ORASURE TECHNOLOGIES INC

(all tabular amounts in thousands)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Principles of Consolidation and Basis of Presentation

The accompanying interim unaudited consolidated financial statements include the accounts of OraSure Technologies, Inc. (“OraSure”) and its wholly-owned subsidiaries, DNA Genotek Inc. (“DNAG”), Diversigen, Inc. (“Diversigen”), Sherlock Biosciences, Inc. and its wholly-owned subsidiary Sense Biodetection Limited (collectively, "Sherlock"), and BioMedomics, Inc. ("BioMedomics"). Novosanis NV ("Novosanis") was a subsidiary of OraSure until it was legally dissolved in June 2025. All intercompany transactions and balances have been eliminated. References herein to “we,” “us,” “our,” or the “Company” mean OraSure and its consolidated subsidiaries, unless otherwise indicated. The unaudited financial statements, in the opinion of management, include all adjustments (consisting only of normal and recurring adjustments) necessary for a fair presentation of the Company's financial position and results of operations for these interim periods. These financial statements should be read in conjunction with the financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2025. Results of operations for the three and nine months ended September 30, 2026 are not necessarily indicative of the results of operations expected for the full year.

Summary of Significant Accounting Policies

There have been no changes to the Company's significant accounting policies described in its Annual Report on Form 10-K for the fiscal year ended December 31, 2025 that have had a material impact on the consolidated financial statements and related notes except as discussed herein.

Cash Equivalents & Short-Term Investments

The Company considers all its investments in debt securities to be available-for-sale securities. These securities consist of guaranteed investment certificates purchased with maturities greater than ninety days and are considered short-term investments. Securities with maturities ninety days or less are considered cash equivalents. Available-for-sale securities are carried at fair value, based upon quoted market prices, with unrealized gains and losses, if any, reported in stockholders’ equity as a component of accumulated other comprehensive loss.

The Company records an allowance for credit loss for the Company's available-for-sale securities when a decline in investment market value is due to credit-related factors. When evaluating an investment for impairment, the Company reviews factors such as the severity of the impairment, changes in underlying credit ratings, forecasted recovery, the Company’s intent to sell or the likelihood that it would be required to sell the investment before its anticipated recovery in market value, and the probability that the scheduled cash payments will continue to be made.

The Company maintains cash balances in the United States in excess of the federally insured limits. The Company periodically evaluates financial institutions and believes the risk of loss to be remote due to this evaluation.

Fair Value of Financial Instruments

As of September 30, 2026 and December 31, 2025, the carrying values of cash and cash equivalents, accounts receivable, accounts payable, and accrued expenses approximate their respective fair values based on their short-term nature.

Fair value measurements of all financial assets and liabilities that are being measured and reported on a fair value basis are required to be classified and disclosed in one of the following three categories:

Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

Level 2: Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability; and

Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity).

To the extent that valuation is based on models or inputs that are unobservable in the market, determining fair value requires more judgment. Because of the inherent uncertainty of valuation, estimated values may be materially higher or lower than the values that would have been used had a ready market for the investments existed. Therefore, the degree of judgment exercised in determining fair value is greatest for assets or liabilities categorized in Level 3. The following table provides a summary of the recognized assets and liabilities that are measured at fair value on a recurring basis:

Included in cash and cash equivalents at September 30, 2026 and December 31, 2025 was $12.8 million and $13.1 million, respectively, invested in guaranteed investment certificates.

Included in cash and cash equivalents at September 30, 2026 and December 31, 2025, was $50.1 million and $68.4 million, respectively, invested in government money market funds. These funds have investments in U.S. government securities and are measured as Level 1 instruments.

The Company offers a nonqualified deferred compensation plan for certain eligible employees and members of the Company's Board of Directors. The assets of the plan are held in the name of the Company at a third-party financial institution. The Company paused the plan in January 2026 and is no longer allowing new participants to enter the plan. Separate accounts are maintained for each participant to reflect the amounts deferred by the participant and all earnings and losses on those deferred amounts. The assets of the plan are held in mutual funds and Company stock. The fair value of the plan assets as of September 30, 2026 and December 31, 2025 was $0.5 million, and was calculated using the quoted market prices of the assets as of those dates. All investments in the plan are classified as trading securities and measured as Level 1 instruments. The fair value of plan assets is included in both current assets and other noncurrent assets with the same amounts included in accrued expenses and other noncurrent liabilities in the accompanying consolidated balance sheets.

Contingent Consideration

The Company has identified its contingent consideration obligations as Level 3 liabilities due to significant inputs that are required to measure the fair value of these obligations. The contingent consideration is comprised of three different tranches: milestone payments, royalty payments, and earnout payments. The significant quantitative unobservable inputs for the milestone payments are the discount rate and probability of achieving regulatory approval milestones. In December 2025, the Company submitted a premarket notification, or 510(k), to the U.S. Food and Drug Administration (the “FDA”) for clearance of its rapid molecular self-test for chlamydia trachomatis and Neisseria gonorrhoeae (“CT/NG”) on the Sherlock platform. Following constructive interactions with the FDA, the Company is updating its submission plan for the CT/NG test on the Sherlock platform to incorporate feedback received from the agency. As part of this process, in July 2026, the Company elected to withdraw its current submission and plans to pursue a future submission. Due to this withdrawal, the Company has concluded that it will not obtain FDA clearance by December 31, 2026 as outlined in the terms of the merger agreement. Accordingly, the Company will not be obligated to pay the milestone contingent payments and the milestone contingent consideration liability was reduced tozero. Furthermore, as a result of the delay in the commercialization of the CT/NG product, the royalty based contingent consideration liability was reduced to reflect the delay in recognizing revenue from the sale of the CT/NG product and increase in discount rate associated with the cash flows. During the three and nine months ended September 30, 2026, to reflect these changes in these liabilities, a decrease in the estimated fair value of acquisition-related contingent consideration of $0 and $22.5 million, respectively, was recorded on the Company's consolidated statement of operations.

The fair value methodology for royalty payments is based on a discounted cash flow model. The significant quantitative unobservable inputs include internally developed future expected cash flows, a discount rate and the probability achievement of a milestone of a regulatory approval. The royalty payments represent a mid-single digit percentage of the net sales through 2034 associated with the acquired in-process and research and development intangible asset.

The fair value methodology for earnout payments is based on a Monte Carlo model. Significant quantitative unobservable inputs are future expected cash flows, discount rate and volatility rate.

There has been a net decrease of $17.9 million in the fair value of the Company's contingent consideration from date of acquisition to September 30, 2026 primarily due to the release of the milestone liability and a reduction in royalty liability as described above.

The fair value analysis as of September 30, 2026, utilized a 20.4% discount rate.

Indefinite-Lived Intangible Asset

Indefinite-lived intangible assets are not amortized but rather tested annually for impairment or more frequently if the Company believes that indicators of impairment exist. Current generally accepted accounting principles permit the Company to make a qualitative evaluation about the likelihood of indefinite-lived intangible asset impairment. If the Company concludes that it is more likely than not that the carrying value of an indefinite-lived intangible asset is greater than its fair value, then the Company would be required to perform a quantitative analysis. The Company would recognize an impairment charge for the amount by which the carrying amount exceeds the fair value.

In December 2025, the Company submitted a 510(k) to the FDA for clearance of its rapid molecular self-test for CT/NG. Following constructive interactions with the FDA, the Company is updating its submission plan for the CT/NG test on the Sherlock platform to incorporate feedback received from the agency. As part of this process, in July 2026, the Company elected to withdraw its current submission and plans to pursue a future submission. This withdrawal was considered an indicator of impairment, which necessitated review of the facts and circumstances underlying the value of the in-process research and development ("IPR&D") technology intangible asset as of June 30, 2026. The Company performed a quantitative indefinite-lived intangible asset impairment test on the IPR&D technology which concluded that the carrying value of the Company's IPR&D technology was below its fair value indicating there was no impairment as of June 30,

2026. The carrying value was 6% below its fair value. There were no triggering events identified for the three months ended September 30, 2026.

As of September 30, 2026, the IPR&D technology intangible asset was $17.0 million. The impairment analysis used an income approach. The income approach estimates fair value for an asset based on the present value of cash flows projected to be generated by the asset. Projected cash flows are discounted at a required rate of return that reflects the relative risk of achieving the cash flows and the time value of money. The revenue and cash flows assumes CT/NG receives regulatory authorization and market competition of future products is low. The revenues assume market growth will accelerate each year. If there are delays to attaining regulatory approval or successfully launching CT/NG, this could have a negative outcome on the indefinite-lived intangible asset impairment analysis.

The below table illustrates the discount rate sensitivity to the fair value of the IPR&D technology intangible asset when performing the impairment analysis as of June 30, 2026. In the IPR&D technology intangible asset impairment analysis as of June 30, 2026, the impairment analysis utilized a 40% discount rate.

Equity Method Investee

In January 2024, the Company led the Series B financing and entered into wide-ranging strategic distribution agreements with KKR Sapphiros L.P. ("Sapphiros"), a privately held consumer diagnostic portfolio company, and certain of its related entities. Through this relationship, the Company expects to be able to offer a more comprehensive range of low-cost diagnostic tests and molecular sample management solutions to the Company's customers globally. As of September 30, 2026, the Company had funded $30.0 million for its interest in Sapphiros. The Company recorded the investment using the equity method in accordance with Accounting Standards Codification ("ASC") Topic 323, Investments—Equity Method and Joint Ventures—Overall. In accordance with the equity method, the Company's equity investment is presented net of its share of any gains or losses of the investee. The Company has elected as its accounting policy to recognize its share of any income or loss in Sapphiros on a three-month lag. The value of the investment in Sapphiros of $23.8 million as of September 30, 2026 is included in the investment in equity method investee line of the Company's balance sheet. The Company has no unconditional obligations or guarantees to, or in support of, its equity method investee and its operations. In conjunction with the preparation of the Company's September 30, 2026 financial statements, the Company evaluated the investment in Sapphiros for impairment and concluded there was no such impairment. The Company's investment in Sapphiros was valued at $26.0 million as of December 31, 2025.

Related Party

The Company loaned Sapphiros $0.3 million during the year ended December 31, 2025. The loan plus interest is due in December 2026. During the year ended December 31, 2025, the Company entered into an agreement with Sapphiros to assist in the development of certain products for Sapphiros. A total of $1.9 thousand and $0.2 million of products and services revenue was recognized from this agreement for the three and nine months ended September 30, 2026. No equivalent amounts were recognized for the three and nine months ended September 30, 2025.

Uncertain Tax Positions

Assets and liabilities are established for uncertain tax positions taken or positions expected to be taken in income tax returns when such positions fail to meet the "more likely than not" threshold based on the technical merits of the positions. The Company assesses whether previously unrecognized tax benefits may be recognized when tax positions are (1) more likely than not of being sustained based on their technical merits, (2) effectively settled through examination, negotiation or litigation, or (3) settled through actual expiration of the relevant tax statutes. The assessment of an uncertain tax position requires significant judgment.

Foreign Currency Transactions

Net foreign exchange gains resulting from foreign currency transactions that are included in other income in the Company's consolidated statements of operations were $33.0 thousand and $0.6 million for the three months ended September 30, 2026 and 2025, respectively.

Net foreign exchange gains (losses) resulting from foreign currency transactions for the nine months ended September 30, 2026 and 2025 were $0.1 million and $(0.7) million respectively.

Accumulated Other Comprehensive Loss

Change in accumulated other comprehensive loss by component is listed below:

Recent Accounting Pronouncements

In November 2024, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update ("ASU") No. 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40), Disaggregation of Income Statement Expenses. The purpose of this update was to require disclosure, in the notes to financial statements, of specified information about certain costs and expenses on a disaggregated basis. The amendments in the ASU are effective for all public business entities for annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027, with early adoption permitted. The amendments are to be applied either prospectively to financial statements issued for reporting periods after the effective date of the update or retrospectively to any or all prior periods presented in the financial statements. Management is evaluating the impact on the Company's consolidated financial statements.

In July 2025, the FASB issued ASU No. 2025-05, Financial Instruments—Credit Losses (Topic 326), Measurement of Credit Losses for Accounts Receivable and Contract Assets. The purpose of this update was to address challenges encountered when applying the guidance in Topic 326, Financial Instruments—Credit Losses, to current accounts receivable and current contract assets arising from transactions accounted for under Topic 606, Revenue from Contracts with Customers. For all business entities, the amendments in this ASU are effective for fiscal years beginning after December 15, 2025, and interim periods within those fiscal periods. The amendments are applied prospectively, and early adoption is permitted. Management does not expect a material impact on the Company's consolidated financial statements.

In September 2025, the FASB issued ASU No. 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40), Targeted Improvements to the Accounting for Internal-Use Software. The purpose of this update was to modernize the accounting for software costs. For all business entities, the amendments in this ASU are effective for fiscal years beginning after December 15, 2027, and interim periods within those fiscal periods. The amendments can be applied prospectively, a modified transition or retrospectively. Early adoption is permitted as of the beginning of an annual reporting period. Management does not expect a material impact on the Company's consolidated financial statements.

In December 2025, the FASB issued ASU No. 2025-10, Government Grants (Topic 832), Accounting for Government Grants Received by Business Entities. The purpose of this update was to improve US GAAP by establishing authoritative guidance on the accounting for government grants received by business entities. For public business entities, the amendments in this ASU are effective for annual reporting periods beginning after December 15, 2028, and interim reporting periods within those annual reporting periods. Early adoption is permitted in both interim and annual reporting periods in which financial statements have not yet been issued or made available for issuance. The amendments can be applied under a modified prospective approach, a modified retrospective approach, or a retrospective approach. Management is evaluating the impact on the Company's consolidated financial statements.

In December 2025, the FASB issued ASU No. 2025-11, Interim Reporting (Topic 270), Narrow-Scope Improvements. The purpose of this update was to improve the navigability of the required interim disclosures and clarifying when that guidance is applicable. The update also provides additional guidance on what disclosures should be provided in interim periods and adds a principal that requires entities to disclose events since the end of the last annual reporting period that have a material impact on the entity. For public business entities, the amendments in this ASU are effective for interim reporting periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The amendments in this update can be applied either prospectively or retrospectively to any or all prior periods presented in the financial statements. Management is evaluating the impact on the Company's consolidated financial statements.

2. INVENTORIES:

3. PROPERTY, PLANT, AND EQUIPMENT, NET:

4. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES:

5. TERMINATION BENEFITS:

Q2 2024 Reduction in Workforce

During the second quarter of 2024, the Company executed a reduction in workforce as the Company notified employees of its intention to consolidate its Novosanis site in Belgium into other locations by the end of December 31, 2024, discontinue the Diversigen molecular services line of business by the end of June 30, 2024, and consolidate facilities by bringing third-party manufacturing activities into its Pennsylvania facilities by the end of the third quarter of 2025.

As of March 31, 2026 the Company had paid the full $1.7 million related to the reduction in workforce. This reduction in workforce was completed by March 31, 2026 and no additional charges were incurred during nine months ended September 30, 2026.

Q3 2024 Reduction in Workforce

During the third quarter of 2024, the Company executed a reduction in workforce as the Company notified certain employees of its intention to discontinue its risk assessment business. Additional employees were notified in the fourth quarter of 2024.

As of September 30, 2026, the Company had $2.7 thousand accrued and had paid $1.2 million related to this reduction in workforce. No additional charges were incurred during the nine months ended September 30, 2026. The Company expects this reduction in workforce to be completed by October 2026.

Q1 2026 Reduction in Workforce

During the first quarter of 2026, the Company executed a reduction in workforce to better align the Company's cost structure. The charges for termination benefits included in the Company's consolidated statements of operations are as follows:

As of September 30, 2026, the Company had $0.1 million accrued and had paid $1.1 million related to the reduction in workforce. No additional charges were incurred during the nine months ended September 30, 2026. The Company expects this reduction in workforce to be completed by February 2027.

6. REVENUES:

Revenues by Product Line. The following table represents total net revenues by product line:

HIV

Sample Management Solutions (1)

HCV

Other products and services revenues (2)

COVID-19 (3)

Risk Assessment Testing (4)

Net product and services revenues

Non-product and services revenues (5)

Net revenues

(1) Includes Genomics, Microbiome and Colli-Pee® product revenues.

(2) Includes Syphilis, Ebola, and Sickle SCAN® product revenues and single order fulfillment.

(3)Includes COVID-19 Diagnostics and COVID-19 Sample Management Solutions revenues.

(4)Includes substance abuse testing product revenues.

(5)Includes funded research and development contracts, royalty income and grant revenues.

Revenues by Geographic Area. The following table represents total net revenues by geographic area, based on the location of the customer:

Customer Concentrations. The following table represents customer concentration risk:

(1) Each commercial customer is a different international distributor.

Vendor Concentrations. The Company currently purchases certain products and critical components of the Company's products from sole-supply vendors. If these vendors are unable or unwilling to supply the required components and products, the Company could be subject to increased costs and substantial delays in the delivery of the Company's products to its customers. Third-party suppliers also manufacture certain products. The Company's inability to have a timely supply of any of these components and products could have a material adverse effect on the Company's business, as well as the Company's financial condition and results of operations.

Deferred Revenue. The Company records deferred revenue when funds are received prior to the recognition of the associated revenue. Deferred revenue as of September 30, 2026 and December 31, 2025 was comprised of customer prepayments of $0.7 million and $1.2 million, respectively. Deferred revenue as of December 31, 2025 was also comprised of $0.4 million of unearned grant income. The Company hadno unearned grant income in deferred revenue as of September 30, 2026.

The following table represents deferred revenue recognized:

7. INCOME TAXES:

The components of the income tax expense (benefit) are as follows:

During the three months ended September 30, 2026 and 2025, the Company recorded income tax expense of $0.7 million and $47.0 thousand, respectively. During the nine months ended September 30, 2026 and 2025, the Company recorded income tax expense of $0.3 million and $1.6 million, respectively. The higher federal and state income tax expense in 2025 is largely due to recording an uncertain tax position for certain tax matters, including penalties and interest. During the three and nine months ended September 30, 2026, the Company had an effective tax rate of (6.0)% and (1.2)%, respectively. During the three and nine months ended September 30, 2025, the Company had an effective tax rate of (0.4)% and (3.4)%, respectively. The change in the tax in the quarterly periods is largely due to a reduction in the uncertain tax position made in Q3 2025 that did not reoccur in the third quarter of 2026. The increase in the Company's tax rate for the year-to-date period is primarily due to the recording of the uncertain tax positions in 2025 and an estimated increase in foreign pre-tax income in 2026.

Income tax expense reflects taxes due to the taxing authorities and the tax effects of temporary differences between the basis of assets and liabilities recognized for financial reporting and tax purposes, and net operating loss and tax credit carryforwards.

A valuation allowance is recorded to the extent it is more likely than not that some portion or all of the deferred tax assets will not be realized. A full valuation allowance was recorded on the Company’s U.S. and U.K. deferred tax assets as of September 30, 2026 and December 31, 2025.

Uncertain tax positions were approximately $2.0 million as of September 30, 2026 and December 31, 2025. The Company’s uncertain tax positions relate to U.S. federal and other jurisdictions. Due to various factors, including the inherent complexities and uncertainties of the judicial, administrative, and regulatory processes in certain jurisdictions, the timing of the resolution of income tax controversies is highly uncertain, and the amounts ultimately paid, if any, upon resolution of the issues raised by the taxing authorities may differ from the amounts accrued. Any assessments or settlements could result in changes to the Company's contingencies related to positions on prior years’ tax filings.

8. EARNINGS (LOSS) PER SHARE:

Basic earnings (loss) per share is computed by dividing net income (loss) by the weighted-average number of shares of common stock outstanding during the period. Diluted earnings (loss) per share is computed in a manner similar to basic earnings (loss) per share except that the weighted-average number of shares outstanding is increased to include incremental shares from the assumed vesting or exercise of dilutive securities, such as common stock options, unvested restricted stock or performance stock units, unless the impact is anti-dilutive. The number of incremental shares is calculated by assuming that outstanding stock options were exercised and unvested restricted shares and performance stock units were vested, and the proceeds from such exercises or vesting were used to acquire shares of common stock at the average market price during the reporting period. Basic and dilutive computations of net loss per share are the same in periods in which a net loss exists as the dilutive effects of excluded items would be anti-dilutive.

For the three months ended September 30, 2026 and 2025, outstanding common stock options, unvested restricted stock, and unvested performance stock units representing 1,729 and 585 shares were excluded from the computation of diluted loss per share.

For the nine months ended September 30, 2026 and 2025, outstanding common stock options, unvested restricted stock, and unvested performance stock units representing 1,179 shares and 605 shares, respectively, were excluded from the computation of diluted loss per share.

9. STOCKHOLDERS' EQUITY:

In March 2025, the Company's Board of Directors authorized a stock repurchase program (the "Repurchase Program") effective March 21, 2025, whereby the Company may purchase up to $40.0 million in shares of its common stock over a period of up totwo years. The amount and timing of share repurchases under the Repurchase Program may be carried out at the discretion of the Company's management through various methods in compliance with applicable state and federal securities laws. The Company did not repurchase shares of its common stock under the Repurchase Program during the three months ended September 30, 2026, and the Company repurchased 1.5 million shares during the three months ended September 30, 2025. The Company repurchased 2.4 million and 3.3 million shares of its common stock under the Repurchase Program during the nine months ended September 30, 2026 and 2025, respectively.

The reconciliation of the changes in stockholders' equity for the three and nine months ended September 30, 2026 and 2025 is as follows:

10. BUSINESS SEGMENT INFORMATION:

The Company is organized on the basis of products and services into a single reportable segment. All products and services reside under the same reporting hierarchy. The Company's reportable segment derives its revenues from the sale of diagnostics products and sample management solutions, as described in Note 1 Summary of Significant Accounting Policies. As the Company has onlyone reportable segment, there are no inter-segment sales or transfers.

The Company's Chief Operating Decision Maker ("CODM") is its Chief Executive Officer. The CODM uses consolidated net income (loss) as reported in the consolidated statement of operations as the primary measure of the reportable segment's profit or loss. The CODM uses consolidated net income (loss) to assess the performance of the segment and make decisions about resource allocation. Consolidated gross profit and consolidated operating income (loss), as reported in the consolidated statement of operations, are also used by the CODM as measures of segment profit or loss. The CODM uses gross profit to assess the impact of the Company's efforts to achieve manufacturing efficiencies and consolidate its production activities. The CODM uses operating income (loss) to assess the impact of the Company's recent restructurings, reduction in workforce, and efforts to streamline its operations to achieve cost savings. The CODM uses consolidated total assets as the measure of segment assets, as reported on the consolidated balance sheet.

The accounting policies of the Company's reportable segment are the same as those described in Note 1 Summary of Significant Accounting Policies.

The following table represents total long-lived assets by geographic area:

The following table represents reported segment revenues, segment loss, and significant segment expenses:

(1)The tables below represent additional significant segment expense categories.

(2)Includes interest expense and foreign currency gains (losses).

11. BUSINESS COMBINATIONS:

BioMedomics

On November 12, 2025, the Company acquired all of the outstanding stock of BioMedomics, pursuant to the terms of an acquisition agreement (the "Acquisition Agreement"). The Company began operating this entity as of the November 12, 2025 closing date.

The primary reason for the acquisition of BioMedomics was to expand the Company's diagnostic portfolio by adding Sickle SCAN®, a rapid, point-of-need test for sickle cell disease that is sold outside of the United States.

The initial aggregate purchase price of this transaction was funded with cash on hand as shown in the table below:

Pursuant to the Acquisition Agreement, the Company agreed to pay up to $5.0 million of contingent consideration based on the achievement of sales thresholds before December 31, 2031. The acquisition-date fair value of the earnout contingent consideration was $0.2 million. The range of outcome for the earnout contingent consideration iszero to $5.0 million.

During the year ended December 31, 2025, the Company incurred a total of $0.5 million of acquisition related costs, including accounting, legal, and other professional fees, all of which were expensed and reported as a component of general and administrative expenses in the consolidated statement of operations for the year ended December 31, 2025.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed as of the acquisition date:

The purchase price was allocated to the tangible assets and identifiable intangible asset acquired and liabilities assumed based on their acquisition-date estimated fair values. The identifiable intangible asset was developed technology. The developed technology was all assigned aten year useful life.

The Company, with the assistance of an independent valuation specialist, assessed the fair value of the intangible asset and contingent consideration of BioMedomics. The fair values recorded as of November 12, 2025 are based on significant inputs that are not observable in the market and thus represent a fair value measurement categorized within Level 3 of the fair value hierarchy.

The fair value of the acquired developed technology was determined using the multi-period excess earnings method, which required judgment in estimating appropriate cash flows, discount rate, survival factor, and remaining useful life.

The fair value of the earnout contingent consideration was determined using the Monte Carlo simulation model, which required judgment in estimating expected revenue, volatility, expected discount rate and risk-free interest rate.

Goodwill is calculated as the difference between the acquisition date fair value of the consideration transferred and the fair value of the net assets acquired, and represents the future economic benefits that the Company expects to achieve as a result of the acquisition. The Company believes the goodwill related to the acquisition was a result of BioMedomics providing a product that will enable the Company to leverage the product with existing and new customers. The goodwill is not deductible for income tax purposes.

The Company continues to evaluate the fair value of assets acquired and liabilities assumed. Additional information, which existed as of the acquisition date, but was at that time unknown to the Company, may become known during the remainder of the measurement period. Changes to amounts recorded as a result of the final determination may result in a corresponding adjustment to these assets and liabilities, including goodwill. The determination of the estimated fair values of all assets acquired was completed as of June 30, 2026.

Revenues from BioMedomics consist of sales from the Sickle SCAN® test. Effective as of November 12, 2025, the financial results of BioMedomics are included in the consolidated financial results of the Company. BioMedomics contributed $0.1 million and $1.1 thousand of revenue and net income, respectively, to the consolidated statement of operations for the year ended December 31, 2025.

Unaudited Pro Forma Financial Information

The unaudited pro forma results presented below include the results of the BioMedomics acquisition as if it had been consummated as of January 1, 2025. The unaudited pro forma results include amortization of the acquired intangible asset, stock compensation, and lease expense adjustments to income before income taxes but do not include changes in the fair value of the Company's contingent consideration obligations. Material nonrecurring charges, directly attributable to the transactions, including direct acquisition costs, are also excluded. In addition, the unaudited pro forma results do not include any expected benefits of the acquisitions. Accordingly, the unaudited pro forma results are not necessarily indicative of either future results of operations or results that might have been achieved had the acquisition been consummated as of January 1, 2025.

12. CONTINGENCIES:

Collaborations

Sherlock has active third-party license agreements entered into in order to advance and obtain technologies and services related to the business. Under these licenses, the Company is required to make up to $3.3 million of cash payments upon the achievement of certain scientific and commercial milestones as well as low single digit royalty payments on product sales. The Company has the right to terminate the licenses.

Litigation

From time to time, the Company is involved in certain legal actions arising in the ordinary course of business. In management’s opinion, based upon the advice of counsel, the outcomes of such actions are not expected, individually or in the aggregate, to have a material adverse effect on the Company's future financial position or results of operations.

On November 14, 2024 the Company filed a complaint against NowDiagnostics, Inc. ("NowDx"), Jody Berry ("Berry") and Janean Young ("Young") in the United States District Court for the Eastern District of Pennsylvania alleging misappropriation and misuse of the Company's proprietary information and trade secrets by NowDx, Berry and Young in violation of the Federal Defend Trade Secrets Act and the Pennsylvania Uniform Trade Secrets Act. The complaint also alleges breach of contract and duty of loyalty by Young, unfair competition by NowDx, and tortious interference with contractual relations by Berry and NowDx. NowDx filed Counterclaims against the Company on January 13, 2025 and the Company filed its Answer to the Counterclaims on February 3, 2025. Young filed a Motion to Dismiss the claims against her, which was denied by the court on February 4, 2025. NowDx, Berry, and Young agreed to a preliminary injunction which the Court entered on February 27, 2025. On February 11, 2026, the Court issued an order scheduling trial for January 17, 2027. On October 27, 2026, the parties resolved the litigation in a manner which resulted in a positive outcome for the Company. The Court, upon the parties' agreement, replaced the February 27, 2025, preliminary injunction with a permanent injunction protecting the Company's proprietary information and trade secrets at issue in the case, and dismissed all claims in the case with prejudice.