UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


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

For the quarterly period ended ~~June 30, 2023.~~March 31, 2024.


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

For the transition period from _________to _________ .

Commission File Number 001-16537

ORASURE TECHNOLOGIES, INC.

(Exact Name of Registrant as Specified in Its Charter)


Delaware			36-4370966
(State or Other Jurisdiction of Incorporation or Organization)			(IRS Employer Identification No.)


220 East First Street, Bethlehem, Pennsylvania			18015
(Address of Principal Executive Offices)			(Zip code)

Registrant’s telephone number, including area code: (610) 882-1820

Securities registered pursuant to Section 12(b) of the Act:

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 x No o

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 x No o

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. o

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 1, 2023,~~May 2, 2024, the registrant had ~~73,414,695~~73,959,289 shares of common stock, $0.000001 par value per share, outstanding.

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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~~the Company's 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~~the Company's 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~~Market acceptance of, and the Company's ability to market and sell, its products and services, whether through ~~our~~its 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~~the Company's products;

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

•~~Our~~The Company's ability to manufacture products in accordance with applicable specifications, performance standards and quality requirements;

•~~Our~~The Company's ability to achieve the anticipated cost savings as a result of its business restructuring, including from in-sourcing third party manufacturing and exiting microbiome services;

•The Company's 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~~The Company's 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~~The Company's ability to meet increased demand for ~~our~~its products;

•The impact of replacing distributors on ~~our~~the Company's business;

•Inventory levels at distributors and other customers;

•~~Our~~The Company's ability to achieve ~~our~~its financial and strategic objectives and continue to increase ~~our~~its revenues, including the ability to expand international sales;

•The impact of competitors, competing products and technology changes on ~~our~~the Company's business;

•Reduction or deferral of public funding available to customers;

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

•~~Our~~The Company's ability to develop, commercialize and market new products;

•~~Market acceptance of oral fluid or urine testing, collection or other products;~~The Company's ability to fulfill its commitments under its contract with the U.S. government for InteliSwab® COVID-19 Rapid Tests;

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•~~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 (the "CDC") or other agencies; ability to fund research and development and other products and operations;

•~~Our~~The Company's 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~~the Company's products;

•The impact of contracting with the U.S. government on ~~our~~the Company's business;

•The impact of negative economic conditions on ~~our~~the Company's business;

•~~Our~~The Company's ability to maintain sustained profitability;

•~~Our~~The Company's ability to increase ~~our~~its gross margins;

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

•Volatility of ~~our~~the Company's 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~~The impact of changes in international funding sources and testing ~~algorithms;~~algorithms on international sales;

•Adverse movements in foreign currency exchange rates;

•Loss or impairment of sources of capital;

•~~Our~~The Company's ability to attract and retain qualified personnel;

•~~Our~~The Company's 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;

•The impact of cybersecurity incidents and other disruptions involving our computer systems or those of our third-party IT service providers; and

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

These and other factors that could affect ~~our~~the Company's 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~~the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2023 filed with the Securities and Exchange ~~Commission (the “SEC”) on March 3, 2023, and in other SEC filings.~~

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Commission (the “SEC”) on March 11, 2024, 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~~the Company undertakes no duty to update these statements, unless ~~we are~~it is required to do so by law. If ~~we do~~the Company does update one or more forward-looking statements, no inference should be drawn that weit will make updates with respect to other forward-looking statements or that weit will make any further updates to those forward-looking statements at any future time.

Investors should also be aware that while ~~we do,~~the Company does, from time to time, communicate with securities analysts, it is against ~~our~~the Company's policy to disclose any material non-public information or other confidential commercial information. Accordingly, stockholders should not assume that ~~we agree~~the Company agrees with any statement or report issued by any analyst irrespective of the content of the statement or report. Furthermore, ~~we have~~the Company has 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.

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PART I. FINANCIAL INFORMATION

			Page No.

Item 1. Financial Statements (Unaudited)

Consolidated Balance Sheets at ~~June~~March 31, 2024 3 0 ~~, 2023~~ and December 31, ~~2022~~202 3			43

Consolidated Statements of Operations for the three ~~and six~~ months ended Ju neMarch 31, 2024 and 202 3 0 ~~, 2023 and 2022~~			54

Consolidated Statements of Comprehensive Income (Loss) for the three ~~and six~~ months ended ~~June~~March 31, 2024 3and 202 0 ~~, 2023 and 2022~~3			65

Consolidated Statements of Cash Flows for the ~~six~~ three months ended ~~June~~March 31, 2024 3and 202 0 ~~, 2023 and 2022~~3			76

Notes to the Consolidated Financial Statements			87

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			17

Item 3. Quantitative and Qualitative Disclosures About Market Risk			2321

Item 4. Controls and Procedures			2321

PART II. OTHER INFORMATION

Item 1. Legal Proceedings			2422

Item 1A. Risk Factors			2422

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			2523

Item 3. Defaults Upon Senior Securities			2523

Item 4. Mine Safety Disclosures			2523

Item 5. Other Information			2523

Item 6. Exhibits			2624

Signatures			2725

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Item 1. FINANCIAL STATEMENTS

ORASURE TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(in thousands, except per share amounts)


	March 31, 2024		December 31, 2023
ASSETS
Current Assets:
Cash and cash equivalents	$	247,145	$	290,407
Short-term investments	16,627		—
Accounts receivable, net of allowance of $1,065 and $1,216	34,037		40,171
Inventories	43,180		47,614
Prepaid expenses	4,691		6,041
Other current assets	2,825		2,226
Total current assets	348,505		386,459
Noncurrent Assets:
Property, plant and equipment, net of accumulated depreciation of $86,332 and $85,143	42,597		45,420
Operating right-of-use assets, net	10,570		12,270
Finance right-of-use assets, net	158		576
Intangible assets, net of accumulated amortization of $33,261 and $33,649	1,010		1,206
Goodwill	35,172		35,696
Investment in equity method investee	28,333		—

Other noncurrent assets	1,213		1,218
Total noncurrent assets	119,053		96,386
TOTAL ASSETS	$	467,558	$	482,845
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable	$	12,683	$	13,151
Deferred revenue	1,597		1,559
Accrued expenses and other current liabilities	12,715		22,710
Finance lease liability	517		539
Operating lease liability	1,593		1,577
Total current liabilities	29,105		39,536
Noncurrent Liabilities:
Finance lease liability	204		226
Operating lease liability	10,676		11,162
Other noncurrent liabilities	727		696
Deferred income taxes	595		554
Total noncurrent liabilities	12,202		12,638
TOTAL LIABILITIES	41,307		52,174
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, 73,959 and 73,528 shares issued and outstanding	—		—
Additional paid-in capital	531,263		529,543
Accumulated other comprehensive loss	(17,497)		(14,941)
Accumulated deficit	(87,515)		(83,931)
Total stockholders' equity	426,251		430,671
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	467,558	$	482,845

See accompanying notes to the consolidated financial statements.

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ORASURE TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED ~~BALANCE SHEETS~~STATEMENTS OF OPERATIONS

(Unaudited)

(in thousands, except per share amounts)

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


	For the Three Months Ended March 31,
		2024		2023
NET REVENUES:
Products and services		$	53,779	$	152,914
Other		353		2,049
		54,132		154,963
COST OF PRODUCTS AND SERVICES SOLD		30,067		89,148
Gross profit		24,065		65,815
OPERATING EXPENSES:
Research and development		7,738		10,560
Sales and marketing		8,448		12,142
General and administrative		11,634		17,711
Loss on impairments		3,338		1,105
Change in the estimated fair value of acquisition-related contingent consideration		—		(24)
		31,158		41,494
Operating income (loss)		(7,093)		24,321
OTHER INCOME		3,491		2,673
Income (loss) before income taxes		(3,602)		26,994
INCOME TAX BENEFIT		(18)		(225)
NET INCOME (LOSS)		$	(3,584)	$	27,219

INCOME (LOSS) PER SHARE:
BASIC		$	(0.05)	$	0.37
DILUTED		$	(0.05)	$	0.37
WEIGHTED-AVERAGE SHARES OUTSTANDING:
BASIC		73,947		73,112
DILUTED		73,947		73,966

See accompanying notes to the consolidated financial statements.

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ORASURE TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF ~~OPERATIONS~~COMPREHENSIVE INCOME (LOSS)

(Unaudited)

(in ~~thousands, except per share amounts)~~thousands)

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


	For the Three Months Ended March 31,
		2024		2023
NET INCOME (LOSS)		$	(3,584)	$	27,219
OTHER COMPREHENSIVE INCOME
Currency translation adjustments		(2,556)		797
Unrealized gain on marketable securities		—		220
COMPREHENSIVE INCOME (LOSS)		$	(6,140)	$	28,236

See accompanying notes to the consolidated financial statements.

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ORASURE TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF ~~COMPREHENSIVE INCOME (LOSS)~~CASH FLOWS

(Unaudited)

(in thousands)

Three Months Ended June 30, Six Months Ended June 30,
2023 2022 2023 2022
NET INCOME (LOSS) $ (4,796) $ (18,589) $ 22,423 $ (38,529)
OTHER COMPREHENSIVE INCOME
Currency translation adjustments 2,859 (4,349) 3,656 (2,593)
Unrealized gain on marketable securities — 82 220 156
COMPREHENSIVE INCOME (LOSS) $ (1,937) $ (22,856) $ 26,299 $ (40,966)


	For the Three Months Ended March 31,
	2024		2023
OPERATING ACTIVITIES:
Net income (loss)	$	(3,584)	$	27,219
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Stock-based compensation	2,968		2,655
Depreciation and amortization	2,725		3,696
Loss on impairments	3,338		1,105
Other non-cash amortization	6		—
Provision for credit losses	(85)		(67)
Unrealized foreign currency (gain) loss	(119)		44
Interest expense on finance leases	7		15
Deferred income taxes	53		—

Change in the estimated fair value of acquisition-related contingent consideration	—		(24)
Payment of acquisition-related contingent consideration	—		(19)
Changes in assets and liabilities:
Accounts receivable	6,199		(36,613)
Inventories	4,337		18,540
Prepaid expenses and other assets	603		5,299
Accounts payable	(68)		(12,097)
Deferred revenue	47		(279)
Accrued expenses and other liabilities	(9,688)		(3,472)
Net cash provided by operating activities	6,738		6,002
INVESTING ACTIVITIES:
Purchases of short-term investments	(25,850)		(22,330)
Purchase of equity method investee	(28,333)		—
Proceeds from maturities and redemptions of short-term investments	9,234		27,304
Purchases of property and equipment	(1,579)		(1,191)
Purchase of property and equipment under government contracts	—		(2,767)

Net cash provided by (used in) investing activities	(46,528)		1,016
FINANCING ACTIVITIES:
Cash payments for lease liabilities	(50)		(148)
Proceeds from exercise of stock options	215		66
Payment of acquisition-related contingent consideration	—		(46)
Repurchase of common stock	(1,462)		(1,203)
Net cash used in financing activities	(1,297)		(1,331)
EFFECT OF FOREIGN EXCHANGE RATE CHANGES ON CASH	(2,175)		527
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	(43,262)		6,214
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	290,407		83,980
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	247,145	$	90,194

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash (refunds) paid for income taxes	$	592	$	(10)
Non-cash investing and financing activities
Accrued property and equipment purchases	$	471	$	733

See accompanying notes to the consolidated financial statements.

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ORASURE TECHNOLOGIES, INC. AND SUBSIDIARIES

~~CONSOLIDATED STATEMENTS OF CASH FLOWS~~

~~(Unaudited)~~

~~(in thousands)~~
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.~~

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~~ORASURE TECHNOLOGIES, INC. AND SUBSIDIARIES~~

Notes to the Consolidated Financial Statements

(Unaudited)

~~(in thousands, except per share amounts, unless otherwise indicated)~~

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 the Company's financial position and results of operations for these interim periods. These financial statements should be read in conjunction with the financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, ~~2022.~~2023. Results of operations for the three ~~and six~~ months ended ~~June 30, 2023~~March 31, 2024 are not necessarily indicative of the results of operations expected for the full year.

Summary of Significant Accounting Policies.

There have been no changes to the Company's significant accounting policies described in its Annual Report on Form 10-K for the fiscal year ended December 31, ~~2022~~2023 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 & Short-Term Investments.

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. Securities with maturities ninety days or less are considered cash equivalents. Available-for-sale securities are carried at fair value, based upon quoted market prices, with unrealized gains and losses, if any, reported in stockholders’ equity as a component of accumulated other comprehensive loss.

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

The following is a summary of the Company's available-for-sale ~~securities:~~securities (in thousands):


	Amortized Cost									Amortized Cost	Gross Unrealized Gains	Gross Unrealized Losses	Fair Value
March 31, 2024
Guaranteed investment certificates
Guaranteed investment certificates
Guaranteed investment certificates
		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
Total
Total	Total	$	27,087	$	—	$	(220)	$	26,867

At March 31, 2024, maturities of the Company's available-for-sale securities were as follows:
At March 31, 2024, maturities of the Company's available-for-sale securities were as follows:
At March 31, 2024, maturities of the Company's available-for-sale securities were as follows:

Less than one year

Less than one year

Less than one year
Greater than one year

The Company had no available-for-sale securities as of December 31, 2023.

Fair Value of Financial Instruments.

As of ~~June 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, 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.

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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

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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 the Company's ~~available-for-sale corporate bonds are measured as Level 2 instruments and the Company's available-for-sale~~ guaranteed investment certificates are measured as Level 1 instruments as of ~~December~~March 31, ~~2022.~~2024.

Included in cash and cash equivalents at ~~June 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023 was ~~$6,928~~$114.1 million and ~~$1,730~~$112.7 million, respectively, invested in money market funds. These money market funds have investments in U.S. government securities and are measured as Level 1 instruments. Included in cash and cash equivalents at ~~June 30,~~March 31, 2024 and December 31, 2023 was ~~$22,642~~$53.6 million and $71.7 million, respectively, of guaranteed investment certificates, which are also measured as Level 1 instruments.

In January 2024, the Company lead the Series B financing and have entered wide-ranging strategic distribution agreements with KKR Sapphiros L.P. ("Sapphiros"), a privately held consumer diagnostic portfolio company and certain of its related entities. Through this relationship, the Company expects to be able to offer a more comprehensive range of low-cost diagnostic test and molecular sample management solutions to the Company's customers globally. The Company has funded $28.3 million for an interest in Sapphiros, with an aggregate commitment of up to $30.0 million to be funded by June 2024, contingent on certain terms and conditions being met. The Company has recorded the investment using the equity method in accordance with Accounting Standards Codification Topic 323, Investments-Equity Method and Joint Ventures - Overall. The investment in Sapphiros L.P. of $28.3 million as of March 31, 2024 is included in the equity method investee line of the Company's balance sheet and is measured as Level 3 investments. There is no similar investment as of December 31, 2023.

The Company offers a nonqualified deferred compensation plan for certain eligible employees and members of 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, 2023~~both March 31, 2024 and December 31, ~~2022~~2023 was ~~$644 and $747, respectively,~~$0.8 million and was calculated using the quoted market prices of the assets as of those dates. All investments in the plan are classified as trading securities and measured as Level 1 instruments. The fair value of plan assets is included in both current assets and noncurrent assets with the same amount included in accrued expenses and other noncurrent liabilities in the accompanying consolidated balance sheets.

Foreign Currency ~~Translation~~. Transactions

Net foreign exchange gains and (losses) resulting from foreign currency transactions that are included in other income in the Company's consolidated statements of operations were ~~$(492)~~$0.2 million and ~~$783~~$(0.05) million for the three months ended ~~June 30,~~March 31, 2024 and 2023, respectively.

Impairment of Long-Lived Assets

Long-lived assets, which include property, plant and ~~2022, respectively. Net foreign exchange gains~~equipment, definite-lived intangible assets, as well as right-of-use assets (ROU assets) of operating and ~~(losses) resulting~~finance leases, are tested for recoverability whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable. The Company assesses the recoverability of the Company's long-lived assets by determining whether the carrying value of such assets can be recovered through the sum of the undiscounted future cash flows expected to be generated from ~~foreign currency transactions~~the use and eventual disposition of the asset. If indicators of impairment exist, the Company measures 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 the Company's assumptions about selling prices, volumes, costs and market conditions over a reasonable period of time.

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The Company identified a triggering event to test for the ~~six~~recoverability of all the property, plant, and equipment and ROU assets of both the Diversigen and Novosanis subsidiaries during the three months ended ~~June 30, 2023~~March 31, 2024, given the Company's decision to initiate a strategic plan to transition away from the microbiome molecular sequencing services business and ~~2022~~close its Belgian operations. The Company performed an undiscounted cash flow analysis and determined the carrying values of the property, plant and equipment and ROU assets could not be recovered through the sum of the undiscounted future cash flows and were ~~$(542)~~impaired. During the three months ended March 31, 2024 the Company recognized aggregate pre-tax impairment charges of $1.2 million and ~~$54,~~$0.3 million to its operating and finance ROU assets, respectively. These charges are reported in the Company's consolidated statement of operations. The impact of the impairments on the Company's property, plant, equipment for the three months ended March 31, 2024 is discussed further in Note 4.

Accumulated Other Comprehensive Loss. ~~Changes~~

Change in accumulated other comprehensive loss by component is listed ~~below.~~below (in thousands):

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)


	Foreign Currency		Total
Balance at December 31, 2023	$	(14,941)	$	(14,941)
Other comprehensive loss	(2,556)		(2,556)
Balance at March 31, 2024	$	(17,497)	$	(17,497)

Recent Accounting Pronouncements

~~Immaterial Correction~~In March 2024, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update ("ASU") No. 2024-01, Topic 718, Compensation-Stock Compensation. The purpose of ~~Errors.~~ ~~Inventories, accounts payable~~this update was to provide illustrative examples to demonstrate how an entity should apply guidance to determine whether profits interests and ~~cost of products~~similar awards should be accounted for in accordance with Topic 718. For public business entities, the amendments in this ASU are effective for fiscal years beginning after December 15, 2024, and ~~services were reduced by $528, $1,329~~interim periods within those fiscal periods. The amendments may be applied prospectively or retrospectively, and ~~$801, respectively, as of and for~~early adoption is permitted. Management is evaluating the ~~year ended December 31, 2022 to correct for~~impact on 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~~Company's 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 has also been adjusted. Furthermore, stockholder's equity at June 30, 2022 has been adjusted to reflect the reduction in cost of products and services sold.statements.

~~Reclassification~~. ~~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 research and development expenses were reclassified to other income in relation to the U.S. Department of Defense (the “DOD”) engineering consulting costs further described in Note 2. This reclassification was made to conform to the presentation in our Annual Report on Form 10-K for the year ended December 31, 2022.

~~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~~$109.0 million in funding from the ~~DOD,~~U.S. Department of Defense (the "DOD"), in coordination with the Department of Health and Human Services, to build additional manufacturing capacity in the United States for its InteliSwab® COVID-19 Rapid Tests as part of the nation’s pandemic preparedness plan. ~~Funding will be paid to the~~

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~~Company based on achievement of milestones through 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% of the total ~~will~~was not bebilled and funded until the completion of the final validation testing, which ~~is scheduled to occur~~occurred in ~~late~~October 2023. ~~The Company began making payments to vendors for the capital project during the fourth quarter of 2021.~~ The Company began receiving funds from the DOD in January 2022 and has received ~~$78,124,~~$109.0 million as of ~~June 30,~~December 31, 2023. ~~The remaining $30,876 is expected to be collected during~~In connection with the ~~remainder~~completion of ~~2023.~~the contract in the fourth quarter of 2023, all funds were received.

Activity for these capital contracts is accounted for pursuant to International Accounting Standards ("IAS") 20, Accounting for Government Grants and Disclosure of Government Assistance,.as there is not direct US GAAP guidance for this type of transaction. Funding 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 for the Company's guaranteed profit which ~~covers~~covered project management costs ~~are~~were recognized straight-line in other income over the term of the government contract. ~~Any amount received in excess of the guaranteed profit discussed above will be recorded in other income at time of payment.~~ The Company recognized ~~$561 of~~no such income ~~which is reported as other income in the Company's consolidated statement of operations for both~~during the three months ended ~~June 30, 2023~~March 31, 2024 and ~~2022. The Company recognize $1,123 of such income, for both~~$0.6 million during the ~~six~~three months ended ~~June 30, 2023 and 2022.~~March 31, 2023.

The DOD also ~~reimburses~~reimbursed the Company for certain engineering consulting costs. These expenses are reflected in research and development expenses as incurred with the corresponding ~~reimbursement~~amount presented in other income. ~~For~~The Company

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recognized no such costs during the three months ended ~~June 30, 2023~~March 31, 2024 and ~~2022, $537 and $395, respectively, were recorded in research and development and other income. For~~$1.1 millionduring the ~~six~~three 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 the Company's consolidated balance sheet are as follows:~~

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)
March 31, 2023.

The activity corresponding to the government contracts included in the Company's consolidated statements of cash flows for the cumulative period ended December 31, 2023 is as ~~follows:~~follows (in thousands):

June 30,
2023 December 31,
2022
Cost of assets, cumulative $ 87,057 $ 83,359
Reduction for funding earned to date, not yet received (8,402) (22,497)
Reduction for funding received to date (78,655) (60,862)
Total property, plant and equipment, net $ — $ —


	December 31,
	2023
Cost of assets, cumulative	$	86,993

Reduction for funding received to date	(86,993)
Total property, plant and equipment, net	$	—

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3. Inventories (in thousands)


		June 30,		December 31,
		2023		2022
	March 31,					March 31,	December 31,
	2024					2024	2023
Raw materials	Raw materials	$	29,647	$	42,445
Work in process	Work in process	1,885		2,335
Finished goods	Finished goods	41,752		50,924
		$	73,284	$	95,704
	$

4. Property, Plant and Equipment, net (in thousands)


		June 30,		December 31,
		2023		2022
	March 31,					March 31,	December 31,
	2024					2024	2023
Land	Land	$	1,118	$	1,118
Buildings and improvements	Buildings and improvements	35,765		35,582
Machinery and equipment	Machinery and equipment	65,204		60,725
Computer equipment and software	Computer equipment and software	17,065		16,681
Furniture and fixtures	Furniture and fixtures	4,100		4,064
Construction in progress	Construction in progress	10,453		11,124
		133,705		129,294
	128,929
Accumulated depreciation	Accumulated depreciation	(84,423)		(69,881)
		$	49,282	$	59,413
	$

During the ~~six~~three months ended ~~June 30,~~March 31, 2024, the Company initiated a strategic plan to transition away from the microbiome molecular sequencing services business and to exit operations at its Belgium location. As a result of these decisions, the Company determined that the carrying values of all the property, plant, and equipment of its Diversigen and Novosanis subsidiaries were not recoverable and recorded an aggregate pre-tax asset impairment charge of $1.8 million during the three months ended March 31, 2024.

During the three months ended March 31, 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,~~this decision, the Company determined that the carrying ~~values~~value of the equipment ~~and leasehold improvements made to date are~~was not recoverable and recorded an aggregate pre-tax asset impairment charge of ~~$1,320~~$1.1 million during the ~~six~~three months ended ~~June 30,~~March 31, 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~~statements of operations.

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5. Accrued Expenses and ~~other current liabilities~~Other Current Liabilities (in thousands)


		June 30,		December 31,
		2023		2022
	March 31,					March 31,	December 31,
	2024					2024	2023
Payroll and related benefits	Payroll and related benefits	$	11,028	$	14,103
Professional fees	Professional fees	7,038		4,685
Sales tax payable	Sales tax payable	1,321		1,519
Other	Other	4,424		5,455
		$	23,811	$	25,762
	$

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6. Termination Benefits

2023 Reduction in Workforce

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.

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The ~~expense~~charges for termination benefits included in the Company's consolidated statements of operations are as ~~follows:~~follows (in thousands):


		Three Months Ended June 30, 2023		Six months ended June 30, 2023
	For the Three Months Ended March 31,						For the Three Months Ended March 31,
	2024					2024		2023
Cost of products and services sold	Cost of products and services sold	$	334	$	369
Research and development	Research and development	—		566
Sales and marketing	Sales and marketing	95		1,543
General and administrative	General and administrative	201		787
Total		$	629	$	3,264
	$

As of ~~June 30, 2023~~March 31, 2024 the Company had ~~$1,591~~$0.1 million accrued and had paid ~~$1,674~~$3.2 million related to the reduction in workforce. No additional expense was incurred during the three months ended March 31, 2024. The Company expects this plan to be completed by September 30, 2024.

Q1 2024 Reduction in Workforce

During the three months ended March 31, 2024, the Company executed a reduction in workforce largely affect its COVID-19 manufacturing workforce. This was accounted for pursuant to Accounting Standards Codification ("ASC") 420, Exit or Disposal Cost Obligations. The charges for termination benefits included in the Company's consolidated statements of operations are as follows (in thousands):


	For the Three Months Ended March 31,
	2024
Cost of products and services sold	$	231
Research and development	87
Sales and marketing	69
General and administrative	17
Total	$	404

As of March 31, 2024 the Company had $0.3 million accrued and had paid $0.1 million related to the reduction in workforce. The Company expects this plan to be completed by December 31, 2024.

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7. Revenues

Revenues by product line. The following table represents total net revenues by product ~~line:~~line (in thousands):


		Three Months Ended June 30,					Six Months Ended June 30,
		2023		2022			2023		2022

				Three Months Ended March 31,
				Three Months Ended March 31,
				Three Months Ended March 31,
						2024					2024	2023
COVID-19 (1)	COVID-19 (1)	$	47,507	$	43,378		$	165,916	$	74,411
HIV	HIV	15,964		10,357			29,868		18,523
Molecular Products (2)		13,050		17,581			25,992		35,514
Molecular Sample Management Solutions (2)
HCV	HCV	3,870		3,691			7,056		6,948
Risk assessment testing		2,358		2,630			4,986		5,191
Risk assessment testing (3)
Molecular Services	Molecular Services	1,354		1,204			2,733		2,938
Other product and service revenues	Other product and service revenues	635		326			1,101		878
Net product and services revenues	Net product and services revenues	84,738		79,167			237,652		144,403
Other non-product revenues (3)		703		1,064			2,752		3,535
Non-product and services revenues (4)
Net revenues	Net revenues	$	85,441	$	80,231		$	240,404	$	147,938

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

(2)Includes Genomics, ~~and~~ Microbiome and Novosanis ~~Products.~~product revenues.

(3)~~Other non-product~~Includes substance abuse testing products.

(4)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 (in thousands):


		Three Months Ended June 30,					Six Months Ended June 30,
		2023		2022			2023		2022
				Three Months Ended March 31,
				Three Months Ended March 31,
				Three Months Ended March 31,
						2024					2024	2023
United States	United States	$	73,871	$	70,320		$	218,890	$	128,307
Europe	Europe	2,453		2,436			4,305		6,722
Other regions	Other regions	9,117		7,475			17,209		12,909
		$	85,441	$	80,231		$	240,404	$	147,938
						$

Customer and Vendor Concentrations. At ~~June 30, 2023,~~March 31, 2024, one non-commercial customer accounted for ~~47%~~29% of the Company's consolidated accounts receivable. The same non-commercial customer accounted for ~~more than 57%~~40% of the Company's consolidated accounts receivable as of December 31, ~~2022.~~2023. The same non-commercial customer also accounted for ~~56% of net consolidated revenues for both the three months ended June 30, 2023~~40% and ~~2022, respectively. The same non-commercial customer also accounted for 70% and 39%~~78% of net consolidated revenues for the ~~six~~three months ended ~~June 30,~~March 31, 2024 and 2023, ~~and 2022,~~ respectively.

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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~~March 31, 2024 and December 31, ~~2022~~2023 included customer prepayments of ~~$1,285~~$1.3 million and ~~$1,533,~~$1.2 million, respectively. Deferred revenue as of ~~June 30, 2023~~March 31, 2024 and December 31, ~~2022~~2023 also included ~~$556~~$0.3 million and ~~$740,~~$0.4 million, 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. Deferred revenue recognized for the three months ended March 31, 2024, and 2023, was $0.7 million and $0.9 million, respectively.

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8. Income Taxes

The components of income tax expense ~~(benefits)~~(benefit) are as ~~follows:~~follows (in thousands):


		Three Months Ended June 30,					Six Months Ended June 30,
		2023		2022			2023		2022
				Three Months Ended March 31,
				Three Months Ended March 31,
				Three Months Ended March 31,
						2024					2024	2023
State income tax expense (benefit)	State income tax expense (benefit)	$	1,481	$	183		$	1,257	$	400
Foreign income tax expense (benefit)	Foreign income tax expense (benefit)	(1,648)		(1,352)			(1,648)		665
Foreign withholding tax	Foreign withholding tax	—		—			—		1,702
		$	(166)	$	(1,169)		$	(391)	$	2,767
						$

During the three months ended March 31, 2024 and 2023, the Company recorded an income tax benefit of $0.0 million and $0.2 million, respectively. The income tax benefit for the three months ended March 31, 2024and 2023 is primarily composed of a U.S. state tax benefit.

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~~liability as of ~~June 30, 2023 relate to foreign net operating losses. The significant components of the Company's total deferred tax liability~~March 31, 2024 and at December 31, ~~2022~~2023 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~~March 31, 2024 and December 31, ~~2022.~~2023.

9. Income (Loss) Per Share

Basic 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.

For the three months ended ~~June 30,~~March 31, 2024, outstanding common stock options, unvested restricted stock, and unvested performance stock units representing 1,697 shares, were excluded from the computation of diluted loss per share. For the three months ended March 31, 2023 outstanding common stock options, unvested restricted stock, and unvested performance stock units representing ~~966~~2,237 shares, were excluded from the computation of diluted loss per share. For the six months ended June 30, 2023, outstanding common stock options, unvested restricted stock, and unvested performance stock units representing 2,030 sharesrespectively, were excluded from the computation of diluted earnings per share as their inclusion would have been anti-dilutive.

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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 and 381 shares, respectively, were excluded from the computation of diluted loss per share.

10. Stockholders’ Equity

Reconciliation of the changes in ~~stockholder's~~stockholders' equity for ~~the~~ three ~~and six~~ months ended ~~June 30,~~March 31, 2024 and 2023 ~~and 2022.~~ :


		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																Common Stock	Additional Paid-in Capital	Accumulated Other Comprehensive Loss	Accumulated Deficit	Total
	Shares
Balance at December 31, 2023
Balance at December 31, 2023
Balance at December 31, 2023
Common stock issued upon exercise of options	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	Vesting of restricted stock and performance stock units	241	—		—				—		—		—
Purchase and retirement of common shares	Purchase and retirement of common shares	(82)	—		(460)				—		—		(460)
Stock-based compensation	Stock-based compensation	—	—		2,357				—		—		2,357
Net loss	Net loss	—	—		—				—		(4,796)		(4,796)
Currency translation adjustments	Currency translation adjustments	—	—		—				2,859		—		2,859
Unrealized gain on marketable securities
Balance at March 31, 2024

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

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		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																Common Stock	Additional Paid-in Capital	Accumulated Other Comprehensive Loss	Accumulated Deficit	Total
	Shares
Balance at December 31, 2022
Balance at December 31, 2022
Balance at December 31, 2022
Common stock issued upon exercise of options	Common stock issued upon exercise of options	2	—		15				—		—		15
Vesting of restricted stock and performance stock units	Vesting of restricted stock and performance stock units	352	—		—				—		—		—
Purchase and retirement of common shares	Purchase and retirement of common shares	(116)	—		(1,049)				—		—		(1,049)
Stock-based compensation	Stock-based compensation	—	—		3,524				—		—		3,524
Net loss		—	—		—				—		(19,940)		(19,940)
Net income
Currency translation adjustments	Currency translation adjustments	—	—		—				1,756		—		1,756
Unrealized gain on marketable securities	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
Balance at March 31, 2023

11. ~~Business Segments~~

The Company is organized on the basis of products and services under a new organizational structure. All products 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 combine the commercial and innovation teams across the Diagnostics and Molecular Solutions segments into one operating segment with sales, marketing, product development and research teams covering all product lines and reporting to a Chief Product Officer. Resources are allocated and performance is assessed on a consolidated basis by our Chief Executive Officer, 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 holistically.

~~12.~~ Commitments and Contingencies

Litigation

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

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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~~Appeals on June 8, 2023. The appeal is pending, with oral argument expected in the second half of 2024. Second, the ~~District~~ Court denied Spectrum’s motion to ~~amend~~supplement its allegations of alleged antitrust violations, finding that if such an amendment were allowed,

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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 District Court's denial of its motion to amend. ~~Both parties have filed motions seeking sanctions~~On February 7, 2024, the PTO issued a Final Written Decision regarding the second patent in the ~~District Court. An~~litigation, holding that claims 1, 3-8, 11 and 12 of U.S. Patent No. 11,002,646 B2 are unpatentable. On March 8, 2024, the Company filed a Request for Rehearing by the Director of the PTO of the Final Written Decision. On March 27, 2024, the Company's Request for Rehearing was denied. The Company is considering its appellate options. On September 15, 2023, Spectrum filed a separate petition for inter partes review ~~is currently pending before~~of a third patent, which DNAG did not assert in the District Court. On March 26, 2024, the PTO ~~regarding the second asserted patent.~~issued a Decision Granting Institution of

Inter Partes Review and scheduled oral argument for January 14, 2025.

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

The following discussion and analysis of ~~our~~the Company's financial condition and results of operations should be read in conjunction with (i) ~~our~~the Company's unaudited condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and (ii) ~~our~~the Company's audited consolidated financial statements and related notes and management’s discussion and analysis of financial condition and results of operations included in ~~our~~the Company's Annual Report on Form 10-K for the year ended December 31, ~~2022~~2023 filed with the Securities and Exchange Commission on March ~~3, 2023.~~11, 2024. 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~~the Company's plans and strategy for ~~our~~its business and impact and potential impacts on ~~our~~its 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~~the Company's Annual Report on Form 10-K for the year ended December 31, ~~2022~~2023 and the “Risk Factors” section of subsequent Quarterly Reports on Form 10-Q, ~~our~~the Company's actual results or timing of certain events could differ materially from the results or timing described in, or implied by, these forward-looking statements.

Business Overview

OraSure Technologies transforms health through powerful insight by providing access to accurate, essential information. In 2022, our business consisted of two segments: our “Diagnostics” segment, and our “Molecular Solutions” segment. In February 2023, we announced a corporate restructuring to combine the commercial and innovation teams across the two segments into one business 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 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 Company's diagnostic~~These products ~~includes~~include 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. 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.~~countries, including as an oral swab in-home test for HIV-1 and HIV-2 in Europe.

The Company's business also includes molecular ~~collection kits~~sample management solutions and services that are used by clinical laboratories, direct-to-consumer laboratories, researchers, pharmaceutical companies, and animal health service and product providers. ~~These~~The revenues from sample management solutions are derived from product sales to commercial customers and sales into the academic and research markets. Customers span the disease risk management, diagnostics, pharmaceutical, biotech, companion animal and environmental markets. The Company has also developed collection devices for the emerging microbiome market, which focuses on studying microbiomes and their effect on human and animal health. The Company also has a urine collection device 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. Additionally, the Company offers laboratory and ~~analytical~~bioinformatics services for both genomics and microbiome ~~customers to more fully meet their needs.~~customers. These services are primarily provided to pharmaceutical, biotech companies, and research institutions.

Recent Developments

Novosanis

During the three months ended March 31, 2024, the Company made a strategic decision to commence wind-down of its operations at its Novosanis subsidiary located in Belgium. The Company intends to continue to sell and manufacture its Colli-Pee® product under the DNAG product line of collection devices. In addition, during the three months ended March 31, 2024, the Company initiated steps to wind down and exit the molecular services business offered by its Diversigen subsidiary while providing transition continuity for clients. This business contributed $0.9 million to revenues during the three months ended March 31, 2024 and contributed $4.5 million for the full year of 2023.

Sapphiros

In January 2024, the Company announced that it is leading the Series B financing and have entered wide-ranging strategic distribution agreements with KKR Sapphiros L.P. ("Sapphiros"), a privately held consumer diagnostics portfolio company based in Boston, and certain of its related entities. Through this strategic relationship, the Company expects to be able to

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offer a more comprehensive range of low-cost diagnostic tests and molecular sample management solutions to the Company's customers globally.

The Company has funded approximately $28.3 million an interest in Sapphiros, with an aggregate commitment of up to $30.0 million to be funded by June 2024, contingent on certain terms and conditions being met.

Results of Operations

~~Three~~For the three months ended ~~June 30, 2023~~March 31, 2024 compared to ~~June 30, 2022.~~March 31, 2023.

CONSOLIDATED NET REVENUES

The table below shows an outline of total consolidated net revenues (dollars in thousands) for the three months ended ~~June 30, 2023~~March 31, 2024 and ~~June 30, 2022:~~2023:


		Three Months Ended June 30,
		Dollars				% Change				Percentage of Total Net Revenues
		2023		2022				2023				2022
	Three Months Ended March 31,																																			Three Months Ended March 31,
	Dollars																								Dollars									% Change							Percentage of Total Net Revenues
	2024																				2024							2023											2024						2023
COVID-19 Diagnostics	COVID-19 Diagnostics	$	47,477	$	43,114			10	%			56	%			54	%	COVID-19 Diagnostics	$	23,097		$				$	118,254		(80)			(80)	%					43		%				76		%
Diagnostics (1)	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 Sample Management Solutions (2)
Other products and services (3)
Molecular Services	Molecular Services	1,354		1,204		12				2				2
COVID-19 Molecular Products	COVID-19 Molecular Products	30		264		(89)				—				—
Net product and services revenues	Net product and services revenues	84,738		79,167		7				99				99
Non-product and services revenues		703		1,064		(34)				1				1
Non-product and services revenues (4)
Net revenues	Net revenues	$	85,441	$	80,231	6	%			100	%			100	%	Net revenues	$	54,132		$			$	154,963			(65)			(65)	%				100		%					100	%

(1)Includes HIV and HCV product revenues.

(2)Includes Genomics, Microbiome and Novosanis product revenues.

(3)Includes Risk assessment testing and other product and services revenues.

(4)Non-product and services revenues include funded research and development contracts, royalty income and grant revenues.

Product and Services Revenues

Consolidated net revenues ~~increased 6%~~decreased 65% to ~~$85.4~~$54.1 million for the three months ended ~~June 30, 2023~~March 31, 2024 from ~~$80.2~~$155.0 million for the three months ended ~~June 30, 2022.~~March 31, 2023.

COVID-19 Diagnostics revenues ~~increased~~decreased by ~~10%~~80% to ~~$47.5~~$23.1 million for the three months ended ~~June 30, 2023~~March 31, 2024 compared to ~~$43.1~~$118.3 million in three months ended ~~June 30, 2022~~March 31, 2023 due to ~~increased~~decreased sales of the Company's InteliSwab® tests through its U.S. government procurement contracts. We expect this decline in revenue to continue throughout 2024 due to the fulfillment of these contracts and lower overall demand for COVID-19 testing.

Sales of the Company's Diagnostics products ~~increased 41%~~decreased 4% to ~~$19.8~~$16.4 million for the three months ended ~~June 30, 2023~~March 31, 2024 from ~~$14.0~~$17.1 million for the three months ended ~~June 30, 2022.~~March 31, 2023. This ~~increase~~decrease 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~~Sample Management Solutions revenues decreased ~~26%~~16% to ~~$13.1~~$10.8 million for the three months ended ~~June 30, 2023~~March 31, 2024 from ~~$17.6~~$12.9 million for the three months ended ~~June 30, 2022.~~March 31, 2023. Sales of the Company's Molecular Products are being impacted by ~~macro-economic factors~~reduced consumer demand for products in which our genomics collection devices are used, economic pressures and reduction on funding for programs in which our collection devices are used, and the overall decline 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.~~microbiome market.

Other products and services revenues ~~remained flat at $3.0~~decreased 17% to $2.6 million for the three months ended ~~June 30, 2023 and 2022.~~

~~Molecular Services revenues, which are largely derived~~March 31, 2024 from ~~the Company's laboratory services, increased 12% to $1.4~~$3.1 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 due to decline in demand for COVID PCR testing given the availability of rapid antigen tests.March 31, 2023.

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~~Non-product~~Molecular Services revenues, which are derived from the Company's microbiome molecular sequencing services, decreased 37% to $0.9 million for the three months ended March 31, 2024 from $1.4 million for the three months ended March 31, 2023. The decrease in services revenues was largely due to discontinuance of customer's clinical trial projects.

Non-Product and Services Revenues

Non-product and services revenues decreased ~~34%~~83% to ~~$0.7~~$0.4 million for the three months ended ~~June 30, 2023~~March 31, 2024 from ~~$1.1~~$2.0 million for the three months ended ~~June 30, 2022~~March 31, 2023 as a result lower funding for research and development activities largely as a result of ~~lower royalty income.~~the end of our agreement with Biomedical Advanced Research Authority ("BARDA") which provided funding to obtain clearance of a premarket notification ("510(k)") and Clinical Laboratory Improvement Amendments of 1988 ("CLIA") waiver of our InteliSwab® tests. The Company has communicated to BARDA that it does not intend to pursue further development of this clearance.

CONSOLIDATED OPERATING RESULTS

Consolidated gross profit margin ~~decreased~~increased to ~~31%~~44.5% for the three months ended ~~June 30, 2023~~March 31, 2024 from ~~35%~~42.5% for the three months ended ~~June 30, 2022.~~March 31, 2023. This ~~decline~~increase in margins was driven by ~~$7.0 million of accelerated depreciation recorded~~increased average selling price on InteliSwab® sales and lower scrap expense. These improvement in ~~the quarter associated with the wind-down of InteliSwab® manual assembly in Thailand as we on-shore and automate manufacturing of this product at our Pennsylvania facilities. This negative impact to~~ margins ~~was~~were partially offset by a ~~cost savings associated with the InteliSwab® packaging redesign, reduction~~decrease in ~~scrap expense and lower freight costs.~~non-product revenues which contribute 100% to gross margin.

Consolidated operating loss for the three months ended ~~June 30, 2023~~March 31, 2024 was ~~$6.4~~$7.1 million, a ~~$15.0~~$31.4 million ~~improvement~~decline from the ~~$21.5~~$24.3 million operating ~~loss~~income reported for the three months ended ~~June 30, 2022.~~March 31, 2023. Results for the three months ended ~~June 30, 2023~~March 31, 2024 were ~~positively~~negatively impacted by ~~reduced~~lower revenues and higher impairment losses offset by increased gross profit margins and lower operating expense ~~and lower impairment losses.~~spend. Results for the three months ended ~~June 30, 2022~~March 31, 2024 included ~~$10.5~~$3.3 million of impairment losses compared to ~~$0.2~~$1.1 million for the three months ended ~~June 30,~~March 31, 2023. Impairment losses in the first quarter of 2024 were comprised of the impairment of Novosanis and Diversigen property plant and equipment, including leased assets while impairment losses in 2023 were associated with idle manufacturing lines.

Operating expenses in the ~~second~~first quarter of ~~2023,~~2024, excluding the impairment charge, decreased ~~$6.1~~$12.6 million compared to the ~~second~~first quarter of ~~2022~~2023 reflecting the impact of ~~our~~the Company's cost saving measures and headcount reductions.

Research and development expenses decreased ~~19%~~27% to $7.7 million for the three months ended ~~June 30, 2023~~March 31, 2024 from ~~$9.5~~$10.6 million for the three months ended ~~June 30, 2022~~March 31, 2023 largely due to a decrease in employee costs associated with a reduction in headcount, decrease in spend on COVID-19 product development, and ~~lower~~no related project management fees for our $109 million manufacturing ~~support costs.~~expansion contract which ended during the fourth quarter of 2023.

Sales and marketing expenses decreased ~~27%~~30% to ~~$8.5~~$8.4 million for the three months ended ~~June 30, 2023~~March 31, 2024 from ~~$11.7~~$12.1 million for the three months ended ~~June 30, 2022~~March 31, 2023 due to lower employee costs associated with a decrease in headcount, ~~lower~~and decreased spend on advertising ~~marketing~~ and ~~sales meeting spend, and a decrease in our reserve for expected credit losses.~~consulting fees.

General and administrative expenses decreased 7%34% to ~~$16.4~~$11.6 million for the three months ended ~~June 30, 2023~~March 31, 2024 from ~~$17.6~~$17.7 million for the three months ended ~~June 30, 2022~~March 31, 2023 largely due to lower ~~severance~~legal fees and ~~accelerated stock compensation expense associated with our former general counsel's employment and termination agreements,~~lower staffing costs due to a ~~decrease~~reduction in headcount, lower consulting fees associated with project management of our $109 million manufacturing expansion contract, lower board of director fees associated with less board members and a decrease in accounting and recruitment fees. These decreases in expense were partially offset by increased legal fees.headcount.

All of the above contributed to the Company's operating loss of ~~$6.4~~$7.1 million for the three months ended ~~June 30, 2023,~~March 31, 2024, which included a non-cash impairment charge of ~~$0.2~~$3.3 million, non-cash charges of ~~$10.3~~$2.7 million for depreciation and amortization, and ~~$2.4~~non-cash charges of $3.0 million for stock-based compensation. The Company's operating ~~loss~~income of ~~$21.5~~$24.3 million for the three months ended ~~June 30, 2022~~March 31, 2023 included a non-cash impairment charge of ~~$10.5~~$1.1 million, non-cash charges of ~~$3.8~~$3.7 million for depreciation and amortization, and ~~$3.3~~$2.7 million for stock-based compensation.

OTHER INCOME

Other income for the three months ended ~~June 30, 2023~~March 31, 2024 was ~~$1.5~~$3.5 million compared to ~~$1.7~~$2.7 million for the three months ended ~~June 30, 2022.~~March 31, 2023. This ~~decrease~~increase is ~~largely~~ due to higher ~~foreign currency losses offset by higher~~ interest income.

CONSOLIDATED INCOME TAXES

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The Company continues to believe the full valuation allowance established against 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,~~March 31, 2024 and 2023, the Company recorded a U.S. state income tax benefit of $0.2 million. For the three months ended March 31, 2024 the state tax benefit was partially offset by foreign tax expense of ~~$1.5 million compared to~~ $0.2 ~~million~~million. No foreign taxes were recorded for the three months ended ~~June 30, 2022 and~~March 31, 2023 due to it being more likely than not that the Canadian subsidiary would not produce sufficient income to receive a ~~foreign~~ tax benefit ~~of $1.6 million~~ for the ~~three months ended June 30, 2023 compared~~year to ~~$1.4 million expense for the three months ended June 30, 2022. U.S. tax expense is higher due to increased projected earnings while decreased foreign earnings resulted in the foreign tax benefit.~~

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~~Results of Operations~~

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

~~CONSOLIDATED NET REVENUES~~

~~The table below shows an outline of total consolidated net revenues (dollars in thousands) for the six months ended June 30, 2023 and 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.~~

~~(2)Includes Risk assessment testing and other product and services revenues.~~

~~Product and Services Revenues~~

Consolidated net product and services revenues increased 63% to $240.4 million for the six months ended June 30, 2023 from $147.9 million for the six months ended June 30, 2022. The Company expects total net product and services revenues for the second half of 2023 to be lower than the first half of 2023 as demand for its COVID-19 Diagnostic product has declined from the levels experienced in the first quarter of 2023 and the second half of 2022.

COVID-19 Diagnostics revenues increased by 154% to $165.7 million for the six months ended June 30, 2023 compared to $65.3 million for the six 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 45% to $36.9 million for the six months ended June 30, 2023 from $25.5 million for the six 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 27% to $26.0 million for the six months ended June 30, 2023 from $35.5 million for the six 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. 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 orders in the first half of 2022 that have not been repeated in the six months ending June 30, 2023. Furthermore revenues are impacted by customer ordering patterns whereby customers purchased at the end of 2022 and did not require further inventory in the first half of 2023.

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

Molecular Services revenues, which are largely derived from the Company's laboratory services, decreased 7% to $2.7 million for the six months ended June 30, 2023 from $2.9 million for the six months ended June 30, 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

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~~other deprioritized microbiome studies. These decreases were offset by higher revenues generated by certain customer contracts due to 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 $0.2 million for the six months ended June 30, 2023 from $9.2 million for the six months ended June 30, 2022 due to decline in demand for COVID PCR testing given the availability of rapid antigen tests.

~~Non-product and services revenues decreased 22% to $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 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, 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 2022. Research and 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 marketing expenses decreased 15% to $20.7 million for the six months ended June 30, 2023 from $24.4 million for the six months ended June 30, 2022 due to a decrease in our reserve for expected credit losses and lower advertising, marketing, sales meeting, and consulting spend.

General and administrative expenses decreased 7% to $34.1 million for the six months ended June 30, 2023 from $36.7 million for the six months ended June 30, 2022 largely due to lower severance and stock compensation expense and recruitment fees. In the first half of 2022, the Company incurred high severance and stock compensation expense associated with the accelerated vesting of shares under our former CEO's and general counsel's employment agreements and higher recruitment expense associated with the new CEO search. Also contributing to the decrease in expense was lower consulting fees, lower board of director fees, due to fewer board members, and lower sales tax penalties. These decreases in expense were partially offset by increased legal fees.

All of the above contributed to the 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 $37.6 million for the six months ended June 30, 2022 included a non-cash impairment charge of $10.5 million, non-cash charges of $7.5 million for depreciation and amortization, and $6.8 million for stock-based compensation.

~~OTHER INCOME~~

Other income for the six months ended June 30, 2023 was $4.1 million compared to $1.9 million for the six months ended June 30, 2022. This increase is largely due to higher interest income and higher reimbursement of costs incurred under our DOD expansion contract which are presented in research and development expenses.

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~~CONSOLIDATED INCOME TAXES~~

The Company continues to believe the full valuation allowance established against 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, 2023, the Company recorded U.S. state tax expense of $1.3 million compared to $0.4 million for the six months ended June 30, 2022 and a foreign tax benefit of $1.6 million for the 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 foreign tax expense is also comprised of $1.7 million of withholding taxes associated with our repatriation of $65.0 million of cash from Canada to the United States. 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.

date loss.

Liquidity and Capital Resources

June 30, 2023

December 31, 2022

(In thousands)

March 31, 2024

December 31, 2023

(in thousands)

Cash and cash equivalents

185,936

83,980

Available-for-sale securities

—

26,867

Short-term investments

Working capital

295,147

256,127

The Company's cash and cash equivalents and ~~available-for-sale securities increased~~short-term investments decreased to ~~$185.9~~$263.8 million at ~~June 30, 2023~~March 31, 2024 from ~~$110.8~~$290.4 million at December 31, ~~2022. $72.1~~2023. $84.5 million or ~~39%~~32% of the ~~$185.9~~$263.8 million in cash and cash equivalents and short-term investments 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~~decreased to ~~$295.1~~$319.4 million at ~~June 30, 2023~~March 31, 2024 from ~~$256.1~~$346.9 million at December 31, ~~2022.~~2023. Working capital ~~increased~~decreased primarily due to the ~~increase~~decrease in cash and cash ~~equivalents and lower accounts payable balances.~~equivalents. Working capital is primarily a function of sales, purchase volumes, inventory requirements, and vendor payment terms.

Analysis of ~~Our~~the Company's Cash Flows

Operating Activities

During the ~~six~~three months ended ~~June 30, 2023,~~March 31, 2024, net cash provided by operating activities was ~~$63.3~~$6.7 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~~loss of ~~$22.4~~$3.6 million included non-cash charges of depreciation and amortization expense of ~~$14.0~~$2.7 million, stock-based compensation expense of ~~$5.0 million, impairment charges taken for idle equipment of $1.3~~$3.0 million, and ~~a non-cash deferred tax benefit~~impairment losses of ~~$1.8~~$3.3 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~~$6.2 million largely associated with lower overall sales and collections of ~~monies~~balances due, ~~from the U.S. government for InteliSwab~~®~~shipments,~~ a ~~$5.5 million~~ decrease in ~~prepaid and other assets~~inventory of $4.3 million as the Company ~~received payment of~~fulfilled demand for its ~~Employee Retention Credit filed for in 2021. Offsetting these increases in cash is a decrease in accounts payable of $22.2 million~~InteliSwab® product, and a decrease in accrued expenses of ~~$1.3 million.~~$9.7 million as the Company paid out year end bonuses in March 2024.

Investing Activities

Net cash ~~provided by~~used in investing activities was ~~$38.2~~$46.5 million for the ~~six~~three months ended ~~June 30, 2023,~~March 31, 2024, which reflects proceeds from the maturities of investments of ~~$27.3~~$9.2 million, ~~$17.8~~offset by $25.9 million in ~~reimbursement received under our $109~~purchases of investments. Investing activities also include a $28.3 million ~~contract with the U.S. government offset by $4.0 million to build additional manufacturing capacity as required by the contract,~~investment in Sapphiros, and ~~$2.9~~$1.6 million to acquire property and equipment to support the normal operations of the business.

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Financing Activities

Net cash used in financing activities was ~~$2.0~~$1.3 million for the ~~six~~three months ended ~~June 30, 2023,~~March 31, 2024, which is largely comprised of ~~$1.7~~$1.5 million used for the repurchase of common stock to satisfy withholding taxes related to the vesting of restricted shares awarded to the Company's employees.

Resources

The Company expects existing cash and cash equivalents will be sufficient to fund its operating expenses and capital expenditure requirements over the next twelve months. 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 its $109 million DOD contract, the~~ scope and timing of future strategic acquisitions, the progress of 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

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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.

A summary of the Company's obligations to make future payments under contracts existing at December 31, ~~2022~~2023 is included in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, of its Annual Report on Form 10-K for the year ended December 31, ~~2022.~~2023. As of ~~June 30, 2023,~~March 31, 2024, there were no significant changes to this information.

Critical Accounting Policies and Estimates

A more detailed review of the Company's critical accounting policies is contained in its Annual Report on Form 10-K for the year ended December 31, ~~2022~~2023 filed with the SEC. No material changes have been made to such critical accounting policies during the ~~six~~three months ended ~~June 30, 2023.~~

March 31, 2024.

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There has been no material change in the Company's assessment of its sensitivity to market risk since its presentation set forth in Item 7A, "Quantitative and Qualitative Disclosures About Market Risk," in its Annual Report on Form 10-K for the year ended December 31, ~~2022.~~2023.

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 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, 2023.~~March 31, 2024. 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, 2023~~March 31, 2024 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 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, 2023~~March 31, 2024 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS

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

Spectrum Patent Litigation

In ~~June~~March 2021, the 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 the Company's patent and that the Company's patent is invalid. In August 2021, the Company amended its complaint to add a second patent to this litigation. Spectrum responded to the Company's amended complaint and asserted counterclaims for inequitable conduct and antitrust violations with respect to one of the patents in the 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~~Appeals on June 8, 2023. The appeal is pending, with oral argument expected in the second half of 2024. Second, the ~~District~~ Court denied Spectrum’s motion to ~~amend~~supplement 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 District Court's denial of its motion to amend. ~~Both parties have filed motions seeking sanctions~~On February 7, 2024, the PTO issued a Final Written Decision regarding the second patent in the ~~District Court. An~~litigation, holding that claims 1, 3-8, 11 and 12 of U.S. Patent No. 11,002,646 B2 are unpatentable. On March 8, 2024, the Company filed a Request for Rehearing by the Director of the PTO of the Final Written Decision. On March 27, 2024, the Company's Request for Rehearing was denied. The Company is considering its appellate options. On September 15, 2023, Spectrum filed a separate petition for inter partes review ~~is currently pending before~~of a third patent, which DNAG did not assert in the District Court. On March 26, 2024, the PTO ~~regarding the second asserted patent.~~issued a Decision Granting Institution of Inter Partes Review and scheduled oral argument for January 14, 2025.

Item 1A. RISK FACTORS

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

~~An Impairment of Goodwill Could Reduce our Earnings.~~2023.

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 market capitalization may suggest that the fair value of 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 decline in our stock price, the significance of the decline, and the duration of time that 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 non-cash impairment charge, which could have a material adverse effect on our consolidated balance sheet, results of operations or our stock price

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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, 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 —


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)
January 1, 2024 - January 31, 2024	59,151	(3)	$	8.19	—	$	11,984,720
February 1, 2024 - February 29, 2024	55,620	(3)	$	7.40	—	$	11,984,720
March 1, 2024 - March 31, 2024	78,707	(3)	$	7.18	—	$	11,984,720
	193,478				—

(1)On August 5, 2008, the Company's Board of Directors approved a share repurchase program pursuant to which 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. 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.None

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Item 6. EXHIBITS


Exhibit Number						Exhibit

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

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 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 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.

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

104						Cover Page from Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in 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.

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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/ Kenneth J. McGrath
Date: ~~August 4, 2023~~May 9, 2024		Kenneth J. McGrath
		Chief Financial Officer
		(Principal Financial Officer)

		/s/Michele M. Anthony
Date: ~~August 4, 2023~~May 9, 2024		Michele M. Anthony
		Senior Vice President, Controller and Chief Accounting Officer
		(Principal Accounting Officer)

2725


	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)


	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)