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Item 9A. Controls and Procedures

2025-03-07 compared with 2024-03-11 · 501 added, 217 removed, 859 unchanged (46% of the section changed)

1 unchanged sentence

(a) Evaluation of Disclosure Controls and Procedures .

The Company’s management, with the participation of the Company’s Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934) as of December 31, 2023.

The Company’s management, with the participation of the Company’s Chief Executive Officer (CEO), Chief Financial Officer (CFO) and Chief Accounting Officer (CAO), has evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934) as of December 31, 2024.

Based on that evaluation, the Company’s management, including such officers, concluded that as of December 31, 2024 the Company’s disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934 is accumulated and communicated to the Company’s management, including the Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer, to allow timely decisions regarding required disclosure and is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission.

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Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

The effectiveness of the Company's internal control over financial reporting as of December 31, 2023 has been audited by KPMG LLP, an independent registered public accounting firm, as stated in their report, which is included below.

The Company acquired Sherlock Biosciences, Inc.

and its wholly owned subsidiaries om December 19, 2024, and management excluded from its assessment of the effectiveness of the Company's internal control over financial reporting as of December 31, 2024, the acquired company representing approximately 4% of total assets, excluding intangible assets and goodwill related to the acquisition and 0% of total revenue of the Company as of and for the year ended December 31,2024.

Management plans to fully integrate the operations of these businesses into the assessment of the effectiveness of the Company's internal control over financial reporting in 2025.

The effectiveness of the Company's internal control over financial reporting as of December 31, 2024 has been audited by GRANT THORNTON LLP, an independent registered public accounting firm, as stated in their report, which is included below.

In the third quarter ended September 30, 2023, we identified a material weakness in our internal control over financial reporting related to customer pricing in the revenue recognition process.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

A control related to the validation of accurate pricing in customer sales orders did not operate effectively to detect an error in prices, which resulted in the recognition of revenue at an inaccurate price during the six months ended June 30, 2023.

Although the resulting error was not material to those financial statements, we concluded that the control deficiency represents a material weakness.

The financial statements for the nine months ended September 30, 2023 were not impacted by this material weakness and are not misstated.

During the quarter ended December 31, 2023, the Company implemented controls to validate accurate pricing in customer sales orders and remediated the material weakness.

Except for the foregoing, there was no change in the Company's internal control over financial reporting identified in management’s evaluation pursuant to Rules 13a or 15d of the Exchange Act that occurred during the quarter ended December 31, 2023 that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.

There were no changes in our internal control over financial reporting during the fiscal quarter ended December 31, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

(d) Report of Independent Registered Public Accounting Firm .

To the Stockholders and Board of Directors

Board of Directors and Stockholders

OraSure Technologies, Inc.

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We have audited OraSure Technologies, Inc.

and subsidiaries' (the Company) internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive income (loss), stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2023, and the related notes (collectively, the consolidated financial statements), and our report dated March 11, 2024 expressed an unqualified opinion on those consolidated financial statements.

(a Delaware corporation) and subsidiaries (the "Company") as of December 31, 2024, based on criteria established in the 2013 Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO").

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on criteria established in the 2013 Internal Control – Integrated Framework issued by COSO.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) ("PCAOB"), the consolidated financial statements of the Company as of and for the year ended December 31, 2024, and our report dated March 7, 2025 expressed an unqualified opinion on those financial statements.

Basis for Opinion

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Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.

Our audit also included performing such other procedures as we considered necessary in the circumstances.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion.

Our audit of, and opinion on, the Company’s internal control over financial reporting does not include the internal control over financial reporting of Sherlock Biosciences, Inc., a wholly-owned subsidiary, whose financial statements reflect total assets, excluding intangible assets and goodwill related to the acquisition, and revenues constituting 4 percent and 0 percent, respectively, of the related consolidated financial statement amounts as of and for the year ended December 31, 2024.

As indicated in Management’s Report, Sherlock Biosciences, Inc.

was acquired during 2024.

Management’s assertion on the effectiveness of the Company’s internal control over financial reporting excluded internal control over financial reporting of Sherlock Biosciences, Inc.

Definition and Limitations of Internal Control Over Financial Reporting

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A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and

that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

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/s/ GRANT THORNTON LLP

Philadelphia, Pennsylvania

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Other Information.

Not applicable.

During the fourth quarter of the fiscal year ended December 31, 2024, no director of “officer” as defined in Rule 16a-1(f) under the Exchange Act adopted or terminated any Rule 10b5-1 trading plan or arrangements or any non-Rule 10b5-1 trading plan or arrangements, in both cases as defined in Item 408(a) of Regulation S-K.

Disclosure regarding Foreign Jurisdictions that Prevent Inspections

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The information required by this Item 10 will be included in the Company's 2025 Proxy Statement and is incorporated herein by reference.

Code of Conduct

The Board of Directors has adopted a Code of Business Conduct and Ethics that applies to the Company's principal executive officer, principal financial officer and principal accounting officer, as well as to the members of its Board of Directors and its other officers and employees.

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The Company intends to satisfy the amendment and waiver disclosure requirements under applicable securities regulations by posting any amendments of, or waivers to, the Code of Business Conduct and Ethics on its website.

Insider Trading Arrangements and Policies

The Board of Directors has adopted insider trading policies and procedures governing the purchase, sale, and other dispositions of securities of OraSure by directors, officers, and employees that the Company believes are reasonably designed to promote compliance with insider trading laws, rules and regulations, and applicable Nasdaq listing standards.

The Company’s insider trading policy states, among other things, that its directors, officers, and employees are prohibited from trading in such securities while in possession of material, nonpublic information.

In addition, with regard to trading in the Company’s own securities, it is the Company’s policy to comply with the federal securities laws and the applicable exchange listing requirements.

The foregoing summary of the Company’s insider trading policies and procedures does not purport to be complete and is qualified by reference to the insider trading policy attached hereto as Exhibit 19.1 and incorporated herein.

Executive Compensation.

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Number Exhibit

2.1+†● Agreement and Plan of Merger, dated December 19, 2024 by and among OraSure Technologies, Inc., Project Watson Merger Sub, Inc., Sherlock Biosciences, Inc.

Paul Meister, solely in his capacity as representative of the securityholders of Sherlock Biosciences, Inc.

3.1.1 Certificate of Incorporation of OraSure Technologies, Inc.

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333-39210), filed June 14, 2000.

3.1.3 Certificate of Amendment to Certificate of Incorporation of OraSure Technologies Inc.

dated May 16, 2024 is incorporated by reference to Exhibit 3.1 to the Company’s Periodic Report on Form 8-K filed on May 17, 202 4 .

3.2 Second Amended and Restated Bylaws of OraSure Technologies, as of May 9, 2023, is incorporated by referenced to Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2023.

4.1 Description of Securities is incorporated by reference to Exhibit 4.1 to the Company’s Annual Report on Form 10-K for the year-ended December 31, 2019 .

10.1 Employment Agreement dated as of January 3, 2018, between OraSure Technologies, Inc.

and Stephen S.

Tang, Ph.D., is incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed January 4, 2018.*

10.1 Employment Agreement, dated as of January 1, 2019, between Kathleen G.

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and OraSure Technologies, Inc.

is in corporated by reference to Exhibit 10.5 of the Company's Annual Report on form 10 -K for the year ended December 31, 2022 *

is incorporated by reference to Exhibit 10.5 of the Company's Annual Report on form 10-K for the year ended December 31, 2022*

10.4 Employment Agreement, dated as of May 20, 2022, between OraSure Technologies, Inc.

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2000 Stock Award Plan, Effective March 31, 2023, is incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed May 16, 2023.*

10.12 Amended and Restated OraSure Technologies, Inc.

2000 Stock Award Plan, Effective March 25, 2024, is incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed May 17, 2024.*

10.13 Form of Restricted Share Award Agreement (Executive Officers – Employment Agreements) is incorporated by reference to Exhibit 10.24 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2015.*

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as Tenant, dated January 3, 2022 is incorporated by reference to Exhibit 10.30 to the Company's Annual Report on Form 10-K for the year ended December 31, 2021.

21.1 Subsidiaries of the Company are incorporated by reference to Exhibit 21 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2013.

19.1+ Insider Trading Policy

21.1+ Subsidiaries of the Company

Consent of KPMG LLP.

23.2+ Consent of Grant Thornton LLP

Powers of Attorney.

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97.10 OraSure Technologies Inc.

Compensation Recovery Policy .

Compensation Recovery Policy is incorporated by reference to Exhibit 97.1 to the Co mpany's Annual Report on Form 10-K for the year ended December 31, 2023.

101.INS Inline XBRL Instance Document

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* Management contract or compensatory plan or arrangement.

† Certain portions of this Exhibit have been redacted pursuant to Item 601(b)(10)(iv) of Regulation S-K.

The Company hereby agrees to furnish supplementally an unredacted copy of the exhibit to the SEC upon its request.

● Certain schedules, annexes or exhibits have been omitted pursuant to Item 601(a)(5) of Regulation S-K, but will be furnished supplementally to the SEC upon request.

Form 10-K Summary.

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ASPINALL Director

DATIN Director

GAGLIANO Director

GAGLIANO, M.D.

Gagliano, M.D.

KENNY Director

*LELIO MARMORA Director

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Index to Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm ( GRANT THORNTON LLP , Philadelphia, PA , Auditor Firm ID:

Report of Independent Registered Public Accounting Firm (KPMG LLP, Philadelphia, PA, Auditor Firm ID:

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Stockholders

OraSure Technologies, Inc.

Opinion on the financial statements

We have audited the accompanying consolidated balance sheet of OraSure Technologies, Inc.

(a Delaware corporation) and subsidiaries (the “Company”) as of December 31, 2024, the related consolidated statements of operations, comprehensive income (loss), stockholders’ equity, and cash flows for the year ended December 31, 2024, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024, and the results of its operations and its cash flows for the year ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of December 31, 2024, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), and our report dated March 7, 2025 expressed an unqualified opinion.

Basis for opinion

These consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audit.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audit provides a reasonable basis for our opinion.

Critical audit matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Fair value of the acquired in-process and research developed intangible asset and royalty contingent consideration in the Sherlock Biosciences, Inc.

As further described in Note 14 to the consolidated financial statements, on December 19, 2024, the Company acquired Sherlock Biosciences, Inc.

("Sherlock"), pursuant to the terms of a merger agreement.

The purchase consideration transferred in this transaction included contingent consideration, as defined under the merger agreement, related to, 1) achievement of a regulatory milestone associated with the acquired in-process research and development technology (“IPR&D technology”) intangible asset, and 2) royalty payments through December 31, 2034, representing a mid-single digit percentage of future revenues associated with the IPR&D technology intangible asset.

Approximately $17.0 million of the initial purchase consideration was allocated to the IPR&D technology intangible asset.

The estimated fair value of the royalty based contingent consideration was $7.0 million.

We identified the fair value determinations of the IPR&D technology intangible asset and royalty based contingent consideration as a critical audit matter.

The principal consideration for our determination that the fair value of the IPR&D technology intangible asset and royalty based contingent consideration is a critical audit matter is that the inputs and assumptions utilized by management require significant judgment and result in a high degree of estimation uncertainty.

The subjectivity of the estimate increases the level of auditor judgment and effort to evaluate management’s significant assumptions, including (i) future expected revenues and cash flows and (ii) discount rates.

Further, changes in these assumptions and judgments could have a significant impact on the recorded fair values.

Our audit procedures related to the fair value of the IPR&D technology and royalty based contingent consideration included the following, among others:

• Evaluated the design and operating effectiveness of key controls related to management’s processes over the development of the fair value estimates and related key inputs and assumptions, and over the evaluation of the competency and objectivity of management's third-party valuation specialist.

• Tested the mathematical accuracy of the valuation models utilized and the completeness, accuracy and relevance of underlying data used in the model.

• Assessed the reasonableness of management’s estimated revenues and cash flows by obtaining an understanding of management’s processes for developing projected financial information, including inspection of relevant market data and other supporting documentation.

• Utilized valuation specialists to evaluate the reasonableness of the methodology and discount rates used in the valuation.

• Conducted sensitivity analyses around the future expected revenues and discount rate assumptions utilized by management.

/s/ GRANT THORNTON LLP

We have served as the Company’s auditor since 2023.

Philadelphia, Pennsylvania

March 7, 2025

Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors

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Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of OraSure Technologies, Inc.

and subsidiaries (the Company) as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive income (loss), stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2023, and the related notes (collectively, the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2023, in conformity with U.S.

We have audited the accompanying consolidated balance sheet of OraSure Technologies, Inc.

and subsidiaries (the Company) as of December 31, 2023, the related consolidated statements of operations, comprehensive income (loss), stockholders’ equity, and cash flows for each of the years in the two-year period ended December 31, 2023, and the related notes (collectively, the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2023, in conformity with U.S.

generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated March 11, 2024 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

Basis for Opinion

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Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

We are a public accounting firm registered with the Public Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

5 unchanged sentences

We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Evaluation of net realizable value adjustments to inventories for excess and obsolescence

As discussed in Notes 2 and 4 to the consolidated financial statements, the Company has inventories with a carrying value of $47,614 thousand as of December 31, 2023.

Inventories are stated at the lower of cost or net realizable value, with cost determined on a first-in, first-out basis.

The majority of the Company’s inventories are subject to expiration dating, which can be extended in certain circumstances.

The Company continually evaluates quantities on hand and the carrying value of inventories to determine the need for net realizable value adjustments for excess and obsolete inventories, based primarily on prior experience with consideration of expected changes in the business and estimated forecasts of product sales.

The Company reserves for unidentified scrap or spoilage based on historical write-off rates.

The Company also considers items identified through specific identification procedures in assessing the adequacy of the reserve.

We identified the evaluation of net realizable value adjustments to inventories for excess or obsolescence as a critical audit matter.

Evaluating the Company’s specific identification procedures, which included reviewing historical inventory consumption as compared to inventory balances as of year-end and the resulting inventory consumption and the ability to extend inventory expiration dates, required a high degree of auditor judgment.

The following are the primary procedures we performed to address this critical audit matter.

We evaluated the design and tested the operating effectiveness of certain internal controls related to the Company’s process for determining net realizable value adjustments for inventory excess or obsolescence, which included controls related to the review of the specific identification procedures.

For a selection of inventory items, we compared actual physical inventory disposals in the current year to the Company's historic estimates of net realizable value adjustments for excess and obsolescence to evaluate the Company's ability to accurately estimate the net realizable value adjustments.

In addition, we selected inventory items from the underlying data used in the Company’s analysis and evaluated the Company’s determination of net realizable value adjustments for those items by:

(1) testing historical inventory consumption by independently recalculating the historical consumption and comparing it to the Company determined consumption, (2) comparing that consumption to inventory balances as of year-end, and (3) evaluating changes in the business that could impact future inventory consumption, as applicable.

We also selected inventory items from the underlying data used in the Company’s analysis and evaluated the ability to extend the expiration dates by inspecting relevant supporting documentation.

We have served as the Company’s auditor since 2002.

We served as the Company’s auditor from 2002 to 2024.

Philadelphia, Pennsylvania

March 11, 2024

March 11, 2024, except for Note 13, as to which the date is March 7, 2025

ORASURE TECHNOLOGIES, INC.

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Cash and cash equivalents $ 267,763 $ 290,407

Short-term investments — 26,867

Accounts receivable, net of allowance for doubtful accounts of $ 774 and $ 1,216

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Noncurrent Assets:

Property, plant and equipment, net 45,420 59,413

Property, plant and equipment, net of accumulated depreciation 45,105 45,420

Operating right-of-use assets, net 13,442 12,270

Finance right-of-use assets, net 145 576

Intangible assets, net 1,206 11,694

Intangible assets, net of accumulated amortization 17,435 1,206

Goodwill 40,330 35,696

Investment in equity method investee 28,300 —

Deferred tax asset 156 —

Other noncurrent assets 1,526 1,218

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Operating lease liability 2,129 1,577

Acquisition-related contingent consideration obligation — 65

Total current liabilities 33,483 39,536

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107,640 138,968 170,594

Operating income (loss) 32,684 ( 22,156 ) ( 10,164 )

Operating (loss) income ( 28,250 ) 32,684 ( 22,156 )

OTHER INCOME 12,249 23,574 6,481

Income (loss) before income taxes 56,258 ( 15,675 ) ( 9,292 )

(Loss) Income before income taxes ( 16,001 ) 56,258 ( 15,675 )

INCOME TAX EXPENSE 1,799 2,603 1,458

NET INCOME (LOSS) $ 53,655 $ ( 17,133 ) $ ( 22,998 )

INCOME (LOSS) PER SHARE:

LOSS ON EQUITY INVESTMENT ( 1,700 ) — —

NET (LOSS) INCOME $ ( 19,500 ) $ 53,655 $ ( 17,133 )

(LOSS) INCOME PER SHARE:

BASIC $ ( 0.26 ) $ 0.73 $ ( 0.24 )

DILUTED $ ( 0.26 ) $ 0.72 $ ( 0.24 )

SHARES USED IN COMPUTING INCOME (LOSS) PER SHARE:

SHARES USED IN COMPUTING (LOSS) INCOME PER SHARE:

BASIC 74,434 73,348 72,505

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2024 2023 2022

NET INCOME (LOSS) $ 53,655 $ ( 17,133 ) $ ( 22,998 )

OTHER COMPREHENSIVE INCOME (LOSS)

NET (LOSS) INCOME $ ( 19,500 ) $ 53,655 $ ( 17,133 )

OTHER COMPREHENSIVE (LOSS) INCOME

Currency translation adjustments ( 9,419 ) 3,274 ( 8,572 )

Unrealized gain (loss) on marketable securities 220 214 ( 86 )

COMPREHENSIVE INCOME (LOSS) $ 57,149 $ ( 25,491 ) $ ( 23,978 )

Unrealized gain on marketable securities — 220 214

COMPREHENSIVE (LOSS) INCOME $ ( 28,919 ) $ 57,149 $ ( 25,491 )

See accompanying notes to the consolidated financial statements.

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Currency translation adjustments — — — ( 8,572 ) — ( 8,572 )

Unrealized loss on marketable securities — — — ( 86 ) — ( 86 )

Unrealized gain on marketable securities — — — 214 — 214

Balance at December 31, 2022 72,734 $ — $ 520,446 $ ( 18,435 ) $ ( 137,586 ) $ 364,425

Common stock issued upon exercise of options 44 — 269 — — 269

2 — 15 — — 15

Vesting of restricted stock and performance stock units 1,098 — — — — —

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Stock-based compensation — — 10,729 — — 10,729

Net loss — — — — ( 17,133 ) ( 17,133 )

Net income — — — — 53,655 53,655

Currency translation adjustments — — — 3,274 — 3,274

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Common stock issued upon exercise of options 32 — 214 — — 214

44 — 269 — — 269

Vesting of restricted stock and performance stock units 1,678 — — — — —

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Stock-based compensation — — 11,920 — — 11,920

Net income — — — — 53,655 53,655

Net loss — — — — ( 19,500 ) ( 19,500 )

Currency translation adjustments — — — ( 9,419 ) — ( 9,419 )

Unrealized gain on marketable securities — — — 220 — 220

Balance at December 31, 2024 74,598 $ — $ 538,129 $ ( 24,360 ) $ ( 103,431 ) $ 410,338

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OPERATING ACTIVITIES:

Net income (loss) $ 53,655 $ ( 17,133 ) $ ( 22,998 )

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

Net (loss) income $ ( 19,500 ) $ 53,655 $ ( 17,133 )

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

Stock-based compensation 11,920 10,729 11,622

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Interest expense on finance leases 22 51 94

Loss on equity investment 1,700 — —

Deferred income taxes ( 657 ) 102 ( 1,651 )

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Purchases of short-term investments ( 53,244 ) ( 74,652 ) ( 22,873 )

Purchase of equity method investee ( 30,000 ) — —

Proceeds from maturities and redemptions of short-term investments 53,052 102,440 47,415

Acquisition of business, net of cash acquired ( 5,037 ) — —

Proceeds from sale of assets — — 121

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Proceeds from funding under government contract — 48,669 60,331

Other investing activities — — ( 18 )

Net cash provided by (used in) investing activities 66,154 21,085 ( 5,501 )

Net cash (used in) provided by investing activities ( 39,026 ) 66,154 21,085

FINANCING ACTIVITIES:

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As a result, all products and services reside under one reporting hierarchy.

The Company's product portfolio is broadly divided into diagnostics products and molecular sample management solutions.

The Company's business consists of the development, manufacture, marketing and sale of simple, diagnostic products and specimen collection devices designed to detect certain infectious diseases including COVID-19, HIV and Hepatitis C that are performed on a rapid basis at the point of care, and tests for drugs of abuse that are processed in a laboratory.

The Company's business also includes molecular sample management solutions and molecular services that are used by clinical laboratories, direct-to-consumer laboratories, researchers, pharmaceutical companies, and animal health service and product providers.

The Company's product portfolio is broadly divided into diagnostics products and sample management solutions.

The Company's business consists of the development, manufacture, marketing and sale of simple, easy to use specimen collection devices and diagnostic products designed to detect certain infectious diseases including COVID-19, HIV and Hepatitis C, and Syphilis that are performed on a rapid basis at the point of care.

The Company's business also includes sample management solutions and molecular services that are used by clinical laboratories, direct-to-consumer laboratories, researchers, pharmaceutical companies, and animal health service and product providers.

During 2024, the Company exited the molecular services business.

In October 2024, the Company announced the discontinuance of the sales of its risk assessment product line which is expected to be completed in the first half of 2025.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

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The consolidated financial statements include the accounts of OraSure Technologies, Inc.

(“OraSure”) and its wholly-owned subsidiaries, DNAG, Diversigen, and Novosanis.

(“OraSure”) and its wholly-owned subsidiaries, DNA Genotek, Inc.

("DNAG"), Diversigen, Inc.

("Diversigen"), Novosanis NV ("Novosanis"), and Sherlock Biosciences, Inc.

("Sherlock").

All intercompany transactions and balances have been eliminated.

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These estimates and underlying assumptions affect the amounts of assets and liabilities reported, disclosures about contingent assets and liabilities, and reported amounts of revenues and expenses.

Such estimates include the valuation of accounts receivable and inventories and assumptions utilized in impairment testing for property, plant and equipment, intangible assets and goodwill, as well as estimates related to taxes, contingent consideration, and performance-based compensation expense.

Such estimates include the fair value of assets acquired and liabilities assumed for business combinations, the valuation of accounts receivable and inventories and assumptions utilized in impairment testing for property, plant and equipment, intangible assets and goodwill, as well as estimates related to accruals, taxes, contingent consideration, and performance-based compensation expense.

These estimates and assumptions are based on management’s best estimates and judgment.

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Changes in those estimates resulting from continuing changes in the economic environment and other factors will be reflected in the financial statements in those future periods.

Employee Retention Credit

In December 2021, the Company applied for the Employee Retention Credit for payroll taxes paid in the first and second quarters of 2021 as provided by the Coronavirus Aid, Relief and Economic Security Act.

The amount due from the Internal Revenue Service of $ 5.7 million was recorded in other current assets in the Company's consolidated balance sheet as of December 31, 2022.

The amount was received in 2023.

The credit is reported in the Company's consolidated statement of operations for the year ended December 31, 2021 within cost of products and services sold, research and development, sales and marketing and general and administrative costs in the amounts of $ 2.5 million, $ 1.1 million, $ 0.9 million, and $ 1.2 million, respectively.

Supplemental Cash Flow Information

The Company received income tax refunds of $ 4.9 million in 2023, and paid income taxes of $ 9.4 million and $ 13.7 million in 2022 and 2021, respectively.

The Company paid income tax of $ 1.8 million in 2024, and received income tax refunds of $ 4.9 million in 2023 and paid income tax of $ 9.4 million in 2022.

The Company had account receivable write-offs of $ 0.5 million, $ 0.7 million, and $ 2.3 million in 2024, 2023, and 2022, respectively.

As of December 31, 2024, 2023 and 2022, the Company had accruals for purchases of property and equipment of $ 0.5 million, $ 0.2 million and $ 0.2 million, respectively.

The Company acquired Sherlock in exchange for contingent consideration of $ 22,910 for the year ended December 31, 2024 .

Cash Equivalents & Short-Term Investments

The Company considers all investments in debt securities to be available-for-sale securities.

These securities are comprised of guaranteed investment certificates and corporate bonds with purchased maturities greater than ninety days.

These securities consist of guaranteed investment certificates purchased with maturities greater than ninety days.

Securities with maturities ninety days or less are considered cash equivalents.

Available-for-sale securities are carried at fair value, based upon quoted market prices, with unrealized gains and losses, if any, reported in stockholders’ equity as a component of accumulated other comprehensive loss.

Available-for-sale securities are carried at fair value, based upon quoted market prices, with unrealized gain and losses, if any, reported in stockholders' equity as a component of other comprehensive loss.

The Company records an allowance for credit loss for the Company's available-for-sale securities when a decline in investment market value is due to credit-related factors.

When evaluating an investment for impairment, the Company reviews factors such as the severity of the impairment, changes in underlying credit ratings, forecasted recovery, the Company’s intent to sell or the likelihood that it would be required to sell the investment before its anticipated recovery in market value, and the probability that the scheduled cash payments will continue to be made.

The Company had no available-for-sale debt securities as of December 31, 2023.

The following is a summary of the Company's available-for-sale securities as of December 31, 2022:

Losses Fair Value

December 31, 2022

Guaranteed investment certificates $ 22,109 $ — $ — $ 22,109

Corporate bonds 4,978 — ( 220 ) 4,758

Total available-for-sale securities $ 27,087 $ — $ ( 220 ) $ 26,867

The Company had no available-for-sale securities as of December 31, 2024 and 2023.

The Company maintains cash balances in the United States in excess of the federally insured limits

Fair Value of Financial Instruments

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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).

The Company had no available-for-sale debt securities as of December 31, 2023.

All of the Company's available-for-sale debt securities as of December 31, 2022 are measured as Level 2 instruments.

The Company's guaranteed investment certificates are measured as Level 1 instruments as of December 31, 2022.

To the extent that valuation is based on models or inputs that are unobservable in the market, determining fair value requires more judgment.

Because of the inherent uncertainty of valuation, estimated values may be materially higher or lower than the values that would have been used had a ready market for the investments existed.

Therefore, the degree of judgment exercised in determining fair value is greatest for assets or liabilities categorized in Level 3.

Level 2024 2023

Guaranteed investment certificates 1 $ 66,584 $ 71,698

Contingent consideration 3 $ 22,910 $ —

Included in cash and cash equivalents at December 31, 2024 and 2023 was $ 66.6 million and $ 71.7 million, respectively, invested in guaranteed investment certificates.

Included in cash and cash equivalents at December 31, 2024 and 2023, was $ 118.5 million and $ 112.7 million, respectively, invested in government money market funds.

These funds have investments in United States government securities and are

measured as Level 1 instruments.

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

These funds have investments in U.S.

government securities and are measured as Level 1 instruments.

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

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Separate accounts are maintained for each participant to reflect the amounts deferred by the participant and all earnings and losses on those deferred amounts.

The assets of the plan are held in mutual funds.

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

The fair value of the plan assets as of December 31, 2024 and 2023 was $ 0.7 million and $ 0.8 million, respectively, 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.

All investments in the plan are classified as trading

securities and measured as Level 1 instruments.

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

Contingent consideration obligations are measured as Level 3 liabilities due to the unobservable inputs that are required to measure the fair value of these obligations.

The Company had no contingent consideration obligations outstanding as of December 31, 2023.

Contingent Consideration

As further discussed in Note 14, Business Combinations, the Company has identified its contingent consideration obligations as Level 3 liabilities due to significant inputs that are required to measure the fair value of these obligations.

The contingent consideration is comprised of two different tranches:

milestone payments and royalty payments.

The significant quantitative unobservable inputs for the milestone payments are the discount rate and probability achievement of a milestone of a regulatory approval.

The fair value methodology for royalty payments are based on a discounted cash flow model.

Significant quantitative unobservable inputs are internally developed future expected cash flows, discount rate and probability achievement of a milestone of a regulatory approval.

The royalty payments represent a mid-single digit percentage of the net sales through 2034 associated with the acquired in-process and research developed intangible asset.

There were no changes in fair value from date of acquisition to December 31, 2024.

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 sample management solutions to the Company's customers globally.

As of December 31, 2024, the Company had funded $ 30.0 million for its interest in Sapphiros.

The Company 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, which coincides with the availability of its financial information.

The investment in Sapphiros of $ 28.3 million as of December 31, 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, its equity method investee and its operations.

In conjunction with the preparation of the Company's December 31, 2024 financial statements, the Company considered whether the carrying value of the investment in Sapphiros was impaired and concluded that no such impairment existed.

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

Accounts Receivable

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This estimated allowance is based primarily on management’s evaluation of specific balances as they become past due, the financial condition of the Company's customers and the Company's historical experience related to write-offs.

2024 2023 2022

Accounts receivable $ 23,816 $ 40,171 $ 70,797

Allowance for doubtful accounts $ 774 $ 1,216 $ 2,365

Inventories are stated at the lower of cost or net realizable value, with cost determined on a first-in, first-out basis, and include the cost of raw materials, labor and overhead.

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Additions or improvements are capitalized, while repairs and maintenance are charged to expense.

Depreciation and amortization are provided using the straight-line method over the estimated useful lives of the related assets.

Buildings are typically depreciated over twenty years , while computer equipment and software, machinery and equipment, and furniture and fixtures are depreciated over two to ten years .

Building improvements are amortized over their estimated useful lives.

Depreciation and amortization are provided using the straight-line method over the estimated useful lives of the related assets as follows:

• buildings twenty years ;

• leasehold improvements, the lesser of the useful life of the improvement or the remaining life of the building or lease;

• computer equipment and software three years ;

• machinery and equipment five years ;

• furniture and fixtures seven years

When assets are sold, retired, or discarded, the related property amounts are relieved from the accounts, and any gain or loss is recorded in the consolidated statements of operations.

Intangible Assets

Intangible assets consist of customer relationships, patents and product rights, acquired technology and trade names.

Intangible assets consist of customer relationships, patents and product rights, acquired technology, in-process research and development technology and trade names.

Patents and product rights consist of costs associated with the acquisition of patents, licenses and product distribution rights.

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Long-lived assets, which include property, plant and equipment and definite-lived intangible assets, are tested for recoverability whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable.

The Company assesses the recoverability of the Company's long-lived assets by determining

whether the carrying value of such assets can be recovered through the sum of the undiscounted future cash flows generated from the use and eventual disposition of the asset.

The Company assesses the recoverability of the Company's long-lived assets by determining whether the carrying value of such assets can be recovered through the sum of the undiscounted future cash flows generated from the use and eventual disposition of the asset.

If indicators of impairment exist, the Company measures the amount of such impairment by comparing the carrying value of the assets to the fair value of the assets, which is generally determined based on the present value of the expected future cash flows associated with the use of the assets.

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

See Notes 5 and 6 for discussion of property, plant and equipment and intangible asset impairments, respectively, recorded for the year ended December 31, 2023.

Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired.

See Notes 5 and 6 for discussion of property, plant and equipment and intangible asset impairments, respectively, recorded for the years ended December 31, 2024 and 2023.

Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired in a business combination.

Goodwill is not amortized but rather is tested annually for impairment or more frequently if the Company believes that indicators of impairment exist.

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If the Company concludes that it is more likely than not that the carrying value of a reporting unit is greater than its fair value, then the Company would be required to recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value, provided the impairment charge does not exceed the total amount of goodwill allocated to the reporting unit.

The Company has historically performed an annual goodwill impairment assessment as of July 31.

On July 31, 2023, the Company performed a quantitative goodwill impairment test which concluded that the carrying value was below fair value indicating there was no impairment.

The Company historically performed an annual goodwill impairment assessment as of July 31.

During the three months ended December 31, 2023, the Company changed the date of its the annual impairment assessment to November 30, to better align with the Company's annual forecasting process.

As of November, 30, 2023, the Company performed a qualitative analysis that concluded it was more likely than not that the fair value of the Company's reporting units is greater than their carrying value.

On November 30, 2024, the Company performed a quantitative goodwill impairment test which concluded that the carrying value of the Company's goodwill was below its fair value indicating there was no impairment.

A more frequent evaluation is performed if an event occurs or circumstances change between annual tests that could more likely than not reduce the fair value of a reporting unit below its carrying amount.

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Other revenues consist primarily of royalty income and funding from grants of research and development efforts.

For the year ended December 31, 2021, other revenue also included cost reimbursements under a charitable support

agreement which ended in June 2021.

Royalties from licensees are based on third-party sales of licensed products and are recorded when the related third-party product sale occurs.

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Deferred revenue as of December 31, 2024 and 2023 included customer prepayments of $ 3.0 million and $ 1.2 million, respectively.

Deferred revenue as of December 31, 2023 and 2022 also included $ 0.4 million and $ 0.7 million, respectively, 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 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 was recognized at that average price.

The $ 0.4 million associated with the long-term contract at December 31, 2023 met the criteria to be recognized as revenue during the year ended December 31, 2024, and as such there was no equivalent balance remaining in deferred revenue at December 31, 2024.

Revenue recognized during the years ended December 31, 2024 and 2023 was $ 3.7 million and $ 2.6 million, respectively, which was included in the beginning period deferred revenue.

2024 2023 2022

Deferred revenue $ 2,961 $ 1,559 $ 2,273

Financing and payment .

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2024 2023 2022

$ 257,779 $ 243,325 $ 76,874

HIV $ 60,804 $ 60,823 $ 38,812

Molecular Sample Management Solutions (2)

Sample Management Solutions (1)

51,046 54,274 63,342

45,172 257,779 243,325

HCV 14,024 12,871 13,369

Risk Assessment Testing (3)

Molecular Services 4,474 7,296 11,840

8,354 9,736 10,269

Other product and services revenues (4)

3,506 2,265 1,634

Molecular Services 1,705 4,474 7,296

Net product and services revenues 184,611 402,222 378,047

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Net revenues $ 185,827 $ 405,472 $ 387,479

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

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

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

(1) Includes Genomics, Microbiome and Colli-Pee product revenues.

(2) Includes COVID-19 Diagnostics and COVID-19 Molecular Products revenues.

(3) Includes substance abuse testing product revenues.

(4) Includes Syphilis revenues.

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

Revenues by geographic area .

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United States $ 139,161 $ 361,660 $ 350,206

Africa 32,745 29,254 18,152

Europe 8,424 8,111 11,536

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$ 185,827 $ 405,472 $ 387,479

Customer and vendor concentrations.

The Company had one customer that accounted for more than 40 % of the Company's consolidated accounts receivable as of December 31, 2023 and 57 % as of December 31, 2022.

The same customer accounted for approximately 63 % of the Company's consolidated net revenues for the year ended December 31, 2023 and 58 % for the year ended December 31, 2022.

The Company had no customers that accounted for more than 10% of the Company's consolidated net revenues for the year ended December 31, 2021.

Customer concentrations.

The following table represents customer concentration risk:

For the Years Ended December 31,

Revenue Concentration

Non-commercial customer (1)

Accounts Receivable 2024 2023

Commercial customer 10 % N/A

Non-commercial customer (1)

(1) Same non-commercial customer.

Vendor concentrations.

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

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If, after considering all relevant positive and negative evidence, it is more likely than not that some portion or all of the net deferred tax assets will not be realized, the Company reduces its net deferred tax assets by a valuation allowance.

The realization of the net deferred tax

assets is dependent on several factors, including the generation of sufficient taxable income prior to the expiration of the Company's net operating loss carryforwards.

The realization of the net deferred tax assets is dependent on several factors, including the generation of sufficient taxable income prior to the expiration of the Company's net operating loss carryforwards.

Foreign Currency Translation

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Diluted earnings (loss) per share is computed in a manner similar to basic earnings (loss) per share except that the weighted-average number of shares outstanding is increased to include incremental shares from the assumed vesting or exercise of dilutive securities, such as common stock options, unvested restricted stock or performance stock units, unless the impact is anti-dilutive.

The number of incremental shares is calculated by assuming that outstanding stock options were exercised and unvested restricted shares and performance stock units were vested, and the proceeds from such exercises or vesting were used to acquire shares of common stock at the average market price during the reporting period.

during the reporting period.

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.

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Diluted $ ( 0.26 ) $ 0.72 $ ( 0.24 )

For the year ended December 31, 2023, outstanding common stock options, unvested restricted stock, and unvested performance stock units representing 1,778 shares were excluded from the computation of diluted earnings per share as their inclusion would have been anti-dilutive.

For the years ended December 31, 2022, and 2021 outstanding common stock options, unvested restricted stock, and unvested performance stock units representing 436 , and 769 shares, respectively, were excluded from the computation of diluted loss per share.

For the year ended December 31, 2024, outstanding common stock options, unvested restricted stock, and unvested performance stock units representing 896 shares were excluded from the computation of diluted loss per share.

For the year ended December 31, 2022, outstanding common stock options, unvested restricted stock, and unvested performance stock units representing 436 shares were excluded from the computation of diluted loss per share.

Accumulated Other Comprehensive Loss

The Company classifies items of other comprehensive income (loss) by their nature and discloses the accumulated balance of other comprehensive loss separately from accumulated deficit and additional paid-in capital in the stockholders’ equity section of the Company's consolidated balance sheets.

The Company classifies items of other comprehensive income (loss) by their nature and discloses the accumulated balance of other comprehensive income (loss) separately from accumulated deficit and additional paid-in capital in the stockholders’ equity section of the Company's consolidated balance sheets.

The Company has defined the Canadian dollar as the functional currency of the Company's Canadian subsidiary, DNAG, and the Company has defined the Euro as the functional currency of the Company's Belgian subsidiary, Novosanis.

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Changes in accumulated other comprehensive loss by component is listed below:

Foreign Currency Marketable Securities Total

Balance as of December 31, 2022 $ ( 18,215 ) $ ( 220 ) $ ( 18,435 )

Other comprehensive gain 3,274 220 3,494

Balance as of December 31, 2023 $ ( 14,941 ) $ — $ ( 14,941 )

Foreign Currency Total

Balance at December 31, 2023 $ ( 14,941 ) $ ( 14,941 )

Other comprehensive loss ( 9,419 ) ( 9,419 )

Balance at December 31, 2024 $ ( 24,360 ) $ ( 24,360 )

Recent Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (“ASU”) No.

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

2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40), Disaggregation of Income Statement Expenses .

The purpose of this update was to require disclosure, in the notes to financial statements, of specified information about certain costs and expenses on a disaggregated basis.

The amendments in the ASU are effective for all public business entities for annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027, with early adoption permitted.

The amendments are to be applied either prospectively to financial statements issued for reporting periods after the effective date of the update or retrospectively to any or all prior periods presented in the financial statements.

Management is evaluating the impact on the Company's consolidated financial statements.

In March 2024, the FASB issued ASU No.

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.

For public business entities, the amendments in this ASU are effective for fiscal years

beginning after December 15, 2024, and interim periods within those fiscal periods.

The amendments may be applied prospectively or retrospectively, and early adoption is permitted.

Management is evaluating the impact on the Company's consolidated financial statements.

In November 2023, the FASB issued ASU No.

2023-07, Segment Reporting (Topic 280), Improvements to Reportable Segment Disclosures .

The purpose of the update was to improve financial reporting by requiring disclosures of incremental segment information on an annual and interim basis for all public entities to enable investors to develop more decision-useful financial analyses.

The amendments in this ASU are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted and requires retrospective application to all periods presented in the consolidated financial statements.

Management is evaluating the impact on the Company's consolidated financial statements.

The amendments in this ASU are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted and require retrospective application to all periods presented in the consolidated financial statements.

The Company has adopted the amendments for the year ended December 31, 2024.

In December 2023, the FASB issued ASU No.

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GOVERNMENT CAPITAL CONTRACTS:

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

In accordance with the agreement, funding was paid to the Company based on achievement of milestones for the design, acquisition, installation, qualification and acceptance of the manufacturing equipment, as set forth in the agreement.

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.

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.

The Company began making payments to vendors for the capital project during the fourth quarter of 2021.

The Company began receiving funds from the DOD in January 2022 and has received $ 109.0 million as of December 31, 2023.

The Company began receiving funds from the DOD in January 2022 and received $ 109.0 million as of December 31, 2023.

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

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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 $ 2.8 million, $ 2.2 million and

$ 0.6 million of such income, which is reported as other income in the Company's consolidated statement of operations for the years ended December 31, 2023, 2022 and 2021, respectively.

Additionally, in connection with the completion of the contract, the Company recognized $ 12.8 million in excess of the guaranteed profit in other income in the Company's consolidated statement of operations for the year ended December 31, 2023, which reflects the difference in overall spend compared to the firm fixed price contract amount of $ 109.0 million.

The Company recognized no such income during the year ended December 31, 2024.

The Company recognized $ 2.8 million and $ 2.2 million of such income during the years ended December 31, 2023 and 2022, respectively .

Additionally, in connection with the completion of the contract, the Company recognized $ 12.8 million in excess of the guaranteed profit in other income in the Company's consolidated statement of operations during the year ended December 31, 2023, which reflects the difference in overall spend compared to the firm fixed price contract amount of $ 109.0 million.

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.

For the years ended December 31, 2023 and 2022, $ 2.0 million and $ 1.4 million was recorded in research and development expenses and other income, respectively.

Additionally, during 2021, the Company received $ 0.5 million in funding from the Commonwealth of Pennsylvania, acting through the Department of Community and Economic Development, for the purchase of machinery and equipment as part of an expansion of manufacturing operations in Pennsylvania.

All related purchases were completed in 2021.

The balances corresponding to government contracts included in the Company's consolidated balance sheet are as follows:

Other current assets:

Billed receivables $ —

Unbilled receivables 27,013

Total other current assets 27,013

Other noncurrent assets —

Accrued expenses and other current liabilities $ ( 318 )

recognized no such costs during the year ended December 31, 2024.

The Company recognized $ 2.0 million and $ 1.4 million of such costs during the years ended December 31, 2023 and 2022, respectively.

The activity corresponding to the government contracts included in the Company's consolidated statements of cash flows is as follows:

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During the years ended December 31, 2024, 2023, and 2022, the Company recorded adjustments to inventory which had a cost of $ 2.6 million, $ 8.9 million, and $ 15.6 million, respectively.

The adjustments in 2021 included a write-off of $ 3.0 million of COVID-19 antibody inventory, which the Company did not believe it could sell as a result of the decision to no longer pursue an emergency use authorization for the enzyme-linked immunosorbent assay ("ELISA") antibody test.

Additionally, a significant portion of the Company's 2022 and 2021 adjustments were related to production and tech-transfer issues associated with the Company's COVID-19 rapid test.

The year ended December 31, 2023 adjustments were primarily related to reduction in COVID-19 demand and the need to reserve for excess inventory levels.

Adjustments for the year ended December 31, 2024 were primarily driven by the write down of inventory based on an estimated amount of inventory that may not be sold as the Company exits the Risk Assessment Testing business and normal operating scrap.

Adjustments for the year ended December 31, 2023 were primarily related to reduction in COVID-19 demand and the need to reserve for excess inventory levels.

Additionally, a significant portion of the Company's 2022 adjustments were related to production and tech-transfer issues associated with the Company's COVID-19 rapid test.

PROPERTY, PLANT AND EQUIPMENT:

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$ 45,105 $ 45,420

During the year ended December 31, 2023, the Company determined several manufacturing lines would not be utilized due to changes in forecasted demand for the products the lines are intended to produce.

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

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

All of these assets were disposed of as of December 31, 2024.

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 year ended December 31, 2024.

During the year ended December 31, 2023 the Company determined several manufacturing lines would not utilized due to changes in forecasted demand for the products the lines are 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 are not recoverable and recorded aggregate pre-tax asset impairment charges of $ 2.3 million for the year ended December 31, 2023.

As a result of these decisions, the Company determined that the carrying values of the equipment and leasehold improvements were not recoverable and recorded aggregate pre-tax asset impairment charges of $ 2.3 million for the year ended December 31, 2023.

During the year ended December 31, 2022, the Company determined several manufacturing lines and associated supporting assets would not be utilized due to changes in forecasted demand for the products the lines are intended to produce.

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

During the second quarter of 2023, the Company shortened the useful lives of machinery and equipment utilized for InteliSwab® production in Thailand.

This reduction in useful lives resulted in $ 6.9 million of accelerated depreciation during the second quarter of 2023, recorded in cost of products and services sold.

During the fourth quarter of 2023, the Company shortened the useful lives of leasehold improvements and equipment due a lease termination.

This reduction in useful lives resulted in $ 0.5 million of accelerated depreciation during the fourth quarter of 2023, recorded in cost of products and services sold.

During the year ended December 31, 2023, the Company shortened the useful lives of machinery and equipment utilized for InteliSwab® production in Thailand.

This reduction in useful lives resulted in $ 6.9 million of accelerated depreciation during 2023, recorded in cost of products and services sold.

Also during 2023, the Company shortened the useful lives of leasehold improvements and equipment due a lease termination.

This reduction in useful lives resulted in an additional $ 0.5 million of accelerated depreciation recorded in cost of products and services sold.

Depreciation expense for 2024, 2023, and 2022 was $ 9.8 million, $ 17.9 million, and $ 11.7 million, respectively.

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Changes in goodwill are as follows:

Collection Device Reporting Unit 2024 2023

Balance as of January 1 $ 35,696 $ 35,104

Impairment — ( 3,604 )

Change related to foreign currency translation ( 1,754 ) 592

Balance as of December 31 33,942 35,696

On July 31, 2023, the Company performed a quantitative goodwill impairment test which concluded that the carrying value of its reporting units were below fair value indicating there was no impairment.

The Company performed a quantitative goodwill impairment test due to the depressed market price of the Company's common stock and concluded no impairment of goodwill.

During the second quarter of 2022, the Company determined that a triggering event occurred in relation to the depressed market price of the Company's common stock and corresponding decline in the Company's market capitalization.

result, the Company performed an interim quantitative goodwill impairment test and concluded that the carrying value of the Company's Diagnostics reporting unit exceeded its estimated fair value and the goodwill balance for that segment was fully impaired.

Diagnostics Reporting Unit

Balance as of January 1 — —

Acquisition 6,388 —

Balance as of December 31 6,388 —

$ 40,330 $ 35,696

On November 30, 2024, the Company performed its quantitative annual goodwill impairment test.

The Company utilizes a combination of the income approach and market approach in determining the fair value of its two reporting units.

The test concluded that the carrying value of the Company's reporting units was below fair value indicating there was no impairment of goodwill.

During 2022, the Company determined that a triggering event occurred in relation to the depressed market price of the Company's common stock and corresponding decline in the Company's market capitalization.

As a result, the Company performed an interim quantitative goodwill impairment test and concluded that the carrying value of the Company's Diagnostics reporting unit exceeded its estimated fair value and the goodwill balance for that segment was fully impaired.

The Company recognized a pre-tax impairment charge of $ 3.6 million during the year ended December 31, 2022, which is reported in loss on impairments in the Company's consolidated statement of operations.

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Period (Years) Gross Accumulated Amortization Net

Definite Life Intangible Assets

Customer relationships 10 $ 10,858 $ ( 10,858 ) $ —

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32,848 ( 32,413 ) 435

Indefinite Life Intangible Assets

IPR&D technology (Note 14) N/A 17,000 — 17,000

$ 49,848 ( 32,413 ) 17,435

December 31, 2023

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Amortization Net

Definite Life Intangible Assets

Customer relationships 10 $ 11,629 $ ( 11,629 ) $ —

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$ 34,854 $ ( 33,649 ) $ 1,206

During the third quarter of 2023, the Company identified a triggering event to test for the recoverability of intangible assets given the decline in the Company's market capitalization leading up to and as of its annual goodwill impairment testing date.

During 2023, the Company identified a triggering event to test for the recoverability of intangible assets given the decline in the Company's market capitalization leading up to and as of its annual goodwill impairment testing date.

The Company performed an undiscounted cash flow analysis and determined the carrying value of the developed technology, trade names, and customer relationships intangible assets could not be recovered through the sum of the undiscounted future cash flows.

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The Company recognized a pre-tax impairment charge of $ 6.2 million during the year ended December 31, 2023 which is reported in loss on impairments in the Company's consolidated statement of operations.

During the fourth quarter of 2023, the Company determined that its remaining developed technology intangible asset was fully impaired.

Also in 2023, the Company determined that its remaining developed technology intangible asset was fully impaired.

As a result of failed stability studies, the Company decided to no longer pursue the technology.

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TERMINATION BENEFITS:

2023 Reduction in Workforce

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 .

The expense included in the Company's consolidated statements of operations are as follows:

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 Year Ended December 31,

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General and administrative 787

Total $ 3,265

As of December 31, 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 year ended December 31, 2024.

This reduction in workforce was completed by June 30, 2024.

Q1 2024 Reduction in Workforce

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 statement of operations are as follows (in thousands):

For the Year Ended December 31,

Cost of products and services sold $ 231

Research and development 87

Sales and marketing 69

General and administrative 17

As of December 31, 2024, the Company had fully paid the $ 0.4 million related to the reduction in workforce.

This reduction in workforce was 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 bringing 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 Year Ended December 31,

Cost of products and services sold $ 889

Research and development 478

Sales and marketing 125

General and administrative 160

As of December 31, 2024 the Company had $ 0.5 million accrued and had paid $ 1.2 million related to the reduction in workforce.

The Company expects this reduction in workforce to be completed by September 2025.

Q3 2024 Reduction in Workforce

During the third quarter of 2024, the Company executed a reduction in workforce largely as the Company notified certain employees of its intention to discontinue its risk assessment business.

Additional employees were notified in the fourth quarter of 2024.

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 Year Ended December 31,

Cost of products and services sold $ 246

Research and development 33

Sales and marketing 782

General and administrative 141

As of December 31, 2024 the Company had $ 1.1 million accrued and had paid $ 0.1 million related to the reduction in workforce.

The Company expects this reduction in workforce to be completed by January 2026.

The Company determines whether an arrangement is a lease at inception.

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As of December 31, 2024, the Company is the lessee in all lease agreements.

The Company's leases have remaining lease terms of 1 to 10 years, some of which include options to extend the leases based on agreed upon terms, and some of which include options to terminate the leases within 1 year.

The Company's leases have remaining lease terms of one to ten years , some of which include options to extend the leases based on agreed upon terms, and some of which include options to terminate the leases within one year .

The Company presents the operating right-of-use asset amortization and the change in operating lease liabilities on the other non-cash amortization line item of the consolidated statements of cash flows.

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For these agreements, the Company accounts for lease components separately from non-lease components.

During the first quarter of 2024, the Company identified a triggering event to test for the recoverability of all the 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 ROU assets could not be recovered through the sum of the undiscounted future cash flows and were impaired.

During the year ended December 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.

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

The components of lease expense are as follows:

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For the years ended December 31, 2024, 2023, and 2022 the Company recorded net foreign income tax expense of $ 1.4 million, $ 0.7 million, and $ 0.5 million, respectively.

The Company's 2022 foreign income tax expense includes $ 1.7 million of Canadian withholding taxes paid on the repatriation of Canadian earnings offset by a foreign income tax benefit of $ 1.2 million associated with the Company's Canadian subsidiary.

The Company's 2022 foreign income tax expense included $ 1.7 million of Canadian withholding taxes paid on the repatriation of Canadian earnings offset by a foreign income tax benefit of $ 1.2 million associated with the Company's Canadian subsidiary.

For the years ended December 31, 2024, 2023, and 2022 the Company recorded U.S.

state tax expense of $ 1.9 million, $ 1.0 million, and $ 0.2 million respectively.

federal tax expense of $ 0.2 million and state tax expense of $ 0.1 million, $ 1.9 million, and $ 1.0 million respectively.

The reconciliation of the statutory United States federal income tax rate to the Company's effective tax rate is as follows:

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Nondeductible expenses and other ( 2.4 ) 0.9 8.7

Nondeductible transaction costs ( 2.1 ) — —

NOL adjustment, foreign ( 31.4 ) — —

Non-controlling interests 2.2 — —

Change in valuation allowance, federal and state ( 10.0 ) — —

Change in valuation allowance, foreign 32.1 ( 20.4 ) ( 25.0 )

Effective tax rate ( 11.2 ) % 4.6 % ( 9.3 ) %

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Valuation allowance ( 75,191 ) ( 41,668 )

Net deferred tax liability $ ( 554 ) $ ( 408 )

Net deferred tax asset (liability) $ 156 $ ( 554 )

In assessing the realizability of the Company's deferred tax asset, the Company considers all relevant positive and negative evidence in determining whether it is more likely than not that some portion or all of the deferred income tax assets will not be realized.

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In 2008, the Company established a full valuation allowance against the Company's U.S.

deferred tax asset, and although the Company has achieved another year of U.S.

deferred tax asset, and although the Company has achieved cumulative of U.S.

pre-tax earnings based on a rolling three year window the Company has not achieved a level of sustained profitability that would, in the Company's judgement, support the release of the valuation allowance.

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federal income tax benefit was recorded for the years ended December 31, 2024, 2023, and 2022.

The Company's federal NOL carryforwards of $ 100.0 million have no expiration date.

The Company's federal NOL carryforwards consist of $ 108.6 million from existing business along with $ 71.5 million of acquired NOL carryforwards.

None of these NOL carryforwards have an expiration date.

The Company's foreign NOL carryforwards consist of $ 63.0 million of acquired NOL carryforwards.

These foreign NOL carryforwards do not have an expiration date.

The Company's state NOL carryforwards consist of $ 33.9 million from existing business along with $ 4.0 million of acquired NOL carryforwards.

The state NOL carryforwards have expirations as follows:

Year of Expiration NOLs

2026 - 2040 $ 14,122

2041 - 2046 13,442

Non-Expiring 10,294

The Tax Reform Act of 1986 contains provisions under Internal Revenue Code (“IRC”) Section 382 that limit the annual amount of federal and state NOL carryforwards that can be used in any given year in the event a significant change in ownership.

The Company does not believe that there is a Section 382 limitation that will impair the Company's future ability to utilize NOLs to offset the Company's future taxable income.

The Company continues to review ownership

changes on an annual basis and the Company does not believe it has had a subsequent ownership change that would impact the NOLs.

The Company continues to review ownership changes on an annual basis and the Company does not believe it has had a subsequent ownership change that would impact the NOLs.

The Company acquired 382 limited NOL carryforwards as part of its acquisition of Sherlock.

These NOL carryforwards have no expiration date.

In January 2022, approximately $ 65.0 million was repatriated from the Company's Canadian subsidiary as a one-time event.

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Interest and penalties were immaterial in 2024, 2023, and 2022.

As a result of the Company's net operating loss carryforward position, the Company is subject to audit by the Internal Revenue Service since the Company's inception, as well as by several jurisdictions for the years ended September 30, 1998 through December 31, 2023.

As a result of the Company's NOL carryforward position, the Company has been subject to audit by the Internal Revenue Service since the Company's inception, as well as by several jurisdictions for the years ended September 30, 1998 through December 31, 2024.

The reconciliation of the Company's unrecognized tax benefits is as follows:

2024 2023 2022

Balance as of January 1 $ 373 $ 805 $ 1,172

Balance at January 1 $ 304 $ 373 $ 805

Additions for tax positions of prior periods 29 — 1

Reductions for tax positions of prior periods — ( 69 ) ( 433 )

Balance as of December 31 $ 304 $ 373 $ 805

Balance at December 31 $ 333 $ 304 $ 373

STOCKHOLDERS’ EQUITY:

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As of December 31, 2024, 5,412 shares were available for future grants under the Stock Plan.

Under the terms of the Stock Plan, nonqualified stock options may be granted to eligible employees, including the Company's officers at a price not less than 75 percent of the fair market value of a share of common stock on the date of grant.

The option term and vesting schedule of such awards may be either unlimited or have a specified period in which to vest and be exercised.

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$ 21.64 - $ 32.46

48 2.78 $ 21.65 47 $ 21.65

2,237 6.33 $ 8.73 1,389 $ 9.79

The Stock Plan also permits the Company to grant restricted shares and restricted units of the Company's common stock to eligible employees, including officers, and the Company's outside directors.

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The market value of these shares and units at the date of grant is recognized on a straight-line basis over the period during which the vesting restrictions lapse.

Compensation cost of $ 7.6

million, $ 9.2 million and $ 4.1 million related to restricted shares was recognized during the years ended December 31, 2023, 2022, and 2021, respectively.

Compensation cost of $ 6.9 million, $ 7.6 million and $ 9.2 million related to restricted shares was recognized during the years ended December 31, 2024, 2023, and 2022, respectively.

The following table summarizes restricted stock award and restricted stock units activity under the Stock Plan:

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On August 5, 2008, the Company's Board of Directors approved a share repurchase program pursuant to which the Company is permitted to acquire up to $ 25.0 million of the Company's outstanding common shares.

No shares were purchased and retired in 2023, 2022, and 2021.

No shares were purchased and retired during the years ended December 31, 2024, 2023, and 2022.

TRANSITION COSTS

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BUSINESS SEGMENT INFORMATION:

The Company is organized on the basis of products and services under a new organizational structure.

The Company is organized on the basis of products and services into a single reportable segment.

All products and services reside under the same reporting hierarchy.

Historically, there was separate management leading the Company's Diagnostics and Molecular Solutions businesses.

In February 2023, the Company announced a corporate restructuring to combine the commercial and innovation teams across the Diagnostics and Molecular Solutions segments into one operating segment with sales, marketing, product development and research teams covering all product lines and reporting to a Chief Product Officer.

Resources are allocated and performance is assessed on a consolidated basis by the Company's Chief Executive Officer, whom the Company has determined to be its Chief Operating Decision Maker ("CODM").

The CODM reviews the business based on individual product success.

Therefore, the Company's historical reportable segments - Diagnostics and Molecular Solutions - are considered one reportable segment and there is no longer is a distinction between Diagnostics and Molecular Solutions, only the Company holistically.

In February 2023, the Company announced a corporate restructuring to combine the commercial and innovation teams across the Diagnostics and Molecular Solutions businesses into one operating segment with sales, marketing, product development and research teams covering all product lines and reporting to a Chief Product Officer ("CPO").

The Company's reportable segment derives its revenues from the sale of diagnostics products and sample management solutions, as described in Note 2 Summary of Significant Accounting Policies.

As the Company has only one reportable segment, there are no inter-segment sales or transfers.

The Company's Chief Operating Decision Maker ("CODM") is its Chief Executive Officer.

The CODM uses consolidated net income (loss) as reported in the consolidated statement of operations as the primary measure of the reportable segment's profit or loss.

The CODM uses consolidated net income (loss) to assess the performance of the segment and make decisions about resource allocation.

Consolidated gross profit and consolidated operating income (loss), as reported in the consolidated statement of operations, are also used by the CODM as measures of segment profit or loss.

The CODM uses gross profit to assess the impact of the Company's efforts to achieve manufacturing efficiencies and consolidate its production activities.

The CODM uses operating income (loss) to assess the impact of the Company's recent restructurings, reduction in workforce, and efforts to streamline its operations to achieve cost savings.

The CODM uses consolidated total assets as the measure of segment assets, as reported on the consolidated balance sheet.

The accounting policies of the Company's reportable segment are the same as those described in Note 2 Summary of Significant Accounting Policies.

The following table represents total long-lived assets by geographic area:

United States $ 40,286 $ 48,311

United Kingdom 12,849 —

Canada 5,468 8,777

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$ 58,692 $ 58,266

The following table represents reported segment revenues, segment profit (loss), and significant segment expenses:

For the Years Ended December 31,

2024 2023 2022

Net revenues $ 185,827 $ 405,472 387,479

Cost of products and services sold (3)

106,437 233,820 239,041

Gross profit 79,390 171,652 148,438

Research and development (3)

26,047 33,728 36,237

Sales and marketing (3)

30,986 36,319 49,238

General and administrative (3)

46,215 58,191 68,206

Loss on impairments 4,392 10,829 17,101

Change in the estimated fair value of acquisition-related contingent consideration — ( 99 ) ( 188 )

Operating (loss) income ( 28,250 ) 32,684 ( 22,156 )

Other (expense) income (1)

( 380 ) 17,836 3,453

Interest revenue 11,469 5,862 1,569

Other segment items (2)

1,160 ( 124 ) 1,459

(Loss) income before income taxes ( 16,001 ) 56,258 ( 15,675 )

Income tax expense 1,799 2,603 1,458

Loss on equity investment ( 1,700 ) — —

Net (loss) income $ ( 19,500 ) $ 53,655 $ ( 17,133 )

(1) Includes $ 12.8 million of excess profits recognized on government contracts in 2023.

(2) Includes interest expense and foreign currency gains (losses).

(3) The following tables represent additional significant segment expense categories:

For the Years Ended December 31,

2024 2023 2022

Stock-based Compensation

Cost of products and services sold $ 734 $ 564 $ 334

Research and development 839 1,159 1,128

Sales and marketing 1,129 1,181 1,702

General and administrative 9,219 7,826 8,458

$ 11,920 $ 10,729 $ 11,622

For the Years Ended December 31,

2024 2023 2022

Depreciation and Amortization

Cost of products and services sold $ 6,343 $ 15,311 $ 9,230

Research and development 1,029 1,208 1,098

Sales and marketing 189 571 630

General and administrative 3,311 3,846 4,350

$ 10,872 $ 20,936 $ 15,308

BUSINESS COMBINATIONS:

Sherlock Biosciences

On December 19, 2024, the Company acquired all of the outstanding stock of Sherlock, pursuant to the terms of a merger agreement (the "Merger Agreement").

The Company began operating this entity as of the December 19, 2024 closing date.

The primary reason for the acquisition is Sherlock's first test for Chlamydia Trachomatis (CT) and Neisseria Gonorrhoeae (NG) is in clinical studies and is expected to be submitted to the FDA for approval by the end of 2025.

Subject to regulatory approvals, this test is expected to expand the Company's portfolio for rapid diagnostics for sexually transmitted infections.

The initial aggregate purchase price of this transaction was funded with cash on had as shown below:

Milestone contingent consideration $ 15,910

Royalty based contingent consideration 7,000

Cash paid to Sherlock 5,000

Legal expenses 389

Insurance policy expense 50

Initial aggregate purchase price $ 28,349

Pursuant to the Merger Agreement, the Company agreed to pay up to $ 20.0 million of contingent consideration based on the achievement of a regulatory milestone on or before December 31, 2026 as defined in the Merger Agreement.

The fair value of this milestone metric contingent consideration was $ 15.9 million.

The range of outcome for the milestone contingent consideration is $ 0.0 million to $ 20.0 million.

Also, there is a mid-single digits quarterly royalty fee based on future sales until 2034 as defined in the Merger Agreement, which was fair valued as part of contingent consideration.

The estimated acquisition-date fair value of the royalty fee acquisition-related contingent consideration was $ 7.0 million.

The range of outcome for the royalty payment cannot be determined due to the fact its based on future sales associated with the acquired in-process research and development technology through 2034 and thus does not have an upper limit.

During the year ended December 31, 2024, the Company incurred a total of $ 1.0 million of acquisition related costs, including accounting, legal, and other professional fees, all of which were expensed and reported as a component of general and administrative expenses in the consolidated statement of operations for the year ended December 31, 2024.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed as of the acquisition date:

Assets Acquired

Other current assets $ 2,570

Property, plant, and equipment, net 9,244

Other noncurrent assets 462

Operating right-of-use assets 4,080

In-process research and development technology intangible asset 17,000

Goodwill 6,382

Total assets acquired 39,738

Liabilities Assumed

Accounts payable 2,449

Current liabilities 3,621

Deferred revenue 1,641

Operating lease liability 4,080

Total liabilities assumed 11,791

Net Assets Acquired 27,947

Estimated fair value of contingent consideration ( 22,910 )

Net Cash Paid (net of cash acquired of $ 402 )

The purchase price was allocated to the tangible assets and identifiable intangible assets acquired and liabilities assumed based on their acquisition-date estimate fair values.

The identifiable intangible assets included in-process research and development technology ("IPR&D Technology"), which is an indefinite lived asset.

The Company, with the assistance of an independent valuation specialist, assessed the fair value of the assets and contingent consideration of Sherlock.

The income approach was used to value the acquired intangibles and the fair value measurements were primarily based on significant inputs that are not observable in the market and are considered Level 3 fair value measurements.

The income approach estimates fair value for an asset based on the present value of cash flows projected to be generated by the asset.

Projected cash flows are discounted at a required rate of return that reflects the relative risk of achieving the cash flows and the time value of money.

The regulatory milestone scenario based model was used to value the assumed milestone contingent consideration, were primarily based on significant unobservable inputs and are considered Level 3 fair value measurements.

The regulatory milestone scenario based model estimates fair value for contingent consideration based on the probability of on the achievement of a certain milestone as defined under the agreements and the discount rate.

The fair value of contingent payments approach was used to value the royalty based contingent consideration, were primarily based on significant unobservable inputs and are considered Level 3 fair value measurements.

The fair value of contingent payments approach were primarily based on projected cash flows, probability of on the achievement of a regulatory milestone as defined under the agreements, and discount rate.

Goodwill is calculated as the difference between the acquisition date fair value of the consideration transferred and the fair value of the net assets acquired, and represents the future economic benefits that we expect to achieve as a result of the acquisition.

The Company believes the goodwill related to the acquisition was a result of Sherlock providing a product offering that will enable the Company to leverage those products with existing and new customers.

The goodwill is not deductible for income tax purposes.

The Company continues to evaluate the fair value of certain assets acquired and liabilities assumed.

Additional information, which existed as of the acquisition date, but was at that time unknown to the Company, may become known during the remainder of the measurement period.

Changes to amounts recorded as a result of the final determination may

result in a corresponding adjustment to these assets and liabilities, including goodwill.

The determination of the estimated fair values of all assets acquired is expected to be completed within one year from the date of acquisition.

Revenues from Sherlock primarily consist of grant revenues for research and development purposes.

Effective as of December 19, 2024, the financial results of Sherlock are included in the consolidated financial results of the Company.

For the year ended December 31, 2024, consolidated net revenues include revenues associated with Sherlock of $ 78.0 thousand and consolidated results from operations include a net loss of $ 255.4 thousand generated since the acquisition date.

Unaudited Pro Forma Financial Information

The unaudited pro forma results presented below include the results of the Sherlock acquisition as if it had been consummated as of January 1, 2023.

The unaudited pro forma results include, depreciation of the acquired property plant and equipment and the estimated tax effect of adjustments to income before income taxes but do not include changes in the fair value of the Company's contingent consideration obligations.

Material nonrecurring charges, directly attributable to the transactions, including direct acquisition costs, are also excluded.

In addition, the unaudited pro forma results do not include any expected benefits of the acquisitions.

Accordingly, the unaudited pro forma results are not necessarily indicative of either future results of operations or results that might have been achieved had the acquisitions been consummated as of January 1, 2023.

For the Years Ended December 31,

Net revenues $ 188,126 $ 406,381

Net income (loss) $ ( 41,459 ) $ 7,992

COMMITMENTS AND CONTINGENCIES:

Purchase Commitments

As of December 31, 2023, the Company had manufacturing agreements with certain third party vendors, in which minimum purchase commitments are required.

If the minimum commitments are not achieved, the Company will be required to make annual penalty payments over the next three years .

As of December 31, 2024, the Company had a manufacturing agreement with a third party vendor requiring a minimum purchase commitment.

If the minimum commitment is not achieved, the Company will be required to make annual penalty payments over the next year.

Based on current forecasts, these penalties aggregate to approximately $ 0.3 million and are accrued for in the consolidated balance sheet.

These estimated penalties can fluctuate based on changes in forecasted demand.

The table below represents an estimate of future purchases under those agreements.

The table below represents an estimate of future purchases under the agreement (in thousands):

Collaborations

Sherlock has an active third-party license agreement entered into in order to advance and obtain technologies and services related to the business.

Under this license, the Company is required to make up to $ 2.3 million of cash payments upon the achievement of certain scientific and commercial milestones as well as low single digit royalty payments on product sales.

No milestone payments have been made as of December 31, 2024.

The Company has the right to terminate the license for any reason.

Unless otherwise terminated, the license terminates upon the expiration of the last to expire valid claim.

From time to time, the Company is involved in certain legal actions arising in the ordinary course of business.

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Spectrum Patent Litigation

In June 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.

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 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.

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.

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

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.

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Spectrum did not appeal the District Court's denial of its motion to amend.

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

On February 14, 2025, the Court of Appeal affirmed the District Court’s judgment.

The Company is considering its appellate options.

On February 7, 2024, the PTO issued a Final Written Decision regarding the second patent in the litigation, holding that claims 1, 3–8, 11, and 12 of U.S.

11,002,646 B2 are unpatentable.

The Company is considering its appellate options.

On March 8, 2024, the Company filed a Request for Rehearing by the Director of the PTO of the Final Written Decision.

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

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.

The Company filed a preliminary patent owner response on December 28, 2023.

That petition remains pending.

On March 26, 2024, the PTO issued a Decision Granting Institution of Inter Partes Review.

On July 2, 2024, the Company filed a Motion to Amend the claims of the third patent and oral argument in this IPR took place on January 24, 2025.

On February 19, 2025, the PTO issued a Final Written Decision regarding the third patent in the litigation, granting the Company's Motion to Amend as to cancelling the original claims,

but denying the Company's Motion to Amend as to adding proposed substitute claims.

The Company is considering its appellate options.

NowDiagnostics Litigation

On November 14, 2024 the Company filed a complaint against NowDiagnostics, Inc.

("NowDx"), Jody Berry ("Berry") and Janean Young ("Young") in the United States District Court for the Eastern District of Pennsylvania alleging misappropriation and misuse of the Company's proprietary information and trade secrets by NowDx, Berry and Young in violation of the Federal Defend Trade Secrets Act and the Pennsylvania Uniform Trade Secrets Act.

The complaint also alleges breach of contract and duty of loyalty by Young, unfair competition by NowDx, and tortious interference with contractual relations by Berry and NowDx.

NowDx filed Counterclaims against the Company on January 13, 2025 and the Company filed its Answer to the Counterclaims on February 3, 2025.

Young filed a Motion to Dismiss the claims against her, which was denied by the court on February 4, 2025.

NowDx, Berry, and Young agreed to a preliminary injunction which the Court entered on February 27, 2025.

RETIREMENT PLANS:

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Participants in the plan may not purchase OraSure stock as an investment vehicle.

As of December 31, 2023 and 2022, the value of the assets associated with this plan was $ 0.8 million and $ 0.7 million, respectively, and is included in current assets and other assets in the Company's consolidated balance sheets.

The Company's obligation related to the deferred compensation plan is included in accrued expenses and other liabilities in the Company's consolidated balance sheets.

As of December 31, 2024 and 2023, the value of the assets associated with this plan was $ 0.7 million and $ 0.8 million, respectively, and is included in other current assets and other noncurrent assets in the Company's consolidated balance sheets.

The Company's obligation related to the deferred compensation plan is included in accrued expenses and other noncurrent liabilities in the Company's consolidated balance sheets.

As of December 31, 2024 and 2023, the Company's total obligation under this plan was $ 0.7 million and $ 0.8 million, respectively.

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The Company contributed $ 0.4 million, $ 0.4 million and $ 0.5 million to the RRSP in 2024, 2023, and 2022, respectively.

SUBSEQUENT EVENTS:

In January 2024, the Company announced that it is leading the Series B financing and has entered wide-ranging strategic distribution agreements with Sapphiros, a privately held consumer diagnostics portfolio company based in Boston, and certain of its related entities.

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

On January 2, 2024 and on February 13, 2024, the Company invested $ 10.0 million and $ 18.3 million, respectively in Sapphiros for a minority interest, which will be accounted for using the cost basis of accounting.

There are future investment commitments of $ 1.7 million to be paid by June 2024, contingent on certain terms and conditions being met.

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 9A. Controls and Procedures