Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

OVERVIEW

You should read this discussion together with the unaudited Condensed Consolidated Financial Statements, related notes, and other financial information included elsewhere in this Quarterly Report on Form 10-Q together with our audited consolidated financial statements, related notes, and other information contained in our Annual Report on Form 10-K for the year ended December 31, 2024 (the "Form 10-K"). The following discussion contains assumptions, estimates and other forward-looking statements that involve a number of risks and uncertainties, including those discussed under "Risk Factors,"in Part I, Item 1A of the Form 10-K and as described from time to time in our other filings with the Securities and Exchange Commission. These risks could cause our actual results to differ materially from those anticipated in these forward-looking statements.

We are a diversified healthcare company that seeks to establish industry leading positions in large and rapidly growing medical markets. Our pharmaceutical business features Somatrogon (hGH-CTP), a once-weekly human growth hormone injection. We have partnered with Pfizer Inc. ("Pfizer") for the development and commercialization of Somatrogon (hGH-CTP). Regulatory approvals for Somatrogon (hGH-CTP) for the treatment of growth hormone deficiency in children and adolescents have been secured in more than 50 markets, including the United States, European Union ("EU") Member States, Japan, Canada, and Australia, where it is marketed under the brand name NGENLA®. We also manufacture and sell Rayaldee, an FDA approved treatment for secondary hyperparathyroidism ("SHPT") in adults with stage 3 or 4 chronic kidney disease ("CKD") and vitamin D insufficiency, through our pharmaceutical division. We have also expanded our pharmaceutical pipeline with early-stage immune therapies targeting cancer and infectious diseases through our 2022 acquisition of ModeX Therapeutics, Inc. ("ModeX").

Our diagnostics business, BioReference Health, LLC ("BioReference"), is a highly specialized laboratory in the United States, with a sales and marketing team focused on growth and new product integration, including the 4Kscore® prostate cancer test. BioReference® offers a broad spectrum of diagnostic testing services for urology (4Kscore), and corrections nationwide, setting new standards with our industry-leading turnaround times. BioReference also provides comprehensive clinical and women's health testing in New York and New Jersey. Our test offerings are backed by a team of board-certified medical professionals and driven by the latest healthcare guidelines and standards marketed directly to physicians, geneticists, hospitals, clinics, correctional facilities, and other healthcare providers.

The Company maintains established, revenue-generating pharmaceutical platforms in Spain, Ireland, Chile, and Mexico, contributing to positive cash flow and facilitating market entry for our development pipeline. In addition to these platforms, we operate a global pharmaceutical development and commercial supply company, and a global supply chain operation.

RECENT DEVELOPMENTS

Completion of the Oncology Transaction

On September 15, 2025, the Company completed the sale of certain assets of BioReference (the "Oncology Transaction") to Laboratory Corporation of America Holdings ("Labcorp") for aggregate consideration of $192.5 million in cash, which is subject to certain adjustments as set forth in the Labcorp Asset Purchase Agreement (as defined in Note 1 to our Condensed Consolidated Financial Statements contained in this Quarterly Report on Form 10-Q (our "Quarterly Financial Statements")). Labcorp acquired BioReference's oncology diagnostics business and related clinical testing services assets. These assets were part of our diagnostics segment. The Company may also receive up to $32.5 million in performance-based contingent consideration as detailed in the Labcorp Oncology Purchase Agreement. We recognized a gain of $101.6 million from the Oncology Transaction for the three and nine months ended September 30, 2025.

Stock Repurchase Program

On April 4, 2025, the Company announced that its Board of Directors authorized an increase of $100.0 million to the Company's Common Stock repurchase program, established on July 18, 2024, bringing its aggregate capacity to $200.0 million. As previously reported in the Form 10-K, as of December 31, 2024, the Company had repurchased 25,825,785 shares of Common Stock at an average price per share of $1.56, for a cost of approximately $40.2 million. An additional 24,327,844 shares of Common Stock were repurchased at an average price per share of $1.36, for a cost of approximately $33.5 million during the nine months ended September 30, 2025. As of September 30, 2025, the total cost of repurchases under the program was approximately $73.8 million. Subsequent to the three and nine months ended September 30, 2025, an additional 400,000 shares were retired for a cost of approximately $0.6 million.

Tariffs and Trading Relationships

In April 2025, the U.S. government announced a series of tariffs on products imported from all countries and an additional individualized reciprocal tariff on the countries with which the United States has the largest trade deficits, including China. Certain of these tariffs have been stayed or otherwise modified, and, since April 2025, the U.S. government has continued to announce new or revised tariffs. Increased tariffs by the United States have led and may continue to lead to the imposition of retaliatory tariffs by foreign jurisdictions. Additionally, the U.S. government has announced and rescinded multiple tariffs on several foreign jurisdictions, which has increased uncertainty regarding the ultimate effect of the tariffs on economic conditions. Current uncertainties about tariffs and their effects on trading relationships may affect costs for and availability of raw materials or contribute to inflation in the markets in which we operate. Although we are continuing to monitor the economic effects of such announcements, as well as opportunities to mitigate their related impacts, costs and other effects associated with the tariffs remain uncertain.

RESULTS OF OPERATIONS

Foreign Currency Exchange Rates

Approximately 25.2% of our revenue for the nine months ended September 30, 2025, was denominated in currencies other than the U.S. Dollar (USD). This compares to 22.3% for the same period in 2024. Our financial statements are reported in USD; therefore, fluctuations in exchange rates affect the translation of foreign-denominated revenue and expenses. During the nine months ended September 30, 2025 and the year ended December 31, 2024, our most significant currency exchange rate exposures were to the Chilean Peso and Euro. Gross accumulated currency translation adjustments, recorded as a separate component of shareholders' equity, totaled $22.1 million and $52.7 million at September 30, 2025 and December 31, 2024, respectively.

We are subject to foreign currency transaction risk due to fluctuations in exchange rates between the time a transaction is initiated and settled. To mitigate this risk, we use foreign currency forward contracts. These contracts fix an exchange rate, allowing us to offset potential losses (or gains) caused by exchange rate changes at the settlement date. As of September 30, 2025, we held $5.3 million in open foreign exchange forward contracts related to inventory purchases on letters of credit, compared to zero open contracts as of December 31, 2024.

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2025 AND 2024

Our consolidated income from operations for the three months ended September 30, 2025 and 2024was as follows:

Diagnostics

Revenue.Revenue from services for the three months ended September 30, 2025 decreased by approximately $26.0 million, a decrease of 21.5%compared to the same period in 2024. This change was driven by total reductions of $29.5 million composed of $19.9 million reflecting the September 2024 sale of BioReference's lab operations, and $9.6 million from lower clinical test volume in continuing operations, which were partially offset by a $3.5 million increase from higher clinical test reimbursement rates.

Estimated collection amounts are subject to the complexities and ambiguities of billing, reimbursement regulations and claims processing, as well as considerations unique to Medicare and Medicaid programs, and require us to consider the potential for retroactive adjustments when estimating variable consideration in the recognition of revenue for the period during which the related services are rendered. For both the three months ended September 30, 2025 and 2024, we recorded $0.7 million of negative revenue adjustments. These adjustments were due to changes in estimates of implicit price concessions for performance obligations satisfied in prior periods, mainly due to the composition of client pay mix.

The composition of revenue from services by payor for the three months ended September 30, 2025 and 2024was as follows:

Cost of revenue. Cost of revenue for the three months ended September 30, 2025 decreased $28.4 million, a decrease of 26.1%compared to the three months ended September 30, 2024. The decrease related predominantly to our disposition of certain lab operations. These divested operations had incurred $24.0 million in cost of revenue for the three months ended September 30, 2024, costs which did not recur for the comparable 2025 period. The remaining decrease primarily reflects lower employee headcount, resulting from both the foregoing divestiture and ongoing cost-reduction initiatives at BioReference, as well as changes in the testing mix for the ongoing operations.

Selling, general and administrative expenses.Selling, general and administrative expenses for the three months ended September 30, 2025 and 2024were $31.5 millionand $70.9 million, respectively, representing a decrease of 55.6%from the prior period. The decrease was primarily driven by a $32.6 million reduction in employee-related expenses resulting from continued cost-reduction initiatives, and a $7.7 million decrease in costs associated with divested operations, which had been incurred for the three months ended September 30, 2024.

Research and development expenses. The following table summarizes the components of our research and development expenses:

The decrease in research and development expenses for the three months ended September 30, 2025 as compared to 2024 was primarily due to continued cost-reduction initiatives implemented at BioReference.

Amortization of intangible assets. Amortization of intangible assets was $3.0 millionand $3.9 million, respectively, for the three months ended September 30, 2025 and 2024. This decrease was primarily due to the removal of amortizable intangible assets associated with the Oncology Transaction that closed during September 2025.

Gain on sale of assets. Gain on sale of assets for the three months ended September 30, 2025 and 2024, was $101.6 million and $121.5 million, respectively. This gain was due to the Oncology Transaction which closed during the third quarter of 2025, and the BioReference Transaction which closed during the third quarter of 2024.

Pharmaceuticals

Revenue from products. Revenue from products for the three months ended September 30, 2025 decreased $1.5 millionor 3.7%, compared to the three months ended September 30, 2024. The decrease was primarily driven by lower sales volume in certain international operations, which resulted in a $3.2 million decrease in revenue. This lower volume was primarily due to unfavorable impacts from the timing of customer orders and product mix. This was partially offset by a $1.7 million increase in revenue from Rayaldee, which increased to $7.5 million from $5.8 million in the 2024 period.

Revenue from transfer of intellectual property and other. Revenue from intellectual property and other increased by $5.5 million to $18.7 million for the three months ended September 30, 2025, from $13.2 million for the same period last year. This growth was primarily driven by the $2.6 million increase from the BARDA Contract (as defined and described in Note 14 to our Quarterly Financial Statements), with revenue of $8.2 million for the three months ended September 30, 2025, compared to $5.5 million for the 2024 period. Additionally, we had an increase of $1.8 million from gross profit share and royalty payments from NGENLA (Somatrogon) and Pfizer's Genotropin® (Somatropin), growing to $8.8 million from $7.0 million in the prior year. Furthermore, contract manufacturers' commercial milestones contributed to a $1.6 million increase, rising to $1.7 million from $0.1 million in the prior year.

Cost of revenue. Cost of revenue for the three months ended September 30, 2025 decreased $3.3 million, or 13.3%, compared to the three months ended September 30, 2024. The decrease was primarily driven by a corresponding decline in product costs related to lower sales volume from our international subsidiaries. Our Chilean subsidiary was disproportionately affected by the combination of both lower sales volume and unfavorable foreign exchange effects. However, the collective performance of other international subsidiaries helped mitigate this impact, as they offset some of the lower sales volume and the negative effects of foreign exchange.

Selling, general and administrative expenses. Selling, general and administrative expenses for the three months ended September 30, 2025 and 2024 were $13.1 millionand $15.2 million, respectively, a decrease of 13.9%from the prior year

period. The decrease was primarily driven by lower employee-related expenses, mainly associated with Rayaldee commercial operations and a decrease in professional fees from our international operations primarily related to tax litigation.

Research and development expenses. Research and development expenses for the three months ended September 30, 2025 and 2024 were $29.6 millionand $28.2 million, respectively, an increase of 5.0%from the prior year period. Research and development expenses include external and internal expenses, partially offset by third-party grants and funding arising from collaboration agreements. External expenses include clinical and non-clinical activities performed by contract research organizations, lab services, purchases of drug and diagnostic product materials and manufacturing development costs. We track external research and development expenses by individual program for phase 3 clinical trials for drug approval and premarket approval for diagnostics tests, if any. Internal expenses include employee-related expenses such as salaries, benefits and equity-based compensation expense. Other internal research and development expenses are incurred to support overall research and development activities and include expenses related to general overhead and facilities.

The following table summarizes the components of our research and development expenses:

Research and development expenses for the three months ended September 30, 2025 increased primarily due to higher expenses at ModeX, driven by growth in our BARDA collaboration and advancements and expansion in our early-stage programs.

Amortization of intangible assets. Amortization of intangible assets was $16.5 millionfor both the three months ended September 30, 2025 and 2024. The expense reflects the amortization of acquired intangible assets with defined useful lives. Our indefinite lived IPR&D assets will not be amortized until the underlying development programs are completed. Upon obtaining regulatory approval by the FDA, the IPR&D assets will be accounted for as a finite-lived intangible asset and amortized on a straight-line basis over its estimated useful life. The assets will be amortized on a straight-line basis over their estimated useful life of approximately 12 years.

Corporate

Operating loss for our unallocated corporate operations was $9.4 millionfor the three months ended September 30, 2025, compared to $12.1 million for the same period in 2024. This decrease was primarily due to lower employee-related expenses, and principally reflects general and administrative expenses incurred in connection with our corporate operations.

Other

Interest income. Interest income for the three months ended September 30, 2025 and 2024 was $3.0 millionand $2.9 million, respectively. The increase in interest income was primarily driven by interest earned on a larger average balance of cash and cash equivalents invested during the 2025 period.

Interest expense. Interest expense decreased to $11.4 millionfor the three months ended September 30, 2025, compared to $17.4 millionfor the same period of 2024. The decrease was attributable to lower interest incurred on the 2029 Convertible 144A Notes and the 2044 Notes, including amortization of deferred financing and debt issuance costs.

Fair value changes of derivative instruments, net. Fair value changes of derivative instruments, net for the three months ended September 30, 2025 and 2024, was $38.0 thousandand $1.0 thousandof income, respectively. Derivative income was principally related to foreign currency forward exchange contracts at OPKO Chile.

Other income (expense), net. Other income (expense), net decreased by $46.9 million to $1.7 millionexpense for the three months ended September 30, 2025, compared to $48.6 millionin income during the prior year period. In the 2024 period, we recorded income of $45.9 million from our investment in GeneDx Holdings (as defined in Note 6 to our Quarterly Financial Statements contained in this Quarterly Report on Form 10-Q), consisting of $35.4 million of income related to changes in the fair value and $10.5 million income from the sale of shares. Foreign currency income was $1.1 million for the 2025 period, compared with $4.1 million income recorded in the 2024 period.

Income tax provision. Our income tax provision for the three months ended September 30, 2025 and 2024 was $19.8 millionand $23.5 million, respectively. The $3.7 million decrease in the provision was primarily drive by the discrete, non-recurring tax expenses related to the BioReference Transaction and the Oncology Transaction. While the U.S. federal statutory income tax rate is 21%, our consolidated effective tax rate for both periods differed from this rate primarily due to the relative mix of earnings and losses generated in the U.S. versus foreign tax jurisdictions, as well as the operating results in tax jurisdictions which do not result in a tax benefit.

Loss from investments in investees. We have invested in certain early-stage companies that we perceive to have valuable proprietary technology and significant potential to create value for us as an equity holder. We account for these investments under the equity method of accounting, resulting in the recording of our proportionate share of their losses until our share of their loss exceeds our investment. Until the investees' technologies are commercialized, if ever, we anticipate they will report net losses Loss from investments in investees was $3.0 thousand for both the three months ended September 30, 2025 and 2024.

FOR THE nine months ended September 30, 2025 and 2024

Our consolidated (loss) from operations for the nine months ended September 30, 2025 and 2024 was as follows:

Diagnostics

Revenue.Revenue from services for the nine months ended September 30, 2025 decreased by approximately $78.4 million, a decrease of 20.8% compared to the same period in 2024. This change was driven by total reductions of $100.6 million, composed of $72.3 million reflecting the September 2024 sale of BioReference's lab operations, and $28.3 million from lower clinical test volume in continuing operations, which were partially offset by a $22.2 million increase from higher clinical test reimbursement rates.

Estimated collection amounts are subject to the complexities and ambiguities of billing, reimbursement regulations and claims processing, as well as considerations unique to Medicare and Medicaid programs, and require us to consider the potential for retroactive adjustments when estimating variable consideration in the recognition of revenue for the period during which the related services are rendered. For the nine months ended September 30, 2025 and 2024, we recorded $1.3 million and $2.2 million, respectively, of negative revenue adjustments due to changes in estimates of implicit price concessions for services provided in prior periods, primarily due to shifts in the composition of our client and patient pay mix.

The composition of revenue from services by payor for the nine months ended September 30, 2025 and 2024 was as follows:

Cost of revenue. Cost of revenue for the nine months ended September 30, 2025 decreased $78.5 million, a decrease of 24.1% compared to the nine months ended September 30, 2024. The decrease is related predominantly to our disposition of certain lab operations in the BioReference Transaction. These divested operations had incurred $71.9 million in cost of revenue for the nine months ended September 30, 2024, costs which did not recur for the comparable 2025 period. The remaining decrease primarily reflects lower employee headcount, resulting from both the foregoing divestiture and ongoing cost-reduction initiatives at BioReference, as well as changes in the testing mix for the ongoing operations.

Selling, general and administrative expenses. Selling, general and administrative expenses for the nine months ended September 30, 2025 and 2024 were $102.8 million and $161.2 million, respectively, representing a decrease of 36.2% from the prior period. The decrease was driven by lower employee-related expenses resulting from continued cost-reduction initiatives and the absence of $26.8 million in costs associated with divested operations (which had been incurred for the nine months ended September 30, 2024). These favorable impacts, which reduced ongoing expenses, were partially offset by $4.7 million in one-time costs recorded for the nine months ended September 30, 2025 related to adjustments to the useful life of certain operating leases.

Research and development expenses. The following table summarizes the components of our research and development expenses:

The decrease in research and development expenses for the nine months ended September 30, 2025 as compared to 2024 was primarily due to a decrease in employee-related expenses as a result of the continued cost-reduction initiatives implemented at BioReference.

Amortization of intangible assets. Amortization of intangible assets was $9.8 million and$12.9 million, respectively, for the nine months ended September 30, 2025 and 2024. This decrease was primarily due to the removal of amortizable intangible assets associated with the lab operations divested in September 2024 and assets included in the Oncology Transaction (defined in Note 1 to our Condensed Consolidated Financial Statements contained in this Quarterly Report on Form 10-Q).

Gain on sale of assets. Gain on sale of assets for the nine months ended September 30, 2025 and 2024, was $101.6 million and $121.5 million, respectively. This gain was due to the Oncology Transaction, which closed during the third quarter of 2025, and the BioReference Transaction, which closed during the third quarter of 2024.

Pharmaceuticals

Revenue from products. Revenue from products for the nine months ended September 30, 2025 decreased $4.4 million or 3.8%, compared to the nine months ended September 30, 2024. The decrease was primarily driven by lower sales volume in our international operations, which resulted in a $5.5 million decrease in revenue. This decrease was impacted primarily by unfavorable foreign exchange of $1.1 million, as well as the timing of customer orders and product mix. This negative impact was partially offset by a $1.1 million increase in revenue from Rayaldee, which grew to $21.0 million compared to $19.9 million in the 2024 period.

Revenue from transfer of intellectual property and other. Revenue from intellectual property and other increased by $11.7 million to $46.0 million for the nine months ended September 30, 2025, from $34.3 million in the same period last year. The increase was primarily driven by a $8.9 million increase from the BARDA Contract, with revenue recognized under the contract totaling $21.6 million for the nine months ended September 30, 2025, compared to $12.8 million for the 2024 period. Additionally, contract manufacturers' commercial milestones contributed a $4.1 million increase, rising to $4.6 million from $0.5 million in the prior year. Furthermore, we had an increase of $0.5 million from gross profit share and royalty payments from NGENLA (Somatrogon) and Pfizer's Genotropin® (Somatropin), growing to $19.4 million from $18.9 million in the prior year. These positive factors were partially offset by a net decrease of $1.8 million from other revenue during the period.

Cost of revenue. Cost of revenue for the nine months ended September 30, 2025 decreased $0.6 million, a decrease of 0.9%, compared to the nine months ended September 30, 2024. This decrease primarily reflected lower product costs resulting from the decrease in sales volume from our international subsidiaries, which was influenced by shifts in product mix due to the timing of customer orders. The impact of this overall decline was concentrated at our Chilean subsidiary, which was disproportionately affected by both lower sales volume and unfavorable foreign exchange effects. This was partially offset, however, by the collective performance of other international subsidiaries, which managed to mitigate some of the lower sales volume and negative foreign exchange impact.

Selling, general and administrative expenses.Selling, general and administrative expenses for the nine months ended September 30, 2025 and 2024 were $39.0 million and $44.3 million, respectively, a decrease of 12.0% from the prior year period. This $5.3 million decrease was primarily driven by lower employee-related expenses resulting from operational efficiencies, particularly impacting the Rayaldee commercial operations. This decrease was further aided by a reduction in costs from international operations, which reflected lower professional fees, primarily related to tax litigation.

Research and development expenses. Research and development expenses for the nine months ended September 30, 2025 and 2024 were $89.7 million and $73.2 million, respectively, an increase of 22.5% from the prior year period. Research and development expenses include external and internal expenses, partially offset by third-party grants and funding arising from collaboration agreements. External expenses include clinical and non-clinical activities performed by contract research organizations, lab services, purchases of drug and diagnostic product materials and manufacturing development costs. We track external research and development expenses by individual program for phase 3 clinical trials for drug approval and premarket approval for diagnostics tests, if any. Internal expenses include employee-related expenses such as salaries, benefits and equity-based compensation expense. Other internal research and development expenses are incurred to support overall research and development activities and include expenses related to general overhead and facilities.

The following table summarizes the components of our research and development expenses:

Research and development expenses for the nine months ended September 30, 2025 increased primarily due to higher expenses at ModeX. This increase was driven by a combination of factors, including growth in our early-stage programs and BARDA collaboration, and higher employee-related expenses due to an increase in headcount.

Amortization of intangible assets. Amortization of intangible assets was $49.1 million and $49.4 million, respectively, for the nine months ended September 30, 2025 and 2024. The expense reflects the amortization of acquired intangible assets with defined useful lives. Our indefinite lived IPR&D assets will not be amortized until the underlying development programs are completed. Upon obtaining regulatory approval by the FDA, the IPR&D assets will be accounted for as a finite-lived intangible asset and amortized on a straight-line basis over its estimated useful life. The assets will be amortized on a straight-line basis over their estimated useful life of approximately 12 years.

Corporate

Operating loss for our unallocated corporate operations for the nine months ended September 30, 2025 and 2024 was 31.0 million and $31.8 million, respectively, and principally reflects general and administrative expenses incurred in connection with our corporate operations. The decrease in operating loss was primarily due to lower employee-related expenses.

Other

Interest income. Interest income for the nine months ended September 30, 2025 and 2024 was $11.0 million and $4.1 million, respectively. The increase in interest income is driven by interest earned on our larger cash investment.

Interest expense. Interest expense increased to $97.2 million for the nine months ended September 30, 2025, compared to $33.2 million for the same period of 2024. The increase was primarily attributable to $59.1 million from the amortization of $54.7 million in unamortized debt discount and $4.4 million in debt issuance costs related to the Note Exchange Transactions (as defined in Note 7 to our Condensed Consolidated Financial Statements contained in this Quarterly Report on Form 10-Q). In addition, interest expense was impacted by $8.1 million interest incurred on the 2029 Convertible Notes and the 2044 Notes, including amortization of deferred financing and debt issuance costs.

Fair value changes of derivative instruments, net. Fair value changes of derivative instruments, net for the nine months ended September 30, 2025 and 2024, was $0.3 million and $26.2 million of expense, respectively. Derivative expense was principally related to the change in fair value on the 2029 Convertible Notes (see Note 7 to our Condensed Consolidated Financial Sstatements contained in this Quarterly Report on Form 10-Q for further information) and on foreign currency forward exchange contracts at OPKO Chile.

Other income (expense), net. Other income (expense), net decreased by $157.7 million to $28.9 million of expense for the nine months ended September 30, 2025, compared to $128.8 million of income in the prior year period. The decrease is related primarily to our GeneDx (as defined in Note 6 to our Condensed Consolidated Financial Statements contained in this Quarterly Report on Form 10-Q) investment; we recognized $129.1 million of income during the nine months ended September 30, 2024, which included $118.6 million reflecting an increase in the fair value of our investment (primarily unrealized gains) and $10.5 million from the sale of GeneDx shares. The decrease was also caused by the inclusion of $32.6 million in inducement expense related to the Note Exchange Transactions (as defined in Note 6 to our Condensed Consolidated Financial Statements contained in this Quarterly Report on Form 10-Q) in the 2025 period. Furthermore, a foreign currency loss of $1.5 million was recorded for the 2025 period, compared with income of $0.1 million in the 2024 period.

Income tax benefit (provision). Our income tax benefit (provision) for the nine months ended September 30, 2025 and 2024 was $0.1 million benefit and $21.9 million provision, respectively. The $22.0 million increase in income tax benefit was primarily a result of the discrete, non-recurring tax expenses related to the BioReference Transaction and the Oncology Transaction. While the U.S. federal statutory income tax rate is 21%, our consolidated effective tax rate for both periods differed from this rate primarily due to the relative mix of earnings and losses generated in the U.S. versus foreign tax jurisdictions, as well as the operating results in tax jurisdictions which do not result in a tax benefit.

Loss from investments in investees. We have invested in certain early-stage companies that we perceive to have valuable proprietary technology and significant potential to create value for us as an equity holder. We account for these investments under the equity method of accounting, resulting in the recording of our proportionate share of their losses until our share of their loss exceeds our investment. Until the investees' technologies are commercialized, if ever, we anticipate they will report net losses. Loss from investments in investees was $12.0 thousand and $7.0 thousand for the nine months ended September 30, 2025 and 2024, respectively.

LIQUIDITY AND CAPITAL RESOURCES

On September 30, 2025, we had cash, cash equivalents and restricted cash of approximately $428.9 million. Cash used in operations of $152.6 millionfor the nine months ended September 30, 2025principally reflected general and administrative expenses related to our corporate operations, research and development activities and sales and marketing activities related to our pharmaceutical and diagnostic business. Cash provided by investing activities was $232.3 millionfor the nine months ended September 30, 2025 primarily reflected proceeds from the Labcorp sales including escrow released of $197.8 million and $51.7 million in proceeds from the sale of equity securities, offset by a $7.7 million investment in Entera and $9.6 million in capital expenditures. Cash used in financing activities for the nine months ended September 30, 2025 of $99.7 millionprimarily reflected the re-purchase of Common Stock for $33.5 million and the repurchase of 2029 Convertible 144A Notes for $62.2 million, and net repayments on our lines of credit of $3.7 million. We have historically not generated sustained positive cash flow sufficient to offset our operating and other expenses, and our primary sources of cash have been from the public and private placement of equity and debt, as well as credit facilities available to us.

On September 15, 2025, the Company consummated the Oncology Transaction, pursuant to which Labcorp acquired select assets of the Company's subsidiary, BioReference. Labcorp paid to the Company aggregate consideration of $192.5 million, consisting of $173.3 million in cash and an escrow of $19.2 million, subject to certain adjustments as set forth in the Labcorp Asset Purchase Agreement. Labcorp acquired BioReference's oncology diagnostics business and related clinical testing services assets.

On April 4, 2025, the Company announced that its Board of Directors has authorized an increase of $100.0 million to the Company's existing Common Stock repurchase program, bringing the aggregate capacity of the program to $200.0 million. Approximately $50.6 million shares of Common Stock had been repurchased under the existing program since its authorization in July 2024. Under this program, the Company may repurchase shares from time to time through various methods, including open market purchases, block trades, privately negotiated transactions, accelerated share repurchases, as well as pursuant to pre-set trading plans meeting the requirements of Rule 10b5-1(c) of the Exchange Act, and otherwise in compliance with applicable laws. The timing and amount of any repurchases is subject to general market conditions, the Company's capital management, investment opportunities, and other factors. The repurchase program does not obligate the Company to repurchase any specific number of shares, has no time limit, and may be modified, suspended, or discontinued at any time at the Company's discretion.

On April 1, 2025, the Company consummated the Note Exchange Transactions related to its 2029 Convertible 144A Notes. Agreements were entered into with certain institutional holders on March 27 and March 28, 2025, and the exchange transactions closed on April 1, 2025. In total, the Company exchanged $159,221,000 aggregate principal amount of the 2029 Convertible 144A Notes for 121,437,998 shares of Common Stock and cash payments totaling approximately $63.5 million, inclusive of accrued and unpaid interest. The exchanged 2029 Convertible 144A Notes were subsequently retired.

During the first quarter of 2025, the Company sold its entire holding of 620 thousand shares of GeneDx common stock at various prices per share for approximately $51.7 million in aggregate proceeds. As a result of these sales, the Company no longer holds shares in GeneDx.

On January 7, 2025, ModeX announced the dosing of the first participant in a Phase 1 study of an EBV vaccine candidate being developed in collaboration with Merck. This achievement triggered a $12.5 million cash milestone payment from Merck to ModeX under the Merck Agreement. Related revenue of $12.5 million was recognized in the fourth quarter of 2024 upon satisfaction of the underlying performance obligation. Pursuant to the Merck Agreement, Merck obtained a license to certain patent rights and know-how in connection with the development of ModeX's preclinical nanoparticle vaccine candidate targeting the Epstein-Barr Virus. Under the terms of the Merck Agreement, ModeX is eligible to receive up to an additional $860.0 million upon the achievement of certain commercial and development milestones.

ModeX and Merck have established a strategic collaboration with a detailed research plan to guide the development of such a vaccine or related product. This plan includes the creation of a joint steering committee, and the potential use of third-party contract development and manufacturing organization to carry out such activities unless otherwise agreed. Merck will reimburse ModeX for development costs incurred as part of this research plan. To date, we have incurred $26.8 million of development costs related to the Epstein-Barr Virus, which Merck has reimbursed in full.

In September 2024, ModeX entered into the BARDA Amendment which increased funding by $26.9 million, for the ongoing development, manufacturing, and execution of a Phase 1 clinical trial for a next-generation MSTAR multispecific antibody with broad neutralizing activity against known variants of SARS-CoV-2. The BARDA Amendment also included BARDA's exercise of an option for the development of a multispecific protein antibody for influenza or another pathogen, with the additional funding allocated to cover the expanded work. These modifications increased the total value of the BARDA Contract to $110.0 million, with a potential value, of $205.0 million if BARDA exercises all options thereunder to expand

ModeX's services. As of September 30, 2025, the aggregate amount remaining to be funded by BARDA, which is subject to performance obligations and excluding unexercised contract options, was $63.4 million.

On July 17, 2024, we completed a private offering of $250 million aggregate principal amount of the 2044 Notes in accordance with the terms of the 2044 Note Purchase Agreement. The 2044 Notes are secured by the Company's profit share payments from Pfizer, received under the Restated Pfizer Agreement. The 2044 Notes bear interest at the 3-month SOFR plus 7.5%, subject to a minimum interest rate of 4.0% per annum. The 2044 Notes mature in July 2044, with interest-only payments required for the first four years.

As of September 30, 2025, the total commitments under our lines of credit with financial institutions in Chile and Spain were $30.9 million, of which $12.5 millionwas drawn as of September 30, 2025. On September 30, 2025, the weighted average interest rate on these lines of credit was approximately 5.4%. These lines of credit are short-term and are used primarily as a source of working capital. The highest aggregate principal balance at any time outstanding during the nine months ended September 30, 2025was $14.3 million. We intend to continue to draw under these lines of credit as needed. There is no assurance that these lines of credit or other funding sources will be available to us on acceptable terms, or at all, in the future.

Our liquidity will be impacted by the successful achievement of various milestones and the generation of royalty revenues under our existing collaboration and licensing agreements. As of September 30, 2025, the potential payments from these agreements are as follows:

Merck Agreement:

Restated Pfizer Agreement:

VFMCRP Agreement:

Nicoya Agreement:

The timing and ultimate receipt of these milestone and royalty payments are subject to the achievement of the specified events and certain risks and uncertainties inherent in drug development and commercialization. For further discussion of these risks, please refer to "Item 1A-Risk Factors" of the Form 10-K for the year ended December 31, 2024.

We believe that the cash, cash equivalents and restricted cash on hand on September 30, 2025 are sufficient to meet our anticipated cash requirements for operations and debt service beyond the next 12 months. We based this estimate on assumptions that may prove to be wrong or are subject to change, and we may be required to use our available cash resources sooner than we currently expect. If we acquire additional assets or companies, accelerate our product development programs or initiate additional clinical trials, we will need additional funds. Our future cash requirements, and the timing of those requirements, will depend on a number of factors, including the approval and success of our products and products in development, particularly our long acting Somatrogon (hGH-CTP) for which we have received approval in over 50 markets, including the United States, Europe, Japan, Australia and Canada, the commercial success of Rayaldee, BioReference's financial performance, possible acquisitions and dispositions, the continued progress of research and development of our product candidates, the timing and outcome of clinical trials and regulatory approvals, the costs involved in preparing, filing, prosecuting, maintaining, defending, and enforcing patent claims and other intellectual property rights, the status of competitive products, the availability of financing, our success in developing markets for our product candidates and results of government investigations, payor claims, existing legal proceedings (including the ITA litigation) and those that may arise in the future. We have historically not generated sustained positive cash flow and if we are not able to secure additional funding when needed, we may have to delay, reduce the scope of, or eliminate one or more of our clinical trials or research and development programs or possible acquisitions or reduce our marketing or sales efforts or cease operations.

The following table provides information as of September 30, 2025, with respect to the amounts and timing of our known contractual obligation payments due by period.

The preceding table does not include information with respect to the amounts of obligations that are not currently determinable, including the following:

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

There were no material changes to our critical accounting policies and estimates described in our Form 10-K that have had a material impact on our Quarterly Financials and related notes.

RECENT ACCOUNTING PRONOUNCEMENTS

Accounting standards yet to be adopted.

In November 2024, the FASB issued ASU 2024-03, Income Statement (Subtopic 220-40): Disaggregation of Income Statement Expenses is effective prospectively to financial statements issued for reporting period after the effective date or retrospectively to any or all prior periods presented in the financial statements, for annual periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. We are currently evaluating the potential impact of adopting this new guidance on our consolidated financial statements and related disclosures.

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures ("ASU 2023-09"), which modifies the rules on income tax disclosures to require entities to disclose (i) specific categories in the rate reconciliation, (ii) the income or loss from continuing operations before income tax expense or benefit (separated between domestic and foreign) and (iii) income tax expense or benefit from continuing operations (separated by federal, state and foreign). ASU 2023-09 also requires entities to disclose their income tax payments to international, federal, state, and local jurisdictions, among other changes. The guidance became effective for annual periods beginning after December 15, 2024. Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance. ASU 2023-09 should be applied on a prospective basis, but retrospective application is permitted. We are currently evaluating the potential impact of adopting this new guidance on our consolidated financial statements and related disclosures.

Recently adopted accounting standards.

In November 2024, the FASB issued ASU 2024-04, Debt (Subtopic 470-20): Debt with Conversion and Other Options. ("ASU 2024-04") clarifies the assessment of whether a transaction should be accounted for as an induced conversion or extinguishment of convertible debt when changes are made to conversion features as part of an offer to settle the instrument. ASU 2024-04 is effective for reporting periods beginning after December 15, 2025, and interim periods within those annual reporting periods. Early adoption is permitted for entities that have adopted ASU 2020-06. We adopted ASU 2024-04 prospectively effective January 1, 2025. The adoption of ASU 2024-04 did not have a material impact on our Condensed Consolidated Financial Statements.

In November 2023, the FASB issued ASU No 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures ("ASU 2023-07"). ASU 2023-07 enhances disclosures for significant segment expenses for all public entities required to report segment information in accordance with ASC 280. ASC 280 requires a public entity to report for each reportable segment a measure of segment profit or loss that its CODM uses to assess segment performance and to make decisions about resource allocations. The Company adopted ASU 2023-07 in the fourth quarter of fiscal year 2024. This guidance was applied prospectively. The adoption of ASU 2023-07 did not have a material impact on our Condensed Consolidated Financial Statements.

In 2021, the Organization for Economic Co-operation and Development ("OECD") established an inclusive framework on base erosion and profit shifting and agreed on a two-pillar solution ("Pillar Two") to global taxation, focusing on global profit allocation and a 15% global minimum effective tax rate. On December 15, 2022, the EU member states agreed to implement the OECD's global minimum tax rate of 15%. The OECD issued Pillar Two model rules and continues to release guidance on these rules. Various participating countries have enacted or have announced plans to enact new tax laws to implement the global minimum tax, some effective beginning 2024. We considered the applicable tax law changes on Pillar Two implementation in the relevant countries, and there is no material impact to our tax results for the period. We anticipate further legislative activity and administrative guidance, and will continue to evaluate the impacts of enacted legislation and pending legislation to enact Pillar Two Model Rules in the non-US tax jurisdictions we operate in.