What changed in this filing

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Item 1. Financial Statements

2025-05-07 compared with 2024-11-06 · 279 added, 220 removed, 268 unchanged (65% of the section changed)

4 unchanged sentences

(in thousands, except per share amounts)

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

Current Assets:

9 unchanged sentences

43,164 45,105

Operating right-of-use assets, net 9,904 12,270

Finance right-of-use assets, net 157 576

Operating right-of-use assets 12,998 13,442

Finance right-of-use assets 132 145

Intangible assets, net of accumulated amortization of $ 25,990 and $ 32,413

17,307 17,435

Goodwill 40,449 40,330

Investment in equity method investee 27,776 28,300

Deferred tax asset 540 156

Other noncurrent assets 1,460 1,526

12 unchanged sentences

Operating lease liability 11,968 12,321

Acquisition-related contingent consideration obligation 23,388 22,910

Other noncurrent liabilities 445 494

Deferred income taxes 671 554

Total noncurrent liabilities 35,903 35,838

14 unchanged sentences

(in thousands, except per share amounts)

For the Three Months Ended September 30, For the Nine Months Ended September 30,

2024 2023 2024 2023

For the Three Months Ended March 31,

NET REVENUES:

10 unchanged sentences

Change in the estimated fair value of acquisition-related contingent consideration 478 —

Gain on sale of assets ( 993 ) —

30,049 31,158

Operating (loss) income ( 5,999 ) 10,894 ( 15,832 ) 28,786

Operating loss ( 17,750 ) ( 7,093 )

OTHER INCOME 1,778 3,491

(Loss) income before income taxes ( 3,218 ) 13,506 ( 6,494 ) 35,538

INCOME TAX EXPENSE 678 2,347 1,041 1,956

Loss before income taxes ( 15,972 ) ( 3,602 )

INCOME TAX BENEFIT ( 456 ) ( 18 )

LOSS ON EQUITY INVESTMENT ( 524 ) —

NET (LOSS) INCOME $ ( 4,507 ) $ 11,159 $ ( 8,706 ) $ 33,582

(LOSS) INCOME PER SHARE:

NET LOSS $ ( 16,040 ) $ ( 3,584 )

LOSS PER SHARE:

BASIC $ ( 0.21 ) $ ( 0.05 )

DILUTED $ ( 0.21 ) $ ( 0.05 )

WEIGHTED-AVERAGE SHARES OUTSTANDING:

SHARES USED IN COMPUTING LOSS PER SHARE:

BASIC 74,867 73,947

3 unchanged sentences

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(in thousands)

For the Three Months Ended September 30, For the Nine Months Ended September 30,

2024 2023 2024 2023

NET (LOSS) INCOME $ ( 4,507 ) $ 11,159 $ ( 8,706 ) $ 33,582

OTHER COMPREHENSIVE (LOSS) INCOME

For the Three Months Ended March 31,

NET LOSS $ ( 16,040 ) $ ( 3,584 )

OTHER COMPREHENSIVE INCOME (LOSS)

Currency translation adjustments 238 ( 2,556 )

Unrealized gain on marketable securities — — — 220

COMPREHENSIVE (LOSS) INCOME $ ( 3,076 ) $ 8,346 $ ( 10,965 ) $ 34,645

COMPREHENSIVE LOSS $ ( 15,802 ) $ ( 6,140 )

See accompanying notes to the consolidated financial statements.

3 unchanged sentences

(in thousands)

For the Nine Months Ended September 30,

For the Three Months Ended March 31,

OPERATING ACTIVITIES:

Net (loss) income $ ( 8,706 ) $ 33,582

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

Net loss $ ( 16,040 ) $ ( 3,584 )

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

Stock-based compensation 2,687 2,968

3 unchanged sentences

Provision for credit losses ( 248 ) ( 85 )

Unrealized foreign currency gain ( 154 ) ( 66 )

Unrealized foreign currency loss (gain) 194 ( 119 )

Interest expense on finance leases 2 7

1 unchanged sentence

Deferred income taxes ( 384 ) 53

Loss on sale of fixed assets ( 121 ) —

Gain on sale of fixed assets ( 780 ) —

Change in the estimated fair value of acquisition-related contingent consideration 478 —

Payment of acquisition-related contingent consideration — ( 19 )

Changes in assets and liabilities:

5 unchanged sentences

Accrued expenses and other liabilities ( 6,616 ) ( 9,688 )

Net cash provided by operating activities 27,265 100,217

Net cash (used in) provided by operating activities ( 19,733 ) 6,739

INVESTING ACTIVITIES:

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

Investment in equity method investee ( 30,000 ) —

Proceeds from maturities and redemptions of short-term investments 53,052 94,980

Purchases of investments — ( 25,850 )

Purchase of equity method investee — ( 28,333 )

Proceeds from maturities and redemptions of investments — 9,234

Proceeds from sale of assets 790 —

Purchases of property and equipment ( 420 ) ( 1,579 )

Purchase of property and equipment under government contracts — ( 4,501 )

Proceeds from funding under government contract — 24,290

Net cash (used in) provided by investing activities ( 33,533 ) 35,600

Net cash provided by (used in) in investing activities 370 ( 46,528 )

FINANCING ACTIVITIES:

Cash payments for lease liabilities ( 746 ) ( 835 )

Cash payments for finance lease liabilities ( 12 ) ( 50 )

Proceeds from exercise of stock options — 214

Payment of acquisition-related contingent consideration — ( 46 )

Repurchase of common stock ( 3,533 ) ( 1,863 )

Withholding and retirement of common stock ( 941 ) ( 1,462 )

Net cash used in financing activities ( 953 ) ( 1,298 )

EFFECT OF FOREIGN EXCHANGE RATE CHANGES ON CASH 122 ( 2,175 )

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ( 11,836 ) 133,553

NET DECREASE IN CASH AND CASH EQUIVALENTS ( 20,194 ) ( 43,262 )

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 267,763 290,407

1 unchanged sentence

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

Cash (refunds) paid for income taxes $ 1,637 $ ( 5,733 )

Cash paid for income taxes $ 1,796 $ 592

Non-cash investing and financing activities

Accrued property and equipment purchases $ 163 $ 471

Accrued property and equipment purchases under government contracts $ — $ 2

See accompanying notes to the consolidated financial statements.

7 unchanged sentences

(“DNAG”), Diversigen, Inc.

(“Diversigen”), and Novosanis NV (“Novosanis”).

(“Diversigen”), Novosanis NV (“Novosanis”), and Sherlock Biosciences, Inc.

("Sherlock").

All intercompany transactions and balances have been eliminated.

2 unchanged sentences

These financial statements should be read in conjunction with the financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

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

Results of operations for the three months ended March 31, 2025 are not necessarily indicative of the results of operations expected for the full year.

Summary of Significant Accounting Policies

There have been no changes to the Company's significant accounting policies described in its Annual Report on Form 10-K for the fiscal year ended December 31, 2024 that have had a material impact on the consolidated financial statements and related notes except as discussed herein.

Change in Accounting Principle

During the three months ended March 31, 2025, the Company changed its methodology for valuing certain inventories to the average cost method from the first-in, first-out ("FIFO") cost method.

The change was applicable to all inventories.

The Company concluded that the average cost basis of accounting is preferable as it results in greater precision in the calculation of acquisition cost of inventory on the balance sheet.

The effect of this change in accounting principle was immaterial.

Therefore, retroactive application was not determined to be necessary and a cumulative adjustment of $ .08 million was recorded in the statement of operations for the three months ended March 31, 2025.

Cash Equivalents & Short-Term Investments

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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.

The Company had no available-for-sale securities as of September 30, 2024 and December 31, 2023.

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 securities as of March 31, 2025 and December 31, 2024.

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

The Company periodically evaluates financial institutions and believe the risk of loss to be remote due to this evaluation.

Fair Value of Financial Instruments

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

As of March 31, 2025 and December 31, 2024, the carrying values of cash and cash equivalents, accounts receivable, accounts payable, and accrued expenses approximate their respective fair values based on their short-term nature.

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

2 unchanged sentences

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

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

Included in cash and cash equivalents at September 30, 2024 and December 31, 2023 was $ 42.5 million and $ 71.7 million, respectively, of guaranteed investment certificates.

Also included in cash and cash equivalents at September 30, 2024 and December 31, 2023 was $ 117.1 million and $ 112.7 million, respectively, invested in money market funds.

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.

March 31, December 31,

Level 2025 2024

Guaranteed investment certificates 1 $ 66,538 $ 66,584

Contingent consideration 3 $ 23,388 $ 22,910

All of the Company's guaranteed investment certificates are measured as Level 1 instruments as of March 31, 2025.

Included in cash and cash equivalents at March 31, 2025 and December 31, 2024 was $ 66.5 million and $ 66.6 million, respectively, of guaranteed investment certificates.

Also included in cash and cash equivalents at March 31, 2025 and December 31, 2024 was $ 119.8 million and $ 118.5 million, respectively, invested in money market funds.

These money market funds have investments in U.S.

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

The fair value of the plan assets as of September 30, 2024 and December 31, 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.

The fair value of the plan assets as of March 31, 2025 and December 31, 2024 was $ 0.8 million and $ 0.7 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 financial instruments.

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

Contingent Consideration

As further discussed in Note 11, 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 is 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 was an increase of $ 0.5 million in the fair value of the Company's contingent consideration from date of acquisition to March 31, 2025.

Equity Method Investee

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

As of September 30, 2024, the Company had funded $ 30.0 million for its interest in Sapphiros.

As of March 31, 2025, 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.

1 unchanged sentence

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

The investment in Sapphiros of $ 28.8 million as of September 30, 2024 is included in the investment in equity method investee line of the Company's balance sheet and is measured as a Level 3 investment.

The investment in Sapphiros of $ 27.8 million as of March 31, 2025 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 September 30, 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.

In conjunction with the preparation of the Company's March 31, 2025 financial statements, the Company considered whether the carrying value of the investment in Sapphiros was impaired and concluded that no such impairment existed.

The Company's investment in Sapphiros was valued at $ 28.3 million as of December 31, 2024.

Foreign Currency Transactions

Net foreign exchange gains and (losses) resulting from foreign currency transactions that are included in other income in the Company's consolidated statements of operations were $( 0.2 ) million and $( 0.1 ) million for the three months ended September 30, 2024 and 2023, respectively.

Net foreign exchange gains and (losses) resulting from foreign currency transactions for the nine months ended September 30, 2024 and 2023 were $ 0.1 million and $( 0.7 ) million, respectively.

Impairment of Long-Lived Assets

Long-lived assets, which include property, plant and equipment, definite-lived intangible assets, as well as right-of-use assets (ROU assets) of operating and finance leases, 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 expected to be 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 these 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.

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

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

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

These charges

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

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

Net foreign exchange gains and (losses) resulting from foreign currency transactions that are included in other income in the Company's consolidated statements of operations were $( 0.4 ) million and $ 0.2 million for the three months ended March 31, 2025 and 2024, respectively.

Accumulated Other Comprehensive Loss

2 unchanged sentences

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

Other comprehensive loss ( 2,259 ) ( 2,259 )

Balance at September 30, 2024 $ ( 17,200 ) $ ( 17,200 )

Other comprehensive gain 238 238

Balance at March 31, 2025 $ ( 24,122 ) $ ( 24,122 )

Recent Accounting Pronouncements

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

In December 2023, the FASB issued ASU No.

2023-09, Income Taxes (Topic 740), Improvements to Income Tax Disclosures.

The purpose of the update was to address investor requests for more transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information.

The amendments in this ASU are effective for annual periods beginning after December 15, 2024.

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

Management determined the annual disclosures required under the new guidance will have a significant impact on the Company's consolidated financial statements.

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 .

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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.

Government Capital Contracts

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 Test as part of the nation’s pandemic preparedness plan.

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

The Company began receiving funds from the DOD in January 2022 and has 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.

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

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

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

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

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

The Company recognized $ 0.6 million and $ 1.7 million of such income during the three and nine months ended September 30, 2023, respectively.

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

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

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

The Company recognized $ 0.4 million and $ 2.0 million of such costs during the three and nine months ended September 30, 2023, respectively.

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

Cost of assets, cumulative $ 86,993

Reduction for funding received to date ( 86,993 )

Total property, plant and equipment, net $ —

Management does not expect an impact on the Company's consolidated financial statements.

Inventories (in thousands)

September 30, December 31,

March 31, December 31,

Raw materials $ 16,228 $ 17,002

3 unchanged sentences

Property, Plant and Equipment, net (in thousands)

September 30, December 31,

March 31, December 31,

Land $ 1,118 $ 1,118

7 unchanged sentences

$ 43,164 $ 45,105

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

As a result of these decisions, the Company determined that the carrying values of all of Diversigen and Novosanis' property, plant, and equipment were not recoverable and recorded an aggregate pre-tax asset impairment charge of $ 1.8 million during the nine months ended September 30, 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 nine months ended September 30, 2024.

During the nine months ended September 30, 2023, the Company determined several manufacturing lines would no longer be utilized due to changes in forecasted demand for the products the equipment was intended to produce.

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

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

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

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

Accrued Expenses and Other Current Liabilities (in thousands)

September 30, December 31,

March 31, December 31,

Payroll and related benefits $ 5,810 $ 11,147

4 unchanged sentences

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 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 Nine Months Ended September 30,

Cost of products and services sold $ 369

Research and development 566

Sales and marketing 1,542

General and administrative 787

As of September 30, 2024 the Company has 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 nine months ended September 30, 2024.

This plan was completed as of June 30, 2024.

Q1 2024 Reduction in Workforce

2 unchanged sentences

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

For the Nine Months Ended September 30,

For the Three Months Ended March 31,

Cost of products and services sold $ 231

2 unchanged sentences

General and administrative 17

As of September 30, 2024 the Company had $ 6.0 thousand accrued and had paid $ 0.4 million related to the reduction in workforce.

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

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

As of March 31, 2025, 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

1 unchanged sentence

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

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

For the Three Months Ended September 30, For the Nine Months Ended September 30,

Cost of products and services sold $ — $ 889

Research and development — 478

Sales and marketing — 125

General and administrative — 160

As of September 30, 2024 the Company had $ 0.9 million accrued and had paid $ 0.7 million related to the reduction in workforce.

No additional expense associated with the Q2 2024 reduction in workforce was incurred during the three months ended September 30, 2024 .

As of March 31, 2025 the Company had $ 0.3 million accrued and had paid $ 1.3 million related to the reduction in workforce.

No additional expense was incurred during the three months ended March 31, 2025.

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

3 unchanged sentences

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

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

For the Three Months Ended September 30,

Cost of products and services sold $ 7

Research and development —

Sales and marketing 346

General and administrative —

As of September 30, 2024 the Company had $ 0.3 million accrued and had paid $ 7.1 thousand related to the reduction in workforce.

The Company expects this plan to be completed by January 2026.

As of March 31, 2025 the Company had $ 0.7 million accrued and had paid $ 0.5 million related to the reduction in workforce.

No additional expense was incurred during the three months ended March 31, 2025.

The Company expects this plan to be completed by the third quarter of 2026.

Revenues by Product Line .

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

For the Three Months Ended September 30, For the Nine Months Ended September 30,

2024 2023 2024 2023

For the Three Months Ended March 31,

HIV $ 12,900 $ 13,380

2,155 50,199 44,222 216,115

Molecular Sample Management Solutions (2)

12,806 15,238 36,237 41,230

Sample Management Solutions (1)

HCV 4,333 3,000

Risk Assessment Testing (2)

1,911 2,554 6,265 7,540

Other product and service revenues (4)

1,196 638 2,623 1,739

Other product and services revenues (3)

Molecular Services — 873

1 unchanged sentence

Non-product and services revenues (5)

263 173 1,002 2,925

Net revenues $ 29,931 $ 54,132

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

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

(3) Includes substance abuse testing products revenues.

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

(2) Includes substance abuse testing product revenues.

(3) Includes Syphilis revenues.

(4) Includes COVID-19 Diagnostics and COVID-19 Sample Management Solutions revenues.

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

1 unchanged sentence

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

For the Three Months Ended September 30, For the Nine Months Ended September 30,

2024 2023 2024 2023

For the Three Months Ended March 31,

United States $ 20,335 $ 45,211

Africa 7,189 5,704

Europe 1,637 1,602

1 unchanged sentence

$ 29,931 $ 54,132

Customer and Vendor Concentrations .

The following table represents the concentration risk.

For the Three Months Ended September 30, For the Nine Months Ended September 30,

Revenue Concentration 2024 2023 2024 2023

Commercial customer (1)

11 % NA NA NA

Commercial customer (1)

10 % NA NA NA

Non-Commercial customer (2)

NA 56 % 26 % 66 %

September 30, December 31,

Customer Concentration .

The following table represents customer concentration risk:

For the Three Months Ended March 31,

Non-commercial customer N/A 40 %

March 31, December 31,

Accounts Receivable

Commercial customer (1)

Non-Commercial customer (2)

Commercial customer (1)

(1) Each commercial customer is different.

(2) Same non-commercial customer.

Vendor Concentration.

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

4 unchanged sentences

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

Deferred revenue as of September 30, 2024 and December 31, 2023 included customer prepayments of $ 1.6 million and $ 1.2 million, respectively.

Deferred revenue as of December 31, 2023 also included $ 0.4 million associated with a long-term contract that had 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 nine months ended September 30, 2024, and as such there was no equivalent balance remaining in deferred revenue at September 30, 2024.

Deferred revenue recognized for the three months ended September 30, 2024 and 2023, was $ 0.5 million and $ 0.4 million , respectively.

Deferred revenue recognized for the nine months ended September 30, 2024 and 2023, was $ 3.3 million and $ 2.2 million, respectively.

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

For the Three Months Ended September 30, For the Nine Months Ended September 30,

Deferred revenue as of March 31, 2025 and December 31, 2024 was comprised of customer prepayments of $ 2.5 million and $ 3.0 million, respectively.

The following table represents deferred revenue recognized:

For the Three Months Ended March 31,

Deferred Revenue Recognized 2025 2024

Accrued at beginning of period $ 771 $ 723

From current period 1,333 834

$ 2,104 $ 1,557

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

For the Three Months Ended March 31,

Federal income tax expense $ 8 $ —

State income tax expense (benefit) 9 ( 230 )

Foreign income tax expense (benefit) 660 1,216 1,250 ( 432 )

Foreign income tax (benefit) expense ( 473 ) 212

$ ( 456 ) $ ( 18 )

During the three months ended September 30, 2024 and 2023, the Company recorded income tax expense of $ 0.7 million and $ 2.3 million, respectively.

The three months ended September 30, 2024 net tax expense decrease is due to having a U.S.

pretax loss and foreign pretax income in 2024 compared to a U.S.

and foreign pretax income for the three months ended September 30, 2023.

During the nine months ended September 30, 2024 and 2023, the Company recorded income tax expense of $ 1.0 million and $ 2.0 million, respectively.

Foreign pre-tax income increased during the nine months ended September 30, 2024 compared to a foreign pre-tax loss during the nine months ended September 30, 2023.

In addition, there was lower state pre-tax income for nine months ended September 30, 2024 compared to 2023.

During the three months ended March 31, 2025 and 2024, the Company recorded an income tax benefit of $ 0.5 million and $ 0.02 million, respectively.

The three months ended March 31, 2025 net tax benefit increase is due to having a U.S.

and foreign pretax loss in 2025 compared to a U.S.

pretax loss and foreign pretax income for the three months ended March 31, 2024.

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

The significant components of the Company's total deferred tax liability as of September 30, 2024 and at December 31, 2023 relate to the tax effects of the basis difference arising from accelerated tax depreciation of fixed assets.

The significant components of the Company's total deferred tax asset as of March 31, 2025 and at December 31, 2024 relate to the tax effects of the basis difference of acquired intangible assets.

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

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

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

deferred tax assets as of March 31, 2025 and December 31, 2024.

Income (Loss) Per Share

Basic income (loss) per share is computed by dividing net income (loss) by the weighted-average number of shares of common stock outstanding during the period.

Basic earnings (loss) per share is computed by dividing net income (loss) by the weighted-average number of shares of common stock outstanding during the period.

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 antidilutive.

1 unchanged sentence

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

For the three and nine months ended September 30, 2024, outstanding common stock options, unvested restricted stock, and unvested performance stock units representing 389 shares and 999 shares, respectively, were excluded from the computation of diluted loss per share.

For the three and nine months ended September 30, 2023, outstanding common stock options, unvested restricted stock, and unvested performance stock units representing 2,027 and 2,048 shares, respectively, were excluded from the computation of diluted earnings per share as their inclusion would have been anti-dilutive.

For the three months ended March 31, 2025 and 2024, outstanding common stock options, unvested restricted stock, and unvested performance stock units representing 689 shares and 1,697 shares, respectively, were excluded from the computation of diluted loss per share.

Stockholders’ Equity

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

Common Stock Additional

Capital Accumulated

Comprehensive

Loss Accumulated

Deficit Total

In March 2025, the Company's Board of Directors authorized a stock repurchase program (the "Repurchase Program") effective March 21, 2025, whereby the Company may purchase up to $ 40.0 million in shares of its common stock over a period of up to two years .

The amount and timing of share repurchases under the Repurchase Program may be carried out at the discretion of the Company's management through various methods in compliance with applicable state and federal securities laws.

The Company did not repurchase any shares of the Company's common stock under the Repurchase Program during the three months ended March 31, 2025.

The reconciliation of the changes in stockholders' equity for the three months ended March 31, 2025 and 2024 is as follows (in thousands):

Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Loss Accumulated Deficit Total

Shares Amount

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

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

Vesting of restricted stock and performance stock units 768 — — — — —

4 unchanged sentences

Balance at March 31, 2025 75,114 $ — $ 539,875 $ ( 24,122 ) $ ( 119,471 ) $ 396,282

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

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

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

Net loss — — — — ( 615 ) ( 615 )

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

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

Vesting of restricted stock and performance stock units 44 — — — — —

Purchase and retirement of common shares ( 19 ) — ( 87 ) — — ( 87 )

Stock-based compensation — — 2,888 — — 2,888

Net loss — — — — ( 4,507 ) ( 4,507 )

Currency translation adjustments — — — 1,431 — 1,431

Balance at September 30, 2024 74,593 $ — $ 535,402 $ ( 17,200 ) $ ( 92,637 ) $ 425,565

Common Stock Additional

Capital Accumulated

Comprehensive

Loss Accumulated

Deficit Total

Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Loss Accumulated Deficit Total

Shares Amount

4 unchanged sentences

Stock-based compensation — — 2,968 — — 2,968

Net income — — — — 27,219 27,219

Net loss — — — — ( 3,584 ) ( 3,584 )

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

Unrealized gain on marketable securities — — — 220 — 220

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

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

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

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

Business Segment Information

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 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 1 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 1 Summary of Significant Accounting Policies.

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

March 31, December 31,

United States $ 39,265 $ 40,286

United Kingdom 11,463 12,849

Canada 5,189 5,468

Other regions 377 89

$ 56,294 $ 58,692

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

For the Three Months Ended March 31,

Net revenues 29,931 54,132

Cost of products and services sold (2)

17,632 30,067

Gross profit 12,299 24,065

Research and development (2)

Sales and marketing (2)

General and administrative (2)

14,102 11,634

Loss on impairments — 3,338

Change in the estimated fair value of acquisition-related contingent consideration 478 —

Gain on sale of assets ( 993 ) —

Operating loss ( 17,750 ) ( 7,093 )

Other (expense) income ( 21 ) 271

Interest revenue 2,156 3,022

Other segment items (1)

Loss before income taxes ( 15,972 ) ( 3,602 )

Income tax benefit ( 456 ) ( 18 )

Loss on equity investment ( 524 ) —

Net loss $ ( 16,040 ) ( 3,584 )

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

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

Common stock issued upon exercise of options 2 — 10 — — 10

Vesting of restricted stock and performance stock units 99 — — — — —

Purchase and retirement of common shares ( 31 ) — ( 200 ) — — ( 200 )

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

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

For the Three Months Ended March 31,

Stock-based Compensation

Net income — — — — 11,159 11,159

Currency translation adjustments — — — ( 2,813 ) — ( 2,813 )

Balance at September 30, 2023 73,483 $ — $ 526,261 $ ( 17,372 ) $ ( 104,004 ) $ 404,885

Cost of products and services sold $ 169 $ 151

Research and development 203 266

Sales and marketing 218 257

General and administrative 2,097 2,294

$ 2,687 $ 2,968

For the Three Months Ended March 31,

Depreciation and Amortization

Cost of products and services sold $ 1,389 $ 1,547

Research and development 485 242

Sales and marketing 27 48

General and administrative 907 888

$ 2,808 $ 2,725

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 was Sherlock's first test for Chlamydia Trachomatis (CT) and Neisseria Gonorrhoeae (NG), which 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 hand as shown in the table 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 the milestone contingent consideration was $ 15.9 million.

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

There is also a mid-single digits quarterly royalty fee based on future sales until 2034 as defined in the Merger Agreement, the fair value of which was determined as part of the 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 it is 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 income 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.

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, 2024.

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 acquisition been consummated as of January 1, 2024.

For the Three Months Ended March 31,

Net revenues $ 54,464

Net loss $ ( 14,338 )

Commitments and Contingencies

7 unchanged sentences

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

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

The Company is pursuing the appeal with respect to the first patent, with oral argument expected in the first quarter of 2025.

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.

1 unchanged sentence

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 Appeals affirmed the District Court’s judgment.

The Court of Appeals mandate issued on March 24, 2025.

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.

3 unchanged sentences

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

On March 26, 2024, the PTO issued a Decision Granting Institution of Inter Partes Review and scheduled oral argument for January 13, 2025.

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

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.

The trial is scheduled for March 9, 2026.

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

What changed 10-Q

Item 1. Financial Statements