What changed in this filing

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Item 1. Financial Statements

2024-08-01 compared with 2024-05-09 · 215 added, 137 removed, 450 unchanged (44% of the section changed)

3 unchanged sentences

(In millions, except par value)

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Current assets:

4 unchanged sentences

Prepaid expenses and other current assets 310.0 262.1

Assets held for sale 52.8 —

Total current assets 1,341.3 1,310.5

24 unchanged sentences

5.0 shares authorized;

none issued or outstanding at March 31, 2024 and December 31, 2023

none issued or outstanding at June 30, 2024 and December 31, 2023

Common stock, $ 0.001 par value per share;

126.2 shares authorized;

66.8 and 66.7 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively

67.1 and 66.7 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively

Additional paid-in capital 2,863.9 2,848.0

5 unchanged sentences

QUIDELORTHO CORPORATION

CONSOLIDATED STATEMENTS OF (LOSS) INCOME

CONSOLIDATED STATEMENTS OF LOSS

(In millions, except per share data)

Three Months Ended

March 31, 2024 April 2, 2023

Three Months Ended Six Months Ended

June 30, 2024 July 2, 2023 June 30, 2024 July 2, 2023

Total revenues $ 637.0 $ 665.1 $ 1,348.0 $ 1,511.2

3 unchanged sentences

Amortization of intangible assets 51.9 51.4 103.6 102.2

Acquisition and integration costs 22.6 29.7

Integration related costs 30.9 24.2 53.5 53.9

Goodwill impairment charge — — 1,743.9 —

Asset impairment charge 56.9 0.5 56.9 1.0

Other operating expenses 9.3 5.8 17.3 9.6

2 unchanged sentences

Other expense, net 4.4 1.0 6.3 3.9

(Loss) income before income taxes ( 1,798.9 ) 60.0

(Benefit from) provision for income taxes ( 92.9 ) 11.2

Net (loss) income $ ( 1,706.0 ) $ 48.8

Basic (loss) earnings per share $ ( 25.50 ) $ 0.73

Diluted (loss) earnings per share $ ( 25.50 ) $ 0.73

Loss before income taxes ( 162.9 ) ( 64.4 ) ( 1,961.8 ) ( 4.4 )

Benefit from income taxes ( 15.2 ) ( 11.2 ) ( 108.1 ) —

Net loss $ ( 147.7 ) $ ( 53.2 ) $ ( 1,853.7 ) $ ( 4.4 )

Basic loss per share $ ( 2.20 ) $ ( 0.80 ) $ ( 27.67 ) $ ( 0.07 )

Diluted loss per share $ ( 2.20 ) $ ( 0.80 ) $ ( 27.67 ) $ ( 0.07 )

Weighted-average shares outstanding - basic 67.1 66.8 67.0 66.7

4 unchanged sentences

(In millions)

Three Months Ended

March 31, 2024 April 2, 2023

Net (loss) income $ ( 1,706.0 ) $ 48.8

Three Months Ended Six Months Ended

June 30, 2024 July 2, 2023 June 30, 2024 July 2, 2023

Net loss $ ( 147.7 ) $ ( 53.2 ) $ ( 1,853.7 ) $ ( 4.4 )

Other comprehensive (loss) income

Changes in cumulative translation adjustment, net of tax ( 5.3 ) 7.4 ( 26.1 ) 38.1

Changes in unrealized gains from investments, net of tax — 0.2

Changes in unrealized gains (losses) from cash flow hedges, net of tax:

Net unrealized gains (losses) on derivative instruments 30.5 ( 16.9 )

Changes in unrealized (losses) gains from investments, net of tax — ( 0.1 ) — 0.1

Changes in unrealized gains from cash flow hedges, net of tax:

Net unrealized gains on derivative instruments 13.1 40.0 43.6 23.1

Reclassification of net realized gains on derivative instruments included in net income ( 6.2 ) ( 4.3 ) ( 12.1 ) ( 10.0 )

Total change in unrealized gains (losses) from cash flow hedges, net of tax 24.6 ( 22.6 )

Total change in unrealized gains from cash flow hedges, net of tax 6.9 35.7 31.5 13.1

Comprehensive (loss) income $ ( 146.1 ) $ ( 10.2 ) $ ( 1,848.3 ) $ 46.9

16 unchanged sentences

Balance at March 31, 2024 66.8 0.1 2,852.0 ( 26.2 ) 481.8 3,307.7

Issuance of common stock under equity compensation plans 0.4 — 4.1 — — 4.1

Stock-based compensation expense — — 10.3 — — 10.3

Tax withholdings related to vesting of stock-based awards ( 0.1 ) — ( 2.5 ) — — ( 2.5 )

Other comprehensive income, net of tax — — — 1.6 — 1.6

Net loss — — — — ( 147.7 ) ( 147.7 )

Balance at June 30, 2024 67.1 $ 0.1 $ 2,863.9 $ ( 24.6 ) $ 334.1 $ 3,173.5

Common Stock Additional

11 unchanged sentences

Balance at April 2, 2023 66.6 0.1 2,809.0 ( 59.3 ) 2,246.7 4,996.5

Issuance of common stock under equity compensation plans 0.2 — 5.5 — — 5.5

Stock-based compensation expense — — 13.7 — — 13.7

Tax withholdings related to vesting of stock-based awards — — ( 3.0 ) — — ( 3.0 )

Other comprehensive income, net of tax — — — 43.0 — 43.0

Net loss — — — — ( 53.2 ) ( 53.2 )

Balance at July 2, 2023 66.8 $ 0.1 $ 2,825.2 $ ( 16.3 ) $ 2,193.5 $ 5,002.5

See accompanying notes.

2 unchanged sentences

(In millions)

Three Months Ended

March 31, 2024 April 2, 2023

Six Months Ended

June 30, 2024 July 2, 2023

OPERATING ACTIVITIES

Net (loss) income $ ( 1,706.0 ) $ 48.8

Adjustments to reconcile net (loss) income to net cash (used for) provided by operating activities:

Net loss $ ( 1,853.7 ) $ ( 4.4 )

Adjustments to reconcile net loss to net cash (used for) provided by operating activities:

Depreciation and amortization 231.0 228.7

Goodwill impairment charge 1,743.9 —

Asset impairment charge 56.9 1.0

Stock-based compensation expense 20.2 25.2

1 unchanged sentence

Change in deferred tax assets and liabilities ( 73.6 ) 0.6

Payment of accreted interest on deferred consideration — ( 9.7 )

Other non-cash, net ( 7.4 ) ( 2.3 )

21 unchanged sentences

Payments of tax withholdings related to vesting of stock-based awards ( 8.3 ) ( 12.5 )

Net cash used for financing activities ( 18.5 ) ( 59.6 )

Principal payments of deferred consideration — ( 30.3 )

Net cash provided by (used for) financing activities 144.0 ( 159.3 )

Effect of exchange rates on cash ( 1.9 ) ( 2.1 )

Net (decrease) increase in cash, cash equivalents and restricted cash ( 40.5 ) 61.0

Net decrease in cash, cash equivalents and restricted cash ( 12.0 ) ( 114.3 )

Cash, cash equivalents and restricted cash at beginning of period 119.5 293.9

13 unchanged sentences

Refer to the Summary of Abbreviated Terms at the end of this Quarterly Report for definitions of terms used throughout the document.

The information at March 31, 2024, and for the three months ended March 31, 2024 and April 2, 2023, is unaudited.

The information at June 30, 2024, and for the three and six months ended June 30, 2024 and July 2, 2023, is unaudited.

For further information, refer to the Company’s Consolidated Financial Statements and notes thereto for the fiscal year ended December 31, 2023 included in QuidelOrtho’s Annual Report.

2 unchanged sentences

For 2024 and 2023, the Company’s fiscal year will end or has ended on December 29, 2024 and December 31, 2023, respectively.

For 2024 and 2023, the Company’s first quarter ended on March 31, 2024 and April 2, 2023, respectively.

The three months ended March 31, 2024 and April 2, 2023 each included 13 weeks.

For 2024 and 2023, the Company’s second quarter ended on June 30, 2024 and July 2, 2023, respectively.

The three and six months ended June 30, 2024 and July 2, 2023 each included 13 and 26 weeks, respectively.

Use of Estimates

1 unchanged sentence

Actual results could differ from those estimates.

Reclassifications

Certain reclassifications have been made to prior periods amounts to conform to the current period presentation.

Such amounts include a reclassification of $ 0.5 million and $ 1.0 million recognized in the three and six months ended July 2, 2023, respectively, related to impairment of long-lived assets from (i) Cost of sales, excluding amortization of intangibles (excludes $ 0.1 million for both the three and six months ended July 2, 2023), and (ii) Research and development (excludes $ 0.4 million and $ 0.9 million for the three and six months ended July 2, 2023, respectively), to Asset impairment charge.

The reclassifications did not have an impact on the Company’s previously reported Consolidated Balance Sheets, Consolidated Statements of Comprehensive (Loss) Income, Consolidated Statements of Stockholders’ Equity or Consolidated Statements of Cash Flows.

Recent Accounting Pronouncements

There have been no accounting pronouncements issued or adopted during the three months ended March 31, 2024 that are expected to have a material impact on the Company’s Consolidated Financial Statements.

There have been no accounting pronouncements issued or adopted during the six months ended June 30, 2024 that are expected to have a material impact on the Company’s Consolidated Financial Statements.

Computation of Earnings Per Share

The following table presents the calculation of the weighted-average shares used in computing basic and diluted EPS in the respective periods:

Three Months Ended

(In millions) March 31, 2024 April 2, 2023

Three Months Ended Six Months Ended

(In millions) June 30, 2024 July 2, 2023 June 30, 2024 July 2, 2023

Basic weighted-average shares of common stock outstanding 67.1 66.8 67.0 66.7

1 unchanged sentence

Diluted weighted-average shares of common stock outstanding 67.1 66.8 67.0 66.7

(1) In the three months ended March 31, 2024, all potential shares of common stock issuable for stock options and RSUs were excluded from the dilutive calculations above because the effect of including them would have been anti-dilutive.

The dilutive effect of potential shares of common stock issuable for stock options and RSUs on the weighted-average number of shares of common stock outstanding would have been as follows:

Three Months Ended

(In millions) March 31, 2024

(1) In the three and six months ended June 30, 2024 and July 2, 2023, all potential shares of common stock issuable for stock options and RSUs were excluded from the dilutive calculations above because the effect of including them would have been anti-dilutive.

effect of potential shares of common stock issuable for stock options and RSUs on the weighted-average number of shares of common stock outstanding would have been as follows:

Three Months Ended Six Months Ended

(In millions) June 30, 2024 July 2, 2023 June 30, 2024 July 2, 2023

Basic weighted-average shares of common stock outstanding 67.1 66.8 67.0 66.7

2 unchanged sentences

Stock options and RSUs where the combined exercise price and unrecognized stock-based compensation was greater than the average market price for the Company’s common stock were not included in the computations of diluted weighted-average shares because the effect would have been anti-dilutive under the treasury stock method.

These stock options and RSUs represented 1.9 million shares of common stock for the three months ended March 31, 2024, and 0.9 million shares of common stock for the three months ended April 2, 2023.

These stock options and RSUs represented 2.1 million shares of common stock for both the three and six months ended June 30, 2024, and 1.2 million and 1.1 million shares of common stock for the three and six months ended July 2, 2023, respectively.

Contract Balances

2 unchanged sentences

Contract assets are included within Prepaid expenses and other current assets in the Company’s Consolidated Balance Sheets and are transferred to accounts receivable when the right to payment becomes unconditional.

The balance of contract assets recorded in the Company’s Consolidated Balance Sheets as of March 31, 2024 and December 31, 2023 was $ 41.9 million and $ 46.2 million, respectively.

The balance of contract assets recorded in the Company’s Consolidated Balance Sheets as of June 30, 2024 and December 31, 2023 was $ 44.1 million and $ 46.2 million, respectively.

The contract asset balance consisted of the following components:

• a customer supply agreement under which the difference between the timing of invoicing and revenue recognition resulted in a contract asset of $ 1.9 million as of December 31, 2023.

There was no contract asset remaining as of March 31, 2024;

There was no contract asset remaining as of June 30, 2024;

• contractual arrangements with certain customers under which the Company invoices the customers based on reportable results generated by its reagents;

2 unchanged sentences

The Company records the revenue upon shipment and an associated contract asset, and relieves the contract asset upon completion of the invoicing.

The balance of the contract asset related to these arrangements was $ 41.9 million and $ 41.8 million as of March 31, 2024 and December 31, 2023, respectively;

The balance of the contract asset related to these arrangements was $ 44.1 million and $ 41.8 million as of June 30, 2024 and December 31, 2023, respectively;

• one of the Company’s contract manufacturing agreements that recognizes revenue as the products are manufactured resulted in a contract asset of $ 2.5 million as of December 31, 2023.

There was no contract asset remaining as of March 31, 2024.

There was no contract asset remaining as of June 30, 2024.

The Company reviews contract assets for expected credit losses resulting from the collectability of customer accounts.

Expected losses are established based on historical losses, customer mix and credit policies, current economic conditions in customers’ country or industry, and expectations associated with reasonable and supportable forecasts.

No credit losses related to contract assets were recognized during the three months ended March 31, 2024 and April 2, 2023.

No credit losses related to contract assets were recognized during the three and six months ended June 30, 2024 and July 2, 2023.

The Company recognizes a contract liability when a customer pays an invoice prior to the Company transferring control of the goods or services (“contract liabilities”).

1 unchanged sentence

The Company classifies deferred revenue as current or non-current based on the timing of the transfer of control or performance of the service.

The balance of the Company’s current deferred revenue was $ 33.9 million and $ 36.8 million as of March 31, 2024 and December 31, 2023, respectively, and was included in Other current liabilities in the Consolidated Balance Sheets.

The balance of the Company’s current deferred revenue was $ 40.1 million and $ 36.8 million as of June 30, 2024 and December 31, 2023, respectively, and was included in Other current liabilities in the Consolidated Balance Sheets.

The Company has one arrangement with a customer where the revenue is expected to be recognized beyond one year.

The balance of the deferred revenue included in long-term liabilities was $ 14.2 million and $ 13.9 million as of March 31, 2024 and December 31, 2023, respectively, and was included in Other liabilities in the Consolidated Balance Sheets.

The amount of deferred revenue as of December 31, 2023 that was recorded in Total revenues during the three months ended March 31, 2024 was $ 19.4 million.

The balance of the deferred revenue included in long-term liabilities was $ 15.9 million and $ 13.9 million as of June 30, 2024 and December 31, 2023, respectively, and was included in Other liabilities in the Consolidated Balance Sheets.

The amount of deferred revenue as of December 31, 2023 that was recorded in Total revenues during the three and six months ended June 30, 2024 was $ 9.2 million and $ 27.0 million, respectively.

Joint Business with Grifols

The Company has an ongoing Joint Business between Ortho and Grifols, under which Ortho and Grifols agreed to pursue a collaboration relating to Ortho’s Hepatitis and HIV diagnostics business.

The governance of the Joint Business is shared through a supervisory board made up of equal representation by Ortho and Grifols, which is responsible for all significant decisions relating to the Joint Business that are not exclusively assigned to either Ortho or Grifols, as defined in the Joint Business agreement.

The Company’s portion of the pre-tax net profit shared under the Joint Business was $ 8.1 million and $ 23.6 million during the three months ended March 31, 2024 and April 2, 2023, respectively.

These amounts included the Company’s portion of the pre-tax net profit of $ 5.0 million and $ 1.2 million during the three months ended March 31, 2024 and April 2, 2023, respectively, on sales transactions with third parties where the Company is the principal.

The Company recognized revenues, cost of sales, excluding amortization of intangibles, and operating expenses, on a gross basis on these sales transactions in their respective lines in the Consolidated Statements of (Loss) Income.

The Company’s portion of the pre-tax net profit also included revenue from collaboration and royalty agreements of $ 3.1 million and $ 22.4 million during the three months ended March 31, 2024 and April 2, 2023, respectively, which is presented on a net basis within Total revenues.

The governance of the Joint Business is shared

through a supervisory board made up of equal representation by Ortho and Grifols, which is responsible for all significant decisions relating to the Joint Business that are not exclusively assigned to either Ortho or Grifols, as defined in the Joint Business agreement.

The Company’s portion of the pre-tax net profit shared under the Joint Business was $ 8.9 million and $ 17.0 million during the three and six months ended June 30, 2024, respectively, and $ 6.1 million and $ 29.7 million during the three and six months ended July 2, 2023, respectively.

These amounts included the Company’s portion of the pre-tax net profit of $ 6.5 million and $ 11.5 million during the three and six months ended June 30, 2024, respectively, and $ 5.5 million and $ 6.7 million during the three and six months ended July 2, 2023, respectively, on sales transactions with third parties where the Company is the principal.

The Company’s portion of the pre-tax net profit also included revenue from collaboration and royalty agreements of $ 2.4 million and $ 5.5 million during the three and six months ended June 30, 2024, respectively, and $ 0.6 million and $ 23.0 million during the three and six months ended July 2, 2023, respectively, which is presented on a net basis within Total revenues.

Disaggregation of Revenue

The following table summarizes Total revenues by business unit:

Three Months Ended

(In millions) March 31, 2024 April 2, 2023

Three Months Ended Six Months Ended

(In millions) June 30, 2024 July 2, 2023 June 30, 2024 July 2, 2023

Labs $ 354.2 $ 361.4 $ 711.1 $ 732.1

4 unchanged sentences

Concentration of Revenue and Credit Risk

For the three months ended March 31, 2024, one distributor represented 11 % of Total revenues.

For the three months ended April 2, 2023, one customer represented 11 % of Total revenues.

As of March 31, 2024, no customers had a balance due in excess of 10% of Accounts receivable, net.

For the six months ended June 30, 2024, one customer represented 11 % of Total revenues.

For the six months ended July 2, 2023, no customers individually accounted for more than 10% of Total revenues.

As of June 30, 2024, no customers had a balance due in excess of 10% of Accounts receivable, net.

As of December 31, 2023, customers with a balance due in excess of 10% of Accounts receivable, net totaled $ 63.5 million.

Revenue related to our respiratory products accounted for 19 % and 31 % of Total revenues for the three months ended March 31, 2024 and April 2, 2023, respectively.

Revenue related to the Company’s respiratory products accounted for 9 % and 14 % of Total revenues for the three and six months ended June 30, 2024, respectively, and 13 % and 23 % for the three and six months ended July 2, 2023, respectively.

Segment and Geographic Information

7 unchanged sentences

Total revenues by reportable segment are as follows:

Three Months Ended

(In millions) March 31, 2024 April 2, 2023

Three Months Ended Six Months Ended

(In millions) June 30, 2024 July 2, 2023 June 30, 2024 July 2, 2023

North America $ 350.1 $ 378.8 $ 784.0 $ 961.6

3 unchanged sentences

Total revenues $ 637.0 $ 665.1 $ 1,348.0 $ 1,511.2

The following table sets forth Adjusted EBITDA by segment and the reconciliations to (Loss) income before income taxes for the three months ended March 31, 2024 and April 2, 2023:

Three Months Ended

(In millions) March 31, 2024 April 2, 2023

The following table sets forth Adjusted EBITDA by segment and the reconciliations to Loss before income taxes for the three and six months ended June 30, 2024 and July 2, 2023:

Three Months Ended Six Months Ended

(In millions) June 30, 2024 July 2, 2023 June 30, 2024 July 2, 2023

North America $ 173.9 $ 176.3 $ 392.7 $ 454.7

7 unchanged sentences

Depreciation and amortization ( 116.1 ) ( 114.5 ) ( 231.0 ) ( 228.7 )

Integration related costs ( 30.9 ) ( 24.2 ) ( 53.5 ) ( 53.9 )

Goodwill impairment charge — — ( 1,743.9 ) —

Acquisition and integration costs ( 22.6 ) ( 29.7 )

Employee compensation charges ( 5.6 ) —

Asset impairment charge ( 56.9 ) ( 0.5 ) ( 56.9 ) ( 1.0 )

Credit Agreement amendment fees ( 4.0 ) — ( 4.0 ) —

Amortization of deferred cloud computing implementation costs ( 3.0 ) ( 1.5 ) ( 5.9 ) ( 3.1 )

1 unchanged sentence

( 0.5 ) ( 0.7 ) ( 1.1 ) ( 1.5 )

Impairment of long-lived assets — ( 0.5 )

Tax indemnification expense — ( 0.3 )

Employee compensation charges — — ( 5.6 ) —

Tax indemnification income — 0.4 — 0.1

Gain (loss) on investments 0.7 ( 0.2 ) — ( 0.2 )

Other adjustments ( 1.1 ) — ( 1.8 ) ( 1.5 )

(Loss) income before income taxes $ ( 1,798.9 ) $ 60.0

Loss before income taxes $ ( 162.9 ) $ ( 64.4 ) $ ( 1,961.8 ) $ ( 4.4 )

(1) Primarily consists of costs related to executive and staff functions, including certain finance, human resources, manufacturing and IT functions, which benefit the Company as a whole.

6 unchanged sentences

The tax effects for other items that are excluded from ordinary income are discretely calculated and recognized in the period in which they occur.

For the three months ended March 31, 2024, the Company recognized an income tax benefit of $ 92.9 million in relation to loss before income taxes of $ 1,798.9 million, resulting in an effective tax rate of 5.2 %.

For the three months ended April 2, 2023, the Company recognized a provision for income taxes of $ 11.2 million in relation to income before income taxes of $ 60.0 million, resulting in an effective tax rate of 18.7 %.

For the three months ended March 31, 2024, the effective tax rate differed from the U.S.

For the three months ended June 30, 2024, the Company recognized an income tax benefit of $ 15.2 million in relation to loss before income taxes of $ 162.9 million, resulting in an effective benefit tax rate of 9.3 %.

For the three months ended July 2, 2023, the Company recognized an income tax benefit of $ 11.2 million in relation to loss before income taxes of $ 64.4 million, resulting in an effective benefit tax rate of 17.4 %.

For the three months ended June 30, 2024, the effective tax rate differed from the U.S.

federal statutory rate primarily due to Subpart F income and the Base Erosion and Anti-Abuse Tax liability.

For the three months ended July 2, 2023, the effective tax rate differed from the U.S.

federal statutory rate primarily due to non-U.S.

earnings being taxed at rates that were different than the U.S.

statutory rate, operating losses in certain subsidiaries not being benefited due to the establishment of valuation allowances, R&D credits and foreign tax credits, partially offset by foreign exchange losses and the Global Intangible Low-Tax Income.

For the six months ended June 30, 2024, the Company recognized an income tax benefit of $ 108.1 million in relation to loss before income taxes of $ 1,961.8 million, resulting in an effective tax rate of 5.5 %.

For the six months ended July 2, 2023, the recognized amount of income tax benefit was not material in relation to loss before income taxes of $ 4.4 million, resulting in an effective benefit tax rate of 0.7 %.

For the six months ended June 30, 2024, the effective tax rate differed from the U.S.

federal statutory rate primarily due to goodwill impairment charges that are nondeductible for tax purposes.

For the three months ended April 2, 2023, the effective tax rate was impacted by income tax benefits related to non-U.S.

earnings being taxed at rates that are different than the U.S.

statutory rate, R&D credits, foreign tax credits, and foreign exchange losses, partially offset by income taxes owed in certain U.S.

states and Global Intangible Low-Tax Income.

The balance of unrecognized tax benefits at March 31, 2024, not including interest and penalties, was $ 28.8 million, of which $ 21.6 million could affect the effective income tax rate in future periods, if recognized.

For the six months ended July 2, 2023, the effective tax rate differed from the U.S.

federal statutory rate primarily due to net operating losses in certain subsidiaries not being benefited due to the establishment of valuation allowances and the Global Intangible Low-Tax Income, partially offset by U.S.

earnings being taxed at rates that were different than the U.S.

statutory rate, R&D credits, foreign tax credits and foreign exchange losses.

The balance of unrecognized tax benefits at June 30, 2024, not including interest and penalties, was $ 29.3 million, of which $ 22.0 million could affect the effective income tax rate in future periods, if recognized.

The Company also recognizes interest and penalties related to unrecognized tax benefits in tax expense.

At March 31, 2024, the Company had approximately $ 3.8 million of interest and penalties accrued related to unrecognized tax benefits.

The Company estimates that within the next 12 months, its uncertain tax positions, excluding interest, will decrease by $ 11.9 million.

At June 30, 2024, the Company had approximately $ 4.1 million of interest and penalties accrued related to unrecognized tax benefits.

The Company estimates that within the next 12 months, its uncertain tax positions, excluding interest, should decrease by $ 11.7 million.

The Company is subject to periodic audits by domestic and foreign tax authorities.

5 unchanged sentences

Pursuant to the stock and asset purchase agreement entered into by Ortho and Johnson & Johnson in January 2014, Johnson & Johnson retained all income tax liabilities accrued as of the date of acquisition, including reserves for unrecognized tax benefits.

Accordingly, all tax liabilities related to these tax years will be indemnified by Johnson & Johnson.

The indemnification receivable from Johnson & Johnson totaled $ 3.0 million as of March 31, 2024 and December 31, 2023, and is included as a component of Prepaid expenses and other current assets on the Consolidated Balance Sheet.

Accordingly, all tax liabilities related to these tax years are required to be indemnified by Johnson & Johnson.

The indemnification receivable from Johnson & Johnson totaled $ 3.0 million as of June 30, 2024 and December 31, 2023, and is included as a component of Prepaid expenses and other current assets on the Consolidated Balance Sheet.

Balance Sheet Account Details

Cash, Cash Equivalents and Restricted Cash

(In millions) March 31, 2024 December 31, 2023

(In millions) June 30, 2024 December 31, 2023

Cash and cash equivalents $ 107.0 $ 118.9

2 unchanged sentences

Marketable Securities

The Company had no marketable securities outstanding as of March 31, 2024.

The Company had no marketable securities outstanding as of June 30, 2024.

The following table is a summary of marketable securities as of December 31, 2023:

11 unchanged sentences

Accounts receivables primarily consist of trade accounts receivables with maturities of one year or less and are presented net of reserves:

(In millions) March 31, 2024 December 31, 2023

(In millions) June 30, 2024 December 31, 2023

Accounts receivable $ 347.2 $ 395.1

4 unchanged sentences

Inventories consisted of the following:

(In millions) March 31, 2024 December 31, 2023

(In millions) June 30, 2024 December 31, 2023

Raw materials $ 222.3 $ 212.7

8 unchanged sentences

Prepaid expenses and other current assets consisted of the following:

(In millions) March 31, 2024 December 31, 2023

(In millions) June 30, 2024 December 31, 2023

Income taxes and other tax receivables $ 156.4 $ 104.7

7 unchanged sentences

Other current liabilities consisted of the following:

(In millions) March 31, 2024 December 31, 2023

(In millions) June 30, 2024 December 31, 2023

Accrued commissions, rebates and returns $ 67.1 $ 63.8

6 unchanged sentences

Total other current liabilities $ 249.1 $ 303.3

Assets Held for Sale

The following criteria are considered before concluding assets are classified as held for sale:

1) management’s commitment to a plan to sell, 2) availability for immediate sale in its present condition, 3) initiation of an active program to identify a buyer, 4) probability of a completed sale within one year, 5) actively marketed for sale at a reasonable price in relation to its current fair value, and 6) likelihood of significant changes to the plan will be made or that the plan will be withdrawn.

If all of the criteria are met as of the balance sheet date, the net assets are presented separately in the balance sheet as held for sale at the lower of its carrying amount or fair value less costs to sell and is no longer depreciated or amortized while classified as held for sale.

The Company assesses the fair value of a long-lived asset less any costs to sell at each reporting period and until the asset is no longer classified as held for sale.

As part of the Company’s cost-savings initiatives, the Company has been evaluating its real estate footprint with the goal to relocate and consolidate its operations to improve long-term results.

As a result, the Company has decided to (i) sell the McKellar, San Diego, CA facility and (ii) sell the Raritan, NJ, facility with the intent to subsequently lease back the right to use the property.

In the second quarter of 2024, the properties met the requirements for reclassification from property, plant and equipment, net to assets held for sale when it became probable that the properties would be sold within one year.

The carrying value of the assets was reduced to its estimated relative fair value less costs to sell resulting in an impairment charge of $ 56.9 million that was included in Asset impairment charge.

Goodwill and Intangible Assets, Net

4 unchanged sentences

Foreign currency translation — ( 7.6 ) ( 1.5 ) ( 6.5 ) ( 15.6 )

Balance at March 31, 2024 $ — $ 574.3 $ 84.7 $ 75.8 $ 734.8

Balance at June 30, 2024 $ — $ 574.8 $ 84.2 $ 73.5 $ 732.5

The Company tests goodwill for impairment on an annual basis on the first day of the fourth quarter and monitors throughout the year for impairment triggering events that indicate that the carrying value of one or more of its reporting units exceeds its fair value.

During the three months ended March 31, 2024, the Company concluded that (i) the sustained decline in the Company’s stock price and market capitalization occurred during the three months ended March 31, 2024, (ii) the faster than expected decline in COVID-19 and flu markets, and (iii) the recent delay in the timing of expected commercialization for Savanna were triggering events requiring an interim goodwill impairment assessment for all reporting units.

During the first quarter of 2024, the Company concluded that (i) the sustained decline in the Company’s stock price and market capitalization occurred during the first quarter of 2024, (ii) the faster than expected decline in COVID-19 and flu markets, and (iii) the recent delay in the timing of expected commercialization for Savanna were triggering events requiring an interim goodwill impairment assessment for all reporting units.

Based on the Company’s interim goodwill impairment assessment, the Company concluded that the North America reporting unit’s carrying value exceeded its estimated fair value.

9 unchanged sentences

The projected future revenue growth rates and EBITDA margins, and the resulting projected cash flows are based on historical experience and internal annual operating plans reviewed by management, extrapolated over the forecast period.

Discount rates are determined using a weighted average cost of capital adjusted for risk factors specific to the reporting units.

Discount rates are determined using a

weighted average cost of capital adjusted for risk factors specific to the reporting units.

Market multiples are based on the guideline public company method using comparable publicly traded company multiples of revenue and EBITDA for a group of benchmark companies.

1 unchanged sentence

The Company also reviews long-lived assets, including intangible assets, for impairment when events or changes in circumstances indicate the carrying value of an asset group may not be recoverable.

Given the indications of possible impairment that occurred during the three months ended March 31, 2024, the Company tested its North America long-lived asset group for recoverability and impairment as of March 31, 2024.

Given the indications of possible impairment that occurred during the first quarter of 2024, the Company tested its North America long-lived asset group for recoverability and impairment as of March 31, 2024.

Recoverability of long-lived assets is measured by a comparison of the carrying value of an asset group to future undiscounted net cash flows expected to be generated by the asset group.

The undiscounted cash flows for the North America long-lived asset group were above the carrying value and the Company determined that the long-lived asset group was recoverable, and no impairment existed as of March 31, 2024.

The components of borrowings were as follows:

(In millions) March 31, 2024 December 31, 2023

(In millions) June 30, 2024 December 31, 2023

Term Loan $ 2,317.1 $ 2,420.2

8 unchanged sentences

The Credit Agreement, dated May 27, 2022, by and among the Company, as borrower, Bank of America, N.A., as administrative agent and swing line lender, and the other lenders and L/C issuers party thereto consists of a $ 2,750.0 million Term Loan and an $ 800.0 million Revolving Credit Facility.

Availability under the Revolving Credit Facility, after deducting letters of credit of $ 13.0 million and $ 40.0 million borrowings outstanding, was $ 747.0 million as of March 31, 2024.

During the three months ended March 31, 2024, the Company made $ 51.6 million in payments on the Term Loan.

Availability under the Revolving Credit Facility, after deducting letters of credit of $ 13.0 million and $ 253.0 million borrowings outstanding, was $ 534.0 million as of June 30, 2024.

During the six months ended June 30, 2024, the Company made $ 103.1 million in payments on the Term Loan.

The Credit Agreement contains affirmative and negative covenants that are customary for credit agreements of this nature.

4 unchanged sentences

The Credit Agreement contains a minimum Consolidated Interest Coverage Ratio (as defined in the Credit Agreement) of 3.00 to 1.00 as of the end of any fiscal quarter for the most recently completed four fiscal quarters.

The Company was in compliance with the financial covenants as of March 31, 2024.

The following table provides the detailed amounts within Interest expense, net for the three months ended March 31, 2024 and April 2, 2023:

Three Months Ended

(In millions) March 31, 2024 April 2, 2023

The Company was in compliance with the financial covenants as of June 30, 2024.

The following table provides the detailed amounts within Interest expense, net for the three and six months ended June 30, 2024 and July 2, 2023:

Three Months Ended Six Months Ended

(In millions) June 30, 2024 July 2, 2023 June 30, 2024 July 2, 2023

Term Loan $ 44.4 $ 44.2 $ 88.9 $ 85.1

6 unchanged sentences

Stock-based compensation expense was as follows:

Three Months Ended

(In millions) March 31, 2024 April 2, 2023

Cost of sales $ 1.2 $ 1.0

Three Months Ended Six Months Ended

(In millions) June 30, 2024 July 2, 2023 June 30, 2024 July 2, 2023

Cost of sales, excluding amortization of intangibles $ 1.5 $ 1.1 $ 2.7 $ 2.1

Selling, marketing and administrative 6.7 10.0 11.8 17.2

Research and development 0.9 1.3 1.9 2.6

Acquisition and integration costs 1.8 4.5

Integration related costs 2.1 4.6 3.9 9.1

Total stock-based compensation expense $ 11.2 $ 17.0 $ 20.3 $ 31.0

The table above includes compensation expense related to liability-classified awards of $ 3.0 million for the three months ended April 2, 2023, which has been or is expected to be settled in cash.

Amounts related to the three months ended March 31, 2024 were not material.

The table above includes compensation expense related to liability-classified awards of $ 2.8 million and $ 5.8 million for the three and six months ended July 2, 2023, respectively, which has been or is expected to be settled in cash.

Amounts related to the three and six months ended June 30, 2024 were not material.

Commitments and Contingencies

4 unchanged sentences

The Bristol County Complaint seeks a judgment determining that the lawsuit can be maintained as a class action and awarding the plaintiff and putative class damages, pre- and post-judgment interest, attorneys’ and experts’ fees, and costs.

On April 25, 2024, a purported stockholder of the Company filed a stockholder derivative complaint, purportedly on behalf of the Company, against the members of the Company’s Board of Directors and three of its current and former executives.

The complaint, which is captioned Matthew Whitfield v.

On April 25, 2024, and June 21, 2024, two purported stockholders of the Company filed separate stockholder derivative complaints, purportedly on behalf of the Company, against the current and certain former members of the Company’s Board of Directors and three of its current and former executives.

The complaints, which are captioned Matthew Whitfield v.

Buechler, Ph.D., et al., Case No.

1:24-cv-03176-MKV (S.D.N.Y.) (the “Whitfield Complaint”), asserts claims for violations of Section 14(a) of the Exchange Act and Rule 14a-9 promulgated thereunder, breach of fiduciary duty, aiding and abetting breach of fiduciary duty, unjust enrichment, abuse of control, gross mismanagement, and waste of corporate assets related to statements regarding sales of the Company’s COVID-19 diagnostic tests and the 510(k) submission for its Savanna RVP4 assay.

The Whitfield Complaint seeks a judgment awarding compensatory and punitive damages against the individual defendants, directing an accounting by the individual defendants, and awarding the costs and disbursements of the action, including attorneys’ fees, accountants’ and experts’ fees, costs, and expenses.

The Company believes that the claims asserted in the Bristol County and Whitfield Complaints are without merit.

1:24-cv-03176-MKV (S.D.N.Y.) (the “Whitfield Complaint”), and Steven Pinkney v.

Douglas Bryant, et al., Case No.

1:24-cv-4753-MKV (S.D.N.Y.) (the “Pinkney Complaint”), assert claims for violations of Sections 10(b), 14(a), and 20(a) of the Exchange Act and Rules 10b-5 and 14a-9 promulgated thereunder, breach of fiduciary duty, aiding and abetting breach of fiduciary duty, unjust enrichment, abuse of control, gross mismanagement, and waste of corporate assets related to statements regarding sales of the Company’s COVID-19 diagnostic tests and the 510(k) submission for its Savanna RVP4 assay.

The Whitfield and Pinkney Complaints seek judgments awarding compensatory and punitive damages against the individual defendants, directing an accounting by the individual defendants, directing the Company and the individual defendants to take actions to improve the Company’s governance and procedures, and awarding the costs and disbursements of the action, including attorneys’ fees, accountants’ and experts’ fees, costs, and expenses.

The Company disputes the allegations of wrongdoing and intends to defend itself vigorously in these matters.

Nevertheless, the outcomes of these lawsuits are uncertain and cannot be predicted with any certainty.

11 unchanged sentences

The following table presents the Company’s hierarchy for its assets and liabilities measured at fair value on a recurring basis as of the following periods:

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

(In millions) Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total

5 unchanged sentences

Total liabilities measured at fair value $ — $ 5.6 $ — $ 5.6 $ — $ 27.5 $ 0.1 $ 27.6

There were no transfers of assets or liabilities into or out of Level 3 of the fair value hierarchy during the three months ended March 31, 2024 and fiscal year 2023.

There were no transfers of assets or liabilities into or out of Level 3 of the fair value hierarchy during the six months ended June 30, 2024 and fiscal year 2023.

Marketable securities consist of investment-grade corporate and government debt securities, corporate asset-backed securities and commercial paper.

2 unchanged sentences

Financial Instruments Not Measured at Fair Value

The estimated fair value of the Company’s borrowings under the Term Loan was $ 2,356.8 million at March 31, 2024, compared to the carrying amount, excluding debt issuance costs, of $ 2,368.6 million.

The estimated fair value of the Company’s borrowings under the Term Loan was $ 2,296.8 million at June 30, 2024, compared to the carrying amount, excluding debt issuance costs, of $ 2,317.1 million.

The estimated fair value of the Company’s borrowings under the Term Loan was $ 2,396.0 million at December 31, 2023, compared to the carrying amount, excluding debt issuance costs, of $ 2,420.2 million.

8 unchanged sentences

The Company’s interest rate risk relates primarily to interest rate exposures on variable rate debt, including the Revolving Credit Facility and Term Loan.

See “—Note 8.

Refer to “—Note 9.

Borrowings” for additional information on the currently outstanding components of the Revolving Credit Facility and Term Loan.

3 unchanged sentences

In the event the Company determines the hedged transaction is no longer probable to occur or concludes the hedge relationship is no longer effective, the hedge is prospectively de-designated.

Pre-tax unrealized gains of $ 20.5 million as of March 31, 2024 are expected to be reclassified from OCI to earnings in the next 12 months.

The following table summarizes the Company’s interest rate derivative agreements as of March 31, 2024, all of which were interest rate swaps:

Pre-tax unrealized gains of $ 20.4 million as of June 30, 2024 are expected to be reclassified from OCI to earnings in the next 12 months.

The following table summarizes the Company’s interest rate derivative agreements as of June 30, 2024, all of which were interest rate swaps:

Notional Amount

22 unchanged sentences

In the event the Company determines the hedged transaction is no longer probable to occur or concludes the hedge relationship is no longer effective, the hedge is prospectively de-designated.

Pre-tax unrealized loss of $ 3.4 million as of March 31, 2024 is expected to be reclassified from OCI to earnings in the next 12 months.

Pre-tax unrealized gains of $ 0.7 million as of June 30, 2024 is expected to be reclassified from OCI to earnings in the next 12 months.

The Company also enters into foreign currency forward contracts that are not part of designated hedging relationships and which are intended to mitigate exchange rate risk of monetary assets and liabilities and related forecasted transactions.

The Company records these non-designated derivatives at mark-to-market with gains and losses recognized in earnings within Other expense, net.

The following table provides details of the currency hedging instruments outstanding as of March 31, 2024:

The following table provides details of the currency hedging instruments outstanding as of June 30, 2024:

Description Notional Amount

2 unchanged sentences

Foreign currency forward contracts $ 710.4 Non-designated

The following table summarizes pre-tax gains and losses from designated derivative and non-derivative instruments within AOCI for the three months ended March 31, 2024 and April 2, 2023:

The following table summarizes pre-tax gains and losses from designated derivative and non-derivative instruments within AOCI for the three and six months ended June 30, 2024 and July 2, 2023:

Designated Hedging Instruments

(In millions) Amount of Loss (Gain) Recognized in OCI on Hedges Location of Amounts Reclassified From AOCI Into Income Amount of Loss (Gain) Reclassified From AOCI Into Income

Three Months Ended March 31, 2024

Three Months Ended June 30, 2024

Foreign currency forward contracts (sales) $ ( 3.2 ) Total revenues $ 0.7

1 unchanged sentence

Interest rate derivatives $ ( 10.8 ) Interest expense, net $ ( 7.0 )

Three Months Ended April 2, 2023

Six Months Ended June 30, 2024

Foreign currency forward contracts (sales) $ ( 6.0 ) Total revenues $ 2.1

1 unchanged sentence

Interest rate derivatives $ ( 45.8 ) Interest expense, net $ ( 14.2 )

Three Months Ended July 2, 2023

Foreign currency forward contracts (sales) $ ( 0.4 ) Total revenues $ 1.8

Foreign currency forward contracts (purchases) $ ( 2.1 ) Cost of sales, excluding amortization of intangibles $ 1.3

Interest rate derivatives $ ( 47.0 ) Interest expense, net $ ( 7.4 )

Six Months Ended July 2, 2023

Foreign currency forward contracts (sales) $ 1.7 Total revenues $ 0.9

Foreign currency forward contracts (purchases) $ ( 2.1 ) Cost of sales, excluding amortization of intangibles $ 1.7

Interest rate derivatives $ ( 26.1 ) Interest expense, net $ ( 12.6 )

The Company also uses forward exchange contracts to hedge a portion of its net investment in foreign operations against movements in exchange rates.

In fiscal year 2023, the Company entered into forward contracts that are designated as hedges of the net investment in foreign operations.

The unrealized gains or losses on these contracts are recorded in translation adjustment within OCI, and remain in AOCI until either the sale or complete or substantially complete liquidation of the subsidiary.

The forward exchange contracts are designated as hedges of the net investment in foreign operations.

The unrealized gains or losses on these contracts are recorded in foreign currency translation adjustments within OCI, and remain in AOCI until either the sale or complete or substantially complete liquidation of the subsidiary.

The Company excludes certain portions of the change in fair value of its derivative instruments from the assessment of hedge effectiveness (excluded components).

1 unchanged sentence

The Company recognizes in earnings the initial value of the excluded components on a straight-line basis over the life of the derivative instrument.

The effect of the Company’s net investment hedges on OCI and the Consolidated Statements of (Loss) Income are shown below:

Amount of Pre-tax (Gain) Loss Recognized in OCI Amount of Pre-tax (Gain) Loss Recognized in Other Expense (Income), Net for Amounts Excluded from Effectiveness Testing

Three Months Ended March 31, 2024

The effect of the Company’s net investment hedges on OCI and the Consolidated Statements of Loss are shown below:

Net Investment Hedging Relationships

(In millions) Amount of Pre-tax (Gain) Loss Recognized in OCI Amount of Pre-tax (Gain) Loss Recognized in Other Expense (Income), Net for Amounts Excluded from Effectiveness Testing

Three Months Ended June 30, 2024

Foreign exchange contracts $ ( 7.3 ) $ ( 2.9 )

Fair value (gains) and losses on foreign currency forward contracts, as determined using Level 2 inputs, that do not qualify for hedge accounting treatment are recorded in Other expense, net and were not material for the three months ended March 31, 2024 and April 2, 2023.

The following table summarizes the fair value of designated and non-designated hedging instruments recognized within the Consolidated Balance Sheets as of March 31, 2024 and December 31, 2023:

(In millions) March 31, 2024 December 31, 2023

Six Months Ended June 30, 2024

Foreign exchange contracts $ ( 18.3 ) $ ( 4.9 )

Fair value gains on foreign currency forward contracts, as determined using Level 2 inputs, that do not qualify for hedge accounting treatment are recorded in Other expense, net and were $ 5.7 million for both the three and six months ended June 30,

Fair value gains that do not qualify for hedge accounting treatment were $ 3.2 million and $ 0.5 million for the three and six months ended July 2, 2023, respectively.

The following table summarizes the fair value of designated and non-designated hedging instruments recognized within the Consolidated Balance Sheets as of June 30, 2024 and December 31, 2023:

(In millions) June 30, 2024 December 31, 2023

Designated cash flow hedges

5 unchanged sentences

Prepaid expenses and other current assets 4.7 3.2

Other assets 6.6 —

Other current liabilities 3.6 9.4

6 unchanged sentences

The following table summarizes the changes in AOCI by component:

Three Months Ended March 31, 2024

Pension and Other Post-

Employment Benefits Cash Flow Hedges Available-for-Sale Investments Unrealized Foreign Currency Translation Adjustments Accumulated Other Comprehensive (Loss) Income

Three Months Ended June 30, 2024

(In millions) Pension and Other Post-

Employment Benefits Cash Flow Hedges Available-for-Sale Investments Foreign Currency Translation Adjustments Accumulated Other Comprehensive (Loss) Income

Balance at March 31, 2024 $ ( 1.3 ) $ 14.8 $ — $ ( 39.7 ) $ ( 26.2 )

Current period deferrals (1)

— 13.1 — ( 2.4 ) 10.7

Amounts reclassified to Net loss

— ( 6.2 ) — ( 2.9 ) ( 9.1 )

Net change — 6.9 — ( 5.3 ) 1.6

Balance at June 30, 2024 $ ( 1.3 ) $ 21.7 $ — $ ( 45.0 ) $ ( 24.6 )

Six Months Ended June 30, 2024

(In millions) Pension and Other Post-

Employment Benefits Cash Flow Hedges Available-for-Sale Investments Foreign Currency Translation Adjustments Accumulated Other Comprehensive (Loss) Income

Balance at December 31, 2023 $ ( 1.3 ) $ ( 9.8 ) $ — $ ( 18.9 ) $ ( 30.0 )

1 unchanged sentence

— 43.6 — ( 21.2 ) 22.4

Amounts reclassified to Net (loss) income — ( 5.9 ) — — ( 5.9 )

Amounts reclassified to Net loss

— ( 12.1 ) — ( 4.9 ) ( 17.0 )

Net change — 31.5 — ( 26.1 ) 5.4

Balance at March 31, 2024 $ ( 1.3 ) $ 14.8 $ — $ ( 39.7 ) $ ( 26.2 )

Three Months Ended April 2, 2023

Pension and Other Post-

employment Benefits Cash Flow Hedges Available-for-Sale Investments Unrealized Foreign Currency Translation Adjustments Accumulated Other Comprehensive (Loss) Income

Balance at June 30, 2024 $ ( 1.3 ) $ 21.7 $ — $ ( 45.0 ) $ ( 24.6 )

Three Months Ended July 2, 2023

(In millions) Pension and Other Post-

Employment Benefits Cash Flow Hedges Available-for-Sale Investments Foreign Currency Translation Adjustments Accumulated Other Comprehensive (Loss) Income

Balance at April 2, 2023 $ 0.7 $ ( 21.1 ) $ ( 0.3 ) $ ( 38.6 ) $ ( 59.3 )

Current period deferrals (2)

— 40.0 ( 0.1 ) 7.4 47.3

Amounts reclassified to Net loss

— ( 4.3 ) — — ( 4.3 )

Net change — 35.7 ( 0.1 ) 7.4 43.0

Balance at July 2, 2023 $ 0.7 $ 14.6 $ ( 0.4 ) $ ( 31.2 ) $ ( 16.3 )

Six Months Ended July 2, 2023

(In millions) Pension and Other Post-

employment Benefits Cash Flow Hedges Available-for-Sale Investments Foreign Currency Translation Adjustments Accumulated Other Comprehensive (Loss) Income

Balance at January 1, 2023 $ 0.7 $ 1.5 $ ( 0.5 ) $ ( 69.3 ) $ ( 67.6 )

1 unchanged sentence

— 23.1 0.1 38.1 61.3

Amounts reclassified to Net (loss) income — ( 5.7 ) — — ( 5.7 )

Amounts reclassified to Net loss

— ( 10.0 ) — — ( 10.0 )

Net change — 13.1 0.1 38.1 51.3

Balance at April 2, 2023 $ 0.7 $ ( 21.1 ) $ ( 0.3 ) $ ( 38.6 ) $ ( 59.3 )

(1) Includes tax impact of $ 6.5 million related to cash flow hedges for the three months ended March 31, 2024.

(2) Includes tax impact of $ 6.1 million related to cash flow hedges for the three months ended April 2, 2023.

Balance at July 2, 2023 $ 0.7 $ 14.6 $ ( 0.4 ) $ ( 31.2 ) $ ( 16.3 )

(1) Includes tax impact of (i) $ 0.9 million and $ 7.4 million related to cash flow hedges for the three and six months ended June 30, 2024, respectively, and (ii) $ 0.9 million and $ 2.9 million related to foreign currency translation adjustments for the three and six months ended June 30, 2024, respectively.

(2) Includes tax impact of $ 9.5 million and $ 3.4 million related to cash flow hedges for the three and six months ended July 2, 2023, respectively.

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 1. Financial Statements