QuidelOrtho Corp 10-Q

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations In this Quarterly Report, all references to “we,” “our” and “us” refer to QuidelOrtho Corporation and its subsidiaries. Future Uncertainties and Forward-Looking Statements 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 statements located elsewhere herein regarding our commercial, integration and other strategic goals, our cost-savings and operational improvement initiatives, industry prospects, our expected results of operations or financial position, and other 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. Actual results or outcomes may differ significantly from those set forth or implied in the forward-looking statements. The following factors, among others, could cause actual results or outcomes to differ from those set forth or implied in the forward-looking statements: fluctuations in demand for our non-respiratory and respiratory products; supply chain, production, logistics, distribution and labor disruptions and challenges; the challenges and costs of integrating, restructuring and achieving anticipated synergies as a result of the Combinations or other acquisitions; failure to exercise the option to acquire or complete the proposed acquisition of LEX Diagnostics on the anticipated timeline, or at all, including risks and uncertainties related to LEX Diagnostics’ ability to secure FDA clearance and satisfy other customary closing conditions and provisions; inability to realize the anticipated benefits of acquisitions, debt refinancings, discontinuances of certain business operations (such as the Savanna Exit) or the Optimization Plan on our anticipated timelines, or at all; delays in the development of or failures or delays in the receipt of approvals for new or enhanced products; 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, investigations 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. All forward-looking statements are based on information currently available to us and speak only as of the date of this Quarterly Report. We undertake no obligation to update any of the forward-looking information or time-sensitive information included in this Quarterly Report, whether as a result of new information, future events, changed expectations or otherwise, except as required by law. Information Available on Our Website This Quarterly Report and each of our other periodic and current reports, including any amendments thereto, are available, free of charge, on our website, www.quidelortho.com, as soon as reasonably practicable after such material is electronically filed with or furnished to the SEC. From time to time, we may use our website as a channel of distribution of material information related to the Company. Financial and other material information regarding the Company is routinely posted on and accessible at https://ir.quidelortho.com/. The information contained on or connected to our website is not deemed to be incorporated by reference into this Quarterly Report or filed with or furnished to the SEC and should not be considered part of this Quarterly Report. Overview Our vision is to advance diagnostics to power a healthier future. With our expertise in immunoassay and molecular testing, clinical chemistry and transfusion medicine, we aim to support clarity for clinicians and patients to help create better health outcomes. Our global infrastructure and commercial reach support our customers across more than 130 countries and territories with quality diagnostics, a broad test portfolio and market-leading service. We operate globally with manufacturing facilities in the U.S. and U.K. and with sales centers, administrative offices and warehouses located throughout the world. 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 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 $25.8 million and $85.6 million for the three and nine months ended 27 September 28, 2025, respectively, and $24.0 million and $75.0 million for the three and nine months ended September 29, 2024, respectively. For the nine months ended September 28, 2025, Total revenues decreased by 3% to $2,006.6 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 did not significantly impact our growth rate for the nine months ended September 28, 2025. Our revenues can be highly concentrated over a small number of products, including certain of our respiratory products. For the nine months ended September 28, 2025 and September 29, 2024, revenues related to our respiratory products accounted for 14% and 17% of our Total revenues, respectively. The respiratory product revenue included revenue related to COVID-19 of $26.9 million and $59.8 million for the three and nine months ended September 28, 2025, respectively, and $72.3 million and $141.4 million for the three and nine months ended September 29, 2024, respectively. Planned Wind-Down of U.S. Donor Screening Portfolio In February 2024, we initiated a wind-down plan to transition out of the U.S. 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. This wind-down will not affect any donor screening portfolio outside of the U.S. While our goal is to wind-down this U.S. donor screening portfolio, we will continue to support our existing customers and honor our contractual commitments. The winding down of the U.S. donor screening portfolio, as compared to the prior year periods, contributed to the decline in revenue with a margin lower than our overall margin. Refer to Item 1, “Financial Statements—Note 3. Revenue” for more information. The wind-down of our U.S. donor screening portfolio is expected to be substantially complete by the first half of 2026. Restructuring and Other Charges In the second quarter of 2025, we launched multi-year, enterprise-wide cost-reduction, strategic productivity and margin improvement initiatives (the “Optimization Plan”) that aim to (i) realign our costs with our long-term revenue expectations, (ii) drive operational efficiencies in manufacturing and distribution cost bases and (iii) support and align with our strategy to invest in key priorities. The cumulative pre-tax charges to be incurred by us to implement the Optimization Plan are expected to be approximately $100 million through 2027. The Optimization Plan is expected to deliver net cost savings of approximately $50 million to be achieved through 2027. The key initiatives of the Optimization Plan are: • Rationalization and consolidation of facilities to reduce operational costs, improve processes, and optimize resource allocation. • A structured approach to procurement to drive identified sourcing cost savings. • A distribution rationalization plan, mainly in EMEA, to streamline a complex corporate structure to reduce costs and improve efficiency. We continue to monitor our operations for cost-reduction, strategic productivity and margin improvement opportunities to streamline our operations globally and identify additional cost savings. We may expand our cost-reduction, strategic productivity and margin improvement initiatives in the future, the costs of which could be material. Additionally, in the second quarter of 2025, we announced a strategic refocusing of our Molecular Diagnostics business, including our plan to discontinue the development of the Savanna platform, which exit we expect to be substantially complete by the first half of 2027, and our intent to acquire LEX Diagnostics. Refer to Item 1, “Financial Statements—Note 14. Restructuring, Integration and Other Charges” for further details regarding these actions. Recent Macroeconomic Trends and Challenges In April 2025, the U.S. announced tariffs on imports from most countries, including significant tariffs on imports from the 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. goods. In addition, in recent months, the U.S. has announced potential new tariffs and related tariff actions affecting companies in the pharmaceutical and biotechnology industries, including a Section 232 national security investigation of imports of personal protective equipment, medical consumables, and medical equipment, including devices. These actions and the related rising political tensions could negatively impact global macroeconomic conditions and the stability of global financial markets. Currently, as a result of recently effected tariffs, we are incurring incremental costs of parts and materials that we use to produce products, as well as incremental costs to ship finished goods to customers. Although the Company plans to, and we have thus far, substantially offset such incremental costs through operating measures, including supply chain adjustments, current and future tariffs could have a material adverse effect on our business, financial condition and 28 results of operations, including through increased supply chain costs. While trade negotiations are ongoing and certain bilateral trade deals have been announced, there remains substantial uncertainty about the duration of existing tariffs, tariff levels, implementation of announced tariffs or imposition of additional tariffs, the potential implications of the Section 232 investigations, litigation challenging tariffs and whether additional tariffs or 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. Outlook 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. 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. 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. Seasonality Revenues from our respiratory products are subject to, and significantly affected by, the seasonal demands of the cold, flu and RSV seasons, which are typically more prevalent during the fall and winter. Historically, revenues from our influenza products have varied from year to year based, in large part, on the severity, length and timing of the onset of the cold, flu and RSV seasons. In addition, the SARS-CoV-2 virus may have similar seasonal demands and impacts on our revenues in the future. Results of Operations Revenues The following table compares Total revenues by business unit for the three and nine months ended September 28, 2025 and September 29, 2024: Three Months Ended Nine Months Ended (Dollars in millions) September 28, 2025 September 29, 2024 % Change September 28, 2025 September 29, 2024 % Change Labs $ 373.8 $ 356.0 5 % $ 1,116.5 $ 1,067.3 5 % Immunohematology (1) 142.0 131.9 8 % 402.8 385.6 4 % Donor Screening (1) 14.7 27.9 (47) % 40.8 95.4 (57) % Point of Care 164.6 205.7 (20) % 428.5 509.6 (16) % Molecular Diagnostics 4.8 5.6 (14) % 18.0 17.2 5 % Total revenues $ 699.9 $ 727.1 (4) % $ 2,006.6 $ 2,075.1 (3) % (1) As a result of the wind-down of the U.S. donor screening portfolio, the Transfusion Medicine business unit is shown in its two product categories: Immunohematology and Donor Screening. For the three months ended September 28, 2025, Total revenues decreased to $699.9 million from $727.1 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 8% compared to the prior year period, primarily due to reagent growth. Donor Screening revenue decreased 47% compared to the prior year period, primarily due to the wind-down of the U.S. donor screening business. Point of Care revenue decreased 20% 29 compared to the prior year period, primarily due to decreases in sales of QuickVue and Sofia SARS Antigen assays. Molecular Diagnostics revenue decreased slightly compared to the prior year period. Currency exchange rates had a favorable impact of approximately 90 basis points on our growth rate for the three months ended September 28, 2025. For the nine months ended September 28, 2025, Total revenues decreased to $2,006.6 million from $2,075.1 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 4% compared to the prior year period, primarily due to reagent growth. Donor Screening revenue decreased 57% compared to the prior year period, primarily due to the wind-down of the U.S. donor screening business. The Point of Care business unit contributed to revenue decline, driven by a decrease of $81.7 million, or 23% in sales of QuickVue SARS and Sofia SARS Antigen assays. Molecular Diagnostics revenue increased 5% compared to the prior year period, driven by higher Savanna revenue. Currency exchange rates did not significantly impact our growth rate for the nine months ended September 28, 2025. Cost of Sales, Excluding Amortization of Intangible Assets Cost of sales, excluding amortization of intangible assets, decreased to $364.3 million, or 52.1% of Total revenues, for the three months ended September 28, 2025, compared to $374.8 million, or 51.5% of Total revenues, for the three months ended September 29, 2024. The decrease in cost of sales, excluding amortization of intangible assets, was driven primarily by procurement-related cost-savings initiatives actioned in 2024. Cost of sales, excluding amortization of intangible assets, decreased to $1,052.8 million, or 52.5% of Total revenues, for the nine months ended September 28, 2025, compared to $1,114.7 million, or 53.7% of Total revenues, for the nine months ended September 29, 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 28, 2025 and September 29, 2024: Three Months Ended Nine Months Ended (Dollars in millions) September 28, 2025 % of Total Revenues September 29, 2024 % of Total Revenues September 28, 2025 % of Total Revenues September 29, 2024 % of Total Revenues Selling, marketing and administrative $ 186.9 26.7 % $ 186.4 25.6 % $ 551.9 27.5 % $ 579.3 27.9 % Research and development 41.5 5.9 % 55.9 7.7 % 140.4 7.0 % 171.4 8.3 % Amortization of intangible assets 47.7 6.8 % 51.9 7.1 % 143.6 7.2 % 155.5 7.5 % Restructuring, integration and other charges 39.6 5.7 % 36.8 5.1 % 234.6 11.7 % 90.3 4.4 % Goodwill impairment charge 700.7 N/M — N/M 700.7 N/M 1,743.9 N/M Asset impairment charge 9.7 N/M — N/M 9.7 N/M 56.9 N/M Other operating expenses 14.3 2.0 % 6.3 0.9 % 25.8 1.3 % 23.6 1.1 % * N/M - Not meaningful Selling, Marketing and Administrative Expenses Selling, marketing and administrative expenses for the three months ended September 28, 2025 increased by $0.5 million, or 0.3%, to $186.9 million from $186.4 million for the same period in the prior year. Selling, marketing and administrative expenses for the nine months ended September 28, 2025 decreased by $27.4 million, or 4.7%, to $551.9 million from $579.3 million for the same period in the prior year, primarily due to lower compensation costs related to cost-savings initiatives actioned in 2024 and lower outside services. Research and Development Expense Research and development expense for the three months ended September 28, 2025 decreased by $14.4 million, or 25.8%, to $41.5 million from $55.9 million for the same period in the prior year, primarily due to lower clinical costs. 30 Research and development expense for the nine months ended September 28, 2025 decreased by $31.0 million, or 18.1%, to $140.4 million from $171.4 million for the same period in the prior year, primarily due to lower clinical costs and compensation costs related to cost-savings initiatives actioned in 2024. Amortization of Intangible Assets Amortization of intangible assets was $47.7 million and $143.6 million for the three and nine months ended September 28, 2025, respectively, and $51.9 million and $155.5 million for the three and nine months ended September 29, 2024, respectively. The decreases were primarily driven by intangible assets that became fully amortized by the end of 2024. Restructuring, integration and other charges Restructuring, integration and other charges were $39.6 million and $234.6 million for the three and nine months ended September 28, 2025, respectively, and $36.8 million and $90.3 million for the three and nine months ended September 29, 2024, respectively. Refer to Item 1, “Financial Statements—Note 14. Restructuring, Integration and Other Charges” for more information. Goodwill Impairment Charge During the three months ended September 28, 2025, we recognized a non-cash goodwill impairment charge of $700.7 million for our reporting units. Refer to Item 1, “Financial Statements—Note 7. Goodwill and Intangible Assets, Net” for more information. We recognized a non-cash goodwill impairment charge of $1.7 billion for the nine months ended September 29, 2024. Asset Impairment Charge We recognized an impairment charge of $9.7 million as a result of the latest fair value assessment for the three and nine months ended September 28, 2025, and $56.9 million for the nine months ended September 29, 2024, related to the long-lived assets classified as assets held for sale. Other Operating Expenses Other operating expenses were $14.3 million and $25.8 million for the three and nine months ended September 28, 2025, respectively, and $6.3 million and $23.6 million for the three and nine months ended September 29, 2024, respectively. The increases were primarily driven by the legal accrual, partially offset by decreases related to profit sharing for our Joint Business. Refer to Item 1, “Financial Statements—Note 4. Segment and Geographic Information” and “—Note 10. Commitments and Contingencies” for more information on the legal accrual. Non-operating Expenses The following table summarizes non-operating expenses, net for the three and nine months ended September 28, 2025 and September 29, 2024: Three Months Ended Nine Months Ended (Dollars in millions) September 28, 2025 September 29, 2024 % Change September 28, 2025 September 29, 2024 % Change Interest expense, net $ 46.1 $ 42.9 7.5 % $ 126.6 $ 122.9 3.0 % Loss on extinguishment of debt 5.1 — N/M 5.1 — N/M Other expense, net 0.9 0.9 — % 10.7 7.2 48.6 % * N/M - Not meaningful Interest Expense, Net Interest expense, net was $46.1 million and $126.6 million for the three and nine months ended September 28, 2025, respectively, and $42.9 million and $122.9 million for the three and nine months ended September 29, 2024, respectively. Refer to Item 1, “Financial Statements—Note 8. Borrowings” for more information. Loss on Extinguishment of Debt Loss on extinguishment of debt was $5.1 million for the three and nine months ended September 28, 2025, and was related to the termination of the Prior Credit Agreement. Refer to Item 1, “Financial Statements—Note 8. Borrowings” for more information. 31 Other Expense, Net Other expense, net was $0.9 million and $10.7 million for the three and nine months ended September 28, 2025, respectively, and $0.9 million and $7.2 million for the three and nine months ended September 29, 2024, respectively. The increase for the nine months ended September 28, 2025 was primarily related to net foreign currency losses, partially offset by Prior Credit Agreement amendment fees in the prior year period. Income Taxes For the three months ended September 28, 2025, we recognized an income tax benefit of $23.9 million in relation to loss before income taxes of $756.9 million, resulting in an effective tax rate of 3.2%. 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 September 28, 2025, 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 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 nine months ended September 28, 2025, we recognized a provision for income taxes of $5.8 million in relation to loss before income taxes of $995.3 million, resulting in a negative effective tax rate of 0.6%. 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 September 28, 2025, the effective tax rate differed from the U.S. federal statutory rate primarily due to goodwill impairment charges that were nondeductible for tax purposes and the impacts of operating losses in certain subsidiaries not being benefited due to the establishment of valuation allowances. For the nine months ended September 29, 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. On July 4, 2025, the OBBBA was enacted in the U.S. The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. Our results for the nine months ended September 28, 2025 include the impacts of OBBBA on our Consolidated Financial Statements. Segment Results We operate under three geographically-based reportable segments: North America, EMEA and China. 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: • Total revenues — This measure is discussed in the section entitled “Results of Operations.” • Adjusted EBITDA — Adjusted EBITDA by reportable segment is used by our management to measure and evaluate the internal operating performance of our reportable segments. It is also the basis for calculating certain management incentive compensation programs. 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) provision for 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. Segment and Geographic Information” for a reconciliation of Adjusted EBITDA by reportable segment to Loss before income taxes. 32 North America Total revenues and Adjusted EBITDA for North America were as follows: Three Months Ended Nine Months Ended (Dollars in millions) September 28, 2025 September 29, 2024 % Change September 28, 2025 September 29, 2024 % Change Total revenues $ 381.4 $ 436.2 (13) % $ 1,098.8 $ 1,220.2 (10) % Adjusted EBITDA $ 210.8 $ 248.0 (15) % $ 604.8 $ 670.2 (10) % Total revenues were $381.4 million for the three months ended September 28, 2025, compared to $436.2 million for the three months ended September 29, 2024. The decrease was primarily driven by decreases in sales of QuickVue and Sofia SARS Antigen assays and the wind-down of the U.S. donor screening business. Total revenues were $1,098.8 million for the nine months ended September 28, 2025, compared to $1,220.2 million for the nine months ended September 29, 2024. The decrease was primarily driven by decreases in sales of QuickVue and Sofia SARS Antigen assays and the wind-down of the U.S. donor screening business, partially offset by an increase in Labs revenues. Adjusted EBITDA was $210.8 million for the three months ended September 28, 2025, compared to $248.0 million for the three months ended September 29, 2024. The decrease was primarily driven by decreases in sales of QuickVue and Sofia SARS Antigen assays and the wind-down of the U.S. donor screening business. Adjusted EBITDA was $604.8 million for the nine months ended September 28, 2025, compared to $670.2 million for the nine months ended September 29, 2024. The decrease was primarily driven by decreases in sales of QuickVue and Sofia SARS Antigen assays and the wind-down of the U.S. donor screening business, partially offset by an increase in Labs revenues and lower operating expenses due to cost-savings initiatives. EMEA Total revenues and Adjusted EBITDA for EMEA were as follows: Three Months Ended Nine Months Ended (Dollars in millions) September 28, 2025 September 29, 2024 % Change September 28, 2025 September 29, 2024 % Change Total revenues $ 91.8 $ 84.0 9 % $ 268.0 $ 249.9 7 % Adjusted EBITDA $ 24.4 $ 12.9 89 % $ 59.2 $ 36.6 62 % Total revenues were $91.8 million for the three months ended September 28, 2025, compared to $84.0 million for the three months ended September 29, 2024, primarily driven by an increase in Immunohematology revenues. Total revenues were $268.0 million for the nine months ended September 28, 2025, compared to $249.9 million for the nine months ended September 29, 2024, primarily driven by increases in Immunohematology and Point of Care revenues. Adjusted EBITDA was $24.4 million for the three months ended September 28, 2025, compared to $12.9 million for the three months ended September 29, 2024. The increase was primarily driven by an increase in revenues, product mix and lower operating expenses. Adjusted EBITDA was $59.2 million for the nine months ended September 28, 2025, compared to $36.6 million for the nine months ended September 29, 2024, primarily driven by increases in revenues and lower distribution costs and other operating expenses due to cost-savings initiatives. China Total revenues and Adjusted EBITDA for China were as follows: Three Months Ended Nine Months Ended (Dollars in millions) September 28, 2025 September 29, 2024 % Change September 28, 2025 September 29, 2024 % Change Total revenues $ 84.6 $ 80.4 5 % $ 243.0 $ 238.1 2 % Adjusted EBITDA $ 36.8 $ 36.8 — % $ 108.2 $ 98.6 10 % Total revenues were $84.6 million for the three months ended September 28, 2025, compared to $80.4 million for the three months ended September 29, 2024, driven by an increase of 7% in Labs revenues. 33 Total revenues were $243.0 million for the nine months ended September 28, 2025, compared to $238.1 million for the nine months ended September 29, 2024, driven by an increase of 6% in Labs revenues, partially offset by a decrease in Point of Care revenues. Adjusted EBITDA was $36.8 million for both the three months ended September 28, 2025 and September 29, 2024, primarily driven by higher Labs revenues offset by the impact from changes in product mix. Adjusted EBITDA was $108.2 million for the nine months ended September 28, 2025, compared to $98.6 million for the nine months ended September 29, 2024. The increase was primarily driven by higher Labs revenues and the impact from changes in product mix. Other Total revenues and Adjusted EBITDA for Other were as follows: Three Months Ended Nine Months Ended (Dollars in millions) September 28, 2025 September 29, 2024 % Change September 28, 2025 September 29, 2024 % Change Total revenues $ 142.1 $ 126.5 12 % $ 396.8 $ 366.9 8 % Adjusted EBITDA $ 44.2 $ 32.4 36 % $ 111.7 $ 97.9 14 % Total revenues were $142.1 million for the three months ended September 28, 2025, compared to $126.5 million for the three months ended September 29, 2024, primarily driven by an increase in Labs revenues. Total revenues were $396.8 million for the nine months ended September 28, 2025, compared to $366.9 million for the nine months ended September 29, 2024, primarily driven by an increase in Labs revenues. Adjusted EBITDA was $44.2 million for the three months ended September 28, 2025, compared to $32.4 million for the three months ended September 29, 2024. The increase was primarily driven by an increase in Labs revenues and the impact from changes in product mix. Adjusted EBITDA was $111.7 million for the nine months ended September 28, 2025, compared to $97.9 million for the nine months ended September 29, 2024, primarily driven by an increase in Labs revenues and the impact from changes in product mix. Liquidity and Capital Resources As of September 28, 2025 and December 29, 2024, our principal sources of liquidity consisted of the following: (In millions) September 28, 2025 December 29, 2024 Cash and cash equivalents $ 98.1 $ 98.3 Amount available to borrow under the Revolving Credit Facility $ 587.2 $ 589.0 Working capital including cash and cash equivalents $ 598.8 $ 220.1 As of September 28, 2025, we had $98.1 million in Cash and cash equivalents, a $0.2 million decrease 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, restructuring and business development activities. We believe our organizational structure allows us the necessary flexibility to move funds throughout our subsidiaries to meet our operational working capital needs. Debt Capitalization On August 21, 2025, we entered into the Credit Agreement by and among us, as borrower, Bank of America, and the other lenders and L/C issuers party thereto. Pursuant to the Credit Agreement, the Lenders provided us with (i) a $1.15 billion Term Loan A, (ii) a $100.0 million DDTL Term Loan A, (iii) a $1.45 billion Term Loan B and (iv) a $700.0 million Revolving Credit Facility. The Financing is guaranteed by certain of our material domestic subsidiaries and is secured by liens on substantially all of our assets and the Guarantors’ assets, excluding real property and certain other types of excluded assets. Loans under the Credit Agreement will bear interest at a rate equal to the Term SOFR, plus the Applicable Rate, or Base Rate, plus the Applicable Rate (each as defined in the Credit Agreement). On the Closing Date, we borrowed the entire amount of the Term Loan A and the Term Loan B, and the effective interest rates as of September 28, 2025 were 6.86% and 8.43%, respectively. 34 We used the proceeds of the Term Loan A and the Term Loan B, along with its cash on hand, to (i) repay the remaining $2,213.9 million and $490.0 million owed under the previous term loan and previous revolving credit facility, respectively, under the Prior Credit Agreement, which was terminated upon such repayment, including principal, accrued interest and outstanding fees and (ii) pay the fees and expenses incurred in connection with the Financing. Availability under the Revolving Credit Facility, after deducting letters of credit of $12.8 million and $100.0 million borrowings outstanding, were $587.2 million as of September 28, 2025. The Term Loans are subject to quarterly amortization at a quarterly rate of 1.25% and 0.25% of the aggregate initial principal amount of the Term A Loan and the Term B loan, respectively, as are set forth in the Credit Agreement. The Term Loan A Facilities and the Revolving Credit Facility will mature on August 21, 2030, and the Term Loan B will mature on August 21, 2032. The Company must prepay loans outstanding under the Credit Agreement in an amount equal to the Net Cash Proceeds (as defined in the Credit Agreement) from (i) certain property dispositions and (ii) the receipt of certain other amounts not in the ordinary course of business, such as certain insurance proceeds and condemnation awards, in each case, if not reinvested within a specified time period as contemplated in the Credit Agreement. The Credit Agreement contains affirmative and negative covenants that are customary for credit agreements of this nature. The negative covenants include, among other matters, 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 each fiscal quarter in the first three years following the Closing Date and (b) 4.25 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. We were in compliance with the financial covenants as of September 28, 2025. Capital Expenditures Capital expenditures, including investments, were $136.4 million for the nine months ended September 28, 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 28, 2025 September 29, 2024 Net cash (used for) provided by operating activities $ (26.7) $ 19.3 Net cash used for investing activities (143.1) (112.0) Net cash provided by financing activities 166.9 117.7 Effect of exchange rates on cash 2.5 (0.5) Net (decrease) increase in cash, cash equivalents and restricted cash $ (0.4) $ 24.5 Nine Months Ended September 28, 2025 Cash used for operating activities was $26.7 million for the nine months ended September 28, 2025 and reflected a net loss of $1,001.1 million and non-cash adjustments of $1,229.3 million, primarily associated with a goodwill impairment charge, depreciation and amortization, stock-based compensation expense, and asset write off related to restructuring, integration and other charges, partially offset by $141.7 million in cash outflows for inventories. Cash used for investing activities of $143.1 million for the nine months ended September 28, 2025 was primarily related to purchases of property, plant, equipment, investments and intangibles. Cash provided by financing activities was $166.9 million for the nine months ended September 28, 2025 and was primarily related to proceeds from long-term borrowings, net of discount and debt issuance costs of $2,546.2 million, offset by payments on long-term borrowings of $2,287.6 million and net payments from the Revolving Credit Facility of $98.0 million. 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. 35 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. 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. Liquidity Outlook Short-term Liquidity Outlook Our primary source of liquidity, other than our holdings of Cash and cash equivalents, has been cash flows from operations. Cash generated from operations provides us with the financial flexibility we need to meet normal operating, investing and financing needs. We anticipate that our current Cash and cash equivalents, together with cash provided by operating activities and amounts available under our Revolving Credit Facility, will be sufficient to fund our near-term capital and operating needs for at least the next 12 months. Normal operating needs include the planned costs to operate our business, including amounts required to fund working capital, R&D and capital expenditures. Our primary short-term needs for capital, which are subject to change, include expenditures related to: • interest on and repayments of our long-term borrowings and lease obligations; • acquisitions of property, equipment and other fixed assets in support of our manufacturing facility expansions; • the continued advancement of R&D efforts; • our integration of the Ortho business arising from the Combinations; • support of commercialization efforts related to our current and future products, including support of our direct sales force and field support resources; and • potential strategic acquisitions and investments. Due to the risks inherent in the product development process, we are unable to estimate with meaningful certainty the costs we will incur in the continued development of our product candidates for commercialization. Our R&D costs may be substantial as we move product candidates into preclinical and clinical trials and advance our existing product candidates into later stages of development. The primary purposes of our capital expenditures are to invest in manufacturing capacity expansion, acquire certain of our instruments, acquire scientific equipment, purchase or develop IT and implement facility improvements. We plan to fund the capital expenditures with the cash on our balance sheet. We are focused on expanding the number of instruments placed in the field and solidifying long-term contractual relationships with customers. In order to achieve this goal, in certain jurisdictions where it is permitted, we have leveraged a reagent rental model that has been recognized as more attractive to certain customers. In this model, we lease, rather than sell, instruments to our customers. Over the term of the contract, the purchase price of the instrument is embedded in the price of the assays and reagents. 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, 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. 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 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 with revenue growth; • competing technological and market developments; and • our entry into strategic collaborations with other companies or acquisitions of other companies or technologies to enhance or complement our product and service offerings. 36 Recent Accounting Pronouncements Information about recent accounting pronouncements is included in Item 1, “Financial Statements—Note 1. Summary of Significant Accounting Policies.” Critical Accounting Estimates Our discussion and analysis of our financial condition and results of operations are based on our Consolidated Financial Statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities and the reported amounts of revenues and expenses. Our critical accounting estimates are those that significantly affect our financial condition and results of operations and require the most difficult, subjective or complex judgments, often because of the need to make estimates about the effect of matters that are inherently uncertain. Because of this uncertainty, actual results may vary from these estimates. 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 28, 2025: Goodwill Impairment During the third quarter of 2025, we concluded that the sustained decline in our stock price and market capitalization was a triggering event requiring an interim goodwill impairment assessment for all reporting units. Based on our interim goodwill impairment assessment in the third quarter of 2025, we concluded that the EMEA, China and Latin America reporting unit’s carrying values exceeded their respective fair values. As a result, we recorded a non-cash goodwill impairment charge of $614.8 million, $68.1 million and $17.8 million in the third quarter of 2025 for the EMEA, China, and Latin America reporting units, respectively, which represented a full impairment of the goodwill allocated to these reporting units. The quantitative goodwill 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. ITEM 3. Quantitative and Qualitative Disclosures About Market Risk There has been no material change in our exposure to market risk from that described in “Item 7A. Quantitative and Qualitative Disclosures About Market Risk” in our Annual Report.