Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 __________________________________________________________ FORM 10-K __________________________________________________________ (Mark One) x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2023 or o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _________ to Commission Fil ...

[Financial Performance Overview](index=1&type=section&id=Financial%20Performance%20Overview) [Q4 & Full-Year 2023 Financial Highlights](index=1&type=section&id=Q4%20%26%20Full-Year%202023%20Financial%20Highlights) OraSure reported Q4 2023 total net revenue of $75.9 million, a 38% decrease year-over-year, primarily due to a 53% decline in COVID-19 related revenue. Core business revenue remained flat. For the full year 2023, total net revenue increased by 5% to $405.5 million. The company achieved a Q4 GAAP EPS of $0.27 and a Non-GAAP EPS of $0.22, while significantly increasing its cash balance to $290.4 million Q4 & Full-Year 2023 Revenue Breakdown (in thousands) | Revenue Source | Three Months Ended Dec 31, 2023 | Three Months Ended Dec 31, 2022 | % Change | Year Ended Dec 31, 2023 | Year Ended Dec 31, 2022 | % Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Core Business | $34,217 | $34,084 | 0% | $147,693 | $144,154 | 2% | | COVID-19 | $41,664 | $88,994 | -53% | $257,779 | $243,325 | 6% | | **Total Net Revenue** | **$75,881** | **$123,078** | **-38%** | **$405,472** | **$387,479** | **5%** | Q4 & Full-Year 2023 Key Financial Metrics | Metric | Q4 2023 | Q4 2022 | FY 2023 | FY 2022 | | :--- | :--- | :--- | :--- | :--- | | GAAP EPS | $0.27 | $0.22 | $0.72 | $(0.24) | | Non-GAAP EPS | $0.22 | $0.36 | $1.04 | $0.36 | | Gross Margin | 46.3% | 40.5% | 42.3% | 38.3% | | Non-GAAP Gross Margin | 49.7% | 40.9% | 45.5% | 40.1% | | Operating Income (Loss) | $3.9M | $14.6M | $32.7M | $(22.2)M | | Non-GAAP Operating Income | $13.6M | $18.6M | $73.6M | $22.5M | - The company's cash, cash equivalents, and short-term investments balance grew to **$290.4 million** as of December 31, 2023. The **$65.5 million increase** during Q4 was driven by improved operational performance and a **$24.4 million receipt** from a U.S. government contract[1](index=1&type=chunk)[7](index=7&type=chunk) [Management Commentary](index=1&type=section&id=Management%20Commentary) The CEO emphasized significant progress in the company's transformation, highlighting positive operating cash flow and margin expansion in 2023. The company is focused on disciplined execution and innovation to elevate core growth as COVID-19 revenues decline, and is on track to achieve break-even cash flow from operations for its core business by the end of 2024 - The company is on track to achieve its target of **break-even in cash flow from operations** for the core business by the end of 2024[2](index=2&type=chunk) - The strategic focus for 2024 is on elevating core growth to offset the expected tapering of COVID-19 contract volumes[3](index=3&type=chunk) - OraSure is investing in its innovation roadmap through both organic development and inorganic partnerships, such as recent agreements with Sapphiros and Diagnostics Direct[3](index=3&type=chunk) [Business and Strategic Developments](index=2&type=section&id=Business%20and%20Strategic%20Developments) [Recent Business Highlights](index=2&type=section&id=Recent%20Business%20Highlights) OraSure has recently undertaken several strategic initiatives to enhance its product portfolio and operational efficiency. Key developments include a strategic partnership with Sapphiros to broaden its diagnostic test offerings, an agreement with Diagnostics Direct to enter the U.S. syphilis testing market, and the consolidation of a distribution facility to reduce costs - Entered a strategic distribution relationship and made an investment in Sapphiros, a consumer diagnostics company, to offer a more comprehensive range of low-cost diagnostic tests and sample management solutions[7](index=7&type=chunk) - Signed a strategic agreement with Diagnostics Direct to distribute Syphilis Health Check, the first CLIA-waived, 10-minute point-of-care syphilis test, marking the company's entry into this market[8](index=8&type=chunk) - Consolidated one of its distribution facilities into its Opus Way facility to drive additional operating efficiencies and cost savings[8](index=8&type=chunk) [Financial Guidance](index=4&type=section&id=Financial%20Guidance) [Q1 2024 Outlook](index=4&type=section&id=Q1%202024%20Outlook) For the first quarter of 2024, OraSure anticipates total revenue to be in the range of $50 million to $54 million. This forecast is composed of $29 to $31 million from its core business and $21 to $23 million from its InteliSwab® product Q1 2024 Revenue Guidance (in millions) | Revenue Category | Guidance Range | | :--- | :--- | | Core Revenue | $29 - $31 | | InteliSwab® Revenue | $21 - $23 | | **Total Revenue** | **$50 - $54** | [Detailed Financial Statements](index=5&type=section&id=Detailed%20Financial%20Statements) [Consolidated Results of Operations](index=5&type=section&id=Consolidated%20Results%20of%20Operations) For the full year 2023, OraSure reported a net income of $53.7 million, a significant turnaround from a net loss of $17.1 million in 2022. This improvement was driven by a 5% increase in total net revenues to $405.5 million and a 16% rise in gross profit. The Diagnostics segment was a key growth driver with a 41% revenue increase, while Molecular Sample Management Solutions and Molecular Services saw declines Full-Year Results of Operations (in thousands) | Line Item | 2023 | 2022 | | :--- | :--- | :--- | | Net revenues | $405,472 | $387,479 | | Gross profit | $171,652 | $148,438 | | Operating income (loss) | $32,684 | $(22,156) | | Net income (loss) | $53,655 | $(17,133) | | Diluted EPS | $0.72 | $(0.24) | Full-Year Revenue by Category (in thousands) | Category | 2023 | 2022 | % Change | | :--- | :--- | :--- | :--- | | COVID-19 Diagnostics | $257,493 | $233,666 | 10% | | Diagnostics | $73,694 | $52,181 | 41% | | Molecular Sample Management Solutions | $54,274 | $63,342 | -14% | | Molecular Services | $4,474 | $7,296 | -39% | | COVID-19 Molecular Products | $286 | $9,659 | -97% | [Consolidated Balance Sheets](index=6&type=section&id=Consolidated%20Balance%20Sheets) As of December 31, 2023, OraSure's balance sheet showed total assets of $482.8 million, up from $444.2 million at year-end 2022. The most significant change was the increase in cash and cash equivalents to $290.4 million from $84.0 million. Concurrently, inventories were nearly halved to $47.6 million, and accounts receivable decreased to $40.2 million, reflecting improved working capital management Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | Dec 31, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $290,407 | $83,980 | | Accounts receivable, net | $40,171 | $70,797 | | Inventories | $47,614 | $95,704 | | Total assets | $482,845 | $444,180 | | **Liabilities & Equity** | | | | Total liabilities | $52,174 | $79,755 | | Stockholders' equity | $430,671 | $364,425 | | Total liabilities and stockholders' equity | $482,845 | $444,180 | [Consolidated Statement of Cash Flows](index=7&type=section&id=Consolidated%20Statement%20of%20Cash%20Flows) For the full year 2023, the company generated $141.6 million in cash from operating activities, a stark contrast to the $47.2 million used in 2022. This positive swing was primarily driven by the return to profitability and significant positive changes in working capital, including a $48.2 million reduction in inventories and a $31.1 million decrease in accounts receivable. Net cash from investing activities was $66.2 million, largely from maturities of short-term investments and government contract proceeds Full-Year Cash Flow Summary (in thousands) | Activity | 2023 | 2022 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $141,583 | $(47,202) | | Net cash provided by investing activities | $66,154 | $21,085 | | Net cash used in financing activities | $(3,023) | $(3,828) | | **Net increase (decrease) in cash** | **$206,427** | **$(32,782)** | - The turnaround in operating cash flow was driven by a net income of **$53.7 million** and favorable working capital changes, including a **$48.2 million decrease** in inventories and a **$31.1 million decrease** in accounts receivable[12](index=12&type=chunk) [Non-GAAP Financial Measures](index=11&type=section&id=Non-GAAP%20Financial%20Measures) [GAAP to Non-GAAP Reconciliation](index=11&type=section&id=GAAP%20to%20Non-GAAP%20Reconciliation) The company uses non-GAAP financial measures to provide investors with supplemental information by excluding items that may not be indicative of recurring core business operations. For the full year 2023, Non-GAAP net income was $77.6 million ($1.04 per share), compared to GAAP net income of $53.7 million ($0.72 per share). Major adjustments included stock compensation, impairment losses, accelerated depreciation, and transformation-related expenses - Management believes non-GAAP measures provide useful supplemental information, facilitate analysis of core operating results, and allow for greater transparency with key metrics used in decision-making[22](index=22&type=chunk) Full-Year 2023 GAAP to Non-GAAP Net Income Reconciliation (in thousands) | Description | Amount | | :--- | :--- | | **GAAP Net Income** | **$53,655** | | Stock compensation | $10,729 | | Loss on impairment | $10,829 | | Accelerated depreciation | $7,466 | | Inventory reserve for excess levels | $3,761 | | Reduction in workforce severance | $3,264 | | Additional profit from government contract | $(12,802) | | Other adjustments (net) | $2,807 | | Tax effect of Non-GAAP adjustments | $(2,124) | | **Non-GAAP Net Income** | **$77,585** | - Key adjustments to reconcile GAAP to Non-GAAP operating income for FY2023 include **$10.8 million** in impairment losses, **$10.7 million** in stock compensation, and **$7.5 million** in accelerated depreciation[24](index=24&type=chunk)

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ______________________________________ FORM 10-Q ______________________________________ (Mark One) x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2023. OR o 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 001-16537 ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ______________________________________ FORM 10-Q ______________________________________ (Mark One) x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2023. OR o 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 001-16537 _____ ...

OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to . UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 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, 2023. Commission File Number 001-16537 ORASURE TECHNOLOGIES, INC. (Exact Name of Registrant as Specified in Its Charter) (State or Other Jurisdiction of Incor ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 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 No. 001-16537 ORASURE TECHNOLOGIES, INC. (Exact name of registrant as specified in its charter) Delaware 36-4370966 (State or other jurisdiction ...

OraSure Technologies, Inc. (NASDAQ:OSUR) Q4 2022 Earnings Conference Call February 14, 2023 5:00 PM ET Company Participants Scott Gleason - SVP, IR & Corporate Communications Carrie Manner - President, CEO & Director Kenneth McGrath - CFO Conference Call Participants Vijay Kumar - Evercore ISI Elizabeth Speyer - Citigroup Brandon Couillard - Jefferies Jacob Johnson - Stephens Inc. Casey Woodring - JPMorgan Chase & Co. Andrew Cooper - Raymond James & Associates Operator Good day, and thank you pray. Welcome ...

OraSure Technologies, Inc. (NASDAQ:OSUR) Q3 2022 Earnings Conference Call November 8, 2022 5:00 PM ET Company Participants Scott Gleason - Senior Vice President of Communications and Investor Relations Carrie Manner - President and Chief Executive Officer Kenneth McGrath - Chief Financial Officer Conference Call Participants Jacob Johnson - Stephens Inc. Casey Woodring - JPMorgan Chase & Co. Operator Good day, and thank you for standing by. Welcome to the OraSure Technologies’ Third Quarter Earnings Confere ...

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the unaudited consolidated financial statements, including balance sheets, statements of operations, comprehensive loss, and cash flows, along with detailed notes explaining significant accounting policies, government contracts, revenue breakdowns, goodwill, leases, and segment information [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets%20at%20September%2030%2C%202022%20and%20December%2031%2C%202021) Consolidated Balance Sheet Highlights (in thousands) | Metric | Sep 30, 2022 | Dec 31, 2021 | Change | % Change | | :-------------------------------- | :----------- | :----------- | :----- | :------- | | Total Assets | $432,208 | $460,990 | $(28,782) | -6.24% | | Total Liabilities | $90,318 | $80,457 | $9,861 | 12.26% | | Total Stockholders' Equity | $341,890 | $380,533 | $(38,643) | -10.15% | [Consolidated Statements of Operations](index=4&type=section&id=Consolidated%20Statements%20of%20Operations%20for%20the%20three%20and%20nine%20months%20ended%20September%2030%2C%202022%20and%202021) Consolidated Statements of Operations Highlights (in thousands, except per share amounts) | Metric | 3 Months Ended Sep 30, 2022 | 3 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net Revenues | $116,463 | $53,917 | $264,401 | $170,106 | | Gross Profit | $46,192 | $21,468 | $98,048 | $90,467 | | Operating Income (Loss) | $875 | $(13,013) | $(36,392) | $(793) | | Net Income (Loss) | $5,273 | $(15,015) | $(33,496) | $(12,605) | | Basic EPS | $0.07 | $(0.21) | $(0.46) | $(0.18) | | Diluted EPS | $0.07 | $(0.21) | $(0.46) | $(0.18) | [Consolidated Statements of Comprehensive Loss](index=5&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Loss%20for%20the%20three%20and%20nine%20months%20ended%20September%2030%2C%202022%20and%202021) Consolidated Statements of Comprehensive Loss Highlights (in thousands) | Metric | 3 Months Ended Sep 30, 2022 | 3 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | | :-------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net Income (Loss) | $5,273 | $(15,015) | $(33,496) | $(12,605) | | Currency translation adjustments | $(9,828) | $(4,117) | $(12,421) | $(1,362) | | Unrealized gain (loss) on marketable securities | $11 | $(161) | $167 | $(262) | | Comprehensive Loss | $(4,544) | $(19,293) | $(45,750) | $(14,229) | [Consolidated Statements of Cash Flows](index=6&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows%20for%20the%20nine%20months%20ended%20September%2030%2C%202022%20and%202021) Consolidated Statements of Cash Flows Highlights (in thousands) | Metric | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | | :-------------------------------- | :-------------------------- | :-------------------------- | | Net cash used in operating activities | $(29,190) | $(22,598) | | Net cash (used in) provided by investing activities | $(4,488) | $776 | | Net cash used in financing activities | $(3,027) | $(3,052) | | Net decrease in cash and cash equivalents | $(41,557) | $(25,840) | | Cash and cash equivalents, end of period | $75,205 | $134,962 | [Notes to the Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20the%20Consolidated%20Financial%20Statements) [1. Summary of Significant Accounting Policies](index=7&type=section&id=1.%20Summary%20of%20Significant%20Accounting%20Policies) This section outlines the company's significant accounting policies, including principles of consolidation, investment classification (available-for-sale), fair value measurements (Level 1, 2, 3), property, plant and equipment depreciation, intangible asset amortization, impairment testing for long-lived assets, and foreign currency translation. It also notes no material changes to policies except as discussed Available-for-Sale Securities (in thousands) | Metric | Sep 30, 2022 | Dec 31, 2021 | | :-------------------------- | :----------- | :----------- | | Total available-for-sale securities (Fair Value) | $26,432 | $53,288 | - Intangible assets decreased from **$14,343 thousand** as of December 31, 2021, to **$11,919 thousand** as of September 30, 2022, primarily due to **$1,617 thousand** in amortization expense and **$807 thousand** in foreign currency translation losses[29](index=29&type=chunk) - An aggregate pre-tax asset impairment charge of **$6,559 thousand** was recorded during the three months ended September 30, 2022, due to changes in forecasted demand for products, rendering several manufacturing lines and associated assets unutilized[31](index=31&type=chunk) Net Foreign Exchange Gains (in thousands) | Period | 2022 | 2021 | | :-------------------------- | :----- | :----- | | Three Months Ended Sep 30 | $2,342 | $7 | | Nine Months Ended Sep 30 | $2,396 | $(371) | [2. Government Capital Contracts](index=9&type=section&id=2.%20Government%20Capital%20Contracts) The company has agreements for funding from the U.S. Department of Defense (DOD) and the Commonwealth of Pennsylvania to expand manufacturing capacity for COVID-19 rapid tests and other operations. Funding earned for capital-related costs reduces the cost of property, plant and equipment, while project management income is recognized straight-line - Received **$109 million** in funding from the U.S. Department of Defense (DOD) to build additional manufacturing capacity for InteliSwab® COVID-19 Rapid Tests[38](index=38&type=chunk) Income Recognized from Government Contracts (in thousands) | Period | 2022 | 2021 | | :-------------------------- | :----- | :----- | | Three Months Ended Sep 30 | $561 | N/A | | Nine Months Ended Sep 30 | $1,684 | N/A | Government Contract Balances (in thousands) | Metric | Sep 30, 2022 | Dec 31, 2021 | | :-------------------------------- | :----------- | :----------- | | Total other current assets (receivables) | $15,329 | $19,629 | | Property, plant and equipment, net | $0 | $0 | | Other non-current assets (unbilled receivables) | $2,489 | $0 | | Accrued expenses and other current liabilities | $(404) | $(8,103) | [3. Inventories](index=10&type=section&id=3.%20Inventories) This section provides a breakdown of the company's inventory, categorized into raw materials, work in process, and finished goods, showing an overall increase from the prior year-end Inventory Breakdown (in thousands) | Category | Sep 30, 2022 | Dec 31, 2021 | Change | % Change | | :--------------- | :----------- | :----------- | :----- | :------- | | Raw materials | $37,137 | $33,168 | $3,969 | 11.97% | | Work in process | $2,499 | $2,252 | $247 | 10.97% | | Finished goods | $39,169 | $17,718 | $21,451 | 121.07% | | Total Inventories | $78,805 | $53,138 | $25,667 | 48.30% | [4. Earnings (Loss) Per Share](index=10&type=section&id=4.%20Earnings%20(Loss)%20Per%20Share) This section details the computation of basic and diluted earnings (loss) per share, including the weighted-average shares outstanding and the impact of dilutive securities. It notes that in periods of net loss, basic and diluted EPS are the same as dilutive effects would be anti-dilutive Earnings (Loss) Per Share (in thousands, except per share amounts) | Metric | 3 Months Ended Sep 30, 2022 | 3 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | | :-------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net income (loss) | $5,273 | $(15,015) | $(33,496) | $(12,605) | | Basic EPS | $0.07 | $(0.21) | $(0.46) | $(0.18) | | Diluted EPS | $0.07 | $(0.21) | $(0.46) | $(0.18) | | Basic Shares | 72,616 | 72,023 | 72,448 | 71,962 | | Diluted Shares | 72,785 | 72,023 | 72,448 | 71,962 | - For the three months ended September 30, 2022, **1,734 shares** from stock options, restricted stock, and performance stock units were excluded from diluted EPS computation as their inclusion would have been anti-dilutive[45](index=45&type=chunk) [5. Revenues](index=11&type=section&id=5.%20Revenues) This section provides a detailed breakdown of net revenues by product line (e.g., COVID-19, Genomics, HIV, HCV) and geographic area. It also highlights significant customer and vendor concentrations, noting that one non-commercial customer accounted for a substantial portion of accounts receivable and net consolidated revenues Net Revenues by Product Line (in thousands) | Product Line | 3 Months Ended Sep 30, 2022 | 3 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | COVID-19 | $79,920 | $13,930 | $154,331 | $54,147 | | Genomics | $13,980 | $19,018 | $44,558 | $49,333 | | HIV | $9,054 | $10,022 | $27,577 | $29,745 | | HCV | $3,234 | $2,715 | $10,182 | $9,382 | | Substance abuse | $2,595 | $2,674 | $7,786 | $7,265 | | Microbiome | $1,761 | $1,693 | $5,583 | $5,888 | | Laboratory services | $1,957 | $2,406 | $4,895 | $8,017 | | Other product and service revenues | $320 | $771 | $2,312 | $1,772 | | Net product and services revenues | $112,821 | $53,229 | $257,224 | $165,549 | | Other revenues | $3,642 | $688 | $7,177 | $4,557 | | Total Net Revenues | $116,463 | $53,917 | $264,401 | $170,106 | Net Revenues by Geographic Area (in thousands) | Geographic Area | 3 Months Ended Sep 30, 2022 | 3 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | | :---------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | United States | $108,941 | $42,969 | $237,248 | $139,669 | | Europe | $2,207 | $2,411 | $8,929 | $10,288 | | Other regions | $5,315 | $8,537 | $18,224 | $20,149 | | Total Net Revenues | $116,463 | $53,917 | $264,401 | $170,106 | - One non-commercial customer accounted for **47%** of accounts receivable at September 30, 2022, and **69%** and **53%** of net consolidated revenues for the three and nine months ended September 30, 2022, respectively[48](index=48&type=chunk) [6. Goodwill](index=11&type=section&id=6.%20Goodwill) This section details the changes in goodwill by operating segment, including an impairment charge for the Diagnostics reporting unit due to a decline in market capitalization. It describes the quantitative impairment test methodology, which combines income-based and market-based approaches Goodwill by Operating Segment (in thousands) | Segment | Balance as of Jan 1, 2022 | Impairment | Foreign Currency Translation Change | Balance as of Sep 30, 2022 | | :------------------ | :------------------------ | :--------- | :---------------------------------- | :------------------------- | | Diagnostics | $3,604 | $(3,604) | $0 | $0 | | Molecular Solutions | $36,675 | $0 | $(2,199) | $34,476 | | Total | $40,279 | $(3,604) | $(2,199) | $34,476 | - A pre-tax impairment charge of **$3.6 million** was recognized during the three months ended June 30, 2022, fully impairing the goodwill balance for the Diagnostics segment, triggered by a significant decline in the company's market capitalization[52](index=52&type=chunk) - Fair values of reporting units were estimated using a combined income-based (**75% weight**) and market-based (**25% weight**) approach, with discount rates of **22%** for Diagnostics and **20%** for Molecular Solutions[53](index=53&type=chunk) [7. Accrued Expenses and other current liabilities](index=12&type=section&id=7.%20Accrued%20Expenses%20and%20other%20current%20liabilities) This section provides a breakdown of accrued expenses and other current liabilities, showing a decrease in total from the prior year-end, primarily due to a reduction in the commitment to purchase under government contracts Accrued Expenses and Other Current Liabilities (in thousands) | Category | Sep 30, 2022 | Dec 31, 2021 | Change | % Change | | :-------------------------------- | :----------- | :----------- | :----- | :------- | | Payroll and related benefits | $11,263 | $15,570 | $(4,307) | -27.66% | | Commitment to purchase under government contract | $0 | $8,103 | $(8,103) | -100.00% | | Professional fees | $4,771 | $3,335 | $1,436 | 43.06% | | Sales tax payable | $1,372 | $2,227 | $(855) | -38.39% | | Other | $8,006 | $4,543 | $3,463 | 76.22% | | Total | $25,412 | $33,778 | $(8,366) | -24.77% | [8. Leases](index=12&type=section&id=8.%20Leases) This section details the company's operating and finance leases for offices, warehouse space, and equipment, including lease expense components, cash flow information, balance sheet impact, and future minimum lease payments. It also notes the termination of a warehouse lease in October 2022, resulting in significant annual cash savings Total Lease Cost (in thousands) | Period | 2022 | 2021 | | :-------------------------- | :----- | :----- | | Three Months Ended Sep 30 | $1,536 | $1,275 | | Nine Months Ended Sep 30 | $4,019 | $2,568 | Lease Liabilities and Terms | Metric | Sep 30, 2022 | Dec 31, 2021 | | :-------------------------------- | :----------- | :----------- | | Total operating lease liabilities (in thousands) | $16,431 | $9,383 | | Total finance lease liabilities (in thousands) | $2,177 | $2,891 | | Weighted-average remaining lease term—operating leases | 7.46 years | 5.26 years | | Weighted-average remaining lease term—finance leases | 1.59 years | 2.21 years | | Weighted-average discount rate—operating leases | 4.25% | 3.90% | | Weighted-average discount rate—finance leases | 3.45% | 3.57% | - The company terminated a warehouse lease effective October 31, 2022, resulting in annual cash savings of approximately **$735 thousand** and a reduction of operating right-of-use assets and lease liabilities by **$4,927 thousand** and **$5,146 thousand**, respectively[61](index=61&type=chunk) [9. Stockholders' Equity](index=14&type=section&id=9.%20Stockholders'%20Equity) This section provides a reconciliation of changes in stockholders' equity, detailing movements in additional paid-in capital, accumulated other comprehensive loss, and accumulated deficit. It also outlines stock-based award activity (options, restricted stock, PSUs) and the company's stock repurchase program Stockholders' Equity Changes (in thousands) | Metric | Dec 31, 2021 | Sep 30, 2022 | Change | | :-------------------------- | :----------- | :----------- | :----- | | Total Stockholders' Equity | $380,533 | $341,890 | $(38,643) | | Additional Paid-in Capital | $511,063 | $518,170 | $7,107 | | Accumulated Other Comprehensive Loss | $(10,077) | $(22,331) | $(12,254) | | Accumulated Deficit | $(120,453) | $(153,949) | $(33,496) | Stock-Based Compensation Expense (in thousands) | Award Type | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | | :-------------------------- | :-------------------------- | :-------------------------- | | Stock options | $1,213 | $793 | | Restricted shares | $7,047 | $2,891 | | PSUs | $840 | $1,471 | | Total | $9,100 | $5,155 | - The company has a share repurchase program approved in 2008 for up to **$25 million** of common shares. No shares were purchased and retired under this program during the nine months ended September 30, 2022 and 2021, but **19,470 shares** were purchased in July 2022 to satisfy tax withholdings related to restricted share vesting[68](index=68&type=chunk)[194](index=194&type=chunk) [10. Transition costs](index=16&type=section&id=10.%20Transition%20costs) This section details the costs and compensation arrangements related to the transition of the company's Chief Executive Officer, including severance for the former CEO, compensation for the interim CEO, and the employment agreement and inducement grants for the new CEO - Former CEO Stephen S. Tang received **$1,569 thousand** in severance and recognized a net **$1,508 thousand** of expense in relation to his stock compensation during the nine months ended September 30, 2022, due to termination without cause[70](index=70&type=chunk)[71](index=71&type=chunk) - Interim CEO Nancy J. Gagliano received a monthly base salary of **$56 thousand**, a one-time award of fully vested common stock with a fair value of **$100 thousand**, and a restricted stock unit award with a fair value of **$670 thousand** (of which **$168 thousand** vested)[72](index=72&type=chunk) - New CEO Carrie Eglinton Manner's compensation package includes an initial annual base salary of **$700 thousand**, participation in an annual incentive plan (target **100%** of base salary), and inducement grants totaling **$5,600 thousand** in fair value (restricted stock unit award of **$4,000 thousand**, restricted stock award of **$1,600 thousand**, and a PSU award)[73](index=73&type=chunk) [11. Income Taxes](index=17&type=section&id=11.%20Income%20Taxes) This section reports the income tax expense or benefit for the periods, highlighting the impact of withholding tax on repatriated earnings from Canada and the decrease in foreign tax expense due to lower income from the Canadian subsidiary. The company maintains a full valuation allowance against its U.S. deferred tax asset Income Tax Expense (Benefit) (in thousands) | Period | 2022 | 2021 | | :-------------------------- | :----- | :----- | | Three Months Ended Sep 30 | $(1,143) | $2,102 | | Nine Months Ended Sep 30 | $1,624 | $12,241 | - Tax expense for the nine months ended September 30, 2022, includes **$1,683 thousand** of withholding tax paid on the repatriation of **$65 million** of unremitted earnings from Canada to the United States[74](index=74&type=chunk) - The company maintains a full valuation allowance against its U.S. deferred tax asset, as management believes the facts and circumstances necessitating the allowance have not changed[76](index=76&type=chunk) [12. Commitments and Contingencies](index=17&type=section&id=12.%20Commitments%20and%20Contingencies) This section addresses the company's involvement in legal actions arising in the ordinary course of business, specifically detailing the ongoing patent litigation against Spectrum Solutions, LLC regarding saliva collection devices - The company is involved in patent litigation against Spectrum Solutions, LLC, filed in March 2021, alleging infringement of patents related to saliva collection devices. Fact discovery is ongoing, with the final pretrial conference set for September 7, 2023[78](index=78&type=chunk)[191](index=191&type=chunk) [13. Business Segment Information](index=18&type=section&id=13.%20Business%20Segment%20Information) This section describes the company's two business segments: Diagnostics (rapid diagnostic tests for infectious diseases and substance abuse) and Molecular Solutions (collection kits for genetic material and microbiome laboratory services). It provides segment-level financial data for revenues, operating income/loss, depreciation, impairment losses, capital expenditures, and total assets Net Revenues by Segment (in thousands) | Segment | 3 Months Ended Sep 30, 2022 | 3 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | | :------------------ | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Diagnostics | $97,651 | $23,511 | $196,416 | $57,368 | | Molecular Solutions | $18,812 | $30,406 | $67,985 | $112,738 | | Total | $116,463 | $53,917 | $264,401 | $170,106 | Operating Income (Loss) by Segment (in thousands) | Segment | 3 Months Ended Sep 30, 2022 | 3 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | | :------------------ | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Diagnostics | $11,289 | $(18,446) | $(20,274) | $(42,413) | | Molecular Solutions | $(10,414) | $5,433 | $(16,118) | $41,620 | | Total | $875 | $(13,013) | $(36,392) | $(793) | Loss on Impairment by Segment (in thousands) | Segment | 3 Months Ended Sep 30, 2022 | 3 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | | :------------------ | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Diagnostics | $0 | $0 | $8,517 | $0 | | Molecular Solutions | $6,559 | $0 | $8,584 | $0 | | Total | $6,559 | $0 | $17,101 | $0 | Total Assets by Segment (in thousands) | Segment | Sep 30, 2022 | Dec 31, 2021 | | :------------------ | :----------- | :----------- | | Diagnostics | $265,790 | $209,674 | | Molecular Solutions | $166,418 | $251,316 | | Total | $432,208 | $460,990 | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=19&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition and results of operations, including an overview of business segments, recent developments, detailed analysis of consolidated and segment-level financial performance for the three and nine months ended September 30, 2022, liquidity and capital resources, and critical accounting policies [Overview and Business Segments](index=21&type=section&id=Overview%20and%20Business%20Segments) The company aims to improve global health through accurate information, operating with two segments: Diagnostics (rapid tests for infectious diseases like COVID-19, HIV, HCV, and substance abuse) and Molecular Solutions (collection kits and services for genomics and microbiome research). The Diagnostics segment includes OTC products and PrEP adherence tests, while Molecular Solutions focuses on clinical, direct-to-consumer, and research markets, including the Colli-Pee® device - The Diagnostics business develops, manufactures, and sells rapid diagnostic products and specimen collection devices for diseases like COVID-19, HIV, and Hepatitis C, as well as drugs of abuse tests. It also includes OTC products and tests for HIV medication adherence[91](index=91&type=chunk) - The Molecular Solutions business, operated by DNA Genotek Inc., Diversigen, Inc., and Novosanis NV, sells collection kits and services for clinical laboratories, direct-to-consumer labs, researchers, and pharmaceutical companies, with a focus on genomics and the emerging microbiome market, including the Colli-Pee® device[92](index=92&type=chunk)[93](index=93&type=chunk)[94](index=94&type=chunk) [Recent Developments](index=21&type=section&id=Recent%20Developments) Recent developments include the ongoing volatility in demand for COVID-19 testing products, new BARDA funding for a second-generation Ebola test, and a contract with the CDC to provide OraQuick® In-Home HIV tests for a self-test program targeting underserved communities - Demand for COVID-19 PCR testing declined in 2022 due to the availability of antigen tests and wider vaccine access, leading to volatility in COVID-19 testing product sales[93](index=93&type=chunk)[96](index=96&type=chunk) - Received up to **$8.6 million** in funding from BARDA to develop a second-generation Ebola test on the OraQuick® testing platform[97](index=97&type=chunk) - Selected to provide up to **1 million** OraQuick® In-Home HIV tests over five years for the CDC's "Together Take Me Home" HIV self-test program, targeting disproportionately affected populations[99](index=99&type=chunk)[100](index=100&type=chunk) [Current Consolidated Financial Results](index=22&type=section&id=Current%20Consolidated%20Financial%20Results) For the nine months ended September 30, 2022, consolidated net revenues increased significantly, primarily driven by InteliSwab® COVID-19 rapid test sales. However, the company reported a higher consolidated net loss due to lower gross margins from unfavorable product mix, increased inventory reserves, manufacturing inefficiencies, and higher operating expenses, including impairment charges and CEO transition costs. Cash used in operating activities also increased Consolidated Financial Highlights (9 Months Ended Sep 30, in millions) | Metric | 2022 | 2021 | Change | % Change | | :-------------------------------- | :----- | :----- | :----- | :------- | | Consolidated Net Revenues | $264.4 | $170.1 | $94.3 | 55.44% | | Consolidated Net Loss | $(33.5) | $(12.6) | $(20.9) | 165.87% | | Cash used in operating activities | $(29.2) | $(22.6) | $(6.6) | 29.20% | | Cash, cash equivalents and available-for-sale securities | $101.6 | N/A | N/A | N/A | - Net loss was impacted by lower gross margins due to an unfavorable product mix (higher sales of lower margin products), increased inventory reserves, manufacturing inefficiencies, lower absorption of labor costs, and the absence of the Gates subsidy. Operating expenses also increased due to impairment charges, legal fees, severance, accelerated stock compensation, increased staffing, and strategic alternatives process costs[102](index=102&type=chunk) [Results of Operations](index=22&type=section&id=Results%20of%20Operations) [Three months ended September 30, 2022 compared to September 30, 2021](index=22&type=section&id=Three%20months%20ended%20September%2030%2C%202022%20compared%20to%20September%2030%2C%202021) For the three months ended September 30, 2022, consolidated net revenues significantly increased, primarily driven by InteliSwab® COVID-19 rapid test sales. Gross profit margins remained flat, but operating income improved from a loss in the prior year, despite impairment charges and increased operating expenses in certain areas [Consolidated Net Revenues](index=22&type=section&id=Consolidated%20Net%20Revenues) Consolidated Net Revenues (3 Months Ended Sep 30, in thousands) | Metric | 2022 | 2021 | % Change | | :-------------------------- | :----- | :----- | :------- | | Net product and services revenues | $112,821 | $53,229 | 112% | | Other revenues | $3,642 | $688 | 429% | | Total Net Revenues | $116,463 | $53,917 | 116% | - The increase in consolidated net revenues was largely due to **$79.6 million** of InteliSwab® COVID-19 rapid test revenues in Q3 2022, compared to **$7.7 million** in Q3 2021. Higher HCV product sales also contributed, while other product lines saw declines[106](index=106&type=chunk) - International sales accounted for **6%** of total net revenues in Q3 2022, down from **20%** in Q3 2021[108](index=108&type=chunk) [Net Revenues by Segment](index=23&type=section&id=Net%20Revenues%20by%20Segment) [Diagnostics Segment](index=23&type=section&id=Diagnostics%20Segment) Diagnostics Segment Net Revenues (3 Months Ended Sep 30, in thousands) | Market | 2022 | 2021 | % Change | | :-------------------------- | :----- | :----- | :------- | | COVID-19 | $79,559 | $7,675 | 937% | | Other infectious disease testing | $12,248 | $12,932 | -5% | | Substance abuse testing | $2,595 | $2,674 | -3% | | Other revenues | $3,249 | $230 | NM | | Total Net Revenues | $97,651 | $23,511 | 315% | OraQuick® HIV and HCV Product Revenues (3 Months Ended Sep 30, in thousands) | Market | 2022 | 2021 | % Change | | :---------------- | :----- | :----- | :------- | | Domestic HIV | $4,609 | $3,440 | 34% | | International HIV | $4,445 | $6,582 | -32% | | Domestic HCV | $1,866 | $1,827 | 2% | | International HCV | $1,368 | $888 | 54% | [Molecular Solutions Segment](index=24&type=section&id=Molecular%20Solutions%20Segment) Molecular Solutions Segment Net Revenues (3 Months Ended Sep 30, in thousands) | Market | 2022 | 2021 | % Change | | :-------------------------- | :----- | :----- | :------- | | Genomics | $13,980 | $19,018 | -26% | | Microbiome | $1,761 | $1,693 | 4% | | COVID-19 | $361 | $6,255 | -94% | | Laboratory services | $1,957 | $2,406 | -19% | | Other product and service revenues | $360 | $576 | -38% | | Other revenues | $393 | $458 | -14% | | Total Net Revenues | $18,812 | $30,406 | -38% | [Consolidated Operating Results](index=25&type=section&id=Consolidated%20Operating%20Results) - Consolidated gross profit margins remained flat at **40%** for both the three months ended September 30, 2022 and 2021[126](index=126&type=chunk) - Consolidated operating income was **$875 thousand** for the three months ended September 30, 2022, a **$13.9 million** increase from the **$13.0 million** operating loss in the prior year, positively impacted by increased revenues despite **$6.6 million** in impairment charges[127](index=127&type=chunk) [Operating Income (Loss) by Segment](index=25&type=section&id=Operating%20Income%20(Loss)%20by%20Segment) [Diagnostics Segment](index=25&type=section&id=Diagnostics%20Segment) - Diagnostics segment gross profit margin increased to **38%** in Q3 2022 from **16%** in Q3 2021, driven by improved product mix, better quality-yield for InteliSwab® tests, and higher non-product revenues[130](index=130&type=chunk) Diagnostics Segment Operating Expenses (3 Months Ended Sep 30, in thousands) | Expense Category | 2022 | 2021 | % Change | | :----------------- | :----- | :----- | :------- | | Research and development | $7,400 | $5,900 | 26% | | Sales and marketing | $9,700 | $9,000 | 8% | | General and administrative | $8,900 | $8,100 | 5% | - The Diagnostics segment reported an operating income of **$11.3 million** for the three months ended September 30, 2022, including **$8.5 million** in non-cash impairment charges, **$2.1 million** for depreciation and amortization, and **$1.6 million** for stock-based compensation[132](index=132&type=chunk) [Molecular Solutions Segment](index=25&type=section&id=Molecular%20Solutions%20Segment) - Molecular Solutions segment gross profit margin decreased to **49%** in Q3 2022 from **58%** in Q3 2021 due to a less favorable product mix[133](index=133&type=chunk) Molecular Solutions Segment Operating Expenses (3 Months Ended Sep 30, in thousands) | Expense Category | 2022 | 2021 | % Change | | :----------------- | :----- | :----- | :------- | | Research and development | $2,400 | $2,700 | -13% | | Sales and marketing | $3,800 | $4,900 | -23% | | General and administrative | $7,000 | $4,400 | 58% | - Operating expenses for the Molecular segment included an impairment charge of **$6.6 million** for idle manufacturing lines[135](index=135&type=chunk) - The Molecular Solutions segment reported an operating loss of **$10.4 million** for the three months ended September 30, 2022, including **$6.6 million** in non-cash impairment charges, **$1.8 million** for depreciation and amortization, and **$0.7 million** for stock-based compensation[136](index=136&type=chunk) [Consolidated Income Taxes](index=26&type=section&id=Consolidated%20Income%20Taxes) Consolidated Income Tax (Benefit) Expense (3 Months Ended Sep 30, in thousands) | Tax Type | 2022 | 2021 | | :---------------- | :----- | :----- | | U.S. state tax benefit | $(40) | $(102) | | Foreign tax (benefit) expense | $(1,100) | $2,200 | - The decrease in foreign tax expense is largely due to a decrease in income before taxes generated by the Canadian subsidiary[138](index=138&type=chunk) [Nine months ended September 30, 2022 compared to September 30, 2021](index=26&type=section&id=Nine%20months%20ended%20September%2030%2C%202022%20compared%20to%20September%2030%2C%202021) For the nine months ended September 30, 2022, consolidated net revenues increased significantly, primarily driven by InteliSwab® COVID-19 rapid test sales. However, gross profit margins decreased due to unfavorable product mix and manufacturing inefficiencies, leading to a substantial consolidated operating loss [Consolidated Net Revenues](index=26&type=section&id=Consolidated%20Net%20Revenues) Consolidated Net Revenues (9 Months Ended Sep 30, in thousands) | Metric | 2022 | 2021 | % Change | | :-------------------------- | :----- | :----- | :------- | | Net product and services revenues | $257,224 | $165,549 | 55% | | Other revenues | $7,177 | $4,557 | 57% | | Total Net Revenues | $264,401 | $170,106 | 55% | - The increase in consolidated net revenues was largely due to **$144.8 million** of InteliSwab® COVID-19 rapid test revenues in the first nine months of 2022, compared to **$7.9 million** in the comparable period of 2021. This was partially offset by declines in molecular sample collection kits for COVID-19 testing and international HIV product sales[141](index=141&type=chunk) - International sales accounted for **10%** of total net revenues in the first nine months of 2022, down from **18%** in the comparable period of 2021[142](index=142&type=chunk) [Net Revenues by Segment](index=27&type=section&id=Net%20Revenues%20by%20Segment) [Diagnostics Segment](index=27&type=section&id=Diagnostics%20Segment) Diagnostics Segment Net Revenues (9 Months Ended Sep 30, in thousands) | Market | 2022 | 2021 | % Change | | :-------------------------- | :----- | :----- | :------- | | COVID-19 | $144,809 | $7,938 | NM | | Other infectious disease testing | $38,179 | $39,664 | -4% | | Substance abuse testing | $7,786 | $7,265 | 7% | | Other revenues | $5,642 | $2,501 | 126% | | Total Net Revenues | $196,416 | $57,368 | 242% | OraQuick® HIV and HCV Product Revenues (9 Months Ended Sep 30, in thousands) | Market | 2022 | 2021 | % Change | | :---------------- | :----- | :----- | :------- | | Domestic HIV | $12,115 | $12,490 | -3% | | International HIV | $15,462 | $17,255 | -10% | | Domestic HCV | $6,440 | $5,580 | 15% | | International HCV | $3,742 | $3,802 | -2% | [Molecular Solutions Segment](index=28&type=section&id=Molecular%20Solutions%20Segment) Molecular Solutions Segment Net Revenues (9 Months Ended Sep 30, in thousands) | Market | 2022 | 2021 | % Change | | :-------------------------- | :----- | :----- | :------- | | Genomics | $44,558 | $49,333 | -10% | | Microbiome | $5,583 | $5,888 | -5% | | COVID-19 | $9,522 | $46,209 | -79% | | Laboratory services | $4,895 | $8,017 | -39% | | Other product revenues | $1,892 | $1,235 | 53% | | Other revenues | $1,535 | $2,056 | -25% | | Total Net Revenues | $67,985 | $112,738 | -40% | [Consolidated Operating Results](index=28&type=section&id=Consolidated%20Operating%20Results) - Consolidated gross profit margins decreased to **37%** for the nine months ended September 30, 2022, from **53%** in the prior year, due to an unfavorable product mix, increased inventory reserves, manufacturing inefficiencies, lower labor cost absorption, and the expiration of the Gates Foundation subsidy[161](index=161&type=chunk) - Consolidated operating loss for the nine months ended September 30, 2022, was **$36.4 million**, a **$35.6 million** decrease from the **$793 thousand** recorded in the prior year, primarily due to lower gross profit margins and an aggregate impairment charge of **$17.1 million**[162](index=162&type=chunk) [Operating Income (Loss) by Segment](index=29&type=section&id=Operating%20Income%20(Loss)%20by%20Segment) [Diagnostics Segment](index=29&type=section&id=Diagnostics%20Segment) - Diagnostics segment gross profit margin improved to **33%** for the nine months ended September 30, 2022, from **29%** in the prior year, due to a more favorable product mix and increased non-product revenues, partially offset by manufacturing inefficiencies and the expiration of the Gates Foundation subsidy[165](index=165&type=chunk) Diagnostics Segment Operating Expenses (9 Months Ended Sep 30, in thousands) | Expense Category | 2022 | 2021 | % Change | | :----------------- | :----- | :----- | :------- | | Research and development | $19,200 | $17,400 | 10% | | Sales and marketing | $25,600 | $21,700 | 18% | | General and administrative | $33,600 | $21,600 | 55% | - Operating expenses for the Diagnostics segment included an impairment charge of **$4.9 million** for an idle manufacturing line and a goodwill impairment charge of **$3.6 million**, writing down the segment's goodwill to **$0**[167](index=167&type=chunk) - The Diagnostics segment reported an operating loss of **$20.3 million** for the nine months ended September 30, 2022, including **$8.5 million** in non-cash impairment charges, **$5.7 million** for depreciation and amortization, and **$7.5 million** for stock-based compensation[168](index=168&type=chunk) [Molecular Solutions Segment](index=29&type=section&id=Molecular%20Solutions%20Segment) - Molecular Solutions segment gross profit margin decreased to **47%** for the nine months ended September 30, 2022, from **66%** in the prior year, due to increased reserves for excess inventory and a less favorable product mix[169](index=169&type=chunk) Molecular Solutions Segment Operating Expenses (9 Months Ended Sep 30, in thousands) | Expense Category | 2022 | 2021 | % Change | | :----------------- | :----- | :----- | :------- | | Research and development | $8,100 | $7,900 | 3% | | Sales and marketing | $12,300 | $12,100 | 1% | | General and administrative | $18,600 | $12,100 | 53% | - Operating expenses for the Molecular Solutions segment included impairment charges of **$8.6 million** for several idle manufacturing lines[171](index=171&type=chunk) - The Molecular Solutions segment reported an operating loss of **$16.1 million** for the nine months ended September 30, 2022, including **$8.6 million** in non-cash impairment charges, **$5.6 million** for depreciation and amortization, and **$1.6 million** for stock-based compensation[172](index=172&type=chunk) [Consolidated Income Taxes](index=30&type=section&id=Consolidated%20Income%20Taxes) Consolidated Income Tax (Benefit) Expense (9 Months Ended Sep 30, in thousands) | Tax Type | 2022 | 2021 | | :---------------- | :----- | :----- | | U.S. state tax expense | $379 | $13 | | Withholding taxes on repatriation | $1,700 | $0 | | Foreign tax (benefit) expense | $(438) | $12,200 | - The overall decrease in foreign tax expense is largely a result of the decrease in income before taxes generated by the Canadian subsidiary[174](index=174&type=chunk) [Liquidity and Capital Resources](index=30&type=section&id=Liquidity%20and%20Capital%20Resources) The company's cash, cash equivalents, and available-for-sale securities decreased, and net cash used in operating activities increased, primarily due to the net loss and increased working capital requirements for COVID-19 testing. Investing activities included proceeds from maturities and purchases of property and equipment, while financing activities mainly involved common stock repurchases for tax withholdings. The company expects current liquidity to be sufficient for the next twelve months, but notes potential impacts from various factors including government contracts, acquisitions, and foreign currency Liquidity and Capital Resources (in thousands) | Metric | Sep 30, 2022 | Dec 31, 2021 | Change | % Change | | :-------------------------------- | :----------- | :----------- | :----- | :------- | | Cash and cash equivalents | $75,205 | $116,762 | $(41,557) | -35.59% | | Available for sale securities | $26,432 | $53,288 | $(26,856) | -50.40% | | Working capital | $208,035 | $220,367 | $(12,332) | -5.60% | Net Cash Flows (9 Months Ended Sep 30, in thousands) | Activity | 2022 | 2021 | | :-------------------------- | :----- | :----- | | Net cash used in operating activities | $(29,190) | $(22,598) | | Net cash used in investing activities | $(4,488) | $776 | | Net cash used in financing activities | $(3,027) | $(3,052) | - Cash used in operating activities increased due to the net loss and increased working capital requirements, including a **$27.6 million** increase in inventory and a **$19.2 million** increase in accounts receivable[176](index=176&type=chunk) - As of September 30, 2022, **$75.2 million** (**74%**) of the **$101.6 million** in cash, cash equivalents, and available-for-sale securities belonged to the Canadian subsidiary. Repatriated **$65.0 million** from Canada to the U.S. in Q1 2022, incurring **$1.7 million** in Canadian withholding tax[179](index=179&type=chunk) [Critical Accounting Policies and Estimates](index=30&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) This section reiterates the company's critical accounting policies and estimates, emphasizing the highly subjective nature and significant judgment involved in evaluating goodwill for impairment, including identifying reporting units and estimating fair value - The process of evaluating goodwill impairment is highly subjective and requires significant judgment, including identifying reporting units, performing qualitative evaluations, and estimating the fair value of applicable reporting units[185](index=185&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=31&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company does not hold derivative financial instruments. Its primary market risk is foreign currency exchange risk, mainly from operations in Canada (Canadian dollar) and Belgium (Euro). Fluctuations in these exchange rates can affect operating results and cash flows - The company has no material derivative risk as it does not hold derivative financial instruments[186](index=186&type=chunk) - Foreign currency exchange risk primarily relates to operations in Canada (Canadian dollar) and Belgium (Euro). A **10%** unfavorable change in the Canadian-to-U.S. dollar and Euro-to-U.S. dollar exchange rates would have decreased comprehensive income by approximately **$11.7 million** for the nine months ended September 30, 2022[187](index=187&type=chunk) [Item 4. Controls and Procedures](index=31&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the effectiveness of the company's disclosure controls and procedures as of September 30, 2022, concluding they were effective. There were no material changes in internal control over financial reporting during the three months ended September 30, 2022 - The company's disclosure controls and procedures were evaluated as effective as of September 30, 2022, providing reasonable assurance that material information is accumulated and communicated timely[188](index=188&type=chunk) - There were no material changes in the company's internal control over financial reporting during the three months ended September 30, 2022[189](index=189&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=32&type=section&id=Item%201.%20Legal%20Proceedings) This section provides an update on legal proceedings, specifically detailing the ongoing patent litigation against Spectrum Solutions, LLC, regarding alleged infringement of patents related to saliva collection devices - The company is involved in patent litigation against Spectrum Solutions, LLC, filed in March 2021, alleging infringement of patents related to saliva collection devices. Fact discovery is ongoing, with the final pretrial conference set for September 7, 2023[191](index=191&type=chunk) [Item 1A. Risk Factors](index=32&type=section&id=Item%201A.%20Risk%20Factors) This section states that there have been no material changes to the risk factors disclosed in the Annual Report on Form 10-K, but highlights customer concentration as a significant risk, with one non-commercial customer accounting for a large portion of net consolidated revenues - One non-commercial customer accounted for **69%** and **53%** of net consolidated revenues for the three and nine months ended September 30, 2022, respectively, creating a significant customer concentration risk[193](index=193&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=32&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details the repurchase of common stock during the period, which was primarily to satisfy minimum tax withholdings related to the vesting of restricted shares awarded to employees, under an existing share repurchase program Common Stock Repurchases (July 1 - Sep 30, 2022) | Period | Total shares purchased | Average price paid per Share | | :-------------------------------- | :--------------------- | :--------------------------- | | July 1, 2022 - July 31, 2022 | 19,470 | $2.78 | | August 1, 2022 - August 31, 2022 | — | — | | September 1, 2022 - September 30, 2022 | — | — | | Total | 19,470 | N/A | - Shares were purchased and retired to satisfy minimum tax withholdings related to the vesting of restricted and performance shares, under a share repurchase program approved in 2008 for up to **$25.0 million**[194](index=194&type=chunk)[195](index=195&type=chunk) [Item 3. Defaults Upon Senior Securities](index=32&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities - No defaults upon senior securities[196](index=196&type=chunk) [Item 4. Mine Safety Disclosures](index=32&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Mine Safety Disclosures are not applicable[196](index=196&type=chunk) [Item 5. Other Information](index=33&type=section&id=Item%205.%20Other%20Information) No other information is reported under this item - No other information to report[197](index=197&type=chunk) [Item 6. Exhibits](index=33&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed as part of the Form 10-Q, including employment agreements, certifications required by the Securities Exchange Act, and XBRL-related documents - Exhibits include employment agreements (e.g., Kenneth J. McGrath), certifications (e.g., Carrie Eglinton-Manner, Kenneth J. McGrath) required by Rule 13a-14(a) and 13a-14(b) of the Securities Exchange Act, and Inline XBRL documents[197](index=197&type=chunk)

Financial Data and Key Metrics Changes - The company reported significant changes in financial performance, including revenue and profitability metrics, which are detailed in the earnings report [5]. Business Line Data and Key Metrics Changes - Specific business lines, such as Diagnostics and Molecular Solutions, showed varied performance metrics, indicating shifts in demand and operational efficiency [4]. Market Data and Key Metrics Changes - The company highlighted changes in market dynamics, including shifts in customer demand and competitive positioning within the industry [4]. Company Strategy and Development Direction - The management discussed strategic initiatives aimed at enhancing product offerings and expanding market reach, focusing on innovation and regulatory compliance [5]. Management Comments on Operating Environment and Future Outlook - Management provided insights into the current operating environment, emphasizing challenges and opportunities that could impact future performance [5]. Other Important Information - The call included forward-looking statements regarding potential risks and uncertainties that could affect the company's financial results [5]. Q&A Session Summary Question: What are the expectations for revenue growth in the upcoming quarters? - Management indicated that they anticipate steady revenue growth driven by new product launches and market expansion efforts [5]. Question: How is the company addressing supply chain challenges? - The company is actively working to mitigate supply chain disruptions through strategic partnerships and inventory management [5].