For the transition period from _________to _________ .

Title of each class

Trading

Symbol(s)

Name of each exchange on which registered

Common Stock, $0.000001 par value per share

OSUR

The NASDAQ Stock Market LLC

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

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

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

Large accelerated filer

☐

Accelerated filer

☒

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

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

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

As of ~~May 3,~~August 1, 2023, the registrant had ~~73,262,370~~73,414,695 shares of common stock, $0.000001 par value per share, outstanding.

FORWARD-LOOKING STATEMENTS

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

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

•

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

•

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

•

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

•

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

•

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

•

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

•

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

•

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

•

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

•

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

•

Our ability to meet increased demand for our products;

•

The impact of replacing distributors on our business;

•

Inventory levels at distributors and other customers;

•

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

•

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

•

Reduction or deferral of public funding available to customers;

•

Competition from new or better technology or lower cost products;

•

Our ability to develop, commercialize and market new products;

•

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

Table of Contents

•

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

•

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

•

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

•

Reliance on sole supply sources for critical products and components;

•

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

•

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

•

The impact of negative economic conditions on our business;

•

Our ability to maintain sustained profitability;

•

Our ability to increase our gross margins;

•

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

•

Volatility of our stock price;

•

Uncertainty relating to patent protection and potential patent infringement claims;

•

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

•

Availability of licenses to patents or other technology;

•

Ability to enter into international manufacturing agreements;

•

Obstacles to international marketing and manufacturing of products;

•

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

•

Adverse movements in foreign currency exchange rates;

•

Loss or impairment of sources of capital;

•

Our ability to attract and retain qualified personnel;

•

Our exposure to product liability and other types of litigation;

•

Changes in international, federal or state laws and regulations;

•

Customer consolidations and inventory practices;

•

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

•

The impact of terrorist attacks and civil unrest; and

•

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

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

Table of Contents

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

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

Table of Contents

~~PART I. FINANCIAL INFORMATION~~


PART I. FINANCIAL INFORMATION


	Page No.

Item 1. Financial Statements (Unaudited)

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

Consolidated Statements of Operations for the three and six months ended ~~March 31,~~Ju ne 3 0 , 2023 and 2022		45

Consolidated Statements of Comprehensive Income (Loss) for the three and six months ended ~~March 31,~~June 3 0 , 2023 and 2022		56

Consolidated Statements of Cash Flows for the ~~three~~ six months ended ~~March 31,~~June 3 0 , 2023 and 2022		67

Notes to the Consolidated Financial Statements		78

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		1417

Item 3. Quantitative and Qualitative Disclosures About Market Risk		1823

Item 4. Controls and Procedures		1823

PART II. OTHER INFORMATION

Item 1. Legal Proceedings		1924

Item 1A. Risk Factors		1924

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		1925

Item 3. Defaults Upon Senior Securities		2025

Item 4. Mine Safety Disclosures		2025

Item 5. Other Information		2025

Item 6. Exhibits		2126

Signatures		2227

Table of Contents

Item 1.FINANCIAL STATEMENTS

Table of Contents

ORASURE TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(in thousands, except per share amounts)


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

March 31, 2023

December 31, 2022

ASSETS

Current Assets:

Cash and cash equivalents
$
90,194

$
83,980

Short-term investments

22,178

26,867

Accounts receivable, net of allowance of $2,297 and $2,365

107,445

70,797

Inventories

77,189

95,704

Prepaid expenses

6,161

6,273

Other current assets

40,428

41,569

Total current assets

343,595

325,190

Noncurrent Assets:

Property, plant and equipment, net of accumulated depreciation of $72,400 and $69,881

57,343

59,413

Operating right-of-use assets, net

9,922

10,399

Finance right-of-use assets, net

1,136

1,293

Intangible assets, net of accumulated amortization of $31,732 and $31,077

11,184

11,694

Goodwill

35,204

35,104

Other noncurrent assets

1,031

1,087

Total noncurrent assets

115,820

118,990

TOTAL ASSETS
$
459,415

$
444,180

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:

Accounts payable
$
27,396

$
38,020

Deferred revenue

1,989

2,273

Accrued expenses and other current liabilities

22,673

25,762

Finance lease liability

1,229

1,179

Operating lease liability

1,761

1,764

Acquisition-related contingent consideration obligation

75

65

Total current liabilities

55,123

69,063

Noncurrent Liabilities:

Finance lease liability

472

503

Operating lease liability

8,623

9,101

Acquisition-related contingent consideration obligation

—

99

Other noncurrent liabilities

609

581

Deferred income taxes

409

408

Total noncurrent liabilities

10,113

10,692

TOTAL LIABILITIES

65,236

79,755

Commitments and contingencies (Note 12)

STOCKHOLDERS' EQUITY

Preferred stock, par value $.000001, 25,000 shares authorized, none issued

—

—

Common stock, par value $.000001, 120,000 shares authorized, 73,254 and 72,734 shares issued and outstanding

—

—

Additional paid-in capital

521,964

520,446

Accumulated other comprehensive loss

(17,418
)

(18,435
)
Accumulated deficit

(110,367
)

(137,586
)
Total stockholders' equity

394,179

364,425

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
$
459,415

$
444,180

See accompanying notes to the consolidated financial statements.

Table of Contents

ORASURE TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(in thousands, except per share amounts)

Three Months Ended March 31,

2023

2022

NET REVENUES:

Products and services

$
152,914

$
65,236

Other

2,049

2,471

154,963

67,707

COST OF PRODUCTS AND SERVICES SOLD

89,148

43,408

Gross profit

65,815

24,299

OPERATING EXPENSES:

Research and development

10,560

8,634

Sales and marketing

12,142

12,717

General and administrative

17,711

19,156

Loss on impairments

1,105

—

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

(24
)

(36
)

41,494

40,471

Operating income (loss)

24,321

(16,172
)
OTHER INCOME

2,673

168

Income (loss) before income taxes

26,994

(16,004
)
INCOME TAX (BENEFIT) EXPENSE

(225
)

3,936

NET INCOME (LOSS)

$
27,219

$
(19,940
)

INCOME (LOSS) PER SHARE:

BASIC

$
0.37

$
(0.28
)
DILUTED

$
0.37

$
(0.28
)
WEIGHTED-AVERAGE SHARES OUTSTANDING:

BASIC

73,112

72,194

DILUTED

73,966

72,194


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

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

See accompanying notes to the consolidated financial statements.

Table of Contents

ORASURE TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)

(in thousands)

Three Months Ended March 31,

2023

2022

NET INCOME (LOSS)

$
27,219

$
(19,940
)

OTHER COMPREHENSIVE INCOME

Currency translation adjustments

797

1,756

Unrealized gain on marketable securities

220

74

COMPREHENSIVE INCOME (LOSS)

$
28,236

$
(18,110
)


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

See accompanying notes to the consolidated financial statements.

Table of Contents

ORASURE TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(in thousands)

For the Three Months Ended March 31,

2023

2022

OPERATING ACTIVITIES:

Net income (loss)

$
27,219

$
(19,940
)

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

Stock-based compensation

2,655

3,524

Depreciation and amortization

3,696

3,682

Loss on impairments

1,105

—

Other non-cash amortization

—

80

Provision for credit losses

(67
)

347

Unrealized foreign currency loss

44

169

Interest expense on finance leases

15

32

Deferred income taxes

—

200

Loss on sale of fixed assets

—

710

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

(24
)

(36
)

Payment of acquisition-related contingent consideration

(19
)

—

Changes in assets and liabilities

Accounts receivable

(36,613
)

(15,295
)

Inventories

18,540

(8,198
)

Prepaid expenses and other assets

5,299

(736
)

Accounts payable

(12,097
)

4,287

Deferred revenue

(279
)

(44
)

Accrued expenses and other liabilities

(3,472
)

(4,603
)

Net cash provided by (used in) operating activities

6,002

(35,821
)

INVESTING ACTIVITIES:

Purchases of investments

(22,330
)

—

Proceeds from maturities and redemptions of investments

27,304

12,135

Purchases of property and equipment

(1,191
)

(20,219
)

Purchase of property and equipment under government contracts

(2,767
)

(28,188
)

Proceeds from funding under government contract

—

26,333

Net cash provided by (used in) investing activities

1,016

(9,939
)

FINANCING ACTIVITIES:

Cash payments for lease liabilities

(148
)

(153
)

Proceeds from exercise of stock options

66

15

Payment of acquisition-related contingent consideration

(46
)

(208
)

Repurchase of common stock

(1,203
)

(1,049
)

Net cash used in financing activities

(1,331
)

(1,395
)

EFFECT OF FOREIGN EXCHANGE RATE CHANGES ON CASH

527

1,114

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

6,214

(46,041
)

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD

83,980

116,762

CASH AND CASH EQUIVALENTS, END OF PERIOD

$
90,194

$
70,721

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

Cash paid for income taxes

$
(10
)

$
3,570

Non-cash investing activities

Accrued property and equipment purchases

$
733

$
642

Accrued property and equipment purchases under government contracts

$
—

$
1,905

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

See accompanying notes to the consolidated financial statements.

Table of Contents

ORASURE TECHNOLOGIES, INC. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(Unaudited)

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

1.Summary of Significant Accounting Policies

Principles of Consolidation and Basis of Presentation. The accompanying interim unaudited consolidated financial statements include the accounts of OraSure Technologies, Inc. (“OraSure”) and its wholly-owned subsidiaries, DNA Genotek Inc. (“DNAG”), Diversigen, Inc. (“Diversigen”), and Novosanis NV (“Novosanis”). All intercompany transactions and balances have been eliminated. References herein to “we,” “us,” “our,” or the “Company” mean OraSure and its consolidated subsidiaries, unless otherwise indicated. The unaudited financial statements, in the opinion of management, include all adjustments (consisting only of normal and recurring adjustments) necessary for a fair presentation of the Company's financial position and results of operations for these interim periods. These financial statements should be read in conjunction with the financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2022. Results of operations for the three and six months ended ~~March 31,~~June 30, 2023 are not necessarily indicative of the results of operations expected for the full year.

Summary of Significant Accounting Policies. There have been no changes to the Company's significant accounting policies described in its Annual Report on Form 10-K for the fiscal year ended December 31, 2022 that have had a material impact on the consolidated financial statements and related notes except as discussed herein. See Note 11 for the discussion regarding the change in business segments.

Cash Equivalents & Investments. The Company considers all investments in debt securities to be available-for-sale securities. These securities consist of guaranteed investment certificates and corporate bonds purchased with maturities greater than ninety days. Available-for-sale securities are carried at fair value, based upon quoted market prices, with unrealized gains and losses, if any, reported in stockholders’ equity as a component of accumulated other comprehensive loss.

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

The following is a summary of the Company's available-for-sale securities:

Amortized
Cost

Gross
Unrealized
Gains

Gross
Unrealized
Losses

Fair Value

March 31, 2023

Guaranteed investment certificates

$
22,178

$
—

$
—

$
22,178

Corporate bonds

—

—

—

—

Total

$
22,178

$
—

$
—

$
22,178

December 31, 2022

Guaranteed investment certificates

$
22,109

$
—

$
—

$
22,109

Corporate bonds

4,978

—

(220
)

4,758

Total

$
27,087

$
—

$
(220
)

$
26,867

At March 31, 2023, maturities of the Company's available-for-sale securities were as follows:

Less than one year

$
22,178

$
—

$
—

$
22,178

Greater than one year

$
—

$
—

$
—

$
—


	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value




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

Fair Value of Financial Instruments. As of ~~March 31,~~June 30, 2023 and December 31, 2022, the carrying values of cash and cash equivalents, accounts receivable, accounts payable, and accrued expenses approximate their respective fair values based on their short-term nature.

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

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

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

Table of Contents

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

All of the Company's available-for-sale corporate bonds are measured as Level 2 instruments ~~as of December 31, 2022. The~~and the Company's available-for-sale guaranteed investment certificates are measured as Level 1 instruments as of ~~March 31, 2023 and~~ December 31, 2022.

Included in cash and cash equivalents at ~~March 31,~~June 30, 2023 and December 31, 2022, was$~~6,846~~ $6,928 and $~~1,730~~$1,730 invested in money market funds. These money market funds have investments in government securities and are measured as Level 1 instruments.

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

The Company offers a nonqualified deferred compensation plan for certain eligible employees and members of its Board of Directors. The assets of the plan are held in the name of the Company at a third-party financial institution. Separate accounts are maintained for each participant to reflect the amounts deferred by the participant and all earnings and losses on those deferred amounts. The assets of the plan are held in mutual funds and company stock. The fair value of the plan assets as of ~~March 31,~~June 30, 2023 and December 31, 2022 was $~~678~~$644 and $~~747~~,$747, respectively, and was calculated using the quoted market prices of the assets as of those dates. All investments in the plan are classified as trading securities and measured as Level 1 instruments. The fair value of plan assets is included in both current assets and noncurrent assets with the same amount included in accrued expenses and other noncurrent liabilities in the accompanying consolidated balance sheets.

Foreign Currency Translation. Net foreign exchange gains and (losses) resulting from foreign currency transactions that are included in other income in the Company's consolidated statements of operations were $(50)$(492) and $~~729~~$783 for the three months ended ~~March 31,~~June 30, 2023 and 2022, respectively. Net foreign exchange gains and (losses) resulting from foreign currency transactions for the six months ended June 30, 2023 and 2022 were $(542) and $54, respectively.

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


	Foreign Currency			Marketable Securities			Total				Foreign Currency		Marketable Securities		Total
Balance at December 31, 2022	$	(18,215	)	$	(220	)	$	(18,435	)	Balance at December 31, 2022	$	(18,215)	$	(220)	$	(18,435)
Other comprehensive gain		797			220			1,017		Other comprehensive gain	3,656		220		3,876
Balance at March 31, 2023	$	(17,418	)	$	0		$	(17,418	)
Balance at June 30, 2023										Balance at June 30, 2023	$	(14,559)	$	—	$	(14,559)

Immaterial Correction of Errors. Inventories, accounts payable and cost of products and services were reduced by $~~528, $1,329~~$528, $1,329 and $~~801~~,$801, respectively, as of and for the year ended December 31, 2022 to correct for the accounting of a vendor rebate earned in 2022. The tax impact of the vendor rebate was negligible. This correction was deemed to be immaterial to the consolidated financial statements as of and for the year ended December 31, 2022. For the three and six months ended ~~March 31,~~June 30, 2022, cost of products and services sold was reduced by $27.$213 and $240, respectively. The respective operating activities on the consolidated statement of cash flows for the ~~three~~six months ended ~~March 31,~~June 30, 2022 has also been adjusted. Furthermore, stockholder's equity at ~~March 31,~~June 30, 2022 has been adjusted to reflect the reduction in cost of products and services sold.

Reclassification. Certain prior period amounts have been reclassified to conform to current year presentations. For the three and six months ended ~~March 31,~~June 30, 2022, $~~221~~$395 and $616 of research and development expenses were ~~reclassed~~reclassified to other income in relation to the U.S. Department of Defense (the “DOD”) engineering consulting costs further described in Note 2. This reclassification was made to conform to the presentation in our Annual Report on Form 10-K for the year ended December 31, 2022.

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

2. Government Capital Contracts

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

Table of Contents

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

began receiving funds from the DOD in January 2022 and has received $~~60,862~~,$78,124, as of ~~March 31,~~June 30, 2023. The remaining $~~48,138~~$30,876 is expected to be collected during the remainder of 2023.

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

Amounts earned for the Company's guaranteed profit which covers project management costs are recognized straight-line in other income over the term of the government contract. Any amount received in excess of the guaranteed profit discussed above will be recorded in other income at time of payment. The Company recognized $561 of such income, which is reported as other income in the Company's consolidated statement of operations for both the three months ended June 30, 2023 and 2022. The Company recognize $1,123 of such income, for both the six months ended June 30, 2023 and 2022.

The DOD also reimburses the Company for certain engineering consulting costs. These expenses are reflected in research and development as incurred with the corresponding reimbursement presented in other income. For the three months ended ~~March 31,~~June 30, 2023 and 2022, $~~1,051~~$537 and $~~221~~,$395, respectively, were recorded in research and development and other income. ~~Amounts earned in excess of~~For the ~~Company's expected costs for the project for project management are recognized straight-line in other income over the term of the government contract. The Company recognized $561~~ ~~of such income, which is reported as other income in the Company's consolidated statement of operations for both the three~~six months ended ~~March 31,~~June 30, 2023 and ~~2022.~~

2022, $1,588 and $616, respectively, were recorded in research and development and other income.

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

March 31,
2023

December 31,
2022

Other current assets:

Billed receivables

$
17,792

$
—

Unbilled receivables

13,604

27,013

Total other current assets

31,396

27,013

Accrued expenses and other current liabilities

$
(679
)

$
(318
)

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

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

March 31,
2023

December 31,
2022

Cost of assets, cumulative

$
86,126

$
83,359

Reduction for funding earned to date, not yet received

(25,264
)

(22,497
)
Reduction for funding received to date

(60,862
)

(60,862
)
Total property, plant and equipment, net

$
—

$
—


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

Table of Contents

3. Inventories


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

March 31,

December 31,

2023

2022

Raw materials

$
35,607

$
42,445

Work in process

2,182

2,335

Finished goods

39,400

50,924

$
77,189

$
95,704

During the ~~three~~six months ended ~~March 31,~~June 30, 2023, the Company determined several manufacturing lines will not be utilized due to changes in forecasted demand for the products the equipment is intended to produce. Additionally, the Company elected not to proceed with certain leasehold improvements to its research and development laboratories. As a result of ~~this decision,~~these decisions, the Company determined that the carrying values of the equipment isand leasehold improvements made to date are not recoverable and recorded an aggregate pre-tax asset impairment charge of $~~1,105~~$1,320 during the ~~three~~six months ended ~~March 31,~~June 30, 2023. ~~This charge is reported within~~ ~~loss on impairments~~ ~~in the consolidated statement of operations.~~

The Company estimated the fair value of the impaired long-lived assets using a market approach, which required the Company to estimate the value that would be received for the equipment in the principal or most advantageous market for that equipment in an orderly transaction between market participants. Due to the extremely specialized nature of the ~~manufacturing~~ equipment and various market data points, the estimated fair value was ~~zero~~.

zero. These charges are reported within loss on impairments in the consolidated statement of operations.

5.Accrued Expenses and other current liabilities

March 31,

December 31,

2023

2022

Payroll and related benefits

$
7,989

$
14,103

Professional fees

7,981

4,685

Sales tax payable

1,512

1,519

Other

5,191

5,455

$
22,673

$
25,762

6.Termination Benefits

~~On February 14,~~During the first and second quarters of 2023, the Company ~~announced~~executed a reduction in ~~its non-production~~ workforce. This was accounted for pursuant to Accounting Standards Codification ("ASC") 420, Exit or Disposal Cost Obligations.

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

Three Months Ended March 31, 2023

Cost of products and services sold
$
35

Research and development

566

Sales and marketing

1,448

General and administrative

586

Total
$
2,635

As of ~~March 31,~~June 30, 2023 the Company had $~~1,894~~$1,591 accrued and had paid $~~741~~$1,674 related to the reduction in workforce.

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

Three Months Ended March 31,

2023

2022

COVID-19 (1)

$
118,409

$
31,032

HIV

13,904

8,166

Molecular Products (2)

12,942

17,933

HCV

3,186

3,257

Risk assessment testing

2,628

2,560

Molecular Services

1,379

1,733

Other product and service revenues

466

555

Net product and services revenues

152,914

65,236

Other non-product revenues (3)

2,049

2,471

Net revenues

$
154,963

$
67,707


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

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

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

(2)Includes Genomics and Microbiome and Novosanis Products.

(3)Other non-product and services revenues include funded research and development contracts, royalty income, and grant revenues.

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

Three Months Ended March 31,

2023

2022

United States

$
145,019

$
57,987

Europe

1,852

4,286

Other regions

8,092

5,434

$
154,963

$
67,707


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

Customer and Vendor Concentrations. At ~~March 31,~~June 30, 2023, one non-commercial customer accounted for 77%47% of the Company's consolidated accounts receivable. The same non-commercial customer accounted for more than 57%57% of the Company's consolidated accounts receivable as of December 31, 2022. The same non-commercial customer also accounted for 78%56% of net consolidated revenues for both the three months ended June 30, 2023 and 18%2022, respectively. The same non-commercial customer also accounted for 70% and 39% of net consolidated revenues for the ~~three~~six months ended ~~March 31,~~June 30, 2023 and 2022, respectively.

Table of Contents

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

Deferred Revenue. The Company records deferred revenue when funds are received prior to the recognition of the associated revenue. Deferred revenue as of ~~March 31,~~June 30, 2023 and December 31, 2022 included customer prepayments of $~~1,358~~$1,285 and $~~1,180~~,$1,533, respectively. Deferred revenue as of ~~March 31,~~June 30, 2023 and December 31, 2022 also included $~~631~~$556 and $~~1,093~~,$740, respectively, associated with a long-term contract that has variable pricing based on volume. The average price over the life of the contract was determined and revenue is recognized at that average price.

8.Income Taxes

~~During the three months ended March 31, 2023 and 2022, the Company recorded~~

The components of income tax expense ~~(benefit) of $(225) and $3,936, respectively. Income taxes for 2023 is comprised of a U.S. state tax benefit.~~ (benefits) are as follows:


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

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

Tax expense reflects taxes due to the taxing authorities and the tax effects of temporary differences between the basis of assets and liabilities recognized for financial reporting and tax purposes, and net operating loss and tax credit carryforwards. The significant components of the Company's total deferred tax ~~liability~~asset as of ~~March 31,~~June 30, 2023 ~~and~~relate to foreign net operating losses. The significant components of the Company's total deferred tax liability at December 31, 2022 relate to the tax effects of the basis difference between the intangible assets acquired in its acquisitions for financial reporting and for tax purposes along with basis differences arising from accelerated tax depreciation of fixed assets.

A valuation allowance is recorded to the extent it is more likely than not that ~~the~~ 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,~~June 30, 2023 and December 31, 2022.

9. Income (Loss) Per Share

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

reporting period. Basic and dilutive computations of net loss per share are the same in periods in which a net loss exists as the dilutive effects of excluded items would be anti-dilutive.

For the three months ended ~~March 31,~~June 30, 2023 outstanding common stock options, unvested restricted stock, and unvested performance stock units representing 966 shares were excluded from the computation of diluted loss per share. For the six months ended June 30, 2023, outstanding common stock options, unvested restricted stock, and unvested performance stock units representing 2,030 shares were excluded from the computation of diluted earnings per share as their inclusion

Table of Contents

would have been anti-dilutive. For the three and six months ended June 30, 2022, outstanding common stock options, unvested restricted stock, and unvested performance stock units representing ~~463~~226 and 381 shares, respectively, were excluded from the computation of diluted loss per share. ~~For the three months ended March 31, 2023, outstanding common stock options, unvested restricted stock, and unvested performance stock units representing~~

~~2,237~~ ~~shares were excluded from the computation of dilute earnings per share as their inclusion would have been anti-dilutive.~~

10.10. Stockholders’ Equity

Reconciliation of the changes in stockholder's equity for the three and six months ended June 30, 2023 and 2022.

11. Business Segments

The Company is organized on the basis of products and services under a new organizational structure. All products and services reside under the same reporting hierarchy. Historically there was separate management leading the Company's Diagnostics and Molecular Solutions businesses. In February 2023, the Company announced a corporate restructuring to combine the commercial and innovation teams across the Diagnostics and Molecular Solutions segments into one operating segment with sales, marketing, product development and research teams covering all product lines and reporting to a Chief Product Officer. Resources are allocated and performance is assessed on a consolidated basis by our Chief Executive Officer, whom we have determined to be our Chief Operating Decision Maker ("CODM"). The CODM reviews the business based on individual product success. Therefore, our historical reportable segments, Diagnostics and Molecular Solutions are now considered one reportable segment and there will no longer be a distinction between Diagnostics and Molecular Solutions, only the Company holistically.

12. Commitments and Contingencies

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

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 ~~intends to appeal~~has appealed the ~~Court’s~~ grant of summary ~~judgment.~~judgment to the Court of Appeal on June 8, 2023. Second, the District Court denied Spectrum’s motion to ~~supplement~~amend its allegations of alleged antitrust ~~violations. A separate~~violations, finding that if such an amendment were allowed, Spectrum’s claims would not survive a motion byfor 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 its counterclaims remains pending.~~amend. Both parties have filed motions seeking sanctions in the District Court. An inter partes review is currently pending before the PTO regarding the second asserted patent. ~~The final pretrial conference in the District Court is set for October 26, 2023.~~

~~13. Subsequent Events~~

~~In May 2023, the Company announced a reduction in its workforce and estimates the expense will be in the range~~Table of $Contents~~500~~ ~~to $600. This will be accounted for pursuant to ASC 420,~~ ~~Exit or Disposal Cost Obligations~~.

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

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with (i) our unaudited condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and (ii) our audited consolidated financial statements and related notes and management’s discussion and analysis of financial condition and results of operations included in our Annual Report on Form 10-K for the year ended December 31, 2022 filed with the Securities and Exchange Commission on March 3, 2023. Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report on Form 10-Q, including information with respect to our plans and strategy for our business and impact and potential impacts on our business, includes forward-looking statements that involve risks and uncertainties. As a result of many factors, including, without limitation, those factors set forth in the “Risk Factors” section of our Annual Report on Form 10-K for the year ended December 31, 2022 and the “Risk Factors” section of subsequent Quarterly Reports on Form 10-Q, our actual results or timing of certain events could differ materially from the results or timing described in, or implied by, these forward-looking statements.

Business Overview

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

OraSure Technologies transforms health ~~and wellness~~through powerful insight by providing access to accurate, essential ~~information through effortless tests, collection kits and services.~~information. In 2022, our business ~~previously~~ consisted of two segments: our “Diagnostics” segment, and our “Molecular Solutions” segment. In February 2023, we announced a corporate restructuring to combine the commercial and innovation teams across the two segments into one business unit with sales, marketing, product development, and research teams covering multiple product lines. This change is intended to accelerate innovation, enhance customer experience and result in operational synergies.

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

The Company's business also includes molecular collection kits and services used by clinical laboratories, direct-to-consumer laboratories, researchers, pharmaceutical companies, and animal health service and product providers. These revenues are derived from product sales to commercial customers and sales into the academic and research markets. Customers span the disease risk management, diagnostics, pharmaceutical, biotech, companion animal and environmental markets. The Company has also developed collection devices for the emerging microbiome market, which focuses on studying microbiomes and their effect on human and animal health. The Company also has a urine collection device which allows for the volumetric collection of first void urine. This product is in its early stages, and initial sales are occurring primarily through distributors and collaborations in the liquid biopsy and sexually transmitted disease markets. Additionally, the Company offers laboratory and analytical services for both genomics and microbiome customers to more fully meet their needs. These services are primarily provided to pharmaceutical, biotech companies, and research institutions.

Results of Operations

CONSOLIDATED NET REVENUES

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

Three Months Ended March 31,

Dollars

Percentage of Total Net Revenues

2023

2022

% Change

2023

2022

COVID-19 Diagnostics

$
118,254

$
22,136

434

%

76

%

33

%
Diagnostics (1)

17,090

11,423

50

11

17

Molecular Products

12,942

17,933

(28
)

8

26

Other products and services (2)

3,094

3,115

(1
)

2

5

Molecular Services

1,379

1,733

(20
)

1

3

COVID-19 Molecular Products

155

8,896

(98
)

1

12

Net product and services revenues

152,914

65,236

134

99

96

Non-product and services revenues

2,049

2,471

(17
)

1

4

Net revenues

$
154,963

$
67,707

129

%

100

%
$
100

%

Other products and services (2)

(1)Includes HIV and HCV product revenues.

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

Product and Services Revenues

Consolidated net ~~product and services~~ revenues increased ~~134%~~6% to ~~$152.9~~$85.4 million for the three months ended ~~March 31,~~June 30, 2023 from ~~$65.2~~$80.2 million for the three months ended ~~March 31,~~June 30, 2022. ~~The Company expects total net product and services revenues to taper off throughout 2023 as demand for its COVID-19 Diagnostic product has declined.~~

COVID-19 Diagnostics revenues increased by ~~434%~~10% to ~~$118.3~~ $47.5 million for the three months ended ~~March 31,~~June 30, 2023 compared to ~~$22.1~~$43.1 million in ~~the~~ three months ended ~~March 31,~~June 30, 2022 due to increased sales of the Company's InteliSwab® tests through its government procurement contracts.

Sales of the Company's Diagnostics products increased ~~50%~~41% to ~~$17.0~~$19.8 million for the three months ended ~~March 31,~~June 30, 2023 from ~~$11.4~~$14.0 million for the three months ended ~~March 31,~~June 30, 2022. This increase in revenues was primarily driven by higher sales of the Company's OraQuick® In-Home HIV tests in support of the CDC's "Together Take Me Home" HIV self-test program which commenced during the first quarter of 2023, and higher sales of the Company's OraQuick® HIV Self-Test in ~~the~~ international markets due to customer ordering patterns.

Molecular Products revenues decreased ~~28%~~26% to ~~$12.9~~$13.1 million for the three months ended ~~March 31,~~June 30, 2023 from ~~$17.9~~$17.6 million for the three months ended ~~March 31,~~June 30, 2022. Sales of the Company's Molecular Products are being impacted by macro-economic factors in the markets in which its customers operate and as a result one of the Company's largest customers scaled down purchasing after they reorganized their business in the second half of 2022.

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

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

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

Non-product and Services Revenues

Non-product and services revenues decreased 34% to $0.7 million for the three months ended June 30, 2023 from $1.1 million for the three months ended June 30, 2022 as a result of lower royalty income.

CONSOLIDATED OPERATING RESULTS

Consolidated gross profit margin decreased to 31% for the three months ended June 30, 2023 from 35% for the three months ended June 30, 2022. This decline in margins was driven by $7.0 million of accelerated depreciation recorded in the quarter associated with the wind-down of InteliSwab® manual assembly in Thailand as we on-shore and automate manufacturing of this product at our Pennsylvania facilities. This negative impact to margins was partially offset by a cost savings associated with the InteliSwab® packaging redesign, reduction in scrap expense and lower freight costs.

Consolidated operating loss for the three months ended June 30, 2023 was $6.4 million, a $15.0 million improvement from the $21.5 million operating loss reported for the three months ended June 30, 2022. Results for the three months ended June 30, 2023 were positively impacted by reduced operating expense and lower impairment losses. Results for the three months ended June 30, 2022 included $10.5 million of impairment losses compared to $0.2 million for the three months ended June 30, 2023.

Operating expenses in the second quarter of 2023, excluding the impairment charge, decreased $6.1 million compared to the second quarter of 2022 reflecting the impact of our cost saving measures and headcount reductions. Research and development expenses decreased 19% to $7.7 million for the three months ended June 30, 2023 from $9.5 million for the three months ended June 30, 2022 largely due to a decrease in headcount and lower manufacturing support costs.

Sales and marketing expenses decreased 27% to $8.5 million for the three months ended June 30, 2023 from $11.7 million for the three months ended June 30, 2022 due to a decrease in headcount, lower advertising, marketing and sales meeting spend, and a decrease in our reserve for expected credit losses.

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

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

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

CONSOLIDATED INCOME TAXES

Results of Operations

CONSOLIDATED NET REVENUES

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

Other products and services (2)

(1)Includes HIV and HCV product revenues.

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

Product and Services Revenues

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

COVID-19 Diagnostics revenues increased by 154% to $165.7 million for the six months ended June 30, 2023 compared to $65.3 million for the six months ended June 30, 2022 due to increased sales of the Company's InteliSwab® tests through its government procurement contracts.

Sales of the Company's Diagnostics products increased 45% to $36.9 million for the six months ended June 30, 2023 from $25.5 million for the six months ended June 30, 2022. This increase in revenues was primarily driven by higher sales of the Company's OraQuick® In-Home HIV tests in support of the CDC's "Together Take Me Home" HIV self-test program which commenced during the first quarter of 2023, and higher sales of the Company's OraQuick® HIV Self-Test in international markets due to customer ordering patterns.

Molecular Products revenues decreased 27% to $26.0 million for the six months ended June 30, 2023 from $35.5 million for the six months ended June 30, 2022. Sales of the Company's Molecular Products are being impacted by macro-economic factors in the markets in which its customers operate. One of the Company's largest ~~customer~~customers scaled down purchasing after they reorganized their business in the second half of 2022 and certain other customers placed large orders in Q1the first half of 2022 ~~which did~~that have not ~~repeat~~been repeated in the ~~first quarter of~~six months ending June 30, 2023. Furthermore revenues are impacted by customer ordering patterns whereby customers purchased at the end of 2022 and did not require further inventory in the first ~~quarter~~half of 2023.

Other products and services revenues were largely flat at ~~$3.1~~$6.1 million for the ~~three~~six months ended ~~March 31,~~June 30, 2023 and 2022.

Molecular Services revenues, which are largely derived from the Company's laboratory services, decreased ~~20%~~7% to ~~$1.4~~$2.7 million for the ~~three~~six months ended ~~March 31,~~June 30, 2023 from ~~$1.7~~$2.9 million for the ~~three~~six months ended ~~March 31,~~June 30, 2022. The decline in services revenues was the direct result of loss of two ~~large~~ customers in 2022. One customer ceased operations in 2022 and the

other deprioritized microbiome studies.

These decreases were offset by higher revenues generated by certain customer contracts due to the timing of work performed for certain clinical studies.

Sales of the Company's COVID-19 Molecular Products collection kits decreased significantly by 98% to $0.2 million for the ~~three~~six months ended ~~March 31,~~June 30, 2023 from ~~$8.9~~$9.2 million for the ~~three~~six months ended ~~March 31,~~June 30, 2022 due to decline in demand for COVID PCR testing given the availability of rapid antigen tests.

~~Non-product and Services Revenues~~

Non-product and services revenues decreased ~~17%~~22% to ~~$2.0~~$2.8 million for the ~~three~~six months ended ~~March 31,~~June 30, 2023 from ~~$2.5~~$3.5 million for the ~~three~~six months ended ~~March 31,~~June 30, 2022 as a result ~~the timing~~ of activities under the Company's funded research and development agreements for the development of a second generation Ebola test and to obtain 510(k) clearance and CLIA waiver for our InteliSwab® test coupled with lower royalty income.

CONSOLIDATED OPERATING RESULTS

Consolidated gross profit margin increased to ~~42.5%~~38% for the ~~three~~six months ended ~~March 31,~~June 30, 2023 ~~and 2022~~ from ~~36%~~35% for the ~~three~~six months ended ~~March 31,~~June 30, 2022. This improvement in margins was driven by InteliSwab® sales which generated higher margins due to reduced costs associated with the correction of manufacturing inefficiencies which occurred during the first quarter of 2022, a packaging change implemented during the first quarter of 2023, and lower freight charges. Lower scrap expense in the first half of 2023 compared to the first half of 2022 also contributed to the margins improvement. These improved margins were partially offset by $7.0 million of accelerated depreciation recorded in the second quarter of 2023 associated with the wind-down of InteliSwab® manual assembly in Thailand as we on-shore and automate the manufacturing of this product at our Pennsylvania facilities and lower COVID-19 Molecular Products revenue which historically generated higher margins. ~~Lower scrap expense in the first quarter of 2023 compared to the first quarter of 2022 also contributed to the improved margins.~~

Consolidated operating income for the ~~three~~six months ended ~~March 31,~~June 30, 2023 was ~~$24.3~~$17.9 million, a ~~$40.5~~$55.5 million increase from the ~~$16.2~~$37.6 million operating loss reported for the ~~three~~six months ended ~~March 31,~~June 30, 2022. Results for the ~~three~~six months ended ~~March 31,~~June 30, 2023were positively impacted by the increase in revenues and gross margins described above and were ~~partially offset~~positively impacted by reduced operating expense and lower impairment ~~charges~~losses. Results for the six months ended June 30, 2022 included $10.5 million of ~~$1.1~~impairment losses compared to $1.3 million ~~taken~~ for ~~idle manufacturing lines.~~

the six months ended June 30, 2023.

Operating expenses in the ~~first quarter of~~six months ended June 30, 2023, excluding the impairment charge, ~~remained largely flat~~decreased $6.2 million compared to the first ~~quarter~~half of 2022. Research and development expenses increased ~~22%~~ to ~~$10.6~~$18.2 million for the ~~three~~six months ended ~~March 31,~~June 30, 2023 from ~~$8.6~~$18.1 million for the ~~three~~six months ended March 31, 2022 largely due to an increase in clinical study activities related to obtaining 510(k) clearance and CLIA waiver for our InteliSwab® rapid test, severance costs associated with our reduction in workforce that occurred during the quarter and higher costs incurred under our DOD expansion contract. Increased spend in research and development was offset by lower sales and marketing and general and administrative costs.

June 30, 2022.

Sales and marketing expenses decreased 5%15% to ~~$12.1~~$20.7 million for the ~~three~~six months ended ~~March 31,~~June 30, 2023 from ~~$12.7~~$24.4 million for the ~~three~~six months ended ~~March 31,~~June 30, 2022 due to a decrease in our reserve for expected credit losses and lower advertising, marketing, sales meeting, and consulting ~~fees offset by severance cost related to our reduction in workforce.~~ spend.

General and administrative expenses decreased 8%7% to ~~$17.7~~$34.1 million for the ~~three~~six months ended ~~March 31,~~June 30, 2023 from ~~$19.2~~$36.7 million for the ~~three~~six months ended ~~March 31,~~June 30, 2022 largely due to lower ~~consulting fees,~~severance and stock compensation expense and recruitment fees. In the first ~~quarter~~half of 2022, the ~~company~~Company incurred high severance and stock compensation expense associated with the accelerated vesting of shares under our former CEO's and general counsel's employment ~~agreement~~agreements and higher recruitment expense associated with the new CEO search. Also contributing to the decrease in expense was lower consulting fees, lower board of director fees, due to fewer board members, and lower sales tax penalties. These decreases in expense were partially offset by increased legal ~~fees and severance costs associated with the reduction in workforce.~~

fees.

All of the above contributed to the Company's operating income of ~~$24.3~~$17.9 million for the ~~three~~six months ended ~~March 31,~~June 30, 2023, which included ~~the~~a non-cash impairment charge of ~~$1.1~~$1.3 million largely related to equipment that will no longer be used in production, non-cash charges of ~~$3.7~~$14.0 million for depreciation and amortization, and ~~$2.7~~$5.0 million for stock-based compensation. The Company's operating loss of ~~$16.2~~$37.6 million for the ~~three~~six months ended ~~March 31,~~June 30, 2022 included a non-cash impairment charge of $10.5 million, non-cash charges of ~~$3.7~~$7.5 million for depreciation and amortization, and ~~$3.5~~$6.8 million for stock-based compensation.

Other income for the ~~three~~six months ended ~~March 31,~~June 30, 2023 was ~~$2.7~~$4.1 million compared to ~~$0.2~~$1.9 million for the six months ended ~~March 31,~~June 30, 2022. This increase is largely due to ~~the~~higher interest income and higher reimbursement of costs incurred under our DOD expansion contract which are presented in research and development ~~expenses as discussed above.~~expenses.

CONSOLIDATED INCOME TAXES

The Company continues to believe the full valuation allowance established against its total U.S. deferred tax asset is appropriate as the facts and circumstances necessitating the allowance have not changed. For the ~~three~~six months ended ~~March 31,~~June 30, 2023, the Company recorded ~~a U.S. state tax benefit of $0.2 million compared to $3.9 million of tax expense for the three months ended March 31, 2022. The 2022 tax expense is comprised of~~ U.S. state tax expense of ~~$0.2~~$1.3 million compared to $0.4 million for the six months ended June 30, 2022 and a foreign tax benefit of $1.6 million for the six months ended June 30, 2023 compared to foreign tax expense of $0.7 million for the six months ended June 30, 2022. The 2022 foreign tax expense is also comprised of $1.7 million of withholding taxes associated with our repatriation of $65.0 million of cash from Canada to the United ~~States, and Canadian~~States. The 2023 U.S. state tax expense is higher due to higher expected US earnings while foreign income tax expense ~~of $2.0 million. No foreign taxes were recorded for the three months ended March 31, 2023~~is lower due to ~~it being more likely than not that the Canadian subsidiary will not produce sufficient income to receive a tax benefit for the year to date loss.~~lower expected foreign earnings.

Liquidity and Capital Resources

March 31,

December 31,

2023

2022

(In thousands)

Cash and cash equivalents

$
90,194

$
83,980

Available-for-sale securities

22,178

26,867

Working capital

288,472

256,127

The Company's cash and cash equivalents and available-for-sale securities increased to ~~$112.4~~$185.9 million at ~~March 31,~~June 30, 2023 from $110.8 million at December 31, 2022. ~~$72.8~~$72.1 million or ~~65%~~39% of the ~~$112.4~~$185.9 million in cash and cash equivalents ~~and available-for-sale securities~~ is held by DNAG, the Company's Canadian subsidiary. In 2022, the Company repatriated $65.0 million of cash into the United States and incurred $1.7 million of Canadian withholding tax. Further repatriation of cash from Canada into the United States could have additional adverse tax consequences. It is still the Company's intention going forward to continue to permanently reinvest the historical undistributed earnings of our foreign subsidiaries.

The Company's working capital increased to ~~$288.5~~$295.1 million at ~~March 31,~~June 30, 2023 from $256.1 million at December 31, 2022. Working capital increased primarily due to ~~increased~~the increase in cash and cash equivalents and lower accounts ~~receivable of $36.6 million.~~payable balances. Working capital is primarily a function of sales, purchase volumes, inventory requirements, and vendor payment terms.

Analysis of Our Cash Flows

Operating Activities

During the ~~three~~six months ended ~~March 31,~~June 30, 2023, net cash provided by operating activities was ~~$6.0~~$63.3 million. Cash flows from operations can be significantly impacted by factors such as timing of receipt from customers, inventory purchases, and payments to vendors. The Company's net income of ~~$27.2 million~~$22.4 included non-cash charges of depreciation and amortization expense of ~~$3.7~~$14.0 million, stock-based compensation expense of ~~$2.7~~$5.0 million, ~~and~~ impairment charges taken for idle equipment of ~~$1.1~~$1.3 million and a non-cash deferred tax benefit of $1.8 million. Cash ~~used to fund~~provided by the working capital accounts included an increase in accounts receivable of $36.6 million largely associated with product shipped to the U.S. government at the end of the first quarter 2023, a decreases in accounts payable of $12.1 million due to reduced inventory purchasing and the timing of payments made and invoices received, and a decrease in accrued expenses of $3.5 million largely associated with the payment of the Company's 2022 year-end bonuses. Offsetting these uses of cash was a decrease in inventory of ~~$18.5~~$22.6 million as we fulfilled demand for our InteliSwab® product in the ~~Company's~~first half of the year, a decrease in accounts receivable of $18.7 million largely associated with collections of monies due from the U.S. government for InteliSwab® ~~COVID-19 rapid test is declining, and~~shipments, a ~~$5.3~~$5.5 million decrease in prepaid and other assets as the Company received payment of its Employee Retention Credit filed for in 2021. Offsetting these increases in cash is a decrease in accounts payable of $22.2 million and a decrease in accrued expenses of $1.3 million.

Investing Activities

Net cash ~~used in~~provided by investing activities was ~~$1.0~~$38.2 million for the ~~three~~six months ended ~~March 31,~~June 30, 2023, which reflects proceeds from the maturities of investments of $27.3 million, $17.8 million in reimbursement received under our $109 million contract with the U.S. government offset by ~~$22.3 million used to purchase investments, $2.8~~$4.0 million to build additional manufacturing capacity as required by the ~~$109 million agreement with the DOD~~contract, and ~~$1.2~~$2.9 million to acquire property and equipment to support the normal operations of the business.

Financing Activities

Net cash used in financing activities was ~~$1.3~~$2.0 million for the ~~three~~six months ended ~~March 31,~~June 30, 2023, which is largely comprised of ~~$1.2~~$1.7 million used for the repurchase of common stock to satisfy withholding taxes related to the vesting of restricted shares awarded to the Company's employees.

The Company expects existing cash and cash equivalents ~~and available-for-sale securities~~ will be sufficient to fund its operating expenses and capital expenditure requirements over the next twelve months. The Company's cash requirements, however, may vary materially from those now planned due to many factors, including, but not limited to, the timing of reimbursement under its $109 million DOD contract, the scope and timing of future strategic acquisitions, the progress of its research and development programs, the scope and results of clinical testing, the cost of any future litigation, the magnitude of capital expenditures, changes in existing and potential relationships with business partners, the timing and cost of obtaining regulatory approvals, the timing and cost of future stock purchases, the costs involved in obtaining and enforcing patents, proprietary rights and any necessary licenses, the cost and timing of expansion of sales and marketing activities, market acceptance of new products, competing technological and market developments, the impact of the current economic environment and other factors.

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

Critical Accounting Policies and Estimates

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

~~CAUTIONARY NOTICE ABOUT FORWARD-LOOKING STATEMENTS~~

This Quarterly Report on Form 10-Q, including “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 2 of Part I of this report, contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Exchange Act. Some of these statements can be identified by the use of terminology such as “believes,” “expects,” “anticipates,” “may,” “will,” “should,” “seeks,” “approximately,” “intends,” “projects,” “plans,” “estimates,” or the negative of these words and other comparable terminology. The discussion of financial trends, strategy, plans, assumptions, or intentions may also include forward-looking statements. Readers should not place undue reliance on forward-looking statements, which speak only as of the date such statements were first made. Except to the extent required by law, we undertake no obligation to update or revise our forward-looking statements. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those projected, anticipated, or implied. Although it is not possible to predict or identify all such risks and uncertainties, they include, but are not limited to, factors described in the Risk Factors discussion in Item 1A of Part I of our most recently filed Annual Report.

Item 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

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 ~~March 31,~~June 30, 2023. Based on that evaluation, the Company’s management, including such officers, concluded that the Company’s disclosure controls and procedures were effective as of ~~March 31,~~June 30, 2023 to provide reasonable assurance that material information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934 was accumulated and communicated to the Company’s management, including the Chief Executive Officer and 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 ~~March 31,~~June 30, 2023 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1.LEGAL PROCEEDINGS

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

Spectrum Patent Litigation

In ~~March~~June 2021, the Company filed a complaint against Spectrum Solutions, LLC ("Spectrum") in the United States District Court for the Southern District of California alleging that certain saliva collection devices manufactured and sold by Spectrum infringe a patent held by DNAG. Spectrum has filed an answer to the initial complaint, asserting that its device does not infringe the Company's patent and that the Company's patent is invalid. In August 2021, the Company amended its complaint to add a second patent to this litigation. Spectrum responded to the Company's amended complaint and asserted counterclaims for inequitable conduct and antitrust violations with respect to one of the patents in the litigation and subsequently filed a request for review of the second patent at the Patent and Trademark Office ("PTO"), which was granted by the PTO. ~~On May 2, 2023, the~~The District Court issued ~~two orders.~~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 ~~intends to appeal~~has appealed the ~~Court’s~~ grant of summary ~~judgment.~~judgment to the Court of Appeal on June 8, 2023. Second, the District Court denied Spectrum’s motion to ~~supplement~~amend its allegations of alleged antitrust ~~violations. A separate~~violations, finding that if such an amendment were allowed, Spectrum’s claims would not survive a motion byfor 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 its counterclaims remains pending.~~amend. Both parties have filed motions seeking sanctions in the District Court. An inter partes review is currently pending before the PTO regarding the second asserted patent. ~~The final pretrial conference in the District Court is set for October 26, 2023.~~

Item 1A.RISK FACTORS

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

An Impairment of Goodwill Could Reduce our Earnings.

Throughout the year, we consider whether any events or changes in the ~~banking system~~business environment have occurred which indicate that goodwill may be impaired. For example, a significant decline in the closing share price of our common stock and ~~financial markets, including~~market capitalization may suggest that the ~~failure~~fair value of ~~banks~~our reporting unit has fallen below its carrying amount, indicating that an interim goodwill impairment test is required. We monitor changes in our stock price during interim periods between annual goodwill impairment tests and ~~financial institutions,~~consider overall stock market conditions, the underlying reasons for the decline in our stock price, the significance of the decline, and the duration of time that our securities have been trading at a lower value.

While our stock price has experienced volatility, we have experienced a decline in its market capitalization as a result of a decline in our stock price. As of July 31, 2023 our market value was $346.5 million which is below our carrying value. If our stock price remains at such levels or deteriorates, our goodwill may be determined to be impaired and we would record a non-cash impairment charge, which could have ana material adverse effect on our ~~operations and financial results.~~

Actual events involving limited liquidity, defaults, non-performance or other adverse developments that affect financial institutions, transactional counterparties or other companies in the financial services industry or the financial services industry generally, or concerns or rumors about any events of these kinds or other similar risks, have in the past and may in the future lead to market-wide liquidity problems. For example, on March 10 and March 12, 2023, the Federal Deposit Insurance Corporation took control and was appointed receiver of Silicon Valley Bank, and Signature Bank and Silvergate Capital Corp, respectively, after each bank was unable to continue their operations. Since then, additional financial institutions have experienced similar failures and have been placed into receivership. It is possible that other banks will face similar difficulty in the future.

Although we do not maintain any deposit accounts, credit agreements or letters of credit with any financial institution currently in receivership, we are unable to predict the extent or nature of the impacts of these evolving circumstances at this time. If, for example, other banks and financial institutions enter receivership or become insolvent in the future in response to financial conditions affecting the banking system and financial markets, our ability to access our existing cash, cash equivalents and investments may be threatened. While it is not possible at this time to predict the extent of the impact that the failure of these financial institutions or the high market volatility and instability of the banking sector could have on economic activity and our business in particular, the failure of other banks and financial institutions and the measures taken by governments, businesses and other organizations in response to these events could adversely impact our business, financial condition andconsolidated balance sheet, results of ~~operations.~~operations or our stock price

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, 2023-January 31, 2023

158,726

(3)

$
5.64

—

11,984,720

February 1, 2023-February 28, 2023

70,685

(3)

5.14

—

11,984,720

March 1, 2023-March 31, 2023

—

(3)

—

—

11,984,720

229,411

—

approximate dollar value)

of shares that may yet be

repurchased under the plans

(1)

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

(2)

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

(3)

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

Item 3.DEFAULTS UPON SENIOR SECURITIES

None

Item 4.MINE SAFETY DISCLOSURES

Not applicable

Item 5.OTHER INFORMATION

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

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

Table of Contents

~~None~~

Item 6. EXHIBITS


Exhibit Number		Exhibit

10.1**
~~Exhibit~~ ~~Number~~	~~Exhibit~~

3.1*	~~Second~~ Amended and Restated ~~Bylaws of~~ OraSure Technologies, Inc., 2000 Stock Award Plan (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K as ~~of May 9, 2023.~~filed.

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

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

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

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

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

101.SCH		Inline XBRL Taxonomy Extension Schema Document

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		Inline XBRL Taxonomy Extension Labels Linkbase Document

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document

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

______________________

*Filed herewith

**Management contract or compensatory plan or arrangement.

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

Table of Contents

SIGNATURES

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


									ORASURE TECHNOLOGIES, INC.

									/s/ Kenneth J. McGrath
Date: ~~May 10,~~August 4, 2023									Kenneth J. McGrath
									Chief Financial Officer
									(Principal Financial Officer)

									/s/Michele M. Anthony
Date: ~~May 10,~~August 4, 2023									Michele M. Anthony
									Senior Vice President, Controller and Chief Accounting Officer
									(Principal Accounting Officer)


	March 31,			December 31,				June 30,		December 31,
	2023			2022				2023		2022
Land	$	1,118		$	1,118		Land	$	1,118	$	1,118
Buildings and improvements		35,626			35,582		Buildings and improvements	35,765		35,582
Machinery and equipment		61,827			60,725		Machinery and equipment	65,204		60,725
Computer equipment and software		16,917			16,681		Computer equipment and software	17,065		16,681
Furniture and fixtures		4,068			4,064		Furniture and fixtures	4,100		4,064
Construction in progress		10,187			11,124		Construction in progress	10,453		11,124
		129,743			129,294			133,705		129,294
Accumulated depreciation		(72,400	)		(69,881	)	Accumulated depreciation	(84,423)		(69,881)
	$	57,343		$	59,413			$	49,282	$	59,413


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


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


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


	March 31, 2023			December 31, 2022
ASSETS
Current Assets:
Cash and cash equivalents	$	90,194		$	83,980
Short-term investments		22,178			26,867
Accounts receivable, net of allowance of $2,297 and $2,365		107,445			70,797
Inventories		77,189			95,704
Prepaid expenses		6,161			6,273
Other current assets		40,428			41,569
Total current assets		343,595			325,190
Noncurrent Assets:
Property, plant and equipment, net of accumulated depreciation of $72,400 and $69,881		57,343			59,413
Operating right-of-use assets, net		9,922			10,399
Finance right-of-use assets, net		1,136			1,293
Intangible assets, net of accumulated amortization of $31,732 and $31,077		11,184			11,694
Goodwill		35,204			35,104
Other noncurrent assets		1,031			1,087
Total noncurrent assets		115,820			118,990
TOTAL ASSETS	$	459,415		$	444,180
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable	$	27,396		$	38,020
Deferred revenue		1,989			2,273
Accrued expenses and other current liabilities		22,673			25,762
Finance lease liability		1,229			1,179
Operating lease liability		1,761			1,764
Acquisition-related contingent consideration obligation		75			65
Total current liabilities		55,123			69,063
Noncurrent Liabilities:
Finance lease liability		472			503
Operating lease liability		8,623			9,101
Acquisition-related contingent consideration obligation		—			99
Other noncurrent liabilities		609			581
Deferred income taxes		409			408
Total noncurrent liabilities		10,113			10,692
TOTAL LIABILITIES		65,236			79,755
Commitments and contingencies (Note 12)
STOCKHOLDERS' EQUITY
Preferred stock, par value $.000001, 25,000 shares authorized, none issued		—			—
Common stock, par value $.000001, 120,000 shares authorized, 73,254 and 72,734 shares issued and outstanding		—			—
Additional paid-in capital		521,964			520,446
Accumulated other comprehensive loss		(17,418	)		(18,435	)
Accumulated deficit		(110,367	)		(137,586	)
Total stockholders' equity		394,179			364,425
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	459,415		$	444,180


	Three Months Ended March 31,
	2023			2022
NET REVENUES:
Products and services	$	152,914		$	65,236
Other		2,049			2,471
		154,963			67,707
COST OF PRODUCTS AND SERVICES SOLD		89,148			43,408
Gross profit		65,815			24,299
OPERATING EXPENSES:
Research and development		10,560			8,634
Sales and marketing		12,142			12,717
General and administrative		17,711			19,156
Loss on impairments		1,105			—
Change in the estimated fair value of acquisition-related contingent consideration		(24	)		(36	)
		41,494			40,471
Operating income (loss)		24,321			(16,172	)
OTHER INCOME		2,673			168
Income (loss) before income taxes		26,994			(16,004	)
INCOME TAX (BENEFIT) EXPENSE		(225	)		3,936
NET INCOME (LOSS)	$	27,219		$	(19,940	)

INCOME (LOSS) PER SHARE:
BASIC	$	0.37		$	(0.28	)
DILUTED	$	0.37		$	(0.28	)
WEIGHTED-AVERAGE SHARES OUTSTANDING:
BASIC		73,112			72,194
DILUTED		73,966			72,194


	For the Three Months Ended March 31,
	2023			2022
OPERATING ACTIVITIES:
Net income (loss)	$	27,219		$	(19,940	)
Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities:
Stock-based compensation		2,655			3,524
Depreciation and amortization		3,696			3,682
Loss on impairments		1,105			—
Other non-cash amortization		—			80
Provision for credit losses		(67	)		347
Unrealized foreign currency loss		44			169
Interest expense on finance leases		15			32
Deferred income taxes		—			200
Loss on sale of fixed assets		—			710
Change in the estimated fair value of acquisition-related contingent consideration		(24	)		(36	)
Payment of acquisition-related contingent consideration		(19	)		—
Changes in assets and liabilities
Accounts receivable		(36,613	)		(15,295	)
Inventories		18,540			(8,198	)
Prepaid expenses and other assets		5,299			(736	)
Accounts payable		(12,097	)		4,287
Deferred revenue		(279	)		(44	)
Accrued expenses and other liabilities		(3,472	)		(4,603	)
Net cash provided by (used in) operating activities		6,002			(35,821	)
INVESTING ACTIVITIES:
Purchases of investments		(22,330	)		—
Proceeds from maturities and redemptions of investments		27,304			12,135
Purchases of property and equipment		(1,191	)		(20,219	)
Purchase of property and equipment under government contracts		(2,767	)		(28,188	)
Proceeds from funding under government contract		—			26,333
Net cash provided by (used in) investing activities		1,016			(9,939	)
FINANCING ACTIVITIES:
Cash payments for lease liabilities		(148	)		(153	)
Proceeds from exercise of stock options		66			15
Payment of acquisition-related contingent consideration		(46	)		(208	)
Repurchase of common stock		(1,203	)		(1,049	)
Net cash used in financing activities		(1,331	)		(1,395	)
EFFECT OF FOREIGN EXCHANGE RATE CHANGES ON CASH		527			1,114
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		6,214			(46,041	)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		83,980			116,762
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	90,194		$	70,721

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for income taxes	$	(10	)	$	3,570
Non-cash investing activities
Accrued property and equipment purchases	$	733		$	642
Accrued property and equipment purchases under government contracts	$	—		$	1,905


	March 31, 2023			December 31, 2022
Other current assets:
Billed receivables	$	17,792		$	—
Unbilled receivables		13,604			27,013
Total other current assets		31,396			27,013
Accrued expenses and other current liabilities	$	(679	)	$	(318	)


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


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

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

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


Reconciliation of the changes in stockholder's equity for the three months ended March 31, 2023 and 2022.
	Common Stock					Additional Paid-in			Accumulated Other Comprehensive			Accumulated
	Shares			Amount		Capital			Loss			Deficit			Total				Common Stock			Additional Paid-in Capital			Accumulated Other Comprehensive Loss			Accumulated Deficit			Total
Balance at December 31, 2022		72,734		$	—	$	520,446		$	(18,435	)	$	(137,586	)	$	364,425												Accumulated Deficit			Total
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
																			Shares	Amount		Additional Paid-in Capital		Additional Paid-in Capital	Accumulated Other Comprehensive Loss			Accumulated Other Comprehensive Loss			Accumulated Deficit			Total
Balance at December 31, 2021		72,069				$	511,063		$	(10,077	)	$	(120,453	)	$	380,533		Balance at December 31, 2021	72,069	$	—							Accumulated Other Comprehensive Loss			Accumulated Deficit			Total
Common stock issued upon exercise of options		2			—		15			—			—			15		Common stock issued upon exercise of options	2	—		15		Additional Paid-in Capital			—			—			15
Vesting of restricted stock and performance stock units		352			—		—			—			—			—		Vesting of restricted stock and performance stock units	352	—		—			—			—			—
Purchase and retirement of common shares		(116	)		—		(1,049	)		—			—			(1,049	)	Purchase and retirement of common shares	(116)	—		(1,049)			—			—			(1,049)
Stock-based compensation		—			—		3,524			—			—			3,524		Stock-based compensation	—	—		3,524			—			—			3,524
Net loss		—			—		—			—			(19,940	)		(19,940	)	Net loss	—	—		—			—			(19,940)			(19,940)
Currency translation adjustments		—			—		—			1,756			—			1,756		Currency translation adjustments	—	—		—			1,756			—			1,756
Unrealized gain on marketable securities		—			—		—			74			—			74		Unrealized gain on marketable securities	—	—		—			74			—			74
Balance at March 31, 2022		72,307		$	—	$	513,553		$	(8,247	)	$	(140,393	)	$	364,913		Balance at March 31, 2022	72,307	$	—	$	513,553		$	(8,247)		$	(140,393)		$	364,913
Common stock issued upon exercise of options																		Common stock issued upon exercise of options	407	—		—			—			—			—
Vesting of restricted stock and performance stock units																		Vesting of restricted stock and performance stock units	(142)	—		(905)			—			—			(905)
Stock-based compensation																		Stock-based compensation	—	—		3,280			—			—			3,280
Net loss																		Net loss	—	—		—			—			(18,589)			(18,589)
Currency translation adjustments																		Currency translation adjustments	—	—		—			(4,349)			—			(4,349)
Unrealized gain on marketable securities																		Unrealized gain on marketable securities	—	—		—			82			—			82
Balance at June 30, 2022																		Balance at June 30, 2022	72,572	$	—	$	515,928		$	(12,514)		$	(158,982)		$	344,432


	Three Months Ended March 31,
	Dollars								Percentage of Total Net Revenues
	2023		2022		% Change				2023			2022
COVID-19 Diagnostics	$	118,254	$	22,136		434		%		76	%		33	%
Diagnostics (1)		17,090		11,423		50				11			17
Molecular Products		12,942		17,933		(28	)			8			26
Other products and services (2)		3,094		3,115		(1	)			2			5
Molecular Services		1,379		1,733		(20	)			1			3
COVID-19 Molecular Products		155		8,896		(98	)			1			12
Net product and services revenues		152,914		65,236		134				99			96
Non-product and services revenues		2,049		2,471		(17	)			1			4
Net revenues	$	154,963	$	67,707		129		%		100	%	$	100	%


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, 2023-January 31, 2023		158,726	(3)	$	5.64		—		11,984,720
February 1, 2023-February 28, 2023		70,685	(3)		5.14		—		11,984,720
March 1, 2023-March 31, 2023		—	(3)		—		—		11,984,720
		229,411					—

~~Delaware~~

~~36-4370966~~

(State or Other Jurisdiction of

Incorporation or Organization)

(IRS Employer Identification No.)