For the transition period from _________to _________ .

Title of each class

Trading

Symbol(s)

Name of each exchange on which registered

Common Stock, $0.000001 par value per share

OSUR

The NASDAQ Stock Market LLC

Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ~~Yes~~x ☒ No ☐

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes ~~Yes~~x ☒ No ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by checkmark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐o No ☒x

As of August ~~5, 2022,~~1, 2023, the registrant had ~~72,619,055~~73,414,695 shares of common stock, ~~$.000001~~$0.000001 par value per share, outstanding.

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains certain “forward-looking statements” within the meaning of the Federal securities laws. These may include statements about our expected revenues, earnings/losses per share, net income (loss), expenses, cash flow or other financial performance, or developments, clinical trial or development activities, expected regulatory filings and approvals, planned business transactions, views of future industry, competitive or market conditions, and other factors that could affect our future operations, results of operations or financial position. These statements often include words, such as “believes,” “expects,” “anticipates,” “intends,” “plans,” “estimates,” “may,” “will,” “should,” “could,” or similar expressions.

Forward-looking statements are not guarantees of future performance or results. Known and unknown factors that could cause actual performance or results to be materially different from those expressed or implied in these statements include, but are not limited to:

•

Our ability to market and sell products, whether through our internal, direct sales force or third parties;

•Our ability to fulfill our commitments under our contract with the U.S. government for InteliSwab® COVID-19 Rapid Tests;

•Failure of distributors or other customers to meet purchase forecasts, historic purchase levels or minimum purchase requirements for our products;

•Significant customer concentrations that exist or may develop in the future:

•Our ability to manufacture products in accordance with applicable specifications, performance standards and quality requirements;

•Our ability to obtain, and timing and cost of obtaining, necessary regulatory approvals for new products or new indications or applications for existing products; ability to comply with applicable regulatory requirements;

•Our ability to effectively resolve warning letters, audit observations and other findings or comments from the U.S. Food and Drug Administration or other regulators;

•The impact of the COVID-19 pandemic on our business, supply chain and workforce;

•The impact of the U.S. government ending the COVID-19 related Public Health Emergency;

•Changes in relationships, including disputes or disagreements, with strategic partners or other parties and reliance on strategic partners for the performance of critical activities under collaborative arrangements;

•Our ability to meet increased demand for our products;

•The impact of replacing distributors on our business;

•Inventory levels at distributors and other customers;

•Our ability to achieve our financial and strategic objectives and continue to increase our revenues, including the ability to expand international sales;

•The impact of competitors, competing products and technology changes on our business;

•Reduction or deferral of public funding available to customers;

•Competition from new or better technology or lower cost products;

•Our ability to develop, commercialize and market new products;

•Market acceptance of oral fluid or urine testing, collection or other products;

~~PART I. FINANCIAL INFORMATION~~•

Market acceptance and uptake of microbiome informatics, microbial genetics technology and related analytics services;

•Changes in market acceptance of products based on product performance or other factors, including changes in testing guidelines, algorithms or other recommendations by the Centers for Disease Control and Prevention or other agencies; ability to fund research and development and other products and operations;

•Our ability to obtain and maintain new or existing product distribution channels;

•Reliance on sole supply sources for critical products and components;

•Availability of related products produced by third parties or products required for use of our products;

•The impact of contracting with the U.S. government on our business;

•The impact of negative economic conditions on our business;

•Our ability to maintain sustained profitability;

•Our ability to increase our gross margins;

•The ability to utilize net operating loss carry forwards or other deferred tax assets;

•Volatility of our stock price;

•Uncertainty relating to patent protection and potential patent infringement claims;

•Uncertainty and costs of litigation relating to patents and other intellectual property;

•Availability of licenses to patents or other technology;

•Ability to enter into international manufacturing agreements;

•Obstacles to international marketing and manufacturing of products;

•Our ability to sell products internationally, including the impact of changes in international funding sources and testing algorithms;

•Adverse movements in foreign currency exchange rates;

•Loss or impairment of sources of capital;

•Our ability to attract and retain qualified personnel;

•Our exposure to product liability and other types of litigation;

•Changes in international, federal or state laws and regulations;

•Customer consolidations and inventory practices;

•Equipment failures and ability to obtain needed raw materials and components;

•The impact of terrorist attacks and civil unrest; and

•General political, business and economic conditions, including inflationary pressures and banking instability.

These and other factors that could affect our results are discussed more fully under the section titled “Risk Factors,” set forth in Part II, Item 1A of this Quarterly Report on Form 10-Q, if any, in Part I, Item 1A of our Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on March 3, 2023, and in other SEC filings.

Although forward-looking statements help to provide information about future prospects, readers should keep in mind that forward-looking statements may not be reliable. Readers are cautioned not to place undue reliance on the forward-looking statements. The forward-looking statements are made as of the date of this report and we undertake no duty to update these statements, unless we are required to do so by law. If we do update one or more forward-looking statements, no inference should be drawn that we will make updates with respect to other forward-looking statements or that we will make any further updates to those forward-looking statements at any future time.

Investors should also be aware that while we do, from time to time, communicate with securities analysts, it is against our policy to disclose any material non-public information or other confidential commercial information. Accordingly, stockholders should not assume that we agree with any statement or report issued by any analyst irrespective of the content of the statement or report. Furthermore, we have a policy against issuing or confirming financial forecasts or projections issued by others. Thus, to the extent that reports issued by securities analysts contain any projections, forecasts or opinions, such reports are not the responsibility of OraSure.

Item 1.FINANCIAL STATEMENTS

ORASURE TECHNOLOGIES, INC. AND SUBSIDIARIES

June 30, 2022

December 31, 2021

ASSETS

Current Assets:

Cash and cash equivalents
$
66,159

$
116,762

Short-term investments

29,625

36,279

Accounts receivable, net of allowance for doubtful accounts of $3,222 and $3,418

62,886

45,323

Inventories

71,304

53,138

Prepaid expenses

5,477

7,939

Other current assets

31,855

28,990

Total current assets

267,306

288,431

Noncurrent Assets:

Property, plant and equipment, net

93,697

88,164

Operating right-of-use assets, net

16,451

9,056

Finance right-of-use assets, net

1,887

2,493

Intangible assets, net

12,851

14,343

Goodwill

36,038

40,279

Long-term investments

—

17,009

Other noncurrent assets

1,024

1,215

Total noncurrent assets

161,948

172,559

TOTAL ASSETS
$
429,254

$
460,990

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:

Accounts payable
$
36,226

$
28,024

Deferred revenue

2,660

2,936

Accrued expenses and other current liabilities

23,165

33,778

Finance lease liabilities

1,182

939

Operating lease liabilities

2,054

2,181

Acquisition-related contingent consideration obligation

199

206

Total current liabilities

65,486

68,064

Noncurrent Liabilities:

Finance lease liabilities

1,445

1,952

Operating lease liabilities

14,978

7,202

Acquisition-related contingent consideration obligation

117

354

Other noncurrent liabilities

489

651

Deferred income taxes

2,547

2,234

Total noncurrent liabilities

19,576

12,393

TOTAL LIABILITIES

85,062

80,457

Commitments and contingencies (Note 12)

STOCKHOLDERS' EQUITY

Preferred stock, par value $.000001, 25,000 shares authorized, NaN issued

—

—

Common stock, par value $.000001, 120,000 shares authorized, 72,572 and 72,069 shares issued and outstanding

0

0

Additional paid-in capital

515,928

511,063

Accumulated other comprehensive loss

(12,514
)

(10,077
)
Accumulated deficit

(159,222
)

(120,453
)
Total stockholders' equity

344,192

380,533

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
$
429,254

$
460,990

See accompanying notes to the consolidated financial statements.

ORASURE TECHNOLOGIES, INC. AND SUBSIDIARIES

See accompanying notes to the consolidated financial statements.

ORASURE TECHNOLOGIES, INC. AND SUBSIDIARIES

See accompanying notes to the consolidated financial statements.

ORASURE TECHNOLOGIES, INC. AND SUBSIDIARIES

(in thousands)

Six Months Ended June 30,

2022

2021

OPERATING ACTIVITIES:

Net income (loss)

$
(38,769
)

$
2,410

Adjustments to reconcile net income (loss) to net cash used in operating activities:

Stock-based compensation

6,804

2,937

Depreciation and amortization

7,464

5,144

Loss on impairment

10,542

—

Other non-cash amortization

313

380

Provision for doubtful accounts

(152
)

747

Inventory reserve

1,989

1,168

Unrealized foreign currency gain

(62
)

(364
)
Interest expense on finance leases

55

35

Deferred income taxes

361

(218
)
Loss on disposal of fixed assets

718

—

Change in the estimated fair value of acquisition-related contingent consideration

(36
)

(1,026
)
Payment of acquisition-related contingent consideration

—

(142
)
Changes in assets and liabilities

Accounts receivable

(18,646
)

3,680

Inventories

(20,385
)

(17,233
)
Prepaid expenses and other assets

(4,416
)

154

Accounts payable

11,942

4,400

Deferred revenue

(252
)

(630
)
Accrued expenses and other liabilities

(2,959
)

(4,914
)
Net cash used in operating activities

(45,489
)

(3,472
)
INVESTING ACTIVITIES:

Purchases of investments

—

(10,428
)
Proceeds from maturities and redemptions of investments

23,017

43,745

Purchases of property and equipment

(25,440
)

(22,929
)
Purchase of property and equipment under government contracts

(33,803
)

—

Proceeds from funding under government contract

33,962

—

Other investing activities

—

(18
)
Net cash (used in) provided by investing activities

(2,264
)

10,370

FINANCING ACTIVITIES:

Cash payments for lease liabilities

(392
)

(510
)
Proceeds from exercise of stock options

15

121

Payment of acquisition-related contingent consideration

(208
)

(264
)
Repurchase of common stock

(1,954
)

(1,877
)
Net cash used in financing activities

(2,539
)

(2,530
)
EFFECT OF FOREIGN EXCHANGE RATE CHANGES ON CASH

(311
)

(7,050
)
NET DECREASE IN CASH AND CASH EQUIVALENTS

(50,603
)

(2,682
)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD

116,762

160,802

CASH AND CASH EQUIVALENTS, END OF PERIOD

$
66,159

$
158,120

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

Cash paid for income taxes

$
9,107

$
10,329

Non-cash investing and financing activities

Accrued property and equipment purchases

1,900

896

Accrued property and equipment purchases under government contracts

2,023

—

Unrealized gain (loss) on marketable securities

156

(101
)

Six Months Ended June 30,
2023 2022
OPERATING ACTIVITIES:
Net income (loss) $ 22,423 $ (38,529)
Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities:
Stock-based compensation 5,012 6,804
Depreciation and amortization 14,011 7,464
Loss on impairments 1,320 10,542
Other non-cash amortization 1 313
Provision for credit losses (478) (152)
Unrealized foreign currency gain (loss) 106 (62)
Interest expense on finance leases 28 55
Deferred income taxes (1,815) 361
Loss on sale of fixed assets — 718
Change in the estimated fair value of acquisition-related contingent consideration (59) (36)
Payment of acquisition-related contingent consideration (19) —
Changes in assets and liabilities:
Accounts receivable 18,652 (18,646)
Inventories 22,556 (18,179)
Prepaid expenses and other assets 5,495 (4,416)
Accounts payable (22,187) 11,485
Deferred revenue (450) (252)
Accrued expenses and other liabilities (1,326) (2,959)
Net cash provided by (used in) operating activities 63,270 (45,489)
INVESTING ACTIVITIES:
Proceeds from maturities and redemptions of investments 27,305 23,017
Purchases of property and equipment (2,893) (25,440)
Purchase of property and equipment under government contracts (4,034) (33,803)
Proceeds from funding under government contract 17,793 33,962
Net cash provided by (used in) investing activities 38,171 (2,264)
FINANCING ACTIVITIES:
Cash payments for lease liabilities (320) (392)
Proceeds from exercise of stock options 66 15
Payment of acquisition-related contingent consideration (46) (208)
Repurchase of common stock (1,663) (1,954)
Net cash used in financing activities (1,963) (2,539)
EFFECT OF FOREIGN EXCHANGE RATE CHANGES ON CASH 2,478 (311)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 101,956 (50,603)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 83,980 116,762
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 185,936 $ 66,159
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for income taxes $ 623 $ 9,107
Non-cash investing and financing activities
Accrued property and equipment purchases $ 314 $ 1,900
Accrued property and equipment purchases under government contracts $ — $ 2,023
Unrealized gain on marketable securities $ — $ 156

See accompanying notes to the consolidated financial statements.

ORASURE TECHNOLOGIES, INC. AND SUBSIDIARIES

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”), and Novosanis NV (“Novosanis”). 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 ~~our~~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 ~~our~~the Company's Annual Report on Form 10-K for the fiscal year ended December 31, ~~2021.~~2022. Results of operations for the three and six months ended June 30, ~~2022~~2023 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 ~~our~~its Annual Report on Form 10-K for the fiscal year ended December 31, ~~2021~~2022 that have had a material impact on the consolidated financial statements and related notes except as discussed herein. See Note 11 for the discussion regarding the change in business segments.

Cash Equivalents & Investments. ~~We consider~~The Company considers all investments in debt securities to be available-for-sale securities. These securities consist of guaranteed investment certificates and corporate bonds purchased with maturities greater than ninety days. 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.

~~We record~~

The Company records an allowance for credit loss for ~~our~~its available-for-sale securities when a decline in investment market value is due to credit-related factors. When evaluating an investment for impairment, ~~we review~~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. ~~During the six months ended June 30, 2022, we recognized a provision for expected credit losses for our available-for-sale securities of $~~72.

The following is a summary of ~~our~~the Company's available-for-sale ~~securities as of June 30, 2022 and December 31, 2021:~~

Amortized
Cost

Gross
Unrealized
Gains

Gross
Unrealized
Losses

Fair Value

June 30, 2022

Guaranteed investment certificates

$
24,860

$
—

$
—

$
24,860

Corporate bonds

5,043

—

(278
)

4,765

Total available-for-sale securities

$
29,903

$
—

$
(278
)

$
29,625

December 31, 2021

Guaranteed investment certificates

$
33,249

$
—

$
—

$
33,249

Corporate bonds

20,473

—

(434
)

20,039

Total available-for-sale securities

$
53,722

$
—

$
(434
)

$
53,288

At June 30, 2022, maturities of our available-for-sale
securities were as follows:

Less than one year

$
29,903

$
—

$
(278
)

$
29,625

Greater than one year

$
—

$
—

$
—

$
—

securities:


	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value




December 31, 2022
Guaranteed investment certificates	$	22,109	$	—	$	—	$	22,109
Corporate bonds	4,978		—		(220)		4,758
Total	$	27,087	$	—	$	(220)	$	26,867

Fair Value of Financial Instruments. As of June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, 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

Table of Contents

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).

All of ~~our~~the Company's available-for-sale ~~debt securities~~corporate bonds are measured as Level 2 instruments ~~as of June 30, 2022~~ and ~~December 31, 2021. Our~~the Company's available-for-sale guaranteed investment certificates are measured as Level 1 instruments as of ~~June 30, 2022 and~~ December 31, ~~2021.~~

2022.

Included in cash and cash equivalents at June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, was$~~5,636~~ $6,928 and $~~1,160~~$1,730 invested in ~~government~~ money market funds. These money market funds have investments in government securities and are measured as Level 1 instruments.

~~We offer~~ Included in cash and cash equivalents at June 30, 2023 was $22,642 of guaranteed investment certificates which are also measured as Level 1 instruments.

The Company offers a nonqualified deferred compensation plan for certain eligible employees and members of ~~our~~its Board of Directors. The assets of the plan are held in the name of the Company at a third-party financial institution. 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 June 30, ~~2022~~2023 and December 31, ~~2021~~2022 was $~~1,576~~$644 and $~~1,763~~,$747, respectively, 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 noncurrent assets with the same amount included in accrued expenses and other noncurrent liabilities in the accompanying consolidated balance sheets.

~~Property, Plant and Equipment~~. Property, plant and equipment are stated at cost. Additions or improvements are capitalized, while repairs and maintenance are charged to expense. Depreciation and amortization are provided using the straight-line method over the estimated useful lives of the related assets. Buildings are depreciated over ~~twenty years, while computer equipment, machinery and equipment, and furniture and fixtures are depreciated over~~ ~~two~~ to ~~ten years~~. Building improvements are amortized over their estimated useful lives. When assets are sold, retired, or discarded, the related property amounts are relieved from the accounts, and any gain or loss is recorded in the consolidated statements of operations. Accumulated depreciation of property, plant and equipment as of June 30, 2022 and December 31, 2021 was $~~66,468~~ ~~and $61,157, respectively.~~

~~Intangible Assets~~. Intangible assets consist of customer relationships, patents and product rights, acquired technology and tradenames. Patents and product rights consist of costs associated with the acquisition of patents, licenses, and product distribution rights. Intangible assets are amortized using the straight-line method over their estimated useful lives of ~~five~~ to ~~fifteen years. Accumulated amortization of intangible assets as of June 30, 2022 and December 31, 2021 was $30,988~~ ~~and $30,412, respectively. The decrease in intangible assets from $14,343~~ ~~as of December 31, 2021 to $12,851~~ ~~as of June 30, 2022 was due to $1,120~~ ~~in amortization expense and foreign currency translation losses of $372~~.

~~Impairment of Long-Lived Assets~~. Long-lived assets, which include property and equipment and definite-lived intangible assets, are tested for recoverability whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable. We assess the recoverability of our long-lived assets by determining whether the carrying value of such assets can be recovered through the sum of the undiscounted future cash flows generated from the use and eventual disposition of the asset. If indicators of impairment exist, we measure the amount of such impairment by comparing the carrying value of the assets to the fair value of these assets, which is generally determined based on the present value of the expected future cash flows associated with the use of the assets. Expected future cash flows reflect our assumptions about selling prices, volumes, costs and market conditions over a reasonable period of time.

During the three months ended June 30, 2022, management decided to move three idle manufacturing cells to storage due to changes in forecasted demand for the products the cells are intended to produce. As a result of this decision, we determined that the carrying values of the equipment is not recoverable and recorded an aggregate pre-tax asset impairment charge of $~~6,938~~ ~~during the three months ended June 30, 2022 to write the assets down their estimated fair values. This charge is reported within loss on impairments in the consolidated statement of operations.~~

We estimated the fair value of the impaired long-lived assets using a market approach, which required us to estimate the value that would be received for the equipment in the principal or most advantageous market for that equipment in an orderly transaction between market participants. Due to the extremely specialized nature of the manufacturing equipment and various market data points, the estimated fair value was not significant. Our fair value estimates were representative of Level 3 measurements within the fair value hierarchy due to the significant level of estimation involved and the lack of transparency as to the inputs used.

Foreign Currency Translation. The assets and liabilities of our foreign operations are translated into U.S. dollars at current exchange rates as of the balance sheet date, and revenues and expenses are translated at average exchange rates for the period. Resulting translation adjustments are reflected in accumulated other comprehensive loss, which is a separate component of stockholders’ equity.

Transaction gains and losses resulting from exchange rate changes on transactions denominated in currencies other than a functional currency are included in our consolidated statements of operations in the period in which the change occurs. Net foreign exchange gains and (losses) resulting from

foreign currency transactions that are included in other income ~~(loss)~~ in ~~our~~the Company's consolidated statements of operations were $~~783~~$(492) and $~~198~~$783 for the three months ended June 30, ~~2022~~2023 and ~~2021,~~2022, respectively. Net foreign exchange gains and (losses) resulting from foreign currency transactions for the six months ended June 30, 2023 and 2022 were $$(542) and $54, respectively.

Accumulated Other Comprehensive Loss54. Changes in accumulated other comprehensive loss by component is listed below.


	Foreign Currency		Marketable Securities		Total
Balance at December 31, 2022	$	(18,215)	$	(220)	$	(18,435)
Other comprehensive gain	3,656		220		3,876
Balance at June 30, 2023	$	(14,559)	$	—	$	(14,559)

Immaterial Correction of Errors. Inventories, accounts payable and $(~~379~~)cost of products and services were reduced by $528, $1,329 and $801, respectively, as of and for the year ended December 31, 2022 to correct for the accounting of a vendor rebate earned in 2022. The tax impact of the vendor rebate was negligible. This correction was deemed to be immaterial to the consolidated financial statements as of and for the year ended December 31, 2022. For the three and six months ended June 30, 2022, cost of products and services sold was reduced by $213 and $240, respectively. The respective operating activities on the consolidated statement of cash flows for the six months ended June 30, 2022 ~~and 2021, respectively.~~

~~Accumulated Other Comprehensive Loss~~. We classify items of other comprehensive loss by their nature and disclose the accumulated balance of other comprehensive loss separately from accumulated deficit and additional paid-in capital in the stockholders’has also been adjusted. Furthermore, stockholder's equity ~~section of our consolidated balance sheets.~~

We have defined the Canadian dollar as the functional currency of our Canadian subsidiary, DNAG, and we have defined the Euro as the functional currency of our Belgian subsidiary, Novosanis. The results of operations for those subsidiaries are translated into U.S. dollars, which is the reporting currency of the Company. Accumulated other comprehensive loss at June 30, 2022 ~~consisted~~has been adjusted to reflect the reduction in cost of $~~12,236~~ ~~of currency translation adjustments~~products and $services sold.

~~278~~ of net unrealized losses on marketable securities, which represents the fair market value adjustment for our investment portfolio. Accumulated other comprehensive loss at December 31, 2021 consists of $~~9,643~~ ~~of currency translation adjustments and $434~~ ~~of net unrealized losses on marketable securities, which represents the fair market value adjustment for our investments portfolio.~~

~~Recent Accounting Pronouncements~~.

~~In March 2020, the FASB issued Accounting Standards Update (“ASU”) No. 2020-04,~~ ~~Reference Rate Reform~~ ~~(Topic 848)~~ ~~Facilitation of the Effects of Reference Rate Reform on Financial Reporting~~Reclassification. ~~The purpose~~Certain prior period amounts have been reclassified to conform to current year presentations.For the three and six months ended June 30, 2022, $395 and $616 of ~~this update is~~research and development expenses were reclassified to ~~provide optional guidance for a limited time~~other income in relation to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. The amendments provide optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments in this ASU were effective upon issuance and could be applied prospectively through December 31, 2022. The FASB issued a proposed amendment to the ASU in April 2022 which, if approved, will extend the date for prospective application to December 31, 2024. Management has evaluated this ASU and concluded that it will not have a material impact on the Company's Consolidated Financial Statements.

Change in Accounting Estimate. During the three months ended June 30, 2023, the Company shortened the useful lives of machinery and equipment utilized for InteliSwab® production in Thailand. This reduction in useful lives resulted in $6,900 of accelerated depreciation during the three months ended June 30, 2023, recorded in cost of products and services sold.

2. Government Capital Contracts

In September 2021, the Company entered into an agreement for $109,000 in funding from the DOD, in coordination with the Department of Health and Human Services, to build additional manufacturing capacity in the United States for ~~our~~its InteliSwab® COVID-19 Rapid Tests as part of the nation’s pandemic preparedness plan. Funding will be paid to the

Company based on achievement of milestones through ~~March 2024~~December 2023 for the design, acquisition, installation, qualification and acceptance of the manufacturing equipment, as set forth in the agreement. In accordance with the milestone payment schedule, 15%15% of the total will not be funded until the completion of the final ~~equipment~~ validation testing, which is scheduled to occur in late ~~2023 or early 2024. We~~2023. The Company began making payments to vendors for the capital project during the fourth quarter of ~~2021 and~~2021. The Company began receiving funds from the DOD in January ~~2022.~~

~~Additionally,~~2022 and has received $78,124, as of June 30, 2023. The remaining $30,876 is expected to be collected during ~~2021, we received $531~~ ~~in funding from~~ the ~~Commonwealth~~remainder of Pennsylvania, acting through the Department of Community and Economic Development, for the purchase of machinery and equipment as part of an expansion of manufacturing operations in Pennsylvania. All related purchases were completed in 2021.

2023.

Activity for these capital contracts is accounted for pursuant to International Accounting ~~Standard~~Standards ("IAS") 20, Accounting for Government Grants and Disclosure of Government ~~Assistance.~~Assistance. Funding ~~earned~~received in relation to capital-related costs incurred for government contracts is recorded as a reduction to the cost of property, plant and equipment and reflected within investing activities in the consolidated statements of cash flows; and associated unpaid liabilities and government proceeds receivable are considered non-cash changes in such balances within the operating section of the consolidated statements of cash flows.

Amounts earned ~~in excess of our expected cost of~~for the ~~project for~~Company's guaranteed profit which covers project management costs are recognized straight-line in other income over the term of the government contract. WeAny amount received in excess of the guaranteed profit discussed above will be recorded in other income at time of payment. The Company recognized $~~561~~ ~~and $1,123~~$561 of such income, ~~for the three and six months ended June 30, 2022, respectively,~~ which is reported as other income ~~(loss)~~ in ~~our~~the Company's consolidated statement of ~~operations.~~

operations for both the three months ended June 30, 2023 and 2022. The Company recognize $1,123 of such income, for both the six months ended June 30, 2023 and 2022.

The DOD also reimburses the Company for certain engineering consulting costs. These expenses are reflected in research and development as incurred with the corresponding reimbursement presented in other income. For the three months ended June 30, 2023 and 2022, $537 and $395, respectively, were recorded in research and development and other income. For the six months ended June 30, 2023 and 2022, $1,588 and $616, respectively, were recorded in research and development and other income.

The balances corresponding to government contracts included in ~~our~~the Company's consolidated balance sheet are as follows:

June 30, 2022

December 31, 2021

Other current assets:

Billed receivables
$
—

$
9,913

Unbilled receivables

15,748

9,716

Total other current assets

15,748

19,629

Property, plant and equipment, net:

Cost of assets, cumulative

47,321

11,495

Reduction for funding earned to date, not yet received

(12,828
)

(10,964
)
Reduction for funding received to date

(34,493
)

(531
)
Total property, plant and equipment, net

—

0

Accrued expenses and other current liabilities

(620
)

(8,103
)

The activity corresponding to the government contracts included in the Company's consolidated statements of cash flows is as follows:

4. Property, Plant and Equipment, net

During the six months ended June 30, 2023, the Company determined several manufacturing lines will not be utilized due to changes in forecasted demand for the products the equipment is intended to produce. Additionally, the Company elected not to proceed with certain leasehold improvements to its research and development laboratories. As a result of these decisions, the Company determined that the carrying values of the equipment and leasehold improvements made to date are not recoverable and recorded an aggregate pre-tax asset impairment charge of $1,320 during the six months ended June 30, 2023. Due to the extremely specialized nature of the equipment and various market data points, the estimated fair value was zero. These charges are reported within loss on impairments in the consolidated statement of operations.

5. Accrued Expenses and other current liabilities

6. Termination Benefits

During the first and second quarters of 2023, the Company executed a reduction in workforce. This was accounted for pursuant to Accounting Standards Codification ("ASC") 420, Exit or Disposal Cost Obligations~~Inventories~~.

June 30, 2022

December 31, 2021

Raw materials

$
37,292

$
33,168

Work in process

2,348

2,252

Finished goods

31,664

17,718

$
71,304

$
53,138

The expense included in the Company's consolidated statements of operations are as follows:

As of June 30, 2023 the Company had $1,591 accrued and had paid $1,674 related to the reduction in workforce.

~~4. Earnings~~Revenues by product line. The following table represents total net revenues by product line:

Molecular Products (2)

Other non-product revenues (3)

(1)Includes COVID-19 Diagnostics and COVID-19 Molecular Products.

(2)Includes Genomics and Microbiome and Novosanis Products.

(3)Other non-product and services revenues include 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 and Vendor Concentrations. At June 30, 2023, one non-commercial customer accounted for 47% of the Company's consolidated accounts receivable. The same non-commercial customer accounted for more than 57% of the Company's consolidated accounts receivable as of December 31, 2022. The same non-commercial customer also accounted for 56% of net consolidated revenues for both the three months ended June 30, 2023 and 2022, respectively. The same non-commercial customer also accounted for 70% and 39% of net consolidated revenues for the six months ended June 30, 2023 and 2022, respectively.

The Company currently purchases certain products and critical components of its 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 its 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 its business, as well as its 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 June 30, 2023 and December 31, 2022 included customer prepayments of $1,285 and $1,533, respectively. Deferred revenue as of June 30, 2023 and December 31, 2022 also included $556 and $740, respectively, associated with a long-term contract that has variable pricing based on volume. The average price over the life of the contract was determined and revenue is recognized at that average price.

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


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
State income tax expense (benefit)	$	1,481	$	183	$	1,257	$	400
Foreign income tax expense (benefit)	(1,648)		(1,352)		(1,648)		665
Foreign withholding tax	—		—		—		1,702
	$	(166)	$	(1,169)	$	(391)	$	2,767

Income taxes for the first six months of 2022 includes $1,702 of Canadian withholding tax on the repatriation of $65,000 of unremitted earnings from Canada to the United States. The increase in state tax expense in 2023 compared to 2022 is a result of the increase in projected income before taxes to be generated by the Company's U.S. operations. Conversely, the increase in foreign tax benefit in 2023 compared to 2022 is a result of the decrease in projected income before taxes expected to be generated by the Company's Canadian subsidiary.

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. The significant components of the Company's total deferred tax asset as of June 30, 2023 relate to foreign net operating losses. The significant components of the Company's total deferred tax liability at December 31, 2022 relate to the tax effects of the basis difference between the intangible assets acquired in its acquisitions for financial reporting and for tax purposes along with basis differences arising from accelerated tax depreciation of fixed assets.

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. deferred tax assets as of June 30, 2023 and December 31, 2022.

9. Income (Loss) Per Share

Basic ~~earnings~~income (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 antidilutive. 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.

~~The computations of basic and diluted earnings (loss) per share are as follows:~~

Three Months Ended June 30,

Six Months Ended June 30,

2022

2021

2022

2021

Net income (loss)

$
(18,802
)

$
(1,364
)

$
(38,769
)

$
2,410

Weighted-average shares of common stock outstanding:

Basic

72,496

71,983

72,361

71,931

Dilutive effect of stock options, restricted stock, and performance stock units

—

—

—

752

Diluted

72,496

71,983

72,361

72,683

Earnings (loss) per share:

Basic

$
(0.26
)

$
(0.02
)

$
(0.54
)

$
0.03

Diluted

$
(0.26
)

$
(0.02
)

$
(0.54
)

$
0.03

would have been anti-dilutive. For the three and six months ended June 30, 2022, outstanding common stock options, unvested restricted stock, and unvested performance stock units representing 226, ~~603~~, and 381 shares, respectively, were excluded from the computation of diluted loss per share. ~~For the six months ended June 30, 2021, outstanding common stock options, unvested restricted stock, and unvested performance stock units representing~~

10. ~~604~~Stockholders’ Equity

~~shares were excluded from the computation of diluted earnings per share as their inclusion would have been anti-dilutive.~~

~~5. Revenues~~

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

Three Months Ended June 30,
Six Months Ended June 30,

2022

2021

2022

2021

COVID-19 (1)

$
43,378

$
12,070

$
74,411

$
40,215

Genomics (1)

15,486

19,498

30,578

30,316

HIV

10,357

10,944

18,523

19,722

HCV

3,691

4,300

6,948

6,668

Substance abuse

2,630

2,629

5,191

4,591

Microbiome (1)

1,832

2,447

3,822

4,198

Laboratory services

1,204

3,114

2,938

5,611

Other product and service revenues

589

739

1,992

999

Net product and services revenues

79,167

55,741

144,403

112,320

Royalty income

642

875

1,326

2,136

Other non-product revenues

422

991

2,209

1,733

Other revenues

1,064

1,866

3,535

3,869

Net revenues

$
80,231

$
57,607

$
147,938

$
116,189

~~(1)~~ ~~2021 COVID-19, Genomics and Microbiome revenues were reclassified to reflect the correct classification~~Reconciliation of the ~~product line sales. The reclassification increased (decreased) the product line revenues for the three months ended June 30, 2021 by $490, $(~~84~~) and $(406), respectively. The reclassification increased (decreased) the product line revenues for the six months ended June 30, 2021 by $1,073, $(330) and $(743), respectively~~.

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

Three Months Ended June 30,

Six Months Ended June 30,

2022

2021

2022

2021

United States

$
70,320

$
47,601

$
128,307

$
96,700

Europe

2,436

3,325

6,722

7,877

Other regions

7,475

6,681

12,909

11,612

$
80,231

$
57,607

$
147,938

$
116,189

~~Customer and Vendor Concentrations. At June 30, 2022, one non-commercial customer accounted for~~ 48~~% of our accounts receivable and another commercial customer accounted for~~ 10~~% of our accounts receivable. No customers accounted for more than~~ 10~~% of our accounts receivable as of December 31, 2021. One non-commercial customer accounted for~~ 56~~% and~~ 39~~% of net consolidated revenues~~changes in stockholder's equity for the three and six months ended June 30, 2023 and 2022. ~~One customer accounted for~~


	Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Total
	Shares	Amount
Balance at December 31, 2022	72,734	$	—	$	520,446	$	(18,435)	$	(137,586)	$	364,425
Common stock issued upon exercise of options	12	—		66		—		—		66
Vesting of restricted stock and performance stock units	737	—		—		—		—		—
Purchase and retirement of common shares	(229)	—		(1,203)		—		—		(1,203)
Stock-based compensation	—	—		2,655		—		—		2,655
Net income	—	—		—		—		27,219		27,219
Currency translation adjustments	—	—		—		797		—		797
Unrealized gain on marketable securities	—	—		—		220		—		220
Balance at March 31, 2023	73,254	$	—	$	521,964	$	(17,418)	$	(110,367)	$	394,179

Vesting of restricted stock and performance stock units	241	—		—		—		—		—
Purchase and retirement of common shares	(82)	—		(460)		—		—		(460)
Stock-based compensation	—	—		2,357		—		—		2,357
Net loss	—	—		—		—		(4,796)		(4,796)
Currency translation adjustments	—	—		—		2,859		—		2,859

Balance at June 30, 2023	73,413	$	—	$	523,861	$	(14,559)	$	(115,163)	$	394,139

%Table of ~~net consolidated revenues for~~Contents


	Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Total
	Shares	Amount
Balance at December 31, 2021	72,069	$	—	$	511,063	$	(10,077)	$	(120,453)	$	380,533
Common stock issued upon exercise of options	2	—		15		—		—		15
Vesting of restricted stock and performance stock units	352	—		—		—		—		—
Purchase and retirement of common shares	(116)	—		(1,049)		—		—		(1,049)
Stock-based compensation	—	—		3,524		—		—		3,524
Net loss	—	—		—		—		(19,940)		(19,940)
Currency translation adjustments	—	—		—		1,756		—		1,756
Unrealized gain on marketable securities	—	—		—		74		—		74
Balance at March 31, 2022	72,307	$	—	$	513,553	$	(8,247)	$	(140,393)	$	364,913
Common stock issued upon exercise of options	407	—		—		—		—		—
Vesting of restricted stock and performance stock units	(142)	—		(905)		—		—		(905)
Stock-based compensation	—	—		3,280		—		—		3,280
Net loss	—	—		—		—		(18,589)		(18,589)
Currency translation adjustments	—	—		—		(4,349)		—		(4,349)
Unrealized gain on marketable securities	—	—		—		82		—		82
Balance at June 30, 2022	72,572	$	—	$	515,928	$	(12,514)	$	(158,982)	$	344,432

11. Business Segments

The Company is organized on the ~~three months ended June 30, 2021. Another customer accounted for~~ 10~~% and~~ 14~~%, respectively,~~basis of ~~net consolidated revenues for the three and six months ended June 30, 2021.~~

~~We currently purchase certain~~ products and ~~critical components of our~~services under a new organizational structure. All products ~~from sole-supply vendors. If these vendors are unable or unwilling~~and services reside under the same reporting hierarchy. Historically there was separate management leading the Company's Diagnostics and Molecular Solutions businesses. In February 2023, the Company announced a corporate restructuring to ~~supply~~combine the ~~required components~~commercial and ~~products, we could be subject to increased costs~~innovation teams across the Diagnostics and substantial delays in the delivery of our products to our customers. Third-party suppliers also manufacture certain products. Our inability to have a timely supply of any of these components and products could have a material adverse effect on our business, as well as our financial condition and results of operations.

~~Deferred Revenue. We record deferred revenue when funds are received prior to the recognition of the associated revenue. Deferred revenue as of June 30, 2022 and December 31, 2021 includes customer prepayments of $1,746~~ ~~and $1,843, respectively. Deferred revenue as of June 30, 2022 and December 31, 2021 also includes $914~~ ~~and $1,093~~, respectively, associated with a long-term contract that has variable pricing based on volume. The average price over the life of the contract was determined and revenue is recognized at that average price.

6.~~Goodwill~~

~~The following table represents the changes in goodwill by~~Molecular Solutions segments into one operating segment ~~for the six months ended June 30, 2022:~~

June 30, 2022

Diagnostics

Molecular Solutions

Balance as of January 1

$
3,604

$
36,675

Impairment

(3,604
)

—

Change related to foreign currency translation

—

(637
)
Balance as of June 30

$
—

$
36,038

~~We perform an annual goodwill impairment assessment as of July 31 each year by comparing the estimated fair values of our~~with sales, marketing, product development and research teams covering all product lines and reporting ~~units~~ to ~~their respective carrying values. A more frequent evaluation~~a Chief Product Officer. Resources are allocated and performance is ~~performed if an event occurs or circumstances change between annual tests that could more likely than not reduce the fair value of a reporting unit below its carrying amount.~~

During the three months ended June 30, 2022, we determined that a triggering event occurred in relation to the depressed market price of the Company's common stock and corresponding significant decline in our market capitalization. As a result, we performed an interim goodwill impairment test and concluded that the carrying value of our Diagnostics reporting unit exceeded its estimated fair value and the goodwill balance for that segment was fully impaired. Thus, we recognized a pre-tax impairment charge of $~~3.6~~ ~~million during the three months ended June 30, 2022, which is reported in loss on impairments in our condensed consolidated statement of operations.~~

We estimated fair values of both of our reporting units using a combined income-based approach and market-based approach. Our income approach utilized projected future cash flows that were discounted at a rate of 22~~% for the Diagnostic reporting unit and~~ 20~~% for the Molecular Solutions reporting unit based~~assessed on a weighted-average cost of capital analysis that reflected current market conditions. The market comparable approach primarily considered earnings, revenue and other multiples of comparable companies and applied those multiples to certain key drivers of the reporting units. This market approach utilized a revenue multiple weightedconsolidated basis by ~~year for the Diagnostics reporting unit and both a revenue and EBITDA multiple for the Molecular Solutions reporting unit. We assigned a weight of~~ 75~~% to the results of~~ our ~~income-based approach and~~ 25% to the results from the market-based approach for estimation of the reporting units' fair value. Our fair value estimates utilize significant unobservable inputs and thus represent Level 3 fair value measurements.

7.~~Accrued Expenses and other current liabilities~~

~~8. Leases~~

We determine whether an arrangement is a lease at inception. We have operating and finance leases for corporate offices, warehouse space and equipment (including vehicles). As of June 30, 2022, we are the lessee in all agreements. Our leases have remaining lease terms of 1 to ~~11 years, some of which include~~ ~~options to extend~~ ~~the leases based on agreed upon terms, and some of which include~~ ~~options to terminate~~ ~~the leases within~~ ~~1 year~~.

As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the lease commencement date in determining the present value of lease payments.

~~We have lease agreements that contain both lease and non-lease components (e.g., common-area maintenance). For these agreements, we account for lease components separate from non-lease components.~~

~~The components of lease expense are as follows:~~

Three Months Ended June 30,

Six Months Ended June 30,

2022

2021

2022

2021

Operating lease cost

$
811

$
499

$
1,510

$
919

Variable and short-term lease cost

152

—

227

—

Finance lease cost:

Amortization of right-of use assets

306

212

691

339

Interest on lease liabilities

23

21

55

35

Total finance lease cost

329

233

746

374

Total lease cost

$
1,292

$
732

$
2,483

$
1,293

~~Supplemental cash flow information related to leases is as follows:~~

Three Months Ended June 30,

Six Months Ended June 30,

2022

2021

2022

2021

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flows from operating leases

$
1,027

$
416

$
2,213

$
824

Operating cash flows from financing leases

23

21

55

35

Financing cash flows from financing leases

239

228

392

510

Non-cash activity:

Right-of-use assets obtained in exchange for operating lease obligations

5,131

7,205

8,797

7,834

Right-of-use assets obtained in exchange for finance lease obligations

-

—

117

—

~~Supplemental balance sheet information related to leases is as follows:~~

June 30, 2022

December 31, 2021

Operating Leases

Right-of-use assets

$
16,451

$
9,056

Lease liabilities:

Current lease liabilities

2,054

2,181

Non-current lease liabilities

14,978

7,202

Total operating lease liabilities

$
17,032

$
9,383

Finance Leases

Right-of-use assets

$
1,887

$
2,493

Lease liabilities:

Current lease liabilities

1,182

939

Non-current lease liabilities

1,445

1,952

Total finance lease liabilities

$
2,627

$
2,891

Weighted Average Remaining Lease Term

Weighted-average remaining lease term—operating leases

7.73 years

5.26 years

Weighted-average remaining lease term—finance leases

1.82 years

2.21 years

Weighted Average Discount Rate

Weighted-average discount rate—operating leases

4.27
%

3.90
%
Weighted-average discount rate—finance leases

3.52
%

3.57
%

~~As of June 30, 2022, minimum lease payments by period are expected to be as follows:~~

Finance

Operating

2022 (excluding the six months ended June 30, 2022)

$
710

$
1,496

2023

1,283

1,879

2024

740

2,969

2025

19

2,619

2026

11

2,422

Thereafter

—

9,021

Total minimum lease payments

2,763

20,406

Less: imputed interest

(136
)

(3,374
)
Present value of lease liabilities

$
2,627

$
17,032

9.~~Stockholders’ Equity~~

Reconciliation of the changes in stockholders' equity for the three and six months ended June 30, 2022 and 2021

Common Stock

Additional
Paid-in

Accumulated
Other
Comprehensive

Accumulated

Shares

Amount

Capital

Loss

Deficit

Total

Balance at December 31, 2021

72,069

$
—

$
511,063

$
(10,077
)

$
(120,453
)

$
380,533

Common stock issued upon exercise of options

2

—

15

—

—

15

Vesting of restricted stock and performance stock units

352

—

—

—

—

—

Purchase and retirement of common shares

(116
)

—

(1,049
)

—

—

(1,049
)
Stock-based compensation

—

—

3,524

—

—

3,524

Net loss

—

—

—

—

(19,967
)

(19,967
)
Currency translation adjustments

—

—

—

1,756

—

1,756

Unrealized gain on marketable securities

—

—

—

74

—

74

Balance at March 31, 2022

72,307

$
—

$
513,553

$
(8,247
)

$
(140,420
)

$
364,886

Vesting of restricted stock and performance stock units

407

—

—

—

—

—

Purchase and retirement of common shares

(142
)

—

(905
)

—

—

(905
)
Stock-based compensation

—

—

3,280

—

—

3,280

Net loss

—

—

—

—

(18,802
)

(18,802
)
Currency translation adjustments

—

—

—

(4,349
)

—

(4,349
)
Unrealized gain on marketable securities

—

—

—

82

—

82

Balance at June 30, 2022

72,572

$
—

$
515,928

$
(12,514
)

$
(159,222
)

$
344,192

Common Stock

Additional
Paid-in

Accumulated
Other
Comprehensive

Accumulated

Shares

Amount

Capital

Loss

Deficit

Total

Balance at December 31, 2020

71,738

$
—

$
505,123

$
(9,097
)

$
(97,455
)

$
398,571

Common stock issued upon exercise of options

11

—

92

—

—

92

Vesting of restricted stock and performance stock units

318

—

—

—

—

Purchase and retirement of common shares

(111
)

—

(1,730
)

—

—

(1,730
)
Stock-based compensation

—

—

1,464

—

—

1,464

Net income

—

—

—

—

3,774

3,774

Currency translation adjustments

—

—

—

1,352

—

1,352

Unrealized gain on marketable securities

—

—

—

21

—

21

Balance at March 31, 2021

71,956

$
—

$
504,949

$
(7,724
)

$
(93,681
)

$
403,544

Common stock issued upon exercise of options

3

—

29

—

—

29

Vesting of restricted stock and performance stock units

64

—

—

—

—

—

Purchase and retirement of common shares

(15
)

—

(147
)

—

—

(147
)
Stock-based compensation

—

—

1,473

—

—

1,473

Net loss

—

—

—

—

(1,364
)

(1,364
)
Currency translation adjustments

—

—

—

1,403

—

1,403

Unrealized loss on marketable securities

—

��

—

—

(122
)

—

(122
)
Balance at June 30, 2021

72,008

$
—

$
506,304

$
(6,443
)

$
(95,045
)

$
404,816

~~Stock-Based Awards~~

We grant stock-based awards under the OraSure Technologies, Inc. Stock Award Plan, as amended (the “Stock Plan”). The Stock Plan permits stock-based awards to employees, outside directors and consultants or other third-party advisors. Awards which may be granted under the Stock Plan include qualified incentive stock options, nonqualified stock options, stock appreciation rights, restricted awards, performance awards and other stock-based awards. We account for stock-based compensation to employees and directors using the fair value method. We recognize compensation expense for stock option and restricted stock awards issued to employees and directors on a straight-line basis over the requisite service period of the award. We recognize compensation expense related to performance-based restricted stock units based on assumptions as to what percentage of each performance target will be achieved. We evaluate these target assumptions on a quarterly basis and adjust compensation expense related to these awards, as appropriate. To satisfy the exercise of options, issuance of restricted stock, or redemption of performance-based restricted stock units, we issue new shares rather than shares purchased on the open market.

~~Total compensation expense related to stock options for the six months ended June 30, 2022 and 2021 was $879and $521, respectively.~~

~~The following table summarizes the stock option activity for the six months ended June 30, 2022:~~


	~~Options~~
~~Outstanding on January 1, 2022~~		~~1,410~~
~~Granted~~		~~589~~
~~Exercised~~		(2	)
~~Expired~~		(20	)
~~Forfeited~~		(~~173~~	)
~~Outstanding on June 30, 2022~~		~~1,804~~

~~Compensation expense of $5,071and $2,066~~ ~~related to restricted shares was recognized during the six months ended June 30, 2022 and 2021, respectively.~~

~~The following table summarizes time-vested restricted stock award and restricted stock unit activity for the six months ended June 30, 2022:~~


	~~Units~~
~~Issued and unvested, January 1, 2022~~		~~701~~
~~Granted~~		~~2,782~~
~~Vested~~		(~~571~~	)
~~Forfeited~~		(~~249~~	)
~~Issued and unvested, June 30, 2022~~		~~2,663~~

~~We grant performance-based restricted stock units (“PSUs”) to certain executives. Vesting of these PSUs is dependent upon achievement of certain performance-based metrics during a~~ ~~one-year~~ or ~~three-year~~ period from the date of grant. Assuming achievement of each performance-based metric, the executive must also generally remain employed for three years from the grant date. If the one-year target is achieved, the PSUs will then vest three years from grant date. If the three-year target is achieved, the corresponding PSUs will then vest three years from grant date. PSUs are converted into shares of our common stock once vested.

~~Compensation expense of $854~~ ~~and $350~~ ~~related to PSUs was recognized during the six months ended June 30, 2022 and 2021, respectively.~~

~~The following table summarizes the PSU activity for the six months ended June 30, 2022:~~


	~~Units~~
~~Issued and unvested, January 1, 2022~~		~~622~~
~~Granted~~ ~~(1)~~		~~532~~
~~Performance adjustment~~ ~~(2)~~		36
~~Vested~~		(~~188~~	)
~~Forfeited~~		(~~171~~	)
~~Issued and unvested, June 30, 2022~~		~~831~~

~~(1)~~ ~~Grant activity for all PSUs disclosed at target~~

~~(2)~~ ~~Reflects the performance adjustment based on actual performance measured at the end of the performance period~~

~~Stock Repurchase Program~~

~~On August 5, 2008, our Board of Directors approved a share repurchase program pursuant to which we are permitted to acquire up to $25,000~~ ~~of our outstanding common shares.~~ ~~NaN~~ ~~shares were purchased and retired during the six months ended June 30, 2022 and 2021.~~

~~10.Transition costs~~

~~On December 31, 2021, the Company's Board of Directors approved the termination of Stephen S. Tang, the Company’s former President and~~ Chief Executive Officer, ~~without cause under his existing employment agreement with~~whom we have determined to be our Chief Operating Decision Maker ("CODM"). The CODM reviews the business based on individual product success. Therefore, our historical reportable segments, Diagnostics and Molecular Solutions are now considered one reportable segment and there will no longer be a distinction between Diagnostics and Molecular Solutions, only the Company with such termination effective as of March 31, 2022. On January 2, 2022, Dr. Tang and the Company entered into a transition agreement ("Transition Agreement") providing for the terms of the cessation of Dr. Tang’s employment with the Company, including the cessation of his service as President and Chief Executive Officer of the Company and as a member of the Board. Dr. Tang’s service to the Company in all capacities ended on March 31, 2022.

~~Pursuant to the Transition Agreement, Dr. Tang received severance of $1,569~~, which was accrued in the consolidated financial statements at December 31, 2021 and paid in April 2022. Additionally, in accordance with his Transition Agreement, certain of his unvested time-vesting restricted stock awards and unvested PSUs that were outstanding at March 31, 2022 vested on April 8, 2022. His remaining unvested time-vesting restricted stock awards and PSUs were forfeited on March 31, 2022. These payments, rights and benefits are substantially similar to the severance benefits contemplated by his previous employment agreement in respect to a termination without cause thereunder. In aggregate, we recognized a net $~~128~~ ~~and $1,508~~ ~~of expense in relation to Dr. Tang's stock compensation during the three and six months ended June 30, 2022, respectively.~~

On April 1, 2022 the Company's Board of Directors appointed Nancy J. Gagliano, M.D., M.B.A., to serve as the Company’s Interim Chief Executive Officer. In connection therewith, the Company and Dr. Gagliano entered into an employment agreement, dated as of March 21, 2022 (the “Employment Agreement”). Pursuant to the Employment Agreement, on April 1, 2022, Dr. Gagliano began receiving a monthly base salary of $56 ~~per month and was also granted a one-time award of fully vested shares of the Company’s common stock with a grant date fair value of $100. Additionally, she was granted a one-time restricted stock unit award with a grant date fair value of $670~~ ~~scheduled to vest in twelve equal monthly installments starting in April through her employment term, of which $168~~ ~~vested during the three months ended June 30, 2022 and the remainder was forfeited when her employment ceased in June 2022.~~

On May 20, 2022, the Company entered into an employment agreement with Carrie Eglinton Manner, and in connection therewith, the Company's Board of Directors appointed Ms. Eglinton Manner as the Company’s President and Chief Executive Officer, effective June 4, 2022 (the “Effective Date”). Pursuant to the Employment Agreement, Ms. Eglinton Manner’s initial annual base salary is $~~700~~ ~~and she will participate in the Company’s annual incentive plan with a target annual incentive amount of at least~~ ~~100% of her annual base salary. Additionally, she received inducement grants comprised of (i) a restricted stock unit award with a grant date fair value of $4,000, which vests on the second anniversary of the Effective Date (ii) a restricted stock award with a grant date fair value of $1,600, which vests annually starting on the first anniversary of the Effective Date and (iii) a PSU award with a grant date fair value of $1,600, which will be subject to the same vesting and performance conditions as are applicable to the 2022 performance-based restricted stock unit awards granted to the Company’s other executive officers.~~

~~11.Income Taxes~~

~~During the three and six months ended June 30, 2022, we recorded an income tax expense (benefit) of $(1,169) and $2,767, respectively. Tax expense for 2022 includes $1,702~~ ~~of withholding tax due on the repatriation of $65,000~~ ~~of unremitted earnings from Canada to the United States. The remaining tax expense for the first half of 2022 is comprised of U.S. state income taxes of $400~~ ~~and foreign taxes of $665. During the three and six months ended June 30, 2021, we recorded income tax expense of $3,610~~ ~~and $10,139, which primarily consists of foreign tax expense.~~

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. The significant components of our total deferred tax liability as of June 30, 2022 and December 31, 2021 relate to the tax effects of the basis difference between the intangible assets acquired in our acquisitions for financial reporting and for tax purposes along with basis differences arising from accelerated tax depreciation of fixed assets.

In 2008, we established a full valuation allowance against our U.S. deferred tax asset. Management believes the full valuation allowance is still appropriate at both June 30, 2022 and December 31, 2021 since the facts and circumstances necessitating the allowance have not changed.

holistically.

12. Commitments and Contingencies

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

conduct claims without trial. First, the District Court granted Spectrum’s motion for ~~September 7, 2023.~~

~~13.Business Segment Information~~

~~Our business consists~~summary judgment of 2 ~~segments: our “Diagnostics” business, which primarily consists of the development, manufacture,~~noninfringement, holding that Spectrum’s saliva collection devices are not “kits for collecting and sale of rapid diagnostic tests used to determine if a person has a variety of infectious diseases including, HIV, HCV, and COVID-19. The Diagnostic business also manufactures and sells oral fluid substance abuse testing products. Our “Molecular Solutions” business is operated by our wholly-owned subsidiaries DNAG, Diversigen, and Novosanis. This segment of the business consists of the development, manufacture, and sale of kits that are used to collect, stabilize, transport and storepreserving a biological sample,” among other rulings. The Company has appealed the grant of ~~genetic material for molecular testing. In addition, our Molecular Solutions business provides microbiome laboratory services.~~

~~We organized our operating segments according~~summary judgment to the ~~nature~~Court of Appeal on June 8, 2023. Second, the ~~products included in those segments. The accounting policies~~District Court denied Spectrum’s motion to amend its allegations of alleged antitrust violations, finding that if such an amendment were allowed, Spectrum’s claims would not survive a motion for summary judgment. Spectrum thereafter withdrew its antitrust and inequitable conduct counterclaims. Spectrum did not appeal the ~~segments are the same as those described~~District Court's denial of its motion to amend. Both parties have filed motions seeking sanctions in the ~~summary~~District Court. An inter partes review is currently pending before the PTO regarding the second asserted patent.

Table of significant accounting policies (see Note 1). We evaluate performance of our operating segments based on revenue and operating income. We do not allocate interest income, interest expense, other income, other expenses or income taxes to our operating segments. Reportable segments have no inter-segment revenues and inter-segment expenses have been eliminated.Contents

~~The following table summarizes operating segment information for the three and six months ended June 30, 2022 and 2021, and asset information as of June 30, 2022 and December 31, 2021:~~

Three Months Ended June 30,

Six Months Ended June 30,

2022

2021

2022

2021

Net revenues:

Diagnostics

$
60,455

$
19,311

$
98,765

$
33,857

Molecular Solutions

19,776

38,296

49,173

82,332

Total

$
80,231

$
57,607

$
147,938

$
116,189

Operating income (loss):

Diagnostics

$
(11,776
)

$
(11,850
)

$
(31,563
)

$
(23,967
)
Molecular Solutions

(9,513
)

13,648

(5,704
)

36,187

Total

$
(21,289
)

$
1,798

$
(37,267
)

$
12,220

Depreciation and amortization:

Diagnostics

$
1,903

$
939

$
3,630

$
1,829

Molecular Solutions

1,879

1,716

3,834

3,315

Total

$
3,782

$
2,655

$
7,464

$
5,144

Loss on impairment:

Diagnostics

$
8,517

$
—

$
8,517

$
—

Molecular Solutions

2,025

—

2,025

—

Total

$
10,542

$
—

$
10,542

$
—

Capital expenditures:

Diagnostics(1)

$
4,302

$
8,513

$
23,434

$
16,150

Molecular Solutions

919

3,355

2,006

6,779

Total

$
5,221

$
11,868

$
25,440

$
22,929

~~(1)Excludes $5,615~~ ~~and $33,803~~ ~~for purchases of property and equipment under government contracts for the three and six months ended June 30, 2022, respectively.~~

June 30,
2022

December 31,
2021

Total assets:

Diagnostics

$
249,123

$
209,674

Molecular Solutions

180,131

251,316

Total

$
429,254

$
460,990

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

~~Statements below regarding future events or performance are “forward-looking statements” within the meaning~~

The following discussion and analysis of ~~the Federal securities laws. These may include statements about~~ our ~~expected revenues, earnings, losses, expenses, or other~~ financial ~~performance, future product performance or development, expected regulatory filings~~condition and ~~approvals, planned business transactions, expected manufacturing performance, views of future industry, competitive or market conditions, and other factors that could affect our future operations,~~ results of operations orshould be read in conjunction with (i) our unaudited condensed consolidated financial ~~position. These~~ statements often include words such as “believes,” “expects,” “anticipates,” “intends,” “plans,” “estimates,” “may,” “will,” “should,” “could,” or similar expressions. Forward-looking statements are not guarantees of future performance or results. Known and unknown factors that could cause actual performance or results to be materially different from those expressed or implied in these statements include, but are not limited to:

•

~~our ability to market and sell products, whether through our internal, direct sales force or third parties;~~

•

~~our ability to fulfill our commitments under our contracts with the U.S. government for~~ ~~InteliSwab~~® ~~COVID-19 Rapid Tests;~~

•

~~the impact of significant customer concentration in the genomics business;~~

•

~~our ability to successfully scale-up our manufacturing for~~ ~~InteliSwab~~®~~COVID-19 Rapid Tests;~~

•

~~failure of distributors or other customers to meet purchase forecasts, historic purchase levels or minimum purchase requirements for our products;~~

•

~~our ability to manufacture products in accordance with applicable specifications, performance standards and quality requirements;~~

•

~~our ability to obtain, and timing and cost of obtaining, necessary regulatory approvals for new products or new indications or applications for existing products;~~

•

~~our ability to comply with applicable regulatory requirements;~~

•

~~our ability to effectively resolve warning letters, audit observations and other findings or comments from the U.S. Food and Drug Administration (or “FDA”), or other regulators;~~

•

~~the impact of the COVID-19 pandemic on our business and labor force and supply chain;~~

•

our ability to successfully develop new products, validate the expanded use of existing collector products, receive necessary regulatory approvals and authorizations, transport work-in-process goods and finished products and commercialize such products for COVID-19 testing;

•

changes in relationships, including disputes or disagreements, with strategic partners or other parties and reliance on strategic partners for the performance of critical activities under collaborative arrangements;

•

~~our ability to meet increased demand for our products;~~

•

~~our ability to diversify our customer base;~~

•

~~the impact of replacing distributors on our business;~~

•

~~inventory levels at distributors and other customers;~~

•

~~our ability to achieve our financial and strategic objectives and continue to increase our revenues, including the ability to expand international sales;~~

•

~~the impact of competitors, competing products and technology changes on our business;~~

•

~~reduction or deferral of public funding available to customers;~~

•

~~competition from new or better technology or lower cost products;~~

•

~~our ability to develop, commercialize and market new products;~~

•

~~market acceptance of oral fluid or urine testing, collection or other products;~~

•

~~market acceptance and uptake of microbiome informatics, microbial genetics technology~~ and related ~~analytics services;~~

•

~~changes~~notes appearing elsewhere in ~~market acceptance~~this Quarterly Report on Form 10-Q and (ii) our audited consolidated financial statements and related notes and management’s discussion and analysis of ~~products based on product performance or other factors, including changes~~financial condition and results of operations included in testing guidelines, algorithms or other recommendations by the Centers for Disease Control and Prevention, or (the “CDC”) or other agencies; ability to fund research and development and other products and operations;

•

our ~~ability to obtain and maintain new or existing product distribution channels;~~

•

~~our reliance on sole supply sources for critical products and components;~~

•

~~the availability of related products produced by third parties or products required for use of our products;~~

•

~~the impact of contracting with the U.S. government on our business;~~

•

~~the impact of negative economic conditions on our business; including as a result of inflation, hostilities or war;~~

•

~~our ability to achieve and maintain sustained profitability;~~

•

~~our ability to increase our gross margins;~~

•

~~our ability to utilize net operating loss carry forwards or other deferred tax assets;~~

•

~~the volatility of our stock price;~~

•

~~uncertainty relating to patent protection and potential patent infringement claims;~~

•

~~uncertainty and costs of litigation relating to patents and other intellectual property;~~

•

~~the availability of licenses to patents or other technology;~~

•

~~our ability to enter into international manufacturing agreements;~~

•

~~obstacles to international marketing and manufacturing of products;~~

•

~~our ability to sell products internationally, including the impact of changes in international funding sources and testing algorithms;~~

•

~~adverse movements in foreign currency exchange rates;~~

•

~~loss or impairment of sources of capital;~~

•

~~our ability to attract and retain qualified personnel;~~

•

~~our exposure to product liability and other types of litigation;~~

•

~~changes in international, federal or state laws and regulations;~~

•

~~customer consolidations and inventory practices;~~

•

~~equipment failures and ability to obtain needed raw materials and components;~~

•

~~the impact of terrorist attacks, civil unrest, hostilities and war; and~~

•

~~general political, business and economic conditions.~~

~~These and other factors that could affect our results are discussed more fully in our Securities and Exchange Commission (“SEC”) filings, including our registration statements,~~ Annual Report on Form 10-K for the year ended December 31, ~~2021,~~2022 filed with the Securities and Exchange Commission on March 3, 2023. Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report on Form 10-Q, including information with respect to our plans and strategy for our business and impact and potential impacts on our business, includes forward-looking statements that involve risks and uncertainties. As a result of many factors, including, without limitation, those factors set forth in the “Risk Factors” section of our Annual Report on Form 10-K for the year ended December 31, 2022 and the “Risk Factors” section of subsequent Quarterly Reports on Form 10-Q, ~~and other filings with~~our actual results or timing of certain events could differ materially from the ~~SEC. Although~~results or timing described in, or implied by, these forward-looking statements help to provide information about future prospects, readers should keep in mind that forward-looking statements may not be reliable. Readers are cautioned not to place undue reliance on the forward-looking statements. ~~The forward-looking statements are made as of the date of this Report, and we undertake no duty to update these statements~~.

The following discussion should be read in conjunction with our consolidated financial statements contained herein and the notes thereto, along with the Section entitled “Critical Accounting Policies and Estimates,” set forth below.

~~Overview and~~

Business ~~Segments~~

~~The overall goal of our Company is to empower the global community to improve~~Overview

OraSure Technologies transforms health ~~and wellness~~through powerful insight by providing access to accurate, essential information. ~~Our~~In 2022, our business ~~consists~~consisted of two segments: our “Diagnostics” segment, and our “Molecular Solutions” segment.

~~Our Diagnostics~~ In February 2023, we announced a corporate restructuring to combine the commercial and innovation teams across the two segments into one business ~~primarily~~unit with sales, marketing, product development, and research teams covering multiple product lines. This change is intended to accelerate innovation, enhance customer experience and result in operational synergies.

The Company's business consists of the development, manufacture, marketing, and sale of simple, easy to use diagnostic products and specimen collection devices using ~~our~~the Company's proprietary technologies, as well as other diagnostic products including immunoassays and other in vitro diagnostic tests that are used on other specimen types. The ~~Diagnostics business~~Company's diagnostic products includes tests for diseases including COVID-19, HIV, and Hepatitis C that are performed on a rapid basis at the point of care, and tests for drugs of abuse that are processed in a laboratory. These products are sold in the United States and internationally to various clinical laboratories, hospitals, clinics, community-based organizations, and other public health organizations, distributors, government agencies, physicians’ offices, and commercial and industrial entities. ~~Our~~The Company's COVID-19 and HIV products are also sold in a consumer-friendly format in the over-the-counter ~~(“OTC”)~~ market in the U.S. and, in the case of the HIV product, as a self-test to individuals in a number of other countries. ~~Through our Diagnostics~~

The Company's business ~~we are~~ also developing and commercializing products that measure adherence to HIV medications including pre-exposure prophylaxis ("PrEP"), the daily medication to prevent HIV, and anti-retroviral medications to suppress HIV. These products include laboratory-based tests that can measure levels of the medications in a patient’s urine or blood, as well as point-of-care products currently in development. We began recording revenues on the sales of our InteliSwab®~~COVID-19 Rapid Tests during the third quarter of 2021.~~

Our Molecular Solutions business is operated by our wholly-owned subsidiaries, DNA Genotek, Inc. ("DNAG"), Diversigen, Inc. ('Diversigen"), and Novosanis NV ("Novosanis"). Our Molecular Solutions business sells its products and services directly to its customers, primarily through its internal sales force in the U.S. domestic market, and in many international markets, also through distributors. Our products primarily consist ofincludes molecular collection kits and services used by clinical laboratories, direct-to-consumer laboratories, researchers, pharmaceutical companies, and animal health service and product providers. ~~Most of our Molecular Solutions~~These revenues are derived from product sales to commercial customers and sales into the academic and research markets. ~~A significant portion of our total sales is from repeat customers in both markets.~~ ~~Molecular Solutions customers~~Customers span the disease risk management, diagnostics, pharmaceutical, biotech, companion animal and environmental markets.

~~We have expanded the market focus of our Molecular Solutions business by selling existing collection products for use with COVID-19 tests. Demand for COVID-19 PCR testing~~ The Company has ~~declined driven by the availability of antigen tests and the wider availability of vaccines, thereby negatively impacting the sales of the collection products. We have~~ also developed ~~new~~ collection devices for the emerging microbiome market, which focuses on studying ~~microbes~~microbiomes and their effect on human and animal health. ~~Our primary product offering in the microbiome market, OMNIgene~~® ~~• GUT, is focused on the human gut microbiome (microbes living in human stool). In 2021, the OMNIgene~~® ~~• GUT~~The Company also has a urine collection device (OMD-200) was granted “FDA De Novo classification for the preservation and stabilization of the relative abundance of microbial nucleic acids in clinical samples.” We leverage our existing sales force and global research connections to engage microbiome customers worldwide to establish ourselves among the leaders in ease-of-collection, stabilization, and transport of this challenging sample type.

~~Our Molecular Solutions segment includes the Colli-Pee~~® ~~device, developed and sold by our Novosanis subsidiary,~~which allows for the volumetric collection of first void urine. This product is in its early stages, and initial sales are occurring primarily through distributors and collaborations in the liquid biopsy and sexually transmitted disease markets. ~~Our Molecular Solutions business also~~Additionally, the Company offers laboratory and analytical services for both genomics and microbiome customers to more fully meet their needs. These services are primarily provided to pharmaceutical, biotech companies, and research institutions.

~~Recent Developments~~

~~Impact~~Table of ~~COVID-19~~Contents

As COVID-19 continues to impact the economy of the United States and other countries around the world, we are committed to being a part of the response to this unprecedented challenge. We have made substantial investments to expand our operations in order to manufacture product used for COVID-19 testing in the United States.

Due to COVID-19, we have experienced volatility, including periods of material decline compared to prior year periods in testing volume of our base business (which excludes COVID-19 testing) and periods of significant demand for our COVID-19 testing product, with demand generally fluctuating in line with changes in prevalence of the virus and related variants. It is difficult for us to predict the duration or magnitude of the outbreak’s effects on our business or results of operations.

~~Appointment of New CEO~~

Carrie Eglinton Manner was appointed President and Chief Executive Officer, effective June 4, 2022. Ms. Eglinton Manner also joined the OraSure Board of Directors (the "Board"). She succeeded Dr. Nancy Gagliano, who was appointed interim CEO in March 2022. Dr. Gagliano continues to serve on the OraSure Board.

Ms. Eglinton Manner, age 48, has years of leadership experience across multiple disciplines. Prior to joining the Company, Ms. Eglinton Manner served as Senior Vice President, Advanced & General Diagnostic and Clinical Solutions at Quest Diagnostics since January 2017. Prior to Quest, Ms. Eglinton Manner spent over 20 years in various leadership roles in healthcare businesses at GE Healthcare. From 2009 through 2016, she served as President & CEO of four distinct GE Healthcare global businesses in the areas of diagnostic imaging, lab services and medical devices. She has served as a director of Repligen Corporation since June 2020. Ms. Eglinton Manner holds a B.S. in mechanical engineering from the University of Notre Dame.

~~Exploration of Strategic Alternatives~~

Ms. Eglinton Manner’s appointment as CEO came in tandem with a decision by the OraSure Board to conclude its previously announced review of strategic alternatives and for the Company to move forward under her leadership. Market conditions and the Board’s belief in the Company’s ability to further build upon recent operational successes with Ms. Eglinton Manner’s leadership were factors in the decision.

~~Current Consolidated Financial Results~~

During the six months ended June 30, 2022, our consolidated net revenues increased 27% to $147.9 million, compared to $116.2 million for the six months ended June 30, 2021. Net product and services revenues during the six months ended June 30, 2022 increased 29% when compared to the same period of 2021, largely due to the inclusion of $65.3 million of InteliSwab® COVID-19 rapid test revenues. We began selling this product in August of 2021 resulting in no comparable revenues in the first half of 2021. Declines in sales of our molecular sample collection kits for COVID-19 testing, lower laboratory services revenues, and a decline in domestic sales of our HIV products partially offset this positive driver of revenue. Other revenues for the six months ended June 30, 2022 were $3.5 million compared to $3.9 million in the same period of 2021. This decrease was largely due to lower royalty income.

Our consolidated net loss for the six months ended June 30, 2022 was $38.8 million, or $0.54 per share on a fully diluted basis, compared to consolidated net income of $2.4 million, or $0.03 per share on a fully diluted basis, for the six months ended June 30, 2021. Results for the six months ended June 30, 2022 were impacted by lower gross margins rates caused by an unfavorable product mix of higher sales of lower margin products, increases in inventory reserves associated with excess inventory levels and manufacturing inefficiencies that occurred in the first quarter of 2022, lower absorption of labor costs and the absence of the Gates subsidy which expired in June 2021. Also contributing to our net loss is an increase in operating expense as a result of impairment charges taken in the second quarter of 2022 on idle manufacturing lines and goodwill, severance charges and accelerated stock compensation expense associated with our CEO transition and termination of our general counsel, and nonrecurring costs associated with our strategic alternatives process.

Cash used in operating activities during the six months ended June 30, 2022 was $45.5 million. Cash used in operating activities during the six months ended June 30, 2021 was $3.5 million. During the first half of 2022, our cash flow used in operating activities increased significantly as a result of our net loss and increased working capital requirements we scale our InteliSwab® manufacturing capacity to meet higher demand. As of June 30, 2022, we had $95.8 million in cash, cash equivalents and available-for-sale securities.

Results of Operations

Three months ended June 30, ~~2022~~2023 compared to June 30, ~~2021~~

2022.

CONSOLIDATED NET REVENUES

The table below shows ~~a breakdown~~an outline of total consolidated net revenues (dollars in thousands) ~~generated by each of our business segments during~~for the three months ended June 30, ~~2022~~2023 and ~~2021.~~June 30, 2022:


	Three Months Ended June 30,
	Dollars				% Change		Percentage of Total Net Revenues
	2023		2022				2023		2022
COVID-19 Diagnostics	$	47,477	$	43,114	10	%	56	%	54	%
Diagnostics (1)	19,834		14,048		41		23		18
Molecular Products	13,050		17,581		(26)		15		22
Other products and services (2)	2,993		2,956		1		4		4
Molecular Services	1,354		1,204		12		2		2
COVID-19 Molecular Products	30		264		(89)		—		—
Net product and services revenues	84,738		79,167		7		99		99
Non-product and services revenues	703		1,064		(34)		1		1
Net revenues	$	85,441	$	80,231	6	%	100	%	100	%

(1)

Includes HIV and HCV product revenues.

For the Three Months Ended June 30,

Dollars

Percentage of Total Net Revenues

2022

2021

% Change

2022

2021

Diagnostics

$
59,976

$
18,252

229

%

75

%

32

%
Molecular Solutions

19,191

37,489

(49
)

24

65

Net product and services revenues

79,167

55,741

42

99

97

Other

1,064

1,866

(43
)

1

3

Net revenues

$
80,231

$
57,607

39

%

100

%

100

%

(2)

~~Consolidated net~~Includes Risk assessment testing and other product and services revenues.

Product and Services Revenues

Consolidated net revenues increased ~~42%~~6% to ~~$79.2~~$85.4 million for the three months ended June 30, 2023 from $80.2 million for the three months ended June 30, 2022.

COVID-19 Diagnostics revenues increased by 10% to $47.5 million for the three months ended June 30, 2023 compared to $43.1 million in three months ended June 30, 2022 due to increased sales of the Company's InteliSwab® tests through its government procurement contracts.

Sales of the Company's Diagnostics products increased 41% to $19.8 million for the three months ended June 30, 2023 from $14.0 million for the three months ended June 30, 2022. This increase in revenues was primarily driven by higher sales of the Company's OraQuick® In-Home HIV tests in support of the CDC's "Together Take Me Home" HIV self-test program which commenced during the first quarter of 2023, and higher sales of the Company's OraQuick® HIV Self-Test in international markets due to customer ordering patterns.

Molecular Products revenues decreased 26% to $13.1 million for the three months ended June 30, 2023 from $17.6 million for the three months ended June 30, 2022. Sales of the Company's Molecular Products are being impacted by macro-economic factors in the markets in which its customers operate and as a result one of the Company's largest customers scaled down purchasing after they reorganized their business in the second half of 2022.

Other products and services revenues remained flat at $3.0 million for the three months ended June 30, 2023 and 2022.

Molecular Services revenues, which are largely derived from the Company's laboratory services, increased 12% to $1.4 million for the three months ended June 30, 2023 from $1.2 million for the three months ended June 30, 2022. The increase in services revenues was largely due to the timing of work performed for certain clinical studies.

Sales of the Company's COVID-19 Molecular Products collection kits decreased by 89% to $30.0 thousand for the three months ended June 30, 2023 from $0.3 million for the three months ended June 30, 2022 ~~from $55.7~~due to decline in demand for COVID PCR testing given the availability of rapid antigen tests.

Table of Contents

Non-product and Services Revenues

Non-product and services revenues decreased 34% to $0.7 million for the three months ended June 30, ~~2021.~~ ~~The increase in revenues is~~ ~~largely due to the inclusion of $43.1 million of InteliSwab~~® ~~COVID-19 rapid test revenues. We began selling this product in August of 2021 resulting in no comparable revenues in the second quarter of 2021. Declines in~~

revenues across all other product line partially offset this positive driver of revenue. Other revenues for the three months ended June 30, 2022 decreased 43% to $1.1 million from $1.9 million for the three months ended June 30, 2021 due to lower research and development funding associated with the development of our InteliSwab® ~~COVID-19 rapid test and lower royalty income.~~

Consolidated net revenues derived from products sold to customers outside of the United States were $9.9 million and $10.0 million, or 12% and 17% of total net revenues, for the three months ended June 30, 2022 and 2021, respectively. Because the majority of our international sales are denominated in U.S. dollars, the impact of fluctuating foreign currency exchange rates was not material to our total consolidated net revenues.

~~Net Revenues by Segment~~

~~Diagnostics Segment~~

~~The table below shows a breakdown of total net revenues (dollars in thousands) generated by our Diagnostics segment during the three months ended June 30, 2022 and 2021.~~

For the Three Months Ended June 30,

Dollars

Percentage of Total Net Revenues

Market

2022

2021

% Change

2022

2021

Infectious disease testing:

COVID-19

$
43,114

$
89

NM

%

71

%

0

%
Other

14,232

15,534

(8
)

23

80

Total infectious disease testing

57,346

15,623

267

95

81

Substance abuse testing

2,630

2,629

0

4

14

Net product revenues

59,976

18,252

229

99

95

Other

479

1,059

(55
)

1

5

Net revenues

$
60,455

$
19,311

213

%

100

%

100

%

~~NM - not meaningful~~

~~Infectious Disease Testing Market~~

~~COVID-19 revenues were $43.1 million for the three months ended June 30, 2022, driven by sales of our InteliSwab~~® ~~COVID-19 rapid test. We first began selling this product in August of 2021 and there are no comparable sales in the second quarter of 2021.~~

Sales to the other infectious disease testing markets decreased 8% to $14.2 million for the three months ended June 30, 2022 from $15.5 million for the three months ended June 30, 2021. This decrease resulted from lower worldwide OraQuick® ~~HIV and international OraQuick~~® ~~HCV product sales.~~

~~The table below shows a breakdown of our total net OraQuick~~® ~~HIV and HCV product revenues (dollars in thousands) during the three months ended June 30, 2022 and 2021.~~

For the Three Months Ended June 30,

Market

2022

2021

% Change

Domestic HIV

$
3,741

$
4,135

(10
)
%
International HIV

6,616

6,809

(3
)

Net HIV revenues

10,357

10,944

(5
)

Domestic HCV

2,537

2,571

(1
)

International HCV

1,154

1,729

(33
)

Net HCV revenues

3,691

4,300

(14
)

Net OraQuick® revenues

$
14,048

$
15,244

(8
)
%

~~Domestic OraQuick~~® HIV sales decreased 10% to $3.7 million for the three months ended June 30, 2022 from $4.1 million for the three months ended June 30, 2021, primarily as a result of a large second quarter 2021 order of our OraQuick® In-Home HIV test shipped to the CDC and used in an initiative to drive increased in-home HIV testing. A similar order did not occur in the second quarter of 2022.

~~International sales of our OraQuick~~® HIV tests decreased 3% to $6.6 million for the three months ended June 30, 2022 from $6.8 million for the three months ended June 30, 2021 due to the absence of the Gates Foundation subsidy which expired in June 2021 and is not included in revenues in the second quarter of 2022, initial stocking orders into Asia that did not recur in 2022, and the impact of the Russian and Ukraine war. These decline in revenues were partially offset by increased sales into Africa as the COVID-19 impact lessens.

~~Domestic OraQuick~~® ~~HCV sales remained largely flat at $2.5 million for the three months ended June 30, 2022 compared to $2.6 million for the three months ended June 30, 2021.~~

~~International OraQuick~~® HCV sales decreased 33 % to $1.2 million for the three months ended June 30, 2022 compared to $1.7 million for the three months ended June 30, 2021 due to a stock order into Korea which did no repeat in 2022.

~~Substance Abuse Testing Market~~

~~Sales to the substance abuse testing assessment market remained flat at $2.6 million for both the three months ended June 30, 2022 and 2021.~~

~~Other Revenues~~

~~Other revenues for the three months ended June 30, 2022 decreased 55% to $479,000~~2023 from $1.1 million for the three months ended June 30, ~~2021, due~~2022 as a result of lower royalty income.

CONSOLIDATED OPERATING RESULTS

Consolidated gross profit margin decreased to ~~lower research and development funding associated with our InteliSwab~~® ~~COVID-19 rapid test.~~

~~Molecular Solutions Segment~~

~~The table below shows a breakdown of our total net revenues (dollars in thousands) during the three months ended June 30, 2022 and 2021.~~

For the Three Months Ended June 30,

Market
2022

2021

% Change

Genomics

$
15,486

$
19,498

(21
)
%
Microbiome

1,832

2,447

(25
)

COVID-19

264

11,981

(98
)

Laboratory services

1,204

3,114

(61
)

Other product and service revenues

405

449

(10
)

Net molecular product and services revenues

$
19,191

37,489

(49
)

Other

585

807

(28
)

Net molecular revenues

$
19,776

$
38,296

(48
)
%

~~Sales of our genomics products decreased 21% to $15.5 million~~31% for the three months ended June 30, ~~2022, compared to $19.5 million~~2023 from 35% for the three months ended June 30, ~~2021, as result of customer ordering patterns.~~

Microbiome kit sales decreased 25% to $1.8 million for the three months ended June 30, 2022 compared to $2.4 million for the three months ended June 30, 2021, due to lower sales to certain Clinical Research Organizations ("CROs") as a result of delays2022. This decline in ~~microbiome clinical studies.~~

Sales of our molecular sample collection kits for COVID-19 testing decreased 98% to $264,000 for the three months ended June 30, 2022 compared to $12.0 million during the comparable period in 2021 due to lower COVID-19 PCR testing sales to our core customers,margins was driven by ~~the availability~~$7.0 million of ~~antigen tests, the wider availability of vaccines and high inventory levels held by some of those customers and the termination of public funding for PCR testing.~~

Laboratory services revenues declined 61% to $1.2 million for the three months ended June 30, 2022 compared to $3.1 million for the three months ended June 30, 2021 as a result of a large customer ceasing its operations and due to timing of clinical trials.

~~Other product and service revenues remained largely unchanged at $405,000~~accelerated depreciation recorded in the ~~second~~ quarter associated with the wind-down of ~~2022 compared~~InteliSwab® manual assembly in Thailand as we on-shore and automate manufacturing of this product at our Pennsylvania facilities. This negative impact to ~~$449,000 in the second quarter of 2021.~~

Other revenues for the three months ended June 30, 2022 decreased 28% to $585,000 from $807,000 for the three months ended June 30, 2021, largely as a result of lower royalty income received under a litigation settlement agreement.

~~CONSOLIDATED OPERATING RESULTS~~

~~Consolidated gross profit margins were 34% for the three months ended June 30, 2022 compared to 53% for the three months ended June 30, 2021. The decrease in gross profit~~ margins was ~~primarily due to~~partially offset by a ~~less favorable product mix and increased~~cost savings associated with the InteliSwab® packaging redesign, reduction in scrap expense ~~associated with reserves for excess inventory.~~

and lower freight costs.

Consolidated operating loss for the three months ended June 30, ~~2022~~2023 was ~~$21.3~~$6.4 million, a ~~$23.1~~$15.0 million ~~decrease~~improvement from the ~~$1.8~~$21.5 million operating ~~income~~loss reported for the three months ended June 30, ~~2021.~~ 2022. Results for the three months ended June 30, ~~2022~~2023 were ~~negatively~~positively impacted by ~~the~~

reduced operating expense and lower ~~gross profit margin described above coupled with an increase in operating expenses as described below, including an aggregate~~ impairment ~~charge of $10.5 million.~~

~~OPERATING INCOME (LOSS) BY SEGMENT~~

We evaluate performance of our operating segments based on revenue and operating income. Reportable segments have no inter-segment revenue and inter-segment expenses are eliminated in consolidation, including the fees associated with an intercompany service agreement between the U.S. and Canadian entities.

~~Diagnostics Segment~~

~~The gross profit margin for the Diagnostics segment was 36%~~losses. Results for the three months ended June 30, 2022 included $10.5 million of impairment losses compared to ~~34%~~$0.2 million for the three months ended June 30, ~~2021.This increase is due~~2023.

Operating expenses in the second quarter of 2023, excluding the impairment charge, decreased $6.1 million compared to ~~improved product mix~~the second quarter of ~~higher margin product sales partially offset by~~2022 reflecting the ~~June 2021 expiration~~impact of ~~subsidies under the support agreement with the Gates Foundation.~~

our cost saving measures and headcount reductions. Research and development expenses ~~increased 26%~~decreased 19% to ~~$6.3~~$7.7 million for the three months ended June 30, 2023 from $9.5 million for the three months ended June 30, 2022 ~~compared~~largely due to ~~$5.0~~a decrease in headcount and lower manufacturing support costs.

Sales and marketing expenses decreased 27% to $8.5 million for the three months ended June 30, ~~2021 largely due to increased staffing costs associated with higher head count, increased clinical study activities related to obtaining CE mark for our InteliSwab~~® ~~rapid test and higher subscription costs associated with our new quality system. Sales and marketing expenses increased 19% to $7.8 million for three months ended June 30, 2022~~2023 from $6.6 million for the three months ended June 30, 2021 due to increased staffing costs associated with higher head count and increased travel, trade show, and annual meetings expenses as travel and in person events have resumed as COVID-19 restrictions have been lifted. These increases in spend were partially offset by a decline in advertising and market research costs associated with our InteliSwab® ~~test. General and administrative expenses increased 54% to $11.0~~$11.7 million for the three months ended June 30, 2022 ~~from $7.1~~due to a decrease in headcount, lower advertising, marketing and sales meeting spend, and a decrease in our reserve for expected credit losses.

General and administrative expenses decreased 7% to $16.4 million for the three months ended June 30, ~~2021~~2023 from $17.6 million for the three months ended June 30, 2022 largely due to lower severance ~~costs~~ and accelerated stock compensation expense associated with our former general counsel's employment and termination agreements, ~~stock compensation costs~~a decrease in headcount, lower consulting fees associated with ~~restricted stock awards granted to certain~~project management of our $109 million manufacturing expansion contract, lower board of director fees associated with less board members ~~with immediate vesting provisions,~~ and ~~higher legal,~~a decrease in accounting and ~~information technologies contract~~recruitment fees.

Operating expenses for the Diagnostic segment also include an impairment charge of $4.9 million associated with an idle manufacturing line for which it has no projected cash flow and minimal resale or salvage value. Diagnostic operating expenses also included a goodwill impairment charge of $3.6 million. The decline These decreases in the Company's stock price was identified as a triggering event which required the Company to perform an quantitative goodwill impairment analysis. The results of this analysis indicated the Diagnostic segment's goodwill was impaired and was written down to $0.

expense were partially offset by increased legal fees.

All of the above contributed to the ~~Diagnostics segment’s~~Company's operating loss of ~~$11.8~~$6.4 million for the three months ended June 30, 2023, which included a non-cash impairment charge of $0.2 million, non-cash charges of $10.3 million for depreciation and amortization, and $2.4 million for stock-based compensation. The Company's operating loss of $21.5 million for the three months ended June 30, 2022 ~~which~~ included ~~the~~a non-cash impairment ~~charges~~charge of ~~$8.5~~$10.5 million, non-cash charges of ~~$1.9~~$3.8 million for depreciation and amortization, and ~~$2.8~~$3.3 million for stock-based compensation. The Diagnostics segment operating loss in the second quarter of 2021 included a $220,000 non-cash pre-tax benefit associated with the change in the fair value of acquisition-related contingent consideration. There was no similar benefit recorded in the second quarter of 2022.

~~Molecular Solutions Segment~~

~~The gross profit margin for the Molecular Solutions segment was 31%~~

OTHER INCOME

Other income for the three months ended June 30, ~~2022~~2023 was $1.5 million compared to 63% for the three months ended June 30, 2021. This decrease was due to an increase in reserves for excess inventory as result of a forecasted decline in demand of certain products used in COVID PCR testing and a less favorable product mix.

~~Research and development expenses remained relatively flat at $2.8 for the three months ended June 30, 2022 from $2.7~~$1.7 million for the three months ended June 30, 2021 . Sales and marketing expenses also remained flat at $3.9 million for the three months ended June 30, 2022 and 2021. General and administrative expenses increased 70% to $6.6 million for the three months ended June 30, 2022 from $3.9 million for the three months ended June 30, 20212022. This decrease is largely due to ~~increased legal fees.~~

Operating expenses for the Molecular segment also include an impairment charge of $2.0 million for the three months ended June 30, 2022 associated with two idle manufacturing lines for which there are no projected cash flow and minimal resale or salvage value.

All of the above contributed to the Molecular Solutions segment’s operating loss of $9.5 million for the three months ended June 30, 2022, which included the non-cash impairment charge of $2.0 million, non-cash charges of $1.9 million for depreciation and amortization and $529,000 for stock-based compensation.

higher foreign currency losses offset by higher interest income.

CONSOLIDATED INCOME TAXES

~~We continue~~

The Company continues to believe the full valuation allowance established against ~~our~~its total U.S. deferred tax asset is appropriate as the facts and circumstances necessitating the allowance have not changed. For the three months ended June 30, ~~2022, we~~2023, the Company recorded U.S. state tax expense of ~~$183,000 compared to $54,000 of state income tax benefit for the three months ended June 30, 2021. For the three months ended June 30, 2022, we recorded a foreign tax benefit of $1.3~~$1.5 million compared to ~~foreign tax expense of $3.7~~$0.2 million for the three months ended June 30, ~~2021. This overall decrease in~~2022 and a foreign tax benefit of $1.6 million for the three months ended June 30, 2023 compared to $1.4 million expense for the three months ended June 30, 2022. U.S. tax expense is ~~largely a result~~higher due to increased projected earnings while decreased foreign earnings resulted in the foreign tax benefit.

Table of ~~the decrease in income before taxes generated by our Canadian subsidiary.~~Contents

Results of Operations

Six months ended June 30, ~~2022~~2023 compared to June 30, ~~2021~~

2022.

CONSOLIDATED NET REVENUES

The table below shows ~~a breakdown~~an outline of total consolidated net revenues (dollars in thousands) ~~generated by each of our business segments during~~for the six months ended June 30, ~~2022~~2023 and ~~2021.~~June 30, 2022:


	Six Months Ended June 30,
	Dollars				% Change		Percentage of Total Net Revenues
	2023		2022				2023		2022
COVID-19 Diagnostics	$	165,731	$	65,250	154	%	69	%	44	%
Diagnostics (1)	36,924		25,471		45		16		17
Molecular Products	25,992		35,514		(27)		11		24
Other products and services (2)	6,087		6,069		—		3		4
Molecular Services	2,733		2,938		(7)		1		2
COVID-19 Molecular Products	185		9,161		(98)		—		6
Net product and services revenues	237,652		144,403		65		99		98
Non-product and services revenues	2,752		3,535		(22)		1		2
Net revenues	$	240,404	$	147,938	63	%	100	%	100	%

(1)

Includes HIV and HCV product revenues.

For the Six Months Ended June 30,

Dollars

Percentage of Total Net Revenues

2022

2021

% Change

2022

2021

Diagnostics

$
96,372

$
31,585

205

%

65

%

27

%
Molecular Solutions

48,031

80,735

(41
)

33

69

Net product and services revenues

144,403

112,320

29

98

96

Other

3,535

3,869

(9
)

2

4

Net revenues

$
147,938

$
116,189

27

%

100

%

100

%

(2)

Includes Risk assessment testing and other product and services revenues.

Product and Services Revenues

Consolidated net product and services revenues increased ~~29%~~63% to ~~$144.4~~$240.4 million for the six months ended June 30, ~~2022~~2023 from ~~$112.3~~$147.9 million for the six months ended June 30, ~~2021.~~2022. The ~~increase in~~Company expects total net product and services revenues is ~~largely due~~for the second half of 2023 to ~~the inclusion of $65.3 million of InteliSwab~~® ~~COVID-19 rapid test revenues. We began selling this product in August of 2021 resulting in no comparable revenues in~~be lower than the first half of ~~2021. Declines~~2023 as demand for its COVID-19 Diagnostic product has declined from the levels experienced in ~~sales~~the first quarter of ~~our molecular sample collection kits for~~ 2023 and the second half of 2022.

COVID-19 ~~testing partially offset this positive driver of revenue. Other~~Diagnostics revenues ~~for the six months ended June 30, 2022 decreased 9%~~increased by 154% to ~~$3.5 million from $3.9~~$165.7 million for the six months ended June 30, ~~2021 largely due~~2023 compared to ~~lower royalty income.~~

Consolidated net revenues derived from products sold to customers outside of the United States were $19.6 million and $19.5 million, or 13% and 17% of total net revenues, for the six months ended June 30, 2022 and 2021, respectively. Because the majority of our international sales are denominated in U.S. dollars, the impact of fluctuating foreign currency exchange rates was not material to our total consolidated net revenues.

~~Net Revenues by Segment~~

~~Diagnostics Segment~~

~~The table below shows a breakdown of total net revenues (dollars in thousands) generated by our Diagnostics segment during the six months ended June 30, 2022 and 2021.~~

For the Six Months Ended June 30,

Dollars

Percentage of Total Net Revenues

Market

2022

2021

% Change

2021

2020

Infectious disease testing:

COVID-19

$
65,250

$
262

NM

%

66

%

0

%
Other

25,931

26,732

(3
)

25

79

Total infectious disease testing

91,181

26,994

238

92

80

Substance abuse testing

5,191

4,591

13

5

14

Net product revenues

96,372

31,585

205

97

94

Other

2,393

2,272

5

3

6

Net revenues

$
98,765

$
33,857

192

%

100

%

100

%

~~NM - not meaningful~~

~~Infectious Disease Testing Market~~

~~COVID-19 revenues were~~ $65.3 million for the six months ended June 30, 2022 ~~driven by~~due to increased sales of ~~our~~the Company's InteliSwab® ~~COVID-19 rapid test. We first began selling this product in August~~tests through its government procurement contracts.

Sales of ~~2021 and there are no comparable sales in~~ the ~~first half of 2021.~~

~~Sales~~Company's Diagnostics products increased 45% to ~~the other infectious disease testing markets decreased 3% to $25.9~~$36.9 million for the six months ended June 30, ~~2022~~2023 from ~~$26.7~~$25.5 million for the six months ended June 30, ~~2021.~~2022. This ~~decrease resulted from lower domestic OraQuick~~® ~~HIV and international OraQuick~~® ~~HCV product sales, partially offset~~increase in revenues was primarily driven by higher ~~international OraQuick~~® sales of the Company's OraQuick® In-Home HIV ~~and domestic OraQuick~~® ~~HCV sales.~~

~~The table below shows a breakdown~~tests in support of ~~our total net OraQuick~~® the CDC's "Together Take Me Home" HIV ~~and HCV product revenues (dollars in thousands)~~self-test program which commenced during the ~~six months ended June 30, 2022~~first quarter of 2023, and ~~2021.~~

Six Months Ended June 30,

Market

2022

2021

% Change

Domestic HIV

$
7,506

$
9,050

(17
)
%
International HIV

11,017

10,672

3

Net HIV revenues

18,523

19,722

(6
)

Domestic HCV

4,574

3,754

22

International HCV

2,374

2,914

(19
)

Net HCV revenues

6,948

6,668

4

Net OraQuick® revenues

$
25,471

$
26,390

(3
)
%

~~Domestic OraQuick~~®higher sales of the Company's OraQuick® HIV ~~sales~~Self-Test in international markets due to customer ordering patterns.

Molecular Products revenues decreased ~~17%~~27% to ~~$7.5~~$26.0 million for the six months ended June 30, ~~2022~~2023 from ~~$9.1~~$35.5 million for the six months ended June 30, ~~2021, primarily as a result~~2022. Sales of athe Company's Molecular Products are being impacted by macro-economic factors in the markets in which its customers operate. One of the Company's largest customers scaled down purchasing after they reorganized their business in the second half of 2022 and certain other customers placed large ~~order fulfilled~~orders in the first half of ~~2021 for our OraQuick® In-Home HIV test shipped to~~2022 that have not been repeated in the ~~CDC~~six months ending June 30, 2023. Furthermore revenues are impacted by customer ordering patterns whereby customers purchased at the end of 2022 and ~~used in an initiative to drive increased in-home HIV testing. A similar order~~ did not ~~occur~~require further inventory in the first half of ~~2022.~~

~~International sales of our OraQuick~~® ~~HIV tests increased 3% to $11.0~~2023.

Other products and services revenues were largely flat at $6.1 million for the six months ended June 30, ~~2022~~2023 and 2022.

Molecular Services revenues, which are largely derived from ~~$10.7~~the Company's laboratory services, decreased 7% to $2.7 million for the six months ended June 30, 2021 due to increased sales into Africa as the COVID-19 impact lessens. This increase to revenues was partially offset by the absence of the Gates Foundation subsidy, which expired in June 2021 and is not included in revenues in the first quarter of 2022, as well as the impact of the Russia and Ukraine war.

~~Domestic OraQuick~~® HCV sales increased 22% to $4.6 million for the six months ended June 30, 2022 from $3.8 million for the six months ended June 30, 2021, driven by new funding granted by certain state governments, increased legislation regarding drug testing and rise in drug use requiring more testing.

~~International OraQuick~~® ~~HCV sales decreased 19% to $2.4 million for the six months ended June 30, 2022~~2023 from $2.9 million for the six months ended June 30, ~~2021~~2022. The decline in services revenues was the direct result of loss of two customers in 2022. One customer ceased operations in 2022 and the

Table of Contents

other deprioritized microbiome studies. These decreases were offset by higher revenues generated by certain customer contracts due to ~~large stock ordering shipped~~the timing of work performed for certain clinical studies.

Sales of the Company's COVID-19 Molecular Products collection kits decreased significantly by 98% to ~~Korea that did not repeat in 2022.~~

~~Sales to the substance abuse testing assessment market increased 13% to $5.2~~$0.2 million for the six months ended June 30, ~~2022 compared to $4.6 million for the six months ended June 30, 2021 due to market share gains.~~

~~Other Revenues~~

~~Other revenues for the six months ended June 30, 2022 increased minimally to $2.4 million~~2023 from ~~$2.3 million for the six months ended June 30, 2021, due to research and development funding for 510(k) clearance and CLIA waiver of our InteliSwab~~® ~~COVID-19 rapid test partially offset by lower royalty income.~~

~~Molecular Solutions Segment~~

~~The table below shows a breakdown of our total net revenues (dollars in thousands) during the six months ended June 30, 2022 and 2021.~~

Six Months Ended June 30,

Market
2022

2021

% Change

Genomics

$
30,578

$
30,316

1

%
Microbiome

3,822

4,198

(9
)

COVID-19

9,161

39,953

(77
)

Laboratory services

2,938

5,611

(48
)

Other product revenues

1,532

657

133

Net molecular product and services revenues

$
48,031

$
80,735

(41
)

Other

1,142

1,597

(28
)

Net molecular product and services revenues

$
49,173

$
82,332

(40
)
%

~~Sales of our genomics products remained largely flat and increased only 1% to $30.6 million for the six months ended June 30, 2022, compared to $30.3 million for the six months ended June 30, 2021.~~

Microbiome kit sales decreased 9% to $3.8 million for the six months ended June 30, 2022 compared to $4.2 million for the six months ended June 30, 2021, due to a decline in revenues to CROs driven by the timing of microbiome clinical studies.

~~Sales of our molecular sample collection kits for COVID-19 testing decreased 77% to~~ $9.2 million for the six months ended June 30, 2022 ~~compared to $40.0 million during the comparable period in 2021~~ due to ~~lower COVID-19~~decline in demand for COVID PCR testing ~~sales to our core customers, driven by~~given the availability of rapid antigen ~~tests, the wider availability of vaccines, lower public funding for PCR testing,~~tests.

Non-product and ~~high inventory levels held by some of those customers.~~

~~Laboratory~~ services revenues ~~declined 48%~~decreased 22% to ~~$2.9~~$2.8 million for the six months ended June 30, 2023 from $3.5 million for the six months ended June 30, 2022 as a result of lower royalty income.

CONSOLIDATED OPERATING RESULTS

Consolidated gross profit margin increased to 38% for the six months ended June 30, 2023 from 35% for the six months ended June 30, 2022. This improvement in margins was driven by InteliSwab® sales which generated higher margins due to reduced costs associated with the correction of manufacturing inefficiencies which occurred during the first quarter of 2022, a packaging change implemented during the first quarter of 2023, and lower freight charges. Lower scrap expense in the first half of 2023 compared to ~~$5.6~~the first half of 2022 also contributed to the margins improvement. These improved margins were partially offset by $7.0 million of accelerated depreciation recorded in the second quarter of 2023 associated with the wind-down of InteliSwab® manual assembly in Thailand as we on-shore and automate the manufacturing of this product at our Pennsylvania facilities and lower COVID-19 Molecular Products revenue which historically generated higher margins.

Consolidated operating income for the six months ended June 30, 2023 was $17.9 million, a $55.5 million increase from the $37.6 million operating loss reported for the six months ended June 30, 2022. Results for the six months ended June 30, 2023 were positively impacted by the increase in revenues and gross margins described above and were positively impacted by reduced operating expense and lower impairment losses. Results for the six months ended June 30, 2022 included $10.5 million of impairment losses compared to $1.3 million for the six months ended June 30, ~~2021 as a result~~2023.

Operating expenses in the six months ended June 30, 2023, excluding the impairment charge, decreased $6.2 million compared to the first half of ~~a large customer ceasing its operations~~2022. Research and ~~a slowdown in clinical trials.~~

~~Other product~~development expenses increased to $18.2 million for the six months ended June 30, 2023 from $18.1 million for the six months ended June 30, 2022.

Sales and ~~service revenues increased 133%~~marketing expenses decreased 15% to ~~$1.5~~$20.7 million for the six months ended June 30, 2023 from $24.4 million for the six months ended June 30, 2022 ~~compared to $657,000 for the six months ended June 30, 2021 largely~~ due to ~~increased~~a decrease in our reserve for expected credit losses and lower advertising, marketing, sales ~~by our Novosanis subsidiary.~~

~~Other revenues for the six months ended June 30, 2022~~meeting, and consulting spend.

General and administrative expenses decreased ~~28%~~7% to ~~$1.1 million from $1.6~~$34.1 million for the six months ended June 30, ~~2021, largely as a result of lower royalty income received under a litigation settlement agreement.~~

~~CONSOLIDATED OPERATING RESULTS~~

Consolidated gross profit margins were 35% for the six months ended June 30, 2022 compared to 59% for the six months ended June 30, 2021. The decrease in gross profit margins was caused by an unfavorable product mix of higher sales of lower margin product, increases in inventory reserves associated with excess inventory levels and manufacturing inefficiencies that occurred in the first quarter of 2022, lower absorption of labor costs and the absence of the Gates subsidy which expired in June 2021.

~~Consolidated operating loss for the six months ended June 30, 2022 was $37.3 million, a $49.5 million decrease~~2023 from ~~the $12.2 million operating income reported for the six months ended June 30, 2021.~~ ~~Results~~ ~~for the six months ended June 30, 2022were negatively impacted by the lower gross profit margin described above coupled with an increase in operating expenses as described below, including an aggregate impairment charge of $10.5 million.~~

~~OPERATING INCOME (LOSS) BY SEGMENT~~

~~Diagnostics Segment~~

~~The gross profit margin for the Diagnostics segment was 29% for the six months ended June 30, 2022 compared to 38% for the six months ended June 30, 2021.This decrease is due to inefficiencies in our InteliSwab~~® manufacturing process experienced in the beginning of the year causing high scrap rates, under-absorption of labor costs, and the June 2021 expiration of subsidies under the support agreement with the Gates Foundation, and a less favorable product mix.

~~Research and development expenses increased 2% to $11.8~~$36.7 million for the six months ended June 30, 2022 ~~compared to $11.5 million for the six months ended June 30, 2021~~ largely due to ~~higher staffing costs associated with increased head count offset by~~ lower ~~product development activities related to our InteliSwab~~® ~~rapid test which did not repeat in~~severance and stock compensation expense and recruitment fees. In the first half of 2022, ~~as we received EUA authorization in June 2021. Sales~~the Company incurred high severance and marketing expenses increased 25% to $15.9 million for six months ended June 30, 2022 from $12.8 million for the six months ended June 30, 2021 due to increased staffing costs associated with higher head count, increased travel and annual meetings expenses as travel and in person events have resumed as COVID-19 restrictions have been lifted, increased consultant costs, higher advertising and market research expenses and higher subscription costs associated with our new CRM system. This increase in spending was partially offset by a decline in our reserve for uncollectible accounts, lower recruiting fees and a decrease in commission expense. General and administrative expenses increased 82% to $24.7 million for the six months ended June 30, 2022 from $13.6 million for the six months ended June 30, 2021 largely due to increased consulting costs, higher stock compensation expense associated with the accelerated vesting of shares under our former CEO's and general counsel's employment agreements ~~higher staffing costs associated with increased head count, increased legal costs, severance costs associated with our former general counsel, increased accounting fees,~~ and higher recruitment expense ~~largely~~ associated with ~~our~~the new CEO search.

~~Operating expenses for~~ Also contributing to the ~~Diagnostic segment also include an impairment charge~~decrease in expense was lower consulting fees, lower board of ~~$4.9 million associated with an idle manufacturing line for which it has no projected cash flow~~director fees, due to fewer board members, and ~~minimal resale or salvage value. Diagnostic operating expenses also included a goodwill impairment charge of $3.6 million. The decline~~lower sales tax penalties. These decreases in the Company's stock price was identified as a triggering event which required the Company to perform an quantitative goodwill impairment analysis. The results of this analysis indicated the Diagnostic segment's goodwill was impaired and was written down to $0.

expense were partially offset by increased legal fees.

All of the above contributed to the ~~Diagnostics segment’s~~Company's operating income of $17.9 million for the six months ended June 30, 2023, which included a non-cash impairment charge of $1.3 million largely related to equipment that will no longer be used in production, non-cash charges of $14.0 million for depreciation and amortization, and $5.0 million for stock-based compensation. The Company's operating loss of ~~$31.6~~$37.6 million for the six months ended June 30, 2022 ~~which~~ included ~~the~~a non-cash impairment charge of ~~$8.5~~$10.5 million, non-cash charges of ~~$3.6~~$7.5 million for depreciation and amortization, and ~~$5.9~~$6.8 million for stock-based compensation. The Diagnostics segment operating loss also included a non-cash pre-tax benefit of $36,000 associated with the change in the fair value of acquisition-related contingent consideration. This is in comparison to an $1.0 million benefit recorded in the first half of 2021.

~~Molecular Solutions Segment~~

~~The gross profit margin for the Molecular Solutions segment was 47%~~

OTHER INCOME

Other income for the six months ended June 30, ~~2022~~2023 was $4.1 million compared to ~~68% for the six months ended June 30, 2021. This decrease was due to an increase in reserves for excess inventory as result of a forecasted decline in demand and a less favorable product mix.~~

~~Research and development expenses increased 11% to $5.7~~$1.9 million for the six months ended June 30, ~~2022 from $5.1 million for the six months ended June 30, 2021~~2022. This increase is largely due to higher ~~staffing costs. Sales~~interest income and ~~marketing expenses increased 18% to $8.5 million for the six months ended June 30, 2022 from $7.2 million for the six months ended June 30, 2021 due to~~ higher ~~staffing~~reimbursement of costs ~~related to increased head count, increased consulting expense associated with business strategy planning,~~incurred under our DOD expansion contract which are presented in research and an increase in travel costs as COVID-19 restrictions are lifted. These increases in expenses were partially offset by lower amortization expense associated with an intangible asset that was fully amortized at the enddevelopment expenses.

Table of ~~2021.~~ContentsGeneral and administrative expenses increased 58% to $12.1 million for the six months ended June 30, 2022 from $7.6 million for the six months ended June 30, 2021 due to increased legal fees and staffing costs.

Operating expenses for the Molecular segment also includes an impairment charge of $2.0 million for the six months ended June 30, 2022 associated with two idle manufacturing lines for which there are no projected cash flow and minimal resale or salvage value.

All of the above contributed to the Molecular Solutions segment’s operating loss of $5.7 million for the six months ended June 30, 2022, which included the non-cash impairment charge of $2.0 million, $3.8 million for depreciation and amortization and $924,000 for stock-based compensation.

CONSOLIDATED INCOME TAXES

~~We continue~~

The Company continues to believe the full valuation allowance established against ~~our~~its total U.S. deferred tax asset is appropriate as the facts and circumstances necessitating the allowance have not changed. For the six months ended June 30, ~~2022, we~~2023, the Company recorded U.S. state tax expense of ~~$400,000~~$1.3 million compared to ~~$115,000 of state income tax expense~~$0.4 million for the six months ended June 30, ~~2021. Additionally, in~~2022 and a foreign tax benefit of $1.6 million for the ~~first half~~six months ended June 30, 2023 compared to foreign tax expense of $0.7 million for the six months ended June 30, 2022. The 2022 ~~we recorded approximately~~foreign tax expense is also comprised of $1.7 million of withholding taxes ~~due to the Canada Revenue Agency~~ associated with our repatriation of $65.0 million of cash from Canada to the United States. ~~For~~The 2023 U.S. state tax expense is higher due to higher expected US earnings while foreign income tax expense is lower due to lower expected foreign earnings.

Liquidity and Capital Resources


	June 30, 2023		December 31, 2022

	(In thousands)
Cash and cash equivalents	$	185,936	$	83,980
Available-for-sale securities	—		26,867
Working capital	295,147		256,127

The Company's cash and cash equivalents and available-for-sale securities increased to $185.9 million at June 30, 2023 from $110.8 million at December 31, 2022. $72.1 million or 39% of the $185.9 million in cash and cash equivalents is held by DNAG, the Company's Canadian subsidiary. In 2022, the Company repatriated $65.0 million of cash into the United States and incurred $1.7 million of Canadian withholding tax. Further repatriation of cash from Canada into the United States could have additional adverse tax consequences. It is still the Company's intention going forward to continue to permanently reinvest the historical undistributed earnings of our foreign subsidiaries.

The Company's working capital increased to $295.1 million at June 30, 2023 from $256.1 million at December 31, 2022. Working capital increased primarily due to the increase in cash and cash equivalents and lower accounts payable balances. Working capital is primarily a function of sales, purchase volumes, inventory requirements, and vendor payment terms.

Analysis of Our Cash Flows

Operating Activities

During the six months ended June 30, ~~2022, we recorded foreign tax~~2023, net cash provided by operating activities was $63.3 million. Cash flows from operations can be significantly impacted by factors such as timing of receipt from customers, inventory purchases, and payments to vendors. The Company's net income of $22.4 included non-cash charges of depreciation and amortization expense of ~~$665,000 compared to foreign tax~~$14.0 million, stock-based compensation expense of ~~$10.0~~$5.0 million, impairment charges taken for idle equipment of $1.3 million and a non-cash deferred tax benefit of $1.8 million. Cash provided by the working capital accounts included a decrease in inventory of $22.6 million as we fulfilled demand for our InteliSwab® product in the first half of the year, a decrease in accounts receivable of $18.7 million largely associated with collections of monies due from the U.S. government for InteliSwab®shipments, a $5.5 million decrease in prepaid and other assets as the Company received payment of its Employee Retention Credit filed for in 2021. Offsetting these increases in cash is a decrease in accounts payable of $22.2 million and a decrease in accrued expenses of $1.3 million.

Investing Activities

Net cash provided by investing activities was $38.2 million for the six months ended June 30, ~~2021. This overall decrease~~2023, which reflects proceeds from the maturities of investments of $27.3 million, $17.8 million in ~~foreign tax expense is largely a result of the decrease in income before taxes generated by~~reimbursement received under our ~~Canadian subsidiary.~~

~~Liquidity and Capital Resources~~

June 30,

December 31,

2022

2021

(In thousands)

Cash and cash equivalents

$
66,159

$
116,762

Available for sale securities

29,625

53,288

Working capital

201,820

220,367

~~Our cash and cash equivalents and available-for-sale securities decreased to $95.8~~$109 million ~~at June 30, 2022 from $170.1 million at December 31, 2021. Our working capital decreased to $201.8 million at June 30, 2022 from $220.4 million at December 31, 2021.~~

~~During the six months ended June 30, 2022, net cash used in operating activities was $45.5 million. Our net loss of $38.8 million included non-cash charges of $10.5 million associated~~contract with impairment charges taken against idle manufacturing lines and goodwill, depreciation and amortization expense of $7.5 million, stock-based compensation expense of $6.8 million, an inventory reserve of $2.0 million, and other non-cash expense of $1.2 million. Cash used to fund our working capital accounts included an increase in inventory of $20.4 million to meet

~~anticipated demand to support COVID-19 testing program, an increase in accounts receivable of $18.6 million largely associated with product shipped to~~ the U.S. government ~~a $4.1~~offset by $4.0 million ~~increase in prepaid expenses~~to build additional manufacturing capacity as required by the contract, and ~~other assets associated with tax installments made to the Canadian Revenue Agency and a~~ $2.9 million ~~decrease in accrued expenses~~to acquire property and ~~other liabilities largely due~~equipment to ~~payment~~support the normal operations of ~~our 2021 bonuses and severance payments to our former CEO. Offsetting these uses~~the business.

Table of ~~cash was a $11.9 million increase in accounts payable due to the timing of invoices received and payments made.~~Contents

Financing Activities

Net cash used in ~~investing~~financing activities was ~~$2.3~~$2.0 million for the six months ended June 30, 2022, which reflects proceeds from the maturities and redemptions of investments of $23.0 million. This was offset by $25.4 million to acquire property and equipment largely to increase our manufacturing capacity.

~~Net cash used in financing activities was $2.5 million for the six months ended June 30, 2022,~~2023, which is largely comprised of ~~$2.0~~$1.7 million used for the repurchase of common stock to satisfy withholding taxes related to the vesting of restricted shares awarded to ~~our~~the Company's employees.

~~We expect current balances of~~

Resources

The Company expects existing cash and cash equivalents ~~and available-for-sale securities to~~will be sufficient to fund ~~our current~~its operating expenses and capital ~~needs as well as those arising~~expenditure requirements over the next twelve months. ~~Our~~The Company's cash requirements, however, may vary materially from those now planned due to many factors, including, but not limited to, the timing of reimbursement under ~~our~~its $109 million DOD contract, the scope and timing of future strategic acquisitions, the progress of ~~our~~its research and development programs, the scope and results of clinical testing, the cost of any future litigation, the magnitude of capital expenditures, changes in existing and potential relationships with business partners, the timing and cost of obtaining regulatory approvals, the timing and cost of future stock purchases, the costs involved in obtaining and enforcing patents, proprietary rights and any necessary licenses, the cost and timing of expansion of sales and marketing activities, market acceptance of new products, competing technological and market developments, the impact of the current economic environment and other factors. In addition, $74.7 million or 78% of our $95.8 million in cash, cash equivalents and available-for-sale securities belongs to our Canadian subsidiary. In the first quarter of 2022, we repatriated $65.0 million of cash from Canada into the United States and incurred approximately $1.7 million of Canadian withholding tax. Further repatriation of cash from Canada into the United States could have additional adverse tax consequences. It is our intention going forward to continue to permanently reinvest the historical undistributed earnings of our foreign subsidiaries.

A summary of ~~our~~the Company's obligations to make future payments under contracts existing at December 31, ~~2021~~2022 is included in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, of ~~our~~its Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022. As of June 30, ~~2022,~~2023, there were no significant changes to this information.

Critical Accounting Policies and Estimates

This Management’s Discussion and Analysis of Financial Condition and Results of Operations discusses our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires that we make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. On an on-going basis, we evaluate our judgments and estimates, including those related to the bad debts, customer sales returns, inventories, intangible assets, income taxes, revenue recognition, performance-based compensation, contingencies and litigation. We base our judgments and estimates on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

A more detailed review of ~~our~~the Company's critical accounting policies is contained in ~~our~~its Annual Report on Form 10-K for the year ended December 31, ~~2021~~2022 filed with the SEC. ~~Except as presented below, no~~No material changes have been made to such critical accounting policies during the six months ended June 30, ~~2022.~~

2023.

~~Goodwill~~

Goodwill is not amortized, but rather is tested annually for impairment or more frequently if we believe that indicators of impairment exist. Current generally accepted accounting principles permit us to make a qualitative evaluation about the likelihood of goodwill impairment and If it is determined that it is more likely than not that the fair value does not exceed the carrying amount, then a quantitative test is performed. The quantitative goodwill impairment test involves a comparison of the estimated fair value of the reporting unit to the respective carrying amount. An impairment charge is recognized in the amount by which the carrying amount exceeds the reporting unit’s fair value, provided the impairment charge does not exceed the total amount of goodwill allocated to the reporting unit.

The process of evaluating the potential impairment of goodwill is highly subjective and requires significant judgment, including the identification of reporting units, qualitative evaluation of events and circumstances to determine if it is more likely than not that an impairment exists, and, if necessary, the estimation of the fair value of the applicable reporting unit.

Item 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

~~We do not hold any amounts of derivative financial instruments or derivative commodity instruments and, accordingly, we have~~

There has been no material ~~derivative risk to report under this Item.~~

As of June 30, 2022, we did not have any foreign currency exchange contracts or purchase currency options to hedge local currency cash flows. Sales denominated in foreign currencies comprised 3.5% of our total revenues for the six months ended June 30, 2022. We do have foreign currency exchange risk related to our operating subsidiaries in Canada and in Belgium. The principal foreign currencies in which we conduct business are the Canadian dollar and the Euro. Fluctuations in the exchange rate between the U.S. dollar and these foreign currencies could affect year-to-year comparability of operating results and cash flows. Our foreign subsidiaries had net assets, subject to translation, of $130.9 million in U.S. Dollars, which are included in the Company’s consolidated balance sheet as of June 30, 2022. A 10% unfavorable change in the ~~Canadian-to-U.S. dollar~~Company's assessment of its sensitivity to market risk since its presentation set forth in Item 7A, "Quantitative and ~~Euro-to-U.S. dollar exchange rates would have decreased our comprehensive income by approximately $13.1 million~~Qualitative Disclosures About Market Risk," in its Annual Report on Form 10-K for the ~~six months~~year ended ~~June 30,~~December 31, 2022.

Item 4.CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures. The Company’s management, with the participation of the Company’s Chief Executive Officer and ~~Interim~~ Chief Financial Officer, evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934) as of June 30, ~~2022.~~2023. Based on that evaluation, the Company’s management, including such officers, concluded that the Company’s disclosure controls and procedures were effective as of June 30, ~~2022~~2023 to provide reasonable assurance that material information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934 was accumulated and communicated to the Company’s management, including the Chief Executive Officer and ~~Interim~~ Chief Financial Officer, to allow timely decisions regarding required disclosure and was recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission.

(b) Changes in Internal Control Over Financial Reporting. There was no change in the Company’s internal control over financial reporting that occurred during the three months ended June 30, ~~2022~~2023 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

Table of Contents

PART II. OTHER INFORMATION

Item 1.LEGAL PROCEEDINGS

From time to time, ~~we are~~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 ~~our~~the Company's future financial position or results of operations.

Spectrum Patent Litigation

In ~~March~~June 2021, wethe Company filed a complaint against Spectrum Solutions, LLC ("Spectrum") in the United States District Court for the Southern District of California alleging that certain saliva collection devices manufactured and sold by Spectrum infringe a patent held by DNAG. Spectrum has filed an answer to the initial complaint, asserting that its device does not infringe ~~our~~the Company's patent and that ~~our~~the Company's patent is invalid. In August 2021, wethe Company amended ~~our~~its complaint to add a second patent to this litigation. Spectrum responded to ~~our~~the Company's amended complaint and asserted counterclaims for inequitable conduct and antitrust violations with respect to one of the patents in the ~~litigation. DNAG~~litigation and subsequently filed a request for review of the second patent at the Patent and Trademark Office ("PTO"), which was granted by the PTO. The District Court issued multiple pretrial orders, resolving the infringement, antitrust, and inequitable conduct claims without trial. First, the District Court granted Spectrum’s motion for summary judgment of noninfringement, holding that Spectrum’s saliva collection devices are not “kits for collecting and preserving a biological sample,” among other rulings. The Company has appealed the grant of summary judgment to the Court of Appeal on June 8, 2023. Second, the District Court denied Spectrum’s motion to ~~dismiss~~amend its allegations of alleged antitrust violations, finding that if such an amendment were allowed, Spectrum’s ~~counterclaims~~claims would not survive a motion for summary judgment. Spectrum thereafter withdrew its antitrust and inequitable conduct counterclaims. Spectrum did not appeal the District Court's denial of its motion to amend. Both parties have filed motions seeking sanctions in ~~October 2021, which was denied by~~ the ~~Court on March 30, 2022. On April 8, 2022,~~District Court. An inter partes review is currently pending before the ~~Court assigned a new judge to preside over~~PTO regarding the ~~matter, which vacated all dates for the trial. We await new dates to be set by the Court.~~second asserted patent.

Item 1A.RISK FACTORS

There have been no material changes to the risk factors disclosed in Item 1A, entitled “Risk Factors,” in ~~our~~the Company's Annual Report on Form 10-K for the year ended December 31, ~~2021,~~2022, other than as set forth below.

~~Customer Concentration Creates Risk for Our Business.~~

An Impairment of Goodwill Could Reduce our Earnings.

~~One non-commercial customer accounted for 56%~~

Throughout the year, we consider whether any events or changes in the business environment have occurred which indicate that goodwill may be impaired. For example, a significant decline in the closing share price of our common stock and ~~39%~~market capitalization may suggest that the fair value of ~~net consolidated revenues~~our reporting unit has fallen below its carrying amount, indicating that an interim goodwill impairment test is required. We monitor changes in our stock price during interim periods between annual goodwill impairment tests and consider overall stock market conditions, the underlying reasons for the ~~three~~decline in our stock price, the significance of the decline, and ~~six months ended June 30, 2022. We~~

~~expect~~the duration of time that ~~sales to the large non-commercial customer will continue~~our securities have been trading at a lower value.

While our stock price has experienced volatility, we have experienced a decline in its market capitalization as a result of a decline in our stock price. As of July 31, 2023 our market value was $346.5 million which is below our carrying value. If our stock price remains at such levels or deteriorates, our goodwill may be determined to be impaired and we would record a ~~significant contributor to our net consolidated revenue. Certain parts of our business may continue to~~non-cash impairment charge, which could have a ~~high customer concentration and depend disproportionately~~material adverse effect on a few large customers. To the extent that such a large customers fail to meet their purchase commitments, change their ordering patterns or business strategies, or otherwise reduce their purchases or stop purchasing our ~~products, or if we experience difficulty in meeting the high demand by these larger customers for our products, our revenues and~~consolidated balance sheet, results of operations ~~could be adversely affected.~~

or our stock price

Table of Contents

Item 2.UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Period

Total number of
shares purchased

Average price
paid per Share

Total number of
shares purchased
as part of publicly
announced plans
or programs

Maximum number (or
approximate dollar value)
of shares that may yet be
repurchased under the plans
or programs (1, 2)

April 1, 2022 - April 30, 2022

107,316

(3)

$
7.08

—

11,984,720

May 1, 2022 - May 31, 2022

21,979

(3)

5.17

—

11,984,720

June 1, 2022 - June 30, 2022

12,311

3.83

—

11,984,720

141,606

—


Period	Total number of shares purchased		Average price paid per Share		Total number of shares purchased as part of publicly announced plans or programs	Maximum number (or approximate dollar value) of shares that may yet be repurchased under the plans or programs (1, 2)
April 1, 2023 - April 30, 2023	7,945	(3)	$	2.77	—	11,984,720
May 1, 2023 - May 31, 2023	86,825	(3)	$	1.96	—	11,984,720
June 1, 2023 - June 30, 2023	64,353	(3)	$	4.10	—	11,984,720
	159,123				—

(1)

On August 5, 2008, ~~our~~the Company's Board of Directors approved a share repurchase program pursuant to which ~~we are~~the Company is permitted to acquire up to $25.0 million of outstanding shares. This share repurchase program may be discontinued at any time.

(2)

This column represents the amount that remains available under the $25.0 million repurchase plan, as of the period indicated. ~~We have~~The Company has made no commitment to purchase any shares under this plan.

(3)

Pursuant to the OraSure Technologies, Inc. Stock Award Plan, and in connection with the vesting of restricted and performance shares, these shares were retired to satisfy minimum tax withholdings.

Item 3.DEFAULTS UPON SENIOR SECURITIES

None

Item 4.MINE SAFETY DISCLOSURES

Not applicable

Item 5.OTHER INFORMATION

On May 25, 2023, Kathleen Weber, our Chief Product Officer, adopted a trading arrangement (the “Trading Plan”) intended to satisfy the affirmative defense conditions of Securities Exchange Act Rule 10b5-1(c) with respect to the sale of up to an aggregate of 64,129 shares of our common stock between August 30 and May 17, 2024 pursuant to the terms of the Trading Plan. The Trading Plan was entered into during an open insider trading window and is intended to satisfy the affirmative defense of Rule 10b5-1(c) under the Exchange Act and the Company’s policies regarding insider transactions.

The number of shares to be withheld, and thus the exact number of shares to be sold pursuant to Ms. Weber’s Trading Plan, can only be determined upon the occurrence of the future vesting events. For purposes of this disclosure, without subtracting any shares to be withheld upon future vesting events, the aggregate number of shares to be sold pursuant to Ms. Weber’s 10b5-1 Plan is 64,129 shares.

Table of Contents

~~None~~

Item 6. EXHIBITS


Exhibit Number			Exhibit


~~Exhibit~~ ~~Number~~	~~Exhibit~~

10.1**		Amended and Restated OraSure Technologies, Inc. 2000 Stock Award Plan ~~is incorporated~~(incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K ~~filed May 18, 2022.~~as filed.

10.2*31.1			Employment Agreement dated as of May 20, 2022, between OraSure Technologies, Inc. and Carrie Eglinton-Manner is incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed May 26, 2022.

31.1*	Certification of Carrie Eglinton-Manner required by Rule 13a-14(a) or Rule 15d-14(a) under the Securities Exchange Act of 1934, as amended.

31.2*			Certification of ~~Scott Gleason~~Kenneth J. McGrath required by Rule 13a-14(a) or Rule 15d-14(a) under the Securities Exchange Act of 1934, as amended.

32.1*+			Certification of Carrie Eglinton-Manner required by Rule 13a-14(b) or Rule 15d-14(b) under the Securities Exchange Act of 1934, as amended, and 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2*+			Certification of ~~Scott Gleason a~~Kenneth J. McGrath required by Rule 13a-14(b) or Rule 15d-14(b) under the Securities Exchange Act of 1934, as amended, and 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of ~~2002.~~2002 .

101.INS			Inline XBRL Instance Document – the Instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH			Inline XBRL Taxonomy Extension Schema Document

101.CAL			Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF			Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB			Inline XBRL Taxonomy Extension Labels Linkbase Document

101.PRE			Inline XBRL Taxonomy Extension Presentation Linkbase Document

~~Exhibit~~ 104			Cover Page from ~~the Company’s Quarterly Report on Form 10-Q for the Quarter Ended June 30, 2021 has been formatted~~Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in ~~Inline XBRL~~exhibits 101).

______________________

*Filed herewith

**Management contract or compensatory plan or arrangement.

+This certification is deemed not filed for purposes of section 18 of the Exchange Act or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act.

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.


		ORASURE TECHNOLOGIES, INC.

		/s/ ~~Scott Gleason~~Kenneth J. McGrath
Date: August ~~9, 2022~~ 4, 2023	Kenneth J. McGrath	~~Scott Gleason~~
	Chief Financial Officer	~~Senior Vice President, Investor Relations and Corporate Communications~~
		(Principal Financial Officer)

		/s/Michele M. ~~Miller~~Anthony
Date: August ~~9, 2022~~ 4, 2023		Michele M. ~~Miller~~Anthony
		Senior Vice President, Controller and Chief Accounting Officer
		(Principal Accounting Officer)


PART I. FINANCIAL INFORMATION


	Page No.

Item 1. Financial Statements (Unaudited)

Consolidated Balance Sheets at June ~~30, 2022~~ 3 0 , 2023 and December 31, ~~2021~~2022		34

Consolidated Statements of Operations for the three and six months ended ~~June 30,~~Ju ne 3 0 , 2023 and 2022 ~~and 2021~~		45

Consolidated Statements of Comprehensive Income (Loss) for the three and six months ended June ~~30, 2022~~ 3 0 , 2023 and ~~2021~~2022		56

Consolidated Statements of Cash Flows for the six months ended June ~~30, 2022~~ 3 0 , 2023 and ~~2021~~2022		67

Notes to the Consolidated Financial Statements		78

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		1917

Item 3. Quantitative and Qualitative Disclosures About Market Risk		3123

Item 4. Controls and Procedures		3123

PART II. OTHER INFORMATION

Item 1. Legal Proceedings		3124

Item 1A. Risk Factors		3124

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		3225

Item 3. Defaults Upon Senior Securities		3225

Item 4. Mine Safety Disclosures		3225

Item 5. Other Information		3225

Item 6. Exhibits		3326

Signatures		3427


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
NET REVENUES:
Products and services	$	84,738	$	79,167	$	237,652	$	144,403
Other	703		1,064		2,752		3,535
	85,441		80,231		240,404		147,938
COST OF PRODUCTS AND SERVICES SOLD	59,070		52,434		148,218		95,842
Gross profit	26,371		27,797		92,186		52,096
OPERATING EXPENSES:
Research and development	7,661		9,463		18,221		18,097
Sales and marketing	8,535		11,684		20,677		24,401
General and administrative	16,424		17,579		34,135		36,735
Loss on impairments	215		10,542		1,320		10,542
Change in the estimated fair value of acquisition-related contingent consideration	(35)		—		(59)		(36)
	32,800		49,268		74,294		89,739
Operating income (loss)	(6,429)		(21,471)		17,892		(37,643)
OTHER INCOME	1,467		1,713		4,140		1,881
Income (loss) before income taxes	(4,962)		(19,758)		22,032		(35,762)
INCOME TAX (BENEFIT) EXPENSE	(166)		(1,169)		(391)		2,767
NET INCOME (LOSS)	$	(4,796)	$	(18,589)	$	22,423	$	(38,529)

INCOME (LOSS) PER SHARE:
BASIC	$	(0.07)	$	(0.26)	$	0.31	$	(0.53)
DILUTED	$	(0.07)	$	(0.26)	$	0.30	$	(0.53)
WEIGHTED-AVERAGE SHARES OUTSTANDING:
BASIC	73,324		72,496		73,219		72,361
DILUTED	73,324		72,496		74,115		72,361


	June 30,		December 31,
	2023		2022
Raw materials	$	29,647	$	42,445
Work in process	1,885		2,335
Finished goods	41,752		50,924
	$	73,284	$	95,704


x			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


o			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


	June 30, 2023		December 31, 2022
ASSETS
Current Assets:
Cash and cash equivalents	$	185,936	$	83,980
Short-term investments	—		26,867
Accounts receivable, net of allowance of $1,908 and $2,365	52,750		70,797
Inventories	73,284		95,704
Prepaid expenses	5,248		6,273
Other current assets	24,349		41,569
Total current assets	341,567		325,190
Noncurrent Assets:
Property, plant and equipment, net of accumulated depreciation of $84,423 and $69,881	49,282		59,413
Operating right-of-use assets, net	13,443		10,399
Finance right-of-use assets, net	803		1,293
Intangible assets, net of accumulated amortization of $32,737 and $31,077	10,665		11,694
Goodwill	35,606		35,104
Deferred tax asset	1,230		—
Other noncurrent assets	998		1,087
Total noncurrent assets	112,027		118,990
TOTAL ASSETS	$	453,594	$	444,180
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable	$	17,753	$	38,020
Deferred revenue	1,841		2,273
Accrued expenses and other current liabilities	23,811		25,762
Finance lease liability	1,080		1,179
Operating lease liability	1,895		1,764
Acquisition-related contingent consideration obligation	40		65
Total current liabilities	46,420		69,063
Noncurrent Liabilities:
Finance lease liability	436		503
Operating lease liability	12,013		9,101
Acquisition-related contingent consideration obligation	—		99
Other noncurrent liabilities	586		581
Deferred income taxes	—		408
Total noncurrent liabilities	13,035		10,692
TOTAL LIABILITIES	59,455		79,755
Commitments and contingencies (Note 12)
STOCKHOLDERS' EQUITY
Preferred stock, par value $0.000001, 25,000 shares authorized, none issued	—		—
Common stock, par value $0.000001, 120,000 shares authorized, 73,413 and 72,734 shares issued and outstanding	—		—
Additional paid-in capital	523,861		520,446
Accumulated other comprehensive loss	(14,559)		(18,435)
Accumulated deficit	(115,163)		(137,586)
Total stockholders' equity	394,139		364,425
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	453,594	$	444,180


	June 30, 2022			December 31, 2021
ASSETS
Current Assets:
Cash and cash equivalents	$	66,159		$	116,762
Short-term investments		29,625			36,279
Accounts receivable, net of allowance for doubtful accounts of $3,222 and $3,418		62,886			45,323
Inventories		71,304			53,138
Prepaid expenses		5,477			7,939
Other current assets		31,855			28,990
Total current assets		267,306			288,431
Noncurrent Assets:
Property, plant and equipment, net		93,697			88,164
Operating right-of-use assets, net		16,451			9,056
Finance right-of-use assets, net		1,887			2,493
Intangible assets, net		12,851			14,343
Goodwill		36,038			40,279
Long-term investments		—			17,009
Other noncurrent assets		1,024			1,215
Total noncurrent assets		161,948			172,559
TOTAL ASSETS	$	429,254		$	460,990
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable	$	36,226		$	28,024
Deferred revenue		2,660			2,936
Accrued expenses and other current liabilities		23,165			33,778
Finance lease liabilities		1,182			939
Operating lease liabilities		2,054			2,181
Acquisition-related contingent consideration obligation		199			206
Total current liabilities		65,486			68,064
Noncurrent Liabilities:
Finance lease liabilities		1,445			1,952
Operating lease liabilities		14,978			7,202
Acquisition-related contingent consideration obligation		117			354
Other noncurrent liabilities		489			651
Deferred income taxes		2,547			2,234
Total noncurrent liabilities		19,576			12,393
TOTAL LIABILITIES		85,062			80,457
Commitments and contingencies (Note 12)
STOCKHOLDERS' EQUITY
Preferred stock, par value $.000001, 25,000 shares authorized, NaN issued		—			—
Common stock, par value $.000001, 120,000 shares authorized, 72,572 and 72,069 shares issued and outstanding		0			0
Additional paid-in capital		515,928			511,063
Accumulated other comprehensive loss		(12,514	)		(10,077	)
Accumulated deficit		(159,222	)		(120,453	)
Total stockholders' equity		344,192			380,533
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	429,254		$	460,990


	Six Months Ended June 30,
	2022			2021
OPERATING ACTIVITIES:
Net income (loss)	$	(38,769	)	$	2,410
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Stock-based compensation		6,804			2,937
Depreciation and amortization		7,464			5,144
Loss on impairment		10,542			—
Other non-cash amortization		313			380
Provision for doubtful accounts		(152	)		747
Inventory reserve		1,989			1,168
Unrealized foreign currency gain		(62	)		(364	)
Interest expense on finance leases		55			35
Deferred income taxes		361			(218	)
Loss on disposal of fixed assets		718			—
Change in the estimated fair value of acquisition-related contingent consideration		(36	)		(1,026	)
Payment of acquisition-related contingent consideration		—			(142	)
Changes in assets and liabilities
Accounts receivable		(18,646	)		3,680
Inventories		(20,385	)		(17,233	)
Prepaid expenses and other assets		(4,416	)		154
Accounts payable		11,942			4,400
Deferred revenue		(252	)		(630	)
Accrued expenses and other liabilities		(2,959	)		(4,914	)
Net cash used in operating activities		(45,489	)		(3,472	)
INVESTING ACTIVITIES:
Purchases of investments		—			(10,428	)
Proceeds from maturities and redemptions of investments		23,017			43,745
Purchases of property and equipment		(25,440	)		(22,929	)
Purchase of property and equipment under government contracts		(33,803	)		—
Proceeds from funding under government contract		33,962			—
Other investing activities		—			(18	)
Net cash (used in) provided by investing activities		(2,264	)		10,370
FINANCING ACTIVITIES:
Cash payments for lease liabilities		(392	)		(510	)
Proceeds from exercise of stock options		15			121
Payment of acquisition-related contingent consideration		(208	)		(264	)
Repurchase of common stock		(1,954	)		(1,877	)
Net cash used in financing activities		(2,539	)		(2,530	)
EFFECT OF FOREIGN EXCHANGE RATE CHANGES ON CASH		(311	)		(7,050	)
NET DECREASE IN CASH AND CASH EQUIVALENTS		(50,603	)		(2,682	)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		116,762			160,802
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	66,159		$	158,120

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for income taxes	$	9,107		$	10,329
Non-cash investing and financing activities
Accrued property and equipment purchases		1,900			896
Accrued property and equipment purchases under government contracts		2,023			—
Unrealized gain (loss) on marketable securities		156			(101	)


	June 30, 2022			December 31, 2021
Other current assets:
Billed receivables	$	—		$	9,913
Unbilled receivables		15,748			9,716
Total other current assets		15,748			19,629
Property, plant and equipment, net:
Cost of assets, cumulative		47,321			11,495
Reduction for funding earned to date, not yet received		(12,828	)		(10,964	)
Reduction for funding received to date		(34,493	)		(531	)
Total property, plant and equipment, net		—			0
Accrued expenses and other current liabilities		(620	)		(8,103	)


	June 30, 2023		December 31, 2022
Other current assets:
Billed receivables	$	—	$	—
Unbilled receivables	15,429		27,013
Total other current assets	15,429		27,013
Accrued expenses and other current liabilities	$	(118)	$	(318)


	Three Months Ended June 30, 2023		Six months ended June 30, 2023
Cost of products and services sold	$	334	$	369
Research and development	—		566
Sales and marketing	95		1,543
General and administrative	201		787
Total	$	629	$	3,264


	June 30, 2022
	Diagnostics			Molecular Solutions
Balance as of January 1	$	3,604		$	36,675
Impairment		(3,604	)		—
Change related to foreign currency translation		—			(637	)
Balance as of June 30	$	—		$	36,038



	June 30, 2022		December 31, 2021
Payroll and related benefits	$	11,636	$	15,570
Commitment to purchase under government contract		—		8,103
Deferred income for government contract		620		—
Professional fees		3,799		3,335
Sales tax payable		1,807		2,227
Other		5,303		4,543
	$	23,165	$	33,778


	June 30,		December 31,
	2023		2022
Land	$	1,118	$	1,118
Buildings and improvements	35,765		35,582
Machinery and equipment	65,204		60,725
Computer equipment and software	17,065		16,681
Furniture and fixtures	4,100		4,064
Construction in progress	10,453		11,124
	133,705		129,294
Accumulated depreciation	(84,423)		(69,881)
	$	49,282	$	59,413



	June 30, 2022		December 31, 2021
Operating Leases
Right-of-use assets	$	16,451	$	9,056
Lease liabilities:
Current lease liabilities		2,054		2,181
Non-current lease liabilities		14,978		7,202
Total operating lease liabilities	$	17,032	$	9,383


Finance Leases
Right-of-use assets	$	1,887	$	2,493
Lease liabilities:
Current lease liabilities		1,182		939
Non-current lease liabilities		1,445		1,952
Total finance lease liabilities	$	2,627	$	2,891


Weighted Average Remaining Lease Term
Weighted-average remaining lease term—operating leases	7.73 years			5.26 years
Weighted-average remaining lease term—finance leases	1.82 years			2.21 years

Weighted Average Discount Rate
Weighted-average discount rate—operating leases		4.27	%		3.90	%
Weighted-average discount rate—finance leases		3.52	%		3.57	%


	Finance			Operating
2022 (excluding the six months ended June 30, 2022)	$	710		$	1,496
2023		1,283			1,879
2024		740			2,969
2025		19			2,619
2026		11			2,422
Thereafter		—			9,021
Total minimum lease payments		2,763			20,406
Less: imputed interest		(136	)		(3,374	)
Present value of lease liabilities	$	2,627		$	17,032


Reconciliation of the changes in stockholders' equity for the three and six months ended June 30, 2022 and 2021
	Common Stock					Additional Paid-in			Accumulated Other Comprehensive			Accumulated
	Shares			Amount		Capital			Loss			Deficit			Total
Balance at December 31, 2021		72,069		$	—	$	511,063		$	(10,077	)	$	(120,453	)	$	380,533
Common stock issued upon exercise of options		2			—		15			—			—			15
Vesting of restricted stock and performance stock units		352			—		—			—			—			—
Purchase and retirement of common shares		(116	)		—		(1,049	)		—			—			(1,049	)
Stock-based compensation		—			—		3,524			—			—			3,524
Net loss		—			—		—			—			(19,967	)		(19,967	)
Currency translation adjustments		—			—		—			1,756			—			1,756
Unrealized gain on marketable securities		—			—		—			74			—			74
Balance at March 31, 2022		72,307		$	—	$	513,553		$	(8,247	)	$	(140,420	)	$	364,886
Vesting of restricted stock and performance stock units		407			—		—			—			—			—
Purchase and retirement of common shares		(142	)		—		(905	)		—			—			(905	)
Stock-based compensation		—			—		3,280			—			—			3,280
Net loss		—			—		—			—			(18,802	)		(18,802	)
Currency translation adjustments		—			—		—			(4,349	)		—			(4,349	)
Unrealized gain on marketable securities		—			—		—			82			—			82
Balance at June 30, 2022		72,572		$	—	$	515,928		$	(12,514	)	$	(159,222	)	$	344,192


	June 30, 2022		December 31, 2021
Total assets:
Diagnostics	$	249,123	$	209,674
Molecular Solutions		180,131		251,316
Total	$	429,254	$	460,990


	For the Three Months Ended June 30,
	Dollars								Percentage of Total Net Revenues
	2022		2021		% Change				2022			2021
Diagnostics	$	59,976	$	18,252		229		%		75	%		32	%
Molecular Solutions		19,191		37,489		(49	)			24			65
Net product and services revenues		79,167		55,741		42				99			97
Other		1,064		1,866		(43	)			1			3
Net revenues	$	80,231	$	57,607		39		%		100	%		100	%


	For the Three Months Ended June 30,
Market	2022		2021		% Change
Domestic HIV	$	3,741	$	4,135		(10	)	%
International HIV		6,616		6,809		(3	)
Net HIV revenues		10,357		10,944		(5	)
Domestic HCV		2,537		2,571		(1	)
International HCV		1,154		1,729		(33	)
Net HCV revenues		3,691		4,300		(14	)
Net OraQuick® revenues	$	14,048	$	15,244		(8	)	%


	For the Six Months Ended June 30,
	Dollars								Percentage of Total Net Revenues
	2022		2021		% Change				2022			2021
Diagnostics	$	96,372	$	31,585		205		%		65	%		27	%
Molecular Solutions		48,031		80,735		(41	)			33			69
Net product and services revenues		144,403		112,320		29				98			96
Other		3,535		3,869		(9	)			2			4
Net revenues	$	147,938	$	116,189		27		%		100	%		100	%

~~Delaware~~

~~36-4370966~~

(State or Other Jurisdiction of

Incorporation or Organization)

(IRS Employer Identification No.)