surgery.
Previously Developed Treatment Alternatives
Given the shortcomings and limitations of existing treatment alternatives, such as bariatric surgery, endoscopic balloon therapy was introduced. Endoscopic balloon therapy involves an endoscopic procedure with anesthesia to implant a balloon in the
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stomach that leads to satiety, followed by another endoscopic procedure with anesthesia several months later to remove the balloon.
We believe high costs, procedural complexity, poor consumer experiences, lack of ongoing patient support and follow-up, and the risk of serious side effects have limited the adoption of endoscopic balloon therapy:
1. Rate of SAEs. In the ReShape Lifesciences, Inc. pivotal clinical trial for its ReShape Integrated Duo Balloon System, 31 device- or procedure-related serious adverse events were reported in 20 patients, resulting in a serious adverse event (“SAE”) rate of approximately 7.5%. Similarly, in the Apollo Endosurgery, Inc. pivotal clinical trial for its ORBERA Intragastric Balloon System, 17 SAEs were reported in 16 patients, resulting in an SAE rate of approximately 10%. In both trials, there were multiple SAEs related to the endoscopy and anesthesia required for placement and removal of the balloons.
2. Lack of comfort and tolerability. The ReShape Duo Balloon and ORBERA Balloon are manufactured from thick silicone containing rigid components. We believe that the materials used in these balloons can lead to discomfort, trauma to the stomach lining, and growth of bacteria and fungi on the balloon surface. Intolerance rates in endoscopic balloons requiring the balloons to be removed were approximately 14-17%, compared with approximately 1-3% for the Allurion Balloon.
3. Limited ability to provide progressive and sustained weight loss. For patients receiving balloon treatment in the ReShape Duo Balloon pivotal trial, the mean weight loss at 24 weeks was just 14.3 pounds. Furthermore, the average treatment subject in ReShape’s pivotal trial with weight loss at 24 weeks regained 40% of the weight loss at 48 weeks, resulting in a mean weight loss of 9.9 pounds at 48 weeks.
4. Inconvenient placement procedure. The placement procedures for the ReShape Duo Balloon and the ORBERA Balloon require both the device placement and the device removal to be performed in an endoscopic procedure using anesthesia. The patient cannot immediately return to normal activities and must be placed under medical observation for at least a few hours until cleared to go home.
Our Platform
The Allurion Program
The Allurion Program features the Allurion Smart Capsule and offers access to the VCS, a cutting-edge digital therapeutic that combines AI-powered remote patient monitoring tools with a behavior change program designed to promote long-term weight maintenance and increase muscle mass.
The Allurion Smart Capsule
The Allurion Smart Capsule is a first of its kind, Procedureless™ intragastric balloon that does not require any surgery, endoscopy, or anesthesia for placement. The balloon is swallowed in a capsule during a discrete outpatient office visit that takes approximately 15 minutes (though times may vary across different outpatient offices). Once the capsule is in the stomach, a delivery catheter is used to fill the Allurion Smart Capsule with approximately 550 milliliters of filling fluid. Approximately four
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months later, a patented ReleaseValve™ opens and allows the balloon to empty and pass out of the body naturally, although in rare cases, endoscopic or surgical intervention may be required for removal.
The Allurion Smart Capsule is designed to help reduce a patient’s food intake by taking up space in the stomach and slowing the rate at which the stomach empties. By the time the Allurion Smart Capsule passes, patients develop new food preferences, including smaller portion sizes, which we believe leads to maintainable, long-lasting results. We believe our clinical studies support that the Allurion Smart Capsule can be swallowed, filled, and passed, and provide short and long-term therapeutic benefit while minimizing risks.
The Allurion Smart Capsule is comprised of several novel and innovative features that differentiate it from previous intragastric balloons and enable it to be swallowed and then naturally passed, including:
In 2024, we released a next-generation version of the Allurion Smart Capsule that has a smaller capsule, more radiopaque catheter, and an enhanced fill valve that we believe collectively increases the ease of use and efficiency of Allurion Smart Capsule placement.
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The Allurion Virtual Care Suite
The VCS is a cutting-edge digital therapeutic that combines AI-powered remote patient monitoring tools with a behavior change program.
The VCS is comprised of tools to support patients’ weight loss experience, which we believe benefit both patients and health care providers:
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In addition to its use by Allurion Smart Capsule patients, we believe the VCS can potentially be a platform for optimal long-term follow up after other medical and surgical weight loss interventions in the future. In June 2022, we incorporated a Treatment Tracking and Clinic-Led Onboarding feature into the VCS, which enables seamless onboarding and management of patients undergoing one or multiple weight loss treatments including gastric balloons such as the Allurion Smart Capsule, surgery, or medications. In April 2024, we launched the VCS in the United States for patients utilizing other weight loss treatments, including anti-obesity medications and bariatric surgery.
Allurion Program Trials
In clinical trials conducted in the United States in a commercial setting, the Allurion Program has demonstrated favorable short and long-term results for weight loss and resolution of co-morbidities in multiple trials, with few adverse events. When the Allurion Program is used in combination with a pharmaceutical therapy, patients have also experienced favorable results with a low risk profile.
Allurion Program as Standalone Therapy
In a prospective, non-randomized, open-label, registry trial of 1,770 patients, Allurion Program patients lost 14.2% of their total body weight or 30 pounds on average after just four months. In another trial of 509 patients, average weight loss was 13.9% at four months and 13.3% at one year after balloon passage, representing a 95% maintenance of total body weight loss. In a third trial of 121 patients treated with two consecutive Allurion Smart Capsule, average total body weight loss was 22.1%. In a study of 5,003 patients treated with the Allurion Program, patients lost an average of 14% after four months.
In a trial of 232 Allurion Program patients who maintained ongoing lifestyle modification after balloon passage, average weight loss was 16.9% at one year. In another trial of 522 Allurion Program patients, 96% of weight loss was maintained one year after passage of the Allurion Smart Capsule.
In a subset of the 5,003 patient open-label registry trial, there were 518 patients (225 with type 2 diabetes and 293 with pre-diabetes) treated with the Allurion Program. Those with type 2 diabetes reduced their hemoglobin A1c (HbA1c) on average by 1.6 points, or 23%, and those with pre-diabetes reduced their HbA1c by 0.8 points, or 14%. On average, both groups achieved disease remission.
The Allurion Program has also been shown to demonstrate weight loss while preserving or in some cases, increasing, muscle mass. In a study of 571 patients, patients treated with the Allurion Smart Capsule gained 5.6% in lean body mass while losing 14% of their total body weight over four months. In another study of 167 patients, patients treated with the Allurion Smart Capsule experienced a weight reduction of 15.7% with no change in muscle mass.
Allurion Program in Combination with GLP-1s
In a randomized controlled trial of 115 patients treated either with the Allurion Program alone, or with the Allurion Program combined with oral semaglutide, co-morbidities were reduced meaningfully—56% resolution of Type 2 diabetes, 59% resolution of hypertension, and 58% resolution of obstructive sleep apnea. The combination of the Allurion Program with oral semaglutide led to a 18.3% weight-loss on average after four months.
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Moreover, in a trial of 181 patients that combined Allurion Smart Capsule treatment with a GLP-1 weight loss drug, the first multi-center trial of balloon and drug combination therapy demonstrating significant synergies, average weight loss was 18.7% of total body weight at eight months.
AUDACITY FDA Pivotal Trial
In November 2021, the FDA approved the investigational device exemption (“IDE”) to initiate the AUDACITY trial in the United States, a 48-week, prospective, randomized, open-label trial comparing the Allurion Smart Capsule to moderate intensity lifestyle intervention and the first FDA pivotal trial on an intragastric balloon for weight loss to report primary outcomes beyond nine months. The first patient was treated in July 2022, we completed enrollment of all patients across 17 sites in the United States in the third quarter of 2023, and the last patient in the trial was treated in September 2024.
AUDACITY’s trial design reflects the FDA’s updated recommendations for weight loss devices and builds upon the ENLIGHTEN trial, our prior IDE trial that was conducted in 2018-2019. The ENLIGHTEN trial featured a sham-controlled design with one balloon cycle. The Allurion Smart Capsule met the co-primary endpoint related to responder rate but failed to meet the co-primary endpoint on superiority margin due to sham overperformance.
In 2019, the FDA issued a White Paper on Weight Loss Devices after safety issues were encountered with other weight loss balloons (ReShape and ORBERA) on the market. The FDA’s updated guidance for clinical trials for weight loss balloons required increased efficacy and increased the minimum treatment duration to 6 months with a preference for one-year outcomes. We designed the AUDACITY trial in collaboration with the FDA to address these new criteria, and believe that AUDACITY improved upon ENLIGHTEN given the open-label trial design (i.e., no sham), utilization of multiple balloon cycles, and alignment with the FDA’s updated guidance on intragastric balloons for weight loss.
Within the AUDACITY trial, 550 subjects were randomized 1:1 to either two cycles of the Allurion Smart Capsule or a control group that received moderate intensity lifestyle therapy. Subjects in the treatment group received their first Allurion Smart Capsule at Week 0, which passes at approximately Week 16, and a second Allurion Smart Capsule at Week 24, which passes at approximately Week 40. Co-primary endpoints based on Allurion Smart Capsule subject responders and a comparison of percent total body weight loss between groups were measured at Week 48, approximately 8 weeks after the second Allurion Smart Capsule passes at Week 40.
On January 8, 2025, we announced topline results from the AUDACITY trial evaluating the safety and efficacy of the Allurion Smart Capsule. The AUDACITY trial achieved its responder rate co-primary endpoint by demonstrating that more than 50% of Allurion Smart Capsule subjects lost more than 5% of their total body weight at 48 weeks (58%; p-value = 0.0089). At 48 weeks, Allurion Smart Capsule subjects exhibited substantially greater weight loss compared to control subjects, with a 3.77% mean difference in total body weight loss, resulting in a 2.69% superiority margin. This margin was less than the pre-specified 3% superiority margin needed to meet the comparative co-primary endpoint (p-value=0.1616). At 40 weeks, the 4.22% mean difference in total body weight loss between groups exceeded a 3% superiority margin.
The rate of serious adverse events in Allurion Smart Capsule subjects in the AUDACITY trial was 3.1%, the lowest reported in a pivotal FDA trial for a liquid-filled intragastric balloon indicated for weight loss.
On February 20, 2026, the U.S. Food and Drug Administration (“FDA”) granted PMA approval for the Allurion Gastric Balloon System (AGBS), featuring the Allurion Smart Capsule. In the United States, the AGBS is indicated to promote short-term limited weight loss in adult individuals with obesity between the ages of 22 years and 65 years with a body mass index (BMI) ≥ 30 kg/m2 and ≤ 40 kg/m2 who have had at least one unsuccessful attempt at a weight loss program. The residence time for each balloon is variable with an average observed residence time of 15.3 weeks. The AGBS is to be used in conjunction with a moderate intensity lifestyle modification therapy program. The AGBS consists of up to two Allurion Balloons placed during a 10-month period.
GLP-1 Combination Trial Pipeline
In addition to the favorable results for weight loss and resolution of co-morbidities demonstrated in trials of the Allurion Smart Capsule, we believe based on initial study results that an approach that combines the balloon with GLP-1s may also result in favorable outcomes for those with obesity and overweight while addressing the shortcomings of GLP-1 use alone. Previous studies in patients undergoing GLP-1 therapy have demonstrated reductions in lean mass of approximately 40% as a proportion of total weight lost and have also shown that 30% of patients discontinue GLP-1 therapy within the first month and 58% discontinue
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before reaching a clinically meaningful health benefit, due in part to side effects, dose escalation required for continued weight loss, and cost.
In March 2025, we announced initial results from a case series of patients treated with the Allurion Smart Capsule and a low dose of semaglutide. 52 patients treated with the Allurion Smart Capsule were started on 0.25mg semaglutide after completing their first month of balloon therapy. The dose of semaglutide was increased to no greater than 1.0mg over the subsequent 6 months. After 8 months of this combination approach, average total body weight loss was 20.3%, and lean body mass increased by 15% from 59.6% to 68.5%. All patients remained adherent to the GLP-1 medication through 8 months.
In November 2025, we announced initial results from a case series of patients treated with the Allurion Smart Capsule and a low dose of tirzepatide. Seventy-six (76) patients treated with the Allurion Smart Capsule were started on low-dose tirzepatide after completing their first 45 days of balloon therapy. The starting dose of tirzepatide was 2.5mg and increased to no greater than 5.0mg over the subsequent two months, considerably lower than standard dosing which can increase to 15mg. Tirzepatide therapy was continued for 8 months and final results were measured 2 months after discontinuation, for a total follow-up period of 12 months. Patients were followed using the AI-powered Virtual Care Suite as part of the Allurion Program. After 12 months, the average total body weight loss was 23%, and lean body mass as a percentage of total body weight increased by 14% from 62% to 70%. No patients discontinued early, and all patients remained adherent to tirzepatide for the duration of the study.
In the future, we intend to perform prospective clinical trials on the combination of the Allurion Smart Capsule and low-dose GLP-1s to further validate the effects on weight loss, muscle mass, and GLP-1 adherence.
Our Business Model
We believe that our business-to-business-to-consumer business model creates an economic benefit for all key stakeholders. Health care providers may benefit from providing the Allurion Program because it addresses a significant unmet need for their patients and is designed to not require time-consuming and costly surgery, endoscopy, or anesthesia. Moreover, we can provide our product to health care providers who have historically not been able to provide cash pay weight loss procedures, because the Allurion Smart Capsule does not require endoscopy or anesthesia for placement and hence there are fewer restrictions on the type of doctor that can use the Allurion Smart Capsule versus other balloons. Patients may benefit because placement procedures do not require invasive surgery, endoscopy, or anesthesia and hence may reduce the overall risk, cost, and inconvenience of getting treated.
We believe our platform addresses the following limitations of current weight loss treatments. Further, we believe that our platform can be combined with other therapeutic approaches (e.g., low-dose GLP-1 therapy) to improve patient outcomes.
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Our Competitive Strengths
We developed the Allurion Program to overcome the limitations of other weight loss treatments, including other intragastric balloons. Based on our commercial experience in over 200,000 patients, we believe that the Allurion Program provides considerable advantages to patients and providers:
Designed to promote metabolically healthy weight loss. The Allurion Program was designed to achieve metabolically healthy weight loss, which entails losing weight, maintaining that weight loss, and maintaining or increasing muscle mass in the process. Unlike other options that lead to short-term weight loss and muscle wasting, the Allurion Program is intended to deliver longer lasting results while reducing fat and preserving muscle. We believe the Allurion Program is also synergistic in combination with other weight loss therapies, including GLP-1 receptor agonists.
Consumer-centric, Procedureless™ technology with favorable safety profile. The Allurion Smart Capsule does not require surgery, endoscopy, or anesthesia for placement; in rare cases, endoscopic or surgical intervention may be required for removal. We believe this results in a safer, easier, faster, and more convenient patient experience at a lower cost and a device that can be administered by a wide array of providers. Though the Allurion Smart Capsule has not been compared in head-to-head trials with other liquid-filled intragastric balloons, Allurion has reported a lower device or procedure-related SAE rate than competing intragastric balloons, with considerably better weight loss results.
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More than just a balloon: an end-to-end weight management platform powered by AI and data. The Allurion Program features a uniquely designed medical device and offers access to a clinically-proven behavior change program and AI-powered remote patient monitoring through the VCS. We believe this holistic approach can improve outcomes for patients, streamline provider workflow, enable end-to-end weight management, and open the door to a life-long relationship with the patient. Further, we believe that the ongoing stream of data we receive on patient outcomes and provider productivity will enable us to enhance the capabilities of our AI platform and further expand our data moat.
Life-changing clinical outcomes that are fast yet durable. In clinical trials performed outside the United States in a commercial setting, on average, Allurion Program patients lose 14% of their total body weight (approximately 14kg or 30lbs) over just four months and sustain 96% of that weight loss at one year. We have also observed similarly significant effects on obesity-related co-morbidities like type 2 diabetes.
Attractive economics for patients and providers. By eliminating endoscopy and anesthesia from balloon placement and removal, we believe that we have made our weight loss product more affordable to the patient and more lucrative for the provider compared to the competition. Typically, health care providers can treat patients with a high-margin device in just a 15-minute office visit, which when compared to devices that require hospital stays, significantly improves profitability per hour.
Broad patent portfolio and proprietary manufacturing capabilities. We have a broad portfolio of intellectual property protecting our products, including 66 issued patents as of December 31, 2025, which we believe, when combined with our proprietary manufacturing processes and know-how, leads to a significant competitive moat. Currently, the Allurion Smart Capsule is manufactured and assembled in-house using components and sub-assemblies at our facilities in Natick, Massachusetts, which further enhances our ability to maintain high levels of quality and protect manufacturing trade secrets that we have developed since inception.
Proven management team with expansive industry experience. Our executive team consists of seasoned medical device and digital health professionals with deep industry experience and expertise, who have led and managed high-growth private and public companies that have introduced and commercialized multiple new products.
Our Growth Strategy
Our primary objective is to become the world’s leader in metabolically healthy weight loss. The key elements to our strategy are the following:
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Our Competition
We have developed, manufactured, and commercialized the world’s first and only swallowable, ProcedurelessTM gastric balloon for weight loss, which we offer as part of our Allurion Program, a multi-faceted, weight loss platform. Weight-loss treatments range from behavioral modification, to drugs and medical devices, to surgery. Outside the United States, we compete with a variety of local and regional competitive intragastric balloon manufacturers including SC MedSil, Medicone and Spatz Laboratories. In the United States, there are three manufacturers with an intragastric balloon approved by the FDA at this time: Boston Scientific Corporation, Inc. (which acquired Apollo Endosurgery), ReShape Lifesciences, Inc. (now Medtimo) and Spatz FGIA Inc. All of these balloons require endoscopy and anesthesia for placement and/or removal. Medtimo does not currently commercialize its product, however.
We also compete against the manufacturers of pharmaceuticals that are directed at treating weight loss, such as Novo Nordisk A/S, Eli Lilly & Co., Roche Holding AG, GlaxoSmithKline plc, Arena Pharmaceuticals, Inc., VIVUS, Inc. and Orexigen Therapeutics, Inc.
We believe that the principal competitive factors in our market include:
Many of our competitors, or their parent companies, are larger than we are, and they may enjoy several competitive advantages over us, including:
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As a result, we cannot assure you that we will be able to compete effectively against these companies or their products.
Intellectual Property
We have assembled a broad portfolio of intellectual property related to our medical device, the Allurion Smart Capsule, and our supporting technology platform, the VCS. We believe this intellectual property, combined with proprietary manufacturing processes and the regulatory approvals we have successfully obtained in over 50 countries outside of the United States, provides us with a strong market position.
As of December 31, 2025, we own or have rights to 23 issued patents and four pending patent applications in the U.S. related to various aspects of our Allurion Smart Capsule, such as a swallowable, self-deflating and naturally passing gastric balloon, improvements to the fill and release valves therein, methods for deploying and releasing a gastric balloon within the body, and next generation fill and release valves. In addition, outside of the United States we have 43 issued and four patents pending that generally parallel the U.S. portfolio in 17 countries as of December 31, 2025. Included are three Unitary European patents that provide protection in 18 EU member states. We are not currently licensing any patents but may do so in the future. Allurion owns and possesses all right, title and interest in and to each patent and patent application noted herein free and clear of all liens, other than any liens granted to RTW (as defined below) pursuant to our royalty arrangements and Amended Note Purchase Agreement with RTW (as defined below).
Our issued patents are expected to expire at various times between February 21, 2033 and November 27, 2040. The following table sets forth a summary of our patents and patent applications, including where patent applications have been filed, the exemplary subject matter being pursed in the applications, and expected expiration dates.
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Family |
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Jurisdictions |
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Patent/Application |
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Exemplary Subject |
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Expiration |
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Type |
1 |
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Australia; Brazil; Canada; China; Europe (France, Germany, Ireland, Italy, Spain, United Kingdom); India; Israel; Japan; South Korea; Mexico; United States |
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Granted European patent validated in Germany; Spain; France; United Kingdom; Ireland; Italy; granted Australia; Brazil; Canada; China; Israel; India; Japan; South Korea; Mexico; United States |
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Provides medical devices for temporary implantation within the body, such as a gastric space, and methods for temporarily occupying the space, the devices having a fluid fill valve and a self-releasing valve upon degradation of a restraining member. |
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2033 |
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Utility |
2 |
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United States |
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Granted |
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Provides ingestible delivery systems having a modified dosage shape. |
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2033 |
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Utility |
3 |
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Australia; Brazil; China; Europe (France, Germany, Ireland, United Kingdom); Israel; Japan; United States |
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Granted European patent validated in France; United Kingdom; Ireland; granted Australia; Brazil; China; Israel; Japan; United States One pending application in the United States |
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Provides medical devices for temporary implantation within the body, having improved fluid fill valves, and devices that can release a drug or other agent over time. |
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2036 |
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Utility |
4 |
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European Unitary Patent (Unitary European patents provide uniform patent protections across 18 EU member states; also, Ireland and Spain); United States |
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Granted European Unitary Patent validated in 18 EU member states; Ireland; Spain. One pending patent application in United States |
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Provides automatic-sealing balloon-filling catheter systems and methods of use, including plug-type sealing of a fill valve, and improved catheter release means. |
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2039 |
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Utility |
5 |
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China; European Unitary Patent (Unitary European patents provide uniform patent protections across 18 EU member states; also, Ireland and Spain); United States |
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Granted China; Unitary European Patents validated in18 EU member states; also, Ireland and Spain. One pending patent application in United States |
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Provides binary fluid control valves for temporarily implanted systems, wherein a fluid release valve includes an energy storage element for enhanced valve opening. |
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2039 |
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Utility |
6 |
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United States |
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Granted |
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Provides an enhanced fluid delivery system for a temporarily implantable device, having an improved junction between a fill catheter and the temporarily implanted device. |
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2040 |
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Utility |
7 |
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United States |
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Granted |
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Provides automatic-sealing balloon-filling catheter systems having enhanced plug-type fluid fill valves and catheter release means. |
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2043 |
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Utility |
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8 |
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United States |
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Pending patent applications in Europe and the United States |
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Provides medical devices for temporary implantation within the body, such as a gastric space, including bidirectional integrated valve structures for both fluid filling and self-releasing. |
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2043 |
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Utility |
9 |
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United States |
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Pending patent application in the United States
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Provides intragastric balloons that can be used for drug delivery. |
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Pending |
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Utility |
We are protecting three Allurion-related trademarks in three classes: medical devices (the balloon), downloadable software and digital scale (the mobile app), and medical services (provided by our physicians). As of December 31, 2025, we have 65 registered trademarks in 40 jurisdictions (which jurisdictions include the 27 member states of the European Union). It is our intention to maintain these registrations indefinitely and to expand the number of jurisdictions in which we have registered trademarks as deemed necessary to protect our freedom to use the marks and/or block competitors in additional markets.
We also hold registrations to the “Elipse” trademark in three classes in four jurisdictions; it is our intention to allow these registrations to lapse at the end of their current terms as we are no longer identified by this trademark.
In addition to pursuing patents on our products, we have taken steps to protect our intellectual property and proprietary technology by entering into confidentiality agreements and intellectual property assignment agreements with our employees, consultants, corporate partners, and, when needed, our advisors. Such agreements may not be enforceable or may not provide meaningful protection for our trade secrets or other proprietary information in the event of unauthorized use or disclosure or other breaches of the agreements, and we may not be able to prevent such unauthorized disclosure. Monitoring unauthorized disclosure is difficult, and we do not know whether the steps we have taken to prevent such disclosure are, or will be, adequate. In addition, in the event we expand our international operations, effective patent, copyright, trademark and trade secret protection may not be available or may be limited in foreign countries.
In general, the medical device industry is characterized by the existence of a large number of patents and frequent allegations and related litigation regarding patent and other intellectual property rights. Third parties, including our competitor companies, may assert patent, copyright, trademark and other intellectual property rights against us, our partners or our customers. Our standard license and other agreements may obligate us to indemnify our partners and customers against such claims. We could incur substantial costs and diversion of the attention of our management and technical personnel in defending against any such claims. Successful claims of infringement of a valid patent by a third party could prevent us from selling or distributing our products or performing certain services, require us to expend time and resources to develop non-infringing products, or force us to pay substantial damages (including treble damages if we are found to have willfully infringed patents), royalties or other fees. We cannot assure you that we do not currently infringe, or that we will not in the future infringe, upon any third-party patents or other proprietary rights.
We intend to continue to expand our intellectual property portfolio and invest in protecting new innovations developed in our pipeline programs.
Third-party open source software components.
The Allurion VCS and our other products and services contain software licensed to us by third-party authors under “open source” licenses. Use of such software may entail greater risks than use of non-open-source third-party commercial software, as open-source licensors generally do not provide support, warranties, indemnification or other contractual protections regarding infringement claims or the quality of the code. Although we seek to monitor our use of open source software to avoid such consequences and to comply with the terms thereof, the terms of many open source licenses have not been interpreted by U.S. or foreign courts, and there is a risk that these licenses could be construed in a way that could impose unanticipated conditions or restrictions on our ability to provide or distribute our platform. We try to mitigate the risk of our use of open source software by managing software development with an information security program that is in compliance with the global standard International Organization for standardization (“ISO”) 27001:2022. Using an automated static code analysis tool, we regularly
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examine all VCS software code, as well as included open-source code, for security vulnerabilities, code quality, as well as open-source licensing that is in alignment with our software distribution requirements.
Sales and Marketing
We currently sell our products either through our direct sales force, or in certain countries, through distributors. As of December 31, 2025, our sales and marketing organization consisted of approximately 18 employees and consultants.
Our sales personnel are equipped with a suite of resources that includes extensive in-depth training, marketing resource tools, and access to a robust schedule of education events. In the regions where we have distributors, we provide clinical training and support to build positive relationships with physicians and clinics and to position our product in the marketplace as a premium product with consequent premium pricing.
We employ a multi-faceted B2B2C marketing strategy focused on empowering providers to expand their practice and increase utilization of the Allurion Smart Capsule.
Manufacturing Capabilities
Allurion Smart Capsules are manufactured in-house using components and sub-assemblies at our 10,000 square foot, ISO 13485 certified manufacturing facility in Natick, Massachusetts. We rely on suppliers for the extruded film to manufacture our Allurion Smart Capsule and suppliers for stylets, filler kits, accessories, and scales. All critical component suppliers undergo strict quality system audits and component inspections to ensure they meet our quality standards. All suppliers and materials must be qualified prior to being approved for manufacturing activities. Our suppliers have no contractual obligations to supply us with components, and we are not contractually obligated to purchase such components from any of our suppliers. Order quantities and lead times for components purchased from our suppliers are based on our forecasts derived from anticipated future demand.
Lead times for components may vary significantly depending on the size of the order, time required to fabricate and test the components, specific supplier requirements and current market demand for the components and sub-assemblies. However, some of these components are critical to our products and there are relatively few alternative sources of supply. To date, we have not experienced significant delays in obtaining any of our components or sub-assemblies.
We have received FDA PMA approval for Allurion Gastric Balloon System, featuring the Allurion Smart Capsule, on February 20, 2026. We manufacture our products in compliance with the FDA’s Quality System Regulation (“QSR”) in 21 CFR part 820 of the Federal Food, Drug and Cosmetic Act ("FDCA").
We are also subject to periodic inspections and audits by various international regulatory and notified bodies, and we believe our past performance in these audits reflects the strength of our quality system and production and process controls. We consider this to be a key element of our risk management and business continuity strategies and a competitive advantage as we have full control of the product life-cycle. Our in-house production team undergo well defined training programs throughout their period of employment. We believe our manufacturing experience, know-how, and process-related trade secrets are a competitive advantage.
Additionally, we will need to increase our manufacturing capabilities over time in order to satisfy any increased demand for our balloon system, and we have no experience manufacturing our balloon system in such quantities. If we are unable to keep up with demand for our balloon system, our revenue could be impaired, market acceptance for our balloon system could be harmed and our customers might instead purchase our competitors’ products.
Government Regulation
The healthcare industry, and thus our business as a medical device company, is subject to extensive federal, state, local and foreign regulation. Some of the pertinent laws have not been definitively interpreted by applicable regulatory authorities or the courts, and their provisions are open to a variety of interpretations. In addition, these laws and their interpretations are subject to change.
Regulatory System for Medical Devices in the United States
Unless an exemption applies, each new or significantly modified medical device a company seeks to commercially distribute in the United States will require a submission to the FDA requesting permission for commercial distribution under
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Section 510(k) of the FDCA, also referred to as a 510(k) clearance, a de novo classification request, or approval from the FDA of a PMA application. The Allurion Gastric Balloon System, featuring the Allurion Smart Capsule, received approval from the FDA of a PMA application on February 20, 2026.
Device Classification
Under the FDCA, medical devices are classified into one of three classes—Class I, Class II or Class III—depending on the degree of risk associated with each medical device and the extent of control needed to provide reasonable assurances with respect to safety and effectiveness.
Class I includes devices with the lowest risk to the patient and are those for which safety and effectiveness can be reasonably assured by adherence to a set of FDA regulations, referred to as General Controls, which require compliance with the applicable portions of the QSR facility registration and product listing, reporting of adverse events and malfunctions, and appropriate, truthful and non-misleading labeling and promotional materials. Some Class I devices, also called Class I reserved devices, also require premarket clearance by the FDA through the 510(k) premarket notification process described below. Most Class I products are exempt from the premarket notification requirements.
Class II devices are those that are subject to the General Controls, and Special Controls as deemed necessary by the FDA to ensure the safety and effectiveness of the device. These Special Controls can include performance standards, patient registries, FDA guidance documents and post-market surveillance. Most Class II devices are subject to premarket review and clearance by the FDA. Premarket review and clearance by the FDA for Class II devices is accomplished through the 510(k) premarket notification process.
Class III devices include devices deemed by the FDA to pose the greatest risk such as life-supporting or life-sustaining devices, or implantable devices, in addition to those deemed novel and not substantially equivalent following the 510(k) process. The safety and effectiveness of Class III devices cannot be reasonably assured solely by the General Controls and Special Controls described above. Therefore, these devices are subject to the PMA application process, described below, which is generally more costly and time consuming than the 510(k) process.
The Investigational Device Process
In the United States, absent certain limited exceptions, human clinical trials intended to support 510(k) clearance, de novo classification, or PMA approval require an investigational device exemption, or "IDE," application. Some types of trials considered to present “non-significant risk” are deemed to have an approved IDE once certain requirements are addressed, and investigational review board (“IRB”) approval is obtained. If the device presents a “significant risk” to human health, as defined by the FDA, the sponsor must submit an IDE application to the FDA and obtain IDE approval prior to commencing the human clinical trials. The IDE application must be supported by appropriate data, such as animal and laboratory testing results, showing that it is safe to test the device in humans and that the testing protocol is scientifically sound.
The IDE application must be approved in advance by the FDA for a specified number of subjects. The FDA also may issue a conditional approval, in which case the trial may be conducted subject to the FDA’s conditions, which the sponsor must address in order to conduct the trial as originally requested. Generally, clinical trials for a significant risk device may begin once the IDE application is approved by the FDA and the trial protocol and informed consent are approved by appropriate IRBs at the clinical trial sites. There can be no assurance that submission of an IDE application will result in the ability to commence clinical trials, and although the FDA’s approval of an IDE application allows clinical testing to go forward for a specified number of subjects, it does not bind the FDA to accept the results of the trial as sufficient to prove the product’s safety and efficacy, even if the trial meets its intended success criteria, unless the sponsor has obtained a binding protocol agreement.
All clinical trials must be conducted in accordance with the FDA’s IDE regulations that govern investigational device labeling, prohibit promotion, and specify an array of recordkeeping, reporting and monitoring responsibilities of trial sponsors and trial investigators. Clinical trials must further comply with the FDA’s good clinical practice regulations for IRB approval and for informed consent and other human subject protections. Required records and reports are subject to inspection by the FDA. Clinical trial investigators must disclose certain financial interests to clinical trial sponsors. The commencement or completion of any clinical trial may be delayed or halted, including from the FDA imposing a clinical hold on a trial, or be inadequate to support approval of a PMA application, de novo classification or clearance of a 510(k), for numerous reasons.
The 510(k) Clearance Process
Under the 510(k) process, the manufacturer must submit to the FDA a premarket notification 90 days before it seeks to commercially distribute its device, demonstrating that the device is “substantially equivalent,” as defined in the statute, to a legally marketed predicate device.
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A predicate device is a legally marketed device that is not subject to premarket approval, i.e., a device that was legally marketed prior to May 28, 1976 (pre-amendments device) and for which a PMA is not required, a device that has been reclassified from Class III to Class II or I, or a device that was previously found substantially equivalent through the 510(k) process.
To be “substantially equivalent,” the proposed device must have the same intended use as the predicate device, and either have the same technological characteristics as the predicate device or have different technological characteristics and not raise different questions of safety or effectiveness than the predicate device. Clinical data is sometimes required to support substantial equivalence.
After a 510(k) premarket notification is submitted, the FDA determines whether to accept it for substantive review. If it lacks necessary information for substantive review, the FDA will refuse to accept the 510(k) premarket notification. If it is accepted for filing, the FDA begins a substantive review. As a practical matter, clearance often takes longer than 90 days, and clearance is never assured. Although many 510(k) premarket notifications are cleared without clinical data, the FDA may require further information, including clinical data, to make a determination regarding substantial equivalence, which may significantly prolong the review process. If the FDA agrees that the device is substantially equivalent, it will grant clearance to commercially market the device.
If the FDA determines that the device is not “substantially equivalent” to a predicate device, or if the device is automatically classified into Class III, the device sponsor must then fulfill the much more rigorous premarketing requirements of the PMA approval process, or seek reclassification of the device through the de novo process. A manufacturer can also submit a petition for direct de novo review if the manufacturer is unable to identify an appropriate predicate device and the new device or new use of the device presents a moderate or low risk.
After a device receives 510(k) clearance, any modification, including modification to or deviation from design, manufacturing processes, materials, packaging and sterilization that could significantly affect the device’s safety or effectiveness, or that would constitute a new or major change in its intended use, will require a new 510(k) clearance or, depending on the modification, could require a PMA application or de novo classification. The FDA requires each manufacturer to determine whether the proposed change requires submission of a 510(k) or a PMA in the first instance, but the FDA can review any such decision and disagree with a manufacturer’s determination. Many minor modifications are accomplished by a letter-to-file in which the manufacturer documents the change in an internal letter-to-file. The letter-to-file is in lieu of submitting a new 510(k) to obtain clearance for such change. The FDA can always review these letters to file in an inspection. If the FDA disagrees with a manufacturer’s determination regarding whether a new premarket submission is required for the modification of an existing device, the FDA can require the manufacturer to cease marketing and/or recall the modified device until 510(k) clearance or approval of a PMA application is obtained. In addition, in these circumstances, the FDA can impose significant regulatory fines or penalties for failure to submit the requisite PMA application(s).
The PMA Approval Process
Through the PMA application process, the applicant must submit data and information demonstrating reasonable assurance of the safety and effectiveness of the device for its intended use to the FDA’s satisfaction. Accordingly, a PMA application typically includes, but is not limited to, extensive technical information regarding device design and development, preclinical study and clinical trial data, manufacturing information, labeling, and financial disclosure information for the clinical investigators in device trials. The PMA application must provide valid scientific evidence that demonstrates to the FDA’s satisfaction a reasonable assurance of the safety and effectiveness of the device for its intended use.
Following receipt of a PMA application, the FDA conducts an administrative review to determine whether the application is sufficiently complete to permit a substantive review. If it is not, the agency will refuse to file the PMA. If it is, the FDA will accept the application for filing and begin the review. The FDA, by statute and by regulation, has 180 days to review a filed PMA application, although the review of an application more often occurs over a significantly longer period. During this review period, the FDA may request additional information or clarification of information already provided, and the FDA may issue a major deficiency letter to the applicant, requesting the applicant’s response to deficiencies communicated by the FDA. The FDA considers a PMA or PMA supplement to have been voluntarily withdrawn if an applicant fails to respond to an FDA request for information (e.g., major deficiency letter) within a total of 360 days. Before approving or denying a PMA, an FDA advisory committee may review the PMA at a public meeting and provide the FDA with the committee’s recommendation on whether the FDA should approve the submission, approve it with specific conditions, or not approve it. The FDA is not bound by the recommendations of an advisory committee, but it considers such recommendations carefully when making decisions.
Prior to approval of a PMA, the FDA may conduct inspections of the clinical trial data and clinical trial sites, as well as inspections of the manufacturing facility and processes. Overall, the FDA review of a PMA application generally takes between one and three years, but may take significantly longer.
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If the FDA evaluation of a PMA is favorable, the FDA will issue either an approval letter, or an approvable letter, the latter of which usually contains several conditions that must be met in order to secure final approval of the PMA. When and if those conditions have been fulfilled to the satisfaction of the FDA, the agency will issue a PMA approval letter authorizing commercial marketing of the device, subject to the conditions of approval and the limitations established in the approval letter. If the FDA’s evaluation of a PMA application or manufacturing facilities is not favorable, the FDA will deny approval of the PMA or issue a not approvable letter. The FDA also may determine that additional tests or clinical trials are necessary, in which case the PMA approval may be delayed for several months or years while the trials are conducted and data is submitted in an amendment to the PMA, or the PMA is withdrawn and resubmitted when the data are available. The PMA process can be expensive, uncertain, and lengthy.
New PMA applications or PMA supplements are required for modification to the manufacturing process, equipment or facility, quality control procedures, sterilization, packaging, expiration date, labeling, device specifications, ingredients, materials or design of a device that has been approved through the PMA process. PMA supplements often require submission of the same type of information as an initial PMA application, except that the supplement is limited to information needed to support any changes from the device covered by the approved PMA application and may or may not require as extensive technical or clinical data or the convening of an advisory panel, depending on the nature of the proposed change.
In approving a PMA application, as a condition of approval, the FDA may also require some form of post-approval trial or post-market surveillance, whereby the applicant conducts a follow-up trial or follows certain patient groups for several years and makes periodic reports to the FDA on the clinical status of those patients when necessary to protect the public health or to provide additional or longer-term safety and effectiveness data for the device. The FDA may also require post-market surveillance for certain devices cleared under a 510(k) notification, such as implants or life-supporting or life-sustaining devices used outside a device user facility. The FDA may also approve a PMA application with other post-approval conditions intended to ensure the safety and effectiveness of the device, such as, among other things, restrictions on labeling, promotion, sale, distribution and use.
Pervasive and Continuing FDA Regulation
After the FDA permits a device to enter commercial distribution, numerous regulatory requirements continue to apply. These include:
Our manufacturing processes are required to comply with the applicable portions of the FDA’s QSR that covers the methods and the facilities and controls for the design, manufacture, testing, production, processes, controls, quality assurance, labeling, packaging, distribution, installation, and servicing of finished devices intended for human use. In February 2024, the FDA issued the Quality Management System Regulation Final Rule to amend the QSR, incorporating by reference the international standard for medical device quality management systems set by the ISO, ISO 13485:2016. The rule will become
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effective on February 2, 2026. Until then, manufacturers are required to comply with the QSR. We actively maintain compliance with the FDA’s QSR, and the European Union’s Quality Management Systems requirements, ISO 13485:2016.
Since February 2017, the FDA has issued three separate letters to health care providers warning of SAEs, including deaths, which are specific to liquid-filled intragastric balloons. We are aware of the filing of additional reports of SAEs, including deaths, associated with liquid-filled balloons since the issuance of the FDA letters to health care providers. While the advisory letters were specific to liquid-filled intragastric balloons and not the Allurion Smart Capsule, these letters could create negative perceptions of the entire gastric balloon category, which may cause negative consequences for us including requiring additional warnings, precautions and/or contraindications in the labeling, delaying or denying approval of our products, or possible review or withdrawal of any approval that we may obtain.
The FDA has broad post-market and regulatory enforcement powers. Medical device manufacturers are subject to unannounced inspections by the FDA and other state, local and foreign regulatory authorities to assess compliance with the QSR and other applicable regulations, and these inspections may include the manufacturing facilities of any suppliers.
Failure to comply with applicable regulatory requirements can result in enforcement action by the FDA, which may include any of the following sanctions:
Other U.S. Healthcare Laws
Our business is regulated by laws pertaining to healthcare fraud and abuse, including anti-kickback laws and false claims laws, and other healthcare laws. Violations of these laws are punishable by significant administrative, criminal and civil penalties, including damages, disgorgement, monetary fines, possible exclusion from participation in federal and state healthcare programs, such as Medicare and Medicaid, imprisonment, and integrity oversight and reporting obligations.
Anti-Kickback Statute
The federal Anti-Kickback Statute prohibits, among other things, persons and entities from knowingly and willfully soliciting, offering, receiving or paying remuneration, directly or indirectly, in cash or in kind, in exchange for or to induce either the referral of an individual for, or the furnishing, recommending, purchasing, leasing, ordering, or arranging for, a good or service for which payment may be made under a federal healthcare program such as Medicare and Medicaid. The term “remuneration” has been broadly interpreted to include anything of value, including payments to physicians or other providers, gifts, discounts, the furnishing of supplies or equipment, credit arrangements, waiver of payments and providing anything of value at less than fair market value. There are a number of statutory exceptions and regulatory safe harbors protecting some common activities from prosecution, but the exceptions and safe harbors are drawn narrowly and require strict compliance in order to offer protection. These exceptions and safe harbors exist for various types of arrangements, including certain investment interests, leases, personal service arrangements, discounts, and management contracts. The failure of a particular activity to comply with all requirements of an applicable safe harbor regulation does not mean that the activity violates the federal Anti-Kickback Statute or that prosecution will be pursued. Instead, the legality of the arrangement will be evaluated on a case-by-case basis based on a cumulative review of all of the relevant facts and circumstances. Activities and business arrangements that do not fully satisfy each applicable exception or safe harbor may result in increased scrutiny by government enforcement authorities such as the Office of the Inspector General.
Additionally, the intent standard under the federal Anti-Kickback Statute was amended by the Affordable Care Act (“ACA”) to a stricter standard such that a person or entity no longer needs to have actual knowledge of the federal Anti-Kickback Statute or specific intent to violate it in order to have committed a violation. Rather, if “one purpose” of the remuneration is to induce referrals, the federal Anti-Kickback Statute is violated. In addition, the ACA codified case law that a claim that includes
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items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the federal civil False Claims Act (“FCA”), discussed below.
Further, certain states have adopted prohibitions similar to the federal Anti-Kickback Statute, some of which apply to the referral of patients for healthcare services reimbursed by any source, not only by government healthcare programs such as the Medicare and Medicaid programs, and do not include comparable exceptions and/or safe harbors to those provided by the federal Anti-Kickback Statute.
Federal False Claims Act
The FCA prohibits, among other things, knowingly filing or causing the filing of a false claim or the knowing use of false statements to obtain payment from the federal government. A claim that is filed pursuant to an unlawful kickback may be a false claim under this law and, in a number of cases, manufacturers of medical products have entered into settlements based on FCA allegations that their financial relationships with customers “caused” these customers to submit false claims. When an entity is determined to have violated the FCA, it may be required to pay up to three times the actual damages sustained by the government, plus mandatory civil penalties for each separate false claim. Private individuals can file suit under the FCA on behalf of the government. These lawsuits are known as “qui tam” actions, and the individuals bringing such suits, sometimes known as “relators” or, more commonly, “whistleblowers,” may share in any amounts paid by the entity to the government in fines or settlement. Since complaints related to “qui tam” actions are initially filed under seal, the action may be pending for some time before a defendant is even aware of such action.
HIPAA
The Health Insurance Portability and Accountability Act (“HIPAA”) created new federal crimes, including healthcare fraud and false statements relating to healthcare matters. HIPAA prohibits knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program, including private payers. A violation of this statute is a felony and may result in fines, imprisonment or exclusion from government-sponsored programs. The false statements statute prohibits knowingly and willfully 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 healthcare benefits, items or services. A violation of this statute is a felony and may result in fines or imprisonment. Similar to the federal Anti-Kickback Statute, 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.
HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act (“HITECH”), also protects the security and privacy of individually identifiable health information maintained or transmitted by certain healthcare providers, health plans and healthcare clearinghouses and their business associates. HIPAA restricts the use and disclosure of patient health information, including patient records. Although we believe that HIPAA does not apply directly to us, most of our customers do or will have significant obligations under HIPAA, and we intend to cooperate with customers and others to ensure compliance with HIPAA with respect to patient information. HITECH created new tiers of civil monetary penalties, amended HIPAA to make civil and criminal penalties directly applicable to business associates, and gave state attorneys general new authority to file civil actions for damages or injunctions in federal courts to enforce the federal HIPAA laws and seek attorney’s fees and costs associated with pursuing federal civil actions. Depending on the facts and circumstances, we could be subject to significant penalties if we violate HIPAA. Failure to comply with HIPAA obligations can result in civil fines and/or criminal penalties. Some states have also enacted rigorous laws or regulations protecting the security and privacy of patient information.
Transparency Reporting
In March 2010, the U.S. Congress enacted the ACA. The U.S. Physician Payments Sunshine Act, which is part of the ACA, requires manufacturers of drugs, biologics, devices and medical supplies that are subject to (or used in procedures subject to) Medicare and Medicaid reimbursement to record payments and transfers of value to physicians (defined to include doctors, dentists, optometrists, podiatrists, and chiropractors), certain non-physician healthcare professionals (such as physician assistants and nurse practitioners), and teaching hospitals as well as ownership and investment interests held by physicians and their immediate family members and to report this data to the Centers for Medicare & Medicaid Services, for public disclosure. Failure to report may result in civil or criminal fines and/or penalties. Similar reporting requirements have also been enacted in several states, and an increasing number of countries worldwide either have adopted or are considering similar laws requiring transparency of interactions with healthcare professionals. In addition to reporting, some states such as Massachusetts and Vermont impose a ban or limit the ability of medical device and pharmaceutical manufacturers providing certain items of value or payments to physicians or other healthcare practitioners licensed in these states. In recent years, the federal government and several states have enacted legislation requiring biotechnology, pharmaceutical and medical device companies to establish marketing compliance programs and file periodic reports on sales, marketing and other activities.
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Analogous State and Foreign Laws and Regulations
Additionally, we are subject to state and foreign equivalents of each of the healthcare laws and regulations described above, among others, some of which may be broader in scope and may apply regardless of the payor. Many U.S. states have adopted laws similar to the federal Anti-Kickback Statute and False Claims Act, and may apply to our business practices, including, but not limited to, research, distribution, sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental payors, including private insurers. In addition, some states have passed laws that require pharmaceutical companies to comply with the April 2003 Office of Inspector General Compliance Program Guidance for Pharmaceutical Manufacturers and/or the Pharmaceutical Research and Manufacturers of America’s Code on Interactions with Healthcare Professionals. Several states also impose other marketing restrictions or require pharmaceutical companies to make marketing or price disclosures to the state and require the registration of pharmaceutical sales representatives. State and foreign laws, including for example the European Union General Data Protection Regulation, which became effective May 2018 also govern the privacy and security of health information in some circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts. There are ambiguities as to what is required to comply with these state requirements and if we fail to comply with an applicable state law requirement we could be subject to penalties.
Coverage, Reimbursement and Healthcare Reform
Patients in the U.S. and elsewhere generally rely on third-party payors to reimburse part or all of the costs associated with their healthcare treatment. Accordingly, market acceptance of our products is dependent on the extent to which third-party coverage and reimbursement is available from third-party payors, which can differ significantly from payor to payor and may change from time to time. Further, from time to time, typically on an annual basis, payment amounts are updated and revised by third-party payors. In cases where the cost of certain of our products are recovered by the healthcare provider as part of the payment for performing a procedure and not separately reimbursed or paid directly by the patient, these updates could directly impact the demand for our products.
Coverage and reimbursement by a third-party payor may depend upon many factors, including the third-party payor’s determination that use of a product is:
All third-party payors, whether governmental or commercial and whether inside the United States or outside, are developing increasingly sophisticated methods of controlling healthcare costs. These cost-control methods include prospective payment systems, bundled payment models, capitated arrangements, group purchasing, benefit redesign, pre-authorization processes and requirements for second opinions prior to procedures. These cost-control methods also potentially limit the amount that healthcare providers may be willing to pay for our products. Therefore, coverage or reimbursement for medical devices may decrease in the future. In addition, consolidation in the healthcare industry could lead to demands for price concessions, which may impact our ability to sell our products at prices necessary to support our current business strategies.
Federal and state governments in the United States and outside the country may enact legislation to modify the healthcare system, which may result in increased government price controls, additional regulatory mandates and other measures designed to constrain medical costs. These reform measures may limit the amounts that federal and state governments will pay for healthcare products and services, and also indirectly affect the amounts that private payors are willing to pay. The pricing pressure resulting from healthcare cost containment and reimbursement changes could decrease demand for our products, the prices that customers are willing to pay and the frequency of use of our products, which could have an adverse effect on our business.
Foreign Government Regulation
In addition to U.S. regulations, we are subject to a variety of foreign government regulations applicable to medical devices, medicinal products and combination products.
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Regulation of Medical Devices in the European Union
The European Union ("EU") has adopted specific directives and regulations regulating the design, manufacture, clinical investigation, conformity assessment, labeling and adverse event reporting for medical devices.
Until May 25, 2021, medical devices were regulated by the Council Directive 93/42/EEC, or Medical Devices Directive (“MDD”), which has been repealed and replaced by Regulation (EU) No 2017/745 ("MDR"). There is a transition period during which certificates issued under the Medical Devices Directive remain valid; however, when such certificates expire (or, if earlier, by May 26, 2024), the devices must be certified under the new regime set forth in the Medical Devices Regulation. An extension for devices transitioning to the EU Medical Devices Regulation has been changed from May 26, 2024 to May 26, 2026 for class III implantable custom-made devices and December 31, 2027 for class III and implantable class IIb devices.
Medical Devices Directive
Under the MDD, all medical devices placed on the market in the EU must meet the relevant essential requirements laid down in Annex I to the MDD, including the requirement that a medical device must be designed and manufactured in such a way that it will not compromise the clinical condition or safety of patients, or the safety and health of users and others. In addition, the device must achieve the performance intended by the manufacturer and be designed, manufactured, and packaged in a suitable manner. The European Commission has adopted various standards applicable to medical devices and there are additionally harmonized standards relating to the design and manufacture of medical devices which are not mandatory but, if complied with, indicate that the device satisfies the applicable element of the essential requirements.
To demonstrate compliance with the essential requirements laid down in Annex I to the MDD, medical device manufacturers must undergo a conformity assessment procedure, which varies according to the type of medical device and its classification with respect to risk. As a general rule, demonstration of conformity of medical devices and their manufacturers with the essential requirements must be based, among other things, on the evaluation of clinical data supporting the safety and performance of the products during normal conditions of use. Specifically, a manufacturer must demonstrate that the device achieves its intended performance during normal conditions of use, that the known and foreseeable risks, and any adverse events, are minimized and acceptable when weighed against the benefits of its intended performance, and that any claims made about the performance and safety of the device are supported by suitable evidence. Except for low-risk medical devices (Class I non-sterile, non-measuring devices), where the manufacturer can self-declare the conformity of its products with the essential requirements (except for any parts which relate to sterility or metrology), a conformity assessment procedure requires the intervention of a notified body. Notified bodies are independent organizations designated by EU member states to assess the conformity of devices before being placed on the market. A notified body would typically audit and examine a product’s technical dossiers and the manufacturers’ quality system. If satisfied that the relevant product conforms to the relevant essential requirements, the notified body issues a certificate of conformity, which the manufacturer uses as a basis for its own declaration of conformity. The manufacturer may then apply the CE Mark to the device, which allows the device to be placed on the market throughout the EU.
Medical Devices Regulation
On April 5, 2017, MDR was adopted with the aim of ensuring better protection of public health and patient safety. Unlike the MDD, the MDR is directly applicable in EU member states without the need for member states to implement into national law. This aims at increasing harmonization across the EU.
The MDR became effective on May 26, 2021. The new Regulation follows the same process of conformity assessment, certificates of conformity and applying a CE mark to devices before they can be placed on the market. However, among other things, the MDR:
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Devices lawfully placed on the market pursuant to the MDD prior to May 26, 2021 may generally continue to be made available on the market or put into service until May 26, 2025, provided that the requirements of the transitional provisions are fulfilled. In particular, the certificate in question must still be valid. However, even in this case, manufacturers must comply with a number of new or reinforced requirements set forth in the MDR, in particular the obligations described below.
The MDR requires that before placing a device, other than a custom-made device, on the market, manufacturers (as well as other economic operators such as authorized representatives and importers) must register by submitting identification information to Eudamed, unless they have already registered. The information to be submitted by manufacturers (and authorized representatives) also includes the name, address and contact details of the person or persons responsible for regulatory compliance.
The MDR also requires that before placing a device, other than a custom-made device, on the market, manufacturers must assign a unique identifier to the device and provide it along with other core data to the UDI database. These new requirements aim at ensuring better identification and traceability of the devices.
Manufacturers are responsible for entering the necessary data on Eudamed, which includes the UDI database, and for keeping it up to date. Eudamed is not yet fully functional, however the European Commission is aiming to have a fully functional version of the Eudamed medical device database available in the fourth quarter of 2027. The Medical Device Coordination Group has published guidance on administrative practices for manufacturers until Eudamed is fully functional.
All manufacturers placing medical devices on the market in the EU must also comply with the EU medical device vigilance system, which has been reinforced by the MDR. Under this system, serious incidents and Field Safety Corrective Actions must be reported to the relevant authorities of the EU member states. These reports will have to be submitted through Eudamed—once functional—and aim to ensure that, in addition to reporting to the relevant authorities of the EU member states, other actors such as the economic operators in the supply chain will also be informed.
Among the new requirements, manufacturers and authorized representatives must have available within their organization at least one person responsible for regulatory compliance (“PRRC”), who possesses the requisite expertise in the field of medical devices. The PRRC is responsible for compliance with post-market surveillance and vigilance requirements.
The aforementioned EU rules are generally applicable in the European Economic Area, which consists of the 27 EU Member States plus Norway, Liechtenstein and Iceland.
Brexit
As a result of the United Kingdom leaving the EU, since January 1, 2021, the regulatory framework and regimes for medical devices in the United Kingdom and the EU have diverged. In particular, a new UKCA Mark was introduced for medical devices placed on the Great Britain market (which includes England, Scotland and Wales). Northern Ireland has adopted a hybrid approach as a result of the divergence in accordance with the Northern Ireland Protocol. Manufactures can continue placing CE marked medical devices on the Great Britain market until June 30, 2024. From July 1, 2024, transitional arrangements will apply for CE and UKCA marked medical devices placed on the Great Britain market.
Environmental Laws
The costs and effects of our compliance with applicable environmental laws during fiscal years 2024 and 2025 were, and historically have been, immaterial and we do not expect any material change in expenditures in the near future.
Human Capital Resources
As of December 31, 2025, we had 41 employees, 38 of whom were full-time, consisting of clinical, research and development, operations, regulatory and quality, sales, marketing, technology, finance, business analytics and human resources. This included 31 employees located in the U.S. From time to time, we also engage contractors, consultants and temporary employees to support our operations. None of the U.S. employees are subject to collective bargaining agreements or represented by a labor union. We consider our relationship with our employees to be good.
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On August 5, 2025, the Company's board of directors approved a restructuring plan to reduce operating expenses and better align its workforce with the needs of its business. Under the restructuring plan, the Company reduced its workforce by approximately 70 roles (approximately 65%). The majority of the restructuring was completed in the third and fourth quarter of 2025.
Corporate & Available Information
We were incorporated under the laws of the State of Delaware on January 25, 2023. The mailing address of our principal executive office is 11 Huron Drive, Natick, MA 01760, and the telephone number is (508) 647-4000. Our website address is www.allurion.com. Further corporate governance information, including our Code of Business Conduct and Ethics, Corporate Governance Guidelines and the charters of our Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee are available on our investor relations website at www.investors.allurion.com under the heading “Governance - Governance Documents.”
We file annual, quarterly, current and other reports with the U.S. Securities and Exchange Commission (the "SEC"), which maintains an Internet site that contains current and periodic reports, proxy and information statements, and other information regarding issuers, including us, that file electronically with the SEC at www.sec.gov. Additional information about our filings can also be obtained at our investor relations website at www.investors.allurion.com under the heading “Financials - SEC Filings.”
We make available free of charge on our investor website our Annual Report on Form 10‑K, Quarterly Reports on Form 10‑Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. The contents of our corporate website and our investor website are not a part of this Annual Report on Form 10-K and should not be considered to be a part of, or incorporated into, this Annual Report on Form 10-K or any of our other securities filings unless specifically incorporated herein or therein by reference.
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Item 1A. Risk Factors.
You should carefully consider the following risk factors in evaluating our business. Such risks could cause our actual results to differ materially from those that are expressed or implied by the forward-looking statements contained herein. Some risks relate principally to our business and the industry in which we operate. Others relate principally to the securities market and ownership of our common stock. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties of which we are unaware, or that we currently deem immaterial, also may become important factors that affect us. Any of the following risks could result in material adverse impacts on our business, financial condition, or results of operations. You also should consider the other information included in this Annual Report on Form 10-K, including our financial statements and the related notes appearing at the end of this Annual Report on Form 10-K, as well as our other filings with the SEC.
Summary of Risk Factors
Our business is subject to numerous risks, which are discussed more fully below. The following is a summary of the principal risk factors we deem material to our business as of the date of this Annual Report on Form 10-K, which summary is not exhaustive.
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Risks Related to the Development and Commercialization of Our Products
We have a limited operating history and may face difficulties encountered by companies early in their commercialization in competitive and rapidly evolving markets.
The Allurion Smart Capsule has been marketed in countries outside of the United States since 2016 and in the United States since March 2026, and as such, we have a limited operating history upon which to evaluate our business and forecast our future revenue and operating results. In assessing our business prospects, you should consider the various risks and difficulties
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frequently encountered by companies early in their commercialization in competitive markets, particularly companies that develop and sell medical devices. These risks include our ability to:
Due to our limited operating history, we may not have the institutional knowledge or experience to be able to effectively address these and other risks that we may face. In addition, we may not be able to develop insights into trends that could emerge and negatively affect our business and may fail to respond effectively to those trends. As a result of these or other risks, we may not be able to execute key components of our business strategy, and our business, financial condition and operating results may suffer.
We have incurred losses to date and expect to incur losses for the foreseeable future, our ability to achieve and maintain profitability depends on the commercial success of the Allurion Smart Capsule, and we expect our revenues to continue to be driven primarily by sales of the Allurion Smart Capsule.
We have incurred losses to date and expect to continue to incur losses for the foreseeable future. Sales of the Allurion Smart Capsule and related accessories, which have occurred outside of the U.S. accounted for substantially all of our revenues for the years ended December 31, 2025 and 2024, and we expect our revenues to continue to be driven primarily by sales of the Allurion Smart Capsule. In order to achieve and sustain profitability, our revenues from sales of the Allurion Smart Capsule will need to grow beyond the levels we have achieved in the past. If health care providers and/or patients do not perceive our products to be competitive in features, efficacy and safety when compared to other products in the market, or if demand for the Allurion Smart Capsule or for weight loss procedures and programs in general decreases, we may fail to achieve sales levels that provide for future profitability.
Our ability to successfully market the Allurion Smart Capsule and our other current and future product and service offerings depends on numerous factors, including but not limited to:
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Some of these factors are beyond our control. If we are unable to continue to commercialize the Allurion Smart Capsule and our other current and future products and services, or are unable to obtain distributors or partners to commercialize them, we may not be able to replicate existing, or produce any incremental revenues related to the Allurion Smart Capsule and our other current and future products and services. This would result in an adverse effect on our business, financial condition, results of operations and growth prospects.
The failure of the Allurion Smart Capsule to achieve and maintain market acceptance, especially in the United States where we just received FDA approval in February 2026, could result in us achieving sales below our expectations, which would cause our business, financial condition and operating results to be materially and adversely affected.
Our current business and growth strategy is highly dependent on the Allurion Smart Capsule achieving and maintaining market acceptance, including in the United States, a geography in which we have no commercial history. In order for us to sell our products to healthcare providers and, ultimately, weight loss patients, we must convince them that our products are an attractive alternative to competitive treatments for patients who are obese and overweight, including traditional pharmaceutical therapies and more aggressive bariatric surgical treatments, such as gastric bypass and sleeve gastrectomy. Market acceptance and adoption of the Allurion Smart Capsule depends on educating health care providers on its safe and appropriate use, as well as the cost, safety, comfort, tolerability, ease of use, and effectiveness of the Allurion Program compared to other treatments. If we are not successful in convincing existing and potential customers of the benefits of our product, or if we are not able to achieve the support of health care providers for our product, our sales may decline or we may achieve sales below our expectations.
Market acceptance of our products could be negatively impacted by many factors, including:
In addition, the rapid evolution of technology and treatment options within our industry may cause consumers to delay the purchase of our products in anticipation of advancements or breakthroughs, or the perception that advancements or breakthroughs could occur, in our products or the products offered by our competitors. It is also possible that consumers interested in purchasing any of our future products currently under development may delay the purchase of one of our current products. In addition, customers may delay their purchasing decisions, or health care providers may refrain from providing our products, as a result of a global pandemic or unfavorable changes in general economic conditions.
If the Allurion Smart Capsule, or any other therapy or product that we may develop, does not achieve and maintain widespread market acceptance, we may fail to achieve sales consistent with our projections, in which case our business, financial condition and operating results could be materially and adversely affected.
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Commercial success of the Allurion Smart Capsule in the United States or elsewhere depends on our ability to accurately forecast customer demand and manufacture sufficient quantities of product that patients and health care providers request, and to manage inventory effectively. The failure to do so could have a material adverse effect on our business, financial condition, results of operations and growth prospects.
Manufacturing of the Allurion Smart Capsule requires capital expenditures and a highly-skilled workforce. There is a significant lead time to build and certify a new manufacturing facility. Although we believe our current facilities will give us adequate manufacturing capacity to meet demand for at least the next two years, we have, in the past, been unable to fill all incoming orders to meet growing demand. Having received FDA approval, we intend to rely on our existing manufacturing facilities to supply products in the United States. If demand increases faster than we expect, or if we are unable to produce the quantity of goods that we expect with our current facilities, we may not be able to grow revenue at an optimal rate. There may be other negative effects from supply shortages, including loss of our reputation in the marketplace and a negative impact on our relationships with our distributors, which could have a material adverse effect on our business, financial condition, results of operations, and growth prospects. We may also need to engage others to assist with the manufacture our products, a process which requires extensive time and resources, and we cannot guarantee that any manufacturing partner would be able to manufacture our products to our specifications and quality standards.
On the other hand, if demand for our products declines, or if market supply surpasses demand, we may not be able to reduce manufacturing expenses or overhead costs proportionately. We have invested significantly in our manufacturing capacity. If an increase in supply outpaces the increase in market demand, or if demand decreases, the resulting oversupply could adversely impact our sales and result in the underutilization of our manufacturing capacity, higher inventory carrying costs and associated working capital, changes in revenue mix, and/or price erosion, any of which would lower our margins and adversely impact our financial results, which could have a material adverse effect on our business, financial condition, results of operations, and growth prospects.
Except for limited exceptions, we do not expect health care providers or patients will receive third-party reimbursement for treatment with our products in the near future. As a result, we expect that our success will depend on the ability and willingness of health care providers to adopt self-pay practice management infrastructure and of patients to pay out-of-pocket for treatment with our products.
Certain elective treatments, such as an intragastric balloon, are typically not covered by insurance. Accordingly, we do not expect, except with limited exceptions, that any third-party payors will cover or reimburse health care providers or patients for the Allurion Program. As a result, we expect that our success will depend on the ability and willingness of health care providers that may not have historically operated a self-pay practice to adopt the policies and procedures needed to successfully operate such a practice. Our sales and marketing efforts have historically targeted bariatric surgeons, gastroenterologists, plastic surgeons and other health care providers.
Although many of these health care providers are accustomed to selling cash-pay services in their practices, some are primarily accustomed to providing services that are reimbursed by third-party payors. As a result, these health care providers may need to augment their administrative staff and billing procedures to address the logistics of a self-pay practice. If health care providers are unable or unwilling to make such changes, adoption of our products may be slower than anticipated.
Our success will also depend on the ability and willingness of patients to pay out-of-pocket for treatment with our products. Adverse changes in the economy, including from heightened inflation, higher interest rates, and geopolitical conflicts such as the Russia-Ukraine war, the Israel-Hamas war, and the Israel/United States - Iran war may cause consumers to reassess their spending choices and reduce the demand for elective treatments and could have an adverse effect on consumer spending. This shift could have an adverse effect on our revenues and operating results. In addition, the operations of the medical device distributors upon whom we rely to sell our products may be negatively impacted by any such adverse economic changes. If our distributors are unable to maintain their operations and effectively market and sell our products, our results of operations and business may suffer.
Furthermore, consumer preferences and trends may shift due to a variety of factors, including changes in demographic and social trends, public health initiatives and product innovations, which may reduce consumer demand for our products. The decision by a patient to elect to undergo treatment with the Allurion Smart Capsule may be influenced by a number of additional factors, such as:
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Our financial performance will be materially harmed if we cannot generate significant customer demand for the Allurion Smart Capsule.
Changes in coverage and reimbursement for obesity treatments and procedures could affect the adoption of the Allurion Program and our future revenues.
Historically, intragastric balloon products are not reimbursed by third-party payors, although a very limited number of balloon procedures have been subject to reimbursement in the U.K. and Kingdom of Saudi Arabia markets. We do not currently plan on submitting any requests to any third-party payor for coverage or billing codes specific to our products other than as allowed by the National Health Service in the United Kingdom and Ministry of Health in the Kingdom of Saudi Arabia. However, payors may change their coverage and reimbursement policies for intragastric balloon products as a category and/or for other obesity treatments and procedures, and these changes could negatively impact our business. For example, healthcare reform legislation or regulation that may be proposed or enacted in the future that results in a favorable change in coverage and reimbursement for competitive products and procedures in weight loss and obesity could also negatively impact adoption of our products and our future revenues, and our business could be harmed as we would be at an economic disadvantage when competing for customers. For more information, see section entitled "Business - Government Regulation - Other U.S. Healthcare Laws - Coverage, Reimbursement and Healthcare Reform.
A substantial proportion of our sales are through third-party distributors, and we do not have direct control over the efforts these distributors may use to sell our products. If our relationships with these distributors deteriorate, or if these distributors fail to sell our products or engage in activities that harm our reputation, or fail to adhere to medical device regulations, our financial results may be negatively affected.
Historically, our sales model has been to sell primarily through distributors rather than through our own sales force, but recently we have begun to transition certain territories to both a direct sales model and a hybrid sales model that includes both distributors and a direct sales effort. We believe that our reliance on distributors improves the economics of our business, as we do not carry the high fixed costs of a large direct sales force in many of the countries in which the Allurion Smart Capsule is commercially available. If we are unable to maintain or enter into such distribution arrangements on acceptable terms, or at all, we may not be able to successfully commercialize our products in certain countries. Furthermore, distributors can choose the level of effort that they apply to selling our products relative to others in their portfolio. The selection, training, and compensation of distributors’ sales personnel are within the distributor’s control rather than our own and may vary significantly in quality from distributor to distributor.
In addition, although our contract terms require our distributors to comply with all applicable laws regarding the sale of our products, including anti-competition, anti-money laundering, sanctions laws and FDA and other health care regulations, we may not be able to ensure proper compliance. If our distributors fail to effectively market and sell our products in full compliance with applicable laws, our results of operations and business may suffer.
In certain large markets, we engage in direct sales efforts. We may fail to maintain and develop our direct sales force, and our revenues and financial outcomes could suffer as a result. Furthermore, our direct sales personnel may not effectively sell our products.
We currently engage in direct sales efforts in approximately 20 countries. We must hire, retain and motivate a significant number of sales and marketing personnel in order to support our existing operations and any future growth in these and other new countries. There is significant competition for quality personnel experienced in such activities, including from companies with greater financial resources than Allurion. If we are not successful in our efforts to continue recruiting, retaining, and motivating such personnel, we may not be able to increase our revenues, or we may increase our expenses in greater measure than our revenues, negatively impacting our operating results.
We are also working on creating a direct sales structure and strategy in certain markets, including implementing the correct legal and business structures to comply with taxation and operational requirements. These structures may not ultimately be implemented or, if implemented, be successful or effective, and may not be able to increase our revenues or improve our gross margins. In addition, our expenses or tax-related costs may increase in greater measure than our revenues, negatively impacting our operating results.
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Furthermore, our sales force may operate independently with limited day-to-day oversight from management. They may engage in sales practices that increase certain risks to our business, including the risk of scrutiny from regulatory authorities and the risk that we violate anti-corruption regulations in one or more countries. These and other independent actions may result in unexpected costs, news that might impair our reputation or revenues, actions by regulatory authorities, litigation, and/or sanctions. Any of these could impair the trading price of our common stock and adversely impact our results.
The effectiveness and safety of the Allurion Smart Capsule depends critically on our ability to educate health care providers on its safe and proper use. If we are unable to do so, we may not achieve our expected growth and may be subject to risks and liabilities.
In addition to educating health care providers on the clinical benefits of the Allurion Smart Capsule, we must also train health care providers on the safe and appropriate use of the Allurion Smart Capsule. If we are unable to provide an adequate training program with respect to the Allurion Smart Capsule, product misuse may occur that could lead to serious adverse events. Many health care providers may be unfamiliar with such treatments or find it more complex than competitive products or alternative treatments. As such, there is a learning process involved for health care providers to become proficient in the use of our products and it may take several procedures for a health care provider to be able to use the Allurion Smart Capsule comfortably. In addition, it is also critical for health care providers to be educated and trained on best practices in order to achieve optimal results, including patient selection and eligibility criteria and patient follow-up, as well as complementary methods of use such as diet or behavioral modification programs. Convincing health care providers to dedicate the time and energy necessary for adequate training is challenging, and we cannot assure you that we will be successful in these efforts. This training process may also take longer than we expect. In the event that health care providers are not properly trained in the use of the Allurion Smart Capsule and Allurion Program generally, they may misuse or ineffectively use our products for the treatment of patients. As a result, patients may experience adverse events or not be able to enjoy the benefits of our program or achieve the weight loss outcomes they expect, leading to dissatisfaction and market rejection of our products. In addition, misuse of our products in any stage of the treatment may result in, among other things, patient injury, adverse side effects, negative publicity or lawsuits against us. Any of these events could have an adverse effect on our business and reputation.
The misuse or off-label use of our products may harm our image in the marketplace, result in injuries that lead to product liability suits or result in costly investigations and sanctions by regulatory bodies if we are deemed to have engaged in the promotion of these uses, any of which could be costly to our business.
The Allurion Smart Capsule has been approved or cleared by regulatory authorities in the countries in which we sell it or in which we conduct our operations for specific indications. We do not promote the Allurion Smart Capsule for uses outside of approved or cleared indications for use, known as “off-label uses.” We cannot, however, prevent a health care provider from using our product off-label, when in the health care provider’s independent professional medical judgment he or she deems it appropriate. There may be increased risk of injury to patients if health care providers attempt to use our product off-label. Furthermore, the use of our product for indications other than those approved or cleared by regulatory authorities may not effectively treat such conditions, which could harm our reputation in the marketplace among physicians and patients.
Health care providers may also misuse our products, use improper techniques, ignore or disregard product warnings, contraindications or other information provided in training materials or product labeling, fail to obtain adequate training, fail to inform patients of the risks associated with procedures that utilize our product or fail to solicit sufficient information from patients regarding their health status or medical histories, any of which may potentially lead to injury and an increased risk of product liability claims. If our product is misused or used with improper techniques or insufficient information, we may become subject to costly litigation by our health care providers or their patients. Moreover, if patients fail to disclose medical conditions or to follow the pre- and post-placement instructions, medication program, and dietary guidelines in connection with their treatment with the Allurion Smart Capsule, there is the risk of injury. Such patients may also fail to achieve their desired results, which could harm our image in the marketplace.
The Allurion Gastric Balloon System, featuring the Allurion Smart Capsule, is approved in more than 80 countries, including the United States and the European Union. Maintaining regulatory approval in these jurisdictions may require further clinical trials and investment and cannot be guaranteed.
The U.S. FDA has required the Company to conduct a post-market approval trial to obtain data regarding the safety and performance of the Allurion Gastric Balloon System in the commercial setting. Completion of this post-approval trial, in a manner which results in data sufficient to maintain FDA approval, is subject to multiple risks, many of which are outside of our control. These include, but are not limited to, our ability to fund the ongoing trial from our operations or via additional fundraising; trial participants’ willingness and ability to return for follow-up trial visits; and maintenance of a suitable trial database over a long period of time. Even if completed and appropriately evaluated, the post-approval trial follow-up may reveal
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safety or other issues that impact the approved labeling, or may result in withdrawal of the Allurion Smart Capsule from the marketplace in the U.S. or elsewhere.
In addition, maintaining regulatory approval in each of our jurisdictions may require additional follow-up trials or other investment. Such follow-up trials would bear the same risks as the U.S. post-approval trial. Moreover, other investment may be required to maintain our regulatory approvals, and the Company may not be able to fund these investments when required, which could result in the loss of such approvals.
Our business depends on maintaining our brand, reputation, and ongoing demand for our products and services, and a significant reduction in sentiment or demand could affect our results of operations.
Our success depends on the reputation and awareness of our brand, which depend on factors such as the safety and quality of our products, our communication activities, including marketing and education efforts, customer acquisition and retention strategies, and our management of our heath care provider and patient experience. Maintaining, promoting and positioning our brand is important to expanding our customer base. This will depend largely on the success of our education and marketing efforts and our ability to provide a consistent, high-quality experience to health care providers and patients. If we do not successfully conduct our education and marketing efforts, particularly to health care systems and large institutions, or if existing users decrease their level of engagement, our revenue, financial results and business may be significantly harmed.
A decrease in customer retention, growth or engagement with our products may have a material and adverse impact on our revenue, business, financial condition and results of operations. Any number of factors could negatively affect customer retention, growth and engagement, including:
We may need to make substantial investments in the areas of education and marketing in order to maintain and enhance our brand and awareness of our products. Ineffective marketing, negative publicity, significant discounts by our competitors, product defects, serious adverse events and related liability litigation, failure to obtain regulatory approval or clearance for our products, counterfeit products, unfair labor practices and failure to protect our intellectual property rights are some of the potential threats to the strength of our business. We may need to make substantial expenditures to mitigate the impact of such threats.
We believe that maintaining and enhancing awareness of our products and brand in the countries in which we currently sell our products and in new countries where we have limited awareness or brand recognition is important to expanding our customer base. As such, our growth will depend on the further development and commercialization of our current products, and marketing authorization of our future products, all in compliance with applicable laws and regulations. If we are unable to increase awareness of our products or enhance the strength of our brand in the countries in which we currently sell our products and in new countries in a timely and compliant manner, then our growth strategy could be adversely affected.
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Risks Related to our Business and Industry
The weight loss and obesity management industries are highly competitive. We also compete with companies that make weight loss drugs and other weight loss solutions outside the medical device industry, including compounded drugs. If our competitors are able to develop and market products that are safer, more effective, easier to use or more readily adopted by patients and health care providers, our commercial opportunities will be reduced or eliminated.
The weight loss and obesity management industries are highly competitive, subject to rapid change and significantly affected by new product introductions, results of clinical research, corporate combinations, actions by regulatory bodies, changes by public and private payers, and other factors relating to our industry. We compete both with companies that offer medical devices as a weight loss therapy as well as companies that make weight loss drugs and other weight loss solutions outside the medical device industry. Because of the market opportunity and the high growth potential of the non-surgical device market for weight loss and obesity, in particular recent pharmaceutical therapies known as GLP-1s, competitors and potential competitors have historically dedicated, and will continue to dedicate, significant resources to aggressively develop and commercialize their products. Any one of these factors could reduce the demand for our devices or services or require substantial resources and expenditures for research, design and development to avoid technological or market obsolescence.
Outside the United States, we compete with a variety of local and regional competitive intragastric balloon manufacturers including SC MedSil, Medicone and Spatz Laboratories. In the United States, there are three manufacturers with an intragastric balloon approved by the FDA at this time: Boston Scientific Corporation, ReShape Lifesciences, Inc. and Spatz FGIA Inc. All of these balloons require endoscopy and anesthesia for placement and/or removal.
We also compete against the manufacturers of pharmaceuticals that are directed at treating weight loss, such as NovoNordisk A/S, Eli Lilly & Co., Roche Holding AG, GlaxoSmithKline plc, Arena Pharmaceuticals, Inc., VIVUS, Inc. and Orexigen Therapeutics, Inc.
At any time, these or other competitors may introduce new or alternative products that compete directly or indirectly with our products and services. They may also develop and patent products and processes earlier than we can or obtain regulatory clearance or approvals before we are able to obtain required approvals, which could impair our ability to develop and commercialize similar products or services. If clinical outcomes of procedures performed with our competitors’ products are, or are perceived to be, superior to the outcomes of treatments performed with our products, sales of our products could be negatively affected and our business, results of operations and financial condition could suffer.
Our success will depend on our ability to enhance our current products and technologies and develop or acquire and market new products and technologies to keep pace with technological developments and evolving industry standards, while responding to changes in customer needs. A failure to adequately develop or acquire device enhancements or new devices that will address changing technologies and customer requirements adequately, or to introduce such devices on a timely basis, may have a material adverse effect on our business, financial condition and results of operations.
Many of our competitors, or their parent companies, have significantly greater financial and other resources than we do, as well as:
We might have insufficient financial resources to improve existing devices, advance technologies, develop new devices, and market them at competitive prices. Technological advances by one or more competitors or future entrants into the field may result in our current devices becoming non-competitive or obsolete, which may decrease revenues and profits and adversely affect our business and results of operations. Competition with these companies could result in significant price-cutting, reduced profit margins and loss of market share, any of which would harm our business, financial condition and results of operations. In
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addition, competitors with greater financial resources than ours could acquire other companies to gain enhanced name recognition and market share, as well as new technologies or products that could effectively compete with our existing and future products, which may cause our revenues to decline and harm our business. In addition, many of our competitors are well-established manufacturers with significant resources and may engage in aggressive marketing tactics. Competitors may also possess the ability to commercialize additional lines of products, bundle products or offer higher discounts and incentives to customers in order to gain a competitive advantage. If the prices of competing products are lowered as a result, we may not be able to compete effectively.
Our current international operations and any expansion of our business internationally expose us to business, regulatory, political, operational, financial, and economic risks associated with doing business internationally.
Our products are registered to be sold in over 50 countries, and we operate subsidiaries in Australia, France, the United Arab Emirates, the United Kingdom, the United States, Italy, Spain and Mexico. Our business strategy contemplates continued international operations in key markets, including partnering with medical device distributors and introducing the Allurion Smart Capsule and other products outside the United States. The sale and shipment of our products internationally, as well as the purchase of components from international sources, subjects us to potential trade, export, import and customs, and economic sanctions regulations and laws.
Compliance with these regulations and laws is costly and exposes us to penalties for non-compliance. Any failure to comply with applicable legal and regulatory obligations could impact us in a variety of ways that include, but are not limited to, significant criminal, civil and administrative penalties, including imprisonment of individuals, fines and penalties, denial of export or import privileges, seizure of shipments, restrictions on certain business activities, and exclusion or debarment from government contracting. Also, the failure to comply with applicable legal and regulatory obligations could result in the disruption of our shipping and sales activities.
In addition, several of the countries in which we sell our products or conduct our operations are, to some degree, subject to political, economic or social instability. Doing business in other countries outside the United States involves a number of other risks, including:
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Any of these risks, if encountered, could harm our future international expansion and operations and, consequently, have an adverse effect on our financial condition, results of operations and cash flows.
We depend on a limited number of single source suppliers to manufacture our components, sub-assemblies and materials, which makes us vulnerable to supply shortages and price fluctuations.
We rely on single source suppliers for some of the components, sub-assemblies and materials for our products. These components, sub-assemblies and materials are critical and, for certain items, there are relatively few alternative sources of supply. These single source suppliers may be unwilling or unable to supply the necessary materials and components reliably and at the levels we anticipate or that are required by the market. We also have two suppliers with which we do not maintain a formal contractual relationship. We typically have at least a six-month supply of the materials provided by each of these suppliers but we cannot guarantee that we could find an alternative before our inventory ran out and therefore the loss of these relationships could cause a substantial disruption to our business. We would also have little to no recourse if one of these two suppliers became unwilling or unable to continue to supply materials. While our suppliers have generally met our demand for their products and services on a timely basis in the past, we cannot guarantee that they will in the future be able to meet our demand for their products, either because of an increase in the level of such demand, acts of nature, the nature of our agreements with those suppliers or our relative importance to them as a customer. Our suppliers may decide in the future to discontinue or reduce the level of business they conduct with us.
We have not qualified or obtained necessary regulatory approvals for additional suppliers for some of these components, sub-assemblies and materials, but we do carry a significant inventory of these items ourselves. While we believe that alternative sources of supply or sterilization may be available, we cannot be certain whether they will be available if and when we need them, or that any alternative suppliers or providers would be able to provide the quantity and quality of components, materials and sterilization that we would need to manufacture and ship our products if our existing suppliers and providers were unable to satisfy our requirements. To utilize other sources, we would need to identify and qualify new providers to our quality standards and obtain any additional regulatory approvals required to change providers, which could result in manufacturing delays and increase our expenses.
Our dependence on third parties subjects us to a number of risks that could impact our ability to manufacture our products and harm our business, including:
Although we require our third-party suppliers and providers to supply us with components and services that meet our specifications and other applicable legal and regulatory requirements in our agreements and contracts, and we perform incoming inspection, testing or other acceptance activities to ensure the components meet our requirements, there is a risk that these third parties will not always act consistently with our best interests, and may not always supply components or provide services that meet our requirements or in a timely manner.
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Negative publicity, product defects and any resulting litigation concerning our products or our competitors’ products could harm our reputation and reduce demand for the Allurion Smart Capsule, either of which could negatively impact our financial results.
The responses of potential patients, health care providers, the media, legislative and regulatory bodies and others to information about complications or alleged complications of our products, or products liability litigation against us or our competitors, could result in negative publicity and could materially reduce market acceptance of our products. These responses or any investigations and potential resulting negative publicity may have a material adverse effect on our business and reputation and negatively impact our financial condition, results of operations or the market price of our common stock. In addition, significant negative publicity could result in an increased number of product liability claims against us.
Moreover, if we, the FDA or a comparable foreign regulatory authority discover previously unknown problems with our products, such as adverse events of unanticipated severity or frequency, or problems with the facilities where our products are manufactured, or if a regulatory authority disagrees with the promotion, marketing or labeling of our products, a regulatory authority may impose restrictions relative to such product, the manufacturing facility or us, including requesting a recall or requiring withdrawal of the product from the market or suspension of manufacturing. For example, on August 6, 2024, the ANSM suspended sales of the Allurion Smart Capsule in France due to adverse events, and we withdrew the Allurion Smart Capsule from the French market, pending implementation of a remediation plan. While the ANSM has since lifted its suspension following our completion of a remediation plan, other regulatory authorities may in the future take action with respect to our products, and there is no guarantee that we will be able to successfully implement a remediation plan or other remedial measures to the satisfaction of any such regulatory authority, and we could be delayed or prevented from resuming sales of the Allurion Smart Capsule in the affected territory as a result. A withdrawal from the market in a country, and the risks identified by the applicable regulatory authority, could negatively affect the market acceptance of the Allurion Smart Capsule.
We depend on our senior management team and the loss of one or more key employees or an inability to attract and retain highly skilled employees could harm our business.
Our success largely depends upon the continued services of our executive management team and key employees, and the loss of one or more of our executive officers or key employees could harm us and directly impact our financial results. Although we have entered into employment agreements with some of our executive officers and key employees, each of them may terminate their employment with us at any time. Changes in our executive management team resulting from the hiring or departure of executives could disrupt our business. For example, on November 7, 2024, Christopher Geberth, our former Chief Financial Officer, notified us of his decision to resign effective as of November 13, 2024, to pursue other interests. These types of changes in our management team could cause retention and morale concerns among current employees, as well as operational risks. In addition, our Chief Executive Officer, Shantanu Gaur, has been with us since inception and has been instrumental in building operational capabilities, raising capital and guiding product development and regulatory strategy. If Dr. Gaur was no longer working at our company, our industry credibility and operational capabilities would be harmed.
To execute our growth plan, we must attract and retain highly qualified personnel. Competition for skilled personnel is intense, especially for engineers with high levels of experience in designing and developing medical devices and for sales executives. We have, from time to time, experienced, and we expect to continue to experience, difficulty in hiring and retaining employees with appropriate qualifications. The loss of the services of our executive officers or other key employees could impede the achievement of our research, development and commercialization objectives and seriously harm our ability to successfully implement our business strategy. Furthermore, replacing executive officers and key employees may be difficult and may take an extended period of time because of the limited number of individuals in our industry with the breadth of skills and experience required to successfully develop, gain regulatory approval of and commercialize medical devices.
Many of the companies with which we compete for experienced personnel have greater resources than we have. If we hire employees from competitors or other companies, their former employers may attempt to assert that these employees or we have breached legal obligations, resulting in a diversion of our time and resources and, potentially, damages. In addition, job candidates and existing employees often consider the value of the stock awards they receive in connection with their employment. If the perceived value of our stock awards declines, either because we are a public company or otherwise, it may harm our ability to recruit and retain highly skilled employees. In addition, we invest significant time and expense in training our employees, which increases their value to competitors who may seek to recruit them. If we fail to attract new personnel or fail to retain and motivate our current personnel, our business and future growth prospects would be harmed.
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We may acquire other businesses, form joint ventures or make investments in other companies or technologies in the future. If we are not successful in integrating these businesses, as well as identifying and controlling risks associated with the past operations of these businesses, we may incur significant costs, receive penalties or other sanctions from various regulatory agencies, and/or incur significant diversions of management time and attention.
We believe our business growth will be enhanced if we continually seek opportunities to enhance and broaden our product offerings. As part of our business strategy, we may pursue acquisitions or licenses of assets, or acquisitions of businesses. We also may pursue strategic alliances and joint ventures that leverage our core technology and industry experience to expand our product offerings or sales and distribution resources.
However, we may not be able to find suitable partners or acquisition candidates, and we may not be able to complete such transactions on favorable terms, if at all. If we make any acquisitions, we may not be able to integrate these acquisitions successfully into our existing business, and we could assume unknown or contingent liabilities. Any future acquisitions also could result in significant write-offs or the incurrence of debt and contingent liabilities, any of which could have an adverse effect on our financial condition, results of operations and cash flows. Integration of an acquired company may also disrupt ongoing operations and require management resources that would otherwise focus on developing our existing business. We may experience losses related to investments in other companies, which could have a negative effect on our results of operations.
We may not identify or complete these transactions in a timely manner, on a cost-effective basis, or at all, and we may not realize the anticipated benefits of any acquisition, license, strategic alliance or joint venture. To finance such a transaction, we may choose to issue our common stock as consideration, which would dilute the ownership of our stockholders. If the price of our common stock is low or volatile, we may not be able to acquire other companies or fund a joint venture project using our common stock as consideration. Alternatively, it may be necessary for us to raise additional funds for acquisitions through public or private financings, royalty or debt financings. Additional funds may not be available on terms that are favorable to us, or at all.
We do not know whether we will be able to successfully integrate any acquired business, product or technology. The success of any given acquisition may depend on our ability to retain any key employees related thereto, and we may not be successful at retaining or integrating such key personnel. Integrating any business, product or technology we acquire could be expensive and time-consuming, disrupt our ongoing business, impact our liquidity, and/or distract our management. If we are unable to integrate any acquired businesses, products or technologies effectively, our business may suffer. Whether as a result of unsuccessful integration, unanticipated costs, including those associated with assumed liabilities and indemnification obligations, negative accounting impact, or other factors, we may not realize the economic benefits we anticipate from acquisitions. In addition, any amortization or charges resulting from the costs of acquisitions could increase our expenses.
If changes in the economy and/or consumer spending, consumer preference and other trends reduce consumer demand for our products, our sales and profitability would suffer.
We are subject to the risks arising from adverse changes in general economic and market conditions. Certain elective procedures, including those for weight loss, are typically not covered by insurance. Adverse changes in the economy may cause consumers to reassess their spending choices, which could have an adverse effect on consumer spending, reduce the demand for these procedures, and therefore have an adverse effect on our revenues. Furthermore, consumer preferences and trends may shift due to a variety of factors, including changes in demographic and social trends, public health initiatives and product innovations, which may reduce consumer demand for our products.
Our overall performance depends, in part, on worldwide economic conditions. In recent quarters, we have observed increased economic uncertainty in the United States and abroad. Impacts of such economic weakness include:
These developments could lead to supply chain disruption, inflation, higher interest rates, and uncertainty about business continuity, which may adversely affect our business and our results of operations. As our customers react to global economic conditions and the potential for a global recession, we may see them reduce spending on our products and take additional precautionary measures to limit or delay expenditures and preserve capital and liquidity. Reductions in spending on our products, delays in purchasing decisions, failure to complete the Allurion Program, and inability to attract new customers, as well as
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pressure for extended billing terms or pricing discounts, would limit our ability to grow our business and negatively affect our operating results and financial condition.
Changes in our business and operations have placed, and may continue to place, significant demands on our management team and infrastructure. If we fail to manage these demands effectively, we may be unable to execute our business plan, maintain high levels of customer and patient satisfaction, or address competitive challenges adequately.
Our business, headcount, and operations have both expanded and contracted, in the United States and abroad, since our inception, and we anticipate operational changes in the future as we enhance our product development efforts and refine our marketing and distribution strategies. While we expect to continue to grow headcount and operations over the long-term, we have executed a number of restructuring plans since January 2024, designed to more closely align our cost structure with near-term revenue expectations, improve our capital structure, and accelerate the path to profitability.
We may be unable to manage effectively the changes to the business and potential disruption occasioned by such reductions. The implementation of our restructuring efforts, including the impact of a leaner organization, may result in delays in delivering our products and services, declines in customer and patient satisfaction, loss of customers, or difficulties in executing new strategies such as new sales and marketing strategies. We may experience employee attrition, decreased employee morale, and difficulty recruiting and retaining new employees in the future, all of which will require the time and attention of our management team.
In addition, our ability to achieve the anticipated benefits from the restructuring plans within the expected time frame, or at all, are subject to successful execution of management’s estimates and assumptions and may vary materially from our expectations, including as a result of factors that are beyond our control. If we do not realize the expected benefits of the restructuring plans on a timely basis, or at all, our business, results of operations and financial condition could be adversely affected. Furthermore, following completion of the restructuring plans, our business may not be more efficient or flexible than prior to implementation. We may also incur additional costs not currently contemplated due to events that may occur as a result of, or that are associated with, the workforce reductions.
In the future, should demand for our products and services significantly increase, including as a result of our recent regulatory approval in the United States, we may need to increase the number of our employees and the scope of our operations, particularly in the areas of regulatory affairs and sales and marketing. We also intend, now and in the future, to continue to improve our operational, financial and management controls and reporting systems and procedures, which may require additional personnel and capital investments and will increase our costs. Such business growth could place a strain on our existing administrative and operational infrastructure, and we may not be able to make improvements to our personnel infrastructure in an efficient or timely manner, or at all. In addition, we may discover deficiencies in existing systems and controls.
Some new personnel likely would be operating in countries outside the jurisdiction of our corporate headquarters, which adds additional complexity, and may require us to expand our facilities. The physical expansion of our operations may lead to significant costs and may divert our management and business development resources. Managing personnel across a global enterprise requires expertise and resources and places a strain on our management, administrative and financial infrastructure. Our failure to effectively manage change and accomplish any of these tasks could delay the execution of our business plans or disrupt our operations, and prevent us from growing successfully. We may also be exposed or subject to additional unforeseen or undisclosed liabilities as well as increased levels of indebtedness.
We may be subject to substantial warranty or product liability claims or other litigation in the ordinary course of business that may adversely affect our business, financial condition and operating results.
We face an inherent risk of product liability exposure related to the sale of the Allurion Smart Capsule and any products in clinical trials. The marketing, sale and use, misuse or off-label use of the Allurion Smart Capsule and our other current and future products could lead to the filing of product liability claims against us if someone alleges that our products failed to perform as designed or caused significant adverse events in patients. We may also be subject to liability for a misunderstanding of, or inappropriate reliance upon, the information we provide. If we cannot successfully defend ourselves against claims that the Allurion Smart Capsule or our other current or future products caused injuries, we may incur substantial liabilities. Regardless of merit or eventual outcome, liability claims may result in:
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We currently hold $5.0 million in product liability insurance coverage, which may not be adequate to cover all liabilities we may incur. Insurance coverage is increasingly expensive. We may not be able to maintain insurance coverage at a reasonable cost or in an amount adequate to satisfy any liability that may arise.
Any future collaboration agreements (including with respect to product manufacturing, distribution, or commercialization) we may enter into with respect to our current or future products may place the development or commercialization of such products outside our control, or may otherwise be on terms unfavorable to us.
We may enter into collaboration agreements with third parties with respect to our current or future products, including for distribution or commercialization in or outside the United States. Our likely collaborators for any distribution, marketing, licensing, manufacturing, or other collaboration arrangements include large and mid-size medical device and diagnostic companies, regional and national medical device and diagnostic companies, and distribution or group purchasing organizations. We will have limited control over the amount and timing of resources that our collaborators dedicate to the development or commercialization of our products. Our ability to generate revenue from these arrangements will depend in part on our collaborators’ abilities to successfully perform the functions assigned to them in these arrangements.
We rely on third parties to conduct certain components of our clinical trials, and those third parties may not perform satisfactorily, including failing to meet deadlines for the completion of such trials, which could interfere with or delay our ability to get regulatory approval or commercialize our products.
We rely on third parties, such as contract research organizations, clinical data management organizations, medical institutions and clinical investigators, to perform various functions for our clinical trials. Our reliance on third parties for clinical development activities reduces our control over these activities but does not relieve us of our responsibilities. We remain responsible for ensuring that each of our clinical trials is conducted in accordance with the general investigational plan and protocols for the trial. Moreover, the International Council for Harmonization and the FDA require us to comply with standards, commonly referred to as good clinical practices, for conducting, recording and reporting the results of clinical trials to ensure that data and reported results are credible and accurate and that the rights, integrity and confidentiality of patients in clinical trials are protected. Furthermore, these third parties may also have relationships with other entities, some of which may be our competitors. If these third parties do not successfully carry out their contractual duties, meet expected deadlines or conduct our clinical trials in accordance with regulatory requirements or our stated protocols, we will not be able to obtain, or may be delayed in obtaining, regulatory approvals for our planned products and will not be able to, or may be delayed in our efforts to, successfully commercialize our planned products.
The failure of third parties to meet their contractual, regulatory, and other obligations could adversely affect our business.
We rely on suppliers, vendors, outsourcing partners, consultants, alliance partners and other third parties to research, develop, manufacture and commercialize our products and manage certain parts of our business. Using these third parties poses a number of risks, such as: (i) they may not perform to our standards or legal requirements; (ii) they may not produce reliable results; (iii) they may not perform in a timely manner; (iv) they may not maintain confidentiality of our proprietary information; (v) disputes may arise with respect to ownership of rights to technology developed with our partners; and (vi) disagreements could cause delays in, or termination of, the research, development or commercialization of our products or result in litigation or arbitration.
Moreover, some third parties are located in markets subject to political and social risk, corruption, infrastructure problems and natural disasters, in addition to country-specific privacy and data security risk given current legal and regulatory environments. Failure of third parties to meet their contractual, regulatory, and other obligations may materially affect our business.
We have significant exposure to the economic and political situations in emerging market countries, and developments in these countries could materially impact our financial results, or our business more generally.
Many of the countries in which our products are sold are emerging markets. Our global growth strategy contemplates the expansion of our existing sales activities in Latin America, the Middle East, Africa and the Asia-Pacific region. Our exposure to emerging markets has increased in recent years, as have the number and importance of our distributor arrangements. Economic and political developments in the emerging markets, including economic crises, currency inflation, or political instability, have
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had in the past, and may have in the future, a material adverse effect on our financial condition and results of operations. Moreover, as these markets continue to grow, competitors may seek to enter these markets and existing market participants will likely try to aggressively protect or increase their market shares. Increased competition may result in price reductions, reduced margins and our inability to gain or hold market share, which could have an adverse effect on our financial condition and results of operations.
Increasing scrutiny and changing expectations from investors with respect to our environmental, social and governance practices may impose additional costs on us or expose us to reputational or other risks.
Investors have increased their emphasis on the environmental, social and governance ("ESG") practices of companies across all industries, including the environmental impact of operations and human capital management. Certain stockholders use third-party benchmarks or scores to measure a company’s ESG practices and decide whether to invest in its common stock or engage with the company to require changes to its practices.
A failure to comply with investor expectations and standards, which are evolving and vary considerably, or the perception that we have not responded appropriately to the growing concern for ESG issues, could result in reputational harm to our business and could have an adverse effect on us.
Risks Related to Government Regulation
Upon receipt of regulatory approval to market the Allurion Smart Capsule in a given jurisdiction, we are (or will be) subject to ongoing regulatory obligations and continued regulatory review, which may result in significant additional expense and subject us to penalties if we fail to comply with applicable regulatory requirements.
When a regulatory approval is obtained, the approved product and its manufacturer are subject to continual review by regulatory authorities. Our regulatory approvals for the Allurion Smart Capsule, as well as any future regulatory approval that we receive for the Allurion Smart Capsule or for any of our other products, may be subject to limitations on the indicated uses for which the product may be marketed. Future approvals may contain requirements for potentially costly post-marketing follow-up trials to monitor the safety and efficacy of the approved product. In addition, we are subject to extensive and ongoing regulatory requirements by the FDA and other regulatory authorities with regard to the labeling, packaging, adverse event reporting, storage, advertising, promotion and recordkeeping for our products. In addition, we are required to comply with regulations regarding the manufacture of the Allurion Smart Capsule, which include requirements related to quality control and quality assurance as well as the corresponding maintenance of records and documentation. Further, regulatory authorities must inspect these manufacturing facilities and determine they are in compliance with FDA good manufacturing practice requirements as set forth in the QSR before the products can be approved.
These facilities are subject to continual review and periodic inspections by the FDA and other regulatory authorities for compliance with the QSR and similar regulations. If we or a third party discover previously unknown problems with a product, such as adverse events of unanticipated severity or frequency, or problems with the facility where the product is manufactured, a regulatory authority may impose restrictions on that product, the manufacturer or us, including requiring withdrawal of the product from the market or suspension of manufacturing.
Inadequate funding for the FDA, the SEC and other government agencies, including from government shutdowns, or other disruptions to these agencies’ operations, could hinder their ability to hire and retain key leadership and other personnel, prevent new products and services from being developed or commercialized in a timely manner or otherwise prevent those agencies from performing normal business functions on which the operation of our business may rely, which could negatively impact our business.
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The ability of the FDA to review and approve new products can be affected by a variety of factors, including government budget and funding levels, the ability to hire and retain key personnel and accept the payment of user fees, and statutory, regulatory and policy changes. Average review times at the agency have fluctuated in recent years as a result. In addition, government funding of the SEC and other government agencies on which our operations may rely, including those that fund research and development activities, is subject to the political process, which is inherently fluid and unpredictable.
Disruptions at the FDA and other agencies may also slow the time necessary for new product candidates to be reviewed and/or approved by necessary government agencies, which could adversely affect our business. If there are significant employee reductions at the FDA or a prolonged government shutdown occurs, it could significantly impact the ability of the FDA to timely review and process our regulatory submissions, which could have a material adverse effect on our business. Further, future reductions in force and government shutdowns could impact our ability to access the public markets and obtain necessary capital in order to properly capitalize and continue our operations. For example, over the last several years the U.S. government has shut down several times and certain regulatory agencies, such as the FDA and the SEC, have had to furlough critical employees and stop critical activities. Currently, federal agencies in the U.S. are operating under a continuing resolution that is set to expire on September 30, 2025. In addition, federal employees recently have been subject to termination in connection with cost reduction efforts by the federal government. If a prolonged government shutdown or significant reduction in force of federal employees occurs, including those working for the FDA, it could significantly impact the ability of the FDA to timely review and process our regulatory submissions, which could have a material adverse effect on our business. Further, future government shutdowns and cost-cutting efforts could impact our ability to access the public markets and obtain necessary capital in order to properly capitalize and continue our operations.
If patients using our products experience adverse events or other undesirable side effects, regulatory authorities could withdraw or modify our regulatory approvals, which would adversely affect our reputation and commercial prospects and/or result in other significant negative consequences.
Undesirable side effects caused by the Allurion Smart Capsule could: cause us, the FDA or other applicable regulatory authorities to interrupt, delay or halt clinical trials, result in more restrictive labeling than originally required, cause the FDA to subsequently withdraw or modify our PMA should we receive approval, or result in the delay, denial or withdrawal of regulatory approval by other regulatory authorities. For example, in the 1980s and early 1990s, the FDA required post-market safety and efficacy data be collected on an earlier version of an intragastric balloon after patients suffered severe side effects and complications with the device, which ultimately resulted in the withdrawal of the PMA approval.
As of December 31, 2025, we had sold over 200,000 units of the Allurion Smart Capsule in international markets. In our commercial experience, the serious adverse event ("SAE") rate has been less than 0.2% and has been similar to the SAE profile reported in the literature.
If we are unable to demonstrate that any adverse events are not related to our product, the FDA or other regulatory authorities could order us to cease further development of, require more restrictive indications for use and/or additional warnings, precautions and/or contraindications in the labeling than originally required, or delay or deny approval of any of our products. Even if we are able to do so, such event(s) could affect patient recruitment or the ability of enrolled patients to complete any future trials. Moreover, if we elect, or are required, to not initiate, delay, suspend or terminate any future clinical trial of any of our products, the commercial prospects of such product may be harmed and our ability to generate product revenues from our product may be delayed or eliminated. Any of these occurrences may harm our ability to develop other products, and may harm our business, financial condition and prospects significantly.
In addition, we or others may later identify undesirable side effects caused by the product (or any other similar product), resulting in potentially significant consequences, including:
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Any of these events could prevent us from achieving or maintaining market acceptance of the Allurion Smart Capsule and could substantially increase the costs of commercializing our product and significantly impact our ability to successfully commercialize our product and generate product sales.
Health care reform measures could hinder or prevent our planned products’ commercial success.
In the United States, there have been, and we expect there will continue to be, a number of legislative and regulatory changes to the health care system in ways that could affect our future revenue and future profitability and the future revenue and future profitability of our potential customers. Federal and state lawmakers regularly propose and, at times, enact legislation, that could result in significant changes to the health care system, some of which are intended to contain or reduce the costs of medical products and services. For example, one of the most significant health care reform measures in decades, the ACA, was enacted in 2010. The ACA contains a number of provisions, including those governing enrollment in federal health care programs, reimbursement changes and fraud and abuse measures, all of which have impacted government health care programs and resulted in the development of new programs. For more information, see section entitled “Business – Government Regulation - Other U.S. Healthcare Laws - Coverage, Reimbursement and Healthcare Reform.”
There have been judicial and Congressional challenges to certain aspects of the ACA, as well as executive efforts to repeal or replace certain aspects of the ACA. The Tax Cuts and Jobs Act passed in 2017 included a provision that would repeal one of the primary pillars of the law, the ACA’s individual mandate penalty, which essentially assessed a monetary penalty or fine on certain individuals who fail to maintain qualifying health coverage for all or part of a year. While not successful, the U.S. Congress may consider other legislation to repeal or replace elements of the ACA on a provision-by-provision basis. We cannot assure you that the ACA, as currently enacted or as amended in the future, will not adversely affect our business and financial results and we cannot predict how future federal or state legislative or administrative changes relating to health care reform will affect our business.
We cannot predict the impact that such actions against the ACA or other health care reform under the Trump administration will have on our business, and there is uncertainty as to what health care programs and regulations may be implemented or changed at the federal and/or state level in the United States, or the effect of any future legislation or regulation. However, it is possible that such initiatives could have an adverse effect on our ability to obtain approval and/or successfully commercialize products in the United States in the future. For example, any changes that reduce, or impede the ability to obtain, reimbursement for the type of products we intend to commercialize in the United States (or our products more specifically, if approved) or reduce medical procedure volumes could adversely affect our business plan to introduce our products in the U.S.
In addition, other legislative changes have been proposed and adopted since the ACA was enacted. For example, the Budget Control Act of 2011 and subsequent legislation resulted in reductions to Medicare payments to providers of up to 2% per fiscal year to 2031 unless additional Congressional action is taken. In addition, the American Taxpayer Relief Act of 2012, among other things, further reduced Medicare payments to several providers, including hospitals, imaging centers, cancer centers and other treatment centers, and increased the statute of limitations period for the government to recover overpayments to providers from three to five years.
We cannot predict whether any additional legislative changes will affect our business.
There have been, and likely will continue to be, legislative and regulatory proposals at the federal and state levels directed at containing or lowering the cost of health care. The implementation of cost-containment measures or other healthcare reforms may prevent us from being able to generate revenue, attain profitability, or commercialize our products. Such reforms could have an adverse effect on anticipated revenue from our products and product candidates that we may successfully develop and for which we may obtain regulatory approval and may affect our overall financial condition and ability to develop future product candidates. We cannot predict the initiatives that may be adopted in the future or their full impact. The continuing efforts of the government, insurance companies, managed care organizations and other payors of health care services to contain or reduce costs of health care may adversely affect:
In addition, the U.S. Supreme Court’s June 2024 decision in Loper Bright Enterprises v. Raimondo overturned the longstanding Chevron doctrine, under which courts were required to give deference to regulatory agencies’ reasonable interpretations of ambiguous federal statutes. The Loper decision could result in additional legal challenges to regulations and
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guidance issued by federal agencies, including the FDA, on which we rely. Any such legal challenges, if successful, could have a material impact on our business. Additionally, the Loper decision may result in increased regulatory uncertainty, inconsistent judicial interpretations, and other impacts to the agency rulemaking process, any of which could adversely impact our business and operations. We cannot predict the likelihood, nature or extent of government regulation that may arise from future legislation or administrative action or as a result of legal challenges, either in the United States or abroad. If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we are not able to maintain regulatory compliance, our business could be materially harmed.
Our business could be adversely affected by a disruption to our contractual relationships for the provision of telehealth services.
The corporate practice of medicine doctrine prohibits non-licensed individuals from practicing medicine, including by employing physicians or other licensed professionals to provide clinical services, directing the clinical practice of physicians and clinical professionals, or holding an ownership interest in an entity that employs or contracts with physicians and other licensed professionals. Certain jurisdictions also prohibit licensed professionals from splitting professional fees with non-licensed professionals.
Through our Virtual Care Suite platform, our customers gain access to one or more licensed health care providers for telehealth consultations. We contract with third parties who maintain a separate clinical environment through which customers can access telehealth consultations, and we contract with additional groups that employ or contract with licensed health care providers to deliver telehealth services and consultations in the same clinical environment (collectively, the “Contracted Telehealth Groups”).
Our contractual arrangements are structured to comply with applicable law and to help ensure providers delivering telehealth services to our customers retain exclusive authority for the provision of telehealth services and exercise independent professional judgment in performing weight-loss consults, supervising nurse practitioners and physician assistants, and writing prescriptions for patients, as applicable. We cannot guarantee that government entities or courts would determine our approach is consistent with the corporate practice of medicine, fee splitting laws, or other laws governing the delivery of clinical services via telehealth. Furthermore, the foregoing laws, and the enforcement landscape, are subject to change based upon political, regulatory, and other influences. If our arrangements for the delivery of telehealth services on the platform are deemed to be unlawful, providers accessing our platform could be subject to penalties (e.g., fines or license suspension), which could discourage providers from entering arrangements with the Contracted Telehealth Groups and delivering services to our customers. Such enforcement actions could result in lawsuits by providers—against the Contracted Telehealth Groups or us—and could require us to restructure or terminate our arrangements with Contracted Telehealth Groups. These consequences, along with any other disputes that may arise with the Contracted Telehealth Groups related to the delivery of telehealth services to our customers, could impair our ability to offer telehealth services on our platform and materially affect our business, financial condition, and results of operations.
Our and the Contracted Telehealth Groups' activities are subject to laws governing the provision of telehealth services, which could be subject to changes that result in additional operational complexity or increase costs.
The Contracted Telehealth Groups and their providers are subject to laws governing the provision of telehealth services and the delivery of professional healthcare services more broadly. For example, some states limit the modality through which telehealth services are delivered, such as requiring synchronous (i.e. “live”) communication or curtailing asynchronous (or “store-and-forward”) communication for certain telehealth services (e.g., prescribing certain types of medications). Although we believe our contractual arrangements with the Contracted Telehealth Groups are structured to comply with laws governing the provision of telehealth services, these laws are evolving at a rapid pace and are subject to changing political, regulatory, and other influences. Due to the rapidly evolving regulatory climate, we cannot assure that our contractual arrangements and telehealth activities, if challenged, will be deemed compliant, nor can we assure that a new or existing law will not be implemented, enforced, or changed, with little or no notice, in manner that requires us to modify our business model at a material expense.
Evolving government regulations and enforcement activities may require increased costs or adversely affect our results of operations.
Our contractual arrangements with our Contracted Telehealth Groups are structured to comply with all applicable material laws, but, due to the uncertain regulatory environment and enforcement discretion, government regulators or enforcement agencies may determine that we or our Contracted Telehealth Groups are in violation of their laws and regulations. If we must remedy such violations, we or the Contracted Telehealth Groups may be required to modify business operations and services in a manner that undermines our ability to retain or acquire new customers, or we—or our Contracted Telehealth Groups—may be
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subject to fines or other burdensome enforcement actions that may result in our termination of operations in certain jurisdictions. If so, our revenue may decline and our business, financial condition, and results of operations could be adversely affected.
Moreover, the laws applicable to our operations are subject to change or reinterpretation, and continued compliance may require us to change our practices at significant expense. Additional expenses may increase future overhead, which could have a material adverse effect on our results of operations. Additionally, modifications to our platform and the products, services and solutions we offer may require us to comply with additional laws and regulations, obtain necessary licenses or certifications, or materially alter our operations—any of which may require incurring significant expenses to ensure compliance. The failure to adequately comply with these future laws and regulations may delay or possibly prevent our products or services from being offered to customers, which could have a material adverse effect on our business, financial condition, and results of operations.
If we fail to comply with health care regulations, we could face substantial penalties and our business, operations and financial condition could be adversely affected.
Even though we do not and will not control referrals of health care services or bill directly to Medicare, Medicaid or other third-party payors, certain federal and state health care laws and regulations pertaining to fraud and abuse and patients’ rights may be applicable to our business. Now we are approved by the FDA to market our products in the U.S., we could be subject to health care fraud and abuse, transparency, and patient privacy regulation by both the federal government and the states in which we conduct our business. For more information, see the section entitled “Business – Other U.S. Healthcare Laws.”
Similar regulations would also apply to our business in countries where we have direct sales operations where there are different regulations at European and national levels. There is a high degree of complication in complying with the different levels of regulation and the singular differences in the different countries and markets.
If our operations are found to be in violation of any of the laws described above or any other governmental regulations that apply to us, we may be subject to penalties, including civil, criminal and administrative penalties, damages, fines, disgorgement, individual imprisonment, exclusion from participation in Medicare, Medicaid and other federal health care programs, additional reporting and government oversight, if we become subject to a corporate integrity agreement or similar agreement to resolve allegations of non-compliance with these laws and the curtailment or restructuring of our operations. Any such penalties or curtailment or restructuring of our operations could adversely affect our ability to operate our business and our financial results. Any action against us for violation of these laws, even if we successfully defend against it, could cause us to incur significant legal expenses and divert our management’s attention from the operation of our business. Moreover, achieving and sustaining compliance with applicable federal, state or international privacy, security and fraud laws may prove costly.
We have obtained the authorization to distribute our products in regions/countries through the certification of our Quality System by the corresponding regulatory entities. Failing to demonstrate that our Quality System is in place and consistently and systematically ensures compliance with regulations from such regions/countries might imply losing the certifications and as such, the rights to freely distribute the products which would adversely impact our revenue and reputation.
We have not historically maintained a compliance policy relating to U.S. or foreign economic sanctions, export controls or anti-corruption laws and regulations, and failure to comply with these regimes creates the potential for significant liabilities, penalties and reputational harm.
We have not historically maintained a compliance policy relating to U.S. economic sanctions, export controls or anti-corruption laws and regulations. Failure to comply with such laws and regulations creates the potential for significant liabilities, penalties and reputational harm. We are subject to a number of laws and regulations governing commercial activities with and payments and contributions to third parties, including restrictions imposed by the FCPA, as well as trade sanctions and export control laws administered by the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”), the U.S. Department of Commerce and the U.S. Department of State.
The FCPA, among other things, prohibits bribery of foreign governments and their officials and political parties and requires U.S. public companies to keep books and records that accurately and fairly reflect those companies’ transactions. OFAC, the U.S. Department of Commerce and the U.S. Department of State administer and enforce various export control laws and regulations and economic sanctions based on U.S. foreign policy and national security goals against targeted foreign states, organizations and individuals.
Similar laws in non-U.S. jurisdictions, such as UK sanctions, EU sanctions or the U.K. Bribery Act, as well as other applicable anti-bribery, anti-corruption, anti-money laundering, sanctions or export control laws, may also impose stricter or more onerous requirements than U.S. economic sanctions, export controls, and anti-corruption laws and regulations, and implementing compliance measures may disrupt our business or cause us to incur significantly more costs. Different laws may also contain conflicting provisions, making compliance more difficult. If we fail to comply with these laws and regulations, we could be exposed to claims for damages, civil or criminal financial penalties, reputational harm, incarceration of our employees,
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restrictions on our operations and other liabilities, which could materially and adversely affect our business, results of operations and financial condition.
While we have implemented policies and procedures designed to promote compliance by us and our personnel with the FCPA and other anti-corruption laws, they may not be effective in all instances to prevent violations. Any determination that we have violated the FCPA or other applicable anti-corruption, sanctions or export control laws could subject us to, among other things, civil and criminal penalties, material fines, profit disgorgement, injunctions on future conduct, securities litigation and a general loss of investor confidence, any one of which could adversely affect our business, financial condition and results of operations.
Unstable global economic and geopolitical conditions could adversely affect our business, financial condition, stock price, and results of operations.
The global economy and financial markets have experienced extreme volatility and disruptions, including severely diminished liquidity and credit availability, declines in consumer confidence, inflation, declines in economic growth, global supply chain disruptions, and uncertainty about economic stability. The global economy and financial markets also may be adversely affected by the potential for significant changes in U.S. policies or regulatory environment given the new administration, current or anticipated impact of military conflict, including the ongoing conflicts between Russia and Ukraine, and in the Middle East, terrorism or other geopolitical events. Sanctions imposed by the United States and other countries in response to such conflicts may adversely impact the financial markets and the global economy, and the economic countermeasures by the affected countries or others could exacerbate market and economic instability.
There can be no assurance that further deterioration in credit and financial markets and confidence in economic conditions will not occur. A severe or prolonged economic downturn could result in a variety of risks to our business, including weakened demand for any product candidates we may develop and our ability to raise additional capital when needed on acceptable terms, if at all. A weak or declining economy could also strain our suppliers, possibly resulting in supply disruption. If the equity and credit markets deteriorate, it may make any necessary equity or debt financing more difficult, more costly, and more dilutive. Failure to secure any necessary financing in a timely manner and on favorable terms could have a material adverse effect on our growth strategy, financial performance and stock price and could require us to delay, scale back or discontinue the clinical development of one or more of our product candidates, and our operations in general. In addition, there is a risk that our current or future service providers, manufacturers or other collaborators may not survive such difficult economic times, which could directly affect our ability to attain our operating goals on schedule and on budget. We cannot anticipate all of the ways in which the current economic climate and financial market conditions could adversely impact our business.
Furthermore, changes in U.S. federal policy that affect the geopolitical landscape could give rise to circumstances outside our control that could have negative impacts on our business operations. For example, the new administration has imposed and announced plans to impose broad-based tariffs on imports from many countries, including China, Mexico, and Canada, as well as countries of the European Union and Japan. Historically, tariffs have led to increased trade and political tensions between the United States and countries in the international community. In response to tariffs, other countries have implemented retaliatory tariffs on U.S. goods. Political tensions as a result of trade policies could reduce trade volume, investment, technological exchange and other economic activities between major international economies, resulting in a material adverse effect on global economic conditions and the stability of global financial markets. Any changes in political, trade, regulatory, and economic conditions, including U.S. trade policies, could have a material adverse effect on our financial condition and results of operations.
We may be affected by regulatory responses to climate-related issues.
The Biden Administration made climate change and the limitation of greenhouse gas ("GHG") emissions one of its primary objectives. Several states and other geographic regions in the United States have also adopted legislation and regulations to reduce emissions of GHGs.
In March 2024, the SEC finalized new rules for public companies that require extensive climate-related disclosures and significant analysis of the impact of climate-related issues on our business strategy, results of operations, and financial condition (the "SEC Climate Disclosure Rules"), although the SEC recently stayed the reporting requirements. If such rules are eventually effective, they will require us to disclose our material climate-related risks and opportunities, GHG emissions inventory, climate-related targets and goals, and financial impacts of physical and transition risks, and our legal, accounting, and other compliance expenses may increase significantly to ensure our compliance; compliance efforts may also divert management time and attention. We may be exposed to legal or regulatory action or claims as a result of these new regulations, should they become effective. All of these risks could have a material adverse effect on our business, financial position, and/or stock price.
The U.S. Congress, the presidential administration, or any new administration may make substantial changes to fiscal, tax, and other federal policies that may adversely affect our business.
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The rules dealing with U.S. federal, state and local income taxation are constantly under review by persons involved in the legislative process and by the Internal Revenue Service (“IRS”) and the U.S. Treasury Department. For example, the One Big Beautiful Bill Act (“OBBBA”) was signed into law on July 4, 2025 and made significant changes to U.S. federal tax law. Changes to tax laws (which changes may have retroactive application) could adversely affect us or holders of our common stock. For example, under Section 174 of the Internal Revenue Code, in taxable years beginning after December 31 2021, expenses that are incurred for research and development performed outside the U.S. will be capitalized and amortized, which may have an adverse effect on our cash flow. The OBBBA provides that for taxable years beginning after December 31, 2024, expenses that are incurred for research and development performed in the United States may, at the taxpayer’s election, be immediately deducted or capitalized and amortized. In addition, the OBBBA provides that for taxable years beginning after December 31, 2021 and before January 1, 2025, certain eligible taxpayers generally may elect to retroactively deduct expenses for research and development performed in the United States in such taxable years generally may elect to accelerate and deduct the remaining unamortized amounts of such research and development expenses (i) in the first taxable year beginning after December 31, 2024, or (ii) ratably over the two-taxable year period beginning
Risks Related to Intellectual Property
The medical device industry is characterized by patent litigation and we could become subject to litigation that could be costly, result in the diversion of management’s time and efforts, require us to pay damages or prevent us from marketing our existing or future products.
Patent litigation is prevalent in the medical device and diagnostic sectors. Our commercial success depends in part upon our ability and that of our distributors, contract manufacturers, and suppliers to manufacture, market, and sell our planned products, and to use our proprietary technologies without infringing, misappropriating or otherwise violating the proprietary rights or intellectual property of third parties. We are, and in the future may become, party to, or be threatened with, adversarial proceedings or litigation regarding intellectual property rights with respect to our products and technology. Third parties may assert infringement claims against us based on existing or future intellectual property rights. Because patent applications can take many years to issue, there may be currently pending patent applications which may later result in issued patents that we may be accused of infringing. In addition, third parties may obtain patents in the future and claim that use of our technologies infringes upon these patents. Accordingly, third parties may assert infringement claims against us based on intellectual property rights that exist now or arise in the future. The outcome of intellectual property litigation is subject to uncertainties that cannot be adequately quantified in advance.
Medical device and diagnostic industries have produced a significant number of patents and it may not always be clear to industry participants, including us, which patents cover various types of products or methods of use or manufacture. The scope of protection afforded by a patent is subject to interpretation by the courts, and the interpretation is not always uniform. If we were sued for patent infringement, we would need to demonstrate that the relevant product or methods of using the product either do not infringe the patent claims of the relevant patent or that the patent claims are invalid or unenforceable and we may not be able to do this. Proving invalidity is difficult. For example, in the U.S., proving invalidity requires a showing of clear and convincing evidence to overcome the presumption of validity enjoyed by issued patents. Even if we are successful in these proceedings, we may incur substantial costs and the time and attention of our management and scientific personnel could be diverted in pursuing these proceedings, which could significantly harm our business and operating results. In addition, parties making claims against us may be able to sustain the costs of complex patent litigation more effectively than we can because they have substantially greater resources, and we may not have sufficient resources to bring these actions to a successful conclusion.
If we are found to infringe a third party’s intellectual property rights, we could be required to obtain a license from such third-party to continue developing and marketing our products and technology. We may also elect to enter into such a license in order to settle pending or threatened litigation. However, we may not be able to obtain any required license on commercially reasonable terms, or at all. Even if we were able to obtain a license, it could be non-exclusive, thereby giving our competitors access to the same technologies licensed to us, and could require us to pay significant royalties and other fees. We could be forced, including by court order, to cease commercializing the infringing technology or product. In addition, we could be found liable for monetary damages. A finding of infringement could prevent us from commercializing our planned products in commercially important territories, or force us to cease some of our business operations, which could harm our business. Our employees may have been previously employed at, and many of our current advisors and consultants are employed by, universities or other biotechnology, medical device or pharmaceutical companies. Although we instruct our employees, advisors and consultants not to, and otherwise endeavor to ensure that they do not, use or disclose the proprietary information or know-how of others in their work for us, we may be subject to claims that we, or these service providers, have used or disclosed intellectual property, including trade secrets or other proprietary information, of any such service providers’ current or former employer or other third party. These and other claims that we have misappropriated the confidential information or trade secrets of third parties can have a similar negative impact on our business to the infringement claims discussed above.
Even if we are successful in defending against intellectual property claims, litigation or other legal proceedings relating to such claims may cause us to incur significant expenses, and could distract our technical and management personnel from their
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normal responsibilities. In addition, there could be public announcements of the results of hearings, motions or other interim proceedings or developments and if securities analysts or investors perceive these results to be negative, it could have a substantial adverse effect on the price of our common stock. Such litigation or proceedings could substantially increase our operating losses and reduce our resources available for development activities. We may not have sufficient financial or other resources to adequately conduct such litigation or proceedings. Some of our competitors may be able to sustain the costs of such litigation or proceedings more effectively than we can because of their substantially greater financial resources. Uncertainties resulting from the initiation and continuation of litigation or other intellectual property related proceedings could have a material adverse effect on our ability to compete in the marketplace.
Changes in U.S. patent law could diminish the value of patents in general, thereby impairing our ability to protect our products.
The U.S. Supreme Court has ruled on several patent cases in recent years, either narrowing the scope of patent protection available in certain circumstances or weakening the rights of patent owners in certain situations. In addition to increasing uncertainty with regard to our ability to obtain future patents, this combination of events has created uncertainty with respect to the value of patents, once obtained. Depending on decisions by the U.S. Congress, the federal courts and the U.S. Patent and Trademark Office (“USPTO”), the laws and regulations governing patents could change in unpredictable ways that would weaken our ability to obtain new patents or to enforce our existing patents or future patents.
If we fail to comply with our obligations in our intellectual property agreements, we could lose intellectual property rights that are important to our business.
We are a party, and expect to become party in the future, to certain intellectual property agreements that impose various obligations on us. If we fail to comply with these obligations, any licensor may have the right to terminate such agreements, in which event we may not be able to develop and market any product that is covered by such agreements. Termination of such agreements, or reduction or elimination of our rights under such agreements, may result in our having to negotiate new or reinstated arrangements on less favorable terms, or our not having sufficient intellectual property rights to operate our business. The occurrence of such events could harm our business and financial condition.
The risks described elsewhere in this Annual Report on Form 10-K pertaining to our intellectual property rights also apply to any intellectual property rights that we may license, and any failure by us or any future licensor to obtain, maintain, defend and enforce these rights could have a material adverse effect on our business.
If we are not able to obtain and maintain intellectual property protection for our products and technologies, if the scope of our patents is not sufficiently broad, or our patents are invalidated, we may not be able to effectively maintain our market leading technology position.
As of December 31, 2025, we own or have rights to 23 issued and four pending patents in the United States related to various aspects of the Allurion Smart Capsule such as a swallowable, self-deflating and naturally passing gastric balloon, improvements to the fill and release valves therein, methods for deploying and releasing a gastric balloon within the body, and next generation fill and release valves. In addition, we have 43 issued and four patents pending outside of the United States. Our success depends in large part on our ability to obtain and maintain patent and other intellectual property protection in the U.S. and in other countries with respect to our proprietary technology and products.
The patent position of medical device and diagnostic companies generally is highly uncertain and involves complex legal and factual questions which are dependent upon the current legal and intellectual property context, extant legal precedent and interpretations of the law by individuals, and for which legal principles remain unresolved. In recent years, patent rights have been the subject of significant litigation. As a result, the issuance, scope, validity, enforceability and commercial value of the patent rights we rely on are highly uncertain.
Pending patent applications cannot be enforced against third parties practicing the technology claimed in such applications unless and until a patent issues from such applications. Pending and future patent applications may not result in patents being issued at all, may not result in patents being issued in a manner which protect our technology or products, or may not result in patents being issued which effectively prevent others from commercializing competitive technologies and products. Assuming the other requirements for patentability are met, currently, the first to file a patent application is generally entitled to the patent. However, prior to March 16, 2013, in the U.S., the first to invent was entitled to the patent. Publications of discoveries in the scientific literature often lag behind the actual discoveries, and patent applications in the U.S. and other jurisdictions are typically not published until 18 months after filing, or in some cases not at all. Therefore, we cannot be certain that we were the first to make the inventions claimed in our patents or pending patent applications, or that we or were the first to file for patent protection of such inventions. If third parties have filed prior patent applications on inventions claimed in our patents or applications that were filed on or before March 15, 2013, an interference proceeding in the U.S. can be initiated by such third parties to determine
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who was the first to invent any of the subject matter covered by the patent claims of our applications. If third parties have filed such prior applications after March 15, 2013, a derivation proceeding in the U.S. can be initiated by such third parties to determine whether our invention was derived from theirs. The determination that a patent application or patent claim meets all the requirements for patentability is a subjective determination based on the application of law and jurisprudence. The ultimate determination by the USPTO, or by a court or other trier of fact in the U.S., or corresponding foreign national patent offices or courts, on whether a claim meets all requirements of patentability cannot be assured. Accordingly, we cannot predict the breadth of claims that may be allowed or enforced in our owned (jointly or fully) or licensed-in patents or patent applications.
We cannot provide assurances that any invention that is the subject of our patent applications, whether licensed-in or owned jointly or completely by us, will be found to be patentable, including over our own prior art publications or patent literature, or any such that application will result in an issued patent. We cannot make assurances as to the scope of any claims that may issue from our pending and future patent applications or to the outcome of any proceedings by any potential third parties that could challenge the patentability, validity or enforceability of our patents and patent applications in the U.S. or foreign jurisdictions. Any such challenge, if successful, could limit patent protection for our technology and products and/or materially harm our business.
Even if the patent applications we rely on issue as patents, they may not issue in a form that will provide us with any meaningful protection, prevent competitors from competing with us or otherwise provide us with any competitive advantage. Our competitors may be able to circumvent our patents by developing similar or alternative technologies or products in a non-infringing manner. The issuance of a patent is not conclusive as to its inventorship, scope, validity or enforceability, and the patents we rely on may be challenged in the courts or patent offices in the U.S. and abroad. There is no assurance that all the potentially relevant prior art relating to our patents and patent applications has been found. If such prior art exists, it may be used to invalidate a patent, or may prevent a patent from issuing from a pending patent application. For example, such patent filings may be subject to a third-party submission of prior art to the USPTO or to other patent offices around the world.
Alternately or additionally, we may become involved in post-grant review procedures, oppositions, derivation proceedings, ex parte re-examinations, inter partes review, supplemental examinations, or interference proceedings or challenges in district court, in the U.S. or in various foreign patent offices, including both national and regional, challenging patents or patent applications in which we have rights, including patents on which we rely to protect our business. Patents that may be issued or in-licensed may be challenged, invalidated, modified, revoked, circumvented, found to be unenforceable or otherwise may not provide any competitive advantage. An adverse determination in any such challenge may result in loss of the patent or in patent application or patent claims being narrowed, invalidated or held unenforceable, in whole or in part, or in denial of the patent application or loss or reduction of the scope of one or more claims of the patent or patent application, any of which could limit our ability to stop or prevent us from stopping others from using or commercializing similar or identical technology and products, or limit the duration of the patent protection of our technology and products.
As another example, a European Unified Patent Court (“UPC”) has entered into force on June 1, 2023. The UPC is a common patent court to hear patent infringement and revocation proceedings effective for member states of the European Union ("EU"). This could enable third parties to seek revocation of any of our European patents or licensed-in European patents in a single proceeding at the UPC rather than through multiple proceedings in each of the jurisdictions in which any such European patent is validated. Any such revocation and loss of patent protection could have a material adverse impact on our business and our ability to commercialize or license our technology and products. Moreover, the controlling laws and regulations of the UPC will develop over time, and may adversely affect our ability to enforce our European patents, whether owned or licensed-in, or defend the validity thereof. We, or any future licensor, may decide to opt out our European patents and patent applications from the UPC. If certain formalities and requirements are not met, however, these European patents and patent applications could be challenged for non-compliance and brought under the jurisdiction of the UPC. We cannot be certain that our owned (jointly or fully) or licensed-in European patents or European patent applications will avoid falling under the jurisdiction of the UPC, if we, or any future licensor, decide to opt out of the UPC. Our competitors, who may have greater resources and may have made significant investments in competing technologies, may seek or may have already obtained patents that will limit, interfere with or eliminate our ability to make, use, and sell our technologies and products. Given the amount of time required for the development, testing and regulatory review of new planned products, patents protecting such products might expire before or shortly after such products are commercialized. As a result, our patent portfolio may not provide us with sufficient rights to exclude others from commercializing products similar or identical to ours or otherwise provide us with a competitive advantage.
Changes in either the patent laws or interpretation of the patent laws in the U.S. and other countries may diminish the value of the patents we rely on or narrow the scope of our patent protection. The laws of other countries may not protect our rights to the same extent as the laws of the U.S. For example, patent laws in various jurisdictions, including jurisdictions covering significant commercial markets, such as the European Patent Office, China and Japan, restrict the patentability of methods of treatment of the human body more than U.S. law does. If these developments were to occur, they could have a material adverse effect on our ability to generate revenue. There may be significant pressure on the U.S. government and international governmental bodies to limit the scope of patent protection both inside and outside the U.S. for disease treatments that prove
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successful, as a matter of public policy regarding worldwide health concerns. Countries other than the U.S. may have patent laws less favorable to patentees than those upheld by U.S. courts, allowing foreign competitors a better opportunity to create, develop, and market competing products. Countries other than the U.S. may, under certain circumstances, force us to grant a license under our patents to a competitor, thus allowing the competitor to compete with us in that jurisdiction or forcing us to lower the price of our product in that jurisdiction.
Furthermore, the degree of future protection for our proprietary rights is uncertain because legal means afford only limited protection and may not adequately protect our rights or permit us to gain or keep our competitive advantage. For example:
In addition, to the extent that we are unable to obtain and maintain patent protection for our technologies or product, or in the event that such patent protection expires, it may no longer be cost-effective to extend our portfolio by pursuing additional development of any future products.
If our trademarks and tradenames are not adequately protected, then we may not be able to build name recognition in our markets and our business may be adversely affected.
We rely on trademarks, service marks, tradenames and brand names to distinguish our products from the products of our competitors, and have registered or applied to register these trademarks. We cannot assure you that our trademark applications will be approved. During trademark registration proceedings, we may receive rejections. Although we are given an opportunity to respond to those rejections, we may be unable to overcome such rejections. In addition, in proceedings before the USPTO and comparable agencies in many foreign jurisdictions, third parties are given an opportunity to oppose pending trademark applications and to seek to cancel registered trademarks. Opposition or cancellation proceedings may be filed against our trademarks, and our trademarks may not survive such proceedings. In the event that our trademarks are successfully challenged, we could be forced to rebrand our products, which could result in loss of brand recognition and could require us to devote resources towards advertising and marketing new brands. At times, competitors may adopt trade names or trademarks similar to ours, thereby impeding our ability to build brand identity and possibly leading to market confusion. Certain of our current or future trademarks may become so well known by the public that their use becomes generic and they lose trademark protection. Over the long term, if we are unable to establish name recognition based on our trademarks and trade names, then we may not be able to compete effectively and our business, financial condition and results of operations may be adversely affected.
We may be subject to claims that we or our employees have misappropriated the intellectual property of a third party, including trade secrets or know-how, or are in breach of non-competition or non-solicitation agreements with our competitors.
Our employees and consultants may have been previously employed at or engaged by other medical device, biotechnology or pharmaceutical companies, including our competitors or potential competitors. Some of these employees, consultants and contractors may have executed proprietary rights, non-disclosure and non-competition agreements in connection with such employment. Although we instruct our employees and consultants not to, and otherwise endeavor to ensure that they do not, use or disclose the intellectual property, proprietary information, know-how or trade secrets of others in their work for us, we may be subject to claims that we or these individuals have, inadvertently or otherwise, misappropriated the intellectual property or disclosed the alleged trade secrets or other proprietary information of such employers or competitors.
Additionally, we may be subject to claims from third parties challenging our ownership interest in intellectual property we regard as our own, based on claims that our employees or consultants have breached an obligation to assign inventions to another employer, to a former employer, or to another person or entity. Litigation may be necessary to defend against any other claims, and it may be necessary or we may desire to enter into a license to settle any such claim; however, there can be no assurance that we would be able to obtain a license on commercially reasonable terms, if at all. If our defense to those claims fails, in addition to paying monetary damages, a court could prohibit us from using technologies or features that are essential to our products, if such technologies or features are found to incorporate or be derived from the trade secrets or other proprietary information of the former employers. An inability to incorporate technologies or features that are important or essential to our products could have a material adverse effect on our business, financial condition and results of operations, and may prevent us from selling our products. In addition, we may lose valuable intellectual property rights or personnel. Even if we are successful in defending
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against these claims, litigation could result in substantial costs and could be a distraction to management. Any litigation or the threat thereof may adversely affect our ability to hire employees or contract with independent sales representatives. A loss of key personnel or their work product could hamper or prevent our ability to commercialize our products, which could have an adverse effect on our business, financial condition and results of operations.
Others may challenge inventorship or claim an ownership interest in our intellectual property which could expose us to litigation and have a significant adverse effect on our prospects.
Determinations of inventorship can be subjective. While we undertake to accurately identify correct inventorship of inventions made on our behalf by our employees, consultants and contractors, an employee, consultant or contractor may disagree with our determination of inventorship and assert a claim of inventorship. Any disagreement over inventorship could result in our being forced to defend our determination of inventorship in a legal action, which could result in substantial costs and be a distraction to our senior management and scientific personnel.
While we typically require employees, consultants and contractors who may develop intellectual property on our behalf to execute agreements assigning such intellectual property to us, we may be unsuccessful in obtaining execution of assignment agreements with each party who in fact develops intellectual property that we regard as our own. If we are unsuccessful in obtaining assignment agreements from an employee, consultant or contractor who develops intellectual property on our behalf, the employee, consultant or contractor may later claim ownership of the invention. Any disagreement over ownership of intellectual property could result in our losing ownership, or exclusive ownership, of the contested intellectual property, paying monetary damages and/ or being enjoined from clinical testing, manufacturing and marketing of the affected product candidate(s). Even if we are successful in defending against such claims, a dispute could result in substantial costs and be a distraction to our senior management and scientific personnel.
We may become involved in legal proceedings to protect or enforce our intellectual property rights, which could be expensive, time consuming, or unsuccessful.
Competitors may infringe or otherwise violate the patents we rely on, or our other intellectual property rights. To counter infringement or unauthorized use, we may be required to file infringement claims, which can be expensive and time-consuming. Any claims that we assert against perceived infringers could also provoke these parties to assert counterclaims against us alleging that we infringe their intellectual property rights. In addition, in an infringement proceeding, a court may decide that a patent we are asserting is invalid or unenforceable, or may refuse to stop the other party from using the technology at issue on the grounds that the patents we are asserting do not cover the technology in question. With respect to a counterclaim of invalidity, we cannot be certain that there is no invalidating prior art of which we and the patent examiner were unaware during prosecution. An adverse result in any litigation proceeding could put one or more patents at risk of being invalidated or interpreted narrowly, prevent us from stopping the other party from using the invention at issue on the grounds that our patent claims do not cover the invention. If any of our patents are found invalid or unenforceable, or construed narrowly, our ability to stop the other party from launching a competitive product would be materially impaired. Further, such adverse outcomes could limit our ability to assert those patents against future competitors. Loss of patent protection would have a material adverse impact on our business.
Even if we establish infringement of any of our patents by a competitive product, a court may decide not to grant an injunction against further infringing activity, thus allowing the competitive product to continue to be marketed by the competitor. It is difficult to obtain an injunction in U.S. litigation and a court could decide that the competitor should instead pay us a “reasonable royalty” as determined by the court, and/or other monetary damages. A reasonable royalty or other monetary damages may or may not be an adequate remedy. Loss of exclusivity and/or competition from a related product would have a material adverse impact on our business.
Litigation often involves significant amounts of public disclosures. Such disclosures could have a materially adverse impact on our competitive position or our stock prices. During any litigation, we would be required to produce voluminous records related to our patents and our research and development activities in a process called discovery. The discovery process may result in the disclosure of some of our confidential information. There could also be public announcements of the results of hearings, motions or other interim proceedings or developments.
Litigation is inherently expensive, and the outcome is often uncertain. Any litigation likely would substantially increase our operating losses and reduce our resources available for development activities. Further, we may not have sufficient financial or other resources to adequately conduct such litigation or proceedings. Some of our competitors may be able to sustain the costs of such litigation or proceedings more effectively than we can because of their substantially greater financial resources. As a result, we may conclude that even if a competitor is infringing any of our patents, the risk-adjusted cost of bringing and enforcing such a claim or action may be too high or not in the best interest of us or our stockholders. In such cases, we may decide that the more prudent course of action is to simply monitor the situation or initiate or seek some other non-litigious action or solution.
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Concurrently with an infringement litigation, third parties may also be able to challenge the validity of our patents before administrative bodies in the United States or abroad. Such mechanisms include re-examination, post grant review and equivalent proceedings in foreign jurisdictions, e.g., opposition proceedings. Such proceedings could result in revocation or amendment of our patents in such a way that they no longer cover our products, potentially negatively impacting any concurrent litigation.
Interference or derivation proceedings provoked by third parties or brought by the USPTO or any other patent authority may be necessary to determine the priority of inventions or other matters of inventorship with respect to patents and patent applications. In addition to challenges during litigation, third parties can challenge the validity of our patents in the U.S. using post-grant review and inter partes review proceedings, which some third parties have been using to cause the cancellation of selected or all claims of issued patents of competitors. For a patent filed March 16, 2013 or later, a petition for post-grant review can be filed by a third party in a nine- month window from issuance of the patent. A petition for inter partes review can be filed immediately following the issuance of a patent if the patent has an effective filing date prior to March 16, 2013. A petition for inter partes review can be filed after the nine-month period for filing a post-grant review petition has expired for a patent with an effective filing date of March 16, 2013 or later. Post-grant review proceedings can be brought on any ground of invalidity, whereas inter partes review proceedings can only raise an invalidity challenge based on published prior art and patents. These adversarial actions at the USPTO review patent claims without the presumption of validity afforded to U.S. patents in lawsuits in U.S. federal courts and use a lower burden of proof than used in litigation in U.S. federal courts. Therefore, it is generally considered easier for a competitor or third party to have a U.S. patent invalidated in a USPTO post-grant review or inter partes review proceeding than invalidated in a litigation in a U.S. federal court. If any of our patents are challenged by a third party in such a USPTO proceeding, there is no guarantee that we or any future licensors or collaborators will be successful in defending the patent, which may result in a loss of the challenged patent right to us. We may become involved in proceedings, including oppositions, interferences, derivation proceedings inter partes reviews, patent nullification proceedings, or re-examinations, challenging our patent rights or the patent rights of others, and the outcome of any such proceedings are highly uncertain. An adverse determination in any such proceeding could reduce the scope of, or invalidate, important patent rights, allow third parties to commercialize our technology or products and compete directly with us, without payment to us, or result in our inability to manufacture or commercialize products without infringing third-party patent rights. Our business also could be harmed if a prevailing party does not offer us a license on commercially reasonable terms, if any license is offered at all. Litigation or other proceedings may fail and, even if successful, may result in substantial costs and distract our management and other employees. We may also become involved in disputes with others regarding the ownership of intellectual property rights. If we are unable to resolve these disputes, we could lose valuable intellectual property rights.
Even if resolved in our favor, litigation or other legal proceedings relating to intellectual property claims may cause us to incur significant expenses, and could distract our technical or management personnel from their normal responsibilities. In addition, there could be public announcements of the results of hearings, motions or other interim proceedings or developments and if securities analysts or investors perceive these results to be negative, it could have a substantial adverse effect on the market price of our common stock. Such litigation or proceedings could substantially increase our operating losses and reduce the resources available for development activities or any future sales, marketing or distribution activities. Uncertainties resulting from the initiation and continuation of intellectual property litigation or other proceedings could have an adverse effect on our ability to compete in the marketplace.
If we are unable to protect the confidentiality of our trade secrets, the value of our technology could be materially adversely affected, harming our business and competitive position.
In addition to our patented technology and products, we rely upon confidential proprietary information, including trade secrets, unpatented know-how, technology and other proprietary information, to develop and maintain our competitive position. Any disclosure to or misappropriation by third parties of our confidential proprietary information could enable competitors to quickly duplicate or surpass our technological achievements, thus eroding our competitive position in the market. Although we have taken steps to protect our confidential proprietary information, in part, by confidentiality agreements with our employees and our collaborators, consultants, vendors and advisors, we cannot provide assurances that all such agreements have been duly executed. Third parties may still obtain this information or may come upon this or similar information independently, and we cannot be certain that our trade secrets and other confidential information will not be disclosed or that competitors will not otherwise gain access to our trade secrets, or that technology relevant to our business will not be independently developed by a person that is not a party to such an agreement. Furthermore, if the employees, consultants, collaborators, vendors or advisors that are parties to these agreements breach or violate the terms of these agreements, we may not have adequate remedies for any such breach or violation, and we could lose our trade secrets through such breaches or violations. Further, our trade secrets could be disclosed, misappropriated or otherwise become known or be independently discovered by our competitors. In addition, intellectual property laws in foreign countries may not protect trade secrets and confidential information to the same extent as the laws of the U.S. If we are unable to prevent disclosure of the intellectual property related to our technologies to third parties, we may not be able to establish or maintain a competitive advantage in our market, which would harm our ability to protect our rights and have an adverse effect on our business.
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We may not be able to protect or enforce our intellectual property rights throughout the world.
Filing, prosecuting and defending patents on all of our planned products throughout the world may be prohibitively expensive to us. The requirements for patentability may differ in certain countries, particularly in developing countries; thus, even in countries where we do pursue patent protection, there can be no assurance that any patents will issue with claims that cover our products.
Moreover, our ability to protect and enforce our intellectual property rights may be adversely affected by unforeseen changes in foreign intellectual property laws. Additionally, laws of some countries outside of the United States and Europe do not afford intellectual property protection to the same extent as the laws of the United States and Europe. Many companies have encountered significant problems in protecting and defending intellectual property rights in certain foreign jurisdictions. This could make it difficult for us to stop the infringement of our patents or the misappropriation of our other intellectual property rights. For example, many foreign countries have compulsory licensing laws under which a patent owner must grant licenses to third parties. Consequently, we may not be able to prevent third parties from practicing our inventions in certain countries outside the U.S. and Europe or from selling or importing products made from our inventions in and into the U.S. or other jurisdictions. Consequently, competitors may use our technologies in jurisdictions where we have not obtained patent protection to develop their own products and, further, may export otherwise infringing products to territories where we have patent protection but where enforcement is not as strong as in the United States. These products may compete with our products in jurisdictions where we do not have any issued patents and our patent claims or other intellectual property rights may not be effective or sufficient to prevent them from so competing.
Many companies have encountered significant problems in protecting and defending intellectual property rights in international jurisdictions. The legal systems of certain countries, particularly certain developing countries, do not favor the enforcement of patents and other intellectual property protection, which could make it difficult for us to stop the infringement of our patents or marketing of competing products in violation of our proprietary rights generally. Proceedings to enforce our patent rights in foreign jurisdictions could result in substantial cost and divert our efforts and attention from other aspects of our business. Further, such proceedings could put our patents (in that or other jurisdictions) at risk of being invalidated, held unenforceable or interpreted narrowly; put our pending patent applications at risk of not issuing; and provoke third parties to assert claims against us. We may not prevail in any lawsuits that we initiate, and the damages or other remedies awarded, if any, may not be commercially meaningful. Furthermore, we cannot ensure that we will be able to initiate or maintain the same level or quality of patent protection in all jurisdictions in which we may wish to market our products. Accordingly, our efforts to protect our intellectual property rights in such countries may be inadequate.
Changes in the interpretation of patent law in the United States and other jurisdictions could diminish the value of patents in general, thereby impairing our ability to protect our products.
In the United States, the U.S. Congress is responsible for passing laws establishing patentability standards, and, as with any laws, implementation is left to federal agencies and the federal courts based on their interpretations of the laws. In the U.S., interpretation of patent standards can vary significantly within the USPTO, and across the various federal courts, including the U.S. Supreme Court. Recently, the U.S. Supreme Court has ruled on several patent cases, generally limiting the types of inventions that can be patented. Further, there are open questions regarding interpretation of patentability standards that the U.S. Supreme Court has yet to decisively address. Absent clear guidance from the U.S. Supreme Court, the USPTO has become increasingly conservative in its interpretation of patent laws and standards. Similar tensions between government administrations and judicial interpretation of patent laws in other jurisdictions may resulting in changes to the scope or validity of our patents in such jurisdictions.
In addition to increasing uncertainty with regard to our ability to obtain patents in the future, the legal landscape in the U.S. and outside the U.S. has created uncertainty with respect to the value of patents. Depending on any actions by applicable legislating bodies, and future decisions by the entities implementing such laws, the laws and regulations governing patents could change in unpredictable ways and could weaken our ability to obtain new patents or to enforce our existing patents and patents that we might obtain in the future.
Obtaining and maintaining patent protection depends on compliance with various procedural, document submission, fee payment and other requirements imposed by governmental patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements.
Periodic maintenance fees, renewal fees, annuity fees and various other governmental fees on patents or applications will be due to be paid by us to the USPTO and various governmental patent agencies outside of the U.S. in several stages over the lifetime of the patents or applications. The USPTO and various non-U.S. governmental patent agencies require compliance with a number of procedural, documentary, fee payment and other similar provisions during the patent application process. Though we use commercially reasonable efforts to comply with all applicable maintenance requirements, we may fail to do so on occasion. In
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many cases, such an inadvertent lapse can be cured by payment of a late fee or by other means in accordance with the applicable rules. However, there are situations in which non-compliance, whether intentional or not, can result in abandonment or lapse of the patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. In such an event, our competitors might be able to use our technologies and this circumstance would have a material adverse effect on our business.
We may need to acquire or license intellectual property from third parties, and such licenses may not be available or may not be available on commercially reasonable terms.
A third party may hold intellectual property, including patent rights, that we may determine are important or necessary to the development of our technology and products, or that a court may determine is infringed by the Allurion Smart Capsule. In addition, it may be necessary for us to use the patented or proprietary technology of one or more third parties to commercialize our current and future products. The licensing and acquisition of third-party intellectual property rights is a competitive area, and a number of more established companies may pursue strategies to license or acquire third-party intellectual property rights that we may consider attractive. These established companies may have a competitive advantage over us due to their size, cash resources and greater clinical development and commercialization capabilities.
If we determine to license or acquire third-party intellectual property and we are unable to acquire such intellectual property outright, or obtain licenses to such intellectual property from such third parties when needed or on commercially reasonable terms, our ability to commercialize our products at such time would likely be delayed or we may have to abandon development of that product or program and our business and financial condition could suffer.
If we in-license additional technologies or products in the future, we might become dependent on proprietary rights from third parties with respect to those technologies or products. Any termination of such licenses could result in the loss of significant rights and would cause material adverse harm to our ability to develop and commercialize any product subject to such licenses.
Disputes may also arise between us and any future licensors regarding intellectual property subject to a license agreement. If disputes over intellectual property that we have licensed prevent or impair our ability to maintain our current licensing arrangements on acceptable terms, we may be unable to successfully develop and commercialize the affected product(s).
The risks described elsewhere pertaining to our intellectual property rights also apply to the intellectual property rights that we may determine to in-license, and any failure by us or any future licensors to obtain, maintain, defend and enforce such rights could have an adverse effect on our business. In some cases we may not have control over the prosecution, maintenance or enforcement of the patents that we determine to license, and may not have sufficient ability to provide input into the patent prosecution, maintenance and defense process with respect to such patents, and potential future licensors may fail to take the steps that we believe are necessary or desirable in order to obtain, maintain, defend and enforce the licensed patents.
The Allurion VCS and other products or services contain third-party open source software components. Certain use of such open source components with our proprietary software could adversely affect our ability to charge fees for, or otherwise protect the value of, our offerings.
The Allurion VCS and our other products and services contain software licensed to us by third-party authors under “open source” licenses. Use of such software may entail greater risks than use of non-open source third-party commercial software, as open source licensors generally do not provide support, warranties, indemnification or other contractual protections regarding infringement claims or the quality of the code. Although we seek to monitor our use of open source software to avoid such consequences and to comply with the terms thereof, the terms of many open source licenses have not been interpreted by U.S. or foreign courts, and there is a risk that these licenses could be construed in a way that could impose unanticipated conditions or restrictions on our ability to provide or distribute our platform. If we are held to have breached the terms of an open source software license, we could face liability which may result in an injunction against providing our offering, or be required to seek costly licenses from third parties to continue providing our offerings on terms that are not economically feasible, to re-engineer our platform, to discontinue or delay the provision of our offerings if re-engineering could not be accomplished on a timely basis or to make generally available, in source code form, our proprietary code, any of which could adversely affect our business, financial condition and results of operations.
Our internal computer systems, or those used by third parties which we rely on, may fail or suffer security breaches.
Despite the implementation of security measures, our internal computer systems, or those used by third parties which we rely on, are vulnerable to damage from computer viruses and unauthorized access, malware, natural disasters, fire, terrorism, war, telecommunication failures, electrical failures, cyber-attacks or cyber-intrusions over the Internet, attachments to emails, persons inside our organization, or persons with access to systems inside our organization. Although our information security program is in compliance with the global ISO 27001:2013 standards, it does not yet fully comply with all of the additions and changes in the updated ISO 27001:2022 version of the standards, which we anticipate complying with prior to the required transition date of October 31, 2025 to maintain ISO 27001 security certification.
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If our security measures are breached, whether due to failure to comply with the ISO 27001:2022 version of the standards or otherwise, or if design flaws in our software or information systems are exposed and exploited, and, as a result, a third party obtains unauthorized access to any of our or our customer’s data, our relationships with our customers and distributors may be damaged, and we could incur significant liability and reputational harm. The risk of a security breach or disruption, particularly through cyber-attacks or cyber intrusion, including by computer hackers, foreign governments, and cyber terrorists, has generally increased as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased. While we have not experienced any such material system failure or security breach to our knowledge to date, if such an event were to occur and cause interruptions in our operations, it could result in a material disruption of our development programs and our business operations. For example, the loss of data from completed, ongoing or future trials could result in delays in our regulatory approval efforts and significantly increase our costs to recover or reproduce the data. To the extent that any disruption or security breach were to result in a loss of, or damage to, our data or applications, or inappropriate disclosure of confidential or proprietary information, we could incur liability and the further development and commercialization of our current and future products could be delayed.
We rely on internet infrastructure, bandwidth providers, third-party computer hardware and software and other third parties for providing services to our customers and patients, and any failure or interruption in the services provided by these third parties could expose us to litigation and negatively impact our relationships with customers and patients, adversely affecting our operating results.
Our ability to deliver our internet-based services depends on the development and maintenance of the infrastructure of the internet by third parties. This includes maintenance of a reliable network backbone with the necessary speed, data capacity, bandwidth capacity and security. Our services are designed to operate without interruption. However, we may experience future interruptions and delays in services and availability from time to time. In the event of a catastrophic event with respect to one or more of our systems, we may experience an extended period of system unavailability, which could negatively impact our relationship with clients and members. To operate without interruption, both we and our service providers must guard against:
We also rely on software licensed from third parties in order to offer our services. These licenses are generally commercially available on varying terms. However, it is possible that this software may not continue to be available on commercially reasonable terms, or at all. Any loss of the right to use any of this software could result in delays in the provisioning of our services until equivalent technology is either developed by us, or, if available, is identified, obtained and integrated. Furthermore, our use of additional or alternative third-party software would require us to enter into license agreements with third parties, and integration of our software with new third-party software may require significant work and require substantial investment of our time and resources. Also, any undetected errors or defects in third-party software could prevent the deployment or impair the functionality of our software, delay new updates or enhancements to our platform, result in a failure of our platform, and injure our reputation.
Our failure to adequately protect personal information in compliance with evolving legal requirements could harm our business.
In the ordinary course of our business, we collect and store sensitive data, including legally protected patient health information and personally identifiable information, or "PII". We collect this kind of information for purposes of servicing potential warranty claims, for post-marketing safety vigilance, and for other permissible purposes. We believe that, because of our current operations and the fact that we do not submit claims to third-party payors for reimbursement, we are not a covered entity or a business associate that acts on behalf of a covered entity under the Health Insurance Portability and Accountability Act (“HIPAA”). Nonetheless, numerous other federal, state, and foreign laws protect the confidentiality, privacy, availability, integrity and security of health information and other types of PII. These laws are evolving and are subject to change or differing interpretations, and new laws regarding privacy, data protection, and information security may be enacted in the future. This complex and evolving landscape could expose us—and the Contracted Telehealth Groups and their providers—to additional expense, adverse publicity, and liability.
For example, as part of the American Recovery and Reinvestment Act 2009 (“ARRA”), the U.S. Congress amended the privacy and security provisions of HIPAA. HIPAA imposes limitations on the use and disclosure of an individual’s protected health information by certain health care providers, health care clearinghouses, and health insurance plans, collectively referred to
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as covered entities, that involve the creation, use, maintenance or disclosure of protected health information. The HIPAA amendments also impose compliance obligations and corresponding penalties for non-compliance on individuals and entities that provide services to health care providers and other covered entities, collectively referred to as business associates. More recently, on December 10, 2020, HHS issued a Notice of Proposed Rulemaking (the public comment period to which was further extended in March 2021) which, if finalized, would make changes to some of HIPAA’s regulatory requirements, which would impact us, to the extent we are a business associate. ARRA also significantly increased the penalties for improper use or disclosure of an individual’s protected health information under HIPAA and extended enforcement authority to state attorneys general. The amendments also create notification requirements for individuals whose protected health information has been inappropriately accessed or disclosed, notification requirements to federal regulators and in some cases, notification to local and national media. Notification is not required under HIPAA if the health information that is improperly used or disclosed is deemed secured in accordance with encryption or other standards developed by HHS. Most states have laws requiring notification of affected individuals and state regulators in the event of a breach of personal information, which is a broader class of information than the protected health information protected by HIPAA. Many state laws impose significant data security requirements, such as encryption or mandatory contractual terms to ensure ongoing protection of personal information.
Even when HIPAA does not apply, according to the Federal Trade Commission ("FTC"), failing to take appropriate steps to keep consumers’ personal information secure constitutes unfair acts or practices in or affecting commerce in violation of Section 5(a) of the FTCA, 15 U.S.C § 45(a). The FTC expects a company’s data security measures to be reasonable and appropriate in light of the sensitivity and volume of consumer information it holds, the size and complexity of its business, and the cost of available tools to improve security and reduce vulnerabilities. Medical data is considered sensitive data that merits stronger safeguards. The FTC’s guidance for appropriately securing consumers’ personal information is similar to what is required by the HIPAA Security Rule.
Many foreign countries and governmental bodies, including the EU, Canada, Australia and other relevant jurisdictions, have their own laws and regulations concerning the collection and use of personal or sensitive data obtained from their residents or by businesses operating within their jurisdiction. For example, the European Commission adopted the General Data Protection Regulation (“GDPR”), effective on May 25, 2018, that supersedes previous EU data protection legislation, imposes more stringent EU data protection requirements and provides for greater penalties for non-compliance. The GDPR applies to any company established in the EU as well as to those outside the EU if they collect and use personal data in connection with the offering goods or services to individuals in the EU or the monitoring of their behavior.
In addition, following the United Kingdom’s exit from the EU on January 31, 2020, the GDPR ceased to apply in the United Kingdom at the end of the transition period on December 31, 2020. However, as of January 1, 2021, the United Kingdom’s European Union (Withdrawal) Act 2018 incorporated the GDPR (as it existed on December 31, 2020 but subject to certain UK specific amendments) into United Kingdom law (referred to as the UK GDPR). The UK GDPR and the UK Data Protection Act 2018 set out the UK’s data protection regime, which is independent from but aligned to the EU’s data protection regime. As used herein, “GDPR” refers to both the EU and the UK GDPR, unless specified otherwise. The GDPR enhances data protection obligations for processors and controllers of personal data, including, for example, expanded disclosures about how personal information is to be used, limitations on retention of information, mandatory data breach notification requirements and onerous new obligations on services providers. Non-compliance with the GDPR can trigger steep fines of up to €20 million (£17.5 million) or 4% of total worldwide annual revenues, whichever is higher. Given the breadth and depth of changes in data protection obligations, meeting the GDPR’s requirements requires time, resources and a review of the technology and systems currently in use against the GDPR’s requirements.
EU Member States have adopted national laws to implement the EU GDPR, which may partially deviate from the EU GDPR, and the competent authorities in the EU Member States may interpret GDPR obligations slightly differently from country to country, such that we do not expect to operate in a uniform legal landscape in the EU with respect to data protection laws. In addition, the UK has announced plans to reform the UK data protection regime.
The GDPR imposes strict rules on the transfer of personal data out of the European Economic Area (“EEA”), or the United Kingdom to third countries, including the United States. On June 4, 2021, the European Commission issued new forms of standard contractual clauses for data transfers from controllers or processors in the EEA, or otherwise subject to the GDPR, to controllers or processors established outside the EEA, and not subject to the GDPR. The new forms of standard contractual clauses have replaced the standard contractual clauses that were adopted previously under the Data Protection Directive. The UK is not subject to the European Commission’s new standard contractual clauses but has published its own transfer mechanism, the International Data Transfer Agreement, which enables transfers from the United Kingdom. We are required to transition to the new forms of standard contractual clauses and doing so requires significant effort and cost. Although the United Kingdom is regarded as a third country under the EU GDPR, the European Commission has issued a decision recognizing the United Kingdom as providing adequate protection under the EU GDPR and, therefore, transfers of personal data originating in the EEA to the United Kingdom remain unrestricted. Like the EU GDPR, the UK GDPR restricts personal data transfers outside the United
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Kingdom to countries not regarded by the United Kingdom as providing adequate protection. The United Kingdom government has confirmed that personal data transfers from the United Kingdom to the EEA remain free flowing.
We may be at risk of enforcement actions taken by certain EU or UK data protection authorities until such point in time that we may be able to ensure that all transfers of personal data to us from the EEA or the United Kingdom are conducted in compliance with all applicable regulatory obligations, the guidance of data protection authorities and evolving best practices. We may find it necessary to establish systems to maintain personal data originating from the EU/UK in the EEA or the United Kingdom (as applicable), which may involve substantial expense and may cause us to need to divert resources from other aspects of our business, all of which may adversely affect our business. Our failure to comply with applicable laws and regulations, or to protect such data, could result in enforcement actions against us, including fines, imprisonment of company officials and public censure, claims for damages by end-customers and other affected individuals, damage to our reputation and loss of goodwill, any of which could harm on our operations, financial performance, and business. Evolving and changing definitions of personal data and personal information, within the European Union, the United Kingdom, the United States, and elsewhere, may limit or inhibit our ability to operate or expand our business, including limiting strategic partnerships that may involve the sharing of data. Moreover, if the relevant laws and regulations change, or are interpreted and applied in a manner that is inconsistent with our data practices or the operation of our products, we may need to expend resources in order to change our business operations, data practices, or the manner in which our products operate. Even the perception of privacy concerns, whether or not valid, may harm our reputation and inhibit adoption of our products.
While we have implemented data privacy and security measures, as well as consent practices, in an effort to comply with applicable laws and regulations relating to data privacy and security, some health information and other PII or confidential information is transmitted to us by third parties, who may not implement adequate security and privacy measures, and it is possible that laws, rules, and regulations relating to privacy, data protection, or information security may be interpreted and applied in a manner that is inconsistent with our practices or those of third parties who transmit health information and other PII or confidential information to us. A finding of noncompliance could result in penalties, orders requiring modification to our data privacy and security practices, or criminal charges, which could adversely affect our business. As noted above, changes in these laws also could result in substantial expenses or require us to materially change our operations in a manner adverse to our business.
We maintain a privacy policy available to customers that describes how we handle health information or other PII. Statements in our privacy policy could be subject to claims of deceptive practices by federal or state regulatory authorities or private parties, which could lead to significant legal expenses, divert our management’s attention from our operations, and seriously harm our business and our financial results. Furthermore, the costs of compliance with, and other burdens imposed by, the laws, regulations and policies that are applicable to us may limit customers’ use and adoption of, and reduce the overall demand for, our platform. Any of the foregoing consequences could have a material adverse impact on our business and our financial results.
Finally, there is the risk that the limits we obtained for our cyber liability insurance may not cover the total loss experienced in the event of a data security incident, including the financial loss, legal costs, and business and reputational harm, particularly if there is an interruption to our systems. Additionally, there is the risk of a data privacy or security incident by an employee, which may expose us to liability. If personal information of our customers or employees is misappropriated, our reputation with our customers and employees may be injured resulting in loss of business and/or morale, and we may incur costs to remediate possible injury to our customers and employees or be required to pay fines or take other action with respect to judicial or regulatory actions arising out of such incidents.
Our business could be affected negatively by increased public scrutiny, regulatory enforcement, or changes in law with respect to online privacy and security.
Practices regarding the registration, collection, processing, storage, sharing, disclosure, use and security of personal and other information by companies offering online services like our platform have recently come under increased public scrutiny and regulatory enforcement. The regulatory landscape applicable to internet privacy and security is evolving rapidly and requires careful monitoring to remain in compliance.
For example, comprehensive state privacy laws, such as the California Consumer Privacy Act (the “CCPA”), which became effective on January 1, 2020, and which, as of January 1, 2023, was modified significantly by the California Privacy Rights Act require, among other things, that covered companies provide new disclosures to California consumers and afford such consumers new abilities to opt-out of certain sales of personal information. Although there are limited exemptions for clinical trial data under the CCPA, the CCPA and other similar laws could impact our business activities depending on how such laws are interpreted and the types of personal information that we handle.
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Similar legislation has been proposed or adopted in many other states. Such proposed legislation, if enacted, may add additional complexity, variation in requirements, restrictions and potential legal risk, require additional investment of resources in compliance programs, impact strategies and the availability of previously useful data and could result in increased compliance costs and/or changes in business practices and policies. The existence of comprehensive privacy laws in different states in the United States makes our compliance obligations more complex and costly and may increase the likelihood that we may be subject to enforcement actions or otherwise incur liability for noncompliance.
There are also states that are specifically regulating health information. For example, Washington state recently passed a health privacy law that, as of June 30, 2024, regulates the collection and sharing of health information. This law also has a private right of action, which further increases the relevant compliance risk collecting the health information of Washington residents. Connecticut and Nevada have also passed similar laws regulating consumer health data. In addition, other states have proposed and/or passed legislation that regulates the privacy and/or security of certain specific types of information, such as biometric data. These various privacy and security laws may impact our business activities, relationships with business partners and ultimately the marketing and distribution of our products. State laws are changing rapidly and there is discussion in the U.S. Congress of a new comprehensive federal data privacy law to which we may likely become subject, if enacted. Aspects of these new and emerging state privacy laws and regulations, as well as their interpretation and enforcement, are dynamic and evolving. These laws and regulations each require particular assessment for compliance, and we may be required to modify our practices in an effort to comply with them, which may impact demand for our offerings.
Although the EU GDPR and the UK GDPR currently impose substantially similar obligations, the UK government has announced plans to reform the data protection legal framework in the UK in its Data Use and Access Bill. This lack of clarity on future UK laws and regulations and their interaction with EU laws and regulations could add legal risk, uncertainty, complexity and cost to our handling of European personal information and our privacy and data security compliance programs and could require us to implement different compliance measures for the UK and the EU.
If there is a significant change to applicable laws, regulations, or industry standards or practices regarding the storage, use, or disclosure of data our customers or providers share with us, or regarding the manner in which the express or implied consent of customers or providers for such collection, analysis and disclosure is obtained., we may be required to modify the design of our websites, mobile applications, solutions, features, or our privacy policies, and we may be limited in our ability to develop new offerings, functionalities or features.
If we are not able to satisfy data protection, security, privacy, and other government- and industry-specific requirements, our business could be harmed.
There are a number of data protection, security, privacy and other government- and industry-specific requirements, including those that require companies to notify individuals of data security incidents involving certain types of personal data. Security compromises experienced by other companies, by our customers or by us may lead to public disclosures, which could harm our reputation, erode customer confidence in the effectiveness of our security measures, and negatively impact our other products and our ability to attract new customers. As we expand into new regions, we will need to comply with new requirements. If we cannot comply or if we incur a violation in one or more of these requirements, our growth could be adversely impacted, and we could incur significant liability.
We have incorporated, and plan to incorporate in the future, artificial intelligence, or AI, into some of our products. This technology is new and developing and may present risks that could affect our business.
We have incorporated, and plan to incorporate in the future, AI, including large language models (such as GPT), machine learning, and predictive analytics into our products under a platform which we call Allurion Iris. Coach Iris is part of the Allurion Iris AI platform, which leverages large learning models to help patients during their weight loss journey by providing 24/7 virtual coaching. AI is a new and emerging technology that is in its early stages of commercial use, particularly within the medical device industry. If any of our products that incorporate AI have perceived or actual negative impacts on the clinicians or patients who use them, we may experience brand or reputational harm, competitive harm or legal liability. The rapid evolution of AI may also require the application of significant resources to develop, test and maintain our products and services that incorporate AI in order to help ensure that it is implemented in a socially responsible manner, to minimize any real or perceived unintended harmful impacts. In addition, AI is subject to a complex and evolving regulatory landscape, including data protection, privacy, and potentially other laws and different jurisdictions have taken and may take in the future varying approaches to regulating AI. Compliance with these laws and regulations can be complex, costly and time-consuming, and there is a risk of regulatory enforcement actions or litigation if we fail to comply with these requirements. As regulations evolve, we may have to alter our business practices or products in order to comply with regulatory requirements.
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Risks Related to Our Financial Condition and Capital Requirements
We have incurred net operating losses in the past and expect to incur net operating losses for the foreseeable future and there is substantial doubt about our ability to continue as a going concern.
We have incurred net operating losses since our inception, and we do not expect to be profitable in 2025. While we instituted cost reduction initiatives in recent years and are directing our efforts to become EBITDA positive in 2026, we expect to continue to incur significant sales and marketing and R&D expenses to operate our business and perform clinical research related to, among other things, the effects of the combination of the Allurion Smart Capsule and GLP-1 therapy on muscle mass and long-term GLP-1 adherence. Investment in medical device product development, particularly clinical trials, is highly speculative. It entails substantial upfront capital expenditures and significant risk that any potential planned product will fail to demonstrate adequate safety or effectiveness.
We expect to generate significant operating losses for the foreseeable future. As of December 31, 2025 and December 31, 2024, we had an accumulated deficit of $251.0 million and $222.2 million, respectively. Based on our recurring losses from operations incurred since inception, the expectation of continuing operating losses for the foreseeable future, the potential need to raise additional capital to finance our future operations and debt service payments, and noncompliance with financial covenants under our credit facilities, we have concluded that there is substantial doubt about our ability to continue as a going concern for a period of one year from the date that the consolidated financial statements for the year ended December 31, 2025 are issued.
We expect that our future financial results will depend primarily on our success in launching, selling and supporting the Allurion Smart Capsule and other products that are part of our weight loss platform. This will require us to be successful in a range of activities, including manufacturing, marketing, and selling the Allurion Smart Capsule. We may not succeed in these activities and may never generate revenue that is sufficient to be profitable in the future. Even if we are profitable, we may not be able to sustain or increase profitability on a quarterly or annual basis. Our failure to achieve sustained profitability would depress the value of our company and could impair our ability to raise capital, expand our business, diversify our planned products, market our current and future products, or continue our operations.
We have a significant amount of debt, which may affect our ability to operate our business and secure additional financing in the future.
On April 16, 2024, we issued an aggregate principal amount of $48 million of Notes to RTW due April 16, 2031. The interest rate is fixed at 6.00% per annum and is payable quarterly in cash or, at our option, in kind for the first three years. In addition, upon consummation of the Business Combination, we received an investment of $40 million from RTW in exchange for future royalty payments pursuant to the Revenue Interest Financing; we are also required to make royalty payments on an additional $7.5 million under the Additional RIFA (as defined herein). We may also incur additional indebtedness to meet future financing needs.
Our ability to make scheduled payments of debt principal and interest on our existing or future indebtedness, or to refinance our indebtedness, and to pay our royalty obligations, depends on our future performance, which is subject to economic, financial, competitive, and other factors beyond our control. Our debt obligations, including the Amended Note Purchase Agreement, impose certain financial covenants relating to minimum liquidity and minimum revenue requirements. We have received waivers of minimum liquidity and minimum revenue requirements under debt arrangements in the past, but there is no guarantee that we will not need to obtain waivers of financial covenants in the future or that, should we require them, we would be able to obtain such waivers on terms favorable to the Company, or at all. To the extent that we are unable to continue to comply with such ongoing minimum liquidity and revenue requirements, including as a result of any weakness in our business or macroeconomic trends, and are unable to procure additional waivers from RTW or other lenders in the future, such lenders may pursue a number of actions, including declaring us in breach of our covenants, requiring conditions to cure such breaches and/or exercising foreclosure remedies. Any or all of these actions may materially impact our working capital, and our business may not continue to generate sufficient cash flows from operations to fund operations, service our debt, and satisfy our royalty payment obligations. If we are unable to generate such cash flows, we may be required to adopt one or more alternatives, such as raising additional capital on terms that may be unfavorable, selling assets or portions of our business, or ceasing operations. Our ability to refinance our existing or any future indebtedness will depend on the capital markets and our financial condition at such time. We may not be able to engage in any of these activities or engage in these activities on desirable terms, which could result in a default on our debt obligations.
In addition, our indebtedness owed to RTW is collateralized by substantially all of our assets and subject to customary financial and operating covenants limiting our ability to, among other things, incur additional indebtedness, change our material line of business, modify our organizational documents, create liens, sell assets, or prepay other indebtedness. These covenants may make it difficult to operate our business. We are also subject to standard event of default provisions under the Revenue Interest Financing Agreement, Additional RIFA and the Amended Note Purchase Agreement, that, if triggered, would allow the
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debt to be accelerated, which could significantly deplete our cash resources, cause us to raise additional capital at unfavorable terms, require us to sell portions of our business or result in us becoming insolvent. The existing collateral pledged to RTW, and the covenants to which we are bound, may (i) prevent us from being able to secure additional debt or equity financing on favorable terms, or at all, or to pursue business opportunities, including potential acquisitions, (ii) heighten our vulnerability to downturns in our business, industry or the economy in general, (iii) limit our ability to adjust to changing market conditions, and (iv) place us at a competitive disadvantage compared to our competitors who have greater capital resources.
We may need additional funds to support our operations, and such funding may not be available to us on acceptable terms, or at all, which would force us to delay, reduce or suspend our planned development and commercialization efforts. Raising additional capital may subject us to unfavorable terms, cause dilution to our existing stockholders, restrict our operations, or require us to relinquish rights to our products and technologies.
Our operations have consumed substantial amounts of cash since our inception, and we expect to incur significant expenses in connection with our planned clinical research, development and product commercialization efforts. If our available cash resources and anticipated cash flow from operations are insufficient to satisfy our liquidity requirements, we may seek to sell equity or convertible debt securities, to obtain another form of third-party funding, or to enter into other debt financing. Any failure to raise the funds necessary to support our operations may force us to delay, reduce or suspend our planned clinical trials, research and development programs, or other commercialization efforts.
To the extent that we raise additional capital through the sale of equity or convertible debt securities, a stockholder's ownership may be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect a holder's rights as a stockholder. Debt financing, if available, may involve agreements that include covenants limiting or restricting our ability to take certain actions, such as incurring additional debt, making capital expenditures or declaring dividends.
If we raise additional funds through strategic collaborations or partnerships, or marketing, distribution, royalty or licensing arrangements with third parties, we may be required to do so at an earlier stage than would otherwise be ideal and/or may have to limit valuable rights to our intellectual property, technologies, products, or future revenue streams, or grant licenses or other rights on terms that are not favorable to us. Furthermore, any additional fundraising efforts may divert our management from their day-to-day activities, which may adversely affect our ability to develop and commercialize our products.
We receive the majority of our revenue from sales to health care providers and other third-party distributors, and the failure to collect receivables from them could adversely affect our financial position and results of operations.
We receive the majority of our revenue from sales to health care providers and third-party distributors. We extend credit to our customers for a significant portion of our sales and receivables from our customers are not secured by any type of collateral. We are therefore subject to the risk that our customers may not pay for the products they have purchased, pay at a slower rate than we have historically experienced, or may seek extended payment terms, which may, in turn, result in delays in our cash collection and increases in our accounts receivable. Our customers may encounter cash flow or operating difficulties, which may reduce their demand for our products or delay their payments to us, thereby increasing our accounts receivable turnover days, or increasing the risk that they may default on their payment obligations. These risks are heightened during periods of global or industry-specific economic downturn or uncertainty and during periods of rising interest rates. Our liquidity and cash flows from operations may be adversely affected if we are unable to settle our accounts receivable on a timely basis, if our accounts receivable cycles or collection periods lengthen or if we encounter a material increase in defaults of payment of our accounts receivable or repayments of amounts we have extended to our customers on credit.
We have restated certain of our previously issued financial statements, which may lead to additional risks and uncertainties, including unanticipated costs, legal proceedings and regulatory actions, and may adversely affect investor confidence, our share price, our reputation and our ability to raise capital in the future.
We have restated certain of our previously issued financial statements for the fiscal years ended December 31, 2023 and 2024, as well as the quarters ended March 31, 2024, June 30, 2024, September 30, 2024, and March 31, 2025 (the "Affected Periods"). The determination to restate the financial statements for the Affected Periods was made by our Audit Committee following the identification of an error that caused both overstatements and understatements of Other comprehensive income (loss) as reflected in the consolidated statements of comprehensive income (loss), Other income (expense) as reflected in the consolidated statements of operations, Net income (loss) as reflected in the consolidated statements of comprehensive loss and consolidated statements of operations, and Accumulated deficit as reflected in the consolidated balance sheets and consolidated statements of stockholders' deficit. The Audit Committee concluded that the previously issued financial statements for the Affected Periods should no longer be relied upon. As a result, the Company has filed amendments to its Annual and Quarterly Reports to restate its previously issued audited and unaudited consolidated financial statements for the Affected Periods.
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The restatement of our previously issued financial statements was time-consuming and expensive. The restatement, the related material weaknesses in our internal control over financial reporting, and other related impacts could expose us to additional risks that could materially adversely affect our financial position, results of operations and cash flows, including unanticipated costs for accounting and legal fees in connection with or related to the restatement and various legal and regulatory challenges. These challenges could include securities class action lawsuits, stockholder derivative suits, and enforcement actions by regulatory authorities such as the SEC and NYSE. Such proceedings may allege violations of federal securities laws, deficiencies in our disclosure controls and procedures, or other corporate governance issues. Defending against these matters is time-consuming and costly and will divert management's attention from our business operations. Adverse outcomes could result in substantial monetary damages, penalties, injunctive, or other relief, and even if resolved favorably, we may incur significant legal expenses. These potential liabilities and costs could materially and adversely impact our business, financial condition, and results of operations.
The restatement of our previously issued financial statements, the related material weaknesses in our internal control over financial reporting, and other related impacts could result in increased volatility in the market price of our securities. We may also experience reduced analyst coverage and diminished interest from institutional investors, which could adversely impact the trading volume, liquidity, and market price of our securities. Moreover, investors may view our historical financial information as less reliable as a result of the restatement of our previously issued financial statements and the identification of material weaknesses in our internal control over financial reporting. This perception could impact investor confidence, adversely affect the market price of our securities, impair our ability to access capital markets, and result in greater difficulty in achieving strategic or financial objectives.
If our estimates or judgments relating to our critical accounting policies prove to be incorrect, our results of operations could be adversely affected.
The preparation of our financial statements requires us to make estimates and assumptions affecting the reported amounts of our assets, liabilities, revenues, expenses and earnings. If these estimates or assumptions are incorrect, it could have a material adverse effect on our results of operations or financial condition. We have identified several accounting policies as being critical to the fair presentation of our financial condition and results of operations because they involve major aspects of our business and require us to make judgments about matters that are inherently uncertain. These policies are described under the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and should be considered in conjunction with our audited consolidated financial statements and notes thereto included elsewhere in this Annual Report on Form 10-K. The implementation of new accounting requirements or other changes to GAAP could have a material adverse effect on our reported results of operations and financial condition. Our results of operations may be adversely affected if our assumptions change or if actual circumstances differ from those in our assumptions, which could cause our results of operations to fall below our expectations and the expectations of securities analysts and investors, resulting in a decline in the trading price of our common stock.
Our strategic restructuring and cash preservation activities, including the reduction in force, may not result in anticipated savings, could result in total costs and expenses that are greater than expected and could disrupt our business.
In August 2025, we implemented a strategic restructuring, including a reduction in force. In connection with the reduction in force, we expect to incur costs of approximately $1.8 million, which are primarily one-time severance benefits. We may not realize, in full or at all, the anticipated benefits, savings and improvements in our cost structure from our restructuring efforts due to unforeseen difficulties, delays or unexpected costs. If we are unable to realize the expected operational efficiencies and cost savings from the restructuring, our operating results and financial condition would be adversely affected. Furthermore, our reduction in force may be disruptive to our operations. For example, headcount reductions could yield unanticipated consequences, such as increased difficulties in implementing our business strategy, including retention of remaining employees.
Due to our limited resources, we may not be able to effectively manage our operations, which may result in weaknesses in our infrastructure, risks that we may not be able to comply with legal and regulatory requirements, and loss of employees and reduced productivity among remaining employees. For example, our limited resources and workforce reduction may negatively impact our R&D and clinical trial activities or expose us to cybersecurity risks, which could result in unexpected costs and expenses and have a material adverse effect on our business, financial condition and prospects.
Risks Related to Ownership of Our Securities
Our share price may be volatile, and purchasers of our securities could incur substantial losses.
Our share price is likely to be volatile. The securities markets in general, and the market for biotechnology and medical device companies in particular, have experienced extreme volatility that has often been unrelated to the operating performance of
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particular companies. You may not be able to resell your shares at an attractive price due to a number of factors, including the following:
These broad market and industry factors may harm the market price of our securities, regardless of our operating performance. Stock markets in general and our stock price in particular have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of those companies and our Company. For example, from January 1, 2025 to December 31, 2025, the closing price per share of our common stock on the NYSE ranged from as high as $10.43 to as low as $1.13 and daily trading volume ranged from approximately 8,300 to 74,451,700 shares. Investors that purchase our securities may lose their investments if the price of our common stock subsequently declines. In the past, following periods of volatility in the market, securities class-action litigation has often been instituted against companies. Such litigation, if instituted against us, could result in substantial costs and diversion of management’s attention and resources, which could adversely affect our business, financial condition, results of operations and growth prospects.
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We do not intend to pay cash dividends for the foreseeable future.
We currently intend to retain our future earnings, if any, to finance the further development and expansion of our business and do not intend to pay cash dividends in the foreseeable future. Any future determination to pay dividends will be at the discretion of our Board and will depend on our financial condition, results of operations, capital requirements, restrictions contained in our current or future credit agreements and financing instruments, business prospects and such other factors as our Board deems relevant.
Future sales of our common stock, or the perception that future sales may occur, may cause the market price of our common stock to decline, regardless of our operating performance.
Sales of a substantial number of shares of our common stock in the public market, including the resale of shares held by various holders of our securities registered for resale, could occur at any time (after the expiration of any applicable lock-up period). These sales, or the perception in the market that the holders of a large number of shares of our common stock intend to sell shares, could increase the volatility of the market price of our common stock or result in a significant decline in the public trading price of our common stock.
In addition, on December 18, 2023, we entered into the Purchase Agreement with Chardan Capital Markets (“Chardan”) related to a “ChEF,” Chardan’s committed equity facility (the “Chardan Equity Facility”). Pursuant to the Purchase Agreement, Chardan shall purchase from us up to $100.0 million of shares of our common stock, upon the terms and subject to the conditions and limitations set forth in the Purchase Agreement. As of March 17 2026, we have sold 377,879 shares of our common stock to Chardan as Purchase Shares (as defined in the Chardan Purchase Agreement) under the Chardan Purchase Agreement, for aggregate net cash proceeds to us of approximately $1.8 million. .
The resale, or expected or potential resale, of a substantial number of shares of our common stock in the public market could adversely affect the market price for our common stock and make it more difficult for stockholders to sell their holdings at times and prices that they determine are appropriate. Furthermore, we expect that, because there is a large number of shares of our common stock registered pursuant to various resale registration statements, the selling securityholders thereunder will continue to offer the securities covered thereby for a significant period of time, the precise duration of which cannot be predicted. Accordingly, the adverse market and price pressures resulting from an offering pursuant to the effective resale registration statements may continue for an extended period of time. Sales of a substantial number of such shares in the public market could adversely affect the market price of our common stock.
Future sales and issuances of our common stock could result in additional dilution of the percentage ownership of our stockholders and could cause our share price to fall.
Significant additional capital will be needed in the future to continue our planned operations. To raise capital, we may sell common stock, convertible securities or other equity securities in one or more transactions at prices and in a manner as determined by our Board from time to time. If we sell common stock, convertible securities or other equity securities, investors may be materially diluted by subsequent sales. Such sales may also result in material dilution to existing stockholders, and new investors could gain rights, preferences and privileges senior to the holders of our common stock.
We will incur increased costs and demands upon management as a result of complying with the laws and regulations affecting public companies, which could adversely affect our business, results of operations, and financial condition.
As a public company, we are subject to the reporting requirements of the Exchange Act, the listing standards of the NYSE or other national exchange on which our securities are traded, and other applicable securities rules and regulations. We expect that the requirements of these rules and regulations will continue to increase our legal, accounting and financial compliance costs, make some activities more difficult, time-consuming and costly, and place significant strain on our personnel, systems and resources. For example, the Exchange Act requires, among other things, that we file annual, quarterly and current reports with respect to our business and results of operations. As a result of the complexity involved in complying with the rules and regulations applicable to public companies, our management’s attention may be diverted from other business concerns, which could harm our business, results of operations and financial condition. Although we already hired additional employees to assist us in complying with these requirements, we may need to hire more employees in the future or engage outside consultants, which will increase our operating expenses.
In addition, changing laws, regulations and standards relating to corporate governance and public disclosure are creating uncertainty for public companies, increasing legal and financial compliance costs, and making some activities more time-consuming. These laws, regulations and standards are subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and
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governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. We expect to invest substantial resources to comply with evolving laws, regulations and standards, and this investment may result in increased general and administrative expenses and a diversion of management’s time and attention from business operations to compliance activities. If our efforts to comply with new laws, regulations and standards differ from the activities intended by regulatory or governing bodies due to ambiguities related to their application and practice, regulatory authorities may initiate legal proceedings against us and our business may be harmed.
We also expect that being a public company and these new rules and regulations will make it more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced coverage or incur substantially higher costs to obtain coverage. These factors could also make it more difficult for us to attract and retain qualified members of our board of directors, particularly to serve on our audit committee and compensation committee, and qualified executive officers.
As a result of disclosure of information in the filings required of a public company, our business and financial condition is more visible, which may result in an increased risk of threatened or actual litigation, including by competitors and other third parties. If such claims are successful, our business and results of operations could be harmed, and even if the claims do not result in litigation or are resolved in our favor, these claims, and the time and resources necessary to resolve them, could divert the resources of our management and harm our business, results of operations, and financial condition.
Certain parties have the right to nominate directors to our board of directors, and their interests may conflict with ours or yours in the future.
Pursuant to our Investor Rights and Lock-up Agreement, dated August 1, 2023, by and among us, Compute Health Sponsor LLC (the “Sponsor”), certain Legacy Allurion stockholders and certain other parties (the "Investors" and such agreement, the “Investor Rights Agreement”), the following persons have the following nomination rights with respect to our board of directors: (i) one director and one independent director to be nominated by Shantanu Gaur; (ii) one director and one independent director to be nominated by Remus Group Management, LLC and its affiliates (“Remus Capital”); (iii) one director to be nominated by the Sponsor; and (iv) two independent directors to be nominated by Allurion (one of whom shall be designated by RTW until such time as all obligations under the Revenue Interest Financing Agreement or any additional revenue interest financing agreement have been satisfied by Allurion). In addition, in September 2024, we appointed Keith Johns to our Board, in satisfaction of certain obligations to RTW set forth in the Amended Note Purchase Agreement, and in January 2025, we entered into the Omnibus Amendment pursuant to which RTW has the right to designate an additional director, initially R. Jason Richey, who was appointed to the Board effective as of December 30, 2024.
As a result of the foregoing, Shantanu Gaur, Remus Capital, the Sponsor and RTW or their respective nominees to our Board collectively have the ability to control the appointment of our management, the entering into of mergers, sales of substantially all or all of our assets and other extraordinary transactions, and influence amendments to our Amended and Restated Certificate of Incorporation (“Charter”) and Amended and Restated Bylaws (“Bylaws”). In any of these matters, the interests of the parties to the Investor Rights Agreement with the right to nominate directors may differ from or conflict with your interests.
Moreover, this control over the nomination of directors to our Board may also adversely affect the trading price for our common stock to the extent investors perceive disadvantages in owning stock of a company with these corporate governance provisions.
We are an “emerging growth company” and a “smaller reporting company” within the meaning of the Securities Act, and we intend to take advantage of certain exemptions from disclosure requirements available to emerging growth companies and/or smaller reporting companies, which could make our securities less attractive to investors and may make it more difficult to compare our performance with that of other public companies.
We are “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 ("JOBS Act"), and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act ("Section 404"), reduced disclosure obligations regarding executive compensation in their periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.
Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a registration statement under the Securities Act declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the
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extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. We have elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, we, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparability of our financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.
Additionally, we are a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K, which allows us to take advantage of certain exemptions from disclosure requirements including exemption from compliance with the auditor attestation requirements of Section 404 and reduced disclosure obligations regarding executive compensation in this Annual Report on Form 10-K and in our periodic reports and proxy statements. We will remain a smaller reporting company until the last day of the fiscal year in which (i) the market value of the shares of our common stock held by non-affiliates exceeds $250 million as of the prior June 30, and (ii) our annual revenue exceeded $100 million during such completed fiscal year or the market value of the shares of our common stock held by non-affiliates exceeds $700 million as of the prior June 30. To the extent we take advantage of such reduced disclosure obligations, it may also make comparison of our financial statements with other public companies difficult or impossible.
We could be subject to securities class action litigation.
In the past, securities class action litigation has often been instituted against companies whose securities have experienced periods of volatility in market price. Securities litigation brought against us following volatility in the price of our common stock, regardless of the merit or ultimate results of such litigation, could result in substantial costs, which would hurt our financial condition and results of operations and divert management’s attention and resources from our business.
We have previously identified material weaknesses in our internal control over financial reporting and may identify additional material weaknesses in the future. If we fail to remediate a material weakness or if we otherwise fail to establish and maintain effective control over financial reporting, it may adversely affect our ability to accurately and timely report our financial results, and may adversely affect investor confidence and business operations.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.
In connection with the audit of our consolidated financial statements as of and for the years ended December 31, 2025 and 2024, we identified material weaknesses in our internal control over financial reporting that we are currently working to remediate, which relate to: (a) insufficient segregation of duties in the financial statement close process; (b) a lack of sufficient levels of staff with public company and technical accounting experience to maintain proper control activities and perform risk assessment and monitoring activities; and (c) insufficient information systems controls, including access and change management controls. We have concluded that these material weaknesses in our internal control over financial reporting occurred because we do not have the necessary business processes, personnel and related internal controls to operate in a manner to satisfy the accounting and financial reporting timeline requirements of a public company.
We are focused on designing and implementing effective internal controls measures to improve our evaluation of disclosure controls and procedures, including internal control over financial reporting, and remediating the material weaknesses. We have taken steps to remediate including consulting with experts on technical accounting matters and in the preparation of our financial statements. We have also hired additional senior level experienced staff with public company experience and upgraded our enterprise resource planning system to SAP in August of 2022.
However, we cannot assure you that the measures we have taken and are taking to remediate the material weaknesses will prevent or avoid potential future material weaknesses. Further, additional weaknesses in our disclosure controls and internal controls over financial reporting may be discovered in the future. Any failure to develop or maintain effective controls or any difficulties encountered in their implementation or improvement could limit our ability to prevent or detect a misstatement of our accounts or disclosures that could result in a material misstatement of our annual or interim financial statements. In such a case, we may be unable to maintain compliance with securities law requirements regarding timely filing of periodic reports in addition to the listing requirements of the NYSE, investors may lose confidence in our financial reporting and our stock price may decline as a result.
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If we are unable to implement and maintain effective internal control over financial reporting in the future, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our common stock may decrease.
We are in the process of designing and implementing our internal controls over financial reporting, which is time-consuming, costly and complicated. We have identified gaps in our internal control environment in the past and cannot provide assurances that there will not be material weaknesses or significant deficiencies in our internal control over financial reporting in the future. If we identify additional material weaknesses in our internal control over financial reporting, if we are unable to comply with the requirements of Section 404 in a timely manner, if we are unable to assert that our internal control over financial reporting is effective or, once required, if our independent registered public accounting firm is unable to attest that our internal control over financial reporting is effective, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our common stock could decrease. We could also become subject to stockholder or other third-party litigation as well as investigations by the NYSE, the SEC or other regulatory authorities, which could require additional financial and management resources and could result in fines, trading suspensions or other remedies.
We will need to raise additional capital in order to execute our business plan and to respond to changing market conditions, which additional capital may not be available on terms acceptable to us, or at all.
We will need to raise additional capital either by issuing equity, debt, or a combination of the two, in order to respond to market timing delays, technological advancements, competition, competitive technologies, customer demands, business opportunities, other challenges, potential acquisitions, unforeseen circumstances, or other reasons. In order to further business relationships with current or potential customers or partners, we may issue equity or equity-linked securities to such customers or partners. Despite the need for additional capital, we may not be able to timely secure additional debt or equity financing on favorable terms, or at all, especially given current market conditions where raising additional capital has proven particularly challenging. If we raise additional capital through the issuance of equity or convertible debt or other equity-linked securities, or if we issue equity or equity-linked securities to current or potential customers to further our business relationships, our existing stockholders would likely experience dilution, which may be significant. Any debt financing obtained by us in the future could involve restrictive covenants relating to our capital raising activities and other financial and operational matters, which may make it more difficult for us to obtain additional capital or to pursue business opportunities, including potential acquisitions. If we are unable to obtain adequate financing on terms satisfactory to us when we require it, our ability to continue to support our business and to respond to business challenges could be significantly limited.
Additionally, under current SEC regulations, if our public float is less than $75 million, and for so long as our public float remains less than $75 million, the amount we can raise through primary public offerings of securities in any twelve-month period using shelf registration statements on Form S-3 is limited to an aggregate of one-third of our public float, which is referred to as the “baby shelf” rules.
As of the date of the Original Form 10-K, our public float is below $75 million. As such, we will be limited by the baby shelf rules until such time as our public float exceeds $75 million, which means we only have the capacity to sell shares up to one-third of our public float under shelf registration statements on Form S-3 in any twelve-month period. If our public float decreases, the number of securities we may sell under our Form S-3 shelf registration statement will also decrease. We will remain constrained by the baby shelf rules under our Form S-3 shelf registration statement until such time as our public float exceeds $75 million, at which time, the number of securities we may sell under a Form S-3 registration statement will no longer be limited by the baby shelf rules.
Trading of our securities on the NYSE was suspended for failure to meet the NYSE's market capitalization standard, and failure to resume trading on the NYSE or a permanent delisting of our securities by the NYSE could have an adverse impact on the perception of our Company and its securities, the trading volume, liquidity, volatility, and market price of our common stock, and our ability to raise capital on favorable terms.
On March 2, 2026, we received a letter (the “Delisting Notice”) from the staff of the NYSE indicating the Company did not meet certain of the Exchange’s continued listing standards as set forth in Section 802.01B of the NYSE Listed Company Manual, which requires listed companies to maintain either (i) at least $50 million in stockholders’ equity or (ii) at least $50 million in total market capitalization on a 30-trading day average basis and that the Exchange will be commencing delisting proceedings. This Delisting Notice came at the end of an 18-month period during which the Company was trying to remediate this market capitalization requirement. The Company appealed this determination and is seeking a review by a Committee of the Board of Directors of the Exchange (the “Committee”).
On March 6, 2026, we received a second letter from the NYSE indicating it has determined to commence proceedings to delist the Company’s Common Stock, and warrants to purchase 0.056818 shares of Common Stock, with an exercise price of $202.50 per share of Common Stock, as a result of the Company’s non-compliance with Rule 802.01B of the NYSE Listed
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Company Manual that requires listing companies to maintain an average global market capitalization of at least $15 million over a period of 30 consecutive trading days. Trading in the Company’s securities on the NYSE was suspended after market close on March 6, 2026. The Company has also appealed this delisting determination and expects a hearing with the Committee.
We cannot assure you that we will be successful in our appeal or otherwise cure the deficiencies with the NYSE’s listing standards. If the Company is unsuccessful in its appeal, the Company expects the NYSE will file a Form 25 with the SEC, which would result in the delisting of the Company’s Common Stock and Warrants from the NYSE on the tenth day after the Form 25 is filed.
The suspension of trading of our securities on the NYSE, or a permanent delisting of our securities from the NYSE, could negatively impact us as it could negatively impact investors’ perception of our Company and our securities. Securities that are not listed on a national securities exchange typically experience lower trading volumes, wider bid‑ask spreads, and greater price volatility. As a result, this may have a negative impact on the trading price of our common stock, and investors may find it more difficult to buy or sell our securities at desired prices or at all. Reduced liquidity may also impair our ability to raise capital on favorable terms, if at all. In addition, not trading on a national exchange may limit interest from institutional investors, analysts, and other market participants, which could further depress the market price of our securities and restrict our access to equity or debt financing.
The suspension or delisting of our securities from the NYSE gives the holder of our convertible notes, at its option, to require the Company to repurchase these notes for cash.
Under the terms of our Amended Note Purchase Agreement with RTW, the suspension or delisting of the Company’s securities constitutes a “Make Whole Fundamental Change” (as defined) and provides the holder of our convertible notes the option to cause the Company to repurchase these convertible notes for cash. The cash out value of these notes is $42.9_million as of December 31, 2025, which far exceeds the cash available to the Company.
Our Securities Trade on an Over‑the‑Counter Market, Which Subjects Investors to Significant Risks Related to Liquidity, Volatility, and Limited Market Visibility.
Our securities currently trade on an over‑the‑counter (“OTC”) market rather than on a national securities exchange. OTC markets generally provide less liquidity, less analyst coverage, and fewer investor protections than exchanges such as the NYSE or Nasdaq. As a result, investors may experience greater difficulty buying or selling our securities, and the market price of our securities may be more volatile, less transparent, and more susceptible to price manipulation.
Because OTC markets typically attract fewer institutional investors and receive limited media and research attention, our ability to increase investor awareness, attract new shareholders, or raise capital on favorable terms may be adversely affected. Reduced liquidity may also impair the accuracy of market valuations, which could result in significant fluctuations in the trading price of our securities unrelated to our operating performance. In addition, companies quoted on OTC markets are often perceived as higher‑risk or less established than exchange‑listed companies. This perception may negatively affect our reputation, business relationships, and ability to retain or recruit employees. If we are unable to improve our financial condition, corporate governance profile, or reporting history sufficiently to qualify for listing on a national securities exchange in the future, investors may continue to face the risks associated with OTC trading for an extended period.
An active trading market may not be available on a consistent basis to provide stockholders with adequate liquidity. The price of our Common Stock may be extremely volatile, and stockholders could lose all or part of their investment.
The market for our securities may be highly volatile or may decline regardless of our operating performance. An active public market for our securities may not develop or be sustained. We cannot predict the extent to which investor interest in Allurion will lead to the development of an active trading market in our common stock or how liquid that market might become. If an active market does not develop or is not sustained, or if we fail to satisfy the continued listing standards of the NYSE for any reason and our securities are delisted, it may be difficult for you to sell your securities at the time you wish to sell them, at a price that is attractive to you, or at all. An inactive trading market may also impair our ability to both raise capital by selling shares of capital stock, attract and motivate employees through equity incentive awards and acquire other companies, products or technologies by using shares of capital stock as consideration.
If securities or industry analysts do not publish research, or publish inaccurate or unfavorable research, about our business, our common stock share price and trading volume could decline.
The trading market for our common stock will depend, in part, on the research and reports that securities or industry analysts publish about us or our business. If few or no securities or industry analysts cover us, the trading price for our common
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stock would likely be negatively impacted. If one or more of the analysts who cover us downgrade our common stock or publish inaccurate or unfavorable research about our business, our share price would likely decline. In addition, if our operating results fail to meet the forecast of analysts, our share price would likely decline. If one or more of these analysts cease coverage of Allurion or fail to publish reports on us regularly, demand for our common stock could decrease, which could cause our share price and trading volume to decline.
Provisions in our Charter and Bylaws could make an acquisition of us more difficult and may prevent attempts by our stockholders to replace or remove our current management.
Provisions in our Charter and Bylaws may discourage, delay, or prevent a merger, acquisition, or other change in control of us that stockholders may consider favorable, including transactions in which stockholders might otherwise receive a premium for their shares. These provisions could also limit the price that investors might be willing to pay in the future for our common stock, thereby depressing the market price of our common stock. In addition, these provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of our board of directors. Because our Board is responsible for appointing the members of our management team, these provisions could in turn affect any attempt by our stockholders to replace current members of our management team. Among others, these provisions include the following:
Sales of shares of our common stock may cause the market price of our common stock to fall.
Sales of a substantial number of shares of our common stock in the public market could occur at any time. These sales, or the perception in the market that the holders of a large number of shares of our common stock intend to sell shares, could increase the volatility of the market price of our common stock or result in a significant decline in the public trading price of our common stock.
In January 2025, we issued and sold 841,751 shares of common stock to RTW for an aggregate purchase price of approximately $2.5 million at a purchase price per share of $2.97 per share. Also in January 2025, we entered into a securities purchase agreement with certain accredited investors pursuant to which we issued and sold 1,240,000 shares of common stock and accompanying common warrants to purchase up to 1,240,000 shares at an offering price of $6.00 per share and accompanying common warrant.
Similarly, in February 2025 we entered into a securities purchase agreement with certain accredited investors pursuant to which we issued and sold 900,000 shares of common stock and accompanying common warrants to purchase up to 1,800,000 shares of common stock at an offering price of $5.23 per share and accompanying common warrant. Concurrently, we issued and sold to an accredited investor affiliated with Leavitt Equity Partners LLC ("Leavitt") 267,686 shares of common stock and common warrants to purchase up to 535,372 shares of common stock for an aggregate purchase price of approximately $1.4 million at a purchase price of $5.23 per share and accompanying private placement warrant.
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In November 2025 we entered into a securities purchase agreement with certain accredited investors pursuant to which we issued and sold 2,994,012 shares of common stock and accompanying warrants to purchase up to 2,994,012 shares of common stock at an offering price of $1.67 per share and accompanying warrant.
Additionally, in February 2026, we entered into the Inducement Letter, where the Company agreed to amend the Existing Warrants by lowering the exercise price of the Existing Warrants to $1.15 per share. Additionally, the Exercising Holders agreed to exercise for cash certain of their Existing Warrants to purchase an aggregate of 2,659,565 shares of Common Stock in exchange for the Company’s agreement to issue to such Exercising Holder New Warrants to purchase up to an aggregate of 5,319,130 shares of Common Stock at an exercise price of $1.15.
While some of our securityholders may experience a positive rate of return based on the current trading price, public securityholders may not experience a similar rate of return on the securities they purchased due to differences in the purchase prices they paid and the trading price at the time of sale and may instead experience a negative rate of return on their investment. On March 17, 2026, the last quoted sale price for our common stock as reported on the OTC was 0.60 per share.
Other than as described above, there are no lock-up, beneficial ownership or stock exchange restrictions that would prevent the foregoing stockholders from selling some or all of their common stock subject to compliance with applicable rules and regulations.
Our warrants are exercisable for common stock, the exercise of which would increase the number of shares eligible for future resale in the public market and result in dilution to our stockholders.
As of March 17, 2026, there were outstanding: (i) 13,206,720 Public Warrants to purchase an aggregate of 750,383 shares of common stock at an exercise price of $202.50 per share, (ii) 14,380 Rollover Warrants to purchase an aggregate of 14,380 shares of common stock at exercise prices ranging from $0.50 per share to $303.50 per share outstanding, (iii) 662,701 July 2024 Public Warrants to purchase an aggregate of 662,701 shares of common stock at a weighted average exercise price of $11.42 per share, (iv) 90,407 Private Placement Warrants to purchase an aggregate of 90,407 shares of common stock at an exercise price of $30.00 per share, (v) 375,001 January 2025 Warrants to purchase an aggregate of 375,001 shares of common stock at an exercise price of $6.00 per share, (vi) 544,356 February 2025 Warrants to purchase an aggregate of 544,356 shares of common stock at an exercise price of $5.23 per share, (vii) 535,372 Leavitt Private Placement Warrants to purchase an aggregate of 535,372 shares of common stock at an exercise price of $5.23 per share, (viii) 2,455,090 November 2025 Warrants to purchase an aggregate 2,455,090 shares of common stock at an exercise price of $1.67, and (ix) 5,319,130 New Warrants to purchase up to an aggregate 5,319,130 shares of common stock at an exercise price of $1.15.
To the extent such warrants are exercised, additional shares of our common stock will be issued, which will result in dilution to the holders of our common stock and increase the number of shares eligible for resale in the public market. Sales of substantial numbers of such shares in the public market could adversely affect the market price of our common stock, the impact of which increases as the value of our stock price increases.
Our existing warrants may not be exercised at all and we may not receive any cash proceeds from the exercise of the warrants.
Due to the significant number of redemptions of Compute Health Class A common stock in connection with the Business Combination, there was a significantly lower number of shares of Compute Health Class A common stock that converted into shares of our common stock in connection with the Business Combination. As a result, the shares of our common stock previously registered for resale are anticipated to constitute a considerable percentage of our public float. Additionally, a significant portion of the shares of our common stock registered for resale were purchased by securityholders pursuant to investments in Legacy Allurion that date from 2013 through the closing of the Business Combination at prices considerably below the current market price of our common stock. This discrepancy in purchase prices may have an impact on the market perception of our common stock’s value and could increase the volatility of the market price of our common stock or result in a significant decline in the public trading price of our common stock. The registration of these shares for resale creates the possibility of a significant increase in the supply of our common stock in the market. The increased supply, coupled with the potential disparity in purchase prices, may lead to heightened selling pressure, which could negatively affect the public trading price of our common stock.
The exercise prices of the warrants, in certain circumstances, may be higher than the prevailing market price of our underlying common stock and the cash proceeds to us associated with the exercise of such warrants are contingent upon our stock price. The value of our common stock may fluctuate and may not exceed the exercise price of the existing warrants at any given time. As of December 31, 2025, all of our Public Warrants, each of which has an exercise price of $202.50 per share, our July 2024 Public Warrants, each of which has an exercise price of $6.00 or $30.00 per share, our January 2025 Warrants, each which has an exercise price of $6.00 per share, our February 2025 Warrants, each which has an exercise price of $5.23 per share, our Leavitt Private Placement Warrants, each which has an exercise price of $5.23 per share, and our November 2025 Warrants, each
74
of which has an exercise price of $1.67 per share, are “out of the money,” meaning the exercise price is higher than the market price of our common stock. As of December 31, 2025, 893 Rollover Warrants have been exercised. Of the 14,380 Rollover Warrants outstanding as of December 31, 2025, 11,446 of such warrants (2,231 of which have an exercise price of $26.25, 392 of which have an exercise price of $28.25, 5,203 of which have an exercise price of $168.25, and 3,620 of which have an exercise price of $303.50) are “out of the money.” Holders of such “out of the money” warrants are not likely to exercise such warrants. There can be no assurance that such warrants will be in the money prior to their respective expiration dates, and therefore, we may not receive any cash proceeds from the exercise of such warrants.
Certain of our existing warrants are accounted for as liabilities and the changes in value of such warrants could have a material effect on, or cause volatility in, our financial results.
In connection with the Business Combination, we assumed our Public Warrants to purchase up to 750,383 shares of our common stock (which were originally issued as warrants to purchase shares of Compute Health Class A common stock in connection with Compute Health’s IPO) and Rollover Warrants to purchase up to 14,380 shares of our common stock (which were originally issued as warrants to purchase shares of Legacy Allurion Common Stock and Legacy Allurion Preferred Stock). Additionally, in July 2024 we issued the July 2024 Public Warrants to purchase up to 662,701 shares of our common stock and the Private Placement Warrants to purchase up to 90,407 shares of our common stock. In January 2025 we issued the January 2025 Warrants to purchase up to 1,240,000 shares of our common stock. In February we issued the February 2025 Warrants to purchase up to 1,800,000 shares of common stock and February 2025 Private placement warrants to purchase up to 535,372 shares of common stock. We evaluated the accounting treatment of such warrants and determined to classify certain of such warrants as liabilities measured at fair value. The fair value of such warrants is remeasured on a quarterly basis with changes in the estimated fair value recorded in Other income (expense) on the consolidated statement of operations and comprehensive loss. Due to the recurring fair value measurement, we expect that we will recognize non-cash gains or losses on such warrants each reporting period and that the amount of such gains or losses could materially impact or cause volatility in our financial results. For example, upon consummation of the Business Combination, the total value of the liability associated with the Public Warrants was $13.8 million measured at fair value based on the Public Warrant quoted price. However, at December 31, 2025, the fair value of the liability associated with the Public Warrants was determined to be $0.2 million.
Our Earn-Out Shares are accounted for as liabilities and the changes in value of such shares could have a material effect on, or cause volatility in, our financial results.
In connection with the Business Combination, holders of Legacy Allurion common stock and Legacy Allurion preferred stock and holders of vested options, warrants and restricted stock units exercisable or convertible into Legacy Allurion capital stock received the contingent right to receive additional shares of our common stock (the Shares”) upon the achievement of certain targets. We evaluated the accounting treatment of our Shares and determined to classify such shares as liabilities measured at fair value. The fair value of such shares is remeasured on a quarterly basis over the period with changes in the estimated fair value recorded in other income (expense) on the consolidated statement of operations and comprehensive loss. Due to the recurring fair value measurement, we expect that we will recognize gains or losses on our Shares each reporting period and that the amount of such gains or losses could materially impact or cause volatility in our financial results. For example, upon consummation of the Business Combination, the fair value of the liability associated with the Earn-Out Shares was initially valued and recorded as $53.0 million. However, at December 31, 2025, the fair value of the liability associated with the Earn-Out Shares was determined to be less than $0.1 million.
The provisions of our Bylaws requiring exclusive forum in the Court of Chancery of the State of Delaware and the federal district courts of the United States for certain types of lawsuits may have the effect of discouraging lawsuits against our directors and officers.
Our Bylaws provide that, to the fullest extent permitted by law, and unless we consent in writing to the selection of an alternative forum, the Court of Chancery (the “Chancery Court”) of the State of Delaware (or, in the event that the Chancery Court does not have jurisdiction, the federal district court for the District of Delaware or other state courts of the State of Delaware) and any appellate court thereof will be the sole and exclusive forum for (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of, or a claim based on, a breach of a fiduciary duty owed by any of our current or former directors, officers, or other employees or stockholders to us or our stockholders, (iii) any action asserting a claim arising pursuant to any provision of the DGCL, our Charter or our Bylaws (including the interpretation, validity or enforceability thereof) or as to which the DGCL confers jurisdiction on the Court of Chancery of the State of Delaware, or (iv) any action asserting a claim governed by the internal affairs doctrine; provided, however, that the preceding clauses (i) through (iv) will not apply to any causes of action arising under the Securities Act or the Exchange Act, or to any claim for which the federal courts have exclusive jurisdiction. Any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock shall be deemed to have notice of and to have consented to the provisions of our Bylaws as described above.
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Additionally, Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder. Accordingly, both state and federal courts have jurisdiction to entertain such Securities Act claims. To prevent having to litigate claims in multiple jurisdictions and the threat of inconsistent or contrary rulings by different courts, among other considerations, our Bylaws provide that, unless we consent in writing to the selection of an alternative forum, to the fullest extent permitted by law, the federal district courts of the United States of America shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act, the Exchange Act, or the respective rules and regulations promulgated thereunder; however, there is uncertainty as to whether a court would enforce such provision, and investors cannot waive compliance with federal securities laws and the rules and regulations thereunder.
These provisions may limit or increase the difficultly in a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors and officers, or may increase the cost for such stockholder to bring a claim, both of which may have the effect of discouraging lawsuits against our directors and officers. The enforceability of similar choice of forum provisions in other companies’ certificates of incorporation has been challenged in legal proceedings, and it is possible that, in connection with any applicable action brought against us, a court could find the choice of forum provisions contained in our Bylaws to be inapplicable or unenforceable in such action. If a court were to find the choice of forum provision inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, results of operations, and financial condition.
Item 1B. Unresolved Staff Comments.
Not applicable.
Item 1C. Cybersecurity.
Cyber Risk Management and Strategy
We recognize the importance of assessing, identifying, and managing risks from cybersecurity threats. We have implemented a cybersecurity risk management program scoped in accordance with our risk profile and our financial condition. This program is informed by and incorporates elements of recognized industry standards. Our cybersecurity risk management strategy has historically been guided by both internal cybersecurity risk assessments and third-party information security audits.
Governance Related to Cybersecurity Risks
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Item 2. Properties.
Our corporate headquarters are located in Natick, Massachusetts, where we lease approximately 9,900 square feet of office space pursuant to a lease agreement that commenced on June 15, 2016 and expires on February 28, 2028. We also lease approximately 10,200 square feet of manufacturing space in Natick, Massachusetts pursuant to a lease agreement that commenced on January 8, 2018 and expires on February 28, 2028. We also lease approximately 9,800 square feet of warehouse space in Hudson, Massachusetts pursuant to a lease agreement that commenced on February 11, 2022 and expired on February 28, 2026. We believe that our existing facilities are suitable and adequate for our needs.
Item 3. Legal Proceedings.
From time to time, we may become involved in legal proceedings or be subject to claims arising in the ordinary course of our business. We are not currently a party to any material legal proceedings. Regardless of outcome, such proceedings or claims can have an adverse impact on us because of defense and settlement costs, diversion of resources and other factors, and there can be no assurances that favorable outcomes will be obtained.
On August 12, 2025, Vanderbilt University Medical Center (“Vanderbilt”) filed a complaint against us in the United States District Court for the Middle District of Tennessee, captioned Vanderbilt University Medical Center v. Allurion Technologies, Inc., d/b/a Allurion. Vanderbilt’s complaint alleges that we breached the Clinical Trial Agreement, dated June 30, 2022, by and between us and Vanderbilt, related to the clinical trial for the Allurion Balloon by failing to reimburse medical expenses incurred in treating a patient enrolled in such trial at Vanderbilt. Vanderbilt is seeking damages of approximately $2.5 million. We intend to defend against such claims vigorously, but we cannot be sure that we will be successful in prevailing in such proceeding or that it will not incur material costs in defending against such allegations.
Item 4. Mine Safety Disclosures.
Not applicable.
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PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
Market Information
Our common stock, par value $0.0001 per share, trades on the NYSE under the symbol "ALUR".
The Company's public warrants to purchase 0.056818 shares of our common stock at $202.50 per share trade on the New York Stock Exchange under the symbol "ALUR WS."
Holders
As of March 17, 2026, there were 179 record holders of our common stock and 1 record holder of our Public Warrants. The actual number of stockholders is greater than this number of record holders and includes stockholders who are beneficial owners but whose shares are held in the street name by brokers and other nominees. This number of record holders also does not include stockholders whose shares may be held in trust by other entities.
Dividends
We do not intend to pay dividends on our common stock unless future profits warrant such action.
Equity Plan Information
See "Equity Plan Information" under Part III, Item 12 of this Annual Report on Form 10-K for information about our equity plans approved, and not approved, by stockholders.
Sales of Unregistered Securities and Purchases by the Issuer and Affiliated Purchasers
All sales of unregistered securities by us during the year ended December 31, 2025 have been previously disclosed. There were no purchases of our common stock by the Company or any affiliated purchaser during the quarter ended December 31, 2025.
Use of Proceeds
Not applicable.
Item 6. [Reserved]
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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis provides information that our management believes is relevant to an assessment and understanding of our consolidated results of operations and financial condition. The discussion and analysis should be read together with the consolidated financial statements as of and for the years ended December 31, 2025 and December 31, 2024, included in this Annual Report on Form 10-K. This discussion may contain forward-looking statements based upon current expectations that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth in the sections titled “Cautionary Statement Regarding Forward-Looking Statements" and “Risk Factors” in other parts of this Annual Report on Form 10-K. For purposes of this section, all references in this discussion and analysis to “Allurion,” the “Company”, “we,” “us,” or “our” refers to the business and operations of Allurion and its consolidated subsidiaries following the consummation of the Business Combination and to Legacy Allurion and its consolidated subsidiaries prior to the consummation of the Business Combination. “Legacy Allurion” refers to Allurion Technologies, LLC, which was previously known as Allurion Technologies Opco, Inc. (formerly Allurion Technologies, Inc.) prior to the consummation of the Business Combination. Capitalized terms not defined in this Management’s Discussion and Analysis of Financial Condition and Results of Operations section have the meanings ascribed to them in the consolidated financial statements and the notes thereto included in this Annual Report on Form 10-K.
Overview
Allurion is a leading medical device company that is focused on creating a best-in-class weight loss platform to treat obese and overweight patients. Our platform, the Allurion Program (the "Allurion Program"), features the world’s first and only swallowable, ProcedurelessTM intragastric balloon for weight loss (the "Allurion Smart Capsule") and offers artificial intelligence ("AI")-powered remote patient monitoring tools, a proprietary behavior change program, secure messaging and video telehealth that are delivered by the Allurion Virtual Care Suite ("VCS").
The Allurion Program was designed to achieve metabolically healthy weight loss, which entails losing weight, maintaining that weight loss, and maintaining or increasing muscle mass in the process. Unlike other options that lead to short-term weight loss and muscle wasting, the Allurion Program is intended to deliver longer lasting results while reducing fat and not muscle. We believe the Allurion Program is also synergistic in combination with other weight loss therapies, including glucagon-like peptide 1 ("GLP-1") receptor agonists.
Our proprietary intragastric balloon, the Allurion Smart Capsule, is swallowed as a capsule under the guidance of a health care provider without surgery, endoscopy, or anesthesia for placement.
The Allurion VCS is comprised of tools to support patients’ weight loss experience, which we believe benefit both patients and health care providers:
In addition to its use by Allurion Smart Capsule patients, we believe the VCS can potentially be a platform for optimal long-term follow up after other medical and surgical weight loss interventions in the future. We have incorporated a Treatment Tracking and Clinic-Led Onboarding feature into the VCS that enables seamless onboarding and management of patients undergoing one or multiple weight loss treatments, including gastric balloons such as the Allurion Balloon, surgery, or medication, and in April 2024, launched the VCS in the United States for patients utilizing other weight loss treatments, including anti-obesity medications and bariatric surgery.
Our Allurion Program products are currently sold in Europe, the Middle East, Africa, Latin America, Canada and the Asia-Pacific region.
Since our inception, we have incurred significant operating losses. Our ability to generate revenue and achieve cost improvements sufficient to achieve profitability will depend on the successful further development and commercialization of our
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products and receipt and maintenance of regulatory approvals. We generated revenue of $15.23 million and $32.1 million for the years ended December 31, 2025 and 2024, respectively, and incurred operating losses of $30.1 million and $50.2 million for those same periods, respectively. We expect to continue to incur operating losses for the foreseeable future as we focus on obtaining regulatory approvals for our products in new markets, refining our sales and marketing strategies, and continuing research and development efforts to further enhance our existing products. Further, following the closing of the Business Combination, we have incurred, and expect to continue to incur, additional costs associated with operating as a public company. As a result, we will need additional funding for expenses related to our operating activities, including selling, marketing, general and administrative, and research and development expenses.
Because of the numerous risks and uncertainties associated with obtaining and maintaining regulatory approval, market acceptance of our products, product development and enhancement, and commercialization, we are unable to accurately predict the timing or amount of increased expenses or when, or if, we will be able to achieve or maintain profitability. Until such time, if ever, as we can generate substantial revenue sufficient to achieve profitability, we expect to finance our operations through a combination of equity offerings and debt financings. We may be unable to raise additional funds or enter into such other agreements or arrangements when needed on favorable terms, or at all. If we are unable to raise capital or enter into such agreements as, and when, needed, we may have to significantly delay, scale back or discontinue the further development and commercialization efforts of one or more of our products, or may be forced to reduce or terminate our operations. See the subsections titled — “Liquidity and Capital Resources” below.
Recent Developments
November 2025 Securities Purchase Agreement
On November 11, 2025, we entered into a securities purchase agreement (the "November 2025 Securities Purchase Agreement") with certain accredited investors named therein, pursuant to which we agreed to issue and sell 2,994,012 shares of our Common Stock and accompanying common warrants to purchase up to 2,994,012 shares of Common Stock (the "November 2025 Private Placement Warrants"), for an aggregate purchase price of approximately $5.0 million at a purchase price of $1.67 per share and accompanying November 2025 Private Placement Warrant.
Exchange Agreement
On November 11, 2025, we entered into a securities purchase and exchange agreement (the "Exchange Agreement") with certain entities managed by RTW, pursuant to which RTW has agreed to exchange all of the (i) principal amount of convertible senior secured notes (the "Notes"), purchased pursuant to the terms of the Amended Note Purchase Agreement, including interest accrued on the Notes; (ii) Company obligations under the Revenue Interest Financing Agreement; and (iii) Company obligations under the New RIFA (together with the Revenue Interest Financing Agreement, the "RIFAs") for shares of a newly issued class of Series B convertible preferred stock, par value $0.0001 per share ("Series B Preferred Stock") of the Company (the "Exchange"). RTW's obligation to consummate the closing of the Exchange is conditioned upon, among other things, the receipt of stockholder approval of the issuance of Series B Preferred Stock no later than January 31, 2026. The terms of the Series B Preferred Stock are described in our Current Report on Form 8-K, filed with the SEC on November 12, 2025.
FDA Approval
On February 20, 2026, the U.S. Food and Drug Administration (“FDA”) granted PMA approval for the Allurion Gastric Balloon System (AGBS), featuring the Allurion Smart Capsule. In the United States, the AGBS is indicated to promote short-term limited weight loss in adult individuals with obesity between the ages of 22 years and 65 years with a body mass index (BMI) ≥ 30 kg/m2 and ≤ 40 kg/m2 who have had at least one unsuccessful attempt at a weight loss program. The residence time for each balloon is variable with an average observed residence time of 15.3 weeks. The AGBS is to be used in conjunction with a moderate intensity lifestyle modification therapy program. The AGBS consists of up to two Allurion Balloons placed during a 10-month period.
Warrant Inducement
On February 24, 2026, Allurion Technologies, Inc. (the “Company”) entered into a warrant exercise inducement offer letter (the “Inducement Letter”) with certain holders (the “Exercising Holders”) of certain of the Company’s: (i) warrants issued in January 2025 to purchase shares of common stock, par value $0.0001 per share (“Common Stock”), with an exercise price of $6.00 per share (the “January 2025 Warrants”); (ii) warrants issued in February 2025 to purchase shares of Common Stock with an exercise price of $5.23 per share (the “February 2025 Warrants”); and (iii) warrants issued in November 2025 to purchase shares of Common Stock with an exercise price of $1.67 per share (the “November 2025 Warrants” and together with the January 2025 Warrants, February 2025 Warrants, the “Existing Warrants”).
Pursuant to the terms of the Inducement Letter, the Company agreed to amend the Existing Warrants by lowering the exercise price of the Existing Warrants to $1.15 per share. Additionally, the Exercising Holders agreed to exercise for cash certain
80
of their Existing Warrants to purchase an aggregate of 2,659,565 shares of Common Stock in exchange for the Company’s agreement to issue to such Exercising Holder new warrants (the “New Warrants”) to purchase up to an aggregate of 5,319,130 shares of Common Stock. The Company received aggregate gross proceeds of approximately $3.1 million from the exercise of the Existing Warrants by the Exercising Holders.
Each New Warrant is exercisable into shares of Common Stock at a price per share of $1.15, will initially be exercisable following stockholder approval (the “Initial Exercise Date”), and will expire on the five-year anniversary of the Initial Exercise Date. Subject to limited exceptions, a holder of New Warrants will not have the right to exercise any portion of its New Warrants if the holder (together with such holder’s affiliates, and any persons acting as a group together with such holder or any of such holder’s affiliates) would beneficially own a number of shares of Common Stock in excess of 4.99% (or 9.99% at the Existing Holders’ option).
The Company has engaged Roth Capital Partners, LLC (“Roth”) as its financial advisor in connection with these transactions and will pay Roth a fee equal to 5.0% of its gross proceeds from the exercise of the Existing Warrants. The Company also agreed to pay Roth up to $40,000 for fees and expenses of legal counsel and other out-of-pocket expenses.
NYSE Continued Listing Standards
On March 2, 2026, the Company announced that it received a letter (the “Delisting Notice”) from the staff of the NYSE indicating that the Company does not meet certain of the NYSE's continued listing standards as set forth in the Minimum Market Capitalization Standard. The Company has a right to a review of this determination by a Committee of the Board of Directors of the Exchange (the “Committee”). The Company has appealed this delisting determination.
On March 6, 2026, the NYSE notified the Company that it has determined to commence proceedings to delist the Company’s Common Stock, and warrants to purchase 0.056818 shares of Common Stock, with an exercise price of $202.50 per share of Common Stock, as a result of the Company’s non-compliance with Rule 802.01B of the NYSE Listed Company Manual that requires listing companies to maintain an average global market capitalization of at least $15 million over a period of 30 consecutive trading days. Trading in the Common Stock on the NYSE was suspended after market close on March 6, 2026. The Company has appealed this delisting determination. If the Company is unsuccessful in its appeal, the Company expects the NYSE will file a Form 25 with the SEC, which would result in the delisting of the Company’s Common Stock and Warrants from the NYSE on the tenth day after the Form 25 is filed.
As a result of the suspension in trading and delisting process pending the Company’s appeal, the Common Stock is trading on the OTCID Market. The Company intends to apply to list on a higher-tier market operated by the OTC Market Group, Inc. under its current symbols "ALUR" and “ALUR WS”.
Key Factors Affecting Our Operating Results
We believe that our performance and future success depend on many factors that present significant opportunities but also pose risks and challenges, including those discussed below and in the “Risk Factors” section of this Annual Report on Form 10-K.
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Operating Segments
We operate our business in a single operating segment and as one reporting unit, which is how our chief operating decision maker ("CODM"), our chief executive officer, reviews financial performance and allocates resources. The CODM reviews financial information presented on a regular basis at the consolidated level for purposes of allocating resources and evaluating financial performance. Since we operate as one operating segment, all required financial segment information can be found in the consolidated financial statements.
Components of Our Results of Operations
Revenue
We derive revenue from the sale of the Allurion Smart Capsule to customers, which are either distributors or health care providers. The Allurion Smart Capsule is the foundation of the Allurion Program, a holistic weight loss program that offers patients the opportunity to receive, and clinic and other health care providers the ability to deliver, behavior change assistance through their use of our remote patient support and monitoring tools.
Cost of Revenue
Cost of revenue consists primarily of costs that are closely correlated or directly related to the delivery of our products, including material costs, labor costs, and depreciation expense for fixed assets.
Operating Expenses
Sales and Marketing Expenses
Sales and marketing expenses consist primarily of salaries and related expenses (including commissions) for our sales and marketing personnel. Marketing programs consist of advertising, training events, brand building, product marketing activities and shipping costs.
Research and Development Expenses
Our research and development expenses consist of costs associated with performing research and development activities such as registering our products in various jurisdictions and performing clinical trials. These costs include salaries and benefits, stock-based compensation, non-capitalizable software development costs, product development costs, materials and supplies, clinical trial activities, registration expenses, depreciation of equipment and other outside services.
General and Administrative Expenses
General and administrative expenses consist primarily of salaries and personnel-related costs, including stock-based compensation, for our personnel in executive, information technology, finance and accounting, human resources and other administrative functions. General and administrative expenses also include legal fees relating to corporate matters; professional fees paid for accounting, auditing, consulting and tax services; insurance costs; travel expenses; office and information technology costs; and facilities, depreciation and other expenses related to general and administrative activities, which include direct or allocated expenses for rent and maintenance of facilities and utilities.
Other Income (Expense)
Interest Expense
Interest expense consists of interest expense associated with outstanding borrowings under our debt obligations, as well as the amortization of debt issuance costs and discounts associated with such borrowings.
Change in Fair Value of Warrants
The change in fair value of warrants consists of the expense recognized upon the mark to market of our warrant liabilities.
Change in Fair Value of Debt
The change in fair value of debt consists of the expense recognized upon the mark to market of our convertible debt.
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Change in Fair Value of Revenue Interest Financing and PIPE Conversion Option
The change in fair value of Revenue Interest Financing and PIPE Conversion Option consists of the expense recognized upon the mark to market of the Revenue Interest Financing with RTW and the issuance and mark to market of the PIPE Conversion Option. See Note 9, Fair Value Measurements for further information.
Change in Fair Value of Earn-out Liabilities
The change in fair value of earn-out liabilities consists of the gain or loss recognized upon the mark to market of the contingent earn-out consideration. See Note 9, Fair Value Measurements for further information.
Loss on Extinguishment of Debt
The loss on extinguishment of debt consists of the loss recognized upon the termination of our term loan facility with Fortress Credit Corp. (the "Fortress Term Loan") and RTW Convertible Notes.
Other Income (expense), Net
Other income (expense), net consists of interest earned on our invested cash balances, which primarily consist of deposit accounts and money market funds, foreign currency transaction gains and losses and expense recognized upon the mark to market of the Share Obligation liability (as defined in Note 7, Debt, in the accompanying notes to the consolidated financial statements). See Note 9, Fair Value Measurements, for further information.
Results of Operations
Comparison of the Years Ended December 31, 2025 and 2024
The following table summarizes our results of operations for the years ended December 31, 2025 and 2024 (in thousands):
|
|
Years Ended December 31, |
|
|||||||||
|
|
2025 |
|
|
2024 |
|
|
Change |
|
|||
Revenue |
|
$ |
15,230 |
|
|
$ |
32,110 |
|
|
$ |
(16,880 |
) |
Cost of revenue |
|
|
5,659 |
|
|
|
10,607 |
|
|
|
(4,948 |
) |
Gross profit |
|
|
9,571 |
|
|
|
21,503 |
|
|
|
(11,932 |
) |
Operating expenses: |
|
|
|
|
|
|
|
|
|
|||
Sales and marketing |
|
|
10,804 |
|
|
|
25,933 |
|
|
|
(15,129 |
) |
Research and development |
|
|
7,571 |
|
|
|
17,369 |
|
|
|
(9,798 |
) |
General and administrative |
|
|
21,353 |
|
|
|
28,399 |
|
|
|
(7,046 |
) |
Total operating expenses: |
|
|
39,728 |
|
|
|
71,701 |
|
|
|
(31,973 |
) |
Loss from operations |
|
|
(30,157 |
) |
|
|
(50,198 |
) |
|
|
20,041 |
|
Other income (expense): |
|
|
|
|
|
|
|
|
|
|||
Interest expense |
|
|
— |
|
|
|
(2,264 |
) |
|
|
2,264 |
|
Changes in fair value of warrants |
|
|
12,800 |
|
|
|
17,024 |
|
|
|
(4,224 |
) |
Changes in fair value of debt |
|
|
(3,615 |
) |
|
|
18,090 |
|
|
|
(21,705 |
) |
Changes in fair value of Revenue Interest Financing and PIPE |
|
|
(9,090 |
) |
|
|
(4,771 |
) |
|
|
(4,319 |
) |
Changes in fair value of earn-out liabilities |
|
|
1,059 |
|
|
|
22,900 |
|
|
|
(21,841 |
) |
Loss on extinguishment of debt |
|
|
(660 |
) |
|
|
(8,713 |
) |
|
|
8,053 |
|
Other income (expense), net |
|
|
982 |
|
|
|
1,452 |
|
|
|
(470 |
) |
Total other income (expense): |
|
|
1,476 |
|
|
|
43,718 |
|
|
|
(42,242 |
) |
Loss before income taxes: |
|
|
(28,681 |
) |
|
|
(6,480 |
) |
|
|
(22,201 |
) |
Provision for income taxes: |
|
|
(74 |
) |
|
|
(718 |
) |
|
|
644 |
|
Net loss |
|
$ |
(28,755 |
) |
|
$ |
(7,198 |
) |
|
$ |
(21,557 |
) |
Revenue
Revenue decreased $16.9 million, or 53%, to $15.2 million for the year ended December 31, 2025, compared to the same period in 2024. The decrease in revenue was primarily the result of lower investment in sales and marketing as we move our strategy to "business to business to customer" and away from direct to customer, distributor transitions initiated in the second quarter of 2025, as well as the temporary suspension of sales in France. The decrease was also driven by selling less or no product to certain distributors and accounts to manage our credit risk.
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Cost of Revenue
Cost of revenue decreased $4.9 million, or 47%, to $5.7 million for the year ended December 31, 2025, compared to the same period in 2024. The decrease in cost of revenue was a direct result of decreased gastric balloons sold, partially offset by an increase in manufacturing expense, as less labor and overhead was absorbed due to lower production volumes.
Gross Profit
Gross profit decreased $11.9 million, or 55%, to $9.6 million for the year ended December 31, 2025, compared to the same period in 2024. The decrease in gross profit was primarily the result of a decrease in revenue and sales volume of our gastric balloon system coupled with lower production volume.
Operating Expenses
Sales and Marketing Expenses
Sales and marketing expenses decreased $15.1 million, or 58%, to $10.8 million for the year ended December 31, 2025, compared to the same period in 2024. The decrease in sales and marketing expenses was primarily the result of a $9.9 million decrease attributable to salaries and related benefit costs due to a lower headcount, $3.8 million decrease in marketing spend driven by a reorganization of our selling and marketing spend focusing on more efficient channels and geographies, a $0.5 million decrease in outside consulting costs, a $0.4 million decrease in shipping and logistics expenses, a $0.3 million decrease in travel expenses, and a $0.2 million decrease in facilities expense. We expect sales and marketing costs to decrease in 2026 as we have implemented cost reduction initiatives, including a reduction in force in Q3 2025, and have shifted our focus of selling and marketing spend on more efficient channels and geographies.
Research and Development Expenses
Research and development expenses decreased $9.8 million, or 56%, to $7.6 million for the year ended December 31, 2025, compared to the same period in 2024. The decrease in research and development expenses was the result of a decrease of $4.7 million in costs related to the AUDACITY clinical trial as the fourth and final module of the PMA was submitted to the FDA in June 2025 and we received FDA approval in February 2026, a $2.7 million decrease attributable to salaries and related benefit costs due to lower headcount, a reduction of $1.7 million of procedure reimbursement costs, a $0.4 million decrease in outside consulting costs, and a $0.2 million decrease in travel expenses. We expect research and development expenses to decrease in 2026 as our AUDACITY trial is completed and we received FDA approval in February 2026, as well as cost reduction initiatives, including a reduction in force in Q3 2025.
General and Administrative Expenses
General and administrative expenses decreased $7.0 million, or 25%, to $21.4 million for the year ended December 31, 2025, compared to the same period in 2024. The decrease in general and administrative expenses was primarily the result of a $4.3 million decrease in legal and professional fees of which $2.3 million can be attributed to one time financing fees in 2024, a $3.4 million decrease in salaries and related benefits costs as a result of the reduction in headcount, a $0.4 million reduction in IT expenses, a $0.4 million reduction in insurance expense, and a $0.1 million decrease in stock based compensation expense. These decreases were partially offset by a $1.4 million increase in bad debt expense. We expect general and administrative expenses to decrease in 2026, as we have implemented cost reduction initiatives, including a reduction in force in Q3 2025.
Other expense (income)
Interest Expense
Interest expense decreased $2.3 million, or 100%, to zero for the year ended December 31, 2025, compared to the same period in 2024. The decrease in interest expense was due the termination of our Fortress Term Loan in April 2024.
Change in Fair Value of Warrants
The $12.8 million gain attributable to the change in fair value of warrants for the year ended December 31, 2025, compared to the $17.0 million gain for the same period in 2024, was due to mark to market fluctuations in our warrant liabilities due to the decline in value of our common stock during the periods.
Change in Fair Value of Debt
The $3.6 million loss attributable to the change in fair value of debt for the year ended December 31, 2025, compared to the $18.1 million gain for the same period in 2024, was due to mark to market fluctuations in our convertible debt.
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Change in Fair Value of Revenue Interest Financing and PIPE Conversion Option
The $9.1 million loss attributable to the change in fair value of the Revenue Interest Financing and PIPE Conversion Option for the year ended December 31, 2025, compared to the $4.8 million loss for the same period in 2024, was primarily due to mark to market fluctuations in our Revenue Interest Financing during the period driven by a decrease in the discount rate.
Change in Fair Value of Earn-Out Liabilities
The $1.1 million gain attributable to the change in the fair value of earn-out liabilities for the year ended December 31, 2025, compared to the $22.9 million gain for the same period in 2024, was due to the fluctuations in our stock price from December 31, 2024 to December 31, 2025.
Loss on Extinguishment of Debt
Loss on extinguishment of debt decreased $8.1 million, or 92%, to $0.7 million for the year ended December 31, 2025, compared to the same period in 2024. This decrease was due to the $0.7 million loss on extinguishment of the RTW Convertible Notes in connection with the Second Amendment to Note Purchase Agreement in the second quarter of 2025 and the $8.7 million loss on extinguishment of our Fortress Loan in April 2024.
Other Income (Expense), Net
The change in Other income (expense), net for the year ended December 31, 2025 compared to the same period in 2024 was a loss of $0.5 million, primarily driven by a $0.9 million foreign currency exchange loss and a $0.4 million loss related to the Company's obligation to issue certain shares under the Omnibus Amendment.
Provision for Income Taxes
We recorded a provision for income taxes of $0.1 million and $0.7 million for the years ended December 31, 2025 and 2024, respectively. These provisions for income taxes are due to net income in certain foreign jurisdictions.
Liquidity and Capital Resources
Since our inception, we have primarily obtained cash to fund our operations through the sale of common stock and preferred stock, issuance of term loans, and issuance of convertible debt instruments. As of December 31, 2025, we had $5.4 million in cash and cash equivalents. We incurred operating losses of $30.1 million and $50.2 million for the years ended December 31, 2025 and 2024, respectively. We incurred cash outflows from operating activities of $28.9 million and $42.3 million during the years ended December 31, 2025 and 2024, respectively. As of December 31, 2025, we had an accumulated deficit of $251.0 million. We expect to continue to generate operating losses for the foreseeable future.
Our future capital requirements will depend on many factors, including:
Our revenue for the year ended December 31, 2025 was $15.2 million, which represented a year-over-year decrease of 53%. The decrease in revenue was primarily the result of lower investment in sales and marketing as we move our strategy to "business to business to customer" and away from direct to customer, distributor transitions initiated in the second quarter of 2025, as well as the temporary suspension of sales in France. The decrease was also driven by selling less or no product to certain distributors and accounts to manage our credit risk. If our current cash and anticipated revenue and resulting cash flows from operations are insufficient to satisfy our liquidity requirements, due to increased expenditures, lower demand for or sales of our gastric balloon system, the occurrence of other events, or the realization of the risks described in this Annual Report on Form 10-K under the heading "Risk Factors," we may be required to raise additional capital through the issuances of public or private equity or debt financing or other capital sources earlier than expected.
Until such time as we can generate sufficient revenue to fund operations, we expect to use proceeds from the issuance of equity, debt financings, or other capital transactions to fund our operations and satisfy our liquidity requirements, but the amount and timing of such financings are uncertain. Additionally, the Company has entered into an Exchange Agreement with RTW, as disclosed in Note 11, Capital Stock and Stockholders Deficit, under which the Company's existing credit facilities will be exchanged for preferred stock upon the satisfaction of certain closing conditions. Based on the Company's recurring losses from operations incurred since inception, its expectation of continuing operating losses for the foreseeable future, the potential need to raise additional capital to finance its future operations, and noncompliance with certain financial covenants under its credit facilities, the Company has concluded that there is substantial doubt about its ability to continue as a going concern for a period of one year from the date that the consolidated financial statements included in this Annual Report on Form 10-K are issued.
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Financing Arrangements
Revenue Interest Financing Agreement
On August 1, 2023, we received $40.0 million in proceeds from the Revenue Interest Financing Agreement with RTW, which matures in December 2030. We entered into the Revenue Interest Financing Agreement on February 9, 2023 and received the proceeds at the closing of the Business Combination. On April 14, 2024, the Revenue Interest Financing Agreement was amended to, among other things, increase the rate of revenue interest payments to be paid to RTW. The Revenue Interest Financing Agreement, as subsequently amended by the Omnibus Amendment, is included in Revenue Interest Financing liability on our consolidated balance sheet as of December 31, 2025. See Note 8, Revenue Interest Financing, Side Letter, and PIPE Conversion Option in the notes to our annual consolidated financial statements for the years ended December 31, 2025 and 2024 for additional details regarding the Revenue Interest Financing Agreement.
On October 22, 2024, funds affiliated with RTW provided notice to the Company of their election under the Amended and Restated RTW Side Letter to surrender 30,000 shares of Common Stock of the Company representing $7.5 million in consideration for an additional Revenue Interest Financing Agreement. Accordingly, on October 30, 2024, the Company and the funds affiliated with RTW entered into the New RIFA.
Chardan Purchase Agreement
On December 18, 2023, we entered into the ChEF Purchase Agreement with Chardan. Pursuant to the ChEF Purchase Agreement, we have the right from time to time at our option to sell to Chardan up to the lesser of (i) $100,000,000 in aggregate gross purchase price of newly issued shares of our common stock, and (ii) the Exchange Cap, subject to certain conditions.
As of December 31, 2025, we have received $1.8 million in net proceeds from the sales of our Common Stock pursuant to the ChEF Purchase Agreement with Chardan and met the Exchange Cap.
Note Purchase Agreement
On April 16, 2024, we received $48.0 million in gross proceeds from the Amended Note Purchase Agreement with RTW, which proceeds were used to repay all outstanding principal, accrued and unpaid interest and other obligations with respect to the Fortress Term Loan.
On April 15, 2025, we entered into the Second Amendment to Note Purchase Agreement with the Purchasers and RTW. On April 16, 2025, pursuant to the Second Amendment to Note Purchase Agreement, the Purchasers provided notice of conversion of $5.0 million of principal amount of the RTW Convertible Notes based on the closing price of the Common Stock on the immediately preceding trading day and resulting market capitalization of less than $15.0 million. The parties agreed that the Market Capitalization Condition was triggered and such mandatory conversion of $5.0 million of principal amount of the RTW Convertible Notes shall occur at the floor price of $3.35 per share. We subsequently issued an aggregate of 1,492,539 shares of Common Stock (subject to rounding for fractional shares) in accordance with the terms of the Second Amendment to Note Purchase Agreement.
On November 4, 2025, pursuant to the terms of the Second Amendment to Note Purchase Agreement, the Purchasers provided notice of conversion of $5.0 million of principal amount of the RTW Convertible Notes at the Floor Conversion Rate, which notice was accepted by the Company on November 5, 2025. The Company subsequently issued an aggregate of 1,492,539 shares of Common Stock to the Purchasers in accordance with the terms of the Second Amendment to Note Purchase Agreement.
As of December 31, 2025, $38.0 million of the RTW Convertible Notes remains outstanding (excluding accrued PIK interest) and is included in current portion of convertible notes payable on our consolidated balance sheets at fair value. See Note 7, Debt, in the notes to our annual consolidated financial statements for the years ended December 31, 2025 and 2024 for additional details related to the Notes.
July 2024 Public Offering and Concurrent Private Placement
On July 1, 2024, we received $15.2 million in net proceeds from the issuance of 576,261 shares of Common Stock and 662,701 warrants to purchase Common Stock, and $2.5 million in net proceeds from the sale and issuance of 2,260,159 shares of Series A Preferred Stock (as converted to 90,407 shares of Common Stock following the Series A Stockholder Approval and Reverse Stock Split) and 90,407 private placement warrants to purchase Common Stock, in each case at an offering price of $30.00 per share and accompanying warrant. On July 5, 2024, the Underwriters partially exercised their option to purchase an additional 77,091 shares of Common Stock for additional net proceeds of $2.2 million.
January 2025 RTW Private Placement
On January 16, 2025, we received net proceeds of $2.5 million from the issuance of 841,751 shares of Common Stock to funds affiliated with RTW at a purchase price of $2.97 per share.
January 2025 Public Offering and Concurrent Private Placement
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On January 27, 2025, we received net proceeds of $5.8 million, from the issuance of 1,240,000 shares of Common Stock and 1,240,000 January 2025 Warrants at an offering price of $6.00 per share and accompanying warrant.
Leavitt Private Placement
On February 20, 2025, we received net proceeds of $1.3 million, from the issuance of 267,686 shares of Common Stock and 535,372 Leavitt Private Placement Warrants at an offering price of $5.23 per share and accompanying warrant.
February 2025 Public Offering and Concurrent Private Placement
On February 20, 2025, the Company received net proceeds of $3.9 million, from the issuance of 900,000 shares of Common Stock and 1,800,000 February 2025 Warrants at an offering price of $5.23 per share and accompanying warrant.
November 2025 Private Placement
On November 11, 2025, the Company entered into the November 2025 Securities Purchase Agreement with certain accredited investors named therein, pursuant to which the Company agreed to issue and sell 2,994,012 November 2025 Private Placement Shares and accompanying November 2025 Private Placement Warrants to purchase up to 2,994,012 shares of Common Stock for an aggregate purchase price of approximately $5.0 million at a purchase price of $1.67 per share and accompanying Private Placement Warrant.
Exchange Agreement with RTW
On November 11, 2025, the Company entered into the Exchange Agreement with certain entities managed by RTW, pursuant to which RTW has agreed to exchange all of the (i) principal amount of the Notes, purchased pursuant to the terms of the Note Purchase Agreement, including interest accrued on the Notes; (ii) Company obligations under the Revenue Interest Financing Agreement; and (iii) Company obligations under the New RIFA for shares of Series B Preferred Stock.
Material Cash Requirements for Known Contractual and Other Obligations
Leases
We have entered into various non-cancelable operating leases for our corporate office, manufacturing facilities, research and development labs, management office space and certain equipment. The leases have varying terms expiring between 2025 and 2028. See Note 15, Commitments and Contingencies in the notes to our annual consolidated financial statements for the years ended December 31, 2025 and 2024 for additional details related to our non-cancelable operating leases.
RTW Convertible Notes
On April 16, 2024, we received $48 million in gross proceeds from the Amended Note Purchase Agreement with RTW, which proceeds were used to repay all outstanding principal, accrued and unpaid interest and other obligations with respect to the Fortress Term Loan.
On April 15, 2025, we entered into the Second Amendment to Note Purchase Agreement. On April 16, 2025, pursuant to the Second Amendment to Note Purchase Agreement, the Purchasers provided notice of conversion of $5.0 million of principal amount of the RTW Convertible Notes based on the closing price of the Common Stock on the immediately preceding trading day and resulting market capitalization of less than $15.0 million. The parties agreed that the Market Capitalization Condition was triggered and such mandatory conversion of $5.0 million of principal amount of the RTW Convertible Notes shall occur at the floor price of $3.35 per share. We subsequently issued an aggregate of 1,492,539 shares of Common Stock (subject to rounding for fractional shares) in accordance with the terms of the Second Amendment to Note Purchase Agreement. On November 4, 2025, the Purchasers provided notice of a conversion of $5.0 million of principal amount of RTW Convertible Notes and we accepted the notice on November 5, 2025. We subsequently issued an aggregate of 1,492,539 shares of Common Stock (subject to rounding for fractional shares) at the floor price of $3.35 per share in accordance with the terms of the Second Amendment to Note Purchase Agreement.
Revenue Interest Financing
We received $40.0 million in proceeds from the Revenue Interest Financing Agreement with RTW on August 1, 2023. In exchange, we are obligated to remit to RTW certain revenue interest payments on all current and future products, digital solutions and services developed, imported, manufactured, marketed, offered for sale, promoted, sold, tested or otherwise distributed by Allurion and its subsidiaries at certain specified rates. On April 14, 2024, the Revenue Interest Financing Agreement was amended to, among other things, increase the rate of revenue interest payments to be paid to RTW for net sales less than or equal to $100 million prior to December 31, 2026 was increased from 6% to 12%, and increase the royalty rate on net sales less than or equal to $100 million on or after January 1, 2027 was increased from 10% to 12%.
If RTW has not received aggregate revenue interest payments equal to at least 100% of the Investment Amount by December 31, 2027, we must make a cash payment in an amount sufficient to catch RTW up to 100% of the Investment Amount.
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If RTW has not received revenue interest payments equal to at least 240% of the Investment Amount by December 31, 2030, we must make a cash payment in an amount sufficient to catch RTW up to 240% of the Investment Amount.
Further, on October 22, 2024, funds affiliated with RTW provided notice to the Company of their election under the Amended and Restated RTW Side Letter (as amended) to surrender 30,000 shares of Common Stock of the Company representing $7.5 million in consideration for an additional Revenue Interest Financing Agreement. Accordingly, on October 30, 2024, the Company and the funds affiliated with RTW entered into the New RIFA. The New RIFA has substantially identical terms and conditions as the RIFA Amendment, except that the amount of financing provided under the Additional Revenue Interest Financing Agreement is equal to the conversion amount of $7.5 million.
Research and Development Costs
We have completed our U.S. FDA AUDACITY clinical trial after submitting the fourth and final module of the PMA in June 2025 and receiving FDA approval in February 2026 and expect our expenses to decrease significantly as we continue to make payments related to the obligations with each clinical trial site. Our clinical trial costs are dependent on, among other things, the size, number, and length of our clinical trial.
Other Capital Requirements
We enter into agreements in the normal course of business with various vendors, which are generally cancelable upon notice. Payments due upon cancellation typically consist only of payments for services provided or expenses incurred, including non-cancelable obligations of service providers, up to the date of cancellation.
Cash Flows
The following table sets forth a summary of cash flows for the periods presented:
|
|
Years Ended December 31, |
|
|||||
(In thousands) |
|
2025 |
|
|
2024 |
|
||
Net cash used in operating activities |
|
$ |
(28,946 |
) |
|
$ |
(42,300 |
) |
Net cash used in investing activities |
|
|
— |
|
|
|
(611 |
) |
Net cash provided by financing activities |
|
|
18,970 |
|
|
|
20,208 |
|
Net increase (decrease) in cash and cash equivalents, and |
|
$ |
(9,976 |
) |
|
$ |
(22,703 |
) |
Net Cash Used in Operating Activities
Years Ended December 31, 2025 and 2024
During the year ended December 31, 2025, operating activities used $28.9 million of cash, resulting from a net loss of $28.8 million and net cash used from changes in our operating assets and liabilities of $7.8 million, partially offset by non-cash charges of $7.6 million.
Non-cash charges consisted of a $9.1 million loss on the change in fair value of our Revenue Interest Financing and PIPE Conversion Option, a $3.6 million of loss related to the change in fair value of our convertible debt, $3.1 million of stock-based compensation expense, a $2.8 million provision for uncollectible accounts, a $1.2 million provision for inventory, $1.5 million of issuance costs associated with warrants recorded at fair value, $1.0 million of depreciation and amortization expense, $0.7 million of non-cash lease expense, $0.7 million loss on the extinguishment of our Fortress Term Loan, and $0.4 million change in fair value of RTW Share Obligation. These non-cash charges were partially offset by $12.8 million of mark to market adjustments related to our warrant liabilities, $2.4 million of interest paid on debt recorded at fair value, $1.1 million of income related to the change in fair value of our earn-out liabilities, and $0.2 million unrealized exchange loss.
Net cash used from changes in our operating assets and liabilities consisted of a net $7.8 million decrease in accounts payable, accrued expenses and other current liabilities, a $0.8 million decrease in our lease liabilities, and a $0.5 million increase in inventory, partially offset by a $0.8 million decrease in accounts receivable and a $0.5 million decrease in prepaid expenses, other current and long-term assets.
The net decrease in accounts payable, accrued expenses and other current liabilities was primarily related to decreased expenses and timing of payments. The increase in inventory was primarily related to an increase in finished goods and work in progress. The decrease in accounts receivable was the result of an increase in cash collections and decrease in revenue. The decrease in prepaid expenses, other current and long-term assets was primarily related to a decrease in payroll deposits.
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During the year ended December 31, 2024, operating activities used $42.3 million of cash, resulting from a net loss of $7.2 million and non-cash income of $36.7 million, partially offset by net cash provided by changes in our operating assets and liabilities of $1.6 million.
Non-cash income consisted of $22.9 million of income related to the change in fair value of our earn-out liabilities, $18.1 million of income related to the change in fair value of our convertible debt, $17.0 million of mark to market adjustments related to our warrant liabilities, $3.1 million of interest paid on debt recorded at fair value, and $1.9 million of income related to the change in fair value of our term loan derivative liability. This non-cash income was partially offset by an $8.7 million loss on the extinguishment of our Fortress Term Loan, a $4.8 million loss on the change in fair value of our Revenue Interest Financing and PIPE Conversion Option, $3.1 million of stock-based compensation expense, a $2.2 million provision for inventory, $1.5 million of non-cash interest expense, $1.4 million of debt issuance costs associated with debt at fair value, a $1.4 million provision for uncollectible accounts, $1.0 million of depreciation and amortization expense, $0.9 million of issuance costs associated with warrants recorded at fair value, and $0.8 million of non-cash lease expense.
Net cash provided by changes in our operating assets and liabilities consisted of a $9.0 million decrease in accounts receivable, a $0.9 million decrease in prepaid expenses, other current and long-term assets, and a $0.5 million decrease in inventory, partially offset by a net $8.0 million decrease in accounts payable, accrued expenses and other current liabilities and a $0.8 million decrease in our lease liabilities.
The decrease in accounts receivable was the result of an increase in cash collections and decrease in revenue. The decrease in inventory was primarily related to a decrease in finished goods and work in progress. The decrease in prepaid expenses, other current and long-term assets was primarily related to a decrease in prepaid inventory and payroll deposits. The net decrease in accounts payable, accrued expenses and other current liabilities was primarily related to decreased expenses and timing of payments.
Net Cash Used in Investing Activities
Years Ended December 31, 2025 and 2024
During the years ended December 31, 2025 and December 31, 2024, cash used in investing activities was zero and $0.6 million, respectively, consisting of purchases of property and equipment.
Net Cash Provided by Financing Activities
Years Ended December 31, 2025 and 2024
During the year ended December 31, 2025, cash provided by financing activities was $19.0 million, consisting of $13.6 million in net proceeds from the Public Offering, $4.6 million in net proceeds from the Private Placement, and $0.8 million of proceeds from our equity line financing.
During the year ended December 31, 2024, cash provided by financing activities was $20.2 million, consisting of $48.0 million in proceeds from the issuance of convertible notes, $17.7 million in net proceeds from the July 2024 Public Offering, $2.6 million in net proceeds from the July 2024 Private Placement, and $1.0 million of proceeds from our equity line financing, partially offset by $47.7 million repayment of the Fortress Term Loan and a $1.4 million payment of debt issuance costs.
Critical Accounting Policies and Estimates
Our consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States. The preparation of our consolidated financial statements and related disclosures requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, costs and expenses, and the disclosure of contingent assets and liabilities in our consolidated financial statements. We base our estimates on historical experience, known trends and events and various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. We evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates under different assumptions or conditions.
While our significant accounting policies are described in more detail in Note 2, Summary of Significant Accounting Policies to our audited consolidated financial statements included in this Annual Report on Form 10-K, we believe that the following accounting policies are those most critical to the judgments and estimates used in the preparation of our consolidated financial statements.
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Revenue Recognition
We account for revenue in accordance with Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (“Topic 606” or “ASC 606”). In accordance with ASC 606, we recognize revenue when control of our products is transferred to our customers in an amount that reflects the consideration we expect to receive in exchange for those products. Our revenue recognition process involves identifying the contract with a customer, determining the performance obligations in the contract, determining the transaction price, allocating the transaction price to the distinct performance obligations in the contract, and recognizing revenue as performance obligations are satisfied.
Revenue is generated primarily from the sale of our gastric balloon system, which includes the Allurion Smart Capsule and related accessories. We have provided customers purchasing the Allurion Smart Capsule with an implied license for access to our Allurion VCS software. This implied software license was given to customers for no additional consideration and was not negotiated as part of the customer’s contracts. As such, it has been deemed an immaterial promise in the context of the contract, and we do not consider the license as a separate performance obligation. In the future, if and when Allurion VCS services are determined to be a performance obligation, we expect the associated consideration will be deferred and recognized over the license period.
We sell our products directly to customers through our direct sales personnel and indirectly through independent distributors. For distributor sales, we sell our products to our distributors, who subsequently resell the products to health care providers, among others. For direct sales, our products are sold directly to our customers, which are typically health care providers. Generally, customer contracts contain Free on Board or Ex-Works shipping point incoterms. We recognize revenue when the customer obtains control of our product, which typically occurs upon shipment, in return for agreed-upon, fixed-price consideration.
Additionally, from time to time, we offer certain incentives to our customers, which are recorded as a reduction of revenue in the period the related product revenue is recognized. Any discounts we offer are outlined in our customer agreements. Payments to the customer for a distinct good or service that reasonably estimates the fair value of the distinct benefit received, such as marketing programs and shipping and logistics services, are recorded as a selling and marketing expense.
Our payment terms are consistent with prevailing practice in the respective markets in which we do business, which are not affected by contingent events that could impact the transaction price. Our contracts with customers do not provide general rights of return unless certain product quality standards are not met.
Valuation of Earn-Out Liabilities
In connection with the Business Combination, holders of Legacy Allurion common stock and Legacy Allurion preferred stock and holders of vested options, warrants and restricted stock units exercisable or convertible into Legacy Allurion capital stock received the contingent right to receive additional shares of our common stock (the “Earn-Out Shares”) upon the achievement of certain earn-out targets. As the contingent earn-out consideration contains a settlement provision that precludes it from being indexed to our stock, it is classified as a liability under ASC 480, as defined in Note 2, Summary of Significant Accounting Policies. The fair value of contingent earn-out consideration is estimated as of the acquisition date at the present value of the expected contingent payments using a Monte Carlo Simulation Method ("MCSM"). The MCSM utilizes a combination of observable (Level 2) and unobservable (Level 3) inputs which include the trading price and volatility of the underlying common stock, expected term, risk-free interest rates, and expected date of a qualifying event. The determination of the fair value of these financial instruments is complex and highly judgmental due to the significant estimation required. In particular, the fair value estimate was sensitive to certain assumptions, such as the volatility and trading price of the underlying shares. The Company's stock price has significantly declined since the Business Combination, driving a significant decrease in the liability of the earn-out liability.
Changes in the estimated fair value of the contingent earn-out consideration are recorded in Other income (expense) in the consolidated statements of operations and are reflected in the period in which they are identified. Changes in the estimated fair value of the contingent earn-out consideration may materially impact or cause volatility in our operating results.
Valuation of Revenue Interest Financing and PIPE Conversion Option
In connection with the Business Combination, we entered into the Revenue Interest Financing Agreement with RTW, under which we received $40.0 million upfront. In exchange, we are obligated to remit to RTW certain revenue interest payments on all current and future products, digital solutions and services developed, imported, manufactured, marketed, offered for sale, promoted, sold, tested, or otherwise distributed by Allurion and its subsidiaries until December 31, 2030. We account for the Revenue Interest Financing Agreement under the fair value option election of ASC 825. The Revenue Interest Financing Agreement accounted for under the FVO election is a debt host financial instrument containing embedded features wherein the entire financial instrument is initially measured at its issue-date estimated fair value and then subsequently remeasured at
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estimated fair value on a recurring basis at each reporting period date. The fair value of the Revenue Interest Financing is calculated using a discounted cash flow method under the income approach utilizing future revenue projections and a discount rate. Changes in the estimated fair value of the Revenue Interest Financing Agreement are recorded as a component of Other income (expense) in the consolidated statements of operations. A portion of the estimated change in fair value must be reported in other comprehensive loss to the extent that it is attributable to instrument-specific credit risk. As a result of electing the FVO, direct costs and fees related to the Revenue Interest Financing are expensed as incurred.
In connection with entering in the Revenue Interest Financing, we and RTW entered into the RTW Side Letter (as subsequently amended and restated) under which RTW was entitled to convert up to $7.5 million of its initial PIPE subscription into an additional revenue interest financing by forfeiting a number of shares of our common stock acquired by RTW in its PIPE Investment (the "PIPE Conversion Option"), which election was made in October 2024. We account for the PIPE Conversion Option as a freestanding financial instrument that qualifies for derivative liability accounting in accordance with ASC 815, Derivatives and Hedging ("ASC 815"). The fair value of the PIPE Conversion Option is measured using a MCSM using a combination of observable (Level 2) and unobservable (Level 3) inputs which include the number of shares convertible, the stock price of the underlying common stock, volatility, risk-free rates, and expected term. The PIPE Conversion Option is initially measured at its fair value within Other liabilities on the consolidated balance sheets with corresponding recognition of expense at inception as there is no right received by the Company that meets the definition of an asset and the transaction did not involve a distribution or a dividend. Subsequent changes in fair value of the derivative liability are recognized as a gain or loss as a component of Other income (expense) in the consolidated statements of operations.
Valuation of RTW Convertible Notes
We entered into the Amended Note Purchase Agreement with RTW on April 16, 2024, under which the Company issued and sold $48.0 million aggregate principal amount of convertible senior secured notes. We account for the Notes under the FVO election of ASC 825, as the Amended Note Purchase Agreement is a financial instrument containing embedded features where the entire financial instrument is measured at its issue-date estimated fair value and then subsequently remeasured at estimated fair value on a recurring basis at each reporting period date. The fair value of the Notes is measured using a discounted cash flow method under the income approach with a MCSM used to determine the simulated stock price at each payment date and event that may trigger conversion of the Notes. The fair value is measured using a combination of observable (Level 2) and unobservable (Level 3) inputs, which include probabilities of various conversion scenarios, volatility, estimated market yields, and expected term. The determination of the fair value of the Notes is complex and highly judgmental due to the significant estimation required.
Changes in the estimated fair value of the Notes are recorded in Other income (expense) in the consolidated statement of operations and are reflected in the period in which they are identified.
Recent Accounting Pronouncements
See Note 2, Summary of Significant Accounting Policies in the accompanying notes to our annual consolidated financial statements for the years ended December 31, 2025 and 2024 included in this Annual Report on Form 10-K for a description of recently issued accounting pronouncements that may potentially impact our financial position, results of operations or cash flows.
Emerging Growth Company and Smaller Reporting Company
We are an emerging growth company, as defined in the Jumpstart Our Business Startups Act (“JOBS Act”). Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards until such time as those standards apply to private companies. We have elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that (i) we are no longer an emerging growth company or (ii) we affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. As a result, these financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates. We may choose to early adopt any new or revised accounting standards whenever such early adoption is permitted for private companies.
Additionally, we are a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K, which allows us to take advantage of certain exemptions from disclosure requirements including exemption from compliance with the auditor attestation requirements of Section 404. We will remain a smaller reporting company until the last day of the fiscal year in which (i) the market value of the shares of our common stock held by non-affiliates exceeds $250 million as of the prior June 30, and (ii) our annual revenue exceeded $100 million during such completed fiscal year or the market value of the shares of our common stock held by non-affiliates exceeds $700 million as of the prior June 30. To the extent we take advantage of such reduced disclosure obligations, it may also make comparison of our financial statements with other public companies difficult or impossible.
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Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
Interest Rate Risk
We had cash and cash equivalents totaling $5.4 million as of December 31, 2025. Cash equivalents were invested primarily in money market funds. Our investment policy is focused on the preservation of capital and supporting our liquidity needs. Under our investment policy, we invest in highly rated securities, issued by the U.S. government or liquid money market funds. We do not invest in financial instruments for trading or speculative purposes, nor do we use leveraged financial instruments. We utilize external investment managers who adhere to the guidelines of our investment policy. A hypothetical 10% change in interest rates would not have a material impact on the value of our cash, cash equivalents, net loss or cash flows.
As of December 31, 2025 we had no variable rate debt outstanding.
Foreign Currency Exchange Risk
We are exposed to foreign currency risks that arise from normal business operations. These risks include transaction gains and losses associated with transactions denominated in currencies other than a location’s functional currency and the remeasurement of foreign currencies to our U.S. dollar reporting currency. As such, we have exposure to adverse changes in exchange rates associated with operating expenses of our foreign operations. Transaction gains or losses are included in other income (expense), net in the consolidated statements of operations, as incurred.
We believe that a 10% increase or decrease in current exchange rates between the U.S. dollar and our foreign currencies could have a material impact on our business, financial condition or results of operations. Our primary exposures related to foreign currency denominated sales and expenses are in Europe and we also have exposure in the Middle East and the Asia-Pacific region, and are monitoring potential developing exposure in the Latin American, Canadian and African markets.
To date, we have not engaged in any foreign currency hedging activities. As we continue to do business internationally, and should our international operations grow, we will continue to reassess our approach to managing the risks relating to fluctuations in foreign currency exchange rates. During the year ended December 31, 2025, the effect of an immediate 10% adverse change in foreign exchange rates on foreign-denominated accounts would have had an impact of approximately 4% on revenues and 3% on expenses and would have impacted our net loss by 2%. During year ended December 31, 2024, the effect of an immediate 10% adverse change in foreign exchange rates on foreign-denominated accounts would have had an impact of approximately 6% on revenues and 3% on expenses and would have impacted our net loss by 2%.
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Item 8. Financial Statements and Supplementary Data.
The financial statements required to be filed pursuant to this Item 8 are appended to this Annual Report on Form 10-K beginning on page F-1. An index of those financial statements is found in Item 15, Exhibits and Financial Statement Schedules, of this Annual Report on Form 10-K.
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.
Not applicable.
Item 9A. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.
Our Chief Executive Officer, who is our principal executive officer and principal financial officer, has reviewed and evaluated the effectiveness of the Company's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Exchange Act) as of the end of the period covered by this Annual Report on Form 10-K. Based on that review and evaluation, the Chief Executive Officer has concluded that the Company's disclosure controls and procedures were not effective as of December 31, 2025 as a result of the material weaknesses in our internal control over financial reporting discussed below.
As of and for the years ended December 31, 2025 and 2024, we identified material weaknesses in our internal control over financial reporting that we are currently working to remediate, which relate to: (a) insufficient segregation of duties in the financial statement close process; (b) a lack of sufficient levels of staff with public company and technical accounting experience to maintain proper control activities and perform risk assessment and monitoring activities; and (c) insufficient information systems controls, including access and change management controls. We have concluded that these material weaknesses in our internal control over financial reporting occurred because we did not have the necessary business processes, personnel and related internal controls to operate in a manner to satisfy the accounting and financial reporting timeline requirements prior to being a public company.
We are focused on designing and implementing effective internal controls measures to improve our evaluation of disclosure controls and procedures, including internal control over financial reporting, and remediating the material weaknesses. In order to remediate these material weaknesses, we have taken and plan to take the following actions:
While progress has been made to enhance our internal control over financial reporting, we are still in the process of building and enhancing our processes, procedures, and controls. Additional time is required to complete the remediation of these material weaknesses and the assessment to ensure the sustainability of these remediation actions. We believe the above actions, when complete, will be effective in the remediation of the material weaknesses described above.
Management's annual report on internal control over financial reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rule 13a-15(f) promulgated under the Exchange Act. Under the supervision and with the participation of our management, including our Chief Executive Officer, we conducted an assessment of the effectiveness of our internal control over financial reporting as of December 31, 2025. In making this assessment, management used the criteria set forth by the Committee
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of Sponsoring Organizations of the Treadway Commission in Internal Control—Integrated Framework (2013). Based on such an assessment, management concluded that the Company’s internal control over financial reporting was not effective as of December 31, 2025.
Our internal control over financial reporting is a process designed under the supervision of our Chief Executive Officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our financial statements for external reporting purposes in accordance with U.S. GAAP. Internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP, and that receipts and expenditures are being made only in accordance with authorizations of our management and directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.
Because of inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluations of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with policies or procedures may deteriorate.
A goal of the assessment was to determine whether any material weaknesses existed with respect to the Company’s internal control over financial reporting. A “material weakness” is defined as a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the registrant’s annual or interim financial statements will not be prevented or detected on a timely basis by the Company’s internal controls.
Based upon that assessment, management identified deficiencies that rose to the level of material weaknesses in our internal control over financial reporting as described above. The Company had previously identified these material weaknesses and has begun the remediation process, described herein.
As disclosed in the Company’s periodic and annual reports for prior periods through fiscal year end 2025, management had concluded that the Company did not maintain effective internal control over financial reporting due to material weaknesses that we are currently working to remediate, which relate to: (a) insufficient segregation of duties in the financial statement close process; (b) a lack of sufficient levels of staff with public company and technical accounting experience to maintain proper control activities and perform risk assessment and monitoring activities; and (c) insufficient information systems controls, including access and change management controls. We have concluded that these material weaknesses in our internal control over financial reporting occurred because we did not have the necessary business processes, personnel and related internal controls to operate in a manner to satisfy the accounting and financial reporting timeline requirements prior to being a public company.
Nonetheless, management believes that our consolidated financial statements included in this Annual Report on Form 10-K have been prepared in accordance with generally accepted accounting principles. Our Chief Executive Officer has certified that, based on such officer’s knowledge, the financial statements and other financial information included in this Annual Report on Form 10-K fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report. In addition, we initiated a remediation plan for the material weaknesses, described above.
Our management, with oversight from our Audit Committee, is actively engaged in remediating the identified material weaknesses. As part of these remediation efforts, management hired additional accounting staff with public company experience, implemented a new enterprise resource planning system to replace the prior enterprise resource planning system, and hired a national accounting firm to assist in the design and implementation of controls and remediation of controls gaps. Management will continue to assess the design of controls to determine if enhancements are needed to increase effectiveness of our internal control over financial reporting.
The Company has made progress in improving its internal control over financial reporting but remediation efforts are ongoing.
Our independent registered accounting firm has not issued an opinion on the effectiveness of our internal control over financial reporting pursuant to Section 404, as it is not required to do so until we are no longer an “emerging growth company” as defined in the JOBS Act.
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Changes in Internal Control Over Financial Reporting
During the most recently completed fiscal quarter, there has been no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Limitations on Effectiveness of Controls and Procedures
In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.
Item 9B. Other Information.
(a) None.
(b) During the three month period ended December 31, 2025,
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.
Not applicable.
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PART III
Item 10. Directors, Executive Officers and Corporate Governance.
The following table sets forth information regarding our directors and executive officers, including their ages, as of March 17, 2026.
Name |
|
Age |
|
Position |
Directors |
|
|
|
|
Dr. Shantanu Gaur |
|
39 |
|
Chief Executive Officer and Director |
Krishna Gupta |
|
38 |
|
Director |
Dr. Omar Ishrak |
|
70 |
|
Chairman and Lead-Independent Director |
Michael Davin |
|
67 |
|
Director |
Douglas Hudson |
|
57 |
|
Director |
Keith B. Johns II |
|
62 |
|
Director |
Nicholas Lewin |
|
48 |
|
Director |
R. Jason Richey |
|
52 |
|
Director |
Executive Officers |
|
|
|
|
Dr. Ram Chuttani (1) |
|
66 |
|
Chief Medical Officer |
Brendan Gibbons |
|
50 |
|
Chief Legal and People Officer and Secretary |
Ojas Buch |
|
53 |
|
Chief Operating Officer |
(1) Dr. Ram Chuttani served as the Company's Chief Medical Officer until April 10, 2025.
Directors
Dr. Shantanu Gaur has served as our Chief Executive Officer and as a member of our board of directors (the “Board of Directors” or “Board”) since September 2009. Dr. Gaur founded Allurion in 2009 while at Harvard Medical School. Dr. Gaur graduated summa cum laude with a B.S. in Biology from Harvard College and with an M.D. from Harvard Medical School, where he was a Paul Revere Frothingham Scholar and Paul & Daisy Soros Fellow. Dr. Gaur is qualified to serve on our Board of Directors because of his experience founding Allurion and serving as our Chief Executive Officer.
Krishna Gupta has served as a member of our Board of Directors since January 2017. He is the founder of REMUS Capital and Romulus Capital (collectively referred to herein as “REMUS Capital”), technology-focused venture capital firms he initially founded in 2008. Mr. Gupta serves as a director on the boards of several privately held companies, including: Ceres Imaging, Inc., which provides computer vision-analytics in agriculture; Cogito Corporation, which provides voice artificial intelligence (“AI”) for large enterprises; Cohealo, Inc., which provides equipment sharing services for health systems; Spotta Ltd., which develops smart insect and pest monitoring solutions; and ZeroCater, Inc., which provides catering technology for enterprises. He was the first investor in Ginger, which was a leader in mental health software and merged with Headspace, Inc. Mr. Gupta has also served as a member of the board of directors of Presto Automation, Inc. (Nasdaq: PRST) since 2017, where he served as chairman of the board from September 2022 to March 2024. Prior to REMUS Capital, Mr. Gupta held roles at McKinsey & Company, a management consulting firm, and JPMorgan Chase & Co., an investment banking firm, where he advised several Fortune 100 clients on technology M&A deals. Mr. Gupta holds B.S. degrees in materials science and engineering, as well as in management sciences, both from the Massachusetts Institute of Technology. Mr. Gupta is qualified to serve on our Board of Directors due to his experience investing in technology and healthcare businesses.
Dr. Omar Ishrak has served as a member of our Board of Directors since August 2023 and previously served as chairman of the board of directors of Compute Health Acquisition Corp. (formerly NYSE: CPUH) (“Compute Health”) from October 2020 to August 2023. Dr. Ishrak also serves on the board of directors of Amgen, Inc. (Nasdaq: AMGN) since July 2021, of Insightec, Ltd., a private company, where he has served since May 2022, and of Exo Imaging, a private company, where he has served since June 2025. Dr. Ishrak also previously served on the board of directors at Intel Corporation (Nasdaq: INTC), where he served as independent chairman of the board from January 2020 to December 2025 and Cargill, Inc., a private company, where he served from January 2021 to December 2025. Dr. Ishrak was the chief executive officer of Medtronic plc (Nasdaq: MDT) from June 2011 to April 2020 and served as executive chairman and chairman of the board of directors until he stepped down in December 2020. Prior to joining Medtronic, Dr. Ishrak was the president and chief executive officer of GE Healthcare Systems. Earlier in his career, Dr. Ishrak amassed 13 years of technology development and business management experience, holding leadership positions at Diasonics Vingmed Ultrasound Ltd., and various product development and engineering positions at Philips
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Ultrasound Inc. He was inducted into the American Institute for Medical and Biological Engineering College of Fellows in 2016 and was elected to the National Academy of Engineering in 2020. Dr. Ishrak serves on the board of directors of the Cleveland Clinic, a nonprofit academic medical center. Dr. Ishrak is also a strategic advisor to the Kingdom of Saudi Arabia's Ministry of Health and is a member of the Board of Trustees of the Asia Society, a leading educational organization dedicated to promoting mutual understanding and strengthening partnerships among peoples, leaders, and institutions of Asia and the United States in a global context. He earned a B.S. degree and Ph.D. in electrical engineering from the University of London, King’s College. He is also a fellow of King’s College. Dr. Ishrak is qualified to serve on our Board of Directors based on his extensive experience on boards of various healthcare and technology companies.
Michael Davin has served as a member of our Board of Directors since October 2017. Mr. Davin has also served as a director of several privately-held companies, including: Follica, Inc. since December 2020, Amsel Medical Corporation since August 2020, Cynosure, LLC since January 2020, and Inkbit Corporation since June 2018. Previously, Mr. Davin served as chairman, president, and chief executive officer of Cynosure Inc. (formerly Nasdaq: CYNO), from 2003 until March 2017, when it was acquired by Hologic Inc. Mr. Davin received his B.S. and B.A. from Southern New Hampshire University. Mr. Davin is qualified to serve on our Board of Directors due to his experience as a director of health care and technology companies, as well as his familiarity with Allurion as a director.
Douglas Hudson has served as a member of our Board of Directors since August 2023. Mr. Hudson has also served as the founder, chief executive officer and a director of Noho Dental, Inc. since July 2018, and as a director of Modern Age since October 2020. Previously, Mr. Hudson served on the board of directors of Relode.com, LLC from 2017 until August 2022. Mr. Hudson also served as the founder and chief executive officer of SmileDirectClub Inc. (formerly Nasdaq: SDC) from 2013 to 2017, and as chairman and chief executive officer of Simplex Healthcare from 2007 until 2013, when it was acquired by Arriva Medical LLC. Earlier in his career, Mr. Hudson served as founder, chief executive officer and director of HearingPlanet, Inc. from 1999 until 2007. Mr. Hudson received his B.S. in organizational behavior from Eckerd College and his M.B.A. from Vanderbilt University, and he completed the executive education programs at Harvard Business School. Mr. Hudson is qualified to serve on our Board of Directors due to his experience as an entrepreneur and an executive of health care companies.
Keith Johns has served as a member of our Board since September 2024. Mr. Johns has also served as Chief Operating Officer of Adipo Therapeutics, LLC since September 2023, and as President of KJ Consulting LLC since March 2023. Previously, Mr. Johns served in various roles of increasing responsibility at Eli Lilly & Company (NYSE: LLY) (“Eli Lilly”) during his over twenty-year tenure at Eli Lily, most recently as Senior Vice President of Global Marketing and Alliance Management for the Diabetes and Obesity Business Unit from October 2022 to December 2022. Mr. Johns holds a bachelor’s degree from Allegheny College, a master's degree from the University of South Carolina, and a M.B.A. from the University of North Carolina’s Kenan-Flagler Business School. Mr. Johns is qualified to serve on our Board due to his experience as an executive of a large healthcare company and his expertise in the obesity management space.
Nicholas Lewin has served as a member of our Board of Directors since August 2023. Mr. Lewin has also served as a director of Establishment Labs Holding, Inc. (Nasdaq: ESTA) since September 2015, and as its chairman since December 2017. He has been a managing member and head of investments at Crown Predator Holdings LLC since 2008 and has been a private investor since 2000. Mr. Lewin also served as a director of Game Square (Nasdaq: GAME) from October 2023 to December 2025 and Cutera Inc. (Nasdaq: CUTR) from May 2023 to April 2025. Mr. Lewin holds a bachelor’s degree in political science from Johns Hopkins University. Mr. Lewin is qualified to serve on our Board of Directors due to his experience as an investor in, and director of, innovative companies, including health care and medical device companies.
R. Jason Richey has served on our Board of Directors since December 2024. Prior to joining our Board of Directors, Mr. Richey served as president and chief executive officer of Cytrellis Biosystems, Inc. (“Cytrellis”) from June 2022 to October 2024. Prior to his time at Cytrellis, he served as president of Cutera, Inc. (Nasdaq: CUTR) (“Cutera”) from July 2018 to June 2021. Prior to serving as Cutera’s president, Mr. Richey served as Cutera’s chief operating officer since July 9, 2018. Mr. Richey also served as Cutera’s interim president and chief executive officer from January 4, 2019 until July 8, 2019. Immediately prior to joining Cutera, Mr. Richey served as the President of North America, for LivaNova, PLC, a $5 billion global medical device manufacturer headquartered in London, England with presence in more than 110 countries worldwide. Mr. Richey joined LivaNova via the merger of Cyberonics Inc. and Sorin SpA. During his 17 year tenure with LivaNova/Cyberonics, he served the company in multiple positions of increasing responsibility, including: Vice President of Global Sales, Marketing, Market Access, and Government Affairs, President & General Manager of the Neuromodulation Franchise, and Regional President, North America. At Cyberonics, among other roles, Mr. Richey served as the Vice President and General Manager of the Company’s international business. Mr. Richey began his medical device career at B Braun Medical in sales and sales management. Mr. Richey holds a B.A. in Biology from Indiana University. Mr. Richey is qualified to serve on our Board of Directors due to his experience as an executive in innovative healthcare companies.
Executive Officers
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Dr. Ram Chuttani has served as our Chief Medical Officer since November 2017 and is a founder of Allurion. Prior to joining us, Dr. Chuttani was the Director of Endoscopy and Chief, Interventional Gastroenterology at Beth Israel Deaconess Medical Center and was on the faculty of Harvard Medical School for 20 years. Dr. Chuttani holds a M.B. and a B.S. in medicine from Maulana Azad Medical College. Dr. Chuttani is internationally recognized as a leader in digestive disease care and has pioneered several innovative endoscopic treatments. He co-invented an endoscopic treatment for gastroesophageal reflux disease and co-developed a novel treatment for obesity. He has published over 100 original scientific articles, in addition to several reviews and book chapters. He has lectured on, and demonstrated, novel and advanced endoscopic procedure at innumerable international conferences and workshops all over the world. Dr. Chuttani completed a residency at Norwalk Hospital, Yale University School of Medicine in Internal Medicine in 1987, and a fellowship in gastroenterology at Harvard Medical School in 1990.
Brendan Gibbons has served as our Chief Legal Officer and Secretary since January 2024. Prior to joining Allurion, Mr. Gibbons served as a chief legal officer at several public companies. From December 2017 to December 2021, he served as executive vice president, chief legal officer, and corporate secretary for Acushnet Company (NYSE: GOLF), the world’s largest golf ball, club, footwear and gear company. From 2014 to 2017, Mr. Gibbons was senior vice president, general counsel and corporate secretary at Wolverine Worldwide, Inc. (NYSE: WWW), a leading international footwear and apparel company. From 2004 to 2013, Mr. Gibbons was senior vice president of legal and corporate affairs, general counsel and secretary at Carter’s, Inc. (NYSE: CRI), the world’s largest baby and young children’s apparel and accessory company. Mr. Gibbons began his career at Ropes & Gray LLP. He received his B.A., magna cum laude, from The University of Pennsylvania and his J.D., magna cum laude, from Boston College Law School.
Ojas Buch has served as our Chief Operating Officer since June 2024. Prior to this role, he was the President—Americas at PENTAX Medical from April 2021 to July 2023, a division of HOYA Corporation (NYSE: HOCPY). PENTAX Medical specializes in endoscopic imaging solutions for Gastroenterology and Otolaryngology. From March 2015 to March 2021, Mr. Buch held the position of Vice President of Connected Care division of Koninklijke Philips NV (NYSE: PHG) (“Philips”), a global leader in diversified medical equipment. Before joining Philips, he held various leadership roles at CareFusion Corporation, St. Jude Medical, Inc. and GE Healthcare Technologies, Inc. He earned his B.S. in Biomedical Engineering from the University of Bombay and a M.S. in Biomedical Engineering from the University of Akron.
Family Relationships; Arrangements; Legal Proceedings
There are no family relationships among our directors and executive officers. There is no arrangement or understanding between any of our directors or executive officers and any other person or persons pursuant to which he or she was or is to be selected as a director or an executive officer except as described herein. There are no material legal proceedings to which any of our directors or executive officers is a party adverse to us or any of our subsidiaries or in which any such person has a material interest adverse to us or any of our subsidiaries.
Delinquent Section 16(a) Reports
Section 16(a) of the Securities Exchange Act of 1934 requires the Company’s directors, certain officers, and beneficial owners of more than 10% of the Company’s common stock to file reports of ownership and changes in ownership of the Company’s equity securities with the Securities and Exchange Commission. Based solely on a review of the Forms 3, 4, and 5 furnished to the Company and written representations from reporting persons that no Form 5 was required, the Company believes that all filing requirements under Section 16(a) were complied with during the fiscal year ended December 31, 2025, except as described below.
On, November 8, 2025, 8,361 restricted stock units vested for each of Mr. Brendan Gibbons and Mr. Ojas Buch, which represented 50% of a restricted stock grant made to Mr. Gibbons and Mr. Buch on November 8, 2024, that vested in two equal, annual installments. Forms 4 were not filed by Mr. Gibbons or Mr. Buch within two business days following November 8, 2025. Rather, each filed a Form 5 reflecting these vestings on February 17, 2026, within the requirement to file such Forms 5 within 45 days of the following fiscal year. The untimely filings were due to administrative oversight, and after being identified, the transactions were reported on Forms 5 within the required timeframe for such filing.
The Company has enhanced its internal procedures to assist reporting persons in meeting their Section 16 filing obligations, including improved automated notifications.
Corporate Governance
General
We believe that good corporate governance is important to ensure that our company is managed for the long-term benefit of our stockholders. We periodically review our corporate governance policies and practices and compare them to those suggested by various authorities in corporate governance and the practices of other public companies. As a result, we have
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adopted policies and procedures that we believe are in the best interests of our company and our stockholders. Key information regarding our corporate governance initiatives can be found on our corporate website at https://investors.allurion.com under “Governance Documents,” including our Corporate Governance Guidelines, our Code of Business Conduct and Ethics (our “Code of Conduct”), and the charters for the committees of our Board of Directors, described below. Information contained on, or that can be accessed through, our website is not incorporated by reference into and does not form a part of this Annual Report on Form 10-K.
Corporate Governance Guidelines
Our corporate governance guidelines assist our Board of Directors in the exercise of its duties and responsibilities and to serve the best interests of our company and our stockholders. These guidelines, which provide a framework for the conduct of Board of Directors business, provide that:
Our Board of Directors is responsible for managing or supervising the management of our business and affairs. This includes appointing our Chief Executive Officer, advising management on strategic issues, approving our business and other plans, and monitoring our performance against those plans and against our operating and capital budgets. In addition, our Board of Directors also receives and considers recommendations from its various committees with respect to matters such as:
Board Composition
Our Board of Directors is comprised of eight directors, divided into three classes with staggered three-year terms. The three classes are as follows:
Directors in a particular class will be elected for three-year terms at the annual meeting of stockholders in the year in which their terms expire. As a result, only one class of directors will be elected at each annual meeting of our stockholders, with the other classes continuing for the remainder of their respective three-year terms. Each director’s term continues until the election and qualification of his or her successor, or the earlier of his or her death, resignation or removal.
Pursuant to that certain Investor Rights Agreement, the following persons have the following nomination rights with respect to our Board of Directors, subject to the limitations set forth in the Investor Rights Agreement:
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In addition, each of the First RIFA and Second RIFA (each as defined below) contain substantially similar rights which entitles RTW to designate one director to our Board which is Mr. Lewin. Pursuant to the Omnibus Agreement and Amended Note Purchase Agreement (As defined below), RTW is entitled to designate two directors to our Board, which are currently Mr. Lewin and Mr. Richey. In addition, we agreed to include an additional director nominee in our proxy statement for the 2024 annual meeting of stockholders, which additional nominee would go through our director nomination process, and RTW was granted the right to approve such nominee. In September 2024, we appointed Keith Johns to our Board and RTW approved his appointment in satisfaction of such obligation.
Our organizational documents provide that only our Board of Directors can fill vacant directorships, including newly created seats. Any additional directorships resulting from an increase in the authorized number of directors would be distributed pro rata among the three classes so that, as nearly as possible, each class would consist of one-third of the authorized number of directors.
Board Diversity
Our Corporate Governance Guidelines provide that diversity of background and experience should be considered in determining director candidates as well as other factors such as a candidate’s character, judgment, skills, education, expertise, and absence of conflicts of interest. Based on our commitment to diversity, our Corporate Governance Guidelines require that the Nominating and Corporate Governance Committee include in its initial list of director candidates for consideration in filling any vacancy on our Board of Directors at least one or more qualified candidates who reflect diverse backgrounds, including diversity of gender and race or ethnicity. However, we do not have a formal policy concerning the diversity of the Board of Directors.
Our priority in the selection of directors is identification of members who will further the interests of our stockholders through their established records of professional accomplishment, their ability to contribute positively to the collaborative culture among board members, their knowledge of our business and understanding of the competitive landscape in which we operate, and their adherence to high ethical standards. Although we do not have a formal diversity policy and do not follow any ratio or formula with respect to diversity in order to determine the appropriate composition of the Board of Directors, the Nominating and Corporate Governance Committee and the Board of Directors are committed to creating a board of directors that promotes our strategic objectives and fulfills its responsibilities to our stockholders, and they consider diversity of gender, race, national origin, education, professional experience, and differences in viewpoints and skills when evaluating proposed director candidates.
Board Committees
Our Board of Directors has established an Audit Committee, a Compensation Committee, and a Nominating and Corporate Governance Committee. The Board of Directors may establish other committees to facilitate the management of our business. The Board of Directors and its committees set schedules for meeting throughout the year and can also hold special meetings and act by written consent from time to time, as appropriate. The Board of Directors has delegated various responsibilities and authority to its committees as generally described below. The committees regularly report on their activities and actions to the full Board. Members will serve on these committees until their resignation or until otherwise determined by the Board of Directors.
Audit Committee
The members of our Audit Committee include R. Jason Richey (Chair), Omar Ishrak, and Michael Davin each of whom can read and understand fundamental financial statements. The Board of Directors has concluded each member of the Audit Committee is independent under the rules and regulations of the SEC and the listing standards of the NYSE applicable to Audit Committee members. Michael Davin qualifies as an audit committee financial expert within the meaning of SEC regulations and meet the financial literacy requirements of the NYSE.
Our Audit Committee assists the Board of Directors with its oversight of the following:
The Audit Committee also is responsible for reviewing and discussing with management the adequacy and effectiveness of our disclosure controls and procedures, and it discusses with management and our independent registered public accounting
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firm the annual audit plan, the scope and timing of audit activities and the results of the audit. The Audit Committee also reviews our financial statements quarterly. As appropriate, the Audit Committee may initiate inquiries into certain aspects of our financial affairs.
Further, the Audit Committee is responsible for establishing and overseeing procedures for the receipt, retention, and treatment of any complaints regarding accounting, internal accounting controls, or auditing matters, as well as for the confidential and anonymous submissions by our employees of concerns regarding questionable accounting or auditing matters. In addition, the Audit Committee has direct responsibility for the appointment, compensation, retention, and oversight of the work of our independent registered public accounting firm. This includes sole authority to approve the hiring and discharging of our independent registered public accounting firm, all audit engagement terms and fees, and all permissible non-audit engagements with the independent auditor. Finally, the Audit Committee reviews and oversees all related-person transactions in accordance with our policies and procedures.
Our Audit Committee operates under a written charter that satisfies the applicable rules and regulations of the SEC and the listing standards of the NYSE. A copy of the charter of our Audit Committee is available on our website at https://investors.allurion.com.
Compensation Committee
The members of our Compensation Committee include Michael Davin (Chair), Nicholas Lewin, and Larson Douglas Hudson. The Board of Directors has concluded each member of the Compensation Committee is considered independent under the rules and regulations of the SEC and the listing standards of the NYSE applicable to Compensation Committee members. The primary objective of the Compensation Committee is to develop and implement compensation policies and plans that ensure the attraction and retention of key management personnel, the motivation of management to achieve our goals and strategies, and the alignment of management's interests with the long-term interests of our stockholders.
Our Compensation Committee’s responsibilities include, among other things:
Our Compensation Committee operates under a written charter that satisfies the applicable rules and regulations of the SEC and the listing standards of the NYSE. A copy of the charter of our Compensation Committee is available on our website at https://investors.allurion.com.
Nominating and Corporate Governance Committee
The members of our Nominating and Corporate Governance Committee include Larson Douglas Hudson (Chair), Omar Ishrak, and Krishna Gupta. The Board of Directors has concluded each member of the Nominating and Corporate Governance Committee is considered independent under the rules and regulations of the SEC and the listing standards of the NYSE.
The Nominating and Corporate Governance Committee assists the Board of Directors with its identification and evaluation of individuals qualified to become members of the Board of Directors (including those recommended by stockholders), consistent with criteria approved by the Board of Directors, and recommends that the Board select the director nominees for election at annual stockholder meetings. The Nominating and Corporate Governance Committee also develops and recommends to the Board of Directors a set of corporate governance guidelines, monitors compliance with our Code of Conduct, and oversees the evaluation of the Board of Directors, its committees and management.
Our Nominating and Corporate Governance Committee’s responsibilities include, among other things:
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Our Nominating and Corporate Governance Committee operates under a written charter that satisfies the applicable listing standards of the NYSE. A copy of the charter of our Nominating and Corporate Governance Committee is available on our website at https://investors.allurion.com.
Director Qualifications
As noted above, our Nominating and Corporate Governance Committee is responsible for identifying individuals qualified to serve as directors, consistent with criteria approved by our Board of Directors, and recommending to the Board qualified individuals to be nominated for election as directors at each annual meeting of stockholders.
In identifying prospective director candidates, the Nominating and Corporate Governance Committee may consider all facts and circumstances that it deems appropriate or advisable, including, among other things, the skills of the prospective candidate, his or her depth and breadth of business experience or other background characteristics, his or her independence, and the needs of the Board of Directors. At a minimum, the Nominating and Corporate Governance Committee must be satisfied that each recommended nominee meets the following minimum qualifications:
(i) relevant experience and expertise to enable him or her to be able to offer germane advice and guidance to management;
(ii) proven achievement and competence in his or her field;
(iii) the ability to exercise sound business judgment;
(iv) an understanding of the fiduciary responsibilities required of a director;
(v) commitment to devoting time and energy to our affairs;
(vi) a diverse personal background, perspective, and experience; and
(vii) commitment to vigorously represent the long-term interests of our stockholders.
In addition to any other standards the Nominating and Corporate Governance Committee deems appropriate from time to time for the overall structure and composition of the Board of Directors, the Nominating and Corporate Governance Committee may consider whether the candidate, if elected, assists in achieving a mix of Board members that represents a diversity of background and experience.
Nomination Policies and Procedures
There have been no material changes to the procedures by which stockholders may recommend nominees for election to our Board.
Board and Committee Meetings Attendance
During 2025, the Board of Directors met nine times, the Audit Committee met seven times, the Compensation Committee met three times, and the Nominating and Corporate Governance Committee met two times. Our independent directors meet in executive sessions without management at least quarterly.
During 2025, each member of the Board of Directors attended in person or participated in 75% or more of the aggregate of (i) the total number of meetings of the Board of Directors (held during the period for which such person has been a director) and (ii) the total number of meetings held by all committees of the Board of Directors on which such person served (during the periods that such person served).
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Director Attendance at Annual Meeting of Stockholders
Directors are encouraged to attend the annual meeting of stockholders to the extent practicable.
Policy on Insider Trading, Pledging, and Hedging
Compensation Recovery Policy
In light of the SEC’s adoption of final clawback rules in October 2022 and the NYSE’s adoption of final listing standards consistent with the SEC rules in June 2023, we adopted a Compensation Recovery Policy effective as of October 2, 2023. If we are required to prepare an accounting restatement due to material non-compliance with any financial reporting requirements under applicable securities laws, the Compensation Recovery Policy requires (subject to certain limited exceptions described in the policy and permitted by the final clawback rules) that we recover erroneously awarded compensation received by any current or former executive officer in the three fiscal years prior to the date we were required to restate our financial statements that is in excess of the amount that would have been received based on the restated financial statements.
Compensation Committee Interlocks and Insider Participation
During 2025, the members of our Compensation Committee included Michael Davin, Nicholas Lewin, and Larson Douglas Hudson. None of the members of our Compensation Committee has ever been an officer or employee of our Company, or had any other relationship requiring disclosure herein. None of our executive officers serve, or have served during the last fiscal year, as a member of the board of directors or compensation committee of any other entity that has or has had one or more executive officers serving as a member of our Board of Directors or Compensation Committee.
Code of Conduct
We have adopted our Code of Business Conduct and Ethics (our "Code of Conduct"), which applies to all of our directors, officers, employees, consultants, and certain designated agents in connection with their work for us. The full text of our Code of Conduct is posted on our website at https://investors.allurion.com. We intend to disclose future amendments to, or waivers of, our Code of Conduct, as and to the extent required by SEC regulations, at the same location on our website identified herein or in public filings. Information contained on our website is not incorporated by reference into this Annual Report on Form 10-K, and you should not consider information contained on our website to be part of this Annual Report on Form 10-K.
Board Leadership Structure and Board's Role in Risk Oversight
Omar Ishrak is the chairman of the Board of Directors and our lead independent director. Dr. Ishrak presides at all meetings of our Board of Directors. Currently, the role of the chairman of the Board is separated from the role of Chief Executive Officer. Separating these positions allows our Chief Executive Officer to focus on our day-to-day business, while allowing the chairman to lead the Board of Directors in its fundamental role of providing advice to and independent oversight of management.
The Board of Directors has not adopted a position description for the chairman. However, there is a shared understanding on the Board of Directors of the chairman’s responsibilities. The chairman’s primary role is to provide leadership to the Board of Directors and its committees, including chairing meetings in a manner that facilitates open discussions and expressions of competing views. The chairman are also responsible for, among other things, assisting the Board in obtaining information required for the performance of its duties, retaining appropriately qualified and independent advisors as needed, working with the Board of Directors to support board development and to ensure a proper committee structure is in place, providing a link between the Board of Directors and management, and acting in an advisory capacity to the Chief Executive Officer in all matters concerning the interests and management of Allurion.
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Our Board of Directors recognizes the time, effort, and energy that the Chief Executive Officer must devote to his position in the current business environment, as well as the commitment required to serve as the chairman of the Board of Directors. Our Board of Directors also believes this leadership structure ensures a greater role for the non-management directors in the oversight of our company and active participation of the independent directors in setting agendas and establishing priorities and procedures for the work of our Board.
Risk is inherent with every business, and how well a business manages risk can ultimately determine its success. As a medical device manufacturer, we face a number of risks, including risks related to patient safety, our financial condition, development and commercialization activities, operations, strategic direction, and intellectual property.
Management is responsible for the day-to-day management of risks we face, while our Board of Directors, as a whole and through its committees, has responsibility for the oversight of risk management. In its risk oversight role, our Board of Directors has the responsibility to satisfy itself that the risk management processes designed and implemented by management are adequate and functioning as designed.
The role of the Board of Directors in overseeing the management of our risks is conducted primarily through committees of the Board of Directors, as disclosed in the descriptions of each of the committees above and in the charters of each of the committees. The full Board of Directors (or the appropriate committee in the case of risks that are under the purview of a particular committee) discusses with management our major risk exposures, their potential impact on us, and the steps we take to manage them. When a committee is responsible for evaluating and overseeing the management of a particular risk or risks, the chairperson of the relevant committee reports on the discussion to the full Board of Directors during the committee reports portion of the next Board of Directors meeting. This enables the Board and its committees to coordinate the risk oversight role, particularly with respect to risk interrelationships.
Item 11. Executive Compensation.
This section discusses the compensation awarded to, earned by, or paid to Allurion's chief executive officer and two other most highly compensated executive officers who were serving as executive officers as of December 31, 2025 (our "Named Executive Officers" or “NEOs”).
Our Named Executive Officers for the fiscal year ended December 31, 2025 were:
2025 Summary Compensation Table
The following table presents information regarding the compensation awarded to, earned by or paid to our NEOs for services rendered in all capacities to the Company and its subsidiaries during the fiscal years ended December 31, 2025 and December 31, 2024.
Name and Principal Position |
|
Year |
|
Salary ($) |
|
|
Bonus ($) (1) |
|
|
Stock Awards ($) (2) |
|
|
Option Awards ($) (3) |
|
|
Non-equity Incentive Plan Compensation ($) (4) |
|
|
All Other Compensation ($) (5) |
|
|
Total ($) |
|
|||||||
Dr. Shantanu Gaur |
|
2025 |
|
|
310,000 |
|
(6) |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
9,200 |
|
|
|
319,200 |
|
Chief Executive Officer |
|
2024 |
|
|
620,000 |
|
|
|
— |
|
|
|
— |
|
|
|
2,200,000 |
|
|
|
— |
|
|
|
9,734 |
|
|
|
2,829,734 |
|
Brendan Gibbons |
|
2025 |
|
|
400,000 |
|
|
|
50,000 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
7,000 |
|
|
|
457,000 |
|
Chief Legal and People Officer |
|
2024 |
|
|
371,282 |
|
(7) |
|
— |
|
|
|
226,381 |
|
|
|
500,000 |
|
|
|
— |
|
|
|
— |
|
|
|
1,097,663 |
|
Ojas Buch |
|
2025 |
|
|
400,000 |
|
|
|
50,000 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
7,000 |
|
|
|
457,000 |
|
Chief Operating Officer |
|
2024 |
|
|
233,333 |
|
(8) |
|
— |
|
|
|
226,381 |
|
|
|
500,000 |
|
|
|
— |
|
|
|
30,000 |
|
|
|
989,714 |
|
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Narrative to Summary Compensation Table
Base Salaries
We use base salaries to recognize the experience, skills, knowledge, and responsibilities required of all our employees, including our Named Executive Officers. Base salaries are reviewed annually and adjusted from time to time to align salaries with market levels after taking into account individual responsibilities, performance, and experience. For the 2025 fiscal year, the annual base salaries for Dr. Gaur, Mr. Gibbons, and Mr. Buch were $620,000, $400,000 and $400,000, respectively. Effective January 1, 2025, to preserve cash Dr. Gaur voluntarily agreed to a 50% reduction in his salary for fiscal year 2025.
Non-equity Incentive Plan Compensation
Each of our Named Executive Officers is eligible to earn a performance-based annual cash bonus based on achievement of pre-established company and individual performance criteria established by our Board of Directors or Compensation Committee in their discretion. For the 2025 fiscal year, the target annual bonus for each of Dr. Gaur, Mr. Gibbons, and Mr. Buch was equal to 80%, 50%, and 50%, respectively, of their annual base salary. However, no annual performance bonuses were earned or paid to our Named Executive Officers for the 2024 and 2025 fiscal years.
Equity Compensation
We believe that equity grants provide our executives with a strong link to our long-term performance, create an ownership culture and help to align the interests of our executives with our stockholders. In addition, we believe that equity grants with a time-based vesting feature promote executive retention because this feature incentivizes our executive officers to remain in our employment during the vesting period.
Independent Compensation Consultant
In assessing and setting the compensation of our Named Executive Officers, the Compensation Committee has engaged Pearl Meyer & Partner LLC ("Pearl Meyer") as its independent compensation consultant. Pearl Meyer advises the Compensation
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Committee on best practices in executive compensation and provides the Compensation Committee with market data in an effort to ensure our compensation program is competitive and designed to attract, retain, and incentivize our Named Executive Officers.
Employment Arrangements with our Named Executive Officers
Employment Agreement with Dr. Shantanu Gaur
We have entered into an employment agreement with Dr. Gaur, effective August 1, 2023, pursuant to which we employ Dr. Gaur as our Chief Executive Officer on an “at will” basis. Dr. Gaur’s employment agreement provides that his initial annual base salary is $620,000, and is subject to periodic review by our Board of Directors or Compensation Committee. In addition, the employment agreement provides that Dr. Gaur is eligible to receive annual cash bonuses, which the target annual amount shall be 80% of his annual base salary. Dr. Gaur is also eligible to participate in the employee benefit plans generally available to our employees, subject to the terms of such plans.
In the event of a termination of Dr. Gaur’s employment by Allurion without “cause” (as defined in his employment agreement) or by his resignation for “good reason” (as defined in his employment agreement), subject to Dr. Gaur’s execution and non-revocation of a separation agreement containing, among other things, a release of claims in favor of Allurion and its affiliates, Dr. Gaur will be entitled to receive (i) base salary continuation for 12 months following his termination date, and (ii) subject to Dr. Gaur’s election to receive continued health benefits under COBRA, payment of the full cost of such continuation coverage plus any administration fee until the earliest of (A) 12 months following termination; (B) the date he becomes eligible for group medical plan benefits under any other employer’s group medical plan; or (C) the expiration of Dr. Gaur’s COBRA health continuation period.
In addition, in lieu of the payments and benefits described above, in the event that Dr. Gaur’s employment is terminated by us without “cause” or by him for “good reason,” in each case, within three months prior to or 12 months following a “sale event” (as defined in our 2023 Stock Option and Incentive Plan, or “2023 Plan”), and subject to Dr. Gaur’s execution and non-revocation of a separation agreement containing, among other things, a release of claims in favor of Allurion and its affiliates, Dr. Gaur will be entitled to receive (i) an amount in cash equal to 1.5 times the sum of (x) Dr. Gaur’s then-current base salary (or, his base salary in effect immediately prior to the sale event, if higher) and (y) Dr. Gaur’s target annual bonus for the then-current year (or, his target annual bonus in effect immediately prior to the sale event, if higher); (ii) full acceleration of vesting of all outstanding time-based equity awards held by Dr. Gaur; and (iii) subject to Dr. Gaur’s election to receive continued health benefits under COBRA, payment of the full cost of such continuation coverage plus any administration fee until the earliest of (A) 18 months following termination; (B) the date he becomes eligible for group medical plan benefits under any other employer’s group medical plan; or (C) the expiration of Dr. Gaur’s COBRA health continuation period. The cash severance payable to Dr. Gaur upon a termination of employment is generally payable in lump sum within 60 days following the date of termination, subject to limited exceptions.
Employment Agreement with Mr. Brendan Gibbons
We entered into an employment agreement with Mr. Gibbons, effective on January 29, 2024, pursuant to which we employ Mr. Gibbons as our Chief Legal Officer on an “at will” basis. Mr. Gibbons’ employment agreement provides that Mr. Gibbons is eligible to receive annual cash bonuses, and to participate in the employee benefit plans generally available to our employees, subject to the terms of such plans. Mr. Gibbons’ annual base salary is currently $400,000 and his target annual cash bonus amount is 50% of his annual base salary.
In the event of a termination of Mr. Gibbons’ employment by Allurion without “cause” (as defined in his employment agreement) or by his resignation for “good reason” (as defined in his employment agreement), subject to Mr. Gibbons’ execution and non-revocation of a separation agreement containing, among other things, a release of claims in favor of Allurion and its affiliates, Mr. Gibbons will be entitled to receive (i) base salary continuation for 9 months following his termination date, and (ii) subject to Mr. Gibbons’ election to receive continued health benefits under COBRA, payment of the full cost of such continuation coverage plus any administration fee until the earliest of (A) 12 months following termination; (B) the date he becomes eligible for group medical plan benefits under any other employer’s group medical plan; or (C) the expiration of Mr. Gibbons’ COBRA health continuation period.
In addition, in lieu of the payments and benefits described above, in the event that Mr. Gibbons’ employment is terminated by us without “cause” or by him for “good reason,” in each case, within 12 months following a “sale event” (as defined in our 2023 Plan), and subject to Mr. Gibbons’ execution and non-revocation of a separation agreement containing, among other things, a release of claims in favor of Allurion and its affiliates, Mr. Gibbons will be entitled to receive (i) an amount in cash equal to 1 times the sum of (x) Mr. Gibbons then-current base salary (or, his base salary in effect immediately prior to the sale event, if higher) and (y) Mr. Gibbons target annual bonus for the then-current year (or, his target annual bonus in effect immediately prior to the sale event, if higher); (ii) full acceleration of vesting of all outstanding time-based equity awards held by Mr. Gibbons; and (iii) subject to Mr. Gibbons’ election to receive continued health benefits under COBRA, payment of the full cost of such continuation coverage plus any administration fee until the earliest of (A) 12 months following termination; (B) the
106
date he becomes eligible for group medical plan benefits under any other employer’s group medical plan; or (C) the expiration of Mr. Gibbons’ COBRA health continuation period. The cash severance payable to Mr. Gibbons upon a termination of employment is generally payable in lump sum within 60 days following the date of termination, subject to limited exceptions.
In the event of a termination of Mr. Gibbons’ employment due to his death or disability, and subject to Mr. Gibbons’ execution and non-revocation of a separation agreement containing, among other things, a release of claims in favor of Allurion and its affiliates, Mr. Gibbons (or his legal representatives or estate) will be entitled to receive a pro-rated annual bonus for the year in which the date of termination occurs, as determined by the Board or Compensation Committee in its discretion.
Offer Letter with Mr. Ojas Buch
We entered into an employment offer letter with Mr. Buch, dated May 17, 2024, pursuant to which we employ Mr. Buch as our Chief Operating Officer on an “at will” basis. Mr. Buch’s offer letter provides that his initial annual base salary is $400,000, and is subject to periodic review and adjustments. In addition, the offer letter provides that Mr. Buch is eligible to receive incentive bonuses, which target amount shall be 50% of his base salary. Mr. Buch is also eligible to receive reimbursement of up to $30,000 in relocation expenses and participate in the employee benefit plans generally available to our employees, subject to the terms of such plans.
Mr. Buch will also be eligible to receive severance benefits consistent with those provided to our other C-suite executives, excluding our CEO. Such severance benefits will include (i) 9 months of salary continuation if Mr. Buch’s employment is terminated without cause or for good reason, or (ii) 12 months of salary continuation and equity acceleration if Mr. Buch’s employment in the event of a change of control.
Equity Grant Timing
Outstanding Equity Awards at 2025 Fiscal Year End
The following table sets forth information concerning outstanding equity awards held by each of our NEOs as of December 31, 2025:
|
|
|
|
|
|
|
Option Awards |
|
Stock Awards |
|
||||||||||||||||||
Name |
|
Grant Date |
|
Vesting Commencement Date |
|
|
Number of Securities Underlying Unexercised Options (#) (Exercisable) (1) |
|
|
Number of Securities Underlying Unexercised Options (#) (Unexercisable) (1) |
|
|
Option Exercise Price ($) (1) |
|
|
Option Expiration Date |
|
Number of Shares or Units of Stock That Have Not Vested (#) (1) |
|
|
Market Value of Shares or Units of Stock That Have Not Vested ($) |
|
||||||
Dr. Shantanu Gaur |
|
08/03/2017 |
|
|
— |
|
|
|
6,846 |
|
|
|
— |
|
|
|
28.25 |
|
|
8/2/2027 |
|
|
|
|
|
|
||
|
|
03/05/2020 |
(2) |
01/01/2020 |
|
|
|
1,956 |
|
|
|
— |
|
|
|
29.25 |
|
|
3/4/2030 |
|
|
|
|
|
|
|||
|
|
12/20/2022 |
(3) |
12/08/2022 |
|
|
|
38,615 |
|
|
|
— |
|
|
|
112.75 |
|
|
12/19/2032 |
|
|
|
|
|
|
|||
|
|
05/03/2024 |
(4) |
05/03/2024 |
|
|
|
22,623 |
|
|
|
34,521 |
|
|
|
1.67 |
|
|
5/2/2034 |
|
|
|
|
|
|
|||
Brendan Gibbons |
|
02/08/2024 |
(4) |
01/29/2024 |
|
|
|
4,871 |
|
|
|
5,282 |
|
|
|
1.67 |
|
|
2/7/2034 |
|
|
|
|
|
|
|||
|
|
11/08/2024 |
(5) |
11/08/2024 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,135 |
|
|
|
7,546 |
|
||||
Ojas Buch |
|
06/03/2024 |
(4) |
06/03/2024 |
|
|
|
4,605 |
|
|
|
7,666 |
|
|
|
1.67 |
|
|
6/2/2034 |
|
|
|
|
|
|
|||
|
|
11/08/2024 |
(5) |
11/08/2024 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,135 |
|
|
|
7,546 |
|
||||
107
Additional Narrative Disclosure
Employee Benefits
Our Named Executive Officers are eligible to participate in our welfare benefit plans, including medical, dental, vision, basic life and accidental death & dismemberment, and short-term and long- term disability insurance benefits, in each case on the same basis as all of our other employees.
401(k) Plan
Allurion participates in the ADP TotalSource Retirement Savings Plan (the “401(k) Plan”), which provides eligible U.S. employees (including our Named Executive Officers) with an opportunity to save for retirement on a tax advantaged basis. Under the 401(k) Plan, eligible employees may defer eligible compensation subject to applicable annual contribution limits imposed by the Internal Code of 1986, as amended (the "Code"). Allurion’s employees’ contributions are allocated to each participant’s individual account and employees may begin participating after an initial 90 day waiting period. Under the provisions of the 401(k) Plan, Allurion makes 2% matching contributions and may make discretionary non-matching contributions, as determined by our Board of Directors. The 401(k) Plan is intended to be qualified under Section 401(a) of the Code with the 401(k) Plan’s related trust intended to be tax exempt under Section 501(a) of the Code. As a tax-qualified retirement plan, contributions to the 401(k) Plan and earnings on those contributions are not taxable to the employees until distributed from the 401(k) Plan.
Director Compensation Table
The following table sets forth information regarding the compensation awarded to, earned by, or paid to Allurion's non-employee directors for service on our Board of Directors during the year ended December 31, 2025. Dr. Gaur, who is our Chief Executive Officer, also served on our Board of Directors, but did not receive any additional compensation for his service as a director and therefore is not included in the table below. Dr. Gaur’s compensation for his service, as our Chief Executive Officer, is set forth above under “Executive Compensation-Summary Compensation Table.”
Name |
|
Fees Earned or Paid in Cash ($) |
|
|
Stock Awards ($) (1)(3) |
|
|
Total Compensation ($) |
|
|||
Omar Ishrak |
|
|
26,250 |
|
|
|
— |
|
|
|
26,250 |
|
Krishna Gupta |
|
|
24,625 |
|
|
|
— |
|
|
|
24,625 |
|
Michael Davin |
|
|
26,875 |
|
|
|
— |
|
|
|
26,875 |
|
Douglas Hudson |
|
|
24,063 |
|
|
|
— |
|
|
|
24,063 |
|
Nicholas Lewin |
|
|
21,250 |
|
|
|
— |
|
|
|
21,250 |
|
Milena Alberti-Perez (2) |
|
|
25,000 |
|
|
|
— |
|
|
|
25,000 |
|
Keith B. Johns II |
|
|
17,500 |
|
|
|
— |
|
|
|
17,500 |
|
R. Jason Richey |
|
|
11,250 |
|
|
|
— |
|
|
|
11,250 |
|
108
Name |
|
RSU Awards Outstanding at 2025 Year End (number of shares) |
|
|
Option Awards Outstanding at 2025 Year End (number of shares) (1) |
|
||
Omar Ishrak |
|
|
602 |
|
|
|
— |
|
Krishna Gupta |
|
|
602 |
|
|
|
— |
|
Michael Davin |
|
|
602 |
|
|
|
6,456 |
|
Douglas Hudson |
|
|
602 |
|
|
|
— |
|
Nicholas Lewin |
|
|
602 |
|
|
|
— |
|
Milena Alberti-Perez |
|
|
— |
|
|
|
— |
|
Keith B. Johns II |
|
|
8,696 |
|
|
|
— |
|
R. Jason Richey |
|
|
— |
|
|
|
— |
|
Non-Employee Director Compensation Policy
Effective as of October 15, 2025, our Board of Directors amended and restated the Director Compensation Policy (the "Amended Director Compensation Policy"). Under the Amended Director Compensation Policy, our non-employee directors are eligible to receive cash retainers (which are payable quarterly in arrears and prorated for partial years of service) and equity awards as set forth below. In addition, we reimburse non-employee directors for all reasonable out-of-pocket expenses incurred in attending meetings of our Board of Directors or committees. We do not pay additional compensation for attending individual meetings of our Board of Directors.
|
|
|
|
|
Annual Retainer for Board Membership |
|
$ |
25,000 |
|
Additional Annual Retainer for Non-Executive Chair |
|
|
25,000 |
|
Additional Annual Retainer for Committee Membership |
|
|
|
|
Audit Committee Chairperson |
|
|
10,000 |
|
Audit Committee Member (other than Chairperson) |
|
|
5,000 |
|
Compensation Committee Chairperson |
|
|
7,500 |
|
Compensation Committee Member (other than Chairperson) |
|
|
3,750 |
|
Nominating and Corporate Governance Committee Chairperson |
|
|
5,000 |
|
Nominating and Corporate Governance Committee Member (other than Chairperson) |
|
|
2,500 |
|
Initial Award: The Amended Director Compensation policy provides that each new non-employee director upon his or her initial election or appointment to the Board of Directors will be granted an initial, one-time restricted stock unit award ("Initial Award") with a value to be determined by the Board. Each Initial Award shall vest in equal annual installments over three years from the grant date, subject to continued service as a director through each vesting date.
Annual Award: On the date of each annual meeting of stockholders, or on such date as determined by the Board of Directors, the continuing non-employee directors ("Outside Directors") as a whole will receive an annual restricted stock unit award with a value equal to 0.5% of total shares of common stock then outstanding (the "Aggregate Annual Award") From this Aggregate Annual Award, each Outside Director, shall receive an individual annual award ("Annual Award") equal to the total number of RSUs underlying the Aggregate Annual Award divided by the number of Outside Directors then serving on the Board, provided that no Outside Director shall be entitled to an Annual Award if he or she received an Initial Award within six months prior to the date that the non-employee director would otherwise receive an Annual Award. Annual Awards shall vest in full on the earlier of the (i) first anniversary of the date of grant or (ii) the date of the next annual meeting of stockholders; provided however, that all vesting shall cease if the director resigns from the Board of Directors or otherwise ceases to serve as a director, unless the Board of Directors determines that the circumstances warrant continuation of vesting; and provided, further, that if such Annual Award is not granted at an annual meeting, then in no event shall any grant be made: (i) during a Company blackout period or when any non-employee director is in possession of material non-public information or (ii) if such grant would otherwise constitute a “spring-loaded award” (as defined in the Staff Accounting Bulletin No. 120). The vesting of all outstanding
109
initial restricted stock unit awards and annual restricted stock unit awards held by non-employee directors will fully accelerate upon a “sale event” (as defined in our 2023 Plan).
For purposes of determining the size of each restricted stock unit award, the Director Compensation Policy defines “value” as the product of (A) the average closing market price on the NYSE (or such other market on which our common stock is then principally listed) of one share of our common stock over the trailing 30-day period ending on the last day of the month immediately prior to the month of the grant date, and (B) the aggregate number of shares of our common stock underlying such award.
On May 9, 2025, in the interest of preserving cash, the Board, upon the recommendation of the Compensation Committee, determined to stop receiving cash compensation and instead, receive the value of that compensation in Restricted Stock Awards. On that date, the Board also determined to receive such Restricted Stock Awards, along with any annual equity awards, after the Company was able to replenish the shares available under its 2023 Amended and Restated Equity Incentive Plan.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
Equity Compensation Plan Information
The following table summarizes, as of December 31, 2025, certain information concerning our equity compensation plans under which our equity securities are currently authorized for issuance.
|
|
(a) |
|
|
(b) |
|
|
(c) |
|
|
|||
Plan Category |
|
Number of Shares to be Issued Upon Exercise of Outstanding Options and RSUs |
|
|
Weighted-Average Exercise Price of Outstanding Options (1) |
|
|
Number of Shares Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Shares Reflected in Column (a)) |
|
|
|||
Equity compensation plans approved by stockholders (2) |
|
|
639,471 |
|
(3) |
$ |
28.96 |
|
|
|
4,197,557 |
|
(4)(5) |
Equity compensation plans not approved by stockholders |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Total |
|
|
639,471 |
|
|
$ |
28.96 |
|
|
|
4,197,557 |
|
|
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Principal Stockholders
The following table sets forth information regarding the beneficial ownership of shares of our common stock, as of March 17, 2026, in each case, by:
Beneficial ownership is determined according to the rules of the SEC, which generally provide that a person has beneficial ownership of a security if he, she or it possesses sole or shared voting or investment power over that security, including options, restricted stock units, and warrants that are currently exercisable or releasable or exercisable or releasable within 60 days.
Unless otherwise indicated, we believe that all persons named in the table below have sole voting and investment power with respect to all shares of voting shares beneficially owned by them. Unless otherwise noted, the business address of each of those listed in the table is c/o Allurion Technologies, Inc., 11 Huron Drive, Natick, MA 01760.
The beneficial ownership of the shares of our common stock is based on 14,994,486 shares of our common stock issued and outstanding as of March 17, 2026.
Name and Address of Beneficial Owner |
|
Number of Shares |
|
|
% of Ownership |
|
||
Directors and Named Executive Officers: |
|
|
|
|
|
|
||
Shantanu Gaur(1) |
|
|
138,028 |
|
|
0.9% |
|
|
Krishna Gupta(2) |
|
|
242,243 |
|
|
1.6% |
|
|
Omar Ishrak(3) |
|
|
160,127 |
|
|
1.1% |
|
|
Michael Davin(4) |
|
|
7,060 |
|
|
* |
|
|
Larson Doug Hudson (5) |
|
|
1,208 |
|
|
* |
|
|
Nicholas Lewin (6) |
|
|
1,208 |
|
|
* |
|
|
Milena Alberti-Perez (7) |
|
|
1,000 |
|
|
* |
|
|
Keith B. Johns II (8) |
|
|
4,348 |
|
|
* |
|
|
R. Jason Richey |
|
|
— |
|
|
|
— |
|
Brendan M. Gibbons (9) |
|
|
9,992 |
|
|
* |
|
|
Ojas Buch (10) |
|
|
9,973 |
|
|
* |
|
|
All Current Directors and Executive Officers as a Group (Twelve Persons) (11) |
|
|
741,046 |
|
|
4.8% |
|
|
Five Percent Holders: |
|
|
|
|
|
|
||
RTW(12) |
|
|
5,891,430 |
|
|
39.3% |
|
|
*Less than one percent.
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Item 13. Certain Relationships and Related Transactions, and Director Independence.
Certain Relationships and Related Party Transactions
Other than the compensation agreements and other arrangements described under “Executive Compensation” and “Director Compensation” in this Annual Report on Form 10-K and the transactions described below, since January 1, 2023, there has not been and there is not currently proposed any transaction or series of similar transactions to which we were, or will be, a party in which the amount involved exceeded, or will exceed, $120,000 (or, if less, 1% of the average of our total assets at year end for the last two completed fiscal years) and in which any director, executive officer, holder of 5% or more of any class of our capital stock or any member of the immediate family of, or entities affiliated with, any of the foregoing persons, had, or will have, a direct or indirect material interest.
Allurion Middle East Medical Instruments Trading, LLC
Allurion Middle East Medical Instruments Trading, LLC (“Allurion Middle East”) is Allurion’s subsidiary in the United Arab Emirates (the “UAE”). Per the law of the UAE, the majority owner of a UAE limited liability company must be a UAE entity. Pursuant to the Second Restated Memorandum of Association of Allurion Middle East Medical Instruments Trading (the "MoA"), Shuraa Management & Consultancy LLC is a 51% owner of Allurion Middle East; Allurion owns the remaining 49%.
Allurion Middle East was established to carry on the business of medical, surgical equipment, and instruments trading in the Middle East on behalf of Allurion. Allurion Middle East is permitted to enter into agreements and act as an agent on Allurion's behalf. Allurion Middle East’s capital is AED 300,000 divided into 300 non-divisible shares, par value AED 1,000. The capital is fully paid in cash and divided as follows: Shuraa Management & Consultancy LLC received 153 shares at a value of AED 153,000 and holds 51% in capital. Allurion holds 147 shares for a value of AED 147,000 and holds 49% in capital. New shares may be issued at any time to increase capital or by transferring the available reserve to share capital by a resolution of the board. Shares are assignable. Under the MoA, transfers are not permitted where they would reduce the UAE national partner’s hold in the capital below 51% unless the number of partners is reduced to below 2 or increased to above 50. Profits from Allurion Middle East are distributed 20% to Shuraa Management and Consultancy LLC and 80% to Allurion.
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On February 2, 2022, Allurion Middle East entered into a one-year lease agreement with Shuraa Business Centre Branch (“SBCB”), an affiliate of Shuraa Management & Consultancy LLC. On August 29, 2022, Allurion Middle East entered into a second one-year lease agreement with SBCB. Under each lease, Allurion Middle East pays to SBCB AED 41,500 and AED 35,000 per year, respectively, plus a AED 3,000 refundable security deposit and 5% VAT. These leases automatically renew after one year as agreed to by the parties. On February 2, 2024, Allurion Middle East entered into a six-month lease agreement with SBCB in lieu of the second annual renewal of its one-year lease agreement entered into on February 2, 2022. Cancellation of these contracts is not permitted until the seventh month and requires a two month notice period. Standard indemnity provisions exist.
Paris Lease Agreement
LNMP JPBC Investment, a French entity, was the lessor under the 56 Rue des Petites Ecuries, Paris Lease (the “56 Rue des Petites Ecuries Lease”), pursuant to which we leased certain space for company purposes. LNMP JPBC Investment is partially owned by Benoit Chardon, our former Chief Commercial Officer. Under the 56 Rue des Petites Ecuries Lease, Allurion paid monthly rent of €9,284. The 56 Rue des Petites Ecuries Lease had a three year term, which began in August 2022, and was renewable by agreement between Allurion and LNMP JPBC Investment. This lease was terminated in February 2024.
PIPE Investment
Certain investors (“PIPE Investors”) related to Legacy Allurion entered into PIPE subscription agreements (“PIPE Subscription Agreements”) with Compute Health and us, pursuant to which they subscribed for shares of our common stock in connection with a private placement pursuant. The PIPE Investors made a private investment in the aggregate amount of $37.9 million on the terms and conditions set forth in the PIPE Subscription Agreements. Such PIPE Investors who participated in the PIPE Investment include Michael Davin (1,233 shares), who is one of our directors, Omar Ishrak (28,410 shares), who is one of our directors, and RTW (85,230 shares), which has the right to designate director nominees to be elected by our stockholders.
Gaur Contribution Agreement
On May 2, 2023, the Shantanu K. Gaur Revocable Trust of 2021 (the “Gaur Trust”) and we entered into the Gaur Contribution Agreement, pursuant to which, among other things, upon the terms and subject to the conditions set forth therein, the Gaur Trust agreed to contribute, as a contribution of capital, 3,170 shares of our common stock (the “Gaur Trust Contributed Shares”). The Gaur Trust’s contribution of the Gaur Trust Contributed Shares was effective immediately following the consummation of the Business Combination between us and Compute Health and the transactions contemplated thereby.
RSU Forfeiture Agreement
On May 2, 2023, Krishna Gupta, a member of our Board, entered into the RSU Forfeiture Agreement, pursuant to which, among other things, upon the terms and subject to the conditions set forth therein, Mr. Gupta agreed to forfeit 3,170 restricted stock units (the “Forfeited RSUs”). The Forfeited RSUs were terminated and cancelled without consideration therefor immediately following the consummation of the transactions contemplated by the Business Combination Agreement between Allurion and Compute Health and other parties thereto, dated as of February 9, 2023, as amended from time to time.
Revenue Interest Financing Agreement, RTW Side Letter and PIPE Conversion Option
On February 9, 2023, concurrently with the execution of the Business Combination Agreement, we entered into the Revenue Interest Financing Agreement with certain entities that engaged RTW, pursuant to which, at the closing of the Business Combination, we assumed all obligations of Legacy Allurion under the Revenue Interest Financing Agreement and RTW paid us an aggregate of $40.0 million (the “Investment Amount”). In exchange for the Investment Amount, we will remit revenue interest payments on all current and future products, digital solutions and services developed, imported, manufactured, marketed, offered for sale, promoted, sold, tested or otherwise distributed by Allurion and its subsidiaries.
On April 14, 2024, the Revenue Interest Financing Agreement was amended pursuant to the RIFA Amendment, and was subsequently further amended on January 7, 2025 pursuant to the Omnibus Amendment, to reflect certain modifications agreed between the parties thereto in connection with the Amended Note Purchase Agreement and the refinancing of the Fortress Credit Agreement. Among other things, the RIFA Amendment waived the existing event of default under the Revenue Interest Financing Agreement, increased the rate of revenue interest payments to be paid to RTW on all current and future products and digital solutions developed and to be developed by the Company (the “Royalty Rate”) for net sales less than or equal to $100 million prior to December 31, 2026 from 6% to 12%, and increased the Royalty Rate on net sales less than or equal to $100 million on or after January 1, 2027 from 10% to 12%, subject to the terms and conditions of the RIFA Amendment.
Additionally, in connection with our entry into the RIFA Amendment, we, Compute Health, Legacy Allurion, Merger Sub II and RTW entered into the RTW Side Letter under which RTW was entitled to elect to exercise the PIPE Conversion Option.
113
On May 2, 2023, the parties amended and restated the RTW Side Letter in connection with the Backstop Agreement, pursuant to which, among other things, Allurion issued 10,000 shares of common stock to RTW immediately prior to the Intermediate Merger Effective Time. On April 14, 2024, the parties entered into the RTW Side Letter Amendment to reflect certain modifications to the Amended and Restated RTW Side Letter in connection with the Amended Note Purchase Agreement. The RTW Side Letter Amendment provided, among other things, that RTW may make a single election in certain circumstances to convert up to $7,500,000 of the purchase price that RTW paid for certain equity interests in Allurion into an amount of financing provided by RTW to Allurion pursuant to an additional revenue interest financing agreement with Legacy Allurion.
Pursuant to the Amended and Restated RTW Side Letter, on October 22, 2024, the Additional RIFA Investors notified us of their election to exercise the Investment Conversion in full. Accordingly, on October 30, 2024, we and the Additional RIFA Investors entered into the Additional Revenue Interest Financing Agreement. The Additional Revenue Interest Financing Agreement has substantially identical terms and conditions as the Revenue Interest Financing Agreement, except that the amount of financing provided by the Additional RIFA Investors to Allurion Opco under the Additional Revenue Interest Financing Agreement is equal to the Conversion Amount.
For more information, see the subsection entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Recent Developments—Amendment to Revenue Interest Financing Agreement, Additional Revenue Interest Financing Agreement, and Omnibus Amendment ”and Note 8, Revenue Interest Financing, Side Letter, and PIPE Conversion Option in the notes to our annual consolidated financial statements for the years ended December 31, 2025 and 2024 included in this Annual Report on Form 10-K for further discussion.
2023 Convertible Note Incremental Financing
On February 15, 2023, we sold a $13 million convertible bridge note (the “HVL Bridge Note”) to Hunter Ventures Limited (“HVL”) and entered into a side letter agreement with HVL (the “Side Letter”), who is a limited partner of Romulus Growth Allurion L.P., which is a fund affiliated with Krishna Gupta (a member of our Board of Directors; in addition, entities affiliated with him hold more than 5% of our outstanding capital stock) (the “Initial Financing”). In connection with the refinancing of the Initial Financing, we entered into a Termination Agreement with HVL, pursuant to which the Side Letter was terminated, effective as of May 2, 2023 (the “HVL Termination Agreement”).
The HVL Termination Agreement provided us, upon the terms and subject to the conditions set forth therein, the right to prepay, in one or more transactions, all or a portion of the outstanding principal amount, plus accrued interest, under the HVL Bridge Note, including by way of (a) a $2.0 million prepayment, $1.5 million of which was deemed a prepayment penalty and (b) immediately prior to the consummation of the Business Combination, an additional payment of at least $6.0 million under the HVL Bridge Note by way of (i) payment in cash by us and/or (ii) the sale and transfer of all or any portion of the HVL Bridge Note, equivalent in value to the portion of the additional payment to be repaid pursuant to this clause (b)(ii), to any person or persons designated in writing by us (the "Incremental Financing").
In addition, under the HVL Termination Agreement, upon the terms and subject to the conditions set forth therein, we agreed to issue to HVL 15,508 additional shares of our common stock.
Consulting Agreements with KKG Enterprises, LLC and Remus Group Management, LLC
In the first quarter of 2023, we entered into consulting agreements with KKG Enterprises, LLC (“KKG Enterprises”) and Remus Group Management, LLC (“Remus Group Management”) to assist us in building out our AI platform, augment our AI advisory board, and provide advisory services related to the Business Combination. These agreements were tied to board-related work by Krishna Gupta, who is a member of our Board of Directors, CEO of Remus Group Management, principal at KKG Enterprises, and affiliated with Romulus Capital, a stockholder. The agreements included payments of $0.2 million to KKG Enterprises and $0.3 million to Remus Group Management, and were terminated in June 2023.
Investment by Former Chief Commercial Officer
On June 24, 2023, Legacy Allurion sold a $200,000 Bridge Note to its former Chief Commercial Officer, Benoit Chardon.
Investor Rights Agreement
In connection with the closing of the Business Combination, we and the Investors entered into the Investor Rights Agreement. Pursuant to the Investor Rights Agreement, upon the terms and subject to the conditions set forth therein, each Investor was granted certain registration rights with respect to such holder's shares of our common stock.
The Investor Rights Agreement restricted the ability of certain Investors to transfer all or a portion of their respective shares of our common stock (or any securities convertible into or exercisable or exchangeable for shares of our common stock), subject to certain permitted transfers, for a period of either 18 months or 12 months following August 1, 2023 (the “Closing Date”), as applicable. The foregoing lock-up restrictions did not apply to: (a) any shares of our common stock purchased pursuant
114
to the PIPE Subscription Agreements, (b) 100 shares of our common stock held by each Investor, (c) shares issued to the Sponsor in the conversion of the loans made by the Sponsor to Compute Health, which balance was $3.7 million at the time of the Business Combination and was converted into 21,023 shares of Allurion common stock, (d) certain incremental shares of PIPE Investors who were existing Allurion Stockholders or existing holders of Allurion Convertible Notes or shares issued upon conversion of securities issued in the Incremental Financing and (e) the Backstop Shares, the Sponsor Contributed Shares, the Gaur Trust Contributed Shares or the shares of our common stock issued to each of HVL, RTW, Fortress and the other holders of the $28.7 million aggregate principal amount of convertible unsecured promissory notes sold in a private placement by Legacy Allurion to various investors from February 15, 2023 until August 1, 2023.
Additionally, pursuant to the Investor Rights Agreement, upon the terms and subject to the conditions set forth therein, the Board was to initially consist of seven directors, a majority of which shall be “independent” directors for purposes of NYSE rules, and the following persons have the following nomination rights with respect to our Board, subject to the limitations set forth in the Investor Rights Agreement: (i) one director and one independent director nominated by Shantanu Gaur; (ii) one director and one independent director nominated by Remus Capital; (iii) one director nominated by the Sponsor; and (iv) two independent directors nominated by Allurion (one of which shall be designated by RTW).
The Investor Rights Agreement terminates upon the earlier of (i) the seventh anniversary of the Closing Date of the Business Combination, (ii) a Change of Control (as defined in the Business Combination Agreement) or (iii) the date as of which there shall be no registrable securities outstanding; provided, that with respect to any Investor, such Investor will have no rights under the Investor Rights Agreement and all of our obligations to such Investor shall terminate upon the earlier of (x) the date at least one year after the Closing Date that such Investor ceases to hold at least one percent of the registrable securities outstanding on the Closing Date or (y) if such Investor is a one of our directors or executive officers, the date such Investor no longer serves as one of our directors or an executive officers. Notwithstanding the foregoing, (a) the piggy-back registration rights provided for in the Investor Rights Agreement terminate no later than the third anniversary of the Closing Date and (b) the obligations regarding the nomination of directors shall survive until the earlier of a termination of the Investor Rights Agreement in accordance with clauses (i) or (ii) above or with respect to any one Investor, at such time as such Investor is no longer entitled to nominate a director to our Board under the terms of the Investor Rights Agreement.
Corporate Officer Agreement and Termination Agreement
Effective as of September 1, 2023, we entered into a corporate officer agreement with Benoit Chardon, then our Chief Commercial Officer, and Benoit Chardon Consulting, a French socie´te´ a’ responsabilite´ limite´e that is solely owned by Mr. Chardon (“BCC”), pursuant to which BCC served as Managing Director of Allurion France. The corporate officer agreement provided that BCC would receive base consulting fees of €28,333.33 per month and additional variable compensation subject to the incentive plan terms issued annually by Allurion and conditional on meeting Allurion France and personal performance goal attainment defined each year by Allurion.
On December 12, 2023, Mr. Chardon, BCC and Allurion France entered into a Termination Agreement (the "Termination Agreement"), pursuant to which the parties agreed to terminate the Corporate Officer Agreement by and among BCC, Mr. Chardon and Allurion France. By virtue of the Termination Agreement, the parties mutually agreed to terminate the Corporate Officer Agreement as of December 31, 2023 (the "Departure Date"). Pursuant to the Termination Agreement, BCC resigned from its duties as managing director of Allurion France effective as of the Departure Date and Allurion paid BCC all amounts due to it under the Corporate Officer Agreement for monthly consulting fees through the Departure Date and its variable compensation due for the third quarter of 2023. In addition, Allurion paid BCC a lump-sum termination fee of €156,740. The Termination Agreement contains a mutual release and non-disparagement provision as well as a non-solicitation provision by BCC in favor of Allurion France.
Amended Note Purchase Agreement
Pursuant to the Amended Note Purchase Agreement, on April 16, 2024, we issued and sold $48 million of Notes to RTW in a private placement. Until the Notes are converted or repaid in full, RTW will be entitled to designate one representative who will serve as a non-voting board observer to the Board. In addition, in September 2024, we appointed Keith Johns to our Board, in satisfaction of certain obligations to RTW set forth in the Amended Note Purchase Agreement. For more information about the Amended Note Purchase Agreement, see the subsection entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Recent Developments—Amended Note Purchase Agreement.”
July 2024 Public Offering and Concurrent Private Placement
Pursuant to the Underwriting Agreement, on July 1, 2024, we issued and sold 576,261 shares of our common stock and 576,261 July 2024 Public Offering Warrants at an offering price of $30.00 per share and accompanying warrant. RTW purchased 9,594 shares of common stock and warrants to purchase 9,594 shares of common stock in the July 2024 Public Offering, for an aggregate purchase price of $0.3 million. On July 5, 2024, the Underwriters partially exercised their over-allotment option to
115
purchase an additional 77,091 shares of common stock, generating additional gross proceeds of approximately $2.2 million to us, before deducting the Underwriters’ discounts and commissions and estimated offering expenses payable by us.
Concurrently with the Underwriting Agreement, we issued and sold 2,260,159 shares of Series A Preferred Stock (which were automatically converted to 90,407 shares of common stock on December 19, 2024 following the Second Stockholder Approval and after giving effect to the Reverse Stock Split) and 90,407 Private Placement Warrants to funds affiliated with RTW, for an aggregate purchase price of approximately $2.7 million, at an offering price of $30.00 per share of Series A Preferred Stock and accompanying Private Placement Warrant.
For more information about the Offering and Private Placement, see the subsection entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations—July 2024 Public Offering and Concurrent Private Placement.”
Omnibus Amendment
On January 7, 2025, the Company and Allurion Opco entered into an Omnibus Amendment with Allurion Australia Pty Ltd, Allurion France SaS, the Additional RIFA Investors and RTW, as agent for the Purchasers, to amend the Existing Documents.
The Omnibus Amendment requires (i) the Company and Allurion Opco to maintain certain minimum balances of unrestricted cash in controlled accounts in the U.S. in the amounts corresponding to the calculations set forth therein, and (ii) the Company to receive minimum trailing twelve-month consolidated Revenue (as defined in the Note Purchase Agreement) in amounts set forth therein, tested quarterly beginning with the twelve-month period ending September 30, 2025. The Omnibus Amendment also requires that (i) Allurion France will have successfully regained marketing authorization from the Agence Nationale de Sécurité du Médicament et des Produits de Santé to resume the Commercialization (as defined in the Existing Documents) of the Product (as defined in the Existing Documents) in France on or prior to December 31, 2025 and (ii) Allurion OpCo shall have received Marketing Authorization from the FDA for the Commercialization of the Product in the United States no later than June 30, 2026.
Pursuant to the Omnibus Amendment, the Additional RIFA Investors and the Purchasers will receive a number of shares of the common stock, representing 5.0% of the fully-diluted shares outstanding (without regard to any beneficial ownership blockers) immediately after the closing of the offering and sale of Additional Shares (as defined in the Existing Documents) to be consummated no later than February 15, 2025, in connection with which the Company shall have raised at least $12,000,000 in aggregate net proceeds (the “Amendment Fee”); provided that, in the event the Company cannot issue shares of common stock to the Additional RIFA Investors and the Purchasers due to applicable law, the Company shall instead issue an equivalent (as-converted) number of shares of a newly created series of Series A-1 non-voting preferred stock, par value $0.0001 per share (the “Series A-1 Preferred Stock”), and the Company shall include a proposal in a definitive proxy statement on Schedule 14A seeking stockholder approval no later than December 31, 2025 to allow the conversion of Series A-1 Preferred Stock into common stock; provided further that, each share of Series A-1 Preferred Stock outstanding on December 31, 2026 (the “Redemption Date”) will, except to the extent prohibited by Delaware law governing distributions to stockholders (including the Delaware General Corporation Law), be redeemed by the Company for cash in an amount equal to the as-converted value of the underlying common stock.
The Omnibus Amendment also provides that the Company will ensure that RTW and the Additional RIFA Investors have the right to designate one director to the Board, which director is currently Nicholas Lewin, and as of the Amendment Effective Date (as defined in the Omnibus Amendment), also have the right to designate a second director to the Board, which additional director will initially be R. Jason Richey.
January 2025 RTW Private Placement
On January 14, 2025, the Company entered into the January 2025 Subscription Agreement with funds affiliated with RTW, pursuant to which the Company agreed to sell to RTW 841,751 shares of its common stock, for an aggregate purchase price of approximately $2.5 million at a purchase price per share of $2.97. The January 2025 RTW Private Placement closed on January 16, 2025.
November 2025 RTW Private Placement
On November 11, 2025, we entered into the Securities Purchase Agreement with the purchasers party thereto, which included funds managed by RTW, pursuant to which we agreed to sell to RTW 2,994,012 shares of our common stock and 2,994,012 accompanying warrants to purchase 2,994,012 shares of our common stock, at an offering price of $1.67 per share and accompanying warrant. The private placement closed on November 14, 2025, and resulted in gross proceeds of approximately $5 million, which includes approximately $3.1 million paid by RTW.
Exchange Agreement
On November 11, 2025, the Company entered into the Exchange Agreement with RTW, pursuant to which RTW has agreed to exchange all of the (i) principal amount of the Notes, purchased pursuant to the terms of the Amended Note Purchase Agreement, including interest accrued on the Notes; (ii) Company obligations under the First RIFA and (iii) Company obligations
116
under the Second RIFA for shares of a newly issued class of Series B Preferred Stock.
Pursuant to the Exchange Agreement, the Company has agreed, at the request of any holder of Series B Preferred Stock, to file a resale registration statement with the SEC to register the resale of the Series B Preferred Stock, the Common Stock issuable upon conversion thereof and other equity of the Company held by RTW as of the date of the Exchange Agreement, and to cause such registration statement to become effective within 90 days of the filing date.
Upon the closing of the Exchange, RTW’s rights to appoint certain directors of the Company pursuant to the Amended Note Purchase Agreement and the RIFAs will terminate and be replaced by the rights set forth in the Certificate of Designations. Pursuant to the terms of the Certificate of Designations, for so long as RTW or its affiliates beneficially own at least: (i) 10% of the Company’s securities, RTW will have the right to nominate an individual for election to the Board and (ii) 30% of our securities, RTW will have the right to nominate a second individual for election to the Board, in each case subject to the recommendation of the Nominating Committee and the approval of the Board. Such individuals shall initially be Nicholas Lewin and R. Jason Richey, respectively, who currently serve on the Board. In addition, for so long as (x) a Specified Breach Event has occurred and is continuing and (y) RTW or its affiliates beneficially own at least 10% of the Company’s securities, RTW will have the right to nominate two additional individuals for election to the Board, in each case subject to the recommendation of the Nominating Committee and the approval of the Board. Notwithstanding the foregoing, if the appointment of such individuals would result in a majority of the Board being comprised of individuals nominated by RTW, then (i) such nomination right will be reduced so that all individuals nominated by RTW shall represent less than a majority of the Board, (ii) the Company will use its best efforts to increase the size of the Board to permit nomination of both individuals while all individuals nominated by RTW represent less than a majority of the Board, and (iii) the dividend rate of the Series B Preferred Stock will be increased by 2% during such period that at least one such individual cannot be appointed.
Indemnification Agreements
We entered into indemnification agreements with our directors and executive officers. The indemnification agreements and our Charter and Bylaws require us to indemnify our directors and executive officers to the fullest extent permitted by law.
Executive Officer and Director Compensation Arrangements
See the sections entitled “Executive Compensation” and “Director Compensation” above for information regarding compensation arrangements with our executive officers and directors, which include, among other things, employment, termination of employment and change in control arrangements, stock awards and certain other benefits.
Related Person Transaction Policy
We have adopted a written related person transaction policy that sets forth the following policies and procedures for the review and approval or ratification of related person transactions
A “Related Person Transaction” is any transaction in which Allurion or any of its subsidiaries was, is or will be a participant, the amount of which involved exceeds $120,000, and in which any related person had, has or will have a direct or indirect material interest. A “Related Person” means:
We also have policies and procedures designed to minimize potential conflicts of interest arising from any dealings we may have with our affiliates and to provide appropriate procedures for the disclosure of any real or potential conflicts of interest that may exist from time to time. Specifically, the Audit Committee will have the responsibility to review related person transactions.
Director Independence
Our Board of Directors has determined that each member of the Board of Directors, other than Dr. Gaur, qualifies as independent, as defined under the listing standards of the NYSE. In addition, our Board of Directors has determined that each of the members of the Audit, Nominating and Corporate Governance, and Compensation Committees is independent in accordance with the rules of the NYSE and, in, the case of the members of the Audit Committee, the rules of the SEC. In determining the independence of its members, the Board of Directors considered all the facts and circumstances it deemed relevant in determining
117
their independence, including, but not limited to, the director's commercial, industrial, banking, consulting, legal, accounting, charitable, and familial relationships. We are subject to the rules of the SEC and NYSE relating to the memberships, qualifications, and operations of the Audit Committee.
Item 14. Principal Accountant Fees and Services.
Independent Registered Public Accounting Firm Fees
Fees billed by our independent public accounting firm, Deloitte & Touche LLP ("Deloitte") (Boston, Massachusetts, PCAOB Auditor ID 34) for the fiscal years ended December 31, 2025 and 2024 related to audit services, audit-related services, tax services, and other services were approved by our Audit Committee. The following table summarizes the aggregate fees billed to us by Deloitte:
Type of Service |
|
Fiscal Year Ended December 31, 2025 |
|
|
Fiscal Year Ended December 31, 2024 |
|
||
Audit Fees(1) |
|
$ |
1,736,760 |
|
|
$ |
1,483,750 |
|
Audit-Related Fees(2) |
|
|
— |
|
|
|
— |
|
Tax Fees(3) |
|
|
— |
|
|
|
— |
|
All Other Fees(4) |
|
|
— |
|
|
|
— |
|
Total |
|
$ |
1,736,760 |
|
|
$ |
1,483,750 |
|
Audit Committee Pre-approval Policy and Procedures
Our Audit Committee has adopted procedures requiring the pre-approval of all audit and permissible non-audit services that are to be performed by our independent registered public accounting firm in order to assure that these services do not impair the auditor’s independence. These procedures generally approve the performance of specific services subject to a cost limit for all such services. This general approval is to be reviewed, and if necessary modified, at least annually. Management must obtain the specific prior approval of the Audit Committee for each engagement of our independent registered public accounting firm to perform any other audit or permissible non-audit services. The Audit Committee may delegate pre-approval authority to one or more of its independent members but does not delegate its responsibility to approve services performed by our independent registered public accounting firm to any member of management.
All of the services rendered by Deloitte & Touche LLP with respect to the 2025 and 2024 fiscal years were pre-approved by the Audit Committee in accordance with this policy.
118
PART IV
Item 15. Exhibits and Financial Statement Schedules.
The following list of exhibits includes exhibits submitted with this Annual Report on Form 10-K as filed with the SEC and those incorporated by reference to other filings.
Exhibit Number |
|
Description |
Incorporated by Reference herein from - Form or Schedule |
File Number |
Exhibit |
Filed Date |
3.1 |
|
Amended and Restated Certificate of Incorporation of Allurion Technologies, Inc. (formerly Allurion Technologies Holdings, Inc.) |
8-K |
001-41767 |
3.1 |
August 7, 2023 |
3.2 |
|
Amended and Restated Bylaws of Allurion Technologies, Inc. (formerly Allurion Technologies Holdings, Inc.) |
8-K |
001-41767 |
3.2 |
August 7, 2023 |
4.1 |
|
Warrant Agreement, dated February 4, 2021, between Compute Health Acquisition Corp. and Continental Stock Transfer & Trust Company, as warrant agent. |
8-K |
001-40001 |
4.1 |
February 9, 2021 |
4.2 |
|
Amendment to Warrant Agreement, dated August 1, 2023, by and between Compute Health and Continental Stock Transfer & Trust Company. |
8-K |
001-41767 |
4.2 |
August 7, 2023 |
4.3 |
|
Warrant Assignment, Assumption and Amendment Agreement, dated August 1, 2023, by and among Compute Health Acquisition Corp., New Allurion Holdings, Inc., and Continental Stock Transfer & Trust Company. |
8-K |
001-41767 |
4.3 |
August 7, 2023 |
4.4 |
|
Description of Capital Stock. |
10-K/A |
001-41767 |
4.4 |
August 19, 2025 |
4.5 |
|
Form of Public Warrant. |
8-K |
001-41767 |
4.1 |
July 1, 2024 |
4.6 |
|
Form of Private Placement Warrant. |
8-K |
001-41767 |
4.2 |
July 1, 2024 |
4.7 |
|
Form of Common Warrant (January 2025). |
8-K |
001-41767 |
4.1 |
January 28, 2025 |
4.8 |
|
Form of Common Warrant (February 2025). |
8-K |
001-41767 |
4.1 |
February 21, 2025 |
4.9 |
|
Form of Private Placement Warrant (February 2025). |
8-K |
001-41767 |
4.2 |
February 21, 2025 |
4.10 |
|
Form of Private Placement Warrant (November 2025) |
8-K |
001-41767 |
4.1 |
November, 12, 2025 |
4.11 |
|
Form of New Warrant |
8-K |
001-41767 |
4.1 |
February 25, 2026 |
10.1 |
|
Form of Indemnification Agreement between Allurion Technologies, Inc. and its Directors and Officers. |
S-4/A |
333-271862 |
10.32 |
June 13, 2023 |
10.2++ |
|
Investor Rights Agreement, dated August 1, 2023, by and among New Allurion, Compute Health Sponsor LLC, certain equity holders of Allurion Technologies, Inc. and certain other parties. |
8-K |
001-41767 |
10.5 |
August 7, 2023 |
10.3++ |
|
Amended and Restated RTW PIPE Side Letter Agreement, dated as of May 2, 2023, by and among Compute Health Acquisition Corp., Allurion Technologies Holdings, Inc., Compute Health LLC, Allurion Technologies, Inc. and certain |
8-K |
001-40001 |
10.6 |
May 2, 2023 |
119
|
|
entities that have engaged RTW Investments, LP as investment manager. |
|
|
|
|
10.4++ |
|
Revenue Interest Financing Agreement, dated as of February 9, 2023, by and among Allurion Technologies, Inc. and certain entities that have engaged RTW Investments, LP as investment manager. |
8-K |
001-40001 |
10.8 |
February 9, 2023 |
10.5++ |
|
Bridging Agreement, dated as of February 9, 2023, by and among Allurion Technologies, Inc. and Fortress Credit Corp. |
8-K |
001-40001 |
10.9 |
February 9, 2023 |
10.6#† |
|
Employment Agreement dated August 1, 2023 with Shantanu Gaur. |
8-K |
001-41767 |
10.10 |
August 7, 2023 |
10.7#† |
|
Employment Agreement between Allurion Technologies, Inc. and Ram Chuttani. |
8-K |
001-41767 |
10.13 |
August 7, 2023 |
10.8# |
|
Allurion Technologies, Inc. 2010 Stock Incentive Plan. |
S-4 |
333-271862 |
10.13 |
May 12, 2023 |
10.9# |
|
Allurion Technologies, Inc. Amended and Restated 2020 Stock Option and Grant Plan. |
S-4 |
333-271862 |
10.14 |
May 12, 2023 |
10.10# |
|
Form of Allurion Technologies Holdings, Inc. 2023 Equity Incentive Plan. |
S-4 |
333-271862 |
10.15 |
May 12, 2023 |
10.11# |
|
Form of Restricted Stock Unit Award Agreement for Non-Employee Directors under the Allurion Technologies, Inc. 2023 Stock Option And Incentive Plan. |
8-K |
001-41767 |
10.18 |
August 7, 2023 |
10.12# |
|
Form of Allurion Technologies Holdings, Inc. 2023 Employee Stock Purchase Plan. |
S-4 |
333-271862 |
10.16 |
May 12, 2023 |
10.13++ |
|
Side Letter Termination Agreement, dated as of May 2, 2023, by and among Allurion Technologies, Inc., Romulus Growth Allurion L.P. and Hunter Ventures Limited. |
S-4 |
333-271862 |
10.1 |
May 12, 2023 |
10.14++ |
|
Backstop Agreement, dated as of May 2, 2023, by and among Hunter Ventures Limited, Allurion Technologies Holdings, Inc., Allurion Technologies, Inc., RTW Master Fund, Ltd., RTW Innovation Master Fund, Ltd., RTW Venture Fund Limited and CFIP2 ALLE LLC. |
8-K |
001-40001 |
10.5 |
May 2, 2023 |
10.15 |
|
Side Letter Agreement, dated as of May 2, 2023, by and among Allurion Technologies, Inc., CFIP2 ALLE LLC and Fortress Credit Corp. |
8-K |
001-40001 |
10.7 |
May 2, 2023 |
10.16 |
|
Contribution Agreement, dated as of May 2, 2023, by and between Compute Health Sponsor LLC and Compute Health Acquisition Corp. |
8-K |
001-40001 |
10.9 |
May 2, 2023 |
10.17 |
|
RSU Partial Forfeiture and Amendment Agreement, dated as of May 2, 2023, by and between Allurion Technologies, Inc. and Krishna Gupta. |
8-K |
001-40001 |
10.10 |
May 2, 2023 |
10.18++ |
|
Credit Agreement and Guaranty, dated as of August 1, 2023, by and among Allurion Technologies, LLC, Allurion Technologies, Inc., the Subsidiary Guarantors from time to time party thereto, the Lenders from time to time parties thereto and Fortress Credit Corp., as administrative agent. |
8-K |
001-41767 |
10.25 |
August 7, 2023 |
10.19# |
|
Form of Restricted Stock Unit Award Agreement for Company Employees under the Allurion Technologies, Inc. 2023 Stock Option and Incentive Plan. |
8-K |
001-41767 |
10.27 |
August 7, 2023 |
10.20# |
|
Form of Incentive Stock Option Agreement under the Allurion Technologies, Inc. 2023 Stock Option and Incentive Plan. |
8-K |
001-41767 |
10.28 |
August 7, 2023 |
10.21# |
|
Form of Non-Qualified Stock Option Agreement under the Allurion Technologies, Inc. 2023 Stock Option and Incentive Plan. |
8-K |
001-41767 |
10.29 |
August 7, 2023 |
10.22 |
|
Contribution Agreement, dated as of May 2, 2023, by and between Shantanu K. Gaur and Neha Gaur, Trustees of The Shantanu K. Gaur Revocable Trust of 2021, and Allurion Technologies Holdings, Inc. |
8-K |
001-40001 |
10.8 |
May 2, 2023 |
120
10.23 |
|
ChEF Purchase Agreement, dated as of December 18, 2023, by and between Allurion Technologies, Inc. and Chardan Capital Markets LLC. |
8-K |
001-41767 |
10.1 |
December 18, 2023 |
10.24 |
|
Registration Rights Agreement dated as of December 18, 2023, by and between Allurion Technologies, Inc. and Chardan Capital Markets LLC. |
8-K |
001-41767 |
10.2 |
December 18, 2023 |
10.25† |
|
Sales Agency Agreement, dated May 15, 2023, by and between Allurion Technologies, Inc. and Covidien AG. |
S-4 |
333-271862 |
10.37 |
July 6, 2023 |
10.26 |
|
Lease for 11 Huron Drive, Natick, MA 01760, dated June 15, 2016, by and between Allurion Technologies, Inc. and Legacy Huron, LLC, as amended by the First Amendment to Lease, dated November 28, 2016, the Second Amendment to Lease, dated March 20, 2017, the Third Amendment to Lease, dated June 21, 2017, the Fourth Amendment to Lease, dated August 21, 2017, the Fifth Amendment to Lease, dated October 30, 2017 and the Sixth Amendment to Lease, dated March 15, 2021. |
S-4 |
333-271862 |
10.18 |
May 12, 2023 |
10.27+ |
|
Commercial Lease for 8 Erie Drive, Natick, MA 01760, dated January 8, 2018, by and between Allurion Technologies, Inc. and 8 Erie Drive, LLC. |
S-4 |
333-271862 |
10.19 |
May 12, 2023 |
10.28+ |
|
Lease for 3 Huron Drive, Natick, MA 01760, dated January 10, 2020, by and between Allurion Technologies, Inc. and 3 Huron Investments LLC. |
S-4 |
333-271862 |
10.20 |
May 12, 2023 |
10.29+ |
|
Lease for 14 Huron Drive, Natick, MA, dated June 18, 2014, by and between the Company and Fourteen Huron Drive, LLC, as amended by the First Amendment to Lease, dated June 30, 2017, the Third Amendment to Lease dated April 5, 2018, the Fourth Amendment to Lease, dated November 16, 2018, the Fifth Amendment to Lease dated as of August 12, 2019 and the Sixth Amendment to Lease, dated March 15, 2021. |
S-4 |
333-271862 |
10.21 |
May 12, 2023 |
10.30++ |
|
Side Letter Termination Agreement, dated as of May 2, 2023, by and among Allurion Technologies, Inc., Romulus Growth Allurion L.P. and Hunter Ventures Limited. |
8-K |
001-40001 |
10.1 |
May 2, 2023 |
10.31# |
|
Settlement Agreement, dated as of December 12, 2023, by and between Allurion Technologies, Inc. and Benoit Chardon. |
10-K |
001-41767 |
10.36 |
March 26,2024 |
10.32# |
|
Termination Agreement, dated as of December 12, 2023 by and between Allurion France and Benoit Chardon Consulting. |
10-K |
001-41767 |
10.37 |
March 26,2024 |
10.33 |
|
Amendment No. 1 to Credit Agreement and Guaranty, dated as of December 29, 2023, by and among Allurion Technologies, Inc., Allurion Technologies, LLC, the Subsidiary Guarantors from time to time party thereto, the Lenders from time to time party thereto and Fortress Credit Corp., as administrative agent for the Lenders. |
8-K |
001-41767 |
10.1 |
December 29, 2023 |
10.34# |
|
Employment Agreement between Allurion Technologies, Inc. and Brendan Gibbons. |
10-K |
001-41767 |
10.39 |
March 26,2024 |
10.35+ ++ |
|
Note Purchase Agreement dated as of April 14, 2024, by and among Allurion Technologies, Inc., RTW Investments, LP, as agent for the purchasers part thereto from time to time, and Acquiom Agency Services, LLC, as collateral agent for the purchasers. |
8-K |
001-41767 |
10.1 |
April 17, 2024 |
10.36++ |
|
Omnibus Amendment, dated as of April 14, 2024, by and among Allurion Technologies, Inc., Allurion Technologies, LLC and certain entities that have engaged RTW Investments, LP as investment manager. |
8-K |
001-41767 |
10.2 |
April 17, 2024 |
10.37++ |
|
First Amendment to Amended and Restated Letter Agreement, dated as of April 14, 2024, by and among Allurion Technologies, Inc., Allurion Technologies, LLC, RTW Master |
8-K |
001-41767 |
10.3 |
April 17, 2024 |
121
|
|
Fund, Ltd., RTW Innovation Master Fund, Ltd. and RTW Biotech Opportunities Operating Ltd. |
|
|
|
|
10.38++ |
|
First Amendment to Note Purchase Agreement, dated as of April 16, 2024, by and among Allurion Technologies, Inc., RTW Investments, LP, as agent for the purchasers party thereto from time to time, and Acquiom Agency Services LLC, as collateral agent for the purchasers. |
8-K |
001-41767 |
10.4 |
April 17, 2024 |
10.39 |
|
Eighth Amendment to 14 Huron Lease, dated as of April 3, 2024, by and between Allurion Technologies, Inc. and Fourteen Huron Drive, LLC. |
10-Q |
001-41767 |
10.6 |
August 14, 2024 |
10.40#† |
|
Offer Letter dated May 17, 2024 with Ojas Buch. |
10-Q |
001-41767 |
10.7 |
August 14, 2024 |
10.41++ |
|
Revenue Interest Financing Agreement, dated as of October 30, 2024, by and among Allurion Technologies, LLC, RTW Master Fund Ltd., RTW Innovations Master Fund, Ltd. and RTW Biotech Opportunities Operating Ltd. |
8-K |
001-41767 |
10.1 |
November 4, 2024 |
10.42++ |
|
Omnibus Amendment, dated as of January 7, 2025, by and among Allurion Technologies, Inc., Allurion Technologies, LLC, Allurion Technologies Australia Pty Ltd, Allurion France, RTW Master Fund, Ltd., RTW Innovation Master Fund, Ltd., RTW Biotech Opportunities Operating Ltd., and RTW Investments, L.P. |
S-1/A |
333-283701 |
10.49 |
January 8, 2025 |
10.43 |
|
Subscription Agreement, dated as of January 14, 2025, between Allurion Technologies, Inc. and the investors named therein. |
8-K |
001-41767 |
10.1 |
January 17, 2025 |
10.44 |
|
Securities Purchase Agreement, dated as of January 24, 2025, by and between Allurion Technologies, Inc. and the purchasers named therein. |
8-K |
001-41767 |
10.1 |
January 28, 2025 |
10.45 |
|
Form of Securities Purchase Agreement. |
8-K |
001-41767 |
10.1 |
February 21, 2025 |
10.46 |
|
Subscription Agreement, dated as of February 19, 2025, between Allurion Technologies, Inc. and the investors named therein. |
8-K |
001-41767 |
10.2 |
February 21, 2025 |
10.47 |
|
Second Amendment to Note Purchase Agreement, dated as of April 15, 2025, by and among Allurion Technologies, Inc., the purchasers party thereto, and RTW Investments, L.P. as agent for purchasers |
8-K |
001-41767 |
10.1 |
April 17, 2025 |
10.48 |
|
Eighth Amendment to 11 Huron Lease, dated as of June 20, 2025, by and between Allurion Technologies, Inc. and Legacy Huron LLC. |
10-K |
001-41767 |
10.2 |
August 19, 2025 |
10.49 |
|
Securities Purchase Agreement, dated as of November 11, 2025, between Allurion Technologies, Inc. and the investors named therein |
8-K |
001-41767 |
10.1 |
November 12, 2025 |
10.50 |
|
Registration Rights Agreement, dated as of November 11, 2025, between Allurion Technologies, Inc. and the investors named therein |
8-K |
001-41767 |
10.2 |
November 12, 2025 |
10.51 |
|
Securities Purchase Agreement, dated as of November 11, 2025, between Allurion Technologies Inc. and certain entities affiliated with RTW Investments, LP. |
8-K |
001-41767 |
10.3 |
November 12, 2025 |
10.52 |
|
Assignment of Lease and Consent to Assignment, dated as of July 10, 2025, by and among Allurion Technologies, Inc., Aila Technologies, Inc. and 3 Huron Investments, LLC. |
10-K |
001-41767 |
10.4 |
November 17, 2025 |
10.53 |
|
Form of Inducement Letter |
8-K |
001-41767 |
10.1 |
February 25, 2026 |
19.1* |
|
Allurion Technologies, Inc. Insider Trading Policy. |
10-K
|
001-41767
|
19.1 |
March 27, 2025
|
122
21.1* |
|
List of subsidiaries of Allurion Technologies Holdings, Inc. |
10-K
|
001-41767
|
21.1
|
March 27, 2025
|
23.1* |
|
Consent of Independent Registered Public Accounting Firm, Deloitte & Touche LLP. |
|
|
|
|
|
|
|
|
|
|
|
31.1* |
|
Certification of Principal Executive Officer and Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
|
|
|
|
32.1** |
|
Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
|
|
|
|
97.1 |
|
Allurion Technologies, Inc. Compensation Recovery Policy. |
10-K
|
001-41767
|
97.1
|
March 27, 2025
|
101.INS |
|
Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document. |
|
|
|
|
101.SCH |
|
Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents |
|
|
|
|
104 |
|
Cover Page formatted as Inline XBRL and contained in Exhibit 101 |
|
|
|
|
* Filed herewith.
** Furnished herewith.
+ Certain of the exhibits and schedules to this exhibit have been omitted in accordance with Regulation S-K Item 601(b)(2). The Registrant agrees to furnish supplementally a copy of all omitted exhibits and schedules to the SEC upon its request.
++ Certain of the exhibits and schedules to this exhibit have been omitted in accordance with Regulation S-K Item 601(a)(5). The Registrant agrees to furnish supplementally a copy of all omitted exhibits and schedules to the SEC upon its request.
† Portions of this exhibit have been redacted in accordance with Regulation S-K Item 601(a)(6).
# Indicates a management contract or compensatory plan, contract or arrangement.
Item 16. Form 10-K Summary
None.
123
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.
|
|
Allurion Technologies, Inc. |
|
|
|
|
|
|
|
By: |
/s/ Shantanu Gaur |
|
|
|
Shantanu Gaur |
|
|
|
Chief Executive Officer |
POWER OF ATTORNEY
Each person whose individual signature appears below hereby constitutes and appoints Shantanu Gaur and Brendan Gibbons, and each of them, with full power of substitution and re-substitution and full power to act without the other, as his or her true and lawful attorney-in-fact and agent to act in his or her name, place and stead and to execute in the name and on behalf of each person, individually and in each capacity stated below, and to file any and all amendments to this Annual Report on Form 10-K, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing, ratifying and confirming all that said attorneys-in-fact and agents or any of them or their or his substitute or substitutes may lawfully do or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Name |
Title |
Date |
/s/ Shantanu Gaur |
Chief Executive Officer and Director (Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer) |
March 30, 2026 |
Shantanu Gaur |
||
/s/ Michael Davin |
Director
|
March 30, 2026
|
Michael Davin |
||
|
Director
|
March 30, 2026
|
Krishna Gupta |
||
/s/ Larson Douglas Hudson |
Director
|
March 30, 2026
|
Larson Douglas Hudson |
||
/s/ Omar Ishrak |
Director
|
March 30, 2026
|
Omar Ishrak |
||
/s/ Keith B. Johns II |
Director
|
March 30, 2026
|
Keith B. Johns II |
||
/s/ Nicholas Lewin |
Director
|
March 30, 2026
|
Nicholas Lewin |
||
/s/ R. Jason Richey |
Director
|
March 30, 2026
|
R. Jason Richey |
124
INDEX TO FINANCIAL STATEMENTS
|
|
Page |
Report of Independent Registered Public Accounting Firm (PCAOB ID: |
|
F-2 |
Consolidated Balance Sheets as of December 31, 2025 and 2024 |
|
F-3 |
Consolidated Statements of Operations for the Years Ended December 31, 2025 and 2024 |
|
F-4 |
Consolidated Statements of Comprehensive Loss for the Years Ended December 31, 2025 and 2024 |
|
F-5 |
Consolidated Statements of Stockholders’ Deficit for the Years Ended December 31, 2025 and 2024 |
|
F-6 |
Consolidated Statements of Cash Flows for the Years Ended December 31, 2025 and 2024 |
|
F-7 |
Notes to Consolidated Financial Statements |
|
F-8 |
F-1
Report of Independent Registered Public Accounting Firm
To the stockholders and the Board of Directors of Allurion Technologies, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Allurion Technologies, Inc. and subsidiaries (the "Company") as of December 31, 2025 and 2024, the related consolidated statements of operations, comprehensive loss, stockholders’ deficit, and cash flows, for each of the two years in the period ended December 31, 2025, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America.
Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company's recurring losses from operations and cash outflows from operating activities incurred since inception, its expectation of continuing operating losses and cash used in operations for the foreseeable future, the need to raise additional capital to satisfy its current obligations and finance its future operations, and noncompliance with certain financial covenants under its credit facilities raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/
March 30, 2026
We have served as the Company’s auditor since 2016.
F-2
ALLURION TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
|
|
December 31, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
Assets |
|
|
|
|
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|
||
Current assets: |
|
|
|
|
|
|
||
Cash and cash equivalents |
|
$ |
|
|
$ |
|
||
Accounts receivable, net of allowance of doubtful accounts of $ |
|
|
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|
|
|
||
Inventory, net |
|
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|
|
|
||
Prepaid expenses and other current assets |
|
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|
||
Total current assets |
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|
||
Property and equipment, net |
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||
Right-of-use asset |
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||
Other long-term assets |
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|
||
Total assets |
|
$ |
|
|
$ |
|
||
Liabilities and Stockholders’ Deficit |
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|
||
Current liabilities: |
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|
|
||
Accounts payable |
|
$ |
|
|
$ |
|
||
Current portion of lease liabilities |
|
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|
||
Accrued expenses and other current liabilities |
|
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|
||
Current portion of convertible notes payable |
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||
Total current liabilities |
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||
Warrant liabilities |
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||
Revenue Interest Financing liability |
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Earn-out liabilities |
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Convertible notes payable |
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||
Lease liabilities, net of current portion |
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||
Other liabilities |
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|
||
Total liabilities |
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||
|
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|||
Stockholders’ deficit: |
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||
Preferred stock, $ |
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|
||
Common stock, $ |
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|
|||
Additional paid-in capital |
|
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|
||
Accumulated other comprehensive gain (loss) |
|
|
|
|
|
( |
) |
|
Accumulated deficit |
|
|
( |
) |
|
|
( |
) |
Total stockholders’ deficit |
|
|
( |
) |
|
|
( |
) |
Total liabilities and stockholders’ deficit |
|
$ |
|
|
$ |
|
||
The accompanying notes are an integral part of these consolidated financial statements.
F-3
ALLURION TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in thousands, except per share amounts)
|
|
Year Ended December 31, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
Revenue |
|
$ |
|
|
$ |
|
||
Cost of revenue |
|
|
|
|
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|
||
Gross profit |
|
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|
||
Operating expenses: |
|
|
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|
||
Sales and marketing |
|
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|
||
Research and development |
|
|
|
|
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|
||
General and administrative |
|
|
|
|
|
|
||
Total operating expenses: |
|
|
|
|
|
|
||
Loss from operations |
|
|
( |
) |
|
|
( |
) |
Other income (expense): |
|
|
|
|
|
|
||
Interest expense |
|
|
|
|
|
( |
) |
|
Changes in fair value of warrants |
|
|
|
|
|
|
||
Changes in fair value of debt |
|
|
( |
) |
|
|
|
|
Changes in fair value of Revenue Interest Financing and PIPE Conversion Option |
|
|
( |
) |
|
|
( |
) |
Changes in fair value of earn-out liabilities |
|
|
|
|
|
|
||
Loss on extinguishment of debt |
|
|
( |
) |
|
|
( |
) |
Other income (expense), net |
|
|
|
|
|
|
||
Total other income: |
|
|
|
|
|
|
||
Loss before income taxes |
|
|
( |
) |
|
|
( |
) |
Provision for income taxes |
|
|
( |
) |
|
|
( |
) |
Net loss |
|
|
( |
) |
|
|
( |
) |
Net loss per share |
|
|
|
|
|
|
||
Basic and diluted |
|
$ |
( |
) |
|
$ |
( |
) |
Weighted-average shares outstanding |
|
|
|
|
|
|
||
Basic and diluted |
|
|
|
|
|
|
||
The accompanying notes are an integral part of these consolidated financial statements.
F-4
ALLURION TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(dollars in thousands)
|
|
Year Ended December 31, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
Net loss |
|
$ |
( |
) |
|
$ |
( |
) |
Other comprehensive income (loss): |
|
|
|
|
|
|
||
Change in fair value of Revenue Interest Financing due to change in credit risk |
|
|
|
|
|
( |
) |
|
Change in fair value of RTW Convertible Notes due to change in credit risk |
|
|
|
|
|
( |
) |
|
Comprehensive loss |
|
$ |
( |
) |
|
$ |
( |
) |
The accompanying notes are an integral part of these consolidated financial statements.
F-5
ALLURION TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT
(dollars in thousands)
|
|
Redeemable Preferred Stock |
|
|
|
Common Sock |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional |
|
|
Accumulated Other |
|
|
Accumulated |
|
|
Stockholders’ |
|
||||||||
|
|
Shares |
|
|
Amount |
|
|
|
Shares |
|
|
Amount |
|
|
Paid-in Capital |
|
|
Comprehensive Loss |
|
|
Deficit |
|
|
Deficit |
|
||||||||
Balance as of December 31, 2023 |
|
|
— |
|
|
$ |
— |
|
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
||||
Exercise of stock options |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
Issuance of common stock for the exercise of Public Warrants |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
Issuance of common stock from equity line financing (Note 11) |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
Issuance of common stock in connection with vesting of RSU awards |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Stock-based compensation expense |
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Issuance of preferred stock in connection with Private Placement, net of issuance costs |
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
||
Issuance of common stock in connection with Public Offering, net of issuance costs |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||||
Exercise of PIPE Conversion Option |
|
|
— |
|
|
|
— |
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
Issuance of common stock for the conversion of preferred stock |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
Other comprehensive loss |
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Net loss |
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Balance as of December 31, 2024 |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|||
Exercise of stock options |
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Issuance of common stock from equity line financing (Note 11) |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
Issuance of common stock in connection with vesting of RSU awards, net |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Stock-based compensation expense |
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Issuance of preferred stock in connection with RTW Private Placement, net of issuance costs |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
Issuance of common stock in connection with January Public Offering, net of issuance costs |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||||
Issuance of common stock in connection with February Public Offering and Leavitt Private Placement, net of issuance costs |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||||
Issuance of common stock in connection with November Private Placement, net of issuance costs |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||||
Issuance of common stock from the conversion of RTW Convertible Notes |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
Issuance of common stock to consultants |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
Other comprehensive income |
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Net loss |
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Balance as of December 31, 2025 |
|
|
— |
|
|
$ |
— |
|
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
||||
The accompanying notes are an integral part of these consolidated financial statements.
F-6
ALLURION TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
|
|
Year Ended December 31, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
Operating Activities: |
|
|
|
|
|
|
||
Net loss |
|
$ |
( |
) |
|
$ |
( |
) |
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
|
|
|
||
Non-cash lease expense |
|
|
|
|
|
|
||
Depreciation and amortization |
|
|
|
|
|
|
||
Stock-based compensation |
|
|
|
|
|
|
||
Provision for uncollectible accounts |
|
|
|
|
|
|
||
Unrealized exchange gain (loss) and other |
|
|
( |
) |
|
|
|
|
Provision for inventory |
|
|
|
|
|
|
||
Change in fair value of warrant liabilities |
|
|
( |
) |
|
|
( |
) |
Change in fair value of derivative liabilities |
|
|
— |
|
|
|
( |
) |
Change in fair value of debt |
|
|
|
|
|
( |
) |
|
Change in fair value of Revenue Interest Financing and PIPE Conversion Option |
|
|
|
|
|
|
||
Change in fair value of earn-out liabilities |
|
|
( |
) |
|
|
( |
) |
Change in fair value of RTW Share Obligation |
|
|
|
|
|
— |
|
|
Interest paid on debt recorded at fair value |
|
|
( |
) |
|
|
( |
) |
Non-cash interest expense |
|
|
— |
|
|
|
|
|
Loss on extinguishment of debt |
|
|
|
|
|
|
||
Debt issuance costs associated with debt recorded at fair value |
|
|
— |
|
|
|
|
|
Issuance costs associated with warrants recorded at fair value |
|
|
|
|
|
|
||
Changes in operating assets and liabilities: |
|
|
|
|
|
|
||
Accounts receivable |
|
|
|
|
|
|
||
Inventory |
|
|
( |
) |
|
|
|
|
Prepaid expenses, other current and long-term assets |
|
|
|
|
|
|
||
Lease liabilities |
|
|
( |
) |
|
|
( |
) |
Accounts payable |
|
|
( |
) |
|
|
( |
) |
Accrued expenses and other current liabilities |
|
|
( |
) |
|
|
( |
) |
Net cash used in operating activities |
|
$ |
( |
) |
|
$ |
( |
) |
Investing Activities: |
|
|
|
|
|
|
||
Purchases of property and equipment |
|
|
— |
|
|
|
( |
) |
Net cash used in investing activities |
|
$ |
— |
|
|
$ |
( |
) |
Financing Activities: |
|
|
|
|
|
|
||
Proceeds from issue of convertible notes |
|
|
— |
|
|
|
|
|
Proceeds from private offerings, net of issuance costs |
|
|
|
|
|
|
||
Proceeds from public offerings, net of issuance costs |
|
|
|
|
|
|
||
Payment of debt issuance costs |
|
|
— |
|
|
|
( |
) |
Repayment of Fortress Term Loan |
|
|
— |
|
|
|
( |
) |
Proceeds from option and warrant exercises |
|
|
— |
|
|
|
|
|
Proceeds from equity line financing |
|
|
|
|
|
|
||
Net cash provided by financing activities |
|
$ |
|
|
$ |
|
||
Net decrease in cash and cash equivalents and restricted cash |
|
|
( |
) |
|
|
( |
) |
Cash and cash equivalents and restricted cash at beginning of period |
|
|
|
|
|
|
||
Cash and cash equivalents and restricted cash at end of period |
|
$ |
|
|
$ |
|
||
Supplemental disclosure of cash flow information |
|
|
|
|
|
|
||
Cash paid for interest |
|
$ |
— |
|
|
$ |
|
|
Supplemental cash flow information on non-cash investing and financing activities |
|
|
|
|
|
|
||
Deferred financing costs in accounts payable and accrued expenses |
|
|
|
|
|
|
||
Change in fair value of RTW Convertible Notes through OCI |
|
|
|
|
|
( |
) |
|
Change in fair value of Revenue Interest Financing through OCI |
|
|
|
|
|
( |
) |
|
Conversion of Series A Preferred Stock into Common Stock |
|
|
— |
|
|
|
( |
) |
Common stock issued for conversion of convertible notes |
|
|
( |
) |
|
|
— |
|
Exercise of PIPE Conversion Option |
|
|
— |
|
|
|
( |
) |
The accompanying notes are an integral part of these consolidated financial statements.
F-7
ALLURION TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except per share amounts)
1. Organization and Basis of Presentation
Organization
Allurion Technologies, Inc. (“Allurion” or the “Company”) is a vertically integrated medical device company that is developing, manufacturing, and commercializing innovative weight loss experiences centered around its Allurion™ Smart Capsule. The Allurion Smart Capsule is the world’s first and only swallowable, Procedureless™ intragastric balloon for weight loss that does not require surgery, endoscopy, or anesthesia for placement. Allurion sells the Allurion Smart Capsule and connected scale through distributors or directly to health care providers.
The Company also offers tiered access to artificial intelligence ("AI")-powered remote patient monitoring tools, a mobile app for patients and a clinic dashboard for providers, referred to as the Allurion Virtual Care Suite (“VCS”) and, collectively with the Allurion Smart Capsule, referred to as the “Allurion Program”. The base tier of the VCS is free of charge to those purchasing the Allurion Smart Capsule, as well as customers looking for a weight-loss management platform for patients utilizing other weight loss treatments, including anti-obesity medications and bariatric surgery. More full-scale versions of the VCS are available to health care providers on an upgrade basis. Allurion currently markets the Allurion Program in over
Business Combination Agreement
On February 9, 2023, Allurion Technologies Opco, Inc. (formerly Allurion Technologies, Inc., “Legacy Allurion”) and Allurion Technologies, Inc. (formerly Allurion Technologies Holdings, Inc.) entered into the Business Combination Agreement (as subsequently amended on May 2, 2023, the “Business Combination Agreement”) with Compute Health Acquisition Corp. (“CPUH” or "Compute Health"), Compute Health Corp. (“Merger Sub I”) and Compute Health LLC (“Merger Sub II” and, together with Merger Sub I, the “Merger Subs”). Pursuant to the Business Combination Agreement, on August 1, 2023 (the “Closing Date”), the Mergers (as defined below) were consummated in three steps: (a) Compute Health merged with and into Allurion (the “CPUH Merger”), with Allurion surviving the CPUH Merger as a publicly listed entity (the time at which the CPUH Merger became effective, the “CPUH Merger Effective Time”) and becoming the sole owner of the Merger Subs; (b) three hours following the consummation of the CPUH Merger, Merger Sub I merged with and into Legacy Allurion (the “Intermediate Merger” and the time at which the Intermediate Merger became effective, the “Intermediate Merger Effective Time”), with Legacy Allurion surviving the Intermediate Merger and becoming a direct, wholly-owned subsidiary of Allurion; and (c) thereafter, Legacy Allurion merged with and into Merger Sub II (the “Final Merger” and, collectively with the CPUH Merger and the Intermediate Merger, the “Mergers”, and together with all other transactions contemplated by the Business Combination Agreement, the “Business Combination”), with Merger Sub II surviving the Final Merger and remaining a direct, wholly-owned subsidiary of Allurion (the time at which the Final Merger became effective, the “Final Merger Effective Time”). Shares of Allurion's Common Stock (defined below) began trading on the New York Stock Exchange ("NYSE") under the ticker symbol “ALUR” on August 2, 2023. Upon completion of the Business Combination, Legacy Allurion's business operations continued as our business operations.
The Business Combination was accounted for as a reverse capitalization in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Under this method of accounting, Compute Health was treated as the “acquired” company for financial reporting purposes and Legacy Allurion was the accounting “acquirer”. Accordingly, the Business Combination was treated as the equivalent of Legacy Allurion issuing stock for the net assets of Compute Health, accompanied by a recapitalization. As a result of the reverse recapitalization, the assets and liabilities of the Company are presented at their historical carrying values, and the assets and liabilities of Compute Health are recognized on the acquisition date and measured on the basis of the net proceeds from the capital transaction, with no goodwill or other intangible assets recorded. This determination is primarily based on the fact that, immediately following the Business Combination, Legacy Allurion stockholders had a majority of the voting power of Allurion, Legacy Allurion controlled the majority of the board seats of Allurion, and Legacy Allurion senior management comprised all of the senior management of Allurion. The equity structure has been restated in all comparative periods up to the Closing Date to reflect the number of shares of the Company's common stock, $
F-8
Unless otherwise indicated, references in this Annual Report on Form 10-K to the "Company", "our", and "Allurion" refer to the consolidated operations of Allurion Technologies, Inc. and its subsidiaries. References to "CPUH" and "Compute Health" refer to Compute Health Acquisition Corp. and its subsidiaries prior to the consummation of the Business Combination and references to "Legacy Allurion" refer to Allurion Technologies, Inc. prior to the consummation of the Business Combination.
Basis of Presentation
The accompanying consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (“US GAAP”) and the rules and regulations of the Securities and Exchange Commission (“SEC”). Any reference in these notes to the applicable accounting guidance is meant to refer to the authoritative U.S. GAAP as found in the Accounting Standards Codification ("ASC"), and Accounting Standards Update ("ASU"), of the Financial Accounting Standards Board ("FASB").
The consolidated financial statements include Allurion; and its consolidated subsidiaries, Allurion France SAS, and Allurion Middle East, LLC, which were both incorporated in 2017; Allurion UK Ltd., which was incorporated in 2021; Allurion Italy, Srl, Allurion Spain Srl, Allurion Australia Pty Ltd. and Allurion Mexico S. de R.L de C.V, which were incorporated in 2022; and Allurion Technologies, LLC, which was incorporated in 2023. The Company’s operations are located in Europe, the Middle East, Africa, Latin America, Canada and the Asia-Pacific region, and it operates in one business segment.
Our foreign operations are subject to exchange rate fluctuations and foreign currency transaction costs. The functional currency for all of our foreign subsidiaries is the United States dollar except Allurion Australia Pty Ltd., which uses the Australian dollar. When remeasuring from a local currency to the functional currency, assets and liabilities are remeasured into U.S. dollars at exchange rates in effect at the balance sheet dates and results of operations transacted in local currency are remeasured into U.S. dollars using average exchange rates for the period presented. Gains (losses) from remeasurement of $
Reverse Stock Split
As a result of the Reverse Stock Split, every
No fractional shares were issued in connection with the Reverse Stock Split. Stockholders who would otherwise be entitled to receive fractional shares as a result of the Reverse Stock Split were automatically entitled to receive an additional fraction of a share of Common Stock to round up to the next whole share.
Proportional adjustments were also made to the number of shares of Common Stock awarded and available for issuance under the Company’s equity incentive plans, as well as the exercise price and the number of shares issuable upon the exercise or conversion of the Company’s outstanding stock options, restricted stock units and other equity securities under the Company’s equity incentive plans. Additionally, all outstanding convertible notes were adjusted in accordance with their terms, which will, among other changes to the convertible note terms, result in proportionate adjustments being made to the number of shares issuable upon exercise of such convertible notes and to the exercise and redemption prices of such convertible notes. All outstanding warrants were also adjusted in accordance with their terms, which will, among other changes to the warrant terms, result in proportionate adjustments being made to the number of shares issuable upon exercise of such warrants and to the exercise and redemption prices of such warrants. Specifically, following the effectiveness of the reverse stock split, every twenty five (
Unless otherwise indicated, all authorized, issued, and outstanding shares and per share amounts contained in the accompanying consolidated financial statements have been adjusted to reflect the 1-for- Reverse Stock Split for all periods presented. As a result, net loss per share was also retrospectively adjusted for periods ended prior to the Reverse Stock Split. Proportionate adjustments for
F-9
the Reverse Stock Split were also made to the exercise prices and number of shares issuable under the Company's equity incentive plans, and the number of shares underlying outstanding equity awards, as applicable.
Going Concern
The accompanying consolidated financial statements have been prepared as though the Company will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The Company has evaluated whether there are certain conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the consolidated financial statements are issued.
The Company (1) has incurred recurring losses from operations and cash outflows from operating activities since inception, (2) anticipates net losses and negative operating cash flows for the foreseeable future, (3) needs to raise additional capital to satisfy its current obligations and finance its future operations and (4) is not in compliance with certain financial covenants required under its credit facilities. Through December 31, 2025, the Company has funded its operations primarily with proceeds from the sale of its Common Stock, convertible preferred stock, issuance of convertible notes, issuance of term loans, and funds received upon consummation of the Business Combination.
Until such time as we can generate sufficient revenue to fund operations, we expect to use proceeds from the issuance of equity, debt financings, or other capital transactions to fund our operations and satisfy our liquidity requirements. Additionally, the Company has entered into an Exchange Agreement with RTW, as disclosed in Note 11, Capital Stock and Stockholder's Deficit, under which the Company's existing credit facilities will be exchanged for preferred stock upon the satisfaction of certain closing conditions. Because the amount and timing of such financings are uncertain, the Company has concluded that management’s plans do not alleviate substantial doubt about its ability to continue as a going concern for a reasonable period of time.
The accompanying consolidated financial statements are prepared in accordance with generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business, and do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of this uncertainty.
2. Summary of Significant Accounting Policies
Use of Estimates
Risk of Concentration of Credit, Significant Customers and Significant Suppliers
Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash equivalents and accounts receivable, net. The Company maintains deposits in accredited financial institutions in excess of federally insured limits. The Company maintains its cash, cash equivalents and restricted cash with financial institutions that management believes to be of high credit quality. The Company has not experienced any losses on such accounts and does not believe it is exposed to any unusual credit risk beyond the normal credit risk associated with commercial banking relationships.
Significant customers are those which represent more than
|
|
Revenue |
|
Accounts Receivable |
|
|||||||
|
|
Years Ended December 31 |
|
December 31, |
|
|||||||
|
|
2025 |
|
2024 |
|
2025 |
|
|
2024 |
|
||
Customer A |
|
N/A |
|
N/A |
|
|
% |
|
N/A |
|
||
Customer B |
|
N/A |
|
N/A |
|
N/A |
|
|
|
% |
||
F-10
The Company relies on third parties for the supply of parts and components for its products as well as third-party logistics providers. In instances where these parties fail to perform their obligations, the Company may be unable to find alternative suppliers of parts and components to satisfactorily deliver its products to its customers on time, if at all, which could have a material adverse effect on the Company’s operating results, financial condition and cash flows and damage its customer relationships.
Leases
The Company accounts for its leases under ASC 842, Leases (“ASC 842"). At the inception of an arrangement, the Company determines whether the arrangement is or contains a lease. A contract is or contains a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. At the lease commencement date, when control of the underlying asset is transferred from the lessor to the Company, the Company classifies a lease as either an operating or finance lease and recognizes a right-of-use (“ROU”) asset and a current and non-current lease liability as applicable, in the consolidated balance sheets if the lease has a term greater than one year. As permitted under ASC 842, the Company has made an accounting policy election, for all classes of underlying assets, to not recognize ROU assets and lease liabilities for leases having an original term of twelve months or less. When it determines the appropriate classification and accounting for a lease arrangement, the Company typically only considers the committed lease term. Options to extend a lease are not included in the Company’s assessment unless there is reasonable certainty that the Company will either renew or not cancel the lease.
At the lease commencement date, operating lease liabilities and their corresponding ROU assets are recorded at the present value of future lease payments over the expected remaining lease term using the discount rate implicit in the lease, if it is readily determinable, or the Company’s incremental borrowing rate. The Company’s incremental borrowing rate reflects the fixed rate at which the Company could borrow the amount of the lease payments in the same currency on a collateralized basis, for a similar term in a similar economic environment. Lease cost for operating leases is recognized on a straight-line basis over the lease term as an operating expense. In addition, certain adjustments to the ROU asset may be required for items such as lease prepayments, incentives received or initial direct costs.
The Company enters into contracts that contain both lease and non-lease components. Non-lease components include costs that do not provide a right to use a leased asset but instead provide a service, such as maintenance costs. Variable costs associated with the lease, such as maintenance and utilities, are not included in the measurement of right-of-use assets and lease liabilities but rather are expensed when the events determining the amount of variable consideration to be paid have occurred.
Cash and Cash Equivalents and Restricted Cash
Cash consists of amounts held in bank savings and checking accounts. Cash equivalents include all highly liquid investments maturing within 90 days from the date of purchase. Cash equivalents consist of money market funds. The Company’s restricted cash consists of cash that the Company is contractually obligated to maintain and deposits of cash collateral held in accordance with the terms of various corporate credit cards. Restricted cash is included within other long-term assets on the consolidated balance sheets.
|
|
December 31, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
Cash and cash equivalents |
|
$ |
|
|
$ |
|
||
Restricted cash included in |
|
|
|
|
|
|
||
Cash and cash equivalents and restricted cash shown in the statement of cash flows |
|
$ |
|
|
$ |
|
||
Segment Reporting
The Company operates in a single operating and reportable segment. Operating segments are defined as components of an enterprise for which discrete financial information is available and is regularly reviewed by the chief operating decision maker (“CODM”) in order to make decisions regarding resource allocation and performance assessment. The Company has determined that its CODM is its Chief Executive Officer. The Company’s CODM reviews financial information presented on a regular basis at the consolidated level for purposes of allocating resources and evaluating financial performance. Since the Company operates as one operating segment, all required financial segment information can be found in the consolidated financial statements.
The Company’s products include the Allurion Smart Capsule and related accessories. See Note 3, Revenue and Note 16, Segment Information, below for financial information about the Company's significant segment expenses and sales in geographic areas, respectively.
F-11
Fair Value Measurements
Fair value is defined as the exchange price that would be received for an asset or an exit price that would be paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The carrying value of the Company’s financial instruments such as cash and cash equivalents, accounts payable, and accrued expenses approximate their fair values due to their short-term maturity. The Company’s assets and liabilities recorded at fair value have been categorized based upon a fair value hierarchy, which is distinguished between observable and unobservable inputs in accordance with authoritative accounting guidance:
Level 1 inputs: Observable inputs such as unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date
Level 2 inputs: Other than quoted prices included in Level 1, inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability
Level 3 inputs: Unobservable inputs for the asset or liability used to measure fair value to the extent that the observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset.
Inventories
Inventories, which include the costs of material, labor, and overhead, are stated at the lower of cost or net realizable value, with cost generally computed using the first-in, first out method. Estimated losses from obsolete and slow-moving inventories are recorded to reduce inventory values to their estimated net realizable value and are charged to cost of sales. At the point of loss recognition, a new cost basis for that inventory is established, and subsequent changes in facts and circumstances do not result in a recovery in carrying value.
Property and Equipment
Property and equipment include computers, laboratory equipment, machinery, and leasehold improvements. Property and equipment are recorded at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the related assets, except for leasehold improvements, which are depreciated on a straight-line basis over the shorter of the estimated life or the lease term. Expenditures for repairs and maintenance are expensed as incurred.
Capitalized Internal-Use Software
Software development costs consist of certain consulting costs and compensation expenses for employees who devote time to the development projects of our internal-use software, as well as certain upgrades and enhancements that are expected to result in enhanced functionality. The Company amortizes these development costs over the estimated useful life, which is determined based on our best estimate of the useful life of the internal-use software after considering factors such as continuous developments in the technology, obsolescence, and anticipated life of the service offering before significant upgrades. Management evaluates the useful lives of these assets and tests for impairment whenever events or changes in circumstances occur that could impact the recoverability of these assets.
The Company determined the amount of internal software costs to be capitalized based on the amount of time spent by our developers on projects in the application stage of development. There is judgment in estimating the time allocated to a particular project in the application stage. A significant change in the time spent on each project could have a material impact on the amount capitalized and related amortization expense in subsequent periods. As of December 31, 2025 and 2024, capitalized internal-use software was immaterial.
Impairment of Long-Lived Assets
The Company evaluates its long-lived assets, which consist primarily of property and equipment, for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds the fair value of the asset. To date, no impairments have occurred.
Debt Issuance Costs
The Company defers costs directly associated with acquiring third-party financing. Fees incurred to issue debt are generally deferred and amortized as a component of interest expense over the estimated term of the related debt using the effective interest rate method. Fees incurred in connection with a modification are deferred and amortized as a component of interest expense over the remaining life of the loan if due to the creditor. Third-party fees incurred in connection with a modification are expensed as incurred. Issuance costs and third-party fees incurred in connection with debt that is accounted for under the fair value options ("FVO") are expensed as incurred.
F-12
Warrants
The Company determines the accounting classification of warrants it issues, as either liability or equity classified, by first assessing whether the warrants meet liability classification in accordance with ASC 480-10, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity (“ASC 480-10”), then in accordance with ASC 815-40, Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock (“ASC 815-40”). Under ASC 480-10, warrants are considered liability classified if the warrants are mandatorily redeemable, obligate the Company to settle the warrants or the underlying shares by paying cash or other assets, or are warrants that must or may require settlement by issuing a variable number of shares. If warrants do not meet liability classification under ASC 480-10, the Company assesses the requirements under ASC 815-40, which states that contracts that require or may require the issuer to settle the contract for cash are liabilities recorded at fair value, irrespective of the likelihood of the transaction occurring that triggers the net cash settlement feature. If the warrants do not require liability classification under ASC 815-40, and in order to conclude equity classification, the Company also assesses whether the warrants are indexed to its common stock and whether the warrants are classified as equity under ASC 815-40 or other applicable GAAP. After all relevant assessments, the Company concludes whether the warrants are classified as liability or equity. Liability classified warrants require fair value accounting at issuance and subsequent to initial issuance, with all changes in fair value after the issuance date recorded in the consolidated statements of operations. Equity classified warrants only require fair value accounting at issuance with no changes recognized subsequent to the issuance date.
Derivative Liabilities
The Company evaluates its convertible instruments and other contracts, including warrants, to determine if those contracts or embedded components of those contracts are required to be accounted for as derivatives, either in whole or in part. If an embedded derivative is bifurcated from a debt host contract, changes in the fair value of the bifurcated derivative are recorded in the accompanying consolidated statements of operations.
Equity-Classified Forward Contracts
The Company evaluates its forward contracts and other equity-linked arrangements to determine whether such contracts are indexed to the Company's own stock and meet the criteria for equity classification. Forward contracts that are determined to be equity classified are recorded in APIC at fair value on the contract issuance date. Subsequent to initial recognition, equity-classified forward contracts are not remeasured, and no changes in fair value are recognized in the consolidated statements of operations unless the contracts are modified or settled.
Earn-Out Liabilities
In connection with the Business Combination, certain holders of Legacy Allurion common stock and Legacy Allurion preferred stock and holders of vested options, warrants and restricted stock units exercisable or convertible into Legacy Allurion capital stock received the contingent right to receive up to
The fair value of the earn-out consideration is remeasured on a quarterly basis over the earn-out period with changes in the estimated fair value of the contingent earn-out consideration recorded in Other income (expense) in the consolidated statements of operations, and are reflected in the period in which they are identified. Changes in the estimated fair value of the contingent earn-out consideration may materially impact or cause volatility in our operating results.
Revenue Interest Financing and PIPE Conversion Option
In connection with the Business Combination, the Company entered into a revenue interest financing agreement, dated as of February 9, 2023 (the "Revenue Interest Financing Agreement") with certain entities that have engaged RTW Investments, LP as investment manager (collectively, “RTW”), under which the Company received $
F-13
to $
The Company accounts for the Revenue Interest Financing Agreement under the fair value option election of ASC 825. The Revenue Interest Financing Agreement accounted for under the FVO election is a debt host financial instrument that contains embedded features. The embedded features include requirements to settle the Revenue Interest Financing prior to maturity upon the occurrence of certain contingent events, a change in royalty rates upon the occurrence of certain contingent events, and the Company's ability to prepay the Revenue Interest Financing. As the Company has elected the FVO, these embedded features would not meet the criteria for bifurcation and separate accounting as the entire financial instrument is initially measured at its issue-date estimated fair value and then subsequently remeasured at estimated fair value on a recurring basis on each reporting period date. Changes in the estimated fair value of the Revenue Interest Financing Agreement are recorded as a component of Other income (expense) in the consolidated statements of operations. A portion of the estimated change in fair value must be reported in other comprehensive loss to the extent that it is attributable to instrument-specific credit risk. As a result of electing the FVO, direct costs and fees related to the Revenue Interest Financing are expensed as incurred.
In connection with the Company entering in the Revenue Interest Financing, the Company and RTW entered into the RTW side letter, as subsequently amended and restated on May 2, 2023 (the "Amended and Restated RTW Side Letter") under which RTW may elect to convert up to $
On October 22, 2024, funds affiliated with RTW provided notice to the Company of their election under the Amended and Restated RTW Side Letter, to surrender
RTW Convertible Notes
The Company accounted for the RTW Convertible Notes (as defined in Note 7, Debt below) under the FVO election of ASC 825. The RTW Convertible Notes accounted for under the FVO election was a debt host financial instrument containing embedded features wherein the entire financial instrument was initially measured at its issue-date estimated fair value and then subsequently remeasured at estimated fair value on a recurring basis at each reporting period date. Changes in the estimated fair value of the RTW Convertible Notes were recorded as a component of Other income (expense) in the consolidated statements of operations. A portion of the estimated change in fair value must be reported in other comprehensive loss to the extent that it is attributable to instrument-specific credit risk. As a result of electing the FVO, direct costs and fees related to the RTW Convertible Notes were expensed as incurred.
Accounts Receivable
Accounts receivable are unsecured and are carried at net realizable value, including an allowance for doubtful accounts. Trade credit is generally extended on a short-term basis; trade receivables do not bear interest, although a finance charge may be applied to such receivables that are past due. The allowance for doubtful accounts is based on the Company’s assessment of the collectability of customer accounts. The Company regularly reviews the allowance by considering factors that may affect a customer’s ability to pay, such as historical expense, credit quality, the age of the account receivable balances, and current economic conditions. Amounts determined to be uncollectible are charged or written off against the allowance.
F-14
The following table summarizes activity in the allowance for doubtful accounts:
|
|
Year Ended December 31, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
Balance at beginning of period |
|
$ |
( |
) |
|
$ |
( |
) |
Provision for uncollectible accounts |
|
|
( |
) |
|
|
( |
) |
Recoveries |
|
|
( |
) |
|
|
— |
|
Uncollectible accounts written off |
|
|
|
|
|
|
||
Balance at end of period |
|
$ |
( |
) |
|
$ |
( |
) |
Revenue Recognition
The Company recognizes revenue under ASU No. 2014-09, Revenue from Contracts with Customers (“Topic 606” or “ASC 606”). In general, the Company’s sales contracts fall under its standard sales agreement whereby control transfers to the customer upon shipment, satisfying the performance obligations of the contract.
The Company recognizes revenue when control of its products is transferred to customers at an amount that reflects the consideration it expects to receive in exchange for those products. The Company’s revenue recognition process involves identifying the contract with a customer, determining the performance obligations in the contract, determining the transaction price, allocating the transaction price to the distinct performance obligations in the contract, and recognizing revenue as performance obligations are satisfied. A performance obligation is considered distinct from other obligations in a contract when it provides a benefit to the customer either on its own or together with other resources that are readily available to the customer and is separately identified in the contract. Performance obligations are considered satisfied once the Company has transferred control of a good or service to the customer, meaning that such customer has the ability to use and obtain the benefit of the good or service.
The Company has provided customers purchasing the Allurion Smart Capsule with an implied license for access to its VCS software. This implied software license was given to customers for no additional consideration and was not negotiated as part of the customer’s contracts. Further, the customer contracts and related purchase orders do not include nor specify rights or obligations associated with the VCS software. Based on this assessment, the Company determined the implied license to be immaterial in the context of the contract with customers purchasing the Allurion Smart Capsule, and as such did not allocate any value to the implied VCS license.
The Company generates revenue from sales of its Allurion Smart Capsule to distributors and health care providers. Customers typically purchase the Allurion Smart Capsule, including the gastric balloon and related accessories together, although customers can purchase the gastric balloon and its accessories separately. Therefore, each component of the Allurion Smart Capsule and accessories represents a distinct performance obligation and is separately identifiable. In arrangements with multiple performance obligations, the transaction price is allocated to each performance obligation using the relative standalone selling price. The Company determines standalone selling prices based on the price at which the performance obligation is sold separately. If the standalone selling price is not observable through past transactions, the Company estimates the standalone selling price taking into account internally approved pricing guidelines and market conditions. Revenue is generally recognized upon shipment of the product because at that point, the customer obtains control of the product and has the ability to direct the use and obtain the benefit of the product. Components of the Allurion Smart Capsule are typically shipped to the customer together, resulting in the performance obligations in the contract being satisfied at the same time. Components shipped separately are recognized upon shipment at their relative standalone selling price.
The Company recognizes revenue at the transaction price, which reflects the consideration it believes it is entitled to receive. Transaction price includes estimates of variable consideration for promotions and prompt pay discounts, which are recorded as a reduction of transaction price in the period the related product revenue is recognized. The Company may also make payments to customers for marketing programs. Payments to customers for a distinct good or service that reasonably estimate the fair value of the distinct benefit received, such as marketing programs, are recorded as a marketing expense on the consolidated statement of operations and comprehensive loss.
The Company expenses incremental costs of obtaining a contract, such as sales commissions, when incurred because the amortization period would have been one year or less. These costs are recorded within sales and marketing expenses in the Company’s consolidated statement of operations and comprehensive loss.
The Company has also elected the sales tax practical expedient; therefore, sales and other taxes assessed by a governmental authority that are collected concurrently with revenue-producing activities are excluded from the transaction price.
The Company has also elected the significant financing component practical expedient, which allows management to not assess whether the contract has a significant financing component in circumstances where, at contract inception, the expected contract duration is less than one year.
F-15
Product Warranty
The Company does not provide general rights of return of products sold to its customers. However, the Company does provide for rights of exchange to its distributors and end-use customers for products that fail to conform to the Company’s specifications for a limited time following delivery. These performance specifications include that the Allurion Smart Capsule (i) is successfully filled upon initial placement when used according to the instructions for use provided by the Company and/or (ii) remains in the patient’s body for 90 days or more once placed. Customers may exchange product within 30 calendar days if they discover product nonconformities through a reasonable inspection and within 30 calendar days after discovery of any hidden or latent product nonconformities that could not have been discovered by a reasonable inspection.
These instances of nonconformity have been immaterial, and the Company’s management expects instances of nonconformity to be extremely rare.
Research and Development Costs
The Company expenses research and development costs as incurred. Research and development expenses consist of costs associated with performing research and development activities, including salaries and benefits, stock-based compensation, product development costs, materials and supplies, clinical trial activities, depreciation of equipment, and contract and other outside services. Payments for activities that are provided by outside vendors are based upon the terms of the individual arrangements with each vendor. Costs of certain of these activities are expensed based upon an evaluation of the progress to completion of specific tasks and actual costs incurred, using information provided to the Company by its vendors. As payments for these activities may differ from the pattern of costs actually incurred, additional costs are reflected in the consolidated financial statements as prepaid or accrued research and development expenses.
Advertising and Marketing Costs
The Company expenses advertising and marketing costs as incurred. Advertising and marketing expenses are included in sales and marketing operating expenses. Advertising and marketing costs for the years ended December 31, 2025 and 2024 were $
Intellectual Property Prosecution Costs
The Company incurs registration and prosecution costs related to its intellectual property. The related costs are expensed as incurred and are classified as a component of general and administrative expenses.
Income Taxes
The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the Company’s consolidated financial statements and tax returns. Deferred tax assets and liabilities are determined based upon the differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities and for net operating loss and tax credit carryforwards, using enacted tax rates expected to be in effect in the year in which the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance if it is more likely than not that these assets may not be realized.
The Company determines whether a tax position will be sustained upon examination. If it is not more likely than not that a position will be sustained, none of the benefit attributable to the position is recognized. The tax benefit to be recognized for any tax position that meets the more likely than not recognition threshold is calculated as the largest amount that is more than 50% likely of being realized upon resolution of the contingency. The Company accounts for interest and penalties related to uncertain tax positions as part of its provision for income taxes. As of December 31, 2025 and 2024, the Company has
Net Loss Per Share
The Company applies the two-class method to compute basic and diluted net loss per share attributable to common stockholders, when shares meet the definition of participating securities. The two-class method determines net loss per share for each class of common and participating securities according to dividends declared or accumulated and participation rights in undistributed earnings. The two-class method requires income (loss) available to common stockholders for the period to be allocated between common and participating securities based upon their respective rights to share in the earnings as if all income (loss) for the period had been distributed. The Company reported a net loss attributable to common stockholders for the years ended December 31, 2025 and 2024.
Basic net loss per share attributable to common stockholders is computed by dividing the net loss attributable to common stockholders less the cumulative undeclared dividend by the weighted average number of common shares outstanding for the period.
Diluted net loss attributable to common stockholders is computed by adjusting net loss attributable to common stockholders to reallocate undistributed earnings based on the potential impact of dilutive securities. Diluted net loss per share attributable to common
F-16
stockholders is computed by dividing the diluted net loss attributable to common stockholders by the weighted average number of common shares outstanding for the period, including potential dilutive common shares assuming the dilutive effect of common stock equivalents.
Stock-Based Compensation
The Company recognizes compensation expense for awards based on the grant-date fair value of stock-based awards on a straight-line basis over the period during which an award holder provides service in exchange for the award. The Company accounts for awards issued to nonemployees under ASU No. 2018-07, Compensation—Stock Compensation (“Topic 718”): Improvements to Nonemployee Share-Based Payment Accounting, with the measurement date for nonemployee awards being the date of grant. The fair value of stock options is calculated using the Black-Scholes option-pricing model. The fair value of Restricted Stock Units (“RSUs”) is based on the fair market value of common stock at the date of grant. The Company records forfeitures as they occur.
Mezzanine Equity
Mezzanine equity represents the Series A Preferred Stock (defined below) issued by the Company. The shares of Series A Preferred Stock are redeemable at a determinable price on a fixed date, which results in mezzanine equity classification (outside of permanent equity) on the Company’s consolidated balance sheet. Refer to Note 11, Capital Stock and Stockholder's Deficit, for additional information regarding the Series A Preferred Stock. On December 19, 2024 the shares Series A Preferred Stock were converted into shares of Common Stock following the Series A Stockholder Approval (defined below). As of December 31, 2025 no shares of preferred stock are outstanding.
Comprehensive Loss
For the years ended December 31, 2025 and 2024, comprehensive loss consists of net loss and other comprehensive loss, which includes changes in the fair value attributable to instrument-specific credit risk related to the Revenue Interest Financing with RTW and the RTW Convertible Notes.
Recently Adopted Accounting Pronouncements
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which require public entities, on an annual basis, to provide disclosure of specific categories in the rate reconciliation, as well as disclosure of income taxes paid disaggregated by jurisdiction. The Company
Recently Issued Accounting Pronouncements Not Yet Adopted
In November 2024, the Financial Accounting Standards Board issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which intends to improve financial reporting by requiring disclosure of additional information about specific expense categories. This guidance is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027. Early adoption is permitted and the guidance is to be applied prospectively and may be applied retrospectively. The Company is currently evaluating the impact of this guidance on its consolidated financial statements and related disclosures.
3. Revenue
Revenue by geographic region is based on the country in which our customer is domiciled and is summarized by geographic area as follows (in thousands):
|
|
Year Ended December 31, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
Spain |
|
$ |
|
|
$ |
|
||
Italy |
|
|
|
|
|
|
||
All other countries |
|
|
|
|
|
|
||
Total Revenues |
|
$ |
|
|
$ |
|
||
There is currently
F-17
Total Revenues, with each country responsible for approximately
4. Inventory
Inventory consists of the following (in thousands):
|
|
December 31, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
Finished goods |
|
$ |
|
|
$ |
|
||
Work in progress |
|
|
|
|
|
|
||
Raw materials |
|
|
|
|
|
|
||
Total Inventory |
|
$ |
|
|
$ |
|
||
Inventory is stated net of $
5. Property and Equipment, net
Property and equipment consist of the following (in thousands):
|
|
|
December 31, |
|
|||||
|
Estimates Useful Life (in Years) |
|
2025 |
|
|
2024 |
|
||
Computers and purchased software |
|
$ |
|
|
$ |
|
|||
Leasehold improvements |
|
|
|
|
|
|
|||
Furniture and fixtures |
|
|
|
|
|
|
|||
Machinery and equipment |
|
|
|
|
|
|
|||
Property and equipment—at cost |
|
|
|
|
|
|
|
||
Less accumulated depreciation and amortization |
|
|
|
( |
) |
|
|
( |
) |
Construction in progress |
|
|
|
|
|
|
|
||
Property and equipment—net |
|
|
$ |
|
|
$ |
|
||
Depreciation expense was $
|
|
Year Ended December 31, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
Cost of revenue |
|
$ |
|
|
$ |
|
||
Research and development |
|
|
|
|
|
|||
Sales and marketing |
|
|
|
|
|
|||
General and administrative |
|
|
|
|
|
|||
Total depreciation and amortization expense |
|
$ |
|
|
$ |
|
||
F-18
6. Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities consist of the following (in thousands):
|
|
December 31, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
Other accrued expenses |
|
$ |
|
|
$ |
|
||
Accrued compensation |
|
|
|
|
|
|
||
Accrued professional fees |
|
|
|
|
|
|
||
Accrued restructuring |
|
|
|
|
|
|
||
Marketing reimbursement |
|
|
|
|
|
|
||
Accrued selling and marketing |
|
|
|
|
|
|
||
Total accrued expenses and other current liabilities |
|
$ |
|
|
$ |
|
||
In November 2024, the Company's management approved and initiated plans to reduce its cost structure. The restructuring plan initiated in November 2024 was substantially completed during the first half of 2025, with remaining payments to be made in accordance with local regulations through April 2026. Substantially all of the charge represents the severance cost of terminated employees, and are included in cost of revenue and operating expenses in the statement of operations.
Accrual at December 31, 2023 |
|
$ |
|
|
Restructuring charges and related costs |
|
|
|
|
Cash payments |
|
|
( |
) |
Accrual at December 31, 2024 |
|
|
|
|
Restructuring charges and related costs |
|
|
( |
) |
Cash payments |
|
|
( |
) |
Accrual at December 31, 2025 |
|
$ |
|
In August 2025, the Company's management approved and initiated plans to reduce its cost structure. The restructuring plan initiated in August 2025 was substantially completed during the third quarter of 2025, with remaining payments to be made in accordance with local regulations through December 2026. Substantially all of the charges represent the severance cost of terminated employees, and are included in cost of revenue and operating expenses in the statement of operations.
Accrual at December 31, 2024 |
|
$ |
|
|
Restructuring charges and related costs |
|
|
|
|
Cash payments |
|
|
( |
) |
Accrual at December 31, 2025 |
|
$ |
|
7. Debt
The components of the Company’s third-party debt consisted of the following (in thousands):
|
|
December 31, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
RTW Convertible Notes |
|
$ |
|
|
$ |
|
||
Total principal amounts of debt |
|
|
|
|
|
|
||
Change in fair value |
|
|
( |
) |
|
|
( |
) |
Current portion of convertible notes payable |
|
|
|
|
|
|
||
Convertible notes payable |
|
$ |
|
|
$ |
|
||
F-19
Fortress Term Loan
On August 1, 2023, the Company entered into the Fortress Term Loan pursuant to the Fortress Credit Agreement with Fortress that provided gross proceeds of $
On December 29, 2023, the Company entered into an amendment to the Fortress Credit Agreement (the "Fortress Amendment"). The Fortress Amendment waived the December 31, 2023 minimum revenue covenant under the Fortress Credit Agreement and modified the minimum liquidity covenant by increasing the minimum liquidity amount from $
The Company assessed the terms and features of the Fortress Credit Agreement in order to identify any potential embedded features that would require bifurcation or any beneficial conversion features. The terms and features assessed include, under certain circumstances, a default interest rate of
On April 16, 2024, the Company repaid all outstanding obligations under the Fortress Term Loan with proceeds from the Amended Note Purchase Agreement (as defined below) with RTW. The total payoff amount was $
Interest expense for the year ended December 31, 2024 related to the Fortress Term Loan was $
RTW Convertible Notes
On April 14, 2024, the Company entered into a note purchase agreement (the "Original Note Purchase Agreement") with RTW as agent for the purchasers (the "Purchasers") party thereto from time to time (RTW in such capacity, the "Principal Purchaser"), and Acquiom Agency Services LLC ("Acquiom") as collateral agent for the Purchasers. Subsequently, on April 16, 2024, the Company, the Principal Purchaser, the Purchasers, and Acquiom entered into the First Amendment to the Original Note Purchase Agreement (the Original Note Purchase Agreement as amended, the "Amended Note Purchase Agreement").
Pursuant to the Amended Note Purchase Agreement, the Company issued and sold $
F-20
raising purposes ending on the date on which the Company has raised aggregate gross offering proceeds of at least $
On January 7, 2025, the Company and Allurion Technologies, LLC ("Allurion OpCo") entered into an Omnibus Amendment (the "Omnibus Amendment") with Allurion Australia Pty Ltd, Allurion France, and RTW to amend the Amended Note Purchase Agreement, the Revenue Interest Financing Agreement, and the New RIFA (collectively, the "Existing Documents").
The Omnibus Amendment requires, among other things, (i) the Company and Allurion OpCo to maintain certain minimum balances of unrestricted cash in controlled accounts in the U.S. in the amounts corresponding to the calculations set forth therein, and (ii) the Company to receive minimum trailing 12-month consolidated Revenue (as defined in the Amended Note Purchase Agreement) in amounts set forth therein, tested quarterly beginning with the 12-month period ending September 30, 2025. The Omnibus Amendment also requires that (i) Allurion France shall have successfully regained marketing authorization from the Agence Nationale de Sécurité du Médicament (“ANSM”) in France on or prior to December 31, 2025 and (ii) Allurion OpCo shall have received Marketing Authorization from the U.S. Food & Drug Administration for the Commercialization of the Product in the United States no later than June 30, 2026.
Pursuant to the Omnibus Amendment, the investors and the purchasers party thereto will receive a number of shares of the Company’s Common Stock, representing in the aggregate
On April 15, 2025, the Company, the Principal Purchaser, and the Purchasers entered into a Second Amendment to the Note Purchase Agreement (the "Second Amendment to Note Purchase Agreement"), which amended the Existing Note Purchase Agreement to reflect additional conversions and other provisions. The Second Amendment to Note Purchase Agreement provides for the mandatory conversion of $
In addition, without regard to the Market Capitalization Condition, the Purchasers may provide the Company notice to convert up to an additional $
The Second Amendment to Note Purchase Agreement is accounted for as an extinguishment of debt under ASC 470, due to
F-21
the substantive conversion features included in the Second Amendment to Note Purchase Agreement. The fair value of the RTW Convertible Notes were remeasured immediately before and after the Amendment was signed on April 15, 2025 as $
The RTW Convertible Notes were accounted for under the FVO election of ASC 825 at inception in April 2024 as the notes contain embedded derivatives, including the conversion upon Stockholder Approval, the conversion upon a Fundamental Change Company Notice (as defined in the RTW Convertible Notes), the conversion upon a Make-Whole Fundamental Change (as defined in the RTW Convertible Notes), redemption upon the event of default, and redemption upon a Fundamental Change (as defined in the RTW Convertible Notes), which would require bifurcation and separate accounting. The RTW Convertible Notes will continue to be accounted for under the FVO election following the extinguishment of debt in connection with the Second Amendment to Note Purchase Agreement. Prior to the Amendment, the RTW Convertible Notes were initially measured at their issue-date estimated fair value and subsequently remeasured at estimated fair value on a recurring basis at each reporting period date. The fair value of the RTW Convertible Notes at issuance in April 2024 was $
The Share Obligation is accounted for as a liability under ASC 480. As the Share Obligation was initiated in exchange for amendments of the Amended Note Purchase Agreement, the Revenue Interest Financing Agreement, and the New RIFA, all of which are accounted for under the FVO election, the liability was recorded at its initial fair value of $
For the year ended December 31, 2025, the Company recorded a loss of $
The Company elected paid in kind interest for the years ended December 31, 2025 and December 31, 2024 related to the RTW Convertible Notes. As of December 31, 2025 we are out of compliance with the covenants of the RTW Convertible Notes and as such it has been reclassified to a current liability on the consolidated balance sheets.
8. Revenue Interest Financing, Side Letter, and PIPE Conversion Option
On February 9, 2023, Legacy Allurion entered into the Revenue Interest Financing Agreement. Pursuant to the Revenue Interest Financing, at the closing of the Business Combination, RTW paid Allurion an aggregate of $
If RTW has not received aggregate revenue interest payments equal to at least
F-22
The Revenue Interest Financing is accounted for under the FVO election as the Revenue Interest Financing contains embedded derivatives, including the requirements to settle the Revenue Interest Financing prior to maturity upon the occurrence of certain contingent events and the Company's ability to prepay the Revenue Interest Financing, which would require bifurcation and separate accounting. The Revenue Interest Financing is initially measured at its issue-date estimated fair value and subsequently remeasured at estimated fair value on a recurring basis at each reporting period date. Changes in fair value are recorded as a component of Other income (expense) in the consolidated statements of operations. A portion of the estimated change in fair value must be reported in other comprehensive loss to the extent that it is attributable to instrument-specific credit risk. In connection with the issuance of the Investment Amount, we paid $
Concurrently, and in connection with the Amended Note Purchase Agreement, the Revenue Interest Financing Agreement was amended pursuant to the Omnibus Amendment (the "RIFA Amendment") by and among the Company, Allurion Opco, Allurion Australia Pty Ltd, a proprietary limited company organized under the laws of Australia and a wholly-owned subsidiary of the Company, the Original RIFA Investors (as defined therein) and RTW, on April 14, 2024. The RIFA Amendment, among other things, increased the rate of revenue interest payments to be paid to RTW on all current and future products, digital solutions and services developed, imported, manufactured, marketed, offered for sale, promoted, sold, tested or otherwise distributed by Allurion and its subsidiaries for net sales less than or equal to $
The RIFA Amendment was accounted for as a modification with the change in fair value of the PIPE Conversion Option treated as an exchange between the Company and RTW as part of the RIFA Amendment. As such, the Revenue Interest Financing and PIPE Conversion Option were remeasured as of April 16, 2024 just prior to the RIFA Amendment, to $
In connection with the Company entering into the Revenue Interest Financing, if, at any time beginning 12 months and ending 24 months following the closing of the Mergers, the VWAP per share of Allurion Common Stock is less than $
On October 22, 2024, funds affiliated with RTW provided notice to the Company of their election of the PIPE Conversion Option under the Amended and Restated RTW Side Letter, to surrender
The exercise of the PIPE Conversion Option was accounted for as a settlement of the derivative liability. As such, the PIPE Conversion Option was remeasured as of October 30, 2024 just prior to conversion, to $
F-23
For the year ended December 31, 2025, the Company recorded a loss of $
9. Fair Value Measurements
The following tables present the fair value hierarchy for assets and liabilities that are measured at fair value at issuance date and on a recurring basis and indicate the level within the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value (in thousands):
Fair Value Measurement as of December 31, 2025 |
|
|||||||||||||||
|
|
Total |
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash equivalents |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Money market funds |
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
||
Total assets |
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
||
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Legacy Allurion Common Stock Warrant Liabilities |
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
||
Public Warrants |
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
||
Public Offering Warrants |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
July 2024 Private Placement Warrants |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
January 2025 Warrants |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
February 2025 Offering Warrants |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
November 2025 Private Placement Warrants |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Revenue Interest Financing |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Earn-out Liability |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
RTW Convertible Notes |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Success Fee Derivative Liability |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Share Obligation |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Total Liabilities |
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|||
Fair Value Measurement as of December 31, 2024 |
|
|||||||||||||||
|
|
Total |
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash equivalents |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Money market funds |
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
||
Total assets |
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
||
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Legacy Allurion Common Stock Warrant Liability |
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
||
Public Warrants |
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
||
Public Offering Warrants |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Private Placement Warrants |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Revenue Interest Financing |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Earn-out Liability |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
RTW Convertible Notes |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Success Fee Derivative Liability |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Total Liabilities |
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|||
F-24
Public Warrants
As a result of the Business Combination on August 1, 2023, the Company assumed
Legacy Allurion Warrants, Public Offering Warrants, July 2024 Private Placement Warrants, January 2025 Warrants, February 2025 Offering Warrants, and November 2025 Warrants
The Company has classified the Legacy Allurion Common Stock Warrants, Public Offering Warrants (defined below), July 2024 Private Placement Warrants (defined below), January 2025 Warrants (defined below), February 2025 Offering Warrants, (defined below), and November 2025 Warrants (defined below) within Level 3 of the hierarchy as the fair value is derived using the Black-Scholes option pricing model, which uses a combination of observable (Level 2) and unobservable (level 3) inputs. See table below for the assumptions used in the pricing model of the Legacy Allurion Common Stock Warrants, Public Offering Warrants, July 2024 Private Placement Warrants, January 2025 Warrants, February 2025 Offering Warrants, and November 2025 Warrants:
|
|
Measurement |
|
Interest |
|
|
Exercise |
|
|
Estimated Fair Value of Underlying Share Price |
|
|
Expected |
|
|
Expected |
|
|||||
Legacy Allurion Series C Preferred Stock warrants (as converted to Common) |
|
December 31, 2025 |
|
|
% |
|
$ |
|
|
$ |
|
|
|
% |
|
|
|
|||||
Legacy Allurion Other Common Stock |
|
December 31, 2025 |
|
|
% |
|
|
|
|
|
|
|
|
% |
|
|
|
|||||
Legacy Allurion Series D-1 Preferred Stock |
|
December 31, 2025 |
|
|
|
|
|
|
|
|
|
|
% |
|
|
|||||||
Public Offering Warrants |
|
December 31, 2025 |
|
|
% |
|
|
|
|
|
|
|
% |
|
|
|
||||||
July 2024 Private Placement Warrants |
|
December 31, 2025 |
|
|
% |
|
|
|
|
|
|
|
|
% |
|
|
|
|||||
January 2025 Warrants |
|
December 31, 2025 |
|
|
% |
|
|
|
|
|
|
|
|
% |
|
|
|
|||||
February 2025 Offering Warrants |
|
December 31, 2025 |
|
|
% |
|
|
|
|
|
|
|
|
% |
|
|
|
|||||
November 2025 Private Placement Warrants |
|
December 31, 2025 |
|
|
% |
|
|
|
|
|
|
|
|
% |
|
|
|
|||||
F-25
|
|
Measurement |
|
Interest |
|
Exercise |
|
|
Estimated Fair Value of Underlying Share Price |
|
|
Expected |
|
Expected |
|
|||
Legacy Allurion Series C Preferred Stock warrants (as converted to Common) |
|
December 31, 2024 |
|
|
$ |
|
|
$ |
|
|
|
|
|
|||||
Legacy Allurion Other Common Stock |
|
December 31, 2024 |
|
|
|
|
|
|
|
|
|
|
|
|||||
Legacy Allurion Series D-1 Preferred Stock |
|
December 31, 2024 |
|
|
|
|
|
|
|
|
|
|
||||||
Public Offering Warrants |
|
December 31, 2024 |
|
|
|
|
|
|
|
|
|
|
|
|||||
July 2024 Private Placement Warrants |
|
December 31, 2024 |
|
|
|
|
|
|
|
|
|
|
|
|||||
Expected dividend yield for all calculations is
The following table reconciles the changes in fair value for the years ended December 31, 2025 and 2024 of the warrant liabilities valued using Level 3 inputs:
|
|
Preferred Stock Warrants (as converted to Common) |
|
|
Common Stock Warrants |
|
|
Public Offering Warrants |
|
|
July 2024 Private Placement Warrants |
|
|
January 2025 Warrants |
|
|
February 2025 Warrants |
|
|
November 2025 Warrants |
|
|
Total |
|
||||||||
Balance – January 1, 2024 |
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
|||
Fair value at issuance |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
Balance – December 31, 2024 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
|||||
Fair value at issuance |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
Balance – December 31, 2025 |
|
$ |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
2019 Term Loan Success Fee Derivative Liability
The derivative liability for the success fee associated with Legacy Allurion's November 2019 loan and security agreement with Western Alliance Bank (the "2019 Term Loan" and such fee, the "Success Fee") was recorded at fair value as of December 31, 2025 and 2024 using the following assumptions: weighted-average probability for the likelihood of a change in control or liquidity event within
Revenue Interest Financing and PIPE Conversion Option
The Revenue Interest Financing was accounted for using the FVO election. Under the FVO election, the financial instrument is initially measured at its issue-date estimated fair value and subsequently remeasured at estimated fair value on a recurring basis at each reporting period date. The fair value of the Revenue Interest Financing was remeasured as of December 31, 2025 and December 31, 2024 using a discounted cash flow ("DCF") method under the income approach utilizing future revenue projections and a discount rate of
The fair value of the PIPE Conversion Option was accounted for as a derivative under ASC 815. Upon the exercise of the PIPE Conversion Option and resulting New RIFA on October 30, 2024, the PIPE Conversion Option was reclassified as an addition to the
F-26
Revenue Interest Financing liability, and as such there is no PIPE Conversion Option liability as of December 31, 2025 and December 31, 2024.
Earn-Out Liability
Upon the closing of the Business Combination, Legacy Allurion equity holders are entitled to receive additional shares of Allurion Common Stock if the share price achieves certain targets (the "Earn-Out Shares). The Earn-Out Shares were accounted for as a liability because the triggering events that determine the number of shares to be earned included events that were not indexed to Allurion Common Stock, with the change in fair value recognized in Change in the fair value of earn-out liabilities in the consolidated statement of operations.
|
|
December 31, 2025 |
|
|
December 31, 2024 |
|
||
Stock Price |
|
$ |
|
|
$ |
|
||
Risk-free interest rate |
|
|
% |
|
|
% |
||
Expected term (in years) |
|
|
|
|
|
|||
Expected volatility |
|
|
% |
|
|
% |
||
Term Loan Derivative Liability
The Term Loan Derivative Liability associated with the Fortress Term Loan was derecognized during the second quarter of 2024 as the Fortress Loan was repaid on April 16, 2024.
RTW Convertible Notes
The RTW Convertible Notes are accounted for using the FVO election. Under the FVO election, the financial instrument is initially measured at its issue-date estimated fair value and subsequently measured at estimated fair value on a recurring basis at each reporting period date. The fair value of the RTW Convertible Notes was remeasured as of December 31, 2025 using a DCF method under the income approach with MCSM applied to determine the simulated stock price at each payment date and event that may trigger conversion of the RTW Convertible Notes.
|
|
December 31, 2025 |
|
|
December 31, 2024 |
|
||
Stock Price |
|
$ |
|
|
$ |
|
||
Risk-free interest rate |
|
|
% |
|
|
% |
||
Discount Rate |
|
|
% |
|
|
% |
||
Expected term (in years) |
|
|
|
|
||||
Expected volatility |
|
|
% |
|
|
% |
||
Share Obligation
The Share Obligation is accounted for as a liability under ASC 480, with the liability initially measured at its issue-date estimate fair value and subsequently measured at its estimated fair value on a recurring basis at each reporting period date.
|
|
December 31, |
|
|
Stock Price |
|
$ |
|
|
Risk-free interest rate |
|
|
% |
|
Expected term (in years) |
|
|
|
|
Expected volatility |
|
|
% |
|
F-27
The changes in the fair values of the Success Fee derivative liability, Revenue Interest Financing, PIPE Conversion Option, Earn-out liability, Term Loan Derivative Liability, RTW Convertible Notes, and Share Obligation categorized with Level 3 inputs for the years ended December 31, 2025 and 2024 were as follows:
|
|
Success Fee |
|
|
Revenue |
|
|
PIPE |
|
|
Earn-Out |
|
|
Term Loan Derivative Liability |
|
|
RTW Convertible Notes |
|
|
Share Obligation |
|
|
Total |
|
||||||||
Balance – January 1, 2024 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
||||||
Fair value upon issuance |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Change in fair value |
|
|
— |
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
||
Change in fair value - OCI |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|||
Exercise of PIPE Conversion Option |
|
|
— |
|
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Repayments of debt |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Balance – December 31, 2024 |
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|||||
Fair value upon issuance |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Change in fair value |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
|
|
|
( |
) |
|
|
|
|||
Change in fair value - OCI |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Extinguishment of debt |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Conversion of convertible notes |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Repayments of debt |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Balance – December 31, 2025 |
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
The change in fair value of the Success Fee derivative liability, Revenue Interest Financing, PIPE Conversion Option, Earn-Out liability, Term Loan Derivative Liability, and RTW Convertible Notes at each period is recorded as a component of Other income (expense) in the consolidated statements of operations, with the exception of the change in fair value associated with the change in credit risk related to the Revenue Interest Financing and RTW Convertible Notes, which is recorded as a component of other comprehensive loss.
10. Income Taxes
The components of loss before income taxes for the years ended December 31, 2025 and 2024 are as follows (in thousands):
|
|
Year Ended December 31, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
U.S. |
|
$ |
( |
) |
|
$ |
( |
) |
Foreign |
|
|
|
|
|
|||
Loss before income taxes |
|
$ |
( |
) |
|
$ |
( |
) |
The components of the provision for income taxes for the years ended December 31, 2025 and 2024 consisted of the following (in thousands):
|
|
Year Ended December 31, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
Current: |
|
|
|
|
|
|
||
Federal |
|
$ |
— |
|
|
$ |
— |
|
State |
|
|
— |
|
|
|
— |
|
Foreign |
|
|
( |
) |
|
|
|
|
Total Current |
|
$ |
( |
) |
|
$ |
|
|
Deferred: |
|
|
|
|
|
|
||
Federal |
|
$ |
( |
) |
|
$ |
|
|
State |
|
|
— |
|
|
|
— |
|
Foreign |
|
|
|
|
|
( |
) |
|
Total Deferred |
|
$ |
|
|
$ |
( |
) |
|
Total |
|
$ |
|
|
$ |
|
||
F-28
The following is a reconciliation between the effective tax rate and the statutory federal income tax rate for the years ended December 31, 2025 in accordance with the guidance in the ASU No. 2023-09, which the Company has elected to prospectively adopt (in thousands):
|
|
Year Ended December 31, |
|
|||||
|
|
2025 |
|
|||||
U.S. statutory federal income tax rate |
|
$ |
( |
) |
|
|
% |
|
State and local income taxes, net of federal income tax effect (1) |
|
|
— |
|
|
|
% |
|
Foreign tax effects: |
|
|
— |
|
|
|
|
|
Other foreign jurisdictions |
|
|
( |
) |
|
|
% |
|
Effect of changes in tax laws or rates enacted in the current period |
|
|
— |
|
|
|
% |
|
Tax credits: |
|
|
— |
|
|
|
|
|
Research and development tax credits |
|
|
( |
) |
|
|
% |
|
Changes in valuation allowances |
|
|
|
|
|
( |
)% |
|
Non-taxable or Non-deductible items: |
|
|
— |
|
|
|
|
|
Mark to market |
|
|
( |
) |
|
|
% |
|
Share-based payment awards |
|
|
|
|
|
( |
)% |
|
Other |
|
|
|
|
|
( |
)% |
|
Changes in unrecognized tax benefits |
|
|
— |
|
|
|
— |
|
Other adjustments |
|
|
( |
) |
|
|
— |
|
Effective tax rate |
|
$ |
|
|
|
( |
)% |
|
(1) State Taxes in Massachusetts made up the majority (greater than 50%) of the tax effect in this category.
The following is a reconciliation of the Company's effective tax rate and the statutory federal income tax rate for the year ended December 31, 2024 prior to the adoption of ASU No. 2023-09:
|
|
Year Ended December 31, |
|
|
|
|
2024 |
|
|
U.S. statutory federal income tax rate |
|
|
% |
|
State income taxes, net of federal income tax benefit |
|
|
% |
|
Change in fair value of financial instruments |
|
|
% |
|
Tax credits |
|
|
% |
|
Valuation allowance |
|
|
( |
)% |
Non-deductible expenses |
|
|
( |
)% |
Other |
|
|
% |
|
Effective tax rate |
|
|
( |
)% |
F-29
Significant components of the Company’s deferred tax assets are as follows (in thousands):
|
|
December 31, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
Deferred Tax Assets |
|
|
|
|
|
|
||
U.S. federal and state net operating loss carryforwards |
|
$ |
|
|
$ |
|
||
Capitalized start-up and research and development expenses |
|
|
|
|
|
|
||
Research and development tax credits |
|
|
|
|
|
|
||
Interest expense |
|
|
|
|
|
|
||
Lease liability |
|
|
|
|
|
|
||
Depreciation |
|
|
|
|
|
|
||
Bad debt reserve |
|
|
|
|
|
|
||
Accrued costs |
|
|
|
|
|
|
||
Other temporary differences |
|
|
|
|
|
|
||
Total deferred tax assets |
|
|
|
|
|
|
||
Less: Valuation allowance |
|
|
( |
) |
|
|
( |
) |
Net deferred tax assets |
|
|
|
|
|
|
||
Deferred Tax Liabilities: |
|
|
|
|
|
|
||
Right of use asset |
|
|
( |
) |
|
|
( |
) |
Other deferred tax liability |
|
|
( |
) |
|
|
( |
) |
Convertible debt |
|
|
( |
) |
|
|
( |
) |
Total deferred tax liabilities |
|
|
( |
) |
|
|
( |
) |
Net deferred tax asset |
|
$ |
( |
) |
|
$ |
|
|
The Company recorded income tax expense of $
As of December 31, 2025, the Company had $
Changes to the Company’s valuation allowance are as follows (in thousands):
|
|
Year Ended December 31, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
Beginning balances |
|
$ |
|
|
$ |
|
||
Additions charged to net loss |
|
|
|
|
|
|
||
Ending balances |
|
$ |
|
|
$ |
|
||
Realization of the future tax benefits from these assets is dependent on many factors, including the Company’s ability to generate taxable income within the net operating loss carryforward period. Under the provisions of the Internal Revenue Code, certain substantial changes in the Company’s ownership, including a sale of the Company or significant changes in ownership due to sales of equity, may have limited, or may limit in the future, the amount of net operating loss and research and development credit carryforwards that could be used annually to offset future taxable income. The Company has not completed a study to assess whether a change of control has occurred or whether there have been multiple changes of control since the Company’s formation due to the significant complexity and cost associated with such study and because there could be additional changes in control in the future. As a
F-30
result, the Company is not able to estimate the effect of the change in control, if any, on the Company’s ability to utilize net operating loss and research and development credit carryforwards in the future.
The Company is subject to US federal income tax, state income tax in Massachusetts, and income tax in certain foreign jurisdictions. The Company’s historical income taxes in foreign jurisdictions have been immaterial to the consolidated financial statements. The Company is not currently under examination by the Internal Revenue Service (“IRS”) or any other jurisdictions for any tax years; however, all tax years since inception remain open to examination by the major taxing jurisdictions to which the Company is subject, as carryforward attributes generated in years past may still be adjusted upon examination by the U.S. IRS or other authorities if they have, or will be, used in a future period.
As of December 31, 2025 and 2024, the unremitted earnings of the Company’s foreign subsidiaries are immaterial.
Interpretive guidance on the accounting for global intangible low-taxed income (“GILTI”) states that an entity can make an accounting policy election to either recognize deferred taxes for temporary basis differences expected to reverse as GILTI in future years or provide for the tax expense related to GILTI in the year the tax is incurred as a period expense. The Company made the accounting policy election to recognize GILTI as a period expense.
As of December 31, 2025 and 2024, the Company has
11. Capital Stock and Stockholders' Deficit
Preferred Equity
Series A Preferred Stock
On June 28, 2024, the Company entered into a subscription agreement (the “Subscription Agreement”) with RTW, pursuant to which the Company agreed to sell to RTW
The July 2024 Private Placement Warrants met the definition of a derivative under ASC 815. The gross proceeds from the July 2024 Private Placement were first allocated to the July 2024 Private Placement Warrants based on its issue-date estimated fair value of $
On December 19, 2024, following the Series A Stockholder Approval (as defined below) and after giving effect to the Reverse Stock Split, the
The rights and preferences of the Series A Preferred Shares were as follows:
Voting Rights
The Series A Preferred Stockholders have
Dividend Rights
The Series A Preferred Stock participates in dividends with Common Stock on an as-converted basis when declared by the Board of Directors.
Liquidation Preference
Conversion Rights
F-31
Redemption
Series B Preferred Stock
On November 11, 2025, the Company entered into a securities purchase and exchange agreement (the "Exchange Agreement") with certain entities managed by RTW, pursuant to which RTW has agreed to exchange all of the (i) principal amount of the RTW Convertible Notes, purchased pursuant to the terms of the Amended Note Purchase Agreement, including interest accrued on the RTW Convertible Notes; (ii) Company obligations under the Revenue Interest Financing Agreement; and (iii) Company obligations under the New RIFA, for shares of a newly issued series of Series B convertible preferred stock, par value $
The Charter authorizes the issuance of up to
Common Equity
Allurion's Certificate of Incorporation authorizes the issuance of up to
July 2024 Public Offering
On June 28, 2024, the Company entered into an underwriting agreement (the “Underwriting Agreement”) with Jefferies LLC and TD Securities (USA) LLC, as representative of the several underwriters (the “Underwriters”), pursuant to which the Company agreed to issue and sell
The Public Offering Warrants met the definition of a derivative under ASC 815 and the Share Overallotment met the requirements for equity classification under ASC 815. The $
RTW Private Placement
On January 14, 2025, the Company entered into a subscription agreement (the “RTW Subscription Agreement”) with funds affiliated with RTW, pursuant to which the Company agreed to sell
January 2025 Public Offering and Concurrent Private Placement
F-32
On January 24, 2025, the Company entered into a securities purchase agreement (the “January 2025 Securities Purchase Agreement”) with certain accredited investors named therein, pursuant to which the Company agreed to issue and sell
Certain purchasers in the January 2025 Offering and January 2025 Private Placement are holders of warrants to purchase Common Stock issued in the Public Offering in July 2024. The exercise price for the Public Offering Warrants initially was $
The January 2025 Warrants met the definition of a derivative under ASC 815. The $
February 2025 Public Offering and Concurrent Private Placement and Leavitt Private Placement
On February 19, 2025, the Company entered into a securities purchase agreement (the “February 2025 Securities Purchase Agreement”) with certain accredited investors named therein, pursuant to which the Company agreed to issue and sell
Additionally, on February 19, 2025, the Company entered into a subscription agreement (the “Leavitt Subscription Agreement”) with an accredited investor affiliated with Leavitt Equity Partners LLC (collectively, “Leavitt”), pursuant to which the Company agreed to issue and sell
The February 2025 Offering Warrants met the definition of a derivative under ASC 815. The $
November 2025 PIPE
On November 11, 2025, the Company entered into a securities purchase agreement (the “November 2025 Securities Purchase Agreement”) with certain accredited investors named therein, pursuant to which the Company agreed to issue and sell
F-33
The November 2025 Warrants met the definition of a derivative under ASC 815. The $
The number of shares of Common Stock that have been reserved for issuance upon the potential conversion or exercise, as applicable, of the Company's securities as of December 31, 2025, is as follows:
Outstanding options to purchase Common Stock |
|
|
|
|
Restricted Stock Units |
|
|
|
|
Warrants to purchase Common Stock |
|
|
|
|
Shares of Common Stock issued upon the exercise of Public Warrants |
|
|
|
|
Earn-Out shares |
|
|
|
|
Convertible Notes |
|
|
|
|
Total |
|
|
|
Warrants to Purchase Common Stock
In connection with the closing of the Business Combination, all outstanding warrants to purchase Legacy Allurion preferred stock and Legacy Allurion common stock were converted into Rollover Warrants to purchase Allurion Common Stock using the Exchange Ratio.
In connection with the equity offerings defined above, the following warrants were outstanding to purchase Common Stock as of December 31, 2025:
December 31, 2025 |
|
|||||||||||||||
Issuance Date |
|
Remaining |
|
|
Underlying Equity Instrument |
|
Balance Sheet |
|
Shares Issuable |
|
|
Weighted |
|
|||
3/30/2021 |
|
|
|
|
Common stock |
|
Liability |
|
|
|
|
$ |
|
|||
9/15/2022 |
|
|
|
|
Common stock |
|
Liability |
|
|
|
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6/4/2022 |
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Common stock |
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Liability |
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1/17/2017 |
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Common stock |
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Equity |
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8/3/2017 |
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Common stock |
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Equity |
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9/8/2017 |
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Common stock |
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Liability |
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6/19/2018 |
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Common stock |
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Liability |
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6/25/2019 |
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Common stock |
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Liability |
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7/1/2024 |
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|
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Common stock |
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Liability |
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1/27/2025 |
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Common stock |
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Liability |
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2/20/2025 |
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Common stock |
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Liability |
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11/11/2025 |
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Common stock |
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Liability |
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F-34
December 31, 2024 |
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|||||||||||||||
Issuance Date |
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Remaining |
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Underlying Equity Instrument |
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Balance Sheet |
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Shares Issuable |
|
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Weighted |
|
|||
12/1/2014 |
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( |
) |
|
Common stock |
|
Equity |
|
|
|
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$ |
|
||
3/30/2021 |
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Common stock |
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Liability |
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9/15/2022 |
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Common stock |
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Liability |
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6/4/2022 |
|
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|
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Common stock |
|
Liability |
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|
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|
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|
|||
1/17/2017 |
|
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|
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Common stock |
|
Equity |
|
|
|
|
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|
|||
8/3/2017 |
|
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|
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Common stock |
|
Equity |
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|
|
|
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|
|||
9/8/2017 |
|
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|
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Common stock |
|
Liability |
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|
|
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|
|||
6/19/2018 |
|
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|
|
Common stock |
|
Liability |
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|
|
|
|
|
|||
6/25/2019 |
|
|
|
|
Common stock |
|
Liability |
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|
|
|
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|
|||
7/1/2024 |
|
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|
|
Common stock |
|
Liability |
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|||
|
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In Compute Health's initial public offering, it sold units at a price of $
Chardan Equity Facility
On December 18, 2023, we entered into a ChEF Purchase Agreement (the "Purchase Agreement") and a Registration Rights Agreement, each with Chardan Capital Markets ("Chardan") related to a "ChEF," Chardan's committed equity facility (the "Chardan Equity Facility"). Pursuant to the Purchase Agreement, the Company has the right from time to time at its option to sell to Chardan up to the lesser of (i) $
Exchange Agreement with RTW
On November 11, 2025, the Company entered into Exchange Agreement with certain entities managed by RTW, pursuant to which RTW has agreed to exchange all of the (i) principal amount of the RTW Convertible Notes, purchased pursuant to the terms of the Amended Note Purchase Agreement, including interest accrued on the RTW Convertible Notes; (ii) Company obligations under the Revenue Interest Financing Agreement; and (iii) Company obligations under the New RIFA, for shares of Series B Preferred Stock of the Company.
The Exchange Agreement contains customary representations, warranties and agreements by the Company, customary conditions to closing, certain obligations of the parties, and indemnification provisions. On December 18, 2025, the Company obtained stockholder approval of the issuance of the Series B Preferred Stock. RTW's obligation to consummate the closing of the Exchange is conditioned upon compliance with the listing requirements of the national securities exchange on which the Common Stock is then listed on.
The Exchange Agreement creates an obligation for the Company to issues shares of Series B Preferred Stock upon satisfaction of the closing conditions (the "Preferred Stock Forward Contract"). The Preferred Stock Forward Contract was determined to be an equity classified freestanding financial instrument in accordance with ASC 815-40 and ASC 480-10, respectively. The fair value was determined as the fair value of the Series B Preferred Stock that will be issued less the fair value of RIFA and RTW Convertible
F-35
Notes. The fair value of the Series B Preferred Stock was performed using a scenario based approach, combining a DCF model with a MCSM valuation approach along with a risk free rate of
12. Net Loss per Share
Basic and diluted net loss per share was calculated as follows:
|
|
Year Ended December 31, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
Numerator: |
|
|
|
|
|
|
||
Net loss |
|
$ |
( |
) |
|
$ |
( |
) |
Denominator: |
|
|
|
|
|
|
||
Basic and diluted weighted-average common stock outstanding |
|
|
|
|
|
|
||
Net loss per share attributable to common stockholders, basic and diluted |
|
$ |
( |
) |
|
$ |
( |
) |
The Company’s potentially dilutive securities have been excluded from the computation of diluted net loss per share as the effect would be to reduce the net loss per share. Therefore, the weighted average number of common shares outstanding used to calculate both basic and diluted net loss per share attributable to common stockholders is the same. The Company excluded the following potential common shares, presented based on amounts outstanding at each period end, from the computation of diluted net loss per share attributable to common stockholders for the periods indicated because including them would have had an anti-dilutive effect:
|
|
Year Ended December 31, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
Outstanding options to purchase Common Stock |
|
|
|
|
|
|
||
Restricted Stock Units |
|
|
|
|
|
|
||
Warrants to purchase Common Stock |
|
|
|
|
|
|
||
Shares of Common Stock issued upon the exercise of Public Warrants |
|
|
|
|
|
|
||
Earn-Out Shares |
|
|
|
|
|
|
||
Convertible notes (as converted to common stock) |
|
|
|
|
|
|
||
Total |
|
|
|
|
|
|
||
13. Stock Based Compensation
Stock Incentive Plans
The Company’s 2010 Stock Option Plan (the “2010 Plan”) provided for the grant of qualified incentive stock options, nonqualified stock options, and other awards to the Company’s employees, officers, directors, advisors, and outside consultants to purchase the Company’s Common Stock. On December 11, 2020, the Company’s Board of Directors adopted the 2020 Stock Option Plan (the “2020 Plan”), which provided for the grant of qualified incentive stock options, nonqualified stock options, and other awards to the Company’s employees, officers, directors, advisors, and outside consultants to purchase the Company’s Common Stock. Each stock option from the 2010 Plan and the 2020 Plan that was outstanding immediately prior to the Business Combination, whether vested or unvested, was canceled and exchanged for a stock option to purchase Allurion Common Stock based on the Exchange Ratio. The per share exercise price for each stock option was divided by the Exchange Ratio.
In connection with the closing of the Business Combination, the Company adopted the 2023 Stock Option and Incentive Plan (the "2023 Plan"), which provides for the award of stock options (both incentive and non-qualified), stock appreciation rights, restricted stock units, restricted stock awards, cash-based awards, and dividend equivalent rights. On October 15, 2025 the Board voted to amend the 2023 Plan to the Amended and Restated 2023 Equity Incentive Plan (the "Amended 2023 Plan") to increase the
F-36
aggregate number of shares of common stock issuable. The Amended 2023 Plan was approved by stockholders on December 18, 2025. As of December 31, 2025, a total of
As of December 31, 2025,
Stock-based compensation expense included in the consolidated statement of operations and comprehensive loss was as follows:
|
|
Year Ended December 31, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
Cost of revenue |
|
$ |
|
|
$ |
|
||
Selling, general, and administrative |
|
|
|
|
|
|
||
Research and development |
|
|
|
|
|
|
||
Total stock-based compensation expense |
|
$ |
|
|
$ |
|
||
Stock Options
The following tables summarizes the option activity under the 2010 Plan, 2020 Plan, 2023 Plan, and the Amended 2023 Plan during the year ended December 31, 2025:
|
|
Number of |
|
|
Weighted |
|
|
Weighted |
|
|
Aggregate |
|
||||
|
|
|
|
|
(per option) |
|
|
(in years) |
|
|
(in thousands) |
|
||||
Outstanding—January 1, 2025 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
Granted |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cancellations and forfeitures |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|||
Exercised |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Outstanding— December 31, 2025 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Exercisable at December 31, 2025 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
Total stock compensation expense related to stock option awards during the year ended December 31, 2025 was $
The fair value of each option award is estimated on the date of grant using the Black-Scholes option-pricing model and the assumptions noted in the table below. Expected volatility for the Company’s Common Stock was determined based on an average of the historical volatility of a peer group of public companies which are similar to the Company. The expected term of options granted to employees was calculated using the simplified method, which represents the average of the contractual term of the option and the weighted- average vesting period of the option. The Company uses the simplified method because it does not have sufficient historical option exercise data to provide a reasonable basis upon which to estimate expected term. The expected term of options granted to non-employees is the remaining contractual term of the award. The assumed dividend yield is based upon the Company’s expectation of not paying dividends in the foreseeable future. The risk-free rate for periods within the expected life of the option is based upon the U.S. Treasury yield curve in effect at the time of grant.
F-37
The assumptions used in the Black-Scholes option-pricing model are as follows:
|
|
Year Ended December 31, |
|
|
Year Ended December 31, |
|
||
|
|
2025 |
|
|
2024 |
|
||
Expected volatility |
|
|
% |
|
|
% |
||
Risk-free interest rate |
|
|
% |
|
|
% |
||
Expected dividend yield |
|
|
% |
|
|
% |
||
Expected term (in years) |
|
|
|
|
|
|||
On December 18, 2025, our board of directors approved a stock option repricing (the "Option Repricing") to be effective on December 18, 2025 (the "Effective Date") in accordance with our 2023 Plan. Pursuant to the Option Repricing the exercise price of each stock option previously granted under the 2023 Plan, totaling
Restricted Stock Units
In December 2022, the Company issued RSUs to a member of the Board of Directors with vesting subject to both a performance-based closing condition dependent on the successful Business Combination with Compute Health and time-based vesting conditions which are fully vested as of December 31, 2025. In October 2023 and March 2024, the Company issued additional RSUs to Board of Director members and in November 2024 and May 2025, to employees and Board members, all of which vest over
The following table summarizes the restricted stock unit activity under the 2020 Plan and 2023 Plan during the year ended December 31, 2025:
|
|
Number of RSUs |
|
|
Weighted |
|
||
|
|
|
|
|
(per share) |
|
||
Outstanding—January 1, 2025 |
|
|
|
|
$ |
|
||
Granted |
|
|
|
|
|
|
||
Cancellations and forfeitures |
|
|
( |
) |
|
|
|
|
Vested |
|
|
( |
) |
|
|
|
|
Outstanding—December 31, 2025 |
|
|
|
|
$ |
|
||
Total stock compensation expense related to RSUs for the year ended December 31, 2025 was $
Employee Stock Purchase Plan
In connection with the closing of the Business Combination, the Company adopted the 2023 Employee Stock Purchase Plan (the "2023 ESPP"). Under the 2023 ESPP plan, substantially all employees may voluntarily enroll to purchase the Company's Common Stock through payroll deductions at a price equal to
F-38
A total of
14. Employee Benefit Plan
The Company has a 401(k) retirement plan that covers eligible U.S. employees. Eligible employees may elect to contribute up to the maximum limits, as set by the Internal Revenue Service, of their eligible compensation. The Company may elect to make a discretionary contribution or match a discretionary percentage of employee contributions. During the years ended December 31, 2025 and 2024, the Company’s matching contributions to the plan were less than $
15. Commitments and Contingencies
Leases
With respect to contracts involving the use of assets, if the Company has the right to direct the use of the asset and obtain substantially all economic benefits from the use of an asset, it accounts for the service contract as a lease.
As of December 31, 2025, the Company was a party to three different leases for office, manufacturing, and laboratory space under non-cancelable office leases in two cities. These leases total approximately
In July 2025, the Company signed an Assignment of Lease and Consent to Assignment (the "Lease Assignment") for one of its Natick leases ending March 2028, whereby a third-party agreed to assume the Company's rights, duties and obligations under the lease beginning September 1, 2025. The lease assignment was contingent upon the landlord's consent and the Company is secondarily liable to the third-party assignee for obligations under the lease. For the year ended December 31, 2025 the Company derecognized the related operating lease right-of-use asset and operating lease liability of $
The components of right -of-use ("ROU") assets and lease liabilities are included in the consolidated balance sheets. The short-term portion of the Company's operating lease liability is recorded as part of Accrued expenses and other current liabilities on the consolidated balance sheets.
Aggregate Lease Information
Other pertinent lease information for the years ended December 31, 2025 and 2024 is as follows (in thousands):
|
|
December 31, 2025 |
|
|
December 31, 2024 |
|
||
Operating lease costs |
|
$ |
|
|
$ |
|
||
Short-term lease costs |
|
|
|
|
|
|
||
Variable operating lease costs |
|
|
|
|
|
|
||
Operating cash flows paid for amounts in the measurement of lease liabilities |
|
|
|
|
|
|
||
Operating lease assets obtained in exchange for lease obligations |
|
|
|
|
|
|
||
F-39
Future commitments under non-cancelable operating lease agreements as of December 31, 2025 are as follows (in thousands):
2026 |
|
$ |
|
|
2027 |
|
|
|
|
2028 |
|
|
|
|
Total lease payments |
|
$ |
|
|
Less: present value adjustment |
|
|
( |
) |
Present value of total lease liabilities |
|
|
|
|
Less: current lease liability |
|
|
( |
) |
Long-term lease liabilities |
|
$ |
|
The weighted-average remaining lease terms and discount rates related to our leases were as follows:
|
|
December 31, 2025 |
|
|
December 31, 2024 |
|
||
Weighted -average remaining lease term (in years) |
|
|
|
|
|
|
||
Weighted-average discount rate |
|
|
% |
|
|
% |
||
Product Liability
The Company has not received any material product liability claims. Notwithstanding this, the Company has obtained insurance related to potential product liability claims.
Litigation and Claims
In the normal course of operations, the Company may become involved in various claims and legal proceedings related to, for example, the validity or scope of its intellectual property rights, employee-related matters, securities class action, or adverse patient reactions. Additionally, during the normal course of business, the Company may be a party to legal claims that may not be covered by insurance.
On August 12, 2025, Vanderbilt University Medical Center (“Vanderbilt”) filed a complaint against the Company in the United States District Court for the Middle District of Tennessee, captioned Vanderbilt University Medical Center v. Allurion Technologies, Inc., d/b/a Allurion. Vanderbilt's complaint alleges that the Company breached the Clinical Trial Agreement, dated June 30, 2022, by and between the Company and Vanderbilt (the "Clinical Trial Agreement"), related to the clinical trial for the Smart Capsule by failing to reimburse medical expenses incurred in treating a patient enrolled in such trial at Vanderbilt. Vanderbilt is seeking damages of approximately $
As of December 31, 2025 and 2024, the Company has recorded accruals for the contractual obligations under the Clinical Trial Agreement with Vanderbilt.
French Regulatory Decision
On August 6, 2024, it was announced that the Agence Nationale de Sécurité du Médicament (“ANSM”), the French regulatory authority, had suspended sales of the Allurion Smart Capsule in France, and the Company withdrew the device from the French market. The Company implemented a remediation plan to reduce certain risks associated with the advertising, follow-up program, and adverse events for the Allurion Smart Capsule. For the year ended December 31, 2024, the Company recognized a reduction to revenues of $
NYSE Continued Listing Standards
On August 29, 2024, we received a notice from the NYSE notifying us that as of August 29, 2024, we were not in compliance with the continued listing standard set forth in Section 802.01B of the NYSE’s Listed Company Manual (the “Minimum Market Capitalization Standard”) because our average market capitalization was less than $
F-40
plan and our common stock will continue to trade on the NYSE during the Cure Period, subject to our compliance with other NYSE continued listing requirements.
On March 2, 2026, Company announced that it received a letter (the “Delisting Notice”) from the staff of the NYSE indicating that the Company does not meet certain of the NYSE's continued listing standards as set forth in the Minimum Market Capitalization Standard The Company has a right to a review of this determination by a Committee of the Board of Directors of the Exchange (the “Committee”). The Company has appealed this delisting determination.
On March 6, 2026, the NYSE informed the Company that it has determined to commence proceedings to delist the Company’s Common Stock, and warrants to purchase
As a result of the suspension in trading and delisting process pending the Company’s appeal, the Common Stock is trading on the OTCID Market. The Company intends to apply to list on a higher-tier market operated by the OTC Market Group, Inc. under its current symbols "ALUR" and “ALUR.WS”.
16. Segment Information
Segment reporting is prepared on the same basis that the Company's , who is our chief operating decision maker (“CODM”), manages the business, makes operating decisions, and assesses performance. The Company operates in
Disclosures about significant segment expenses and long-lived assets by geography are presented below. Refer to Note 3, Revenue, for information on revenue by geography.
Significant segment expenses are set forth in the following table (in thousands):
|
|
Year Ended December 31, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
Revenue |
|
$ |
|
|
$ |
|
||
Less: |
|
|
|
|
|
|
||
Cost of revenue |
|
|
|
|
|
|
||
Sales and marketing |
|
|
|
|
|
|
||
Clinical trials and medical affairs |
|
|
|
|
|
|
||
Product development |
|
|
|
|
|
|
||
Digital |
|
|
|
|
|
|
||
Quality and regulatory |
|
|
|
|
|
|
||
General and administrative |
|
|
|
|
|
|
||
Other segment items (1) |
|
|
( |
) |
|
|
( |
) |
Net loss |
|
$ |
( |
) |
|
$ |
( |
) |
Long-lived assets, consisting of property and equipment, net and ROU assets by geography were as follows (in thousands):
|
|
December 31, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
United States |
|
$ |
|
|
$ |
|
||
France |
|
|
|
|
|
|
||
Long-lived assets |
|
$ |
|
|
$ |
|
||
F-41
17. Related-party Transactions
Lease Agreement with Related Party
In August 2022, the Company entered into an operating lease agreement for additional office space in Paris, France with LNMP JPBC Invest. The Company’s then-Trade Marketing Director was the signor of this lease for LNMP JPBS Invest. Additionally, the Company’s former Chief Commercial Officer is also a partner of LNMP JPBC Invest. The lease agreement included lease payments of approximately $
Convertible Note Agreement with RTW
Pursuant to the Amended Note Purchase Agreement, on April 16, 2024, we issued and sold $
RTW Participation in Public Offering
In connection with the Public Offering, the Company issued and sold
Private Placement with RTW
On June 28, 2024, pursuant to the Subscription Agreement, the Company agreed to sell to RTW
Exercise of PIPE Conversion Option and New RIFA with RTW
On October 22, 2024, funds affiliated with RTW provided notice to the Company of their election of the PIPE Conversion Option under the Amended and Restated RTW Side Letter, to surrender
January 2025 Private Placement with RTW
On January 14, 2025, the Company entered into the RTW Subscription Agreement with funds affiliated with RTW, pursuant to which the Company agreed to sell
Second Amendment to Amended Note Purchase Agreement
On April 15, 2025, the Company, the Purchasers and RTW, as agent for the Purchasers entered into the Second Amendment to Note Purchase Agreement, which amended the Amended Note Purchase Agreement to reflect additional conversion and other provisions, including provisions permitting the conversion of the RTW Convertible Notes at reduced conversion prices, resulting in the potential issuance of additional shares, which had been approved by the Company’s stockholders at the Special Meeting of Stockholders held on April 10, 2025. On April 16, 2025, subject to the terms of the Second Amendment to Note Purchase Agreement, the Purchasers provided notice of conversion of $
Exchange Agreement with RTW
On November 11, 2025, the Company entered into the Exchange Agreement with RTW. Refer to Note 11, Capital Stock and Stockholders Deficit, for more information regarding the Exchange Agreement. As of December 31, 2025, the Exchange has not occurred.
November 2025 Private Placement with RTW
F-42
On November 11, 2025, the Company entered into the RTW Subscription Agreement with funds affiliated with RTW, pursuant to which the Company agreed to sell
18. Subsequent Events
FDA Approval
On February 20, 2026, the U.S. Food and Drug Administration (“FDA”) granted PMA approval for the Allurion Gastric Balloon System (AGBS), featuring the Allurion Smart Capsule. In the United States, the AGBS is indicated to promote short-term limited weight loss in adult individuals with obesity between the ages of 22 years and 65 years with a body mass index (BMI) ≥ 30 kg/m2 and ≤ 40 kg/m2 who have had at least one unsuccessful attempt at a weight loss program. The residence time for each balloon is variable with an average observed residence time of
Warrant Inducement
On February 24, 2026, the Company entered into a warrant exercise inducement offer letter (the “Inducement Letter”) with certain holders (the “Exercising Holders”) of certain of the Company’s: (i) January 2025 Warrants; (ii) February 2025 Offering Warrants; and (iii) November 2025 Private Placement Warrants (together with the January 2025 Warrants and February 2025 Offering Warrants, the “Existing Warrants”).
Pursuant to the terms of the Inducement Letter, the Company agreed to amend the Existing Warrants by lowering the exercise price of the Existing Warrants to $
Each New Warrant is exercisable into shares of Common Stock at a price per share of $
The Company has engaged Roth Capital Partners, LLC (“Roth”) as its financial advisor in connection with these transactions and will pay Roth a fee equal to
F-43
FAQ
What is Allurion (ALUR) and its core weight loss product?
What recent FDA approval did Allurion (ALUR) receive?
How is Allurion (ALUR) funding its operations and growth plans?
What is happening with Allurion’s (ALUR) NYSE listing status?
How large is Allurion’s target market for obesity treatment?
How effective is the Allurion Program for weight loss and co-morbidities?
What intellectual property protections does Allurion (ALUR) report?
