What changed in this filing

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Item 1. Financial Statements

2024-08-06 compared with 2024-05-09 · 145 added, 88 removed, 319 unchanged (42% of the section changed)

4 unchanged sentences

(in thousands, except per share amounts)

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Current Assets:

47 unchanged sentences

(in thousands, except per share amounts)

For the Three Months Ended March 31,

For the Three Months Ended June 30, For the Six Months Ended June 30,

2024 2023 2024 2023

NET REVENUES:

11 unchanged sentences

27,429 32,800 58,587 74,294

Operating income (loss) ( 7,093 ) 24,321

Operating (loss) income ( 2,740 ) ( 6,429 ) ( 9,833 ) 17,892

OTHER INCOME 3,066 1,467 6,557 4,140

Income (loss) before income taxes ( 3,602 ) 26,994

INCOME TAX BENEFIT ( 18 ) ( 225 )

NET INCOME (LOSS) $ ( 3,584 ) $ 27,219

INCOME (LOSS) PER SHARE:

(Loss) income before income taxes 326 ( 4,962 ) ( 3,276 ) 22,032

INCOME TAX EXPENSE (BENEFIT) 381 ( 166 ) 363 ( 391 )

LOSS ON EQUITY INVESTMENT ( 560 ) — ( 560 ) —

NET (LOSS) INCOME $ ( 615 ) $ ( 4,796 ) $ ( 4,199 ) $ 22,423

(LOSS) INCOME PER SHARE:

BASIC $ ( 0.01 ) $ ( 0.07 ) $ ( 0.06 ) $ 0.31

8 unchanged sentences

(in thousands)

For the Three Months Ended March 31,

NET INCOME (LOSS) $ ( 3,584 ) $ 27,219

OTHER COMPREHENSIVE INCOME

For the Three Months Ended June 30, For the Six Months Ended June 30,

2024 2023 2024 2023

NET (LOSS) INCOME $ ( 615 ) $ ( 4,796 ) $ ( 4,199 ) $ 22,423

OTHER COMPREHENSIVE (LOSS) INCOME

Currency translation adjustments ( 1,134 ) 2,859 ( 3,690 ) 3,656

Unrealized gain on marketable securities — — — 220

COMPREHENSIVE INCOME (LOSS) $ ( 6,140 ) $ 28,236

COMPREHENSIVE (LOSS) INCOME $ ( 1,749 ) $ ( 1,937 ) $ ( 7,889 ) $ 26,299

See accompanying notes to the consolidated financial statements.

3 unchanged sentences

(in thousands)

For the Three Months Ended March 31,

For the Six Months Ended June 30,

OPERATING ACTIVITIES:

Net income (loss) $ ( 3,584 ) $ 27,219

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Net (loss) income $ ( 4,199 ) $ 22,423

Adjustments to reconcile net (loss) income to net cash provided by operating activities:

Stock-based compensation 6,290 5,012

5 unchanged sentences

Interest expense on finance leases 13 28

Loss on equity investment 560 —

Deferred income taxes 91 ( 1,815 )

15 unchanged sentences

Purchase of property and equipment under government contracts — ( 4,034 )

Proceeds from funding under government contract — 17,793

Net cash provided by (used in) investing activities ( 40,865 ) 38,171

10 unchanged sentences

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

Cash (refunds) paid for income taxes $ 592 $ ( 10 )

Cash paid for income taxes $ 1,607 $ 623

Non-cash investing and financing activities

14 unchanged sentences

These financial statements should be read in conjunction with the financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2023.

Results of operations for the three months ended March 31, 2024 are not necessarily indicative of the results of operations expected for the full year.

Results of operations for the three and six months ended June 30, 2024 are not necessarily indicative of the results of operations expected for the full year.

Summary of Significant Accounting Policies

7 unchanged sentences

Losses Fair Value

March 31, 2024

June 30, 2024

Guaranteed investment certificates $ 9,142 $ — $ — $ 9,142

Total $ 9,142 $ — $ — $ 9,142

At March 31, 2024, maturities of the Company's available-for-sale securities were as follows:

At June 30, 2024, maturities of the Company's available-for-sale securities were as follows:

Less than one year $ 9,142 $ — $ — $ 9,142

2 unchanged sentences

Fair Value of Financial Instruments

As of March 31, 2024 and December 31, 2023, the carrying values of cash and cash equivalents, accounts receivable, accounts payable, and accrued expenses approximate their respective fair values based on their short-term nature.

As of June 30, 2024 and December 31, 2023, the carrying values of cash and cash equivalents, accounts receivable, accounts payable, and accrued expenses approximate their respective fair values based on their short-term nature.

Fair value measurements of all financial assets and liabilities that are being measured and reported on a fair value basis are required to be classified and disclosed in one of the following three categories:

2 unchanged sentences

Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity).

All of the Company's guaranteed investment certificates are measured as Level 1 instruments as of March 31, 2024.

Included in cash and cash equivalents at March 31, 2024 and December 31, 2023 was $ 114.1 million and $ 112.7 million, respectively, invested in money market funds.

All of the Company's guaranteed investment certificates are measured as Level 1 instruments as of June 30, 2024.

Included in cash and cash equivalents at June 30, 2024 and December 31, 2023 was $ 60.3 million and $ 71.7 million, respectively, of guaranteed investment certificates.

All of the Company's guaranteed investment certificates are measured as Level 1 instruments.

Also included in cash and cash equivalents at June 30, 2024 and December 31, 2023 was $ 115.6 million and $ 112.7 million, respectively, invested in money market funds.

These money market funds have investments in U.S.

government securities and are measured as Level 1 instruments.

Included in cash and cash equivalents at March 31, 2024 and December 31, 2023 was $ 53.6 million and $ 71.7 million, respectively, of guaranteed investment certificates, which are also measured as Level 1 instruments.

In January 2024, the Company lead the Series B financing and have entered wide-ranging strategic distribution agreements with KKR Sapphiros L.P.

("Sapphiros"), a privately held consumer diagnostic portfolio company and certain of its related entities.

Through this relationship, the Company expects to be able to offer a more comprehensive range of low-cost diagnostic test and molecular sample management solutions to the Company's customers globally.

The Company has funded $ 28.3 million for an interest in Sapphiros, with an aggregate commitment of up to $ 30.0 million to be funded by June 2024, contingent on certain terms and conditions being met.

The Company has recorded the investment using the equity method in accordance with Accounting Standards Codification Topic 323, Investments-Equity Method and Joint Ventures - Overall.

The investment in Sapphiros L.P.

of $ 28.3 million as of March 31, 2024 is included in the equity method investee line of the Company's balance sheet and is measured as Level 3 investments.

There is no similar investment as of December 31, 2023.

The Company offers a nonqualified deferred compensation plan for certain eligible employees and members of its Board of Directors.

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The assets of the plan are held in mutual funds and company stock.

The fair value of the plan assets as of both March 31, 2024 and December 31, 2023 was $ 0.8 million and was calculated using the quoted market prices of the assets as of those dates.

All investments in the plan are classified as trading securities and measured as Level 1 instruments.

The fair value of the plan assets as of both June 30, 2024 and December 31, 2023 was $ 0.7 million and was calculated using the quoted market prices of the assets as of those dates.

All investments in the plan are classified as trading securities and measured as Level 1 financial instruments.

The fair value of plan assets is included in both current assets and noncurrent assets with the same amount included in accrued expenses and other noncurrent liabilities in the accompanying consolidated balance sheets.

Equity Method Investee

In January 2024, the Company lead the Series B financing and entered into wide-ranging strategic distribution agreements with KKR Sapphiros L.P.

("Sapphiros"), a privately held consumer diagnostic portfolio company, and certain of its related entities.

Through this relationship, the Company expects to be able to offer a more comprehensive range of low-cost diagnostic tests and molecular sample management solutions to the Company's customers globally.

As of June 30, 2024, the Company had funded $ 28.3 million for an interest in Sapphiros, with an aggregate commitment of up to $ 30.0 million, of which the remainder was funded in July 2024.

The Company has recorded the investment using the equity method in accordance with Accounting Standards Codification ("ASC") Topic 323, Investments—Equity Method and Joint Ventures—Overall.

In accordance with the equity method, the Company's equity investment is presented net of its share of any gains or losses of the investee.

The Company has elected as its accounting policy to recognize its share of any income or loss in Sapphiros on a three-month lag.

The investment in Sapphiros of $ 27.8 million as of June 30, 2024 is included in the investment in equity method investee line of the Company's balance sheet and is measured as a Level 3 investment.

The Company has no unconditional obligations or guarantees to, or in support of, our equity method investee and its operations.

In conjunction with the preparation of the Company's June 30, 2024 financial statements, the Company considered whether the carrying values of Sapphiros was impaired and concluded that no such impairment existed.

There was no similar investment as of December 31, 2023.

Foreign Currency Transactions

Net foreign exchange gains and (losses) resulting from foreign currency transactions that are included in other income in the Company's consolidated statements of operations were $ 0.2 million and $( 0.05 ) million for the three months ended March 31, 2024 and 2023, respectively.

Net foreign exchange gains and (losses) resulting from foreign currency transactions that are included in other income in the Company's consolidated statements of operations were $ 0.1 million and $( 0.5 ) million for the three months ended June 30, 2024 and 2023, respectively.

Net foreign exchange gains and (losses) resulting from foreign currency transactions for the six months ended June 30, 2024 and 2023 were $ 0.3 million and $( 0.5 ) million, respectively.

Impairment of Long-Lived Assets

3 unchanged sentences

Expected future cash flows reflect the Company's assumptions about selling prices, volumes, costs and market conditions over a reasonable period of time.

The Company identified a triggering event to test for the recoverability of all the property, plant, and equipment and ROU assets of both the Diversigen and Novosanis subsidiaries during the three months ended March 31, 2024, given the Company's decision to initiate a strategic plan to transition away from the microbiome molecular sequencing services business and close its Belgian operations.

During the first quarter of 2024, the Company identified a triggering event to test for the recoverability of all the property, plant, and equipment and ROU assets of both the Diversigen and Novosanis subsidiaries, given the Company's decision to initiate a strategic plan to transition away from the microbiome molecular sequencing services business and close its Belgian operations.

The Company performed an undiscounted cash flow analysis and determined the carrying values of the property, plant and equipment and ROU assets could not be recovered through the sum of the undiscounted future cash flows and were impaired.

During the three months ended March 31, 2024 the Company recognized aggregate pre-tax impairment charges of $ 1.2 million and $ 0.3 million to its operating and finance ROU assets, respectively.

During the six months ended June 30, 2024 the Company recognized aggregate pre-tax impairment charges of $ 1.2 million and $ 0.3 million to its operating and finance ROU assets, respectively.

These charges are reported in the Company's consolidated statement of operations.

The impact of the impairments on the Company's property, plant, equipment for the three months ended March 31, 2024 is discussed further in Note 4.

The impact of the impairments on the Company's property, plant, equipment for the six months ended June 30, 2024 is discussed further in Note 4.

Accumulated Other Comprehensive Loss

3 unchanged sentences

Other comprehensive loss ( 3,690 ) ( 3,690 )

Balance at March 31, 2024 $ ( 17,497 ) $ ( 17,497 )

Balance at June 30, 2024 $ ( 18,631 ) $ ( 18,631 )

Recent Accounting Pronouncements

In March 2024, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update ("ASU") No.

2024-01, Topic 718, Compensation-Stock Compensation .

2024-01, Compensation—Stock Compensation (Topic 718), Scope Application of Profits Interest and Similar Awards .

The purpose of this update was to provide illustrative examples to demonstrate how an entity should apply guidance to determine whether profits interests and similar awards should be accounted for in accordance with Topic 718.

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In September 2021, the Company entered into an agreement for $ 109.0 million in funding from the U.S.

Department of Defense (the "DOD"), in coordination with the Department of Health and Human Services, to build additional manufacturing capacity in the United States for its InteliSwab ® COVID-19 Rapid Tests as part of the nation’s pandemic preparedness plan.

Department of Defense (the "DOD"), in coordination with the Department of Health and Human Services, to build additional manufacturing capacity in the United States for its InteliSwab ® COVID-19 Rapid Test as part of the nation’s pandemic preparedness plan.

In accordance with the milestone payment schedule, 15 % of the total was not billed and funded until the completion of the final validation testing, which occurred in October 2023.

1 unchanged sentence

In connection with the completion of the contract in the fourth quarter of 2023, all funds were received.

Activity for these capital contracts is accounted for pursuant to International Accounting Standards ("IAS") 20, Accounting for Government Grants and Disclosure of Government Assistance, as there is not direct US GAAP guidance for this type of transaction.

Funding received in relation to capital-related costs incurred for government contracts is recorded as a reduction to the cost of property, plant and equipment and reflected within investing activities in the consolidated statements of cash flows;

and associated unpaid liabilities and government proceeds receivable are considered non-cash changes in such balances within the operating section of the consolidated statements of cash flows.

Activity for these capital contracts was accounted for pursuant to International Accounting Standards ("IAS") 20, Accounting for Government Grants and Disclosure of Government Assistance, as there is not direct US GAAP guidance for this type of transaction.

Funding received in relation to capital-related costs incurred for government contracts was recorded as a reduction to the cost of property, plant and equipment and reflected within investing activities in the consolidated statements of cash flows;

and associated unpaid liabilities and government proceeds receivable were considered non-cash changes in such balances within the operating section of the consolidated statements of cash flows.

Amounts earned for the Company's guaranteed profit which covered project management costs were recognized straight-line in other income over the term of the government contract.

The Company recognized no such income during the three months ended March 31, 2024 and $ 0.6 million during the three months ended March 31, 2023.

The Company recognized no such income during the three and six months ended June 30, 2024.

The Company recognized $ 0.6 million and $ 1.1 million of such income during the three and six months ended June 30, 2023, respectively.

The DOD also reimbursed the Company for certain engineering consulting costs.

These expenses are reflected in research and development expenses as incurred with the corresponding amount presented in other income.

recognized no such costs during the three months ended March 31, 2024 and $ 1.1 million during the three months ended March 31, 2023.

The Company recognized no such costs during the three and six months ended June 30, 2024.

The Company recognized $ 0.5 million and $ 1.6 million of such costs during the three and six months ended June 30, 2023, respectively.

The activity corresponding to the government contracts included in the Company's consolidated statements of cash flows for the cumulative period ended December 31, 2023 is as follows (in thousands):

3 unchanged sentences

Inventories (in thousands)

March 31, December 31,

June 30, December 31,

Raw materials $ 20,137 $ 20,727

3 unchanged sentences

Property, Plant and Equipment, net (in thousands)

March 31, December 31,

June 30, December 31,

Land $ 1,118 $ 1,118

7 unchanged sentences

$ 40,313 $ 45,420

During the three months ended March 31, 2024, the Company initiated a strategic plan to transition away from the microbiome molecular sequencing services business and to exit operations at its Belgium location.

As a result of these decisions, the Company determined that the carrying values of all the property, plant, and equipment of its Diversigen and Novosanis subsidiaries were not recoverable and recorded an aggregate pre-tax asset impairment charge of $ 1.8 million during the three months ended March 31, 2024.

During the three months ended March 31, 2023, the Company determined several manufacturing lines will not be utilized due to changes in forecasted demand for the products the equipment is intended to produce.

As a result of this decision, the Company determined that the carrying value of the equipment was not recoverable and recorded an aggregate pre-tax asset impairment charge of $ 1.1 million during the three months ended March 31, 2023.

Due to the extremely specialized nature of the equipment and various market data points, the estimated fair value was zero.

These charges are reported within loss on impairments in the consolidated statements of operations.

During the first quarter of 2024, the Company initiated a strategic plan to transition away from the microbiome molecular sequencing services business and to exit operations at its Belgium location.

During the second quarter of 2024, the Company determined a manufacturing line will no longer be utilized.

As a result of this decision, the Company determined that the carrying value of the equipment was not recoverable and recorded an aggregate pre-tax impairment charge of $ 1.1 million during the six months ended June 30, 2024.

During the six months ended June 30, 2023, the Company determined several manufacturing lines will not be utilized due to changes in forecasted demand for the products the equipment is intended to produce.

Additionally, the Company elected not to proceed with certain leasehold improvements to its research and development laboratories.

As a result of these decisions, the Company determined that the carrying values of the equipment and leasehold improvements made to date were not recoverable and recorded an aggregate pre-tax asset impairment charge of $ 1.3 million during the six months ended June 30, 2023.

Due to the extremely specialized nature of the property, plant, and equipment in each triggering event noted above and due to various market data points, the estimated fair value of all assets was determined to be zero.

These charges are reported within loss on impairments in the consolidated statement of operations.

Accrued Expenses and Other Current Liabilities (in thousands)

March 31, December 31,

June 30, December 31,

Payroll and related benefits $ 9,881 $ 14,654

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During the first and second quarters of 2023, the Company executed a reduction in workforce.

This was accounted for pursuant to Accounting Standards Codification ("ASC") 420, Exit or Disposal Cost Obligations .

This was accounted for pursuant to ASC 420, Exit or Disposal Cost Obligations .

The charges for termination benefits included in the Company's consolidated statements of operations are as follows (in thousands):

For the Three Months Ended March 31,

For the Three Months Ended June 30, For the Six Months Ended June 30,

2024 2023 2024 2023

Cost of products and services sold $ — $ 334 $ — $ 369

2 unchanged sentences

General and administrative — 201 — 787

As of March 31, 2024 the Company had $ 0.1 million accrued and had paid $ 3.2 million related to the reduction in workforce.

No additional expense was incurred during the three months ended March 31, 2024.

The Company expects this plan to be completed by September 30, 2024.

$ — $ 629 $ — $ 3,264

As of June 30, 2024 the Company had fully paid the $ 3.3 million related to the reduction in workforce.

No additional expense associated with the 2023 reduction in workforce was incurred during the six months ended June 30, 2024.

This plan was completed as of June 30, 2024.

Q1 2024 Reduction in Workforce

During the three months ended March 31, 2024, the Company executed a reduction in workforce largely affect its COVID-19 manufacturing workforce.

This was accounted for pursuant to Accounting Standards Codification ("ASC") 420, Exit or Disposal Cost Obligations .

During the first quarter of 2024, the Company executed a reduction in workforce largely affecting its COVID-19 manufacturing workforce.

This was accounted for pursuant to ASC 420, Exit or Disposal Cost Obligations .

The charges for termination benefits included in the Company's consolidated statements of operations are as follows (in thousands):

For the Three Months Ended March 31,

For the Six Months Ended June 30,

Cost of products and services sold $ 231

2 unchanged sentences

General and administrative 17

As of March 31, 2024 the Company had $0.3 million accrued and had paid $ 0.1 million related to the reduction in workforce.

As of June 30, 2024 the Company had $ 51.8 thousand accrued and had paid $ 0.4 million related to the reduction in workforce.

No additional expense associated with the Q1 2024 reduction in workforce was incurred during the three months ended June 30, 2024 .

The Company expects this plan to be completed by December 31, 2024.

Q2 2024 Reduction in Workforce

During the second quarter of 2024, the Company executed an additional reduction in workforce as the Company notified employees of its intention to consolidate its Novosanis site in Belgium into other locations by the end of December 31,

2024, discontinue the Diversigen molecular services line of business by the end of June 30, 2024, and consolidate facilities by third-party manufacturing activities into its Pennsylvania facilities by the end of the third quarter of 2025.

This was accounted for pursuant to ASC 420, Exit or Disposal Cost Obligations .

The charges for termination benefits included in the Company's consolidated statements of operations are as follows (in thousands):

For the Three Months Ended June 30,

Cost of products and services sold $ 889

Research and development 478

Sales and marketing 125

General and administrative 160

Total $ 1,652

As of June 30, 2024 the Company had $ 1.5 million accrued and had paid $ 0.2 million related to the reduction in workforce.

The Company expects this plan to be completed by September 2025.

Revenues by product line .

The following table represents total net revenues by product line (in thousands):

Three Months Ended March 31,

For the Three Months Ended June 30, For the Six Months Ended June 30,

2024 2023 2024 2023

$ 18,939 $ 47,507 $ 42,067 $ 165,916

HIV 13,652 15,964 27,032 29,868

3 unchanged sentences

Risk assessment testing (3)

2,308 2,358 4,352 4,986

Molecular Services 810 1,354 1,683 2,733

Other product and service revenues (4)

897 635 1,429 1,101

Net product and services revenues 53,949 84,738 107,728 237,652

Non-product and services revenues (5)

386 703 739 2,752

Net revenues $ 54,335 $ 85,441 $ 108,467 $ 240,404

(1) Includes COVID-19 Diagnostics and COVID-19 Molecular Products.

(1) Includes COVID-19 Diagnostics and COVID-19 Molecular revenues.

(2) Includes Genomics, Microbiome and Novosanis product revenues.

(3) Includes substance abuse testing products.

(4) Non-product and services revenues include funded research and development contracts, royalty income and grant revenues.

(3) Includes substance abuse testing products revenues.

(4) Includes Syphilis revenues.

(5) Includes funded research and development contracts, royalty income and grant revenues.

Revenues by geographic area .

The following table represents total net revenues by geographic area, based on the location of the customer (in thousands):

Three Months Ended March 31,

For the Three Months Ended June 30, For the Six Months Ended June 30,

2024 2023 2024 2023

United States $ 44,386 $ 73,871 $ 89,597 $ 218,890

3 unchanged sentences

Customer and Vendor Concentrations .

At March 31, 2024, one non-commercial customer accounted for 29 % of the Company's consolidated accounts receivable.

At June 30, 2024, one non-commercial customer accounted for 22 % of the Company's consolidated accounts receivable.

The same non-commercial customer accounted for 40 % of the Company's consolidated accounts receivable as of December 31, 2023.

The same non-commercial customer also accounted for 40 % and 78 % of net consolidated revenues for the three months ended March 31, 2024 and 2023, respectively.

The same non-commercial customer also accounted for 33 % and 56 % of net consolidated revenues for the three months ended June 30, 2024 and 2023, respectively.

The same non-

commercial customer also accounted for 37 % and 70 % of net consolidated revenues for the six months ended June 30, 2024 and 2023, respectively.

The Company currently purchases certain products and critical components of its products from sole-supply vendors.

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The Company records deferred revenue when funds are received prior to the recognition of the associated revenue.

Deferred revenue as of March 31, 2024 and December 31, 2023 included customer prepayments of $ 1.3 million and $ 1.2 million, respectively.

Deferred revenue as of March 31, 2024 and December 31, 2023 also included $ 0.3 million and $ 0.4 million, respectively, associated with a long-term contract that has variable pricing based on volume.

Deferred revenue as of June 30, 2024 and December 31, 2023 included customer prepayments of $ 1.4 million and $ 1.2 million, respectively.

Deferred revenue as of December 31, 2023 also included $ 0.4 million associated with a long-term contract that has variable pricing based on volume.

The average price over the life of the contract was determined and revenue is recognized at that average price.

Deferred revenue recognized for the three months ended March 31, 2024, and 2023, was $ 0.7 million and $ 0.9 million , respectively.

The $ 0.4 million associated with the long-term contract met the criteria to be recognized as revenue during the six months ended June 30, 2024, and as such there is no equivalent balance remaining in deferred revenue at June 30, 2024.

Deferred revenue recognized for the three months ended June 30, 2024 and 2023, was $ 2.0 million and $ 0.9 million , respectively.

Deferred revenue recognized for the six months ended June 30, 2024 and 2023, was $ 2.7 million and $ 1.8 million, respectively.

The components of income tax expense (benefit) are as follows (in thousands):

Three Months Ended March 31,

For the Three Months Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

State income tax expense (benefit) $ 3 $ 1,481 $ ( 228 ) $ 1,257

2 unchanged sentences

$ 381 $ ( 166 ) $ 363 $ ( 391 )

During the three months ended March 31, 2024 and 2023, the Company recorded an income tax benefit of $ 0.0 million and $ 0.2 million, respectively.

The income tax benefit for the three months ended March 31, 2024 and 2023 is primarily composed of a U.S.

state tax benefit.

During the three months ended June 30, 2024 and 2023, the Company recorded income tax expense and benefit of $ 0.4 million and $ 0.2 million, respectively.

The three months ended June 30, 2024 net tax expense increase is due to having both U.S.

and foreign pretax income in 2024 compared to a foreign pretax loss for the three months ended June 30, 2023.

During the three months ended June 30, 2024, the state income taxes declined compared to the three months ended June 30, 2023 due to lower state pretax income in 2024.

During the six months ended June 30, 2024 and 2023, the Company recorded income tax expense and benefit of $ 0.4 million and $ 0.4 million, respectively.

Foreign pretax income increased during the six months ended June 30, 2024 compared to a foreign pretax loss offset by lower state pretax income for six months ended June 30, 2023.

Income tax expense reflects taxes due to the taxing authorities and the tax effects of temporary differences between the basis of assets and liabilities recognized for financial reporting and tax purposes, and net operating loss and tax credit carryforwards.

The significant components of the Company's total deferred tax liability as of March 31, 2024 and at December 31, 2023 relate to the tax effects of the basis difference between the intangible assets acquired in its acquisitions for financial reporting and for tax purposes along with basis differences arising from accelerated tax depreciation of fixed assets.

The significant components of the Company's total deferred tax liability as of June 30, 2024 and at December 31, 2023 relate to the tax effects of the basis difference between the intangible assets acquired in its acquisitions for financial reporting and for tax purposes along with basis differences arising from accelerated tax depreciation of fixed assets.

A valuation allowance is recorded to the extent it is more likely than not that some portion or all of the deferred tax assets will not be realized.

A full valuation allowance was recorded on the Company’s U.S.

deferred tax assets as of March 31, 2024 and December 31, 2023.

deferred tax assets as of June 30, 2024 and December 31, 2023.

Income (Loss) Per Share

3 unchanged sentences

Basic and dilutive computations of net loss per share are the same in periods in which a net loss exists as the dilutive effects of excluded items would be anti-dilutive.

For the three months ended March 31, 2024, outstanding common stock options, unvested restricted stock, and unvested performance stock units representing 1,697 shares, were excluded from the computation of diluted loss per share.

For the three months ended March 31, 2023 outstanding common stock options, unvested restricted stock, and unvested performance stock units representing 2,237 shares, respectively, were excluded from the computation of diluted earnings per share as their inclusion would have been anti-dilutive.

For the three months ended June 30, 2024 and 2023, outstanding common stock options, unvested restricted stock, and unvested performance stock units representing 1,010 shares and 966 shares, respectively, were excluded from the computation of diluted loss per share.

For the six months ended June 30, 2024, outstanding common stock options, unvested restricted stock, and unvested performance stock units representing 1,333 shares, were excluded from the computation of diluted loss per share.

For the six months ended June 30, 2023, outstanding common stock options, unvested restricted stock, and unvested performance stock units representing 2,030 shares were excluded from the computation of diluted earnings per share as their inclusion would have been anti-dilutive.

Stockholders’ Equity

Reconciliation of the changes in stockholders' equity for three months ended March 31, 2024 and 2023 :

Reconciliation of the changes in stockholders' equity for the three and six months ended June 30, 2024 and 2023:

Common Stock Additional

11 unchanged sentences

Currency translation adjustments — — — ( 2,556 ) — ( 2,556 )

Unrealized gain on marketable securities — — — — — —

Balance at March 31, 2024 73,959 $ — $ 531,263 $ ( 17,497 ) $ ( 87,515 ) $ 426,251

Vesting of restricted stock and performance stock units 1,033 — — — — —

Purchase and retirement of common shares ( 424 ) — ( 1,984 ) — — ( 1,984 )

Stock-based compensation — — 3,322 — — 3,322

Net loss — — — — ( 615 ) ( 615 )

Currency translation adjustments — — — ( 1,134 ) — ( 1,134 )

Balance at June 30, 2024 74,568 $ — $ 532,601 $ ( 18,631 ) $ ( 88,130 ) $ 425,840

Common Stock Additional

13 unchanged sentences

Balance at March 31, 2023 73,254 $ — $ 521,964 $ ( 17,418 ) $ ( 110,367 ) $ 394,179

Vesting of restricted stock and performance stock units 241 — — — — —

Purchase and retirement of common shares ( 82 ) — ( 460 ) — — ( 460 )

Stock-based compensation — — 2,357 — — 2,357

Net loss — — — — ( 4,796 ) ( 4,796 )

Currency translation adjustments — — — 2,859 — 2,859

Balance at June 30, 2023 73,413 $ — $ 523,861 $ ( 14,559 ) $ ( 115,163 ) $ 394,139

Commitments and Contingencies

2 unchanged sentences

In March 2021, the Company filed a complaint against Spectrum Solutions, LLC ("Spectrum") in the United States District Court for the Southern District of California alleging that certain saliva collection devices manufactured and sold by Spectrum infringe a patent held by DNAG.

Spectrum filed an answer to the initial complaint, asserting that its device does not infringe the Company's patent and that the Company's patent is invalid.

Spectrum filed an answer asserting that its device does not infringe the Company's patent and that the Company's patent is invalid.

In August 2021, the Company amended its complaint to add a second patent to this litigation.

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The District Court issued multiple pretrial orders, resolving the infringement, antitrust, and inequitable conduct claims without trial.

First, the District Court granted Spectrum’s motion for summary judgment of noninfringement, holding that Spectrum’s saliva collection devices are not “kits for collecting and preserving a biological sample,” among other rulings.

First, the District Court granted Spectrum’s motion for summary judgment of noninfringement.

The Company appealed the grant of summary judgment to the Court of Appeals on June 8, 2023.

The appeal is pending, with oral argument expected in the second half of 2024.

Second, the Court denied Spectrum’s motion to supplement its allegations of alleged antitrust violations, finding that if such an amendment were allowed,

Spectrum’s claims would not survive a motion for summary judgment.

The Company is pursuing the appeal with respect to the first patent, with oral argument expected in the second half of 2024.

Second, the Court denied Spectrum’s motion to supplement its allegations of alleged antitrust violations, finding that if such an amendment were allowed, Spectrum’s claims would not survive a motion for summary judgment.

Spectrum thereafter withdrew its antitrust and inequitable conduct counterclaims.

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On March 27, 2024, the Company's Request for Rehearing was denied.

The Company is considering its appellate options.

On September 15, 2023, Spectrum filed a separate petition for inter partes review of a third patent, which DNAG did not assert in the District Court.

On March 26, 2024, the PTO issued a Decision Granting Institution of Inter Partes Review and scheduled oral argument for January 14, 2025.

On July 2, 2024 the Company filed a Motion to Amend the claims of the third patent, which remains pending.

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-Q

Item 1. Financial Statements