ORASURE TECHNOLOGIES INC 10-Q

Item 1. FINANCIAL STATEMENTS (UNAUDITED) Table of Contents ORASURE TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Unaudited) (in thousands, except per share amounts) September 30, 2025 December 31, 2024 ASSETS Current Assets: Cash and cash equivalents $ 216,478 $ 267,763 Accounts receivable, net of allowance for doubtful accounts of $ 166 and $ 773 24,300 23,816 Inventories 33,401 34,197 Prepaid expenses 4,709 3,956 Other current assets 4,123 3,488 Total current assets 283,011 333,220 Noncurrent Assets: Property, plant and equipment, net of accumulated depreciation of $ 73,118 and $ 65,918 40,795 45,105 Operating right-of-use assets, net 12,240 13,442 Finance right-of-use assets, net 164 145 Intangible assets, net of accumulated amortization of $ 26,802 and $ 32,413 17,202 17,435 Goodwill 41,313 40,330 Investment in equity method investee 26,600 28,300 Deferred tax asset 211 156 Other noncurrent assets 1,562 1,526 Total noncurrent assets 140,087 146,439 TOTAL ASSETS $ 423,098 $ 479,659 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable $ 6,360 $ 8,173 Deferred revenue 1,879 2,961 Accrued expenses and other current liabilities 12,669 20,179 Finance lease liability 63 41 Operating lease liability 2,045 2,129 Acquisition-related contingent consideration obligation 17,232 — Total current liabilities 40,248 33,483 Noncurrent Liabilities: Finance lease liability 117 113 Operating lease liability 11,240 12,321 Acquisition-related contingent consideration obligation 7,264 22,910 Other noncurrent liabilities 2,249 494 Total noncurrent liabilities 20,870 35,838 TOTAL LIABILITIES 61,118 69,321 Commitments and contingencies (Note 12) STOCKHOLDERS' EQUITY Preferred stock, par value $ 0.000001 , 25,000 shares authorized, none issued — — Common stock, par value $ 0.000001 , 120,000 shares authorized, 72,265 and 74,598 shares issued and outstanding — — Additional paid-in capital 535,029 538,129 Accumulated other comprehensive loss ( 20,173 ) ( 24,360 ) Accumulated deficit ( 152,876 ) ( 103,431 ) Total stockholders' equity 361,980 410,338 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 423,098 $ 479,659 See accompanying notes to the consolidated financial statements. Table of Contents ORASURE TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (in thousands, except per share amounts) For the Three Months Ended September 30, For the Nine Months Ended September 30, 2025 2024 2025 2024 NET REVENUES: Products and services $ 25,336 $ 39,651 $ 84,180 $ 147,379 Other 1,749 264 4,078 1,003 27,085 39,915 88,258 148,382 COST OF PRODUCTS AND SERVICES SOLD 15,313 22,845 51,028 82,558 Gross profit 11,772 17,070 37,230 65,824 OPERATING EXPENSES: Research and development 10,106 5,623 31,110 19,960 Sales and marketing 6,299 7,615 19,533 23,994 General and administrative 11,081 9,831 37,859 33,310 Loss on impairments — — — 4,392 Change in the estimated fair value of acquisition-related contingent consideration 376 — 1,587 — Gain on sale of assets — — ( 993 ) — 27,862 23,069 89,096 81,656 Operating loss ( 16,090 ) ( 5,999 ) ( 51,866 ) ( 15,832 ) OTHER INCOME 2,799 2,781 5,712 9,338 Loss before income taxes and equity investment ( 13,291 ) ( 3,218 ) ( 46,154 ) ( 6,494 ) INCOME TAX EXPENSE 47 678 1,591 1,041 LOSS BEFORE EQUITY INVESTMENT ( 13,338 ) ( 3,896 ) ( 47,745 ) ( 7,535 ) LOSS ON EQUITY INVESTMENT ( 374 ) ( 611 ) ( 1,700 ) ( 1,171 ) NET LOSS $ ( 13,712 ) $ ( 4,507 ) $ ( 49,445 ) $ ( 8,706 ) LOSS PER SHARE: BASIC $ ( 0.19 ) $ ( 0.06 ) $ ( 0.67 ) $ ( 0.12 ) DILUTED $ ( 0.19 ) $ ( 0.06 ) $ ( 0.67 ) $ ( 0.12 ) SHARES USED IN COMPUTING LOSS PER SHARE: BASIC 73,004 74,583 74,131 74,330 DILUTED 73,004 74,583 74,131 74,330 See accompanying notes to the consolidated financial statements. Table of Contents ORASURE TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Unaudited) (in thousands) For the Three Months Ended September 30, For the Nine Months Ended September 30, 2025 2024 2025 2024 NET LOSS ( 13,712 ) ( 4,507 ) ( 49,445 ) ( 8,706 ) OTHER COMPREHENSIVE (LOSS) INCOME Currency translation adjustments ( 2,802 ) 1,431 4,187 ( 2,259 ) COMPREHENSIVE LOSS $ ( 16,514 ) $ ( 3,076 ) $ ( 45,258 ) $ ( 10,965 ) See accompanying notes to the consolidated financial statements. Table of Contents ORASURE TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands) For the Nine Months Ended September 30, 2025 2024 OPERATING ACTIVITIES: Net loss $ ( 49,445 ) $ ( 8,706 ) Adjustments to reconcile net loss to net cash (used in) provided by operating activities Stock-based compensation 8,687 9,178 Depreciation and amortization 7,789 8,380 Loss on impairments — 4,392 Other non-cash amortization ( 221 ) ( 569 ) Provision for credit losses ( 176 ) 521 Unrealized foreign currency loss (gain) 294 ( 154 ) Interest expense on finance leases 6 20 Loss on equity investment 1,700 1,171 Deferred income taxes ( 86 ) 165 Gain on sale of fixed assets ( 993 ) ( 121 ) Change in the estimated fair value of acquisition-related contingent consideration 1,587 — Changes in assets and liabilities: Accounts receivable ( 16 ) 12,658 Inventories 894 8,659 Prepaid expenses and other assets ( 1,915 ) 2,622 Accounts payable ( 1,733 ) ( 3,431 ) Deferred revenue ( 1,085 ) 66 Accrued expenses and other liabilities ( 5,314 ) ( 7,586 ) Net cash (used in) provided by operating activities ( 40,027 ) 27,265 INVESTING ACTIVITIES: Purchases of short-term investments — ( 53,244 ) Purchase of equity method investee — ( 30,000 ) Proceeds from maturities and redemptions of short-term investments — 53,052 Proceeds from sale of assets 888 — Purchases of property and equipment ( 3,275 ) ( 3,341 ) Net cash used in investing activities ( 2,387 ) ( 33,533 ) FINANCING ACTIVITIES: Cash payments for lease liabilities ( 43 ) ( 746 ) Proceeds from exercise of stock options — 214 Repurchase of common stock ( 10,001 ) — Payment of taxes related to net share settlement of equity awards ( 1,786 ) ( 3,533 ) Net cash used in financing activities ( 11,830 ) ( 4,065 ) EFFECT OF FOREIGN EXCHANGE RATE CHANGES ON CASH 2,959 ( 1,503 ) NET DECREASE IN CASH AND CASH EQUIVALENTS ( 51,285 ) ( 11,836 ) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 267,763 290,407 CASH AND CASH EQUIVALENTS, END OF PERIOD $ 216,478 $ 278,571 SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid for income taxes $ 2,582 $ 1,637 Non-cash investing and financing activities Accrued property and equipment purchases $ 372 $ 103 See accompanying notes to the consolidated financial statements. Table of Contents ORASURE TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (all tabular amounts in thousands) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Principles of Consolidation and Basis of Presentation The accompanying interim unaudited consolidated financial statements include the accounts of OraSure Technologies, Inc. (“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. References herein to “we,” “us,” “our,” or the “Company” mean OraSure and its consolidated subsidiaries, unless otherwise indicated. The unaudited financial statements, in the opinion of management, include all adjustments (consisting only of normal and recurring adjustments) necessary for a fair presentation of the Company's financial position and results of operations for these interim periods. 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, 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 Effective January 1, 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 $ 0.1 million was recorded in the statement of operations for the nine months ended September 30, 2025. Cash Equivalents & Short-Term Investments The Company considers all investments in debt securities to be available-for-sale securities. 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. 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 September 30, 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. Table of Contents Fair Value of Financial Instruments As of September 30, 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: Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities; Level 2: Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability; and Level 3: 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). 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. September 30, December 31, Level 2025 2024 Guaranteed investment certificates 1 $ 66,857 $ 66,584 Contingent consideration: 3 Current portion $ 17,232 $ — Long-term portion 7,264 22,910 $ 24,496 $ 22,910 Included in cash and cash equivalents at September 30, 2025 and December 31, 2024 was $ 66.9 million and $ 66.6 million, respectively, invested in guaranteed investment certificates. Included in cash and cash equivalents at September 30, 2025 and December 31, 2024, was $ 122.4 million and $ 118.5 million, respectively, invested in government money market funds. 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. The assets of the plan are held in the name of the Company at a third-party financial institution. 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 and Company stock. The fair value of the plan assets as of September 30, 2025 and December 31, 2024 was $ 0.6 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 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 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. Table of Contents There was an increase of $ 1.6 million in the fair value of the Company's contingent consideration from date of acquisition to September 30, 2025. Table of Contents Equity Method Investee In January 2024, the Company lead the Series B financing and entered into wide-ranging strategic distribution agreements with KKR Sapphiros L.P. ("Sapphiros"), a privately held consumer diagnostic portfolio company, and certain of its related entities. Through this relationship, the Company expects to be able to offer a more comprehensive range of low-cost diagnostic tests and molecular sample management solutions to the Company's customers globally. As of September 30, 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. In accordance with the equity method, the Company's equity investment is presented net of its share of any gains or losses of the investee. The Company has elected as its accounting policy to recognize its share of any income or loss in Sapphiros on a three-month lag. The investment in Sapphiros of $ 26.6 million as of September 30, 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, 2025 financial statements, the Company considered whether there were any triggering events that may indicate impairment in the investment in Sapphiros and concluded that no such triggers 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 (losses) resulting from foreign currency transactions that are included in other income in the Company's consolidated statements of operations were $ 0.6 million and $( 0.2 ) million for the three months ended September 30, 2025 and 2024, respectively. Net foreign exchange gains (losses) resulting from foreign currency transactions for the nine months ended September 30, 2025 and 2024 were $( 0.7 ) million and $ 0.1 million respectively. Accumulated Other Comprehensive Loss Change in accumulated other comprehensive loss by component is listed below: Foreign Currency Total Balance at December 31, 2024 $ ( 24,360 ) $ ( 24,360 ) Other comprehensive gain 4,187 4,187 Balance at September 30, 2025 $ ( 20,173 ) $ ( 20,173 ) Uncertain Tax Positions Assets and liabilities are established for uncertain tax positions taken or positions expected to be taken in income tax returns when such positions fail to meet the "more likely than not" threshold based on the technical merits of the positions. We assess whether previously unrecognized tax benefits may be recognized when tax positions are (1) more likely than not of being sustained based on their technical merits, (2) effectively settled through examination, negotiation or litigation, or (3) settled through actual expiration of the relevant tax statures. The assessment of an uncertain tax position requires significant judgment. Table of Contents Recent Accounting Pronouncements 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), Measurement of Credit Losses for Accounts Receivable and Contract Assets . 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 does not expect an impact on the Company's consolidated financial statements. In July 2025, the FASB issued ASU No. 2025-05, Financial Instruments—Credit Losses (Topic 326), Scope Application of Profits Interest and Similar Awards . The purpose of this update was to address challenges encountered when applying the guidance in Topic 326, Financial Instruments—Credit Losses, to current accounts receivable and current contract assets arising from transactions accounted for under Topic 606, Revenue from Contracts with Customers 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 all business entities, the amendments in this ASU are effective for fiscal years beginning after December 15, 2025, and interim periods within those fiscal periods. The amendments are applied prospectively, and early adoption is permitted. Management does not expect an impact on the Company's consolidated financial statements. In September 2025, the FASB issued ASU No. 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40), Targeted Improvements to the Accounting for Internal-Use Software . The purpose of this update was to modernize the accounting for software costs. For all business entities, the amendments in this ASU are effective for fiscal years beginning after December 15, 2027, and interim periods within those fiscal periods. The amendments can be applied prospectively, a modified transition or retrospectively. Early adoption is permitted as of the beginning of an annual reporting period. Management does not expect an impact on the Company's consolidated financial statements. 2. INVENTORIES: September 30, December 31, 2025 2024 Raw materials $ 15,039 $ 17,002 Work in process 685 420 Finished goods 17,677 16,775 $ 33,401 $ 34,197 Table of Contents 3. PROPERTY, PLANT, AND EQUIPMENT, NET: September 30, December 31, 2025 2024 Land $ 1,118 $ 1,118 Buildings and improvements 39,112 36,152 Machinery and equipment 57,337 51,015 Computer equipment and software 12,385 11,502 Furniture and fixtures 1,644 1,621 Construction in progress 2,317 9,615 113,913 111,023 Accumulated depreciation ( 73,118 ) ( 65,918 ) $ 40,795 $ 45,105 4. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES: September 30, December 31, 2025 2024 Payroll and related benefits $ 7,385 $ 11,147 Professional fees 2,077 2,469 Sales tax payable 1,092 1,339 Other 2,115 5,224 $ 12,669 $ 20,179 Table of Contents 5. TERMINATION BENEFITS: 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: For the Nine Months Ended September 30, 2024 Cost of products and services sold $ 231 Research and development 87 Sales and marketing 69 General and administrative 17 $ 404 As of September 30, 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 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: For the Nine Months Ended September 30, 2024 Cost of products and services sold $ 889 Research and development 478 Sales and marketing 125 General and administrative 160 $ 1,652 As of September 30, 2025 the Company had $ 0.3 million accrued and had paid $ 1.4 million related to the reduction in workforce. No additional expenses were incurred during the nine months ended September 30, 2025. The Company expects this reduction in workforce to be completed by October 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: For the Three Months Ended September 30, 2024 Cost of products and services sold $ 7 Research and development — Sales and marketing 346 General and administrative — $ 353 Table of Contents As of September 30, 2025 the Company had $ 0.2 million accrued and had paid $ 1.0 million related to the reduction in workforce. No additional expense was incurred during the nine months ended September 30, 2025. The Company expects this reduction in workforce to be completed by December 2025. Table of Contents 6. REVENUES: Revenues by Product Line . The following table represents total net revenues by product line: For the Three Months Ended September 30, For the Nine Months Ended September 30, 2025 2024 2025 2024 HIV $ 11,141 $ 18,347 $ 38,439 $ 45,379 Sample Management Solutions (1) 10,306 12,806 29,271 36,237 HCV 2,604 3,228 11,063 10,962 Other product and services revenues (2) 1,196 1,196 2,963 2,623 COVID-19 (3) 89 2,155 578 44,222 Risk Assessment Testing (4) — 1,911 1,866 6,265 Molecular Services — 9 — 1,692 Net product and services revenues $ 25,336 $ 39,652 $ 84,180 $ 147,380 Non-product and services revenues (5) 1,749 263 4,078 1,002 Net revenues $ 27,085 $ 39,915 $ 88,258 $ 148,382 (1) Includes Genomics, Microbiome and Colli-Pee ® product revenues. (2) Includes Syphilis revenues. (3) Includes COVID-19 Diagnostics and COVID-19 Sample Management Solutions revenues. (4) Includes substance abuse testing product revenues. (5) Includes funded research and development contracts, royalty income and grant revenues. Revenues by Geographic Area . The following table represents total net revenues by geographic area, based on the location of the customer: For the Three Months Ended September 30, For the Nine Months Ended September 30, 2025 2024 2025 2024 United States $ 19,662 $ 25,353 $ 60,070 $ 115,055 Africa 4,875 11,376 19,023 23,446 Europe 1,300 2,126 5,064 5,892 Other regions 1,248 1,060 4,101 3,989 $ 27,085 $ 39,915 $ 88,258 $ 148,382 Customer Concentrations. The following table represents customer concentration risk: For the Three Months Ended September 30, For the Nine Months Ended September 30, 2024 2024 Net Revenues Commercial customer (1) 11 % N/A Commercial customer (1) 10 % N/A Non-commercial customer N/A 26 % September 30, December 31, 2025 2024 Accounts Receivable Commercial customer 20 % 10 % (1) Each commercial customer is different. There were no customers that accounted for over 10% of the Company's consolidated net revenues during the three and nine months ended September 30, 2025. Table of Contents Vendor concentrations. The Company currently purchases certain products and critical components of the Company's products from sole-supply vendors. If these vendors are unable or unwilling to supply the required components and products, the Company could be subject to increased costs and substantial delays in the delivery of the Company's products to its customers. Third-party suppliers also manufacture certain products. The Company's inability to have a timely supply of any of these components and products could have a material adverse effect on the Company's business, as well as the Company's financial condition and results of operations. Deferred Revenue. The Company records deferred revenue when funds are received prior to the recognition of the associated revenue. Deferred revenue as of September 30, 2025 and December 31, 2024 was comprised of customer prepayments of $ 1.9 million and $ 3.0 million, respectively. The following table represents deferred revenue recognized: For the Three Months Ended September 30, For the Nine Months Ended September 30, Deferred Revenue Recognized 2025 2024 2025 2024 Accrued at beginning of year $ 529 $ 171 $ 1,991 $ 1,365 Table of Contents 7. INCOME TAXES: The components of income tax expense are as follows: For the Three Months Ended September 30, For the Nine Months Ended September 30, 2025 2024 2025 2024 Federal income tax expense $ 3 $ — $ 168 $ — State income tax (benefit) expense ( 612 ) 18 1,792 ( 209 ) Foreign income tax expense (benefit) 656 660 ( 369 ) 1,250 $ 47 $ 678 $ 1,591 $ 1,041 During the three months ended September 30, 2025 and 2024, the Company recorded income tax expense of $ 47.0 thousand and $ 0.7 million, respectively. The state income tax benefit for the three months ended September 30, 2025 is largely comprised of an adjustment made to the Company's liability for uncertain tax position for certain tax matters, including penalty and interest. During the nine months ended September 30, 2025 and 2024, the Company recorded income tax expense of $ 1.6 million and $ 1.0 million, respectively. The state income tax expense for the nine months ended September 30, 2025 is largely due to recording an uncertain tax position for certain tax matters, including penalty and interest. The decline in foreign taxes for the nine months ended September 30, 2025 is due to lower pretax earnings in 2025 as compared to 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 asset as of September 30, 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. and U.K. deferred tax assets as of September 30, 2025 and December 31, 2024. Uncertain tax positions were approximately $ 1.9 million and $ 0.0 million, as of September 30, 2025 and December 31, 2024, respectively. The Company’s uncertain tax position relates to U.S. federal and other jurisdictions. Due to various factors, including the inherent complexities and uncertainties of the judicial, administrative, and regulatory processes in certain jurisdictions, the timing of the resolution of income tax controversies is highly uncertain, and the amounts ultimately paid, if any, upon resolution of the issues raised by the taxing authorities may differ from the amounts accrued. Any assessments or settlements could result in changes to our contingencies related to positions on prior years’ tax filings. On July 4, 2025, Congress enacted the One Big Beautiful Bill Act (“OBBBA”), which includes several changes to the Internal Revenue Code which will result in changes to the Company’s income tax expense. The Company has evaluated the impacts of the OBBBA and determined changes in tax law will not materially affect the Company’s operating performance or financial position. 8. INCOME (LOSS) PER SHARE: 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 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. Basic and dilutive computations of net loss per share are the same in periods in which a net loss exists as the dilutive effects of excluded items would be anti-dilutive. For the three months ended September 30, 2025 and 2024, outstanding common stock options, unvested restricted stock, and unvested performance stock units representing 585 shares and 389 shares, respectively, were excluded from the computation of diluted loss per share. Table of Contents For the nine months ended September 30, 2025 and 2024, outstanding common stock options, unvested restricted stock, and unvested performance stock units representing 605 shares and 999 shares, respectively, were excluded from the computation of diluted loss per share. 9. STOCKHOLDERS' EQUITY: 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 repurchased 3.3 million shares of its common stock under the Repurchase Program during the nine months ended September 30, 2025. The reconciliation of the changes in stockholders' equity for the three and nine months ended September 30, 2025 and 2024 is as follows: 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 Vesting of restricted stock and performance stock units 768 — — — — — Purchase and retirement of common shares ( 252 ) — ( 941 ) — — ( 941 ) Stock-based compensation — — 2,687 — — 2,687 Net loss — — — — ( 16,040 ) ( 16,040 ) Currency translation adjustments — — — 238 — 238 Balance at March 31, 2025 75,114 $ — $ 539,875 $ ( 24,122 ) $ ( 119,471 ) $ 396,282 Vesting of restricted stock and performance stock units 713 — — — — — Purchase and retirement of common shares ( 271 ) — ( 784 ) — — ( 784 ) Stock-based compensation — — 3,165 — — 3,165 Repurchase of common stock ( 1,821 ) — ( 5,000 ) — — ( 5,000 ) Net loss — — — — ( 19,693 ) ( 19,693 ) Currency translation adjustments — — — 6,751 — 6,751 Balance at June 30, 2025 73,735 $ — $ 537,256 $ ( 17,371 ) $ ( 139,164 ) $ 380,721 Vesting of restricted stock and performance stock units 76 — — — — — Purchase and retirement of common shares ( 21 ) — ( 61 ) — — ( 61 ) Stock-based compensation — — 2,835 — — 2,835 Repurchase of common stock ( 1,525 ) — ( 5,001 ) — — ( 5,001 ) Net loss — — — — ( 13,712 ) ( 13,712 ) Currency translation adjustments — — — ( 2,802 ) — ( 2,802 ) Balance at September 30, 2025 72,265 $ — $ 535,029 $ ( 20,173 ) $ ( 152,876 ) $ 361,980 Table of Contents Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Loss Accumulated Deficit Total Shares Amount Balance at December 31, 2023 73,528 $ — $ 529,543 $ ( 14,941 ) $ ( 83,931 ) $ 430,671 Common stock issued upon exercise of options 32 — 214 — — 214 Vesting of restricted stock and performance stock units 593 — — — — — Purchase and retirement of common shares ( 194 ) — ( 1,462 ) — — ( 1,462 ) Stock-based compensation — — 2,968 — — 2,968 Net loss — — — — ( 3,584 ) ( 3,584 ) Currency translation adjustments — — — ( 2,556 ) — ( 2,556 ) Balance at March 31, 2024 73,959 $ — $ 531,263 $ ( 17,497 ) $ ( 87,515 ) $ 426,251 Vesting of restricted stock and performance stock units 1,033 — — — — — Purchase and retirement of common shares ( 424 ) — ( 1,984 ) — — ( 1,984 ) Stock-based compensation — — 3,322 — — 3,322 Net loss — — — — ( 615 ) ( 615 ) Currency translation adjustments — — — ( 1,134 ) — ( 1,134 ) Balance at June 30, 2024 74,568 $ — $ 532,601 $ ( 18,631 ) $ ( 88,130 ) $ 425,840 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 Table of Contents 10. BUSINESS SEGMENT INFORMATION: 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: September 30, December 31, 2025 2024 United States $ 37,424 $ 40,286 United Kingdom 10,532 12,849 Canada 4,868 5,468 Other regions 375 89 $ 53,199 $ 58,692 Table of Contents The following table represents reported segment revenues, segment profit (loss), and significant segment expenses: For the Three Months Ended September 30, For the Nine Months Ended September 30, 2025 2024 2025 2024 Net revenues $ 27,085 $ 39,915 $ 88,258 $ 148,382 Cost of products and services sold (2) 15,313 22,845 51,028 82,558 Gross profit 11,772 17,070 37,230 65,824 Research and development (2) 10,106 5,623 31,110 19,960 Sales and marketing (2) 6,299 7,615 19,533 23,994 General and administrative (2) 11,081 9,831 37,859 33,310 Loss on impairments — — — 4,392 Change in the estimated fair value of acquisition-related contingent consideration 376 — 1,587 — Gain on sale of assets — — ( 993 ) — Operating loss ( 16,090 ) ( 5,999 ) ( 51,866 ) ( 15,832 ) Other income 154 95 138 335 Interest revenue 2,051 2,885 6,279 8,938 Other segment items (1) 594 ( 199 ) ( 705 ) 65 Loss before income taxes ( 13,291 ) ( 3,218 ) ( 46,154 ) ( 6,494 ) Income tax expense 47 678 1,591 1,041 Loss on equity investment ( 374 ) ( 611 ) ( 1,700 ) ( 1,171 ) Net loss $ ( 13,712 ) $ ( 4,507 ) $ ( 49,445 ) $ ( 8,706 ) (1) Includes interest expense and foreign currency gains (losses). (2) The following tables represent additional significant segment expense categories: For the Three Months Ended September 30, For the Nine Months Ended September 30, 2025 2024 2025 2024 Stock-based Compensation Cost of products and services sold $ 208 $ 195 $ 584 $ 539 Research and development 282 159 764 689 Sales and marketing 213 317 648 887 General and administrative 2,132 2,217 6,691 7,063 $ 2,835 $ 2,888 $ 8,687 $ 9,178 For the Three Months Ended September 30, For the Nine Months Ended September 30, 2025 2024 2025 2024 Depreciation and Amortization Cost of products and services sold $ 1,054 $ 1,934 $ 3,503 $ 4,988 Research and development 514 248 1,568 734 Sales and marketing 21 48 78 143 General and administrative 865 818 2,640 2,515 $ 2,454 $ 3,048 $ 7,789 $ 8,380 Table of Contents 11. 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 in late 2025 or early 2026 for r. 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 acquisition-date 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. Table of Contents 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 ) $ 5,037 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 has completed the fair value of the assets acquired and liabilities assumed. 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. Table of Contents 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 September 30, For the Nine Months Ended September 30, 2024 2024 Net revenues $ 40,424 $ 149,462 Net loss $ ( 12,472 ) $ ( 36,675 ) 12. COMMITMENTS AND CONTINGENCIES: Litigation From time to time, the Company is involved in certain legal actions arising in the ordinary course of business. In management’s opinion, based upon the advice of counsel, the outcomes of such actions are not expected, individually or in the aggregate, to have a material adverse effect on the Company's future financial position or results of operations. 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 case is currently in the discovery phase and the schedule for any further proceedings is currently pending. 13. SUBSEQUENT EVENTS: On November 5, 2025, the Company signed a definitive merger agreement ( the "Agreement") with BioMedomics, Inc. (“BioMedomics”), pursuant to which BioMedomics will become a wholly-owned subsidiary of the Company. The closing of the foregoing transaction is subject to various customary conditions, and is expected to occur within the fourth quarter of 2025. The upfront purchase price is $ 4.0 million in cash, adjusted for certain transaction costs, indebtedness, holdback amounts and working capital adjustments. In addition, pursuant to the Agreement, the Company has agreed to pay certain contingent consideration based on achievement of defined revenue targets by December 31, 2031. Under certain circumstances, the original BioMedomics shareholders may opt to forgo a portion of the final revenue milestone, and instead choose either (i) different revenue milestones related to sales of certain products currently in development by BioMedomics (the “BM Pipeline Products”), or (ii) to share in a portion of the proceeds in the event that the Company enters into a disposition of any of the BM Pipeline Products on or prior to December 31, 2030.