Niagen Bioscience, Inc. 10-Q

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion should be read in conjunction with the Unaudited Condensed Consolidated Financial Statements and accompanying notes, which appear elsewhere in this Quarterly Report on Form 10-Q. We urge you to carefully review and consider the various disclosures made by us in this Quarterly Report and in our other reports filed with the Securities and Exchange Commission (SEC), including our Annual Report on Form 10-K for the year ended December 31, 2025 , as well as subsequent reports we may file from time to time on Form 10-Q and Form 8-K, for additional information. All dollar amounts in this Management’s Discussion and Analysis of Financial Condition and Results of Operations are approximate. Growth and percentage comparisons made herein generally refer to the three and six months ended June 30, 2026 compared with the three and six months ended June 30, 2025 unless otherwise noted. Unless otherwise indicated or unless the context otherwise requires, all references in this document to “we,” “us,” “our,” the “Company,” “Niagen Bioscience” and similar expressions refer to Niagen Bioscience, Inc., and depending on the context, its subsidiaries. Special Note Regarding Forward Looking Statements Certain statements in this MD&A, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives and expected operating results, and the assumptions upon which those statements are based, are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements generally can be identified by the use of forward-looking terminology such as “expects,” “anticipates,” “intends,” “estimates,” “plans,” “potential,” “possible,” “probable,” “believes,” “seeks,” “may,” “will,” “should,” “could,” “predicts,” “projects,” “continue,” “would” or the negative of such terms or other similar expressions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events, or otherwise. Readers should carefully review the risk factors set forth below in Part II, Item 1A, “Risk Factors” and our financial statements and related notes included in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the year ended December 31, 2025 filed with the Securities and Exchange Commission on March 4, 2026 (Annual Report). Company Overview We are a global bioscience company dedicated to promoting healthy aging. Our operations are centered on the research, development and commercialization of nicotinamide adenine dinucleotide (NAD+) precursors and related technologies. NAD+ is an essential coenzyme that regulates cellular metabolism and is present in every cell of the human body. NAD+ levels naturally decline with age and may also be impacted by lifestyle and certain disease states. Increasing NAD+ levels through NAD+ precursors has been shown to support cellular function. Our business and product platform are grounded in a significant and growing body of scientific research related to NAD+ and its role in human health. Nicotinamide riboside chloride (“NRC,” also referred to as “NRCL” or “NR”), the active ingredient in our proprietary Niagen®, is among the most extensively studied NAD+ precursors. Data from preclinical studies and human clinical trials indicate that orally administered NRC can increase NAD+ levels in blood and tissue. Food-grade Niagen® has been reviewed under the U.S. Food and Drug Administration’s (FDA) new dietary ingredient notification program, notified to the FDA as generally recognized as safe (GRAS), and has received approvals or authorizations in multiple international jurisdictions, including Canada, the European Union, Turkey, and Australia. Niagen® and other NAD+ precursors are protected by a portfolio of owned and licensed patents. There are more than 525 published human clinical studies related to NAD+ and its role in health. Areas of study include, but are not limited to, understanding NAD+’s role in rare diseases such as Ataxia-Telangiectasia, neurodegenerative diseases, neuropathy, sarcopenia, liver disease and heart failure. Through our Niagen Research Program (NRP®), formerly the ChromaDex External Research Program (CERP®), we have established research collaborations with universities and research institutions that contribute to peer-reviewed publications advancing the understanding of NAD+ biology and informing the development of our products and technologies. 25 Table of Contents Our business is organized around a platform that spans consumer products, ingredient supply, and pharmaceutical development: Consumer Products We develop and commercialize finished consumer products that incorporate our proprietary ingredient, Niagen®. Our primary consumer offering is Tru Niagen®, a dietary supplement available directly to consumers and through distributors. We have also expanded our Tru Niagen® product line to include additional formulations and formats, as well as stick packs and a topical skincare product, each incorporating Niagen®. Ingredients We develop and supply proprietary ingredient technologies, including food-grade and pharmaceutical-grade Niagen®. Food-grade Niagen® is supplied as a dietary and food ingredient to manufacturers of consumer products. Pharmaceutical-grade Niagen® is supplied to U.S. FDA-registered 503B outsourcing facilities and certain international compounding pharmacies for use in compounded intravenous and injectable formulations, subject to applicable regulatory requirements. The Company also supports clinician-directed telehealth access to prescription-based Niagen® offerings. These formulations are marketed by the compounding pharmacies as Niagen IV and Niagen injectable products, including under the name "Niagen Plus." Pharmaceutical Development We are pursuing the development of certain proprietary molecules for potential therapeutic applications, including rare genetic diseases and aging related disorders. Our activities include preclinical and clinical studies, regulatory planning, and other research and development efforts, and we do not currently generate revenue from these activities. We may pursue internal development as well as strategic collaborations or licensing arrangements. Recent Developments NB4168 Rare Disease Development Milestones In July 2026, we publicly introduced NB4168, our proprietary lead investigational therapeutic candidate for the treatment of Ataxia-Telangiectasia (A-T). NB4168 is an oral small molecule engineered to deliver substantially greater nicotinamide riboside (NR) exposure than conventional NR while maintaining a differentiated pharmacokinetic and safety profile. More recently, the U.S. Food and Drug Administration granted Rare Pediatric Disease (RPD) designation for NB4168 for the treatment of AT, and the European Medicines Agency (EMA) granted Orphan Medicinal Product Designation (OMPD) for NB4168, supporting our plans to advance the program globally. Los Angeles, CA Office Lease Agreement In June 2026, we entered into a new office lease for 10,564 rentable square feet in Los Angeles, California. The lease has a contractual term of approximately 8 years and is scheduled to commence on April 1, 2027. We may receive limited early access to the premises prior to the commencement date for move-in and related activities. Because the lease had not commenced as of June 30, 2026, no right-of-use asset or lease liability has been recognized under ASC 842. Telehealth Platform Launch In May 2026, we launched a clinician-directed telehealth platform under Niagen Plus, enabling eligible U.S. patients to connect with independent licensed healthcare providers who, where medically appropriate, may prescribe Niagen® at-home injection kits, expanding the Niagen Plus clinic channel beyond in-person settings and introducing a direct-to-patient access model. 26 Table of Contents Resolution of Previously Disclosed Contingency In April 2026, we reached an agreement in principle with a retail partner in Asia to resolve a previously disclosed dispute related to the recall and withdrawal of certain Tru Niagen® Immune Daily Defense products. Under the terms of the arrangement, previously withheld receivables totaling approximately $1.3 million were released and fully collected by the end of April 2026. We expect this to result in improved collections and a reduction in accounts receivable in the near term. The agreement also includes the return of certain unsold inventory and the provision of replacement products. As a result, we expect to recognize costs associated with returned inventory, rework activities, and replacement products, which will be reflected in cost of sales in the period incurred. These costs are expected to impact gross margin in the near term; however, we do not expect these costs to be material. Subsequent to June 30, 2026, we received the returned inventory from the retail partner and began shipping replacement products in accordance with the terms of the agreement. We do not expect the resolution of this matter to have a material adverse impact on our overall financial condition. In addition, while we have agreed to provide replacement products for certain future customer returns of the affected product, such obligations are limited in scope and are not currently expected to be material. Disposal of Analytical Reference Standards and Services Segment In February 2026, we completed the sale of substantially all of the assets of our analytical reference standards and services business to a third party for total cash consideration of approximately $6.0 million, subject to customary working capital adjustments of approximately $0.2 million. As part of the transaction, the buyer assumed certain operating liabilities arising after the closing date, while we retained accounts receivable and accounts payable incurred prior to closing. We recognized a gain on the sale of approximately $4.8 million during the three months ended March 31, 2026, which is included in gain on sale of operating segment in the Unaudited Condensed Consolidated Statements of Operations. The transaction provides additional liquidity and allows us to further focus on our core Niagen®-based consumer products, ingredient supply, and pharmaceutical development activities. As a result of the disposition, revenue attributable to analytical reference standards and services is no longer included in our ongoing operating results following the closing date. This change is expected to further concentrate our revenue mix toward higher-growth, consumer-oriented product offerings and ingredient sales. In addition, the analytical reference standards and services business operated with a cost structure and margin profile that differed from our core businesses, including higher fixed operating costs related to specialized personnel, laboratory operations, and quality systems. Following the disposition, certain shared fixed costs that were previously allocated to the analytical reference standards and services segment will be absorbed primarily by our remaining operations, particularly the ingredients segment, until such time as we are able to realign our cost structure. We may also undertake organizational and workforce adjustments in response to the disposition; however, any related cost savings are expected to be realized over time and not immediately. As a result, the full impact of these changes on our cost structure and operating margins may evolve over the course of the year. The exit of this operating segment is expected to reduce ongoing operating complexity and may result in greater margin consistency across our remaining operations over time. However, period-to-period comparability of revenue and margins may be affected due to the absence of revenues previously generated by this operating segment. In connection with the sale, we entered into a transition services agreement (TSA) under which we will provide certain operational and administrative services to the buyer for a period of up to six months following the closing date. We receive service fees for these services, which are recognized as the services are performed. During the three and six months ended June 30, 2026, we recognized $236,000 and $310,000 of transition services revenue, respectively, which is included in net sales. The net sales and cost of sales from this TSA are temporary in nature and are not expected to recur beyond the transition period. The results of the analytical reference standards and services business are included in continuing operations for all periods presented. For additional information, refer to Note 4, Business Segments and Concentrations to our Unaudited Condensed Consolidated Financial Statements. 27 Table of Contents Financial Condition and Results of Operations The discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles (GAAP). The preparation of these financial statements requires making estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported net sales and expenses during the reporting periods. On an ongoing basis, we evaluate such estimates and judgments, including those described in greater detail below. We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. As of June 30, 2026, our cash and cash equivalents totaled approximately $66.7 million, of which $66.6 million was unrestricted. We anticipate that our current unrestricted cash and cash equivalents and cash to be generated from net sales will be sufficient to meet our financial obligations as they become due over at least the next twelve months. We may, however, seek additional capital in the next twelve months, both to meet our projected operating plans after the next twelve months and/or to fund our longer-term strategic objectives. For the periods presented, we operated our business through four operating segments that offer differentiated products and services. Through our Consumer Products segment, we provide finished consumer products incorporating our proprietary ingredients directly to consumers and distributors, including dietary supplements and a topical skincare product. We deliver food-grade Niagen® as the sole or principal ingredient in our consumer product line, Tru Niagen®. Our Ingredients segment develops and commercializes proprietary ingredient technologies, including food-grade Niagen® and pharmaceutical-grade Niagen®, and supplies these ingredients as raw materials to manufacturers of consumer products and U.S. FDA-registered 503B outsourcing facilities, respectively, and supports clinician-directed telehealth access to prescription-based Niagen® offerings. Our Pharmaceuticals segment is focused on the research and development of proprietary molecules for potential therapeutic applications, including in rare genetic diseases and aging related disorders. To date, this segment has been limited to research and development activities, including preclinical and clinical studies and regulatory planning, and does not currently generate revenue. Our Analytical Reference Standards and Services segment focused on natural product fine chemicals, known as phytochemicals, and related research and development services. As discussed in “ Recent Developments ,” we sold this operating segment in February 2026. The results of these segments and our consolidated operations are detailed in the discussion that follows. Our consolidated net sales, net income and income per share for the three and six months ended June 30, 2026 and 2025 are as follows: Three Months Ended June 30, Six Months Ended June 30, (In thousands, except per share data) 2026 2025 2026 2025 Net sales $ 29,785 $ 31,117 $ 61,259 $ 61,598 Net income 963 3,609 7,281 8,672 Income Per Share: Basic income per common share $ 0.01 $ 0.05 $ 0.09 $ 0.11 Diluted income per common share $ 0.01 $ 0.04 $ 0.09 $ 0.10 28 Table of Contents Net Sales Net sales consist of gross sales less discounts and returns. The following table sets forth our total net sales by reportable segment: Three Months Ended June 30, Six Months Ended June 30, ($ In thousands) 2026 2025 % Change 2026 2025 % Change Net sales: Consumer Products $ 24,162 $ 22,699 6 % $ 46,575 $ 44,200 5 % Ingredients 5,387 7,619 (29) % 13,951 15,788 (12) % Analytical reference standards and services — 799 (100) % 423 1,610 (74) % Corporate and other 236 — N/A 310 — N/A Total net sales $ 29,785 $ 31,117 (4) % $ 61,259 $ 61,598 (1) % Total net sales decreased by $1.3 million and $0.3 million for the three and six months ended June 30, 2026, respectively, as compared to the same periods in 2025. The decrease was primarily attributable to lower net sales from our ingredients segment and the absence of analytical reference standards and services revenue following the February 2026 disposition of that business, partially offset by growth within our consumer products segment. The pharmaceuticals segment did not generate revenue during the periods presented. Detailed changes in net sales were driven by the following: • Within our consumer products segment, Tru Niagen® sales increased by $1.5 million and $2.4 million for the three and six months ended June 30, 2026, respectively, compared to the corresponding periods in 2025. This growth was driven by increased e-commerce channel performance, which grew by approximately $2.5 million and $4.8 million, respectively, compared to prior year periods, reflecting increased customer demand and acquisition. Sales to A.S. Watson Group were lower by $2.3 million and $4.7 million, respectively, compared to the prior year periods, partially offset by increased sales to other distribution channels by $1.3 million and $2.2 million. Growth within other distribution channels was driven in part by increased cross-border sales into China, which increased approximately $1.0 million and $1.6 million for the three and six months ended June 30, 2026, respectively, compared to the corresponding prior-year periods. The decline in sales to A.S. Watson Group reflects variability in ordering patterns and commercial activity during the period. We continue to engage with this partner on marketing and sales initiatives to support the ongoing relationship. • Total ingredient sales decreased by $2.2 million and $1.8 million for the three and six months ended June 30, 2026, respectively, compared to the same periods in 2025. The decrease was primarily driven by lower sales to food-grade Niagen® partners, which declined by approximately $1.1 million and $0.7 million, respectively, as well as lower pharmaceutical-grade Niagen® sales of $1.0 million and $1.1 million respectively. Food-grade ingredient sales were impacted by lower purchasing from a significant customer due to softer downstream demand and sell-through. Pharmaceutical-grade sales also reflected reduced purchasing expectations from certain partners. Ingredient partner orders remain subject to timing variability. • Analytical reference standards and services net sales decreased by $0.8 million and $1.2 million for the three and six months ended June 30, 2026, respectively, compared to the same periods in 2025. The decreases reflect the February 2026 divestiture of the Analytical Reference Standards and Services business, resulting in only partial-period revenue being recognized during the current-year periods. As a result of the divestiture, we do not expect to generate additional net sales from this segment in future periods. • Corporate and other net sales represent revenue generated under the TSA entered into in connection with the February 2026 disposition of our Analytical Reference Standards and Services operating segment. The TSA provides for specified transition services to support the buyer for a period of up to six months following the closing date. Accordingly, the related revenue is temporary in nature and is not expected to recur beyond the transition period. 29 Table of Contents Cost of Sales Cost of sales includes raw materials, labor, overhead, and delivery costs. The following table sets forth our total cost of sales by reportable segment: Three Months Ended June 30, Six Months Ended June 30, Amount % of net sales Amount % of net sales ($ In thousands) 2026 2025 2026 2025 2026 2025 2026 2025 Cost of sales: Consumer Products $ 7,839 $ 7,453 32.4 % 32.8 % $ 15,434 $ 14,860 33.1 % 33.6 % Ingredients 2,374 2,808 44.1 36.9 5,929 5,909 42.5 37.4 Analytical reference standards and services — 630 N/A 78.8 308 1,272 72.8 79.0 Corporate and other 258 — 109.3 N/A 298 — 96.1 N/A Total cost of sales $ 10,471 $ 10,891 35.2 % 35.0 % $ 21,969 $ 22,041 35.9 % 35.8 % Total cost of sales, as a percentage of net sales, remained generally consistent at 35.2% and 35.9% for the three and six months ended June 30, 2026, respectively, compared to 35.0% and 35.8% for the corresponding periods in 2025. Changes in cost of sales were primarily driven by the following: • Cost of sales, as a percentage of net sales, within our consumer products segment may vary due to changes in business mix, product mix, costs of components, inflationary pressures, optimization efforts in our supply chain, and other factors. For the three and six months ended June 30, 2026, cost of sales as a percentage of net sales decreased by approximately 40 basis points and 50 basis points, respectively, compared to the same periods in 2025. The modest improvement was attributable to a favorable shift in business mix, with e-commerce representing a greater portion of segment net sales, which generally carries higher gross margins. • Cost of sales, as a percentage of net sales, in our ingredients segment are influenced by several factors including inventory purchase costs, fixed supply chain overhead, transportation and storage costs, product mix, and other factors. For the three and six months ended June 30, 2026, cost of sales as a percentage of net sales increased by approximately 720 basis points and 510 basis points, respectively, compared to the same periods in 2025. The increase was primarily attributable to an unfavorable shift in product mix, with food-grade Niagen® representing a greater proportion of segment sales and pharmaceutical-grade Niagen® representing a smaller proportion of segment sales, each of which carries a distinct margin profile, resulting in lower overall gross margins during the period. Gross margins were also impacted by pricing concessions provided to certain customers to support commercial relationships in a more competitive market environment. • Cost of sales, as a percentage of net sales, in our analytical reference standards and services segment are influenced by many factors including inventory purchase costs, fixed supply chain overhead, transportation and storage costs, and other factors. Following the February 2026 disposition of the business, both net sales and cost of sales reflect only partial-period operations during the current year and therefore declined compared to the corresponding prior-year periods. We do not expect this segment to generate additional net sales or incur additional cost of sales in future periods. • Corporate and other cost of sales represent expenses incurred under the TSA entered into in connection with the February 2026 disposition of our Analytical Reference Standards and Services operating segment. The TSA provides for specified transition services to support the buyer for a period of up to six months following the closing date. Accordingly, the related cost of sales are temporary in nature and are not expected to recur beyond the transition period. 30 Table of Contents Gross Profit (loss) Gross profit (loss) is net sales less the cost of sales and is affected by business and product mix, competitive pricing and costs of products, labor, overhead, services, and delivery, among other factors. The following table sets forth our total gross profit (loss) by reportable segment: Three Months Ended June 30, Six Months Ended June 30, ($ In thousands) 2026 2025 % Change 2026 2025 % Change Gross profit (loss): Consumer Products $ 16,323 $ 15,246 7 % $ 31,141 $ 29,340 6 % Ingredients 3,013 4,811 (37) 8,022 9,879 (19) Analytical reference standards and services — 169 (100) 115 338 (66) Corporate and other (22) — N/A 12 — N/A Total gross profit (loss) $ 19,314 $ 20,226 (5) % $ 39,290 $ 39,557 (1) % For details supporting the changes in gross profit, refer to the preceding discussions outlining the changes in both our net sales and cost of sales for each respective segment. Operating Expenses-Sales and Marketing Sales and marketing expense consists of salaries, advertising, public relations, marketing expenses and commissions. Sales and marketing expense by reportable segment is as follows: Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 ($ In thousands) Amount % of net sales Amount % of net sales Amount % of net sales Amount % of net sales Advertising expenses: Consumer Products $ 3,166 13.1 % $ 2,882 12.7 % $ 6,458 13.9 % $ 5,858 13.3 % Total advertising expenses $ 3,166 10.6 % $ 2,882 9.3 % $ 6,458 10.5 % $ 5,858 9.5 % Marketing expenses: Consumer Products $ 3,712 15.4 % $ 2,514 11.1 % $ 7,134 15.3 % $ 4,967 11.2 % Ingredients 180 3.3 45 0.6 276 2.0 70 0.4 Total marketing expenses $ 3,892 13.1 % $ 2,559 8.2 % $ 7,410 12.1 % $ 5,037 8.2 % Sales expenses: Consumer Products $ 3,032 12.5 % $ 2,678 11.8 % $ 5,759 12.4 % $ 5,185 11.7 % Ingredients 40 0.7 7 0.1 134 1.0 56 0.4 Analytical reference standards and services — N/A 81 10.1 44 10.4 188 11.7 Total sales expenses $ 3,072 10.3 % $ 2,766 8.9 % $ 5,937 9.7 % $ 5,429 8.8 % Total sales and marketing expenses: Consumer Products $ 9,910 41.0 % $ 8,074 35.6 % $ 19,351 41.5 % $ 16,010 36.2 % Ingredients 220 4.1 52 0.7 410 2.9 126 0.8 Analytical reference standards and services — N/A 81 10.1 44 10.4 188 11.7 Total sales and marketing expenses $ 10,130 34.0 % $ 8,207 26.4 % $ 19,805 32.3 % $ 16,324 26.5 % 31 Table of Contents Total sales and marketing expenses increased by $1.9 million and $3.5 million during the three and six months ended June 30, 2026, respectively, as compared to the same periods in 2025. As a percentage of net sales, total sales and marketing expenses increased by 760 basis points and 580 basis points, respectively. The increase primarily reflects higher cost of advertising and customer acquisition, investments to support brand growth and planned commercial initiatives, including increased spending in marketing channels that are expected to build longer-term brand awareness and customer acquisition rather than generate immediate revenue. • For our consumer products segment, sales and marketing expenses increased by $1.8 million and $3.3 million during the three and six months ended June 30, 2026, respectively, compared to the same periods in 2025 and, as a percentage of net sales, increased to 41.0% from 35.6% and to 41.5% from 36.2%, respectively. The increase was primarily attributable to higher marketing and advertising expenditures to support brand growth and customer acquisition initiatives, as well as increased personnel-related costs associated with the expansion of our marketing organization. These initiatives are intended to support long-term growth and may not result in immediate increases in net sales. • For our ingredients segment, sales and marketing expense slightly increased by $0.2 million and $0.3 million during the three and six months ended June 30, 2026, respectively, compared to the same periods in 2025 and, as a percentage of net sales, increased to 4.1% from 0.7% and to 2.9% from 0.8%. The increase was primarily attributable to higher marketing and promotional expenditures supporting pharmaceutical-grade Niagen® commercialization initiatives. • For our analytical reference standards and services segment, sales and marketing expense decreased for the three and six months ended June 30, 2026, compared to the corresponding periods in 2025, primarily due to the February 2026 disposition of the business and the resulting reduction in operating activities. Operating Expenses-Research and Development Research and development (R&D) expenses consist primarily of personnel-related costs, clinical trials, product development, and process development expenses. Prior-period amounts have been recast to conform to the current period segment presentation. R&D expenses by reportable segment were as follows: Three Months Ended June 30, Six Months Ended June 30, ($ In thousands) 2026 2025 % Change 2026 2025 % Change R&D expenses: Consumer Products $ 841 $ 891 (6) % $ 1,574 $ 1,536 2 % Ingredients 191 304 (37) 471 549 (14) Pharmaceuticals 481 372 29 949 740 28 Total R&D expenses $ 1,513 $ 1,567 (3) % $ 2,994 $ 2,825 6 % • R&D expenses in our pharmaceuticals segment slightly increased by $0.1 million and $0.2 million for the three and six months ended June 30, 2026, respectively, compared to the same periods in 2025. This increase primarily reflects continued research and development of an NAD+ precursor-based candidate for potential therapeutic applications in rare diseases. These costs were primarily related to ongoing preclinical activities and supporting research infrastructure. In late June 2026, we entered into an agreement with a contract research organization ("CRO") to support the advancement of our development programs. While the agreement had a limited impact on current-period expenses, we expect it to contribute to increased research and development expenditures in future periods as activities under the agreement progress. • The remaining R&D expenses related to our Niagen® branded ingredient are allocated to the consumer products and ingredients segments based on recorded revenues. R&D expenses allocated to these segments remained generally consistent for the three and six months ended June 30, 2026, compared to the corresponding periods in 2025. Lower direct consulting and product development research expenses were largely offset by higher spending on other research and development activities, including scientific engagement initiatives such as a research conference. We expect R&D spending within these segments to continue to vary based on the timing and scope of research projects, clinical development activities, scientific engagement initiatives, and internal resource allocation. 32 Table of Contents Operating Expenses-General and Administrative General and administrative expense consists of general company administration, legal, royalties, IT, accounting and executive management expenses. General and administrative expenses are not allocated by segment and instead are classified under our Corporate and Other category. General and administrative expense for the periods indicated were as follows: Three Months Ended June 30, Six Months Ended June 30, ($ In thousands) 2026 2025 % Change 2026 2025 % Change General and administrative $ 6,971 $ 7,267 (4) % $ 14,215 $ 12,451 14 % Total general and administrative expenses decreased by $0.3 million during the three months ended June 30, 2026, compared to the corresponding period in 2025. The slight decrease was primarily due to lower royalties, professional fees, and employee-related expenses, substantially offset by higher share-based compensation. Total general and administrative expenses increased by $1.8 million during the six months ended June 30, 2026, compared to the corresponding period in 2025. The increase was primarily driven by a $1.3 million increase in provisions for credit losses, reflecting a $1.3 million recovery of credit losses recognized in the prior year period that did not occur in 2026, as well as $1.0 million in higher share-based compensation, partially offset by lower royalties of $0.7 million. For additional details regarding the prior year recovery of credit losses, refer to our Form 10-K filing for the year ended December 31, 2025, Note 10, Commitments and Contingencies . Income Taxes Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. As of June 30, 2026 and December 31, 2025, we maintained a full valuation allowance against the entire deferred income tax balance. In accordance with ASC 740, Income Taxes, future realization of deferred tax assets depends on the existence of sufficient taxable income, including the expectation of future profitability. The Company recorded income tax expense of $106,000 and $523,000 during the three and six months ended June 30, 2026, respectively, representing 9.9% and 6.7% of earnings before income taxes for the respective periods. During the three and six months ended June 30, 2025, the Company recorded $128,000 and $296,000, respectively, of income tax expense representing 3.4% and 3.3% of earnings before income taxes for the respective periods. The Company is not currently under examination by the Internal Revenue Service or any other major income tax jurisdiction. As of June 30, 2026 and December 31, 2025, the Company has not identified any material uncertain tax positions requiring a reserve. Depreciation and Amortization Depreciation expense was approximately $233,000 and $316,000 for the six months ended June 30, 2026 and 2025, respectively. We depreciate our assets on a straight-line basis, based on the estimated useful lives of the respective assets. Amortization expense of intangible assets was approximately $349,000 and $75,000 for the six months ended June 30, 2026 and 2025, respectively. We amortize intangible assets using a straight-line method, generally over 10 years. For licensed patent rights, the useful lives are 10 years or the remaining term of the patents underlying licensing rights, whichever is shorter. The useful life of subsequent milestone payments that are capitalized match the remaining useful life of the initial licensing payment that was originally capitalized. Noncash lease expense related to right-of-use assets was approximately $352,000 for the six months ended June 30, 2026 compared to $332,000 for the six months ended June 30, 2025. Liquidity and Capital Resources From inception through June 30, 2026, we have incurred aggregate losses of approximately $157.2 million. These losses are primarily due to expenses associated with the development and expansion of our operations and investments to protect our intellectual property, including litigation-related expenses. Historically, our operations were financed primarily through capital contributions, including the issuance of common stock in private placements, as well as cash generated from sales. As our operating results and cash generation have improved, our liquidity profile has strengthened. 33 Table of Contents Our board of directors periodically reviews our capital requirements in light of our operating performance, growth initiatives, and long-term business objectives. Our future capital requirements will be influenced by several factors, including cash flows from operations, sales growth, gross margin performance, planned investments in research and development and commercialization activities, and the timing and scale of potential strategic initiatives. While we currently expect to fund our operations primarily through existing cash resources and cash generated from operations, we may, from time to time, consider additional financing to support strategic investments or growth opportunities. Any such financing may include equity or debt financings, collaborative arrangements, or other sources of capital. As of June 30, 2026, we had cash and cash equivalents of $66.7 million, including approximately $0.2 million of restricted cash. Our cash and cash equivalents as of June 30, 2026 consisted of bank deposits and short-term investments in highly liquid investment-grade debt instruments with an original maturity of three months or less. In addition, as of June 30, 2026, we had purchase obligations of approximately $20.5 million related to inventory purchase commitments and approximately $2.6 million related to future minimum lease obligations under commenced leases to be paid over twelve months and four years, respectively, as well as fixed, unconditional deferred consideration obligations of approximately $9.5 million and £0.4 million payable through 2038 in connection with the assignment of certain patent rights. During June 2026, we entered into a new operating lease for office space in Los Angeles with a contractual commencement date of April 1, 2027, subject to certain early access provisions. Because the lease had not commenced as of June 30, 2026, no related right-of-use asset or lease liability has been recognized in the accompanying Unaudited Condensed Consolidated Balance Sheets. Upon commencement of the lease, we expect to recognize the associated operating lease assets and liabilities in accordance with ASC 842. As of June 30, 2026 and December 31, 2025, we had no material off-balance sheet arrangements and no borrowings outstanding under our line of credit. We believe that our current unrestricted cash and cash equivalents, together with cash expected to be generated from operations will be sufficient to meet our financial obligations as they become due over at least the next twelve months and beyond. In addition, pursuant to the Sales Agreement with Canaccord Genuity LLC and Roth Capital Partners, LLC entered into on June 26, 2026 (ATM Facility), our ATM facility provides us with the ability to raise up to $50.0 million of additional capital, subject to market conditions. As of the date of this Quarterly Report on Form 10-Q, we have not sold any shares under the ATM Facility. Net cash provided by operating activities: Cash provided by operating activities is net income adjusted for certain non-cash items and changes in operating assets and liabilities. For the six months ended June 30, 2026, net cash provided by operating activities was approximately $1.6 million, compared to approximately $9.1 million for the same period in 2025, representing a decrease of $7.6 million. Net income for the six months ended June 30, 2026 was $7.3 million, compared to $8.7 million for the same period in 2025. Net income in the current period includes several non-cash items, including $3.4 million of share-based compensation expense and a $4.8 million gain on the sale of the analytical reference standards and services business segment. In addition, the prior year period included the recovery of previously written-off amounts, which did not recur in the current period. Changes in working capital resulted in a net use of cash during the six months ended June 30, 2026, primarily driven by accounts payable and accrued expenses. Accounts payable decreased, resulting in a $1.4 million use of cash during the current period, compared to a $5.2 million source of cash in the prior year period. Accrued expenses decreased, resulting in a $3.9 million use of cash during the current period, compared to a $0.4 million use of cash in the prior year period. These decreases were partially offset by inventory and trade receivables. Inventory increased, resulting in a $0.2 million use of cash during the current period, compared to a $5.2 million use of cash in the prior year period, reflecting higher inventory purchases in the prior year period associated with our inventory purchase commitments. Trade receivables resulted in a $1.1 million source of cash during the six months ended June 30, 2026, compared to a $0.7 million use of cash in the prior year period. We expect operating cash flows to continue to fluctuate significantly from period to period due to a variety of factors, including changes in operating results, shipment timing, the pace of trade receivable collections, inventory management practices, and the timing of payments to vendors, among other factors. Cash provided by (used in) investing activities: Investing cash flows consist primarily of proceeds from the sale of a business segment and related transaction costs as well as capital expenditures. Net cash provided by investing activities was $5.2 million for the six months ended June 30, 2026 compared to a net use of cash of approximately $0.2 million for the same period in 2025. The increase of $5.3 million was driven by the sale of the analytical reference standards and services business segment. 34 Table of Contents Net cash (used in) provided by financing activities: Financing cash flows consist primarily of exercises of stock options and ESPP purchases through employee equity incentive plans, share repurchases, and settlements of deferred consideration. For the six months ended June 30, 2026, net cash used in financing activities was $4.8 million, compared to net cash provided by financing activities of $6.8 million for the same period in 2025. This decrease of $11.6 million was primarily driven by $5.1 million of common stock repurchases in the current year period and lower proceeds from stock option exercises of approximately $6.5 million compared to the prior year period. Critical Accounting Estimates There have been no material changes to critical accounting estimates from those disclosed in our 2025 Form 10-K.