What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-05-08 compared with 2024-11-08 · 102 added, 179 removed, 160 unchanged (64% of the section changed)

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This Quarterly Report contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act, and Section 21E of the Exchange Act.

These statements are any statement contained herein that is not strictly historical, including, but not limited to, certain statements under Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” including under “Outlook” and “Liquidity Outlook,” and located elsewhere herein regarding our commercial, integration and other strategic goals, our cost-savings initiatives, industry prospects, our expected results of operations or financial position, and future plans, objectives, strategies, expectations and intentions.

Without limiting the foregoing, the words “may,” “will,” “would,” “should,” “might,” “expect,” “anticipate,” “believe,” “estimate,” “plan,” “intend,” “goal,” “project,” “strategy,” “future,” “continue” or similar words, expressions or the negative of such terms or other comparable terminology are intended to identify forward-looking statements.

These statements are any statement contained herein that is not strictly historical, including, but not limited to, certain statements under Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” including under “Outlook” and “Liquidity Outlook,” and statements located elsewhere herein regarding our commercial, integration and other strategic goals, our cost-savings initiatives, industry prospects, our expected results of operations or financial position, and future plans, objectives, strategies, expectations and intentions.

Without limiting the foregoing, the words “may,” “will,” “could,” “would,” “should,” “might,” “expect,” “anticipate,” “believe,” “estimate,” “plan,” “intend,” “goal,” “project,” “strategy,” “future,” “continue,” “aim,” “strive,” “seek” or similar words, expressions or the negative of such terms or other comparable terminology are intended to identify forward-looking statements.

Such statements are based on the beliefs and expectations of our management as of the date of this Quarterly Report and are subject to significant known and unknown risks and uncertainties.

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the challenges and costs of integrating, restructuring and achieving anticipated synergies as a result of the Combinations;

and other macroeconomic, geopolitical, market, business, competitive and/or regulatory factors affecting our business generally, including those discussed under Part II, Item 1A, “Risk Factors” of this Quarterly Report and Part I, Item 1A, “Risk Factors” of our Annual Report.

and other macroeconomic, geopolitical, market, business, competitive and/or regulatory factors affecting our business generally, including those arising from the effects of announced or future or amended tariffs, trade policies and global trade relations, as well as those discussed under Part II, Item 1A, “Risk Factors” of this Quarterly Report and Part I, Item 1A, “Risk Factors” of our Annual Report.

Investors should not rely on forward-looking statements as predictions of future events because these statements are based on assumptions that may not come true and are speculative by their nature.

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We manage our business geographically to better align with the market dynamics of the specific geographic regions in which we operate, with our reportable segments being North America, EMEA and China.

Latin America and JPAC (Japan and Asia Pacific) are immaterial operating segments that are not considered reportable segments and are included in “Other.” We generate our revenue in the following business units:

Labs, Immunohematology, Donor Screening, Point of Care and Molecular Diagnostics.

For the nine months ended September 29, 2024, Total revenues decreased by 8% to $2,075.1 million as compared to the same period in the prior year, primarily driven by variability of our U.S.

respiratory products.

Latin America and JPAC are immaterial operating segments that are not considered reportable segments and are included in “Other.” We generate our revenue in the following business units:

Labs, Transfusion Medicine (Immunohematology and Donor Screening product categories), Point of Care and Molecular Diagnostics.

We also generate non-core revenue, including through our contract manufacturing business and certain business collaborations, which accounted for $33.4 million and $31.0 million for the three months ended March 30, 2025 and March 31, 2024, respectively.

For the three months ended March 30, 2025, Total revenues decreased by 3% to $692.8 million as compared to the same period in the prior year.

This decrease was primarily driven by variability of our U.S.

respiratory products, mainly due to a decrease in COVID-19 revenues, partially offset by an increase in flu revenues.

Currency exchange rates had an unfavorable impact of 150 basis points on our growth rate.

Our revenues can be highly concentrated over a small number of products, including certain of our respiratory products.

For the nine months ended September 29, 2024 and October 1, 2023, revenues related to our respiratory products accounted for approximately 17% and 24% of our Total revenues, respectively.

For the three months ended March 30, 2025 and March 31, 2024, revenues related to our respiratory

products accounted for 17% and 19% of our Total revenues, respectively.

The respiratory product revenue included $23.4 million and $50.2 million revenue related to COVID-19 for the three months ended March 30, 2025 and March 31, 2024, respectively.

Planned Wind-Down of U.S.

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donor screening portfolio.

Specifically, we plan to wind-down only the ORTHO VERSEIA® Integrated Processor platform and microplate assays, which are only sold in the U.S., and have a lower growth and margin profile.

Specifically, we plan to wind-down only the ORTHO VERSEIA® Integrated Processor platform and microplate assays, which are only sold in the U.S.

and have a lower growth and margin profile.

This wind-down will not affect any donor screening portfolio outside of the U.S.

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donor screening portfolio is expected to be substantially complete by the end of 2025.

Our financial performance and results of operations will depend on future developments and other factors that are highly uncertain, continuously evolving and unpredictable, including the occurrence, spread, severity, duration and emergence of new variants of respiratory diseases, including flu, strep, RSV and COVID-19, as well as ongoing supply, production and logistics challenges.

Recent Macroeconomic Trends and Challenges

In recent months, the United States has announced tariffs on imports from most countries, including significant tariffs on imports from U.K., Canada, Mexico and China, leading to increasing trade and political tensions.

In response to tariffs, other countries have implemented retaliatory tariffs on U.S.

These actions and the related rising political tensions could negatively impact global macroeconomic conditions and the stability of global financial markets, which could have a material adverse effect on our business, financial condition and results of operations, including through increased supply chain costs.

There is substantial uncertainty about the duration of existing tariffs or pauses in tariffs, tariff levels and whether additional tariffs or other retaliatory actions may be imposed, modified or suspended.

We continue to closely monitor these events as they unfold and assess their potential impact on our operations to inform our response strategy.

We expect overall demand for our non-respiratory and respiratory products to continue to fluctuate and pricing pressures on certain products to persist as a result of a number of factors, including increased supply, emergence and spread of new variants, and the seasonal demands of the respiratory season, which are typically more prevalent during the fall and winter.

Because our business environment is highly competitive, our long-term growth and profitability will depend in part on our ability to retain and grow our current customers and attract new customers through developing and delivering new and improved products and services that meet our customers’ needs and expectations, including with respect to product performance, product offerings, cost, automation and other work-flow efficiencies.

As a result, we expect to continue to maintain our emphasis on R&D investments for longer term growth, including for our next generation platforms and assays, as well as additional assays to be launched on our current platforms.

In addition, we expect to continue to evaluate strategic opportunities to (i) expand our product lines and services, production capabilities, technologies and geographic footprint and address other business challenges and opportunities, and (ii) rationalize and consolidate facilities with the goal to improve our long-term results.

We expect to continue to evaluate strategic opportunities to (i) expand our product lines and services, production capabilities, technologies and geographic footprint and address other business challenges and opportunities, and (ii) rationalize and consolidate facilities with the goal to improve our long-term results.

While we expect the revenues and financial results from our non-respiratory and respiratory products to be affected by the highly competitive environment and our respiratory products to be affected by the seasonal demands of the respiratory season, we intend to continue our focus on prudently managing our business and delivering improved financial results, while at the same time striving to introduce new products and services into the market.

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Results of Operations

The following table compares Total revenues by business unit for the three and nine months ended September 29, 2024 and October 1, 2023:

Three Months Ended Nine Months Ended

(Dollars in millions) September 29, 2024 October 1,

2023 % Change September 29, 2024 October 1,

2023 % Change

The following table compares Total revenues by business unit for the three months ended March 30, 2025 and March 31, 2024:

Three Months Ended

(Dollars in millions) March 30, 2025 March 31, 2024 % Change

Labs $ 373.1 $ 356.9 5 %

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

For the three months ended September 29, 2024, Total revenues decreased to $727.1 million from $744.0 million for the same period in the prior year.

Labs revenue increased 4% compared to the prior year period, primarily due to growth in recurring revenue, which includes reagents, consumables and services in our Labs revenue, partially offset by a decline in instrument revenue.

Excluding foreign currency impact, Labs revenue increased 5% compared to the prior year period.

Immunohematology revenue increased 2% compared to the prior year period, primarily due to reagent growth.

Donor Screening revenue decreased 20% compared to the prior year period, primarily due to the wind-down of the U.S.

donor screening business.

Point of Care revenue decreased 12% compared to the prior year period, primarily due to lower sales of Sofia SARS Antigen assays, partially offset by an increase in demand for QuickVue SARS Antigen assays.

Currency exchange rates did not significantly impact our growth rate for the three months ended September 29, 2024.

For the nine months ended September 29, 2024, Total revenues decreased to $2,075.1 million from $2,255.2 million for the same period in the prior year.

Labs revenue decreased 1% compared to the prior year period, primarily due to a $19.2 million settlement award from a third party related to one of our collaboration agreements in the prior year period, partially offset by growth in recurring revenue.

For the three months ended March 30, 2025, Total revenues decreased to $692.8 million from $711.0 million for the same period in the prior year.

Labs revenue increased 5% compared to the prior year period, primarily due to growth in reagents, consumables and services, partially offset by a decline in instrument revenue.

Immunohematology revenue increased 1% compared to the prior year period, primarily due to reagent growth.

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donor screening business.

The Point of Care business unit contributed to revenue decline, driven by a decrease of $178.9 million in sales of QuickVue SARS Antigen assays, primarily due to a COVID-19 government award in the prior year period, partially offset by an increase of $11.8 million in sales of Sofia SARS Antigen assays.

Molecular Diagnostics sales decreased by $6.0 million, driven primarily by lower demand.

Currency exchange rates had an unfavorable impact of approximately 100 basis points on our growth rate for the nine months ended September 29, 2024.

The Point of Care business unit contributed to revenue decline, driven by a decrease of $15.8 million, or 37% in sales of QuickVue SARS Antigen assays.

Molecular Diagnostics revenue increased 6% compared to the prior year period, driven by higher Savanna revenue.

Currency exchange rates had an unfavorable impact of 150 basis points on our growth rate for the three months ended March 30, 2025.

Cost of Sales, Excluding Amortization of Intangible Assets

Cost of sales, excluding amortization of intangible assets, increased to $374.8 million, or 51.5% of Total revenues, for the three months ended September 29, 2024, compared to $374.6 million, or 50.3% of Total revenues, for the three months ended October 1, 2023.

Cost of sales, excluding amortization of intangible assets, was impacted by a shift in product mix.

Cost of sales, excluding amortization of intangible assets, decreased to $1,114.7 million, or 53.7% of Total revenues, for the nine months ended September 29, 2024, compared to $1,140.7 million, or 50.6% of Total revenues, for the nine months ended October 1, 2023.

The decrease in cost of sales, excluding amortization of intangible assets, was driven primarily by a prior year period COVID-19 government award, along with the corresponding inventory release of $39 million, partially offset by an increase in sales of Sofia SARS Antigen assays.

Cost of sales, excluding amortization of intangible assets, decreased to $349.5 million, or 50.4% of Total revenues, for the three months ended March 30, 2025, compared to $378.9 million, or 53.3% of Total revenues, for the three months ended March 31, 2024.

The decrease in cost of sales, excluding amortization of intangible assets, was driven primarily by procurement-related cost-savings initiatives actioned in 2024.

Operating Expenses

The following table summarizes operating expenses for the three and nine months ended September 29, 2024 and October 1, 2023:

Three Months Ended Nine Months Ended

(Dollars in millions) September 29, 2024 % of

Total Revenues October 1, 2023 % of

Total Revenues September 29, 2024 % of

Total Revenues October 1, 2023 % of

The following table summarizes operating expenses for the three months ended March 30, 2025 and March 31, 2024:

Three Months Ended

(Dollars in millions) March 30, 2025 % of

Total Revenues March 31, 2024 % of

Total Revenues

Selling, marketing and

administrative $ 186.4 25.6 % $ 194.1 26.1 % $ 579.3 27.9 % $ 575.6 25.5 %

Selling, marketing and administrative $ 187.0 27.0 % $ 204.7 28.8 %

Research and development 53.2 7.7 % 59.2 8.3 %

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Integration related costs 16.1 2.3 % 22.6 3.2 %

Goodwill impairment charge — N/M — N/M 1,743.9 N/M — N/M

Asset impairment charge — N/M 2.2 N/M 56.9 N/M 3.2 N/M

Goodwill impairment charge — N/M 1,743.9 N/M

Other operating expenses 6.4 0.9 % 8.0 1.1 %

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Selling, Marketing and Administrative Expenses

Selling, marketing and administrative expenses for the three months ended September 29, 2024 decreased by $7.7 million, or 4.0%, to $186.4 million from $194.1 million for the same period in the prior year, primarily due to lower employee compensation costs.

Selling, marketing and administrative expenses for the nine months ended September 29, 2024 increased by $3.7 million, or 0.6%, to $579.3 million from $575.6 million for the same period in the prior year, primarily due to higher employee compensation costs.

Selling, marketing and administrative expenses for the three months ended March 30, 2025 decreased by $17.7 million, or 8.6%, to $187.0 million from $204.7 million for the same period in the prior year, primarily due to compensation costs related to cost-savings initiatives actioned in 2024.

Research and Development Expense

Research and development expense for the three months ended September 29, 2024 decreased by $5.6 million, or 9.1%, to $55.9 million from $61.5 million for the same period in the prior year, primarily due to lower outside services and employee compensation costs.

Research and development expense for the nine months ended September 29, 2024 decreased by $14.3 million, or 7.7%, to $171.4 million from $185.7 million for the same period in the prior year, primarily due to lower employee compensation costs and outside services.

Research and development expense for the three months ended March 30, 2025 decreased by $6.0 million, or 10.1%, to $53.2 million from $59.2 million for the same period in the prior year, primarily due to compensation costs related to cost-savings initiatives actioned in 2024.

Amortization of Intangible Assets

Amortization of intangible assets was $51.9 million and $155.5 million for the three and nine months ended September 29, 2024, respectively, and $51.4 million and $153.6 million for the three and nine months ended October 1, 2023, respectively.

Amortization of intangible assets was $48.0 million and $51.7 million for the three months ended March 30, 2025 and March 31, 2024, respectively.

Integration Related Costs

Integration related costs were $36.8 million and $90.3 million for the three and nine months ended September 29, 2024, respectively, and $26.5 million and $80.4 million for the three and nine months ended October 1, 2023, respectively.

The increase in costs compared to the prior year periods was primarily due to consulting costs and employee compensation related charges.

Integration related costs were $16.1 million and $22.6 million for the three months ended March 30, 2025 and March 31, 2024, respectively.

The decrease in costs compared to the prior year period was primarily due to lower consulting costs and compensation related charges.

Goodwill Impairment Charge

During the nine months ended September 29, 2024, we identified a triggering event requiring an interim goodwill impairment assessment for our reporting units.

As a result, we recognized a non-cash goodwill impairment charge of $1.7 billion for the North America reporting unit.

Refer to Item 1, “Financial Statements—Note 8.

Goodwill and Intangible Assets, Net” for more information.

Asset Impairment Charge

During the nine months ended September 29, 2024, we recognized an impairment charge of $56.9 million related to the long-lived assets classified as assets held for sale.

Refer to Item 1, “Financial Statements—Note 7.

Assets Held for Sale” for more information.

Asset impairment charges were $2.2 million and $3.2 million for the three and nine months ended October 1, 2023, respectively.

We recognized a non-cash goodwill impairment charge of $1.7 billion for the three months ended March 31, 2024.

Other Operating Expenses

Other operating expenses were $6.3 million and $23.6 million for the three and nine months ended September 29, 2024, respectively, and $7.4 million and $17.0 million for the three and nine months ended October 1, 2023, respectively.

Other operating expenses were primarily related to the profit share expense for our Joint Business with Grifols.

Other operating expenses were $6.4 million and $8.0 million for the three months ended March 30, 2025 and March 31, 2024, respectively.

Other operating expenses were primarily related to the profit share expense for our Joint Business.

Non-operating Expenses

Interest Expense, Net

Interest expense, net was $42.9 million and $122.9 million for the three and nine months ended September 29, 2024, respectively, and $37.7 million and $110.9 million for the three and nine months ended October 1, 2023, respectively.

Interest expense, net was $40.0 million and $39.0 million for the three months ended March 30, 2025 and March 31, 2024, respectively.

Refer to Item 1, “Financial Statements—Note 7.

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Other Expense, Net

Other expense, net was $0.9 million and $7.2 million for the three and nine months ended September 29, 2024, respectively, and $4.1 million and $8.0 million for the three and nine months ended October 1, 2023, respectively.

The decreases from prior year periods were primarily related to net foreign currency losses offset by the Credit Agreement amendment fees.

Refer to Item 1, “Financial Statements—Note 9.

Borrowings” for more information.

For the three months ended September 29, 2024, we recognized an income tax benefit of $8.9 million in relation to loss before income taxes of $28.8 million, resulting in an effective tax rate of 30.9%.

For the three months ended October 1, 2023, we recognized an income tax benefit of $2.8 million in relation to loss before income taxes of $15.5 million, resulting in an effective tax rate of 18.1%.

For the three months ended September 29, 2024, the effective tax rate differed from the U.S.

federal statutory rate primarily due to the utilization of net operating losses previously not benefited due to valuation allowances.

For the three months ended October 1, 2023, the effective tax rate differed from the U.S.

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

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

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

For the nine months ended September 29, 2024, we recognized an income tax benefit of $117.0 million in relation to loss before income taxes of $1,990.6 million, resulting in an effective tax rate of 5.9%.

For the nine months ended October 1, 2023, we recognized an income tax benefit of $2.8 million in relation to loss before income taxes of $19.9 million, resulting in an effective tax rate of 14.1%.

For the nine months ended September 29, 2024, the effective tax rate differed from the U.S.

Other expense, net was $1.4 million and $1.9 million for the three months ended March 30, 2025 and March 31, 2024, respectively.

For the three months ended March 30, 2025, we recognized a provision for income taxes of $3.9 million in relation to loss before income taxes of $8.8 million, resulting in a negative effective tax rate of 44.3%.

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

For the three months ended March 30, 2025, the effective tax rate differed from the U.S.

federal statutory rate primarily due to the impacts of operating losses in certain subsidiaries not being benefited due to the establishment of valuation allowances.

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

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

For the nine months ended October 1, 2023, the effective tax rate differed from the U.S.

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

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

Segment Results

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North America, EMEA and China.

Our operations in Latin America and JPAC (Japan and Asia Pacific) are immaterial operating segments that are not considered reportable segments and are included in “Other.”

Our operations in 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, we revised the internal allocation of certain global costs primarily between the North America segment and Corporate to better align costs that impact us as a whole.

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

The key indicators that we monitor are as follows:

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We believe that this measurement is useful to investors as a way to analyze the underlying trends in our core business, including at the segment level, consistently across the periods presented and to evaluate performance under management incentive compensation programs.

Adjusted EBITDA consists of Net loss before Interest expense, net, Benefit from income taxes and depreciation and amortization and eliminates (i) certain non-operating income or expense items, and (ii) impacts of certain non-cash, unusual or other items that are included in Net loss and that we do not consider indicative of our ongoing operating performance.

Adjusted EBITDA consists of Net loss before Interest expense, net, Provision for (benefit from) income taxes and depreciation and amortization and eliminates (i) certain non-operating income or expense items, and (ii) impacts of certain non-cash, unusual or other items that are included in Net loss and that we do not consider indicative of our ongoing operating performance.

Refer to Item 1, “Financial Statements—Note 4.

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Total revenues and Adjusted EBITDA for North America were as follows:

Three Months Ended Nine Months Ended

(Dollars in millions) September 29, 2024 October 1,

2023 % Change September 29, 2024 October 1,

2023 % Change

Three Months Ended

(Dollars in millions) March 30, 2025 March 31, 2024 % Change

Total revenues $ 406.7 $ 433.9 (6) %

Adjusted EBITDA $ 234.3 $ 236.6 (1) %

Total revenues were $436.2 million for the three months ended September 29, 2024, compared to $465.2 million for the three months ended October 1, 2023.

The decrease was primarily driven by lower revenues for Sofia SARS Antigen assays and the wind-down of the U.S.

donor screening business, partially offset by higher demand for QuickVue SARS Antigen assays.

Total revenues were $1,220.2 million for the nine months ended September 29, 2024, compared to $1,426.8 million for the nine months ended October 1, 2023.

The decrease was primarily driven by a COVID-19 government award in the prior year period and the wind-down of the U.S.

donor screening business, partially offset by an increase in revenues for Sofia SARS Antigen assays.

Adjusted EBITDA was $233.0 million for the three months ended September 29, 2024, compared to $253.4 million for the three months ended October 1, 2023.

The decrease was primarily driven by lower revenues for Sofia SARS Antigen assays and

the wind-down of the U.S.

donor screening business, partially offset by a decrease in employee compensation costs, lower other operating expenses and higher demand for QuickVue SARS Antigen assays.

Adjusted EBITDA was $625.7 million for the nine months ended September 29, 2024, compared to $708.1 million for the nine months ended October 1, 2023.

The decrease was primarily driven by a COVID-19 government award in the prior year period, along with the corresponding inventory release of $39 million, partially offset by a decrease in employee compensation costs, lower other operating expenses and an increase in revenues for Sofia SARS Antigen assays.

Total revenues were $406.7 million for the three months ended March 30, 2025, compared to $433.9 million for the three months ended March 31, 2024.

The decrease was primarily driven by the wind-down of the U.S.

donor screening business and a decrease in sales of QuickVue SARS Antigen assays, partially offset by an increase in Labs revenues.

Adjusted EBITDA was $234.3 million for the three months ended March 30, 2025, compared to $236.6 million for the three months ended March 31, 2024.

The decrease was primarily driven by decreases in revenue due to the wind-down of the U.S.

donor screening business and sales of QuickVue SARS Antigen assays, partially offset by an increase in Labs revenues and lower operating expenses due to cost-savings initiatives.

Total revenues and Adjusted EBITDA for EMEA were as follows:

Three Months Ended Nine Months Ended

(Dollars in millions) September 29, 2024 October 1,

2023 % Change September 29, 2024 October 1,

2023 % Change

Three Months Ended

(Dollars in millions) March 30, 2025 March 31, 2024 % Change

Total revenues $ 88.9 $ 84.8 5 %

Adjusted EBITDA $ 16.5 $ 11.6 42 %

Total revenues were $84.0 million for the three months ended September 29, 2024, compared to $74.5 million for the three months ended October 1, 2023, primarily driven by an increase in Labs and Immunohematology revenues.

Total revenues were $249.9 million for the nine months ended September 29, 2024, compared to $236.4 million for the nine months ended October 1, 2023, primarily driven by an increase in Labs and Immunohematology revenues.

Adjusted EBITDA was $6.7 million for the three months ended September 29, 2024, compared to $10.2 million for the three months ended October 1, 2023.

The decrease was primarily driven by (i) product mix and (ii) foreign exchange net losses resulting from re-measurement and settlement transactions, including loans transacted in non-functional currencies.

These decreases were partially offset by (i) an increase in Labs and Immunohematology revenues and (ii) net gains realized on foreign currency forward contracts.

Adjusted EBITDA was $30.9 million for the nine months ended September 29, 2024, compared to $22.7 million for the nine months ended October 1, 2023, primarily driven by an increase in Labs and Immunohematology revenues and product mix.

Total revenues were $88.9 million for the three months ended March 30, 2025, compared to $84.8 million for the three months ended March 31, 2024, primarily driven by increases in revenues across most of our business units.

Adjusted EBITDA was $16.5 million for the three months ended March 30, 2025, compared to $11.6 million for the three months ended March 31, 2024, primarily driven by lower operating expenses due to cost-savings initiatives and increases in revenues.

Total revenues and Adjusted EBITDA for China were as follows:

Three Months Ended Nine Months Ended

(Dollars in millions) September 29, 2024 October 1,

2023 % Change September 29, 2024 October 1,

2023 % Change

Three Months Ended

(Dollars in millions) March 30, 2025 March 31, 2024 % Change

Total revenues $ 75.0 $ 76.1 (1) %

Adjusted EBITDA $ 29.3 $ 26.1 12 %

Total revenues were $80.4 million for the three months ended September 29, 2024, which decreased slightly compared to $81.1 million for the three months ended October 1, 2023, driven by an increase of 6% in Labs revenues, offset by decreases in other business units revenues.

Total revenues were $238.1 million for the nine months ended September 29, 2024, compared to $233.0 million for the nine months ended October 1, 2023, driven by an increase of 7% in Labs revenues, offset by decreases in other business units revenues.

Adjusted EBITDA was $36.9 million for the three months ended September 29, 2024, compared to $37.3 million for the three months ended October 1, 2023.

The decrease was primarily driven by a decrease in other business units revenues, partially offset by higher Labs revenues.

Adjusted EBITDA was $97.4 million for the nine months ended September 29, 2024, compared to $96.0 million for the nine months ended October 1, 2023.

The increase was primarily driven by higher Labs revenues, partially offset by a decrease in other business units revenues and the impact from changes in product mix.

Total revenues were $75.0 million for the three months ended March 30, 2025, compared to $76.1 million for the three months ended March 31, 2024, driven by a decrease in Point of Care revenues, partially offset by an increases in Labs and Donor Screening revenues.

Adjusted EBITDA was $29.3 million for the three months ended March 30, 2025, compared to $26.1 million for the three months ended March 31, 2024.

The increase was primarily driven by the impact from changes in product mix and higher Labs revenues.

Total revenues and Adjusted EBITDA for Other were as follows:

Three Months Ended Nine Months Ended

(Dollars in millions) September 29, 2024 October 1,

2023 % Change September 29, 2024 October 1,

2023 % Change

Three Months Ended

(Dollars in millions) March 30, 2025 March 31, 2024 % Change

Total revenues $ 122.2 $ 116.2 5 %

Adjusted EBITDA $ 29.6 $ 31.5 (6) %

Total revenues were $126.5 million for the three months ended September 29, 2024, which increased slightly compared to $123.2 million for the three months ended October 1, 2023, primarily due to an increase in Labs revenues, partially offset by a decrease in Point of Care revenues.

Total revenues were $366.9 million for the nine months ended September 29, 2024, compared to $359.0 million for the nine months ended October 1, 2023, primarily driven by an increase in Labs revenues, partially offset by a decrease in Point of Care revenues.

Adjusted EBITDA was $31.7 million for the three months ended September 29, 2024, which increased slightly compared to $31.2 million for the three months ended October 1, 2023.

The increase was primarily driven by an increase in Labs revenues, partially offset by a decrease in Point of Care revenues and product mix.

Adjusted EBITDA was $97.8 million for the nine months ended September 29, 2024, compared to $89.3 million for the nine months ended October 1, 2023, primarily driven by an increase in Labs revenues, partially offset by a decrease in Point of Care revenues and product mix.

Total revenues were $122.2 million for the three months ended March 30, 2025, compared to $116.2 million for the three months ended March 31, 2024, primarily driven by an increase in Labs revenues.

Adjusted EBITDA was $29.6 million for the three months ended March 30, 2025, compared to $31.5 million for the three months ended March 31, 2024, primarily driven by higher operating expenses and the impact from changes in product mix.

Liquidity and Capital Resources

As of September 29, 2024 and December 31, 2023, our principal sources of liquidity consisted of the following:

(Dollars in millions) September 29, 2024 December 31,

As of March 30, 2025 and December 29, 2024, our principal sources of liquidity consisted of the following:

(In millions) March 30, 2025 December 29, 2024

Cash and cash equivalents $ 127.1 $ 98.3

Marketable securities, current — 48.4

Marketable securities, non-current — 7.4

Total cash, cash equivalents and marketable securities $ 143.7 $ 174.7

Amount available to borrow under the Revolving Credit Facility $ 537.3 $ 589.0

Working capital including cash and cash equivalents and marketable securities, current $ 385.3 $ 476.7

As of September 29, 2024, we had $143.7 million in Cash and cash equivalents, a $24.8 million increase from December 31, 2023.

Working capital including cash and cash equivalents $ 211.0 $ 220.1

As of March 30, 2025, we had $127.1 million in Cash and cash equivalents, a $28.8 million increase from December 29, 2024.

Our cash requirements fluctuate as a result of numerous factors, including cash generated from operations, progress in R&D, capital expansion projects and acquisition and business development activities.

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Our 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 $230.0 million borrowings outstanding, was $557.0 million as of September 29, 2024.

On April 25, 2024, we entered into the Amendment, by and among us, the lenders party thereto, and Bank of America, N.A., as administrative agent, which amended the Credit Agreement.

Availability under the Revolving Credit Facility, after deducting letters of credit of $12.7 million and $250.0 million borrowings outstanding, was $537.3 million as of March 30, 2025.

On April 25, 2024, we entered into Amendment No.

2 to the Credit Agreement, by and among us, 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.

We were in compliance with the financial covenants as of September 29, 2024.

We were in compliance with the financial covenants as of March 30, 2025.

Capital Expenditures

Capital expenditures, including investments, were $147.9 million for the nine months ended September 29, 2024.

Capital expenditures, including investments, were $56.2 million for the three months ended March 30, 2025.

We continue to make capital expenditures in connection with the expansion of our manufacturing capabilities and other facility-related activities.

Cash Flow Summary

Nine Months Ended

(In millions) September 29, 2024 October 1,

Net cash provided by operating activities $ 19.3 $ 199.8

Three Months Ended

(In millions) March 30, 2025 March 31, 2024

Net cash provided by (used for) operating activities $ 65.6 $ (0.7)

Net cash used for investing activities (56.2) (20.2)

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Net increase (decrease) in cash, cash equivalents and restricted cash $ 28.7 $ (40.5)

Nine Months Ended September 29, 2024

Cash provided by operating activities was $19.3 million for the nine months ended September 29, 2024, and reflected a net loss of $1,873.6 million and non-cash adjustments of $2,099.8 million, primarily associated with a goodwill impairment charge and change in deferred tax assets and liabilities as well as depreciation and amortization, asset impairment charge and stock-based compensation expense.

Cash provided by operating activities was also driven by $110.9 million cash outflows for inventories.

Cash used for investing activities was $112.0 million for the nine months ended September 29, 2024, and was primarily related to $147.9 million in purchases of property, plant, equipment, investments and intangibles.

Three Months Ended March 30, 2025

Cash provided by operating activities was $65.6 million for the three months ended March 30, 2025 and reflected a net loss of $12.7 million and non-cash adjustments of $123.7 million, primarily associated with depreciation and amortization and stock-based compensation expense, partially offset by $53.1 million in cash outflows for inventories.

Cash used for investing activities of $56.2 million for the three months ended March 30, 2025 was related to purchases of property, plant, equipment, investments and intangibles.

Cash provided by financing activities was $17.6 million for the three months ended March 30, 2025 and was primarily related to net proceeds from the Revolving Credit Facility of $52.0 million, partially offset by payments on long-term borrowings of $36.0 million.

Three Months Ended March 31, 2024

Cash used for operating activities was $0.7 million for the three months ended March 31, 2024 and reflected a net loss of $1,706.0 million and non-cash adjustments of $1,791.6 million, primarily associated with a goodwill impairment charge and change in deferred tax assets and liabilities as well as depreciation and amortization and stock-based compensation expense.

We benefited from collections on accounts receivables, which contributed cash inflows of $26.4 million, offset by other changes in working capital, including $37.7 million cash outflows for inventories.

Cash used for investing activities was $20.2 million for the three months ended March 31, 2024 and was primarily related to $66.1 million in purchases of property, plant, equipment, investments and intangibles.

We also sold $63.1 million of marketable securities.

Cash provided by financing activities was $117.7 million for the nine months ended September 29, 2024, and was primarily related to net proceeds from the Revolving Credit Facility of $230.0 million, partially offset by payments on long-term borrowings of $107.0 million.

Nine Months Ended October 1, 2023

Cash provided by operating activities was $199.8 million for the nine months ended October 1, 2023, and reflected a net loss of $17.1 million and non-cash adjustments of $366.6 million, primarily associated with depreciation and amortization, stock-based compensation expense and accretion of interest on deferred consideration.

We benefited from collections on accounts receivables of $124.1 million, primarily due to a COVID-19 government award, offset by other changes in working capital, including $146.0 million cash outflows for inventories.

Cash used for investing activities was $132.5 million for the nine months ended October 1, 2023, and was primarily related to $160.7 million in purchases of property, plant, equipment, investments and intangibles.

We also purchased $50.6 million and sold $68.3 million of marketable securities.

Cash used for financing activities was $208.0 million for the nine months ended October 1, 2023, and was primarily related to payments on long-term borrowings of $175.7 million, payments for deferred consideration of $30.3 million and payments of tax withholdings related to vesting of stock-based awards of $13.0 million.

Cash used for financing activities was $18.5 million for the three months ended March 31, 2024 and was primarily related to payments on long-term borrowings of $51.9 million and net proceeds from the Revolving Credit Facility of $40.0 million.

Liquidity Outlook

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Going forward, we intend to increase the number of reagent rental placements in developed markets, a strategy that we believe is beneficial to our commercial goals because it lowers our customers’ upfront capital costs and therefore allows purchasing decisions to be made at the lab manager level.

For these same reasons, the reagent rental model also benefits our commercial strategy in emerging markets.

For these same reasons, the reagent rental model also benefits our commercial strategy in emerging markets, where permitted by law.

We believe that the shift in our sales strategy will grow our installed base, thereby increasing sales of higher-margin assays, reagents and other consumables over the life of the customer contracts and enhancing our recurring revenue and cash flows.

During the nine months ended September 29, 2024, we transferred $99.4 million of instrument inventories from Inventories to Property, plant and equipment, net, further increasing our investment in property, plant and equipment.

Long-term Liquidity Outlook

Our future capital requirements and the adequacy of our available funds to service any long-term debt outstanding and to fund working capital expenditures and business development efforts will depend on many factors, including:

• our ability to successfully integrate the Ortho business and realize cross-selling revenue synergies;

• our ability to realize revenue growth from our new technologies and create innovative products in our markets;

• outstanding debt and covenant restrictions;

• our ability to leverage our operating expenses to realize operating profits as we grow revenue;

• our ability to leverage our operating expenses to realize operating profits with revenue growth;

• competing technological and market developments;

• our entry into strategic collaborations with other companies or acquisitions of other companies or technologies to enhance or complement our product and service offerings.

On March 1, 2024, our lease for warehouse space in the U.S.

Information regarding the lease is included in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report.

Recent Accounting Pronouncements

There have been no accounting pronouncements issued or adopted during the nine months ended September 29, 2024 that are expected to have a material impact on the Company’s financial statements.

There have been no accounting pronouncements issued or adopted during the three months ended March 30, 2025 that are expected to have a material impact on the Company’s financial statements.

Critical Accounting Estimates

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A comprehensive discussion of our critical accounting estimates is included in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report.

Other than the following, there have been no significant changes to our critical accounting policies and estimates during the nine months ended September 29, 2024:

Goodwill Impairment

We test goodwill for impairment on an annual basis on the first day of the fourth quarter and monitor throughout the year for impairment triggering events that indicate that the carrying value of one or more of our reporting units exceeds its fair value.

During the first quarter of 2024, we concluded that (i) the sustained decline in our 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 our interim goodwill impairment assessment in the first quarter of 2024, we concluded that the North America reporting unit’s carrying value exceeded its estimated fair value.

As a result, we 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.

The estimated fair values of our EMEA, Latin America and JPAC reporting units as of the interim testing 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) ranged from approximately 30% to 150%.

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, Latin America and JPAC reporting units, we applied a hypothetical 5% decrease to the fair values of each reporting unit and compared those hypothetical values to the reporting unit carrying values.

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) for each of our reporting units ranged from approximately 25% to 140%.

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.

We believe 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.

There have been no significant changes to our critical accounting policies and estimates during the three months ended March 30, 2025.

Quantitative and Qualitative Disclosures About Market Risk

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What changed 10-Q

Item 2. Management’s Discussion and Analysis