What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-08-08 compared with 2025-05-09 · 135 added, 61 removed, 126 unchanged (61% of the section changed)

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We are ISO 13485:2016 certified, enabling us to manufacture products for use in diagnostic and therapeutic applications.

Our certification allows us to offer solutions across the entire customer product development workflow, supporting our customers ’ need for materials in greater volume and that meet increasingly stringent quality requirements as they scale from research to commercialization.

Our certification allows us to offer solutions across the entire customer product development workflow, supporting our customers’ needs for materials in greater volume and that meet increasingly stringent quality requirements as they scale from research to commercialization.

We manufacture our products at our Hollister, California headquarters and stock inventory of raw materials, components, and finished goods at that campus.

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We typically recognize revenue when products are shipped.

We generated revenue of $9.8 million during the three months ended March 31, 2025, which represents an increase of $0.5 million compared to revenue of $9.3 million during the three months ended March 31, 2024.

For the three months ended March 31, 2025 and 2024, only 5.3% and 4.5%, respectively, of our revenue was generated from customers located outside of the United States.

We generated revenue of $10.3 million during the three months ended June 30, 2025, which represents an increase of $0.7 million compared to revenue of $9.6 million during the three months ended June 30, 2024.

For the three months ended June 30, 2025 and 2024, only 5.0% and 4.0%, respectively, of our revenue was generated from customers located outside of the United States.

We generated revenue of $20.1 million during the six months ended June 30, 2025, which represents an increase of $1.2 million compared to revenue of $18.9 million during the six months ended June 30, 2024.

For the six months ended June 30, 2025 and 2024, only 5.1% and 4.3%, respectively, of our revenue was generated from customers located outside of the United States.

Our sales outside of the United States are denominated in U.S.

We had an operating loss of $5.0 million during the three months ended March 31, 2025, compared to an operating loss of $8.0 million during the three months ended March 31, 2024.

While our expenses may fluctuate over the short term, we expect our expenses will continue to increase in future periods, but at a slower rate, in connection with our ongoing activities as we:

We had an operating loss of $3.4 million during the three months ended June 30, 2025, compared to an operating loss of $5.1 million during the three months ended June 30, 2024.

We had an operating loss of $8.4 million during the six months ended June 30, 2025, compared to an operating loss of $13.1 million during the six months ended June 30, 2024.

While our expenses may fluctuate over the short term, we expect our expenses will increase in future periods, in connection with our ongoing activities as we:

• attract, hire, and retain qualified personnel;

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rose in recent years to levels not experienced in recent decades.

While the rate of inflation moderated in 2024, general inflation, including rising prices for our raw materials and other inputs, as well as rising salaries and other expenses, can negatively impact our business by increasing our

cost of sales and operating expenses.

In addition, during early 2024, the U.S.

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We cannot predict the impact of future inflation and interest rate changes on the results of our operations.

Furthermore, changes to tariff and related international trade policy in early 2025 create uncertainty about the broader economy and our business.

Furthermore, changes to tariff and related international trade policy in the first half of 2025 create uncertainty about the broader economy and our business.

For further information regarding the impact of these economic factors on the Company, please see the risk factors identified in Part I, Item 1A, Risk Factors, of our 2024 Annual Report on Form 10-K.

Results of Operations

Comparison of the Three Months Ended March 31, 2025, and Three Months Ended March 31, 2024

The following tables set forth our results of operations for the three months ended March 31, 2025 and 2024 (dollars in thousands):

For the Three Months Ended March 31,

Comparison of the Three Months Ended June 30, 2025, and Three Months Ended June 30, 2024

The following tables set forth our results of operations for the three months ended June 30, 2025 and 2024 (dollars in thousands):

For the Three Months Ended June 30,

Cost of sales

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Interest expense, net

Total other income (expenses), net

Loss before income taxes

Provision for (benefit from) income taxes

Our revenue disaggregated by product category for the three months ended June 30, 2025 and 2024, was as follows (dollars in thousands):

For the Three Months Ended June 30,

Lab Essentials

Clinical Solutions

Total revenue

Total revenue was $10.3 million and $9.6 million for the three months ended June 30, 2025 and 2024, respectively.

Lab Essentials revenue was $7.8 million for the three months ended June 30, 2025, an increase of $0.2 million, or 2.0%, compared to $7.6 million for the three months ended June 30, 2024.

The increase in Lab Essentials revenue was attributable to an increased number of customers, partially offset by slightly lower average revenue per customer.

Clinical Solutions revenue was $2.1 million for the three months ended June 30, 2025, an increase of $0 .5 million, or 31 .6 %, compared to $1.6 million for the three months ended June 30, 2024.

The increase in Clinical Solutions revenue was attributable to an increased number of customers, partially offset by lower average revenue per customer.

Our revenue disaggregated by geographic region, for the three months ended June 30, 2025 and 2024, was as follows (dollars in thousands):

For the Three Months Ended June 30,

United States

International

Total revenue

Revenue from U.S.

sales was $9.8 million and $9.2 million for the three months ended June 30, 2025 and 2024, respectively.

Revenue from U.S.

sales as a percentage of our total revenue was consistent period over period, representing 95.0% and 96.0% of our total revenue during the three months ended June 30, 2025 and 2024, respectively.

Revenue from international sales was $0.5 million and $0.4 million for the three months ended June 30, 2025 and 2024, respectively.

Revenue from international sales as a percentage of our total revenue was also consistent period over period, representing 5.0% and 4.0% of our total revenue during the three months ended June 30, 2025 and 2024, respectively.

Our gross profit for the three months ended June 30, 2025 and 2024, was as follows (dollars in thousands):

For the Three Months Ended June 30,

Cost of sales

Gross profit %

Gross profit percentage was 38.7% and 29.2% for the three months ended June 30, 2025 and 2024, respectively.

The increase in gross profit was driven by manufacturing efficiency gains and higher revenue.

Operating expenses

Our operating expenses for the three months ended June 30, 2025 and 2024, were as follows (dollars in thousands):

For the Three Months Ended June 30,

Research and development

Sales and marketing

General and administrative

Amortization of intangible assets

Total operating expenses

Research and development expenses were consistent at $0.6 million and $0.7 million for the three months ended June 30, 2025 and 2024, respectively.

Sales and marketing expenses were consistent at $1.6 million and $1.5 million for the three months ended June 30, 2025 and 2024, respectively.

General and administrative expenses were $4.9 million and $5.5 million for the three months ended June 30, 2025 and 2024, respectively.

Excluding the one-time, non-recurring charge of $0.1 million related to the increase of our loss contingency for the three months ended June 30, 2024, general and administrative expenses decreased $0.5 million.

The decrease was driven by reduced spending, primarily on insurance and facility costs.

Amortization of intangible assets was consistent at $0.3 million for each of the three months ended June 30, 2025 and 2024.

Other expenses, net

Our other expenses, net for the three months ended June 30, 2025 and 2024, were as follows (dollars in thousands):

For the Three Months Ended June 30,

Interest expense, net

Total other expenses, net

Total other expenses, net was $0.2 million for the three months ended June 30, 2025, compared to total other expenses, net of $0.3 million for the three months ended June 30, 2024.

The decrease in total other expense, net was primarily attributable to lower interest expense.

Provision for (benefit from) income taxes

Our provision for and (benefit from) income taxes for the three months ended June 30, 2025 and 2024, was as follows (dollars in thousands):

For the Three Months Ended June 30,

Provision for (benefit from) income taxes

Effective tax rate

Our income taxes were not significant for either the three months ended June 30, 2025 or 2024.

The effective tax rates for the three months ended June 30, 2025 and 2024 were (0.5%) and 0.1%, respectively.

The effective tax rates differ from the federal statutory rate primarily due to operating losses not expected to produce an income tax benefit.

Comparison of the Six Months Ended June 30, 2025, and Six Months Ended June 30, 2024

The following tables set forth our results of operations for the six months ended June 30, 2025 and 2024 (dollars in thousands):

For the Six Months Ended June 30,

Cost of sales

Operating expenses:

Research and development

Sales and marketing

General and administrative

Amortization of intangible assets

Total operating expenses

Loss from operations

Other income (expenses), net

Interest expense, net

Other adjustment to loan exit fee

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Provision for (benefit from) income taxes

Our revenue disaggregated by product category for the three months ended March 31, 2025 and 2024, was as follows (dollars in thousands):

For the Three Months Ended March 31,

Our revenue disaggregated by product category for the six months ended June 30, 2025 and 2024, was as follows (dollars in thousands):

For the Six Months Ended June 30,

Lab Essentials

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Total revenue

Total revenue was $9.8 million and $9.3 million for the three months ended March 31, 2025 and 2024, respectively.

Lab Essentials revenue was $8.1 million for the three months ended March 31, 2025, an increase of $0.9 million, or 11.7%, compared to $7.3 million for the three months ended March 31, 2024.

Total revenue was $20.1 million and $18.9 million for the six months ended June 30, 2025 and 2024, respectively.

Lab Essentials revenue was $15.9 million for the six months ended June 30, 2025, an increase of $1.0 million, or 6.7%, compared to $14.9 million for the six months ended June 30, 2024.

The increase in Lab Essentials revenue was attributable to an increased number of customers, partially offset by slightly lower average revenue per customer.

Clinical Solutions revenue was $1.2 million for the three months ended March 31, 2025, a decrease of $0 .6 million, or 32 .4 %, compared to $1.7 million for the three months ended March 31, 2024.

Clinical Solutions revenue was $3.2 million for the six months ended June 30, 2025, a decrease of $0 .1 million, or 1 .9 %, compared to $3.3 million for the six months ended June 30, 2024.

The decrease in Clinical Solutions revenue was attributable to lower average revenue per customer, partially offset by an increased number of customers.

Our revenue disaggregated by geographic region, for the three months ended March 31, 2025 and 2024, was as follows (dollars in thousands):

For the Three Months Ended March 31,

Our revenue disaggregated by geographic region, for the six months ended June 30, 2025 and 2024, was as follows (dollars in thousands):

For the Six Months Ended June 30,

United States

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Revenue from U.S.

sales was $9.3 million and $8.9 million for the three months ended March 31, 2025 and 2024, respectively.

sales was $19.0 million and $18.1 million for the six months ended June 30, 2025 and 2024, respectively.

Revenue from U.S.

sales as a percentage of our total revenue was consistent period over period, representing 94.7% and 95.5% of our total revenue during the three months ended March 31, 2025 and 2024, respectively.

Revenue from international sales was $0.5 million and $0.4 million for the three months ended March 31, 2025 and 2024, respectively.

Revenue from international sales as a percentage of our total revenue was also consistent period over period, representing 5.3% and 4.5% of our total revenue during the three months ended March 31, 2025 and 2024, respectively.

Our gross profit for the three months ended March 31, 2025 and 2024, was as follows (dollars in thousands):

For the Three Months Ended March 31,

sales as a percentage of our total revenue was consistent period over period, representing 94.9% and 95.7% of our total revenue during the six months ended June 30, 2025 and 2024, respectively.

Revenue from international sales was $1.0 million and $0.8 million for the six months ended June 30, 2025 and 2024, respectively.

Revenue from international sales as a percentage of our total revenue was also consistent period over period, representing 5.1% and 4.3% of our total revenue during the six months ended June 30, 2025 and 2024, respectively.

Our gross profit for the six months ended June 30, 2025 and 2024, was as follows (dollars in thousands):

For the Six Months Ended June 30,

Cost of sales

Gross profit %

Gross profit percentage was 30.7% and 23.8% for the three months ended March 31, 2025 and 2024, respectively.

The increase in gross profit was primarily driven by higher revenue coupled with lower overhead costs.

Gross profit percentage was 34.8% and 26.5% for the six months ended June 30, 2025 and 2024, respectively.

The increase in gross profit was driven by manufacturing efficiency gains and higher revenue.

Operating expenses

Our operating expenses for the three months ended March 31, 2025 and 2024, were as follows (dollars in thousands):

For the Three Months Ended March 31,

Our operating expenses for the six months ended June 30, 2025 and 2024, were as follows (dollars in thousands):

For the Six Months Ended June 30,

Research and development

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Total operating expenses

Research and development expenses were $0.6 million and $0.9 million for the three months ended March 31, 2025 and 2024, respectively.

Research and development expenses were $1.1 million and $1.5 million for the six months ended June 30, 2025 and 2024, respectively.

The decrease was primarily driven by lower salaries and wages resulting from the reduction in workforce that was completed early during the three months ended March 31, 2024.

Sales and marketing expenses were $1.6 million and $1.7 million for the three months ended March 31, 2025 and 2024, respectively.

The decrease was primarily driven by lower salaries and wages resulting from the reduction in workforce that occurred during the three months ended March 31, 2024.

However, the decrease in salaries and wages was largely offset by increased marketing costs during the three months ended March 31, 2025.

General and administrative expenses were $5.5 million and $7.4 million for the three months ended March 31, 2025 and 2024, respectively.

Excluding the one-time, non-recurring charges related to the reduction in workforce of $1.3 million for the three months ended March 31, 2024, general and administrative expenses decreased $0.6 million.

The decrease was primarily driven by lower stock-based compensation expense due to repricing that occurred during the three months ended March 31, 2024.

Sales and marketing expenses were consistent at $3.2 million and $3.1 million for the six months ended June 30, 2025 and 2024, respectively.

Lower salaries and wages resulting from the reduction in workforce that occurred during the three months ended March 31, 2024, were largely offset by increased marketing costs during the six months ended June 30, 2025.

General and administrative expenses were $10.4 million and $12.9 million for the six months ended June 30, 2025 and 2024, respectively.

Excluding the one-time, non-recurring charges related to the reduction in workforce of $1.3 million and $0.1 million related to the increase of our loss contingency for the six months ended June 30, 2024, general and administrative expenses decreased $1.1 million.

The decrease was driven by reduced spend, primarily on facility costs and insurance as well as lower stock-based compensation expense due to one-time costs incurred in connection with the repricing that occurred during the three months ended March 31, 2024.

See “Notes to Financial Statements—Note 13.

Stock-Based Compensation” for a more detailed discussion of the stock option repricing.

Amortization of intangible assets was consistent at $0.3 million for each of the three months ended March 31, 2025 and 2024.

Amortization of intangible assets was consistent at $0.6 million for each of the six months ended June 30, 2025 and 2024.

Other income (expenses), net

Our other income (expenses), net for the three months ended March 31, 2025 and 2024, were as follows (dollars in thousands):

For the Three Months Ended March 31,

Our other income (expenses), net for the six months ended June 30, 2025 and 2024, were as follows (dollars in thousands):

For the Six Months Ended June 30,

Interest expense, net

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Total other income (expenses), net

Total other income, net was $0.3 million for the three months ended March 31, 2025, compared to total other expenses, net of $0.1 million for the three months ended March 31, 2024.

The increase in total other income, net was primarily attributable to a $0.5 million adjustment recognized on the exit fee concurrent with the refinancing of our credit agreement during the three months ended March 31, 2025.

Total other income, net was $0.2 million for the six months ended June 30, 2025, compared to total other expenses, net of $0.4 million for the six months ended June 30, 2024.

The decrease in total other expense, net was primarily attributable to a $0.5 million adjustment recognized on the exit fee concurrent with the refinancing of our credit agreement during the three months ended March 31, 2025 coupled with lower interest expense.

Provision for (benefit from) income taxes

Our provision for and (benefit from) income taxes for the three months ended March 31, 2025 and 2024, was as follows (dollars in thousands):

For the Three Months Ended March 31,

Our provision for and (benefit from) income taxes for the six months ended June 30, 2025 and 2024, was as follows (dollars in thousands):

For the Six Months Ended June 30,

Provision for (benefit from) income taxes

Effective tax rate

Our income taxes were not significant for either the three months ended March 31, 2025 or 2024.

The effective tax rates for the three months ended March 31, 2025 and 2024 were (0.5%) and 0.4%, respectively.

Our income taxes were not significant for either the six months ended June 30, 2025 or 2024.

The effective tax rates for the six months ended June 30, 2025 and 2024 were (0.5)% and 0.3% respectively.

The effective tax rates differ from the federal statutory rate primarily due to operating losses not expected to produce an income tax benefit.

Liquidity and Capital Resources

The primary sources of financing for our operations are our (i) registered direct offering and concurrent private placement completed in September 2023 (collectively, the September 2023 Offerings), which resulted in aggregate gross proceeds of $22.9 million before deducting offering expenses of $0.4 million and the prepayment of $10.0 million owed under the Term Loan as discussed below, and (ii) private placement completed in July 2024 (the July 2024 Offering), which resulted in aggregate gross proceeds of $15.4 million before deducting offering expenses of $0.2 million.

The primary sources of financing for our operations are our (i) registered direct offering and concurrent private placement completed in September 2023 (collectively, the September 2023 Offerings), which resulted in aggregate gross proceeds of $22.9 million before deducting offering expenses of $0.4 million and the prepayment of $10.0 million of the Term Loan , and (ii) private placement completed in July 2024 (the July 2024 Offering), which resulted in aggregate gross proceeds of $15.4 million before deducting offering expenses of $0.2 million.

Our principal liquidity requirements are to fund our operations and capital expenditures.

As of March 31, 2025, we had $32.7 million in net working capital, which included $26.3 million in cash and cash equivalents and short-term investments.

Our material cash requirements from known contractual obligations and commitments relate primarily to operating leases for our office, manufacturing, warehouse, and distribution facilities at March 31, 2025.

As of June 30, 2025, we had $31.6 million in net working capital, which included $24.0 million in cash and cash equivalents and short-term investments.

See “Notes to Financial Statements—Note 9.

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See “Notes to Financial Statements—Note 12.

Long-term Debt,” for a more detailed discussion of the material terms of our Second Amended and Restated Credit Agreement.

Long-term Debt, Net” for a more detailed discussion of the material terms of our Second Amended and Restated Credit Agreement.

The following table sets forth, for the periods indicated, net cash flows used in operating activities, used in investing activities, and used in financing activities (in thousands):

For the Three Months Ended March 31,

For the Six Months Ended June 30,

Net cash used in operating activities

Net cash provided by investing activities

Net cash provided by (used in) investing activities

Net cash used in financing activities

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Net cash used in operating activities consists primarily of net loss adjusted for certain non-cash items (including depreciation and amortization, bad debt expense, deferred taxes, loss on disposal of property, plant, and equipment, inventory reserve, amortization of debt issuance costs, and stock-based compensation expense), and the effect of changes in working capital and other activities.

Net cash used in operating activities was $4.1 million for the three months ended March 31, 2025, which primarily consisted of net loss of $4.6 million plus net adjustments for non-cash charges of $2.3 million, offset by net changes in operating assets and liabilities of $1.8 million.

Net cash used in operating activities was $6.2 million for the six months ended June 30, 2025, which primarily consisted of net loss of $8.2 million plus net adjustments for non-cash charges of $5.4 million, offset by net changes in operating assets and liabilities of $3.4 million.

The primary non-cash adjustments to net loss included $3.2 million of depreciation and amortization, $1.8 million of stock-based compensation, and $0.9 million provision for inventory, partially offset an adjustment to the loan exit fee of $0.5 million, and amortization of the discount on short-term investments of $0.4 million.

The main drivers of the changes in operating assets and liabilities were a $1.3 million increase in accounts receivable, a $1.0 million decrease in accrued liabilities, and a $0.2 million increase in inventories, partially offset by a $0.7 million increase in accounts payable.

Net cash used in operating activities was $6.6 million for the three months ended March 31, 2024, which primarily consisted of net loss of $8.1 million plus net adjustments for non-cash charges of $3.0 million, offset by net changes in operating assets and liabilities of $1.5 million.

The primary non-cash adjustments to net loss included $1.6 million of depreciation and amortization and $1.3 million of stock-based compensation.

The main drivers of the changes in operating assets and liabilities were a $1.7 million decrease in accrued liabilities, and a $0.6 million increase in accounts receivable, partially offset by a $0.5 million decrease in inventories, a $0.2 million decrease in prepaid expenses and other current assets, a $0.1 million increase in accounts payable, and a $0.1 million decrease other non-current assets.

The main drivers of the changes in operating assets and liabilities were a $1.7 million increase in inventories, a $1.2 million decrease in accrued liabilities, and a $0.9 million increase in accounts receivable, partially offset by a $0.4 million increase in accounts payable.

Net cash used in operating activities was $9.4 million for the six months ended June 30, 2024, which primarily consisted of net loss of $13.5 million plus net adjustments for non-cash charges of $6.6 million, offset by net changes in operating assets and liabilities of $2.6 million.

The primary non-cash adjustments to net loss included $3.3 million of depreciation and amortization, $2.1 million of stock-based compensation, and $0.9 million provision for inventory.

The main drivers of the changes in operating assets and liabilities were a $1.8 million decrease in accrued liabilities, a $0.7 million increase in accounts receivable, a $0.4 million decrease in accounts payable, and a $0.3 million increase in inventories, partially offset by a $0.4 million decrease in prepaid expenses and other current assets and a $0.2 million decrease other non-current assets.

Investing Activities

Net cash provided by investing activities was $3.8 million for the three months ended March 31, 2025, which consisted of maturities of short-term investments of $6.0 million, partially offset by purchases of short-term investments of $2.0 million and purchases of property, plant, and equipment of $0.2 million.

Net cash provided by investing activities was not significant for the three months ended March 31, 2024, as proceeds from the sale of certain long-lived assets of $0.1 million were partially offset by purchases of property, plant, and equipment of $0.1 million.

Net cash provided by investing activities was $5.9 million for the six months ended June 30, 2025, which consisted of maturities of short-term investments of $16.0 million, partially offset by purchases of short-term investments of $9.7 million and purchases of property, plant, and equipment of $0.4 million.

Net cash used in investing activities was $0.1 million for the six months ended June 30, 2024, which consisted of purchases of property, plant, and equipment of $0.2 million, partially offset by proceeds from the sale of certain long-lived assets of $0.1 million.

Financing Activities

Net cash used in financing activities was $0.1 million for the three months ended March 31, 2025, which was primarily attributable to payment of exit fee costs of $1.1 million and repayment of financed insurance premiums of $0.1 million, largely offset by proceeds from long-term debt of $1.1 million.

Net cash used in financing activities was $0.3 million for the three months ended March 31, 2024, which was primarily attributable to repayments of financed insurance premiums.

Net cash used in financing activities was $0.1 million for the six months ended June 30, 2025, which was primarily attributable to payment of exit fee costs of $1.1 million, payment of debt issuance costs of $0.1 million, and repayment of financed insurance premiums of $0.1 million, largely offset by proceeds from long-term debt of $1.1 million and proceeds of $0.1 million from the issuance of common stock under our employee stock purchase plan.

Net cash used in financing activities was $0.4 million for the six months ended June 30, 2024, which was primarily attributable to repayments of financed insurance premiums of $0.4 million, partially offset by proceeds of $0.1 million from the issuance of common stock under our employee stock purchase plan.

Critical Accounting Policies and Estimates

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• the last day of the fiscal year in which we have total annual gross revenues of $1.235 billion or more;

• the last day of our fiscal year following the fifth anniversary of the date of the closing of our IPO;

• the last day of our fiscal year following the fifth anniversary of the date of the closing of our initial public offering, which we completed in June 2021 (IPO);

• the date on which we have issued more than $1.0 billion in nonconvertible debt during the previous three years;

• the date on which we are deemed to be a “large accelerated filer” under the Securities Exchange Act of 1934, as amended (the Exchange Act) (i.e., the first day of the fiscal year after we have (i) more than $700.0 million in outstanding common equity held by our non-affiliates, measured each year on the last business day of our most recently completed second fiscal quarter, and (ii) been public for at least 12 months).

outstanding common equity held by our non-affiliates, measured each year on the last business day of our most recently completed second fiscal quarter, and (ii) been public for at least 12 months).

We are also a “smaller reporting company” as defined in Rule 12b-2 under the Exchange Act.

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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-Q

Item 2. Management’s Discussion and Analysis