UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended ~~September 30, 2017.~~

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)


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

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

~~(Registrant’s Telephone Number, Including Area Code)~~

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 ☐

Indicate by check mark whether the Registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ 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 ~~and post~~ such files). Yes ☒x No ☐

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

Large accelerated filer

☐

Accelerated filer

☒x

Non-accelerated filer

~~☐ (Do not check if a smaller reporting company)~~

Smaller reporting company

☐o

Emerging growth company

☐o

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

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

~~Number~~x

As of May 2, 2024, the registrant had 73,959,289 shares of ~~Common Stock,~~common stock, $0.000001 par value ~~$.000001~~ per share, ~~outstanding~~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 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 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:

•Market acceptance of, and the Company's ability to market and sell, its products and services, whether through its internal, direct sales force or third parties;

•Failure of distributors or other customers to meet purchase forecasts, historic purchase levels or minimum purchase requirements for the Company's products;

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

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

•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;

•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;

•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;

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

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

•Inventory levels at distributors and other customers;

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

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

•Reduction or deferral of public funding available to customers;

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

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

•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 the Company's products;

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

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

•The Company's ability to maintain sustained profitability;

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

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

•Volatility of 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;

•The impact of changes in international funding sources and testing algorithms on international sales;

•Adverse movements in foreign currency exchange rates;

•Loss or impairment of sources of capital;

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

•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.

These and other factors that could affect 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 the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2023 filed with the Securities and Exchange

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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 ~~November 3, 2017: 60,648,324 shares.~~

the date of this report and the Company undertakes no duty to update these statements, unless it is required to do so by law. If the Company does update one or more forward-looking statements, no inference should be drawn that it will make updates with respect to other forward-looking statements or that it will make any further updates to those forward-looking statements at any future time.

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

~~PART I. FINANCIAL INFORMATION~~

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PART I. FINANCIAL INFORMATION

	Page No.

Item 1. Financial Statements ~~(unaudited)~~(Unaudited)

Consolidated Balance Sheets at ~~September 30, 2017~~March 31, 2024 and December 31, ~~2016~~202 3		3

Consolidated Statements of ~~Income~~Operations for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2024 and ~~2016~~202 3		4

Consolidated Statements of Comprehensive Income (Loss) for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2024 and ~~2016~~202 3		5

Consolidated Statements of Cash Flows for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2024 and ~~2016~~202 3		6

Notes to the Consolidated Financial Statements		7

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		19	17

Item 3. Quantitative and Qualitative Disclosures About Market Risk		32	21

Item 4. Controls and Procedures		33	21

PART II. OTHER INFORMATION

Item 1. Legal Proceedings		34	22

Item 1A. Risk Factors		34	22

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		34	23

Item 3. Defaults Upon Senior Securities		34	23

Item 4. Mine Safety Disclosures		34	23

Item 5. Other Information		34	23

Item 6. Exhibits		35	24

Signatures		36	25

~~-2-~~

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~~Item 1.~~

~~FINANCIAL STATEMENTS~~

Item 1. FINANCIAL STATEMENTS

ORASURE TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(in thousands, except per share amounts)

   September 30, 2017 December 31, 2016
ASSETS

CURRENT ASSETS:

Cash and cash equivalents
   $ 76,770 $ 107,959
Restricted cash
   1,840 1,831
Short-term investments
   83,372 11,160
Accounts receivable, net of allowance for doubtful accounts of $494 and $484
   28,099 19,827
Inventories
   16,859 11,799
Prepaid expenses
   1,189 1,722
Other current assets
   1,206 2,143


Total current assets
   209,335 156,441
PROPERTY AND EQUIPMENT, net
   21,496 20,033
INTANGIBLE ASSETS, net
   8,972 10,337
GOODWILL
   20,257 18,793
LONG TERM INVESTMENTS
   18,290 —
OTHER ASSETS
   3,909 2,331


   $ 282,259 $ 207,935


LIABILITIES AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES:

Accounts payable
   $ 9,624 $ 4,633
Deferred revenue
   1,186 1,388
Accrued expenses
   15,813 11,314


Total current liabilities
   26,623 17,335


OTHER LIABILITIES
   3,928 2,304


DEFERRED INCOME TAXES
   2,194 2,446


COMMITMENTS AND CONTINGENCIES (Note 7)

STOCKHOLDERS’ EQUITY

Preferred stock, par value $.000001, 25,000 shares authorized, none issued
   —   —
Common stock, par value $.000001, 120,000 shares authorized, 60,631 and 56,001 shares issued and outstanding
   —   —
Additional paid-in capital
   385,978 350,528
Accumulated other comprehensive loss
   (9,638 ) (14,220 )
Accumulated deficit
   (126,826 ) (150,458 )


Total stockholders’ equity
   249,514 185,850


   $ 282,259 $ 207,935


	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.

~~-3-~~

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ORASURE TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF ~~INCOME~~

OPERATIONS

(Unaudited)

(in thousands, except per share amounts)

   Three Months Ended September 30,    Nine Months Ended September 30,
   2017    2016    2017 2016
NET REVENUES:

Product
   $ 41,157    $ 25,460    $ 111,771 $ 78,286
Other
   1,157    6,791    3,265 14,413






   42,314    32,251    115,036 92,699
COST OF PRODUCTS SOLD
   17,670    9,576    44,605 28,626






Gross profit
   24,644    22,675    70,431 64,073






OPERATING EXPENSES:

Research and development
   3,228    3,196    9,536 8,547
Sales and marketing
   7,162    6,428    21,541 22,531
General and administrative
   6,935    6,907    21,777 19,803
Gain on litigation settlement
   —      —      (12,500 ) —






   17,325    16,531    40,354 50,881






Operating income
   7,319    6,144    30,077 13,192
OTHER INCOME (EXPENSE)
   113    498    676 (34 )






Income before income taxes
   7,432    6,642    30,753 13,158
INCOME TAX EXPENSE
   1,669    400    7,121 634






NET INCOME
   $ 5,763    $ 6,242    $ 23,632 $ 12,524






EARNINGS PER SHARE:

BASIC
   $ 0.10    $ 0.11    $ 0.40 $ 0.23






DILUTED
   $ 0.09    $ 0.11    $ 0.39 $ 0.22






SHARES USED IN COMPUTING EARNINGS PER SHARE:

BASIC
   60,090    55,653    58,511 55,549






DILUTED
   62,172    56,530    60,569 56,273


	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.

~~-4-~~

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ORASURE TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(LOSS)

(Unaudited)

(in thousands)

   Three Months Ended September 30, Nine Months Ended September 30,
   2017 2016 2017 2016
NET INCOME
   $ 5,763 $ 6,242 $ 23,632 $ 12,524
OTHER COMPREHENSIVE INCOME

Currency translation adjustments
   2,570 (729 ) 4,882 2,501
Unrealized loss on marketable securities
   (245 ) —   (300 ) —


COMPREHENSIVE INCOME
   $ 8,088 $ 5,513 $ 28,214 $ 15,025


	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.

~~-5-~~

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ORASURE TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(in thousands)

   Nine Months Ended September 30,
   2017 2016
OPERATING ACTIVITIES:

Net income
   $ 23,632 $ 12,524
Adjustments to reconcile net income to net cash provided by operating activities:

Stock-based compensation
   5,213 4,438
Depreciation and amortization
   4,589 4,152
Unrealized foreign currency loss
   (246 ) 75
Deferred income taxes
   (425 ) (205 )
Changes in assets and liabilities

Accounts receivable
   (7,706 ) 3,818
Inventories
   (4,886 ) 1,236
Prepaid expenses and other assets
   1,616 1,186
Accounts payable
   4,593 (125 )
Deferred revenue
   (212 ) (1,829 )
Accrued expenses and other liabilities
   4,193 (90 )


Net cash provided by operating activities
   30,361 25,180


INVESTING ACTIVITIES:

Purchases of investments
   (132,177 ) (22,966 )
Proceeds from maturities and redemptions of investments
   42,613 22,966
Purchases of property and equipment
   (3,462 ) (3,512 )


Net cash used in investing activities
   (93,026 ) (3,512 )


FINANCING ACTIVITIES:

Payments for debt issue costs
   —   (367 )
Proceeds from exercise of stock options
   31,402 894
Repurchase of common stock
   (1,234 ) (3,311 )


Net cash provided by (used in) financing activities
   30,168 (2,784 )


EFFECT OF FOREIGN EXCHANGE RATE CHANGES ON CASH
   1,317 558
NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH
   (31,180 ) 19,442
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, BEGINNING OF PERIOD
   109,790 94,094


CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, END OF PERIOD
   $ 78,610 $ 113,536


SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

Cash paid for income taxes
   $ 4,317 $ 812


Noncash investing activities (accrued property and equipment purchases)
   $ 437 $ 241


Noncash unrealized losses on marketable securities
   $ (300 ) $ —

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.

~~-6-~~

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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.	~~The Company~~

~~We develop, manufacture, market and sell diagnostic products and specimen collection devices using our proprietary technologies, as well as other diagnostic products, including immunoassays and other~~~~in vitro~~ diagnostic tests that are used on other specimen types. Our diagnostic products include tests that are performed on a rapid basis at the point-of-care, tests that are processed in a laboratory, a rapid point-of-care HIV in-home test approved for use in the domestic consumer retail or over-the-counter (“OTC”) market and a rapid point-of-care HIV self-test used in certain international markets. We also manufacture and sell devices used to collect, stabilize, transport and store samples

1. Summary of genetic material for molecular testing in the consumer genetic, clinical genetic, academic, research, pharmacogenomic, personalized medicine, microbiome and animal genetic markets. Lastly, we manufacture and sell medical devices used for the removal of benign skin lesions by cryosurgery, or freezing. Our products are sold in the United States and internationally to various clinical laboratories, hospitals, clinics, community-based organizations, public health organizations, research and academic institutions, distributors, government agencies, physicians’ offices, commercial and industrial entities, retail pharmacies and mass merchandisers, and to consumers over the internet.

2.	~~Summary of Significant Accounting Policies~~

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 ~~subsidiary,~~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 ~~subsidiary,~~subsidiaries, unless otherwise indicated.

The ~~accompanying consolidated~~unaudited financial statements, ~~are unaudited and,~~ in the opinion of management, include all adjustments (consisting only of normal and recurring adjustments) necessary for a fair presentation of ~~our~~the Company's financial position and results of operations for these interim periods. These financial statements should be read in conjunction with the financial statements and notes thereto included in ~~our~~the Company's Annual Report on Form 10-K for the fiscal year ended December 31, ~~2016.~~2023. Results of operations for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2024 are not necessarily indicative of the results of operations expected for the full year.

~~Use~~

Summary of ~~Estimates~~.~~The preparation 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, 2023 that have had a material impact on the consolidated financial statements ~~in conformity with accounting principles generally accepted in the United States of America requires management to make estimates~~ and assumptions about future events. These estimates and underlying assumptions affect the amounts of assets and liabilities reported, disclosures about contingent assets and liabilities, and reported amounts of revenues and expenses. Such estimates include the valuation of accounts receivable and inventories and assumptions utilized in impairment testing for intangible assets and goodwill,related notes except as well as calculations related to contingencies, accruals, and performance-based compensation expense, among others. These estimates and assumptions are based on management’s best estimates and judgment. Management evaluates its estimates and assumptions on an ongoing basis, using historical experience and other factors, which management believes to be reasonable under the circumstances, including the current economic environment. As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates. Changes in those estimates resulting from continuing changes in the economic environment and other factors will be reflected in the financial statements in those future periods.

discussed herein.

Cash Equivalents & Short-Term Investments.~~We consider~~

The Company considers all investments in debt securities to be available-for-sale securities. These securities ~~are comprised~~consist of guaranteed investment certificates ~~and corporate bonds~~purchased with ~~purchased~~ 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.

~~-7-~~

The following is a summary of ~~our~~the Company's available-for-sale securities ~~at September 30, 2017 and~~(in thousands):


	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
March 31, 2024
Guaranteed investment certificates	$	16,627	$	—	$	—	$	16,627

Total	$	16,627	$	—	$	—	$	16,627

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

Less than one year	$	16,627	$	—	$	—	$	16,627
Greater than one year	$	—	$	—	$	—	$	—

The Company had no available-for-sale securities as of December 31, ~~2016:~~

   Amortized
Cost    Gross
Unrealized
Gains    Gross
Unrealized
Losses Fair Value
September 30, 2017

Guaranteed investment certificates
   $ 16,039    $ —      $ —   $ 16,039
Corporate bonds
   85,923    —      (300 ) 85,623






Total available-for-sale securities
   $ 101,962    $ —      $ (300 ) $ 101,662






December 31, 2016

Guaranteed investment certificates
   $ 11,160    $ —      $ —   $ 11,160






Total available-for-sale securities
   $ 11,160    $ —      $ —   $ 11,160






At September 30, 2017 maturities of our available-for-sale securities were as follows:

Less than one year
   $ 83,582    $ —      $ (210 ) $ 83,372






Greater than one year
   $ 18,380    $ —      $ (90 ) $ 18,290

2023.

Fair Value of Financial Instruments.

As of ~~September 30, 2017~~March 31, 2024 and December 31, ~~2016,~~2023, the carrying values of cash and cash equivalents, ~~restricted cash,~~ accounts receivable, ~~and~~ 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

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

All of ~~our available-for-sale securities~~the Company's guaranteed investment certificates are measured as Level 1 instruments as of ~~September 30, 2017 and December~~March 31, ~~2016.~~

2024.

Included in cash and cash equivalents at ~~September 30, 2017~~March 31, 2024 and December 31, ~~2016,~~2023 was ~~$33,633~~$114.1 million and ~~$83,704~~$112.7 million, respectively, invested in ~~government~~ money market funds. These money market funds ~~hold~~have investments in U.S. government securities and are measured as Level 1 instruments.

We Included in cash and cash equivalents at March 31, 2024 and December 31, 2023 was $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 ~~our~~its Board of Directors. The assets of the plan are held in the name of the Company at a third-party financial institution. Separate accounts are maintained for each participant to reflect the amounts deferred by the participant and all earnings and losses on those deferred amounts. The assets of the plan are held in mutual funds and ~~Company~~company stock. The fair value of the plan assets as of ~~September 30, 2017~~both March 31, 2024 and December 31, ~~2016~~2023 was ~~$3,670 and $1,980, 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 ~~other~~both current assets and noncurrent assets with the same amount included in accrued expenses and other noncurrent liabilities in the accompanying consolidated balance sheets.

~~In 2017, we purchased certificates~~

Foreign Currency 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 ~~deposit (“CDs”)~~operations were $0.2 million and $(0.05) million for the three months ended March 31, 2024 and 2023, respectively.

Impairment of Long-Lived Assets

Long-lived assets, which include property, plant and equipment, definite-lived intangible assets, as well as right-of-use assets (ROU assets) of operating and 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 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 ~~commercial bank.~~ reasonable period of time.

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The ~~CDs bear interest at rates ranging~~Company identified a triggering event to test for the recoverability of all the property, plant, and equipment and ROU assets of both the Diversigen and Novosanis subsidiaries during the three months ended March 31, 2024, given the Company's decision to initiate a strategic plan to transition away from ~~0.86% to 0.94%~~the microbiome molecular sequencing services business and ~~mature periodically through January 15, 2018.~~close its Belgian operations. The Company performed an undiscounted cash flow analysis and determined the carrying values of the ~~CDs~~

~~-8-~~

approximate their fair value. These CDs serve as collateral for certain standby letters of credit and are reported as restricted cash on the accompanying consolidated balance sheets. Also see Note 7 – Commitments and Contingencies.

~~Inventories~~.~~Inventories are stated at the lower of cost or net realizable value determined on a first-in, first-out basis and are comprised of the following:~~

   September 30,
2017    December 31,
2016
Raw materials
   $ 8,252    $ 5,399
Work in process
   1,746    1,034
Finished goods
   6,861    5,366




   $ 16,859    $ 11,799

~~Property and Equipment~~.Property and equipment are stated at cost. Additions or improvements are capitalized, while repairs and maintenance are charged to expense. Depreciation and amortization are provided using the straight-line method over the estimated useful lives of the related assets. Buildings are depreciated over twenty to forty years, while computer equipment, machineryproperty, plant and equipment and ~~furniture~~ROU assets could not be recovered through the sum of the undiscounted future cash flows and ~~fixtures~~were impaired. During the three months ended March 31, 2024 the Company recognized aggregate pre-tax impairment charges of $1.2 million and $0.3 million to its operating and finance ROU assets, respectively. These charges are depreciated over two to ten years. Building improvements are amortized over their estimated useful lives. When assets are sold, retired, or discarded, the related property amounts are relieved from the accounts, and any gain or loss is recordedreported in the Company's consolidated ~~statements~~statement of ~~income. Accumulated depreciation of property and equipment as of September 30, 2017 and December 31, 2016 was $38,689 and $36,067, respectively.~~

~~Intangible Assets~~. Intangible assets consist of a customer list, patents and product rights, acquired technology and tradenames. Patents and product rights consist of costs associated with the acquisition of patents, licenses, and product distribution rights. Intangible assets are amortized using the straight-line method over their estimated useful lives of seven to fifteen years. Accumulated amortization of intangible assets as of September 30, 2017 and December 31, 2016 was $18,129 and $15,197, respectively.operations. The ~~change in intangibles from $10,337 as of December 31, 2016 to $8,972 as of September 30, 2017 is a result of $1,984 in amortization expense and $619 in foreign currency translation gains.~~

~~Goodwill~~.~~Goodwill represents the excess~~impact of the ~~purchase price we paid over~~impairments on the fair value of the net tangible and identifiable intangible assets acquired and liabilities assumed in our acquisition of DNAG in August 2011. Goodwill is not amortized but rather is tested annually for impairment or more frequently if we believe that indicators of impairment exist. Current U.S. generally accepted accounting principles permit us to make a qualitative evaluation about the likelihood of goodwill impairment. If we conclude that it is more likely than not that the carrying value of a reporting unit is greater than its fair value, then we would be required to recognize an impairment chargeCompany's property, plant, equipment for the ~~amount~~three months ended March 31, 2024 is discussed further in Note 4.

Accumulated Other Comprehensive Loss

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


	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

In March 2024, the ~~carrying amount exceeds~~Financial Accounting Standards Board (FASB) issued Accounting Standard Update ("ASU") No. 2024-01, Topic 718, Compensation-Stock Compensation. The purpose of this update was to provide illustrative examples to demonstrate how an entity should apply guidance to determine whether profits interests and similar awards should be accounted for in accordance with Topic 718. For public business entities, the ~~reporting unit’s fair value, provided~~amendments in this ASU are effective for fiscal years beginning after December 15, 2024, and interim periods within those fiscal periods. The amendments may be applied prospectively or retrospectively, and early adoption is permitted. Management is evaluating the ~~impairment charge does not exceed~~impact on the ~~total amount of goodwill allocated to~~Company's consolidated financial statements.

2. Government Capital Contracts

In September 2021, the ~~reporting unit.~~

We performed our last annual impairment assessment as of July 31, 2017 utilizing a qualitative evaluation and concluded that it was more likely than not that the fair value of our DNAG reporting unit is greater than its carrying value. We believe we have made reasonable estimates and assumptions to calculate the fair value of our reporting unit. If actual future results are not consistent with management’s estimates and assumptions, we may have to take an impairment charge in the future related to our goodwill. Future impairment tests will continue to be performed annually in the fiscal third quarter, or sooner if a triggering event occurs. As of September 30, 2017, we believe no indicators of impairment exist.

~~The increase in goodwill from $18,793 as of December 31, 2016 to $20,257 as of September 30, 2017 is a result of foreign currency translation.~~

~~Revenue Recognition~~. We recognize product revenues when there is persuasive evidence that an arrangement exists, the price is fixed or determinable, title has passed and collection is reasonably assured. Product revenues are recorded net of allowances for any discounts or rebates. Other than for sales of our OraQuick^® ~~In-Home HIV test to the retail trade, we do not grant price protection or product return rights to our customers except for warranty~~

~~-9-~~

~~returns. Historically, returns arising from warranty issues have been infrequent and immaterial. Accordingly, we expense warranty returns as incurred.~~

~~Our net revenues recorded on sales of the OraQuick~~^® In-Home HIV test represent total gross revenues, less an allowance for expected returns, and customer allowances for cooperative advertising, discounts, rebates, and chargebacks. The allowance for expected returns is an estimate established by management, based upon currently available information, and is adjusted to reflect known changes in the factors that impact this estimate. Other customer allowances are at contractual rates and are recorded as a reduction of gross revenue when recognized in our consolidated statements of income.

We record shipping and handling charges billed to our customers as product revenue and the related expense as cost of products sold. Taxes assessed by governmental authorities, such as sales or value-added taxes, are excluded from product revenues.

~~In June 2014, we~~Company entered into ~~a Master Program Services and Co-Promotion Agreement with AbbVie Bahamas Ltd., a wholly-owned subsidiary of AbbVie Inc. (“AbbVie”), to co-promote our OraQuick~~^® ~~HCV test~~an agreement for $109.0 million in the United States. On June 30, 2016, we mutually agreed to terminate our agreement with AbbVie effective December 31, 2016. Accordingly, during the third quarter and first nine months of 2017 we did not record any revenue from this co-promotion agreement. During the third quarter and first nine months of 2016, $6,114 and $12,837, respectively, of exclusivity revenue was recognized and recorded as other revenue in our consolidated statements of income.

~~In June 2015, we were awarded a grant for up to $10,400 in total~~ funding from the U.S. Department of Defense (the "DOD"), in coordination with the Department of Health and Human Services, ~~(“HHS”) Office~~to build additional manufacturing capacity in the United States for its InteliSwab® COVID-19 Rapid Tests as part of the ~~Assistant Secretary for Preparedness~~nation’s pandemic preparedness plan. In accordance with the milestone payment schedule, 15% of the total was not billed and ~~Response’s Biomedical Advanced Research~~funded until the completion of the final validation testing, which occurred in October 2023. The Company began receiving funds from the DOD in January 2022 and ~~Development Authority (“BARDA”) related to our OraQuick~~^® ~~Ebola rapid antigen test. The three-year, multi-phased grant includes an initial commitment~~has received $109.0 million as of ~~$1,800 and options for up to an additional $8,600 to fund certain clinical and regulatory activities.~~December 31, 2023. In ~~September 2015 and July 2017, BARDA exercised an option to provide $7,200 and $1,330, respectively, in additional funding for our OraQuick~~^® Ebola test. Amounts related to this grant are recorded as other revenue in our consolidated statements of income as the activities are being performed and the related costs are incurred. During the third quarter and first nine months of 2017, $386 and $1,260, respectively, was recognized in connection with the completion of 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 ~~grant. During the third quarter and first nine months~~type of ~~2016, $474 and $1,373 respectively, was recognized in connection with this grant.~~

In August 2016, we were awarded a contract for up to $16,600 in total funding from BARDA related to our rapid Zika test. The six-year, multi-phased contract includes an initial commitment of $7,000 and options for up to an additional $9,600 to fund the evaluation of additional product enhancements, and clinical and regulatory activities. In May 2017, BARDA exercised an option to provide $2,600 in additional funding for our rapid Zika test.transaction. Funding received ~~under this contract is recorded as other revenue~~ in ~~our consolidated statements of income as the activities are being performed and the related~~relation to capital-related costs are incurred. During the third quarter and first nine months of 2017, $553 and $1,787, respectively, was recognized as other revenue in connection with this grant. During the third quarter and first nine months of 2016, $203 was recognized as other revenue in connection with this grant.

~~In June 2017, we entered into a four-year Charitable Support Agreement with the Bill & Melinda Gates Foundation (“Gates Foundation”) that will enable us to offer our OraQuick~~^® HIV self-test at an affordable price in 50 developing countries with funding from the Gates Foundation. The funding will consist of support payments tied to volume of product sold by us and reimbursement of certain related costs. The funding from the Gates Foundation will be in an aggregate amount not to exceed $20,000 over the four-year term or $6,000 each year of the agreement. Funding received under this agreement in the form of support paymentsincurred for ~~product purchases~~government contracts is recorded as a ~~component~~reduction to the cost of ~~product revenue. During the third quarter~~property, plant and ~~first nine months of 2017, $458 of support payments were recognized in product revenue in connection with this agreement. Funding received~~equipment and reflected within investing activities in the ~~form of reimbursement of certain related costs is recorded as other revenue in our~~ consolidated statements of ~~income. During~~cash flows; and associated unpaid liabilities and government proceeds receivable are considered non-cash changes in such balances within the ~~third quarter and first nine months~~operating section of ~~2017, $218 was recognized in other revenue in connection with this agreement.~~

~~Customer Sales Returns and Allowances~~. ~~We do not grant return rights to our customers for any product, except for our OraQuick~~^® ~~In-Home HIV test. Accordingly, we have recorded an estimate of expected returns as a reduction of gross OraQuick~~^® ~~In-Home HIV product revenues in our~~the consolidated statements of cash flows.

Amounts earned for the Company's guaranteed profit which covered project management costs were recognized straight-line in other income over the term of the government contract. The Company recognized no such income during the three months ended March 31, 2024 and $0.6 million during the three months ended March 31, 2023.

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

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recognized no such costs during the three months ended March 31, 2024 and $1.1 millionduring the three months ended 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 (in thousands):


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

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

3. Inventories (in thousands)


	March 31,		December 31,
	2024		2023
Raw materials	$	17,621	$	20,727
Work in process	1,340		1,900
Finished goods	24,219		24,987
	$	43,180	$	47,614

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


	March 31,		December 31,
	2024		2023
Land	$	1,118	$	1,118
Buildings and improvements	35,013		34,606
Machinery and equipment	62,308		64,156
Computer equipment and software	17,681		17,739
Furniture and fixtures	3,468		3,748
Construction in progress	9,341		9,196
	128,929		130,563
Accumulated depreciation	(86,332)		(85,143)
	$	42,597	$	45,420

During the three months ended 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. As a result of this decision, the Company determined that the carrying value of the equipment was not recoverable and recorded an aggregate pre-tax asset impairment charge of $1.1 million during the three months ended 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 statements of operations.

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5. Accrued Expenses and Other Current Liabilities (in thousands)


	March 31,		December 31,
	2024		2023
Payroll and related benefits	$	5,475	$	14,654
Professional fees	1,980		2,827
Sales tax payable	1,268		1,245
Other	3,992		3,984
	$	12,715	$	22,710

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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 ~~estimate reflects our historical sales experience~~was accounted for pursuant to ~~retailers and consumers,~~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 ~~well as other retail factors, and is reviewed regularly to~~

~~-10-~~

~~ensure that it reflects potential product returns.~~ follows (in thousands):


	For the Three Months Ended March 31,
	2024		2023
Cost of products and services sold	$	—	$	35
Research and development	—		566
Sales and marketing	—		1,448
General and administrative	—		586
	$	—	$	2,635

As of March 31, 2024 the Company had $0.1 million accrued and had paid $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, ~~2017~~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, ~~2016,~~2024.

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7. Revenues

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


	Three Months Ended March 31,
		2024		2023
COVID-19 (1)		$	23,128	$	118,409
HIV		13,380		13,904
Molecular Sample Management Solutions (2)		10,822		12,942
HCV		3,000		3,186
Risk assessment testing (3)		2,080		2,628
Molecular Services		873		1,379
Other product and service revenues		496		466
Net product and services revenues		53,779		152,914
Non-product and services revenues (4)		353		2,049
Net revenues		$	54,132	$	154,963

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

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

(3)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 reserve for sales returns and allowances was $186 and $217, respectively. If actual product returns differ materially from our reserve amount, or if a determination is made that this product’s distribution would be discontinued in whole or in part by certain retailers, then we would need to adjust our reserve. Should the actual level of product returns vary significantly from our estimates, our operating and financial results could be materially affected.

~~Deferred Revenue~~. ~~We record deferred revenue when funds are received prior to the recognition~~location of the ~~associated revenue. Deferred revenue as of September 30, 2017 and December 31, 2016 was comprised of~~ customer ~~prepayments of $1,186 and $1,388, respectively.~~

(in thousands):

Three Months Ended March 31,
2024 2023
United States $ 45,211 $ 145,019
Europe 1,602 1,852
Other regions 7,319 8,092
$ 54,132 $ 154,963

Customer and Vendor Concentrations. ~~One of our customers~~ At March 31, 2024, one non-commercial customer accounted for ~~21%~~29% of ~~our~~the Company's consolidated accounts receivable. The same non-commercial customer accounted for 40% of the Company's consolidated accounts receivable as of ~~September 30, 2017. Another~~December 31, 2023. The same non-commercial customer also accounted for ~~14%~~40% and ~~15%~~78% of our accounts receivable as of September 30, 2017 and December 31, 2016, respectively. One of our customers accounted for approximately 25% and 19% of our net consolidated revenues for the three and nine months ended September 30, 2017, respectively. For the three and nine months ended September 30, 2016, this same customer accounted for approximately 19% and 14% of our net consolidated revenues, respectively. Another customer accounted for 11% and 10% of our net consolidated revenues for the three months ended March 31, 2024 and ~~nine months ended September 30, 2017,~~2023, respectively. This customer notified us in October 2017 that our supply contract for HCV rapid test will not be renewed at this time. It is unclear whether this customer will fulfill the remaining $4 million of purchase obligations under our existing contract.

The Company currently ~~purchase~~purchases certain products and critical components of ~~our~~its products from sole-supply vendors. If these vendors are unable or unwilling to supply the required components and products, wethe Company could be subject to increased costs and substantial delays in the delivery of ~~our~~its products to ~~our~~its customers. ~~Also, our subsidiary, DNAG, uses two third-party~~Third-party suppliers toalso manufacture ~~its~~certain products. ~~Our~~The Company's inability to have a timely supply of any of these components and products could have a material adverse effect on ~~our~~its business, as well as ~~our~~its financial condition and results of operations.

~~Earnings~~

Deferred Revenue. The Company records deferred revenue when funds are received prior to the recognition of the associated revenue. Deferred revenue as of March 31, 2024 and December 31, 2023 included customer prepayments of $1.3 million and $1.2 million, respectively. Deferred revenue as of March 31, 2024 and December 31, 2023 also included $0.3 million and $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 (benefit) are as follows (in thousands):
Three Months Ended March 31,
2024 2023
State income tax expense (benefit) $ (230) $ (225)
Foreign income tax expense (benefit) 212 —
Foreign withholding tax — —
$ (18) $ (225)
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 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 liability as of March 31, 2024 and at December 31, 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 March 31, 2024 and December 31, 2023.

9. Income (Loss) Per Share.

Basic ~~earnings~~income (loss) per share is computed by dividing net income (loss) by the weighted-average number of shares of common stock outstanding during the period. Diluted earnings (loss) per share is computed in a manner similar to basic earnings (loss) per share except that the ~~weighted average~~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.

~~The~~ Basic and dilutive computations of ~~basic and diluted earnings~~net loss per share are the same in periods in which a net loss exists as ~~follows:~~

   Three Months    Nine Months
   Ended September 30,    Ended September 30,
   2017    2016    2017    2016
Net income
   $ 5,763    $ 6,242    $ 23,632    $ 12,524








Weighted average shares of common stock outstanding:

Basic
   60,090    55,653    58,511    55,549
Dilutive effect of stock options, restricted stock, and performance units
   2,082    877    2,058    724








Diluted
   62,172    56,530    60,569    56,273








Earnings per share:

Basic
   $ 0.10    $ 0.11    $ 0.40    $ 0.23








Diluted
   $ 0.09    $ 0.11    $ 0.39    $ 0.22

~~-11-~~

the dilutive effects of excluded items would be anti-dilutive.

For the ~~three-month periods~~three months ended ~~September 30, 2017 and 2016,~~March 31, 2024, outstanding common stock options, unvested restricted stock, and unvested performance stock units representing 81,697 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 ~~2,130~~unvested performance stock units representing 2,237 shares, respectively, were excluded from the computation of diluted earnings per share as their inclusion would have been anti-dilutive. For the nine months ended September 30, 2017 and 2016, outstanding common stock options, unvested restricted stock and unvested performance units representing 238 and 2,837 shares, respectively, were similarly excluded from the computation

Table of ~~diluted earnings per share.~~

~~Foreign Currency Translation~~~~. The assets and liabilities of our foreign operations are translated into U.S. dollars at current exchange rates as~~Contents

10. Stockholders’ Equity

Reconciliation of the ~~balance sheet date, and revenues and expenses are translated at average exchange rates~~changes in stockholders' equity for ~~the period. Resulting translation adjustments are reflected in accumulated other comprehensive loss, which is a separate component of stockholders’ equity.~~

Transaction gains and losses resulting from exchange rate changes on transactions denominated in currencies other than functional currency are included in our consolidated statements of income in the period in which the change occurs. Net foreign exchange (losses) gains resulting from foreign currency transactions that are included in other income (expense) in our consolidated statements of income were $(638) and $84 for the three months ended ~~September 30, 2017~~March 31, 2024 and ~~2016, respectively. Net foreign exchange losses were $(1,256)~~2023 :


	Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Total
	Shares	Amount
Balance at December 31, 2023	73,528	$	—	$	529,543	$	(14,941)	$	(83,931)	$	430,671
Common stock issued upon exercise of options	32	—		214		—		—		214
Vesting of restricted stock and performance stock units	593	—		—		—		—		—
Purchase and retirement of common shares	(194)	—		(1,462)		—		—		(1,462)
Stock-based compensation	—	—		2,968		—		—		2,968
Net loss	—	—		—		—		(3,584)		(3,584)
Currency translation adjustments	—	—		—		(2,556)		—		(2,556)
Unrealized gain on marketable securities	—	—		—		—		—		—
Balance at March 31, 2024	73,959	$	—	$	531,263	$	(17,497)	$	(87,515)	$	426,251


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

11. Commitments and ~~$(564) for the nine months ended September 30, 2017 and 2016, respectively.~~

~~Accumulated Other Comprehensive Income (Loss)~~. We classify items of other comprehensive income (loss) by their nature and disclose the accumulated balance of other comprehensive loss separately from accumulated deficit and additional paid-in capital in the stockholders’ equity section of our consolidated balance sheet.

We have defined the Canadian dollar as the functional currency of our Canadian subsidiary, DNAG, and as such, the results of its operations are translated into U.S. dollars, which is the reporting currency of the Company. Accumulated other comprehensive loss at September 30, 2017 consists of $9,338 of currency translation adjustments and $300 of net unrealized losses on marketable securities.

~~Recent Accounting Pronouncements~~.~~In May 2014, the Financial Accounting Standards Board (“FASB”) issued converged guidance on recognizing revenue in contracts with customers, ASU 2014-09,~~~~Revenue from Contracts with Customers~~. The intent of the new standard is to improve financial reporting and comparability of revenue globally. The core principle of the standard is for a company to recognize revenue in a manner that depicts the transfer of goods or services to customers in an amount that reflects the consideration which the company expects to receive in exchange for those goods or services. The standard will be effective for the first interim period within annual reporting periods beginning after December 15, 2017, at which point we plan to adopt the standard.

The FASB allows two adoption methods under ASU 2014-09. We plan to adopt the standard using the “modified retrospective method.” Under that method, we will apply the rules to all contracts existing as of January 1, 2018, recognizing in beginning retained earnings an adjustment for the cumulative effective of the change and providing additional disclosures comparing results to those under the previous accounting standard.

Upon initial evaluation, we believe the key changes in the standard that impact our revenue recognition relate to the allocation of the transaction price to performance obligations related to our drug testing kits. This revenue stream amounts to less than 1% of total consolidated revenues. We will continue to evaluate the impact that the adoption of ASU 2014-09 will have on our consolidated financial statements and related disclosures, but do not anticipate the adoption will have a material impact on our financial results.

~~In July 2015, the FASB issued ASU 2015-11,~~~~Simplifying the Measurement of Inventory~~, which requires an entity that uses the first-in, first-out method for inventory measurement to report inventory cost at the lower of cost and net realizable value versus the current measurement principle of lower of cost or market. The ASU requires prospective adoption for inventory measurements for fiscal years beginning after December 15, 2016. We adopted ASU 2015-11 on January 1, 2017. The adoption of this standard did not have a material impact on our consolidated financial statements and related disclosures.

~~In February 2016, the FASB issued ASU 2016-02,~~~~Leases~~, which requires entities to begin recording assets and liabilities from leases on the balance sheet. The new guidance will also require significant additional disclosures about the amount, timing and uncertainty of cash flows from leases. The standard will be effective for the first

~~-12-~~

interim period within annual reporting periods beginning after December 15, 2018, using a modified retrospective approach. Early adoption is permitted. We are evaluating the effect that ASU 2016-02 may have on our consolidated financial statements and related disclosures.

~~In March 2016, the FASB issued authoritative guidance under ASU 2016-09,~~~~Compensation-Stock Compensation (Topic 718) Improvements to Employee Share-Based Payment Accounting~~. ASU 2016-09 provides for simplification of several aspects of the accounting for share-based payment transactions, including income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. We adopted ASU 2016-09 on January 1, 2017. Since we have a full valuation allowance against our U.S. net deferred tax assets, the adoption of this standard for recognition of the tax effect of deductions for employee share awards in excess of compensation costs (“windfall”) did not have a material impact on our consolidated financial statements and related disclosures. See Note 6 – Income Taxes, for additional information. Should our full valuation allowance be reversed in future periods, the adoption of this new guidance will introduce more volatility in the calculation of our effective tax rate, depending on the Company’s share price at exercise or vesting of share-based awards as compared to grant date. The other provisions of ASU 2016-09 did not have a material impact on our consolidated financial statements and related disclosures.

~~In August 2016, the FASB issued ASU 2016-15,~~~~Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments~~, which provides guidance related to cash flows presentation and is effective for annual reporting periods beginning after December 15, 2017, subject to early adoption. The majority of the guidance in ASU 2016-15 is consistent with our current cash flow classifications and we do not expect the adoption of this standard will have a material impact on our consolidated financial statements.

~~In January 2017, the FASB issued ASU 2017-04,~~~~Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment~~, which requires an entity to no longer perform a hypothetical purchase price allocation to measure goodwill impairment. Instead, impairment will be measured using the difference between the carrying amount and the fair value of the reporting unit. This update will be effective for annual and interim periods in fiscal years beginning after December 15, 2019. Early adoption is permitted. We adopted ASU 2017-04 in the second quarter of 2017. The adoption of this standard did not have a material impact on our consolidated financial statements and related disclosures.

~~In March 2017, the FASB issued ASU 2017-08,~~~~Receivables-Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities~~, which shortens the premium amortization period for purchased non-contingently callable debt securities. Shortening the amortization period is generally expected to more closely align the interest income recognition with the expectations incorporated in the market pricing on the underlying securities. This ASU is effective for annual and interim periods in fiscal years beginning after December 15, 2018. Early adoption is permitted. We are evaluating the effect that ASU 2017-08 may have on our consolidated financial statements and related disclosures.

3.	~~Accrued Expenses~~

   September 30,
2017    December 31,
2016
Payroll and related benefits
   $ 8,684    $ 7,685
Income taxes payable (receivable)
   3,303    (39 )
Professional fees
   688    982
Royalties
   659    715
Other
   2,479    1,971




   $ 15,813    $ 11,314

4.	~~Credit Facility~~

~~-13-~~

closing date, that the lender, at its election, provide up to $5,000 of additional revolving commitments. Obligations under the Credit Agreement are secured by a first priority security interest in certain eligible accounts receivable, 65% of the equity of our subsidiary, DNAG, and certain related assets. There were no borrowings outstanding under the Credit Agreement at September 30, 2017 and December 31, 2016.

Borrowings under the Credit Agreement are subject to compliance with borrowing base limitations tied to eligibility of accounts receivable. Interest under the Credit Agreement is payable at the London Interbank Offered Rate for one, two, three or six-month loans, as selected by the Company, plus 2.50% per year. The Credit Agreement is subject to an unused line fee of 0.375% per year on the unused portion of the commitment under the Credit Agreement during the revolving period. The maturity date of the Credit Agreement is September 30, 2019.

In connection with the Credit Agreement, under certain circumstances, we must comply with a minimum fixed charge coverage ratio of 1.10 to 1.00, measured as of the last day of each fiscal month and for the twelve-fiscal month period ending on such date. As of September 30, 2017 and December 31, 2016, we were in compliance with all applicable covenants in the Credit Agreement.

5.	~~Stockholders’ Equity~~

~~Stock-Based Awards~~

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

Total compensation cost related to stock options for the three months ended September 30, 2017 and 2016 was $547 and $646, respectively. Total compensation cost related to stock options for the nine months ended September 30, 2017 and 2016 was $1,554 and $2,033, respectively. Net cash proceeds from the exercise of stock options were $31,402 and $894 for the nine months ended September 30, 2017 and 2016, respectively. As a result of the Company’s net operating loss carryforward position, no actual income tax benefit was recognized in the consolidated statements of income from stock option exercises during these periods.

Compensation cost of $667 and $736 related to restricted shares was recognized during the three months ended September 30, 2017 and 2016, respectively. Compensation cost of $2,022 and $2,137 related to restricted shares was recognized during the nine months ended September 30, 2017 and 2016, respectively. In connection with the vesting of restricted shares during the nine months ended September 30, 2017 and 2016, we purchased and immediately retired 122 and 117 shares with aggregate values of $1,234 and $651, respectively, in satisfaction of minimum tax withholding obligations.

Commencing in 2016, we granted performance-based restricted stock units (“PSUs”) to certain executives. Vesting of these PSUs is dependent upon achievement of performance-based metrics during a one-year or three-year period, from the date of grant. Assuming achievement of each performance-based metric, the executive must also remain in our service for three years from the grant date. Performance during the one-year period will be based on a one-year earnings per share target. If the one-year target is achieved, the PSUs will then vest three years from grant date. Performance during the three-year period will be based on achievement of a three-year compound annual growth rate for consolidated product revenues. If the three-year target is achieved, the corresponding PSUs will then vest three years from grant date. PSUs are converted into shares of our common stock once vested. Upon grant of the PSUs, we recognize compensation expense related to these awards based on assumptions as to what percentage of each target will be achieved. The Company evaluates these assumptions on a quarterly basis and adjusts compensation expense related to these awards, as appropriate. Compensation cost of $368 and $114 related to PSUs

~~-14-~~

was recognized during the three months ended September 30, 2017 and 2016, respectively. Compensation cost of $1,637 and $268 related to PSUs was recognized during the nine months ended September 30, 2017 and 2016, respectively.

~~Stock Repurchase Program~~

On August 5, 2008, our Board of Directors approved a share repurchase program pursuant to which we are permitted to acquire up to $25,000 of our outstanding common shares. No shares were purchased and retired during the nine months ended September 30, 2017. During the nine months ended September 30, 2016, we purchased and retired 423 shares of common stock at an average price of $6.29 per share for a total cost of $2,660 under this share purchase agreement.

6.	~~Income Taxes~~

During the three and nine months ended September 30, 2017, we recorded tax expense of $1,669 and $7,121, respectively. During the three and nine months ended September 30, 2016, we recorded tax expense of $400 and $634, respectively.

Tax expense reflects taxes due to state and Canadian taxing authorities and the tax effects of temporary differences between the basis of assets and liabilities recognized for financial reporting and tax purposes, and net operating loss and tax credit carryforwards. The significant components of our total deferred tax liability as of September 30, 2017 relate to the tax effects of the basis difference between the intangible assets acquired in the DNAG acquisition for financial reporting and tax purposes. Tax expense in the first nine months of 2017 reflects an increase in earnings and additional Canadian taxes due as a result of the $12,500 gain from the settlement of our patent infringement and breach of contract litigation against Ancestry.com DNA LLC and its contract manufacturer.

In 2008, we established a full valuation allowance against our U.S. deferred tax asset. Management believes the full valuation allowance is still appropriate as of both September 30, 2017 and December 31, 2016 since the facts and circumstances necessitating the allowance have not changed. As a result, no U.S. federal or state deferred income tax expense or benefit was recorded for the three and nine-month periods ended September 30, 2017 and 2016.

The new accounting guidance under ASU 2016-09 allows for the recognition of excess tax benefits regardless of whether the deduction reduces taxes payable. On January 1, 2017, we recorded a cumulative-effect adjustment to retained earnings of $3,391 to recognize the increase in our net operating loss carryforwards from the cumulative excess tax benefits not recognized in periods prior to January 1, 2017. A corresponding $3,391 increase to our valuation allowance associated with this tax benefit was also recorded to retained earnings thereby resulting in a net impact to retained earnings of $0.

7.	~~Commitments and Contingencies~~

~~Standby Letters of Credit~~

We established standby letters of credit in the aggregate amount of $1,840, naming international customers as the beneficiaries. These letters of credit were required as a performance guarantee of our obligations under our product supply contracts with those customers and are collateralized by certificates of deposit maintained at a commercial bank.

Contingencies

Litigation

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

~~-15-~~

8.	~~Business Segment Information~~

~~We operate our business within two reportable segments: our “OSUR” business, which consists of~~

In March 2021, the development, manufacture and sale of diagnostic products, specimen collection devices and medical devices; and our molecular collection systems or “DNAG” business, which primarily consists of the manufacture, development and sale of oral fluid collection devices that are used to collect, stabilize and store samples of genetic material for molecular testing. OSUR revenues are derived primarily from products soldCompany 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 internationally to various clinical laboratories, hospitals, clinics, community-based organizations, public health organizations, distributors, government agencies, physicians’ offices, commercial and industrial entities, retail pharmacies and mass merchandisers, and to consumers over the internet. OSUR also derives other revenues, including exclusivity payments for co-promotion rights and other licensing and product development activities. DNAG revenues result primarily from products sold into the commercial market which consists of customers engaged in consumer genetics, clinical genetic testing, pharmacogenomics, personalized medicine, microbiome, animal genetic testing and research. DNAG products are also sold into the academic research market, which consists of research laboratories, universities and hospitals.

~~We organized our operating segments according~~by Spectrum infringe a patent held by DNAG. Spectrum filed an answer to the ~~nature~~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 ~~products included~~patents in ~~those segments. The accounting policies~~the litigation and subsequently filed a request for review of the ~~segments~~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 appealed the ~~same as those described~~grant of summary judgment to the Court of Appeals on June 8, 2023. The appeal is pending, with oral argument expected in the second half of 2024. Second, the Court denied Spectrum’s motion to supplement its allegations of alleged antitrust violations, finding that if such an amendment were allowed,

Table of Contents

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 ~~significant accounting policies (see Note 2). We evaluate performance~~its motion to amend. On February 7, 2024, the PTO issued a Final Written Decision regarding the second patent in the litigation, holding that claims 1, 3-8, 11 and 12 of our operating segments based on revenue and operating income. We do not allocate interest income, interest expense, other income, other expenses or income taxes to our operating segments. Reportable segments have no inter-segment revenues and inter-segment expenses have been eliminated.

~~The following table summarizes operating segment information~~U.S. Patent No. 11,002,646 B2 are unpatentable. On March 8, 2024, the Company filed a Request for Rehearing by the ~~three and nine months ended September 30, 2017 and 2016, and asset information as of September 30, 2017 and December 31, 2016:~~

~~-16-~~

   Three Months Ended September 30,    Nine Months Ended September 30,
   2017    2016    2017    2016
Net revenues:

OSUR
   $ 23,762    $ 23,924    $ 69,720    $ 69,050
DNAG
   18,552    8,327    45,316    23,649








Total
   $ 42,314    $ 32,251    $ 115,036    $ 92,699








Operating income (loss):

OSUR
   $ (453 )    $ 4,571    $ (235 )    $ 9,098
DNAG
   7,772    1,573    30,312    4,094








Total
   $ 7,319    $ 6,144    $ 30,077    $ 13,192








Depreciation and amortization:

OSUR
   $ 855    $ 688    $ 2,189    $ 2,003
DNAG
   843    726    2,400    2,149








Total
   $ 1,698    $ 1,414    $ 4,589    $ 4,152








Capital expenditures:

OSUR
   $ 1,156    $ 283    $ 2,493    $ 1,406
DNAG
   739    500    969    2,106








Total
   $ 1,895    $ 783    $ 3,462    $ 3,512








   September 30,
2017    December 31,
2016
Total assets:

OSUR
   $ 192,298    $ 151,719
DNAG
   89,961    56,216





Total
   $ 282,259    $ 207,935

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

   Three Months Ended September 30,    Nine Months Ended September 30,
   2017    2016    2017    2016
United States
   $ 29,063    $ 26,302    $ 78,871    $ 72,493
Europe
   3,204    2,171    8,765    9,006
Other regions
   10,047    3,778    27,400    11,200








   $ 42,314    $ 32,251    $ 115,036    $ 92,699

~~-17-~~

PTO of the Final Written Decision. On March 27, 2024, the Company's Request for Rehearing was denied. The ~~following table represents total long-lived assets by geographic area:~~

   September 30,
2017    December 31,
2016
United States
   $ 16,644    $ 15,737
Canada
   4,767    4,286
Other regions
   85    10




   $ 21,496    $ 20,033

~~-18-~~

Company is considering its appellate options. On September 15, 2023, Spectrum filed a separate petition for inter partes review of a third patent, which DNAG did not assert in the District Court. On March 26, 2024, the PTO issued a Decision Granting Institution of Inter Partes Review and scheduled oral argument for January 14, 2025.

Table of Contents

~~Item 2.~~

~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~

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

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

The following discussion and analysis of the ~~Federal securities laws. These may include statements about our expected revenues, earnings/loss per share, net income (loss), expenses, cash flow or other~~Company's financial ~~performance or developments, clinical trial or development activities, expected regulatory filings~~condition and ~~approvals, planned business transactions, views of future industry, competitive or market conditions, and other factors that could affect our future operations,~~ results of operations orshould be read in conjunction with (i) the Company's unaudited condensed consolidated financial ~~position. These~~ statements ~~often include~~and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and (ii) the ~~words “believes,” “expects,” “anticipates,” “intends,” “plans,” “estimates,” “may,” “will,” “should,” “could,” or similar expressions. Forward-looking~~Company's audited consolidated financial statements ~~are not guarantees~~and related notes and management’s discussion and analysis of ~~future performance or results. Known~~financial condition and ~~unknown factors that could cause actual performance or~~ results ~~to be materially different from those expressed or implied~~of operations included in these statements include, but are not limited to: ability to market and sell products, whether through our internal, direct sales force or third parties; ability to manufacture products in accordance with applicable specifications, performance standards and quality requirements; 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; ability to effectively resolve warning letters, audit observations and other findings or comments from the U.S. Food and Drug Administration (“FDA”) or other regulators; 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; ability to meet increased demand for our products; impact of increased reliance on U.S. government contracts; failure of distributors or other customers to meet purchase forecasts, historic purchase levels or minimum purchase requirements for our products; impact of replacing distributors; inventory levels at distributors and other customers; ability of the Company to achieve its financial and strategic objectives and continue to increase its revenues, including the ability to expand international sales; ability to identify, complete, integrate and realize the full benefits of future acquisitions; impact of competitors, competing products and technology changes; impact of negative economic conditions, high unemployment levels and poor credit conditions; reduction or deferral of public funding available to customers; competition from new or better technology or lower cost products; ability to develop, commercialize and market new products; market acceptance of oral fluid testing or other products; 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 (“CDC”) or other agencies; ability to fund research and development and other products and operations; ability to obtain and maintain new or existing product distribution channels; reliance on sole supply sources for critical products and components; availability of related products produced by third parties or products required for use of our products; history of losses and ability to achieve sustained profitability; ability to utilize net operating loss carry forwards or other deferred tax assets; volatility of 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; ability to sell products internationally, including the impact of changes in international funding sources and testing algorithms; ability to successfully renew contracts or enter into new contracts with existing customers; adverse movements in foreign currency exchange rates; loss or impairment of sources of capital; ability to meet financial covenants in credit agreements; ability to attract and retain qualified personnel; exposure to product liability and other types of litigation; changes in international, federal or state laws and regulations; customer consolidations and inventory practices; equipment failures and ability to obtain needed raw materials and components; the impact of terrorist attacks and civil unrest; and general political, business and economic conditions. These and other factors are discussed more fully in our Securities and Exchange Commission (“SEC”) filings, including our registration statements,Company's Annual Report on Form 10-K for the year ended December 31, ~~2016,~~2023 filed with the Securities and Exchange Commission on March 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 the Company's plans and strategy for its business and impact and potential impacts on 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 the Company's Annual Report on Form 10-K for the year ended December 31, 2023 and the “Risk Factors” section of subsequent Quarterly Reports on Form 10-Q, ~~and other filings with~~ the ~~SEC. Although~~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 help to provide information about future prospects, readers should keep in mind that forward-looking statements may not be reliable.~~ statements.

Business Overview

The ~~forward-looking statements are made as~~Company's business consists of the ~~date~~development, manufacture, marketing and sale of ~~this Report, and we undertake no duty~~simple, easy to ~~update these statements~~.

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

~~-19-~~

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.

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

~~Overview~~

~~We develop, manufacture, market and sell~~use diagnostic products and specimen collection devices using ~~our~~the Company's proprietary technologies, as well as other diagnostic products including immunoassays and otherin vitro diagnostic tests that are used on other specimen types. ~~Our diagnostic~~These products include tests for diseases including COVID-19, HIV and Hepatitis C that are performed on a rapid basis at the ~~point-of-care,~~point of care, and tests for drugs of abuse that are processed in a laboratory, a rapid point-of-care HIV test approved for use in the domestic consumer retail or over-the-counter (“OTC”) market and a rapid point-of-care HIV self-test used in certain international markets. We also manufacture and sell collection devices used to collect, stabilize, transport and store samples of genetic material for molecular testing in the consumer genetic, clinical genetic, academic, research, pharmacogenomic, personalized medicine, microbiome and animal genetic markets. Lastly, we manufacture and sell medical devices used for the removal of benign skin lesions by cryosurgery, or freezing. Ourlaboratory. These products are sold in the United States and internationally to various clinical laboratories, hospitals, clinics, community-based organizations, ~~public health organizations, research~~ and ~~academic institutions, distributors, government agencies, physicians’ offices, commercial and industrial entities, retail pharmacies and mass merchandisers, and to consumers over the internet.~~

~~Recent Developments~~

In 2016, we entered into a contract to supply a foreign government with $18 million of product, primarily to support a nationwide HCV testing and treatment program. To date, we have supplied $14.0 million of product to this customer under the contract. The contract includes a renewal option under which the government may purchase up to 100% of the original quantities of product on the same terms and conditions contained in the contract. During the past several months, we have engaged in renewal discussions with this customer, including with respect to specific quantities of product to be supplied. During these discussions, we were advised that the contract would likely be renewed at quantities substantially in excess of the original quantities under the contract. However, we were recently informed that the government has decided to move to an all laboratory testing solution and that another party had been selected to provide that solution based on cost. As a result, it is our expectation that our supply contract with this customer for rapid tests will not be renewed at this time. In light of these developments, it is unclear whether this government will fulfill the remaining purchase obligations under our existing contract.

~~Current Consolidated Financial Results~~

During the nine months ended September 30, 2017, our consolidated net revenues were $115.0 million, compared to $92.7 million for the nine months ended September 30, 2016. Net product revenues during the nine months ended September 30, 2017 increased 43% when compared to the first nine months of 2016, primarily due to higher sales of our molecular and OraQuick^® ~~HCV products and increased international sales of our OraQuick~~^® ~~HIV self-test. Partially offsetting these increases were lower domestic sales of our professional OraQuick~~^® HIV product and lower domestic and OTC sales of our cryosurgical products. Other revenues for the first nine months of 2017 were $3.3 million compared to $14.4 million in the same period of 2016. Other revenues in the first nine months of 2017 largely represent revenue recognized in connection with funding received from the U.S. Department of Health and Human Services Office of the Assistant Secretary for Preparedness and Response’s Biomedical Advanced Research and Development Authority (“BARDA”) related to our Ebola and Zika products. Other revenues in the first nine months of 2016 included $1.6 million of BARDA funding and $12.8 million of exclusivity revenues recognized under our HCV co-promotion agreement with AbbVie, which terminated on December 31, 2016.

Our consolidated net income for the nine months ended September 30, 2017 was $23.6 million, or $0.39 per share on a fully-diluted basis, compared to consolidated net income of $12.5 million, or $0.22 per share on a fully-diluted basis for the nine months ended September 30, 2016. Results for the current nine month period include a pre-tax gain of $12.5 million associated with the settlement of our litigation against Ancestry.com DNA LLC and its contract manufacturer in the first quarter of 2017.

~~-20-~~

Cash provided by operating activities for the nine months ended September 30, 2017 was $30.4 million and included the $12.5 million litigation settlement noted above. Cash provided by operating activities during the nine months ended September 30, 2016 was $25.2 million. As of September 30, 2017, we had $180.3 million in cash (including restricted cash), cash equivalents, and available-for-sale securities, compared to $120.9 million at December 31, 2016.

~~Business Segments~~

We operate our business within two reportable segments: our “OSUR” business, which consists of the development, manufacture and sale of diagnostic products, specimen collection devices, and medical devices, and our “DNAG” or molecular collection systems business, which consists primarily of the development, manufacture and sale of oral fluid collection devices that are used to collect, stabilize, transport, and store samples of genetic material for molecular testing. OSUR revenues are derived primarily from products sold into the United States and internationally to various clinical laboratories, hospitals, clinics, community-based organizations,other public health organizations, distributors, government agencies, physicians’ offices, and commercial and industrial ~~entities, retail pharmacies, mass merchandisers~~entities. The Company's COVID-19 and ~~consumers over~~HIV products are also sold in a consumer-friendly format in the ~~internet. DNAG~~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, including as an oral swab in-home test for HIV-1 and HIV-2 in Europe.

The Company's business also includes molecular 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. The revenues ~~result primarily~~ from ~~products sold into the~~sample management solutions are derived from product sales to commercial ~~market, which consists of~~ customers ~~engaged in consumer genetics, clinical genetic testing, pharmacogenomics, personalized medicine, microbiome, animal genetic testing~~ and ~~research, as well as products sold~~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 ~~consists~~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 bioinformatics services for both genomics and microbiome customers. These services are primarily provided to pharmaceutical, biotech companies, and research ~~laboratories, universities~~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 ~~hospitals.~~

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 ~~September 30, 2017~~March 31, 2024 compared to ~~September 30, 2016~~

March 31, 2023.

CONSOLIDATED NET REVENUES

The table below shows ~~a breakdown~~an outline of total consolidated net revenues (dollars in thousands) ~~generated by each of our business segments~~ for the three months ended ~~September 30, 2017~~March 31, 2024 and ~~2016.~~

   Three Months Ended September 30,
   Dollars    Percentage of Total
Net Revenues
   2017    2016    %
Change 2017 2016
OSUR
   $ 22,605    $ 17,133    32 % 53 % 53 %
DNAG
   18,552    8,327    123 44 26






Net product revenues
   41,157    25,460    62 97 79
Other
   1,157    6,791    (83 ) 3 21






Net revenues
   $ 42,314    $ 32,251    31 % 100 % 100 %

~~Consolidated net product revenues increased 62% to $41.2 million in the third quarter of 2017 from $25.5 million in the comparable period of 2016. Higher sales of our molecular and OraQuick~~^® ~~HCV products and higher international sales of our OraQuick~~^® ~~HIV self-test were partially offset by lower domestic sales of our professional OraQuick~~^® HIV product and lower domestic and OTC sales of our cryosurgical products. In the third quarter of 2017, we recognized $939,000 in other revenues in connection with funding from BARDA related to our Ebola and Zika products and $218,000 in reimbursement of certain costs under our charitable support agreement with the Bill & Melinda Gates Foundation (“Gates Foundation”). Other revenues in the third quarter of 2016 were $6.8 million and included $6.1 million in exclusivity payments received under our HCV co-promotion agreement with AbbVie and $676,000 in BARDA funding. Our co-promotion agreement with AbbVie was terminated effective as of December 31, 2016 and no further revenues were recognized under this agreement after that time.

~~-21-~~

Consolidated net revenues derived from products sold to customers outside of the United States were $13.3 million and $5.9 million, or 31% and 18% of total net revenues, in the third quarters of 2017 and 2016, respectively. Because the majority of our international sales are denominated in U.S. dollars, the impact of fluctuating foreign currency exchange rates was not material to our total consolidated net revenues.

~~Net Revenues by Segment~~

~~OSUR Segment~~

~~The table below shows a breakdown of total net revenues (dollars in thousands) generated by our OSUR segment.~~

   Three Months Ended September 30,
   Dollars    Percentage of Total
Net Revenues
Market
   2017    2016    %
Change 2017 2016
Infectious disease testing
   $ 16,577    $ 10,412    59 % 70 % 43 %
Risk assessment testing
   3,149    3,481    (10 ) 13 15
Cryosurgical
   2,879    3,240    (11 ) 12 14






Net product revenues
   22,605    17,133    32 95 72
Other
   1,157    6,791    (83 ) 5 28






Net revenues
   $ 23,762    $ 23,924    (1 )% 100 % 100 %

~~Infectious Disease Testing Market~~

Sales to the infectious disease testing market increased 59% to $16.6 million in the third quarter of 2017 from $10.4 million in the third quarter of 2016. This increase resulted from higher sales of our OraQuick^® ~~HCV product and higher international sales of our OraQuick~~^® ~~HIV self-test, partially offset by a decline in domestic sales of our professional OraQuick~~^® ~~HIV product.~~

~~-22-~~

~~The table below shows a breakdown of our total net OraQuick~~^®2023:


	Three Months Ended March 31,
	Dollars				% Change		Percentage of Total Net Revenues
	2024		2023				2024		2023
COVID-19 Diagnostics	$	23,097	$	118,254	(80)	%	43	%	76	%
Diagnostics (1)	16,380		17,090		(4)		30		11
Molecular Sample Management Solutions (2)	10,822		12,942		(16)		20		8
Other products and services (3)	2,576		3,094		(17)		5		2
Molecular Services	873		1,379		(37)		2		1
COVID-19 Molecular Products	31		155		(80)		—		—
Net product and services revenues	53,779		152,914		(65)		99		99
Non-product and services revenues (4)	353		2,049		(83)		1		1
Net revenues	$	54,132	$	154,963	(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 ~~(dollars in thousands) during the third quarters of 2017~~include funded research and ~~2016.~~

   Three Months Ended September 30,
Market
   2017    2016    % Change
Domestic HIV
   $ 3,622    $ 4,858    (25 )%
International HIV
   3,069    1,110    176
Domestic OTC HIV
   1,515    1,311    16





Net HIV revenues
   8,206    7,279    13





Domestic HCV
   1,889    1,529    24
International HCV
   6,154    1,293    376





Net HCV revenues
   8,043    2,822    185





Net OraQuick^® HIV and HCV product revenues
   $ 16,249    $ 10,101    61 %

~~Domestic OraQuick~~^® ~~HIV sales~~development contracts, royalty income and grant revenues.

Product and Services Revenues

Consolidated net revenues decreased ~~25%~~65% to ~~$3.6~~$54.1 million for the three months ended ~~September 30, 2017~~March 31, 2024 from ~~$4.9~~$155.0 million for the three months ended ~~September 30, 2016.~~March 31, 2023.

COVID-19 Diagnostics revenues decreased by 80% to $23.1 million for the three months ended March 31, 2024 compared to $118.3 million in three months ended March 31, 2023 due to 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 decreased 4% to $16.4 million for the three months ended March 31, 2024 from $17.1 million for the three months ended March 31, 2023. This ~~reduction~~decrease in revenues was primarily the result of competitive losses tied to pricing and the Centers for Disease Control and Prevention (“CDC”) testing guidelines recommending the use of competing fourth generation automated HIV immunoassays performed in a laboratory. Sales in the current quarter were also negatively impacteddriven by customer ordering ~~patterns,~~patterns.

Molecular Sample Management Solutions revenues decreased 16% to $10.8 million for the three months ended March 31, 2024 from $12.9 million for the three months ended March 31, 2023. Sales of the Company's Molecular Products are being impacted by reduced ~~government~~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 athe overall decline in ~~orders placed by those customers located in geographic areas severely impacted by recent weather events. We anticipate that future domestic sales of our professional HIV product will continue~~the microbiome market.

Other products and services revenues decreased 17% to ~~be negatively affected as a result of~~$2.6 million for the ~~CDC testing guidelines, changes in government funding and continued product and price competition.~~

~~International sales of our OraQuick~~^® ~~HIV test during the third quarter of 2017 rose 176% to~~three months ended March 31, 2024 from $3.1 million for the three months ended ~~September 30, 2017~~March 31, 2023.

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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 83% to $0.4 million for the three months ended March 31, 2024 from $2.0 million for the three months ended March 31, 2023 as a result lower funding for research and development activities largely as a result of 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 increased to 44.5% for the three months ended March 31, 2024 from 42.5% for the three months ended March 31, 2023. This increase in margins was driven by increased average selling price on InteliSwab® sales and lower scrap expense. These improvement in margins were partially offset by a decrease in non-product revenues which contribute 100% to gross margin.

Consolidated operating loss for the three months ended March 31, 2024 was $7.1 million, a $31.4 million decline from the $24.3 million operating income reported for the three months ended March 31, 2023. Results for the three months ended March 31, 2024 were negatively impacted by lower revenues and higher impairment losses offset by increased gross profit margins and lower operating expense spend. Results for the three months ended March 31, 2024 included $3.3 million of impairment losses compared to $1.1 million for the three months ended ~~September 30, 2016. This increase was largely due to increased sales of our OraQuick~~^® ~~HIV self-test into Africa. The majority of tests shipped into Africa during~~March 31, 2023. Impairment losses in the ~~current quarter were subject to support payments under our charitable support agreement with the Gates Foundation. Product revenues during the third~~first quarter of ~~2017 included approximately $458,000~~2024 were comprised of ~~support payments~~the impairment of Novosanis and Diversigen property plant and equipment, including leased assets while impairment losses in 2023 were associated with ~~this agreement.~~

~~Sales of our OraQuick~~^® ~~In-Home HIV test during~~idle manufacturing lines.

Operating expenses in the ~~third~~first quarter of ~~2017 increased 16%~~2024, excluding the impairment charge, decreased $12.6 million compared to ~~$1.5 million from $1.3 million in~~ the ~~third~~first quarter of ~~2016 largely as a result of additional shelf placement~~2023 reflecting the impact of the ~~product in~~Company's cost saving measures and headcount reductions.

Research and development expenses decreased 27% to $7.7 million for the ~~home diagnostic section of certain retail pharmacies.~~

~~Domestic OraQuick~~^® ~~HCV sales increased 24% to $1.9~~three months ended March 31, 2024 from $10.6 million infor the third quarter of 2017 from $1.5 million in the third quarter of 2016 primarily due to increased HCV testing by a global nonprofit provider of infectious disease prevention, testing and healthcare services and higher sales to non-acute healthcare offices. International OraQuick^® HCV sales increased 376% to $6.1 million in the third quarter of 2017 from $1.3 million in the third quarter of 2016, largely due to continued product shipments to a foreign government to support a nationwide HCV testing and treatment program, partially offset by the loss of a multi-national humanitarian organization customer who switched to a competitive product due to pricing. As discussed above, we were recently notified that our supply contract with the foreign government will not be renewed, which will negatively affect our international HCV sales in future periods.

~~Risk Assessment Market~~

~~Sales to the risk assessment market decreased 10% to $3.1 million in the third quarter of 2017 compared to $3.5 million in the third quarter of 2016~~three months ended March 31, 2023 largely due to a ~~change~~decrease in ~~inventory~~employee costs associated with a reduction in headcount, decrease in spend on COVID-19 product development, and no related project management ~~by one of~~fees for our ~~larger customers.~~

~~-23-~~

~~Cryosurgical Market~~

~~Sales of our cryosurgical products decreased 11% to $2.9~~$109 million inmanufacturing expansion contract which ended during the ~~third~~fourth quarter of ~~2017 from $3.2 million in the third quarter of 2016.~~

~~The table below shows a breakdown of our total net cryosurgical revenues (dollars in thousands) generated in each market during the third quarters of 2017 and 2016.~~

   Three Months Ended September 30,
Market
   2017    2016    % Change
Domestic professional
   $ 1,426    $ 1,456    (2 )%
International professional
   179    162    10
Domestic OTC
   325    339    (4 )
International OTC
   949    1,283    (26 )





Net cryosurgical revenues
   $ 2,879    $ 3,240    (11 )%

~~Third quarter 2017 sales of our domestic and international Histofreezer~~^® ~~product sold to physicians’ offices and our private-label wart removal product sold in the U.S. retail market remained consistent with the level of sales recorded in the third quarter of 2016.~~

Sales of our international OTC cryosurgical products during the third quarter of 2017 decreased 26% to $949,000 compared to $1.3 million in the third quarter of 2016 due to customer ordering patterns in Latin America and Europe.

~~Other revenues~~

Other revenues in the third quarter of 2017 decreased 83% to $1.2 million from $6.8 million in the third quarter of 2016. Other revenues in the third quarter of 2016 included $6.1 million of AbbVie exclusivity revenues. There are no similar revenues in the third quarter of 2017 due to the termination of the AbbVie co-promotion agreement on December 31, 2016. Revenue from BARDA funding increased to $939,000 in the third quarter of 2017 compared to $676,000 in the third quarter of 2016. Other revenues in the third quarter of 2017 also included $218,000 in reimbursement of certain costs under our charitable support agreement with the Gates Foundation.

~~DNAG Segment~~

~~Molecular Market~~

~~Net molecular revenues increased 123% to $18.6 million in the third quarter of 2017 from $8.3 million in the third quarter of 2016. Sales of our Oragene~~^® product in the commercial market rose 157% in the third quarter of 2017 compared to the third quarter of 2016, largely as a result of higher customer demand, primarily from a large customer in the consumer genetics market. Sales of our Oragene^® product in the academic market increased 46% in the third quarter of 2017 compared to the third quarter of 2016 largely due to higher customer demand and customer ordering patterns. The higher revenues in the third quarter of 2017 also included $776,000 in sales of our microbiome product compared to $362,000 in the same period of 2016. We believe interest in our microbiome product offering continues to grow with both new and existing customers.

~~CONSOLIDATED OPERATING RESULTS~~

Consolidated gross margin was 58% for the third quarter of 2017 compared to 70% for the third quarter of 2016. Gross margin in the third quarter of 2017 was negatively impacted by the absence of exclusivity revenues under our HCV co-promotion agreement with AbbVie, an increase in lower margin product sales and higher scrap and spoilage costs.

~~-24-~~

Consolidated operating income for the third quarter of 2017 was $7.3 million, a $1.2 million improvement from the $6.1 million of operating income reported in the third quarter of 2016. Operating income for the third quarter of 2017 benefited from higher product revenues as compared to the same period last year, partially offset by higher sales and marketing expense in the current period and the absence of AbbVie revenues from the prior year.

~~OPERATING INCOME (LOSS) BY SEGMENT~~

~~OSUR Segment~~

OSUR’s gross margin was 55% in the third quarter of 2017 compared to 71% in the third quarter of 2016. OSUR’s gross margin in the third quarter of 2017 was negatively impacted by the absence of exclusivity revenues under our AbbVie co-promotion agreement ($6.1 million was recorded in the third quarter of 2016 versus none in 2017), an increase in lower margin product revenues as a result of higher international sales, and higher scrap and spoilage costs incurred during the quarter.

Research and development expenses increased 12% to $2.5 million in the third quarter of 2017 from $2.3 million in the third quarter of 2016, largely due to increased staffing and product registration costs. 2023.

Sales and marketing expenses ~~grew 3%~~decreased 30% to ~~$4.8~~$8.4 million infor the ~~third quarter of 2017~~three months ended March 31, 2024 from ~~$4.7~~$12.1 million infor the ~~third quarter of 2016 largely~~three months ended March 31, 2023 due to ~~increased external commissions to be paid to our international distributors partially offset by~~ lower ~~call center~~employee costs associated with ~~our OraQuick~~^® ~~In-Home HIV test.~~ a decrease in headcount, and decreased spend on advertising and consulting fees.

General and administrative expenses ~~increased 14%~~decreased 34% to ~~$6.2~~$11.6 million infor the ~~third quarter of 2017~~three months ended March 31, 2024 from ~~$5.5~~$17.7 million infor the ~~third quarter of 2016~~three months ended March 31, 2023 largely due to ~~higher~~lower legal fees and lower staffing costs ~~which includes an increase~~due to a reduction in ~~accrued bonuses as a result of Company performance partially offset by lower consulting costs.~~

headcount.

All of the above contributed to ~~OSUR’s third quarter 2017~~the Company's operating loss of ~~$453,000,~~$7.1 million for the three months ended March 31, 2024, which included a non-cash impairment charge of $3.3 million, non-cash charges of ~~$855,000~~$2.7 million for depreciation and amortization, and ~~$1.4~~non-cash charges of $3.0 million for stock-based compensation.

~~DNAG Segment~~

DNAG’s gross margin was 62% in the third quarter of 2017 compared to 69% in the third quarter of 2016. This decline was attributable to an increase in lower margin product sales in the third quarter of 2017 compared to the third quarter of 2016.

Research and development expenses decreased 26% to $681,000 in the third quarter of 2017 from $924,000 in the third quarter of 2016. Research and development expenses in the third quarter of 2016 included costs associated with field studies required to achieve World Health Organization (“WHO”) endorsement of our OMNIgene^® • Sputum product for tuberculosis. There were no similar expenses in the third quarter of 2017. Sales and marketing expenses rose 33% to $2.3 million in the third quarter of 2017 from $1.8 million in the third quarter of 2016 due to an increase in our allowance for uncollectible accounts and higher staffing costs. General and administrative expenses decreased 52% to $696,000 in the third quarter of 2017 compared to $1.4 million in the third quarter of 2016 primarily due to lower legal and staffing expenses.

~~All of the above contributed to DNAG’s third quarter 2017~~ The Company's operating income of ~~$7.8~~$24.3 million ~~which~~for the three months ended March 31, 2023 included a non-cash impairment charge of $1.1 million, non-cash charges of ~~$843,000~~$3.7 million for depreciation and amortization, and ~~$170,000~~$2.7 million for stock-based compensation.

OTHER INCOME

Other income for the three months ended March 31, 2024 was $3.5 million compared to $2.7 million for the three months ended March 31, 2023. This increase is due to higher interest income.

CONSOLIDATED INCOME TAXES

~~We continue~~

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The Company continues to believe the full valuation allowance established ~~in 2008~~ against ~~OSUR’s~~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 ~~September 30, 2017, no~~March 31, 2024 and 2023, the Company recorded a U.S. state income tax ~~expense was recorded as compared to $200,000 in~~benefit of $0.2 million. For the three months ended ~~September 30, 2016. Canadian income~~March 31, 2024 the state tax benefit was partially offset by foreign tax expense of ~~$1.7 million and $200,000 was~~$0.2 million. No foreign taxes were recorded infor the ~~third quarters of 2017 and 2016, respectively.~~

~~-25-~~

~~Nine~~three months ended ~~September 30, 2017 compared~~March 31, 2023 due to ~~September 30, 2016~~

~~CONSOLIDATED NET REVENUES~~

~~The table below shows~~it being more likely than not that the Canadian subsidiary would not produce sufficient income to receive a ~~breakdown of total consolidated net revenues (dollars in thousands) generated by each of our business segments~~tax benefit for the ~~nine months ended September 30, 2017~~year to date loss.

Liquidity and ~~2016.~~

   Nine Months Ended September 30,
   Dollars    Percentage of Total
Net Revenues
   2017    2016    %
Change 2017 2016
OSUR
   $ 66,455    $ 54,637    22 % 58 % 59 %
DNAG
   45,316    23,649    92 39 25






Net product revenues
   111,771    78,286    43 97 84
Other
   3,265    14,413    (77 ) 3 16






Net revenues
   $ 115,036    $ 92,699    24 % 100 % 100 %

~~Consolidated net product revenues increased 43%~~Capital Resources


	March 31, 2024		December 31, 2023
	(in thousands)
Cash and cash equivalents	$	247,145	$	290,407
Short-term investments	16,627		—
Working capital	319,400		346,923

The Company's cash and cash equivalents and short-term investments decreased to ~~$111.8~~$263.8 million at March 31, 2024 from $290.4 million at December 31, 2023. $84.5 million or 32% of the $263.8 million in cash and cash equivalents and short-term investments is held by DNAG, the ~~first nine months of 2017~~Company's Canadian subsidiary.

The Company's working capital decreased to $319.4 million at March 31, 2024 from ~~$78.3~~$346.9 million ~~in the comparable period of 2016. Higher sales of our molecular and OraQuick~~^® ~~HCV products and higher international sales of our OraQuick~~^® ~~HIV self-test were partially offset by lower domestic sales of our professional OraQuick~~^® HIV product and lower domestic and OTC sales of our cryosurgical products. In the first nine months of 2017, we recognized $3.3 million as other revenues largely in connection with funding from BARDA related to our Ebola and Zika products. Other revenues in the first nine months of 2016 were $14.4 million and included $12.8 million in exclusivity payments received under our AbbVie co-promotion agreement and $1.6 million in BARDA funding. Our co-promotion agreement with AbbVie was terminated onat December 31, ~~2016 and no further revenues were recognized under this agreement.~~

Consolidated net revenues derived from products sold to customers outside of the United States were $36.2 million and $20.2 million, or 31% and 22% of total net revenues, during the nine months ended September 30, 2017 and 2016, respectively. Because the majority of our international sales are denominated in U.S. dollars, the impact of fluctuating foreign currency exchange rates was not material to our total consolidated net revenues.

~~Net Revenues by Segment~~

~~OSUR Segment~~

~~The table below shows a breakdown of total net revenues (dollars in thousands) generated by our OSUR segment.~~

~~-26-~~

   Nine Months Ended September 30,
   Dollars    Percentage of Total
Net Revenues
Market
   2017    2016    %
Change 2017 2016
Infectious disease testing
   $ 47,822    $ 34,729    38 % 68 % 50 %
Risk assessment testing
   9,517    9,746    (2 ) 14 14
Cryosurgical systems
   9,116    10,162    (10 ) 13 15






Net product revenues
   66,455    54,637    22 95 79
Other
   3,265    14,413    (77 ) 5 21






Net revenues
   $ 69,720    $ 69,050    1 % 100 % 100 %

~~Infectious Disease Testing Market~~

Sales to the infectious disease testing market increased 38% to $47.8 million in the first nine months of 2017 from $34.7 million in the first nine months of 2016. This increase resulted from higher sales of our OraQuick^® ~~HCV product and higher international sales of our OraQuick~~^® ~~HIV self-test, partially offset by a decline in domestic sales of our professional OraQuick~~^® ~~HIV product.~~

~~The table below shows a breakdown of our total net OraQuick~~^® ~~HIV and HCV product revenues (dollars in thousands) during the nine months ended September 30, 2017 and 2016.~~

   Nine Months Ended September 30,
Market
   2017    2016    %
Change
Domestic HIV
   $ 12,401    $ 16,446    (25 )%
International HIV
   7,738    3,934    97
Domestic OTC HIV
   4,951    4,574    8





Net HIV revenues
   25,090    24,954    1





Domestic HCV
   5,980    5,218    15
International HCV
   15,817    3,722    325





Net HCV revenues
   21,797    8,940    144





Net OraQuick^® revenues
   $ 46,887    $ 33,894    38 %

~~Domestic OraQuick~~^® ~~HIV sales~~2023. Working capital decreased 25% to $12.4 million for the nine months ended September 30, 2017 from $16.4 million for the nine months ended September 30, 2016. This reduction was primarily the result of competitive losses tied to pricing and the CDC’s testing guidelines recommending the use of competing fourth generation automated HIV immunoassays performed in a laboratory, reduced government funding and customer ordering patterns. We anticipate that future domestic sales of our professional HIV product will continue to be negatively affected by the CDC testing guidelines, changes in government funding, and continued product and price competition.

~~International sales of our OraQuick~~^® HIV products during the first nine months of 2017 rose 97% to $7.7 million from $3.9 million in the first nine months of 2016. This increase was largely due to the continued shipment of product in support of a HIV self-testing program in Africa and higher sales into the Middle East and Asia. Funding under the charitable support agreement with the Gates Foundation began in the third quarter of 2017. Sales to certain

~~-27-~~

~~regions in Africa during the quarter were subject to support payments under this agreement. Product revenues during the third quarter of 2017 included approximately $458,000 of such support payments.~~

~~Sales of our OraQuick~~^® In-Home HIV test during the first nine months of 2017 of $4.9 million increased 8% compared to $4.6 million in the first nine months of 2016 largely due to expansion of public health programs that use our In-Home test and additional shelf placement of the product in the home diagnostic section of certain retail pharmacies.

~~Domestic OraQuick~~^® HCV sales increased 15% to $6.0 million in the first nine months of 2017 from $5.2 million in the first nine months of 2016 primarily due to an increase in sales to our U.S. public health customers related to HCV testing program expansion and higher sales to non-acute healthcare offices, partially offset by customer ordering patterns. International OraQuick^® HCV sales increased 325% to $15.8 million in the first nine months of 2017 from $3.7 million in the first nine months of 2016, largely due to continued product shipments to a foreign government to support a nationwide HCV testing and treatment program and increased sales in Asia and Africa partially offset by the loss of a multi-national humanitarian organization customer who switched to a competitive product due to pricing. As discussed above, we were recently notified that our supply contract with the foreign government will not be renewed, which will negatively affect our international HCV sales in future periods.

~~Risk Assessment Market~~

~~Sales to the risk assessment market decreased slightly to $9.5 million in the first nine months of 2017 compared to $9.7 million in the first nine months of 2016.~~

~~Cryosurgical Market~~

~~Sales of our cryosurgical products decreased 10% to $9.1 million in the first nine months of 2017 from $10.2 million in the first nine months of 2016.~~

~~The table below shows a breakdown of our total net cryosurgical revenues (dollars in thousands) generated in each market during the nine months ended September 30, 2017 and 2016.~~

   Nine Months Ended
September 30,
Market
   2017    2016    %
Change
Domestic professional
   $ 4,368    $ 4,155    5 %
International professional
   552    607    (9 )
Domestic OTC
   957    1,062    (10 )
International OTC
   3,239    4,338    (25 )





Net cryosurgical systems revenues
   $ 9,116    $ 10,162    (10 )%

~~Sales of our Histofreezer~~^® ~~product to physicians’ offices in the United States increased 5% to $4.4 million in the first nine months of 2017 from $4.2 million in the first nine months of 2016,~~ primarily due to the ~~continued recovery~~decrease in cash and cash equivalents. Working capital is primarily a function of ~~business previously lost to competition. International~~ sales, ~~of our Histofreezer~~^® ~~product decreased to $552,000 in the first nine months of 2017 from $607,000 in the first nine months of 2016.~~

Sales of our private-label wart removal product in the U.S. retail market decreased to $957,000 in the first nine months of 2017 from $1.1 million in the first nine months of 2016. Sales volume in 2016 was higher as a result of initial stocking orders for a new large pharmacy customer during that period.

Sales of our international OTC cryosurgical products during the first nine months of 2017 decreased 25% to $3.2 million compared to $4.3 million in the first nine months of 2016, largely due to lower sales into Europe as a result

~~-28-~~

~~of customer ordering patterns~~purchase volumes, inventory requirements, and ~~competitive pressures and lower sales in Latin America due to customer ordering patterns and the economic instability~~vendor payment terms.

Analysis of the ~~countries into which we sell.~~

~~Other revenues~~

~~Other revenues in~~Company's Cash Flows

Operating Activities

During the ~~first ninth~~three months ~~of 2017 decreased 77% to $3.3 million~~ended March 31, 2024, net cash provided by operating activities was $6.7 million. Cash flows from $14.4 million in the first nine months of 2016. Other revenues in 2016 included AbbVie exclusivity revenues of $12.8 million. There are no similar revenues in 2017 due to the termination of our AbbVie co-promotion agreement on December 31, 2016. Revenues related to funding from BARDA increased to $3.1 million in the first nine months of 2017 compared to $1.6 million in the first nine months of 2016. Revenues in the first nine months of 2017 also include $218,000 in reimbursement of certain costs under our charitable support agreement with the Gates Foundation.

~~DNAG Segment~~

~~Molecular Market~~

~~Net molecular revenues increased 92% to $45.3 million in the first nine months of 2017 from $23.6 million in the first nine months of 2016. Sales of our Oragene~~^® product in the commercial market rose 134% in the first nine months of 2017 compared to the first nine months of 2016, largely as a result of higher customer demand primarily from a large customer in the consumer genetics market. Sales of our Oragene^® product in the academic market increased 5% in the first nine months of 2017 compared to the first nine months of 2016 largely due to higher customer demand and customer ordering patterns. The higher revenues in the first nine months of 2017 also included $2.4 million in sales of our microbiome product compared to $742,000 in the same period of 2016. We believe interest in our microbiome product offering continues to grow with both new and existing customers.

~~CONSOLIDATED OPERATING RESULTS~~

~~Consolidated gross margin was 61% for the first nine months of 2017 compared to 69% for the first nine months of 2016. Gross margin in the first nine months of 2017 was negatively~~operations can be significantly impacted by ~~the absence~~factors such as timing of ~~exclusivity revenues under our HCV co-promotion agreement with AbbVie, an increase in lower margin product sales,~~receipt from customers, inventory purchases, and ~~higher scrap and spoilage costs.~~

~~Consolidated operating income for the first nine months of 2017 was $30.1 million, a $16.9 million improvement from $13.2 million of operating income reported in the first nine months of 2016.~~payments to vendors. The ~~operating income for the first nine months of 2017 benefited from the Ancestry litigation settlement gain, increased product revenues, and lower sales and marketing costs, partially offset by the~~Company's net loss of ~~AbbVie exclusivity revenues recorded in the prior year and higher research and development and general and administrative expenses in the current year.~~

~~OPERATING INCOME (LOSS) BY SEGMENT~~

~~OSUR Segment~~

OSUR’s gross margin was 59% in the first nine months of 2017 compared to 69% in the first nine months of 2016. OSUR’s gross margin in the first nine months of 2017 was negatively impacted by the absence of exclusivity revenues under our AbbVie agreement ($12.8$3.6 million ~~was recorded in the first nine months of 2016 versus none in 2017), an increase in lower margin product revenue as a result of higher international sales, and an increase in scrap and spoilage costs.~~

Research and development expenses increased 18% to $7.5 million in the first nine months of 2017 from $6.4 million in the first nine month of 2016, largely due to increased staffing expenses and higher supply costs associated with the development of our Ebola and Zika products. Sales and marketing expenses decreased 9% to $14.7 million in the first nine months of 2017 from $16.1 million in the same period of 2016. This decrease was primarily the result of the termination of our AbbVie agreement on December 31, 2016 and lower staffing costs, partially offset by higher external commissions to be paid to our international distributors. General and administrative expenses increased 20% to $19.3 million in the first nine months of 2017 from $16.0 million in the first nine months of 2016 due to higher staffing costs, which includes an increase in accrued bonuses as a result of Company performance.

~~-29-~~

~~All of the above contributed to OSUR’s operating loss of $235,000 in the first nine months of 2017, which~~ included non-cash charges of ~~$2.2 million for depreciation and amortization and $4.8 million for stock-based compensation.~~

~~DNAG Segment~~

DNAG’s gross margin was 64% in the first nine months of 2017 compared to 70% in the first nine months of 2016. This decline was attributable to an increase in lower margin sales in the first nine months of 2017 compared to the same period of 2016.

Research and development expenses decreased 8% to $2.0 million in the first nine months of 2017 from $2.2 million in the first nine months of 2016. Research and development expenses in first nine months of 2016 included costs associated with field studies required to achieve WHO endorsement of our OMNIgene^® • Sputum product for tuberculosis. No similar expenses were recorded in 2017. Partially offsetting these cost savings were higher staffing costs in the first nine months of 2017. Sales and marketing expenses increased 7% to $6.9 million in the first nine months of 2017 from $6.4 million in the first nine months of 2016 due to higher staffing costs. General and administrative expenses decreased 35% to $2.5 million in the first nine months of 2017 compared to $3.8 million in the first nine months of 2016 primarily due to lower legal costs. Operating expenses in the first nine months of 2017 were offset by the $12.5 million pre-tax gain associated with the settlement of our litigation with Ancestry.com DNA, LLC and its contract manufacturer.

All of the above contributed to DNAG’s operating income of $30.3 million in the first nine months of 2017, which included non-cash charges of $2.4 million for depreciation and amortization and $430,000 for stock-based compensation.

~~CONSOLIDATED INCOME TAXES~~

We continue to believe the full valuation allowance established in 2008 against OSUR’s total U.S. deferred tax asset is appropriate as the facts and circumstances necessitating the allowance have not changed. For the nine months ended September 30, 2017, we recorded state income tax expense of $31,000 compared to $250,000 in the nine months ended September 30, 2016. Canadian income tax expense of $7.1 million and $384,000 was recorded in the first nine months of 2017 and 2016, respectively. Canadian taxes in the first nine months of 2017 included the additional taxes due as a result of the $12.5 million Ancestry litigation settlement gain and DNAG’s increased pre-tax income.

~~Liquidity and Capital Resources~~

   September 30,
2017    December 31,
2016
   (In thousands)
Cash, cash equivalents and restricted cash
   $ 78,610    $ 109,790
Available-for-sale securities
   101,662    11,160
Working capital
   182,712    139,106

Our cash, cash equivalents, restricted cash and available-for-sale securities increased to $180.3 million at September 30, 2017 from $120.9 million at December 31, 2016. Our working capital increased to $182.7 million at September 30, 2017 from $139.1 million at December 31, 2016.

During the first nine months of 2017, we generated $30.4 million in cash from operating activities. Our net income of $23.6 million benefitted from non-cash stock-based compensation expense of $5.2 million and depreciation and amortization expense of ~~$4.6~~$2.7 million, ~~partially offset~~stock-based compensation expense of $3.0 million, and impairment losses of $3.3 million. Cash provided by the working capital accounts included a ~~net reduction of other non-cash charges of $671,000. Additional sources of cash included an increase~~decrease in accounts ~~payable~~receivable of ~~$4.6~~$6.2 million largely associated with lower overall sales and collections of balances due, toa decrease in inventory ~~purchases that were invoiced at~~of $4.3 million as the ~~end of the quarter, an increase in accrued expenses and other liabilities of $4.2 million largely due to an increase in our Canadian income taxes payable,~~Company fulfilled demand for its InteliSwab® product, and a decrease in ~~prepaid and other assets~~accrued expenses of ~~$1.6 million largely due to the receipt of $1.4~~$9.7 million as ~~payment of a claim from one of our raw material~~

~~-30-~~

~~suppliers. This settlement was recorded as a receivable at December 31, 2016. Uses of cash~~the Company paid out year end bonuses in operating activities during the period include an increase in accounts receivable of $7.7 million largely resulting from the increase in orders placed near the end of the current quarter and an increase in inventory balances of $4.9 million required to meet expected demand.

March 2024.

Investing Activities

Net cash used in investing activities was ~~$93.0~~$46.5 million for the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2024, which reflects ~~$132.2~~proceeds from the maturities of investments of $9.2 million, ~~used to purchase investments~~offset by $25.9 million in purchases of investments. Investing activities also include a $28.3 million investment in Sapphiros, and ~~$3.4~~$1.6 million to acquire property and equipment ~~partially offset by $42.6 million in proceeds from~~to support the ~~maturities and redemptions~~normal operations of ~~investments.~~

the business.

Financing Activities

Net cash ~~provided by~~used in financing activities was ~~$30.2~~$1.3 million for the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2024, which ~~resulted from $31.4 million in proceeds received from the exercise~~is largely comprised of ~~stock options partially offset by $1.2~~$1.5 million used for the repurchase of common stock to satisfy withholding taxes related to the vesting of restricted ~~shares.~~

On September 30, 2016, we entered into a credit agreement (the “Credit Agreement”) with a commercial bank. The Credit Agreement provides for revolving extensions of credit in an initial aggregate amount of up to $10.0 million (inclusive of a letter of credit subfacility of $2.5 million), with an option to request, priorshares awarded to the second anniversary of the closing date, that lenders, at their election, provide up to $5.0 million of additional revolving commitments. Obligations under the Credit Agreement are secured by a first priority security interest in certain eligible accounts receivable, 65% of the equity of our subsidiary, DNAG, and certain related assets. There were no borrowings outstanding at September 30, 2017 or December 31, 2016.

Resources

The Company plus 2.50% per year. The Credit Agreement will be subject to an unused line fee of 0.375% per annum on the unused portion of the commitment under the Credit Agreement during the revolving period. The maturity date of the Credit Agreement is September 30, 2019.

~~Our current balances of~~expects existing cash and cash equivalents ~~and available-for-sale securities and our available borrowing capacity are expected to~~will be sufficient to fund ~~our current~~its operating expenses and capital ~~needs for~~expenditure requirements over the ~~foreseeable future. Our~~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 scope and timing of future strategic acquisitions, the progress of ~~our~~its research and development programs, the scope and results of clinical testing, the cost of any future litigation, the magnitude of capital expenditures, changes in existing and potential relationships with business partners, the timing and cost of obtaining regulatory approvals, the timing and cost of future stock purchases, the costs

Table of Contents

involved in obtaining and enforcing patents, proprietary rights and any necessary licenses, the cost and timing of expansion of sales and marketing activities, market acceptance of new products, competing technological and market developments, the impact of the current economic environment and other factors. In addition, $43.3 million or 24% of our $180.3 million in cash, cash equivalents, restricted cash and available-for-sale securities belongs to our Canadian subsidiary and any repatriation of such cash into the United States could have adverse tax consequences.

~~Summary of Contractual Obligations~~

A summary of ~~our~~the Company's obligations to make future payments under contracts existing at December 31, ~~2016~~2023 is included in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, of ~~our~~its Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2023. As of ~~September 30, 2017,~~March 31, 2024, there were no significant changes to this ~~information, including the absence of any off-balance sheet arrangements.~~

information.

Critical Accounting Policies and Estimates

This Management’s Discussion and Analysis of Financial Condition and Results of Operations discusses our consolidated financial statements, which have been prepared in accordance with accounting principles generally

~~-31-~~

accepted in the United States of America. The preparation of these consolidated financial statements requires that we make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. On an on-going basis, we evaluate our judgments and estimates, including those related to the valuation of accounts receivable, inventories and intangible assets, as well as calculations related to contingencies accruals and the measurement of performance-based restricted stock expense. We base our judgments and estimates on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

A more detailed review of ~~our~~the Company's critical accounting policies is contained in ~~our~~its Annual Report on Form 10-K for the year ended December 31, ~~2016~~2023 filed with the SEC. ~~During the first nine months of 2017, there were no~~No material changes ~~in our~~have been made to such critical accounting ~~policies.~~

policies during the three months ended March 31, 2024.

~~Item 3.~~

~~QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK~~

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

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

As of September 30, 2017, we did not have any foreign currency exchange contracts or purchase currency options to hedge local currency cash flows. Sales denominated in foreign currencies comprised 4.1% of our total revenues for the nine months ended September 30, 2017. We do have foreign currency exchange risk related to our operating subsidiary in Canada. While the majority of this subsidiary’s revenues are recorded in U.S. dollars, almost all of this subsidiary’s operating expenses are denominated in Canadian dollars. Fluctuations in the exchange rate between the U.S. dollar and the Canadian dollar could affect year-to-year comparability of operating results and cash flows. Our Canadian subsidiary had net assets, subject to translation, of $89.4 million CDN ($71.7 million USD), which are included in the Company’s consolidated balance sheet as of September 30, 2017. A 10% unfavorable change in the ~~Canadian-to-U.S. dollar exchange rate would have decreased our comprehensive income by $7.2 million~~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 ~~nine months~~year ended ~~September 30, 2017.~~

~~-32-~~

December 31, 2023.

~~Item 4.~~

~~CONTROLS AND PROCEDURES~~

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 ~~September 30, 2017.~~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 ~~September 30, 2017~~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 ~~September 30, 2017~~March 31, 2024 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

~~-33-~~

Table of Contents

PART II. OTHER INFORMATION

~~Item 1.~~

~~LEGAL PROCEEDINGS~~

Item 1. LEGAL PROCEEDINGS

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

Spectrum Patent Litigation

In March 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 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 appealed the grant of summary judgment to the Court of Appeals on June 8, 2023. The appeal is pending, with oral argument expected in the second half of 2024. Second, the Court denied Spectrum’s motion to 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. On February 7, 2024, the PTO issued a Final Written Decision regarding the second patent in the 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 of a third patent, which DNAG did not assert in the District Court. On March 26, 2024, the PTO issued a Decision Granting Institution of Inter Partes Review and scheduled oral argument for January 14, 2025.

~~Item 1A.~~

~~RISK FACTORS~~

Item 1A. RISK FACTORS

There have been no material changes to the risk factors disclosed in Item ~~1A.,~~1A, entitled “Risk Factors,” in ~~our~~the Company's Annual Report on Form 10-K for the year ended December 31, ~~2016.~~

2023.

Table of Contents

~~Item 2.~~

~~UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS~~

Period
   Total number
of shares
purchased Average price
paid per
Share    Total number of
shares purchased
as part of publicly
announced plans
or programs    Maximum number (or
approximate dollar
value) of shares that
may yet be repurchased
under the plans or
programs^{(1, 2)}
July 1, 2017 - July 31, 2017
   1,440 ⁽³⁾ $ 17.75    N/A    11,984,720
August 1, 2017 - August 31, 2017
   —   —      $ —      11,984,720
September 1, 2017 - September 30, 2017
   —   —      —      11,984,720



   1,440    —

⁽¹⁾	On August 5, 2008, our Board of Directors approved a share repurchase program pursuant to which we are permitted to acquire up to $25.0 million of outstanding shares. This share repurchase program may be discontinued at any time.

⁽²⁾	~~This column represents the amount that remains available under the $25.0 million repurchase plan, as of the period indicated. We have 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 shares, these shares were retired to satisfy minimum tax withholdings.~~

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)
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~~

Item 3. DEFAULTS UPON SENIOR SECURITIES

None

~~ITEM 4.~~

~~MINE SAFETY DISCLOSURES~~

Item 4. MINE SAFETY DISCLOSURES

Not applicable

~~ITEM 5.~~

~~OTHER INFORMATION~~

Item 5. OTHER INFORMATION

None

~~-34-~~

Table of Contents

Item 6. EXHIBITS


Exhibit Number		Exhibit
~~Exhibit~~ ~~Number~~		~~Exhibit~~
31.1*
31.1*	Certification of ~~Douglas A. Michels~~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 ~~Ronald H. Spair~~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 ~~Douglas A. Michels~~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 ~~Ronald H. Spair~~Kenneth J. McGrath required by Rule 13a-14(b) or Rule 15d-14(b) under the Securities Exchange Act of 1934, as amended, and 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of ~~2002.~~2002.

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

101.SCH		Inline XBRL Taxonomy Extension Schema Document

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		Inline XBRL Taxonomy Extension Labels Linkbase Document

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document

104		Cover Page from Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in exhibits 101).

______________________

*Filed herewith

~~-35-~~

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

Table of Contents

SIGNATURES

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

ORASURE TECHNOLOGIES, INC.

/s/ ~~Ronald H. Spair~~Kenneth J. McGrath

Date: ~~November~~May 9, ~~2017~~2024

~~Ronald H. Spair~~Kenneth J. McGrath

~~Chief Operating Officer and~~

Chief Financial Officer

(Principal Financial Officer)

/s/~~Mark L. Kuna~~Michele M. Anthony

Date: ~~November~~May 9, ~~2017~~2024

~~Mark L. Kuna~~Michele M. Anthony

Senior Vice President, ~~Finance~~Controller and ~~Controller~~Chief Accounting Officer

(Principal Accounting Officer)

~~-36-~~


	September 30, 2017			December 31, 2016
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	76,770		$	107,959
Restricted cash		1,840			1,831
Short-term investments		83,372			11,160
Accounts receivable, net of allowance for doubtful accounts of $494 and $484		28,099			19,827
Inventories		16,859			11,799
Prepaid expenses		1,189			1,722
Other current assets		1,206			2,143

Total current assets		209,335			156,441
PROPERTY AND EQUIPMENT, net		21,496			20,033
INTANGIBLE ASSETS, net		8,972			10,337
GOODWILL		20,257			18,793
LONG TERM INVESTMENTS		18,290			—
OTHER ASSETS		3,909			2,331

	$	282,259		$	207,935

LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	9,624		$	4,633
Deferred revenue		1,186			1,388
Accrued expenses		15,813			11,314

Total current liabilities		26,623			17,335

OTHER LIABILITIES		3,928			2,304

DEFERRED INCOME TAXES		2,194			2,446

COMMITMENTS AND CONTINGENCIES (Note 7)
STOCKHOLDERS’ EQUITY
Preferred stock, par value $.000001, 25,000 shares authorized, none issued		—			—
Common stock, par value $.000001, 120,000 shares authorized, 60,631 and 56,001 shares issued and outstanding		—			—
Additional paid-in capital		385,978			350,528
Accumulated other comprehensive loss		(9,638	)		(14,220	)
Accumulated deficit		(126,826	)		(150,458	)

Total stockholders’ equity		249,514			185,850

	$	282,259		$	207,935


	Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017			2016
NET REVENUES:
Product	$	41,157	$	25,460	$	111,771		$	78,286
Other		1,157		6,791		3,265			14,413

		42,314		32,251		115,036			92,699
COST OF PRODUCTS SOLD		17,670		9,576		44,605			28,626

Gross profit		24,644		22,675		70,431			64,073

OPERATING EXPENSES:
Research and development		3,228		3,196		9,536			8,547
Sales and marketing		7,162		6,428		21,541			22,531
General and administrative		6,935		6,907		21,777			19,803
Gain on litigation settlement		—		—		(12,500	)		—

		17,325		16,531		40,354			50,881

Operating income		7,319		6,144		30,077			13,192
OTHER INCOME (EXPENSE)		113		498		676			(34	)

Income before income taxes		7,432		6,642		30,753			13,158
INCOME TAX EXPENSE		1,669		400		7,121			634

NET INCOME	$	5,763	$	6,242	$	23,632		$	12,524

EARNINGS PER SHARE:
BASIC	$	0.10	$	0.11	$	0.40		$	0.23

DILUTED	$	0.09	$	0.11	$	0.39		$	0.22

SHARES USED IN COMPUTING EARNINGS PER SHARE:
BASIC		60,090		55,653		58,511			55,549

DILUTED		62,172		56,530		60,569			56,273


	September 30, 2017		December 31, 2016
Raw materials	$	8,252	$	5,399
Work in process		1,746		1,034
Finished goods		6,861		5,366

	$	16,859	$	11,799


	Three Months				Nine Months
	Ended September 30,				Ended September 30,
	2017		2016		2017		2016
Net income	$	5,763	$	6,242	$	23,632	$	12,524

Weighted average shares of common stock outstanding:
Basic		60,090		55,653		58,511		55,549
Dilutive effect of stock options, restricted stock, and performance units		2,082		877		2,058		724

Diluted		62,172		56,530		60,569		56,273

Earnings per share:
Basic	$	0.10	$	0.11	$	0.40	$	0.23

Diluted	$	0.09	$	0.11	$	0.39	$	0.22


	Three Months Ended September 30,
	Dollars							Percentage of Total Net Revenues
	2017		2016		% Change			2017			2016
OSUR	$	22,605	$	17,133		32	%		53	%		53	%
DNAG		18,552		8,327		123			44			26

Net product revenues		41,157		25,460		62			97			79
Other		1,157		6,791		(83	)		3			21

Net revenues	$	42,314	$	32,251		31	%		100	%		100	%


	Three Months Ended September 30,
Market	2017		2016		% Change
Domestic HIV	$	3,622	$	4,858		(25	)%
International HIV		3,069		1,110		176
Domestic OTC HIV		1,515		1,311		16

Net HIV revenues		8,206		7,279		13

Domestic HCV		1,889		1,529		24
International HCV		6,154		1,293		376

Net HCV revenues		8,043		2,822		185

Net OraQuick^® HIV and HCV product revenues	$	16,249	$	10,101		61	%


	Nine Months Ended September 30,
Market	2017		2016		% Change
Domestic professional	$	4,368	$	4,155		5	%
International professional		552		607		(9	)
Domestic OTC		957		1,062		(10	)
International OTC		3,239		4,338		(25	)

Net cryosurgical systems revenues	$	9,116	$	10,162		(10	)%


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)}
July 1, 2017 - July 31, 2017		1,440	⁽³⁾	$	17.75		N/A		11,984,720
August 1, 2017 - August 31, 2017		—			—	$	—		11,984,720
September 1, 2017 - September 30, 2017		—			—		—		11,984,720

		1,440					—

~~Delaware~~

~~36-4370966~~

(State or Other Jurisdiction of

Incorporation or Organization)

(IRS Employer Identification No.)