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Item 7. Management’s Discussion and Analysis

2026-02-19 compared with 2025-02-27 · 193 added, 161 removed, 252 unchanged (58% of the section changed)

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This discussion should be read in conjunction with the section entitled “Future Uncertainties and Forward-Looking Statements” on page 4 and the “Risk Factors” starting on page 26 of this Annual Report.

In addition, our discussion of QuidelOrtho’s financial condition and results of operation

s in this Item 7 should be read in conjunction with our Consolidated Financial Statements and the related Notes included elsewhere in this Annual Report.

In addition, our discussion of QuidelOrtho’s financial condition

and results of operations in this Item 7 should be read in conjunction with our Consolidated Financial Statements and the related Notes included elsewhere in this Annual Report.

Our vision is to advance diagnostics to power a healthier future.

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Our global infrastructure and commercial reach support our customers across more than 140 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 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 (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:

We operate globally with manufacturing facilities in the U.S., U.K.

and China and with sales centers, administrative offices and warehouses located throughout the world.

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 $112.9 million, $94.2 million and $125.0 million for fiscal years ended 2025, 2024 and 2023, respectively.

On May 27, 2022, pursuant to the BCA, Quidel and Ortho consummated the Combinations and each of Quidel and Ortho became a wholly owned subsidiary of QuidelOrtho.

Our Consolidated Financial Statements for fiscal years ended 2024 and 2023 each include a full year of Ortho operations.

For additional information about the Combinations, refer to Part II, Item 8, “Financial Statements and Supplementary Data—Note 2.

Business Combination.”

For fiscal year ended 2025, Total revenues decreased by 2% to $2,730.2 million as compared to the prior year.

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These decreases were primarily driven by variability of our U.S.

respiratory products.

Currency exchange rates had an unfavorable impact of approximately 60 basis points and 100 basis points on our growth rates for fiscal years ended 2024 and 2023, respectively.

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 fiscal year ended 2025.

Currency exchange rates had an unfavorable impact of approximately 60 basis points on our growth rate for fiscal year ended 2024.

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

For fiscal years ended 2025, 2024 and 2023, revenues related to our respiratory products accounted for approximately 15%, 18% and 24% of our Total revenues, respectively .

Planned Wind-Down of U.S.

The respiratory products revenue included revenue related to COVID-19 of $80.2 million, $184.9 million and $409.1 million for fiscal years ended 2025, 2024 and 2023, respectively.

Wind-Down of U.S.

Donor Screening Portfolio

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donor screening portfolio.

Specifically, we plan to wind-down only the VIP platform and microplate assays, which are only sold in the U.S.

Specifically, we are winding-down the VIP 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.

While we 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 prior years, contributed to the decline in revenue with a margin lower than our overall margin.

donor screening portfolio, as compared to the prior years, contributed to the decline in revenue with a margin lower than our overall margin.

Refer to Part II, Item 8, “Financial Statements and Supplementary Data—Note 3.

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The wind-down of our U.S.

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

Supply Chains

We obtain raw materials from reputable outside suppliers and believe our business relationships with them are good.

Some of our raw materials are available from a limited number of sources.

While we encountered increasing pressures on raw material pricing during fiscal years ended 2023 and 2022, inflationary impacts during fiscal year ended 2024 lessened and returned closer to pre-COVID-19 pandemic levels.

To help mitigate these supply chain challenges, we (i) partner with suppliers to invest in additional capacity and raw material inventory, (ii) diversify our supply base, where possible, to minimize reliance on a single source of supply for key raw materials and components, (iii) create redundancy in our global supply chain and (iv) insource activity where it makes strategic and financial sense.

In addition, we routinely evaluate our supply chain for potential gaps and continue to take other steps intended to help address continuity.

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.

Demand for our respiratory products, which includes our COVID-19 products, declined in 2024 compared to 2023 due to the decreased occurrence and duration of COVID-19 in an endemic environment and a COVID-19 government award in 2023 that

did not occur in 2024.

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.

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 Part II, Item 8, “Financial Statements and Supplementary Data—Note 17.

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.

In addition, 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 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.

Demand for our respiratory products, which includes our COVID-19 products, declined in 2025 compared to 2024 due to the continued decreased occurrence, severity and duration of COVID-19 in an endemic environment.

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 demands of the respiratory season, which are variable and typically more prevalent during the fall and winter.

A recent research report was issued regarding the potential for the adoption of a dry chemistry VBP program in the Jiangxi province of China.

At this time, we have no indication that such a program will be implemented or if our products would be included in such a program.

Should this occur, we would seek to implement remediation efforts to offset potential costs.

Based on current information, we believe that any potential business impact would likely be insignificant to our total annualized revenue.

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.

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 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.

Results of Operations

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Fiscal Year Ended

(Dollars in millions) 2024 2023 2022 % Change

(Dollars in millions) 2025 2024 (1)

% Change 2024 vs.

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Total revenues $ 2,730.2 $ 2,782.9 $ 2,997.8 (2) % (7) %

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

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

(1) Certain reclassifications have been made to prior period amounts to conform to the current period presentation.

(2) 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.

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

For fiscal year ended 2025, Total revenues decreased to $2,730.2 million from $2,782.9 million for the prior year.

Labs revenue increased 6% compared to the prior year, 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, primarily due to reagent growth.

Donor Screening revenue decreased 54% compared to the prior year, primarily due to the wind-down of the U.S.

donor screening business.

Point of Care revenue decreased 13% compared to the prior year, primarily due to decreases in sales of QUICKVUE SARS and SOFIA SARS Antigen assays.

Molecular Diagnostics revenue increased 10% compared to the prior year, driven by higher SAVANNA revenue.

Currency exchange rates did not significantly impact our growth rate for fiscal year ended 2025.

For fiscal year ended 2024, Total revenues decreased to $2,782.9 million from $2,997.8 million for the prior year.

The increase in Labs revenue was primarily related to growth in reagents, consumables and services, partially offset by decreased COVID-19 and non-core revenue compared to the prior year.

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

Donor Screening revenue decreased 15% compared to the prior year period, primarily due to the wind-down of the U.S.

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

Donor Screening revenue decreased 15% compared to the prior year, 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 $188.6 million in sales of QuickVue SARS Antigen assays, primarily due to a COVID-19 government award in the prior year period, and a decrease of $5.8 million in sales of Sofia SARS Antigen assays.

The Point of Care business unit contributed to revenue decline, driven by a decrease of $188.6 million in sales of QUICKVUE SARS Antigen assays, primarily due to a COVID-19 government award in the prior year, and a decrease of $5.8 million in sales of SOFIA SARS Antigen assays.

Molecular Diagnostics sales decreased by $7.7 million, primarily driven by lower demand.

Currency exchange rates had an unfavorable impact of approximately 60 basis points on the growth rate for fiscal year ended 2024.

For fiscal year ended 2023, Total revenues decreased to $2,997.8 million from $3,266.0 million for the prior year.

The increases in Labs, Immunohematology and Donor Screening revenues were primarily related to incremental revenues from the Combinations.

Additionally, the increase in Labs revenue included a $19.2 million settlement award from a third party related to one of our collaboration agreements.

The Point of Care business unit contributed to revenue decline, driven by decreases of $846.0 million in sales of QuickVue SARS Antigen assays and $219.1 million in sales of Sofia SARS Antigen assays.

Molecular Diagnostics revenue decreased by $65.0 million, primarily driven by lower demand for the Lyra SARS Antigen assay due to the end of the public health emergency in the U.S.

Currency exchange rates had an unfavorable impact of approximately 100 basis points on the growth rate for fiscal year ended 2023.

Currency exchange rates had an unfavorable impact of approximately 60 basis points on our growth rate for fiscal year ended 2024.

Cost of Sales, Excluding Amortization of Intangible Assets

Cost of sales, excluding amortization of intangible assets, was $1,456.0 million, or 53.3% of Total revenues, for fiscal year ended 2025, compared to $1,496.4 million, or 53.8% of Total revenues, for fiscal year ended 2024.

The increase in cost of sales, excluding amortization of intangible assets as a percentage of revenue, was driven primarily by product mix, partially offset by a prior year period COVID-19 government award, along with the corresponding inventory reserve release of $39 million.

Cost of sales, excluding amortization of intangible assets, increased to $1,500.7 million, or 50.1% of Total revenues, for fiscal year ended 2023, compared to $1,329.8 million, or 40.7% of Total revenues, for fiscal year ended 2022.

The increase in cost of sales, excluding amortization of intangible assets as a percentage of revenue, was primarily driven by incremental revenues in the Labs, Immunohematology and Donor Screening business units as a result of the Combinations and a decrease in sales of respiratory products.

We also recorded $60.6 million of expense related to the unwind of the inventory fair value adjustment related to the Combinations during fiscal year ended 2022.

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

Cost of sales, excluding amortization of intangible assets, was $1,496.4 million, or 53.8% of Total revenues, for fiscal year ended 2024, compared to $1,500.7 million, or 50.1% of Total revenues, for fiscal year ended 2023.

The increase in cost of sales, excluding amortization of intangible assets as a percentage of revenue, was driven primarily by product mix, partially offset by a prior year COVID-19 government award, along with the corresponding inventory reserve release of $39 million.

Operating Expenses

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Amortization of intangible assets 189.2 6.9 % 203.4 7.3 % 204.8 6.8 %

Acquisition and integration costs 127.2 4.6 % 113.4 3.8 % 136.0 4.2 %

Restructuring, integration and other charges 263.6 9.7 % 127.2 4.6 % 113.4 3.8 %

Goodwill impairment charge 700.7 N/M 1,822.6 N/M — N/M

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Selling, Marketing and Administrative Expenses

Selling, marketing and administrative expenses for fiscal year ended 2025 decreased by $20.5 million, or 2.7%, to $746.3 million from $766.8 million for the prior year, primarily due to lower costs of outside services and lower compensation costs related to cost-savings initiatives actioned in 2024.

Selling, marketing and administrative expenses for fiscal year ended 2024 increased by $3.6 million, or 0.5%, to $766.8 million from $763.2 million for the prior year, primarily due to higher incentive-based employee compensation costs, partially offset by compensation costs related to cost-savings initiatives and lower advertising costs.

Selling, marketing and administrative expenses for fiscal year ended 2023 increased by $142.2 million, or 22.9%, to $763.2 million from $621.0 million for the prior year, primarily due to the incremental impact of the Combinations, partially offset by freight expense due to lower sales and shipment volume and lower employee compensation costs.

Research and Development Expense

Research and development expense for fiscal year ended 2025 decreased by $32.5 million, or 14.9%, to $186.2 million from $218.7 million for the prior year, primarily due to lower third-party material and outside service spend, compensation costs and clinical costs related to cost-savings initiatives actioned in 2024.

Research and development expense for fiscal year ended 2024 decreased by $26.3 million, or 10.7%, to $218.7 million from $245.0 million for the prior year, primarily due to lower employee compensation costs and costs of outside services.

Research and development expense for fiscal year ended 2023 increased by $57.1 million, or 30.4%, to $245.0 million from $187.9 million for the prior year, primarily due to the incremental impact of the Combinations, as well as increased costs related to the development of Savanna, QuickVue OTC assays and Sofia products.

Amortization of Intangible Assets

Amortization of intangible assets for fiscal years ended 2025, 2024 and 2023 was $189.2 million, $203.4 million and $204.8 million, respectively.

The increase in amortization expense in fiscal year ended 2023 compared to fiscal year ended 2022 was primarily due to the Combinations.

Acquisition and Integration Costs

Acquisition and integration costs were $127.2 million, $113.4 million and $136.0 million for fiscal years ended 2024, 2023 and 2022, respectively.

The increase in costs in fiscal year ended 2024 compared to fiscal year ended 2023 was primarily due to employee compensation related charges and consulting costs.

The decrease in costs in fiscal year ended 2023 compared to fiscal

year ended 2022 was primarily due to acquisition costs attributable to the Combinations, partially offset by higher integration-related costs.

The decrease in amortization expense in fiscal year ended 2025 compared to fiscal year ended 2024 was 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 $263.6 million, $127.2 million and $113.4 million for fiscal years ended 2025, 2024 and 2023, respectively.

The increase in costs in fiscal year ended 2025 compared to fiscal year ended 2024 was primarily driven by restructuring and other charges.

The increase in costs in fiscal year ended 2024 compared to fiscal year ended 2023 was primarily due to integration charges related to employee compensation and consulting costs.

Refer to Part II, Item 8, “Financial Statements and Supplementary Data—Note 17.

Restructuring, Integration and Other Charges” for more information.

Goodwill Impairment Charge

During fiscal year ended 2024, we recognized a non-cash goodwill impairment charge of $1.8 billion.

During fiscal years ended 2025 and 2024, we recognized non-cash goodwill impairment charges of $700.7 million and $1.8 billion, respectively.

Refer to Part II, Item 8, “Financial Statements and Supplementary Data—Note 8.

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Asset Impairment Charge

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

Refer to Part II, Item 8, “Financial Statements and Supplementary Data—Note 8.

During fiscal years ended 2025 and 2024, we recognized impairment charges of $9.7 million and $56.9 million, respectively, related to the long-lived assets classified as assets held for sale.

Refer to Part II, Item 8, “Financial Statements and

Supplementary Data—Note 7.

Assets Held for Sale” for more information.

Asset impairment charges were $4.5 million and $2.8 million for fiscal years ended 2023 and 2022, respectively.

Asset impairment charge was $4.5 million for fiscal year ended 2023.

Other Operating Expenses

Other operating expenses were $51.8 million, $27.1 million and $12.3 million for fiscal years ended 2024, 2023 and 2022, respectively, which were primarily related to the profit share expense for our Joint Business with Grifols and, in fiscal year ended 2024, a $20.0 million write off of the tax assessment refund.

Other operating expenses were $97.7 million, $51.8 million and $27.1 million for fiscal years ended 2025, 2024 and 2023, respectively.

The increase in costs in fiscal year ended 2025 compared to fiscal year ended 2024 was primarily related to (i) the contract termination cost of $65 million and (ii) the legal accrual in connection with the resolution of a contractual dispute, partially offset by (iii) a $20.0 million write off of the tax assessment refund in fiscal year ended 2024 and (iv) decline in profit sharing expense for our Joint Business.

The increase in costs in fiscal year ended 2024 compared to fiscal year ended 2023 was primarily related to the $20.0 million write off of the tax assessment refund.

Refer to Part II, Item 8, “Financial Statements and Supplementary Data—Note 3.

Revenue” for information related to the contract termination cost and —Note 4.

Segment and Geographic Information” for more information.

Non-operating Expenses

The following table summarizes non-operating expenses, net for fiscal years ended 2025, 2024 and 2023:

Fiscal Year Ended

(Dollars in millions) 2025 2024 2023 % Change

% Change 2024 vs.

Interest expense, net $ 177.6 $ 163.5 $ 147.6 8.6 % 10.8 %

Loss on extinguishment of debt 5.1 — — N/M N/M

Other expense, net 5.8 7.1 20.6 (18.3) % (65.5) %

* N/M - Not meaningful

Interest Expense, Net

Interest expense, net was $177.6 million, $163.5 million and $147.6 million for fiscal years ended 2025, 2024 and 2023, respectively.

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Loss on Extinguishment of Debt

Loss on extinguishment of debt was $24.0 million for fiscal year ended 2022, and was related to the satisfaction and discharge of the senior notes and termination of the former term loans and revolving credit facility of Ortho, which occurred in connection with the consummation of the Combinations.

Loss on extinguishment of debt was $5.1 million for fiscal year ended 2025, and was related to the termination of the Prior Credit Agreement.

Refer to Part II, Item 8, “Financial Statements and Supplementary Data—Note 9.

Borrowings” for more information.

Other Expense, Net

Other expense, net was $5.8 million, $7.1 million and $20.6 million for fiscal years ended 2025, 2024 and 2023, respectively.

The decrease in Other expense, net in fiscal year ended 2025 compared to fiscal year ended 2024 was primarily related to Prior Credit Agreement amendment fees in the prior year, partially offset by net foreign currency losses.

The decrease in Other expense, net in fiscal year ended 2024 compared to fiscal year ended 2023 was primarily related to (i) a prior year release of tax reserves upon the settlement of certain U.S.

federal tax matters, with an offsetting benefit recorded to income tax expense, and (ii) Credit Agreement amendment fees, partially offset by loss on investments in the prior year period.

The increase in Other expense, net in fiscal year ended 2023 compared to fiscal year ended 2022 was primarily related to (i) the release of tax reserves upon the settlement of certain U.S.

federal tax matters, with an offsetting benefit recorded to income tax expense and (ii) net foreign currency losses.

federal tax matters, with an offsetting benefit recorded to income tax expense, and (ii) Prior Credit Agreement amendment fees, partially offset by loss on investments in the prior year.

Refer to Part II, Item 8, “Financial Statements and Supplementary Data—Note 5.

Income Taxes” for more information.

For fiscal years ended 2024 and 2023, we recognized income tax benefits of $79.5 million in relation to loss before taxes of $2,131.5 million and $19.0 million in relation to loss before taxes of $29.1 million, resulting in effective tax rates of 3.7% and 65.3%, respectively.

For fiscal year ended 2024, the effective tax rate differed from the U.S.

For fiscal years ended 2025 and 2024, we recognized income tax expense of $24.1 million in relation to loss before taxes of $1,107.7 million and an income tax benefit of $79.5 million in relation to loss before taxes of $2,131.5 million, resulting in effective tax rates of (2.2)% and 3.7%, respectively.

For fiscal years ended 2025 and 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.

We recognized an income tax benefit of $79.5 million, resulting in an effective tax rate of 3.7% for fiscal year ended 2024, compared to an income tax benefit of $19.0 million, resulting in an effective tax rate of 65.3% for fiscal year ended 2023.

For fiscal year ended 2023, the effective tax rate differed from the U.S.

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federal reserves for uncertain tax positions due to settlement of certain tax matters partially offset by net operating losses in certain subsidiaries not being benefited due to the establishment of valuation allowances and Global Intangible Low-Taxed Income.

We recognized an income tax benefit of $19.0 million, resulting in an effective tax rate of 65.3% for fiscal year ended 2023, compared to an income tax provision of $187.2 million, resulting in an effective tax rate of 25.4% for fiscal year ended 2022.

For fiscal year ended 2022, the effective tax rate differed from the U.S.

federal statutory rate, primarily due to income taxes owed in certain U.S.

states, foreign income taxed at rates other than the applicable U.S.

rate, and the deduction for foreign derived intangible income.

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 fiscal year ended 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 (Japan and Asia Pacific) 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.

We operate under five geographically-based reportable segments:

North America, EMEA, China, JPAC and Latin America.

Beginning in the fourth quarter of 2025, we determined that the JPAC segment, previously included in “Other,” meets the quantitative thresholds for separate reporting under ASC 280.

This determination was based on JPAC’s segment revenue exceeding 10% of the combined reported segment revenue.

As Latin America is the only remaining immaterial operating segment, results are reported separately.

This change in segment reporting did not have an impact on our previously reported Consolidated Financial Statements.

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

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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) income 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) income 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 Part II, Item 8, “Financial Statements and Supplementary Data—Note 4.

Segment and Geographic Information” for a reconciliation of Adjusted EBITDA by reportable segment to (Loss) income before income taxes.

Segment and Geographic Information” for a reconciliation of Adjusted EBITDA by reportable segment to Loss before income taxes.

North America

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(Dollars in millions) 2025 2024 2023 % Change

% Change 2023 vs.

Total revenues $ 1,488.9 $ 1,619.8 $ 1,877.1 (8) % (14) %

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Total revenues were $1,488.9 million for fiscal year ended 2025, compared to $1,619.8 million for fiscal year ended 2024.

The decrease was primarily driven by (i) a decrease in Point of Care revenue, primarily due to a COVID-19 government award in the prior year period, (ii) the wind-down of the U.S.

donor screening business and (iii) the settlement award from a third party related to one of our collaboration agreements in the prior year period.

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.

Total revenues wer e $1,619.8 million for fiscal year ended 2024, compared to $1,877.1 million for fiscal year ended 2023.

The decrease was primarily driven by lower demand for QuickVue and Sofia SARS Antigen assays, partially offset by incremental revenues of $433.8 million from the Combinations.

The decrease was primarily driven by (i) a decrease in Point of Care revenues, primarily due to a COVID-19 government award in the prior year, (ii) the wind-down of the U.S.

donor screening business and (iii) the settlement award from a third party related to one of our collaboration agreements in the prior year.

Adjusted EBITDA was $807.0 million for fiscal year ended 2025, compared to $892.1 million for fiscal year ended 2024.

The decrease was primarily driven by (i) a COVID-19 government award in the prior year period, along with the corresponding inventory reserve release of $39 million, (ii) the wind-down of the U.S.

donor screening business and (iii) the settlement award from a third party related to one of our collaboration agreements in the prior year period, partially offset by a decrease in employee compensation costs and other operating expenses.

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.

Adjusted EBITDA was $892.1 million for fiscal year ended 2024, compared to $1,025.2 million for fiscal year ended 2023.

The decrease was primarily driven by lower demand for QuickVue and Sofia SARS Antigen assays, partially offset by decreased distribution costs and approximately $160 million of incremental impact of the Combinations.

The decrease was primarily driven by (i) a COVID-19 government award in the prior year, along with the corresponding inventory reserve release of $39 million, (ii) the wind-down of the U.S.

donor screening business and (iii) the settlement award from a third party related to one of our collaboration agreements in the prior year, partially offset by a decrease in employee compensation costs and other operating expenses.

Total revenues and Adjusted EBITDA for EMEA were as follows:

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(Dollars in millions) 2025 2024 2023 % Change

% Change 2023 vs.

Total revenues $ 360.7 $ 335.8 $ 327.3 7 % 3 %

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Total revenues were $335.8 million for fiscal year ended 2024, compared to $327.3 million for fiscal year ended 2023.

The increase was primarily driven by incremental revenues of $110.1 million from the Combinations, partially offset by a decrease in Point of Care revenue.

Adjusted EBITDA was $46.5 million for fiscal year ended 2024, compared to $41.0 million for fiscal year ended 2023.

The increase was primarily driven by increases in Immunohematology and Point of Care revenues.

Adjusted EBITDA was $82.6 million for fiscal year ended 2025, compared to $46.5 million for fiscal year ended 2024.

The increase was primarily driven by incremental revenues from the Combinations, partially offset by lower Point of Care revenue and increased selling and distribution costs.

The increase was primarily driven by increases in Immunohematology and Point of Care revenues, product mix and lower distribution and selling costs and other operating expenses due to cost-savings initiatives.

Adjusted EBITDA was $46.5 million for fiscal year ended 2024, compared to $41.0 million for fiscal year ended 2023.

The increase was primarily driven by increases in Immunohematology and Point of Care revenues.

Total revenues and Adjusted EBITDA for China were as follows:

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(Dollars in millions) 2025 2024 2023 % Change

% Change 2023 vs.

Total revenues $ 334.7 $ 325.0 $ 310.1 3 % 5 %

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Total revenues were $334.7 million for fiscal year ended 2025, compared to $325.0 million for fiscal year ended 2024.

The increase was primarily driven by an increase in Labs revenue, partially offset by a decrease in Point of Care revenue.

The increase was primarily driven by an increase of 5% in Labs revenues, partially offset by decreases in Donor Screening and Immunohematology revenues.

Total revenues were $325.0 million for fiscal year ended 2024, compared to $310.1 million for fiscal year ended 2023.

The increase was primarily driven by incremental revenues of $95.0 million from the Combinations, partially offset by lower Point of Care revenue, primarily related to decreased demand for QuickVue SARS Antigen assays.

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

Adjusted EBITDA was $141.2 million for fiscal year ended 2025, compared to $130.5 million for fiscal year ended 2024.

The increase was primarily driven by an increase in Labs revenue, partially offset by a decrease in Point of Care revenue and the impact from changes in product mix.

The increase was primarily driven by an increase in Labs revenues, partially offset by decreases in Donor Screening and Immunohematology revenues.

Adjusted EBITDA was $130.5 million for fiscal year ended 2024, compared to $127.2 million for fiscal year ended 2023.

The increase was primarily driven by approximately $29 million of incremental impact of the Combinations, partially offset by lower Point of Care revenue and a shift in product mix.

Total revenues and Adjusted EBITDA for Other were as follows:

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

Total revenues and Adjusted EBITDA for JPAC were as follows:

Fiscal Year Ended

(Dollars in millions) 2025 2024 2023 % Change

% Change 2023 vs.

Total revenues $ 293.0 $ 279.4 $ 272.7 5 % 2 %

Adjusted EBITDA $ 73.2 $ 69.9 $ 58.5 5 % 19 %

Total revenues w ere $502.3 million for fiscal year ended 2024, compared to $483.3 million for fiscal year ended 2023.

The increase was primarily driven by an increase in Labs revenue, partially offset by a decrease in Point of Care revenue.

Total revenues w ere $483.3 million for fiscal year ended 2023, compared to $302.7 million for fiscal year ended 2022.

The increase was primarily driven by incremental revenues of $177.1 million from the Combinations and higher Labs revenue, partially offset by lower Point of Care revenue.

Total revenues were $293.0 million for fiscal year ended 2025, compared to $279.4 million for fiscal year ended 2024.

The increase was primarily driven by increases in Labs and Immunohematology revenues.

Total revenues were $279.4 million for fiscal year ended 2024, compared to $272.7 million for fiscal year ended 2023.

The increase was primarily driven by an increase in Labs revenues, partially offset by a decrease in Immunohematology revenues.

Adjusted EBITDA was $73.2 million for fiscal year ended 2025, compared to $69.9 million for fiscal year ended 2024.

The increase was primarily driven by an increase in Labs revenue and a decrease in operating expenses, partially offset by a decrease in Point of Care revenue.

The increase was primarily driven by increases in Labs and Immunohematology revenues.

Adjusted EBITDA was $69.9 million for fiscal year ended 2024, compared to $58.5 million for fiscal year ended 2023.

The increase was primarily driven by approximately $37 million of incremental impact of the Combinations, partially offset by lower Point of Care revenue.

The increase was primarily driven by an increase in Labs revenues and a decrease in operating expenses, partially offset by a decrease in Immunohematology revenues.

Latin America

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

Fiscal Year Ended

(Dollars in millions) 2025 2024 2023 % Change

Total revenues $ 252.9 $ 222.9 $ 210.6 13 % 6 %

Adjusted EBITDA $ 78.4 $ 63.6 $ 56.8 23 % 12 %

Total revenues were $252.9 million for fiscal year ended 2025, compared to $222.9 million for fiscal year ended 2024.

The increase was primarily driven by an increase in Labs revenues.

Total revenues were $222.9 million for fiscal year ended 2024, compared to $210.6 million for fiscal year ended 2023.

The increase was primarily driven by increases in Labs and Immunohematology revenues, partially offset by a decrease in Point of Care revenues.

Adjusted EBITDA was $78.4 million for fiscal year ended 2025, compared to $63.6 million for fiscal year ended 2024.

The increase was primarily driven by an increase in Labs revenues, partially offset by an increase in operating expenses.

Adjusted EBITDA was $63.6 million for fiscal year ended 2024, compared to $56.8 million for fiscal year ended 2023.

The increase was primarily driven by increases in Labs and Immunohematology revenues, partially offset by an increase in operating expenses and a decrease in Point of Care revenues.

Liquidity and Capital Resources

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Cash and cash equivalents $ 169.8 $ 98.3

Marketable securities, current — 48.4

Marketable securities, non-current — 7.4

Total cash, cash equivalents and marketable securities $ 98.3 $ 174.7

Amount available to borrow under the Revolving Credit Facility $ 596.6 $ 589.0

Working capital including cash and cash equivalents and marketable securities, current $ 220.1 $ 476.7

As of December 29, 2024, we had $98.3 million in Cash and cash equivalents, a $20.6 million decrease from December 31, 2023.

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.

Working capital including cash and cash equivalents, current $ 481.2 $ 220.1

As of December 28, 2025, we had $169.8 million in Cash and cash equivalents, a $71.5 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, 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

Our Credit Agreement consists of a $2,750.0 million Term Loan and an $800.0 million Revolving Credit Facility.

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 December 28, 2025 were 6.87% and 8.43%, respectively.

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 $2.21 billion 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 $23.4 million and $80.0 million borrowings outstanding, was $596.6 million as of December 28, 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.

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 December 28, 2025.

Receivables Purchase Agreement

On March 31, 2023, we entered into an amendment to our existing RPA, by and among Ortho-Clinical Diagnostics US FinanceCo I, LLC (“Ortho FinanceCo I”), as Seller, our wholly owned receivables financing subsidiary, Wells Fargo Bank, N.A., as administrative agent (the “Agent”), Ortho-Clinical Diagnostics, Inc., as the Master Servicer and as an Originator (“Ortho Inc.”), Quidel Corporation, as an Originator, and certain Purchasers.

Under the RPA, as amended, Ortho FinanceCo I may sell receivables in amounts up to a $150.0 million limit, subject to certain conditions, including that, at any date of determination, the aggregate capital paid to Ortho FinanceCo I does not exceed a “capital coverage amount,” equal to an adjusted net receivables pool balance minus a required reserve.

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of its obligations as Master Servicer.

Stock Repurchases

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

We did not repurchase any shares of our common stock during fiscal year ended 2024 through the expiration date.

For the fiscal year ended 2023, we repurchased 120,000 shares of outstanding common stock under the Stock Repurchase Program for approximately $7.2 million.

Capital Expenditures

Annual capital expenditures, including investments, net of proceeds from government assistance allocated to fixed assets, were approximately $182 million, $195 million and $196 million in fiscal years ended 2025, 2024 and 2023, respectively.

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

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

Cash Flow Summary

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Effect of exchange rates on cash 3.0 (2.9) (1.2)

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

Net increase (decrease) in cash, cash equivalents and restricted cash $ 71.3 $ (21.0) $ (174.4)

Fiscal Year Ended December 28, 2025

Cash provided by operating activities was $105.2 million for fiscal year ended 2025, and reflected a net loss of $1,131.8 million and non-cash adjustments of $1,362.8 million, primarily associated with a goodwill impairment charge, depreciation and amortization, asset write off related to restructuring, integration and other charges, and stock-based compensation expense, partially offset by $148.3 million and $117.5 million in cash outflows for inventories and accounts receivable, respectively.

Cash used for investing activities was $192.7 million for fiscal year ended 2025, and was primarily related to purchases of property, plant, equipment, investments and intangibles.

Cash provided by financing activities was $155.8 million for fiscal year ended 2025, and was primarily related to proceeds from long-term borrowings, net of discount and debt issuance costs of $2,559.3 million, offset by payments on long-term borrowings of $2,289.2 million and net payments from the Revolving Credit Facility of $118.0 million.

Fiscal Year Ended December 29, 2024

Cash provided by operating activities was $83.0 million for fiscal year ended 2024, and reflected a net loss of $2,052.0 million and non-cash adjustments of $2,293.7 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 $134.1 million of cash outflows for inventories.

Cash used for investing activities was $149.9 million for fiscal year ended 2024, and was primarily related to $195.1 million in purchases of property, equipment, investments and intangibles, partially offset by $9.3 million in net proceeds from the sale of the McKellar, San Diego, CA facility.

Cash used for investing activities was $149.9 million for fiscal year ended 2024, and was primarily related to $195.1 million in purchases of property, plant, equipment, investments and intangibles, partially offset by $9.3 million in net proceeds from the sale of the McKellar, San Diego, CA facility.

We also purchased $7.2 million and sold $63.1 million of marketable securities during fiscal year ended 2024.

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Cash used for financing activities was $265.8 million for fiscal year ended 2023, and was primarily related to payments on long-term borrowings of $228.0 million, payments of deferred consideration of $30.3 million and payments of tax withholdings related to vesting of stock-based awards of $13.5 million.

Fiscal Year Ended January 1, 2023

Cash provided by operating activities was $885.3 million for fiscal year ended 2022, and reflected net income of $548.7 million and non-cash adjustments of $389.8 million, primarily associated with depreciation and amortization, stock-based compensation expense, change in deferred tax assets and liabilities, loss on extinguishment of debt and the unwind of the inventory fair value step up initially recorded in connection with the Combinations.

In addition, we benefited from collections on accounts receivables, which contributed $150.2 million to Cash provided by operating activities, offset by other changes in working capital, including $116.9 million of cash outflows for inventories.

Cash used for investing activities was $1,644.2 million for fiscal year ended 2022, and was primarily related to the Combinations.

We purchased $140.9 million of property, equipment, investments and intangibles and received $18.4 million in proceeds from government assistance allocated to fixed assets.

We also purchased $63.7 million and sold $53.4 million of marketable securities during 2022.

Refer to Part II, Item 8, “Financial Statements and Supplementary Data—Note 2.

Business Combination” for further discussion regarding the Combinations.

Cash provided by financing activities was $252.0 million for fiscal year ended 2022, and was primarily related to proceeds from long-term borrowings, net of debt issuance costs of $2,734.5 million, payments on long-term borrowings and extinguishment

costs of $2,388.3 million, repurchases of common stock of $74.3 million and payments of $37.7 million for contingent and deferred consideration.

Liquidity Outlook

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• 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;

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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.

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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;

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Recent Accounting Pronouncements

Information about recently adopted and proposed accounting pronouncements is included in Part II, Item 8, “Financial Statements and Supplementary Data—Note 1.

Information about recent accounting pronouncements is included in Part II, Item 8, “Financial Statements and Supplementary Data—Note 1.

Basis of Presentation and Summary of Significant Accounting Policies.”

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

In addition, the determination of such adjustments includes estimating rebate percentages which are dependent on estimated end-user sales mix and customer contractual terms, which vary across customers, the related balance of which was $39.8 million of our rebate reserves at December 29, 2024.

In addition, the determination of such adjustments includes estimating rebate percentages which are dependent on estimated end-user sales mix

and customer contractual terms, which vary across customers, the related balance of which was $28.7 million of our rebate reserves at December 28, 2025.

Goodwill and Intangible Assets

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

For our annual evaluation for impairment of goodwill as of September 30, 2024, we bypassed the qualitative assessment and

proceeded directly to the quantitative goodwill impairment test for all reporting units.

This quantitative analysis required us to make estimates and assumptions in order to calculate the fair value of our reporting units.

We utilized the values separately derived from both income and market approach valuation techniques to develop an overall estimate of reporting unit fair values.

Under the income approach, we calculated the fair value of our reporting units based on estimated future discounted cash flows which required significant assumptions surrounding projected revenue growth rates, projected EBITDA margins and discount rates.

Under the market approach, we estimated the fair value based on market multiples of our revenue and EBITDA.

For our annual evaluation for impairment of goodwill as of September 30, 2024, we bypassed the qualitative assessment and proceeded directly to the quantitative goodwill impairment test for all reporting units.

We concluded that the China and JPAC reporting units’ carrying values exceeded their respective estimated fair values.

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

The estimated fair values of the EMEA and Latin America reporting units exceeded their respective carrying values and consequently did not result in an impairment.

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

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

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

During the third quarter of 2025, 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 units’ 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.

This quantitative analysis required us to make estimates and assumptions in order to calculate the fair value of our 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.

Refer to Part II, Item 8, “Financial Statements and Supplementary Data—Note 8.

Goodwill and Intangible Assets, Net” for more information on the goodwill impairment recognized in 2024.

Goodwill and Intangible Assets, Net” for more information on the goodwill impairment recognized in 2024 and 2025.

Significant judgment is required in determining our provision for income taxes, current tax assets and liabilities, deferred tax assets and liabilities, and our future taxable income, both as a whole and in various tax jurisdictions, for purposes of assessing our ability to realize future benefit from our deferred tax assets.

A valuation allowance may be established to reduce our deferred tax assets to the amount that is considered more likely than not to be realized through the generation of future taxable income and other tax planning opportunities.

As of December 29, 2024, we had a valuation allowance of $142.4 million, which represents the portion of our deferred tax assets that management believes is not more likely than not to be realized.

As of December 28, 2025, we had a valuation allowance of $249.8 million, which

represents the portion of our deferred tax assets that management believes is not more likely than not to be realized.

We will continue to assess the need for a valuation allowance on our deferred tax assets by evaluating both positive and negative evidence that may exist.

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Income Taxes” for more information on income taxes.

Accounting for Business Combinations

Under the acquisition method of accounting, the cost of an acquired business is assigned to the tangible and identifiable intangible assets acquired and liabilities assumed on the basis of the estimated fair values at the date of acquisition.

We assess fair value, which is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, using a variety of methods including, but not limited to, an income approach and a market approach, such as the estimation of future cash flows of the acquired business and current selling prices of similar assets.

These valuations require us to make estimates and assumptions, especially with respect to intangible assets.

Fair value of the assets acquired and liabilities assumed, including intangible assets, IPR&D, and contingent payments, are measured based on the assumptions and estimations with regards to variable factors such as the amount and timing of future cash flows for the asset or liability being measured, appropriate risk-adjusted discount rates, nonperformance risk, or other factors that market participants would consider.

Upon acquisition, we determine the estimated economic lives of the acquired intangible assets for amortization purposes, which are based on the underlying expected cash flows of such assets.

When applicable, adjustments to inventory are based on the fair market value of inventory and are recognized into income based on the period in which the underlying inventory is sold.

Goodwill is an asset representing the future economic benefits arising from other assets acquired in a business combination that is not individually identified and separately recognized.

Actual results may vary from projected results and assumptions used in the fair value assessments.

If the initial accounting for a business combination is incomplete by the end of a reporting period that falls within the measurement period, we report provisional amounts in our financial statements.

During the measurement period, we adjust the

provisional amounts recognized at the acquisition date to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the measurement of the amounts recognized as of that date.

We record these adjustments to the provisional amounts with a corresponding offset to goodwill.

Any adjustments identified after the measurement period are recorded in the Consolidated Statements of (Loss) Income.

Inventory Valuations

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis