Quanterix Corp 10-Q

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited Consolidated Financial Statements and Notes to Consolidated Financial Statements in the section titled “Part I. Item 1. Financial Statements (Unaudited)” in this Quarterly Report on Form 10-Q and our audited Consolidated Financial Statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2024 (the “ Form 10-K ” ), as filed with the U.S. Securities and Exchange Commission (the “ SEC”) on March 17, 2025. Certain columns and rows may not add due to the use of rounded numbers. Percentages presented are calculated from the underlying unrounded numbers. In addition to historical information, the following discussion and analysis contains forward-looking statements that involve risks, uncertainties, and assumptions. Our actual results, performance, or experience may differ materially from those discussed below due to various important factors, risks, and uncertainties, including, but not limited to, those set forth in the sections titled “Part II, Item 1A. Risk Factors” and “Note Regarding Forward-Looking Statements” included in this Quarterly Report on Form 10-Q or in the section titled “Part I, Item 1A. Risk Factors” of our Form 10-K. Unless the context otherwise requires, the terms “Quanterix,” the “Company,” “we,” “it,” “us, “and “our” in this Quarterly Report on Form 10-Q refer to Quanterix Corporation and its consolidated subsidiaries. Overview We are a life sciences company that develops and commercializes next-generation, ultra-sensitive digital immunoassay platforms that advance life sciences research and diagnostics. Our platforms are based on our proprietary digital “Simoa” detection technology and enable customers to reliably detect protein biomarkers at ultra-low concentrations in blood, serum and other fluids that, in many cases, are undetectable using conventional, analog immunoassay technologies. The ability of our Simoa platforms to detect proteins in the femtomolar range enables the development of novel therapies and diagnostics and has the potential to identify early-stage disease markers before symptoms appear to facilitate a paradigm shift in healthcare from an emphasis on later-stage treatment to a focus on earlier detection, monitoring, prognosis, and, ultimately, prevention. Our Simoa platforms have achieved significant commercial adoption with an installed base of over 1,000 instruments, and scientific validation with citations in more than 3,200 scientific publications in areas of high unmet medical need and research interest such as neurology, oncology and immunology, and inflammation. Our instruments are designed to be used either with assays fully developed by us, including all antibodies and supplies required to run the assays, or with “homebrew” assay kits where we supply some of the components required for testing and the customer supplies the remaining required elements. Accordingly, our installed instruments generate a recurring revenue stream through the sale of these consumables. As the installed base of our Simoa instruments increases, we expect total consumables revenue to increase. We commercially launched our HD-X instrument in the second half of 2019. The HD-X is an upgraded version of the Simoa HD-1 (our first Simoa instrument, launched in January 2014), collectively “HD Instruments”, that is designed to deliver significant productivity and operational efficiency improvements, as well as greater user flexibility. The HD-X uses our bead-based technology, and assays run on the HD-X are fully automated. At March 31, 2025 , appro ximately 84% of the HD Instrument installed base were HD-X instruments. Further, we launched our SR-X instrument in 2017 as a compact desktop instrument with a lower price point, more flexible assay preparation, and a wider range of applications. The SR-X utilizes the same Simoa bead-based technology and assay kits as the HD-X. With our acquisition of Aushon BioSystems, Inc. in 2018, we acquired a CLIA-certified laboratory and proprietary sensitive planar array detection technology. The Clinical Laboratory Improvement Amendments of 1988 (“CLIA”) are federal regulatory standards that apply to all clinical laboratory testing performed on humans in the United States (with the exception of research testing that does not report patient specific results). Leveraging our proprietary sophisticated Simoa image analysis and data analysis algorithms, we further refined the planar array technology to develop the SP-X instrument to provide sensitivity similar to that found in our Simoa bead-based platform. We commercially launched the SP-X instrument in 2019. 28 Table of Contents Our wholly-owned subsidiary UmanDiagnostics AB (“Uman”), a company located in Umeå, Sweden, supplies neurofilament light (“NfL”), antibodies, and enzyme-linked immunoassay (“ELISA”) kits, which are used by researchers and biopharmaceutical and diagnostics companies world-wide in the detection of NfL to advance the development of therapeutics and diagnostics for neurodegenerative conditions. We also provide contract research services for customers and Laboratory Developed Test (“LDT”) services through our CLIA-certified Accelerator Laboratory (the “Accelerator Laboratory”). The Accelerator Laboratory provides customers with access to our Simoa technology and our Lucent Diagnostics clinical testing services, and supports multiple projects and services, including sample tes ting, homebrew assay development, custom assay development, and blood-based biomarker testing. To date, we have completed over 2,400 projects for more than 500 customers from all over the world using our Simoa platforms. We have an extensive base of customers including pharmaceutical, biotechnology, contract research organizations, academic, and governmental research institutions. We sell our instruments, consumables, and services through a direct field sales force and support organizations in North America and Europe, and through our own sales force and distributors in additional countries, including Australia, Brazil, China, Czech Republic, India, Hong Kong, Israel, Japan, New Zealand, Qatar, Saudi Arabia, Singapore, South Africa, South Korea, Taiwan, and the United Arab Emirates. As of March 31, 2025 , we had cash, cash equivalents, and m arketable securities of $266.9 million and restricted cash of $2.6 million. Since our inception, we have incurred annual net losses. Our net losses were $20.5 million and $11.2 million for the three months ended March 31, 2025 and 2024, respectively. As of March 31, 2025, we had an accumulated deficit of $490.6 million and stockholders’ equity of $316.4 million. We expect to incur operating losses at least through the next 24 months and we expect our expenses to increase as we: • expand our research and development efforts to improve our existing, or to develop and launch, new assays and instruments. These expenses could be particularly significant if any of our products become subject to additional or more burdensome regulation by the U.S. Food and Drug Administration (the “FDA”); • invest in Lucent Diagnostics, additional LDTs, and other diagnostics initiatives including entry into translational pharma and clinical diagnostic markets; • seek Premarket Approval (“PMA”), de novo classification, or 510(k) clearance from the FDA for our existing products or new products, including new assays and instruments, if or when we decide to market products for use in the prevention, diagnosis, or treatment of a disease or other condition; • strategically acquire and integrate companies or technologies that may be complementary to our business, including Akoya Biosciences, Inc. (“Akoya”); • are required to pay any earnouts under the agreement to acquire Emission, Inc. acquisition agreement, which are contingent upon completion of certain technical milestones and the achievement of certain performance milestones; • enter into collaboration arrangements, or in-license other products and technologies; and • add or enhance operational, financial, and management information systems. We believe the acquisition of Akoya, if completed on the terms described below in the section titled “Recent Business Developments”, and subsequent integration activities should, over time, generate synergies that will offset the expenses and operating losses we otherwise expect to incur. 29 Table of Contents Recent Business Developments Restructuring On May 12, 2025, we announced a plan to reduce operating costs and preserve cash. As part of this plan, the Company will reduce its operating expenses by approximately $15 million in 2025, with annualized savings of $30.0 million, or 15% of the Company's cost base. Approximately $9.0 million of the $15.0 million savings will be realized from headcount actions. The remaining savings will be realized from a reduction in other costs. The reduction in force is expected to be substantially completed by the end of the second quarter of 2025. We expect to incur expenses of approximately $1.5 million related to the reduction-in-force, substantially all of which will be cash expenditures incurred in 2025 for severance. ISO 13485 Certification On January 31, 2025, we received ISO 13485 certification for our operations in Billerica, Massachusetts. ISO 13485 certification indicates that a company has implemented a quality management system that meets international requirements for medical device manufacturing. Acquisition of Emission, Inc. On January 8, 2025, we acquired all of the issued and outstanding shares of capital stock of Emission, Inc. (“Emission”), a life sciences manufacturing company based in Georgetown, Texas. Emission produces large-scale, highly-uniform dye-encapsulating magnetic beads designed for low and mid-plex assays and a mid-plex platform that reads its proprietary beads. The transaction is part of our plans to secure the use of Emission’s highly controlled beads in our next generation platforms and expansion into a new multi-plex segment targeting third-party original equipment manufacturer customers. As part of the acquisition of Emission, we made an upfront payment of $9.0 million, with up to an additional $1.0 million payable at the end of the holdback period and an additional $10.0 million payable upon completion of certain technical milestones. Additionally, the selling shareholders of Emission (collectively, the “Emission Shareholders”) may receive up to an additional $50.0 million in earnout payments through December 31, 2029, contingent upon the achievement of certain performance milestones. In connection with the closing of the acquisition, the parties entered into a call option agreement (the “Option Agreement”), in which the Emission Shareholders have the right to repurchase all of the outstanding capital stock of Emission for $10.0 million after five years if Emission’s revenues do not exceed $5.0 million in any one year during such five-year period. If the Emission Shareholders exercise the right to repurchase Emission under the Option Agreement and consummate the repurchase, we will retain a perpetual, fully-paid, irrevocable license to all Emission intellectual property required to continue to manufacture and commercialize our products. Agreement to Acquire Akoya Biosciences, Inc. On January 9, 2025, we entered into an Agreement and Plan of Merger (the “Original Merger Agreement”) to acquire Akoya, a life sciences technology company based in Marlborough, Massachusetts, and on April 28, 2025, we entered into entered into an Amended and Restated Agreement and Plan of Merger (the “A&R Merger Agreement”), that amends and restates the Original Merger Agreement in its entirety. Akoya specializes in delivering spatial biology solutions through the power of spatial phenotyping. Spatial phenotyping refers to a rapidly evolving technology that enables academic and biopharma scientists to detect and map the distribution of cell types and biomarkers across whole tissue samples at single-cell resolution, enabling advancements in their understanding of disease progression and patient response to therapy. Akoya commercializes proprietary instrument platforms, reagents, software, and services that offer end-to-end solutions to perform tissue analysis and spatial phenotyping from discovery through translational and clinical research and diagnostics. The transaction is part of our plans to establish the first fully integrated technology ecosystem to identify and measure biomarkers across tissue and blood, expand our technology offerings into oncology and immunology, and expand our portfolio of lab service offerings. Under the A&R Merger Agreement, upon completion of the merger contemplated by the A&R Merger Agreement (the “Merger”), each issued and outstanding share of common stock of Akoya will be converted into the right to receive (a) 0.1461 (the “Exchange Ratio”) of a share of our common stock (the “Per Share Stock Consideration”) and, if 30 Table of Contents applicable, cash in lieu of fractional shares, and (b) $0.38 in cash, without interest (the “Per Share Cash Consideration” and, together with the Per Share Stock Consideration, the “Per Share Merger Consideration”). In addition: • Each restricted stock unit in respect of shares of Akoya common stock (“Akoya RSUs") that is outstanding and unvested (each, a “Rollover RSU”) will automatically be converted into the right to receive the Per Share Merger Consideration upon vesting. Each Rollover RSU shall otherwise remain subject to the same terms and conditions, including vesting, as were applicable immediately prior to the Merger. • Each Akoya RSU that is outstanding and vested immediately prior to the Merger will receive the Per Share Merger Consideration. • Each option to purchase Akoya common stock (“Akoya Options”) that is outstanding will, if unvested, become vested, and (a) if the per share exercise price is equal to or greater than the value of the Per Share Merger Consideration, will automatically terminate and be cancelled for no consideration; and (b) if the per share exercise price is less than the value of the Per Share Merger Consideration, will automatically terminate and be cancelled in consideration for the right to receive the Per Share Merger Consideration in respect of a number of shares of Akoya common stock determined assuming a synthetic cashless exercise of such Akoya Options as determined based on the aggregate excess of the per share exercise price of such Akoya Options divided by the value of the Per Share Merger Consideration. Under the terms of the A&R Merger Agreement, in no event shall (i) the aggregate number of shares of our common stock to be issued by us pursuant to the Merger (including shares issuable upon vesting of Rollover RSUs after the Merger is completed) exceed 19.99% of our issued and outstanding shares of common stock immediately prior to the Merger and (ii) the aggregate cash consideration to be paid by us (including cash payable upon vesting of Rollover RSUs after the Effective Time) exceed $20.0 million. If any of such limits were to be exceeded, the Exchange Ratio and the Per Share Cash Consideration, as the case may be, would be reduced, with a corresponding increase in the other component (to the extent such increase does not exceed the limitations described in the foregoing sentence). The closing of the Merger is subject to a number of conditions, including approval of the Merger by Akoya stockholders and the effectiveness of the registration statement on Form S-4 filed with the SEC in connection with the Merger (after the filing of any required post-effective amendment as may be necessary in order to reflect the revised terms of the Merger as contemplated in the A&R Merger Agreement). We expect that, if approved, the Merger will close in the second quarter of 2025. Securities Purchase Agreement with Akoya On April 2, 2025, we entered into a securities purchase agreement with Akoya, as amended on April 28, 2025 (the “Securities Purchase Agreement”), pursuant to which Akoya will issue and sell us from time to time one or more convertible promissory notes having an aggregate principal amount of up to $30.0 million (the “Convertible Notes”). Akoya may draw on the Convertible Notes between June 15, 2025 and the earlier of (a) the closing of the Merger and (b) August 31, 2025 if the A&R Merger Agreement is lawfully terminated pursuant to its terms on or prior to such date; provided, however, that if the closing of the Merger occurs on or prior to June 15, 2025, Akoya may not draw on the Convertible Notes. Any Convertible Notes issued under the Securities Purchase Agreement will mature on the earliest to occur of (i) the 91st day following the earlier of (a) November 1, 2027 and (b) the date that Akoya’s existing indebtedness is repaid in full and all commitments under such documents have been terminated and (ii) subject to the terms of a subordination agreement, any acceleration of the Convertible Notes. Any Convertible Note issued under the Securities Purchase Agreement will bear interest at a rate per annum equal to the SOFR interest rate plus an applicable margin specified in the Convertible Note to, but excluding, the date of repayment or conversion of the Convertible Note. Interest on the Convertible Notes will be paid in arrears on the first day of each month and on the maturity date of the Convertible Notes. 31 Table of Contents Comparison of Results of Operations for the Three Months Ended March 31, 2025 and 2024: The following table sets forth select Consolidated Statements of Operations data, and such data as a percentage of total revenues (in thousands, except percentages): Three Months Ended March 31, Increase (Decrease) 2025 % of revenue 2024 % of revenue Amount % Revenues: Product revenue $ 20,739 68 % $ 19,670 61 % $ 1,069 5 % Service and other revenue 8,763 29 % 11,967 37 % (3,204) (27) % Collaboration and license revenue 771 3 % 155 — % 616 397 % Grant revenue 60 — % 274 1 % (214) (78) % Total revenues 30,333 100 % 32,066 99 % (1,733) (5) % Costs of goods sold and services: Cost of product revenue 9,764 32 % 8,237 26 % 1,527 19 % Cost of service and other revenue 4,154 14 % 5,281 16 % (1,127) (21) % Total costs of goods sold and services 13,918 46 % 13,518 42 % 400 3 % Gross profit 16,415 54 % 18,548 58 % (2,133) (11) % Operating expenses: Research and development 10,036 33 % 6,742 21 % 3,294 49 % Selling, general and administrative 32,457 107 % 26,039 81 % 6,418 25 % Other lease costs 288 1 % 924 3 % (636) (69) % Total operating expenses 42,781 141 % 33,705 105 % 9,076 27 % Loss from operations (26,366) (87) % (15,157) (47) % (11,209) 74 % Other income (expense): Interest income 3,267 11 % 3,948 12 % (681) (17) % Change in fair value of contingent consideration (379) (1) % — — % (379) (100) % Other income 61 — % 226 1 % (165) (73) % Loss before income taxes (23,417) (77) % (10,983) (34) % (12,434) 113 % Income tax benefit (expense) 2,913 10 % (180) (1) % 3,093 (1718) % Net loss $ (20,504) (67) % $ (11,163) (35) % $ (9,341) 84 % Revenues Total revenues decreased $1.7 million, or 5%, to $30.3 million for the three months ended March 31, 2025, compared to $32.1 million for the three months ended March 31, 2024. Product revenue was $20.7 million for the three months ended March 31, 2025 and consisted of instrument sales of $2.6 million and sales of consumables and other products of $18.1 million. This represented an increase of $1.1 million, or 5%, compared to product revenue of $19.7 million for the three months ended March 31, 2024. The increase was primarily due to higher selling prices of consumables. Instrument revenue remained flat and we expect softness in instrument sales to continue in 2025 as a result of what we believe is a constrained capital funding environment. We believe instrument sales will recover with an improvement in the capital funding environment and further believe the introduction of our Simoa ONE instrument, which is expected to launch by the end of 2025, will help grow instrument sales in future years. 32 Table of Contents Service revenue was $8.8 million for the three months ended March 31, 2025, compared to $12.0 million for the three months ended March 31, 2024, a decrease of $3.2 million, or 27%. The decrease was due to lower volumes of sample testing and assay development services in our Accelerator Laboratory and the completion of a collaboration agreement with Eli Lilly and Company in the third quarter of 2024 which previously generated $1.5 million of revenue per quarter. While we continue to see strong opportunities with customers, the uncertain macroeconomic environment is expected to drive fluctuations in Accelerator Laboratory revenue in 2025. Collaboration and license revenue was $0.8 million for the three months ended March 31, 2025, compared to $0.2 million for the three months ended March 31, 2024, an increase of $0.6 million, or 397%. The increase was primarily due to LDT and other diagnostic related license revenues. Cost of Goods Sold and Services Total cost of goods sold and services increased $0.4 million , or 3% , to $13.9 million for the three months ended March 31, 2025 , compared to $13.5 million for the three months ended March 31, 2024 . Cost of product revenue increased $1.5 million , or 19% , to $9.8 million for the three months ended March 31, 2025 , compared to $8.2 million for the three months ended March 31, 2024 . This increase was primarily due to decreased capitalization of labor and overhead costs as a result of lower production volume and output, as well as an increase in the inventory reserve for expiring materials. Cost of service and other revenue was $4.2 million for the three months ended March 31, 2025 , compared to $5.3 million for the three months ended March 31, 2024, a decrease of $1.1 million, or 21% . This decrease was due to lower volumes of sample testing and assay development services in our Accelerator Laboratory and a decrease in compensation and benefits costs related to decreased headcount. The overall decrease is consistent with the rate of revenue decline over the same period. Research and Development Research and development expense increased $3.3 million, or 49%, to $10.0 million for the three months ended March 31, 2025, compared to $6.7 million for the three months ended March 31, 2024. This increase was primarily due to (1) a $1.9 million charge to compensation expense associated with the contingent consideration payable under the acquisition of Emission, (2) a $0.7 million increase in compensation and benefits costs related to increased headcount, and (3) a $0.6 million increase in costs of outside services, research lab supplies and equipment to enable product development. We believe that our continued investment in research and development is essential to our long-term competitive position. We expect research and development expense to continue to increase due to continued investment in new instruments, including Simoa ONE, and assay development. Selling, General and Administrative Selling, general and administrative expense increased $6.4 million, or 25%, to $32.5 million for the three months ended March 31, 2025, compared to $26.0 million for the three months ended March 31, 2024. Included within selling, general, and administrative expense are $1.6 million and $2.1 million of shipping and handling costs for product sales for the three months ended March 31, 2025 and 2024, respectively. The increase in selling, general and administrative was primarily due to (1) a $3.6 million increase in due diligence and other acquisition costs related to the potential acquisition of Akoya, (2) a $1.9 million charge to compensation expense associated with the contingent consideration payable under the acquisition of Emission, (3) a $1.2 million increase in professional services and consulting fees related to our annual audit and our efforts to remediate the material weaknesses in our internal control over financial reporting described in our Form 10-K, and (4) a $0.5 million increase related to a leased facility we began using in the fourth quarter of 2024. These increases were partially offset by a $0.5 million decrease in shipping and handling costs primarily due to changing shipping providers. We do not expect selling, general and administrative expenses to increase in future periods at the same rate as total revenue or research and development expenses. Other Lease Costs Other lease costs were $0.3 million and $0.9 million for the three months ended March 31, 2025 and 2024, respectively. In the fourth quarter of 2024, we began using one of the leased facilities that we did not occupy as a result of 33 Table of Contents the restructuring and strategic realignment plan in August 2022. Accordingly, as of the fourth quarter of 2024, the amortization of the operating lease right-of-use asset and related leased facility operating expenses at this facility are no longer recorded in other lease costs. Interest Income Interest income decreased $0.7 million, or 17%, to $3.3 million for the three months ended March 31, 2025, as compared to $3.9 million for the three months ended March 31, 2024. The decrease in fair value was primarily due to lower interest rates and a lower balance of cash, cash equivalents, and marketable securities. Change in Fair Value of Contingent Consideration Change in fair value of contingent consideration increased $0.4 million, or 100%, for the three months ended March 31, 2025. The contingent consideration arrangement relates to the Emission acquisition that closed in the first quarter of 2025. The increase was due to the passage of time between the acquisition date and end of the quarter. Other Income Other income decreased $0.2 million, or 73%, to less than $0.1 million for the three months ended March 31, 2025, as compared to $0.2 million for the three months ended March 31, 2024. Income Tax (Expense) Benefit Income tax benefit was $2.9 million for the three months ended March 31, 2025, as compared to income tax expense of $0.2 million for the three months ended March 31, 2024. The $3.1 million change was primarily due to the release of a portion of our valuation allowance on deferred tax assets due to temporary tax differences related to the acquisition of Emission. Liquidity and Capital Resources Our principal sources of liquidity are cash, cash equivalents, marketable securities, and funds generated from sales of our products and services. As of March 31, 2025, we had $76.5 million of cash and cash equivalents and $190.4 million of marketable securities. Historically we have also financed our operations through equity offerings and borrowings from credit facilities. We believe our cash, cash equivalents, and marketable securities, along with funds generated from sales of our products and services, will be sufficient to meet our anticipated operating cash requirements for at least 12 months from the date of this Quarterly Report on Form 10-Q. Our liquidity requirements have consisted, and we expect that they will continue to consist, of sales and marketing expenses, research and development expenses, working capital, general corporate expenses, and payments related to our acquisition activity. For example, we funded our recent acquisition of Emission entirely with cash on hand and we are obligated to make certain future contingent cash payments related to the Emission acquisition. If the acquisition of Akoya is completed, we will be required to fund the cash portion of the merger consideration. We also have a commitment to provide Akoya with up to $30.0 million of funding in the form of convertible promissory notes, subject to the conditions and timing as further discussed below in the section titled “Securities Purchase Agreement with Akoya”. Our future capital requirements will depend on many factors, including, but not limited to, our pace of growth, expansion or introduction of instruments, assays, and services, including Lucent Diagnostics, advancing access to our diagnostic tests, market acceptance of our products and services, regulatory requirements, regulatory approval of our products or services, and the effects of competition, technological developments, and broader market and economic trends. We regularly assess other potential acquisitions and may need capital to pursue acquisitions of complementary businesses, services, and technologies. To the extent our existing cash, cash equivalents, and marketable securities are insufficient to fund future activities or requirements to continue operating our business, we may need to raise additional capital. If the conditions for raising capital are favorable, we may seek to finance future cash needs through public or private equity, debt offerings, or other financings. 34 Table of Contents If needed, we cannot guarantee that we will be able to obtain additional funds on acceptable terms, or at all. If we raise additional funds by issuing equity or equity-linked securities, our stockholders may experience dilution. Future debt financing, if available, may involve covenants restricting our operations or our ability to incur additional debt. Any debt or equity financing that we raise may contain terms that are not favorable to us or our stockholders. If we raise additional funds through collaboration and licensing arrangements with third parties, it may be necessary to relinquish some rights to our technologies or our products, or grant licenses on terms that are not favorable to us. If we do not have or are not able to obtain sufficient funds, if needed, we may have to delay development or commercialization of our products and services. We also may have to reduce marketing, customer support, or other resources devoted to our products, or cease operations. Cash Flows The following table summarizes our cash flows (in thousands): Three Months Ended March 31, 2025 2024 Net cash used in operating activities $ (13,888) $ (20,164) Net cash provided by (used in) investing activities 32,762 (109,195) Net cash provided by financing activities 93 599 Net increase (decrease) in cash, cash equivalents, and restricted cash $ 18,967 $ (128,760) Operating Activities We derive cash flows from operations primarily from the sale of our products and services. Our cash flows from operating activities are also significantly influenced by our use of cash for operating expenses to develop new products and services, invest in process and product improvements, and increase our sales and marketing efforts. We have historically experienced negative cash flows from operating activities as we have developed our technology, expanded our business, and built our infrastructure. We expect negative cash flows from operating activities will continue in future periods. Net cash used in operating activities was $13.9 million and $20.2 million for the three months ended March 31, 2025 and 2024, respectively. The $6.3 million decrease in net cash used in operations was driven by a change in working capital items, primarily a decrease in accounts receivable from efforts to improve collections and a decrease raw materials purchases. This decrease was partially offset by an overall increase in our net loss, adjusted for non-cash items. Cash used in operations during the first quarter of 2025 also included payments for professional fees supporting due diligence, legal, and accounting activities related to the proposed acquisition of Akoya. Investing Activities Our primary investing activities have consisted of purchases of marketable securities. Additionally, we use funds to acquire companies and to make capital expenditures for the purchase of property and equipment to support our expanding infrastructure. Net cash provided by investing activities was $32.8 million during the three months ended March 31, 2025, which consisted of proceeds from sales and maturities of marketable securities of $73.3 million and cash used of 9.0 million for the acquisition of Emission, $30.2 million for the purchase of marketable securities, and $1.3 million for purchases of property and equipment. Net cash used in investing activities was $109.2 million during the three months ended March 31, 2024, which consisted of the purchase of $137.9 million of marketable securities and $0.5 million for purchases of property and equipment, was partially offset by proceeds from the maturities of marketable securities of $29.2 million. Financing Activities Net cash used in financing activities was $0.1 million during the three months ended March 31, 2025, compared to net cash provided by financing activities of $0.6 million during the three months ended March 31, 2024. These cash flows are related to the issuance of our common stock under our equity incentive plans and payments for employee taxes withheld. 35 Table of Contents Future Cash Obligations As of March 31, 2025, there have been no material changes to our contractual obligations and commitments from those described in the section titled “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Form 10-K, other than those described below. Contingent Consideration - Emission Acquisition The acquisition of Emission included two arrangements that could result in additional cash payments to the selling shareholders. An additional $10.0 million is payable upon completion of certain technical milestones (“Earnout 1”) and up to $50.0 million could be payable based on the amount and timing of certain performance targets over a five year period ending December 31, 2029 (“Earnout 2”). The fair value of Earnout 2 at March 31, 2025 was $7.0 million. Agreement to Acquire Akoya Under the terms of the A&R Merger Agreement, we are required to pay up to $20.0 million in cash consideration at closing of the Merger. The closing of the Merger is subject to a number of conditions and obligations and we expect that, if approved, the Merger will close in the second quarter of 2025. Securities Purchase Agreement with Akoya Under the Securities Purchase Agreement, Akoya may issue and sell us from time to time one or more convertible promissory notes having an aggregate principal amount of up to $30.0 million. Akoya may draw on the Convertible Notes between June 15, 2025 and the earlier of (a) the closing of the Merger and (b) August 31, 2025 if the A&R Merger Agreement is lawfully terminated pursuant to its terms on or prior to such date; provided, however, that if the closing of the Merger occurs on or prior to June 15, 2025, Akoya may not draw on the Convertible Notes. Any Convertible Notes issued under the Securities Purchase Agreement will mature on the earliest to occur of (i) the 91st day following the earlier of (a) November 1, 2027 and (b) the date that Akoya’s indebtedness under the Akoya Existing Loan Agreement is repaid in full and all commitments under such documents have been terminated. In addition to the cash commitments disclosed in our Form 10-K, we may have other payables and liabilities that may be legally enforceable but are not considered contractual commitments. Critical Accounting Policies and Estimates Our critical accounting policies and significant estimates that involve a higher degree of judgment and complexity are described in the section titled “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies and Estimates” included in our Form 10-K. There have been no material changes to our critical accounting policies and estimates as previously disclosed in that report, except that the policy under the heading “Impairment of Other Long-Lived Assets” is deleted and replaced in its entirety by the following sections: Acquired Goodwill, Intangible Assets,and Contingent Consideration When acquiring a business, we determine the estimated fair values of the assets acquired and liabilities assumed as of the acquisition date, which may include a significant amount of intangible assets such as customer relationships, technology, trademarks and trade names, and non-compete agreements, as well as goodwill and contingent consideration. The determination of the fair values these assets and liabilities involves significant judgment in selecting inputs used in a valuation methodology, including expected future revenues or cash flows, future changes in technology, estimated replacement costs, covenants not to compete, obsolescence of developed technologies, the likelihood and timing of achieving milestones or performance targets, discount rates, and assumptions about the period of time a brand will continue to be used in our product portfolio. In a typical acquisition, we engage third-party valuation experts to assist us with the fair value analyses. Our estimates of fair value are based upon assumptions and inputs we believe to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. A change in the inputs used could have a material impact on the estimated fair values. 36 Table of Contents Intangible assets with finite lives consist of customer relationships, developed technology, know-how, trademarks and trade names, and non-compete agreements and are recorded at their fair values as described above. These assigned values are amortized over each asset's useful life on a basis which best matches the periods in which the economic benefits are expected to be realized. Determining an intangible asset's useful life requires significant judgment and is based on evaluating a number of factors, including, but not limited to, the expected use of the asset, historical client retention rates, consumer awareness, trademark and trade name history, and any contractual provisions that could limit or extend an asset's useful life. Actual useful lives may differ from estimated useful lives. Business combinations may also include contingent consideration to be paid based on the occurrence of future events, such as the completion of a technical milestone or upon meeting certain performance targets. Contingent consideration treated as purchase price is a liability recorded at fair value, as described above, at the acquisition date. We remeasure the fair value of outstanding contingent consideration liabilities at each reporting period and changes are recognized in change in fair value of contingent consideration on the Consolidated Statements of Operations. Impairment of Goodwill, Intangible Assets, and Other Long-Lived Assets Goodwill is required to be assessed for impairment at least annually or whenever events or circumstances indicate that there may be an impairment. An impairment assessment requires evaluating the potential impairment at the reporting unit level using either a qualitative assessment, to determine if it is more likely than not that the fair value of any reporting unit is less than its carrying amount, or a quantitative analysis, to determine and compare the fair value of each reporting unit to its carrying value, or a combination of both. Reporting units are determined based on the components of our operating segments that constitute a business for which financial information is available and for which operating results are regularly reviewed by segment management. Judgment is required in determining the use of a qualitative or quantitative assessment, as well as in determining each reporting unit’s estimated fair value, as it requires us to make estimates of market conditions and operational performance, including projected financial results, discount rates, control premium, and valuation multiples for key financial metrics. Absent an event that indicates a specific impairment may exist, we have selected October 1st as the date to perform our annual goodwill impairment test. Future events could cause us to conclude that impairment indicators exist and that goodwill associated with our acquired businesses is impaired. Any resulting impairment loss could have a material adverse impact on our results of operations. Additionally, we continually evaluate whether events or circumstances have occurred that indicate the estimated remaining useful life of any of our intangible assets or other long-lived assets (which consists of property and equipment), or the estimated remaining lease term of any of our operating lease right-of-use assets may warrant revision, or that the carrying value of these assets may be impaired. To assess whether a long-lived asset or asset group has been impaired, the estimated undiscounted and discounted future cash flows for the estimated remaining useful life or estimated lease term of the asset is compared to its carrying value. Significant judgment is required to estimate future cash flows, including, but not limited to, the expected use of the asset, historical client retention rates, technology roadmaps, consumer awareness, trademark and trade name history, contractual provisions that could limit or extend an asset's useful life, market data, discount rates, and potential sublease opportunities, including rent and rent escalation rates, time to sublease, and free rent periods. To the extent that the future cash flows are less than the carrying value, a long-lived asset or asset group is impaired and written down to its estimated fair value. Non-GAAP Financial Measures To supplement our financial statements presented on a U.S. GAAP basis, we present the following non-GAAP financial measures: adjusted gross profit, adjusted gross margin, adjusted total operating expenses, and adjusted loss from operations. These non-GAAP measures are calculated by (1) including shipping and handling costs for product sales within cost of product revenue instead of within selling, general and administrative expenses and (2) e xcluding amortization of certain acquired intangible assets, acquisition and integration related costs, and certain other items which include other charges or benefits resulting from transactions or events that are highly variable, significant in size, and that we do not believe are indicative of ongoing or future business operations. Adjusted gross margin is calculated as adjusted gross profit divided by total revenues. We believe that presentation of these non-GAAP financial measures provides supplemental information useful to investors in understanding our underlying operating results and trends. We use these non-GAAP financial measures to evaluate our operating performance in a manner that allows for meaningful period-to-period comparison and analysis of 37 Table of Contents trends in our business and our competitors. We believe that presentation of these non-GAAP financial measures provides useful information to investors in assessing our operating performance within our industry and to allow comparability with the presentation of other companies in our industry. The non-GAAP financial measures presented here should be considered in conjunction with, and not as a substitute for, the financial information presented in accordance with U.S. GAAP. Set forth below is a reconciliation of adjusted gross profit, adjusted gross margin, adjusted total operating expenses, and adjusted loss from operations to their most directly comparable GAAP financial measures (in thousands, except percentages): Three Months Ended March 31, 2025 2024 Gross profit $ 16,415 $ 18,548 Shipping and handling costs (1,577) (2,142) Amortization of acquired intangible assets (1) 227 — Adjusted gross profit (non-GAAP) $ 15,065 $ 16,406 Total revenues $ 30,333 $ 32,066 Gross margin (gross profit as % of total revenues) 54.1% 57.8% Adjusted gross margin (non-GAAP) (adjusted gross profit as % of total revenues) 49.7% 51.2% Total operating expenses $ 42,781 $ 33,705 Shipping and handling costs (1,577) (2,142) Acquisition and integration related costs (2) (3,578) — Earnout recorded as compensation expense (3) (3,744) — Adjusted total operating expenses (non-GAAP) $ 33,882 $ 31,563 Loss from operations $ (26,366) $ (15,157) Amortization of acquired intangible assets (1) 227 — Acquisition and integration related costs (2) 3,578 — Earnout recorded as compensation expense (3) 3,744 — Adjusted loss from operations (non-GAAP) $ (18,817) $ (15,157) (1) Consists only of the amortization of intangible assets acquired in 2025. (2) Represents acquisition and integration costs directly related to the Company's business combinations. Acquisition costs include professional and consulting fees supporting due diligence, legal, and accounting activities to execute a transaction. Integration costs include third party and internal direct costs to integrate acquired companies, employees, and their customers. (3) Consists of the earnout recognized as compensation expense related to the Emission acquisition. Recent Accounting Pronouncements Refer to Note 2 - Significant Accounting Policies in the Notes to Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for a full description of recent accounting pronouncements, including the expected dates of adoption and effects on our Consolidated Financial Statements and related disclosures. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK As of March 31, 2025, there have been no material changes to the market risk information from those described in the section titled “Part II, Item 7A. Quantitative and Qualitative Disclosures About Market Risk” included in our Form 10-K. 38 Table of Contents