What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-02-27 compared with 2025-02-28 · 140 added, 118 removed, 275 unchanged (48% of the section changed)

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Our laboratory services business includes technical laboratory and testing services and professional interpretation of laboratory results by licensed physicians.

Our therapeutic development business is focused on developing drug candidates for treating a broad range of cancers using a novel nanoencapsulation and targeted therapy platform designed to improve the therapeutic window and PK profile of new and existing cancer drugs.

Our therapeutic development business is focused on developing product candidates for treating a broad range of cancers using a novel nanoencapsulation and targeted therapy platform designed to improve the therapeutic window and PK profile of new and existing cancer drugs.

We recorded revenue and net (loss) from operations of $322.7 million and ($60.5) million, respectively, in 2025, compared to revenue and net (loss) from operations of $283.5 million and ($42.7) million, respectively, in 2024.

2025 Developments

In 2024, we began enrollment of a Phase 2, randomized, multi-center, open-label trial of FID-007 in patients with recurrent or metastatic H&N squamous cell carcinoma, established seven testing sites, and as of December 31, 2024, we had enrolled 17 patients.

In December 2024, we filed an IND for the investigation of FID-022 in a Phase 1/1b clinical trial, and in January 2025, the IND for this trial was cleared by the FDA.

Bako and StrataDx Acquisition

In December 2025, we announced that we entered into definitive agreements to acquire selected assets of Bako Diagnostics, a premier pathology laboratory headquartered in Alpharetta, Georgia and to acquire StrataDx, a premier dermatopathology laboratory located in Lexington, Massachusetts for a total combined purchase price of approximately $55.5 million, subject to adjustments, to be paid from cash on hand.

The acquisition is expected to close during the first half of 2026, subject to satisfying customary closing conditions, including regulatory approvals.

Refer to Note 15.

Business Combinations , for additional details.

Purchase of Income Tax Credits

In 2025, we purchased $106.3 million worth of Investment Tax Credits, or ITCs, under the transferability provisions of the Inflation Reduction Act of 2022 for $99.5 million in cash.

Refer to Note 11.

Income Taxes , for additional details with regard to the treatment of Investment Tax Credits purchased previously.

ANP Acquisition

On July 9, 2025, we completed an acquisition of 100% of ANP, an innovation-driven company, which has developed multiple proprietary product platforms.

This acquisition enables us to secure ownership of the patents previously licensed from ANP, which are currently utilized in ongoing clinical studies.

By securing full ownership of these intellectual property rights, we aim to enhance our

control over the development and commercialization of related therapeutic candidates, thereby aligning with its strategic objectives to advance clinical programs.

Refer to Note 15.

Business Combinations , for additional details.

Factors Affecting Our Performance

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We consider each single billing and paying unit to be an individual customer, even though a unit may represent multiple physicians and healthcare providers ordering tests.

The composition and concentration of our customer base can fluctuate from period to period, and in certain prior periods, a small number of customers have accounted for a significant portion of our revenue.

we do not have long-term purchase agreements with any of our customers, including these key customers, and, as result, any or all of them could decide at any time to increase, accelerate, decrease, delay or discontinue their orders from us.

Although we believe some of these fluctuations in customer demand may be attributable in part to the nature of our business, in which our customers can experience significant volatility in their testing demand from period to period in the ordinary course of their operations, these demand fluctuations, particularly for our key customers, can have a significant impact on our period-to-period performance regardless of their cause.

The composition and concentration of our customer base often fluctuate from period to period, and in certain prior periods, a small number of customers have accounted for a significant portion of our revenue.

When customers who, to our knowledge, are under common control or otherwise affiliated with each other are aggregated, one of our customers contributed $70.8 million or 22% of our total revenue during the year ended December 31, 2025.

For this customer and for customers generally, tests are purchased on a test-by-test basis and not pursuant to any long-term purchasing arrangements.

We expect reduced revenues moving forward into 2026 from this significant customer.

We plan to continue to focus on developing other customers and capturing new customers.

If these efforts are successful, we may be able to offset, or partially offset, this decrease in revenue.

We currently classify our customers into three payor types:

(i) Insurance, (ii) Institutional, including hospitals, medical institutions, other laboratories, governmental bodies, municipalities, and large corporations or (iii) Patients who pay directly.

(i) Insurance, (ii) Institutional, including hospitals, medical institutions, other laboratories, governmental bodies, and large corporations or (iii) Patients who pay directly.

Typically, we bill our Institutional customers for our tests, and they are responsible for paying us directly and billing their patients separately or obtaining reimbursement from insurance payors in connection with a patient’s diagnosis related group.

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Ability to Maintain Low Internal Costs and Inflation

We have developed various proprietary technologies that improve our laboratory efficiency and reduce the costs we incur to perform our tests, including our proprietary gene probes, data algorithms, adaptive learning software and genetic reference library.

This technology platform enables us to perform each test and deliver its results at a lower cost to us than many of our competitors, and this low cost allows us to maintain affordable and competitive pricing for our customers, which we believe encourages repeat ordering from existing customers and attracts new customers.

We have developed various proprietary technologies, including various AI tools, that improve our laboratory efficiency and reduce the costs we incur to perform our tests, including our proprietary gene probes, data algorithms, adaptive learning software and genetic reference library.

believe encourages repeat ordering from existing customers and attracts new customers.

We believe this low internal cost is a key factor in our ability to grow our business and obtain margins on our sales that allow us to drive toward sustained profitability.

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Much of our revenue depends on receiving reimbursement for our tests from insurance payors, including our Insurance and Institutional customers.

These payors have complicated rules and procedures regarding submissions for reimbursement and their

reimbursement practices and procedures may vary from period to period.

These payors have complicated rules and procedures regarding submissions for reimbursement, and their reimbursement practices and procedures may vary from period to period.

Reimbursed amounts are often subject to audit, and our ability to collect and retain reimbursement from these payors may vary from period to period.

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Our level of success in obtaining and maintaining adequate coverage and reimbursement from insurance payors for our testing services will, we believe, be a key factor in the rate and level of growth of our business over the long term.

These reimbursement activities also subject us to payor and government audits and investigations such as the HRSA audit and the CIDs discussed in Note 8, Debt, Commitments and Contingencies to the Consolidated Financial Statements.

The results of these matters and the expenses and use of resources needed in connection with these and similar matters could materially affect our results of operations.

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however, the impact of foreign currency exchange rate fluctuations may increase in future periods as we pursue continued international expansion.

COVID-19 Testing Services

We experienced significant volume growth in 2020, 2021 and 2022 after the launch of our COVID-19 testing services in 2020.

Most of this growth in our testing volume resulted from COVID-19 tests that we conducted for certain counties, states and municipalities during the pandemic.

However, due to decreased demand of COVID-19 testing following the pandemic and our decision to scale back our COVID-19 testing services, we do not expect material revenue from COVID-19 testing in future periods.

Business Risks and Uncertainties

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Financial Overview

Our laboratory service segment generates revenue from molecular testing, including precision diagnostics and anatomic pathology, BioPharma services, and COVID-19 testing.

We recognize revenue upon delivery of a report to the ordering physician or other customer based on the established billing rate, less contractual and other adjustments, to arrive at the amount we expect to collect.

Our therapeutic development segment is still pre-revenue.

Our laboratory service segment generates revenue from molecular testing, including precision diagnostics and anatomic pathology, BioPharma services, and COVID-19 testing (which is not expected to produce material revenue).

We recognize revenue upon delivery of a report to the ordering physician or other customer based on the established billing rate, less contractual and other

adjustments, to arrive at the amount we expect to collect.

Our therapeutic development segment has started producing BioPharma services revenue with the acquisition of ANP.

Cost of Revenue

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delivery and courier costs relating to the transportation of specimens to be tested;

amortization of leasehold improvements;

amortization of building or leasehold improvements;

and allocated overhead expenses, including rent and utilities.

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Research and Development Expenses

Research and development expenses represent costs incurred to develop our technology and future tests and treatments and our drug candidates.

Research and development expenses represent costs incurred to develop our technology and future tests and treatments and our product candidates.

These costs consist of:

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We expense all research and development costs in the periods in which they are incurred.

We expect our research and development expenses will continue to increase in absolute dollars, as we expect to continue to invest in research and development activities and continue to innovate and expand the application of our platform.

Furthermore, we expect our research and development expenses for our therapeutic development segment to increase as we incur incremental expenses associated with our drug candidates that are currently under development and in clinical trials.

Drug candidates in later stages of clinical development generally have higher development costs, primarily due to the increased size and duration of later-stage clinical trials.

Accordingly, we expect to incur significant research and development expenses in connection with our Phase 2 trials for FID-007 and the initiation of clinical trials for FID-022.

Furthermore, we expect our research and development expenses for our therapeutic development segment to increase as we incur incremental expenses associated with our product candidates that are currently under development and in clinical trials.

Product candidates in later stages of clinical development generally have higher development costs, primarily due to the increased size and duration of later-stage clinical trials.

Accordingly, we expect to incur significant research and development expenses in connection with our clinical trials for FID-007 and FID-022.

Selling and Marketing Expenses

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We expect our general and administrative expenses will continue to increase in absolute dollars as we seek to continue to scale our operations.

We also expect to continue to incur general and administrative expenses as a result of operating as a public company, including expenses related to compliance with the rules and regulations of the SEC, and Nasdaq, additional insurance expenses, investor relations activities and other administrative and professional services.

We also expect to continue to incur general and administrative expenses as a result of operating as a public company, including expenses related to compliance with the rules and

regulations of the SEC, and Nasdaq, additional insurance expenses, investor relations activities and other administrative and professional services.

Goodwill Impairment Loss

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If impairment is indicated, we measure the amount of the impairment loss as the amount by which the carrying amount exceeds the fair value of the asset.

(Benefit from) Provision for Income Taxes

(Benefit from) provision for income taxes consists of U.S.

Benefit from Income Taxes

Benefit from income taxes consists of U.S.

federal and state income taxes.

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Amortization of intangible assets

Goodwill impairment loss

Total operating expenses

Operating (loss) income

Operating loss

Other income (expenses)

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Interest expense

Impairment of available-for-sale debt securities

Impairment loss

Other income, net

Total other income, net

(Loss) income before income taxes

(Benefit from) provision for income taxes

Net (loss) income from consolidated operations

Loss before income taxes

Benefit from income taxes

Net loss from consolidated operations

Net loss attributable to noncontrolling interests

Net (loss) income attributable to Fulgent

* not meaningful

Net loss attributable to Fulgent

Year Ended December 31,

(in thousands, except percentages)

Revenue from laboratory services

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Total laboratory services

Revenue decreased by $5.7 million, or 2%, from $289.2 million in 2023 to $283.5 million in 2024.

The decrease in revenue between periods was driven by decreases of $24.8 million in COVID-19 testing, $9.1 million in BioPharma services, and $7.6 million in anatomic pathology.

However, these declines were offset by an increase of $35.8 million in precision diagnostics.

The decrease in COVID-19 testing services resulted from the cessation of testing operations at the end of March 2023.

Continued COVID-19 revenues after March 2023 are due to variable consideration recognized for services completed in prior periods.

The decrease in anatomic pathology services was due to lower reimbursement rates from insurance payors and client losses.

The decrease in BioPharma services revenue was primarily due to the scaling back or termination of certain projects, as some clients faced financial distress, underwent restructuring, shifted strategic priorities, adapted to market changes, or completed large clinical trials.

BioPharma services revenue is expected to remain variable due to the long sales cycle and project timing differences.

Conversely, the increase in precision diagnostics revenue was driven by growth in our reproductive health services and legacy diagnostic offerings.

Revenue from therapeutic development

BioPharma services

Total therapeutic development

Total revenue

* not meaningful

(1) Beginning in 2025, COVID-19 revenue is grouped with precision diagnostics, which was insignificant in 2025.

Revenue increased by $39.2 million, or 14%, from $283.5 million in 2024 to $322.7 million in 2025.

The increase in revenue between periods was driven by increases of $22.7 million in precision diagnostics, $9.4 million in anatomic pathology, and $9.4 million in BioPharma services.

However, these increases were offset by a decrease of $2.3 million in COVID-19 revenue.

The increase in precision diagnostics revenue for the year was driven by growth in our reproductive health services and continued strength in legacy diagnostic offerings.

The increase in anatomic pathology services was primarily due to the absence of weather-related disruptions and client losses that had affected the prior year.

The increase in BioPharma services revenue was

primarily due to the timing of service projects, though this revenue is expected to remain variable due to the long sales cycle and fluctuations in project timing.

Conversely, the decrease in COVID-19 testing services resulted from the cessation of testing operations at the end of March 2023, leading to the subsequent inclusion of any remaining COVID-19 revenue to be grouped under precision diagnostics, beginning in 2025.

Continuing COVID-19 revenues after March 2023 are expected to be minimal, and are typically due to variable consideration recognized for services completed in prior periods.

We believe the factors that will affect our ability to grow these revenue streams are 1) the average price point we offer and the reimbursement rate from insurance payors;

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Estimated collection amounts from insurance payors are subject to the complexities and ambiguities of billing, reimbursement regulations and claims processing, as well as considerations unique to Medicare and Medicaid programs.

Because our proprietary technology platform allows for repaid scaling of a broad, flexible testing menu, we can offer our customers more scalable and affordable testing.

Because our proprietary technology platform allows for rapid scaling of a broad, flexible testing menu, we can offer our customers more scalable and affordable testing.

Going forward, we will strive to maintain this competitive advantage and emphasize this in our marketing efforts to grow our testing revenue.

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For the laboratory services segment, aggregating customers that are under common control, one customer comprised $70.8 million or 22% of our revenue in 2025 and $62.6 million or 22% of our revenue in 2024.

To reduce this revenue risk, we will focus on increasing the number of customers and thereby reducing the concentration.

We began to see lower than anticipated testing volume from our largest customer in the fourth quarter of 2025, and we expect revenues for this customer to decline in 2026 (particularly through the second quarter of 2026) as this customer begins to perform tests internally.

The tests and testing services this customer has historically purchased were primarily precision diagnostic tests.

To reduce this revenue risk, we will focus on developing existing customers and increasing the number of customers and thereby reducing the concentration.

Revenue from the therapeutic development segment includes amounts recognized by ANP, a recently acquired entity, from technologies licensed to pharmaceutical and biotechnology companies, as well as CROs.

In addition, ANP has entered into a manufacturing and supply agreement with a customer for specific COVID-19 testing kits, under which, ANP is entitled to participate in gross-margin sharing on the sale of those kits.

The timing of the gross-margin sharing revenue is dependent on the customer’s downstream sales of the kits.

An insignificant amount of gross-margin sharing revenue was recognized for the year ended December 31, 2025.

Revenue from non-U.S.

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The increase in revenue from non-U.S.

sources between periods were primarily due to increased sales of our traditional genetic testing services to customers in China through our joint venture, which contributed $11.8 million in total revenue in 2024.

sources between periods were primarily due to increased sales of our traditional genetic testing services to customers in China, which increased $0.3 million in 2025, as well as increases in total revenue to Australia of $0.7 million and Canada of $0.5 million.

Cost of Revenue

Year Ended December 31,

(in thousands, except percentages)

Cost of revenue

Cost of revenue as a % of revenue

Our consolidated cost of revenue decreased by $8.5 million, or 5%, from $184.8 million in 2023 to $176.3 million in 2024.

The decrease was primarily due to decreases of $6.7 million in consulting and outside labor costs for production, $1.7 million in software and software licensing expenses, $1.4 million in personnel costs, including equity-based compensation, $0.8 million in shipping expenses, and $0.2 million in dues and subscriptions expense, related to efforts of optimizing cost structures including bringing certain operations in house, consolidating laboratory operations, and the cessation of our COVID-19 testing operations, and partially offset by an increase of $1.8 million in reagent and supply costs and $0.5 million in depreciation expenses.

Our consolidated cost of revenue increased by $15.5 million, or 9%, from $176.3 million in 2024 to $191.8 million in 2025.

The increase was primarily due to increases of $7.5 million in personnel costs, including equity-based compensation, $4.2 million in reagent and supplies cost, $1.7 million in consulting and outside labor costs for production, $1.1 million in depreciation expenses, $0.8 million in software and software licensing expenses, $0.7 million in office expenses, and $0.7 million in facilities expenses, and partially offset by a decrease of $1.1 million in shipping and handling costs.

The cost of revenue for the therapeutic development segment resulted from ANP, is insignificant for the year ended December 31, 2025.

Our consolidated cost of revenues as a percentage of revenue decreased from 62.2% to 59.4%.

Our gross profit increased by $2.8 million, or 3%, from $104.5 million in 2023 to $107.2 million in 2024.

Our gross profit as a percentage of revenue, or gross margin, increased from 36.1% to 37.8%.

This is driven by the efforts of optimizing cost structures as discussed above.

Our gross profit increased by $23.7 million, or 22%, from $107.2 million in the year ended December 31, 2024, to $130.9 million in the year ended December 31, 2025.

Our gross profit as a percentage of revenue, or gross margin, increased from 38% in the year ended December 31, 2024, to 41% in the year ended December 31, 2025.

This was driven by the increased revenue, efforts of optimizing cost structures as discussed above, and efficiency as a result of our investments in scaling and centralizing lab operations.

Research and Development

Year Ended December 31,

(in thousands, except percentages)

Research and development

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Total research and development

Laboratory Services

For the laboratory services segment, the research and development expenses were mainly for advancing our technology and future testing and testing services.

The expenses decreased by $1.3 million, or 4%, from $29.7 million in 2023 to $28.4 million in 2024.

The decrease was primarily attributed to reductions of $0.6 million in facility expenses due to the consolidation of office and laboratory space, $0.3 million in depreciation expenses, $0.2 million in personnel expenses, and $0.1 million in consulting and external labor expenses.

The expenses increased by $1.2 million, or 4%, from $28.4 million in 2024 to $29.6 million in 2025.

The increase was primarily attributed to an increase of $1.3 million in personnel expenses.

In 2025, the research and development expenses primarily consisted of $26.6 million in personnel expenses, including bonuses and equity-based compensation, $1.3 million in reagent and supply costs, $0.5 million in facility expenses, $0.4 million in depreciation expense, and $0.2 million in software and licensing fees.

The 2024 expenses primarily consisted of $25.3 million in personnel expenses, including bonuses and equity-based compensation, $1.4 million in reagent and supply costs, $0.6 million in facility expenses, $0.4 million in depreciation expense, and $0.4 million in software and licensing fees.

For the therapeutic development segment, the research and development expenses in 2024 included $10.9 million in CRO costs, $8.6 million in personnel costs, including equity-based compensation, and $0.7 million in depreciation expenses.

In 2023, these expenses comprised $6.4 million of personnel expenses, including equity-based compensation, $4.5 million in CRO costs, and $0.7 million in depreciation expenses.

Therapeutic Development

For the therapeutic development segment, the research and development expenses in 2025 included $12.4 million in CRO costs, $10.5 million in personnel costs, including equity-based compensation, $0.5 million in facility expenses, and $0.5 million in depreciation expenses.

In 2024, these expenses comprised $10.9 million in CRO costs, $8.6 million of personnel expenses, including equity-based compensation, $0.7 million in depreciation expense, and insignificant facility expenses.

Research and development expenses for the therapeutic development segment increased by $3.9 million, or 19%, from $20.4 million in 2024 to $24.3 million in 2025.

The increase was primarily driven by increases of $6.4 million in CRO costs and $2.2 million in personnel costs, including equity-based compensation expense.

The overall increase was attributed to the advancement and continuation of the clinical study of FID-007, along with the completion of preclinical work for FID-022.

In 2024, approximately $2.1 million was incurred for the preclinical development of FID-022, whereas related costs in 2023 were minimal.

Looking ahead, we expect research and development expenses to continue increasing as clinical trials progress for FID-007, FID-022, and other preclinical studies.

The increase was primarily driven by increases of $1.9 million in personnel costs, including equity-based compensation expense, $1.5 million in CRO costs, and $0.5 million in facility expenses.

The overall increase was attributed to the advancement and continuation of the clinical study of FID-007, along with FID-022.

In 2024, approximately $2.1 million was incurred for the pre-clinical development of FID-022, compared to $3.2 million in 2025 for the pre-clinical and clinical development.

Expenses for our therapeutic development segment will be influenced by our ability to progress our therapeutic candidates through development with the FDA, the timing of which can be uncertain and delayed due to a variety of factors beyond our control, including recently announced staff reductions at the FDA and the effects or residual effects of the recent U.S.

“government shutdowns,” which may affect the FDA’s ability to provide any required approvals or review in a timely manner or in the timelines expected.

Looking ahead, we expect research and development expenses to continue increasing as clinical trials progress for FID-007, FID-022, and other pre-clinical studies.

Selling and Marketing

Our consolidated selling and marketing expenses decreased by $5.2 million, or 13%, from $41.5 million in 2023 to $36.2 million in 2024.

The decrease was primarily due to decreases of $1.9 million in facility expenses due to the consolidation of office space, $1.3 million in consulting and outside labor expenses, $1.0 million in advertising and marketing expenses, $0.9 million in commissions, $0.6 million in depreciation expenses, $0.3 million in losses of fixed asset disposals, and $0.2 million in software and software licensing expenses, and partially offset by an increase of $1.0 million personnel costs, including equity-based compensation expense.

Our consolidated selling and marketing expenses increased by $7.1 million, or 20%, from $36.2 million in 2024 to $43.4 million in 2025.

The increase was primarily due to increases of $4.0 million personnel costs, including equity-based compensation expense, $1.9 million in advertising and marketing expenses, $0.4 million in travel expenses, $0.3 million in consulting and outside labor expenses, $0.2 million in supply and material costs, and $0.2 million in software and software licensing expenses.

General and Administrative

Our consolidated general and administrative expenses decreased by $0.9 million, or 1%, from $89.0 million in 2023 to $88.1 million in 2024.

The decrease was primarily due to decreases of $10.1 million in legal and professional fees related to a voluntary disclosure, see Note 8, Debt, Commitments and Contingencies , of our consolidated financial statements included in this report, $1.6 million in insurance expenses, $0.8 million in provision for credit losses due to subsequent collections from customers who were previously reserved, and $0.7 million in depreciation expenses and partially offset by increases of $11.4 million in personnel costs, including equity-based compensation, and $0.8 million in software and software licensing fees.

Our consolidated general and administrative expenses increased by $28.6 million, or 32%, from $88.1 million in 2024 to $116.7 million in 2025.

The increase was primarily due to increases of $17.0 million in legal and professional fees including an accrual related to a professional liability matter, $9.4 million in provision for credit losses, $2.2 million in personnel costs, including equity-based compensation, $1.9 million in acquisition-related costs, $1.0 million in consulting and outside labor costs, $0.9 million in

insurance expenses, and $0.9 million in office expenses, and partially offset by decreases of $2.5 million in facility expenses and $1.6 million in depreciation expenses, and $0.8 million in accounting expenses.

Amortization of Intangible Assets

Our consolidated amortization of intangible assets represents amortization expenses on the intangible assets that arose from the business combinations in 2025, 2022 and 2021, and a patent purchased in 2021.

Goodwill Impairment Loss

Year Ended December 31,

(dollars in thousands)

Goodwill impairment loss

Laboratory services

Therapeutic development

* not meaningful

Goodwill impairment loss for 2023 was comprised of a full goodwill impairment loss of $120.2 million for the laboratory services reporting unit.

There was no goodwill impairment loss for the year ended December 31, 2024.

The full impairment was driven by a sustained decline in our stock price and market capitalization.

There was no impairment loss for the therapeutic development unit for the years ended December 31, 2024 and 2023.

See Note 17, Goodwill and Intangible Assets, for more details.

Other Income (Expenses)

Other income, net, is primarily comprised of interest income, which was $31.3 million and $21.6 million for 2024 and 2023, respectively, and impairment of available-for-sale debt securities of $10.1 million in 2024.

Other income (expense) is primarily comprised of interest income, which was $30.9 million and $31.3 million for 2025 and 2024, respectively, and impairment of available-for-sale debt and equity securities of $9.9 million and $10.1 million in 2025 and 2024, respectively.

This interest income included interest earned on marketable securities and realized gain or loss on sale of marketable securities.

The increase in interest income was primarily due to increased interest rates on marketable securities relative to the prior comparative period.

(Benefit from) Provision for Income Taxes

(Benefit from) provision for income taxes were ($8.1) million and $1.2 million in 2024 and 2023, respectively.

The decrease in interest income was primarily due to decreased interest rates on marketable securities relative to the prior comparative period.

Benefit from Income Taxes

Benefit from income taxes were $8.4 million and $8.1 million in 2025 and 2024, respectively.

The effective income tax rate was 12% and 16% of loss before income taxes for 2025 and 2024, respectively.

The change in the effective tax rate compared to prior period is due to the valuation allowance in the current period that precludes us from recognizing the benefit from our net operating losses.

The increase in the valuation allowance for 2024 was primarily due to the increase in capitalized Section 174 expenditures.

On July 4, 2025, OBBBA was signed into law, making permanent certain provisions of the Tax Cuts and Jobs Act, including 100% bonus depreciation and domestic research cost expensing.

In accordance with ASC 740, “ Income Taxes ,” we have recognized the effects of the new tax law in the period of enactment.

The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027.

The legislation does not have a material impact on our consolidated financial statements for the year ended December 31, 2025.

See Note 11, Income Taxes , to our consolidated financial statements included in this report for more information regarding our income taxes.

Net Loss Attributable to Noncontrolling Interest

Net loss attributable to noncontrolling interest represents net loss attributable to minority shareholders from entities not wholly owned.

Net loss attributable to noncontrolling interest represents net loss attributable to minority stockholders from entities not wholly owned.

Liquidity and Capital Resources

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treasury bills, corporate bonds, municipal bonds, and Yankee debt securities as of December 31, 2025, and 2024.

Our primary uses of cash are for capital expenditures mainly in buildings, building improvements, and equipment, to repurchase our stock, fund our operations, and to fund strategic acquisitions as we continue to invest in and seek to grow our business.

Our primary uses of cash are for strategic acquisitions;

capital expenditures, mainly in buildings, building improvements, and equipment;

repurchases of our stock;

the funding of our clinical trials;

and the funding of our operations as we continue to invest in and seek to grow our business.

Cash used to fund operating expenses is impacted by the timing of our expense payments, as reflected in the changes in our outstanding accounts payable and accrued expenses.

We expect our existing cash, cash equivalent, and short-term marketable securities to continue to be sufficient to meet our anticipated cash requirements for at least the next 12 months.

We expect our existing cash, cash equivalents, restricted cash, and marketable securities to continue to be sufficient to meet our anticipated cash requirements for at least the next 12 months.

Cash provided by operations has significantly contributed to our ability to meet our liquidity needs, including paying for capital expenditures, however, cash provided by our operations has in the past experienced fluctuations from period to period, which we expect may continue in the future.

These fluctuations can occur because of a variety of factors, including, among others, factors relating to the demand for our tests, the amount and timing of sales, the prices we charge for our tests due to changes in product mix, customer mix, general price degradation for tests, or other factors, the rate and timing of our billing and collections cycles and the timing and amount of our commitments and other payments.

These fluctuations can occur because of a variety of factors, including, among others, factors relating to the demand for our tests, whether large customers continue ordering our tests, the amount and timing of sales, the prices we charge for our tests due to changes in product mix, customer mix, general price degradation for tests, or other factors, the rate and timing of our billing and collections cycles and the timing and amount of our commitments and other payments.

We intend to improve our profitability by improving margins and expanding in new markets for our tests, but these efforts are subject to risks, including those described in Item 1A of this Annual Report, and may not be successful.

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If we seek to sell assets or enter into collaborations or licensing arrangements to raise capital, we may be required to accept unfavorable terms or relinquish or license to a third-party our rights to important or valuable technologies or tests we may otherwise seek to develop ourselves.

Moreover, we may incur substantial costs in pursuing future capital, including investment banking, legal and accounting fees, printing and distribution expenses and other similar costs.

Moreover, we may incur substantial costs in pursuing future capital raises, including investment banking, legal and accounting fees, printing and distribution expenses and other similar costs.

Additional funding may not be available to us when needed, on acceptable terms or at all.

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(in thousands)

Net cash provided by operating activities

Net cash (used in) provided by investing activities

Net cash (used in) provided by operating activities

Net cash provided by (used in) investing activities

Net cash used in financing activities

Operating Activities

During the year ended December 31, 2024, our operations provided $21.1 million of cash as compared to $27.0 million in 2023.

The decrease in cash provided from operating activities in 2024 compared to the corresponding 2023 period was primarily due to timing of cash receipts from customers and cash payments for operating expenses.

During the year ended December 31, 2025, our operations used $101.6 million of cash as compared to $21.1 million provided in 2024.

The decrease in cash provided from operating activities in 2025 compared to the corresponding 2024 period was primarily due to the purchase of Investment Tax Credits for $99.6 million in cash in 2025, as well as by timing of cash receipts from customers and cash payments for operating expenses.

We expect to incur more operating expenses and use more cash in operating activities in the coming year as a result of our planned and ongoing clinical trials for FID-007 and FID-022, and as we continue to invest resources to grow our laboratory services business.

Investing Activities

The cash provided by or used in investing activities are impacted by capital expenditures for operation needs and timing of payments, timing of maturities of marketable securities, and discretionary business combinations and other investment.

The cash provided by or used in investing activities is impacted by capital expenditures for operation needs and timing of payments, timing of maturities of marketable securities, and discretionary business combinations and other investment.

Cash provided by investing activities in 2025 was $111.4 million, which primarily related to $211.0 million related to maturities of marketable securities, and $3.8 million related to the acquisition of ANP, and partially offset by $80.8 million in purchase of marketable securities, $22.6 million related to the purchase of fixed assets consisting mainly of building improvement and medical laboratory equipment.

Cash used in investing activities in 2024 was $58.4 million, which primarily related to $472.4 million in purchase of marketable securities, $40.3 million related to the purchase of fixed assets consisting mainly of building, building improvement, and medical laboratory equipment, and partially offset by $349.8 million related to maturities of marketable securities, $104.3 million related to proceeds from sales of marketable securities, and $0.3 million related to the sale of fixed assets.

Cash provided by investing activities in 2023 was $38.9 million, which primarily related to $508.6 million related to maturities of marketable securities, $44.1 million related to proceeds from sales of marketable securities, and $0.8 million related to the sale of fixed assets, and partially offset by $491.9 million in purchase of marketable securities, $22.2 million related to the purchase of fixed assets consisting mainly of medical laboratory equipment and building improvement, and $0.4 million related to a business acquisition.

Financing Activities

Cash used in financing activities in 2024 was $4.8 million, which primarily related to $1.2 million used in the repayment of notes payable, and $2.9 million used in common stock withholding for employee tax obligations.

Cash used in financing activities in 2023 was $47.8 million, which primarily related to $25.1 million used in the repurchase of common stock, $15.0 million used in the repayment for the margin account, $4.3 million used in the repayment of notes payable, and $2.7 million used in common stock withholding for employee tax obligations.

We did not expect to use any credit facilities due to the strong cash position as of December 31, 2024.

Cash used in financing activities in 2025 was $14.8 million, which primarily related to $3.0 million used in common stock withholding for employee tax obligations, $10.9 million used to repurchase common stock, and $0.5 million used in the repayment of notes payable.

Cash used in financing activities in 2024 was $4.8 million, which primarily related to $2.9 million used in common stock withholding for employee tax obligations and $1.2 million used in the repayment of notes payable.

We do not expect to use any credit facilities due to the strong cash position as of December 31, 2025.

Stock Repurchase Program

In March 2022, our Board authorized a $250.0 million stock repurchase program.

In March 2022, our board of directors authorized a $250.0 million stock repurchase program.

The stock repurchase program has no expiration from the date of authorization.

Under the stock repurchase program, the Company may repurchase shares from time to time in the open market or in privately negotiated transactions.

During the year ended December 31, 2024, we repurchased 10,000 shares of our common stock at an aggregate cost of $0.2 million under the stock repurchase program.

Under the stock repurchase program, we may repurchase shares from time to time in the open market or in privately negotiated transactions.

During the year ended December 31, 2025, we repurchased 0.6 million shares of our common stock at an aggregate cost of $10.9 million under the stock repurchase program.

During the year ended December 31, 2024, we repurchased ten thousand shares of our common stock at an aggregate cost of $0.2 million under the stock repurchase program.

During the year ended December 31, 2023, we repurchased 1.0 million shares of our common stock at an aggregate cost of $25.1 million under the stock repurchase program.

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As of December 31, 2025, we have an outstanding balance of $2.4 million on an installment loan, of which, the current portion is $0.5 million.

See Note 8, Debt, Commitments and Contingencies , of our consolidated financial statements included in this report.

See Note 8, Debt, Commitments and Contingencies , to our consolidated financial statements included in this report.

The following summarizes our contractual obligations as of December 31, 2025:

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(1) Represents non-cancelable operating leases.

For further information, refer to Note 9, Leases, to the Consolidated Financial Statements.

For further information, refer to Note 9, Leases, to our consolidated financial statements.

(2) Represents non-cancelable finance leases.

For further information, refer to Note 9, Leases , to the Consolidated Financial Statements.

(3) Represents purchase obligations for medical lab equipment, reagents and other supplies, see Note 8, Debt, Commitment and Contingencies , to the Consolidated Financial Statements.

For further information, refer to Note 9, Leases , to our consolidated financial statements.

(3) Represents purchase obligations for medical lab equipment, reagents and other supplies.

These purchase obligations are not unconditional, and they are generally cancellable in full or in part through the contractual provisions.

Critical Accounting Policies and Use of Estimates

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The preparation of consolidated financial statements in accordance with U.S.

GAAP requires management to make certain estimates, judgments and assumptions and decisions that affect the reported amounts and related disclosures, including the selection of appropriate accounting principles and the assumptions on which to base accounting estimates.

GAAP requires management to make certain estimates, judgments, assumptions and decisions that affect the reported amounts and related disclosures, including the selection of appropriate accounting principles and the assumptions on which to base accounting estimates.

In making these estimates and assumptions and reaching these decisions, we apply judgment based on our understanding and analysis of the relevant circumstances, including historical data and experience available at the date of the consolidated financial statements, as well as various other factors management believes to be reasonable under the circumstances, including but not limited to valuation of intangible assets and goodwill in recent business combinations.

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We currently receive payments from:

insurance, institutional customers, including hospitals, medical institutions, other laboratories, governmental bodies, municipalities, and large corporations;

and patients who pay directly.

(i) Insurance, (ii) Institutional customers, including hospitals, medical institutions, other laboratories, governmental bodies, and large corporations;

and (iii) Patients, who pay directly.

We recognize revenue in an amount that reflects the consideration to which we expect to be entitled in exchange for the transfer of promised goods or services to our customers.

For insurance payors, in the absence of Medicare coverage, contractually established reimbursement rates or other coverage, we have concluded that our contracts include variable consideration because the amounts paid by Medicare or commercial health insurance carriers may be paid at less than our standard rates or not paid at all, with such differences considered implicit price concessions.

Variable consideration attributable to these price concessions measured at the expected value using the “most likely amount” method under Accounting Standards Codification, or ASC, 606 Revenue from Contracts with Customers, or ASC 606.

Variable consideration attributable to these price concessions is measured using the “expected value” method under Accounting Standards Codification, or ASC, 606 Revenue from Contracts with Customers, or ASC 606.

The amounts are determined by the historical average collection rates by test type taking into consideration the range of possible outcomes, the predictive value of our past experiences, the time period of when uncertainties expect to be resolved and the amount of consideration that is susceptible to factors outside of our influence, such as the judgment and actions of third parties.

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We record any necessary adjustments in the current period’s revenue.

$1.8 million and $23.0 million variable consideration was recognized as additional revenue in the year ended December 31, 2024 and 2023, respectively, that related to collections for COVID-19 tests completed in the prior period.

Valuation of Goodwill and Indefinite-Lived Intangible Assets

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The acquisition method of accounting for business combinations requires us to estimate the fair value of assets acquired, liabilities assumed, and any noncontrolling interest in an acquired business to properly allocate purchase price consideration between assets that are depreciated or amortized and goodwill.

See Note 2, Summary of Significant Accounting Policies , to our consolidated financial statements included in this report for information about our valuation and assessment process with regard to potential impairment of goodwill and indefinite-lived intangibles.

Also see Note 17, Goodwill and Intangible Assets , to our consolidated financial statements included in this report for details on the valuation estimate and results for 2024.

Also see Note 17, Goodwill and Intangible Assets , to our consolidated financial statements included in this report for details on the valuations and results for 2025.

There can be no assurance that the estimates and assumptions management made for the purposes of the goodwill or in-process research & development, or IPR&D, impairment analysis will prove to be accurate predictions of future performance.

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We will continue to monitor the therapeutic development reporting unit.

For all IPR&D projects, there are major risks and uncertainties associated with the timely and successful completion of development and commercialization of these drug candidates, including the ability to confirm their efficacy based on data from clinical trials, the ability to obtain necessary regulatory approvals, and the ability to successfully complete these tasks within budgeted costs.

We are not able to market a human therapeutic without obtaining regulatory approvals, and such approvals require completing clinical trials that demonstrate a drug candidate is safe and effective.

For all IPR&D projects, there are major risks and uncertainties associated with the timely and successful completion of development and commercialization of these product candidates, including the ability to confirm their efficacy based on data from clinical trials, the ability to obtain necessary regulatory approvals, and the ability to successfully complete these tasks within budgeted costs.

We are not able to market a human therapeutic without obtaining regulatory approvals, and such approvals require completing clinical trials that demonstrate a product candidate is safe and effective.

In addition, the availability and extent of coverage and reimbursement from insurance payors, including government healthcare programs and private insurance plans, impact the revenues a product can generate.

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Off-Balance Sheet Arrangements

We did not have, and do not currently have, any off-balance sheet arrangements during the periods presented, as defined in the rules and regulations of the SEC, that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenue or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

Quantitative and Qualitat ive Disclosures About Market Risk.

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For the purpose of analyzing foreign currency exchange risk, we considered the historical trends in foreign currency exchange rates and determined that it was reasonably possible that adverse changes in exchange rates of 10% could be experienced in the near term.

If an adverse 10% foreign currency exchange rate change was applied to total monetary assets denominated in currencies other than the functional currencies at the balance sheet date, it would have resulted in decrease in assets of approximately $1.1 million as of December 31, 2024, and $1.3 million as of December 31, 2023.

If an adverse 10% foreign currency exchange rate change was applied to total monetary assets denominated in currencies other than the functional currencies at the balance sheet date, it would have resulted in a decrease in assets of approximately $0.7 million as of December 31, 2025, and $1.1 million as of December 31, 2024.

The impact to income (loss) before income tax was not significant.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis