COVID is Here to Stay—as a Risk Factor in SEC Filings

By Nate DiCamillo, Quartz (TNS)

Although the World Health Organization has ended the COVID-19 public health emergency, people around the world still die from covid and lose hours at work because of the disease.

On Wall Street too, covid remains an issue that companies going public want to warn investors about as a potential drag on earnings. For those businesses, it’s now typical to make at least one reference to covid in the regulatory filing they must give to the Securities and Exchange Commission (SEC) when they IPO. Some companies refer to the pandemic dozens of times.

Arm, the British semiconductor giant, warned in its recent S-1 filing with the SEC that COVID variants could cause China to shut down parts of its economy again and that the disease may keep future economic conditions uncertain.

The company also included an “unrelated epidemic” along with COVID as a potential risk to be cautious of. Such disclosures speak to the fact that the globe still doesn’t have ideal pandemic procedures in place, even after pushing through years of COVID disruptions and millions of lives lost. In all, Arm mentions covid 18 times in its prospectus.

What are the financial risks of COVID-19?

COVID-19 also showed up in the S-1 for Aeon Biopharma, a U.S. clinical-stage biopharmaceutical firm that went public in July. Aeon cautioned investors that the illness may cause participants in its drug trials to drop out or miss a dose, hurting the results. It also cited regulatory authorities slowing down drug approval processes because of a backlog of COVID-related needs.

American glass company Crown Electrokinetics noted in its August IPO filing that COVID has prompted it to modify its business practices, including those around business travel and in-person conferences.

“Even after the coronavirus outbreak has subsided, we may continue to experience materially adverse impacts to our business as a result of its global economic impact, including any recession that has occurred or may occur in the future,” Crown wrote in its prospectus.

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