[PART I. FINANCIAL INFORMATION](index=6&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=6&type=section&id=Item%201.%20Financial%20Statements) OPKO Health reported **$237.6 million** in Q1 2023 total revenues and a net loss of **$18.3 million**, an improvement from the prior year's **$55.4 million** net loss, with **$2.17 billion** in total assets [Condensed Consolidated Balance Sheets](index=7&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets reached **$2.17 billion** as of March 31, 2023, with cash at **$110.8 million** and total liabilities at **$617.9 million** Condensed Consolidated Balance Sheet Data (in thousands) | Account | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $110,830 | $153,191 | | Total current assets | $406,418 | $394,525 | | Goodwill | $597,380 | $595,851 | | Intangible assets, net | $803,616 | $823,520 | | **Total assets** | **$2,169,670** | **$2,167,259** | | **Liabilities & Equity** | | | | Total current liabilities | $222,422 | $213,480 | | Long term portion of convertible notes | $211,328 | $210,371 | | **Total liabilities** | **$617,860** | **$605,611** | | **Total shareholders' equity** | **$1,551,810** | **$1,561,648** | [Condensed Consolidated Statements of Operations](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Q1 2023 total revenues declined to **$237.6 million**, but operating loss narrowed to **$30.6 million** and net loss improved to **$18.3 million** Q1 2023 vs Q1 2022 Statement of Operations (in thousands, except per share data) | Metric | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | Revenue from services | $132,368 | $286,599 | | Revenue from products | $40,383 | $36,658 | | Revenue from transfer of intellectual property | $64,826 | $5,962 | | **Total revenues** | **$237,577** | **$329,219** | | Total costs and expenses | $268,171 | $401,643 | | **Operating loss** | **$(30,594)** | **$(72,424)** | | **Net loss** | **$(18,267)** | **$(55,433)** | | **Loss per share** | **$(0.02)** | **$(0.08)** | [Condensed Consolidated Statements of Cash Flows](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Operating activities used **$22.6 million** in Q1 2023, leading to a **$42.4 million** net decrease in cash, ending at **$110.8 million** Q1 2023 vs Q1 2022 Cash Flows (in thousands) | Cash Flow Activity | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | $(22,647) | $(19,856) | | Net cash used in investing activities | $(7,717) | $(4,903) | | Net cash used in financing activities | $(13,119) | $(7,891) | | **Net decrease in cash and cash equivalents** | **$(42,361)** | **$(32,429)** | | **Cash and cash equivalents at end of period** | **$110,830** | **$102,281** | [Notes to Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail business structure, key transactions, and accounting policies, including a **$50 million** Merck alliance and a **$246 million** tax assessment - Revenue from services for Q1 2023 decreased by **$154.2 million** compared to Q1 2022, driven by lower COVID-19 testing volumes, but routine clinical test volume increased by **6.8%** excluding COVID-19 tests[39](index=39&type=chunk) - In March 2023, ModeX entered a license and research collaboration with Merck for an Epstein Barr Virus vaccine candidate, receiving a **$50.0 million** upfront payment and eligibility for up to **$872.5 million** in milestones[191](index=191&type=chunk)[192](index=192&type=chunk) - The Israel Tax Authority (ITA) issued an assessment of approximately **$246 million** (including interest) against OPKO Biologics for tax years 2014-2020, which the company is appealing[156](index=156&type=chunk) - In February 2023, the company amended its **$55.0 million** 5% Convertible Promissory Notes, extending maturity to January 31, 2025, and resetting the conversion price to **$1.66**[122](index=122&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=46&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Consolidated revenue declined **28%** due to lower COVID-19 testing, but operating loss improved to **$30.6 million** driven by intellectual property revenue [Results of Operations](index=47&type=section&id=Results%20of%20Operations) Q1 2023 operating loss improved to **$30.6 million**, with Diagnostics revenue down **54%** and Pharmaceuticals revenue up **147%** Segment Operating Income (Loss) (in thousands) | Segment | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | Pharmaceutical | $18,955 | $(18,108) | | Diagnostics | $(40,007) | $(43,548) | | Corporate | $(9,542) | $(10,768) | | **Total Operating Loss** | **$(30,594)** | **$(72,424)** | - Diagnostics revenue decreased by **$154.2 million**, primarily due to lower demand and reimbursement for COVID-19 testing, with BioReference performing only **68,000** molecular COVID-19 tests in Q1 2023 compared to **1,981,000** in Q1 2022[248](index=248&type=chunk) - Pharmaceuticals revenue from transfer of intellectual property increased to **$64.8 million** from **$6.0 million**, mainly due to a **$50.0 million** upfront payment from Merck and a **$7.0 million** milestone from Vifor[257](index=257&type=chunk) - Pharmaceutical R&D expenses increased to **$31.9 million** from **$12.3 million**, primarily due to a **$12.5 million** payment to Sanofi related to the Merck collaboration[261](index=261&type=chunk) [Liquidity and Capital Resources](index=53&type=section&id=Liquidity%20and%20Capital%20Resources) Q1 2023 ended with **$110.8 million** in cash, supported by a **$50 million** Merck payment, ensuring sufficient liquidity for the next 12 months - As of March 31, 2023, the company had cash and cash equivalents of **$110.8 million**[272](index=272&type=chunk) - A one-time, non-refundable upfront payment of **$50.0 million** from Merck was received in April 2023[273](index=273&type=chunk) - The company believes its cash on hand and available credit lines are sufficient to meet anticipated cash requirements for operations and debt service beyond the next 12 months[286](index=286&type=chunk) Known Contractual Obligations as of March 31, 2023 (in thousands) | Obligation Type | Total | Due in < 1 Year | Due in 1-3 Years | Due in 3-5 Years | Due Thereafter | | :--- | :--- | :--- | :--- | :--- | :--- | | 2025 and 2023 Convertible Notes | $211,328 | $0 | $211,328 | $0 | $0 | | Lines of credit | $22,259 | $22,259 | $0 | $0 | $0 | | Operating leases | $37,952 | $9,041 | $12,722 | $6,728 | $9,461 | | Open purchase orders | $52,809 | $52,568 | $241 | $0 | $0 | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=58&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces market risks from foreign currency fluctuations, primarily Euro and Chilean Peso, and interest rate changes on variable-rate borrowings - The company is subject to foreign exchange risk, with approximately **18.5%** of Q1 2023 revenue denominated in currencies other than the U.S. Dollar, primarily the Euro and Chilean Peso[300](index=300&type=chunk) - Interest rate risk exposure relates to cash and investments and variable-rate borrowings, with **$22.3 million** outstanding under lines of credit at a weighted average interest rate of approximately **5.4%** as of March 31, 2023[302](index=302&type=chunk) - The company's **$55.0 million** 2023 Convertible Notes (**5%** fixed rate) and **$200.0 million** 2025 Notes (**4.50%** fixed rate) are not subject to fluctuations in market interest rates[303](index=303&type=chunk) [Item 4. Controls and Procedures](index=60&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were effective as of March 31, 2023, with no material changes to internal controls - Based on an evaluation as of the end of the period, management concluded that the company's disclosure controls and procedures were effective[306](index=306&type=chunk) - No changes occurred during the quarter ended March 31, 2023, that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[307](index=307&type=chunk) [PART II. OTHER INFORMATION](index=61&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=61&type=section&id=Item%201.%20Legal%20Proceedings) BioReference was informed by the Texas Attorney General's office of potential Medicaid Fraud Prevention Act violations - In February 2023, the Texas Attorney General's office informed BioReference of potential violations of the Texas Medicaid Fraud Prevention Act regarding claims presented to Texas Medicaid for reimbursement from 2005 to February 2023[310](index=310&type=chunk) - The company cannot currently predict the outcome or determine the extent of any potential liability for the Texas OAG matter[310](index=310&type=chunk) [Item 1A. Risk Factors](index=62&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors were reported from the 2022 Annual Report on Form 10-K - There have been no material changes to risk factors previously disclosed in the 2022 Annual Report on Form 10-K[313](index=313&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=62&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered sales of equity securities or use of proceeds were reported [Item 3. Defaults Upon Senior Securities](index=62&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) No defaults upon senior securities were reported [Item 5. Other Information](index=62&type=section&id=Item%205.%20Other%20Information) No other information was reported [Item 6. Exhibits](index=62&type=section&id=Item%206.%20Exhibits) Key exhibits include the License and Research Collaboration Agreement with Merck and certifications by the CEO and CFO - A key exhibit filed is the License and Research Collaboration Agreement between ModeX Therapeutics, Inc., OPKO Health, Inc., and Merck Sharp & Dohme LLC, dated March 7, 2023[318](index=318&type=chunk)

[Part I](index=7&type=section&id=Part%20I) [Business](index=7&type=section&id=Item%201.%20Business) OPKO Health is a diversified healthcare company with Diagnostics and Pharmaceuticals segments, focusing on product development and international expansion [Overview](index=7&type=section&id=OVERVIEW) - OPKO is a diversified healthcare company with a diagnostics business (BioReference Laboratories) and a pharmaceutical business (Rayaldee®, Somatrogon)[20](index=20&type=chunk) - The diagnostics arm, BioReference, is one of the largest full-service laboratories in the U.S., offering a comprehensive test menu including the **4Kscore® prostate cancer test**[20](index=20&type=chunk)[21](index=21&type=chunk) - The pharmaceutical arm features Rayaldee® for SHPT in CKD patients and Somatrogon (NGENLA®), a once-weekly human growth hormone partnered with Pfizer, which has received marketing authorization in the EU, Japan, Canada, and Australia[20](index=20&type=chunk) - In May 2022, OPKO acquired ModeX Therapeutics to expand its pipeline with multi-specific immune therapies for cancer and infectious diseases[20](index=20&type=chunk) - The company operates in two reportable segments: diagnostics (BioReference clinical labs) and pharmaceuticals (operations in Chile, Mexico, Ireland, Israel, Spain, U.S., and global R&D)[30](index=30&type=chunk) [Growth Strategy](index=7&type=section&id=GROWTH%20STRATEGY) - Continue to enhance commercialization capability in the U.S. and internationally[30](index=30&type=chunk) - Obtain regulatory approval and compile clinical data for advanced product candidates[30](index=30&type=chunk) - Continue marketing Rayaldee and potentially expand its label to additional indications[30](index=30&type=chunk) - Support Pfizer's efforts to secure U.S. regulatory approval for Somatrogon (hGH-CTP)[30](index=30&type=chunk) - Leverage the acquisition of ModeX to expand the pharmaceutical product line with its MSTAR platform for multispecific antibodies[27](index=27&type=chunk) - Expand BioReference's core laboratory services and seek new strategic ventures with large healthcare groups[31](index=31&type=chunk) [Current Products and Services](index=9&type=section&id=CURRENT%20PRODUCTS%20AND%20SERVICES%20AND%20RELATED%20MARKETS) - The company's business is divided into two main areas: Diagnostics and Pharmaceuticals[32](index=32&type=chunk)[48](index=48&type=chunk) - Diagnostics are primarily driven by BioReference, one of the largest full-service labs in the U.S., offering routine and esoteric testing, and the 4Kscore test for prostate cancer[32](index=32&type=chunk)[43](index=43&type=chunk) - The pharmaceutical portfolio includes the commercial product Rayaldee for kidney disease, and a pipeline of candidates including Somatrogon (hGH-CTP) for growth hormone deficiency, assets from the ModeX acquisition for oncology and infectious diseases, and other early-stage biologics and therapeutics[48](index=48&type=chunk)[60](index=60&type=chunk)[75](index=75&type=chunk) - The company also has international commercial operations in Europe and Latin America, and an API manufacturing subsidiary in Israel[88](index=88&type=chunk)[92](index=92&type=chunk) [Research and Development Expenses](index=17&type=section&id=RESEARCH%20AND%20DEVELOPMENT%20EXPENSES) R&D Expense | Year | R&D Expense (in millions) | | :--- | :--- | | 2022 | $73.9 | | 2021 | $76.9 | | 2020 | $75.3 | - Research and development expenses primarily consisted of development programs for **hGH-CTP and Rayaldee**[99](index=99&type=chunk) [Intellectual Property](index=17&type=section&id=INTELLECTUAL%20PROPERTY) - The company employs a comprehensive intellectual property strategy, seeking protection through U.S. and foreign patents, trademarks, trade secrets, and contractual arrangements[100](index=100&type=chunk)[101](index=101&type=chunk) - Rayaldee is protected by multiple U.S. patent families with expiration dates extending to **at least 2034**[103](index=103&type=chunk)[104](index=104&type=chunk) - Somatrogon (hGH-CTP) is covered by multiple U.S. patent families, with some expiring in **2027/2028** and others, if granted, extending to **2033**[105](index=105&type=chunk) - Patents for OPK88003 (oxyntomodulin) and OPK88004 (SARM) expire in **December 2030** and **November 2027**, respectively, without extensions[106](index=106&type=chunk) [Competition](index=19&type=section&id=COMPETITION) - The pharmaceutical and diagnostic testing industries are highly competitive, characterized by rapid technological advancements and a strong emphasis on proprietary products[110](index=110&type=chunk) - Competitors include major pharmaceutical companies, specialty pharma, biotech firms, and large reference laboratories like **Quest Diagnostics** and **Laboratory Corporation of America**, most of whom have substantially greater financial and operational resources[111](index=111&type=chunk)[114](index=114&type=chunk) - Rayaldee competes with activated vitamin D analogs and vitamin D supplements[112](index=112&type=chunk) - Long-acting hGH-CTP faces competition from several companies developing sustained-release growth hormone products and existing generic daily hGH products[113](index=113&type=chunk) [Government Regulation](index=20&type=section&id=GOVERNMENT%20REGULATION) - The company's operations are subject to extensive regulation by U.S. federal, state, and local authorities, including the FDA and CMS, as well as similar agencies in other countries[116](index=116&type=chunk)[117](index=117&type=chunk) - Clinical laboratory operations must comply with the **Clinical Laboratory Improvement Amendments (CLIA)**, which mandate specific standards for quality, personnel, and inspections[118](index=118&type=chunk)[119](index=119&type=chunk) - Drug development is a lengthy and costly process requiring preclinical studies and multi-phase clinical trials to establish safety and efficacy before FDA approval can be sought via a New Drug Application (NDA) or Biologics License Application (BLA)[121](index=121&type=chunk)[122](index=122&type=chunk)[123](index=123&type=chunk) - The company is subject to healthcare fraud and abuse laws, including the **Anti-Kickback Statute**, the **Stark law**, and the **False Claims Act**, which carry significant civil and criminal penalties for violations[146](index=146&type=chunk)[148](index=148&type=chunk)[150](index=150&type=chunk) - Privacy and security of patient information are governed by **HIPAA** and other regulations like **GDPR** in Europe, with substantial penalties for non-compliance[143](index=143&type=chunk)[145](index=145&type=chunk) [Human Capital Resources](index=27&type=section&id=HUMAN%20CAPITAL%20RESOURCES) - As of December 31, 2022, the company had **4,196 full-time employees** worldwide[160](index=160&type=chunk) - The company focuses on employee health and safety, complying with OSHA, CLIA, and College of American Pathologists requirements[161](index=161&type=chunk) - OPKO is committed to competitive pay, benefits, diversity, inclusion, and talent development, and has adopted a Code of Business Conduct and Ethics for all employees[162](index=162&type=chunk)[163](index=163&type=chunk)[165](index=165&type=chunk)[166](index=166&type=chunk) [Risk Factors](index=28&type=section&id=Item%201A.%20Risk%20Factors) The company faces risks from operating losses, R&D outcomes, regulatory hurdles, competition, and reliance on key personnel and third parties [Risks Related to Our Business](index=28&type=section&id=RISKS%20RELATED%20TO%20OUR%20BUSINESS) - The company has a **history of operating losses** and may not achieve profitability, especially as COVID-19 testing revenue declines[169](index=169&type=chunk) - Additional funding may be required but may not be available on acceptable terms, if at all[171](index=171&type=chunk)[174](index=174&type=chunk) - The business is substantially dependent on the commercial success of its laboratory operations and key pharmaceutical products like Somatrogon (hGH-CTP), which has **not yet received FDA approval in the U.S.**[187](index=187&type=chunk)[195](index=195&type=chunk) - The company faces intense competition from larger, better-resourced companies in the pharmaceutical and diagnostics industries[200](index=200&type=chunk) - Success is highly dependent on the involvement and reputation of Chairman and CEO, **Phillip Frost, M.D.**[219](index=219&type=chunk) - Failure to obtain and enforce patent protection for products could materially harm the business[243](index=243&type=chunk) [Risks Related to Regulatory Compliance](index=45&type=section&id=RISKS%20RELATED%20to%20REGULATORY%20COMPLIANCE) - Failure to maintain **CLIA certification** and comply with its requirements could lead to the suspension or revocation of the laboratory's ability to conduct business[268](index=268&type=chunk) - The regulatory approval process for drugs and devices is expensive, time-consuming, and uncertain, and may prevent the commercialization of product candidates[270](index=270&type=chunk) - The company is subject to complex healthcare laws (e.g., **Anti-Kickback, Stark, False Claims Act**), and failure to comply could result in significant penalties and exclusion from federal healthcare programs[280](index=280&type=chunk) - Changes in healthcare reimbursement policies, particularly from Medicare and Medicaid, could adversely affect the profitability of diagnostic services[294](index=294&type=chunk)[298](index=298&type=chunk) - Failure to maintain the security of patient-related information under **HIPAA** and other privacy laws could damage reputation and result in substantial costs and litigation[282](index=282&type=chunk) [Risks Related to International Operations](index=51&type=section&id=RISKS%20RELATED%20TO%20INTERNATIONAL%20OPERATIONS) - Marketing products abroad requires separate regulatory approvals in each jurisdiction, which is a complex and uncertain process[304](index=304&type=chunk) - Foreign governments often impose strict price controls, which may adversely affect future profitability[305](index=305&type=chunk) - Operations in Israel expose the company to potential political, economic, and military instability in the region[306](index=306&type=chunk) - A significant portion of revenue comes from international sales, subjecting the company to risks from currency exchange rate fluctuations[307](index=307&type=chunk) - The company is subject to the **U.S. Foreign Corrupt Practices Act (FCPA)**, and violations could lead to severe penalties[310](index=310&type=chunk) [Risks Related to Acquisitions and Investments](index=52&type=section&id=RISKS%20RELATED%20TO%20ACQUISITIONS%20AND%20INVESTMENTS) - The company has a large amount of goodwill and other intangible assets (**$1.6 billion at Dec 31, 2022**) that are subject to periodic impairment evaluations, which could result in significant non-cash charges[317](index=317&type=chunk) - Underperformance of assets like Rayaldee or failure to gain U.S. approval for Somatrogon could trigger a **material impairment charge**[318](index=318&type=chunk)[319](index=319&type=chunk) [Risks Related to Ownership of Our Common Stock](index=53&type=section&id=RISKS%20RELATED%20TO%20OWNERSHIP%20OF%20OUR%20COMMON%20STOCK) - The trading price of the company's common stock may fluctuate significantly due to various factors, including clinical trial results, regulatory developments, and market conditions[320](index=320&type=chunk) - As of February 15, 2023, directors, executive officers, and affiliates beneficially owned approximately **47.4% of voting securities**, with Chairman and CEO Dr. Phillip Frost owning about **31.6%**, concentrating significant control[321](index=321&type=chunk) - A historically significant short position in the stock (**4.7% as of Jan 31, 2023**) could create downward pressure and volatility in the stock price[323](index=323&type=chunk) - Failure to maintain effective internal controls could lead to a loss of investor confidence and a decline in stock price[325](index=325&type=chunk) [Properties](index=55&type=section&id=Item%202.%20Properties) The company leases its corporate office in Miami and owns key manufacturing facilities in Mexico and Spain, with other significant properties leased globally Key Property Overview | Location | Purpose | Occupancy | | :--- | :--- | :--- | | Miami, FL | Corporate Headquarters | Leased | | Elmwood Park, NJ | Main Laboratory | Leased | | Guadalajara, Mexico | Pharmaceutical Manufacturing | Owned | | Banyoles, Spain | Pharmaceutical Manufacturing | Owned | | Waterford, Ireland | Pharmaceutical Manufacturing | Leased | | Nesher, Israel | API Manufacturing | Leased | [Legal Proceedings](index=55&type=section&id=Item%203.%20Legal%20Proceedings) The company is involved in significant legal matters, including a potential Texas Medicaid fraud violation and a ~$246 million Israeli tax assessment - In February 2023, the Texas Attorney General's Office alleged that BioReference may have violated the **Texas Medicaid Fraud Prevention Act** from 2005 to the present[333](index=333&type=chunk) - On December 29, 2022, the Israel Tax Authority issued a tax assessment of approximately **$246 million** (including interest) against OPKO Biologics for tax years 2014-2020, which the company is appealing[334](index=334&type=chunk) - The company is responding to a Civil Investigative Demand (CID) from the U.S. Department of Justice regarding potential violations of the **False Claims Act** and **Anti-Kickback Statute**, in which the government has declined to intervene but a private relator's complaint has been served[337](index=337&type=chunk) [Part II](index=57&type=section&id=Part%20II) [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=57&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) OPKO's stock (OPK) trades on NASDAQ and Tel Aviv, has not paid dividends, and has underperformed the S&P 500 and NASDAQ Biotechnology Index - The company's common stock is traded on the NASDAQ Stock Market and the Tel Aviv Stock Exchange under the symbol **"OPK"**[342](index=342&type=chunk) - As of February 15, 2023, there were approximately **374 holders of record** of the Common Stock[343](index=343&type=chunk) - The company has not declared or paid any cash dividends on its Common Stock and does not anticipate doing so in fiscal 2023[343](index=343&type=chunk) Five-Year Stock Performance Comparison | Index | 12/31/2017 | 12/31/2022 | | :--- | :--- | :--- | | OPKO Health, Inc. | $100.00 | $25.50 | | S&P 500 | $100.00 | $156.80 | | NASDAQ Biotechnology | $100.00 | $129.50 | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=59&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) A 43% revenue decline in 2022 to $1.0 billion, driven by lower COVID-19 testing, resulted in a $226.3 million operating loss [Results of Operations](index=60&type=section&id=RESULTS%20OF%20OPERATIONS) - The COVID-19 pandemic significantly impacted results, with high testing volumes boosting revenue in 2020 and 2021, followed by a **sharp decline in 2022** as demand waned[353](index=353&type=chunk)[354](index=354&type=chunk) Financial Performance Summary | (In thousands) | 2022 | 2021 | % Change | | :--- | :--- | :--- | :--- | | Total revenues | $1,004,196 | $1,774,718 | (43)% | | Total costs and expenses | $1,230,449 | $1,755,968 | (30)% | | Income (loss) from operations | $(226,253) | $18,750 | (1307)% | - Diagnostics segment revenue decreased by **53% in 2022 to $755.6 million**, primarily due to lower demand and reimbursement for COVID-19 testing[360](index=360&type=chunk) - Pharmaceuticals segment revenue increased by **48% in 2022 to $248.6 million**, largely driven by **$85.0 million** in regulatory milestone payments from Pfizer for NGENLA® (Somatrogon)[371](index=371&type=chunk) - Net loss for 2022 was **$328.4 million**, compared to a net loss of $30.1 million in 2021, influenced by lower operating income and a **$150.9 million expense** from the decrease in fair value of the company's investment in GeneDx Holdings[383](index=383&type=chunk)[517](index=517&type=chunk) [Liquidity and Capital Resources](index=70&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) - As of December 31, 2022, the company had cash and cash equivalents of **$153.2 million**[414](index=414&type=chunk) - Key cash inflows in 2022 included **$115.4 million** net proceeds from the sale of GeneDx and **$85.0 million** in milestone payments from Pfizer for NGENLA®[414](index=414&type=chunk)[418](index=418&type=chunk) - The company has several convertible notes outstanding, including **$142.1 million of 4.50% notes due 2025** and **$55.0 million of 5% notes due 2023** (subsequently extended to 2025)[419](index=419&type=chunk)[422](index=422&type=chunk)[423](index=423&type=chunk) - As of December 31, 2022, the company had total credit line commitments of $63.2 million, with $31.8 million drawn; BioReference's secured revolving credit facility had **$16.8 million available** for borrowing[424](index=424&type=chunk)[425](index=425&type=chunk) - Management believes that cash on hand and available credit are sufficient to meet cash requirements for operations and debt service **beyond the next 12 months**[429](index=429&type=chunk) [Critical Accounting Policies and Estimates](index=73&type=section&id=CRITICAL%20ACCOUNTING%20POLICIES%20AND%20ESTIMATES) - **Goodwill and Intangible Assets**: Goodwill and indefinite-lived intangible assets are tested for impairment annually or when triggering events occur; this process requires significant judgment in estimating fair value, and impairment charges may occur if future results do not meet estimates, particularly for the diagnostics segment and the Somatrogon IPR&D asset[436](index=436&type=chunk)[442](index=442&type=chunk) - **Revenue Recognition**: Revenue from laboratory services is recognized when test results are reported, net of variable consideration such as contractual allowances and implicit price concessions; revenue from product sales (e.g., Rayaldee) is recognized upon delivery, net of estimated rebates, chargebacks, and returns; revenue from intellectual property involves complex judgments on performance obligations, transaction price, and timing of recognition for upfront fees, milestones, and royalties[446](index=446&type=chunk)[456](index=456&type=chunk)[460](index=460&type=chunk) - **Contingent Consideration**: Obligations from prior acquisitions are revalued to fair value each period, with changes recorded in earnings; this requires significant judgment regarding the probability and timing of milestone achievements and the discount rates used[477](index=477&type=chunk)[478](index=478&type=chunk) - **Income Taxes**: Deferred tax assets and liabilities are recognized for future tax consequences; a valuation allowance is established against deferred tax assets if it is more-likely-than-not that they will not be realized[474](index=474&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=79&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company is exposed to market risks from foreign currency exchange rates, primarily the Chilean Peso and Euro, and interest rate changes - The company is exposed to foreign currency exchange rate risk, primarily from the **Chilean Peso and the Euro**, as **21.6% of 2022 revenue** was denominated in non-USD currencies[481](index=481&type=chunk)[484](index=484&type=chunk) - To manage currency risk, the company uses foreign exchange forward contracts to hedge forecasted cash flows, particularly for inventory purchases[482](index=482&type=chunk) - Interest rate risk affects cash and investments, as well as variable-rate borrowings; the investment portfolio consists of short-term, low-risk instruments to minimize this risk[486](index=486&type=chunk) - As of December 31, 2022, the company had **$31.8 million in variable-rate debt** with a weighted average interest rate of approximately **5.5%**; the upcoming phase-out of LIBOR presents uncertainty for this debt[487](index=487&type=chunk)[488](index=488&type=chunk) [Financial Statements and Supplementary Data](index=81&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the audited consolidated financial statements for FY2022, including the independent auditor's report from Ernst & Young LLP [Report of Independent Registered Public Accounting Firm](index=82&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) - Ernst & Young LLP issued an **unqualified opinion** on OPKO Health's consolidated financial statements for the year ended December 31, 2022, stating they are presented fairly in conformity with U.S. GAAP[495](index=495&type=chunk) - The firm also issued an **unqualified opinion** on the effectiveness of the company's internal control over financial reporting as of December 31, 2022[496](index=496&type=chunk)[505](index=505&type=chunk) - A **Critical Audit Matter** was identified concerning the estimation of variable consideration in determining revenue from services, due to the complexity and judgment required in evaluating factors like reimbursement regulations and collection experience[502](index=502&type=chunk) [Consolidated Financial Statements](index=85&type=section&id=Consolidated%20Financial%20Statements) Consolidated Balance Sheet Highlights (in thousands) | | Dec 31, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | **Total Assets** | **$2,167,259** | **$2,399,715** | | Cash and cash equivalents | $153,191 | $134,710 | | Goodwill & Intangibles | $1,614,371 | $1,432,484 | | **Total Liabilities** | **$605,611** | **$714,589** | | Convertible notes | $213,421 | $187,935 | | **Total Shareholders' Equity** | **$1,561,648** | **$1,685,126** | Consolidated Statement of Operations Highlights (in thousands) | | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | Total revenues | $1,004,196 | $1,774,718 | $1,435,413 | | Operating income (loss) | $(226,253) | $18,750 | $57,714 | | Net income (loss) | $(328,405) | $(30,143) | $30,586 | | EPS (basic and diluted) | $(0.46) | $(0.05) | $0.05 | Consolidated Statement of Cash Flows Highlights (in thousands) | | 2022 | 2021 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | $(95,189) | $38,337 | | Net cash provided by investing activities | $91,038 | $35,949 | | Net cash provided by (used in) financing activities | $22,971 | $(10,350) | | Net increase in cash | $18,481 | $62,499 | [Notes to Consolidated Financial Statements](index=91&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) - In May 2022, OPKO acquired ModeX Therapeutics for a purchase price of **$300 million**, paid entirely in OPKO common stock; the acquisition added **$195 million in IPR&D assets** and **$80.4 million in goodwill**[532](index=532&type=chunk)[593](index=593&type=chunk) - In April 2022, OPKO completed the sale of its subsidiary GeneDx to Sema4 (now GeneDx Holdings) for **$150 million in cash** and **80 million shares** of GeneDx Holdings stock, recognizing a gain of **$18.6 million**[534](index=534&type=chunk)[535](index=535&type=chunk)[537](index=537&type=chunk) - The company adopted ASU 2020-06 on January 1, 2022, which simplified the accounting for convertible instruments; this resulted in an increase to the carrying value of the 2025 Convertible notes by **$21.6 million** and adjustments to retained earnings and additional paid-in capital[583](index=583&type=chunk)[584](index=584&type=chunk) - As of Dec 31, 2022, the company had federal, state, and foreign net operating loss carryforwards of approximately **$423.8 million**, **$774.5 million**, and **$83.8 million**, respectively; a valuation allowance is maintained against deferred tax assets not expected to be realized[663](index=663&type=chunk) - In July 2022, the company and BioReference entered into a settlement agreement with the U.S. Department of Justice and other parties, agreeing to pay approximately **$10 million** to resolve allegations related to certain overpayments for office space rentals that occurred prior to OPKO's acquisition of BioReference[696](index=696&type=chunk)[697](index=697&type=chunk) [Controls and Procedures](index=135&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management and the independent auditor concluded that the company's disclosure controls, procedures, and internal control over financial reporting were effective - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were **effective** as of December 31, 2022[787](index=787&type=chunk) - Based on an evaluation using the COSO framework, management concluded that the company's internal control over financial reporting was **effective** as of December 31, 2022[789](index=789&type=chunk) - The independent registered public accounting firm, Ernst & Young LLP, audited and provided an **unqualified opinion** on the effectiveness of the company's internal control over financial reporting as of December 31, 2022[790](index=790&type=chunk) - No changes to the company's internal control over financial reporting occurred during the fourth quarter of 2022 that materially affected, or are reasonably likely to materially affect, these controls[791](index=791&type=chunk) [Part III](index=136&type=section&id=Part%20III) [Directors, Executive Officers, Corporate Governance, Executive Compensation, Security Ownership, and Principal Accounting Fees](index=136&type=section&id=Items%2010-14) Required information for Items 10-14 is incorporated by reference from the company's 2023 definitive proxy statement - Information for Items 10, 11, 12, 13, and 14 is incorporated by reference from the registrant's definitive proxy statement for its 2023 Annual Meeting of Stockholders[8](index=8&type=chunk)[796](index=796&type=chunk) [Part IV](index=137&type=section&id=Part%20IV) [Exhibits, Financial Statement Schedules](index=137&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section lists all exhibits filed with the Form 10-K, including material contracts, debt indentures, and executive certifications - This section contains the index to financial statements, financial statement schedules, and a comprehensive list of exhibits filed with the report[799](index=799&type=chunk)[800](index=800&type=chunk) - Key exhibits listed include the Agreement and Plan of Merger with ModeX Therapeutics, Inc., the Amended and Restated Development and Commercialization License Agreement with Pfizer, and various debt-related indentures and credit agreements[801](index=801&type=chunk)[802](index=802&type=chunk)[803](index=803&type=chunk) - Certifications by the CEO and CFO pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 are included as exhibits[804](index=804&type=chunk)

OPKO Health, Inc. (NASDAQ:OPK) Q4 2022 Earnings Conference Call February 23, 2023 4:30 PM ET Company Participants Yvonne Briggs - LHA Investor Relations Phillip Frost - Chairman & CEO Elias Zerhouni - President & Vice Chairman Steven Rubin - EVP, Administration & Director Gary Nabel - Chief Innovation Officer & Director Adam Logal - SVP, CFO, CAO & Treasurer Conference Call Participants Kevin Strang - Jefferies Jeffrey Cohen - Ladenburg Thalmann Edward Tenthoff - Piper Sandler Yale Jen - Laidlaw & Company Y ...

OPKO Health, Inc. (NASDAQ:OPK) Q3 2022 Earnings Conference Call November 8, 2022 4:30 PM ET Company Participants Yvonne Briggs - LHA Investor Relations Phillip Frost - Chairman and Chief Executive Officer Adam Logal - SVP and Chief Financial Officer Jon Cohen - SVP and Executive Chairman Elias Zerhouni - President and Vice Chairman Conference Call Participants Kevin Strang - Jefferies Jeffrey S. Cohen - Ladenburg Thalmann Company Inc. Edward Tenthoff - Piper Sandler Operator Good day and welcome to the OPKO ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2022. OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to . Commission file number 001-33528 OPKO Health, Inc. (Exact Name of Registrant as Specified in Its Charter) (State or Other Jurisdicti ...

Financial Data and Key Metrics Changes - The company reported an operating loss of $10.7 million for Q2 2022, compared to an operating income of $5.6 million in Q2 2021 [47] - The net loss for Q2 2022 was $101.7 million, or $0.14 per diluted share, compared to a net loss of $16.2 million, or $0.03 per diluted share in the prior year [47] - The diagnostic segment revenue decreased to $186.8 million from $397.2 million in the same period last year, primarily due to reduced COVID testing [42] Business Line Data and Key Metrics Changes - The pharmaceutical segment reported revenues of $123.1 million for Q2 2022, up from $45.2 million in Q2 2021, driven by milestone payments for NGENLA [45] - Revenue from product sales in the pharmaceutical segment increased to $35.9 million, including $6.2 million from RAYALDEE, compared to $35.7 million in the prior year [45] - The diagnostic segment experienced an operating loss of $57.5 million, contrasting with an operating income of $30 million in Q2 2021 [44] Market Data and Key Metrics Changes - The company performed approximately 1 million COVID-19 tests in Q2 2022, down from 2.1 million in Q1 2022 and 3 million in Q2 2021 [31][42] - The shift from lab-based PCR testing to point-of-care testing has negatively impacted overall gross margins and operating margins [42][44] - The company has access to over 85 million lives through its Preferred Lab Network agreements with major health plans [32] Company Strategy and Development Direction - The company is focusing on a three-pronged strategy to return to its margin profile and increase growth, including cost reduction initiatives and pursuing revenue opportunities in oncology and women's health [26][28] - The integration of ModeX Therapeutics is proceeding smoothly, with expectations of advancing both ModeX and OPKO's proprietary pipelines [7][15] - The company is adapting its BioReference business to a post-COVID environment by restructuring its organization for efficiency [30] Management's Comments on Operating Environment and Future Outlook - Management noted a significant decline in COVID testing demand and the need to adjust the cost structure accordingly [25][44] - The company anticipates performing between 3.3 million and 3.5 million COVID PCR tests for the year, without expecting a new surge in testing [48] - Management expressed optimism about the potential of the ModeX acquisition and its impact on future growth [61] Other Important Information - The company closed the acquisition of ModeX Therapeutics, issuing approximately 90 million shares valued at about $219 million [37] - The company recorded a non-cash mark-to-market adjustment of $71.2 million related to the decline in Sema4's stock price [41] - The company expects total revenue for 2022 to be between $950 million and $1 billion [50] Q&A Session Summary Question: What percentage of COVID-19 testing is done within surveillance contracts and their durability? - Management indicated that the majority of COVID testing is now through surveillance contracts, with a significant drop in public testing [53][54] Question: Clarification on the ModeX pipeline and potential partnerships? - Management confirmed interest in partnerships beyond EBV and highlighted multiple oncology assets in development [56][57] Question: Will there be an R&D Day? - Management expressed interest in holding an R&D Day in the fall, pending scheduling [58]

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2022. OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to . Commission file number 001-33528 OPKO Health, Inc. (Exact Name of Registrant as Specified in Its Charter) (State or Other Jurisdiction of ...

Financial Data and Key Metrics Changes - The Diagnostics segment reported revenue of $286 million for Q1 2022, down from $507 million in the same period of 2021, reflecting decreasing testing levels [19] - The consolidated results showed an operating loss of $72.4 million for Q1 2022, compared to operating income of $38.4 million in 2021 [23] - Net loss for Q1 2022 was $55.4 million or $0.08 per diluted share, compared to net income of $31.1 million or $0.05 per share in the prior year [23] Business Line Data and Key Metrics Changes - BioReference Laboratories saw a 4% increase in clinical base business volume compared to Q4 2021, driven by preferred status with UnitedHealthcare and Aetna [11] - Noninvasive prenatal testing in women's health grew by 219% year-over-year, with an increase of almost 16,000 samples [11] - Oncology business increased by 5% year-over-year, surpassing pre-pandemic volumes, particularly in hematology and cancer genetics [12] Market Data and Key Metrics Changes - COVID-19 PCR tests performed in Q1 2022 totaled 2 million, down from 2.7 million in Q4 2021, with stable daily testing volumes due to ongoing surveillance [14] - Point-of-care COVID testing remains strong, with over 1.6 million tests performed to date, including events like the Super Bowl and NBA All-Star game [14] Company Strategy and Development Direction - The acquisition of ModeX Therapeutics is seen as a transformative step, focusing on developing innovative immunotherapies for cancer and infectious diseases [7][8] - The company aims to leverage its partnership with Pfizer to enhance its product offerings, particularly with the launch of Neglina in major markets [8] - The Reach initiative is targeting $40 million in cost reductions through over 100 separate initiatives to improve operational efficiency [17] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the impact of rising labor costs on margins during Q1 2022, particularly due to the Omicron variant surge [19] - The company expects to perform between 3 and 3.5 million COVID diagnostic tests in 2022, with no anticipated new surge in testing [24] - Revenue guidance for 2022 is projected to be between $1.1 billion to $1.2 billion, reflecting a focus on core clinical laboratory business improvement [25] Other Important Information - The ModeX acquisition involved a total payment of $287 million in OPKO shares, with principal sellers agreeing to a four-year lock-up [18] - The company reported a significant increase in SG&A expenses due to investments in the GeneDx commercial team and Scarlet Health digital platform [21] Q&A Session Summary Question: How should R&D spend be viewed going forward? - Management indicated that ModeX programs are not significantly expensive compared to clinical products, with a modest increase in overall R&D spending planned for 2022 [28] Question: Are there updates on the Somatrogon gross profit share in Japan and Europe? - The gross profit share in Japan is expected to start in Q2 2022, while pricing in Europe may take about a year from initial approvals [32] Question: Is the ModeX acquisition closed? - The acquisition was confirmed to have closed on the same day as the call [34] Question: When should the $85 million milestone from Pfizer and Sema4's $18 million be expected on the income statement? - Both amounts are expected to be recognized in the second quarter [35] Question: Can you provide clarity on the cost of service versus product revenue? - Management confirmed that the cost to serve on BioReference was impacted by labor costs [38]

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2022. OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to . Commission file number 001-33528 OPKO Health, Inc. (Exact Name of Registrant as Specified in Its Charter) (State or Other Jurisdiction o ...

[PART I](index=6&type=section&id=Part%20I%2E) This section details OPKO Health's business, strategy, products, R&D, intellectual property, competition, regulatory environment, risks, and legal matters [ITEM 1. BUSINESS](index=6&type=section&id=Item%201.%20Business) OPKO Health is a diversified healthcare company with diagnostics and pharmaceuticals segments, leveraging R&D and commercial infrastructure for growth [OVERVIEW](index=6&type=section&id=OVERVIEW) OPKO Health is a diversified healthcare company with diagnostics and pharmaceuticals, including internationally approved Somatrogon and global platforms - OPKO Health is a diversified healthcare company with diagnostics (BioReference) and pharmaceutical (Rayaldee, Somatrogon pipeline) segments[17](index=17&type=chunk) - **Somatrogon (hGH-CTP)** received marketing authorization in the European Union (NGENLA®), Japan (NGENLA®), Health Canada, and Australia, but the FDA issued a Complete Response Letter for its Biologics License Application (BLA) in the U.S[17](index=17&type=chunk) - The company operates established pharmaceutical platforms in Spain, Ireland, Chile, and Mexico, and owns a specialty API manufacturer in Israel[19](index=19&type=chunk) [GROWTH STRATEGY](index=6&type=section&id=GROWTH%20STRATEGY) OPKO's growth strategy leverages commercial infrastructure, proprietary technology, and R&D to expand diagnostics, develop new drug indications, and secure approvals - Growth is expected from leveraging commercial infrastructure, proprietary technology, and R&D strengths[22](index=22&type=chunk) - Enhance U.S. and international commercialization capability[26](index=26&type=chunk) - Develop and commercialize Rayaldee for new indications (e.g., SHPT in stage 5 CKD requiring hemodialysis)[26](index=26&type=chunk) - Obtain regulatory approval and compile clinical data for advanced product candidates[26](index=26&type=chunk) - Expand into significant and synergistic medical markets[26](index=26&type=chunk) - BioReference strategy includes three pillars: core business, digital health (e.g., Scarlet™ Health for mobile phlebotomy), and strategic ventures, with a fourth pillar added for large-scale COVID-19 screening programs[24](index=24&type=chunk)[26](index=26&type=chunk) [CORPORATE INFORMATION](index=7&type=section&id=CORPORATE%20INFORMATION) OPKO Health, incorporated in Delaware, trades on NASDAQ and TASE, managing operations across diagnostics and pharmaceutical segments - **OPKO Health, Inc.** was incorporated in Delaware in October 1991 and changed its name to OPKO Health, Inc. on June 8, 2007[25](index=25&type=chunk) - The company's shares are publicly traded on the **NASDAQ Stock Market (OPK)** and the **Tel Aviv Stock Exchange (OPK)**[25](index=25&type=chunk) - Operations are managed in two reportable segments: diagnostics (clinical laboratory operations of BioReference, point-of-care) and pharmaceuticals (international operations in Chile, Mexico, Ireland, Israel, Spain, and R&D)[26](index=26&type=chunk) [CURRENT PRODUCTS AND SERVICES AND RELATED MARKETS](index=8&type=section&id=CURRENT%20PRODUCTS%20AND%20SERVICES%20AND%20RELATED%20MARKETS) OPKO offers diagnostics (BioReference, 4Kscore, COVID-19 tests) and pharmaceuticals (Rayaldee, Somatrogon, pipeline candidates) leveraging CTP technology [Diagnostics](index=8&type=section&id=Diagnostics) OPKO's diagnostics, led by BioReference, provides comprehensive lab testing, COVID-19 screening, and the 4Kscore prostate cancer test - **BioReference Laboratories** provides comprehensive laboratory testing services, including routine and esoteric tests (endocrinology, genetics, immunology, microbiology, molecular diagnostics, oncology, serology, toxicology), and large-scale COVID-19 screening programs[27](index=27&type=chunk)[29](index=29&type=chunk)[30](index=30&type=chunk)[32](index=32&type=chunk) - The **4Kscore test**, an FDA-approved laboratory developed blood test, helps assess the risk of high-grade prostate cancer in men aged 45 and older, and is included in NCCN and EAU guidelines[35](index=35&type=chunk)[38](index=38&type=chunk) - OPKO Diagnostics has developed the **Claros Analyzer**, a point-of-care diagnostic instrument system, with the Sangia Total PSA Test approved by the FDA in January 2019; commercialization strategies for the system and other biomarkers are under evaluation[40](index=40&type=chunk)[41](index=41&type=chunk)[42](index=42&type=chunk) [Pharmaceutical Business](index=10&type=section&id=Pharmaceutical%20Business) OPKO's pharmaceuticals include Rayaldee for SHPT and a pipeline of Somatrogon, Factor VIIa-CTP, and OPK88003, leveraging CTP technology - **Rayaldee**, an extended-release calcifediol, is FDA-approved for SHPT in adults with stage 3 or 4 CKD and vitamin D insufficiency; it is also being evaluated in a Phase 2 trial for mild-to-moderate COVID-19 and a Phase 4 trial comparing it with other SHPT treatments[43](index=43&type=chunk)[49](index=49&type=chunk)[50](index=50&type=chunk)[51](index=51&type=chunk) - **Somatrogon (hGH-CTP)**, a once-weekly human growth hormone, has met primary endpoints in Phase 3 pediatric GHD trials and received marketing authorizations in Europe, Japan, Canada, and Australia; the FDA issued a Complete Response Letter for its U.S. BLA[67](index=67&type=chunk)[69](index=69&type=chunk) - Other pipeline candidates include **OPK88004 (SARM)** for prostate hyperplasia and anabolic benefits, **OPK88003 (oxyntomodulin)** for type 2 diabetes and obesity (joint venture with LeaderMed), **Factor VIIa-CTP** for hemophilia (also with LeaderMed), and **AntagoNAT oligonucleotide therapeutics** for Dravet Syndrome (licensed to CAMP4)[53](index=53&type=chunk)[55](index=55&type=chunk)[58](index=58&type=chunk)[59](index=59&type=chunk)[71](index=71&type=chunk)[72](index=72&type=chunk)[76](index=76&type=chunk)[78](index=78&type=chunk) [Commercial Operations](index=15&type=section&id=Commercial%20Operations) OPKO leverages global commercial expertise, including EirGen and platforms in Spain, Mexico, and Chile, for manufacturing and distribution - OPKO aims to leverage global commercialization expertise for growth, including through acquisitions of commercial businesses[79](index=79&type=chunk) - **EirGen (Ireland)** is a specialty pharmaceutical company focused on developing and supplying high-potency, high-barrier-to-entry pharmaceutical products, exporting to over 50 countries[79](index=79&type=chunk)[80](index=80&type=chunk) - OPKO operates established pharmaceutical platforms in Spain (Farmadiet Group Holding, S.L.), Mexico (Pharmacos Exakta S.A. de C.V.), and Chile (Pharma Genexx, S.A. and ALS Distribuidora Limitada) for manufacturing, marketing, and distribution of various products[81](index=81&type=chunk)[82](index=82&type=chunk)[83](index=83&type=chunk) [Strategic Investments](index=15&type=section&id=Strategic%20Investments) OPKO makes strategic investments in early-stage companies with valuable proprietary technology and significant potential to create shareholder value - OPKO makes strategic investments in early-stage companies with valuable proprietary technology and significant potential to create shareholder value[84](index=84&type=chunk) [RESEARCH AND DEVELOPMENT EXPENSES](index=15&type=section&id=RESEARCH%20AND%20DEVELOPMENT%20EXPENSES) OPKO's research and development expenses were $76.9 million in 2021, $75.3 million in 2020, and $117.9 million in 2019, primarily focused on hGH-CTP (Somatrogon) and Rayaldee development programs Research and Development Expenses (in millions USD) | Year | Amount | | :--- | :----- | | 2021 | $76.9 | | 2020 | $75.3 | | 2019 | $117.9 | - Primary focus of R&D expenses was on **hGH-CTP (Somatrogon)** and **Rayaldee** development programs[86](index=86&type=chunk) [INTELLECTUAL PROPERTY](index=16&type=section&id=INTELLECTUAL%20PROPERTY) OPKO protects its products and technologies through a comprehensive IP strategy, including thousands of patents for pharmaceuticals and diagnostics - OPKO's intellectual property strategy includes U.S. and foreign patents, trademarks, trade secrets, copyrights, and contractual arrangements[87](index=87&type=chunk)[88](index=88&type=chunk) - The company owns or licenses thousands of patents and applications for its products, product candidates, and out-licensed candidates, covering pharmaceuticals, diagnostics, compositions, and manufacturing processes[89](index=89&type=chunk) - **Rayaldee**: Multiple U.S. patent families covering sustained release oral dosage formulation and methods of treatment, expiring between 2027 and 2034, also includes a patent publication for use in treating SARS-CoV-2 infection[90](index=90&type=chunk) - **Somatrogon (hGH-CTP)**: Patents licensed to Pfizer covering modified hGH polypeptides, uses in adult and pediatric patients, and manufacturing methods, with expirations ranging from 2027 to 2034[91](index=91&type=chunk) - **OPK88003 (oxyntomodulin)** and **OPK88004 (SARM)**: Licensed from Eli Lilly with granted patents worldwide covering compounds and uses, expiring in 2030 and 2027 respectively, with additional patent applications filed for expanded uses[92](index=92&type=chunk) [LICENSES AND COLLABORATIVE RELATIONSHIPS](index=17&type=section&id=LICENSES%20AND%20COLLABORATIVE%20RELATIONSHIPS) OPKO develops products via R&D, acquisitions, and partnerships, including key collaborations for Rayaldee, Somatrogon, and pipeline candidates - OPKO's strategy includes developing product candidates through internal development, acquisition, and external partnerships[94](index=94&type=chunk) - **Rayaldee**: Licensed to VFMCRP for Europe, Canada, Australia, and other international markets (including Japan after JT termination), and to Nicoya Macau Limited for Greater China[94](index=94&type=chunk) - **AntagoNAT technology**: Exclusively licensed to CAMP4 Therapeutics Corporation[94](index=94&type=chunk) - **OPK-88003** and **Factor VIIa**: Specific arrangements with LeaderMed Health Group Limited for certain countries in Asia[94](index=94&type=chunk) - **Somatrogon (hGH-CTP)**: Exclusive worldwide agreement with Pfizer for development and commercialization[94](index=94&type=chunk) [COMPETITION](index=17&type=section&id=COMPETITION) OPKO faces intense competition in pharmaceuticals (Rayaldee, hGH-CTP) and diagnostics (BioReference) from larger, well-resourced companies - The pharmaceutical and diagnostic testing industries are highly competitive, characterized by rapidly advancing technologies, intense competition, and a strong emphasis on proprietary products[95](index=95&type=chunk) - Competitors include major pharmaceutical companies, specialty pharmaceutical companies, biotechnology companies, major diagnostic companies, reference laboratories, molecular diagnostic firms, universities, and research institutions, many with substantially greater financial and other resources[96](index=96&type=chunk) - **Rayaldee** competes with activated vitamin D analogs (calcitriol, doxercalciferol, paricalcitol) and vitamin D supplements (ergocalciferol, cholecalciferol)[98](index=98&type=chunk) - **hGH-CTP** faces competition from companies developing sustained-release or long-acting GHD products, and generic daily human growth hormone products[99](index=99&type=chunk) - **BioReference** competes with hospital laboratories, physician-office laboratories, and other independent clinical laboratories, including Quest Diagnostics and Laboratory Corporation of America, by focusing on innovative testing services and personalized customer service[100](index=100&type=chunk) [GOVERNMENT REGULATION](index=18&type=section&id=GOVERNMENT%20REGULATION) OPKO's operations are extensively regulated by federal, state, and international authorities, requiring strict compliance to avoid significant penalties - OPKO's healthcare operations are subject to extensive regulation by federal (FDA, CMS, OIG, DOJ), state, and international governmental authorities[103](index=103&type=chunk)[104](index=104&type=chunk) - Clinical laboratories must comply with CLIA requirements, state clinical laboratory laws, and regulations related to billing, sales, marketing, and health information security[105](index=105&type=chunk) - Drug development involves lengthy and costly regulatory processes (preclinical, IND, Phase 1-3 clinical trials, BLA/NDA approval), with no guarantee of timely approval or broad indications[107](index=107&type=chunk) - Medical device development requires premarket clearance (510(k)) or approval (PMA) based on risk classification, with potential for clinical trials and post-market surveillance[114](index=114&type=chunk) - Diagnostic products, including Laboratory Developed Tests (LDTs), face evolving regulatory oversight, with potential for new legislation (VALID Act, VITAL Act) to formalize FDA regulation[124](index=124&type=chunk)[125](index=125&type=chunk) - Compliance with regulations, including HIPAA, GDPR, Anti-Kickback Statute, Stark Law, False Claims Act, and FCPA, is critical; non-compliance can result in sanctions, fines, exclusion from healthcare programs, and reputational damage[127](index=127&type=chunk)[130](index=130&type=chunk)[133](index=133&type=chunk)[136](index=136&type=chunk)[137](index=137&type=chunk)[141](index=141&type=chunk) [MANUFACTURING AND QUALITY](index=25&type=section&id=MANUFACTURING%20AND%20QUALITY) OPKO's global manufacturing (pharmaceuticals, diagnostics) adheres to strict FDA, cGMP, and QSR standards, with some outsourcing - Pharmaceutical manufacturing facilities are located in Waterford (Ireland), Guadalajara (Mexico), Nesher (Israel), and Banyoles (Spain); clinical supplies are outsourced to third parties[142](index=142&type=chunk) - Point-of-care diagnostic system components (test reagents, cassettes) are prepared in Woburn, Massachusetts, while analyzers are manufactured by third parties[144](index=144&type=chunk) - All manufacturing facilities and suppliers must comply with FDA regulations, current good laboratory practices (GLP), current good manufacturing practices (cGMPs), and Quality System Regulation (QSR) requirements, subject to periodic inspections[142](index=142&type=chunk)[143](index=143&type=chunk) [SALES & MARKETING](index=25&type=section&id=SALES%20%26%20MARKETING) OPKO's sales and marketing efforts are driven by BioReference's nearly 250-person team in the U.S. for diagnostics and a specialized 57-person team for Rayaldee commercialization. Limited sales and marketing personnel also operate in international pharmaceutical markets - The diagnostics business leverages **BioReference's approximately 250-person sales and marketing team** in the U.S[146](index=146&type=chunk) - A highly specialized, field-based **57-person sales and marketing team** in the U.S. is dedicated to **Rayaldee's** commercialization[146](index=146&type=chunk) - Limited sales and marketing personnel are also present in Ireland, Chile, Spain, Mexico, and Israel for pharmaceutical products[146](index=146&type=chunk) [HUMAN CAPITAL RESOURCES](index=25&type=section&id=HUMAN%20CAPITAL%20RESOURCES) OPKO had 5,767 global employees in 2021, prioritizing health, competitive benefits, diversity, and talent development - As of December 31, 2021, OPKO had **5,767 full-time employees worldwide**, with good employee relations, except for one subsidiary in Spain where employees are represented by a collective bargaining agreement[148](index=148&type=chunk) - Health and Safety: Compliance with College of American Pathologists, CLIA, and OSHA regulations, with an EHS Manager overseeing standards, training, and auditing; implemented COVID-19 safety measures for essential workers[149](index=149&type=chunk) - Competitive Pay and Benefits: Committed to fair pay and offers competitive medical benefits, which are above the competitive range for similar companies in its industries[150](index=150&type=chunk) - Inclusion and Diversity: Recognizes and values diversity, promoting discussions and learning from differences, with a diverse workforce and pride/respect among teams[151](index=151&type=chunk) - Talent Development: Focuses on enhancing employee training and development through a Head of Learning and Training, and transforming recruitment strategies for diverse channels and improved retention[153](index=153&type=chunk) [ITEM 1A. RISK FACTORS](index=26&type=section&id=Item%201A.%20Risk%20Factors) OPKO faces risks from COVID-19, operating losses, R&D uncertainties, regulatory compliance, international operations, acquisitions, and stock ownership [RISKS RELATED TO OUR BUSINESS](index=27&type=section&id=RISKS%20RELATED%20TO%20OUR%20BUSINESS) OPKO's business risks include COVID-19 impacts, operating losses, R&D uncertainties, partner dependence, intense competition, and litigation - The **COVID-19 pandemic** has significantly impacted the business, increasing overall testing volume but decreasing core testing demand; future demand for COVID-19 testing is uncertain, and declines could adversely affect operations[158](index=158&type=chunk)[159](index=159&type=chunk) - OPKO has a history of operating losses and may not sustain profitability, especially if COVID-19 testing revenue declines without offset from other income streams; additional funding may be required and might not be available on favorable terms[164](index=164&type=chunk)[166](index=166&type=chunk)[169](index=169&type=chunk) - Research and development activities may not result in commercially viable products, and positive early clinical trial results are not predictive of future success; regulatory approval for product candidates, including **Somatrogon (hGH-CTP)**, is not guaranteed, and unexpected side effects could arise[170](index=170&type=chunk)[172](index=172&type=chunk)[174](index=174&type=chunk)[180](index=180&type=chunk)[183](index=183&type=chunk) - Dependence on licensing agreements with Vifor, Nicoya, and Pfizer for international development and marketing of **Rayaldee** and **Somatrogon** means failure to maintain these agreements or partners' underperformance could adversely affect the business[175](index=175&type=chunk)[178](index=178&type=chunk)[179](index=179&type=chunk) - The business relies heavily on generating profits and cash flow from laboratory operations (**BioReference**), which faces intense competition, efforts by payors to reduce reimbursement, and risks from discontinuations of testing products or new technologies[188](index=188&type=chunk)[190](index=190&type=chunk)[191](index=191&type=chunk)[194](index=194&type=chunk) - Product development delays, manufacturing quality control issues, lack of market acceptance for new products, and inadequate reimbursement from third-party payors are significant risks[196](index=196&type=chunk)[198](index=198&type=chunk)[205](index=205&type=chunk)[207](index=207&type=chunk) - Adverse results in material litigation, governmental inquiries, or product liability claims could lead to substantial damages, reputational harm, and financial impact[255](index=255&type=chunk)[256](index=256&type=chunk)[258](index=258&type=chunk) [RISKS RELATED TO REGULATORY COMPLIANCE](index=42&type=section&id=RISKS%20RELATED%20TO%20REGULATORY%20COMPLIANCE) OPKO faces extensive regulatory compliance risks, including CLIA, FDA approvals, billing, data privacy, anti-fraud laws, and reimbursement changes - Successful operation of laboratories and commercialization of diagnostic tests (including LDTs) depend on maintaining **CLIA certification** and complying with state clinical laboratory laws; failure to comply can result in suspension, revocation of certificates, fines, and criminal penalties[260](index=260&type=chunk)[261](index=261&type=chunk) - The regulatory approval process for drug products, diagnostic products, and medical devices is expensive, time-consuming, and uncertain; delays or rejections of applications (BLA, NDA, 510(k), PMA) can occur, and post-approval products are subject to continuous review and potential restrictions[262](index=262&type=chunk)[264](index=264&type=chunk)[266](index=266&type=chunk)[268](index=268&type=chunk)[270](index=270&type=chunk) - Compliance with federal and state laws regarding billing and claims payment, anti-kickback, physician self-referral (**Stark Law**), and false claims (**FCA**) is critical; violations can lead to civil/criminal penalties, exclusion from federal healthcare programs, and substantial monetary liability[271](index=271&type=chunk)[282](index=282&type=chunk)[283](index=283&type=chunk) - Data privacy and security regulations under **HIPAA** (including HITECH Act amendments) and international laws like **GDPR** require robust compliance; breaches or non-compliance can result in fines, litigation, and reputational damage[273](index=273&type=chunk)[274](index=274&type=chunk)[275](index=275&type=chunk)[276](index=276&type=chunk) - Changes in government and third-party payor policies, including increasing downward pressure on healthcare reimbursement (e.g., **PAMA** for clinical diagnostic laboratory tests), can adversely affect the profitability of diagnostic services and product sales[284](index=284&type=chunk)[287](index=287&type=chunk)[289](index=289&type=chunk) [RISKS RELATED TO INTERNATIONAL OPERATIONS](index=48&type=section&id=RISKS%20RELATED%20TO%20INTERNATIONAL%20OPERATIONS) OPKO's international operations face risks from regulatory approvals, price controls, political instability, currency fluctuations, and FCPA compliance - Failure to obtain separate regulatory approvals in non-U.S. markets (e.g., European Union) will prevent marketing of products and product candidates abroad, as FDA approval does not guarantee international approval[294](index=294&type=chunk) - Non-U.S. governments often impose strict price controls, which can lead to lengthy pricing negotiations and potentially unsatisfactory reimbursement levels, adversely affecting future profitability[295](index=295&type=chunk) - Political, economic, and military instability in **Israel**, where OPKO has office, laboratory, and manufacturing operations, could adversely affect business conduct and results[296](index=296&type=chunk) - Significant portions of consolidated net revenues are derived from international sales, making the company subject to risks from **currency exchange rate fluctuations**, which can adversely affect margins and reported results[297](index=297&type=chunk) - The company is subject to the U.S. **Foreign Corrupt Practices Act (FCPA)** and other anti-corruption laws globally; any failure to comply, including unauthorized payments by employees or agents, could result in substantial penalties or restrictions on international business[298](index=298&type=chunk)[301](index=301&type=chunk) [RISKS RELATED TO ACQUISITIONS AND INVESTMENTS](index=50&type=section&id=RISKS%20RELATED%20TO%20ACQUISITIONS%20AND%20INVESTMENTS) OPKO's acquisitions and investments carry risks of integration difficulties, litigation, and potential impairment of goodwill and intangible assets - Acquisitions and dispositions are part of OPKO's business strategy, but they present risks such as integration difficulties, management distraction, and potential third-party claims or litigation[214](index=214&type=chunk) - The company has a large amount of **goodwill and other intangible assets ($1.4 billion** at Dec 31, 2021) subject to periodic impairment evaluations; underperforming assets or changes in projections could lead to material non-cash impairment charges[303](index=303&type=chunk)[305](index=305&type=chunk) - The sale of **GeneDx** to Sema4 Holdings Corp. for an upfront payment of **$150 million cash** and 80 million shares, plus potential milestones, is expected to close in Q2 2022; an impairment charge may be incurred depending on Sema4's stock price at closing[216](index=216&type=chunk)[217](index=217&type=chunk) - Failure to successfully commercialize **Somatrogon** in the U.S. or negative impacts on net cash flow forecasts could expose the company to a material impairment charge related to its In-Process Research and Development (IPR&D) for Somatrogon[306](index=306&type=chunk) [RISKS RELATED TO OWNERSHIP OF OUR COMMON STOCK](index=51&type=section&id=RISKS%20RELATED%20TO%20OWNERSHIP%20OF%20OUR%20COMMON%20STOCK) OPKO common stock faces price volatility, short position pressure, and concentrated ownership by insiders influencing corporate control - The trading prices of OPKO's Common Stock may fluctuate significantly due to factors like product announcements, clinical trial results, intellectual property developments, regulatory approvals, and general market conditions[307](index=307&type=chunk) - A significant 'short' position in the Common Stock (approximately **43.1 million shares** or **6.3% outstanding** as of Jan 31, 2022) could cause downward pressure and volatility in the stock price[310](index=310&type=chunk) - Directors, executive officers, and affiliated entities beneficially own approximately **40% of outstanding voting securities**, with Chairman and CEO Phillip Frost, M.D., owning about **33.9%**; this concentration allows them to significantly impact major corporate decisions and potentially delay changes in control[308](index=308&type=chunk)[309](index=309&type=chunk) [ITEM 1B. UNRESOLVED STAFF COMMENTS](index=52&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) There are no unresolved staff comments to report - No unresolved staff comments[315](index=315&type=chunk) [ITEM 2. PROPERTIES](index=53&type=section&id=Item%202.%20Properties) OPKO's properties include a leased Miami HQ, main labs in NJ/MD, and owned pharmaceutical manufacturing in Mexico/Spain - The principal corporate office is located in leased space in Miami, FL, from Frost Real Estate Holdings, LLC, an entity controlled by Dr. Phillip Frost, Chairman and CEO[316](index=316&type=chunk) Significant Physical Properties (as of December 31, 2021) | Location | Segment and Purpose | Type of Occupancy | | :------------------- | :------------------------------------------------ | :---------------- | | Miami, FL | Diagnostics & Pharmaceutical: Corporate Headquarters | Leased | | Elmwood Park, NJ | Diagnostics: Main Laboratory | Leased | | Gaithersburg, MD | Diagnostics: Genetics Laboratory | Leased | | Kiryat Gat, Israel | Pharmaceutical: Research and Development, CTP | Leased | | Woburn, MA | Diagnostics | Leased | | Nesher, Israel | Pharmaceuticals: API Manufacturing | Leased | | Guadalajara, Mexico | Pharmaceuticals: Pharmaceutical Manufacturing | Owned | | Banyoles, Spain | Pharmaceuticals: Pharmaceutical Manufacturing | Owned | | Palol de Revardit, Spain | Warehouse | Leased | | Barcelona, Spain | Pharmaceuticals: Research and Development | Leased | | Waterford, Ireland | Pharmaceuticals: Pharmaceutical Manufacturing | Leased | | Santiago, Chile | Pharmaceuticals: Office; Warehouse | Leased | [ITEM 3. LEGAL PROCEEDINGS](index=53&type=section&id=Item%203.%20Legal%20Proceedings) OPKO faces ongoing legal proceedings, including a DOJ investigation, False Claims Act allegations, and past settled class action lawsuits - OPKO settled a class action lawsuit for **$16.5 million** and derivative suits for **$3.1 million**, stemming from SEC allegations of securities law violations against the company and its CEO in 2018[319](index=319&type=chunk)[320](index=320&type=chunk)[321](index=321&type=chunk)[324](index=324&type=chunk) - BioReference received a Civil Investigative Demand (CID) from the U.S. Department of Justice (DOJ) regarding alleged unlawful remuneration to healthcare practitioners and false claims; a verbal agreement for a settlement of approximately **$10 million** has been reached[338](index=338&type=chunk) - OPKO was served with a Relator's Summons and Complaint in February 2022, alleging violations of the **False Claims Act** and state fraud prevention acts, following the federal government's decision not to intervene[339](index=339&type=chunk) - A lawsuit by former Claros Diagnostics, Inc. shareholders regarding a milestone payment was settled in January 2021 for **$1.1875 million**[341](index=341&type=chunk) - OPKO entered into a confidential mutual release and settlement agreement with MabVax Therapeutics Holdings, Inc. in January 2022, subject to bankruptcy court approval[340](index=340&type=chunk) [ITEM 4. MINE SAFETY DISCLOSURES](index=57&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Not applicable - Not applicable[342](index=342&type=chunk) [PART II](index=58&type=section&id=Part%20II%2E) This part covers OPKO Health's market for common equity, selected financial data, management's discussion and analysis, market risk disclosures, and audited financial statements [ITEM 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=58&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) OPKO's common stock trades on NASDAQ and TASE, with no cash dividends anticipated, and a five-year stock performance decline - **OPKO Health, Inc. Common Stock** is traded on the **NASDAQ Stock Market** and the **Tel Aviv Stock Exchange** under the symbol "OPK"[344](index=344&type=chunk) - As of February 25, 2022, there were approximately **363 holders of record** of the Common Stock[345](index=345&type=chunk) - The company has not declared or paid any cash dividends on its Common Stock and none are anticipated in fiscal 2022[345](index=345&type=chunk) Five-Year Cumulative Total Return (Indexed to $100) | Index | 12/31/2016 | 12/31/2017 | 12/31/2018 | 12/31/2019 | 12/31/2020 | 12/31/2021 | | :------------------- | :--------- | :--------- | :--------- | :--------- | :--------- | :--------- | | OPKO Health, Inc. | $100.00 | $52.69 | $32.37 | $15.81 | $42.47 | $51.7 | | S&P 500 | 100.00 | 121.83 | 116.49 | 153.17 | 181.35 | 233.4 | | NASDAQ Biotechnology | 100.00 | 121.63 | 110.85 | 138.69 | 175.33 | 175.3 | [ITEM 6. Selected Financial Data](index=59&type=section&id=Item%206.%20Selected%20Financial%20Data) This item is not applicable for the report - Not applicable[349](index=349&type=chunk) [ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=60&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses OPKO's financial condition, operating results, liquidity, and critical accounting policies, emphasizing COVID-19 impacts [OVERVIEW](index=60&type=section&id=OVERVIEW) OPKO Health is a diversified healthcare company with diagnostics and pharmaceuticals, including internationally approved Somatrogon and global platforms - OPKO Health is a diversified healthcare company with diagnostics (BioReference) and pharmaceutical (Rayaldee, Somatrogon pipeline) segments[351](index=351&type=chunk) - **Somatrogon (hGH-CTP)** has received marketing authorization in the European Union (NGENLA®), Japan (NGENLA®), Health Canada, and Australia; the FDA issued a Complete Response Letter for its Biologics License Application (BLA) in the U.S[351](index=351&type=chunk) - The company operates established pharmaceutical platforms in Spain, Ireland, Chile, and Mexico, and owns a specialty API manufacturer in Israel[353](index=353&type=chunk) [RECENT DEVELOPMENTS](index=60&type=section&id=RECENT%20DEVELOPMENTS) Recent developments include international NGENLA approvals, FDA's Somatrogon BLA letter, GeneDx sale agreement, and positive Rayaldee trial results - **NGENLA (Somatrogon)** received marketing authorization in Europe and Japan in early 2022, and in Canada and Australia in late 2021, for pediatric growth hormone deficiency[354](index=354&type=chunk)[355](index=355&type=chunk) - The FDA issued a **Complete Response Letter** for the Biologics License Application (BLA) for Somatrogon in January 2022[356](index=356&type=chunk) - OPKO signed a definitive agreement to sell its wholly-owned subsidiary, **GeneDx, Inc.**, to Sema4 Holdings Corp. for an upfront payment of **$150 million cash** plus 80 million shares of Sema4 Common Stock, with potential additional milestones up to **$150 million**; the total aggregate consideration is approximately **$623 million**[357](index=357&type=chunk)[358](index=358&type=chunk) - Preliminary topline results from a Phase 2 trial indicated **Rayaldee** can accelerate recovery from mild-to-moderate COVID-19, and the FDA approved the **4Kscore test** for men aged 45 and older[360](index=360&type=chunk) [RESULTS OF OPERATIONS](index=61&type=section&id=RESULTS%20OF%20OPERATIONS) OPKO's operating results show a 2021 income decline from 2020, but a significant improvement from 2019, driven by diagnostics and COVID-19 testing [Impact of COVID-19](index=61&type=section&id=Impact%20of%20COVID-19) COVID-19 significantly boosted 2021 service revenue from testing, but impacted core testing and Rayaldee sales, with future demand uncertain - Revenue from services increased by **$344.9 million** in 2021 compared to 2020, primarily due to COVID-19 testing volumes[362](index=362&type=chunk)[565](index=565&type=chunk) - **BioReference** performed **11.9 million diagnostic molecular tests** and **0.7 million serology antibody tests** for COVID-19 in 2021, representing **58.5% of total test volume**[370](index=370&type=chunk) - Sales of **Rayaldee** were negatively impacted by challenges in onboarding new patients due to the COVID-19 pandemic[362](index=362&type=chunk)[565](index=565&type=chunk) - Received approximately **$14 million** under CMS Accelerated and Advance Payment Program in 2020 (repaid in 2021)[365](index=365&type=chunk)[567](index=567&type=chunk) - Eligible to defer employer's share of Social Security taxes for payments due from March 27, 2020, through December 31, 2020[568](index=568&type=chunk) - Received approximately **$16.2 million** in 2020 from healthcare provider grants for COVID-19 related expenses/lost revenues[568](index=568&type=chunk) - HHS provides claims reimbursement at Medicare rates for testing uninsured patients[568](index=568&type=chunk) - Clinical laboratories received a one-year reprieve from PAMA reporting requirements and a one-year delay of reimbursement rate reductions for Medicare clinical laboratory services in 2021[568](index=568&type=chunk) [For The Years Ended December 31, 2021 and December 31, 2020](index=62&type=section&id=For%20The%20Years%20Ended%20December%2031%2C%202021%20and%20December%2031%2C%202020) 2021 revenues grew 24% to $1.77 billion, driven by services and products, but operating income decreased 68% due to higher costs Consolidated Revenues (in thousands USD) | Revenue Type | 2021 | 2020 | Change | % Change | | :----------------------------------------- | :---------- | :---------- | :---------- | :------- | | Revenue from services | $1,607,106 | $1,262,242 | $344,864 | 27% | | Revenue from products | $141,770 | $119,952 | $21,818 | 18% | | Revenue from transfer of intellectual property and other | $25,842 | $53,219 | $(27,377) | (51)% | | **Total revenues** | **$1,774,718** | **$1,435,413** | **$339,305** | **24%** | Consolidated Costs and Expenses (in thousands USD) | Expense Type | 2021 | 2020 | Change | % Change | | :--------------------------------- | :---------- | :---------- | :---------- | :------- | | Cost of revenue | $1,193,194 | $894,408 | $298,786 | 33% | | Selling, general and administrative | $468,857 | $355,573 | $113,284 | 32% | | Research and development | $76,850 | $75,316 | $1,534 | 2% | | Contingent consideration | $(1,703) | $(3,989) | $2,286 | (57)% | | Amortization of intangible assets | $50,278 | $56,391 | $(6,113) | (11)% | | Gain on sale of assets | $(31,508) | — | $(31,508) | (100)% | | **Total costs and expenses** | **$1,755,968** | **$1,377,699** | **$378,269** | **27%** | | **Income (loss) from operations** | **$18,750** | **$57,714** | **$(38,964)** | **(68)%** | - A **$31.5 million gain on sale of assets** was recognized in 2021 from the sale of an EirGen facility in Ireland[368](index=368&type=chunk)[387](index=387&type=chunk) [For The Years Ended December 31, 2020 and December 31, 2019](index=68&type=section&id=For%20The%20Years%20Ended%20December%2031%2C%202020%20and%20December%2031%2C%202019) 2020 revenues surged 59% to $1.44 billion, driven by COVID-19 testing, turning a 2019 operating loss into a $57.7 million income Consolidated Income (Loss) from Operations (in thousands USD) | Metric | 2020 | 2019 | Change | % Change | | :------------------------- | :---------- | :----------- | :---------- | :------- | | Total revenues | $1,435,413 | $901,935 | $533,478 | 59% | | Total costs and expenses | $1,377,699 | $1,175,987 | $201,712 | 17% | | Income (loss) from operations | $57,714 | $(274,052) | $331,766 | (121)% | - Revenue from services increased by **$545.8 million (76%)** in 2020 due to COVID-19 testing volumes, with BioReference performing **10.1 million molecular tests** and **0.8 million serology antibody tests**[398](index=398&type=chunk) - Research and development expenses decreased by **$42.6 million (36%)** in 2020, primarily due to the completion of the Phase 3 study for Somatrogon[397](index=397&type=chunk)[415](index=415&type=chunk) - Asset impairment charges of **$92.4 million** were recognized in 2019, including goodwill impairment for OPKO Diagnostics, CURNA, and Transition Therapeutics, and IPR&D impairment for OPK88003 and CURNA's platform technology, and Claros Analyzer[397](index=397&type=chunk)[408](index=408&type=chunk)[418](index=418&type=chunk) [Other (Interest income, expense, fair value changes, income tax, investment losses)](index=67&type=section&id=Other%20%28Interest%20income%2C%20expense%2C%20fair%20value%20changes%2C%20income%20tax%2C%20investment%20losses%29) In 2021, OPKO reported $18.9 million interest expense, $0.8 million derivative income, and $14.8 million other expense, with a $15.5 million tax provision Other Income and (Expense), Net (in thousands USD) | Metric | 2021 | 2020 | 2019 | | :--------------------------------------- | :---------- | :---------- | :----------- | | Interest income | $28 | $152 | $1,710 | | Interest expense | $(18,880) | $(21,934) | $(21,516) | | Fair value changes of derivative instruments, net | $846 | $50 | $174 | | Other income (expense), net | $(14,770) | $12,701 | $(11,281) | | **Total Other income and (expense), net** | **$(32,776)** | **$(9,031)** | **$(30,913)** | - Other expense in 2021 primarily included an **$11.1 million non-cash loss** from the exchange of 2025 Notes for common stock and net unrealized losses on equity securities[393](index=393&type=chunk) - The income tax provision was **$15.5 million** in 2021, reflecting the mix of earnings/losses in U.S. vs. foreign jurisdictions and discrete tax events[394](index=394&type=chunk) - Loss from investments in investees was **$0.6 million** in 2021, consistent with anticipated net losses from early-stage companies accounted for under the equity method[395](index=395&type=chunk) [LIQUIDITY AND CAPITAL RESOURCES](index=73&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) OPKO had $134.7 million cash in 2021, with $38.3 million from operations, and liquidity will be impacted by the GeneDx sale - Cash and cash equivalents were **$134.7 million** at December 31, 2021[428](index=428&type=chunk) Cash Flows Summary (in thousands USD) | Activity | 2021 | 2020 | 2019 | | :----------------------- | :---------- | :---------- | :----------- | | Operating activities | $38,337 | $39,476 | $(172,522) | | Investing activities | $35,949 | $(18,327) | $(13,270) | | Financing activities | $(10,351) | $(35,076) | $175,248 | | Net increase (decrease) in cash | $62,499 | $(13,241) | $(11,021) | - The pending sale of **GeneDx** to Sema4 Holdings Corp. for an upfront payment of **$150 million cash** and 80 million shares, plus potential milestones up to **$150 million**, is expected to close in Q2 2022 and will significantly impact liquidity[430](index=430&type=chunk)[431](index=431&type=chunk) - In 2021, OPKO sold an EirGen facility in Ireland for **$65 million cash**, generating a **$31.5 million gain**[433](index=433&type=chunk)[563](index=563&type=chunk) - Debt includes **$119.4 million in 4.50% Senior Convertible Notes due 2025**, **$65.5 million in 5% Convertible Promissory Notes due 2023**, and **$3.1 million in 3.0% Senior Notes due 2033**; lines of credit totaled **$13.7 million outstanding** at year-end 2021[635](index=635&type=chunk) - The company believes current cash, operations, and available lines of credit are sufficient for anticipated cash requirements beyond the next 12 months, but this is based on assumptions subject to change and the uncertain impact of COVID-19[464](index=464&type=chunk)[466](index=466&type=chunk) [CRITICAL ACCOUNTING POLICIES AND ESTIMATES](index=78&type=section&id=CRITICAL%20ACCOUNTING%20POLICIES%20AND%20ESTIMATES) OPKO's critical accounting policies involve significant estimates for goodwill, intangible assets, revenue recognition, and other financial items - The preparation of financial statements requires management to make significant estimates and assumptions, which can differ from actual results[469](index=469&type=chunk)[571](index=571&type=chunk) - **Goodwill and indefinite-lived intangible assets (IPR&D)** are tested annually for impairment using qualitative and quantitative analyses, involving complex judgments on future cash flows, market conditions, and discount rates; impairment charges were **$92.4 million** in 2019 but none in 2020 or 2021[471](index=471&type=chunk)[472](index=472&type=chunk)[473](index=473&type=chunk)[477](index=477&type=chunk)[478](index=478&type=chunk)[576](index=576&type=chunk)[580](index=580&type=chunk)[581](index=581&type=chunk) - Revenue recognition for services, products, and intellectual property involves estimating variable consideration, such as contractual discounts, implicit price concessions, rebates, and milestones, which are subject to retroactive adjustments and re-assessment each period[480](index=480&type=chunk)[485](index=485&type=chunk)[489](index=489&type=chunk)[493](index=493&type=chunk)[494](index=494&type=chunk) - Other critical estimates include allowances for doubtful accounts (considering historical collections, creditworthiness, economic conditions), income taxes (deferred tax assets, valuation allowances, uncertain tax positions), equity-based compensation (using Black-Scholes-Merton model), inventory valuation (lower of cost and net realizable value, obsolescence), and contingent consideration (revalued each period based on milestone probabilities and timing)[503](index=503&type=chunk)[506](index=506&type=chunk)[508](index=508&type=chunk)[509](index=509&type=chunk)[510](index=510&type=chunk) [RECENT ACCOUNTING PRONOUNCEMENTS](index=84&type=section&id=RECENT%20ACCOUNTING%20PRONOUNCEMENTS) OPKO is evaluating ASU No. 2020-06, which simplifies accounting for convertible instruments, effective for fiscal years after December 15, 2021 - OPKO is evaluating the impact of **ASU No. 2020-06**, "Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity's Own Equity (Subtopic 815-40)," which simplifies accounting for convertible instruments[511](index=511&type=chunk)[607](index=607&type=chunk) - The ASU is effective for public entities for fiscal years beginning after December 15, 2021, with early adoption permitted[511](index=511&type=chunk)[607](index=607&type=chunk) [ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=84&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) OPKO manages foreign currency exchange rate risk with forward contracts and has minimal interest rate risk due to fixed-rate debt and short-term investments [Foreign Currency Exchange Rate Risk](index=84&type=section&id=Foreign%20Currency%20Exchange%20Rate%20Risk) OPKO manages foreign exchange risk from global operations, particularly with the Chilean Peso, using forward contracts to hedge inventory purchases - OPKO operates globally and is subject to foreign exchange risk from fluctuations in the **Chilean Peso, Mexican Peso, and Euro**, affecting revenues and margins[512](index=512&type=chunk) - The company uses foreign exchange forward contracts to economically hedge forecasted cash flows from inventory purchases, with gains and losses on contracts partially offsetting those on exposed transactions[513](index=513&type=chunk)[514](index=514&type=chunk)[515](index=515&type=chunk) [Interest Rate Risk](index=85&type=section&id=Interest%20Rate%20Risk) OPKO's interest rate risk is minimal due to short-term, low-risk investments and fixed rates on most significant debt instruments - Interest rate risk is minimal due to investments in short-term money market funds and marketable securities, and fixed interest rates on the **2033 Senior Notes (3%)**, **2023 Convertible Notes (5%)**, and **2025 Notes (4.50%)**[517](index=517&type=chunk)[519](index=519&type=chunk) - At December 31, 2021, **$13.7 million** was outstanding under lines of credit with a weighted average interest rate of approximately **5.4%**[518](index=518&type=chunk) - The primary objective of investment activities is to preserve principal and maximize yields without significantly increasing risk, maintaining investments with an average maturity of generally less than three months[520](index=520&type=chunk) [ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA](index=86&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents OPKO's audited consolidated financial statements and notes, with an unqualified opinion from Ernst & Young LLP [Reports of Independent Registered Certified Public Accounting Firm (PCAOB ID No. 42)](index=87&type=section&id=Reports%20of%20Independent%20Registered%20Certified%20Public%20Accounting%20Firm%20%28PCAOB%20ID%20No.%2042%29) Ernst & Young LLP issued an unqualified opinion on OPKO's financial statements and internal controls, noting goodwill and revenue as critical audit matters - **Ernst & Young LLP** issued an unqualified opinion on the consolidated financial statements for the three years ended December 31, 2021, and on the effectiveness of internal control over financial reporting as of December 31, 2021[524](index=524&type=chunk)[525](index=525&type=chunk)[534](index=534&type=chunk)[535](index=535&type=chunk) - Critical audit matters identified were the valuation of **Goodwill and IPR&D for Rayaldee and Biologics**, and the variable consideration in determining revenue from services, both requiring significant auditor judgment due to complex estimations and assumptions[528](index=528&type=chunk)[530](index=530&type=chunk) [Consolidated Balance Sheets](index=91&type=section&id=Consolidated%20Balance%20Sheets) OPKO's 2021 balance sheet shows $2.40 billion in total assets, including $315.0 million assets held for sale, and $1.69 billion in equity Consolidated Balance Sheet Highlights (in thousands USD) | Metric | December 31, 2021 | December 31, 2020 | | :--------------------------- | :---------------- | :---------------- | | Cash and cash equivalents | $134,710 | $72,211 | | Accounts receivable, net | $259,637 | $286,314 | | Inventory, net | $86,502 | $132,341 | | Assets held for sale | $314,994 | — | | **Total current assets** | **$823,013** | **$523,179** | | Property, plant and equipment, net | $79,727 | $140,554 | | Intangible assets, net | $321,683 | $475,002 | | In-process research and development | $590,200 | $590,200 | | Goodwill | $520,601 | $680,602 | | **Total assets** | **$2,399,715** | **$2,473,063** | | Accounts payable | $82,040 | $100,883 | | Accrued expenses | $193,493 | $240,869 | | Liabilities associated with assets held for sale | $28,156 | — | | **Total current liabilities** | **$330,008** | **$375,483** | | Convertible notes | $187,935 | $221,989 | | **Total liabilities** | **$714,589** | **$801,512** | | **Total shareholders' equity** | **$1,685,126** | **$1,671,551** | - Assets held for sale of **$314.994 million** at December 31, 2021, primarily relate to **GeneDx**, which met held-for-sale accounting criteria[543](index=543&type=chunk)[562](index=562&type=chunk) [Consolidated Statements of Operations](index=92&type=section&id=Consolidated%20Statements%20of%20Operations) OPKO reported a $30.1 million net loss in 2021, despite 24% revenue growth, due to higher costs, contrasting with 2020's $30.6 million net income Consolidated Statements of Operations Highlights (in thousands USD) | Metric | 2021 | 2020 | 2019 | | :--------------------------------------- | :---------- | :---------- | :----------- | | Total revenues | $1,774,718 | $1,435,413 | $901,935 | | Total costs and expenses | $1,755,968 | $1,377,699 | $1,175,987 | | Operating income (loss) | $18,750 | $57,714 | $(274,052) | | Other income and (expense), net | $(32,776) | $(9,031) | $(30,913) | | Income tax provision | $(15,489) | $(17,617) | $(7,060) | | Loss from investments in investees | $(629) | $(480) | $(2,900) | | **Net income (loss)** | **$(30,143)** | **$30,586** | **$(314,925)** | | Income (loss) per share basic and diluted | $(0.05) | $0.05 | $(0.53) | - Total revenues increased by **$339.3 million (24%)** in 2021, driven by a **$344.9 million increase** in revenue from services and a **$21.8 million increase** in revenue from products[368](index=368&type=chunk)[546](index=546&type=chunk) - Operating income decreased by **$39.0 million (68%)** in 2021, primarily due to a **$298.8 million increase** in cost of revenue and a **$113.3 million increase** in selling, general and administrative expenses[368](index=368&type=chunk)[546](index=546&type=chunk) [Consolidated Statements of Comprehensive Income (Loss)](index=93&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20%28Loss%29) OPKO reported a $56.4 million comprehensive loss in 2021, a shift from 2020's income, driven by net loss and foreign currency translation Consolidated Statements of Comprehensive Income (Loss) (in thousands USD) | Metric | 2021 | 2020 | 2019 | | :---------------------------------------------- | :---------- | :---------- | :----------- | | Net income (loss) | $(30,143) | $30,586 | $(314,925) | | Change in foreign currency translation and other comprehensive income (loss) | $(26,270) | $17,845 | $(1,939) | | **Comprehensive income (loss)** | **$(56,413)** | **$48,431** | **$(316,864)** | - The shift from comprehensive income in 2020 to comprehensive loss in 2021 was largely due to a net loss and a negative impact from foreign currency translation[549](index=549&type=chunk) [Consolidated Statements of Equity](index=94&type=section&id=Consolidated%20Statements%20of%20Equity) OPKO's equity slightly increased to $1.69 billion in 2021, influenced by equity compensation, note conversions, net loss, and foreign currency impacts Consolidated Statements of Equity Highlights (in thousands USD) | Metric | December 31, 2021 | December 31, 2020 | | :----------------------------------- | :---------------- | :---------------- | | Common Stock | $6,901 | $6,706 | | Additional paid-in capital | $3,222,487 | $3,152,694 | | Accumulated other comprehensive loss | $(30,495) | $(4,225) | | Accumulated deficit | $(1,511,976) | $(1,481,833) | | **Total shareholders' equity** | **$1,685,126** | **$1,671,551** | - Equity-based compensation expense was **$13.6 million** in 2021[552](index=552&type=chunk) - Conversion of **$55.4 million of 2025 convertible notes** resulted in the issuance of **19,051,270 shares** of Common Stock in 2021[552](index=552&type=chunk) - Accumulated other comprehensive loss increased by **$26.3 million** in 2021, primarily due to foreign currency translation[552](index=552&type=chunk)[666](index=666&type=chunk) [Consolidated Statements of Cash Flows](index=95&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) OPKO generated $38.3 million cash from operations in 2021, with a $62.5 million net increase in cash, ending at $134.7 million Consolidated Statements of Cash Flows (in thousands USD) | Cash Flow Activity | 2021 | 2020 | 2019 | | :--------------------------------- | :---------- | :---------- | :----------- | | Net cash provided by (used in) operating activities | $38,337 | $39,476 | $(172,522) | | Net cash provided by (used in) investing activities | $35,949 | $(18,327) | $(13,270) | | Net cash (used in) provided by financing activities | $(10,351) | $(35,076) | $175,248 | | Effect of exchange rate changes on cash and cash equivalents | $(1,436) | $686 | $(477) | | Net increase (decrease) in cash and cash equivalents | $62,499 | $(13,241) | $(11,021) | | Cash and cash equivalents at end of period | $134,710 | $72,211 | $85,452 | - Cash from operating activities in 2021 primarily reflects cash generated by the diagnostics segment due to COVID-19 testing volumes[428](index=428&type=chunk) - Investing activities in 2021 were positively impacted by **$66.0 million** from the sale of property, plant, and equipment, partially offset by **$32.2 million** in capital expenditures[429](index=429&type=chunk)[554](index=554&type=chunk) - Financing activities in 2021 primarily reflect net repayments on lines of credit[429](index=429&type=chunk) [Notes to Consolidated Financial Statements](index=96&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Notes provide detailed disclosures on OPKO's business, accounting policies, financial captions, debt, equity, and commitments, including COVID-19 impacts - Notes provide detailed information on OPKO's business, organization, and significant accounting policies, including the impact of COVID-19 and the pending GeneDx transaction[556](index=556&type=chunk)[560](index=560&type=chunk)[564](index=564&type=chunk)[570](index=570&type=chunk) - Key accounting policies cover goodwill and intangible assets, revenue recognition (services, products, intellectual property), investments, debt, equity-based compensation, and income taxes[575](index=575&type=chunk)[589](index=589&type=chunk)[593](index=593&type=chunk)[599](index=599&type=chunk)[600](index=600&type=chunk)[606](index=606&type=chunk)[608](index=608&type=chunk) - Detailed breakdowns are provided for accounts receivable, inventories, property, plant and equipment, intangible assets, accrued expenses, and other long-term liabilities[628](index=628&type=chunk)[629](index=629&type=chunk) - Information on debt instruments (convertible notes, lines of credit), shareholders' equity, equity-based compensation, income tax provisions, related party transactions, employee benefit plans, commitments, contingencies, strategic alliances, leases, segments, fair value measurements, and derivative contracts is included[635](index=635&type=chunk)[660](index=660&type=chunk)[667](index=667&type=chunk)[676](index=676&type=chunk)[697](index=697&type=chunk)[714](index=714&type=chunk)[715](index=715&type=chunk)[725](index=725&type=chunk)[750](index=750&type=chunk)[778](index=778&type=chunk)[782](index=782&type=chunk)[788](index=788&type=chunk)[793](index=793&type=chunk) [ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE](index=140&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) There have been no changes in or disagreements with accountants on accounting and financial disclosure - No changes in or disagreements with accountants on accounting and financial disclosure[804](index=804&type=chunk) [ITEM 9A. CONTROLS AND PROCEDURES](index=140&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded OPKO's disclosure controls and internal control over financial reporting were effective as of December 31, 2021 - Management, with CEO and CFO participation, concluded that disclosure controls and procedures were effective as of December 31, 2021[805](index=805&type=chunk) - Management assessed and concluded that internal control over financial reporting was effective as of December 31, 2021, based on the 2013 COSO framework[807](index=807&type=chunk) - **Ernst & Young LLP** audited and expressed an unqualified opinion on the effectiveness of internal control over financial reporting[808](index=808&type=chunk) - No material changes to internal control over financial reporting occurred during the quarter ended December 31, 2021[809](index=809&type=chunk) [ITEM 9B. OTHER INFORMATION](index=140&type=section&id=Item%209B.%20Other%20Information) There is no other information to report - None[810](index=810&type=chunk) [ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS.](index=140&type=section&id=Item%209C.%20Disclosure%20regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections%2E) This item is not applicable for the report - Not applicable[811](index=811&type=chunk) [PART III](index=141&type=section&id=Part%20III%2E) This part incorporates information on directors, executive officers, corporate governance, executive compensation, security ownership, and related transactions by reference [ITEM 10. Directors, Executive Officers and Corporate Governance](index=141&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information on directors, executive officers, and corporate governance is incorporated by reference from the 2022 proxy statement - Information is incorporated by reference from the company's definitive proxy statement for the 2022 Annual Meeting of Stockholders[814](index=814&type=chunk) [ITEM 11. Executive Compensation](index=141&type=section&id=Item%2011.%20Executive%20Compensation) Information on executive compensation is incorporated by reference from the company's definitive proxy statement for the 2022 Annual Meeting - Information is incorporated by reference from the company's definitive proxy statement for the 2022 Annual Meeting of Stockholders[814](index=814&type=chunk) [ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=141&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information on security ownership and related stockholder matters is incorporated by reference from the 2022 proxy statement - Information is incorporated by reference from the company's definitive proxy statement for the 2022 Annual Meeting of Stockholders[814](index=814&type=chunk) [ITEM 13. Certain Relationships and Related Transactions and Director Independence](index=141&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%20and%20Director%20Independence) Information on certain relationships, related transactions, and director independence is incorporated by reference from the 2022 proxy statement - Information is incorporated by reference from the company's definitive proxy statement for the 2022 Annual Meeting of Stockholders[814](index=814&type=chunk) [ITEM 14. Principal Accounting Fees and Services](index=141&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) Information on principal accounting fees and services is incorporated by reference from the 2022 proxy statement - Information is incorporated by reference from the company's definitive proxy statement for the 2022 Annual Meeting of Stockholders[814](index=814&type=chunk) [PART IV](index=142&type=section&id=Part%20IV%2E) This part details exhibits and financial statement schedules filed as part of the 10-K report, including various agreements and certifications [Item 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.](index=142&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section lists all exhibits and financial statement schedules filed as part of the 10-K report, including agreements and certifications - The report includes financial statements as per Part II, Item 8, and an Index to Exhibits[819](index=819&type=chunk) - Exhibits include underwriting agreements, merger agreements (e.g., GeneDx Merger Agreement), corporate governance documents (Certificate of Incorporation, Bylaws), debt instruments (indentures for convertible notes), and various license and asset purchase agreements[819](index=819&type=chunk)[820](index=820&type=chunk) - Certifications by the CEO and CFO (pursuant to Sarbanes-Oxley Act Sections 302 and 906) are also included[820](index=820&type=chunk) [Item 16. Summary](index=145&type=section&id=Item%2016.%20Summary) This item is not applicable for the report - None[822](index=822&type=chunk)