What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2025-02-27 compared with 2024-02-29 · 482 added, 349 removed, 1003 unchanged (45% of the section changed)

4 unchanged sentences

Consolidated Statements of (Loss) Income

Consolidated Statements of Comprehensive Income

Consolidated Statements of Comprehensive (Loss) Income

Consolidated Statements of Stockholders’ Equity

4 unchanged sentences

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of QuidelOrtho Corporation (the Company) as of December 31, 2023 and January 1, 2023, the related consolidated statements of (loss) income, comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2023, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2023 and January 1, 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with U.S.

We have audited the accompanying consolidated balance sheets of QuidelOrtho Corporation (the Company) as of December 29, 2024 and December 31, 2023, the related consolidated statements of (loss) income, comprehensive (loss) income, stockholders’ equity and cash flows for each of the three years in the period ended December 29, 2024, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 29, 2024 and December 31, 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 29, 2024, in conformity with U.S.

generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 29, 2024 expressed an unqualified opinion thereon.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 29, 2024, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 27, 2025 expressed an adverse opinion thereon.

Basis for Opinion

9 unchanged sentences

We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Reserve for contractual rebates

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of the critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing a separate opinion on the critical audit matters or on the accounts or disclosures to which they relate.

Allowance for contractual rebates

Description of the Matter As described in Note 1 and Note 7 to the consolidated financial statements, the Company records revenues from product sales net of contractual rebates that are estimated at the time of sale.

As of December 31, 2023, the Company recognized an allowance on accounts receivable of $ 31.3 million in rebates which are dependent on estimated rebate percentages that vary based on end-user sales mix.

Auditing the Company’s allowance for contractual rebates is especially challenging because the calculation involves estimating adjustments to revenue based upon a high volume of data including inputs from third-party sources, such as distributor inventory levels and historical distributor sales to end users.

As of December 29, 2024, the Company recognized an allowance on accounts receivable of $ 39.8 million for rebates which are dependent on estimated rebate percentages that vary based on end-user sales mix.

Auditing the Company’s allowance for contractual rebates is especially challenging because the estimate is based upon a high volume of data including inputs from third-party sources.

In addition, the allowance for contractual rebates involves estimating rebate percentages which are dependent on estimated end-user sales mix and customer contractual terms, which vary across customers.

How We Addressed the Matter in Our Audit

We obtained an understanding, evaluated the design and tested the operating effectiveness of key controls over the Company’s process to calculate the reserves for contractual rebates, including management’s evaluation of third-party data inputs utilized in the reserve calculations, as well as the Company’s data inputs such as accuracy of contractual pricing and reasonableness of estimated end user sales.

Our audit procedures also included, among others, the evaluation of the Company’s retrospective analysis of rebates claimed compared to actual payments issued and performance of analytical procedures and sensitivity analyses over the Company’s significant inputs.

We also tested the underlying data used in management’s calculations for accuracy and completeness, which included inspection of source data supporting the inventory levels and agreement of contractual rebate amounts to underlying customer contracts.

To test the allowance for contractual rebates, our audit procedures included, among others, a retrospective analysis of the allowance for contractual rebates compared to actual rebate claims received and performance of analytical procedures and sensitivity analyses over the Company's significant inputs.

We tested the underlying data used in management's calculations for accuracy and completeness, which included inspection of source data supporting distributor inventory levels.

We also evaluated rebate claims received after year end to assess the accrual as of the balance sheet date and the Company’s estimates.

Goodwill impairment assessments

Description of the Matter As of December 29, 2024, the Company’s goodwill balance was $649.5 million.

During the year ended December 29, 2024, the Company recognized goodwill impairments totaling $1,822.6 million.

As described in Note 1 and Note 9 to the consolidated financial statements, the Company evaluates goodwill at the reporting unit level for impairment on an annual basis on the first day of the fourth quarter of the fiscal year, or whenever events or changes in circumstances occur that indicate that the fair value of a reporting unit is below its carrying amount.

In performing both interim and annual goodwill impairment assessments, reporting unit fair values were estimated by management using a weighted discounted cash flow method and guideline public company method.

Auditing the Company’s interim and annual goodwill impairment assessments involved significant auditor judgment due to the significant estimation uncertainty in determining the fair value of the reporting units.

The assumptions with a significant level of subjectivity or complexity utilized in the impairment assessments included the revenue growth rates, EBITDA margins and discount rates.

How We Addressed the Matter in Our Audit

To test the estimated fair value of the Company’s reporting units, our audit procedures included, among others, evaluating the significant assumptions discussed above and testing the underlying data used by the Company in its analysis.

We performed sensitivity analyses of the significant assumptions to evaluate changes in fair value of the reporting units to determine if contrary evidence exists.

We also assessed the historical accuracy of the Company’s forecasts of financial results used in developing fair value estimates to assist in evaluating the reliability of the forecasts utilized in the estimate.

In addition, with the support of our valuation specialist, we evaluated the Company’s use of a weighted discounted cash flow method and guideline public company method and selection of the discount rates, which included comparing the discount rates used by the Company against discount rate ranges that were independently developed using publicly available market data for comparable entities.

In addition, we tested the Company’s reconciliation of the fair value of the reporting units to the market capitalization of the Company.

/s/ Ernst & Young LLP

5 unchanged sentences

(In millions, except par value)

December 31, 2023 January 1, 2023

December 29, 2024 December 31, 2023

Current assets:

4 unchanged sentences

Prepaid expenses and other current assets 262.4 262.1

Assets held for sale 42.1 —

Total current assets 1,218.9 1,310.5

4 unchanged sentences

Intangible assets, net 2,735.6 2,934.3

Deferred tax asset 25.9 16.4

Deferred tax assets — 25.9

Other assets 270.7 179.6

10 unchanged sentences

Long-term borrowings 2,141.3 2,274.8

Deferred tax liability 192.2 213.2

Deferred tax liabilities 76.5 192.2

Other liabilities 55.3 83.6

4 unchanged sentences

5.0 shares authorized;

none issued or outstanding at December 31, 2023 and January 1, 2023

none issued or outstanding at December 29, 2024 and December 31, 2023

Common stock, $ 0.001 par value per share;

126.2 shares authorized;

66.7 and 66.4 shares issued and outstanding at December 31, 2023 and January 1, 2023, respectively

67.3 and 66.7 shares issued and outstanding at December 29, 2024 and December 31, 2023, respectively

Additional paid-in capital 2,884.8 2,848.0

15 unchanged sentences

Acquisition and integration costs 127.2 113.4 136.0

Goodwill impairment charge 1,822.6 — —

Asset impairment charge 56.9 4.5 2.8

Other operating expenses 51.8 27.1 12.3

Operating income 139.1 843.7 906.0

Operating (loss) income ( 1,960.9 ) 139.1 843.7

Interest expense, net 163.5 147.6 75.7

Loss on extinguishment of debt — — 24.0

Other expense (income), net 20.6 8.1 ( 0.1 )

Other expense, net 7.1 20.6 8.1

(Loss) income before income taxes ( 2,131.5 ) ( 29.1 ) 735.9

7 unchanged sentences

QUIDELORTHO CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(In millions)

2 unchanged sentences

Net (loss) income $ ( 2,052.0 ) $ ( 10.1 ) $ 548.7

Other comprehensive income (loss)

Other comprehensive (loss) income

Changes in cumulative translation adjustment, net of tax ( 38.4 ) 50.4 ( 69.8 )

3 unchanged sentences

Net unrealized gains on derivative instruments 52.1 12.6 6.7

Reclassification of net realized (gains) losses on derivative instruments included in net income ( 23.9 ) ( 5.2 ) 2.4

Total change in unrealized (losses) gains from cash flow hedges, net of tax ( 11.3 ) 1.5 2.5

Comprehensive income $ 27.5 $ 480.7 $ 705.0

Reclassification of net realized gains on derivative instruments included in net income ( 22.7 ) ( 23.9 ) ( 5.2 )

Total change in unrealized gains (losses) from cash flow hedges, net of tax 29.4 ( 11.3 ) 1.5

Comprehensive (loss) income $ ( 2,058.2 ) $ 27.5 $ 480.7

See accompanying notes.

5 unchanged sentences

comprehensive

(loss) income Retained earnings Total

income (loss) Retained earnings Total

stockholders’

2 unchanged sentences

Stock-based compensation expense — — 45.1 — — 45.1

Tax withholdings related to vesting of stock-based awards ( 0.2 ) — ( 37.1 ) — — ( 37.1 )

Repurchases of common stock ( 1.0 ) — ( 103.5 ) — — ( 103.5 )

Other comprehensive income, net of tax — — — 0.8 — 0.8

Net income — — — — 704.2 704.2

Balance at January 2, 2022 41.7 $ — $ 279.8 $ 0.4 $ 1,649.2 $ 1,929.4

Issuance of common stock under equity compensation plans 0.7 — 30.8 — — 30.8

Stock-based compensation expense — — 45.1 — — 45.1

Issuance of shares in connection with the Combinations 25.1 — 2,495.4 — — 2,495.4

12 unchanged sentences

Balance at December 31, 2023 66.7 $ 0.1 $ 2,848.0 $ ( 30.0 ) $ 2,187.8 $ 5,005.9

Issuance of common stock under equity compensation plans 0.7 — 5.4 — — 5.4

Stock-based compensation expense — — 41.0 — — 41.0

Tax withholdings related to vesting of stock-based awards ( 0.1 ) — ( 9.6 ) — — ( 9.6 )

Other comprehensive loss, net of tax — — — ( 6.2 ) — ( 6.2 )

Net loss — — — — ( 2,052.0 ) ( 2,052.0 )

Balance at December 29, 2024 67.3 $ 0.1 $ 2,884.8 $ ( 36.2 ) $ 135.8 $ 2,984.5

See accompanying notes.

8 unchanged sentences

Depreciation and amortization 453.4 457.2 283.6

Goodwill impairment charge 1,822.6 — —

Asset impairment charge 56.9 4.5 2.8

Stock-based compensation expense 42.1 51.6 48.4

Change in deferred tax assets and liabilities ( 99.3 ) ( 11.6 ) ( 44.0 )

Net change in operating lease right-of-use assets and liabilities ( 0.2 ) — 18.4

2 unchanged sentences

Unwind inventory fair value adjustment — — 60.6

Asset write off 20.0 — —

Other non-cash, net ( 1.8 ) ( 6.8 ) 6.4

9 unchanged sentences

INVESTING ACTIVITIES

Acquisitions of property, equipment, investments and intangibles ( 209.3 ) ( 140.9 ) ( 292.8 )

Acquisitions of property, plant, equipment, investments and intangibles ( 195.1 ) ( 209.3 ) ( 140.9 )

Proceeds from held for sale asset, net of costs to sell 9.3 — —

Acquisition of businesses, net of cash and restricted cash acquired — — ( 1,511.4 )

7 unchanged sentences

Short-term borrowings, net ( 1.6 ) 1.6 —

Revolving credit facility, net 198.0 — —

Proceeds from long-term borrowings, net of debt issuance costs — — 2,734.5

4 unchanged sentences

Principal payments of deferred consideration — ( 30.3 ) ( 33.5 )

Net cash (used for) provided by financing activities ( 265.8 ) 252.0 ( 173.1 )

Net cash provided by (used for) financing activities 48.8 ( 265.8 ) 252.0

Effect of exchange rates on cash ( 2.9 ) ( 1.2 ) ( 2.0 )

Net (decrease) increase in cash, cash equivalents and restricted cash ( 174.4 ) ( 508.9 ) 312.9

Net decrease in cash, cash equivalents and restricted cash ( 21.0 ) ( 174.4 ) ( 508.9 )

Cash, cash equivalents and restricted cash at beginning of period 119.5 293.9 802.8

Cash, cash equivalents and restricted cash at end of period $ 98.5 $ 119.5 $ 293.9

Fiscal Year Ended

2024 2023 2022

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

4 unchanged sentences

Reduction of other current liabilities upon issuance of restricted share units $ 0.3 $ 1.9 $ 4.6

Initial recognition of finance lease right-of-use asset and liability $ 12.5 $ — $ —

See accompanying notes.

4 unchanged sentences

The Company’s vision is to advance diagnostics to power a healthier future.

With its expertise in immunoassay and molecular testing, clinical chemistry and transfusion medicine, the Company aims to provide clarity to clinicians and patients to help create better health outcomes.

With its expertise in immunoassay and molecular testing, clinical chemistry and transfusion medicine, the Company aims to support clarity for clinicians and patients to help create better health outcomes.

The Company’s global infrastructure and commercial reach support its customers across more than 130 countries and territories with quality diagnostics, a broad test portfolio and market-leading service.

10 unchanged sentences

The Company follows the concept of a fiscal year that ends on the Sunday nearest to the end of the month of December, and fiscal quarters that end on the Sunday nearest to the end of the months of March, June, and September.

For fiscal years 2023, 2022 and 2021, the Company’s fiscal years ended on December 31, 2023, January 1, 2023 and January 2, 2022, respectively.

Fiscal years 2023, 2022 and 2021 were 52 weeks.

For fiscal years ended 2024, 2023 and 2022, the Company’s fiscal years ended on December 29, 2024, December 31, 2023 and January 1, 2023, respectively.

Fiscal years ended 2024, 2023 and 2022 were 52 weeks.

Use of Estimates

4 unchanged sentences

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 $ 4.5 million and $ 2.8 million recognized for fiscal years ended 2023 and 2022, respectively, related to impairment of long-lived assets from (i) Cost of sales, excluding amortization of intangibles (excludes $ 2.7 million and $ 0.2 million for fiscal years ended 2023 and 2022, respectively), and (ii) Research and development (excludes $ 1.8 million and $ 2.6 million for fiscal years ended 2023 and 2022, 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.

Consolidation

3 unchanged sentences

The Company considers cash equivalents to be highly liquid investments with a maturity at the date of purchase of three months or less.

They are carried at cost plus accrued interest, which approximates fair value because of the short-term maturity of these instruments.

They are carried at cost plus accrued interest, which approximates fair value because of the short-term maturity of these

Cash equivalents include money market funds and debt securities of high quality institutions.

Cash balances may exceed government insured limits in certain jurisdictions.

Restricted Cash

Restricted cash primarily consists of funds reserved for legal requirements.

Restricted cash balances are included in Other assets in the Consolidated Balance Sheets.

Marketable Securities

2 unchanged sentences

These marketable securities are classified as available-for-sale and, accordingly, such securities are recorded at fair value.

Unrealized gains and losses that are deemed temporary are included in Accumulated other comprehensive loss as a separate component of stockholders’ equity.

Unrealized gains and losses that are deemed temporary are included in AOCI as a separate component of stockholders’ equity.

If any adjustment to fair value reflects a significant decline in the value of the security, the Company evaluates the extent to which the decline is determined to be other-than-temporary and would mark the security to market through a charge to its Consolidated Statements of (Loss) Income.

Marketable securities are classified as non-current when maturities are one year or more.

Accounts Receivable and Allowance for Credit Losses and Concentration of Credit Risk

Accounts Receivable, Allowance for Credit Losses and Concentration of Credit Risk

The Company sells its products directly to physician offices, hospitals, clinical laboratories, reference laboratories, urgent care clinics, leading universities, retail clinics, pharmacies, wellness screening centers, other POC settings, blood banks and donor centers, as well as to individual, non-professional OTC customers, and other distributors in the U.S.

and internationally (see “—Note 4.

and internationally (refer to “—Note 4.

The Company periodically assesses the financial strength of these customers and establishes reserves for anticipated losses when necessary, which historically have not been material.

1 unchanged sentence

Amounts later determined to be uncollectible are charged or written off against this allowance.

T he balance of accounts receivable is net of reserves of $ 91.8 million and $ 89.1 million at December 31, 2023 and January 1, 2023, respectively, of which the reserve related to contract rebates was $ 75.6 million and $ 73.5 million, respectively.

T he balance of accounts receivable is net of reserves of $ 99.6 million and $ 91.8 million at December 29, 2024 and December 31, 2023, respectively.

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash equivalents, marketable securities and trade accounts receivable.

Credit losses are identified when cash flows received are not expected to be sufficient to recover the amortized cost basis of a security.

In the event of a credit loss, only the amount associated with the credit loss is recognized in operating results, with the amount of loss relating to other factors recorded in Accumulated other comprehensive loss.

In the event of a credit loss, only the amount associated with the credit loss is recognized in operating results, with the amount of loss relating to other factors recorded in AOCI.

The Company performs credit evaluations of its customers’ financial condition and limits the amount of credit extended when deemed necessary, but generally requires no collateral.

15 unchanged sentences

major replacements and improvements that extend the useful life are capitalized.

Assets Held for Sale

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

(i) management’s commitment to a plan to sell, (ii) availability for immediate sale in its present condition, (iii) initiation of an active program to identify a buyer, (iv) probability of a completed sale within one year, (v) actively marketed for sale at a reasonable price in relation to its current fair value, and (vi) 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.

Goodwill represents the excess of purchase price over the fair values of underlying net assets acquired in an acquisition.

1 unchanged sentence

The Company’s annual impairment assessment date is the first day of the fourth quarter of the fiscal year.

The chief operating decision maker (“CODM”) reviews the Company’s performance and allocates resources based on six operating segments:

North America, EMEA, China, Latin America, Japan and Asia Pacific.

The CODM reviews the Company’s performance and allocates resources based on five operating segments:

North America, EMEA, China, Latin America and JPAC (Japan and Asia Pacific).

North America, EMEA and China are the Company’s reportable segments;

Latin America, Japan and Asia Pacific are immaterial operating segments that are not considered reportable segments and are included in “Other.” Each of these six operating segments is considered a reporting unit for the purpose of allocating goodwill and performing the annual goodwill impairment assessment.

Latin America and JPAC are immaterial operating segments that are not considered reportable segments and are included in “Other.” Each of these five operating segments is considered a reporting unit for the purpose of allocating goodwill and performing the annual goodwill impairment assessment.

When testing goodwill for impairment, the Company first has an option to assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not (more than 50%) that impairment exists.

5 unchanged sentences

If the fair value of a reporting unit is less than its carrying value, impairment will be recognized in the amount by which the carrying value exceeds the fair value.

For fiscal year 2023, the Company bypassed the qualitative assessment and proceeded directly to the quantitative goodwill impairment test for all reporting units as of the beginning of the fiscal fourth quarter.

In all instances, the estimated fair values of the Company’s reporting units exceeded their carrying values and consequently did not result in an impairment.

As a result of the identification of indicators of impairment during the first quarter of 2024, the Company performed an interim impairment test that resulted in a non-cash goodwill impairment charge of $ 1.7 billion for the North America reporting unit.

For the annual impairment test as of the beginning of the fiscal fourth quarter, the Company bypassed the qualitative assessment and proceeded directly to the quantitative goodwill impairment test for all reporting units.

The Company concluded that the China and JPAC reporting units’ goodwill were impaired.

As a result, the Company recorded non-cash goodwill impairment charges of $ 17.3 million and $ 61.4 million in the fourth quarter of 2024 for the China and JPAC reporting units, respectively.

Refer to “—Note 9.

Goodwill and Intangible Assets, Net” for further information.

Intangible Assets

20 unchanged sentences

The Company estimates the transaction price for revenue from sales to retail customers based on historical experience and current trends to evaluate when uncertainties related to right of return provisions are res olved.

In fiscal years 2022 and 2021, due to a lack of history on which to base an estimate of products to be returned from the retailers, the Company established a reserve based on an estimate of total inventory remaining at our retailers which was subject to return.

During fiscal year 2023, the Company concluded that it had developed sufficient historical experience regarding the pattern in customer returns to be able to estimate the amount of consideration to which the Company expects to be entitled, excluding consideration for the products expected to be returned.

In fiscal year ended 2022, due to a lack of history on which to base an estimate of products to be returned from the retailers, the Company established a reserve based on an estimate of total inventory remaining at our retailers which was subject to return.

During fiscal year ended 2023, the Company concluded that it had developed sufficient historical experience regarding the pattern in customer returns to be able to estimate the amount of consideration to which the Company expects to be entitled, excluding consideration for the products expected to be returned.

Amounts received or receivable that are expected to be returned are recognized as a refund liability, which is included in Other current liabilities.

1 unchanged sentence

The refund liability is remeasured at each reporting period to reflect changes in assumptions about expected returns.

Revenues from sales to retail customers amounted to approximately 3 % of Total revenues for fiscal year

The impact from this change in estimate is approximately $ 0.3 million and is not material to the Company’s Consolidated Financial Statements.

Revenues from sales to retail customers amounted to approximately 3 % of Total revenues for fiscal year ended 2023.

The impact from this change in estimate was approximately $ 0.3 million and is not material to the Company’s Consolidated Financial Statements.

A portion of product sales includes revenues for diagnostic kits, which are utilized on leased instrument systems under the Company’s “reagent rental” program.

8 unchanged sentences

The instrument is considered an operating lease.

Variable lease revenue and fixed lease revenue represented approximately 4 % and 1 %, respectively, of the Company’s Total revenues for fiscal year 2023.

Revenue allocated to the instrument was not material for fiscal years 2022 and 2021.

Variable lease revenue and fixed lease revenue represented approximately 6 % and 1 %, respectively, of the Company’s Total revenues for fiscal year ended 2024.

Variable lease revenue and fixed lease revenue represented approximately 4 % and 1 %, respectively, of the Company’s Total revenues for fiscal year ended 2023.

Revenue allocated to the instrument was not material for fiscal year ended 2022.

Government Assistance

During fiscal year 2020, the Company entered into a contract with the National Institutes of Health (“NIH”), through its newly launched Rapid Acceleration of Diagnostics - Advanced Technology Platforms initiative, to support the Company’s expansion of its manufacturing capacity for its diagnostic assays that test for the SARS-CoV-2 antigen.

The contract originally provided for consideration to the Company of up to $ 65.0 million and had a performance period of one year , which began in July 2020.

During 2021, the Company entered into several amendments to the contract, which added additional deliverables and milestones, as well as extended the performance period.

The contract and amendments included key deliverables and milestones that directly supported the upgrade and addition of new manufacturing lines, as well as the outfitting of the new distribution center.

The Company also provided instruments and assays to NIH.

There were no refund provisions under the contract.

Consideration from the contract was allocated to each deliverable identified within the contract using a relative fair value allocation method and recognized when there was reasonable assurance the Company would meet the milestones and receive the consideration.

Consideration allocated to the delivery of instruments and assays was recognized in accordance with the Company’s existing revenue recognition policy described above.

Consideration that related to capital expenditures was recorded as a reduction to the carrying value of such assets and amortized over the useful life of the assets.

Consideration allocated to the remainder of the contract was recorded as reductions to the related expense.

As of January 2, 2022, the Company had achieved and collected payments for all milestones under the NIH contract.

In connection with the Combinations, the Company acquired a previously established agreement between Ortho and the Biomedical Advanced Research and Development Authority (“BARDA”), a division of HHS, which provides funding for Ortho to build manufacturing space and production support equipment to increase COVID-19 assay production capacity, as well as to build a manufacturing facility to produce certain analyzers needed to support COVID-19 testing.

In connection with the Combinations, the Company acquired a previously established agreement between Ortho and BARDA, a division of HHS, which provides funding for Ortho to build manufacturing space and production support equipment to increase COVID-19 assay production capacity, as well as to build a manufacturing facility to produce certain analyzers needed to support COVID-19 testing.

Amounts received from BARDA under this grant are recorded as a reduction to the carrying value of the related assets.

A portion of the grant is for purposes of reimbursement of certain general and administrative expenses related to the project, which are not capitalized as part of the equipment constructed in connection with the project and are recorded as a reduction to the related expense.

The Company received $ 13.5 million and $ 18.4 million during fiscal years 2023 and 2022, respectively, which were recorded as reductions to the carrying value of the related assets.

The Company received $ 13.5 million and $ 18.4 million during fiscal years ended

2023 and 2022, respectively, which were recorded as reductions to the carrying value of the related assets.

No funding was received during fiscal year ended 2024.

Research and Development Costs

Research and development costs are charged to operations as incurred.

R&D costs are charged to operations as incurred.

Upfront and milestone payments made to third parties in connection with R&D collaborations are expensed as incurred up to the point of regulatory approval.

5 unchanged sentences

Often, these collaborations require upfront, milestone and royalty or profit share payments, contingent upon the occurrence of certain future events linked to the success of the asset in development.

Amounts due from collaborative partners related to development activities are generally reflected as a reduction of research and development expense because the performance of contract development services is not central to the Company’s operations.

Amounts due from collaborative partners related to development activities are generally reflected as a reduction of R&D expense because the performance of contract development services is not central to the Company’s operations.

Product Shipment Costs

Product shipment costs are included in Selling, marketing and administrative expense in the accompanying Consolidated Statements of (Loss) Income.

Shipping and handling costs were $ 124.1 million, $ 104.9 million and $ 29.3 million for fiscal years 2023, 2022 and 2021, respectively.

Shipping and handling costs were $ 125.4 million, $ 124.1 million and $ 104.9 million for fiscal years ended 2024, 2023 and 2022, respectively.

Advertising Costs

Advertising costs are expensed as incurred and included in Selling, marketing and administrative expense in the accompanying Consolidated Statements of (Loss) Income.

Advertising costs were $ 15.1 million, $ 26.8 million and $ 13.7 million for fiscal years 2023, 2022 and 2021, respectively.

Advertising costs were $ 6.2 million, $ 15.1 million and $ 26.8 million for fiscal years ended 2024, 2023 and 2022, respectively.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, using enacted tax rates in effect for the year in which the differences are expected to reverse.

5 unchanged sentences

Fair Value of Financial Instruments

The Company uses the fair value hierarchy established in Accounting Standards Codification (“ASC”) Topic 820, Fair Value Measurements and Disclosures, which requires that the valuation of assets and liabilities subject to fair value measurements be classified and disclosed by the Company in one of the following three categories:

The Company uses the fair value hierarchy established in ASC Topic 820, Fair Value Measurements and Disclosures, which requires that the valuation of assets and liabilities subject to fair value measurements be classified and disclosed by the Company in one of the following three categories:

Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

3 unchanged sentences

Stock-based Compensation

Stock-based compensation, comprised of stock options, restricted stock units (“RSUs”) and restricted stock awards to employees and directors, is measured at fair value on the grant date.

Stock-based compensation, comprised of (i) stock options and (ii) RSUs, which include time-based RSUs, performance-based RSUs and restricted stock awards, to employees and non-employee directors, is measured at fair value on the grant date.

Compensation expense is recognized over the requisite service period, which is generally the vesting period, and includes an estimate of the awards that will be forfeited, and an estimate of the level of performance the Company will achieve for performance-based awards.

Lease liabilities represent the obligation to make lease payments and right-of-use (“ROU”) assets represent the right to use the underlying asset during the lease term.

Lease liabilities represent the obligation to make lease payments and ROU assets represent the right to use the underlying asset during the lease term.

Lease liabilities and ROU assets are recognized at the commencement date of the lease based on the present value of lease payments over the lease term at the commencement date.

5 unchanged sentences

Operating leases are included in ROU assets, operating lease liabilities and operating lease liabilities non-current in the Consolidated Balance Sheets.

Comprehensive Income

Comprehensive income includes unrealized gains and losses that are related to cumulative translation adjustments;

Comprehensive (Loss) Income

Comprehensive (loss) income includes unrealized gains and losses that are related to cumulative translation adjustments;

unrealized gains and losses on marketable securities;

18 unchanged sentences

Recent Accounting Pronouncements

There have been no accounting pronouncements issued or adopted during fiscal year 2023 that are expected to have a material impact on the Company’s Consolidated Financial Statements.

Recently Adopted Pronouncements

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures, that is intended to improve the disclosures about reportable segments and add more detailed information about a reportable segment’s expenses.

The amendments in the ASU require public entities to disclose on an annual and interim basis (i) significant segment expenses that are regularly provided to the CODM and included within each reported measure of segment profit or loss, (ii) other segment items by reportable segment, (iii) the title and position of the CODM and (iv) an explanation of how the CODM uses the reported measures of segment profit or loss in assessing segment performance and deciding how to allocate resources.

The ASU does not change the definition of a segment, the method for determining segments, the criteria for aggregating operating segments into reportable segments, or the current specifically enumerated segment expenses that are required to be disclosed.

The ASU was adopted in the fourth quarter of 2024 and applied retrospectively to all prior periods presented (refer to “—Note 5.

Segment and Geographic Information”).

The adoption of this ASU did not impact the Company’s results of operations, cash flows or financial condition.

Recently Issued Accounting Standards Not Yet Adopted

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures, to improve its income tax disclosure requirements.

Under the guidance, entities must annually (i) disclose specific categories in the rate reconciliation and (ii) provide additional information for reconciling items that meet a quantitative threshold.

The amendments in ASU 2023-09 are effective for fiscal years beginning after December 15, 2024, with early adoption permitted.

Other than the respective disclosures, the ASU is not expected to have an impact to the Company’s Consolidated Financial Statements.

In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40), which requires disclosure, in the notes to the financial statements, of specified information about certain costs and expenses.

This ASU is effective for public entities for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027.

Other than the respective disclosures, the ASU is not expected to have an impact to the Company’s Consolidated Financial Statements.

Business Combination

3 unchanged sentences

The Combinations were completed for a total consideration of $ 4.3 billion, which included the fair value of equity issued based on the May 26, 2022 closing price of $ 99.60 per share of Quidel common stock.

Former Ortho shareholders received $ 7.14 in

cash and 0.1055 shares of QuidelOrtho common stock for each Ortho ordinary share.

Former Ortho stockholders received $ 7.14 in cash and 0.1055 shares of QuidelOrtho common stock for each Ortho ordinary share.

The total purchase consideration was calculated as follows (in millions, except value per share data and Ortho Exchange Ratio):

10 unchanged sentences

The portion of the fair value of the replacement equity awards attributable to service after the Combinations is $ 46.6 million and will be recognized as compensation expense based on the vesting terms of the replacement equity awards.

(2) Represents cash consideration of $ 7.14 per share paid to Ortho shareholders and holders of vested Ortho stock options on the closing date of the Combinations for 237.5 million outstanding Ortho shares and 7.3 million vested Ortho stock options.

(2) Represents cash consideration of $ 7.14 per share paid to Ortho stockholders and holders of vested Ortho stock options on the closing date of the Combinations for 237.5 million outstanding Ortho shares and 7.3 million vested Ortho stock options.

The Company funded the cash portion of the purchase price with cash on its balance sheet and a portion of the Term Loan proceeds from the Financing.

The Combinations have been accounted for as a business combination, which requires that assets acquired and liabilities assumed be recognized at their fair value as of the date of the consummation of the Combinations, with Quidel considered the accounting and the legal acquirer.

The assessment of the fair value of assets acquired and liabilities assumed was finalized in fiscal year 2023.

The measurement period adjustments reflected in fiscal year 2023 resulted from finalization of tax related matters.

The related impact to net earnings that would have been recognized in previous periods if the adjustments were recognized as of the date of the consummation of the Combinations is immaterial to the Company’s Consolidated Financial Statements.

In 2023, the Company recognized measurement period adjustments to Goodwill of $ 19.9 million resulting from finalization of tax-related matters.

The purchase price allocation resulted in the following amounts being allocated to the assets acquired and liabilities assumed at the acquisition date based upon their respective fair values summarized below:

(In millions) Amounts Recognized as of Acquisition Date

(As Previously Reported) (1)

Measurement Period Adjustments Purchase Price Allocation

(In millions) Purchase Price Allocation

Cash and cash equivalents $ 234.5

1 unchanged sentence

Inventories (1)

384.4 — 384.4

Property, plant and equipment 948.9

6 unchanged sentences

Long-term borrowings, including current portion (2)

( 2,268.4 ) — ( 2,268.4 )

Deferred tax liability ( 260.1 )

2 unchanged sentences

Total purchase consideration $ 4,291.1

(1) As reported in the Company’s Annual Report on Form 10-K for the fiscal year ended January 1, 2023.

(2) Includes an estimated fair value adjustment to inventory of $ 61.7 million, which was fully recognized in the Consolidated Statements of (Loss) Income in fiscal year 2022.

(1) Includes an estimated fair value adjustment to inventory of $ 61.7 million, which was fully recognized in the Consolidated Statements of (Loss) Income in fiscal year ended 2022.

(2) Immediately following the closing of the Combinations, the Company repaid long-term borrowings assumed, which consisted of $ 1,608.4 million aggregate principal amount related to Ortho’s Dollar Term Loan and Euro Term Loan Facilities, $ 240.0 million aggregate principal amount of 7.375 % Senior Notes due 2025 and $ 405.0 million aggregate principal amount of 7.250 % Senior Notes due 2028.

3 unchanged sentences

Goodwill is not deductible for tax purposes.

The assignment of goodwill by reportable segment at the acquisition date is as follows (in millions):

North America $ 1,202.1

Refer to “—Note 9.

Goodwill and Intangible Assets, Net” for further information.

The following table sets forth the amounts assigned to the identifiable intangible assets acquired (in millions, except years):

13 unchanged sentences

Intangible assets are amortized on a straight-line basis over the amortization periods noted above, which reflects the estimated useful life of the underlying assets.

For fiscal year 2022, the Company incurred $ 46.9 million of transaction costs related to the Combinations, which primarily consisted of financial advisory, legal, accounting and valuation-related expenses.

For fiscal year ended 2022, the Company incurred $ 46.9 million of transaction costs related to the Combinations, which primarily consisted of financial advisory, legal, accounting and valuation-related expenses.

These expenses were recorded in Acquisition and integration costs in the Consolidated Statements of (Loss) Income.

4 unchanged sentences

Pro forma net income 589.3 613.2

This supplemental pro forma financial information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved had the Combinations been completed at the beginning of fiscal year 2021.

In addition, the supplemental pro forma financial information is not a projection of the Company’s future results of operations, nor does it reflect the expected realization of any synergies or cost savings associated with the Combinations.

3 unchanged sentences

• decreases in interest expense associated with the issuance of debt to finance the Combinations and to repay Ortho’s then-outstanding indebtedness, including the net impact of the removal of the amortization of the discount on Ortho’s indebtedness and the change in amortization of deferred financing fees;

• the removal of loss on extinguishment of debt from Ortho’s results in fiscal year 2021 and the reclassification of loss on extinguishment of debt in fiscal years 2021 and 2022;

• the reclassification of expense related to the accelerated vesting of certain stock awards of Ortho’s former chief executive officer;

• the removal of loss on extinguishment of debt from Ortho’s results in fiscal year ended 2021 and the reclassification of loss on extinguishment of debt in fiscal years ended 2021 and 2022;

• the reclassification of expense related to the accelerated vesting of certain stock awards of Ortho’s former CEO;

• tax impacts related to the above adjustments.

1 unchanged sentence

Computation of Earnings Per Share

Basic earnings per share (“EPS”) is computed by dividing Net (loss) income by the weighted-average number of shares of common stock outstanding.

Basic EPS is computed by dividing Net (loss) income by the weighted-average number of shares of common stock outstanding.

Diluted EPS is computed based on the sum of the weighted-average number of shares of common stock and potentially dilutive shares of common stock outstanding during the period.

7 unchanged sentences

Diluted weighted-average shares of common stock outstanding 67.2 66.8 57.4

(1) In fiscal year 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.

(1) In fiscal years ended 2024 and 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.

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:

4 unchanged sentences

Diluted weighted-average shares of common stock outstanding 67.4 67.3

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.

These stock options and RSUs represented 1.6 million, 0.9 million and 0.1 million shares of common stock for fiscal years 2023, 2022 and 2021, respectively.

These stock options and RSUs represented 1.8 million, 1.6 million and 0.9 million shares of common stock for fiscal years ended 2024, 2023 and 2022, 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 December 31, 2023 and January 1, 2023 was $ 46.2 million and $ 49.6 million, respectively.

The contract asset balance consisted of the following components, all of which related to agreements acquired by the Company in connection with the Combinations:

• 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 and $ 6.8 million as of December 31, 2023 and January 1, 2023, respectively;

The balance of contract assets recorded in the Company’s Consolidated Balance Sheets as of December 29, 2024 and December 31, 2023 was $ 32.5 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 December 29, 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 $ 41.8 million and $ 38.5 million as of December 31, 2023 and January 1, 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 and $ 4.3 million as of December 31, 2023 and January 1, 2023, respectively.

The balance of the contract asset related to these arrangements was $ 32.5 million and $ 41.8 million as of December 29, 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 December 29, 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 fiscal years 2023 and 2022.

No credit losses related to contract assets were recognized during fiscal years ended 2024 and 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 $ 36.8 million and $ 76.4 million as of December 31, 2023 and January 1, 2023, respectively.

The balance of the Company’s current deferred revenue was $ 33.5 million and $ 36.8 million as of December 29, 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 $ 13.9 million and $ 9.4 million as of December 31, 2023 and January 1, 2023, respectively, and was included in Other liabilities in the Consolidated Balance Sheets.

The amount of deferred revenue as of January 1, 2023 that was recorded in Total revenues during fiscal year 2023 was $ 72.1 million.

The amount of deferred revenue as of January 2, 2022 that was recorded in Total revenues during fiscal year 2022 was not material.

The balance of the deferred revenue included in long-term liabilities was $ 17.3 million and $ 13.9 million as of December 29, 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 fiscal year ended 2024 was $ 34.0 million.

The amount of deferred revenue as of January 1, 2023 that was recorded in Total revenues during fiscal year ended 2023 was $ 72.1 million.

Joint Business with Grifols

In connection with the Combinations, the Company acquired the 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 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 $ 47.3 million and $ 18.6 million during fiscal years 2023 and 2022, respectively.

These amounts included the Company’s portion of the pre-tax net profit of $ 21.4 million and $ 11.1 million during fiscal years 2023 and 2022, respectively, on sales transactions with third parties where the Company is the principal.

The Company’s portion of the pre-tax net profit shared under the Joint Business was $ 29.5 million, $ 47.3 million and $ 18.6 million during fiscal years ended 2024, 2023 and 2022, respectively.

These amounts included the Company’s portion of the pre-tax net profit of $ 21.1 million, $ 21.4 million and $ 11.1 million during fiscal years ended 2024, 2023 and 2022, 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 $ 26.0 million and $ 7.5 million during fiscal years 2023 and 2022, respectively, which is presented on a net basis within Total revenues.

The Company’s portion of the pre-tax net profit also included revenue from collaboration and royalty agreements of $ 8.4 million, $ 26.0 million and $ 7.5 million during fiscal years ended 2024, 2023 and 2022, respectively, which is presented on a net basis within Total revenues.

Disaggregation of Revenue

3 unchanged sentences

Labs $ 1,426.7 $ 1,425.4 $ 820.2

Transfusion Medicine 648.5 393.8 —

Immunohematology (1)

522.6 512.4 296.8

Donor Screening (1)

115.5 136.1 97.0

Point of Care 694.1 892.2 1,955.3

1 unchanged sentence

Total revenues $ 2,782.9 $ 2,997.8 $ 3,266.0

(1) For presentation purposes, as a result of the wind-down of the U.S.

donor screening portfolio, the previously reported Transfusion Medicine business unit is shown in its two product categories:

Immunohematology and Donor Screening.

Prior periods have been revised to align with the current period presentation.

Concentration of Revenue and Credit Risk

For fiscal year 2023, no customer individually accounted for more than 10% of Total revenues.

Customers that accounted for 10% or more of the Company’s Total revenues for fiscal years 2022 and 2021 were as follows:

Fiscal Year Ended

Customer A 20 % 1 %

Customer B 11 % 24 %

As of December 31, 2023 and January 1, 2023, customers with balances due in excess of 10% of Accounts receivable, net totaled $ 63.5 million and $ 161.9 million, respectively.

Revenue related to our respiratory products accounted for 24 %, 57 % and 81 % of Total revenues for fiscal years 2023, 2022 and 2021, respectively.

For fiscal year ended 2024, one customer represented 11 % of Total revenues in the North America segment.

For fiscal year ended 2023, no customer individually accounted for more than 10% of Total revenues.

For fiscal year ended 2022, two separate customers accounted for 20 % and 11 % of Total revenues, in the Other and North America segments, respectively.

Revenue related to the Company’s respiratory products accounted for 18 %, 24 % and 57 % of Total revenues for fiscal years ended 2024, 2023 and 2022, respectively.

As of December 29, 2024 and December 31, 2023, customers with a balance due in excess of 10% of Accounts receivable, net totaled $ 33.7 million and $ 63.5 million, respectively.

Segment and Geographic Information

2 unchanged sentences

Although all three segments are engaged in the marketing, distribution and sale of diagnostic instruments and assays for hospitals, retailers, distributors, laboratories and/or blood and plasma centers worldwide, each region is managed separately to better align with the market dynamics of the specific geographic region.

Latin America, Japan and Asia Pacific are immaterial operating segments that are not considered reportable segments and are included in “Other.”

Total revenues by reportable segment are as follows:

Latin America and JPAC are immaterial operating segments that are not considered reportable segments and are included in “Other.”

In the fourth quarter of 2024, the Company revised the internal allocation of certain global costs primarily between the North America segment and Corporate to better align costs that impact the Company as a whole.

Prior periods have been revised to align with the current period presentation.

The following table presents the results of operations of the Company’s reportable segments for fiscal years ended 2024, 2023 and 2022:

Fiscal Year Ended 2024

(In millions) 2023 2022 2021

North America $ 1,877.1 $ 2,536.5 $ 1,500.2

EMEA 327.3 206.8 69.6

China 310.1 220.0 58.0

Other 483.3 302.7 70.8

(In millions) North America EMEA China Other Total

Total revenues $ 1,619.8 $ 335.8 $ 325.0 $ 502.3 $ 2,782.9

The following table sets forth Adjusted EBITDA by segment and the reconciliations to (Loss) income before income taxes for fiscal years 2023, 2022 and 2021:

Fiscal Year Ended

(In millions) 2023 2022 2021

North America $ 949.2 $ 1,614.6 $ 1,028.5

EMEA 58.3 31.7 28.1

China 129.1 104.1 24.1

Other 116.3 92.7 43.0

Cost of sales, excluding amortization of intangibles 547.0 179.5 148.0 271.3 1,145.8

Selling, marketing and administrative 179.6 105.8 44.6 96.6 426.6

Research and development 1.6 2.6 4.3 3.1 11.6

Other expense, net ( 0.5 ) 1.4 ( 2.4 ) ( 2.2 ) ( 3.7 )

Total segment Adjusted EBITDA $ 892.1 $ 46.5 $ 130.5 $ 133.5 1,202.6

Reconciliation of segment Adjusted EBITDA

Corporate (2)

( 529.7 ) ( 512.1 ) ( 152.9 )

Depreciation and amortization ( 453.4 )

Interest expense, net ( 163.5 )

Acquisition and integration costs ( 127.2 )

Goodwill impairment charge ( 1,822.6 )

Asset impairment charge ( 56.9 )

Asset write off (3)

Amortization of deferred cloud computing implementation costs ( 14.7 )

Employee compensation charges ( 5.6 )

Credit Agreement amendment fees ( 4.0 )

EU medical device regulation transition costs (4)

Loss on disposal (5)

Gain on investments 0.7

Other adjustments ( 4.0 )

(Loss) income before income taxes $ ( 2,131.5 )

Fiscal Year Ended 2023

(In millions) North America EMEA China Other Total

Total revenues $ 1,877.1 $ 327.3 $ 310.1 $ 483.3 $ 2,997.8

Cost of sales, excluding amortization of intangibles 644.3 176.2 134.9 264.7 1,220.1

Selling, marketing and administrative 205.9 105.1 44.7 100.1 455.8

Research and development 1.6 2.5 4.5 3.1 11.7

Other expense, net 0.1 2.5 ( 1.2 ) 0.1 1.5

Total segment Adjusted EBITDA $ 1,025.2 $ 41.0 $ 127.2 $ 115.3 1,308.7

Reconciliation of segment Adjusted EBITDA

Corporate (2)

Depreciation and amortization ( 457.2 )

Interest expense, net ( 147.6 )

Acquisition and integration costs ( 113.4 )

Asset impairment charge ( 4.5 )

Tax indemnification expense ( 12.6 )

Amortization of deferred cloud computing

implementation costs ( 9.2 ) ( 5.4 ) ( 3.7 )

Impairment of long-lived assets ( 4.5 ) ( 2.8 ) —

(Loss) gain on investments ( 3.6 ) ( 5.8 ) 1.5

Amortization of deferred cloud computing implementation costs ( 9.2 )

Loss on investments ( 3.6 )

EU medical device regulation transition costs (4)

( 2.5 ) ( 1.5 ) —

Unwind inventory fair value adjustment — ( 60.6 ) —

Other adjustments ( 1.7 )

(Loss) income before income taxes $ ( 29.1 )

Fiscal Year Ended 2022

(In millions) North America EMEA China Other Total

Total revenues $ 2,536.5 $ 206.8 $ 220.0 $ 302.7 $ 3,266.0

Cost of sales, excluding amortization of intangibles 619.8 105.1 92.5 153.4 970.8

Selling, marketing and administrative 226.6 66.7 27.1 56.1 376.5

Research and development 1.0 2.2 2.4 1.7 7.3

Other expense, net ( 0.1 ) 1.4 ( 1.4 ) 0.3 0.2

Total segment Adjusted EBITDA $ 1,689.2 $ 31.4 $ 99.4 $ 91.2 1,911.2

Reconciliation of segment Adjusted EBITDA

Corporate (2)

Depreciation and amortization ( 283.6 )

Interest expense, net ( 75.7 )

Loss on extinguishment of debt ( 24.0 )

Acquisition and integration costs ( 136.0 )

Asset impairment charge ( 2.8 )

Unwind inventory fair value adjustment ( 60.6 )

Loss on investments ( 5.8 )

Amortization of deferred cloud computing implementation costs ( 5.4 )

Employee compensation charges ( 3.2 )

EU medical device regulation transition costs (4)

Tax indemnification expense ( 0.3 )

Derivative mark-to-market gain 4.4

1 unchanged sentence

(Loss) income before income taxes $ 735.9

(1) The significant expense categories and amounts align with the segment-level information that is regularly provided to the CODM.

(2) 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.

1 unchanged sentence

The Company’s corporate function also includes debt and stock-based compensation associated with all employee stock-based awards.

(3) Represents the write off of the tax assessment refund related to the Luxembourg net wealth tax, as the weight of available evidence indicated that it is not more likely than not that the position will be sustained during the pendency of an appeal.

(4) Represents incremental consulting costs and R&D manufacturing site costs to align compliance of the Company’s existing, on-market products that were previously registered under the European In Vitro Diagnostics Directive regulatory framework with the requirements under the EU’s In Vitro Diagnostic Regulation, which generally apply from May 2022 onwards.

The CODM does not review capital expenditures, total depreciation and amortization or assets by segment, and therefore this information has been excluded as it does not comprise part of management’s key performance metrics.

(5) Represents loss on disposal from the sale of the McKellar, San Diego, CA facility.

The Company’s President and CEO is the Company’s CODM.

The CODM reviews the segment adjusted EBITDA results against the forecast to assess segment performance and determine how to allocate resources.

The CODM does not review and is not provided capital expenditures, total depreciation and amortization or assets by segment, and therefore this information has been excluded as it does not comprise part of management’s key performance metrics.

The following presents long-lived assets (excluding intangible assets) and total net revenue by geographic territory:

Long-lived Assets as of Total Revenues for Fiscal Year

(In millions) December 31, 2023 January 1, 2023 2023 2022 2021

Long-lived Assets as of Total Revenues for Fiscal Year Ended

(In millions) December 29, 2024 December 31, 2023 2024 2023 2022

Domestic $ 947.8 $ 1,024.5 $ 1,568.8 $ 1,829.4 $ 2,451.7

7 unchanged sentences

Foreign 22.1 36.4 17.6

Total current provision ( 14.5 ) 228.6 193.5

Total current provision (benefit) 25.9 ( 14.5 ) 228.6

Federal ( 130.5 ) 8.5 ( 31.9 )

1 unchanged sentence

Foreign 24.5 ( 9.4 ) ( 0.2 )

Total deferred (benefit) provision ( 4.5 ) ( 41.4 ) 2.6

Total deferred benefit ( 105.4 ) ( 4.5 ) ( 41.4 )

(Benefit from) provision for income taxes $ ( 79.5 ) $ ( 19.0 ) $ 187.2

5 unchanged sentences

(Loss) income before income taxes $ ( 2,131.5 ) $ ( 29.1 ) $ 735.9

Significant components of the Company’s deferred tax assets and deferred tax liabilities as of December 31, 2023 and January 1, 2023 are shown below:

(In millions) December 31, 2023 January 1, 2023

Significant components of the Company’s deferred tax assets and deferred tax liabilities as of December 29, 2024 and December 31, 2023 are shown below:

(In millions) December 29, 2024 December 31, 2023

Deferred tax assets:

14 unchanged sentences

Property, plant and equipment ( 107.5 ) ( 114.3 )

Other, net ( 5.7 ) —

Total deferred tax liabilities ( 620.7 ) ( 707.4 )

1 unchanged sentence

Management assesses the available positive and negative evidence to estimate if sufficient future taxable income will be generated to use the existing deferred tax assets.

For the fiscal years ended December 31, 2023, January 1, 2023 and January 2, 2022, the Company has demonstrated positive cumulative pre-tax book income.

Such objective positive evidence allowed the Company to consider other subjective evidence, such as the Company’s projections for future profitability, to determine the realizability of its deferred tax assets.

During the fiscal year ended 2024, the Company was no longer demonstrating positive worldwide cumulative pre-tax book income, driven primarily by the impairment of goodwill during 2024.

Absent utilizing more subjective projections of future income, a portion of the Company’s federal net operating loss and interest expense carryforwards, a portion of certain state net operating loss, interest expense and tax credit carryforwards, and deferred tax assets related to certain foreign subsidiaries were not more likely than not to be realized.

Therefore, the Company established a valuation allowance during the fiscal year ended 2024 for those U.S.

and foreign deferred tax assets not more likely than not to be utilized.

The valuation allowance of $ 142.4 million as of December 29, 2024 represents the portion of the deferred tax asset that management could not conclude was more likely than not to be realized.

The Company’s valuation allowance relates primarily to the realization of recorded tax benefits on tax loss carryforwards from operations in Luxembourg and credits in U.S.

state jurisdictions.

The amount of the deferred tax assets considered realizable could be adjusted in the future based on changes in available positive and negative evidence.

The Company’s valuation allowance relates primarily to the realization of recorded tax benefits on tax interest and loss carryforwards from operations in the U.S.

federal and state jurisdictions as well as Luxembourg, tax credits in U.S.

state jurisdictions, and foreign distributors deferred tax assets.

The amount of the deferred tax assets considered realizable could be adjusted in future years based on changes in available positive and negative evidence.

The Company’s overall valuation allowance recorded on deferred tax assets decreased primarily due to certain Luxembourg tax loss carryforwards for which a reserve for unrecognized tax benefits was recorded during the fiscal year ended 2024.

As of December 29, 2024, the Company had U.S.

federal net operating loss (“NOL”) carryforwards of $ 792.5 million, of which $ 304.1 million are subject to expiration through 2037 and $ 488.4 million are not subject to expiration.

federal NOL carryforwards of $ 856.8 million, of which $ 345.0 million are subject to expiration through 2037 and $ 511.8 million are not subject to expiration.

In addition, the Company has state NOLs of approximately $ 623.1 million, which will expire in years 2025 through 2044.

6 unchanged sentences

Pursuant to Internal Revenue Code Sections 382 and 383, the Company’s use of its NOL and tax credit carryforwards may be limited as a result of cumulative changes in ownership of more than 50% over a three-year period.

As a result of an ownership change that occurred in the second quarter of fiscal year 2022, the Company may be limited in its ability to utilize its NOL carryforwards and certain other attributes, starting on the ownership change date.

As a result of an ownership change that occurred in the second quarter of fiscal year ended 2022, the Company may be limited in its ability to utilize its NOL carryforwards and certain other attributes, starting on the ownership change date.

The reconciliation of income tax computed at the federal statutory rate to the provision for income taxes from continuing operations was as follows:

5 unchanged sentences

rate 10.3 ( 23.0 ) ( 27.5 )

Goodwill Impairment 316.2 — —

Permanent differences 14.8 ( 4.3 ) 8.2

16 unchanged sentences

Increases related to current year tax positions — 2.6 1.8

(Decreases) increases related to prior year tax positions ( 0.1 ) ( 0.6 ) 0.5

Increases (decreases) related to prior year tax positions 165.4 ( 0.1 ) ( 0.6 )

Increases due to current year acquisitions — — 27.8

Decreases due to settlements ( 13.7 ) ( 6.7 ) —

Decreases from voluntary disclosure agreements — — ( 6.3 )

Decreases due to settlements and expirations ( 10.3 ) ( 13.7 ) ( 6.7 )

Ending balance $ 183.9 $ 28.8 $ 40.0

As of December 31, 2023, January 1, 2023 and January 2, 2022, the Company had unrecognized tax benefits of $ 28.8 million, $ 40.0 million, and $ 17.7 million, respectively, of which $ 21.6 million, $ 28.3 million and $ 11.3 million, respectively, would reduce the Company’s annual effective tax rate, if recognized.

As of December 29, 2024, December 31, 2023 and January 1, 2023, the Company had unrecognized tax benefits of $ 183.9 million, $ 28.8 million, and $ 40.0 million, respectively, of which $ 16.3 million, $ 21.6 million and $ 28.3 million, respectively, would reduce the Company’s annual effective tax rate, if recognized.

The Company estimates that within the next 12 months, its uncertain tax positions, excluding interest, will decrease by $ 5.1 million related to the lapse of statutes of limitations as well as an on-going multi-state tax commission audit that is expected to be settled within the next 12 months.

The Company’s policy is to recognize the interest expense and penalties related to income tax matters as a component of the income tax expense.

The Company had accrued interest and penalties associated with uncertain tax positions of $ 4.0 million as of December 31, 2023 and $ 8.3 million as of January 1, 2023.

The Company recognized net interest income of $ 4.3 million for fiscal year 2023 due to the reversals of prior year accrued interest;

interest expense for fiscal years 2022 and 2021 was approximately $ 0.3 million and $ 0.7 million, respectively.

The Company had accrued interest and penalties associated with uncertain tax positions of $ 1.6 million as of December 29, 2024 and $ 4.0 million as of December 31, 2023.

The Company recognized net interest income of $ 2.4 million and $ 4.3 million for fiscal years ended 2024 and 2023, respectively, due to the reversals of prior year accrued interest;

interest expense for fiscal year ended 2022 was approximately $ 0.3 million.

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

5 unchanged sentences

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

During the fourth quarter of fiscal year 2023, the federal examination for tax years 2013 through 2014 closed with no liability due.

During the fourth quarter of fiscal year ended 2023, the federal examination for tax years 2013 through 2014 closed with no liability due.

As such, the related unrecognized tax benefits and interest were released totaling $ 19.9 million, offset by $ 5.4 million of competent authority benefits reversed.

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

The following table summarizes the changes to the valuation allowance for balances for fiscal years 2023, 2022 and 2021:

As of December 29, 2024, the remaining indemnification receivable from Johnson & Johnson totaled $ 3.2 million and is included as a component of Prepaid expenses and other current assets on the Consolidated Balance Sheet.

In 2024, the Company determined that an uncertain tax benefit was required to be established related to net operating loss and interest expense carryforwards associated with an on-going Luxembourg income tax audit for tax years 2017 through 2020.

As such, Luxembourg net operating loss and interest expense carryforward deferred tax assets that were previously fully offset by a valuation allowance have been reduced by the amount of uncertain tax benefits recorded as a contra deferred tax asset.

The Luxembourg income tax audit is not expected to be settled in the next 12 months.

The following table summarizes the changes to the valuation allowance for balances for fiscal years ended 2024, 2023 and 2022:

Beginning Balance Additions Due to Current Year Acquisitions Additions

Charged to (Benefit From) Provision for

Income Taxes Currency Translation/Other Ending Balance

Income Taxes Currency Translation/Other (1)

Ending Balance

Deferred tax valuation allowance

Fiscal year ended December 29, 2024 $ 274.7 — 31.3 ( 163.6 ) $ 142.4

Fiscal year ended January 1, 2023 $ 2.3 223.5 26.2 ( 0.7 ) $ 251.3

Fiscal year ended December 31, 2023 $ 251.3 — 10.4 13.0 $ 274.7

Fiscal year ended January 1, 2023 $ 2.3 223.5 26.2 ( 0.7 ) $ 251.3

(1) The other decreases in valuation allowance during fiscal year ended 2024 related predominately to reserves for unrecognized tax benefits recorded on certain Luxembourg tax loss carryforwards during the period.

Balance Sheet Account Details

Cash, Cash Equivalents and Restricted Cash

(In millions) December 31, 2023 January 1, 2023

(In millions) December 29, 2024 December 31, 2023

Cash and cash equivalents $ 98.3 $ 118.9

2 unchanged sentences

Marketable Securities

The following table is a summary of marketable securities:

December 31, 2023 January 1, 2023

(In millions) Amortized Cost Gross Unrealized Losses Fair Value Amortized Cost Gross Unrealized Losses Fair Value

The Company had no marketable securities outstanding as of December 29, 2024.

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

December 31, 2023

(In millions) Amortized Cost Gross Unrealized Losses Fair Value

Corporate bonds $ 38.1 $ ( 0.1 ) $ 38.0

Corporate asset-backed securities 8.9 — 8.9

government securities — — — 2.0 — 2.0

Agency bonds 1.5 — 1.5

Sovereign government bonds — — — 1.9 — 1.9

Foreign and other — — — 0.5 — 0.5

Total marketable securities, current 48.5 ( 0.1 ) 48.4

5 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) December 31, 2023 January 1, 2023

(In millions) December 29, 2024 December 31, 2023

Accounts receivable $ 382.0 $ 395.1

3 unchanged sentences

The allowance for contractual rebates involves estimating adjustments to revenue based on a high volume of data, including inputs from third-party sources.

In addition, the determination of such adjustments includes estimating rebate percentages which are dependent on estimated end-user sales mix and customer contractual terms, which vary across customers, the related balance of which was $ 31.3 million and $ 40.0 million at December 31, 2023 and January 1, 2023, respectively, and was included in the allowance for contract rebates and discounts.

The following table summarizes changes to the accounts receivable allowance balances for fiscal years 2023, 2022 and 2021:

In addition, the determination of such adjustments includes estimating rebate percentages which are dependent on estimated end-user sales mix and customer contractual terms, which vary across customers, the related balance of which was $ 39.8 million and $ 31.3 million at December 29, 2024 and December 31, 2023, respectively, and was included in the allowance for contract rebates and discounts.

The following table summarizes changes to the accounts receivable allowance balances for fiscal years ended 2024, 2023 and 2022:

Period Additions Charged to Expense or as Reductions to Revenue (1)

3 unchanged sentences

Fiscal year ended December 29, 2024 $ 91.8 $ 486.2 $ ( 478.4 ) $ 99.6

Fiscal year ended January 1, 2023 $ 52.4 $ 407.6 $ ( 370.9 ) $ 89.1

Fiscal year ended December 31, 2023 $ 89.1 $ 493.5 $ ( 490.8 ) $ 91.8

Fiscal year ended January 1, 2023 $ 52.4 $ 407.6 $ ( 370.9 ) $ 89.1

(1) Includes opening balance of $ 31.4 million related to the Combinations during fiscal year 2022.

(1) Includes opening balance of $ 31.4 million related to the Combinations during fiscal year ended 2022.

Primarily represents charges for contract rebate allowances recorded as reductions to revenue.

3 unchanged sentences

Inventories consisted of the following:

(In millions) December 31, 2023 January 1, 2023

(In millions) December 29, 2024 December 31, 2023

Raw materials $ 211.8 $ 212.7

8 unchanged sentences

Prepaid expenses and other current assets consisted of the following:

(In millions) December 31, 2023 January 1, 2023

Prepaid expenses $ 67.0 $ 96.7

(In millions) December 29, 2024 December 31, 2023

Income taxes and other tax receivables $ 112.1 $ 104.7

Prepaid expenses 77.3 67.0

Contract assets 32.5 46.2

4 unchanged sentences

Property, Plant and Equipment, Net

The following is a summary of property, plant and equipment:

(In millions) December 31, 2023 January 1, 2023

The following is a summary of property, plant and equipment, net:

(In millions) December 29, 2024 December 31, 2023

Equipment, furniture and fixtures $ 673.2 $ 595.2

1 unchanged sentence

Customer leased instruments 728.1 602.0

Finance lease right-of-use asset 12.5 —

Land 11.7 34.7

5 unchanged sentences

In addition, construction in progress includes certain instruments that have not been placed at a customer under a lease agreement that will be reclassified to leased instruments once placed at a customer site.

The total expense for depreciation of fixed assets and amortization of leasehold improvements was $ 252.4 million, $ 151.1 million and $ 24.3 million for fiscal years 2023, 2022 and 2021, respectively.

Goodwill and Intangible Assets

The total expense for depreciation of fixed assets and amortization of leasehold improvements was $ 250.0 million, $ 252.4 million and $ 151.1 million for fiscal years ended 2024, 2023 and 2022, respectively.

Other Current Liabilities

Other current liabilities consisted of the following:

(In millions) December 29, 2024 December 31, 2023

Accrued commissions, rebates and returns $ 67.4 $ 63.8

Accrued interest 39.0 30.3

Deferred revenue 33.5 36.8

Operating lease liabilities 31.1 26.7

Accrued other taxes payable 20.9 17.9

Derivatives 4.0 12.1

Other 92.8 115.7

Total other current liabilities $ 288.7 $ 303.3

Assets 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 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.

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.

The McKellar, San Diego, CA facility was sold during the fourth quarter of 2024 for net cash proceeds of $ 9.3 million, resulting in a loss on disposal of $ 1.2 million.

This loss was included in Other operating expenses.

The Raritan, NJ facility continues to meet the criteria for held for sale.

Goodwill and Intangible Assets, Net

Changes in goodwill were as follows:

1 unchanged sentence

Balance at January 1, 2023 $ 1,547.7 $ 358.6 $ 118.1 $ 452.4 $ 2,476.8

Impact of reportable segment revisions $ 336.9 $ 0.1 $ — $ — 337.0

Goodwill acquired 1,211.5 370.0 121.6 475.3 2,178.4

Foreign currency translation ( 0.7 ) ( 11.5 ) ( 3.5 ) ( 22.9 ) ( 38.6 )

Balance at January 1, 2023 $ 1,547.7 $ 358.6 $ 118.1 $ 452.4 $ 2,476.8

Reallocation of goodwill (1)

4 unchanged sentences

Balance at December 31, 2023 $ 1,743.9 $ 582.4 $ 85.7 $ 80.0 $ 2,492.0

Impairment charge ( 1,743.9 ) — ( 17.3 ) ( 61.4 ) ( 1,822.6 )

Foreign currency translation — ( 16.4 ) ( 1.8 ) ( 1.7 ) ( 19.9 )

Balance at December 29, 2024 $ — $ 566.0 $ 66.6 $ 16.9 $ 649.5

(1) During the fourth quarter of 2023, management identified an incorrect allocation of goodwill arising from the Combinations.

The reallocation solely impacts the translation of foreign exchange on goodwill reflected through the cumulative translation adjustments.

An out-of-period adjustment was included in fiscal year 2023 to increase goodwill and decrease Accumulated other comprehensive loss by $ 15.5 million.

An out-of-period adjustment was included in fiscal year ended 2023 to increase goodwill and decrease AOCI by $ 15.5 million.

The adjustment was not material to the previously reported Consolidated Financial Statements of the Company.

Intangible assets consisted of the following:

December 31, 2023 January 1, 2023

December 29, 2024 December 31, 2023

Description Weighted-average

10 unchanged sentences

Total intangible assets $ 3,453.7 $ ( 718.1 ) $ 2,735.6 $ 3,449.6 $ ( 515.3 ) $ 2,934.3

Amortization expense related to the capitalized software costs was $ 0.6 million, $ 0.9 million and $ 1.0 million for fiscal years 2023, 2022 and 2021, respectively.

Amortization expense (including capitalized software costs) was $ 204.8 million, $ 132.5 million and $ 27.4 million for fiscal years 2023, 2022 and 2021, respectively.

Interim impairment assessment

During the first quarter of 2024, the Company concluded that (i) the sustained decline in the Company’s stock price and market capitalization that occurred during the first quarter of 2024, (ii) the faster than expected decline in COVID-19 and flu markets, and (iii) the 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 in the first quarter of 2024, the Company concluded that the North America reporting unit’s carrying value exceeded its estimated fair value.

As a result, the Company recorded a non-cash goodwill impairment charge of $ 1.7 billion in the first quarter of 2024 for the North America reporting unit, which represented a full impairment of the goodwill allocated to the North America reporting unit.

The decline in the estimated fair value of the North America reporting unit and the resulting impairment were primarily driven by revised short-term and mid-term forecasts for revenue and EBITDA expectations in North America.

Annual impairment assessment

During the fourth quarter of 2024, the Company conducted its annual goodwill impairment test for all reporting units pursuant to its policy.

The Company bypassed the qualitative assessment and proceeded directly to the quantitative goodwill impairment test for all reporting units as of the beginning of the fiscal fourth quarter.

Based on the Company’s annual goodwill impairment assessment in the fourth quarter of 2024, the Company concluded that the China and JPAC reporting units’ carrying values exceeded their respective estimated fair values.

As a result, the Company

recorded non-cash goodwill impairment charges of $ 17.3 million and $ 61.4 million in the fourth quarter of 2024 for the China and JPAC reporting units, respectively, which represented a full impairment of the goodwill allocated to the JPAC reporting unit.

The estimated fair values of the EMEA and Latin America reporting units as of the annual impairment assessment date exceeded their respective carrying values.

The excess of the estimated fair value over carrying value (expressed as a percentage of carrying value for the respective reporting unit) was approximately 8 % and 45 %, respectively.

Due to the significant excess of fair value over carrying value of these reporting units, they are less sensitive to changes in forecast assumptions.

To evaluate the sensitivity of the fair value calculations used in the interim goodwill impairment test for the EMEA and Latin America reporting units, the Company applied a hypothetical 5 % decrease to the fair value of each reporting unit and compared that hypothetical value to the reporting unit’s carrying value.

Based on this hypothetical 5 % decrease, the excess of the estimated fair value over carrying value (expressed as a percentage of carrying value for the respective reporting unit) was approximately 3 % and 37 % for the EMEA and Latin America reporting units, respectively.

The quantitative goodwill impairment assessment for all reporting units consisted of a fair value calculation that combines an income approach, using a discounted cash flow method, and a market approach, using the guideline public company method.

The quantitative goodwill impairment assessment requires the application of a number of significant assumptions, including estimates of future revenue growth rates, EBITDA margins, discount rates and market multiples.

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.

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.

The Company believes the assumptions that were used in the quantitative goodwill impairment assessment are reasonable and consistent with assumptions that would be used by other marketplace participants.

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 first quarter and fourth quarter of 2024, the Company tested its North America long-lived asset group for recoverability and impairment as of March 31, 2024 and its China and JPAC long-lived asset groups for recoverability and impairment as of December 29, 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, China and JPAC long-lived asset groups were above the carrying value and the Company determined that the long-lived asset groups were recoverable, and no impairment existed as of March 31, 2024 for North America and as of December 29, 2024 for China and JPAC.

Amortization expense related to the capitalized software costs was $ 2.7 million, $ 0.6 million and $ 0.9 million for fiscal years ended 2024, 2023 and 2022, respectively.

Amortization expense (including capitalized software costs) was $ 203.4 million, $ 204.8 million and $ 132.5 million for fiscal years ended 2024, 2023 and 2022, respectively.

The expected future annual amortization expense of the Company’s finite-lived intangible assets held as of December 29, 2024 is as follows:

(In millions)

Other Current Liabilities

Other current liabilities consisted of the following:

(In millions) December 31, 2023 January 1, 2023

Accrued commissions, rebates and returns $ 63.8 $ 57.5

Deferred revenue 36.8 76.4

Accrued interest 30.3 1.4

Operating lease liabilities 26.7 24.4

Accrued other taxes payable 17.9 9.3

Derivatives 12.1 19.7

Deferred consideration — 39.3

Other 115.7 97.4

Total other current liabilities $ 303.3 $ 325.4

The components of borrowings were as follows:

(In millions) December 31, 2023 January 1, 2023

(In millions) December 29, 2024 December 31, 2023

Term Loan $ 2,282.7 $ 2,420.2

Revolving Credit Facility 198.0 —

Financing lease obligation 7.9 0.4

Other short-term borrowings — 1.6

Other long-term borrowings — 0.4

Financing lease obligation 0.4 0.8

Unamortized deferred financing costs ( 5.5 ) ( 8.0 )

2 unchanged sentences

Long-term borrowings $ 2,141.3 $ 2,274.8

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 (the “Credit Agreement”) consists of a $ 2,750.0 million Term Loan and an $ 800.0 million revolving credit facility (the “Revolving Credit Facility” and with the Term Loan, the “Financing”).

The Financing is guaranteed by certain material domestic subsidiaries of the Company (the “Guarantors”) and is secured by liens on substantially all of the assets of the Company and the Guarantors, excluding real property and certain other types of excluded assets.

Loans under the Credit Agreement will bear interest at a rate per annum equal to the Term SOFR or Base Rate plus the Applicable Rate (each as defined in the Credit Agreement).

As of December 31, 2023, letters of credit issued under the Revolving Credit Facility totaled $ 12.9 million, which reduced the available amount under the Revolving Credit Facility to $ 787.1 million.

The Credit Agreement 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 $ 198.0 million borrowings outstanding, was $ 589.0 million as of December 29, 2024.

In connection with the Credit Agreement, the Company incurred $ 15.4 million of debt issuance costs, of which $ 11.9 million was related to the Term Loan and $ 3.5 million was related to the Revolving Credit Facility.

1 unchanged sentence

Debt issuance costs related to the Revolving Credit Facility were recorded as Other assets and are amortized on a straight-line basis over the term of the Revolving Credit Facility.

As of December 31, 2023 and January 1, 2023, there were no amounts outstanding under the Revolving Credit Facility.

During the year ended December 31, 2023, the Company made $ 226.7 million in payments on the Term Loan, including a voluntary prepayment of $ 20.0 million.

During the year ended December 29, 2024, the Company made $ 137.5 million in payments on the Term Loan.

The Term Loan is subject to quarterly amortization of the principal amount on the last business day of each fiscal quarter of the Company (commencing on September 30, 2022).

4 unchanged sentences

The negative covenants include, among other things, limitations on asset sales, mergers, indebtedness, liens, investments and transactions with affiliates.

The Credit Agreement contains two financial covenants:

(i) a maximum Consolidated Leverage Ratio (as defined in the Credit Agreement) as of the last day of each fiscal quarter of (a) 4.50 to 1.00 for the first four fiscal quarters ending after the closing date of the Credit Agreement (the “Initial Measurement Period”), (b) 4.00 to 1.00 for the first

four fiscal quarters ending after the Initial Measurement Period and (c) 3.50 to 1.00 for each fiscal quarter thereafter;

and (ii) 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.

On April 25, 2024, the Company entered into Amendment No.

2 to the Credit Agreement, by and among the Company, the lenders party thereto, and Bank of America, N.A., as administrative agent.

The amendment sets a maximum Consolidated Leverage Ratio (as defined in the Credit Agreement) for the applicable measurement period as of the last day of each fiscal quarter of (a) 4.50 to 1.00 on or prior to June 30, 2023, (b) 4.00 to 1.00 after June 30, 2023 and on or prior to June 30, 2024, (c) 4.25 to 1.00 after June 30, 2024 and on or prior to December 31, 2024, (d) 4.00 to 1.00 after December 31, 2024 and on or prior to June 30, 2025 and (e) 3.75 to 1.00 each fiscal quarter after June 30, 2025.

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 December 29, 2024.

The Company entered into the Credit Agreement in connection with the Combinations in order to fund a portion of the cash portion of the purchase price as well as to repay substantially all of Ortho’s then-outstanding indebtedness.

The following table provides the detailed amounts within Interest expense, net for fiscal years 2023, 2022 and 2021:

The following table provides the detailed amounts within Interest expense, net for fiscal years ended 2024, 2023 and 2022:

Fiscal Year Ended

11 unchanged sentences

Facility leases generally provide for periodic rent increases, and may contain clauses for rent escalation, renewal options or early termination.

Operating lease cost for fiscal years 2023, 2022 and 2021 was $ 38.4 million, $ 26.4 million and $ 15.4 million, respectively.

Variable lease cost for fiscal years 2023, 2022 and 2021 was $ 9.8 million, $ 5.6 million and $ 2.7 million, respectively.

Operating lease cost for fiscal years ended 2024, 2023 and 2022 was $ 40.4 million, $ 38.4 million and $ 26.4 million, respectively.

Variable lease cost for fiscal years ended 2024, 2023 and 2022 was $ 13.2 million, $ 9.8 million and $ 5.6 million, respectively.

Finance leases are immaterial to the Company’s Consolidated Financial Statements.

10 unchanged sentences

The Company leases its facilities and certain equipment.

Commitments for minimum rentals under non-cancelable operating leases at the end of fiscal year 2023 were as follows:

Commitments for minimum rentals under non-cancelable operating leases at the end of fiscal year ended 2024 were as follows:

(In millions)

6 unchanged sentences

Weighted average discount rate 4 %

Undiscounted lease obligations for operating leases not yet commenced were approximately $ 36 million as of December 31, 2023.

The obligation relates to a warehouse facility that is expected to be ready for use in 2024.

Stockholders’ Equity

2 unchanged sentences

The Board is authorized to fix the number of shares of any series of preferred stock and to determine the designation of such shares.

No shares of preferred stock were outstanding for fiscal years 2023, 2022 or 2021.

No shares of preferred stock were outstanding for fiscal years ended 2024, 2023 or 2022.

Equity Incentive Plan

2 unchanged sentences

Also in connection with the Combinations, the Company assumed all obligations of Quidel pursuant to each stock option to purchase a Quidel Share and pursuant to each right to acquire or vest in a Quidel Share that was outstanding immediately prior to the closing of the Combinations, and all agreements relating to such equity awards.

The Company grants stock options, time-based RSUs and performance-based RSUs (“PSUs”) to employees and non-employee directors under the 2018 Plan.

The Company grants (i) stock options and (ii) RSUs, which include time-based RSUs, performance-based RSUs and restricted stock awards, to employees and non-employee directors, under the 2018 Plan.

Quidel previously granted stock options under its 2016 Equity Incentive Plan (the “2016 Plan”), Amended and Restated 2010 Equity Incentive Plan (the “2010 Plan”) and Amended and Restated 2001 Equity Incentive Plan (the “2001 Plan”).

The 2016 Plan, 2010 Plan and 2001 Plan were terminated at the time of adoption of the Quidel Equity Plan, but the terminated plans continue to govern outstanding options granted thereunder.

The Company has stock options, RSUs and PSUs outstanding, which were issued under these equity incentive plans to certain employees and non-employee directors.

The Company has stock options and RSUs outstanding, which were issued under these equity incentive plans to certain employees and non-employee directors.

Stock options granted under these plans have terms ranging up to ten years , have exercise prices ranging from $ 15.40 to $ 254.00 per share, and generally vest over three or four years .

As of December 31, 2023, approximately 1.3 million shares of common stock remained available for grant and 4.1 million shares of common stock were reserved for future issuance under the 2018 Plan.

The Company grants both RSUs and PSUs to certain officers and directors.

Until the restrictions lapse, ownership of the shares underlying the affected RSUs or PSUs is conditional upon continuous employment with the Company and/or achievement of certain performance goals.

For fiscal years 2023, 2022 and 2021, the Company granted approximately 0.6 million, 0.7 million and 0.1 million shares of common stock, respectively, of RSUs to certain officers and directors, which either have a time-based, three-year or four-year vesting provision or performance-based vesting provision.

During fiscal years 2023, 2022 and 2021, RSUs were granted to certain members of the Board in lieu of cash compensation as a part of the Company’s non-employee director’s deferred compensation program.

The compensation expense associated with these RSU grants was $ 0.5 million, $ 0.6 million and $ 0.6 million for fiscal years 2023, 2022 and 2021, respectively.

Employee Deferred Bonus Compensation Program

For fiscal years 2023, 2022 and 2021, certain employees of the Company were eligible to participate in the Company’s deferred bonus compensation program with respect to any payments received under the Company’s cash incentive plan.

As of December 29, 2024, 411,892 shares of common stock remained available for grant and 2,892,702 shares of common stock were reserved for future issuance under the 2018 Plan.

The Company grants RSUs to certain officers and directors.

Until the restrictions lapse, ownership of the shares underlying the affected RSUs is conditional upon continuous employment with the Company and/or achievement of certain performance goals.

For fiscal years ended 2024, 2023 and 2022, the Company granted 1.2 million, 0.6 million and 0.7 million shares of common stock, respectively, of RSUs to certain officers and directors, which either have a time-based, three-year or four-year vesting provision or performance-based vesting provision.

During fiscal years ended 2024, 2023 and 2022, RSUs were granted to certain non-employee directors of the Board in lieu of cash compensation as a part of the Company’s Board Deferred Compensation Plan.

The compensation expense associated with these RSU grants was $ 0.6 million, $ 0.5 million and $ 0.6 million for fiscal years ended 2024, 2023 and 2022, respectively.

Employee Deferred Compensation Plan

For fiscal years ended 2024, 2023 and 2022, certain employees of the Company were eligible to participate in the Employee Deferred Compensation Plan with respect to any payments received under the Company’s cash incentive plan.

Participating employees could elect to receive 50 % or 100 % of the value of their cash bonus in the form of fully vested RSUs, plus a premium of additional RSUs, issued under the 2018 Plan.

5 unchanged sentences

In connection with the assumption of the Quidel ESPP, the Quidel ESPP was renamed the “QuidelOrtho Corporation Amended and Restated 1983 Employee Stock Purchase Plan” (the “ESPP”) and all references to the “Company” in the Quidel ESPP were changed to QuidelOrtho.

Under the ESPP, full-time employees were allowed to purchase common stock through payroll deductions (which could not exceed 10 % of the employee’s compensation) at the lower of 85 % of fair market value at the beginning or end of each six-month purchase period.

Under the ESPP, certain full-time employees were allowed to purchase common stock through payroll deductions (which could not exceed 10 % of the employee’s compensation) at the lower of 85 % of fair market value at the beginning or end of each six-month purchase period.

As of December 29, 2024, 538,401 shares of common stock remained available for future issuance.

Stock Repurchase Program

On December 18, 2018, Quidel announced a stock repurchase program to repurchase up to $ 50.0 million of its common stock, which was authorized by Quidel’s board of directors (the “Quidel Board”) on December 12, 2018.

On August 28, 2020, the Quidel Board authorized an increase of an additional $ 150.0 million to Quidel’s existing stock repurchase program authorization, which was announced on September 1, 2020.

The Quidel Board also extended the stock repurchase program through August 28, 2022.

In connection with the consummation of the Combinations, Quidel’s stock repurchase program was terminated.

On August 17, 2022, the Board authorized the Stock Repurchase Program, allowing the Company to repurchase up to $ 300.0 million of its common stock through August 17, 2024.

During fiscal years 2023 and 2022, 120,000 and 953,468 shares of outstanding common stock, respectively, were repurchased under the Stock Repurchase Program.

As of December 31, 2023, the Company had approximately $ 218.4 million available under the Stock Repurchase Program.

During fiscal year 2021, 957,239 shares of outstanding common stock were repurchased under Quidel’s stock repurchase program.

On August 17, 2022, the Board authorized the Stock Repurchase Program, allowing the Company to repurchase up to $ 300.0 million of its common stock, which expired on August 17, 2024.

During fiscal year ended 2024, the Company did not repurchase any shares of its common stock through the expiration date.

During fiscal years ended 2023 and 2022, 120,000 and 953,468 shares of outstanding common stock, respectively, were repurchased under the Stock Repurchase Program.

Stock-based Compensation

2 unchanged sentences

(In millions) 2024 2023 2022

Cost of sales $ 4.3 $ 2.9 $ 2.7

Research and development 4.9 4.9 4.4

Cost of sales, excluding amortization of intangibles $ 5.5 $ 4.3 $ 2.9

Selling, marketing and administrative 26.0 37.7 27.4

37.7 27.4 18.3

Research and development 3.4 4.9 4.9

Acquisition and integration costs 7.5 16.9 30.4

Total stock-based compensation expense $ 42.4 $ 63.8 $ 65.6

Income tax benefit $ 1.7 $ 2.1 $ 0.6

The table above includes $ 12.2 million and $ 17.2 million of compensation expense related to liability-classified awards for fiscal years 2023 and 2022, respectively, which has been or is expected to be settled in cash.

These awards primarily represent

the $ 7.14 per share cash settled portion of the replacement awards issued in connection with the Combinations.

Cash paid to settle liability-classified awards was $ 7.3 million and $ 20.9 million for fiscal years 2023 and 2022, respectively, and was not material for fiscal year 2021.

For fiscal years 2023, 2022 and 2021, the Company recorded $ 1.5 million, $ 3.7 million and $ 3.0 million in stock-based compensation expense, respectively, associated with the deferred bonus compensation program described in “—Note 10.

Income tax (expense) benefit $ ( 7.1 ) $ 1.7 $ 2.1

The table above includes $ 12.2 million and $ 17.2 million of compensation expense related to liability-classified awards for fiscal years ended 2023 and 2022, respectively, which has been or is expected to be settled in cash.

These awards primarily represent the $ 7.14 per share cash settled portion of the replacement awards issued in connection with the Combinations.

Cash paid to settle liability-classified awards was $ 7.3 million and $ 20.9 million for fiscal years ended 2023 and 2022, respectively.

Amounts related to fiscal year ended 2024 were not material.

For fiscal years ended 2024, 2023 and 2022, the Company recorded $ 0.6 million, $ 1.5 million and $ 3.7 million in stock-based compensation expense, respectively, associated with the Employee Deferred Compensation Plan described in “—Note 12.

Stockholders’ Equity.”

Stock Options

A summary of the status of stock option activity for fiscal year 2023 is as follows:

A summary of the status of stock option activity for fiscal year ended 2024 is as follows:

(In thousands, except price data)

3 unchanged sentences

Remaining Contractual Term (In Years) Aggregate Intrinsic Value

Outstanding at January 1, 2023 1,656 $ 90.34

Outstanding at December 31, 2023 1,636 $ 89.69

Granted 219 42.27

7 unchanged sentences

Fiscal Year Ended

December 31, 2023 January 1, 2023 January 2, 2022

December 29, 2024 December 31, 2023 January 1, 2023

Risk-free interest rate 4.60 % 3.52 % 1.96 %

11 unchanged sentences

The Company’s determination of fair value is affected by the Company’s stock price, as well as a number of assumptions that require judgment.

The total intrinsic value was $ 4.4 million, $ 13.7 million and $ 9.9 million for options exercised during fiscal years 2023, 2022, and 2021, respectively.

The total intrinsic value was $ 2.1 million, $ 4.4 million and $ 13.7 million for options exercised during fiscal years ended 2024, 2023 and 2022, respectively.

In January 2023, the Compensation Committee of the Board approved a modification to the vesting terms of certain stock options that were previously granted by Ortho to certain Ortho employees, such that the stock options vested on December 31, 2023.

The modification resulted in an additional $ 11.1 million of stock-based compensation expense recognized during fiscal year 2023.

The modification resulted in an additional $ 11.1 million of stock-based compensation expense recognized during fiscal year ended 2023.

As of December 29, 2024, total unrecognized compensation expense related to stock options was approximately $ 6.3 million and the related weighted-average period over which it is expected to be recognized is approximately 1.8 years.

The maximum contractual term of the Company’s stock options is ten years .

A summary of the status of RSU activity for fiscal year 2023 is as follows:

A summary of the status of RSU activity for fiscal year ended 2024 is as follows:

(In thousands, except price data)

Shares Weighted-Average

Non-vested at January 1, 2023 1,032 $ 98.89

Non-vested at December 31, 2023 1,156 $ 95.56

Granted 1,240 50.05

4 unchanged sentences

The fair value of RSUs is determined based on the closing market price of the Company’s common stock on the grant date.

The weighted-average fair value of RSUs granted during the fiscal years ended January 1, 2023 and January 2, 2022 was $ 97.31 and $ 188.06 , respectively.

The weighted-average fair value of RSUs granted during the fiscal years ended December 31, 2023 and January 1, 2023 was $ 86.49 and $ 97.31 , respectively.

Commitments and Contingencies

1 unchanged sentence

The Company had $ 277.3 million of purchase obligations as of December 29, 2024, the majority of which is expected to be purchased in the next year.

These purchase obligations include agreements to purchase goods or services that are enforceable and legally binding and that specify all significant terms, including (i) fixed or minimum quantities to be purchased, (ii) fixed, minimum or variable price provisions and (iii) the approximate timing of the transaction, as well as amounts for planned inventory purchases under contractual arrangements.

minimum or variable price provisions and (iii) the approximate timing of the transaction, as well as amounts for planned inventory purchases under contractual arrangements.

Litigation and Other Legal Proceedings

On April 12, 2024, a purported stockholder of the Company filed a putative class action complaint under the federal securities laws against the Company and three of its current and former executives.

The complaint, which is captioned Bristol County Retirement System v.

QuidelOrtho Corporation, et al., Case No.

1:24-cv-02804-JAV (S.D.N.Y.) (the “Bristol County Complaint”), asserts claims for violations of Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5 promulgated thereunder related to statements regarding sales of the Company’s COVID-19 diagnostic tests and the 510(k) submission for its Savanna RVP4 assay.

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 December 16, 2024, the court appointed Central States, Southeast and Southwest Areas Health and Welfare Fund and Teamsters Local 710 Pension Fund (“Teamsters Funds”) as lead plaintiffs in the action, and approved their selection of lead counsel.

Teamsters Funds filed an amended complaint on February 7, 2025, and added as additional defendants three current and former executives of the Company not previously named in the Bristol County Complaint.

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 Board and three of the Company’s current and former executives.

The complaints, which are captioned Matthew Whitfield v.

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

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

Douglas Bryant, et al., Case No.

1:24-cv-4753-JAV (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.

On December 16, 2024, the court consolidated the Whitfield and Pinkney Complaints into a single action and stayed the consolidated derivative action.

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.

Accordingly, at this time, the Company is not able to estimate a possible loss or range of loss that may result from these lawsuits or to determine whether such loss, if any, would have a material adverse effect on its business, financial condition, results of operations or liquidity.

From time to time, the Company is involved in litigation and other legal proceedings, including matters related to product liability claims, commercial disputes and intellectual property claims, as well as regulatory, employment, and other claims related to its business.

5 unchanged sentences

For those matters as to which the Company is not able to estimate a possible loss or range of loss, the Company is not able to determine whether the loss will have a material adverse effect on its business, financial condition, results of operations or liquidity.

Management believes that all such current legal actions, in the aggregate, are not expected to have a material adverse effect on the Company.

Management believes that all current legal actions to which the Company is able to estimate a possible loss or range of loss, in the aggregate, are not expected to have a material adverse effect on the Company.

However, the resolution of, or increase in any accruals for, one or more matters may have a material adverse effect on the Company’s results of operations and cash flows.

1 unchanged sentence

The Company has entered into various licensing and royalty agreements, which largely require payments by the Company based on specified product sales, as well as the achievement of specified milestones.

The Company had royalty and license expenses relating to those agreements of approximately $ 21.8 million, $ 7.9 million and $ 2.0 million for fiscal years 2023, 2022 and 2021, respectively.

The Company had royalty and license expenses relating to those agreements of approximately $ 18.5 million, $ 21.8 million and $ 7.9 million for fiscal years ended 2024, 2023 and 2022, respectively.

Fair Value Measurements

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:

December 31, 2023 January 1, 2023

December 29, 2024 December 31, 2023

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

Cash equivalents $ — $ — $ — $ — $ 0.6 $ 2.1 $ — $ 2.7

Marketable securities $ — $ — $ — $ — $ — $ 55.8 $ — $ 55.8

3 unchanged sentences

Contingent consideration — — — — — — 0.1 0.1

Deferred consideration (1)

— — — — — 39.3 — 39.3

Total liabilities measured at fair value $ — $ 5.4 $ — $ 5.4 $ — $ 27.5 $ 0.1 $ 27.6

(1) In connection with the acquisition of the BNP Business, the Company paid its last annual installment of $ 40.0 million during fiscal year 2023.

There were no transfers of assets or liabilities into or out of Level 3 of the fair value hierarchy during fiscal years 2023 and 2022.

Cash equivalents consist of funds held in money market accounts that are valued using quoted prices in active markets for identical instruments and highly liquid corporate debt securities with maturities within three months from purchase.

There were no transfers of assets or liabilities into or out of Level 3 of the fair value hierarchy during fiscal years ended 2024 and 2023.

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

3 unchanged sentences

The estimated fair value of the Company’s borrowings under the Term Loan was $ 2,254.2 million at December 29, 2024, compared to the carrying amount, excluding debt issuance costs, of $ 2,282.7 million.

The estimated fair value of the Company’s borrowings under the Term Loan was $ 2,630.3 million at January 1, 2023, compared to the carrying amount, excluding debt issuance costs of $ 2,646.9 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.

The estimate of fair value is generally based on the quoted market prices for similar issuances of long-term debt with the same maturities, which is classified as a Level 2 input.

7 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 10.

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

2 unchanged sentences

The Company records gains and losses due to changes in fair value of the derivatives within OCI and reclassifies these amounts to Interest expense, net in the same period or periods for which the underlying hedged transaction affects earnings.

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.

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 gain of $ 6.5 million as of December 29, 2024 is expected to be reclassified from OCI to earnings in the next 12 months.

13 unchanged sentences

During the fourth quarter of 2022 the Company terminated its non-designated $ 1.0 billion notional value 3.428 % interest rate cap.

As a result of this termination in fiscal year 2022, the Company recognized an immaterial gain within Other expense (income), net and received $ 3.3 million of cash proceeds, presented within operating activities in the Consolidated Statements of Cash Flows.

As a result of this termination in fiscal year ended 2022, the Company recognized an immaterial gain within Other expense, net and received $ 3.3 million of cash proceeds, presented within operating activities in the Consolidated Statements of Cash Flows.

Currency Hedging Instruments

1 unchanged sentence

The Company uses foreign currency forward contracts and may use option contracts and cross currency swaps to manage its currency risk exposures.

The Company’s foreign currency forward contracts are denominated primarily in Australian Dollar, Brazilian Real, British Pound, Canadian Dollar, Chilean Peso, Chinese Yuan/Renminbi, Colombian Peso, Euro, Indian Rupee, Japanese Yen, Mexican Peso, Philippine Peso, South Korean Won, Swiss Franc, Danish Krone, Czech Koruna and Thai Baht.

The Company’s foreign currency forward contracts are denominated primarily in Australian Dollar, Brazilian Real, British Pound, Canadian Dollar, Chilean Peso, Chinese Yuan/Renminbi, Colombian Peso, Czech Koruna, Danish Krone, Euro, Indian Rupee, Japanese Yen, Mexican Peso, Philippine Peso, Singapore Dollar, South Korean Won, Swedish Krona, Swiss Franc and Thai Baht.

The Company designates certain foreign currency forward contracts as cash flow hedges.

1 unchanged sentence

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.

The pre-tax unrealized loss of $ 6.7 million as of December 31, 2023 is expected to be reclassified from OCI to earnings in the next 12 months.

Pre-tax unrealized gain of $ 8.4 million as of December 29, 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 (income), net.

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 December 29, 2024:

3 unchanged sentences

Foreign currency forward contracts $ 764.0 Non-designated

The following table summarizes pre-tax gains and losses from designated derivative and non-derivative instruments within AOCI for fiscal years ended December 31, 2023 and January 1, 2023:

The following table summarizes pre-tax gains and losses from designated derivative and non-derivative instruments within AOCI for fiscal years ended December 29, 2024, December 31, 2023 and January 1, 2023:

Designated Hedging Instruments

4 unchanged sentences

Interest rate derivatives $ ( 44.8 ) Interest expense, net $ ( 25.5 )

Fiscal Year Ended December 31, 2023

Foreign currency forward contracts (sales) $ 7.0 Total revenues $ 4.3

Foreign currency forward contracts (purchases) $ ( 2.5 ) Cost of sales, excluding amortization of intangibles $ 1.9

Interest rate derivatives $ ( 13.4 ) Interest expense, net $ ( 30.1 )

Fiscal Year Ended January 1, 2023

2 unchanged sentences

Interest rate derivatives $ ( 11.4 ) Interest expense, net $ ( 1.7 )

Gains and losses from designated derivative and non-derivative instruments within AOCI for fiscal year 2021 were not material.

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 a 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).

2 unchanged sentences

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

Fiscal Year Ended December 31, 2023

Net Investment Hedging Relationships

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

Fiscal Year Ended December 29, 2024

Foreign exchange contracts $ ( 29.6 ) $ ( 11.6 )

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 (income), net and were not material for fiscal years 2023, 2022 and 2021.

Fair value gains on interest rate derivatives, as determined using Level 2 inputs, that do not qualify for hedge accounting treatment are recorded in Other expense (income), net and were $ 3.4 million for fiscal year 2022 and were immaterial for fiscal year 2021.

There were no fair value gains and losses on interest rate derivatives that do not qualify for hedge accounting treatment for fiscal year 2023.

The following table summarizes the fair value of designated and non-designated hedging instruments recognized within the Consolidated Balance Sheets as of December 31, 2023 and January 1, 2023:

(In millions) December 31, 2023 January 1, 2023

Fiscal Year Ended December 31, 2023

Foreign exchange contracts $ 8.5 $ ( 1.0 )

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 $ 12.4 million for fiscal year ended 2024.

Fair value gains and losses on foreign currency forward contracts that do not qualify for hedge accounting treatment were not material for fiscal years ended 2023 and 2022.

Fair value gains on interest rate derivatives, as determined using Level 2 inputs, that do not qualify for hedge accounting treatment are recorded in Other expense, net and were $ 3.4 million for fiscal year ended 2022.

There were no fair value gains and losses on interest rate derivatives that do not qualify for hedge accounting treatment for fiscal years ended 2024 and 2023.

The following table summarizes the fair value of designated and non-designated hedging instruments recognized within the Consolidated Balance Sheets as of December 29, 2024 and December 31, 2023:

(In millions) December 29, 2024 December 31, 2023

Designated cash flow hedges

1 unchanged sentence

Prepaid expenses and other current assets $ 1.3 $ 0.2

Other assets 12.4 —

Other liabilities — 6.9

1 unchanged sentence

Prepaid expenses and other current assets 11.0 3.2

Other assets 9.1 —

Other current liabilities 3.3 9.4

12 unchanged sentences

Obligation and Funded Status

The measurement dates used to determine the defined benefit and other post-employment benefit obligations were December 31, 2023 and January 1, 2023.

The following tables set forth the changes to the projected benefit obligations (“PBO”) and plan assets:

The measurement dates used to determine the defined benefit and other post-employment benefit obligations were December 29, 2024 and December 31, 2023.

The following tables set forth the changes to the PBO and plan assets:

Fiscal Year Ended

(In millions) December 31, 2023 January 1, 2023

(In millions) December 29, 2024 December 31, 2023

Defined Benefit Plans

Change in benefit obligation:

Projected benefit obligation at beginning of year $ 33.9 $ —

PBO at beginning of year $ 36.9 $ 33.9

Service cost 2.1 2.0

Interest cost 1.1 1.0

Contributions by plan participants 0.1 —

Benefits paid ( 1.3 ) ( 0.2 )

Actuarial loss (gain) 2.8 ( 0.6 )

Assumed obligation from the Combinations — 33.3

Actuarial (gain) loss ( 1.4 ) 2.8

Settlements ( 1.8 ) ( 2.4 )

Foreign currency exchange rate changes ( 2.7 ) ( 0.2 )

Projected benefit obligation at end of year $ 36.9 $ 33.9

PBO at end of year $ 33.0 $ 36.9

Change in plan assets:

3 unchanged sentences

Benefits paid ( 1.0 ) ( 0.2 )

Transfers in from the Combinations — 20.1

Settlements ( 1.9 ) ( 2.4 )

8 unchanged sentences

Fiscal Year Ended

(In millions) December 31, 2023 January 1, 2023

(In millions) December 29, 2024 December 31, 2023

What changed 10-K

Item 8. Financial Statements and Supplementary Data