What changed in this filing

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Item 1A. Risk Factors

2025-08-07 compared with 2025-05-12 · 65 added, 53 removed, 1050 unchanged (10% of the section changed)

35 unchanged sentences

• governmental regulations that burden operations or narrow the market for our products;

• adverse effects resulting from enhanced trade tariffs, import restrictions, export restrictions, or other trade barriers;

• adverse effects resulting from new, increased, or enhanced trade tariffs, import restrictions, export restrictions, or other trade barriers;

• evolving ethical, legal, privacy, social, and regulatory concerns regarding genetic testing;

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For example, we recorded $184.5 million of impairment charges during the year ended December 31, 2024 as described in additional detail in Note 4.

Balance Sheet Components in Part II, Item 8 of our 2024 Annual Report, and $15.0 million of impairment charges during the three months ended March 31, 2025, as described in additional detail in Note 3 .

Balance Sheet Components in Part II, Item 8 of our 2024 Annual Report, and $15.0 million of impairment charges during the six months ended June 30, 2025, as described in additional detail in Note 3.

Balance Sheet Components in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Additionally, amortization of acquired intangible assets during the three months ended March 31, 2025 included $359.3 million of accelerated amortization pertaining to the Company's change in estimate of its remaining useful life of the developed technology acquired in connection with the 2021 Omniome acquisition as described in additional detail in Note 5 .

Additionally, amortization of acquired intangible assets during the six months ended June 30, 2025 included $359.3 million of accelerated amortization pertaining to the Company's change in estimate of its remaining useful life of the developed technology acquired in connection with the 2021 Omniome acquisition as described in additional detail in Note 5.

Restructuring in Part I, Item 1 of this Quarterly Report on Form 10-Q.

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For more information on impairment considerations, see “ — The commercialization and sales of our current or future products may be unsuccessful or less successful than anticipated.

While we plan to continue pursuing new products and expand ing into adjacent markets, we have limited experience in managing and selling multiple products and, as a result, may face challenges selling in new markets and fail to successfully carry out these initiatives, which may adversely impact our business, financial condition or results of operation.

While we plan to continue pursuing new products and expanding into adjacent markets, we have limited experience in managing and selling multiple products and, as a result, may face challenges selling in new markets and fail to successfully carry out these initiatives, which may adversely impact our business, financial condition or results of operation.

Expense reduction initiatives could be disruptive to our operations and adversely affect our results of operations and financial condition, and we may not realize some or all of the anticipated benefits of these initiatives, whether in the time frame anticipated or at all.

Our expense reduction initiatives comprise, among other things, workforce reductions, facilities downsizing and a refined pipeline of development activities.

For example, during the second quarter of 2024 we initiated plans to reduce certain of our annualized run-rate operating expenses by the end of the year, with the intent of better aligning our organizational structure and resources with our strategic initiatives, and during the first quarter of 2025 we initiated further plans to reduce certain of our annualized run-rate operating expenses by the end of the year, given persistent uncertainty surrounding academic and NIH funding, along with the introduction of new tariffs.

The implementation of these expense reduction initiatives, including the impact of workforce reductions, could impair our ability to invest in developing, marketing and selling new and existing products, be disruptive to our operations, make it difficult to attract or retain employees, result in higher than anticipated charges, divert the attention of management, result in a loss of accumulated knowledge, impact our customer and supplier relationships, and otherwise adversely affect our results of operations and financial condition.

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We receive a significant portion of our revenue from a limited number of customers.

While for the three months ended March 31, 2025, and 2024, no customer accounted for 10% or more of our total revenue, many of our customers make large purchases on a purchase-order basis rather than pursuant to long-term contracts.

While during the six months ended June 30, 2025, and 2024, no customer accounted for 10% or more of our total revenue, many of our customers make large purchases on a purchase-order basis rather than pursuant to long-term contracts.

As a consequence of the concentrated nature of our customer base and their purchasing behavior, our quarterly revenue and results of operations have fluctuated, and may fluctuate in the future, from quarter to quarter and are difficult to forecast.

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We are subject to risks associated with political conflicts between the U.S.

While for the three months ended March 31, 2025 and 2024, no customer accounted for 10% or more of our total revenue, a portion of our revenue is generated from China.

While during the six months ended June 30, 2025 and 2024, no customer accounted for 10% or more of our total revenue, a portion of our revenue is generated from China.

In addition, certain components, some of which are critical components, of our products are manufactured in China.

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Substantially all of our consumable chips are partly manufactured by a company based in Taiwan.

Our supply of consumables chips and other critical components may be materially and adversely affected by diplomatic, geopolitical, military and other developments affecting the relationship between China and Taiwan.

Our supply of consumable chips and other critical components may be materially and adversely affected by diplomatic, geopolitical, military and other developments affecting the relationship between China and Taiwan.

Recent military exercises in the Taiwan Strait have contributed to geopolitical uncertainty regarding the future of the relationship between China and Taiwan.

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Tax laws, regulations and administrative practices in these jurisdictions may be subject to significant changes, with or without advance notice.

Changes in tax laws, regulations or rulings, changes in interpretations of existing laws and regulations or changes in accounting principles could negatively and materially affect our financial position, cash flows, and results of operations.

Changes in tax laws, regulations or rulings, such as the recently enacted U.S.

federal tax legislation commonly referred to as the One Big Beautiful Bill Act (the “OBBB Act”), changes in interpretations of existing laws and regulations or changes in accounting principles could negatively and materially affect our financial position, cash flows, and results of operations.

We are currently evaluating the full impact of the OBBB Act on us.

Q2 Fiscal 2025 Form 10-Q

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In May 2024, the FDA issued a final rule that phases out its enforcement discretion for LDTs, unless exempt, and amends the FDA’s regulations to make explicit that in vitro diagnostics are medical devices under the Federal Food, Drug, and Cosmetic Act (“FDCA”), including when the manufacturer of the diagnostic product is a laboratory.

On March 31, 2025, U.S.

District Court in Texas ruled that FDA exceeded its authority and vacated and set aside this LDT final rule in its entirety.

On March 31, 2025, a U.S.

District Court in Texas ruled that the FDA exceeded its authority and vacated and set aside this LDT final rule in its entirety.

We will continue to monitor this case, as well as any future lawsuits brought against the FDA, and future legislative and administration actions on our business.

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We cannot predict the full impact of this decision on our business or that of our customers.

Further, under the new leadership at the Department of Health and Human Services under the Trump administration, agency reorganization, departure of high-profile regulators at the FDA, layoffs due to the reduction in force initiative may impact the normal operations of federal agencies, including FDA.

NIH funding cuts can impact the business operations of our customers and decrease the demand for our products.

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Such laws include, without limitation, state and federal anti-kickback or anti-referral laws, healthcare fraud and abuse laws, false claims laws, privacy and security laws, Physician Payments Sunshine Act and related transparency and manufacturer reporting laws, and other laws and regulations applicable to medical device manufacturers.

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making purposes, our ability to market and sell our products could be impeded and our business, prospects, results of operations and financial condition may be adversely affected.

If the FDA determines our products or related applications should be subject to additional regulation as in vitro diagnostic devices based upon customers’ use of our products for clinical diagnostic or therapeutic decision-making purposes, our ability to market and sell our products could be impeded and our business, prospects, results of operations and financial condition may be adversely affected.

In addition, the FDA could consider our products to be misbranded or adulterated under the FDCA and subject to recall and/or other enforcement action.

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Even if we were to seek and obtain regulatory approval or clearance, it may not be for the intended uses we request or that we believe are important or commercially attractive.

There can be no assurance that future products for which we may seek pre-market clearance or approval will be approved or cleared by FDA or a comparable foreign regulatory authority on a timely basis, if at all, nor can there be assurance that labeling claims will be consistent with our anticipated claims or adequate to support continued adoption of such products.

There can be no assurance that future products for which we may seek pre-market clearance or approval will be approved or cleared by the FDA or a comparable foreign regulatory authority on a timely basis, if at all, nor can there be assurance that labeling claims will be consistent with our anticipated claims or adequate to support continued adoption of such products.

Compliance with FDA or comparable foreign regulatory authority regulations will require substantial costs, and subject us to heightened scrutiny by regulators and substantial penalties for failure to comply with such requirements or the inability to market our products.

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Unlike many of the other companies offering nucleic acid sequencing equipment or consumables, this is an area where we do not have expertise.

We, or our other third-party sales and distribution partners, may not be able to obtain regulatory approvals in such countries or may incur significant costs in obtaining or maintaining our foreign regulatory approvals.

In addition, the export by us of certain of our products, which have not yet been cleared for domestic commercial distribution, may be

We, or our other third-party sales and distribution partners, may not be able to obtain regulatory approvals in such countries or

Q2 Fiscal 2025 Form 10-Q

subject to FDA or other export restrictions.

may incur significant costs in obtaining or maintaining our foreign regulatory approvals.

In addition, the export by us of certain of our products, which have not yet been cleared for domestic commercial distribution, may be subject to FDA or other export restrictions.

Failure to comply with these regulatory requirements or obtain and maintain required approvals, clearances and certifications could impair our ability to commercialize our products for diagnostic use outside of the United States.

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Since that time, USTR has enacted further tariff increases on certain Chinese products, in some instances raising this additional tariff on these products to up to 100%.

In February 2025, the U.S.

government also enacted an additional 10% ad valorem tariff on almost all imports of Chinese-origin goods, and in March 2025, this tariff was further escalated to 20% ad valorem.

An additional reciprocal 125% ad valorem tariff has been imposed by the U.S.

In February 2025, under separate authorities, the U.S.

government enacted an additional 10% ad valorem tariff on almost all imports of Chinese-origin goods, and in March 2025, this tariff was further escalated to 20% ad valorem.

An additional reciprocal tariff of 10% to 125% ad valorem had been imposed by the U.S.

on many Chinese-origin goods since April 2025—alongside an 10% ad valorem tariff on almost all imports from trading partners other than China, Canada, Mexico, and countries with which the U.S.

does not have normal trade relations—with limited exceptions for pharmaceuticals, semiconductors, computers, and certain other imports.

Additionally, China also has imposed tariffs on imports into China from the United States.

Currently, this additional reciprocal tariff has been reduced to 10% through August 2025 pursuant to a trade deal reached between the U.S.

however, these tariff rates are currently under negotiation and are subject to further changes.

Additionally, China also has imposed tariffs on imports into China from the U.S.

These tariffs have and could continue to raise our costs.

Furthermore, tariffs, trade restrictions, or trade barriers that have been, and may in the future be, placed on products such as ours by foreign governments, especially China, have raised, and could further raise, amounts paid for some or all of our products, which may result in the loss of customers and our business, and our financial condition and results of operations may be harmed.

In February 2025, the Trump Administration also announced new 25% tariffs on imports from Canada and Mexico, which were temporarily suspended subject to further negotiations, and partially implemented with respect to goods not eligible for duty-free import under the U.S.-Mexico-Canada Agreement as of March 2025.

tariffs of 25% have also been implemented on a wider array of imported steel and aluminum items as of March 2025, on automobiles as of April 2025 and on automobile components as of May 2025.

government announced in July 2025 that these tariffs could increase to 35% for Canada and 30% for Mexico as of August 1, 2025.

tariffs of 25% have also been implemented on a wider array of imported steel and aluminum items as of March 2025 (increased to 50% as of June 2025), on automobiles as of April 2025 and on automobile components as of May 2025.

Additional reciprocal tariffs on a wide range of U.S.

trading partners were briefly implemented in April 2025 and have been temporarily suspended through July 2025.

trading partners were briefly implemented in April 2025 but have since been temporarily suspended through August 2025.

Additional tariffs may be forthcoming, including tariffs on items that have been the subject of recent U.S.

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government expanded the list of advanced integrated circuits subject to heightened export controls, including certain hardware containing these specified integrated circuits, expanded the list of destinations requiring export authorization for such items, and added new restrictions based on the headquarters location of the parties involved.

Regulations further expanding the controls to impose a worldwide licensing requirement on certain integrated circuits and computing resources that are used for training of AI models are currently in effect and have a scheduled compliance date of May 15, 2025, after which time companies may be subject to further enforcement.

In many cases, these licenses are subject to a policy of denial and will not be issued.

Regulations further expanding the controls to impose a worldwide licensing requirement on certain integrated circuits and computing resources that are used for training of AI models were introduced in January 2025 and were scheduled to have a compliance date of May 15, 2025.

These regulations were rescinded shortly before the compliance date, but we expect that they will be replaced by a new regulation containing a version of these controls.

government also continues to add additional entities in China and other countries to restricted party lists impacting the ability of U.S.

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These existing and future laws and regulations may impact our ability to export certain products to customers or distributors in China or other locations and restrict our ability to use certain integrated circuits in our products.

Should we violate such existing or similar laws or regulations, we may be subject to substantial monetary fines or suffer reputational damage and other penalties that could negatively impact our business.

If we need to obtain any necessary export licenses or other authorizations for a particular sale, the process may be time-consuming and may result in the delay or loss of opportunities to sell our products.

Moreover, in November 2018, the U.S.

Commerce Department’s Bureau of Industry and Security (“BIS”) released an advance notice of proposed rulemaking to control the export of emerging technologies.

In April 2025, the Company received inquiries from the Bureau of Industry and Security (“BIS”) regarding a distributor based in Hong Kong and that distributor's customer located in China.

In May 2025, following a review of sales to China, the Company responded to BIS's inquiries and submitted a voluntary self-disclosure to BIS related to a limited number of transactions.

BIS is in the process of reviewing the information presented.

If we are found to be in violation of U.S.

economic sanctions or export control laws, it could result in fines and penalties.

We may also be adversely affected through other penalties, business disruption, reputational harm, loss of access to certain markets, or otherwise.

Moreover, in November 2018, BIS released an advance notice of proposed rulemaking to control the export of emerging technologies.

This notice included “[b]iotechnology, including nanobiology;

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For example, in December 2024, China announced a new export control regime that includes stringent export controls on exports of germanium and gallium, and in February 2025 implemented additional export controls regulating the export of resources including tungsten, tellurium, bismuth, indium, and molybdenum.

Export controls on these and other rare earth materials further increased in retaliation to the increase in U.S.

tariffs on products of Chinese origin in April 2025, which has resulted in a pause of the export of these materials from China.

It also is possible that additional restrictions will be put in place that could impact our ability to provide our products to customers or distributors in China or source components from China.

Export controls on these and other rare earth materials further increased in retaliation for the increase in U.S.

tariffs on products of Chinese origin in April 2025, which resulted in a pause of the export of these materials from China.

Chinese export controls have been and continue to be negotiated by U.S.

and Chinese trade delegations in bilateral trade discussions, and these policies are subject to change.

It is possible that additional restrictions will be put in place that could impact our ability to provide our products to customers or distributors in China or source components from China.

The continued threats of tariffs, trade restrictions and trade barriers could have a generally disruptive impact on the global economy and, therefore, negatively impact our sales.

Given the relatively fluid regulatory environment in China and the United States and uncertainty how the U.S.

Given the relatively fluid regulatory environment in

Q2 Fiscal 2025 Form 10-Q

China and the United States and uncertainty how the U.S.

or foreign governments will act with respect to export controls, tariffs, international trade agreements and policies, there could be additional tax or other regulatory changes in the future.

Any such changes could, directly or indirectly, adversely impact our financial results and results of operations.

Q1 Fiscal 2025 Form 10-Q

Our international business could expose us to business, regulatory, political, operational, financial, and economic risks associated with doing business outside of the United States.

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There can be no assurance that violations of environmental, health and safety laws will not occur as a result of human error, accident, equipment failure or other causes.

The failure to comply with past, present or future laws could result in the imposition of substantial fines and penalties, remediation costs, property damage and personal injury claims, investigations, the suspension of production or product sales, loss of permits or a cessation of operations.

The failure to comply with past, present or future laws could result

Q2 Fiscal 2025 Form 10-Q

in the imposition of substantial fines and penalties, remediation costs, property damage and personal injury claims, investigations, the suspension of production or product sales, loss of permits or a cessation of operations.

Any of these events could harm our business, operating results, and financial condition.

We also expect that our operations will be affected by new environmental, health and safety laws and regulations on an ongoing basis, or more stringent enforcement of existing laws and regulations.

New laws or changes to existing

Q1 Fiscal 2025 Form 10-Q

laws may result in additional costs and may increase penalties associated with violations or require us to change the content of our products or how we manufacture them, which could have a material adverse effect on our business, operating results, and financial condition.

New laws or changes to existing laws may result in additional costs and may increase penalties associated with violations or require us to change the content of our products or how we manufacture them, which could have a material adverse effect on our business, operating results, and financial condition.

Ethical, legal, privacy, data protection and social concerns or governmental restrictions surrounding the use of genetic information could reduce demand for our technology.

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• addition or loss of significant customers;

Q2 Fiscal 2025 Form 10-Q

• changes in laws or regulations applicable to our products;

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• announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures, capital commitments or achievement of significant milestones;

Q1 Fiscal 2025 Form 10-Q

• additions or departures of key personnel;

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Any such issuances would result in dilution to our existing stockholders and the market price of our common stock may be adversely affected.

Q2 Fiscal 2025 Form 10-Q

Concentration of ownership by our principal stockholders may result in control by such stockholders of the composition of our board of directors.

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These parties may now and in the future be able to exercise a significant level of control over all matters requiring stockholder approval, including the election of directors.

This control could have the effect of delaying or preventing a change of control of our company or

Q1 Fiscal 2025 Form 10-Q

changes in management and will make the approval of certain transactions difficult or impossible without the support of these stockholders.

This control could have the effect of delaying or preventing a change of control of our company or changes in management and will make the approval of certain transactions difficult or impossible without the support of these stockholders.

Anti-takeover provisions in our charter documents and under Delaware law could make an acquisition of us, which may be beneficial to our stockholders, more difficult and may prevent attempts by our stockholders to replace or remove our current management and limit the market price of our common stock.

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(i) any derivative action or proceeding brought on our behalf; (ii) any action asserting a claim of breach of a fiduciary duty owed by any of our current or former directors, stockholders, officers, or other employees to us or our stockholders; (iii) any action arising pursuant to any provision of the Delaware General Corporation Law;

(iv) any action to interpret, apply, enforce or determine the validity of our amended and restated certificate of incorporation or our amended and restated bylaws; or (v) any action asserting a claim governed by the internal affairs doctrine, except as to each of (i) through (v) above, for any claim as to which such court determines that there is an indispensable party not subject to the jurisdiction of such court.

Q2 Fiscal 2025 Form 10-Q

through (v) above, for any claim as to which such court determines that there is an indispensable party not subject to the jurisdiction of such court.

Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all such Securities Act actions.

Accordingly, both state and federal courts have jurisdiction to entertain such claims.

To prevent having to litigate claims in multiple jurisdictions and the threat of inconsistent or contrary rulings by different courts, among other considerations, our amended and restated bylaws also provide that, unless we consent in writing to the selection of an alternative forum, the federal district courts of the United States of America will be the exclusive forum for resolving any complaint asserting a cause of action arising under the

Q1 Fiscal 2025 Form 10-Q

Securities Act including, without limitation and for the avoidance of doubt, any auditor, underwriter, expert, control person or other defendant.

Any person or entity purchasing, holding or otherwise acquiring any interest in any of our securities shall be deemed to have notice of and consented to the foregoing bylaw provisions.

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We may not have the ability to raise the funds necessary to settle conversions of the Notes in cash or to repurchase the Notes upon a fundamental change, and our future debt may contain limitations on our ability to pay cash upon conversion or repurchase of the Notes.

As of March 31, 2025, we had outstanding approximately $200.0 million aggregate principal amount of our 2029 Notes and $441.0 million aggregate principal amount of our 2030 Notes.

As of June 30, 2025, we had outstanding approximately $200.0 million aggregate principal amount of our 2029 Notes and $441.0 million aggregate principal amount of our 2030 Notes.

The 2029 Notes will mature on August 15, 2029, subject to earlier conversion, redemption or repurchase, including upon a fundamental change.

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Holders of each series of Notes will have the right to require us to repurchase all or a portion of their Notes upon the occurrence of a fundamental change before the maturity date at a repurchase price equal to 100% of the principal amount of the Notes of the applicable series to be repurchased, plus unpaid interest to, but excluding, the applicable maturity date.

In addition, upon conversion of the Notes of a series, unless we elect to deliver solely shares of our common stock to settle such conversion (other than paying cash in lieu of delivering any fractional share), we will be required to settle a portion or all of our conversion obligation in cash in respect of the Notes being converted.

Q2 Fiscal 2025 Form 10-Q

of the Notes being converted.

Moreover, we will be required to repay the Notes of the applicable series in cash at the applicable maturity unless earlier converted, redeemed, or repurchased.

However, we may not have enough available cash or be able to obtain financing at the time we are required to make repurchases of Notes surrendered therefor or pay cash with respect to Notes being converted or at their maturity.

Q1 Fiscal 2025 Form 10-Q

In addition, our ability to repurchase the Notes or to pay cash upon conversions of Notes or at the applicable maturity may be limited by law, regulatory authority or agreements governing our future indebtedness.

Our failure to repurchase Notes of a series at a time when the repurchase is required by the applicable indenture or to pay cash upon conversions such Notes or at the applicable maturity as required by the applicable indenture would constitute a default under such indenture.

Our failure to repurchase Notes of a series at a time when the repurchase is required by the applicable indenture or to pay cash upon conversions of such Notes or at the applicable maturity as required by the applicable indenture would constitute a default under such indenture.

A default under either indenture or the occurrence of a fundamental change under either indenture itself could also lead to a default under agreements governing our future indebtedness.

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A breach of any of the covenants under the Letter Agreement could result in an event of default under the 2029 Notes.

As of March 31, 2025, we were in compliance with all covenants under the Letter Agreement.

As of June 30, 2025, we were in compliance with all covenants under the Letter Agreement.

However, if an event of default occurs, SBN could accelerate our obligations under the 2029 Notes.

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For more information on impairment considerations, see “ —The commercialization and sales of our current or future products may be unsuccessful or less successful than anticipated.

While we plan to continue pursuing new products and expanding into adjacent markets, we have limited experience in managing and selling multiple products and, as a result, may face challenges selling in new markets and fail to successfully carry out these initiatives, which may adversely impact our business, financial condition or results of operation.

Delivery of our products could be delayed or disrupted by factors beyond our control, and we could lose customers as a result.

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and foreign government trade restrictions, including those which may impose restrictions on the importation, exportation, re-exportation, sale, shipment or other transfer of programming, technology, components, and/or services to foreign persons;

• changes in diplomatic and trade relationships, including new tariffs, trade protection measures, import or export licensing requirements, trade embargoes, sanctions, and other trade barriers;

• changes in diplomatic and trade relationships, including new, increased, or enhanced tariffs, trade protection measures, import or export licensing requirements, trade embargoes, sanctions, and other trade barriers;

• tariffs imposed by the U.S.

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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 1A. Risk Factors