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, 2025 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: 001-39139 CURIOSITYSTREAM INC. (Exact Name of Registrant as Specified in It ...

[PART I – FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20%E2%80%93%20FINANCIAL%20INFORMATION) This section presents the unaudited condensed consolidated financial statements and notes for Q2 2025 and FY 2024 [Item 1—Condensed Consolidated Financial Statements (Unaudited)](index=3&type=section&id=Item%201%E2%80%94Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) This section presents the unaudited condensed consolidated financial statements and notes for Q2 2025 and FY 2024 [Condensed Consolidated Statements of Financial Condition](index=3&type=section&id=Condensed%20Consolidated%20Statements%20of%20Financial%20Condition) This statement provides a snapshot of the company's assets, liabilities, and equity as of June 30, 2025, and December 31, 2024 | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :----------------------------- | :----------------------------- | :----------------------------- | | Total Assets | $5,191,386 | $4,789,729 | | Receivable portfolios, net | $4,184,780 | $3,776,369 | | Total Liabilities | $4,295,415 | $4,022,398 | | Borrowings | $3,965,465 | $3,672,762 | | Total Stockholders' Equity | $895,971 | $767,331 | - Most assets of consolidated variable interest entities (VIEs) can only be used to settle obligations of those VIEs, and liabilities exclude amounts where creditors have recourse to the Company's general credit[9](index=9&type=chunk) [Condensed Consolidated Statements of Income](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) This statement details the company's revenues, operating income, net income, and earnings per share for the three and six months ended June 30, 2025 and 2024 | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :----------------------------- | :------------------------------------ | :------------------------------------ | :---------------------------------- | :---------------------------------- | | Total Revenues | $442,122 | $355,285 | $834,897 | $683,671 | | Income from operations | $150,733 | $101,839 | $280,076 | $185,430 | | Net Income | $58,721 | $32,181 | $105,517 | $55,420 | | Basic EPS | $2.50 | $1.35 | $4.45 | $2.33 | | Diluted EPS | $2.49 | $1.34 | $4.41 | $2.28 | [Condensed Consolidated Statements of Comprehensive Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) This statement presents net income and other comprehensive income components, including unrealized gains/losses on derivatives and foreign currency translation | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :------------------------------------------------ | :------------------------------------ | :------------------------------------ | :---------------------------------- | :---------------------------------- | | Net income | $58,721 | $32,181 | $105,517 | $55,420 | | Unrealized (loss) gain on derivative instruments, net of tax | $(2,853) | $(1,819) | $(3,729) | $971 | | Unrealized gain (loss) on foreign currency translation, net of tax | $30,914 | $(703) | $46,378 | $(7,009) | | Comprehensive income | $86,782 | $29,659 | $148,166 | $49,382 | [Condensed Consolidated Statements of Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Equity) This statement outlines changes in total stockholders' equity, accumulated earnings, and other comprehensive loss, including share repurchases | Metric | December 31, 2024 (in thousands) | June 30, 2025 (in thousands) | | :----------------------------- | :----------------------------- | :----------------------------- | | Total Stockholders' Equity | $767,331 | $895,971 | | Accumulated Earnings | $909,927 | $1,015,221 | | Accumulated Other Comprehensive Loss | $(162,130) | $(119,481) | | Common Stock Shares Outstanding | 23,691 | 23,095 | - The company repurchased **418,499 shares** of common stock for approximately **$15.0 million** during the three months ended June 30, 2025, and **707,924 shares** for approximately **$25.0 million** during the six months ended June 30, 2025[18](index=18&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This statement summarizes cash flows from operating, investing, and financing activities for the six months ended June 30, 2025 and 2024 | Metric | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :------------------------------------ | :------------------------------------ | :------------------------------------ | | Net cash provided by operating activities | $54,807 | $86,697 | | Net cash used in investing activities | $(169,652) | $(131,886) | | Net cash provided by financing activities | $87,230 | $139,492 | | Purchases of receivable portfolios, net of put-backs | $(725,391) | $(566,960) | | Collections applied to receivable portfolios | $553,400 | $419,833 | | Cash and cash equivalents, end of period | $172,896 | $250,621 | [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures supporting the condensed consolidated financial statements [Note 1: Ownership, Description of Business, and Summary of Significant Accounting Policies](index=9&type=section&id=Note%201%3A%20Ownership%2C%20Description%20of%20Business%2C%20and%20Summary%20of%20Significant%20Accounting%20Policies) This note describes the company's business, primary operations, and recent accounting pronouncements affecting financial reporting - Encore Capital Group, Inc. is an international specialty finance company providing debt recovery solutions and related services, primarily purchasing defaulted consumer receivables[25](index=25&type=chunk) - The company's primary operations are through Midland Credit Management, Inc. (MCM) in the U.S. and Cabot Credit Management Limited (CCM) in Europe and the UK[26](index=26&type=chunk) - Recent accounting pronouncements include ASU 2023-09 (Income Tax Disclosures, effective after Dec 15, 2024), ASU 2024-03/2025-01 (Expense Disaggregation Disclosures, effective after Dec 15, 2026), and ASU 2024-04 (Induced Conversions of Convertible Debt, effective after Dec 15, 2025)[33](index=33&type=chunk)[34](index=34&type=chunk)[35](index=35&type=chunk) [Note 2: Earnings Per Share](index=10&type=section&id=Note%202%3A%20Earnings%20Per%20Share) This note details the calculation of basic and diluted earnings per share and information on share repurchases | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income | $58,721 | $32,181 | $105,517 | $55,420 | | Basic earnings per share | $2.50 | $1.35 | $4.45 | $2.33 | | Diluted earnings per share | $2.49 | $1.34 | $4.41 | $2.28 | | Weighted-average basic shares outstanding | 23,507 | 23,883 | 23,692 | 23,834 | | Weighted-average dilutive shares outstanding | 23,578 | 24,097 | 23,926 | 24,282 | - The company repurchased **418,499 shares** for approximately **$15.0 million** during the three months ended June 30, 2025, and **707,924 shares** for approximately **$25.0 million** during the six months ended June 30, 2025, under its **$300.0 million** share repurchase program[38](index=38&type=chunk) [Note 3: Fair Value Measurements](index=11&type=section&id=Note%203%3A%20Fair%20Value%20Measurements) This note provides fair value measurements for financial instruments, including derivatives and receivable portfolios, and their valuation methodologies | Financial Instrument | Fair Value Level | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :------------------- | :--------------- | :----------------------------- | :----------------------------- | | Interest rate cap contracts | Level 2 | $503 | $252 | | Interest rate swap agreements | Level 2 | $(22,659) | $(18,360) | | Financial Instrument | Fair Value Level | Carrying Amount (June 30, 2025) | Estimated Fair Value (June 30, 2025) | | :------------------- | :--------------- | :------------------------------ | :----------------------------------- | | Receivable portfolios, net | Level 3 | $4,184,780 | $4,469,118 | - The fair value of receivable portfolios is measured by discounting estimated future cash flows using proprietary forecasting models, with key inputs including estimated future gross cash flow, average cost to collect, and discount rate[48](index=48&type=chunk) [Note 4: Derivatives and Hedging Instruments](index=12&type=section&id=Note%204%3A%20Derivatives%20and%20Hedging%20Instruments) This note explains the company's use of interest rate swaps and cross-currency swaps to manage interest rate and foreign currency risks | Derivative Instrument | Balance Sheet Location | Fair Value (June 30, 2025, in thousands) | Fair Value (December 31, 2024, in thousands) | | :-------------------- | :--------------------- | :--------------------------------------- | :--------------------------------------- | | Interest rate cap contracts | Other assets | $503 | $252 | | Interest rate swap agreements | Other liabilities | $(22,659) | $(18,360) | - The company uses interest rate swap agreements and interest rate cap contracts as cash flow hedges to reduce exposure to fluctuations in interest rates on variable interest rate debt[55](index=55&type=chunk) - Cross-currency swap agreements are used as fair value hedges to manage foreign currency exchange risk by converting fixed-rate Euro and GBP borrowings to fixed-rate USD debt[56](index=56&type=chunk) [Note 5: Receivable Portfolios, Net](index=14&type=section&id=Note%205%3A%20Receivable%20Portfolios%2C%20Net) This note details the balance of receivable portfolios, net, and the impact of collections and changes in expected recoveries | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :------------------------------------ | :----------------------------- | :----------------------------- | | Receivable portfolios, net (Balance, end of period) | $4,184,780 | $3,776,369 | | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :------------------------------------ | :------------------------------------ | :------------------------------------ | :---------------------------------- | :---------------------------------- | | Negative allowance for expected recoveries - portfolio purchases | $367,099 | $278,692 | $734,950 | $574,406 | | Collections applied to receivable portfolios, net | $(293,811) | $(224,798) | $(553,400) | $(419,833) | | Changes in recoveries | $55,599 | $5,754 | $77,063 | $(6,655) | - Collections over-performed forecasted collections by approximately **$52.3 million** and **$79.2 million** for the three and six months ended June 30, 2025, respectively[66](index=66&type=chunk) [Note 6: Other Assets](index=17&type=section&id=Note%206%3A%20Other%20Assets) This note provides a breakdown of other asset categories, including operating lease right-of-use assets and real estate owned | Other Asset Category | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :------------------- | :----------------------------- | :----------------------------- | | Operating lease right-of-use assets | $61,054 | $58,089 | | Prepaid expenses | $34,874 | $35,564 | | Real estate owned | $30,122 | $38,075 | | Total Other Assets | $206,743 | $225,090 | [Note 7: Borrowings](index=17&type=section&id=Note%207%3A%20Borrowings) This note outlines the company's various borrowing instruments, including credit facilities and senior notes, and recent amendments | Borrowing Type | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :------------------------------------ | :----------------------------- | :----------------------------- | | Global senior secured revolving credit facility | $999,678 | $865,365 | | Senior secured notes | $1,950,022 | $1,846,047 | | Convertible senior notes | $330,000 | $330,000 | | Cabot securitisation senior facility | $350,141 | $319,137 | | U.S. facility | $300,000 | $283,500 | | Total Borrowings (net) | $3,965,465 | $3,672,762 | - The Global Senior Facility was upsized by **$190.0 million** to **$1.485 billion** and its termination date extended from September 2028 to September 2029 (except for a **$69.5 million** tranche)[71](index=71&type=chunk) - The U.S. Facility was amended on July 3, 2025, to extend its maturity date from October 2027 to October 2028 and increase the committed amount from **$300.0 million** to **$450.0 million**[91](index=91&type=chunk) [Note 8: Variable Interest Entities](index=20&type=section&id=Note%208%3A%20Variable%20Interest%20Entities) This note explains the company's consolidation of Variable Interest Entities (VIEs) for which it is the primary beneficiary - The company consolidates Variable Interest Entities (VIEs) for which it is the primary beneficiary, having both the power to direct activities and the obligation to absorb losses or right to receive benefits[94](index=94&type=chunk) - VIEs include certain securitized financing vehicles and other immaterial special purpose entities created to purchase receivable portfolios in specific geographies[95](index=95&type=chunk) [Note 9: Accumulated Other Comprehensive Loss](index=20&type=section&id=Note%209%3A%20Accumulated%20Other%20Comprehensive%20Loss) This note details the components of accumulated other comprehensive loss, including derivatives and currency translation adjustments | Component | Balance at December 31, 2024 (in thousands) | Balance at June 30, 2025 (in thousands) | | :----------------------------- | :------------------------------------------ | :-------------------------------------- | | Derivatives | $(16,368) | $(20,097) | | Currency Translation Adjustments | $(145,762) | $(99,384) | | Total Accumulated Other Comprehensive Loss | $(162,130) | $(119,481) | - For the six months ended June 30, 2025, other comprehensive income before reclassification included **$(7.1) million** from derivatives and **$46.2 million** from currency translation adjustments[98](index=98&type=chunk) [Note 10: Income Taxes](index=21&type=section&id=Note%2010%3A%20Income%20Taxes) This note presents the provision for income taxes, effective tax rates, and factors influencing tax rate differences | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Provision for income taxes | $19,295 | $10,329 | $32,959 | $17,582 | | Effective tax rate | 24.7% | 24.3% | 23.8% | 24.1% | - The effective tax rate differences from the federal statutory rate were primarily due to state income taxes and other foreign adjustments for 2025, and state income taxes for 2024[99](index=99&type=chunk) - The company has estimated and recorded an immaterial impact from the OECD's Pillar Two global minimum tax framework, and the recently signed One Big Beautiful Bill Act (OBBBA) is expected to have an immaterial impact for future periods[103](index=103&type=chunk)[105](index=105&type=chunk) [Note 11: Commitments and Contingencies](index=22&type=section&id=Note%2011%3A%20Commitments%20and%20Contingencies) This note discusses legal actions, regulatory investigations, and forward flow purchase agreements for nonperforming loans - The company is routinely subject to legal actions and regulatory investigations related to debt collection practices (e.g., FDCPA, FCRA, TCPA)[106](index=106&type=chunk) - As of June 30, 2025, there were no material developments in previously disclosed legal proceedings, nor any new material legal proceedings, and no material reserves for legal matters[107](index=107&type=chunk)[108](index=108&type=chunk) - The company had forward flow purchase agreements for nonperforming loans with an estimated minimum aggregate purchase price of approximately **$411.1 million** as of June 30, 2025[110](index=110&type=chunk) [Note 12: Segment and Geographic Information](index=23&type=section&id=Note%2012%3A%20Segment%20and%20Geographic%20Information) This note provides revenue and operating income by the company's single reportable segment and geographic areas - The company operates as one reportable segment: debt purchasing and recovery, based on aggregation criteria[112](index=112&type=chunk) | Metric | Three Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | | :----------------------------- | :------------------------------------ | :---------------------------------- | | Debt purchasing and recovery segment - Total revenues | $442,122 | $834,897 | | Debt purchasing and recovery segment - Operating income | $167,815 | $311,081 | | Geographic Area | Three Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | | :-------------- | :------------------------------------ | :---------------------------------- | | United States | $312,590 | $582,176 | | Europe | $128,138 | $249,599 | | Other geographies | $1,394 | $3,122 | | Total Revenues | $442,122 | $834,897 | [Note 13: Goodwill](index=25&type=section&id=Note%2013%3A%20Goodwill) This note details the balance of goodwill, the effect of foreign currency translation, and impairment testing information | Metric | December 31, 2024 (in thousands) | June 30, 2025 (in thousands) | | :----------------------------- | :----------------------------- | :----------------------------- | | Balance of Goodwill | $507,808 | $542,912 | | Effect of foreign currency translation | N/A | $35,104 | - The company's goodwill is tested for impairment annually, and no interim assessment was required for the three and six months ended June 30, 2025[123](index=123&type=chunk)[124](index=124&type=chunk) - Accumulated goodwill impairment loss was **$338.8 million** as of June 30, 2025, attributable to the Cabot reporting unit[125](index=125&type=chunk) [Item 2 – Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=Item%202%20%E2%80%93%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section discusses the company's financial condition, operations, and liquidity, analyzing Q2 2025 revenues, expenses, and cash flows [Our Business](index=26&type=section&id=Our%20Business) This section describes Encore's core business as an international specialty finance company focused on debt recovery solutions - Encore is an international specialty finance company providing debt recovery solutions and related services, primarily purchasing portfolios of defaulted consumer receivables[128](index=128&type=chunk) - The company operates through three business units: MCM (United States), Cabot (Europe), and LAAP (Latin America and Asia-Pacific)[129](index=129&type=chunk) - The long-term growth strategy focuses on continuing to invest in core portfolio purchasing and recovery in the United States and United Kingdom, and strengthening and developing business in France and Spain[132](index=132&type=chunk) [Government Regulation](index=26&type=section&id=Government%20Regulation) This section outlines the federal, state, municipal, and foreign regulations governing the company's debt collection and purchasing activities - U.S. operations (MCM) are subject to federal, state, and municipal statutes, rules, and regulations, including the Fair Debt Collection Practices Act (FDCPA), Fair Credit Reporting Act (FCRA), and Telephone Consumer Protection Act (TCPA)[133](index=133&type=chunk)[134](index=134&type=chunk) - European operations (Cabot) are affected by foreign statutes, rules, and regulations regarding debt collection and debt purchase activities, which are subject to modification[135](index=135&type=chunk) [Portfolio Purchasing and Recovery](index=27&type=section&id=Portfolio%20Purchasing%20and%20Recovery) This section details the types of defaulted consumer receivables purchased and the proprietary models used for valuation and collections - In the United States, the company primarily purchases charged-off credit card debt portfolios, with a small percentage comprising Chapter 13 and Chapter 7 bankruptcy proceedings[136](index=136&type=chunk) - Proprietary statistical and behavioral models are employed across U.S. operations for accurate portfolio valuation and to maximize future collections[137](index=137&type=chunk) - In Europe, purchased defaulted debt portfolios primarily consist of credit card and consumer loan accounts, valued using a proprietary pricing model[138](index=138&type=chunk) [Purchases and Collections](index=27&type=section&id=Purchases%20and%20Collections) This section analyzes market conditions, capital deployments, and gross collections from purchased receivables by geographic location [Portfolio Pricing, Supply and Demand](index=27&type=section&id=Portfolio%20Pricing%2C%20Supply%20and%20Demand) This section discusses the supply, demand, and pricing dynamics for defaulted consumer receivables in the U.S. and European markets - In the U.S., supply of defaulted consumer receivables remains elevated due to record lending and high charge-off rates, with pricing remaining at favorable levels[139](index=139&type=chunk) - Smaller competitors face difficulties in the U.S. portfolio purchasing market due to high operating costs and increasing cost of capital, favoring larger participants like MCM[140](index=140&type=chunk) - The UK market provides a relatively consistent pipeline of opportunities, and France and Spain are significant markets in Europe for non-performing loan disposals[141](index=141&type=chunk)[142](index=142&type=chunk) - Portfolio pricing remains competitive across European markets, constraining the amount of capital deployed in Europe[143](index=143&type=chunk) [Purchases by Geographic Location](index=28&type=section&id=Purchases%20by%20Geographic%20Location) This section provides a breakdown of capital deployed for receivable portfolio purchases across different geographic regions | Geographic Location | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :------------------ | :------------------------------------ | :------------------------------------ | :---------------------------------- | :---------------------------------- | | MCM (United States) | $317,264 | $236,826 | $633,630 | $473,335 | | Cabot (Europe) | $49,835 | $41,866 | $101,320 | $101,071 | | Total purchases of receivable portfolios | $367,099 | $278,692 | $734,950 | $574,406 | - U.S. capital deployments increased during the three and six months ended June 30, 2025, due to increased supply and favorable pricing[144](index=144&type=chunk) - European capital deployment increased during the three months ended June 30, 2025, primarily due to favorable foreign currency translation, while remaining relatively consistent for the six-month period[145](index=145&type=chunk) [Collections from Purchased Receivables by Channel and Geographic Location](index=28&type=section&id=Collections%20from%20Purchased%20Receivables%20by%20Channel%20and%20Geographic%20Location) This section details gross collections from purchased receivables, segmented by geographic area and collection channel | Geographic Area | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :-------------- | :------------------------------------ | :------------------------------------ | :---------------------------------- | :---------------------------------- | | MCM (United States) - Subtotal | $490,352 | $396,629 | $944,377 | $766,107 | | Cabot (Europe) - Subtotal | $163,967 | $149,224 | $313,943 | $289,921 | | Total collections from purchased receivables | $654,985 | $546,728 | $1,259,792 | $1,057,615 | - Gross collections from purchased receivables increased by **19.8%** to **$655.0 million** (three months) and **19.1%** to **$1.26 billion** (six months) in 2025[148](index=148&type=chunk) - Increases were driven by consistent capital deployments in the U.S. and a combination of increased capital deployments and acquisitions of portfolios with higher returns in Europe[148](index=148&type=chunk) [Results of Operations](index=29&type=section&id=Results%20of%20Operations) This section analyzes the company's financial performance, including revenues, operating expenses, interest expense, and income taxes [Revenues](index=31&type=section&id=Revenues) This section examines the sources and drivers of the company's total revenues, including portfolio revenue and servicing revenue | Revenue Category | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :--------------- | :------------------------------------ | :------------------------------------ | :---------------------------------- | :---------------------------------- | | Portfolio revenue | $361,174 | $321,930 | $706,392 | $637,782 | | Changes in recoveries | $55,599 | $5,754 | $77,063 | $(6,655) | | Total debt purchasing revenue | $416,773 | $327,684 | $783,455 | $631,127 | | Servicing revenue | $22,300 | $21,107 | $44,847 | $41,486 | | Other revenues | $3,049 | $6,494 | $6,595 | $11,058 | | Total revenues | $442,122 | $355,285 | $834,897 | $683,671 | - Revenue recognized from portfolio basis increased due to a higher receivable portfolios balance in the U.S. driven by consistent higher purchase volumes in recent periods[157](index=157&type=chunk) - Collections over-performed forecasted collections by approximately **$52.3 million** (three months) and **$79.2 million** (six months) in 2025, primarily driven by enhanced U.S. collection strategies[158](index=158&type=chunk) [Operating Expenses](index=37&type=section&id=Operating%20Expenses) This section details changes in key operating expense categories, such as salaries, legal collections, and general and administrative costs | Expense Category | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :--------------- | :------------------------------------ | :------------------------------------ | :---------------------------------- | :---------------------------------- | | Salaries and employee benefits | $117,738 | $106,608 | $223,670 | $210,792 | | Cost of legal collections | $79,649 | $64,249 | $147,662 | $122,970 | | General and administrative expenses | $41,327 | $36,779 | $82,345 | $73,020 | | Other operating expenses | $36,990 | $30,845 | $71,242 | $61,212 | | Total operating expenses | $291,389 | $253,446 | $554,821 | $498,241 | - Salaries and employee benefits increased primarily due to an increase in overall headcount and employee benefits/payroll taxes[174](index=174&type=chunk) - Cost of legal collections increased due to increased legal placements in this channel in the United States[176](index=176&type=chunk) [Interest Expense](index=39&type=section&id=Interest%20Expense) This section discusses the factors contributing to changes in interest expense, including debt balances and interest rates | Expense Category | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :--------------- | :------------------------------------ | :------------------------------------ | :---------------------------------- | :---------------------------------- | | Stated interest on debt obligations | $70,276 | $57,163 | $137,262 | $109,201 | | Total interest expense | $73,943 | $61,376 | $144,473 | $117,141 | - The increase in interest expense was primarily due to increased average debt balance and rising interest rates[183](index=183&type=chunk) - Foreign currency translation had an unfavorable impact on interest expense, driven by the weakening of the U.S. dollar against the British Pound[183](index=183&type=chunk) [Other Income, net of Other Expense](index=39&type=section&id=Other%20Income%2C%20net%20of%20Other%20Expense) This section provides an overview of other non-operating income and expenses impacting the company's financial results | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :-------------------- | :------------------------------------ | :------------------------------------ | :---------------------------------- | :---------------------------------- | | Other income, net | $1,226 | $2,047 | $2,873 | $4,713 | | Interest income | $1,400 (approx.) | $1,800 (approx.) | $2,900 (approx.) | $3,100 (approx.) | [Provision for Income Taxes](index=40&type=section&id=Provision%20for%20Income%20Taxes) This section analyzes the provision for income taxes and the effective tax rate, highlighting key reconciling items | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :-------------------- | :------------------------------------ | :------------------------------------ | :---------------------------------- | :---------------------------------- | | Provision for income taxes | $19,295 | $10,329 | $32,959 | $17,582 | | Effective tax rate | 24.7% | 24.3% | 23.8% | 24.1% | - The differences between the effective tax rate and the federal statutory rate were primarily due to state income taxes offset by other foreign adjustments for 2025, and state income taxes for 2024[184](index=184&type=chunk) [Non-GAAP Disclosure](index=40&type=section&id=Non-GAAP%20Disclosure) This section defines and reconciles Adjusted EBITDA, a non-GAAP financial measure, to GAAP net income for performance evaluation - Adjusted EBITDA is a non-GAAP financial measure used to evaluate operating performance, defined as net income before interest, taxes, depreciation and amortization, stock-based compensation, acquisition/integration/restructuring expenses, and other non-indicative charges or gains[187](index=187&type=chunk) | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :-------------------- | :------------------------------------ | :------------------------------------ | :---------------------------------- | :---------------------------------- | | GAAP net income, as reported | $58,721 | $32,181 | $105,517 | $55,420 | | Adjusted EBITDA | $164,233 | $116,029 | $304,693 | $214,247 | [Supplemental Performance Data](index=42&type=section&id=Supplemental%20Performance%20Data) This section presents key performance metrics, including cumulative collections money multiples and estimated remaining gross collections - Supplemental performance data, including purchases, collections, and Estimated Remaining Collections (ERC), is impacted by foreign currency translation[192](index=192&type=chunk) [Cumulative Collections Money Multiple - Cumulative Collections from Purchased Receivables to Purchase Price Multiple](index=43&type=section&id=Cumulative%20Collections%20Money%20Multiple%20-%20Cumulative%20Collections%20from%20Purchased%20Receivables%20to%20Purchase%20Price%20Multiple) This section provides the cumulative collections money multiple, comparing total collections to purchase price by geographic area | Geographic Area | Total Purchase Price (in thousands) | Total Cumulative Collections (in thousands) | CCMM (Multiple) | | :-------------- | :---------------------------------- | :------------------------------------------ | :-------------- | | United States | $10,567,420 | $21,519,619 | 2.0 | | Europe | $4,366,630 | $6,512,157 | 1.5 | | Other geographies | $340,283 | $550,501 | 1.6 | | Total | $15,274,333 | $28,582,277 | 1.9 | [Purchase Price Multiple - Total Estimated Collections from Purchased Receivables to Purchase Price Multiple](index=44&type=section&id=Purchase%20Price%20Multiple%20-%20Total%20Estimated%20Collections%20from%20Purchased%20Receivables%20to%20Purchase%20Price%20Multiple) This section presents the purchase price multiple, comparing total estimated gross collections to purchase price by geographic area | Geographic Area | Purchase Price (in thousands) | Total Estimated Gross Collections (in thousands) | Purchase Price Multiple | | :-------------- | :---------------------------- | :----------------------------------------------- | :---------------------- | | United States | $10,567,420 | $27,175,949 | 2.6 | | Europe | $4,366,630 | $10,146,612 | 2.3 | | Other geographies | $340,283 | $575,287 | 1.7 | | Total | $15,274,333 | $37,897,848 | 2.5 | [Estimated Remaining Gross Collections by Year of Purchase](index=45&type=section&id=Estimated%20Remaining%20Gross%20Collections%20by%20Year%20of%20Purchase) This section details the estimated remaining gross collections (ERC) for portfolios and real estate owned, segmented by geographic area | Category | Total ERC (in thousands) | | :--------------- | :----------------------- | | Portfolio ERC | $9,315,571 | | REO ERC | $46,829 | | Total ERC | $9,362,400 | | Geographic Area | Portfolio ERC (in thousands) | | :-------------- | :--------------------------- | | United States | $5,656,330 | | Europe | $3,634,455 | | Other geographies | $24,786 | [Estimated Future Collections Applied to Receivable Portfolios](index=46&type=section&id=Estimated%20Future%20Collections%20Applied%20to%20Receivable%20Portfolios) This section outlines the projected amortization schedule for estimated future collections applied to receivable portfolios | Years Ending December 31, | Total Amortization (in thousands) | | :----------------------- | :-------------------------------- | | 2025 (July-Dec) | $469,704 | | 2026 | $926,570 | | 2027 | $698,223 | | 2028 | $485,396 | | 2029 | $357,310 | | 2030 | $268,196 | | Total | $4,184,780 | [Liquidity and Capital Resources](index=47&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's cash flow activities, primary capital sources, and available funding capacity [Liquidity](index=47&type=section&id=Liquidity) This section analyzes the company's cash flows from operating, investing, and financing activities and their impact on overall liquidity | Cash Flow Activity | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :----------------- | :------------------------------------ | :------------------------------------ | | Net cash provided by operating activities | $54,807 | $86,697 | | Net cash used in investing activities | $(169,652) | $(131,886) | | Net cash provided by financing activities | $87,230 | $139,492 | - Net cash provided by operating activities decreased due to adjustments for changes in recoveries, which resulted in a **$77.1 million** decrease in operating cash flows for the six months ended June 30, 2025[209](index=209&type=chunk) - Net cash used in investing activities was primarily affected by **$725.4 million** in receivable portfolio purchases (net of put-backs) and **$553.4 million** in collections applied to receivable portfolios for the six months ended June 30, 2025[210](index=210&type=chunk) [Capital Resources](index=47&type=section&id=Capital%20Resources) This section identifies the primary sources of capital, including debt facilities and share repurchase programs, and their utilization - Primary sources of capital include cash collections from receivable portfolios, bank borrowings, debt offerings, and equity offerings[212](index=212&type=chunk) - Available capacity under the Global Senior Facility was **$397.2 million** as of June 30, 2025[213](index=213&type=chunk) - The company repurchased **707,924 shares** of common stock for approximately **$25.0 million** during the six months ended June 30, 2025, under its **$300.0 million** share repurchase program, with **$66.9 million** remaining authorization[214](index=214&type=chunk) [Critical Accounting Estimates](index=48&type=section&id=Critical%20Accounting%20Estimates) This section highlights key accounting estimates, particularly the ongoing reassessment of expected future recoveries of receivable portfolios - The preparation of condensed consolidated financial statements requires management to make estimates and assumptions, particularly regarding the ongoing reassessment of expected future recoveries of receivable portfolios under the CECL accounting policy[218](index=218&type=chunk) - No material changes to critical accounting policies and estimates have occurred since the Annual Report on Form 10-K for the year ended December 31, 2024, other than the ongoing reassessment of expected future recoveries[218](index=218&type=chunk) [Item 3 – Quantitative and Qualitative Disclosures About Market Risk](index=49&type=section&id=Item%203%20%E2%80%93%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As of June 30, 2025, there were no material changes in foreign currency exchange rates or interest rate risk information compared to the 2024 Annual Report on Form 10-K - No material change in foreign currency risk information as of June 30, 2025, compared to the 2024 Annual Report on Form 10-K[220](index=220&type=chunk) - No material change in interest rate risk information as of June 30, 2025, compared to the 2024 Annual Report on Form 10-K[221](index=221&type=chunk) [Item 4 – Controls and Procedures](index=49&type=section&id=Item%204%20%E2%80%93%20Controls%20and%20Procedures) Management confirmed effective disclosure controls as of June 30, 2025, with no material changes to internal control during the quarter - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective at the reasonable assurance level as of June 30, 2025[225](index=225&type=chunk) - There were no changes in internal control over financial reporting that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting during the quarter ended June 30, 2025[226](index=226&type=chunk) [PART II – OTHER INFORMATION](index=50&type=section&id=PART%20II%20%E2%80%93%20OTHER%20INFORMATION) This section provides information on legal proceedings, risk factors, equity sales, other disclosures, and exhibits [Item 1 – Legal Proceedings](index=50&type=section&id=Item%201%20%E2%80%93%20Legal%20Proceedings) Information regarding legal proceedings is incorporated by reference from "Note 11: Commitments and Contingencies" in the condensed consolidated financial statements - Information with respect to legal proceedings is found in "Note 11: Commitments and Contingencies" to the condensed consolidated financial statements[228](index=228&type=chunk) [Item 1A – Risk Factors](index=50&type=section&id=Item%201A%20%E2%80%93%20Risk%20Factors) There were no material changes in the risk factors reported in the company's Annual Report on Form 10-K for the fiscal year ended December 31, 2024 - There is no material change in the information reported under "Part I-Item 1A-Risk Factors" in the Annual Report on Form 10-K for the fiscal year ended December 31, 2024[230](index=230&type=chunk) [Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds](index=50&type=section&id=Item%202%20-%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company repurchased **418,499 shares** for **$15.0 million** in Q2 2025, with **$66.9 million** remaining under its **$300.0 million** share repurchase program - The company repurchased **418,499 shares** of common stock for approximately **$15.0 million** during the three months ended June 30, 2025, under its **$300.0 million** share repurchase program[232](index=232&type=chunk) - As of June 30, 2025, authorization for **$66.9 million** of share repurchases remained under the share repurchase program[232](index=232&type=chunk) [Item 5 – Other Information](index=50&type=section&id=Item%205%20%E2%80%93%20Other%20Information) John Yung adopted a Rule 10b5-1(c) trading plan to sell up to **6,000 shares** of common stock between August 2025 and June 2026 - John Yung, President International and Cabot Credit Management, adopted a trading plan intended to satisfy the affirmative defense of Rule 10b5-1(c) to sell up to **6,000 shares** of Encore Capital Group, Inc. common stock between August 15, 2025, and June 9, 2026[234](index=234&type=chunk) [Item 6 – Exhibits](index=51&type=section&id=Item%206%20%E2%80%93%20Exhibits) This section lists Form 10-Q exhibits, including corporate documents, a Senior Facilities Agreement amendment, and officer certifications - Exhibits include the Restated Certificate of Incorporation, Amended and Restated Bylaws, an Amendment Letter to the Amended and Restated Senior Facilities Agreement, and certifications from the Principal Executive Officer and Principal Financial Officer[237](index=237&type=chunk) [SIGNATURES](index=52&type=section&id=SIGNATURES) This section confirms the official signing of the report by the company's Chief Financial Officer and Treasurer on August 6, 2025 - The report was signed on behalf of Encore Capital Group, Inc. by Tomas Hernanz, Executive Vice President, Chief Financial Officer and Treasurer, on August 6, 2025[241](index=241&type=chunk)

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section presents Azenta, Inc.'s unaudited condensed consolidated financial statements, including detailed notes, management's discussion and analysis, market risk disclosures, and controls and procedures [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents Azenta, Inc.'s unaudited condensed consolidated financial statements, including balance sheets, statements of operations, comprehensive income (loss), cash flows, and changes in stockholders' equity, along with detailed notes explaining the company's nature of operations, significant accounting policies, discontinued operations, marketable securities, derivative instruments, goodwill and intangible assets, restructuring, supplementary balance sheet information, stockholders' equity, revenue recognition, stock-based compensation, fair value measurements, income taxes, net income (loss) per share, and segment/geographic information [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Condensed Consolidated Balance Sheets (in thousands) | Metric | June 30, 2025 | September 30, 2024 | | :-------------------------------- | :------------ | :----------------- | | Total Assets | $2,019,135 | $2,100,041 | | Total Liabilities | $345,501 | $331,074 | | Total Stockholders' Equity | $1,673,634 | $1,768,967 | [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Condensed Consolidated Statements of Operations (in thousands, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Total Revenue | $143,942 | $144,292 | $434,870 | $422,372 | | Gross Profit | $67,760 | $65,478 | $202,317 | $187,885 | | Operating Loss | $(714) | $(7,106) | $(28,218) | $(47,564) | | Income (Loss) from Continuing Operations | $680 | $(158) | $(26,926) | $(23,552) | | Loss from Discontinued Operations, net of tax | $(53,486) | $(6,424) | $(79,676) | $(135,634) | | Net Loss | $(52,806) | $(6,582) | $(106,602) | $(159,186) | | Basic Net Loss Per Share | $(1.15) | $(0.12) | $(2.33) | $(2.90) | | Diluted Net Loss Per Share | $(1.15) | $(0.12) | $(2.33) | $(2.90) | [Condensed Consolidated Statements of Comprehensive Income (Loss)](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) Condensed Consolidated Statements of Comprehensive Income (Loss) (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Net Loss | $(52,806) | $(6,582) | $(106,602) | $(159,186) | | Total Other Comprehensive Income (Loss), net of tax | $22,514 | $(3,167) | $(6,171) | $17,531 | | Comprehensive Loss | $(30,292) | $(9,749) | $(112,773) | $(141,655) | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Condensed Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------ | :------------------------------ | | Net cash provided by operating activities | $70,011 | $32,151 | | Net cash (used in) provided by investing activities | $(91,287) | $26,732 | | Net cash used in financing activities | $(10,408) | $(411,661) | | Effects of exchange rate changes on cash, cash equivalents and restricted cash | $4,510 | $15,596 | | Net decrease in cash, cash equivalents and restricted cash | $(27,174) | $(337,182) | | Cash, cash equivalents and restricted cash, end of period | $293,816 | $346,863 | [Condensed Consolidated Statements of Changes in Stockholders' Equity](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity) Changes in Stockholders' Equity (in thousands) | Metric | Balance September 30, 2024 | Net Loss | Stock-based Compensation | Net Investment Hedge Currency Translation Adjustment | Foreign Currency Translation Adjustments | Balance June 30, 2025 | | :------------------------------------ | :------------------------- | :--------- | :----------------------- | :-------------------------------------------- | :--------------------------------------- | :-------------------- | | Total Equity | $1,768,967 | $(106,602) | $15,887 | $(39,744) | $33,462 | $1,673,634 | [Notes to Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) [Note 1. Nature of Operations](index=12&type=section&id=1.%20Nature%20of%20Operations) - Azenta, Inc. is a global provider of biological and chemical compound sample exploration and management solutions for the life sciences industry, offering sample management, automated storage, and genomic services[33](index=33&type=chunk) - The Company announced a plan to sell its B Medical Systems business in Q1 fiscal year 2025 to simplify its portfolio and focus on core businesses, classifying this business as 'held for sale' and 'discontinued operations'[34](index=34&type=chunk)[35](index=35&type=chunk) - Discontinued operations also include a loss contingency related to the sale of the semiconductor automation business in February 2022, with an accrued liability of **$2.1 million** as of June 30, 2025[36](index=36&type=chunk)[58](index=58&type=chunk) [Note 2. Summary of Significant Accounting Policies](index=12&type=section&id=2.%20Summary%20of%20Significant%20Accounting%20Policies) - The Company revised its Condensed Consolidated Statements of Cash Flows for prior periods (FY2023 and interim FY2024) to correct immaterial classification errors, primarily related to the effects of exchange rate changes on foreign denominated cash and cash equivalents[40](index=40&type=chunk)[41](index=41&type=chunk) - Net foreign currency transaction and remeasurement losses were **$0.2 million** and **$0.5 million** for the three months ended June 30, 2025 and 2024, respectively, and **$1.3 million** and **$1.5 million** for the nine months ended June 30, 2025 and 2024, respectively[44](index=44&type=chunk) - The Company does not expect the adoption of new accounting standards (ASU 2023-07 Segment Reporting, ASU 2023-09 Income Taxes, Pillar 2 global minimum tax) to have a material impact on its financial statements in the near term, with ASU 2024-03 (Expense Disaggregation) still under evaluation[45](index=45&type=chunk)[46](index=46&type=chunk)[47](index=47&type=chunk)[48](index=48&type=chunk) [Note 3. Discontinued Operations](index=15&type=section&id=3.%20Discontinued%20Operations) - The Company recorded an additional **$68.8 million** loss on assets held for sale for the B Medical Systems business during the three months ended June 30, 2025, bringing the total loss to **$93.0 million** for the nine months ended June 30, 2025[53](index=53&type=chunk)[55](index=55&type=chunk) Financial Results of B Medical Systems Business (Discontinued Operations, in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Total Revenue | $16,302 | $28,517 | $51,099 | $63,888 | | Gross Profit | $4,909 | $3,578 | $13,445 | $6,068 | | Operating Loss | $(72,774) | $(7,647) | $(105,855) | $(140,821) | | Loss from Discontinued Operations, net of tax | $(53,187) | $(6,424) | $(78,997) | $(135,634) | Carrying Value of B Medical Systems Assets and Liabilities Held for Sale (in thousands) | Category | June 30, 2025 | September 30, 2024 | | :------------------------------------ | :------------ | :----------------- | | Current Assets Held for Sale | $77,025 | $88,894 | | Noncurrent Assets Held for Sale | $85,479 | $173,794 | | Current Liabilities Held for Sale | $31,715 | $30,050 | | Noncurrent Liabilities Held for Sale | $17,091 | $42,196 | - The Company accrued an additional **$0.4 million** liability for the 2020 Claim related to the semiconductor cryogenics business sale, resulting in a total accrual of **$2.1 million** as of June 30, 2025[58](index=58&type=chunk) [Note 4. Marketable Securities](index=19&type=section&id=4.%20Marketable%20Securities) Sales and Maturities of Marketable Securities (in thousands) | Period | Sales and Maturities | | :------------------------------------ | :------------------- | | Three Months Ended June 30, 2025 | $57,900 | | Three Months Ended June 30, 2024 | $241,000 | | Nine Months Ended June 30, 2025 | $242,500 | | Nine Months Ended June 30, 2024 | $431,500 | Marketable Securities Amortized Cost and Fair Value (in thousands) | Category | June 30, 2025 Amortized Cost | June 30, 2025 Fair Value | September 30, 2024 Amortized Cost | September 30, 2024 Fair Value | | :------------------------------------ | :--------------------------- | :----------------------- | :-------------------------------- | :------------------------------ | | U.S. Treasury securities and obligations of U.S. government agencies | $255,091 | $254,993 | $118,159 | $118,091 | | Bank certificates of deposit | $1,234 | $1,234 | $5,212 | $5,200 | | Corporate securities | $3,782 | $3,782 | $77,580 | $77,325 | | Municipal securities | $10,932 | $10,976 | - | - | | Total | $271,039 | $270,985 | $200,951 | $200,616 | - Unrealized losses on fixed-income securities are primarily due to changes in interest rates, but the Company does not believe they represent impairments[65](index=65&type=chunk) [Note 5. Derivative Instruments](index=20&type=section&id=5.%20Derivative%20Instruments) Realized Losses on Undesignated Derivatives (in thousands) | Period | Realized Losses | | :------------------------------------ | :------------------- | | Three Months Ended June 30, 2025 | $(4,242) | | Three Months Ended June 30, 2024 | $(415) | | Nine Months Ended June 30, 2025 | $(4,246) | | Nine Months Ended June 30, 2024 | $(2,202) | Notional Amounts of Derivative Instruments (in thousands) | Instrument | June 30, 2025 | September 30, 2024 | | :------------------------------------ | :------------ | :----------------- | | Cross-currency swap (Net Investment Hedge) | $260,025 | $75,978 | | Foreign exchange contracts (Undesignated) | $46,975 | $60,101 | - The Company entered into a new cross-currency swap agreement on February 3, 2025, notionally exchanging **$260.0 million** for **€250.0 million** to hedge net investments against a Euro-denominated subsidiary, maturing on February 2, 2026[69](index=69&type=chunk) - Interest income from cross-currency swaps was **$1.2 million** and **$0.3 million** for the three months ended June 30, 2025 and 2024, respectively, and **$2.2 million** and **$3.4 million** for the nine months ended June 30, 2025 and 2024, respectively[72](index=72&type=chunk) [Note 6. Goodwill and Intangible Assets](index=21&type=section&id=6.%20Goodwill%20and%20Intangible%20Assets) - The Company performed an interim quantitative goodwill impairment test as of June 30, 2025, and concluded there was no impairment to goodwill for its Sample Management Solutions (SMS) and Multiomics reporting units[73](index=73&type=chunk)[74](index=74&type=chunk) Changes in Carrying Amount of Goodwill by Segment (in thousands) | Segment | Balance - October 1, 2024 | Currency Translation Adjustments | Balance - June 30, 2025 | | :------------------------------------ | :-------------------------- | :------------------------------- | :-------------------- | | Sample Management Solutions | $494,649 | $12,205 | $506,854 | | Multiomics | $196,760 | — | $196,760 | | Total | $691,409 | $12,205 | $703,614 | Identifiable Intangible Assets (Net Book Value, in thousands) | Category | June 30, 2025 Net Book Value | September 30, 2024 Net Book Value | | :------------------------------------ | :----------------------------- | :-------------------------------- | | Completed technology | $50,270 | $54,758 | | Trademarks and trade names | $463 | $531 | | Customer relationships | $57,403 | $69,753 | | Total | $108,136 | $125,042 | - Amortization expenses for intangible assets were **$6.2 million** and **$7.2 million** for the three months ended June 30, 2025 and 2024, respectively, and **$18.4 million** and **$21.6 million** for the nine months ended June 30, 2025 and 2024, respectively[77](index=77&type=chunk) [Note 7. Restructuring](index=22&type=section&id=7.%20Restructuring) - The Company continued its 2024 Restructuring Plan, focusing on facilities consolidation, portfolio optimization, and organization structure simplification, with completion expected by the end of fiscal year 2025[79](index=79&type=chunk) Restructuring Charges (in thousands) | Category | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Severance and related costs | $971 | $852 | $4,740 | $3,625 | | ROU asset abandonment | — | — | — | $901 | | Other | $(217) | $849 | $25 | $1,389 | | Total Restructuring Charges | $754 | $1,701 | $4,765 | $5,915 | - The majority of 2025 restructuring expenses are severance and related costs, with **$0.3 million** for SMS and **$0.4 million** for Multiomics in the three months ended June 30, 2025[80](index=80&type=chunk) [Note 8. Supplementary Balance Sheet Information](index=23&type=section&id=8.%20Supplementary%20Balance%20Sheet%20Information) Inventories (in thousands) | Category | June 30, 2025 | September 30, 2024 | | :------------------------------------ | :------------ | :----------------- | | Raw materials and purchased parts | $35,796 | $34,134 | | Work-in-process | $6,056 | $8,402 | | Finished goods | $38,654 | $36,387 | | Total Inventories | $80,506 | $78,923 | | Inventory reserves | $8,500 | $6,100 | Product and Warranty Retrofit Activity (in thousands) | Metric | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------ | :------------------------------ | | Balance at beginning of period | $5,213 | $3,974 | | Accruals for warranties during the period | $587 | $1,939 | | Costs incurred during the period | $(427) | $(1,184) | | Balance at end of period | $5,373 | $4,729 | [Note 9. Stockholders' Equity](index=24&type=section&id=9.%20Stockholders'%20Equity) - The Company completed its **$1.5 billion** 2022 Repurchase Authorization by September 30, 2024, repurchasing **30.0 million** shares, and made an **$11.4 million** excise tax payment related to these repurchases during the nine months ended June 30, 2025[86](index=86&type=chunk)[87](index=87&type=chunk) Components of Accumulated Other Comprehensive Income (Loss) (in thousands) | Component | Balance at September 30, 2024 | Other comprehensive income (loss) before reclassifications (9M 2025) | Amounts reclassified (9M 2025) | Balance at June 30, 2025 | | :------------------------------------ | :---------------------------- | :----------------------------------------------------------------- | :----------------------------- | :----------------------- | | Currency Translation Adjustments | $(34,170) | $33,462 | — | $(708) | | Unrealized Gains (Losses) on Available-for-Sale Securities | $(263) | $262 | — | $(1) | | Gains (Losses) on Derivative Net of tax | $21,468 | $(39,744) | — | $(18,276) | | Pension Liability Adjustments Net of tax | $(499) | $(205) | $54 | $(650) | | Total | $(13,464) | $(6,225) | $54 | $(19,635) | [Note 10. Revenue from Contracts with Customers](index=25&type=section&id=10.%20Revenue%20from%20Contracts%20with%20Customers) Revenue by Significant Business Line (in thousands) | Business Line | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Multiomics | $66,235 | $63,619 | $196,054 | $188,556 | | Core Products | $45,750 | $49,440 | $143,418 | $143,170 | | Sample Repository Services | $31,957 | $31,233 | $95,398 | $90,646 | | Total Revenue | $143,942 | $144,292 | $434,870 | $422,372 | - Accounts receivable, net, decreased from **$156.3 million** at September 30, 2024, to **$124.5 million** at June 30, 2025[91](index=91&type=chunk) - Contract assets increased from **$28.9 million** at September 30, 2024, to **$40.1 million** at June 30, 2025, while contract liabilities increased from **$30.5 million** to **$40.0 million** over the same period[92](index=92&type=chunk)[93](index=93&type=chunk) - Remaining performance obligations totaled **$76.2 million** as of June 30, 2025, with **$55.2 million** expected to be recognized within one year and **$21.0 million** after one year[94](index=94&type=chunk) [Note 11. Stock-Based Compensation](index=26&type=section&id=11.%20Stock-Based%20Compensation) Total Stock-Based Compensation Expense for Continuing Operations (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Restricted stock units | $1,973 | $3,381 | $14,408 | $11,122 | | Employee stock purchase plan | $242 | $310 | $711 | $980 | | Total | $2,215 | $3,691 | $15,119 | $12,102 | - As of June 30, 2025, the future unrecognized stock-based compensation expense related to restricted stock units for continuing operations is **$25.5 million**, expected to be recognized over an estimated weighted average amortization period of **1.7 years**[98](index=98&type=chunk) - In October 2023, the Company amended performance goals for previously issued performance-based restricted stock units, leading to a total potential maximum compensation cost of **$3.3 million** recognized through November 2025[102](index=102&type=chunk) - In November 2024, the Company issued restricted stock unit awards with vesting based on market conditions (relative total shareholder return), with fair values estimated using the Monte Carlo simulation model[105](index=105&type=chunk) [Note 12. Fair Value Measurements](index=29&type=section&id=12.%20Fair%20Value%20Measurements) Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis (in thousands) | Description | Total Fair Value (June 30, 2025) | Level 1 (June 30, 2025) | Level 2 (June 30, 2025) | Level 3 (June 30, 2025) | | :------------------------------------ | :------------------------------- | :---------------------- | :---------------------- | :---------------------- | | **Assets:** | | | | | | Cash equivalents | $141,537 | $141,035 | $502 | — | | Available-for-sale securities | $270,985 | $9,447 | $261,538 | — | | Investment in equity securities | $2,100 | — | — | $2,100 | | Foreign exchange contracts | $142 | — | $142 | — | | **Liabilities:** | | | | | | Net investment hedge | $34,656 | — | $34,656 | — | - Cash equivalents primarily consist of money market funds and U.S. government backed securities (Level 1) and debt securities/bank certificates of deposit (Level 2)[109](index=109&type=chunk) - Available-for-sale securities include highly rated corporate debt and U.S. government backed securities (Level 1) and debt securities/bank certificates of deposit valued using matrix pricing (Level 2)[110](index=110&type=chunk) - The Company's investment in preferred stock of a private company (converted from convertible notes) is valued at **$2.1 million** and classified as Level 3 due to unobservable inputs[112](index=112&type=chunk) [Note 13. Income Taxes](index=32&type=section&id=13.%20Income%20Taxes) Income Tax Expense (in thousands) | Period | Income Tax Expense | | :------------------------------------ | :------------------- | | Three Months Ended June 30, 2025 | $2,758 | | Nine Months Ended June 30, 2025 | $14,007 | | Three Months Ended June 30, 2024 | $600 | | Nine Months Ended June 30, 2024 | $3,220 | - The nine-month tax expense for 2025 was primarily driven by a **$6.5 million** tax expense related to a change in indefinite reinvestment assertion and the repatriation of cash from a China subsidiary[116](index=116&type=chunk)[121](index=121&type=chunk) - The Company maintains a valuation allowance against U.S. deferred tax assets due to U.S. pre-tax losses and expects a **$22 million** valuation allowance for fiscal year 2025[119](index=119&type=chunk) [Note 14. Net Income (Loss) per Share](index=33&type=section&id=14.%20Net%20Income%20(Loss)%20per%20Share) Net Income (Loss) per Share (in thousands, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Income (loss) from continuing operations | $680 | $(158) | $(26,926) | $(23,552) | | Loss from discontinued operations, net of tax | $(53,486) | $(6,424) | $(79,676) | $(135,634) | | Net loss | $(52,806) | $(6,582) | $(106,602) | $(159,186) | | Basic net loss per share | $(1.15) | $(0.12) | $(2.33) | $(2.90) | | Diluted net loss per share | $(1.15) | $(0.12) | $(2.33) | $(2.90) | | Weighted average common shares outstanding (Basic) | 45,780 | 52,963 | 45,712 | 54,914 | | Weighted average common shares outstanding (Diluted) | 45,823 | 52,963 | 45,712 | 54,914 | [Note 15. Segment and Geographic Information](index=33&type=section&id=15.%20Segment%20and%20Geographic%20Information) - The Company's continuing operations consist of two operating and reportable segments: Sample Management Solutions (SMS) and Multiomics[128](index=128&type=chunk)[131](index=131&type=chunk) Segment Revenue and Adjusted Operating Income (Loss) (in thousands) | Segment | Three Months Ended June 30, 2025 Revenue | Three Months Ended June 30, 2024 Revenue | Nine Months Ended June 30, 2025 Revenue | Nine Months Ended June 30, 2024 Revenue | Three Months Ended June 30, 2025 Adjusted Operating Income (Loss) | Three Months Ended June 30, 2024 Adjusted Operating Income (Loss) | Nine Months Ended June 30, 2025 Adjusted Operating Income (Loss) | Nine Months Ended June 30, 2024 Adjusted Operating Income (Loss) | | :------------------------------------ | :--------------------------------------- | :--------------------------------------- | :-------------------------------------- | :-------------------------------------- | :--------------------------------------------------------------- | :--------------------------------------------------------------- | :-------------------------------------------------------------- | :-------------------------------------------------------------- | | Sample Management Solutions | $77,707 | $80,673 | $238,816 | $233,816 | $11,248 | $3,582 | $18,177 | $1,509 | | Multiomics | $66,235 | $63,619 | $196,054 | $188,556 | $(3,331) | $(592) | $(11,127) | $(6,736) | | Total Revenue / Segment Adjusted Operating Loss | $143,942 | $144,292 | $434,870 | $422,372 | $7,917 | $2,990 | $7,050 | $(5,227) | Revenue by Geographic Location (in thousands) | Geographic Location | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | United States | $87,833 | $95,037 | $271,244 | $272,898 | | China | $14,321 | $14,510 | $41,947 | $43,054 | | United Kingdom | $9,370 | $8,086 | $25,252 | $19,387 | | Rest of Europe | $25,430 | $21,370 | $75,009 | $66,493 | | Asia Pacific/Other | $6,988 | $5,289 | $21,418 | $20,540 | | Total Revenue | $143,942 | $144,292 | $434,870 | $422,372 | [Note 16. Commitments and Contingencies](index=36&type=section&id=16.%20Commitments%20and%20Contingencies) - The Company is subject to various legal proceedings but believes no new material provision for liability or disclosure is required as of June 30, 2025, for continuing operations[133](index=133&type=chunk) - In July 2024, the Company paid approximately **$2.5 million** in tariffs and interest related to imports from its GENEWIZ business into the United States for the period from December 2021 to July 2024[134](index=134&type=chunk) - As of June 30, 2025, the Company had non-cancellable commitments totaling **$48.7 million**, including **$37.3 million** for inventory purchase orders and **$11.4 million** for other operating expenses[135](index=135&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=37&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on Azenta, Inc.'s financial condition and results of operations for the three and nine months ended June 30, 2025, compared to the corresponding periods in 2024, covering business overview, strategic decisions, detailed financial performance by segment, critical accounting policies, and an analysis of liquidity and capital resources [Overview](index=37&type=section&id=Overview) - Azenta is a leading global provider of biological and chemical compound sample exploration and management solutions for the life sciences industry, with approximately **3,000 employees** and sales in **92 countries**[139](index=139&type=chunk) - The Company is pursuing the sale of its B Medical Systems business to simplify its portfolio and focus on core Sample Management Solutions (SMS) and Multiomics segments[138](index=138&type=chunk) - The Sample Management Solutions segment offers end-to-end sample management products and services, including Sample Repository Services and Core Products (Automated Stores, Cryogenic Systems, etc.)[142](index=142&type=chunk) - The Multiomics segment provides genomic services such as gene sequencing, synthesis, and editing, supporting research and development in life sciences[143](index=143&type=chunk) [Business and Financial Performance](index=38&type=section&id=Business%20and%20Financial%20Performance) Key Financial Performance (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Revenue | $143,942 | $144,292 | $434,870 | $422,372 | | Gross profit | $67,760 | $65,478 | $202,317 | $187,885 | | Operating loss | $(714) | $(7,106) | $(28,218) | $(47,564) | | Net loss | $(52,806) | $(6,582) | $(106,602) | $(159,186) | - Revenue was flat for the three months ended June 30, 2025, but increased **3%** for the nine months, driven by Multiomics growth and strong Sample Repository Solutions performance[146](index=146&type=chunk) - Gross margin increased to **47%** for both the three and nine months ended June 30, 2025, from **45%** and **44%** respectively, primarily due to operational efficiencies and favorable sales mix[146](index=146&type=chunk) - Net loss from discontinued operations was significantly higher in Q3 2025 (**$53.5 million**) compared to Q3 2024 (**$6.4 million**), primarily due to a loss on assets held for sale[146](index=146&type=chunk) [Critical Accounting Policies and Estimates](index=39&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) - The preparation of financial statements requires management to make estimates and judgments, which are evaluated on an ongoing basis[147](index=147&type=chunk) - There have been no material changes to the Company's critical accounting policies or estimates from those set forth in its 2024 Annual Report on Form 10-K[148](index=148&type=chunk) [Results of Operations](index=39&type=section&id=Results%20of%20Operations) [Non-GAAP Financial Measures](index=39&type=section&id=Non-GAAP%20Financial%20Measures) - Management uses non-GAAP financial measures, adjusting GAAP results for items like amortization, transformation costs, and restructuring charges, to provide investors with a better perspective on operations comparable to peers[150](index=150&type=chunk) [Revenue](index=40&type=section&id=Revenue) Revenue by Segment (in thousands, except percentages) | Segment | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | % Change 2025 v. 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | % Change 2025 v. 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :-------------------- | :------------------------------ | :------------------------------ | :-------------------- | | Sample Management Solutions | $77,707 | $80,673 | (3.7)% | $238,816 | $233,816 | 2.1% | | Multiomics | $66,235 | $63,619 | 4.1% | $196,054 | $188,556 | 4.0% | | Total Revenue | $143,942 | $144,292 | (0.2)% | $434,870 | $422,372 | 3.0% | - Sample Management Solutions revenue decreased **4%** in the three months ended June 30, 2025, due to lower Core Products revenue (Automated Stores and Cryogenic Systems), but increased **2%** for the nine months due to Sample Repository Services growth[151](index=151&type=chunk) - Multiomics segment revenue increased approximately **4%** for both the three and nine months ended June 30, 2025, driven by Next Generation Sequencing services, partially offset by declines in Gene Synthesis and Sanger sequencing[152](index=152&type=chunk) - Revenue generated outside the United States increased to **39.0%** and **37.6%** of total revenue for the three and nine months ended June 30, 2025, respectively, compared to **34.1%** and **35.4%** in the prior year periods[153](index=153&type=chunk) [Operating Income (Loss)](index=40&type=section&id=Operating%20Income%20(Loss)) Segment Operating Income (Loss) and Adjusted Operating Income (Loss) (in thousands) | Segment | Three Months Ended June 30, 2025 Operating Income (Loss) | Three Months Ended June 30, 2024 Operating Income (Loss) | Nine Months Ended June 30, 2025 Operating Income (Loss) | Nine Months Ended June 30, 2024 Operating Income (Loss) | Three Months Ended June 30, 2025 Adjusted Operating Income (Loss) | Three Months Ended June 30, 2024 Adjusted Operating Income (Loss) | Nine Months Ended June 30, 2025 Adjusted Operating Income (Loss) | Nine Months Ended June 30, 2024 Adjusted Operating Income (Loss) | | :------------------------------------ | :------------------------------------------------------- | :------------------------------------------------------- | :------------------------------------------------------ | :------------------------------------------------------ | :--------------------------------------------------------------- | :--------------------------------------------------------------- | :-------------------------------------------------------------- | :-------------------------------------------------------------- | | Sample Management Solutions | $9,834 | $2,647 | $11,963 | $(1,733) | $11,248 | $3,582 | $18,177 | $1,509 | | Multiomics | $(4,191) | $(1,630) | $(13,710) | $(9,853) | $(3,331) | $(592) | $(11,127) | $(6,736) | - Sample Management Solutions operating income increased significantly, driven by gross margin expansion, despite increased transformation costs[158](index=158&type=chunk) - Multiomics segment operating loss increased, primarily due to lower revenue from Gene Synthesis and Sanger sequencing services, partially offset by Next Generation Sequencing growth[159](index=159&type=chunk) [Gross Margin](index=43&type=section&id=Gross%20Margin) Segment Gross Margin and Adjusted Gross Margin (in percentages) | Segment | Three Months Ended June 30, 2025 Gross Margin | Three Months Ended June 30, 2024 Gross Margin | Nine Months Ended June 30, 2025 Gross Margin | Nine Months Ended June 30, 2024 Gross Margin | Three Months Ended June 30, 2025 Adjusted Gross Margin | Three Months Ended June 30, 2024 Adjusted Gross Margin | Nine Months Ended June 30, 2025 Adjusted Gross Margin | Nine Months Ended June 30, 2024 Adjusted Gross Margin | | :------------------------------------ | :-------------------------------------------- | :-------------------------------------------- | :------------------------------------------- | :------------------------------------------- | :------------------------------------------------------ | :------------------------------------------------------ | :----------------------------------------------------- | :----------------------------------------------------- | | Sample Management Solutions | 52.0% | 45.0% | 48.9% | 43.8% | 53.6% | 46.1% | 50.3% | 45.2% | | Multiomics | 41.3% | 45.9% | 43.6% | 45.3% | 42.6% | 47.5% | 44.9% | 46.9% | | Azenta Total | 47.1% | 45.4% | 46.5% | 44.5% | 48.5% | 46.7% | 47.9% | 46.0% | - Sample Management Solutions gross margin and adjusted gross margin increased due to operational efficiencies and a favorable sales mix[161](index=161&type=chunk) - Multiomics segment gross margin and adjusted gross margin decreased, primarily driven by lower revenue from Gene Synthesis and Sanger sequencing services[162](index=162&type=chunk) [Research and Development Expenses](index=44&type=section&id=Research%20and%20Development%20Expenses) Research and Development Expenses (in thousands, except percentages) | Metric | Three Months Ended June 30, 2025 | % of Revenue | Three Months Ended June 30, 2024 | % of Revenue | Nine Months Ended June 30, 2025 | % of Revenue | Nine Months Ended June 30, 2024 | % of Revenue | | :------------------------------------ | :------------------------------- | :----------- | :------------------------------- | :----------- | :------------------------------ | :----------- | :------------------------------ | :----------- | | Total research and development expense | $6,685 | 4.6% | $6,911 | 4.8% | $19,934 | 4.6% | $21,957 | 5.2% | - Total R&D expenses decreased by **$0.2 million** (3 months) and **$2.0 million** (9 months) year-over-year, driven by cost reduction initiatives, primarily decreased compensation and benefits[163](index=163&type=chunk) [Selling, General and Administrative Expenses](index=44&type=section&id=Selling,%20General%20and%20Administrative%20Expenses) Selling, General and Administrative Expenses (in thousands, except percentages) | Metric | Three Months Ended June 30, 2025 | % of Revenue | Three Months Ended June 30, 2024 | % of Revenue | Nine Months Ended June 30, 2025 | % of Revenue | Nine Months Ended June 30, 2024 | % of Revenue | | :------------------------------------ | :------------------------------- | :----------- | :------------------------------- | :----------- | :------------------------------ | :----------- | :------------------------------ | :----------- | | Total selling, general and administrative expense | $61,035 | 42.4% | $63,972 | 44.3% | $205,836 | 47.3% | $202,919 | 48.0% | - Total SG&A expenses decreased by **$2.9 million** for the three months ended June 30, 2025, primarily due to decreased compensation and benefits expense[164](index=164&type=chunk) - Total SG&A expenses increased by **$2.9 million** for the nine months ended June 30, 2025, primarily due to higher stock-based compensation and one-time costs related to leadership changes, partially offset by decreased compensation and benefits[164](index=164&type=chunk) [Restructuring Charges](index=45&type=section&id=Restructuring%20Charges) - Restructuring charges decreased by **$0.9 million** to **$0.8 million** for the three months ended June 30, 2025, and by **$1.2 million** to **$4.8 million** for the nine months ended June 30, 2025, compared to the prior year periods[165](index=165&type=chunk) [Non-Operating Income](index=45&type=section&id=Non-Operating%20Income) Interest Income, Net (in thousands) | Period | Interest Income, Net | | :------------------------------------ | :------------------- | | Three Months Ended June 30, 2025 | $5,000 | | Three Months Ended June 30, 2024 | $7,900 | | Nine Months Ended June 30, 2025 | $13,800 | | Nine Months Ended June 30, 2024 | $27,400 | - The decrease in interest income year over year is due to decreased investments in marketable securities[166](index=166&type=chunk) - Other income (expense), net, was an expense of **$0.8 million** for the three months ended June 30, 2025, and income of **$1.5 million** for the nine months, with the increase primarily from foreign exchange gains and a **$2.1 million** gain from a cost method investment[167](index=167&type=chunk) [Income Tax Expense](index=45&type=section&id=Income%20Tax%20Expense) Income Tax Expense (in thousands) | Period | Income Tax Expense | | :------------------------------------ | :------------------- | | Three Months Ended June 30, 2025 | $2,800 | | Nine Months Ended June 30, 2025 | $14,000 | | Three Months Ended June 30, 2024 | $600 | | Nine Months Ended June 30, 2024 | $3,200 | - The 2025 tax expense was primarily driven by a **$6.5 million** charge related to a change in indefinite reinvestment assertion and the expectation to repatriate cash from a China subsidiary, along with profits in foreign jurisdictions and a U.S. valuation allowance[168](index=168&type=chunk) - The Company does not expect the recently signed 'One Big Beautiful Bill Act' to have a significant near-term effect on its effective tax rate or cash flows[170](index=170&type=chunk) [Discontinued Operations](index=45&type=section&id=Discontinued%20Operations) Revenue and Loss from Discontinued Operations (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Revenue from discontinued operations | $16,300 | $28,500 | $51,100 | $63,900 | | Loss from discontinued operations, net of tax | $53,500 | $6,400 | $79,700 | $135,600 | - The significant loss from discontinued operations in 2025 was primarily driven by the loss on assets held for sale related to the B Medical Systems business, while in 2024 it was due to goodwill impairment[171](index=171&type=chunk) [Liquidity and Capital Resources](index=46&type=section&id=Liquidity%20and%20Capital%20Resources) Cash, Cash Equivalents, Restricted Cash, and Marketable Securities (in thousands) | Metric | June 30, 2025 | September 30, 2024 | | :------------------------------------ | :------------ | :----------------- | | Cash and cash equivalents | $270,040 | $280,030 | | Restricted cash | $8,776 | $10,061 | | Short-term marketable securities | $48,817 | $151,162 | | Long-term marketable securities | $222,168 | $49,454 | | Total | $549,801 | $490,707 | - The Company believes its current cash and cash equivalents are sufficient to fund operating expenses and capital expenditures for at least one year[172](index=172&type=chunk) - Cash inflows from operating activities for the nine months ended June 30, 2025, were **$70.0 million**, primarily due to increased revenue, collections, and an **$11.5 million** U.S. federal tax refund[174](index=174&type=chunk) - The Company had **$121.9 million** of cash, cash equivalents, and restricted cash held outside the U.S. as of June 30, 2025, including **$23 million** in China, with a plan to repatriate cash from China and a **$6.5 million** tax provision for this plan[173](index=173&type=chunk) - As of June 30, 2025, the Company had no outstanding debt and non-cancellable commitments of **$48.7 million**[175](index=175&type=chunk)[176](index=176&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=47&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section outlines Azenta, Inc.'s exposure to market risks, specifically focusing on interest rate fluctuations affecting its cash and investments, and foreign currency exchange rate changes impacting its international transactions and balances, quantifying the potential impact of hypothetical changes in these market factors on the company's financial performance - A hypothetical **100 basis point** change in interest rates would result in a **$2.7 million** and **$6.1 million** change in interest income earned during the nine months ended June 30, 2025 and 2024, respectively[178](index=178&type=chunk) - Sales in currencies other than the U.S. dollar were approximately **34%** and **29%** of total sales during the nine months ended June 30, 2025 and 2024, respectively[179](index=179&type=chunk) - Liquid assets denominated in non-functional currencies (primarily Euro and British Pound) were **$50.7 million** at June 30, 2025, with foreign currency losses of **$1.3 million** and **$1.5 million** for the nine months ended June 30, 2025 and 2024, respectively[180](index=180&type=chunk) - A hypothetical **10%** change in foreign exchange rates as of June 30, 2025, would result in an approximate **$0.4 million** change in net loss during the nine months ended June 30, 2025[180](index=180&type=chunk) [Item 4. Controls and Procedures](index=47&type=section&id=Item%204.%20Controls%20and%20Procedures) This section details the evaluation of Azenta, Inc.'s disclosure controls and procedures, concluding they were not effective as of June 30, 2025, due to identified material weaknesses, specifically addressing a continuing material weakness related to the review of the cash flow statement and a new material weakness concerning the preparation and review of account reconciliations, with the company outlining its remediation plans for these control deficiencies - The Company's disclosure controls and procedures were not effective as of June 30, 2025, due to material weaknesses[181](index=181&type=chunk) - A material weakness related to the review of the cash flow statement, previously disclosed in the 2024 Annual Report on Form 10-K, continues to exist as of June 30, 2025[182](index=182&type=chunk) - An additional material weakness was identified during Q2 fiscal year 2025, concerning the design and maintenance of effective controls related to the preparation and review of account reconciliations[183](index=183&type=chunk) - Remediation plans include implementing a new cash flow reporting tool, new processes and controls for cash flow review, and for account reconciliations, designing enhanced controls, redesigning policy, and engaging outside consultants[185](index=185&type=chunk)[186](index=186&type=chunk) [PART II. OTHER INFORMATION](index=49&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section covers legal proceedings, risk factors, other information such as Rule 10b5-1 trading arrangements and personnel appointments, and a list of exhibits [Item 1. Legal Proceedings](index=49&type=section&id=Item%201.%20Legal%20Proceedings) This section states that Azenta, Inc. is involved in various legal proceedings in the ordinary course of business, and while the ultimate outcome is unpredictable, the company believes that none of these current claims will have a material adverse effect on its consolidated financial condition or results of operations for continuing operations - The Company is subject to various legal proceedings arising in the ordinary course of business[190](index=190&type=chunk) - As of the filing date, the Company believes that none of these claims will have a material adverse effect on its consolidated financial condition or results of operations for continuing operations[190](index=190&type=chunk) [Item 1A. Risk Factors](index=49&type=section&id=Item%201A.%20Risk%20Factors) This section refers readers to the risk factors previously disclosed in Azenta, Inc.'s 2024 Annual Report on Form 10-K and the Quarterly Report on Form 10-Q for the quarter ended March 31, 2025, confirming that there have been no material changes to these risk factors - There have been no material changes to the risk factors disclosed in the 2024 Annual Report on Form 10-K and the Quarterly Report on Form 10-Q for the quarter ended March 31, 2025[191](index=191&type=chunk) [Item 5. Other Information](index=49&type=section&id=Item%205.%20Other%20Information) This section provides updates on Rule 10b5-1 trading arrangements and a key personnel appointment, stating that no directors or officers adopted, modified, or terminated Rule 10b5-1 trading arrangements during the quarter, and announces the appointment of Lawrence Lin as the Principal Accounting Officer - No director or officer adopted, modified, or terminated a Rule 10b5-1 trading arrangement during the three months ended June 30, 2025[192](index=192&type=chunk) - Lawrence Lin, Executive Vice President and Chief Financial Officer, was appointed as the Company's Principal Accounting Officer, effective August 7, 2025[193](index=193&type=chunk) [Item 6. Exhibits](index=50&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed as part of the Quarterly Report on Form 10-Q, including severance agreements, certifications from the CEO and CFO, and financial statements formatted in iXBRL - Exhibits include severance agreements, certifications pursuant to the Sarbanes-Oxley Act, and financial statements formatted in iXBRL[195](index=195&type=chunk) [Signatures](index=51&type=section&id=Signatures) This section contains the official signatures of the authorized officers of Azenta, Inc., certifying the filing of the Quarterly Report on Form 10-Q - The report was signed by Lawrence Lin, Executive Vice President and Chief Financial Officer, and Violetta A. Hughes, Vice President and Chief Accounting Officer, on August 6, 2025[199](index=199&type=chunk)

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 June 30, 2025 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 001-37884 VALVOLINE INC. (Exact name of registrant as specified in its charter) Kentucky ...

PART I FINANCIAL INFORMATION [Item 1. Consolidated Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Consolidated%20Financial%20Statements%20%28Unaudited%29) The unaudited interim consolidated financial statements for Cytek Biosciences, Inc. as of June 30, 2025, show a net loss of $17.0 million and a slight decrease in total assets [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) Total assets decreased to $493.3 million as of June 30, 2025, driven by reduced cash, while liabilities increased and stockholders' equity declined due to net losses Consolidated Balance Sheet Summary (in thousands) | Account | June 30, 2025 (unaudited) | December 31, 2024 (audited) | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $75,470 | $98,716 | | Marketable securities | $186,552 | $179,145 | | Total current assets | $382,825 | $396,446 | | Total assets | $493,320 | $499,500 | | **Liabilities & Stockholders' Equity** | | | | Total current liabilities | $73,270 | $67,663 | | Total liabilities | $115,763 | $103,763 | | Total stockholders' equity | $377,557 | $395,737 | | Total liabilities and stockholders' equity | $493,320 | $499,500 | [Consolidated Statements of Operations and Comprehensive Loss](index=4&type=section&id=Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) Total revenue decreased 5% to $87.1 million for the six months ended June 30, 2025, resulting in a wider net loss of $17.0 million Statement of Operations Summary (in thousands, except per share data) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Product Revenue | $59,525 | $68,698 | | Service Revenue | $27,534 | $22,779 | | **Total Revenue, net** | **$87,059** | **$91,477** | | Gross Profit | $44,024 | $48,449 | | Loss from Operations | $(25,598) | $(19,260) | | **Net Loss** | **$(16,985)** | **$(16,603)** | | Net Loss Per Share (basic & diluted) | $(0.13) | $(0.13) | [Consolidated Statements of Cash Flows](index=6&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operating activities was $17,000 for the six months ended June 30, 2025, with significant cash outflows from investing and financing activities Cash Flow Summary (in thousands) | Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | $(17) | $10,161 | | Net cash used in investing activities | $(6,961) | $(3,732) | | Net cash used in financing activities | $(14,147) | $(98) | | **Net (decrease) increase in cash** | **$(23,275)** | **$10,288** | - The significant cash used in financing activities during the first six months of 2025 was driven by **$15.1 million** in share repurchases[16](index=16&type=chunk) [Notes to Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Detailed notes explain accounting policies, revenue disaggregation, the 2023 FCI Acquisition, legal proceedings, share repurchases, and material weaknesses in internal controls - The company operates as a single reportable segment, providing cell analysis solutions with its Full Spectrum Profiling (FSP) technology, expanded by the **2023 FCI Business acquisition**[19](index=19&type=chunk) Revenue Disaggregation - Six Months Ended June 30 (in thousands) | Category | 2025 | 2024 | | :--- | :--- | :--- | | **Sales Channel** | | | | Direct sales channel | $63,439 | $68,869 | | Distributor channel | $23,620 | $22,608 | | **Customer Mix** | | | | Academia and government | $38,886 | $38,643 | | Biotechnology, pharmaceutical, etc. | $48,173 | $52,834 | - The company's ongoing share repurchase program, authorized for up to **$50 million**, saw **3.3 million shares repurchased for $15.1 million** as of June 30, 2025, with **$35.0 million remaining**[122](index=122&type=chunk) - A patent infringement lawsuit filed by Beckman Coulter, Inc. in August 2024 alleges that Cytek's Aurora and Northern Lights products infringe on their patents, with a trial scheduled for August 17, 2026[152](index=152&type=chunk) - In July 2025, the company initiated a plan to transition manufacturing operations from Seattle to Singapore by the end of fiscal year 2025 to optimize efficiency and reduce costs[164](index=164&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=34&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses a 5% revenue decrease, declining gross margin, increased operating expenses due to litigation, and macroeconomic challenges impacting sales [Results of Operations](index=39&type=section&id=Results%20of%20Operations) Total revenue decreased 5% to $87.1 million, driven by a 13% decline in product revenue, while operating loss widened due to increased general and administrative expenses Revenue Comparison - Six Months Ended June 30 (in thousands) | Revenue Type | 2025 | 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Product | $59,525 | $68,698 | $(9,173) | (13)% | | Service | $27,534 | $22,779 | $4,755 | 21% | | **Total** | **$87,059** | **$91,477** | **$(4,418)** | **(5)%** | - The **13% decrease in product revenue** for the first six months of 2025 was primarily due to lower sales in EMEA and the United States, partially offset by growth in the APAC market[214](index=214&type=chunk) - General and administrative expenses increased by **$3.3 million (14%)** for the six months ended June 30, 2025, primarily due to ongoing patent litigation expenses[223](index=223&type=chunk) [Liquidity and Capital Resources](index=44&type=section&id=Liquidity%20and%20Capital%20Resources) The company held **$262.0 million** in cash and investments as of June 30, 2025, deemed sufficient for the next 12 months, despite significant share repurchases - As of June 30, 2025, cash, cash equivalents, and short-term investments totaled approximately **$262.0 million**[229](index=229&type=chunk) - The company has an "at the market" sales agreement to sell up to **$150.0 million** of its common stock, with no sales made under this agreement as of the report date[235](index=235&type=chunk) - Management believes existing cash and anticipated cash flows will be sufficient to meet capital needs for at least the next 12 months[233](index=233&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=46&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Primary market risk stems from foreign currency fluctuations, especially the renminbi and euro, while interest rate risk is considered immaterial - The company's main market risk is foreign currency fluctuations, primarily from the renminbi and the euro, due to its global revenue streams[251](index=251&type=chunk) - Interest rate risk is not considered material because cash and investments are held in short-term instruments[249](index=249&type=chunk)[250](index=250&type=chunk) [Item 4. Controls and Procedures](index=47&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls were ineffective as of June 30, 2025, due to material weaknesses in IT controls and financial reporting procedures, with a remediation plan underway - Management concluded that as of June 30, 2025, the company's disclosure controls and procedures were **not effective** due to material weaknesses in internal controls[254](index=254&type=chunk) - Identified material weaknesses include inadequate general information technology controls (GITCs) and ineffective design and/or review procedures for journal entries and balance sheet account reconciliations[256](index=256&type=chunk) - A remediation plan is in progress, involving hiring qualified personnel, revising control designs with external consultants, and expanding training and monitoring[257](index=257&type=chunk)[259](index=259&type=chunk) PART II OTHER INFORMATION [Item 1. Legal Proceedings](index=48&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to Note 18 for details on ongoing legal proceedings, including a patent infringement lawsuit by Beckman Coulter, Inc - The company is involved in legal proceedings, with details provided in Note 18 of the financial statements[263](index=263&type=chunk) [Item 1A. Risk Factors](index=48&type=section&id=Item%201A.%20Risk%20Factors) Key risks include limited operating history, product dependence, supply chain reliance, international trade issues, internal control weaknesses, and intellectual property litigation - The company has a limited operating history and is highly dependent on a small number of products (Cytek Aurora, Northern Lights, Aurora CS), which have substantial sales cycles[265](index=265&type=chunk)[267](index=267&type=chunk)[268](index=268&type=chunk) - Reliance on single and sole-source suppliers for key components without long-term contracts poses a significant supply chain risk[265](index=265&type=chunk)[272](index=272&type=chunk) - International operations are subject to risks including tariffs, export controls, and sanctions, with new US government license requirements for exports to countries like China potentially impacting sales and R&D[266](index=266&type=chunk)[285](index=285&type=chunk) - The company has identified material weaknesses in its internal control over financial reporting, which could prevent the accurate or timely reporting of its financial condition[269](index=269&type=chunk)[330](index=330&type=chunk) - The company faces risks from intellectual property litigation, including claims that could prevent product sales or require costly licenses, with an ongoing lawsuit with Beckman Coulter noted[427](index=427&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=91&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company repurchased **1,214,005 shares** for **$3.71 per share** during Q2 2025 under its **$50 million** program, with **$35 million** remaining Issuer Purchases of Equity Securities (Q2 2025) | Period | Total Shares Repurchased | Average Price Paid ($) | | :--- | :--- | :--- | | April 2025 | 939,946 | 3.72 | | May 2025 | 274,059 | 3.65 | | June 2025 | — | — | | **Total** | **1,214,005** | **3.71** | - As of June 30, 2025, approximately **$35.0 million** remained authorized for purchase under the company's stock repurchase program, expiring on December 31, 2025[481](index=481&type=chunk)

[PART I. FINANCIAL INFORMATION](index=5&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) Presents the unaudited condensed consolidated financial statements and management's discussion for the six months ended June 30, 2025 [Financial Statements (Unaudited)](index=5&type=section&id=Item%201.%20Financial%20Statements%20%28Unaudited%29) Presents unaudited condensed consolidated financial statements for H1 2025, showing a net income turnaround and shifts in assets and equity [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets decreased to **$909.3 million** from **$1,091.4 million** at year-end 2024, while equity increased to **$609.3 million** Condensed Consolidated Balance Sheet Highlights (in millions) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $114.9 | $100.5 | | Marketable securities | $746.3 | $938.9 | | Total current assets | $889.5 | $1,067.3 | | **Total assets** | **$909.3** | **$1,091.4** | | **Liabilities & Equity** | | | | Deferred revenue (Current & Long-term) | $237.0 | $448.2 | | Total liabilities | $300.0 | $529.7 | | Total stockholders' equity | $609.3 | $561.7 | | **Total liabilities and stockholders' equity** | **$909.3** | **$1,091.4** | [Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20%28Loss%29%20Income) Reports **$21.7 million** net income for H1 2025, a significant improvement from a **$104.6 million** net loss in H1 2024 Consolidated Statements of Operations Highlights (in millions, except per share data) | Metric | Q2 2025 | Q2 2024 | Six Months 2025 | Six Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Revenue | $22.4 | $76.5 | $211.2 | $101.8 | | Research and development | $68.6 | $93.7 | $159.4 | $178.0 | | General and administrative | $25.3 | $31.3 | $51.9 | $55.6 | | Loss from operations | $(71.5) | $(48.5) | $(0.1) | $(131.8) | | Net (loss) income | $(61.2) | $(35.2) | $21.7 | $(104.6) | | Diluted (Loss) earnings per share | $(0.84) | $(0.49) | $0.30 | $(1.46) | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operating activities increased to **$184.3 million** in H1 2025, offset by **$198.3 million** from investing activities Cash Flow Summary for the Six Months Ended June 30 (in millions) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(184.3) | $(47.2) | | Net cash provided by (used in) investing activities | $198.3 | $(114.7) | | Net cash provided by financing activities | $0.4 | $5.0 | | Net increase (decrease) in cash | $14.4 | $(156.9) | [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Details accounting policy changes, collaboration impacts, and a Q2 2025 restructuring plan reducing workforce by **33%** - A change in accounting estimate for the Vepdegestrant (ARV-471) Collaboration Agreement with Pfizer, due to removing two Phase 3 trials from the development plan, resulted in a **$147.6 million** increase in net income for the six months ended June 30, 2025[53](index=53&type=chunk) - In Q2 2025, the company implemented a restructuring plan, reducing its workforce by approximately **33%**, resulting in a net charge of **$1.0 million**, comprising **$7.4 million** in cash severance offset by a **$6.4 million** reversal of non-cash stock compensation and bonus expenses[97](index=97&type=chunk)[98](index=98&type=chunk) R&D Expenses by Program (in millions) | Program | Q2 2025 | Q2 2024 | Six Months 2025 | Six Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Vepdegestrant (ARV-471) | $15.1 | $25.1 | $39.2 | $44.1 | | ARV-102 | $3.8 | $1.7 | $10.3 | $3.0 | | ARV-393 | $2.5 | $1.7 | $5.1 | $2.9 | | ARV-806 | $1.7 | $0.2 | $2.6 | $0.3 | | Luxdegalutamide (ARV-766) | $0.0 | $9.5 | $0.0 | $13.2 | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=25&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Discusses business strategy, clinical pipeline progress, financial results, and liquidity, projecting capital sufficiency into H2 2028 [Business Overview](index=25&type=section&id=Business%20Overview) Arvinas, a clinical-stage biotech, submitted an NDA for vepdegestrant and initiated a Phase 1 trial for ARV-806, alongside a **33%** workforce reduction - Submitted a New Drug Application (NDA) to the FDA for vepdegestrant in Q2 2025 for ER+/HER2- ESR1-mutated advanced or metastatic breast cancer, representing the first NDA for a PROTAC[118](index=118&type=chunk) - The Phase 3 VERITAC-2 trial for vepdegestrant met its primary endpoint, showing a **43%** reduction in the risk of disease progression or death compared to fulvestrant in the ESR1m patient population[122](index=122&type=chunk) - The company is in active discussions with Pfizer to revise the vepdegestrant collaboration after removing two planned Phase 3 combination trials from the joint development plan and determining it is no longer viable to build out its own commercial infrastructure[124](index=124&type=chunk)[127](index=127&type=chunk) - A Phase 1 trial for ARV-806 (KRAS G12D degrader) was initiated in Q2 2025 for patients with solid tumors harboring KRAS G12D mutations[147](index=147&type=chunk) [Results of Operations](index=40&type=section&id=Results%20of%20Operations) Revenue increased by **$109.4 million** to **$211.2 million** in H1 2025, resulting in **$21.7 million** net income, driven by a Pfizer collaboration accounting change Comparison of Results of Operations (in millions) | Line Item | Six Months 2025 | Six Months 2024 | Change ($) | | :--- | :--- | :--- | :--- | | Revenue | $211.2 | $101.8 | $109.4 | | Research and development expenses | $(159.4) | $(178.0) | $18.6 | | General and administrative expenses | $(51.9) | $(55.6) | $3.7 | | Net income (loss) | $21.7 | $(104.6) | $126.3 | - The **$109.4 million** increase in revenue for H1 2025 was primarily driven by a **$161.0 million** increase from the Vepdegestrant (ARV-471) Collaboration Agreement with Pfizer due to changes in total program cost estimates[201](index=201&type=chunk) - The **$18.6 million** decrease in R&D expenses for H1 2025 was mainly due to reduced external expenses for the luxdegalutamide (ARV-766) and vepdegestrant (ARV-471) programs, and lower compensation costs[204](index=204&type=chunk) [Liquidity and Capital Resources](index=42&type=section&id=Liquidity%20and%20Capital%20Resources) The company holds **$861.2 million** in cash and marketable securities, projected to fund operations into the second half of 2028 - The company's cash, cash equivalents, and marketable securities totaled **$861.2 million** as of June 30, 2025[219](index=219&type=chunk)[225](index=225&type=chunk) - Management projects that the current cash position will fund planned operating expenses and capital expenditure requirements into the second half of 2028[225](index=225&type=chunk) - Net cash used in operating activities for the six months ended June 30, 2025, was **$184.3 million**, an increase of **$137.1 million** from the same period in 2024, primarily due to a decrease in deferred revenue[219](index=219&type=chunk)[220](index=220&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=46&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Primary market risk is interest rate sensitivity on cash and marketable securities, with **$22.0 million** interest income in H1 2025 - The company's main market risk is interest rate sensitivity on its portfolio of cash, cash equivalents, and marketable securities, with interest income for the first six months of 2025 at **$22.0 million**[233](index=233&type=chunk) [Controls and Procedures](index=46&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were effective as of June 30, 2025, with no material changes in internal control - Based on an evaluation as of June 30, 2025, the CEO and CFO concluded that the company's disclosure controls and procedures were effective[234](index=234&type=chunk) - No changes occurred during the quarter that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[235](index=235&type=chunk) [PART II. OTHER INFORMATION](index=47&type=section&id=PART%20II.%20OTHER%20INFORMATION) Provides updates on legal proceedings, new and amended risk factors, and other corporate information [Legal Proceedings](index=47&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently involved in any material litigation or legal proceedings - As of the filing date, the company is not involved in any material legal proceedings[238](index=238&type=chunk) [Risk Factors](index=47&type=section&id=Item%201A.%20Risk%20Factors) Introduces new risks regarding workforce reduction and regulatory delays, while amending existing risks on funding and key personnel retention - A new risk factor was added concerning the April 2025 workforce reduction of approximately **33%**, which may not result in anticipated savings and could disrupt operations or harm the ability to attract and retain talent[240](index=240&type=chunk) - A new risk factor highlights potential disruptions at the FDA and other government agencies due to funding cuts, personnel losses (RIF), and government shutdowns, which could hinder the ability to secure timely approval for product candidates[241](index=241&type=chunk)[242](index=242&type=chunk)[243](index=243&type=chunk) - An amended risk factor underscores that future success depends on retaining key employees and managing the transition to a new CEO, following the announced retirement of the current President and CEO[264](index=264&type=chunk)[265](index=265&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=53&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company did not issue any unregistered equity securities during the second quarter of 2025 - There were no sales of unregistered equity securities during the second quarter of 2025[274](index=274&type=chunk) [Other Information](index=53&type=section&id=Item%205.%20Other%20Information) No directors or officers adopted or terminated Rule 10b5-1 trading arrangements during Q2 2025 - No director or officer trading arrangements under Rule 10b5-1 were adopted or terminated during the quarter[275](index=275&type=chunk) [Exhibits](index=54&type=section&id=Item%206.%20Exhibits) Lists exhibits filed with the Form 10-Q, including corporate governance documents and certifications

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 _________________________________ FORM 10-Q _________________________________ ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2025 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: 001-36257 TRAVERE THERAPEUTICS, INC. (Exact name of ...

PART I [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) The company began generating product revenue from VYKAT XR in Q2 2025, leading to a net loss of $48.5 million for the first six months of 2025 due to commercial launch costs, while total assets slightly increased to $332.3 million [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheet reflects a slight increase in total assets to $332.3 million as of June 30, 2025, with new current assets from the VYKAT XR commercial launch Balance Sheet Summary (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $76,497 | $87,928 | | Marketable securities | $217,346 | $230,720 | | Total current assets | $316,789 | $293,889 | | Total assets | $332,306 | $330,972 | | **Liabilities & Equity** | | | | Total current liabilities | $20,943 | $18,747 | | Long-term debt, net | $49,845 | $49,828 | | Total liabilities | $92,166 | $85,859 | | Total stockholders' equity | $240,140 | $245,113 | - The company reported new current assets of **Accounts Receivable ($24.6 million)** and **Inventory ($2.4 million)** as of June 30, 2025, following the commercial launch of VYKAT XR[9](index=9&type=chunk) [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) The company recorded its first product revenue of $32.7 million in Q2 2025, but increased selling, general, and administrative expenses led to a net loss of $48.5 million for the first six months of 2025 Statement of Operations Summary (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | Six Months 2025 | Six Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Product revenue, net | $32,657 | $— | $32,657 | $— | | Total operating expenses | $39,182 | $24,868 | $84,925 | $48,343 | | Research and development | $9,147 | $12,342 | $22,664 | $26,944 | | Selling, general and administrative | $28,238 | $10,889 | $57,497 | $19,361 | | Operating loss | $(6,525) | $(24,868) | $(52,268) | $(48,343) | | Net loss | $(4,708) | $(21,854) | $(48,481) | $(43,252) | | Net loss per share, basic and diluted | $(0.09) | $(0.57) | $(1.00) | $(1.16) | - The company began generating product revenue in Q2 2025, recording **$32.7 million** following FDA approval of VYKAT XR, which was accompanied by a significant increase in Selling, General and Administrative expenses to support the commercial launch[11](index=11&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operating activities increased to $45.4 million for the first six months of 2025, while investing activities provided cash and financing activities contributed $18.9 million Cash Flow Summary for Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(45,360) | $(30,179) | | Net cash provided by (used in) investing activities | $15,022 | $(236,165) | | Net cash provided by financing activities | $18,907 | $153,687 | | **Net decrease in cash and cash equivalents** | **$(11,431)** | **$(112,657)** | - Net cash used in operating activities increased to **$45.4 million** in the first six months of 2025 from **$30.2 million** in the prior year period, primarily due to costs associated with the commercial launch of VYKAT XR[16](index=16&type=chunk) - Financing activities in the first half of 2025 provided **$18.9 million**, mainly from the exercise of stock options and warrants, compared to **$153.7 million** in the same period of 2024 which included proceeds from a common stock sale[16](index=16&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes detail the FDA approval and commercial launch of VYKAT XR, the company's liquidity position, debt agreements, and revenue recognition policies - The company's lead product, **VYKAT XR**, received FDA approval on March 26, 2025, for treating hyperphagia in patients with Prader-Willi syndrome (PWS), with revenue recognition beginning in Q2 2025[18](index=18&type=chunk) - As of June 30, 2025, the company held **$76.5 million** in cash and cash equivalents and **$217.3 million** in marketable securities, which management deems sufficient to meet obligations for at least the next twelve months[19](index=19&type=chunk)[24](index=24&type=chunk) - The company has a loan agreement with Oxford for up to **$200 million**, with **$50 million** outstanding as of June 30, 2025, and an additional **$50 million** available upon FDA approval of VYKAT XR[20](index=20&type=chunk)[66](index=66&type=chunk) - Subsequent to the quarter end, in July 2025, the company closed an underwritten public offering of common stock, raising gross proceeds of **$230.0 million**[23](index=23&type=chunk)[103](index=103&type=chunk) - Product revenue is recognized upon transfer of control to its single specialty pharmacy customer, with net revenue including estimates for variable consideration totaling **$4.3 million** in provisions for the six months ended June 30, 2025[34](index=34&type=chunk)[35](index=35&type=chunk)[38](index=38&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=28&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's transition to a commercial-stage entity following VYKAT XR's FDA approval, highlighting initial product revenue of $32.7 million in Q2 2025, increased SG&A expenses for launch, and strengthened liquidity from a recent $230 million public offering [Results of Operations](index=31&type=section&id=Results%20of%20Operations) The company's results reflect the commercial launch of VYKAT XR, with new product revenue offset by significantly increased selling, general, and administrative expenses Comparison of Three Months Ended June 30, 2025 and 2024 (in thousands) | Item | 2025 | 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Product revenue, net | $32,657 | $— | $32,657 | 100% | | Research and development | $9,147 | $12,342 | $(3,195) | (26%) | | Selling, general and administrative | $28,238 | $10,889 | $17,349 | 159% | | Net loss | $(4,708) | $(21,854) | $17,146 | (78%) | - For Q2 2025, R&D expenses decreased by **$3.2 million (26%)** YoY due to lower costs for the NDA submission, while SG&A expenses increased by **$17.3 million (159%)** YoY, driven by hiring and program costs for the commercial launch of VYKAT XR[121](index=121&type=chunk)[122](index=122&type=chunk) Comparison of Six Months Ended June 30, 2025 and 2024 (in thousands) | Item | 2025 | 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Product revenue, net | $32,657 | $— | $32,657 | 100% | | Research and development | $22,664 | $26,944 | $(4,280) | (16%) | | Selling, general and administrative | $57,497 | $19,361 | $38,136 | 197% | | Net loss | $(48,481) | $(43,252) | $(5,229) | 12% | - For the first six months of 2025, SG&A expenses increased by **$38.1 million (197%)** YoY, reflecting a **$15.3 million** increase in personnel costs and a **$12.6 million** increase in commercial launch program costs[131](index=131&type=chunk) [Liquidity and Capital Resources](index=35&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains a strong liquidity position with substantial cash and marketable securities, further bolstered by available debt and a recent public offering - As of June 30, 2025, the company had **$76.5 million** in cash and cash equivalents and **$217.3 million** in marketable securities, with a working capital of **$295.8 million**[134](index=134&type=chunk) - The company has access to additional capital through its loan agreement with Oxford, with **$50 million** available through September 30, 2025, and further tranches available upon meeting certain milestones[135](index=135&type=chunk) - In July 2025, the company raised gross proceeds of **$230.0 million** from a public offering of common stock, further strengthening its capital position[137](index=137&type=chunk) - Management believes that existing cash, cash equivalents, and marketable securities are sufficient to meet working capital needs for the next twelve months[138](index=138&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=38&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company states that there have been no material changes to its exposure to market risk during the six months ended June 30, 2025, as compared to the disclosures in its 2024 Annual Report on Form 10-K - There have been no material changes to the company's market risk exposure during the first six months of 2025[148](index=148&type=chunk) [Controls and Procedures](index=38&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls were ineffective as of June 30, 2025, due to a material weakness in IT general controls, for which a remediation plan is being implemented - Management concluded that disclosure controls were not effective as of June 30, 2025, due to a material weakness in internal control[151](index=151&type=chunk) - The material weakness relates to ineffective design and operation of controls over certain **information technology general controls (ITGCs)**, including segregation of duties, program change management, and user access controls[152](index=152&type=chunk) - The company is implementing a remediation plan that includes hiring additional personnel, enhancing training, and improving oversight of IT controls[154](index=154&type=chunk)[157](index=157&type=chunk) PART II—OTHER INFORMATION [Legal Proceedings](index=41&type=section&id=Item%201.%20Legal%20Proceedings) The company states that it may be party to litigation in the ordinary course of business but currently believes these matters will not have a material adverse effect - The company is not currently involved in any legal proceedings that are expected to have a material adverse effect on its business[159](index=159&type=chunk) [Risk Factors](index=41&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks primarily from its dependence on the commercial success of VYKAT XR, alongside financial, operational, intellectual property, and regulatory challenges, including potential stock price volatility - The company is highly dependent on the commercial success of its sole FDA-approved product, **VYKAT XR**[164](index=164&type=chunk) - The company has a limited commercialization history, has incurred significant losses since inception, and may need additional funds to support operations[162](index=162&type=chunk)[167](index=167&type=chunk) - Market acceptance of **VYKAT XR** by physicians, patients, and payers is critical for commercial success and is not guaranteed[187](index=187&type=chunk) - The company relies on sole source suppliers for manufacturing and a single specialty pharmacy for initial U.S. distribution, posing supply chain and commercialization risks[236](index=236&type=chunk)[240](index=240&type=chunk) - The company faces risks from potential intellectual property infringement claims and challenges in maintaining and enforcing its own patent rights[245](index=245&type=chunk)[251](index=251&type=chunk) - Ongoing regulatory obligations, healthcare reform measures like the **Inflation Reduction Act**, and compliance with fraud and abuse laws present significant challenges[292](index=292&type=chunk)[307](index=307&type=chunk)[314](index=314&type=chunk)

PART I FINANCIAL INFORMATION [Financial Statements](index=6&type=section&id=Item%201.%20Financial%20Statements) The unaudited condensed consolidated financial statements for ADMA Biologics, Inc. as of June 30, 2025, show significant growth in revenues and net income compared to the same period in 2024, with total assets increasing to $558.4 million from $488.7 million at year-end 2024, driven by higher accounts receivable and inventories [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Presents the company's financial position, detailing assets, liabilities, and equity at specific dates Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 (Unaudited) | December 31, 2024 | | :--- | :--- | :--- | | **Current Assets** | | | | Cash and cash equivalents | $90,285 | $103,147 | | Accounts receivable, net | $109,726 | $49,999 | | Inventories, net | $191,464 | $170,235 | | **Total Assets** | **$558,380** | **$488,678** | | **Current Liabilities** | $74,941 | $55,542 | | **Total Liabilities** | **$160,055** | **$139,660** | | **Total Stockholders' Equity** | **$398,325** | **$349,018** | - Total assets grew to **$558.4 million** as of June 30, 2025, from **$488.7 million** at the end of 2024, primarily due to a significant increase in accounts receivable and inventories[13](index=13&type=chunk) - The company initiated a treasury stock program, holding **$15.1 million** in treasury stock as of June 30, 2025, which was not present at the end of 2024[13](index=13&type=chunk) [Unaudited Condensed Consolidated Statements of Operations](index=7&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Operations) Details the company's financial performance, including revenues, expenses, and net income over reporting periods Statement of Operations Summary (in thousands, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | **Revenues** | **$121,984** | **$107,191** | **$236,786** | **$189,066** | | Gross Profit | $67,227 | $57,453 | $128,323 | $96,561 | | Income from Operations | $42,798 | $39,201 | $77,678 | $61,022 | | **Net Income** | **$34,219** | **$32,062** | **$61,122** | **$49,868** | | Diluted EPS | $0.14 | $0.13 | $0.25 | $0.21 | - Revenues for the second quarter of 2025 increased to **$122.0 million**, a **13.8% increase** from **$107.2 million** in the same period of 2024[14](index=14&type=chunk) - Net income for the six months ended June 30, 2025, rose to **$61.1 million** from **$49.9 million** in the prior-year period, representing a **22.6% increase**[14](index=14&type=chunk) [Unaudited Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Summarizes cash inflows and outflows from operating, investing, and financing activities for the period Cash Flow Summary for Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $1,464 | $43,428 | | Net cash used in investing activities | ($7,247) | ($4,727) | | Net cash used in financing activities | ($7,079) | ($1,809) | | **Net (decrease) increase in cash** | **($12,862)** | **$36,892** | - Net cash from operating activities significantly decreased to **$1.5 million** in the first six months of 2025 from **$43.4 million** in the same period of 2024, primarily due to large increases in accounts receivable and inventories[18](index=18&type=chunk) - Cash used in financing activities increased, driven by **$8.4 million** in taxes paid on vested restricted stock units and a **$30.0 million** principal payment on a term loan, which was offset by a **$30.0 million** draw from a revolver[18](index=18&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) Provides essential disclosures and explanations supporting the condensed consolidated financial statements - In May 2025, the Board authorized a share repurchase program of up to **$500.0 million** During the quarter, the company repurchased **816,237 shares** for **$15.1 million**[50](index=50&type=chunk)[51](index=51&type=chunk) - In May 2025, the company repaid **$30.0 million** of its term loan using a draw from its revolving credit facility, resulting in a debt extinguishment loss of **$1.2 million**[47](index=47&type=chunk) - Subsequent to the quarter end, in August 2025, the company entered into a new **$300 million** credit agreement with JPMorgan, consisting of a **$75 million** term loan and a **$225 million** revolving facility, to refinance its existing debt[86](index=86&type=chunk) - In July 2025, the company acquired real estate in Boca Raton, FL for **$12.6 million** to expand production operations and storage capacity[85](index=85&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=27&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations.) Management attributes the strong financial performance in the first half of 2025 to the continued commercial success and growing market acceptance of its IVIG product, ASCENIV, with revenues for the second quarter and first six months of 2025 increasing by 14% and 25% year-over-year, respectively [Overview](index=27&type=section&id=Overview) Introduces ADMA's business, products, and key strategic developments, including recent FDA approvals and acquisitions - ADMA is an end-to-end commercial biopharmaceutical company with three FDA-approved products: ASCENIV, BIVIGAM, and Nabi-HB, manufactured at its Boca Raton facility[95](index=95&type=chunk)[96](index=96&type=chunk) - The company operates ten FDA-licensed plasma collection centers, which supply plasma for its products and for sale to third parties[98](index=98&type=chunk) - In April 2025, the FDA approved an innovative yield enhancement production process for ASCENIV and BIVIGAM, which is expected to increase production yields by approximately **20%** and contribute to revenue and earnings growth starting in the second half of 2025[101](index=101&type=chunk) - In July 2025, the company acquired real estate in Boca Raton for **$12.6 million** to expand production and storage capabilities[103](index=103&type=chunk) [Results of Operations](index=30&type=section&id=Results%20of%20Operations) Analyzes the company's financial performance, highlighting revenue, gross profit, and net income trends and drivers Q2 2025 vs Q2 2024 Results (in thousands) | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Revenues | $121,984 | $107,191 | $14,793 | | Gross Profit | $67,227 | $57,453 | $9,774 | | Income from Operations | $42,798 | $39,201 | $3,597 | | Net Income | $34,219 | $32,062 | $2,157 | - Q2 2025 revenues increased **14% YoY**, primarily due to higher sales volume of ASCENIV Excluding a **$12.6 million** Medicaid rebate accrual adjustment in Q2 2024, the underlying revenue growth was **29%**[118](index=118&type=chunk) H1 2025 vs H1 2024 Results (in thousands) | Metric | H1 2025 | H1 2024 | Change | | :--- | :--- | :--- | :--- | | Revenues | $236,786 | $189,066 | $47,720 | | Gross Profit | $128,323 | $96,561 | $31,762 | | Income from Operations | $77,678 | $61,022 | $16,656 | | Net Income | $61,122 | $49,868 | $11,254 | - For the first six months of 2025, revenues grew **25% YoY** A voluntary withdrawal of three BIVIGAM lots reduced revenue by **$4.0 million** during this period[130](index=130&type=chunk) - Gross margin for H1 2025 improved to **54.2%** from **51.1%** in H1 2024, driven by a better product mix and manufacturing efficiencies[132](index=132&type=chunk) [Liquidity and Capital Resources](index=37&type=section&id=Liquidity%20and%20Capital%20Resources) Assesses the company's financial flexibility, cash position, debt structure, and future funding outlook - As of June 30, 2025, the company had working capital of **$324.6 million**, including **$90.3 million** in cash and cash equivalents[146](index=146&type=chunk) - Management anticipates that current cash, receivables, and projected operating cash flow will be sufficient to fund operations through the first half of 2026 and beyond, with no current need to raise additional capital[148](index=148&type=chunk) - On August 5, 2025, the company refinanced its debt by entering a new **$300 million** credit facility with JPMorgan, replacing the previous Ares facility The new facility includes a **$75 million** term loan and a **$225 million** revolving credit line[157](index=157&type=chunk)[158](index=158&type=chunk) - Net cash from operations for the first six months of 2025 was **$1.5 million**, a significant decrease from **$43.4 million** in the prior year, mainly due to investments in inventory and an increase in accounts receivable[165](index=165&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=42&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk.) The company is exposed to interest rate risk due to its variable-rate senior credit facilities, with a hypothetical 100 basis point increase in interest rates resulting in an approximate $0.8 million negative impact on annualized earnings and cash flows - The company's primary market risk is from changes in interest rates on its senior credit facility[172](index=172&type=chunk) - As of June 30, 2025, a hypothetical **100 basis point (1%)** increase in interest rates would have an approximate **$0.8 million** negative impact on annual earnings and cash flows based on the **$75.0 million** outstanding variable-rate debt[172](index=172&type=chunk) [Controls and Procedures](index=42&type=section&id=Item%204.%20Controls%20and%20Procedures.) Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures as of June 30, 2025, concluding they were effective in ensuring timely and accurate reporting, with no material changes to internal control over financial reporting during the quarter - The principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were effective as of June 30, 2025[174](index=174&type=chunk) - There were no changes in the company's internal control over financial reporting during the quarter ended June 30, 2025, that have materially affected, or are reasonably likely to materially affect, internal controls[176](index=176&type=chunk) PART II OTHER INFORMATION [Legal Proceedings](index=43&type=section&id=Item%201.%20Legal%20Proceedings.) The company reports that it is not currently involved in any material pending legal proceedings that would have a material adverse effect on its financial position, results of operations, or cash flows - Management states that there are currently no material pending legal proceedings against the company[178](index=178&type=chunk) [Risk Factors](index=43&type=section&id=Item%201A.%20Risk%20Factors.) The company outlines several key risks to its business, including the potential inability to maintain profitability, reliance on third-party contractors for manufacturing and plasma supply, business interruptions, regulatory hurdles, customer concentration, stock price volatility, and limitations on the use of Net Operating Loss (NOL) carryforwards - The company may not be able to maintain profitability, despite achieving it for the first time in the year ended December 31, 2024[179](index=179&type=chunk)[182](index=182&type=chunk) - A few customers account for a significant portion of revenue and accounts receivable, with two customers representing about **72%** of consolidated revenues for the first six months of 2025[181](index=181&type=chunk)[216](index=216&type=chunk) - The business relies on third parties for filling, packaging, testing, and sourcing plasma, which introduces risks related to performance, quality, and supply chain disruptions[179](index=179&type=chunk)[185](index=185&type=chunk) - The company's new senior secured credit facility with JPMorgan contains covenants and is subject to acceleration in case of default, which could lead to the seizure of collateral[181](index=181&type=chunk)[231](index=231&type=chunk)[232](index=232&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=72&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds.) The company reports no unregistered sales of equity securities during the period, having repurchased 816,237 shares in June 2025 at an average price of $18.35 per share under its publicly announced share repurchase program, with approximately $485 million remaining available for future repurchases Share Repurchases in Q2 2025 | For the Month Ended | Total Number of Shares Purchased | Average Price Paid Per Share | Approximate Dollar Value of Shares that May Yet Be Purchased | | :--- | :--- | :--- | :--- | | April 30, 2025 | - | $- | $- | | May 31, 2025 | - | $- | $- | | June 30, 2025 | 816,237 | $18.35 | $485,002,210 | - The share repurchases were made pursuant to the program publicly announced on May 5, 2025, which has no expiration date[296](index=296&type=chunk)[297](index=297&type=chunk) [Other Information](index=73&type=section&id=Item%205.%20Other%20Information.) The company states that none of its directors or executive officers adopted or terminated any Rule 10b5-1 trading plans or other non-Rule 10b5-1 trading arrangements during the quarter ended June 30, 2025 - No directors or executive officers adopted or terminated any Rule 10b5-1 trading plans during the second quarter of 2025[300](index=300&type=chunk)

[Part I. Financial Information](index=3&type=section&id=Part%20I.%20Financial%20Information) [Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20FINANCIAL%20STATEMENTS%20(UNAUDITED)) The unaudited condensed consolidated financial statements for the period ended June 30, 2025, show a significant decline in total assets and a worsening stockholders' deficit. The company reported a substantial decrease in revenue and an increased net loss compared to the prior year, primarily driven by a severe downturn in its sell-side advertising segment. Cash flow from operations remained negative, though improved from the prior year, with financing activities, particularly stock issuance, providing necessary liquidity. The notes highlight substantial doubt about the company's ability to continue as a going concern [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheet shows a decline in total assets and an increase in liabilities, leading to a worsened stockholders' deficit Condensed Consolidated Balance Sheets | Balance Sheet Items (in thousands) | June 30, 2025 (Unaudited) | December 31, 2024 | | :--- | :--- | :--- | | **Total Current Assets** | $6,727 | $8,535 | | **Total Assets** | **$23,326** | **$26,006** | | **Total Current Liabilities** | $13,675 | $13,350 | | **Total Liabilities** | **$47,907** | **$45,736** | | **Total Stockholders' Deficit** | **($24,581)** | **($19,730)** | - The company's financial position weakened, with total assets decreasing by **10.3%** and total liabilities increasing by **4.7%** from December 31, 2024, to June 30, 2025. This resulted in a **24.6%** increase in the total stockholders' deficit[9](index=9&type=chunk) [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The statements of operations reveal a significant revenue decline and an increased net loss, primarily from sell-side advertising Condensed Consolidated Statements of Operations | Income Statement (in thousands) | Q2 2025 | Q2 2024 | YoY Change | | :--- | :--- | :--- | :--- | | **Total Revenues** | **$10,144** | **$21,855** | **-53.6%** | | Sell-side advertising | $2,483 | $14,298 | -82.6% | | Buy-side advertising | $7,661 | $7,557 | +1.4% | | **Gross Profit** | **$3,561** | **$5,931** | **-40.0%** | | **Loss from Operations** | **($2,426)** | **($2,065)** | **+17.5%** | | **Net Loss** | **($4,196)** | **($3,141)** | **+33.6%** | | **Net Loss per Share (Basic)** | **($0.23)** | **($0.16)** | **+43.8%** | - For the six months ended June 30, 2025, total revenues plummeted by **58.5%** to **$18.3 million** from **$44.1 million** in the prior-year period. The net loss for the six-month period widened to **$10.1 million** from **$7.0 million**[11](index=11&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Cash flow from operations improved but remained negative, with financing activities providing necessary liquidity Condensed Consolidated Statements of Cash Flows | Cash Flows (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | ($5,398) | ($10,111) | | Net cash used in investing activities | ($38) | ($10) | | Net cash provided by financing activities | $5,584 | $6,074 | | **Net increase (decrease) in cash** | **$148** | **($4,047)** | - Cash used in operations for the first six months of 2025 improved to **-$5.4 million** from **-$10.1 million** in the prior year. Financing activities provided **$5.6 million** in cash, primarily from the issuance of **$5.9 million** in Class A Common Stock[22](index=22&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Key notes highlight going concern doubts, customer concentration, ongoing litigation, and significant long-term debt - **Going Concern:** Management has identified conditions that raise substantial doubt about the Company's ability to continue as a going concern. These include a net loss of **$10.1 million** for the six months ended June 30, 2025, an accumulated deficit of **$13.4 million**, low cash reserves of **$1.6 million**, maturing debt, and non-compliance with Nasdaq's listing requirements[65](index=65&type=chunk)[66](index=66&type=chunk) - **Customer Concentration:** For the three months ended June 30, 2025, two customers accounted for **31%** of revenues. This is a significant reduction in concentration from the same period in 2024, where one sell-side customer accounted for **58%** of revenues[50](index=50&type=chunk) - **Litigation:** The company is involved in litigation, including a lawsuit it filed against the author of a defamatory article that caused a significant sell-side customer to temporarily pause its connection, disrupting business. The company is also defending against a putative class-action lawsuit alleging violations of federal securities laws[121](index=121&type=chunk)[122](index=122&type=chunk) - **Long-Term Debt:** As of June 30, 2025, total long-term debt was **$41.2 million**. The company has received multiple amendments to its credit facilities to provide temporary relief from debt covenants and extend maturity dates, indicating ongoing liquidity challenges[70](index=70&type=chunk)[87](index=87&type=chunk)[88](index=88&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=29&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes the severe 54% year-over-year revenue decline in Q2 2025 to a significant disruption in its sell-side business, caused by a defamatory blog post in May 2024 that led a key customer to temporarily halt activity. While buy-side revenue saw marginal growth, the collapse in sell-side revenue led to a wider net loss. The company is facing substantial liquidity challenges, evidenced by a 'going concern' warning, non-compliance with Nasdaq listing rules, and reliance on an Equity Reserve Facility for funding. Management has implemented cost-saving measures, including staff reductions, to mitigate the financial impact [Results of Operations](index=36&type=section&id=Results%20of%20Operations) Operational results show a sharp revenue drop due to sell-side disruption, despite cost-saving measures - The primary cause for the **83%** decrease in Q2 2025 sell-side advertising revenue was an unexpected business disruption from a defamatory blog post in May 2024, which caused partners and clients to pause activity. Sell-side volumes have not yet recovered to prior levels[173](index=173&type=chunk) Results of Operations | Revenue and Gross Profit (in thousands) | Q2 2025 | Q2 2024 | YoY Change | | :--- | :--- | :--- | :--- | | **Total Revenues** | **$10,144** | **$21,855** | **(54%)** | | Sell-side advertising | $2,483 | $14,298 | (83%) | | Buy-side advertising | $7,661 | $7,557 | 1% | | **Gross Profit** | **$3,561** | **$5,931** | **(40%)** | - Operating expenses for Q2 2025 decreased by **25%** to **$6.0 million**, primarily due to lower compensation costs resulting from a staff reduction effective July 1, 2024, and reduced professional fees[183](index=183&type=chunk)[184](index=184&type=chunk)[185](index=185&type=chunk) [Liquidity and Capital Resources](index=39&type=section&id=Liquidity%20and%20Capital%20Resources) Liquidity remains a major concern, with substantial doubt about going concern and reliance on equity financing - The company's ability to continue as a going concern is in substantial doubt due to significant net losses, low cash balance (**$1.6 million**), maturing debt, and Nasdaq delisting risk[191](index=191&type=chunk) - To address liquidity concerns, the company is relying on cash from operations, its Equity Reserve Facility, and potential future financing. It has also implemented cost reductions and obtained temporary relief from debt covenants[192](index=192&type=chunk) - During the first six months of 2025, the company sold **6,059,351** shares of Class A Common Stock for **$4.6 million** under its Equity Reserve Facility to fund operations[143](index=143&type=chunk) Liquidity and Capital Resources | Key Liquidity Metrics (in thousands) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $1,593 | $1,445 | | Working capital deficit | ($6,948) | ($4,815) | [Recent Developments](index=31&type=section&id=Recent%20Developments) Recent developments include Nasdaq non-compliance notices for equity and bid price, with an extension granted - On October 18, 2024, the company was notified by Nasdaq of non-compliance with the minimum stockholders' equity requirement. Subsequently, on May 12, 2025, it received another notice for failing to meet the **$1.00** minimum bid price requirement[140](index=140&type=chunk)[141](index=141&type=chunk) - The company has been granted an extension until October 14, 2025, by a Nasdaq Hearings Panel to regain compliance with the stockholders' equity rule, subject to meeting certain interim conditions[141](index=141&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=42&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company, as a "smaller reporting company," is not required to provide the information for this item - As a smaller reporting company, the registrant is exempt from providing quantitative and qualitative disclosures about market risk[210](index=210&type=chunk) [Controls and Procedures](index=42&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were not effective as of June 30, 2025. This is due to a previously identified material weakness related to the technical evaluation of accounting matters. While remediation efforts are underway, including hiring additional personnel and engaging consultants, they were not fully effective by the end of the period - The CEO and CFO concluded that the Company's Disclosure Controls were not effective as of June 30, 2025[211](index=211&type=chunk) - A material weakness in controls over the technical evaluation of accounting matters, previously identified as of December 31, 2023, and 2024, has not been fully remediated[212](index=212&type=chunk)[215](index=215&type=chunk) - Remediation steps include engaging consultants and hiring additional qualified accounting personnel, but these controls have not been in place long enough to demonstrate operating effectiveness[215](index=215&type=chunk) [Part II. Other Information](index=43&type=section&id=Part%20II.%20Other%20Information) [Legal Proceedings](index=43&type=section&id=Item%201.%20Legal%20Proceedings) The company is actively involved in two significant legal matters. It has filed a lawsuit against the author of a defamatory article from May 2024 that negatively impacted its business. Concurrently, it is defending against a consolidated putative class-action lawsuit filed by stockholders alleging violations of federal securities laws - The company filed a lawsuit against the author of a defamatory article published on May 10, 2024, which caused a major sell-side customer to temporarily pause its connection[219](index=219&type=chunk) - A putative class-action lawsuit was filed against the company and certain officers in May 2024, alleging violations of federal securities laws related to public disclosures. The company believes the claims lack merit and intends to defend itself vigorously[220](index=220&type=chunk) [Risk Factors](index=44&type=section&id=Item%201A.%20Risk%20Factors) The primary risk highlighted is the potential delisting of the company's Class A Common Stock from the Nasdaq Capital Market. The company is non-compliant with both the minimum stockholders' equity and minimum bid price requirements. Failure to regain compliance within the granted extension period could severely impact the stock's liquidity, the company's ability to raise capital, and investor confidence - A significant risk is the potential delisting from the Nasdaq Capital Market due to non-compliance with the minimum stockholders' equity requirement and the minimum bid price rule[222](index=222&type=chunk)[223](index=223&type=chunk) - Delisting could adversely affect the ability to raise additional financing, negatively impact the value and liquidity of the stock, and result in a loss of institutional investor interest[223](index=223&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=44&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities during the period - There were no unregistered sales of equity securities in the reporting period[224](index=224&type=chunk) [Other Information](index=45&type=section&id=Item%205.%20Other%20Information) On August 5, 2025, the company entered into a Sixth Amendment to its Credit Agreement with East West Bank (EWB). This amendment extended the maturity date of the credit facility from July 31, 2025, to August 31, 2025, in exchange for a principal payment of $200,000 - The company amended its credit agreement with EWB on August 5, 2025, extending the maturity date to August 31, 2025[230](index=230&type=chunk) - In connection with the maturity extension, the company agreed to make a principal payment of **$200,000** by August 15, 2025[230](index=230&type=chunk)