ORASURE TECHNOLOGIES INC 10-Q

Item 1. FINANCIAL STATEMENTS (UNAUDITED) ORASURE TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Unaudited) (in thousands, except per share amounts) March 31, 2026 December 31, 2025 ASSETS Current Assets: Cash and cash equivalents $ 176,964 $ 199,278 Accounts receivable, net of allowance for doubtful accounts of $ 253 and $ 188 24,807 22,203 Inventories 30,307 31,060 Prepaid expenses 5,225 5,221 Income tax receivable 1,608 — Other current assets 1,870 4,146 Total current assets 240,781 261,908 Noncurrent Assets: Property, plant and equipment, net of accumulated depreciation 37,857 39,179 Operating right-of-use assets, net 11,548 11,996 Finance right-of-use assets, net 203 146 Intangible assets, net of accumulated amortization of $ 26,977 and $ 27,180 18,940 19,046 Goodwill 43,047 43,363 Investment in equity method investee 24,868 25,956 Deferred tax asset 643 271 Other noncurrent assets 1,282 1,303 Total noncurrent assets 138,388 141,260 TOTAL ASSETS $ 379,169 $ 403,168 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable $ 10,628 $ 6,521 Deferred revenue 872 1,518 Accrued expenses and other current liabilities 11,590 11,149 Finance lease liability 83 63 Operating lease liability 2,134 2,164 Acquisition-related contingent consideration obligation 18,777 18,380 Total current liabilities 44,084 39,795 Noncurrent Liabilities: Finance lease liability 143 100 Operating lease liability 10,299 10,870 Acquisition-related contingent consideration obligation 9,029 9,333 Other noncurrent liabilities 2,290 2,243 Total noncurrent liabilities 21,761 22,546 TOTAL LIABILITIES 65,845 62,341 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, 69,397 and 70,391 shares issued and outstanding — — Additional paid-in capital 527,900 531,393 Accumulated other comprehensive loss ( 20,037 ) ( 18,404 ) Accumulated deficit ( 194,539 ) ( 172,162 ) Total stockholders' equity 313,324 340,827 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 379,169 $ 403,168 See accompanying notes to the consolidated financial statements. 3 Table of Contents ORASURE TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (in thousands, except per share amounts) For the Three Months Ended March 31, 2026 2025 NET REVENUES: Products and services $ 26,376 $ 28,997 Other 1,549 934 27,925 29,931 COST OF PRODUCTS AND SERVICES SOLD 16,121 17,632 Gross profit 11,804 12,299 OPERATING EXPENSES: Research and development 13,654 9,603 Sales and marketing 6,770 6,859 General and administrative 14,556 14,102 Change in the estimated fair value of acquisition-related contingent consideration 93 478 Gain on sale of assets — ( 993 ) 35,073 30,049 Operating loss ( 23,269 ) ( 17,750 ) OTHER INCOME 1,548 1,778 Loss before income taxes and equity investment ( 21,721 ) ( 15,972 ) INCOME TAX BENEFIT ( 432 ) ( 456 ) LOSS BEFORE EQUITY INVESTMENT ( 21,289 ) ( 15,516 ) LOSS ON EQUITY INVESTMENT ( 1,088 ) ( 524 ) NET LOSS $ ( 22,377 ) $ ( 16,040 ) LOSS PER SHARE: BASIC $ ( 0.32 ) $ ( 0.21 ) DILUTED $ ( 0.32 ) $ ( 0.21 ) SHARES USED IN COMPUTING LOSS PER SHARE: BASIC 69,675 74,867 DILUTED 69,675 74,867 See accompanying notes to the consolidated financial statements. 4 Table of Contents ORASURE TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Unaudited) (in thousands) For the Three Months Ended March 31, 2026 2025 NET LOSS ( 22,377 ) ( 16,040 ) OTHER COMPREHENSIVE (LOSS) INCOME Currency translation adjustments ( 1,633 ) 238 COMPREHENSIVE LOSS $ ( 24,010 ) $ ( 15,802 ) See accompanying notes to the consolidated financial statements. 5 Table of Contents ORASURE TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands) For the Three Months Ended March 31, 2026 2025 OPERATING ACTIVITIES: Net loss $ ( 22,377 ) $ ( 16,040 ) Adjustments to reconcile net loss to net cash used in operating activities Stock-based compensation 2,768 2,687 Depreciation and amortization 2,341 2,808 Other non-cash amortization ( 82 ) ( 37 ) Provision for credit losses 66 ( 248 ) Unrealized foreign currency (gain) loss ( 153 ) 194 Interest expense on finance leases 3 2 Loss on equity investment 1,088 524 Deferred income taxes ( 354 ) ( 384 ) Gain on sale of fixed assets — ( 780 ) Change in the estimated fair value of acquisition-related contingent consideration 93 478 Changes in assets and liabilities: Accounts receivable ( 2,621 ) 2,413 Inventories 714 ( 1,482 ) Prepaid expenses and other assets 583 ( 2,075 ) Accounts payable 4,104 ( 726 ) Deferred revenue ( 645 ) ( 451 ) Accrued expenses and other liabilities 577 ( 6,616 ) Net cash used in operating activities ( 13,895 ) ( 19,733 ) INVESTING ACTIVITIES: Proceeds from sale of assets — 790 Purchases of property and equipment ( 913 ) ( 420 ) Net cash (used in) provided by investing activities ( 913 ) 370 FINANCING ACTIVITIES: Cash payments for lease liabilities ( 21 ) ( 12 ) Repurchase of common stock ( 5,000 ) — Payment of taxes related to net share settlement of equity awards ( 1,261 ) ( 941 ) Net cash used in financing activities ( 6,282 ) ( 953 ) EFFECT OF FOREIGN EXCHANGE RATE CHANGES ON CASH ( 1,224 ) 122 NET DECREASE IN CASH AND CASH EQUIVALENTS ( 22,314 ) ( 20,194 ) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 199,278 267,763 CASH AND CASH EQUIVALENTS, END OF PERIOD $ 176,964 $ 247,569 SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: (Refund received) cash paid for income taxes $ ( 75 ) $ 1,796 Non-cash investing and financing activities Accrued property and equipment purchases $ 471 $ 163 See accompanying notes to the consolidated financial statements. 6 Table of Contents ORASURE TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (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”), Sherlock Biosciences, Inc. ("Sherlock"), and BioMedomics, Inc. ("BioMedomics"). Novosanis NV ("Novosanis") was a subsidiary of OraSure until it was legally dissolved in June 2025. 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, 2025. Results of operations for the three months ended March 31, 2026 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, 2025 that have had a material impact on the consolidated financial statements and related notes except as discussed herein. 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 and are considered short-term investments. 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 maintains cash balances in the United States in excess of the federally insured limits. The Company periodically evaluates financial institutions and believes the risk of loss to be remote due to this evaluation. Fair Value of Financial Instruments As of March 31, 2026 and December 31, 2025, 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). 7 Table of Contents 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. The following table provides a summary of the recognized assets and liabilities that are measured at fair value on a recurring basis: March 31, December 31, Level 2026 2025 Guaranteed investment certificates 1 $ 12,985 $ 13,114 Trading securities 1 466 543 Contingent consideration: 3 Current portion $ 18,777 $ 18,380 Long-term portion 9,029 9,333 $ 27,806 $ 27,713 Included in cash and cash equivalents at March 31, 2026 and December 31, 2025 was $ 13.0 million and $ 13.1 million, respectively, invested in guaranteed investment certificates. Included in cash and cash equivalents at March 31, 2026 and December 31, 2025, was $ 69.0 million and $ 68.4 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. The Company paused the plan in January 2026 and is no longer allowing new participants to enter the plan. 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 March 31, 2026 and December 31, 2025 was $ 0.5 million, and was calculated using the quoted market prices of the assets as of those dates. All investments in the plan are classified as trading securities and measured as Level 1 instruments. The fair value of 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 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 three different tranches: milestone payments, royalty payments, and earnout payments. The significant quantitative unobservable inputs for the milestone payments are the discount rate and probability of achieving regulatory approval milestones. 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 and development intangible asset. The fair value methodology for earnout payments is based on a Monte Carlo model. Significant quantitative unobservable inputs are future expected cash flows, discount rate and volatility rate. There was an increase of $ 4.7 million in the fair value of the Company's contingent consideration from date of acquisition to March 31, 2026 due to the milestone and royalty payments. Fair Value Balance at December 31, 2025 $ 27,713 Additions — Change in fair value 93 Balance at March 31, 2026 $ 27,806 8 Table of Contents Equity Method Investee In January 2024, the Company led 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 March 31, 2026, 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 value of the investment in Sapphiros of $ 24.9 million as of March 31, 2026 is included in the investment in equity method investee line of the Company's balance sheet. 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 March 31, 2026 financial statements, the Company evaluated the investment in Sapphiros for impairment and concluded there was no such impairment. The Company's investment in Sapphiros was valued at $ 26.0 million as of December 31, 2025. Related Party The Company loaned Sapphiros $ 0.3 million during the year ended December 31, 2025. The loan plus interest is due in December 2026. During the year ended December 31, 2025, the Company entered into an agreement with Sapphiros to develop certain products for Sapphiros. A total of $ 0.1 million of revenue was recognized from this agreement for the three months ended March 31, 2026. No equivalent amount was recognized for the three months ended March 31, 2025. 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. The Company assesses 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 statutes. The assessment of an uncertain tax position requires significant judgment. 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 $ 0.2 million and $( 0.4 ) million for the three months ended March 31, 2026 and 2025, respectively. Accumulated Other Comprehensive Loss Change in accumulated other comprehensive loss by component is listed below: Foreign Currency Total Balance at December 31, 2025 $ ( 18,404 ) $ ( 18,404 ) Other comprehensive loss ( 1,633 ) ( 1,633 ) Balance at March 31, 2026 $ ( 20,037 ) $ ( 20,037 ) 9 Table of Contents Recent Accounting Pronouncements 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 July 2025, the FASB issued ASU No. 2025-05, Financial Instruments—Credit Losses (Topic 326), Measurement of Credit Losses for Accounts Receivable and Contract Assets . 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 . 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 a material 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 a material impact on the Company's consolidated financial statements. In December 2025, the FASB issued ASU No. 2025-10, Government Grants (Topic 832), Accounting for Government Grants Received by Business Entities . The purpose of this update was to improve US GAAP by establishing authoritative guidance on the accounting for government grants received by business entities. For public business entities, the amendments in this ASU are effective for annual reporting periods beginning after December 15, 2028, and interim reporting periods within those annual reporting periods. Early adoption is permitted in both interim and annual reporting periods in which financial statements have not yet been issued or made available for issuance. The amendments can be applied under a modified prospective approach, a modified retrospective approach, or a retrospective approach. Management is evaluating the impact on the Company's consolidated financial statements. In December 2025, the FASB issued ASU No. 2025-11, Interim Reporting (Topic 270), Narrow-Scope Improvements . The purpose of this update was to improve the navigability of the required interim disclosures and clarifying when that guidance is applicable. The update also provides additional guidance on what disclosures should be provided in interim periods and adds a principal that requires entities to disclose events since the end of the last annual reporting period that have a material impact on the entity. For public business entities, the amendments in this ASU are effective for interim reporting periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The amendments in this update can be applied either prospectively 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. 2. INVENTORIES: March 31, December 31, 2026 2025 Raw materials $ 15,534 $ 14,831 Work in process 1,042 56 Semi-finished goods 2,581 1,965 Finished goods 11,150 14,208 $ 30,307 $ 31,060 10 Table of Contents 3. PROPERTY, PLANT, AND EQUIPMENT, NET: March 31, December 31, 2026 2025 Land $ 1,118 $ 1,118 Buildings and improvements 39,047 39,071 Machinery and equipment 46,349 46,202 Computer equipment and software 11,752 11,101 Furniture and fixtures 1,624 1,632 Construction in progress 2,906 2,931 102,796 102,055 Accumulated depreciation ( 64,939 ) ( 62,876 ) $ 37,857 $ 39,179 4. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES: March 31, December 31, 2026 2025 Payroll and related benefits $ 5,541 $ 5,255 Professional fees 2,425 1,938 Sales tax payable 1,044 1,152 Other 2,580 2,804 $ 11,590 $ 11,149 11 Table of Contents 5. TERMINATION BENEFITS: Q2 2024 Reduction in Workforce During the second quarter of 2024, the Company executed a 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. As of March 31, 2026 the Company had paid the full $ 1.7 million related to the reduction in workforce. No additional charges were incurred during the three months ended March 31, 2026. This reduction in workforce was completed by March 31, 2026. 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. As of March 31, 2026, the Company had $ 0.1 million accrued and had paid $ 1.1 million related to the reduction in workforce. The Company expects this reduction in workforce to be completed by September 2026. Q1 2026 Reduction in Workforce During the first quarter of 2026, the Company executed a reduction in workforce to better align the Company's cost structure. The charges for termination benefits included in the Company's consolidated statements of operations are as follows: For the Three Months Ended March 31, 2026 Cost of products and services sold $ 65 Research and development 264 Sales and marketing 260 General and administrative 680 $ 1,269 As of March 31, 2026, the Company had $ 1.0 million accrued and had paid $ 0.2 million related to the reduction in workforce. The Company expects this reduction in workforce to be completed by February 2027. 12 Table of Contents 6. REVENUES: Revenues by Product Line . The following table represents total net revenues by product line: For the Three Months Ended March 31, 2026 2025 HIV $ 13,019 $ 12,900 Sample Management Solutions (1) 9,058 9,110 HCV 2,663 4,333 Other product and services revenues (2) 1,618 773 COVID-19 (3) 18 461 Risk Assessment Testing (4) — 1,420 Net product and services revenues $ 26,376 $ 28,997 Non-product and services revenues (5) 1,549 934 Net revenues $ 27,925 $ 29,931 (1) Includes Genomics, Microbiome and Colli-Pee ® product revenues. (2) Includes Syphilis revenues and single order fulfillment. (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 March 31, 2026 2025 United States $ 18,672 $ 20,335 Africa 6,774 7,189 Europe 1,449 1,637 Other regions 1,030 770 $ 27,925 $ 29,931 Customer Concentrations. The following table represents customer concentration risk: For the Three Months Ended March 31, Net Revenues 2026 2025 Commercial customer 12 % N/A March 31, December 31, Accounts Receivable 2026 2025 Commercial customer (1) 14 % N/A Commercial customer (1) N/A 15 % (1) Each commercial customer is different. 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. 13 Table of Contents Deferred Revenue. The Company records deferred revenue when funds are received prior to the recognition of the associated revenue. Deferred revenue as of March 31, 2026 and December 31, 2025 was comprised of customer prepayments of $ 0.9 million and $ 1.2 million, respectively. Deferred revenue as of December 31, 2025 was also comprised of $ 0.4 million of unearned grant income. The Company had no unearned grant income in deferred revenue as of March 31, 2026. The following table represents deferred revenue recognized: For the Three Months Ended March 31, Deferred Revenue Recognized 2026 2025 Accrued at beginning of year $ 961 $ 771 7. INCOME TAXES: The components of the income tax benefit are as follows: For the Three Months Ended March 31, 2026 2025 Federal income tax expense $ 3 $ 8 State income tax expense 28 9 Foreign income tax benefit ( 463 ) ( 473 ) $ ( 432 ) $ ( 456 ) During the three months ended March 31, 2026 and 2025, the Company recorded income tax benefit of $ 0.4 million and $ 0.5 million, respectively. The three months ended March 31, 2026 and 2025 net tax benefits are due to having a U.S. and foreign pretax loss in 2026 and 2025, respectively. During the three months ended March 31, 2026 and 2025, the Company had an effective tax rate of 2.0 % and 2.9 %, respectively. The decrease in the Company's effective tax rate was primarily due to an increase in the valuation allowance associated with the Company's U.S. operations. 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. 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 March 31, 2026 and December 31, 2025. Uncertain tax positions were approximately $ 2.0 million as of March 31, 2026 and December 31, 2025. 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. 8. 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 14 Table of Contents 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 March 31, 2026 and 2025, outstanding common stock options, unvested restricted stock, and unvested performance stock units representing 746 shares and 689 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 1.8 million shares of its common stock under the Repurchase Program during the three months ended March 31, 2026. 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, 2026 and 2025 is as follows: Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Loss Accumulated Deficit Total Shares Amount Balance at December 31, 2025 70,391 $ — $ 531,393 $ ( 18,404 ) $ ( 172,162 ) $ 340,827 Vesting of restricted stock and performance stock units 1,190 — — — — — Purchase and retirement of common shares in satisfaction of minimum tax withholdings for vested restricted stock and performance stock units ( 416 ) — ( 1,261 ) — — ( 1,261 ) Stock-based compensation — — 2,768 — — 2,768 Shares repurchased and retired in connection with share repurchase program ( 1,768 ) — ( 5,000 ) — — ( 5,000 ) Net loss — — — — ( 22,377 ) ( 22,377 ) Currency translation adjustments — — — ( 1,633 ) — ( 1,633 ) Balance at March 31, 2026 69,397 $ — $ 527,900 $ ( 20,037 ) $ ( 194,539 ) $ 313,324 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 in satisfaction of minimum tax withholdings for vested restricted stock and performance stock units ( 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 15 Table of Contents 10. 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. 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, 2026 2025 United States $ 35,387 $ 36,254 United Kingdom 9,527 10,061 Canada 4,352 4,642 Other regions 342 364 $ 49,608 $ 51,321 16 Table of Contents The following table represents reported segment revenues, segment profit (loss), and significant segment expenses: For the Three Months Ended March 31, 2026 2025 Net revenues $ 27,925 $ 29,931 Cost of products and services sold (2) 16,121 17,632 Gross profit 11,804 12,299 Research and development (2) 13,654 9,603 Sales and marketing (2) 6,770 6,859 General and administrative (2) 14,556 14,102 Change in the estimated fair value of acquisition-related contingent consideration 93 478 Gain on sale of assets — ( 993 ) Operating loss ( 23,269 ) ( 17,750 ) Other income (expense) 169 ( 21 ) Interest revenue 1,220 2,156 Other segment items (1) 159 ( 357 ) Loss before income taxes and equity investment ( 21,721 ) ( 15,972 ) Income tax benefit ( 432 ) ( 456 ) Loss on equity investment ( 1,088 ) ( 524 ) Net loss $ ( 22,377 ) $ ( 16,040 ) (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, 2026 2025 Stock-based Compensation Cost of products and services sold $ 190 $ 169 Research and development 280 203 Sales and marketing 204 218 General and administrative 2,094 2,097 $ 2,768 $ 2,687 For the Three Months Ended March 31, 2026 2025 Depreciation & Amortization Cost of products and services sold $ 992 $ 1,389 Research and development 349 485 Sales and marketing 2 27 General and administrative 998 907 $ 2,341 $ 2,808 17 Table of Contents 11. BUSINESS COMBINATIONS: BioMedomics On November 12, 2025, the Company acquired all of the outstanding stock of BioMedomics, pursuant to the terms of an acquisition agreement (the "Acquisition Agreement"). The Company began operating this entity as of the November 12, 2025 closing date. The primary reason for the acquisition of BioMedomics was to expand 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. The initial aggregate purchase price of this transaction was funded with cash on hand as shown in the table below: Cash paid to BioMedomics $ 2,865 Transaction expenses 403 Debt paid off 330 Earnout contingent consideration 233 Expense fund 40 Initial aggregate purchase price $ 3,871 Pursuant to the Acquisition Agreement, the Company agreed to pay up to $ 5.0 million of contingent consideration based on the achievement of sales thresholds before December 31, 2031. The acquisition-date fair value of the earnout contingent consideration was $ 0.2 million. The range of outcome for the earnout contingent consideration is zero to $ 5.0 million. During the year ended December 31, 2025, the Company incurred a total of $ 0.5 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, 2025. The following table summarizes the estimated fair values of the assets acquired and liabilities assumed as of the acquisition date: Assets Acquired Other current and non current assets $ 10 Inventory 284 Operating right-of-use assets 120 Developed technology intangible asset 1,900 Goodwill 1,775 Total assets acquired 4,089 Liabilities Assumed Accounts payable 34 Current liabilities 17 Deferred revenue 72 Operating lease liability 120 Total liabilities assumed 243 Net Assets Acquired 3,846 Estimated fair value of contingent consideration ( 233 ) Net Cash Paid (net of cash acquired of $ 25 ) $ 3,613 The purchase price was allocated to the tangible assets and identifiable intangible asset acquired and liabilities assumed based on their acquisition-date estimate fair values. The identifiable intangible asset was developed technology. The developed technology was all assigned a ten year useful life. 18 Table of Contents The Company, with the assistance of an independent valuation specialist, assessed the fair value of the intangible asset and contingent consideration of BioMedomics. The fair values recorded as of November 12, 2025 are based on significant inputs that are not observable in the market and thus represent a fair value measurement categorized within Level 3 of the fair value hierarchy. The fair value of the acquired developed technology was determined using the multi-period excess earnings method, which required judgment in estimating appropriate cash flows, discount rate, survival factor, and remaining useful life. The fair value of the earnout contingent consideration was determined using the Monte Carlo simulation model, which required judgment in estimating expected revenue, volatility, expected discount rate and risk-free interest 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 BioMedomics providing a product that will enable the Company to leverage the product with existing and new customers. The goodwill is not deductible for income tax purposes. The Company continues to evaluate the fair value of 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 BioMedomics consist of sales from the SickleSCAN ® test. Effective as of November 12, 2025, the financial results of BioMedomics are included in the consolidated financial results of the Company. BioMedomics contributed $ 0.1 million and $ 1.1 thousand of revenue and net income, respectively, to the consolidated statement of operations for the year ended December 31, 2025. Unaudited Pro Forma Financial Information The unaudited pro forma results presented below include the results of the BioMedomics acquisition as if it had been consummated as of January 1, 2025. The unaudited pro forma results include amortization of the acquired intangible asset, stock compensation, and lease expense 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, 2025. For the Three Months Ended March 31, 2025 Net revenues $ 30,205 Net loss $ ( 16,071 ) 19 Table of Contents 12. CONTINGENCIES: Collaborations Sherlock has active third-party license agreements entered into in order to advance and obtain technologies and services related to the business. Under these licenses, the Company is required to make up to $ 3.8 million of cash payments upon the achievement of certain scientific and commercial milestones as well as low single digit royalty payments on product sales. The Company has the right to terminate the licenses. 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. On February 11, 2026, the Court issued an order scheduling trial for January 17, 2027. The case is currently in the discovery phase.