What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-03-09 compared with 2025-03-07 · 80 added, 83 removed, 113 unchanged (59% of the section changed)

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Factors that could affect results are discussed more fully under the Item 1A, entitled “Risk Factors,” and elsewhere in this Annual Report.

Although forward-looking statements help to

provide complete information about the Company, readers should keep in mind that forward-looking statements may not be reliable.

Although forward-looking statements help to provide complete information about the Company, readers should keep in mind that forward-looking statements may not be reliable.

Readers are cautioned not to place undue reliance on the forward-looking statements.

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Business Overview

The Company's business consists of the development, manufacture, marketing and sale of simple, easy to use diagnostic products and specimen collection devices using the Company's proprietary technologies, as well as other diagnostic products including immunoassays and other in vitro diagnostic tests that are used on other specimen types.

These products include tests for diseases including COVID-19, HIV, Hepatitis C, and Syphilis that are performed on a rapid basis at the point of care, and tests for drugs of abuse that are processed in a laboratory.

The Company's business consists of the development, manufacture, marketing, sale and distribution of simple, easy to use diagnostic products and specimen collection devices using its proprietary technologies, as well as other diagnostic products including immunoassays and other in vitro diagnostic tests that are used on other specimen types.

Our diagnostic products include tests for diseases including HIV, Hepatitis C, Syphilis, Sickle Cell and COVID-19 that are performed on a rapid basis at the point of care.

These products are sold in the United States and internationally to various clinical laboratories, hospitals, clinics, community-based organizations, and other public health organizations, distributors, government agencies, physicians’ offices, and commercial and industrial entities.

The Company's COVID-19 and HIV products are also sold in a consumer-friendly format in the over-the-counter (“OTC”) market in the U.S.

and, in the case of the HIV product, as a self-test to individuals in a number of other countries, including as an oral swab in-home test for HIV-1 and HIV-2 in Europe.

The Company's HIV and COVID-19 products are also sold in a consumer-friendly format in the OTC market in the U.S.

and, in the case of the HIV and HCV products, as a self-test to individuals in a number of other countries, including, for the HIV products, as an oral swab in-home test for HIV-1 and HIV-2 in Europe, and for the HCV products, as an OTC test.

In December 2025, the Company submitted a 510(k) to the FDA for clearance of its rapid molecular self-test for CT/NG, which is currently under review.

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

The revenues from sample management solutions are derived from product sales to commercial customers and sales into the academic and research markets.

Customers span the disease risk management, diagnostics, pharmaceutical, biotech, companion animal and environmental markets.

Customers span the disease risk management, diagnostics, pharmaceutical, biotech, and companion animal market segments.

The Company has also developed collection devices for the emerging microbiome market, which focuses on studying microbiomes and their effect on human and animal health.

The Company also has a urine collection device which allows for the volumetric collection of first void urine.

This product is in its early stages, and initial sales are occurring primarily through distributors and collaborations in the liquid biopsy and sexually transmitted disease markets.

Initial sales of this product for research use only are occurring primarily through distributors and collaborations in the liquid biopsy and sexually transmitted disease markets.

In December 2025, the Company also submitted a 510(k) to the FDA for clearance of its Colli-Pee ® at-home urine collection device for sexually transmitted infections, which is currently under review.

Recent Developments

During the first quarter of 2024, the Company initiated steps to wind down and exit the molecular services business offered by its Diversigen subsidiary.

This strategic action was largely completed in June 2024.

Diversigen contributed $1.7 million and $4.5 million, to revenues during the years ended December 31, 2024 and 2023, respectively.

During the first quarter of 2024, the Company also made a strategic decision to commence wind-down of its operations at it Novosanis subsidiary located in Belgium.

The Company intends to continue to sell and manufacture its Colli-Pee® product under the DNAG product line of collection devices.

As of December 31, 2024, this strategic plan was largely completed.

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

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

The Company has funded $30.0 million for its interest in Sapphiros.

Risk Assessment Testing

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

Sales of its risk assessment products contributed $8.4 million and $9.7 million to revenues during the years ended December 31, 2024, and 2023, respectively.

Sherlock Acquisition

In December 2024, the Company acquired Sherlock and its subsidiaries.

The Sherlock acquisition expands the Company's innovation pipeline with the addition of Sherlock’s molecular diagnostics platform, which is in Phase 3 clinical trials and is expected to provide rapid results with strong sensitivity and specificity in a disposable format that is well-suited for OTC usage.

Sherlock has operations in the United States and the United Kingdom.

In the third quarter of 2024, the Company announced the discontinuance of sales of its risk assessment product line which was completed in the second quarter of 2025.

Sales of its risk assessment products contributed $1.9 million and $8.4 million to revenues during the twelve months ended December 31, 2025 and 2024, respectively.

During the first quarter of 2025, the Company sold certain assets that made up the risk assessment product line including certain intellectual property, contracts, permits, and equipment.

Acquisition of BioMedomics, Inc.

In November 2025, the Company acquired BioMedomics, Inc.

(“BioMedomics”), pursuant to which BioMedomics became a wholly-owned subsidiary of the Company.

The BioMedomics acquisition expands the Company's diagnostic portfolio by adding SickleSCAN ® , a rapid, point-of-need test for sickle cell disease that is sold outside of the United States.

Results of Operations

The Company's consolidated net loss for the year ended December 31, 2024 was $19.5 million, or $0.26 per share on a fully diluted basis, compared to consolidated net income of $53.7 million, or $0.72 per share on a fully diluted basis, for the year ended December 31, 2023.

The Company's consolidated net loss for the year ended December 31, 2025 was $68.7 million, or $0.94 per share on a fully diluted basis, compared to consolidated net loss of $19.5 million, or $0.26 per share on a fully diluted basis, for the year ended December 31, 2024.

Year ended December 31, 2025 compared to December 31, 2024.

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38,356 51,046 (25) 33 28

COVID-19 Diagnostics 45,136 257,493 (82) 24 64

Risk Assessment Testing (3)

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Other products and services (4)

1,716 2,453 (30) 1 1

COVID-19 Diagnostics 620 45,136 (99) 1 24

Molecular Services — 1,705 (100) — 1

COVID-19 Molecular Products 36 286 (87) — —

Net product and services revenues 109,055 184,611 (41) 95 99

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Net revenues $ 115,021 $ 185,827 (38) % 100 % 100 %

(1) Includes HIV, HCV and Syphilis product revenues.

(1) Includes HIV, HCV, Syphilis, and SureQuick ® product revenues.

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

(3) Includes substance abuse testing product revenues.

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

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

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Consolidated net revenues decreased 38% to $115.0 million for the year ended December 31, 2025 from $185.8 million for the year ended December 31, 2024.

Sales of the Company's Diagnostics products increased 3% to $75.9 million for the year ended December 31, 2024 from $73.7 million for the year ended December 31, 2023.

This increase in revenues is largely due to higher international HIV revenues primarily driven by customer ordering patterns in Africa offset by lower sales into Asia.

Also contributing to the diagnostic revenue increase is an increase in sales of the Company's HCV domestic product and higher Syphilis revenues.

Offsetting these increases in revenues is a decline in HIV domestic revenue resulting from funding delays or reductions in funding for HIV products and customer ordering patterns.

Sales of the Company's Diagnostics products decreased 12% to $66.5 million for the year ended December 31, 2025 from $75.9 million for the year ended December 31, 2024.

This decrease in revenues is largely due to lower international HIV revenues primarily driven by a decrease in funding and customer ordering patterns in Africa and Asia.

Lower sales of the Company's HIV domestic products due to a decrease in overall funding impacting HIV programs also contributed to the decline in diagnostic revenues.

Offsetting these decreases in revenues is an increase in Syphilis revenue resulting from the launch in the second quarter of 2024.

Sample Management Solutions revenues decreased by 25% to $38.4 million for the year ended December 31, 2025 compared to $51.0 million for the year ended December 31, 2024.

Sales of the Company's Sample Management Solutions are being impacted by reduced consumer demand for products in which the Company's genomics collection devices are used, economic pressures, and the overall decline in the microbiome market.

Sales of the Company's Sample Management Solutions are being impacted by a large customer's bankruptcy.

Risk Assessment testing revenues decreased 78% to $1.9 million for the year ended December 31, 2025 from $8.4 million for the year ended December 31, 2024.

The Company discontinued this line of business at the end of 2024 and the business wound down in early 2025.

COVID-19 Diagnostics revenues decreased 99% to $0.6 million for the year ended December 31, 2025 from $45.1 million for the year ended December 31, 2024 due to decreased sales of the Company's InteliSwab ® tests through its U.S.

government procurement contracts.

The Company experienced a significant decline in COVID-19 revenues during 2024 due to the fulfillment of these contracts and lower overall demand for COVID-19 testing, and expects further declines in 2025.

Risk assessment testing revenues decreased 14% to $8.4 million for the year ended December 31, 2024 from $9.7 million for the year ended December 31, 2023 due to the loss of customers to competing products.

The Company has announced the discontinuance this product line and expects minimal sales through the first half of 2025 as it fulfills existing customer orders.

Molecular Services revenues, which are largely derived from the Company's microbiome molecular sequencing services, decreased 62% to $1.7 million for the year ended December 31, 2024 from $4.5 million for the year ended December 31, 2023.

The Company experienced a significant decline in COVID-19 revenues during 2024

due to the fulfillment of these contracts and lower overall demand for COVID-19 testing and anticipates that this trend will continue into the foreseeable future.

Molecular Services revenues, which were largely derived from the Company's microbiome molecular sequencing services, were nil for the year ended December 31, 2025 compared to $1.7 million for the year ended December 31, 2024.

The decrease in services revenues was due to the decision to exit this line of business.

Non-Product and Services Revenues

Non-product and services revenues decreased 63% to $1.2 million for the year ended December 31, 2024 from $3.3 million for the year ended December 31, 2023 as a result lower funding for research and development activities and lower royalty income.

Non-product and services revenues increased 391% to $6.0 million for the year ended December 31, 2025 from $1.2 million for the year ended December 31, 2024 primarily due to the recognition of revenue under funded R&D contracts that were assumed by the Company as a result of the Sherlock acquisition at the end of 2024 as well as an increase in funded R&D under other BARDA contracts.

CONSOLIDATED OPERATING RESULTS

Consolidated gross profit margin increased to 43% for the year ended December 31, 2024 from 42% for the year ended December 31, 2023.

Gross margins increased in 2024 despite the significant decrease in revenues due to following factors.

Results for the year ended December 31, 2024 included lower depreciation expense as a result of the inclusion in 2023 results of $6.9 million of accelerated depreciation associated with the wind-down of InteliSwab® manual assembly in Thailand as the Company on-shored and automated the manufacturing of this product at its Pennsylvania facilities and $0.5 million from the exit from one of its leased warehouse in an effort to consolidate facilities and further lower costs.

Results for the year ended December 31, 2024 also included improved manufacturing overhead absorption largely resulting from reduced salary and benefits due to the reduction of workforce put in place in 2024 and 2023.

2024 also included lower product scrap expense as compared to the prior year.

Offsetting these improvement to margins was lower gross margins generated from product mix primarily driven by the decline in InteliSwab® revenues and the mix of higher international sales of the Company's HIV products.

Other non-product revenues which contribute 100% to gross margins also declined for the year ended December 31, 2024.

Consolidated operating loss for the year ended December 31, 2024 was $28.3 million, a $60.9 million decline from the $32.7 million operating income reported for the year ended December 31, 2023.

Results for the year ended December 31, 2024 were negatively impacted by the decrease in revenues and were positively impacted by reduced operating expenses.

Results for the year ended December 31, 2024 included $4.4 million of impairment losses compared to $10.8 million for the year ended December 31, 2023.

Operating expenses for the year ended December 31, 2024, excluding the impairment charges, decreased by $25.0 million to $103.2 million compared to $128.2 million the year ended December 31, 2023, reflecting the impact of the Company's cost saving measures and headcount reductions.

Research and development expenses decreased 23% to $26.0 million for the year ended December 31, 2024 from $33.7 million for the year ended December 31, 2023 largely due to lower staffing costs due to a decrease in headcount and no related project management fees for our $109 million manufacturing expansion contract which ended during the fourth quarter of 2023, and a decrease in spend on COVID-19 product development.

This overall decrease in spend is partially offset by an increase in severance costs for those employees impacted by the Company's decisions to exit the molecular services business offered by its Diversigen subsidiary and wind-down of operations located in Belgium.

The Company expects research and development expense to increase in 2025 as we invest in the development of Sherlock's test for CT/NG and other innovative projects.

Sales and marketing expenses decreased 15% to $31.0 million for the year ended December 31, 2024 from $36.3 million for the year ended December 31, 2023 primarily due to decreased employee costs associated with a reduction in headcount, and lower advertising and consulting spend.

Amortization also decreased as $6.2 million of intangibles were impaired in 2023.

These decreases are partially offset by increases in bad debt expense and severance charges related to the discontinuance of the risk assessment product line.

General and administrative expenses decreased 21% to $46.2 million for the year ended December 31, 2024 from $58.2 million for the year ended December 31, 2023 largely due to lower legal fees relating to the Spectrum litigation (discussed further in Note 15, Commitments and Contingencies, to the consolidated financial statements included herein) and lower employee costs associated with reduced headcount partially offset by increase in non-cash stock compensation expense and transaction expenses associated with the Company's acquisition of Sherlock in December.

All of the above contributed to the Company's operating loss of $28.3 million for the year ended December 31, 2024, which included non-cash impairment charges of $4.4 million, non-cash charges of $10.9 million for depreciation and amortization, and $11.9 million for stock-based compensation.

The Company's operating income of $32.7 million for the year ended December 31, 2023 included a non-cash impairment charge of $10.8 million, non-cash charges of $20.9 million for depreciation and amortization, and $10.7 million for stock-based compensation.

Consolidated gross profit margin decreased to 41.9% for the year ended December 31, 2025 from 42.7% for the year ended December 31, 2024.

The largest driver of the margin decline was a negative product mix driven by lower InteliSwab® sales that generate higher gross margins and lower genomics sales that also generate higher gross margins.

Also contributing to the decline in margins was lower absorption of fixed overhead costs due to lower revenues and production.

The termination of the microbiome molecular sequencing services business which historically dragged down the gross margin rate helped to improve the gross margin rate during the period along with the higher non-product revenues which contribute 100% to gross margin.

Consolidated operating loss for the year ended December 31, 2025 was $72.0 million, compared to a $28.3 million operating loss reported for the year ended December 31, 2024.

Results for the year ended December 31, 2025 were negatively impacted by the decrease in revenues, lower gross margins earned on the revenues and by higher operating expenses.

Results for the year ended December 31, 2025 included change in the estimated fair value of acquisition-related contingent consideration of $4.6 million offset by gain on sale of assets of $0.7 million.

Results for the year ended December 31, 2024 included impairment charges of $4.4 million.

Research and development expenses increased 63% to $42.5 million for the year ended December 31, 2025 from $26.0 million for the year ended December 31, 2024 largely due to higher spend incurred for clinical trials for the CT/NG device and additional research and development operational expense layered in from the acquired Sherlock companies.

Sales and marketing expenses decreased 16% to $26.1 million for the year ended December 31, 2025 from $31.0 million for the year ended December 31, 2024 primarily due to decreased employee costs associated with a reduction in headcount, and lower market research and advertising spend.

General and administrative expenses increased 3% to $47.7 million for the year ended December 31, 2025 from $46.2 million for the year ended December 31, 2024 largely due to higher legal fees relating to the NowDx litigation (discussed further in Note 14, Commitments and Contingencies, to the consolidated financial statements included herein) and costs associated with the Sherlock acquisition.

Also contributing to the increase were additional general and administrative expenses layered in from the acquired Sherlock companies which occurred in December 2024.

Lower stock compensation expense, consulting fees, and decreased employee costs partially offset the increase in general and administrative spend.

All of the above contributed to the Company's operating loss of $72.0 million for the year ended December 31, 2025, which included non-cash charges of $10.2 million for depreciation and amortization, $10.1 million for stock-based compensation, and $4.6 million for change in the estimated fair value of acquisition-related contingent consideration.

The Company's operating loss of $28.3 million for the year ended December 31, 2024 included a non-cash charge of $11.9 million for stock-based compensation, $10.9 million for depreciation and amortization, and impairment charges of $4.4 million.

CONSOLIDATED OTHER INCOME

Other income for the year ended December 31, 2025 was $7.4 million compared to $12.2 million for the year ended December 31, 2024.

This decrease is largely due to the inclusion in 2023 results of $12.8 million of additional profit earned above the guaranteed profit earned under the $109 million DOD manufacturing expansion contract that was completed in the fourth quarter of 2023.

This additional profit resulted from lower spend under the fixed firm contract than originally budgeted.

Other income in 2023 also included $2.8 million of guaranteed profit which covered project management costs recognized straight-line over the term of the contract.

These amounts included in 2023 other income, which were not repeated in 2024, were partially offset by higher interest income and foreign currency gains for the year ended December 31, 2024 as compared to 2023.

The decrease in other income is primarily due to lower interest income and lower foreign currency gains.

CONSOLIDATED INCOME TAXES

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deferred tax asset is appropriate as the facts and circumstances necessitating the allowance have not changed.

Although the Company has achieved U.S.

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

For the year ended December 31, 2024, the Company recorded income tax expense of $1.8 million.

2024 income tax expense is comprised of $0.4 million of U.S.

federal and state income tax expense, and foreign income tax expense of $1.4 million.

For the year ended December 31, 2023, the Company recorded income tax expense of $2.6 million.

2023 income tax expense is comprised of U.S.

state income tax expense of $1.9 million, and foreign income tax expense of $0.7 million.

The Company has not achieved U.S.

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

For the years ended December 31, 2025 and 2024, the Company recorded income tax expense of $1.8 million.

Liquidity and Capital Resources

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The Company's cash and cash equivalents decreased to $199.3 million at December 31, 2025 from $267.8 million at December 31, 2024.

$82.0 million, or 31%, of the Company's $267.8 million in cash, cash equivalents and available-for-sale securities is held by DNAG, the Company's Canadian subsidiary.

The Company has $86.9 million, or 44% of its $199.3 million of cash, cash equivalents and available-for-sale securities held by DNAG, the Company's Canadian subsidiary.

The Company's working capital decreased to $222.1 million at December 31, 2025 from $299.7 million at December 31, 2024.

The decrease in cash and cash equivalents and working capital is primarily due to the investment in Sapphiros of $30.0 million and the initial payment for the acquisition of Sherlock for $5.0 million.

Working capital is primarily a function of sales, purchase volumes, inventory requirements, and vendor payment terms.

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Operating Activities

During the year ended December 31, 2024, net cash provided by operating activities was $27.4 million.

Cash flows from operations can be significantly impacted by factors such as timing of receipt from customers, inventory purchases, and payments to vendors.

The Company's net loss of $19.5 million included non-cash charges of depreciation and amortization expense of $10.9 million, stock-based compensation expense of $11.9 million, impairment charges taken for idle equipment and right-of-use assets associated with Diversigen and Novosanis of $4.4 million, a loss on equity investment of 1.7 million and other non-cash charges aggregating to $0.8 million.

Cash provided by the Company's working capital accounts included a decrease in accounts receivable of $15.9 million largely associated with lower overall sales and collections of balances due, a decrease in inventory of $13.1 million as the Company fulfilled demand for its InteliSwab® product, and a decrease in prepaid and other assets of $4.1 million.

Offsetting these increases in cash was a $7.6 million decrease in accounts payable due to the timing of invoices received and payments made and a decrease in accrued expenses and other liabilities of $6.4 million.

During the year ended December 31, 2025, net cash used in operating activities was $49.0 million.

Cash flows from operations can be significantly impacted by factors such as timing of receipts from customers, inventory purchases, and payments to vendors.

The Company's net loss of $68.7 million included non-cash charges of depreciation and amortization expense of $10.2 million, stock-based compensation expense of $10.1 million, change in estimated fair value of acquisition-related contingent consideration of $4.6 million, a loss on equity investment of $2.3 million, and other non-cash charges aggregating to $1.2 million.

Cash used by the Company's working capital accounts included a decrease in accrued expenses and other liabilities of $8.7 million largely attributable to lower bonus accruals, an increase in prepaid expenses and other assets of $2.4 million associated with an increase in the Company's Canadian income tax receivable and increased prepayment of costs associated with the Company's efforts to prepare for production of the CT/NG device, a decrease of $1.7 million in accounts payable, and a decrease in deferred revenue of $1.5 million as work on grant projects is completed and earned.

Offsetting these uses of cash is a decrease in inventory balances of $3.6 million related to the discontinuance of sales of the Company's Risk Assessment products and lower demand for its InteliSwab ® COVID-19 Rapid test, and a decrease in accounts receivable of $1.9 million as the Company experienced a decline in overall sales.

Investing Activities

Net cash used in investing activities was $39.0 million for the year ended December 31, 2024, which reflects proceeds from the maturities and redemptions of investments of $53.1 million, offset by $53.2 million used to purchase investments and $30.0 million used to purchase an equity stake in Sapphiros.

Investing activities also included $3.8 million to acquire property and equipment to support normal operations of the business and the acquisition of Sherlock of $5.0 million.

Net cash used in investing activities was $6.8 million for the year ended December 31, 2025, associated with proceeds from sale of property and equipment offset by the acquisition of new property and equipment.

Investing activities also includes $3.6 million of cash used for the acquisition of BioMedomics .

Financing Activities

Net cash used in financing activities was $4.2 million for the year ended December 31, 2024, which reflects $3.5 million used for the repurchase of common stock to satisfy withholding taxes related to the vesting of restricted awarded to the Company's employees and payments for lease liabilities of $0.8 million.

Net cash used in financing activities was $16.9 million for the year ended December 31, 2025, which was largely comprised of $15.0 million to repurchase common stock pursuant to the Company's stock repurchase plan and $1.8 million used for the repurchase of common stock to satisfy withholding taxes related to the vesting of restricted stock awarded to the Company's employees.

The Company's contractual obligations are included in Note 14 of its consolidated financial statements.

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Revenue from product sales is recognized upon transfer of control of a product to a customer based on an amount that reflects the consideration the Company is entitled to, net of allowances for any discounts or rebates.

The Company generally does not grant product return rights to its customers, except for warranty returns and return rights on sales of its OraQuick ® In-Home HIV test to the retail trade, and InteliSwab ® products to the retail trade and certain customers.

The Company generally does not grant product return rights to its customers, except for warranty returns and return rights on sales of its OraQuick ® HIV Self-Test to the retail trade, and InteliSwab ® products to the retail trade and certain other customers.

Historically, returns arising from warranty issues have been infrequent and immaterial.

Accordingly, the Company expenses warranty returns as incurred.

The Company records shipping and handling charges billed to the Company's customers as product revenue and the related expense as cost of products sold.

Service revenues

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The Company recognizes revenues when it satisfies its performance obligations for services rendered.

Service revenue was discontinued with the closure of the molecular services line of business in 2024.

Arrangements with multiple-performance obligations

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The consideration allocated to each distinct performance obligation is recognized as revenue when control is transferred for the related goods or services or when the performance obligation has been satisfied.

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

The Company's inventories are stated at the lower of cost or net realizable value, with cost determined on an average cost method, and include the cost of raw materials, labor and overhead.

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

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

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

The Company reserves for inventory expiring within ninety days, with the exception of inventory that will be consumed or will have expiration dates extended.

It also considers items identified through specific identification procedures in assessing the adequacy of its reserve.

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The process of evaluating the potential impairment of goodwill is highly subjective and requires significant judgment, including the identification of reporting units, qualitative evaluation of events and circumstances to determine if it is more likely than not that an impairment exists, and, if necessary, the estimation of the fair value of the applicable reporting unit.

The Company performed its annual goodwill impairment analysis and noted there were impairment indicators.

A quantitative impairment test was performed on both reporting units.

Both reporting units showed fair value exceeded carrying value.

The diagnostic reporting unit impairment results reflected a fair value with a narrower margin to its carrying value.

As of November 30, 2025, the annual impairment testing date, the diagnostic reporting unit fair value exceeded the carrying value by 13%.

As of December 31, 2025, the diagnostic reporting unit had $8.2 million of goodwill.

The diagnostic reporting unit goodwill impairment analysis used both an income and market approach.

These two approaches were weighted and the income approach was weighed more than the market approach.

Key assumptions included estimates of revenues increasing each year as new products are launched and a weighted-average cost of capital based on guideline companies.

The revenue and cashflows forecasts assume products are passed by regulatory bodies on a set timeline and market competition of future products is low.

The revenues assume market growth will accelerate each year.

If there are delays to attaining regulatory approval or successfully launching products, this could have a negative outcome on the goodwill impairment analysis.

In addition, if the Company's weighted-average cost of capital is not aligned with guideline companies, this could negatively affect the goodwill impairment outcome.

Business Combinations and Contingent Consideration

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We account for contingent consideration in accordance with applicable guidance provided within the business combination accounting guidance.

As part of our consideration for the Sherlock acquisition, we are contractually obligated to pay certain consideration resulting from the outcome of future events.

As part of our consideration for the Sherlock acquisition, we are contractually obligated to pay

certain consideration resulting from the outcome of future events.

Therefore, we are required to update our underlying assumptions each reporting period, based on new developments, and record such contingent consideration liabilities at fair value until the contingency is resolved.

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

What changed 10-K

Item 7. Management’s Discussion and Analysis