What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-08-07 compared with 2026-05-08 · 111 added, 43 removed, 65 unchanged (70% of the section changed)

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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.

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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.

In December 2025, the Company submitted a 510(k) to the FDA for clearance of its Colli-Pee ® at-home urine collection device for sexually transmitted infections, which was approved in June 2026.

Risk Assessment Testing

During 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 did not contribute to revenues during the three months ended March 31, 2026.

Sales of its risk assessment products contributed $1.4 million to revenues during the three months ended March 31, 2025.

Sales of its risk assessment products did not contribute to revenues during the six months ended June 30, 2026.

Sales of its risk assessment products contributed $0.4 million to revenues during the three months ended June 30, 2025 and $1.9 million for the six months ended June 30, 2025.

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.

Recent Developments

In June 2026, the Company received clearance from the FDA of its Colli-Pee™•Dx Urine Collection Kit for use on Roche's tests for Chlamydia trachomatis (CT), Neisseria gonorrhoeae (NG), Trichomonas vaginalis (TV), and Mycoplasma genitalium (MG) and to run on Roche’s cobas® 5800, 6800, and 8800 molecular diagnostic systems.

The Colli-Pee™•Dx Urine Collection Kit will be sold by the Company's subsidiary DNA Genotek Inc.

and supports at-home self-collection of first-void urine, enabling convenient sample collection at-home or in any private setting for both male and female patients.

In July 2026, the Company received Emergency Use Authorization ("EUA") from the FDA for its second generation OraQuick™ Ebola Rapid Antigen Test for use with whole blood in live patients, as well as cadaveric oral fluid from individuals suspected to have had Ebola disease at the time of death.

The test can detect all four Ebola viruses currently known to cause disease in humans:

Bundibugyo, Zaire, Sudan, and Taï Forest.

The OraQuick® Ebola Rapid Antigen Test originally received De Novo marketing authorization from the FDA in 2019, making it the first and only rapid antigen test to receive full authorization for the detection of Ebola virus.

The second-generation test authorized by the FDA has increased sensitivity, new chemistry, and a more automated manufacturing process.

It was developed in cooperation with the Biomedical Advanced Research and Development Authority (BARDA) under a contract granted in 2022.

The current Ebola epidemic, centered in the Democratic Republic of the Congo with cases extending into neighboring Uganda, has already resulted in hundreds of deaths and prompted the World Health Organization to declare a global public health emergency.

The Company is ramping up production of the OraQuick™ Ebola 2.0 Rapid Antigen Test to meet potential demand and expand access to a proven, reliable test.

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

Following constructive interactions with the FDA, the Company is updating its submission plan for the CT/NG test on the Sherlock platform to incorporate feedback received from the agency.

As part of this process, in July 2026, the Company elected to withdraw its current submission and plans to pursue a future submission.

The clinical studies that were

performed demonstrated strong performance compared with centralized laboratory molecular diagnostic methods, and the Company remains encouraged by the product’s performance and its potential to serve an important public health need.

Results of Operations (all dollar amounts in tables are presented in thousands)

For the three months ended March 31, 2026 compared to March 31, 2025.

For the three months ended June 30, 2026 compared to June 30, 2025.

CONSOLIDATED NET REVENUES

The table below shows total consolidated net revenues for the three months ended March 31, 2026 and 2025:

For the Three Months Ended March 31,

The table below shows total consolidated net revenues for the three months ended June 30, 2026 and 2025:

For the Three Months Ended June 30,

Dollars % Change Percentage of Total Net Revenues

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498 324 54 2 1

COVID-19 Diagnostics 18 457 (96) — 2

Risk Assessment Testing (4)

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

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

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

(4) Includes substance abuse testing product revenues.

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Product and Services Revenues

Consolidated net revenues decreased 7% to $27.9 million for the three months ended March 31, 2026 from $29.9 million for the three months ended March 31, 2025.

Sales of the Company's Diagnostics products decreased 5% to $16.9 million for the three months ended March 31, 2026 from $17.7 million for the three months ended March 31, 2025.

This decrease in revenues is largely due to lower international HCV revenues driven by customer ordering patterns and funding constraints.

This decline in revenues was offset by an increase in Company's Syphilis product sales to new customers in the women's health market.

Sample Management Solutions revenues remained largely flat at $9.1 million for the three months ended March 31, 2026 and 2025.

COVID-19 Diagnostics sales decreased 96% to $18.0 thousand for the three months ended March 31, 2026 from $0.5 million for the three months ended March 31, 2025, due to completion of the Company's InteliSwab® tests contract with the U.S.

government and lower overall demand for COVID-19 testing.

Consolidated net revenues decreased 2% to $30.6 million for the three months ended June 30, 2026 from $31.2 million for the three months ended June 30, 2025.

Sales of the Company's Diagnostics products increased 1% to $19.4 million for the three months ended June 30, 2026 from $19.2 million for the three months ended June 30, 2025.

This increase was primarily driven by higher syphilis sales resulting from new customers in the women's health market and the inclusion of SickleSCAN ® revenues, a new revenue stream acquired through the BioMedomics, Inc.

acquisition completed in November 2025.

These increases were partially offset by lower HCV revenues due to the expiration and non-renewal of a large customer's HCV testing program, as well as reduced funding associated with other programs.

The increase was further offset by lower domestic HIV revenues attributable to lower purchases under the Together Take Me Home Program.

Sample Management Solutions revenues remained largely flat at $9.9 million for the three months ended June 30, 2026 and 2025.

Risk Assessment Testing revenues are $0 in 2026 as the product line was discontinued and wound down in early 2025.

Non-Product and Services Revenues

Non-product and services revenues increased 66% to $1.5 million for the three months ended March 31, 2026 from $0.9 million for the three months ended March 31, 2025 primarily due to the recognition of revenue under various funded R&D contracts.

Non-product and services revenues decreased 34% to $0.9 million for the three months ended June 30, 2026 from $1.4 million for the three months ended June 30, 2025 primarily due to the completion of various funded R&D contracts.

CONSOLIDATED OPERATING RESULTS

Consolidated gross profit margin increased to 42.3% for the three months ended March 31, 2026 compared to 41.1% for the three months ended March 31, 2025.

The drivers of the margin increase were better absorption of fixed overhead costs

due to operational efficiencies, improved product mix, and higher non-product revenues which contribute 100% to gross margin.

An increase in scrap expense in the quarter partially offset the increases in gross margin.

Consolidated operating loss for the three months ended March 31, 2026 was $23.3 million compared to $17.8 million for the three months ended March 31, 2025.

The higher operating loss reported in 2026 was largely a result of lower revenues coupled with increased research and development spend.

Research and development expenses increased 42% to $13.7 million for the three months ended March 31, 2026 from $9.6 million for the three months ended March 31, 2025 largely due to higher spend incurred for clinical trials associated with the Chlamydia Trachomatis (CT) and Neisseria Gonorrhoeae (NG) device and the Colli-Pee ® device.

The increase in research and development expenses is also due to additional severance charges associated with the Company's reduction in its workforce in February 2026.

Sales and marketing expenses decreased 1% to $6.8 million for the three months ended March 31, 2026 from $6.9 million for the three months ended March 31, 2025.

General and administrative expenses increased 3% to $14.6 million for the three months ended March 31, 2026 from $14.1 million for the three months ended March 31, 2025 largely due to an increase in professional services and severance charges.

The Company recorded non-cash adjustments of $0.1 million for the three months ended March 31, 2026, reflecting the change in the estimated fair value of the Sherlock acquisition-related contingent consideration.

All of the above contributed to the Company's operating loss of $23.3 million for the three months ended March 31, 2026, which included non-cash charges of $2.8 million for stock-based compensation, $2.3 million for depreciation and amortization, and $0.1 million for the change in the estimated fair value of acquisition-related contingent consideration.

The Company's operating loss of $17.8 million for the three months ended March 31, 2025 included non-cash charges of $2.7 million for stock-based compensation, $2.8 million for depreciation and amortization, and $0.5 million for the change in the estimated fair value of acquisition-related contingent consideration.

Other income for the three months ended March 31, 2026 was $1.5 million compared to $1.8 million for the three months ended March 31, 2025.

The decrease in other income is due to lower interest income and increased foreign currency losses.

Consolidated gross profit margin increased to 43.5% for the three months ended June 30, 2026 compared to 42.1% for the three months ended June 30, 2025.

The drivers of the margin increase are attributable to better absorption of fixed overhead costs due to operational efficiencies, partially offset by a negative product mix and lower non-product revenues which contribute 100% to gross margin.

Consolidated operating income for the three months ended June 30, 2026 was $5.4 million compared to an operating loss of $18.0 million for the three months ended June 30, 2025.

Research and development expenses decreased 17% to $9.4 million for the three months ended June 30, 2026 from $11.4 million for the three months ended June 30, 2025 primarily due to lower clinical trial costs associated with the Chlamydia Trachomatis (CT) and Neisseria Gonorrhoeae (NG) device.

Sales and marketing expenses increased 4% to $6.6 million for the three months ended June 30, 2026 from $6.4 million for the three months ended June 30, 2025.

General and administrative expenses increased 14% to $14.4 million for the three months ended June 30, 2026 from $12.7 million for the three months ended June 30, 2025 largely due to an increase in legal fees and in professional services related to the proxy statement and related stockholder activism costs.

All of the above contributed to the Company's operating income of $5.4 million for the three months ended June 30, 2026, which included non-cash charges of $2.4 million for depreciation and amortization and $2.3 million for stock-based compensation, and $22.6 million in non-cash income reflected in the change in the estimated fair value of acquisition-related contingent consideration.

The Company's operating loss of $18.0 million for the three months ended June 30, 2025 included non-cash charges of $3.2 million for stock-based compensation, $2.5 million for depreciation and amortization, and $0.7 million for the change in the estimated fair value of acquisition-related contingent consideration.

Other income for the three months ended June 30, 2026 was $1.4 million compared to $1.1 million for the three months ended June 30, 2025.

The increase in other income is due to lower interest income offset by lower foreign currency losses.

CONSOLIDATED INCOME TAXES

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

For the three months ended March 31, 2026 and 2025, the Company recorded income tax benefits of $0.4 million and $0.5 million, respectively.

For the three months ended June 30, 2026 and 2025, the Company recorded income tax expense of $0.1 million and $2.0 million, respectively.

During the three months ended June 30, 2026 and 2025, the Company had an effective tax rate of 0.8% and (11.8)%, respectively.

The increase in the Company's tax rate was primarily due to the recording of a uncertain tax position in 2025 and projected break-even results in foreign operations in 2026 versus projected losses in 2025.

Results of Operations

For the six months ended June 30, 2026 compared to June 30, 2025.

CONSOLIDATED NET REVENUES

The table below shows an outline of total consolidated net revenues for the six months ended June 30, 2026 and 2025:

For the Six Months Ended June 30,

Dollars % Change Percentage of Total Net Revenues

2026 2025 2026 2025

Diagnostics (1)

$ 36,217 $ 36,911 (2) % 62 % 60 %

Sample Management Solutions (2)

18,933 18,965 — 32 31

Other products and services 931 617 51 2 1

COVID-19 Diagnostics 19 485 (96) — 1

Risk Assessment Testing (3)

— 1,866 (100) — 3

Net product and services revenues 56,100 58,844 (5) 96 96

Non-product and services revenues (4)

2,464 2,329 6 4 4

Net revenues $ 58,564 $ 61,173 (4) % 100 % 100 %

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

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

(3) Includes substance abuse testing product revenues.

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

Product and Services Revenues

Consolidated net revenues decreased 4% to $58.6 million for the six months ended June 30, 2026 from $61.2 million for the six months ended June 30, 2025.

Sales of the Company's Diagnostics products decreased 2% to $36.2 million for the six months ended June 30, 2026 from $36.9 million for the six months ended June 30, 2025.

This decline is primarily attributable to lower international HCV revenues driven by reduced reimbursement subsidies in the Asian market and a large order shipped into Africa in the second quarter of 2025 that did not recur.

Domestic HCV revenues also declined as a result of a large customer's HCV testing programs ending and not being renewed, as well as reduced funding associated with other programs.

In addition, domestic HIV revenues decreased due to lower purchases under the Together Take Me Home program partially offset by higher international revenues associated with timing of customer orders.

These decreases were partially offset by higher syphilis sales driven by new customers in the women's health market and the inclusion of SickleSCAN ® revenues, a new revenue stream acquired through the BioMedomics, Inc.

acquisition completed in November 2025.

Sample Management Solutions revenues remained largely flat at $18.9 million for the six months ended June 30, 2026 and 2025.

COVID-19 Diagnostics revenues decreased 96% to $19.0 thousand for the six months ended June 30, 2026 from $485.0 thousand for the six months ended June 30, 2025 due to lower overall demand for COVID-19 testing.

Risk Assessment testing revenues decreased to zero for the six months ended June 30, 2026 from $1.9 million for the six months ended June 30, 2025.

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

Non-Product and Services Revenues

Non-product and services revenues increased 6% to $2.5 million for the six months ended June 30, 2026 from $2.3 million for the six months ended June 30, 2025 primarily due to an increase in funded R&D under certain BARDA contracts.

CONSOLIDATED OPERATING RESULTS

Consolidated gross profit margin increased to 42.9% for the six months ended June 30, 2026 from 41.6% for the six months ended June 30, 2025.

The largest driver of the margin improvement is better absorption of fixed overhead costs due to operational efficiencies partially offset by higher scrap expense.

Consolidated operating loss for the six months ended June 30, 2026 was $17.8 million, compared to a $35.8 million operating loss reported for the six months ended June 30, 2025.

Results for the six months ended June 30, 2026 benefited from a $22.5 million change in the estimated fair value of acquisition-related contingent consideration but were negatively impacted by the decrease in revenues and by higher operating expenses.

Research and development expenses increased 10% to $23.1 million for the six months ended June 30, 2026 from $21.0 million for the six months ended June 30, 2025 largely due to higher spend incurred for clinical trials for the CT/NG and Colli-Pee ® d evices.

Sales and marketing expenses remained largely flat at $13.4 million and $13.2 million for the six months ended June 30, 2026 and 2025, respectively.

General and administrative expenses increased 8% to $29.0 million for the six months ended June 30, 2026 from $26.8 million for the six months ended June 30, 2025, largely due to higher professional, consulting, and legal fees associated with the proxy statement, including stockholder activism costs.

All of the above contributed to the Company's operating loss of $17.8 million for the six months ended June 30, 2026, which included non-cash income of $22.5 million reflected in the change in the estimated fair value of acquisition-related contingent consideration, and non-cash charges of $5.1 million for stock-based compensation, and $4.7 million for depreciation and amortization.

The Company's operating loss of $35.8 million for the six months ended June 30, 2025 included a non-cash charge of $5.9 million for stock-based compensation, $5.3 million for depreciation and amortization, and $1.2 million for the change in the estimated fair value of acquisition-related contingent consideration.

CONSOLIDATED OTHER INCOME

Other income remained largely flat at $2.9 million for the six months ended June 30, 2026 and 2025.

CONSOLIDATED INCOME TAXES

The Company continues to believe the full valuation allowance established against its total U.S.

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

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 six months ended June 30, 2026 and 2025, the Company recorded income tax benefit and expense of $0.4 million and $1.5 million, respectively.

During the six months ended June 30, 2026 and 2025, the Company had an effective tax rate of 2.5% and (4.7)%, respectively.

Liquidity and Capital Resources

March 31, 2026 December 31, 2025

June 30, 2026 December 31, 2025

(in thousands)

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Working capital 197,818 222,113

The Company's cash and cash equivalents decreased to $177.0 million at March 31, 2026 from $199.3 million at December 31, 2025.

The Company's cash and cash equivalents decreased to $160.6 million at June 30, 2026 from $199.3 million at December 31, 2025.

The Company has $84.6 million, or 53%, of its $160.6 million of cash and cash equivalents held by DNAG, the Company's Canadian subsidiary.

The Company's working capital decreased to $196.7 million at March 31, 2026 from $222.1 million at December 31, 2025.

The Company's working capital decreased to $197.8 million at June 30, 2026 from $222.1 million at December 31, 2025.

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

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Operating Activities

During the three months ended March 31, 2026, net cash used in operating activities was $13.9 million.

During the six months ended June 30, 2026, net cash used in operating activities was $23.8 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 $22.4 million included non-cash charges of stock-based compensation expense of $2.8 million, depreciation and amortization expense of $2.3 million, a loss on equity investment of $1.1 million, and other non-cash charges aggregating to $0.4 million.

Changes in the Company's working capital accounts contributed to cash and included an increase of $4.1 million in accounts payable associated with the timing of spend on consulting services and inventory purchases, a decrease in overall inventory balances of $0.7 million due to maintaining lower COVID-19 inventory levels attributable to decreased demand, a decrease in prepaid expenses and other assets of $0.6 million, and an increase in accrued expenses and other liabilities of $0.6 million.

The Company's net loss of $16.1 million included non-cash charges of a change in the estimated fair value of acquisition-related contingent consideration of $22.5 million, stock-based compensation expense of $5.1 million, depreciation and amortization expense of $4.7 million, a loss on equity investment of $1.6 million, and other non-cash charges aggregating to $0.2 million.

Changes in the Company's working capital accounts contributed to cash and included an increase in accrued expenses and other liabilities of $2.9 million largely associated with higher compensation-related accruals, a decrease in prepaid expenses and other assets of $2.5 million resulting from lower deposits paid, an increase of $1.3 million in accounts payable associated with the timing of spend on consulting services and inventory purchases, and an overall decrease in inventory balances of $0.9 million due to an increase in inventory reserves associated with expired inventory and lower COVID-19 inventory levels due to decreased demand.

These contributions to cash were offset by an increase in accounts receivable of $3.7 million due to timing of shipments and invoicing and a decrease in deferred revenue of $0.6 million as work on grant projects is completed and earned.

Investing Activities

Net cash used in investing activities was $0.9 million for the three months ended March 31, 2026, for purchases of property and equipment .

Net cash used in investing activities was $3.3 million for the six months ended June 30, 2026, for purchases of property and equipment .

Financing Activities

Net cash used in financing activities was $6.3 million for the three months ended March 31, 2026, which was largely comprised of $5.0 million to repurchase common stock pursuant to the Company's stock repurchase plan and $1.3 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.

Net cash used in financing activities was $8.5 million for the six months ended June 30, 2026, which was largely comprised of $7.0 million to repurchase common stock pursuant to the Company's stock repurchase plan and $1.5 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 12 of its consolidated financial statements.

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A more detailed review of the Company's critical accounting policies is contained in its Annual Report on Form 10-K for the year ended December 31, 2025 filed with the SEC.

No material changes have been made to such critical accounting policies during the three months ended March 31, 2026.

No material changes have been made to such critical accounting policies during the six months ended June 30, 2026.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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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-Q

Item 2. Management’s Discussion and Analysis