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Item 2. Management’s Discussion and Analysis

2026-08-06 compared with 2026-05-08 · 192 added, 99 removed, 169 unchanged (63% of the section changed)

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Revio is increasingly being adopted in laboratory-developed test ("LDT") and clinical research settings, supporting consolidation of multiple tests, addressing complex genetic challenges, and driving sustained utilization of HiFi sequencing.

This includes in the Americas, where we continue to aggressively shift our strategy to clinical and commercial accounts where we believe the funding dynamics are more favorable.

This includes in the Americas, where we continue to aggressively shift our strategy to clinical and commercial accounts where we believe the funding dynamics are more favorable and HiFi sequencing can provide meaningful improvements in diagnostic yield, particularly in rare disease cohorts, resolution of previously unsolved Mendelian disease cases, characterization of repeat expansion disorders, and structural variant detection, among others, relative to currently known short-read sequencing technologies.

• Advance data-driven interpretation through scalable HiFi datasets and analytics.

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We continue to develop sequencing solutions designed to increase throughput, simplify workflows, lower the cost to sequence a genome, and enhance downstream data analysis and interpretation capabilities, which we believe will allow us to address a larger portion of the market.

Q2 Fiscal 2026 Form 10-Q

We continue to believe that with the capabilities of our technology, we can be a market leader in whole-genome clinical sequencing.

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Collaborative arrangements add to the awareness of our products and service offerings and may drive new applications for use of our technology.

Q1 Fiscal 2026 Form 10-Q

Recent Developments

Restructuring

On July 30, 2026, our Board of Directors approved a restructuring plan to continue to better align our organizational structure and resources wit h our strategic initiatives.

The restructuring includes operating expense reductions and a reduction in force (the “Reduction in Force”).

These restructuring actions are expected to result in a workforce reduction of approximately 40 employees, or approximately 8% of our workforce, as we align our organizational structure with our strategic priorities.

Including the Reduction in Force and related non-headcount cost actions, we expect to reduce our annualized operating expenses by $30 million to $40 million by the end of 2027.

We estimate that we will incur aggregate pre-ta x charges of approximately $2.0 million in connection with the Reduction in Force, primarily consisting of severance payments, employee benefits, outplacement services and related costs.

We expect that the Reduction in Force will be completed and that these charges will be incurred in the third quarter of 2026.

Appointments and Resignations

Our Board of Directors appointed Mark Van Oene as President and Chief Executive Officer and as a member of our Board of Directors, effective August 5, 2026.

Van Oene succeeds Christian Henry, who stepped down as our President and Chief Executive Officer effective August 5, 2026.

Henry will continue to serve as a member of our Board of Directors.

Financial Overview

Key highlights of the three months ended March 31, 2026 consolidated financial results include the following:

Key highlights of the six months ended June 30, 2026 consolidated financial results include the following:

Revenue of Gross profit of

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compared to $76.9 M during the same period of 2025

compared to gross loss of $1.4 M during the same period of 2025

compared to $13.3 M during the same period of 2025

compared to $473.8 M during the same period of 2025

compared to $279.5 M at December 31, 2025

• Revenue was comprised of $9.7 million in instrument revenue, $21.8 million in consumables revenue and $5.6 million in service and other revenue during the three months ended March 31, 2026.

Revenue was comprised of $11.0 million in instrument revenue, $20.1 million in consumables revenue and $6.0 million in service and other revenue during the three months ended March 31, 2025.

An increase in Consumable revenue and higher Revio unit sales were offset by lower Vega unit sales and a decrease in service and other revenue.

• We recorded a gross profit of $12.8 million during the three months ended March 31, 2026 compared to a gross loss of $1.4 million during the same period of 2025.

We recorded approximately $12.0 million of restructuring charges during the three months ended March 31, 2025.

• Revenue was comprised of $22.6 million in instrument revenue, $41.9 million in consumables revenue and $11.7 million in service and other revenue during the six months ended June 30, 2026.

Revenue was comprised of $25.2 million in instrument revenue, $39.0 million in consumables revenue and $12.7 million in service and other revenue during the six months ended June 30, 2025.

Lower Vega unit sales and a decrease in service and other revenue were partially offset by an increase in consumables revenue and higher Revio unit sales.

• We recorded a gross profit of $25.5 million during the six months ended June 30, 2026 compared to $13.3 million during the same period of 2025.

We recorded approximately $12.4 million of restructuring charges during the six months ended June 30, 2025.

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

Gross margins may be affected by product mix, manufacturing efficiencies, changes in warranty costs, average selling price fluctuations, product promotions, future product launches, changes to inventory reserves, costs of raw materials, computing costs, specifically memory, and tariffs.

• Loss from operations decreased $420.6 million during the three months ended March 31, 2026, compared with the same period of 2025, primarily due to a $406.4 million decrease in operating expenses.

Operating expenses of $21.2 million for the three months ended March 31, 2026 included litigation settlement expenses of $15.4 million.

Operating expenses were mostly offset by a $45.8 million gain on disposal of assets to Illumina Cambridge Limited due to the Asset Sale.

Financial Instruments in Part I, Item I of this Quarterly Report on Form 10-Q for more information.

Operating expenses of $427.6 million during the three months ended March 31, 2025 included $381.8 million of costs incurred in connection with the restructuring and strategic shift, which included $359.3 million of accelerated amortization of acquired intangibles, $15.0 million of impairment charges, and $4.6 million of employee separation costs, partially offset by an $18.7 million decrease in the change in the fair value of the contingent consideration.

• Cash, cash equivalents, and short-term investments were $276.0 million at March 31, 2026, which represents a 1% decrease compared to the balance at December 31, 2025.

During the three months ended March 31, 2026 we received net cash proceeds of approximately $48.1 million in conjunction with the gain on disposal of assets discussed above.

Q2 Fiscal 2026 Form 10-Q

• Loss from operations decreased $420.8 million during the six months ended June 30, 2026, compared with the same period of 2025, primarily due to a $408.7 million decrease in operating expenses.

Operating expenses of $78.4 million for the six months ended June 30, 2026 included litigation settlement expenses of $15.4 million.

Operating expenses were partially offset by a $45.8 million gain on disposal of assets to Illumina Cambridge Limited due to the Asset Sale.

Financial Instruments in Part I, Item 1 of this Quarterly Report on Form 10-Q for more information.

Operating expenses of $487.1 million during the six months ended June 30, 2025 included $382.4 million of costs incurred in connection with the restructuring and strategic shift, which primarily included $359.3 million of accelerated amortization of acquired intangibles, $15.0 million of impairment charges, and $4.8 million of employee separation costs, partially offset by an $18.7 million decrease in the change in the fair value of the contingent consideration.

• Cash, cash equivalents, and investments were $236.9 million at June 30, 2026, which represents a 15% decrease compared to the balance at December 31, 2025.

During the six months ended June 30, 2026 we received net cash proceeds of approximately $48.1 million in conjunction with the gain on disposal of assets discussed above.

We also paid $8.0 million related to the settlement agreement with Personal Genomics of Taiwan, Inc.

Balance Sheet Components in Part I, Item 1 of this Quarterly Report on Form 10-Q for further details regarding the settlement with PGI.

We believe that demand for our instruments (particularly Vega) remains constrained due to, among other reasons, the funding environment in the United States, contributing to elongated sales cycles, or in certain cases, customers not placing instrument orders.

Additionally, sales cycles have been and continue to be impacted by, among other reasons, continued capital funding constraints in academic and research markets, procurement timing considerations, and longer adoption cycles among new customers, which have affected the timing of certain instrument orders.

We believe these challenges will impact second quarter 2026 revenue with approximately single-digit to low double-digit sequential revenue growth.

However, we believe that revenues will be greater in the back half of 2026, which we expect will be driven by continued clinical adoption, SPRQ-Nx consumable growth, and revenue associated with the Basecamp Research program, which we believe will start to materialize in the second and third quarters of 2026.

We are continuing development of a high-throughput, HiFi sequencer, which we believe could launch in 2027.

Macroeconomic dynamics that have impacted and could continue to impact the Company include rising inflation, higher computing component costs, specifically memory, which may result in material cost pressures and supply constraints in future periods, geopolitical tensions, including recent conflicts in the Middle East (including Iran), volatile capital markets, tariffs, uncertainty in the United States related to NIH and academic funding, and fluctuating exchange rates.

These factors could continue to impact our revenues and results of

Q1 Fiscal 2026 Form 10-Q

operations in future periods;

However, we believe that revenues will be greater in the second half of 2026, which we expect will be driven by continued clinical adoption, SPRQ-Nx consumable growth, and revenue associated with the Basecamp Research program.

Macroeconomic dynamics that have impacted and could continue to impact the Company include rising inflation, higher computing component costs, specifically memory, which has resulted in material cost pressures and supply constraints, geopolitical tensions, including recent conflicts in the Middle East (including Iran), volatile capital markets, tariffs, uncertainty in the United States related to NIH and academic funding, and fluctuating exchange rates.

These factors could continue to impact our revenues and results of operations in future periods;

however, the magnitude and duration of these impacts is highly uncertain and inherently unpredictable.

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However, these estimates could change in future periods based on events or changes in circumstances, which could result in material future impairment charges.

We recorded $15.0 million of impairment charges during the three months ended March 31, 2025.

We recorded $15.0 million of impairment charges during the six months ended June 30, 2025.

See additional discussion below in Results of Operations, as well as Note 3.

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See the Risk Factors section for further discussion.

Q2 Fiscal 2026 Form 10-Q

RESULTS OF OPERATIONS

Comparison of the Three Months Ended March 31, 2026 and 2025

Three Months Ended March 31,

Comparison of the Three Months Ended June 30, 2026 and 2025

Three Months Ended June 30,

(In thousands, except percentages)

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Total cost of revenue 26,369 25,082 1,287 5 %

Gross profit (loss)

Gross profit 12,638 14,684 (2,046) (14 %)

Operating Expense:

Research and development 23,022 22,529 493 2 %

Sales, general and administrative 33,393 36,175 (2,782) (8 %)

Amortization of acquired intangible assets 833 833 — — %

Total operating expense 57,248 59,537 (2,289) (4 %)

Operating loss (44,610) (44,853) 243 (1 %)

Interest expense (2,110) (1,738) (372) 21 %

Other income, net 2,037 4,696 (2,659) (57 %)

Loss before income taxes

(44,683) (41,895) (2,788) 7 %

Income tax provision 58 35 23 66 %

Net loss $ (44,741) $ (41,930) $ (2,811) 7 %

Q2 Fiscal 2026 Form 10-Q

Total Revenue

Total revenue decreased $0.8 million, or 2%, for the second quarter of 2026 compared with the same quarter of 2025.

Product revenue decreased $0.1 million primarily due to a decrease of $1.3 million, or 9%, in instrument revenue partially offset by an increase of $1.2 million, or 6%, in consumable revenue.

Service and other revenue decreased $0.6 million, or 9%.

Consumables Revenue

The increase in consumables revenue for the second quarter of 2026 was primarily driven by higher Revio consumables sales, reflecting the continued expansion of the Revio instrument installed base.

We also launched SPRQ-Nx during the second quarter of 2026.

Shipments of Vega consumables also contributed to the increase in consumables revenue during the period, and we anticipate increased contributions as customers continue ramping usage of the Vega platform and the installed base expands.

Looking ahead, we expect continued growth in consumables revenue as Revio and Vega installed bases continue to grow, along with increased demand in connection with the recent launch of SPRQ-Nx.

This anticipated growth reflects increasing instrument placements, improving consumable utilization, broadening addressable applications for our platforms, and further expanding adoption across our research, clinical and commercial customers.

Instrument Revenue

Instrument revenue decreased for the second quarter of 2026 reflecting l ower Revio average selling prices associated with strategic multi-system customer placements.

Instrument revenue was also impacted by variability in customer purchasing behavior resulting from uncertainty surrounding the funding for new capital equipment, particularly among academic and research institutions.

Sales of Vega systems decreased for the second quarter of 2026.

We sold 26 units compared to 38 units in the same quarter of 2025.

Sales of Revio systems increased with 20 units sold compared to 15 units in the same quarter of 2025.

We expect that instrument revenue may fluctuate quarter-to-quarter based on timing of customer purchasing decisions, sales mix, promotional activities, and funding dynamics.

Q2 Fiscal 2026 Form 10-Q

Cost of Revenue and Gross Profit

Total cost of revenue increased $1.3 million, or 5%, in the second quarter of 2026 compared to the same quarter of 2025.

Total cost of revenue included share-based compensation expense of $0.7 million and $0.9 million during the second quarter of 2026 and 2025, respectively.

Cost of product revenue increased $0.9 million, or 5%, in the second quarter of 2026 compared to the same quarter of 2025 primarily due to exit costs associated with a contract manufacturer, increased memory costs, product transition costs related to the disposition of assets in the first quarter of 2026, and amortization of the patent license obtained through the legal settlement with PGI.

These increases were partially offset by lower Instrument volumes and a shifting Consumables product mix.

Gross profit decreased $2.0 million, or 14%, during the second quarter of 2026 compared to the same period of 2025.

The decrease was driven primarily by slightly lower revenue and the increase in cost of revenue described above.

While higher consumables mix and the introduction of SPRQ-Nx remain important drivers of margin expansion, rising computing component costs will temper the pace of margin improvement in the near term.

Gross margins may be affected by product mix, manufacturing efficiencies, changes in warranty costs, average selling price fluctuations, including promotional pricing, future product launches, changes to inventory reserves, costs of raw materials and increased computing component costs, specifically memory, which may result in material cost pressures and supply constraints in future periods, and tariffs.

Research and Development Expense

Research and development expense increased by $0.5 million, or 2%, for the second quarter of 2026, compared to the same quarter of 2025.

The increase was primarily driven by higher product development costs associated with ongoing investments in future sequencing platform development, partially offset by lower personnel and related expenses, including share-based compensation expense.

Research and development expense included share-based compensation expense of $2.4 million and $3.3 million during the second quarter of 2026 and 2025, respectively.

We anticipate research and development expense to decrease during the remainder of 2026 in connection with our recently announced expense reduction initiatives, primarily due to headcount reductions.

Sales, General, and Administrative Expense

Sales, general and administrative expense decreased by $2.8 million, or 8%, for the second quarter of 2026, compared to the same quarter of 2025.

The decrease was primarily driven by lower personnel and related expenses, including share-based compensation.

We also recorded $0.6 million of restructuring-related charges in the second quarter of 2025.

Sales, general, and administrative expense included share-based compensation expense of $6.2 million and $7.7 million during the second quarter of 2026 and 2025, respectively.

We anticipate sales, general, and administrative expense to decrease during the remainder of 2026 in connection with our recently announced expense reduction initiatives, primarily due to headcount reductions.

Amortization of Acquired Intangible Assets

Amortization of acquired intangible assets included in operating expenses for the second quarter of 2026 and 2025 consists of amortization expense attributable to acquired intangible assets that are not directly related to sales generating activities.

Interest Expense

Interest expense for the second quarter of 2026 and 2025 was primarily comprised of interest on the convertible senior notes.

Interest expense for the second quarter of 2026 also included interest related to the liability recorded for the license and settlement agreement with PGI.

Other Income, Net

Other income, net for the second quarter of 2026 decreased compared to the same quarter of 2025 primarily driven by lower investment income due to lower cash and investment balances.

Q2 Fiscal 2026 Form 10-Q

Comparison of the Six Months Ended June 30, 2026 and 2025

Six Months Ended June 30,

(In thousands, except percentages)

2026 2025 $ Change % Change

Product revenue $ 64,484 $ 64,196 $ 288 — %

Service and other revenue 11,701 12,723 (1,022) (8 %)

Total revenue 76,185 76,919 (734) (1 %)

Cost of Revenue:

Cost of product revenue 40,916 46,355 (5,439) (12 %)

Cost of service and other revenue 9,424 8,631 793 9 %

Amortization of acquired intangible assets

366 4,528 (4,162) (92 %)

Loss on purchase commitment

— 4,092 (4,092) (100 %)

Total cost of revenue 50,706 63,606 (12,900) (20 %)

Gross profit 25,479 13,313 12,166 91 %

Operating Expense:

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Settlement charges 15,400 — 15,400 —

15,400 — 15,400 —

Gain on disposal of assets (45,796) — (45,796) —

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Income tax provision (benefit) 242 (267) 509 (191 %)

184 (302) 486 (161 %)

Net loss $ (53,016) $ (468,005) $ 414,989 (89 %)

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Total Revenue

Total revenue was relatively flat for the first quarter of 2026 compared with the same quarter of 2025.

Product revenue increased $0.4 million, or 1%, primarily due to an increase of $1.7 million, or 9%, in consumable revenue, partially offset by a decrease of $1.3 million, or 12%, in instrument revenue.

Total revenue decreased $0.7 million, or 1%, during the six months ended June 30, 2026 compared with the same period of 2025.

Product revenue increased $0.3 million primarily due to an increase of $2.9 million, or 7%, in consumable revenue partially offset by a decrease of $2.6 million, or 10%, in instrument revenue.

Service and other revenue decreased $1.0 million, or 8%.

Instrument Revenue

Instrument revenue decreased for the first quarter of 2026, primarily due to lower selling prices, including with respect to our Vega promotional pricing through the end of the first quarter.

Sales of Revio systems increased—15 units compared to 12 units in the same quarter of 2025.

Sales of Vega systems decreased—27 units compared to 28 units in the same quarter of 2025.

We expect that instrument revenue may fluctuate quarter-to-quarter based on timing of customer purchasing decisions, sales mix, promotional activities, and funding dynamics.

Consumables Revenue

The increase in consumables revenue for the first quarter of 2026 was primarily driven by higher Revio consumables sales, reflecting the continued expansion of the Revio instrument installed base, partially offset by some customers delaying consumable shipments in anticipation of the SPRQ-Nx commercial launch.

Shipments of Vega consumables also contributed modestly during the period, and we anticipate increased contributions as customers continue ramping usage of the Vega platform and the installed base expands.

Looking ahead, we expect continued growth in consumables revenue as adoption of the Revio and Vega platforms expands, along with increased demand in connection with the expected commercial launch of SPRQ-Nx kits in May 2026.

The increase in consumables revenue during the six months ended June 30, 2026 was primarily driven by higher Revio consumables sales, reflecting the continued expansion of the Revio instrument installed base.

We also launched SPRQ-Nx during the second quarter of 2026.

Looking ahead, we expect continued growth in consumables revenue as Revio and Vega installed bases continue to grow, along with increased demand in connection with the recent launch of SPRQ-Nx.

Instrument Revenue

Instrument revenue decreased during the six months ended June 30, 2026 reflecting lower Revio average selling prices associated with strategic multi-system customer placements.

Sales of Vega systems decreased during the six months ended June 30, 2026.

We sold 53 units compared to 66 units in the same period of 2025.

Sales of Revio systems increased with 35 units sold compared to 27 units in the same period of 2025.

We expect that instrument revenue may fluctuate quarter-to-quarter based on timing of customer purchasing decisions, sales mix, promotional activities, and funding dynamics.

Q2 Fiscal 2026 Form 10-Q

Cost of Revenue and Gross Profit (Loss)

Total cost of revenue decreased $14.2 million, or 37%, in the first quarter of 2026 compared to the same quarter of 2025.

We recorded approximately $12.0 million of restructuring charges during the three months ended March 31, 2025.

Total cost of revenue included share-based compensation expense of $0.6 million and $1.2 million during the first quarter of 2026 and 2025, respectively.

Cost of product revenue decreased $6.4 million, or 24%, in the first quarter of 2026 compared to the same quarter of 2025 primarily due to cost reductions related to our instrument platforms.

We recorded a gross profit of $12.8 million during the three months ended March 31, 2026 compared to a gross loss of $1.4 million during the same period of 2025.

The change was driven primarily by relatively flat revenue and the lower cost of revenue described above.

During the first quarter of 2026, gross margin was affected by higher computing component costs, specifically memory, inventory adjustments, certain incremental warranty charges, as well as a limited time Vega promotion, which resulted in lower first quarter average selling prices for the product.

We expect Vega average selling prices to normalize in the second quarter of 2026.

While higher consumables mix and the introduction of SPRQ-Nx remain important drivers of margin expansion, rising compute costs will temper the pace of margin improvement in the near term.

Gross margins may be affected by product mix, manufacturing efficiencies, changes in warranty costs, average selling price fluctuations, including promotional pricing, future product launches, changes to inventory reserves, costs of raw materials and computing costs, specifically memory, which may result in material cost pressures and supply constraints in future periods, and tariffs.

Cost of Revenue and Gross Profit

Total cost of revenue decreased $12.9 million, or 20%, during the six months ended June 30, 2026, compared to the same period of 2025 primarily due to decreases in cost of product revenue, amortization of acquired intangible assets, and share-based compensation expense.

We recorded $12.4 million of restructuring-related costs during the six months ended June 30, 2025, which included $3.8 million relating to loss on purchase commitments which was based on an estimate of future excess inventory related to supply agreements for which we did not expect to have related sales.

Restructuring in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional information about restructuring activities.

Total cost of revenue included share-based compensation expense of $1.3 million and $2.1 million during the six months ended June 30, 2026 and 2025, respectively.

Cost of product revenue decreased $5.4 million, or 12%, during the six months ended June 30, 2026, compared to the same period of 2025 primarily due to the restructuring-related costs that were recorded in the prior period, lower Instrument volumes, and a shifting Consumables product mix partially offset by exit costs associated with a contract manufacturer, increased memory costs, product transition costs related to the disposition of assets in the first quarter of 2026, and amortization of the patent license obtained through the legal settlement with PGI.

Gross profit increased $12.2 million, or 91%, during the six months ended June 30, 2026, compared to the same period of 2025 in line with the decrease in total cost of revenue described above and relatively flat revenue.

Research and Development Expense

Research and development expense decreased by $9.4 million, or 33%, for the first quarter of 2026, compared to the same quarter of 2025.

The decrease was primarily driven by decreases in personnel and related expenses, including share-based compensation.

We also recognized approximately $2.7 million of restructuring charges during the first quarter of 2025.

Research and development expense included net negative share-based compensation expense of $0.8 million during the first quarter of 2026 due to the Company's estimated forfeitures and share-based compensation expense of $2.6 million during the first quarter of 2025.

Research and development expense decreased by $9.0 million, or 17%, during the six months ended June 30, 2026, compared to the same period of 2025.

The decrease was primarily driven by lower personnel and related expenses, including share-based compensation expense, partially offset by an increase in product development costs associated with ongoing investments in future sequencing platform development.

We also recorded $2.7 million of restructuring-related charges during the six months ended June 30, 2025.

Research and development expense included share-based compensation expense of $1.6 million and $5.9 million during the six months ended June 30, 2026 and 2025, respectively.

We anticipate research and development expense to decrease during the remainder of 2026 in connection with our recently announced expense reduction initiatives, primarily due to headcount reductions.

Sales, General, and Administrative Expense

Sales, general and administrative expense decreased by $9.0 million, or 22%, for the first quarter of 2026, compared to the same quarter of 2025.

The decrease was primarily driven by decreases in personnel and related expenses, including share-based compensation.

We also recognized approximately $4.8 million of restructuring charges during the first quarter of 2025.

Sales, general, and administrative expense included share-based compensation expense of $4.6 million and $5.4 million during the first quarter of 2026 and 2025, respectively.

Sales, general and administrative expense decreased by $11.8 million, or 15%, during the six months ended June 30, 2026, compared to the same period of 2025.

The decrease was primarily due to a decrease in personnel and related expenses, including share-based compensation expense, and lower marketing expense, partially offset by legal expenses related to the settlement with PGI.

We also recorded $5.4 million of restructuring-related charges during the six months ended June 30, 2025.

Sales, general, and administrative expense included share-based compensation expense of $10.7 million and $13.1 million during the six months ended June 30, 2026 and 2025, respectively.

Impairment Charges

We recorded impairment charges of $15.0 million during the first quarter of 2025, related to in-process research and development (“IPR&D”).

We recorded impairment charges of $15.0 million during the six months ended June 30, 2025, related to in-process research and development (“IPR&D”).

These charges resulted from an interim impairment assessment performed in response to identified indicators of impairment during the period.

The impairment test concluded that the fair value of our IPR&D assets was $0.

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

The impairment test concluded that the carrying amount of our IPR&D assets exceeded their estimated fair value.

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

Q2 Fiscal 2026 Form 10-Q

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In the first quarter of 2026, the Company entered into a license and settlement agreement with PGI in connection with the PGI Settlement.

Under the fixed payment structure pursuant to the agreement, the Company paid PGI $8,000,000 in the second quarter of 2026, and will pay $5,000,000 in the first quarter of each of 2027, 2028 and 2029, with the payment in 2027 increasing by $1,000,000 if the Company’s 2026 revenue is at least $165,000,000 and another $1,000,000 if it is at least $180,000,000.

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

Under the fixed payment structure pursuant to the agreement, the Company paid PGI $8.0 million in the second quarter of 2026, and will pay $5.0 million in the first quarter of each of 2027, 2028 and 2029, with the payment in 2027 increasing by $1.0 million if the Company’s 2026 revenue is at least $165.0 million and another $1.0 million if it is at least $180.0 million.

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

Gain on Disposal of Assets

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During the first quarter of 2026, in connection with the Asset Sale, Buyer paid, at our direction, 4% of the net cash proceeds to the former equity holders of Apton Biosystems, Inc.

in connection with the waiver of remaining milestone obligations from our August 2023 acquisition of Apton.

("Apton") in connection with the waiver of remaining milestone obligations from our August 2023 acquisition of Apton.

As a result, we received approximately $48.1 million in net cash proceeds from the Asset Sale.

In connection with the transaction, the Company incurred transaction costs of $2.3 million in the first quarter of 2026 that are offset against the gain on disposal of assets on our condensed consolidated statements of operations and comprehensive loss.

Financial Instruments in Part I, Item I of this Quarterly Report on Form 10-Q for further details.

Financial Instruments in Part I, Item 1 of this Quarterly Report on Form 10-Q for further details.

Amortization of Acquired Intangible Assets

Amortization of acquired intangible assets included in operating expenses for the first quarter of 2026 and 2025 consists of amortization expense attributable to acquired intangible assets that are not directly related to sales generating activities.

Amortization of acquired intangible assets for the first quarter of 2025 included $359.3 million of accelerated amortization recorded during the first quarter of 2025 which was related to developed technology from the 2021 Omniome acquisition, reflecting our revised estimate that the asset will no longer generate economic benefit.

Amortization of acquired intangible assets included in operating expenses for the six months ended June 30, 2026 and 2025 consists of amortization expense attributable to acquired intangible assets that are not directly related to sales generating activities.

Amortization of acquired intangible assets included in operating expenses during the six months ended June 30, 2025 included $359.3 million of accelerated amortization related to developed technology from the 2021 Omniome, Inc.

acquisition, reflecting our revised estimate that the asset will no longer generate economic benefit beyond March 31, 2025.

Change in Fair Value of Contingent Consideration

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This was primarily due to management's decision to cease development of the high-throughput short-read system, the associated changes in expected future revenues, and the requirement that the milestone event occur prior to the five-year anniversary of the acquisition closing date.

During the first quarter of 2026, in connection with the Asset Sale, Buyer paid at our direction 4% of the net proceeds from the Purchase Price to the former equity holders of Apton related to the waiver of all remaining milestone obligations associated with our purchase of Apton in August 2023.

Financial Instruments in Part I, Item 1 of this Quarterly Report on Form 10-Q for further details.

Interest Expense

Interest expense for the first quarter of 2026 and 2025 was comprised of interest on the convertible senior notes.

Interest expense during the six months ended June 30, 2026 and 2025 was primarily comprised of interest on the convertible senior notes.

Interest expense for the six months ended June 30, 2026 also included interest related to the liability recorded for the license and settlement agreement with PGI.

Other Income, Net

Other income, net for the first quarter of 2026 decreased compared to the same quarter of 2025 primarily driven by lower investment income due to lower cash and investment balances.

Other income, net during the six months ended June 30, 2026 decreased compared to the same period of 2025 primarily driven by lower investment income due to lower cash and investment balances.

Q2 Fiscal 2026 Form 10-Q

LIQUIDITY AND CAPITAL RESOURCES

As of March 31, 2026, we had cash, cash equivalents and investments of $276.0 million compared to $279.5 million as of December 31, 2025.

We believe that our existing cash, cash equivalents and investments will be sufficient to fund our projected operating requirements beyond the next 12 months from the date of filing of this Quarterly Report on Form 10-Q for the quarter ended March 31, 2026.

As of June 30, 2026, we had cash, cash equivalents and investments of $236.9 million compared to $279.5 million as of December 31, 2025.

Our primary sources of liquidity, other than our holdings of cash, cash equivalents, and investments, have primarily been through the issuance of debt or equity securities, together with cash flow from operating activities.

We have historically incurred, and expect to continue to incur, operating losses and generate negative cash flows from operations on an annual basis, and as a result, we may require additional capital resources to execute our strategic initiatives to grow our business.

We approved and implemented certain efficiency and expense reduction initiatives during 2025 and 2024.

During the third quarter of 2026, we announced a restructuring plan to continue to better align our organizational structure and resources wit h our strategic initiatives.

Including the Reduction in Force and related non-headcount cost actions, we expect to reduce our annualized operating expenses by $30 million to $40 million by the end of 2027.

We expect that the Reduction in Force will be completed and that these charges will be incurred in the third quarter of 2026.

We also approved and implemented certain efficiency and expense reduction initiatives during 2025 and 2024.

These expense reduction initiatives included workforce reductions, facilities downsizing and a refined pipeline of development programs.

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In the first quarter of 2026, the Company entered into a license and settlement agreement with PGI in connection with the PGI Settlement.

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

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

Convertible Senior Notes

As of March 31, 2026, 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, 2026, 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.

The 2030 Notes will mature on December 15, 2030, subject to earlier conversion, redemption or repurchase, including upon a fundamental change.

Convertible Senior Notes in Part I, Item I of this Quarterly Report on Form 10-Q for further details.

Convertible Senior Notes in Part I, Item 1 of this Quarterly Report on Form 10-Q for further details.

Our future capital requirements and the adequacy of our available funds will depend on many factors, including:

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• the costs involved in preparing, filing, prosecuting, defending and enforcing intellectual property rights;

Q2 Fiscal 2026 Form 10-Q

• our ability to manage manufacturing and production costs, especially costs related to the compute requirements of our instrument platforms, including purchase obligations;

• the extent to which we engage in collaborations with partners and acquire other businesses or technologies.

Q1 Fiscal 2026 Form 10-Q

If economic, financial, business, or other factors adversely affect our ability to fund our projected operating cash requirements, we may be required to obtain funding through traditional or alternative sources of financing.

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Cash Flow Summary

Three Months Ended March 31,

Six Months Ended June 30,

(In thousands) 2026 2025

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Net cash provided by financing activities 1,692 1,959

Net (decrease) increase in cash, cash equivalents, and restricted cash

$ (7,395) $ 3,137

Net decrease in cash, cash equivalents, and restricted cash $ (2,652) $ (957)

Operating Activities

Our primary uses of cash in operating activities include the development of future products and product enhancements, manufacturing, and support functions related to our sales, general and administrative activities.

Cash used in operating activities during the three months ended March 31, 2026 of $44.7 million was due primarily to an $8.3 million net loss that included non-cash items such as amortization of acquired intangible assets of $1.0 million, share-based compensation of $4.5 million, depreciation expense of $2.2 million, and $3.2 million in net changes to operating assets and liabilities, which were offset by a $48.1 million gain on disposal of assets.

Cash flow impact from changes in net operating assets and liabilities was primarily driven by a decrease in accounts receivable as well as an increase in other liabilities.

These sources of cash were partially offset by an increase in inventory and a decrease in accounts payable.

Cash used in operating activities during the three months ended March 31, 2025 of $44.1 million was due primarily to a $426.1 million net loss that included non-cash items such as amortization of acquired intangible assets of $366.4 million, an impairment charge of $15.0 million, share-based compensation of $9.2 million, $7.7 million of inventory adjustments, depreciation expense of $5.1 million, and $2.4 million in net changes to operating assets and liabilities, partially offset by an $18.7 million decrease in the change in the fair value of the contingent consideration.

Cash flow impact from changes in net operating assets and liabilities was primarily driven by an increase in accrued expenses partially offset by an increase in accounts receivable.

Cash used in operating activities during the six months ended June 30, 2026 of $80.3 million was due primarily to a $53.0 million net loss that included non-cash items such as share-based compensation of $13.7 million, depreciation expense of $4.5 million, and amortization of acquired intangible assets of $2.0 million, which were offset by a $48.1 million gain on disposal of assets and $2.8 million in net changes to operating assets and liabilities.

Cash flow impact from changes in net operating assets and liabilities was primarily driven by an increase in inventory and a decrease in accrued expenses.

These uses of cash were partially offset by increases in other liabilities and operating lease liabilities as well as a decrease in accounts receivable.

Cash used in operating activities during the six months ended June 30, 2025 of $73.4 million was due primarily to a $468.0 million net loss that included non-cash items such as amortization of acquired intangible assets of $367.4 million, an impairment charge of $15.0 million, share-based compensation of $21.1 million, $8.5 million of inventory adjustments, depreciation expense of $7.8 million, and $6.3 million in net changes to operating assets and liabilities, partially offset by an $18.7 million decrease in the change in the fair value of the contingent consideration.

Cash flow impact from changes in net operating assets and liabilities was primarily driven by increases in accounts receivable and inventory, as well as decreases in accrued expenses and operating lease liabilities.

These uses of cash were partially offset by a decrease in prepaid expenses and other assets.

Investing Activities

Our investing activities consist primarily of capital expenditures and investment purchases, sales, and maturities.

Cash provided by investing activities during the three months ended March 31, 2026 was primarily from $48.3 million of maturities of investments and $50.0 million of gross proceeds from a disposal of assets partially offset by $52.4 million of purchases of investments and $5.0 million in purchases of intangible assets.

Cash provided by investing activities during the three months ended March 31, 2025 was primarily from $113.4 million of maturities of investments partially offset by $61.8 million of purchases of investments and $5.0 million in purchases of intangible assets.

Financing Activities

Cash provided by financing activities during the three months ended March 31, 2026 resulted from $1.4 million of proceeds from the issuance of common stock through our equity compensation plans.

Cash provided by financing activities during the three months ended March 31, 2025 resulted from $2.0 million from the issuance of common stock through our equity compensation plans.

Our investing activities consist primarily of capital expenditures and investment purchases and maturities.

Cash provided by investing activities during the six months ended June 30, 2026 was primarily from $97.0 million of maturities of investments and $50.0 million of gross proceeds from a disposal of assets partially offset by $57.5 million of purchases of investments, $5.0 million of purchases of intangible assets, and $4.6 million of purchases of property and equipment.

Cash provided by investing activities during the six months ended June 30, 2025, was primarily from $195.4 million of maturities of investments partially offset by $118.0 million of purchases of investments and $5.0 million in purchases of intangible assets.

Q2 Fiscal 2026 Form 10-Q

Financing Activities

Cash provided by financing activities during the six months ended June 30, 2026 resulted from $1.7 million of proceeds from the issuance of common stock through our equity compensation plans.

Cash provided by financing activities during the six months ended June 30, 2025 resulted from $2.0 million from the issuance of common stock through our equity compensation plans.

Contractual Obligations

We presented our contractual obligations at December 31, 2025 in our 2025 Annual Report.

There were no material changes outside the ordinary course of business to our contractual obligations during the three months ended March 31, 2026.

There were no material changes outside the ordinary course of business to our contractual obligations during the six months ended June 30, 2026.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

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Actual results may differ from these estimates under different assumptions or conditions.

There have been no changes to our significant accounting policies as disclosed in our 2025 Annual Report.

There have been no changes to our significant accounting policies and estimates as disclosed in our 2025 Annual Report.

RECENT ACCOUNTING PRONOUNCEMENTS

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OFF-BALANCE SHEET ARRANGEMENTS

As of March 31, 2026, we did not have any off-balance sheet arrangements.

As of June 30, 2026, we did not have any off-balance sheet arrangements.

In the ordinary course of business, we enter into standard indemnification arrangements.

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To the extent that such indemnification obligations apply to the lawsuits described in Note 6.

Commitments and Contingencies in Part I, Item 1 of this Quarterly Report on Form 10-Q, any associated expenses incurred are included within the related accrued litigation expense amounts.

No additional liability associated with such indemnification agreements has been recorded as of March 31, 2026.

Commitments and Contingencies in Part I, Item 1 of this Quarterly Report on Form 10-Q, any associated expenses incurred are included within the related accrued litigation expense

Q2 Fiscal 2026 Form 10-Q

No additional liability associated with such indemnification agreements has been recorded as of June 30, 2026.

Q2 Fiscal 2026 Form 10-Q

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