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☒ 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☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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.

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 check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of ~~May 3, 2021,~~April 29, 2022, the registrant had ~~234,915,016~~237,734,877 ordinary shares outstanding ($0.00001 par value per share).


	Fiscal First Quarter Ended						Fiscal Quarter Ended
	April 4, 2021			March 29, 2020			April 3, 2022			April 4, 2021
Net revenue	$	506.8		$	407.9		$	500.1		$	506.8
Cost of revenue, excluding amortization of intangible assets		248.2			213.2			249.5			248.2
Gross profit		258.6			194.7
Selling, marketing and administrative expenses		131.5			117.4			129.5			131.5
Research and development expense		28.9			23.6			32.2			28.9
Amortization of intangible assets		33.4			33.0			33.2			33.4
Other operating expense, net		7.4			8.8			8.6			7.4
Income from operations		57.4			11.9			47.1			57.4
Interest expense, net		43.4			52.2			32.5			43.4
Tax indemnification income, net		(0.2	)		(2.5	)		(0.2	)		(0.2	)
Other expense, net		50.0			59.3
Loss before provision for income taxes		(35.8	)		(97.1	)
Other (income) expense, net								(3.5	)		50.0
Income (loss) before income taxes								18.3			(35.8	)
Provision for income taxes		3.3			4.1			3.5			3.3
Net loss	$	(39.1	)	$	(101.2	)
Basic and diluted net loss per ordinary share	$	(0.19	)	$	(0.69	)
Basic and diluted weighted-average ordinary shares outstanding		206.2			146.3
Net income (loss)							$	14.8		$	(39.1	)
Basic net income (loss) per ordinary share							$	0.06		$	(0.19	)
Basic weighted-average ordinary shares outstanding								237.2			206.2
Diluted net income (loss) per ordinary share							$	0.06		$	(0.19	)
Diluted weighted-average ordinary shares outstanding								242.0			206.2

The accompanying notes are an integral part of these unaudited consolidated financial statements.


	April 4, 2021			January 3, 2021			April 3, 2022			January 2, 2022
Assets
Current assets:
Cash and cash equivalents	$	153.8		$	132.8		$	281.1		$	309.7
Accounts receivable (net of allowance for doubtful accounts of $9.6 and $9.8, respectively)		324.1			318.7
Accounts receivable (net of allowance for credit losses of $8.9 and $8.6, respectively)								241.0			257.2
Inventories		291.1			278.7			316.7			305.4
Other current assets		150.8			127.0			150.8			139.4
Total current assets		919.8			857.2			989.6			1,011.7
Property, plant and equipment, net		805.6			832.0			784.2			791.4
Goodwill		576.1			580.1			572.8			573.6
Intangible assets, net		983.4			1,016.7			840.7			879.2
Deferred income taxes		7.8			8.0			9.7			9.7
Other assets		99.8			107.5			119.4			98.2
Total assets	$	3,392.5		$	3,401.5		$	3,316.4		$	3,363.8
Liabilities and Stockholders’ Equity (Deficit)
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable	$	130.3		$	146.2		$	169.5		$	181.0
Accrued liabilities		260.9			284.7			259.5			299.6
Deferred revenue		34.3			35.5			30.5			34.5
Current portion of borrowings		139.4			160.0			63.2			63.4
Total current liabilities		564.9			626.4			522.7			578.5
Long-term borrowings		2,240.3			3,558.5			2,177.1			2,186.7
Employee-related obligations		38.9			39.3			36.9			37.1
Other liabilities		103.8			120.8			67.4			78.9
Deferred income taxes		68.0			67.3			69.0			72.1
Total liabilities		3,015.9			4,412.3			2,873.1			2,953.3
Commitments and contingencies (Note 14)
Stockholders’ Equity (Deficit):
Preferred redeemable shares, $1.39 nominal value per share, 50,000 shares issued and outstanding as of April 4, 2021		0.1			0
Ordinary shares, $0.00001 par, 1,000,000,000 shares authorized, 234,843,052 and 147,295,511 shares issued and outstanding as of April 4, 2021 and January 3, 2021, respectively		0			0
Shareholders’ Equity:
Preferred redeemable shares, $1.39 nominal value per share, 50,000 shares issued and outstanding as of both April 3, 2022 and January 2, 2022, respectively								0.1			0.1
Ordinary shares, $0.00001 par value, 1,000,000,000 shares authorized, 237,612,459 and 237,203,879 shares issued and outstanding as of April 3, 2022 and January 2, 2022, respectively								0			0
Additional paid-in capital		2,394.3			975.1			2,431.9			2,425.9
Accumulated deficit		(1,956.6	)		(1,917.5	)		(1,957.0	)		(1,971.8	)
Accumulated other comprehensive loss		(61.2	)		(68.4	)		(31.7	)		(43.7	)
Total stockholders’ equity (deficit)		376.6			(1,010.8	)
Total liabilities and stockholders’ equity (deficit)	$	3,392.5		$	3,401.5
Total shareholders’ equity								443.3			410.5
Total liabilities and shareholders’ equity							$	3,316.4		$	3,363.8

The accompanying notes are an integral part of these unaudited consolidated financial statements.

Consolidated ~~Statement~~Statements of Changes in ~~Stockholders’~~Shareholders’ Equity (Deficit)

Ordinary
shares issued

Ordinary
share
par value

Preferred redeemable
shares issued

Preferred redeemable
shares
par value

Additional
paid-in
capital

Accumulated
deficit

Accumulated
other
comprehensive
loss

Total

Balance as of January 3, 2021

147,295,511

$
0

0

$
0

$
975.1

$
(1,917.5
)

$
(68.4
)

$
(1,010.8
)
Net loss

—

—

—

—

—

(39.1
)

—

(39.1
)
Issuance of ordinary shares upon completion of initial public offering, net of commissions, underwriting discounts and offering costs

87,400,000

—

—

—

1,414.7

—

—

1,414.7

Issuance of incorporation shares consisting of ordinary share and preferred redeemable shares

1

—

50,000

0.1

—

—

—

0.1

Exercise of stock options

147,540

—

—

—

1.0

—

—

1.0

Recognition of stock-based compensation

—

—

—

—

3.5

—

—

3.5

Foreign currency derivatives, net of tax of $0.0

—

—

—

—

—

—

3.6

3.6

Interest rate derivatives, net of tax of $0.0

—

—

—

—

—

—

12.4

12.4

Foreign currency translation adjustments

—

—

—

—

—

—

(8.8
)

(8.8
)
Balance as of April 4, 2021

234,843,052

$
0

50,000

$
0.1

$
2,394.3

$
(1,956.6
)

$
(61.2
)

$
376.6

Ordinary
shares issued

Ordinary
share
par value

Preferred redeemable
shares issued

Preferred redeemable
shares
par value

Additional
paid-in
capital

Accumulated
deficit

Accumulated
other
comprehensive
loss

Total

Balance as of December 29, 2019

146,437,546

$
0

0

$
0

$
964.7

$
(1,705.6
)

$
(71.9
)

$
(812.8
)
Net loss

—

—

—

—

—

(101.2
)

—

(101.2
)
Exercise of stock options

89,223

—

—

—

0.2

—

—

0.2

Recognition of stock-based compensation

—

—

—

—

1.6

—

—

1.6

Foreign currency derivatives, net of tax of $0.0

—

—

—

—

—

—

4.9

4.9

Interest rate derivatives, net of tax of $0.0

—

—

—

—

—

—

(43.9
)

(43.9
)
Foreign currency translation adjustments

—

—

—

—

—

—

(10.8
)

(10.8
)
Balance as of March 29, 2020

146,526,769

$
0

0

$
0

$
966.5

$
(1,806.8
)

$
(121.7
)

$
(962.0
)

The accompanying notes are an integral part of these unaudited consolidated financial statements.

	Fiscal First Quarter Ended
	April 4, 2021			March 29, 2020			Fiscal Quarter Ended
Cash Flows from Operating activities:
Net loss	$	(39.1	)	$	(101.2	)
Adjustments to reconcile net loss to cash used in operating activities:
							April 3, 2022			April 4, 2021
Cash Flows from Operating Activities:
Net income (loss)							$	14.8		$	(39.1	)
Adjustments to reconcile net income (loss) to cash used in operating activities:
Depreciation and amortization		82.7			79.8			79.4			82.7
Unrealized foreign exchange losses, net		22.0			49.9
Unrealized foreign exchange (gains) losses, net								(10.1	)		22.0
Loss on extinguishment of debt		50.3			10.0			0			50.3
Amortization of deferred financing costs and original issue discount		2.4			2.7			2.0			2.4
Stock-based compensation		3.5			1.6			2.6			3.5
Deferred tax provision		1.0			0.2
Provision for doubtful accounts		0.3			0.3
Other non-cash, net		(15.9	)		4.5
Deferred tax (benefit) provision								(0.8	)		1.0
Change in allowance for credit losses								0.6			0.3
Other, net								0.6			(15.9	)
Changes in operating assets and liabilities:
Accounts receivable		(10.3	)		21.6			13.7			(10.3	)
Inventories		(41.7	)		(40.9	)		(35.8	)		(41.7	)
Other current and non-current assets		(15.0	)		(3.1	)		(25.2	)		(15.0	)
Accounts payable and accrued liabilities		(56.5	)		(35.7	)		(39.8	)		(56.5	)
Deferred revenue		(1.0	)		(7.0	)		(3.9	)		(1.0	)
Other current and non-current liabilities		7.4			(0.2	)		(2.1	)		7.4
Cash used in operating activities		(9.9	)		(17.5	)		(4.0	)		(9.9	)
Cash Flows from Investing activities:
Cash Flows from Investing Activities:
Purchase of property, plant and equipment		(13.4	)		(18.1	)		(27.0	)		(13.4	)
Proceeds from cross currency swaps and others, net		2.7			(0.2	)
Proceeds from cross currency swaps								0			2.4
Milestone payments and other, net								(0.2	)		0.3
Cash used in investing activities		(10.7	)		(18.3	)		(27.2	)		(10.7	)
Cash Flows from Financing activities:
Cash Flows from Financing Activities:
Proceeds from initial public offering		1,426.4			0			—			1,426.4
Payment of initial public offering costs								0			(5.0	)
Payments on long-term borrowings		(1,375.9	)		(1,015.5	)		(1.3	)		(1,375.9	)
Proceeds from (payments on) short-term borrowings, net		(5.4	)		299.3
Payment of initial public offering costs		(5.0	)		0
Proceeds from other long-term borrowings		0			1,032.2
Payments on short-term borrowings, net								0			(5.4	)
Proceeds from exercise of stock options		1.0			0.2			3.4			1.0
Cash provided by financing activities		41.1			316.2			2.1			41.1
Effect of exchange rate changes on cash		(0.2	)		(2.5	)		0.5			(0.2	)
Increase in cash, cash equivalents and restricted cash		20.3			277.9
(Decrease) increase in cash, cash equivalents and restricted cash								(28.6	)		20.3
Cash, cash equivalents and restricted cash at beginning of period		144.2			84.0			311.6			144.2
Cash, cash equivalents and restricted cash at end of period	$	164.5		$	361.9		$	283.0		$	164.5

The accompanying notes are an integral part of these unaudited consolidated financial statements.

(1) General and description of the business

~~(1)~~

~~General and description of the business~~

Ortho Clinical Diagnostics Holdings plc (“UK Holdco” “we,” “our” or the “Company”), and formerly known as Ortho-Clinical Diagnostics Bermuda Co. Ltd. (“Bermuda Holdco”), is a public limited company incorporated under the laws of England and Wales. UK Holdco became the new holding company of Bermuda Holdco and its consolidated subsidiaries ~~and upon incorporation, it had an initial share capital of 1 ordinary share and 50,000 preferred redeemable shares~~ (“Incorporation Shares”). On January 25, 2021, The Carlyle Group L.P. (“Carlyle”), and all other shareholders of Bermuda Holdco contributed all of their outstanding equity interests in Bermuda Holdco to UK Holdco in exchange for ordinary shares of UK Holdco on a 1-for-1 basis (the “Reorganization Transactions”).

~~UK Holdco is a holding company with no business operations~~Ortho” or ~~assets other than cash, intercompany receivables, miscellaneous administrative costs and guarantees of certain obligations of Ortho-Clinical Diagnostics, Inc. (“Ortho U.S.”~~“the Company”) and 100% of its ownership interest of Ortho-Clinical Diagnostics Holdings Luxembourg S.à r.l., which itself is a holding company with no operations or assets other than cash, intercompany receivables, miscellaneous administrative costs and its ownership of 100% of the capital stock of Ortho-Clinical Diagnostics S.A. (“LuxCo”). LuxCo, together with its indirect wholly owned subsidiary, Ortho U.S., are co-borrowers under the Senior Secured Credit Facilities and co-issuers of the Notes (each as defined in Note 7). The Company’s global operations are conducted by indirect wholly owned subsidiaries.

~~The Company~~ is a leading global provider of in-vitro diagnostics (“IVD”) solutions to the clinical laboratory and transfusion medicine communities. The Company maintains a commercial presence in more than 130 countries and territories. The Company’s instruments, assays, reagents and other consumables are used in hospitals, laboratories, clinics, blood banks and donor centers worldwide. The Company is globally operated with manufacturing facilities in the United States (“U.S.”) and the United Kingdom (“U.K.”) and with sales centers, administrative offices and warehouses located throughout the world.

~~Both~~Business Combination with Quidel

On December 22, 2021, the Company, Coronado Topco, Inc., a Delaware corporation and a wholly owned subsidiary of the Company (“Coronado Topco”), Laguna Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of Topco (“U.S. Merger Sub”), Orca Holdco, Inc., a Delaware corporation and a wholly owned subsidiary of Topco (“U.S. Holdco Sub”), Orca Holdco 2, Inc., a Delaware corporation and a wholly owned subsidiary of U.S. Holdco Sub (“U.S. Holdco Sub 2”) and Quidel Corporation, a Delaware corporation (“Quidel”) entered into a Business Combination Agreement (the “Business Combination Agreement,” and the transactions contemplated thereby, the “Combinations”), pursuant to which, among other things and subject to the terms and conditions contained therein, (i) under a scheme of arrangement under UK corporate law, each issued and outstanding share of the Company will be acquired by a depository nominee (or transferred within the depository nominee) on behalf of Coronado Topco in exchange for (x) 0.1055 shares of common stock of Coronado Topco and (y) $7.14 in cash (the “Ortho Scheme”) and (ii) immediately after the consummation of the Ortho Scheme, U.S. Merger Sub will merge with and into Quidel, pursuant to which each issued and outstanding share of Quidel common stock will be converted into one share of Coronado Topco common stock, with Quidel surviving as a wholly owned subsidiary of Coronado Topco. The boards of directors of both the Company and Quidel have unanimously approved the terms of the Business Combination Agreement, which is expected to close during the first half of fiscal year 2022. Upon completion of the Combinations, which requires shareholder approval, the Company's shareholders are expected to own approximately 38% of Coronado Topco and Quidel stockholders are expected to own approximately 62% of Coronado Topco on a fully diluted basis, based on the respective capitalizations of the Company and Quidel as of the date the parties entered into the Business Combination Agreement.

In the event that the Business Combination Agreement is terminated by Ortho as a result of the occurrence of certain terms and conditions as specified therein, the Company must pay Quidel a termination fee of approximately $46.9 million, less any expenses reimbursable by Quidel pursuant to the Business Combination Agreement. If the Business Combination Agreement is terminated by Quidel as a result of the occurrence of certain terms and conditions as specified therein, the Company will receive approximately $207.8 million, less any expenses reimbursable by Ortho pursuant to the Business Combination Agreement.

Costs incurred related to the proposed transaction, including integration-related activities, were $5.7 million during the fiscal quarter ended April 3, 2022 and were recorded to Other operating expenses, net in the consolidated statement of operations.

(2) Basis of presentation of the unaudited consolidated financial statements

These unaudited consolidated financial statements for the Company include the accounts of the Company and its subsidiaries. All intercompany accounts and transactions have been eliminated. These unaudited consolidated financial statements have been prepared in accordance with U.S. Generally Accepted Accounting Principles (“U.S. GAAP”) and Regulation S-X. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, considered necessary for a fair presentation have been included. Results for the fiscal quarter ended April 3, 2022 should not be considered indicative of results for the fiscal year ending January 1, 2023. These unaudited consolidated financial statements do not represent complete financial statements and should be read in conjunction with the Company’s ~~domestic~~audited consolidated financial statements and international operations have been and continue to be affected by the ongoing global pandemic of a novel strain of coronavirus (“COVID-19”) and the resulting volatility and uncertainty it has caused in the U.S. and international markets. The Company has a direct commercial presence in more than 30 countries, including many of the regions most impacted by the COVID-19 pandemic. The Company has experienced a recovery in the base business since the lower shipments to customers experienced primarily in the fiscal second and fiscal third quarters offootnotes thereto for the fiscal year ended January ~~3, 2021; however through~~2, 2022 in the Company’s most recent Annual Report on Form 10-K.

The Company follows the concept of a fiscal ~~first~~year which ends on the Sunday nearest to the end of the month of December, and fiscal quarters which end on the Sunday nearest to the end of the months of March, June, and September. Each fiscal quarter ~~ended April 4, 2021 the Company continues to experience higher distribution costs~~presented in this Quarterly Report on Form 10-Q consists of 13 weeks.

Amounts reported in millions have been calculated based on underlying, unrounded amounts. Amounts presented in tables may not total due to ~~higher shipping rates as a result of the pandemic, which~~rounding. Percentages have been ~~partially offset by lower travel-related expenses for our employees due to global travel restrictions.~~calculated using underlying, unrounded amounts.

During the fiscal first quarter ended April 4, 2021, the Company completed its initial public offering (“IPO”) of ordinary shares at a price of $17.00 per share. The Company issued and sold 87,400,000 ordinary shares in the IPO, including 11,400,000 ordinary shares issued pursuant to the full exercise of the underwriters option to purchase additional shares. The ordinary shares sold in the IPO were registered under the Securities Act pursuant to a Registration Statement on Form S-1, which was declared effective by the SEC on January 29, 2021. The offering generated net proceeds of $1,426.4 million after deducting underwriting discounts and commissions.

The Company used a portion of the net proceeds from the IPO (i) to redeem $160.0 million of its 2025 Notes (as defined in Note 7), plus accrued interest thereon and $11.8 million of redemption premium, (ii) to redeem $270.0 million of its 2028 Notes, plus accrued interest thereon and $19.6 million of redemption premium, (iii) to repay $892.7 million in aggregate principal amount of borrowings under its Dollar Term Loan Facility (as defined in Note 7) and (iv) for working capital and general corporate purposes.

~~The accompanying~~These unaudited consolidated financial statements have been prepared on a basis which assumes that the Company will continue as a going concern and contemplates the realization of assets and satisfaction of liabilities and commitments in the normal course of business. As shown in the unaudited consolidated financial statements, the Company has total ~~cash~~Cash and cash equivalents of ~~$153.8~~$281.1 million and an ~~accumulated~~Accumulated deficit of ~~$1,956.6~~$1,957.0 million as of April ~~4, 2021.~~3, 2022. The Company reported ~~a net loss~~Net income of ~~$39.1~~$14.8 million and Cash used ~~$9.9~~in operating activities of

Ortho Clinical Diagnostics Holdings plc

Notes to unaudited consolidated financial statements

April 3, 2022

(Dollars in millions, unless otherwise stated)

$4.0 million ~~of cash from operations~~ during the fiscal ~~first~~ quarter ended April ~~4, 2021.~~3, 2022. The Company’s primary future cash needs will be to meet debt service requirements, working capital needs and capital expenditures. Management is required to evaluate whether there are conditions and events that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the financial statements are issued and, if so, disclose that fact.

The Company’s debt agreements contain various covenants that may restrict the Company’s ability to borrow on available credit facilities and future financing arrangements and require the Company to remain below a specific credit coverage threshold. The Company’s credit agreement that governs its Senior Secured Credit ~~Agreement~~Facilities (as defined in Note 7)7–Borrowings, the “Credit Agreement”) has a financial covenant ~~(First~~referred to as the First Lien Net Leverage Ratio,

~~Ortho Clinical Diagnostics Holdings plc~~

~~Notes to consolidated financial statements (unaudited)~~

~~April 4, 2021~~

~~(Dollars in millions, unless otherwise stated)~~

~~(as~~ (as defined in the ~~credit agreement)~~Credit Agreement, not to exceed ~~6-to-1,~~5.5-to-1, subject to ~~two~~a 50 basis point ~~step-downs~~step-down on ~~June 30, 2021 and~~ September 30, 2022) that is tested when borrowings and letters of credit issued under the Revolving Credit Facility (as defined in Note 7–Borrowings) exceed ~~30%~~30% of the committed amount at any period end reporting date. As of April ~~4, 2021,~~3, 2022, the Company had 0no outstanding borrowings under its Revolving Credit Facility and letters of credit issued under the Revolving Credit Facility totaled ~~$37.0~~$43.7 million. ~~The~~As of April 3, 2022, the Company ~~believes that it has complied and will continue to comply~~was in compliance with the financial ~~covenant for the next 12 months.~~covenant. In the event the Company does not comply with the financial covenant of the Revolving Credit Facility, the lenders will have the right to call on all of the borrowings under the Revolving Credit Facility. If the lenders on the Revolving Credit Facility terminate their commitments and accelerate the loans, this would become a cross default to other material indebtedness.

The Company evaluated its liquidity position and ability to comply with financial covenants in its Revolving Credit Facility as of the date of the issuance of these ~~interim~~unaudited consolidated financial statements. Based on this evaluation, management believes that the Company’s financial position, ~~net cash~~Cash provided by ~~operations~~operating activities combined with ~~cash~~Cash and cash equivalents, and borrowing ~~availability~~capacity available under its Revolving Credit Facility, will be sufficient to fund its current obligations, capital spending, debt service requirements and working capital requirements ~~over~~for a period of at least the next 12 months from the issuance of these ~~interim~~unaudited consolidated financial statements.

Should it become necessary, the Company may seek to raise additional capital within the next 12 months through borrowings on credit facilities, other financing activities and/or the public or private sale of equity securities. The Company may also need to control discretionary spending, which could impact its planned general and administrative, research and development, or capital spend in an effort to provide sufficient funds to continue its operations or maintain compliance with the financial covenants, and the Company may be subject to adverse business conditions due to the global COVID-19 pandemic, all of which could adversely affect the Company’s business.

(3) Recent accounting pronouncements

~~(2)~~

~~Basis of presentation of the consolidated financial statements~~

The interim unaudited consolidated financial statements for the Company include the accounts of UK Holdco and its subsidiaries. All intercompany accounts and transactions have been eliminated. These consolidated financial statements have been prepared in accordance with U.S. GAAP for interim financial information and are consistent with Article 10 of Regulation S-X. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair statement of the results for interim periods have been included. Results for interim periods should not be considered indicative of results for a full year or any subsequent period. The interim unaudited consolidated financial statements do not represent complete financial statements and should be read in conjunction with the Company’s consolidated financial statements for the fiscal year ended January 3, 2021.

The Company follows the concept of a fiscal year which ends on the Sunday nearest to the end of the month of December, and fiscal quarters which end on the Sunday nearest to the end of the months of March, June, and September. Each fiscal quarter presented in this Quarterly Report on Form 10-Q consists of 13 weeks.

~~Columns and rows within tables may not add up due to rounding. Percentages have been calculated using actual, non-rounded figures.~~

~~On January 18,~~July 2021, the Company approved an issuance of 54,860,691 shares (an additional 0.5934 share for each existing share), which effected a 1.5934-for-1 stock split of its ordinary shares. All references to share and per share amounts in the Company’s consolidated financial statements have been retrospectively revised to reflect the stock split.

There have been no material changes to the significant accounting policies previously disclosed in the Company’s consolidated financial statements and in Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operation” of the Company’s Annual Report on Form 10-K for the fiscal year ended January 3, 2021.

~~In December 2019,~~ the FASB issued ASU ~~2019-12, Income Taxes~~2021-05, Leases (Topic ~~740)~~842): ~~Simplifying~~Lessors – Certain Leases with Variable Lease Payments, which amends the ~~Accounting for Income Taxes, which enhances and simplifies various aspects of the income tax accounting guidance related to intra period tax allocations, interim period~~ accounting for ~~enacted changes~~lease contracts that have variable lease payments that do not depend on a reference index or rate, and which would have resulted in ~~tax law,~~the recognition of a loss at lease commencement if classified as a sales-type or direct financing lease. Upon adoption, lessors will classify and account for leases with variable payments that do not depend on a reference index or rate as an operating lease if the ~~year-to-date~~lease would have been classified as a sales-type or direct financing lease, and if the lessor would have otherwise recognized a loss ~~limitation~~at lease commencement. The guidance in ~~interim period tax accounting.~~ASU 2021-05 is effective for fiscal years beginning after December 15, 2021 and can be applied either prospectively or retrospectively for reporting entities that have adopted Topic 842 prior to the issuance date of this amendment. The Company adopted this guidance prospectively on January ~~4, 2021~~3, 2022, and the adoption did not have a material impact on ~~the Company’s~~its unaudited consolidated financial statements.

(4) Net income (loss) per share

~~Reference rate reform (Topic 848)~~

In January 2021, the FASB issued ASU 2021-01, Reference rate reform (Topic 848), which clarifies that certain optional expedients and exceptions in Topic 848 apply to derivative instruments that use an interest rate for margining, discounting, or contract price alignment that is modified as a result of reference rate reform. The guidance in ASU 2021-01 is optional and may be elected over time as reference rate reform activities occur. The optional amendments can be applied on a full retrospective basis as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020, or on a prospective basis to new modifications from any date within an interim period that includes or is subsequent to the date of the issuance of a final update, up to the date that financial statements are available to be issued. The Company has determined that the optional amendments are not applicable to the derivative instruments held as of the end of the fiscal quarter ended April 4, 2021. The Company continues to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur.

~~(4)~~

~~Net loss per share~~

Basic net ~~loss~~income (loss) per ~~share attributable to the Company’s~~ ordinary ~~shareholders~~share is based ~~upon~~on the weighted-average number of ordinary shares outstanding during the ~~period, excluding restricted stock that have been issued but are not yet vested.~~period. Diluted net ~~loss~~income (loss) per ~~share attributable to the Company’s~~ ordinary ~~shareholders~~share is based ~~upon~~on the weighted-average number of ordinary shares ~~outstanding during the period plus additional weighted-average~~and ordinary share equivalents, outstanding during the period when the effect is dilutive. Ordinary share equivalents result from the assumed exercise of outstanding stock options (the proceeds of which are then assumed to have been used to repurchase outstanding stockcalculated using the treasury stock ~~method) and~~method, outstanding during the ~~vesting of unvested restricted shares of~~period. The Company excludes potential ordinary ~~shares. Ordinary~~ share equivalents ~~have not been included in~~from the calculation if the effect would be anti-dilutive. For the fiscal quarter ended April 4, 2021, during which the Company incurred a Net loss, it excluded potential ordinary share equivalents from the calculations of Diluted net loss per ordinary share ~~calculation~~ because the effect ~~would have been~~was anti-dilutive. ~~Total potential gross~~The weighted-average number of ordinary shares used in the computation of Basic and Diluted net income (loss) per share ~~equivalents consisted of the following:~~

were as follows:

Fiscal First Quarter Ended

April 4, 2021

March 29, 2020

Stock options

15,895,457

15,534,797

Unvested restricted shares and restricted stock units

1,009,568

341,566

16,905,025

15,876,363

~~(5)~~

~~Revenue~~


	Fiscal Quarter Ended
(In millions)	April 3, 2022		April 4, 2021
Basic weighted-average ordinary shares outstanding		237.2		206.2
Effect of stock options, unvested restricted shares and restricted stock units		4.8		—
Diluted weighted-average ordinary shares		242.0		206.2

Revenue is recognized when obligations under the terms of a contract with a customer are satisfied; this occurs with the transfer of control of the Company’s goods or services. The Company considers revenue to be earned when all of the following criteria are met: (i) the Company has a contract with a customer that creates enforceable rights and obligations; (ii) promised products or services are identified; (iii) the transaction price, or consideration the Company expects to receive for transferring the goods or providing services, is determinable; and (iv) the Company has transferred control of the promised items to the customer. A promise in a contract to transfer a distinct good or service to the customer is identified as a performance obligation. A contract’s transaction price is allocated to each performance obligation and recognized as revenue when, or as, the performance obligation is satisfied.

The Company generates revenue primarily from the sale of IVD instruments, assays, reagents and other consumables, accessories and service contracts. The Company generally recognizes revenue when the customer obtains control of the

Ortho Clinical Diagnostics Holdings plc

Notes to unaudited consolidated financial statements ~~(unaudited)~~

April ~~4, 2021~~3, 2022

(Dollars in millions, unless otherwise stated)

~~products, which occurs at a point in time. For instruments,~~

The following table provides the ~~Company generally recognizes revenue upon installation and customer acceptance. The Company has determined that~~total outstanding ordinary share equivalents, unaffected by the installation services do not constitute a separate performance obligation. For assays, reagents and other consumables, the Company recognizes revenue upon shipment or delivery based on the contractual shipping terms of a contract. Service revenue is generally recognized over time using a time-based model, which is consistent with the pattern in which we provide the services.

If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. The Company may also enter into transactions that involve multiple performance obligations, suchtreasury stock method weighted-average calculation, as ~~the sale of products and related services. In accounting for these transactions, the Company allocates the consideration to the deliverables by use~~ of the ~~relative standalone selling price method.~~end of each period below:

A portion of the Company’s product revenue includes revenue earned under reagent rental programs which provide customers the right to use instruments at no separate cost to the customer in consideration for a multi-year agreement to purchase reagents, assays and consumables. The Company allocates a portion of the revenue from the future consumable sale to the instrument based on the customers’ minimum volume commitment and recognizes revenue at the time of the future sale of reagents, assays and consumables. The cost of the instrument is capitalized within property and equipment, and is charged to cost of revenue on a straight-line basis over the term of the minimum purchase agreement.


	Fiscal Quarter Ended
(In millions)	April 3, 2022		April 4, 2021
Stock options		12.6		15.9
Unvested restricted shares and restricted stock units		0.5		1.0
		13.1		16.9

(5) Revenue earned from operating leases is recognized over the lease term, normally five to seven years. Revenue earned under sales-type leases is recognized at the beginning of the lease, as well as a lease receivable and unearned interest associated with the lease. Revenue is recognized when control has transferred for the reagents, assays and consumables. Costs related to product sales are recognized at time of delivery.

The Company recognizes product revenues at the net sales price, which includes estimates of variable consideration related to rebates and volume discounts. Rights of return are generally not included in the Company’s arrangements with customers. Management’s estimates of rebates and discounts are determined using the expected value method and take into consideration historical experience, contractual and statutory requirements, and other relevant information such as forecasted activity. These reserves reflect the Company’s best estimate of the amount of consideration to which it is entitled. The amount of variable consideration included in the net sales price is limited to the amount that is probable not to result in a significant future reversal of cumulative revenue under the contract.

Contract balances

Timing of revenue recognition may differ from timing of invoicing to customers. The Company records an asset when revenue is recognized prior to invoicing a customer (“contract asset”). Contract assets are included within ~~other~~Other current assets or ~~other~~Other assets in the Company’s unaudited consolidated balance sheet and are transferred to accounts receivable when the right to payment becomes unconditional. The balance of ~~contract~~Contract assets recorded in ~~our~~the Company’s unaudited consolidated balance sheets were as follows:


	April 3, 2022		January 2, 2022
Other current assets	$	52.2	$	47.2
Other assets		0		1.0
Total contract assets	$	52.2	$	48.1

April 4, 2021

January 3, 2021

Other current assets

$
49.3

40.4

Other assets

0

2.4

Total contract assets

$
49.3

$
42.8

The contract asset balance consists of the following components:

•

A customer supply agreement under which the difference between the timing of invoicing and revenue recognition resulted in a contract asset of $9.0 million as of April 3, 2022 was recorded in Other current assets. As of January 2, 2022, the balance of the contract asset related to this agreement was $12.4 million, of which $11.5 million was recorded in Other current assets and $1.0 million was recorded in Other assets.

•

Contractual arrangements with certain customers under which the Company invoices the customers based on reportable results generated by its reagents; however, control of the goods transfers to the customers upon shipment or delivery of the products, as determined under the terms of the contract. Using the expected value method, the Company estimates the number of reagents that will generate a reportable result. The Company records the revenue upon shipment and an associated contract asset, and relieves the contract asset upon completion of the invoicing. The balance of the contract asset related to these arrangements was $43.2 million and $35.7 million as of April 3, 2022 and January 2, 2022, respectively.

•

A customer supply agreement under which the difference between the timing of invoicing and revenue recognition resulted in a contract asset of $11.8 million and $15.1 million as of April 4, 2021 and January 3, 2021, respectively, of which $2.4 million was recorded in Other assets as of January 3, 2021.

•

Contractual arrangements with certain customers under which the Company invoices the customers based on reportable results generated by its reagents, however, control of the goods transfers to the customers upon shipment or delivery of the products, as determined under the terms of the contract. Using the expected value method, the Company estimates the number of reagents that will generate a reportable result. The Company records the revenue upon shipment and an associated contract asset, and relieves the contract asset upon completion of the invoicing. The balance of the contract asset related to these arrangements was $35.9 million and $24.3 million as of April 4, 2021 and January 3, 2021, respectively.

~~Ortho Clinical Diagnostics Holdings plc~~

~~Notes to consolidated financial statements (unaudited)~~

~~April 4, 2021~~

~~(Dollars in millions, unless otherwise stated)~~

•

One of the Company’s contract manufacturing agreements where revenue is recognized as the products are manufactured. The balance of the contract asset related to this arrangement was $1.6 million and $3.4 million as of April 4, 2021 and January 3, 2021, respectively.

The Company reviews contract assets for expected credit losses resulting from the collectability of customer accounts. Expected losses are established based on historical losses, customer mix and credit policies, current economic conditions in customers’ country or industry, and expectations associated with reasonable and supportable forecasts. NaN credit losses related to contract assets were recognized during the fiscal quarters ended April 3, 2022 and April 4, ~~2021 and March 29, 2020, respectively.~~2021.

The Company recognizes a contract liability when a customer pays an invoice prior to the Company transferring control of the goods or services (“contract liabilities”). The Company’s contract liabilities consist of deferred revenue primarily related to customer service contracts. The Company classifies deferred revenue as current or noncurrent based on the timing of the transfer of control or performance of the service. The balance of the Company’s current deferred revenue was ~~$34.3~~$30.5 million and ~~$35.5~~$34.5 million as of April ~~4, 2021~~3, 2022 and January ~~3, 2021,~~2, 2022, respectively. The Company has one arrangement with a customer ~~that~~where the revenue is expected to be recognized beyond one year. The balance of the deferred revenue included in long-term liabilities was ~~$6.3~~$8.7 million and ~~$6.6~~$5.6 million as of April ~~4, 2021~~3, 2022 and January ~~3, 2021,~~2, 2022, respectively, and was included in Other liabilities in the unaudited consolidated balance sheets. The amount of deferred revenue as of January ~~3, 2021~~2, 2022 that was recorded in Net revenue during the fiscal quarter ended April ~~4, 2021~~3, 2022 was ~~$17.9~~$19.3 million.

Ortho Clinical Diagnostics Holdings plc

Notes to unaudited consolidated financial statements

April 3, 2022

(Dollars in millions, unless otherwise stated)

Disaggregation of revenue

The Company generates product revenue in the following lines of business:

•

Clinical Laboratories—Focused on (i) clinical chemistry, which is the measurement of target chemicals in bodily fluids for the evaluation of health and the clinical management of patients, (ii) immunoassay instruments, which test the measurement of proteins as they act as antigens in the spread of disease, antibodies in the immune response spurred by disease, or markers of proper organ function and health, and (iii) testing to detect and monitor disease progression across a broad spectrum of therapeutic areas.

•

Transfusion Medicine—Focused on (i) immunohematology instruments and tests used for blood typing to ensure patient-donor compatibility in blood transfusions, and (ii) donor screening instruments and tests used for blood and plasma screening for infectious diseases for customers primarily in the U.S.

•

Other Product Revenue—Includes revenues primarily from contract manufacturing.

•

~~Clinical Laboratories—Focused on clinical chemistry and immunoassay instruments and tests to detect and monitor disease progression across a broad spectrum of therapeutic areas.~~

•

Transfusion Medicine—Focused on (i) immunohematology instruments and tests used for blood typing to ensure patient-donor compatibility in blood transfusions and (ii) donor screening instruments and tests used for blood and plasma screening for infectious diseases for customers primarily in the United States.

•

~~Other Product Revenue—Includes revenues primarily from contract manufacturing.~~

The Company also enters into collaboration and license agreements pursuant to which the Company derives collaboration and royalty revenues. During the fiscal ~~third~~ quarter ended September 27, 2020, the Company entered into 2 agreements with the Biomedical Advanced Research and Development Authority, ~~(BARDA),~~ a division of the U.S. Department of Health and Human Services, ~~(HHS),~~ for 2 awards of up to ~~$13.6~~$13.6 million to develop and submit Emergency Use Authorizations and 510(k) applications to the U.S. Food and Drug Administration ~~(“FDA”)~~ for ~~our~~its COVID-19 antigen and antibody tests. An additional award was granted to the Company on April 16, 2021 for an amount up to $3.6 million to submit a 510(k) application for its COVID-19 antigen test. During the fiscal quarter ended April 3, 2022 and April 4, 2021, the Company recognized ~~$4.0~~$0.2 million and $4.0 million, respectively, of ~~grant~~Net revenue related to these grants based upon project milestones completed to date.

The following table summarizes ~~net~~Net revenue by line of business for the fiscal quarter ended April 3, 2022 and April 4, ~~2021 and March 29, 2020:~~2021:


	Fiscal Quarter Ended
	April 3, 2022		April 4, 2021
Clinical Laboratories	$	321.2	$	334.0
Transfusion Medicine		173.6		161.4
Other Product Revenue		0.4		4.3
Total Product Revenue		495.2		499.7
Collaborations and Other Revenue		4.8		7.1
Net Revenue	$	500.1	$	506.8

(6) Inventories

Fiscal First Quarter Ended

April 4, 2021

March 29, 2020

Clinical Laboratories

$
334.0

$
256.4

Transfusion Medicine

161.4

147.9

Other Product Revenue

4.3

0

Total Product Revenue

499.7

404.3

Collaborations and Other Revenue

7.1

3.6

Net Revenue

$
506.8

$
407.9

The Company’s inventories were as follows:


	April 3, 2022		January 2, 2022
Raw materials and supplies	$	74.8	$	76.4
Goods in process		34.7		32.4
Finished goods		207.2		196.5
Total Inventories	$	316.7	$	305.4

~~(6)~~

~~Inventories~~

As of April ~~4, 2021~~3, 2022 and January 3, 2021, the components of borrowings were as follows:


	April 4, 2021			January 3, 2021			April 3, 2022			January 2, 2022
Senior Secured Credit Facilities
Dollar Term Loan Facility	$	1,292.8		$	2,185.5		$	1,292.8		$	1,292.8
Euro Term Loan Facility		392.9			408.9			324.8			335.8
Revolving Credit Facility		0			0			0			0
2028 Notes		405.0			675.0			405.0			405.0
2025 Notes		240.0			400.0			240.0			240.0
Accounts Receivable Financing		72.2			75.0
Sale and Leaseback Financing		0			20.5
Capital lease obligation		0.9			1.0
Other short-term borrowings		3.7			0.9
Finance lease obligation								0.8			0.7
Other long-term borrowings		3.6			3.9			2.2			2.6
Unamortized deferred financing costs		(25.1	)		(40.9	)		(20.2	)		(21.4	)
Unamortized original issue discount		(6.3	)		(11.3	)		(4.9	)		(5.3	)
Total borrowings		2,379.7			3,718.5			2,240.4			2,250.2
Less: Current portion		(139.4	)		(160.0	)		(63.2	)		(63.4	)
Long-term borrowings	$	2,240.3		$	3,558.5		$	2,177.1		$	2,186.7

In February 2021, the Company used a portion of the proceeds from its IPO to repay $892.7 million of borrowings under the Dollar Term Loan Facility and recognized a loss on early extinguishment of debt of $11.4 million due to the repayment, which is recorded as a component of Other expense, net.

~~On February 5, 2021, the Company entered into a fifth amendment of its credit agreement (as amended, the “Credit Agreement”) governing its senior secured credit facilities, which~~The Company’s Senior Secured Credit Facilities consist of (i) the ~~Dollar~~senior secured term loan facility in an amount of $2,325.0 million (the “Dollar Term Loan ~~Facility,~~Facility”), (ii) the euro-denominated senior secured term loan facility in an amount equal to ~~€337.4~~€337.4 million (the “Euro Term Loan Facility”, as described below, and, together with the Dollar Term Loan Facility, the “Term Loan Facilities”), and (iii) the multi-currency senior secured revolving facility with commitments of ~~$500.0~~$500.0 million (the “Revolving Credit Facility”) ~~(collectively,~~.

In February 2021, the ~~“Senior Secured Credit Facilities”), which increased~~Company used a portion of the ~~Revolving Credit Facility contained in the credit agreement by $150~~proceeds from its initial public offering (“IPO”) to repay $892.7 million ~~to an aggregate amount~~ of $500 million and extended the maturity date to February 5, 2026, provided that such date may be accelerated subject to certain circumstances as set forth in the fifth amendment. To the extent that the aggregate principal amount ofborrowings under the Dollar Term Loan Facility and ~~Euro Term Loan Facility (and any Refinancing Indebtedness (as defined in~~recognized a loss on early extinguishment of debt of $11.4 million, which is recorded as a component of Other expense, net during the Credit Agreement) with respect thereto that matures on or prior to June 30, 2025) outstanding as of March 31, 2025 exceeds $500 million then the maturity date with respect to the Revolving Credit Facility shall be March 31, 2025. All other terms of the Senior Secured Credit Facilities will remain substantially the same except as otherwise amended by the fifth amendment.

As of April ~~4, 2021 and January~~ 3, 2021, the remaining balance of deferred financing costs related to the Dollar Term Loan Facility was $9.7 million and $17.3 million, respectively. As of April 4, 2021 and January 3, 2021, the remaining balance of deferred financing costs related to the Euro Term Loan Facility was $4.3 million and $4.6 million, respectively. As of April 4, 2021 and January 3, 2021, the remaining unamortized balance related to the Revolving Credit Facility was $4.0 million and $3.4 million, respectively. The effective interest rate of the Dollar Term Loan Facility and Euro Term Loan Facility as of April 4, 2021 is 5.76% and 3.88%, respectively.

~~As of April 4, 2021,~~2022, there was 0 outstanding balance under the Revolving Credit Facility, and letters of credit issued under the Revolving Credit Facility totaled ~~$37.0~~$43.7 million, which reduced the availability under the Revolving Credit Facility to ~~$463.0~~$456.3 million. The Senior Secured Credit Facilities are subject to various covenants that may restrict the Company’s ability to borrow on available credit facilities and future financing arrangements or require the Company to remain below a specific credit coverage threshold as indicated in our debt agreements. The Senior Secured Credit Facilities include a financial covenant that is tested when borrowings and letters of credit issued under the Revolving Credit Facility exceed ~~30%~~30% of the committed amount at any period end reporting date and provides that ~~LuxCo~~Ortho-Clinical Diagnostics S.A. (“LuxCo”) will not permit the First Lien Net Leverage Ratio as of the end of ~~such~~each fiscal quarter of ~~the~~ LuxCo and its Restricted Subsidiaries (as defined in the Credit Agreement) to be greater than(i) ~~6.00:~~5.50:1.00 for each fiscal quarter ending on or prior to ~~June 30, 2021, (ii) 5.50:1.00 for each fiscal quarter ending after June 30, 2021 and on or prior to~~ September 30, 2022 and ~~(iii) 5.00:~~(ii) 5.00:1:00 for each fiscal quarter ending thereafter. The Company was in compliance with the covenants as of April ~~4, 2021.~~3, 2022.

As of April 3, 2022 and January 2, 2022, the remaining balance of deferred financing costs related to the Dollar Term Loan Facility was $7.5 million and $8.1 million, respectively. As of April 3, 2022 and January 2, 2022, the remaining balance of deferred financing costs related to the Euro Term Loan Facility was $3.4 million and $3.6 million, respectively. As of April 3, 2022 and January 2, 2022, the remaining unamortized balance related to the Revolving Credit Facility was $2.2 million and $2.7 million, respectively. The effective interest rate of the Dollar Term Loan Facility and Euro Term Loan Facility as of April 3, 2022 is 5.76% and 3.88%, respectively.

Original issue discount related to the Senior Secured Credit Facilities was recorded as a reduction of the principal amount of the borrowings and is amortized using the effective interest method as a component of interest expense over the life of the Senior Secured Credit Facilities. As of April 3, 2022 and January 2, 2022, the remaining unamortized balance was $4.9 million and $5.3 million, respectively.

On June 11, 2020, ~~the~~ LuxCo and ~~Ortho U.S.~~Ortho-Clinical Diagnostics, Inc. (collectively, the “Issuers”), issued ~~$400~~$400.0 million aggregate principal amount of ~~7.375%~~7.375% Senior Notes due 2025 (the “2025 Notes’), on which interest is payable semi-annually in arrears on June 1 and December 1 of each year. The 2025 Notes will mature on June 1, ~~2025.~~2025. The 2025 Notes and guarantees thereof are senior unsecured obligations and rank equally in right of payment with all of the Issuers’ and guarantors’ existing and future senior debt, including the 2028 Notes (as defined below). The

2025 Notes and the guarantees thereof are effectively subordinated to any of the Issuers’ and guarantors’ existing and future secured debt, including the Senior Secured Credit Facilities, ~~and the Financing Program (as defined below),~~ to the extent of the value of the assets securing such debt. In addition, the 2025 Notes and the guarantees thereof rank senior in right of payment to all of the Issuers’ and guarantors’ future subordinated debt and will be structurally subordinated to the liabilities of the Issuers’ non-guarantor subsidiaries. The Company incurred deferred financing costs of ~~$7.5~~$7.5 million related to the 2025 Notes, which were capitalized as deferred financing costs and are being amortized using the effective interest method as a component of interest expense over the life of the 2025 Notes.

On or after June 1, 2022, the Issuers have the option to redeem all or part of the 2025 Notes at the following redemption prices (expressed as percentages of principal amount):


Year	Price			Price
2022		103.688	%	103.688%
2023		101.844	%	101.844%
2024 and thereafter		100.000	%	100.000%

Notwithstanding the foregoing, at any time and from time to time prior to June 1, 2022, the Issuers may at their option redeem in the aggregate up to ~~100%~~100% of the original aggregate principal amount of the 2025 Notes plus accrued and unpaid interest, if any to, but not including, the date of redemption, plus a “make-whole premium.” The Issuers may also, at their option, redeem up to ~~40%~~40% of the principal amount of the 2025 Notes with the net cash proceeds of certain equity offerings at a redemption price of ~~107.375%~~107.375% of the principal amount of the 2025 Notes redeemed, plus accrued and unpaid interest, if any, to, but not including, the date of redemption.

On February 5, 2021, the Company used a portion of the proceeds from its IPO to redeem ~~$160~~$160.0 million aggregate principal amount of the 2025 Notes, plus accrued interest thereon and ~~$11.8~~$11.8 million of redemption premium, which iswas recorded as a component of Other expense, ~~net.~~net, during the fiscal quarter ended April 4, 2021. The redemption resulted in an extinguishment loss recognized of ~~$14.5~~$14.5 million, which consisted of ~~$2.7~~$2.7 million of unamortized deferred issuance costs and ~~$11.8~~$11.8 million of the redemption ~~premium, respectively.~~premium. As of April ~~4, 2021~~3, 2022 and January ~~3, 2021,~~2, 2022, the remaining unamortized balance of deferred issuance costs was ~~$4.0~~$3.2 million and ~~$7.0~~$3.4 million, respectively. The effective interest rate on the 2025 Notes is ~~8.03%~~8.03%.

On January 27, 2020, the Issuers issued ~~$675~~$675.0 million aggregate principal amount of ~~7.250%~~7.250% Senior Notes due 2028 (the “2028 Notes” and together with the 2025 Notes, the “Notes”), on which interest is payable semi-annually in arrears on February 1 and August 1 of each year. The 2028 Notes will mature on February 1, ~~2028.~~2028. The 2028 Notes and the guarantees thereof are senior unsecured obligations and rank equally in right of payment with all of the Issuers’ and guarantors’ existing and future senior debt, including the 2025 Notes. The 2028 Notes and the guarantees thereof are effectively subordinated to any of the Issuers’ and guarantors’ existing and future secured debt, including the Senior Secured Credit Facilities, ~~and the Financing Program,~~ to the extent of the value of the assets securing such debt. In addition, the 2028 Notes and the guarantees thereof rank senior in right of payment to all of the Issuers’ and guarantors’ future subordinated debt and will be structurally subordinated to the liabilities of the Issuers’ non-guarantor subsidiaries. The Company incurred deferred financing costs of ~~$12.9~~$12.9 million related to the 2028 Notes, which were capitalized as deferred financing costs and are being amortized using the effective interest method as a component of interest expense over the life of the 2028 Notes.

On or after February 1, 2023, the Issuers have the option to redeem all or part of the 2028 Notes at the following redemption prices (expressed as percentages of principal amount):


Year	Price			Price
2023		103.625	%	103.625%
2024		101.813	%	101.813%
2025 and thereafter		100.000	%	100.000%

Notwithstanding the foregoing, at any time and from time to time prior to February 1, 2023, the Issuers may at their option redeem in the aggregate up to ~~100%~~100% of the original aggregate principal amount of the 2028 Notes plus accrued and unpaid interest, if any to, but not including, the date of redemption, plus a “make-whole premium.” The Issuers may also, at their option, redeem up to ~~40%~~40% of the principal amount of the 2028 Notes with the net cash proceeds of certain equity offerings at a redemption price of ~~107.25%~~107.25% of the principal amount of the 2028 Notes redeemed, plus accrued and unpaid interest, if any, to, but not including, the date of redemption.

On February 5, 2021, the Company used a portion of the proceeds from its IPO to redeem ~~$270~~$270.0 million aggregate principal amount of the 2028 Notes, plus accrued interest thereon and ~~$19.6~~$19.6 million of redemption premium. The redemption resulted in an extinguishment loss recognized of ~~$24.3~~$24.3 million, which consisted of ~~$4.7~~$4.7 million of unamortized deferred issuance costs and ~~$19.6~~$19.6 million of the redemption premium, ~~respectively~~ which is recorded as a component of Other expense, ~~net.~~net during the fiscal quarter ended April 4, 2021. As of April ~~4, 2021~~3, 2022 and January ~~3, 2021,~~2, 2022, the remaining unamortized balance of deferred issuance costs was ~~$7.0~~$6.2 million and ~~$11.8~~$6.4 million, respectively. The effective interest rate on the 2028 Notes is ~~7.76%~~7.76%.

Concurrent with the issuance of the $675 million aggregate principal amount of 2028 Notes, the Company entered into U.S. Dollar to Japanese Yen cross currency swaps for a total notional amount of $350 million at a weighted average interest rate of 5.56%, with a ~~five-year~~ term in order to lower interest expense on the 2028 Notes. On April 1, 2021, the Company terminated the cross currency swaps which resulted in a net settlement of $12.8 million, with cash received subsequent to April 4, 2021.

On January 28, 2020, the Company used the net proceeds from the issuance of the Euro Term Loan Facility and 2028 Notes, after payment of fees and expenses, to fund the redemption and discharge of $1.0 billion of the $1.3 billion in aggregate principal amount of 6.625% Senior Notes due 2022 ( the “2022 Notes”). On June 12, 2020 the Company used the net proceeds from the issuance of the 2025 Notes, after payments of fees and expenses, to fund the redemption and discharge of the remaining $300 million of the 2022 Notes. The redemption of the 2022 Notes was accounted for as an extinguishment of debt. During the fiscal first quarter ended March 29, 2020, the Company recorded a $10.0 million loss on extinguishment of debt, primarily related to the unamortized deferred financings costs on the redeemed 2022 Notes, included as a component of Other expense, net.

In June 2016, the Company entered into a sale-leaseback financing arrangement with a third-party financing company (the “Buyer-lessor”) related to specific property and equipment of the Company. The property and equipment were sold for $36.3 million and leased back over an initial term of two years. The monthly lease payments are $1.5 million until the equipment is repurchased or the lease is terminated. At the end of the initial term, the Company can repurchase the property and equipment at a price to be negotiated with the Buyer-lessor or terminate the lease arrangement, return the property and (possibly) enter into a new lease agreement. During the fiscal second quarter ended July 1, 2018, the Company gave notice to the Buyer-lessor that it intends to negotiate with the Buyer-lessor the purchase of the property and equipment at the end of the initial term and have had discussions on negotiating the repurchase price for the property and equipment. Pursuant to the sale-leaseback financing agreement, if the parties do not reach a new lease agreement to purchase the property and equipment at the end of the initial term, the lease will automatically renew for another year, and afterwards, the lease will automatically be renewed for successive six month periods, provided that each of the Company and the Buyer-lessor have a right to terminate the lease agreement 30 days prior to the end of each six month renewal period. A security deposit for the leaseback was retained by the third-party financing company and will be refunded to the Company at the end of the lease term. The balance of the security deposit was $9.1 million as of January 3, 2021, and was included in other current assets in the consolidated balance sheet. The transaction did not meet the criteria for sale-leaseback accounting as the security deposit constitutes a continuing involvement. Therefore, the Company accounted for this arrangement as a financing over 42 months and recorded a financing obligation amounting to $36.3 million at inception.

On February 9, 2021, the Company and the Buyer-lessor agreed on a re-purchase price for the property and equipment, which included the outstanding balance of the financing plus accrued interest. During the fiscal first quarter ended April 4, 2021, the Company paid the full amount of the negotiated price.

In September 2016, the Company entered into an accounts receivable financing program (the “Financing Program”) with a financial institution. The Financing Program matures on January 24, 2022 and is secured by receivables from the Company’s U.S. business that are sold or contributed to a wholly-owned, consolidated, bankruptcy remote subsidiary. The bankruptcy remote subsidiary’s sole business consists of the purchase or receipt of the receivables and subsequent granting of a security interest to the financial institution under the program, and its assets are available first to satisfy obligations and are not available to pay creditors of the Company’s other legal entities. Under the Financing Program, the Company may borrow up to the lower of $75 million or 85% of the accounts receivable borrowing base. As of April 4, 2021, the outstanding amount under the Financing Program is $72.2 million based on a borrowing base of $84.9 million.

Interest on outstanding borrowing under the Financing Program is charged based on a per annum rate equal to the London Inter-bank Offered Rate (the “LIBOR Rate”) (with a floor of 0 percent and as defined in the agreement) plus the LIBOR Rate margin (2.25 percentage points) if the related loan is a LIBOR Rate loan. Otherwise, the per annum rate is equal to a Base Rate (as defined in the Financing Program agreement) plus the base rate margin (1.25 percentage points). Interest is due and payable, in arrears, on the first day of each month. The Financing Program is also subject to termination under standard events of default as defined.

In addition to customary representations, warranties and affirmative and negative covenants, the program is subject to interest coverage and minimum liquidity covenants. As of April 4, 2021, the Company was in full compliance with all debt covenant requirements.

The following table provides the detail of ~~interest~~amounts within Interest expense, net for the fiscal ~~first~~ quarter ended April ~~4, 2021~~3, 2022 and ~~March 29, 2020:~~

Fiscal First Quarter Ended

April 4, 2021

March 29, 2020

Interest expense:

Dollar Term Loan Facility

$
14.1

$
27.9

Euro Term Loan Facility

3.6

2.3

Revolving Credit Facility

0

1.0

2028 Notes

9.1

8.6

2025 Notes

5.5

0

2022 Notes

0

10.1

Accounts Receivable Financing

0.9

1.6

Amortization of:

Deferred financing costs

1.7

2.2

Original issue discount

0.3

0.6

Derivative instruments and other

8.2

(2.1
)
Interest expense, net

$
43.4

$
52.2

~~Below is a schedule of required future repayments of all borrowings outstanding on~~ April 4, 2021:

Remainder of 2021

$
123.7

2022

63.2

2023

62.8

2024

62.5

2025

1,453.9

Thereafter

645.0

$
2,411.1

Cash and cash equivalents and restricted cash within the unaudited consolidated balance sheets are presented below:


	April 3, 2022		January 2, 2022
Cash and cash equivalents	$	281.1	$	309.7
Restricted cash included in Other assets		1.9		1.9
Cash, cash equivalents and restricted cash	$	283.0	$	311.6

~~(8)~~

~~Accrued liabilities~~

Accrued liabilities included in Total current liabilities ~~consist~~consisted of the following:

(9) Collaborations and other relationships

April 4, 2021

January 3, 2021

Accrued compensation and employee-related obligations

$
82.3

$
110.5

Derivatives

39.2

10.3

Accrued commissions and rebates

24.3

24.9

Accrued interest

17.7

42.2

Accrued taxes other than income

16.2

14.3

Current portion of operating lease liabilities

13.9

15.1

Income taxes payable

3.9

4.1

Other accrued liabilities

63.4

63.3

Total Accrued Liabilities

$
260.9

$
284.7

~~Ortho Clinical Diagnostics Holdings plc~~

~~Notes to consolidated financial statements (unaudited)~~

~~April 4, 2021~~

~~(Dollars in millions, unless otherwise stated)~~

~~(9)~~

~~Collaborations and other relationships~~

In the normal course of business, the Company has entered into various collaboration arrangements which provide the Company with rights to develop, produce and market products using certain know-how, technology and patent rights maintained by the Company’s collaborative partners. The arrangements are often entered into in order to share risks and rewards related to a specific program or product. The Company’s collaborative arrangements include agreements with respect to transition services and a number of on-going relationships.

Ortho Clinical Diagnostics Holdings plc

Notes to unaudited consolidated financial statements

April 3, 2022

(Dollars in millions, unless otherwise stated)

Grifols / Novartis Vaccines and Diagnostics, Inc.

The Company and Grifols Diagnostic Solutions, Inc. (“Grifols”) have an ongoing collaboration arrangement (the “Joint Business”) to pursue income-generating opportunities through the development of certain intellectual properties (“IP”). The ~~Company’s portion~~governance of ~~the pre-tax net profit shared under~~ the Joint Business ~~was $10.8 million during~~is shared through a Supervisory Board made up of equal representation by the ~~fiscal quarter ended April 4, 2021.~~Company and Grifols, which is responsible for all significant decisions relating to the Joint Business that are not exclusively assigned to either the Company or Grifols, as defined in the Joint Business agreement. The Company’s portion of the pre-tax net profit shared under the Joint Business was ~~$11.6~~$10.3 million and $10.8 million during the fiscal quarter ended ~~March 29, 2020.~~April 3, 2022 and April 4, 2021, respectively. This includes the Company's portion of the pre-tax net profit of $5.6 million and $7.6 million during the fiscal quarter ended April 3, 2022 and April 4, 2021, respectively, on sales transactions with third parties where the Company is the principal. The Company recognized revenues, cost of revenue, excluding amortization of intangible assets, and operating expenses on a gross basis on these sales transactions in their respective lines in the consolidated statements of operations. This also includes revenue from collaboration and royalty agreements, which is presented on a net basis within Collaboration and other revenues, of $4.7 million, and $3.2 million during the fiscal quarter ended April 3, 2022 and April 4, 2021, respectively.

Quotient Limited

In January 2015, the Company entered into an exclusive agreement with Quotient Limited (“Quotient”), a commercial-stage diagnostics company, to distribute and sell Quotient’s transfusion diagnostics platform MosaiQ™. Under the terms of a distribution and supply agreement, Quotient is responsible for the development and launch of MosaiQ™, while the Company will leverage its worldwide commercial capabilities to sell the product to customers. The Company has exclusive rights to distribute MosaiQ™ for the global patient testing market (for blood grouping) and the donor testing market in the developing world and Japan (for blood grouping and serological disease screening). Quotient retains all rights to commercialize MosaiQ™ in the developed world, ~~(excluding Japan)~~excluding Japan, for the donor testing market. On September 4, 2020, the Company and Quotient amended the distribution and supply agreement and entered into a binding letter agreement (the “Letter Agreement”).

Pursuant to the Letter Agreement, the Company made an initial, non-refundable upfront payment of $7.5 million to Quotient on the date of the Letter Agreement, and recorded a corresponding $7.5 million charge to research and development expense for the fiscal year ended January 3, 2021. In addition to the initial $7.5 million upfront payment,, under which the Company may be required to make up to ~~an additional $60~~$60.0 million of payments upon achievement of certain regulatory milestones and commercial sales benchmarks, which include up to ~~$25~~$25.0 million of payments upon the achievement by the Company of certain cumulative revenue milestones. The Company did not make such payments during the fiscal ~~first~~ quarter ended April ~~4, 2021~~3, 2022 and does not anticipate making any such payments for the remainder of fiscal year ~~2021.~~2022.

~~In the Letter Agreement, the Company and Quotient have agreed that the Company will have the right to distribute exclusively in the United States, the European~~ ~~Economic Area, the United Kingdom and Switzerland a transfusion diagnostic patient immunohematology microarray (“PIM”), intended~~ ~~for use~~ with Quotient’s MosaiQ Instruments, on which multiple compounds are placed which, when exposed to human blood samples, generate reactions that indicate the presence or absence of certain blood characteristics and antigens and is intended for ~~immuno-hematological~~ ~~testing~~ of ~~the~~ ~~blood of medical patients during the course of their care or treatment.~~

During the fiscal ~~first~~ quarter ended April 3, 2022 and April 4, 2021, under a separate supply agreement, the Company purchased inventories from a subsidiary of Quotient amounting to ~~$5.5 million. The Company purchased inventories~~$6.2 million and $5.5 million, respectively. As of April 3, 2022 and January 2, 2022, Accounts payable included amounts related to purchases from the Quotient ~~amounting to $5.4~~subsidiary of $3.2 million ~~during the fiscal first quarter ended March 29, 2020.~~and $4.1 million, respectively. During the fiscal ~~first~~ quarters ended April 3, 2022 and April 4, 2021, ~~and March 29, 2020,~~ sales to Quotient were immaterial. As of April 3, 2022 and January 2, 2022, amounts due from Quotient were immaterial.

(10) Income taxes

~~(10)~~

~~Income taxes~~

During the fiscal ~~first~~quarter ended April 3, 2022, the Company reported income before provision for income taxes of $18.3 million and recognized a provision for income taxes of $3.5 million, resulting in an effective tax rate of 19.1%. The effective tax rate for the fiscal quarter ended April 3, 2022 differs from the U.S. federal statutory rate primarily due to (i) a net cost of $2.5 million for the impacts of operating losses in certain subsidiaries not being benefited due to the establishment of valuation allowances and (ii) a net benefit of $2.5 million related to non-U.S. earnings being taxed at rates that are different than the U.S. statutory rate.

During the fiscal quarter ended April 4, 2021, the Company incurred a loss before provision for income taxes of ~~$35.8~~$35.8 million and recognized a provision for income taxes of ~~$3.3~~$3.3 million, resulting in a negative effective tax rate of ~~9.2%~~9.2%. The effective tax rate for the ~~period~~fiscal quarter ended April 4, 2021 differs from the U.S. federal statutory rate primarily due to ~~(1)~~(i) a net cost of $14.8 million for the ~~impact~~impacts of operating losses in certain subsidiaries not being ~~benefitted~~benefited due to the establishment of valuation allowances and (ii) a ~~valuation allowance and (2)~~net benefit of $4.9 million due to the non-U.S. earnings being taxed at rates that are different than the U.S. statutory rate.

During the fiscal first quarter ended March 29, 2020, the Company incurred a loss before provision for income taxes of $97.1 million and recognized a provision for income taxes of $4.1 million resulting in a negative effective tax rate of 4.2%.

The effective tax rate for the period differs from the U.S. federal statutory rate primarily due to (1) the impact of operating losses in certain subsidiaries not being benefitted due to the establishment of a valuation allowance (2) an increase in the Company’s interest expense on prior year reserves for uncertain tax positions and (3) non-U.S. earnings being taxed at rates that are different than the U.S. statutory rate.

The balance of unrecognized tax benefits at April ~~4, 2021,~~3, 2022, not including interest and penalties, was ~~$27.9~~$27.9 million, of which ~~$23.5~~$23.0 million would affect the effective income tax rate in future periods, if recognized. The Company also recognizes interest and penalties related to unrecognized tax benefits in tax expense. At April ~~4, 2021,~~3, 2022, the Company had approximately ~~$6.3~~$6.6 million of interest and penalties accrued related to unrecognized tax benefits. The Company estimates that within the next 12twelve months, its uncertain tax positions, excluding interest, will ~~not significantly decrease.~~decrease by $3.0 million.

On January 16, 2014, Bermuda Holdco entered into a stock and asset purchase agreement (the “Acquisition Agreement”) of (i) certain assets and liabilities and (ii) all of the equity interests and substantially all of the assets and liabilities of certain entities which, together with their subsidiaries, comprised the Ortho Clinical Diagnostics business from Johnson & Johnson. The Acquisition Agreement generally provided that Johnson & Johnson retained all income tax liabilities accrued as of the date of the acquisition, including reserves for unrecognized tax benefits. The indemnification receivable from Johnson & Johnson totaled ~~$17.1~~$16.5 million and $16.1 million as of April ~~4, 2021~~3, 2022 and January ~~3, 2021.~~2, 2022, respectively. The Company recorded ~~$0.2~~$0.2 million of interest and penalties during the fiscal quarter ended April ~~4, 2021.~~3, 2022. These receivables are included as a component of Other current assets and Other assets on the unaudited consolidated balance sheets.

(11) Segment and geographic information

~~(11)~~

~~Segment and geographic information~~

The Company has 3three geographically-based reportable segments: Americas, Europe, the Middle East and Africa (“EMEA”), and Greater China. Although all ~~three~~3 segments are engaged in the marketing, distribution and sale of diagnostic instruments and assays for hospitals, laboratories and/or blood and plasma centers worldwide, each region is managed separately to better align with the market dynamics of the specific geographic region. Japan and Asia Pacific (“ASPAC”) are immaterial operating segments not considered as reportable segments and are included in “Other.”

Net revenue by segment is as follows:


	Fiscal Quarter Ended
	April 3, 2022		April 4, 2021
Americas	$	315.4	$	321.4
EMEA		68.7		68.5
Greater China		54.5		55.0
Net revenue of reportable segments	$	438.7	$	444.9
Other		61.4		61.9
Net revenue	$	500.1	$	506.8

Fiscal First Quarter Ended

April 4, 2021

March 29, 2020

Americas

$
321.4

$
250.5

EMEA

68.5

58.7

Greater China

55.0

46.3

Other

61.9

52.4

Net Revenue

$
506.8

$
407.9

In the fiscal first quarter ended April 4, 2021, the Company changed the basis by which it measures segment profit or loss from Management EBITDA to Adjusted EBITDA. The new basis has been retroactively applied to the prior year period presented. Adjusted EBITDA by segment is as follows:


	Fiscal Quarter Ended
	April 3, 2022			April 4, 2021
Americas	$	143.2		$	141.1
EMEA		19.7			17.5
Greater China		24.7			25.2
Other		17.0			19.4
Total Segment Adjusted EBITDA (a)		204.6			203.2
Corporate (b)		(65.2	)		(50.8	)
Depreciation and amortization		(79.4	)		(82.7	)
Interest expense, net		(32.5	)		(43.4	)
Loss on extinguishment of debt		0			(50.3	)
Stock-based compensation		(2.5	)		(3.5	)
Restructuring and severance-related costs		(1.0	)		(1.3	)
Quidel acquisition-related costs		(5.7	)		0
Tax indemnification income, net		0.2			0.2
Costs related to Ortho's initial public offering		—			(3.8	)
EU medical device regulation transition costs		(0.7	)		(0.9	)
Other adjustments		0.4			(2.5	)
Income (loss) before provision for income taxes	$	18.3		$	(35.8	)

Fiscal First Quarter Ended

April 4, 2021

March 29, 2020

Americas

$
141.1

$
108.1

EMEA

17.5

11.7

Greater China

25.2

18.8

Other

19.4

15.2

Corporate(1)

(50.8
)

(51.7
)
Adjusted EBITDA

$
152.4

$
102.0

(a)

For a reconciliation of Net income (loss) to Adjusted EBITDA, refer to Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations - Use of Non-GAAP Financial Measures - Reconciliation of Net Income (Loss) to Adjusted EBITDA.

(b)

Corporate primarily consists of costs related to executive and staff functions, including certain finance, human resources, manufacturing and information technology, which benefit the Company as a whole. These costs are primarily related to the general management of these functions on a corporate level and the design and development of programs, policies and procedures that are then implemented in the individual segments, with each segment bearing its own cost of implementation. The Company’s corporate function also includes debt and stock-based compensation associated with all employee stock-based awards.

(12) Noncash investing and financing activitiesprimarily related to the general management of these functions on a corporate level and the design and development of programs, policies and procedures that are then implemented in the individual segments, with each segment bearing its own cost of implementation. Our corporate function also includes debt and stock-based compensation associated with all employee stock-based awards.

For the fiscal quarter ended March 29, 2020, Unrealized foreign currency exchange losses represent non-cash unrealized gains and losses resulting from the remeasurement of transactions denominated in foreign currencies primarily related to intercompany loans. In the fiscal first quarter ended April 4, 2021, the Company initiated programs to mitigate the impact of foreign currencies related to intercompany loans in its results, and such non-cash net unrealized losses were approximately $22 million forDuring the fiscal quarter ended April ~~4, 2021. The Company expects these programs to continue to mitigate the impact of foreign currencies related to intercompany loans in its results in future periods,~~3, 2022 and thus the Company did not exclude non-cash unrealized gains and losses resulting from the remeasurement of transactions denominated in foreign currencies from Adjusted EBITDA during the first quarter ended April 4, 2021, ~~and onwards.~~

~~During the fiscal first quarter ended April 4, 2021 and March 29, 2020,~~ the Company made noncash transfers of instrument inventories from ~~“Inventories”~~Inventories to ~~“Property,~~Property, plant and ~~equipment”~~equipment, net of ~~$25.6~~$21.9 million and ~~$27.7~~$25.6 million, respectively.

As of April ~~4, 2021~~3, 2022 and January ~~3, 2021, accounts~~2, 2022, Accounts payable and ~~accrued~~Accrued liabilities included amounts related to purchases of property, plant and equipment and capitalized internal-use software costs of ~~$1.9~~$8.2 million and ~~$11.4~~$17.2 million, respectively. As of ~~March 29, 2020~~April 4, 2021 and ~~December 29, 2019, accounts~~January 3, 2021, Accounts payable and ~~accrued~~Accrued liabilities included amounts related to purchases of property, plant and equipment and capitalized internal-use software costs of ~~$3.9~~$1.9 million and ~~$14.1~~$11.4 million, respectively. The changes in these balances are excluded from changes in ~~accounts~~Accounts payable and ~~accrued~~Accrued liabilities in the unaudited consolidated statements of ~~cashflows.~~cash flows.

(13) Related party transactions

~~As of April 4, 2021 and January 3, 2021, accounts payable and accrued liabilities included amounts related to initial public offering costs of $4.5 million and $3.0 million, respectively.~~

~~(13)~~

~~Related party transactions~~

The Company entered into consulting services agreements with Carlyle Investment Management, L.L.C. (“CIM”), pursuant to which the Company pays CIM a fee for advisory, consulting and other services to be provided to the ~~Company.~~Company (the “Consulting Services Agreement”). Pursuant to the ~~consulting services agreement,~~Consulting Services Agreement, which has an initial term of ten years, the Company pays an annual management fee ~~due on a quarterly basis,~~ to CIM of ~~$3.0~~$3.0 million (the “Management Fee”). The Management Fee is payable on a quarterly basis. The Company will also reimburse CIM’s reasonable out-of-pocket expenses incurred in connection with services provided pursuant to the ~~consulting services agreement,~~Consulting Services Agreement, and the Company may pay CIM additional fees associated with other future transactions or in consideration of any additional services provided to the Company under the ~~consulting services agreement.~~Consulting Services Agreement. During both the fiscal ~~first quarters~~quarter ended April 3, 2022 and April 4, 2021, ~~and March 29, 2020~~ the Company recorded ~~$0.8~~$0.8 million of Management Fee expense and other out-of-pocket expenses. As of April 3, 2022 and January 2, 2022, there were 0 amounts due to CIM.

~~Ortho Clinical Diagnostics Holdings plc~~

~~Notes to consolidated financial statements (unaudited)~~

~~April 4, 2021~~

~~(Dollars in millions, unless otherwise stated)~~

The Company, as part of the normal course of business, entered into agreements to sell products and provide services to ~~health care~~healthcare diagnostics companies that are portfolio companies of a fund affiliated with Carlyle. During the fiscal ~~first quarters~~quarter ended April ~~4, 2021~~3, 2022 and ~~March 29, 2020 the Company recognized revenues pursuant to such agreements of $0.9 million and $0.7 million, respectively.~~

~~The Company, as part of normal course of business, purchased inventories from health care companies that are affiliated with our officers. During the fiscal first quarter ended~~ April 4, 2021, the Company ~~purchased inventories~~recognized revenues from business conducted with these healthcare diagnostics companies of ~~$0.6~~$1.5 million and $0.9 million, respectively. As of April 3, 2022 Accounts receivable included amounts related to these healthcare diagnostics companies of $1.3 million. ~~During the fiscal first quarter ended March 29, 2020, inventory purchases made by the Company were not material.~~As of January 2, 2022, Accounts receivable included amounts related to these healthcare diagnostics companies of $1.2 million.

The Company, as part of the normal course of business, ~~entered into an agreement to purchase~~purchased inventories from a healthcare equipment company that is a portfolio company of a fund affiliated with Carlyle. During the fiscal ~~first~~ quarter ended April 3, 2022 and April 4, 2021, the Company ~~purchased inventories~~recorded expenses for business conducted with this healthcare equipment company of ~~$0.8 million. During the fiscal first quarter ended March 29, 2020, purchases made by the Company were not material.~~$0.3 million and $0.8 million, respectively. As of April 3, 2022 Accounts payable included $0.1 million of amounts due to this healthcare equipment company. As of January 2, 2022, Accounts payable included immaterial amounts due to this healthcare equipment company.

Portfolio companies of funds affiliated with Carlyle provide ITInformation Technology (“IT”) services to the Company. During the fiscal ~~first~~quarter ended April 3, 2022, the Company recorded expenses for business conducted with these companies of $0.2 million. During the fiscal quarter ended April 4, ~~2021,~~2021. the Company ~~incurred IT service fees~~recorded expenses for business conducted with these companies of ~~$0.3~~$0.3 million. ~~During the fiscal first quarter ended March 29, 2020, the expenses incurred were not material.~~As of April 3, 2022. Accounts payable included $0.1 million of amounts related to these companies. As of January 2, 2022, Accounts payable included immaterial amounts related to these companies.

A portfolio company of a fund affiliated with Carlyle provides consulting services to the Company. During the fiscal ~~first quarters~~quarter ended April 3, 2022 and April 4, 2021, ~~and March 29, 2020,~~ the Company ~~incurred consulting fees~~recorded expenses for business conducted with this portfolio company of ~~$0.7~~$0.1 million and ~~$0.2~~$0.7 million, respectively. As of January 2, 2022, Accounts payable included immaterial amounts related to this portfolio company. As of April 3, 2022, there were 0 amounts due to this portfolio company.

A security services company that is affiliated with Carlyle provides services to the Company at one of its facilities. This was a new Carlyle investment in 2021. During the fiscal quarter ended April 3, 2022, the Company recorded expenses for these services of $0.3 million. As of April 3, 2022, Accounts payable included $0.1 million of amounts due to this company. As of January 2, 2022, Accounts payable included $0.2 million of amounts due to this company.

A pharmacy benefit management organization that is a portfolio company of a fund affiliated with ~~a member of our Board of Directors~~Carlyle provides pharmacy services to the Company. During the fiscal ~~first quarters~~quarter ended April 3, 2022 and April 4, 2021, ~~and March 29, 2020,~~ the Company ~~incurred fees~~recorded expenses for business conducted with this pharmacy benefit management organization of $1.4 million and $1.6 million, respectively. As of both April 3, 2022 and January 2, 2022, Accounts payable included amounts related to this pharmacy ~~services~~benefit management organization of ~~$1.6 million and $1.4 million, respectively.~~$0.3 million.

Ortho Clinical Diagnostics Holdings plc

Notes to unaudited consolidated financial statements

April 3, 2022

(Dollars in millions, unless otherwise stated)

As part of the normal course of business, the Company may purchase from or sell to portfolio companies of funds affiliated with Carlyle or the Company’s officers and directors. These ~~purchases~~expenses and ~~sales~~revenues are not expected to be material.

(14) Commitments and contingencies

~~(14)~~

~~Commitments and contingencies~~

At times, the entities that carry out the Company’s business are the subject of governmental investigations and various legal actions and claims from governmental agencies and other parties. The outcomes of these matters are not within the Company’s complete control and may not be known for prolonged periods of time. The Company records a liability in the unaudited consolidated financial statements for loss contingencies when a loss is known or considered probable and the amount can be reasonably estimated. If the reasonable estimate of a known or probable loss is a range, and no amount within the range is a better estimate than any other, the minimum amount of the range is accrued. When determining the estimated loss or range of loss, significant judgment is required to estimate the amount and timing of a loss to be recorded. Estimates of probable losses resulting from these matters are inherently difficult to predict.

The Company is involved in an arbitration related to a commercial contract dispute. Although the Company believes it has meritorious defenses against the claim which it intends to pursue vigorously, arbitration is inherently uncertain and it could result in an unfavorable ruling to the Company. Given the early stage of this matter, an estimate of the possible loss or range of loss cannot be made at this time.

~~Cash and cash equivalents~~—The carrying amount of cash and cash equivalents, ~~approximates fair value because the original maturity is less than 90 days.~~

~~Accounts receivable—The carrying amount of~~ current accounts receivable, approximates fair value because of their short outstanding terms. For payments expected from customers over periods longer than one year, receivables have been discounted to reflect the estimated period of time for collection and are presented as a component of Other assets in the consolidated balance sheets.

~~Accounts payable—The carrying amount of~~ accounts payable, ~~approximates fair value because of their~~and short ~~outstanding terms.~~

~~Short-term borrowings—The carrying amount of short-term~~term borrowings approximates fair value because of their short outstanding terms.

~~Long-term borrowings~~—The estimated fair values of ~~long-term~~the Company’s Long-term borrowings were based on trades as reported by a third-party bond pricing service. Due to the infrequency of trades of the Notes and Term Loans, these inputs are considered ~~to be~~ Level 2 inputs. The following table presents the fair ~~value~~values of ~~long-term~~Long-term borrowings:


	April 3, 2022		January 2, 2022
Long-term borrowings:
Dollar Term Loan Facility	$	1,288.0	$	1,291.4
Euro Term Loan Facility		322.2		335.7
2028 Notes		416.6		435.4
2025 Notes		247.5		253.2

(16) Derivative instruments and hedging activities

April 4, 2021

January 3, 2021

Long-term borrowings:

Dollar Term Loan Facility

$
1,517.4

$
2,627.7

Euro Term Loan Facility

391.8

401.1

2028 Notes

442.5

710.4

2025 Notes

258.0

424.0

~~(16)~~

~~Derivative instruments and hedging activities~~

The Company selectively uses derivative and non-derivative instruments to ~~reduce~~manage market risk associated with changes in interest rates and foreign ~~currency.~~currency exchange rates. The use of derivatives is intended for hedging purposes only, and the Company does not enter into derivative ~~instruments~~transactions for speculative purposes. The Company’s derivative contracts do not require cash collateral.

~~For derivative~~Interest rate hedging instruments ~~that are designated and qualify as cash flow hedges,~~

The Company’s interest rate risk relates primarily to interest rate exposures on variable rate debt including the ~~gain or loss~~Senior Secured Credit Facilities. Refer to Note 7–Borrowings for additional information on the ~~derivative is reported as a component~~currently outstanding components of ~~other comprehensive income (“OCI”) and reclassified into earnings in~~ the ~~same period or periods during which the hedged transaction affects earnings.~~

~~Interest rate hedging~~

Senior Secured Credit Facilities. The Company entered into a series of interest rate cap and swap agreements to hedge ~~our~~the related risk of the variability to the Company’s cash flows due to the rates specified for these credit facilities.

The Company designates certain interest rate ~~exposures related to our variable rate borrowings under the Senior Secured Credit Facilities. The Company also entered into an interest rate swap agreement, which fixed~~derivative instruments as cash flow hedges, including a portion of the ~~variable~~outstanding interest rate swaps. The Company records gains and losses due onto changes in fair value of the ~~Company’s variable rate debt.~~derivatives within Other comprehensive income (loss) (“OCI”) and reclassifies these amounts to Interest expense, net in the same period or periods for which the underlying hedged transaction affects earnings. In the event the Company determines the hedged transaction is no longer probable to occur or concludes the hedge relationship is no longer effective, the hedge is prospectively de-designated. The pre-tax unrealized gain of $1.1 million within OCI as of April 3, 2022 is expected to be reclassified to earnings in the next 12 months.

Ortho Clinical Diagnostics Holdings plc

Notes to unaudited consolidated financial statements

April 3, 2022

(Dollars in millions, unless otherwise stated)

The following tables summarize the Company’s interest rate derivative agreements as of April ~~4, 2021:~~

Effective date

Expiration date

Interest rate cap amount

Notional amount

Hedge designation
December 31, 2020

December 31, 2023

3.5%

$
1,500,000,000

Not designated

Effective date

Expiration date

Description

Fixed rate

Floating rate

Notional amount ^(a)

Hedge designation
September 27,
2019

December 31,
2023

Pay fixed,
receive float

1.635%

1-month LIBOR rate

$
1,500,000,000

Cash Flow
Hedge

3, 2022:


Effective date	Expiration date	Interest rate cap amount	Notional amount (a)		Hedge designation
December 31, 2020	December 31, 2023	3.5%	$	1,000.0	Non-designated

Effective date

Expiration date

Description

Fixed rate

Floating rate

Notional amount(a)

Hedge designation

September 27,
2019

December 31,
2023

Pay fixed,
receive float

1.635%

1-month LIBOR rate

1,000.0

Cash Flow
Hedge

(a)

The notional value of this instrument is expected to be ~~$1,000 million in fiscal 2022 and $500~~$500.0 million in fiscal 2023.

The Company previously entered into an interest rate cap that was designated as a cash flow hedge. During the fiscal quarter ended September 29, 2019, the Company de-designated its ~~3.5%~~3.5% interest rate ~~cap~~caps upon entering into the interest rate swap agreement that hedges a portion of the Company’s borrowings under the Senior Secured Credit Facilities. ~~Accordingly,~~Upon de-designation, the Company ~~recorded the activity related to the hedge through the date of the de-designation as a cash flow hedge,~~began prospectively recognizing mark-to-market gains and ~~subsequently recorded the activity related to~~losses within Other expense, net on the interest rate ~~cap as mark to market, with the impact recorded to other income, net.~~caps. The remaining loss ~~of $9.3 million~~on the interest rate caps that was ~~included~~deferred in ~~OCI until the effective date of December 31, 2020. As of April 4, 2021, the remaining balance included in OCI was $8.5 million. During the fiscal quarter ended April 4, 2021, $0.8 million~~Accumulated other comprehensive income (loss) (“AOCI”) was amortized to ~~interest~~Interest expense, ~~and~~net until the Company concluded that a portion of the interest on the Company’s previously hedged borrowings was no longer probable of being paid due to the ~~proceeds of the IPO being used to~~ pay down of a portion of the ~~borrowings.~~borrowings using proceeds from the IPO. Accordingly, ~~$0.6~~$0.6 million of losses that had previously been deferred within ~~other comprehensive income~~AOCI were released into ~~interest~~Interest expense, net during the fiscal ~~first~~ quarter ended April 4, 2021.

During the fiscal quarter ended April 4,3, 2022, the Company reclassified $0.9 million of deferred losses from AOCI to Interest expense, net. As of April 3, 2022 and January 2, 2022, the remaining balance of the deferred loss in AOCI was $4.7 million and $5.6 million, respectively.

In February 2021, the Company concluded that a portion of the interest on the Company’s previously hedged borrowings related to the interest rate swap was no longer probable of being paid due to the ~~proceeds of the IPO being used to~~ pay down of a portion of the ~~borrowings.~~borrowings using the proceeds from the IPO. Due to this reduction in the hedged borrowings, the Company de-designated the hedging relationship, and contemporaneously re-designated the remaining borrowings. Accordingly, ~~$3.1~~$3.1 million of losses that had previously been deferred within ~~other comprehensive income~~AOCI were released into ~~interest~~Interest expense, net during the fiscal ~~first~~ quarter ended April 4, 2021. As of April 3, 2022 and January 2, 2022, the remaining balance of the deferred gain and deferred loss in AOCI was $6.7 million and $13.9 million, respectively.

~~Ortho Clinical Diagnostics Holdings plc~~Currency hedging instruments

~~Notes to consolidated financial statements (unaudited)~~

~~April 4, 2021~~

~~(Dollars in millions, unless otherwise stated)~~

~~Foreign currency hedging~~

The Company has currency risk exposures relating primarily to foreign currency denominated monetary assets and liabilities and forecasted foreign currency denominated intercompany and third-party transactions. The Company uses foreign currency forward, option contracts and cross currency swaps to manage its currency risk exposures. The Company’s foreign currency forward contracts are denominated primarily in Australian Dollar, Brazilian Real, British Pound, Canadian Dollar, Chilean Peso, Chinese Yuan/Renminbi, Colombian Peso, Euro, Indian Rupee, Japanese Yen, Mexican Peso, Philippine Peso, Singapore Dollar, Swiss Franc and the Thai Baht.

The Company designates certain foreign currency forward contracts as cash flow hedges. The Company records gains and losses due to changes in fair value of the derivatives within OCI and reclassifies these amounts to Cost of revenue, excluding amortization of intangible assets in the same period or periods for which the underlying hedged transaction affects earnings. In the event the Company determines the hedged transaction is no longer probable to occur or concludes the hedge relationship is no longer effective, the hedge is de-designated prospectively. The pre-tax unrealized loss of $1.1 million within OCI as of April 3, 2022 is expected to be reclassified to earnings in the next 12 months.

Foreign exchange risk is also managed through the use of foreign currency debt. During the fiscal quarter ended April 3, 2022, €260.0 million ($287.1 million) of the Company's senior secured Euro Term Loan Facility has been designated as, and is effective as, economic hedges of the net investment in a foreign operation. Accordingly, foreign currency transaction gains or losses due to spot rate fluctuations on the Euro-denominated debt instruments are included in foreign currency translation adjustments within AOCI. In April 2022, the Company de-designated the net investment hedge.

The Company also enters into foreign currency forward contracts that are not part of designated hedging relationships, which are intended to mitigate exchange rate risk of monetary assets and liabilities and related forecasted transactions. The Company records these non-designated derivatives at mark-to-market with gains and losses recognized currently in earnings within Other expense, net.

Concurrent with the issuance of the 2028 Notes, the Company entered into U.S. Dollar to Japanese Yen cross currency swaps for total notional of ~~$350~~$350.0 million at a weighted average interest rate of ~~5.56%~~5.56%, with a five-year term to lower interest expense on the 2028 Notes. These cross currency swaps were not designated for hedge accounting, and consequently, changes in their fair value ~~are~~were recorded to Other ~~income,~~expense, net. On

Ortho Clinical Diagnostics Holdings plc

Notes to unaudited consolidated financial statements

April ~~1, 2021, the~~3, 2022

(Dollars in millions, unless otherwise stated)

The Company terminated the cross currency swaps ~~which resulted in a~~on April 1, 2021 and received $12.8 million of cash from net settlement ~~of $12.8 million, with cash received~~ subsequent to April 4, 2021.

The following table provides details of the ~~foreign~~ currency ~~forward contracts~~hedging instruments outstanding as of April ~~4, 2021:~~3, 2022:


Description	Notional amount		Hedge designation
Foreign currency forward contracts	$	356.4	Cash Flow Hedge
Foreign currency forward contracts		333.2	Not designated

Description (a)

Notional amount

Hedge designation
Forward Foreign Currency Contracts

$
331.4

Cash Flow Hedge
Forward Foreign Currency Contracts

$
1,566.1

Not designated

~~(a)~~

The Company’s forward currency foreign exchange contracts are denominated primarily in Australian Dollar, Brazilian Real, British Pound, Canadian Dollar, Chilean Peso, Chinese Yuan/Renminbi, Colombian Peso, Euro, Indian Rupee, Japanese Yen, Mexican Peso, Philippine Peso, Swiss Franc and the Thai Baht.

The foreign currency forward contracts that qualified and were designated as cash flow hedges are recorded at their fair value as of April 4, 2021 and the unrealized loss of $1.3 million is reported as a component of OCI, all of which is expected to be reclassified to earnings in the next 12 months. Actual gains (losses) upon settlement will be recognized in earnings, within the line item impacted, during the estimated time in which the transactions occur.

~~Fair value gains~~Gains and losses ~~of foreign currency contracts~~from designated derivative and ~~interest rate derivatives, as determined using Level 2 inputs, that are designated and qualify as cash flow hedges~~non-derivative instruments within AOCI during the fiscal quarter ended April 3, 2022 and April 4, 2021 ~~and March 29, 2020~~ were recorded as follows:


Designated Hedging Instruments	Amount of loss (gain) recognized in OCI on hedges			Location of amounts reclassified from AOCI into income	Amount of loss (gain) reclassified from AOCI into income
Fiscal Quarter Ended April 3, 2022
Cash flow hedges:
Foreign currency forward contracts	$	1.5		Cost of revenue, excluding amortization of intangible assets	$	(1.3	)
Interest rate derivative contracts		(16.8	)	Interest expense, net		4.6
Net investment hedges:
Foreign currency-denominated debt(a)		(8.9	)	N/A	N/A
Fiscal Quarter Ended April 4, 2021
Cash flow hedges:
Foreign currency forward contracts	$	(3.5	)	Cost of revenue, excluding amortization of intangible assets	$	0.1
Interest rate derivative contracts		(3.3	)	Interest expense, net		9.1

Derivatives in cash flow hedging relationships

Amount of Loss
(gain) recognized
in OCI on
derivatives

Location of loss
reclassified
from accumulated
OCI into income

Amount of loss
(gain) reclassified
from accumulated
OCI into income

Fiscal first quarter ended April 4, 2021

Foreign currency forward contracts

$
(3.5
)

Cost of revenue

$
0.1

Interest rate derivatives

(3.3
)

Interest expense

9.1

(a)

The amount of loss (gain) recognized in OCI for the foreign-currency denominated debt is presented within the CTA component of OCI. These gains and losses will remain in CTA until the related hedged item affects earnings, which would occur upon disposal or complete or substantial liquidation of the underlying hedged entities.

The following tables present the effect of the Company’s designated derivative instruments within Interest expense, net and Cost of revenue, excluding amortization of intangible assets in the unaudited consolidated statements of operations:

Derivatives in cash flow hedging relationships

Amount of loss
(gain) recognized
in OCI on
derivatives

Location of loss
reclassified
from accumulated
OCI into income

Amount of loss
(gain) reclassified
from accumulated
OCI into income

Fiscal first quarter ended March 29, 2020

Foreign currency forward contracts

$
(5.4
)

Cost of revenue

$
(0.5
)
Interest rate derivatives

38.1

Interest expense, net

(2.2
)


	Fiscal Quarter Ended April 3, 2022					Fiscal Quarter Ended April 4, 2021
	Interest expense, net		Cost of revenue, excluding amortization of intangible assets				Interest expense, net		Cost of revenue, excluding amortization of intangible assets
Total amount of line item in unaudited consolidated statements of operations where effects of hedges are presented:	$	32.5	$	249.5			$	43.4	$	248.2
Effects of cash flow hedging relationships
Loss (Gain) on cash flow hedging relationships
Foreign currency forward contracts:
Amount of loss (gain) reclassified from AOCI into income	N/A		$	(1.3	)		N/A		$	0.1
Amount reclassified from AOCI into income due to forecast transaction that is no longer probable of occurring	N/A		$	0			N/A		$	0
Interest rate derivative contracts:
Amount of net loss reclassified from AOCI into income	$	4.6	N/A				$	9.1	N/A
Amount reclassified from AOCI into income due to a forecast transaction that is no longer probable of occurring (a)	$	0	N/A				$	3.7	N/A

Ortho Clinical Diagnostics Holdings plc

Notes to unaudited consolidated financial statements ~~(unaudited)~~

April ~~4, 2021~~3, 2022

(Dollars in millions, unless otherwise stated)

(a) The ~~following table presents~~amount is included within the ~~effect~~total amount of ~~the Company’s derivative instruments on the statements of operations and comprehensive loss:~~loss (gain) reclassified from AOCI into income.

Fiscal quarter ended
April 4, 2021

Fiscal quarter ended
March 29, 2020

Interest
expense

Cost of
revenue

Interest
expense

Cost of
revenue

Total amounts of financial statement line item presented
   in the statements of operations and comprehensive
   loss in which the effects of cash flow hedges are
   recorded

$
43.4

$
248.2

$
52.2

$
213.2

The effects of cash flow hedging

Loss (Gain) on cash flow hedging relationships:

Foreign currency forward contracts

Amount of Loss (Gain) Reclassified from Accumulated
   OCI Into Income

N/A

$
0.1

N/A

$
(0.5
)
Amount Reclassified from Accumulated OCI into
   Income due to a Forecast Transaction That is
   No Longer Probable of Occurring

N/A

$
0

N/A

$
0

Interest Rate Derivatives

Amount of Loss (Gain) Reclassified from Accumulated
   OCI Into Income

$
9.1

N/A

$
(2.2
)

N/A

Amount Reclassified from Accumulated OCI into
   Income due to a Forecast Transaction That is
   No Longer Probable of Occurring (a)

$
3.7

N/A

$
0

N/A

Fair value ~~gains~~(gains) and losses of derivative contracts, as determined using Level 2 inputs, that do not qualify for hedge accounting treatment ~~were~~are recorded in ~~earnings~~other expense, net and were as follows:

Fiscal quarter ended

Derivatives not designated as hedging instruments under ASC 815

Location of loss
recognized in
earnings
on derivatives

April 4, 2021

March 29, 2020

Interest rate derivatives

Other (income)
expense, net

$
0.2

$
(1.1
)
Foreign currency derivatives

Other (income)
expense, net

30.4

0.7

Cross currency swaps

Other (income)
expense, net

(24.0
)

(0.8
)

The following table presents the location and fair values asof designated hedging instruments recognized within the unaudited consolidated balance sheets. The fair values of designated hedging instruments have been determined using Level 2 ~~inputs of derivative instruments that qualify and have been designated as cash flow hedges included in the consolidated balance sheets:~~inputs.

April 4, 2021

January 3, 2021

Interest rate derivatives:

Accrued liabilities

$
0

$
0.1

Other long-term liabilities

35.0

44.1

Foreign currency forward contracts:

Other current assets

7.1

4.2

Accrued liabilities

8.2

10.0

The following table presents the location and fair values asof non-designated hedging instruments recognized within the unaudited consolidated balance sheets. The fair values of non-designated hedging instruments have been determined using Level 2 ~~inputs of derivative instruments that have not been designated as cash flow hedges included in the consolidated balance sheets:~~inputs.

April 4, 2021

January 3, 2021

Interest rate derivatives:

Accrued liabilities

$
0

$
0.1

Other long-term liabilities

9.4

11.1

Foreign currency derivative contracts:

Other current assets

0.4

0.3

Accrued liabilities

31.0

0.1

Cross currency swaps:

Other current assets

12.8

2.0

Other long-term liabilities

0

10.8

The balances of AOCI, net of tax, were as follows for the fiscal ~~first~~ quarters ended April 3, 2022 and April 4, ~~2021~~2021:


	Pension and Other Postemployment Benefits			Foreign Currency Derivatives			Interest Rate Derivatives			Unrealized Foreign Currency Translation Adjustments			Accumulated Other Comprehensive Loss
Balance at January 2, 2022	$	(3.3	)	$	1.7		$	(19.5	)	$	(22.6	)	$	(43.7	)
Current period deferrals		0			(1.5	)		16.8			(6.6	)		8.7
Amounts reclassified to net income		0			(1.3	)		4.6			0			3.3
Net change		0			(2.8	)		21.4			(6.6	)		12.0
Balance at April 3, 2022	$	(3.3	)	$	(1.2	)	$	1.9		$	(29.2	)	$	(31.7	)


	Pension and Other Postemployment Benefits			Foreign Currency Derivatives			Interest Rate Derivatives			Unrealized Foreign Currency Translation Adjustments			Accumulated Other Comprehensive Loss
Balance at January 3, 2021	$	(4.5	)	$	(4.9	)	$	(53.9	)	$	(5.1	)	$	(68.4	)
Current period deferrals		0			3.5			3.3			(8.8	)		(2.0	)
Amounts reclassified to net loss		0			0.1			9.1			0			9.2
Net change		0			3.6			12.4			(8.8	)		7.2
Balance at April 4, 2021	$	(4.5	)	$	(1.3	)	$	(41.5	)	$	(13.9	)	$	(61.2	)

(18) Other (income) expense, net

Other income, net was $3.5 million for the fiscal quarter ended April 3, 2022, comprised primarily of $1.7 million of net foreign currency gains and ~~March 29, 2020:~~fair value gains of $1.9 million from interest rate caps.

Pension and
Other
Postemployment
Benefits

Foreign
Currency
Derivatives

Interest
Rate
Derivatives

Unrealized
Foreign
Currency
Translation
Adjustments

Accumulated
Other
Comprehensive
Loss

Balance at January 3, 2021

$
(4.5
)

$
(4.9
)

$
(53.9
)

$
(5.1
)

$
(68.4
)
Current period deferrals

0

3.5

3.3

(8.8
)

(2.0
)
Amounts reclassified to net loss

0

0.1

9.1

0

9.2

Net change

0

3.6

12.4

(8.8
)

7.2

Balance at April 4, 2021

$
(4.5
)

$
(1.3
)

$
(41.5
)

$
(13.9
)

$
(61.2
)

Pension and
Other
Postemployment
Benefits

Foreign
Currency
Derivatives

Interest
Rate
Derivatives

Unrealized
Foreign
Currency
Translation
Adjustments

Accumulated
Other
Comprehensive
Loss

Balance at December 29, 2019

$
(4.3
)

$
2.7

$
(5.8
)

$
(64.5
)

$
(71.9
)
Current period deferrals

0

5.4

(38.1
)

(10.8
)

(43.5
)
Amounts reclassified to net loss

0

(0.5
)

(2.1
)

0

(2.6
)
Cumulative effect of change in accounting
standard

0

0

(3.7
)

0

(3.7
)
Net change

0

4.9

(43.9
)

(10.8
)

(49.8
)
Balance at March 29, 2020

$
(4.3
)

$
7.6

$
(49.7
)

$
(75.3
)

$
(121.7
)

~~(18)~~

~~Other expense, net~~

Other expense, net was ~~$50.0~~$50.0 million for the fiscal ~~first~~ quarter ended April 4, 2021, ~~and was~~ comprised primarily of loss on early extinguishment of debt of ~~$50.3~~$50.3 million, which was related to the use of proceeds from the IPO to redeem portions of ~~our~~the Company's outstanding 2025 Notes, 2028 Notes and Dollar Term Loan Facility. This was partially offset by ~~$0.9~~$0.9 million of net foreign currency gains, of which ~~$22.9~~$22.9 million of realized gains were partially offset by ~~$22.0~~$22.0 million of unrealized losses, primarily related to the unwinding of the cross currency swaps.

Other expense, net was $59.3 million for the fiscal first quarter ended March 29, 2020 and was comprised primarily of $48.3 million of net foreign currency losses, of which $49.9 million was unrealized, primarily related to intercompany loans denominated in currencies other than the functional currency of the affected subsidiaries, and loss on early extinguishment of debt of $10.0 million related to debt refinancing activities.20

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

The following discussion summarizes the significant factors affecting the operating results, financial condition, liquidity and cash flows of our company as of and for the periods presented below. The following discussion and analysis should be read in conjunction with the unaudited interim consolidated financial statements and the related notes thereto included elsewhere in this Quarterly Report on Form 10-Q. Some of the discussion includes forward-looking statements related to future events and our future operating performance that are based on current expectations and are subject to risk and uncertainties. Without limiting the foregoing, the words as “anticipate,” “expect,” “suggest,” “plan,” “believe,” “intend,” “project,” “forecast,” “estimates,” “targets,” “projections,” “should,” “could,” “would,” “may,” “might,” “will,” and the negative thereof and similar words and expressions are intended to identify forward-looking statements. The cautionary statements made in this report should be read as applying to all related forward-looking statements wherever they appear in this report. Actual results could differ materially from those discussed in or implied by forward-looking statements as a result of various factors, including, ~~those~~but not limited to: the ongoing global coronavirus (“COVID-19”) pandemic; risks related to the proposed acquisition of Ortho by Quidel Corporation, including (i) failure to complete the proposed transaction on the proposed terms or on the anticipated timeline, or at all, (ii) risks and uncertainties related to securing the necessary regulatory and shareholder approvals, the sanction of the High Court of Justice of England and Wales and satisfaction of other closing conditions to consummate the proposed transaction; (iii) the occurrence of any event, change or other circumstance that could give rise to the termination of the definitive transaction agreement relating to the proposed transaction; (iv) the challenges and costs of closing, integrating, restructuring and achieving anticipated synergies; (v) the ability to retain key employees; and (vi) the economic, business, competitive, and/or regulatory factors affecting the business of the Company and Quidel; increased competition; manufacturing problems or delays or failure to develop and market new or enhanced products or services; adverse developments in global market, economic and political conditions; our ability to obtain additional capital on commercially reasonable terms may be limited or non-existent; our inability to implement our strategies for improving growth or to realize the anticipated benefits of any acquisitions and divestitures, including as a result of difficulties integrating acquired businesses with, or disposing of divested businesses from, our current operations; a need to recognize impairment charges related to goodwill, identified intangible assets and fixed assets; our inability to achieve some or all of the operational cost improvements and other benefits that we expect to realize; our ability to operate according to our business strategy should our collaboration partners fail to fulfill their obligations; risk that the insurance we will maintain may not fully cover all potential exposures; product recalls or negative publicity may harm our reputation or market acceptance of our products; decreases in the number of surgical procedures performed, and the resulting decrease in blood demand; fluctuations in our cash flows as a result of our reagent rental model; terrorist acts, conflicts, wars and natural disasters that may materially adversely affect our business, financial condition and results of operations; the outcome of legal proceedings instituted against us and/or others; risks associated with our non-U.S. operations, including currency translation risks, the impact of possible new tariffs and compliance with applicable trade embargoes; the effect of the U.K.’s withdrawal from the European Union; our inability to deliver products and services that meet customers’ needs and expectations; failure to maintain a high level of confidence in our products; significant changes in the healthcare industry and related industries that we serve, in an effort to reduce costs; reductions in government funding and reimbursement to our customers; price increases or interruptions in the supply of raw materials, components for our products, and products and services provided to us by certain key suppliers and manufacturers; our ability to recruit and retain the experienced and skilled personnel we need to compete; work stoppages, union negotiations, labor disputes and other matters associated with our labor force; consolidation of our customer base and the formation of group purchasing organizations; unexpected payments to any pension plans applicable to our employees; our inability to obtain required clearances or approvals for our products; failure to comply with applicable regulations, which may result in significant costs or the suspension or withdrawal of previously obtained clearances or approvals; the inability of government agencies to hire, retain or deploy personnel or otherwise prevent new or modified products from being developed, cleared or approved or commercialized in a timely manner; disruptions resulting from President Biden’s invocation of the Defense Production Act; results of clinical studies, which may be delayed or fail to demonstrate the safety and effectiveness of our products; costs to comply with environmental and health and safety requirements, or costs related to liability for contamination or other potential environmental harm; healthcare fraud and abuse regulations that could result in liability, require us to change our business practices and restrict our operations in the future; failure to comply with the anti-corruption laws of the United States and various international jurisdictions; failure to comply with anti-terrorism laws and regulations and applicable trade embargoes; failure to comply with the requirements of federal, state and international laws pertaining to the privacy and security of health information; our inability to maintain our data management and information technology systems; data corruption, cyber-based attacks, security breaches and privacy violations; our inability to protect and enforce our intellectual property rights or defend against intellectual property infringement suits against us by third parties; risks related to changes in income tax laws and regulations; risks related to our substantial indebtedness; our ability to generate cash flow to service our substantial debt obligations; difficulties complying with the rules of the Nasdaq Global Select Market regarding the composition of our Board of Directors and certain committees now that we are no longer a “controlled company;” risks related to the ownership of our ordinary shares; and risks related to the ongoing military action between Russia and Ukraine; as well as other risks discussed ~~below~~from time to time in our filings with the Securities and Exchange Commission, including, without limitation, the risk factors set forth in Part II, Item 1A,“Risk Factors” of this Quarterly Report on Form 10-Q, if any, as well as the risk factors set forthinPart I, Item 1A, “Risk Factors” of in our Annual Report on Form 10-Kfor the fiscal year ended January ~~3, 2021 .~~2, 2022.

We are a pure-play in vitro diagnostics (“IVD”) business pioneering life-impacting advances in diagnostics for over 80 years, from our earliest work in blood typing, to our innovation in infectious diseases and our latest developments in laboratory solutions. We are driven by ~~our~~the credo, “Because Every Test is A Life.” This guiding principle reflects the crucial role diagnostics play in global health and guides our priorities as an organization. As a leader in IVD, we impact approximately 800,000 patients every day. We are dedicated to improving outcomes for these patients and saving lives through providing innovative and reliable diagnostic testing solutions to the clinical laboratory and transfusion medicine communities. Our global infrastructure and commercial reach allow us to serve these markets with significant scale. We have an intense focus on the customer. We support our customers with high quality diagnostic instrumentation, a broad test portfolio and market leading service. Our products deliver consistently fast, accurate and reliable results that allow clinicians to make better-informed treatment decisions. Our business model generates significant recurring revenues and strong cash flow streams, primarily from the ongoing sales of high margin consumables. ~~These consumables contribute more than 90%~~In the fiscal quarter ended April 3, 2022, these recurring revenues contributed approximately 94% of both our total and core revenue. We maintain close connectivity with ~~our~~ customers through ~~our~~a global presence, with ~~more than 4,500~~approximately 4,800 employees, including approximately ~~2,200~~2,300 commercial sales, service and marketing teammates. This global organization allows us to support our customers across more than 130 countries and territories.

We manage our business geographically to better align with the market dynamics of the specific geographic region with our reportable segments being Americas, ~~EMEA~~Europe, the Middle East and Africa (“EMEA”) and Greater China. We generate revenue primarily in the following lines of business:

All non-core revenue is recorded in the Americas segment for all periods presented.

On December 22, 2021, Ortho, Coronado Topco, Inc., a Delaware corporation and a wholly owned subsidiary of the ~~initial public offering~~

~~Use~~Company (“Coronado Topco”), Laguna Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of ~~proceeds~~Topco (“U.S. Merger Sub”), Orca Holdco, Inc., a Delaware corporation and ~~impact~~a wholly owned subsidiary of ~~debt extinguishment~~

~~On February 1, 2021, we completed~~Topco (“U.S. Holdco Sub”), Orca Holdco 2, Inc., a Delaware corporation and a wholly owned subsidiary of U.S. Holdco Sub (“U.S. Holdco Sub 2”) and Quidel Corporation, a Delaware corporation (“Quidel”) entered into a Business Combination Agreement (the “Business Combination Agreement,” and the ~~initial public offering (“IPO”~~transactions contemplated thereby, the “Combinations”), pursuant to which, among other things and subject to the terms and conditions contained therein, (i) under a scheme of ~~our ordinary shares at a price of $17.00 per share. We~~arrangement under U.K. corporate law, each issued and ~~sold 76,000,000 ordinary~~outstanding share of Ortho will be acquired by a depository nominee (or transferred within the depository nominee) on behalf of Coronado Topco in exchange for (x) 0.1055 shares of common stock of Coronado Topco and (y) $7.14 in cash (the “Ortho Scheme”) and (ii) immediately after the ~~IPO~~consummation of the Ortho Scheme, U.S. Merger Sub will merge with and into Quidel, pursuant to which each issued and ~~sold an additional 11,400,000 ordinary shares on February 4, 2021 pursuant to~~outstanding share of Quidel common stock will be converted into one share of Coronado Topco common stock, with Quidel surviving as a wholly owned subsidiary of Coronado Topco. The boards of directors of both Ortho and Quidel have unanimously approved the ~~full exercise~~terms of the ~~underwriters’ option~~Business Combination Agreement, which is expected to ~~purchase additional shares from us. The ordinary shares sold in~~close during the ~~IPO were registered under the Securities Act pursuant to~~a Registration Statement on Form S-1 (the “IPO Registration Statement”), which was declared effective by the SEC on January 29, 2021. Our ordinary shares are listed on Nasdaq under the symbol “OCDX.” The offering, including proceeds from the full exercisefirst half of fiscal year 2022. Upon completion of the ~~underwriters’ option~~Combinations, which requires shareholder approval, Ortho shareholders are expected to ~~purchase additional shares, generated net proceeds~~own approximately 38% of Coronado Topco and Quidel stockholders are expected to usown approximately 62% of ~~$1,426.4 million after deducting underwriting discounts~~Coronado Topco on a fully diluted basis, based on the respective capitalizations of Ortho and ~~commissions.~~

We used the net proceeds from the IPO (i) to redeem $160 million of our 2025 Notes, plus accrued interest thereon and $11.8 million of redemption premium, (ii) to redeem $270 million of our 2028 Notes, plus accrued interest thereon and $19.6 million of redemption premium, (iii) to repay $892.7 million in aggregate principal amount of borrowings under our Dollar Term Loan Facility and (iv) for working capital and general corporate purposes.

~~As a new public company, we will incur significant expenses on an ongoing basis that we did not incur~~Quidel as a private company, including increased director and officer liability insurance expense, as well as third-party and internal resources related to accounting, auditing, Sarbanes-Oxley Act compliance, and legal, investor and public relations expenses. These costs will generally be included in selling, marketing and administrative expenses.

In connection with our IPO, in the fiscal year 2021, we may incur a one-time stock-based compensation expense related to options held by certain members of management that may vest upon the completion of certain liquidity and realization events. During the fiscal first quarter ended April 4, 2021, we did not incur any such one-time stock-based compensation expense. Furthermore, during the fiscal first quarter ended April 4, 2021, we implemented a new long-term equity incentive plan in connection with our IPO in order to align our equity compensation program with public company plans and practices.

During the fiscal first quarter ended March 29, 2020, as the global COVID-19 pandemic began to affect certain countries, we began to see a decrease in the number of tests run in China in February, which spread to certain countries in EMEA and ASPAC in early March and resulted in a worldwide decrease in the number of tests run globally by the end of March 2020. In many countries, we experienced a lag between the timing of the ~~decrease in number of tests run and~~date the decrease in shipments of additional products to our customers. The decrease in shipments to our customers began to occur during the fiscal second quarter ended June 28, 2020 in many countries, including the United States, and as a result, during the fiscal year ended January 3, 2021, we experienced decreased revenues, incurred idle or underutilized facilities costs, higher freight and higher distribution costs compared to the periods prior to the pandemic. During the fiscal fourth quarter ended January 3, 2021, we did experience some recovery in the base business of our core revenue, which continuedparties entered into the ~~fiscal first quarter ended April 4, 2021. The recovery in~~Business Combination Agreement.

In the ~~base business was further supplemented with sales of our COVID-19 antibody and antigen tests. Through~~event that the ~~fiscal first quarter ended April 4, 2021, we have continued to experience higher distribution costs caused~~Business Combination Agreement is terminated by ~~higher shipping rates~~Ortho as a result of the ~~ongoing global~~occurrence of certain terms and conditions as specified therein, we must pay Quidel a termination fee of approximately $46.9 million, less any expenses reimbursable by Quidel pursuant to the Business Combination Agreement. If the Business Combination Agreement is terminated by Quidel as a result of the occurrence of certain terms and conditions as specified therein, we will receive approximately $207.8 million, less any expenses reimbursable by us pursuant to the Business Combination Agreement.

During the fiscal quarter ended April 3, 2022, we entered into agreements with certain of our officers related to the vesting of certain outstanding equity awards in connection with the consummation of the Combinations. Additionally, our Compensation Committee approved an amendment to our outstanding equity awards to provide for immediate vesting of unvested options in the event that the option holder’s service with Ortho is terminated without cause whether before, on or after the consummation of the Combinations. These agreements are contingent upon the closing of the acquisition of Ortho by Quidel. Accordingly, we have not recorded any impact to our results of operations related to these agreements or the amendment to our outstanding equity awards during the fiscal quarter ended April 3, 2022, as the Combinations have not yet been completed.

Impact of COVID-19pandemic ~~partially offset by decreased travel-related costs for our employees due to global travel restrictions.~~

In response to the global COVID-19 pandemic, we mobilized our research and development teams ~~in order~~ to bring to market COVID-19 antibody and antigen tests. Our COVID-19 antibody tests detect whether a patient has been previously infected by COVID-19 and our COVID-19 antigen test detects whether a patient is currently infected by COVID-19. We have received a combination of Emergency Use Authorization (“EUA”) from the U.S. Food and Drug Administration (the “FDA”), authority to affix a CE Mark for sale in the European Union and various other regulatory approvals globally for our COVID-19 antibody tests. We have also received authority to affix a CE Mark for sale in the European Union and the FDA accepted ~~the Company’s Emergency Use Authorization~~our EUA for our COVID-19 antigen test. We ~~also~~ sell these tests in various other markets globally and continue to work on gaining further regulatory approvals in other markets. ~~Our COVID-19 antibody tests detect whether a patient has been previously infected by COVID-19 and our COVID-19 antigen test detects whether a patient is currently infected by COVID-19.~~ All of our COVID-19 antibody and antigen tests run on our existing instruments.

Since the fiscal quarter ended June 28, 2020, our results of operations were supplemented with revenue from sales of our COVID-19 antibody and antigen tests. However, starting in the fiscal quarter ended July 4, 2021 and continuing through the end of fiscal year 2021, this supplemental revenue from sales of our COVID-19 antibody and antigen tests began to decline. During the fiscal quarter ended April 3, 2022, sales related to our COVID-19 antibody and antigen tests were relatively consistent with the prior quarter, however, they were $16.8 million lower than the sales made in the fiscal quarter ended April 4, 2021. During the fiscal quarter ended April 3, 2022, we also continued to experience higher distribution costs due to higher shipping rates as a result of the COVID-19 pandemic and continued to experience some supply chain disruptions. These supply chain disruptions have resulted in shortages or delays in receipts for certain key components of our instruments and assays. Additionally, we have experienced distribution challenges, which has affected our ability to fulfill customer orders on a timely basis, including instrument placements. These supply chain and distribution challenges have impacted, and we expect will continue to impact, our results of operations and resulted in disruption to our business operations. We are continuously evaluating our supply chain to identify potential gaps and take steps to ensure continuity, including working closely with our primary suppliers of these components and pursuing additional suppliers for certain of these components, in order to maintain supply to our customers. During the fiscal quarter ended April 3, 2022, pandemic-related lockdowns in Greater China began to impact our business operations. While the impact of the recent lockdowns in Greater China was not material to our results of operations in the fiscal quarter ended April 3, 2022, we continue to monitor the potential impact of any further lockdowns in Greater China and the other issues noted above regarding our business.

We are continually monitoring our business continuity ~~plans due to the global COVID-19 pandemic.~~plans. Due to the fact that our products and services are considered to be medically critical, our manufacturing and research and development sites are generally exempt from governmental orders in the ~~United States~~U.S. and other countries requiring businesses to cease or reduce operations. For these sites, we have ~~taken~~implemented steps to protect our ~~employees, and the majority of our~~employees. Our office-based work ~~is being conducted remotely.~~sites in the U.S. are subject to operating restrictions consistent with applicable health guidelines.

On September 9, 2021, President Biden issued the Executive Order on Ensuring Adequate COVID Safety Protocols for Federal Contractors (the “Executive Order”), which directs executive departments and agencies to ensure that contracts covered by the Executive Order require relevant federal contractors and subcontractors to mandate their employees to be fully vaccinated against COVID-19 by certain dates that continue to be extended by the government. The Executive Order has faced several legal challenges and on December 7, 2021, the U.S. District Court for the Southern District of Georgia issued a nationwide injunction blocking enforcement of the federal contractor mandate which was upheld by the Eleventh Circuit on December 17, 2021. We ~~have also implemented strict travel restrictions for our employees, which has reduced our travel-related operating expenses.~~continue to monitor all court developments as well as impacts of requirements as it relates to any applicable contracts.

As the global COVID-19 pandemic is an ongoing matter, our future assessment of the magnitude and duration of the COVID-19 pandemic, as well as other factors, could result in material impacts to our consolidated financial statements in future reporting periods.

The following discussion should be read in conjunction with the information contained in the accompanying interim unaudited consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q. Our historical results of operations may not necessarily reflect what will occur in the future.

~~Fiscal First Quarter Ended April 4, 2021 compared with Fiscal First Quarter Ended March 29, 2020~~

~~During~~Net income for the fiscal ~~first~~quarter ended April 3, 2022 was $14.8 million compared to net loss of $39.1 million for fiscal quarter ended April 4, 2021, ~~reported net loss~~representing a change of ~~$39.1 million decreased by $62.1 million compared with the fiscal first quarter ended March 29, 2020.~~$53.9 million. The ~~decrease~~change resulting in net ~~loss~~income was primarily due to ~~an increase~~the $50.3 million extinguishment of debt in ~~net revenue,~~the prior year period in connection with the use of our proceeds from our initial public offering (“IPO”), as well as a decrease in interest expense ~~and~~in the current year period as a ~~decrease~~result of our debt pay down in ~~foreign currency losses,~~the prior year period. These impacts were partially offset by ~~an increase in sales, marketing~~lower revenues and ~~administrative expense and~~increased research and development ~~expense. We also incurred losses on early extinguishment of debt due to our use of proceeds from our IPO to redeem portions of our 2025 Notes, 2028 Notes and Dollar Term Loan Facility.~~costs in the current year period.

Net revenue for the fiscal ~~first~~ quarter ended April ~~4, 2021 increased~~3, 2022 decreased by ~~$98.9~~$6.8 million, or ~~24.2%~~1.3%, compared with the fiscal ~~first~~ quarter ended ~~March 29, 2020.~~April 4, 2021. Revenues for the fiscal ~~first~~ quarter ended April ~~4, 2021~~3, 2022 included an operational net revenue increase of ~~21.8% and a positive~~0.1%, more than offset by the negative impact of ~~2.4%~~1.4% from foreign currency fluctuations, which was primarily driven by the ~~weakening~~strengthening of the U.S. Dollar against a variety of ~~currencies, primarily the Euro, British Pound and Chinese Yuan, partially offset by the strengthening of the Brazilian Real.~~currencies. The operational net increase in Core revenues for the fiscal ~~first~~ quarter ended April ~~4, 2021,~~3, 2022 was 4.2%, excluding the negative impact of 1.5% from foreign currency ~~exchange,~~fluctuations and the decrease in sales of COVID-19 antibody and antigen tests of $16.8 million, and was ~~mainly~~primarily driven by ~~our Core lines of business, as we recorded higher~~increased revenues in ~~all geographic segments of our Clinical Laboratories business, and in certain geographic segments of~~ our Transfusion Medicine business.


	Fiscal First Quarter Ended							Fiscal Quarter Ended
(Dollars in millions)	April 4, 2021		March 29, 2020		% Change			April 3, 2022		April 4, 2021		% Change
Clinical Laboratories	$	338.0	$	256.4		31.8	%	$	321.3	$	338.0		(4.9	)%
Transfusion Medicine		161.4		147.9		9.1	%		173.6		161.4		7.6	%
Core Revenue		499.3		404.3		23.5	%		495.0		499.3		(0.9	)%
Other Product Revenue		4.3		-		0.0	%		0.4		4.3		(90.3	)%
Collaboration and Other Revenue		3.2		3.6		-11.1	%		4.7		3.2		48.5	%
Non-Core Revenue		7.5		3.6		106.4	%		5.1		7.5		(31.7	)%
Net Revenue	$	506.8	$	407.9		24.2	%	$	500.1	$	506.8		(1.3	)%

Clinical Laboratories revenue for the fiscal ~~first~~quarter ended April 3, 2022 decreased by $16.7 million, or 4.9% compared with the fiscal quarter ended April 4, 2021, including an operational net revenue decrease of 4.1% and a negative impact of 0.8% from foreign currency fluctuations. The decrease in Clinical Laboratories revenue was primarily due to lower revenues related to the sales of our COVID-19 antibody and antigen tests. We recorded revenue of $12.2 million related to our COVID-19 antibody and antigen tests in the fiscal quarter ended April 3, 2022, compared with $29.0 million in the fiscal quarter ended April 4, 2021.

Transfusion Medicine revenue for the fiscal quarter ended April 3, 2022 increased by ~~$81.6~~$12.3 million, or ~~31.8%~~7.6%, compared with the fiscal ~~first~~ quarter ended ~~March 29, 2020. This increase included~~April 4, 2021, including an operational net revenue increase of ~~29.9% and~~10.5%, partially offset by a ~~positive~~negative impact of 1.9% from foreign currency fluctuations. Clinical Laboratories revenue increased in all geographic segments, primarily driven by higher reagent revenue, including $29.0 million from our COVID-19 antibody and antigen tests, and higher instrument sales in the Americas, EMEA and Greater China segments.

Transfusion Medicine revenue for the fiscal first quarter ended April 4, 2021 increased by $13.5 million, or 9.1%, compared with the fiscal first quarter ended March 29, 2020. This increase included an operational net revenue increase of 6.0% and a positive impact of 3.1%2.9% from foreign currency fluctuations. The increase in Transfusion Medicine revenue, excluding the impact of foreign currency exchange, was primarily driven by increased reagent and instrument revenues related to our Immunohematology business, mainly in the Americas and EMEA, and to a ~~new customer in~~lesser extent, increased revenue related to our Donor Screening business in the United States.

Other product revenue, related to our contract manufacturing business, ~~increased~~decreased by ~~$4.3~~$3.9 million ~~or 100.0%,~~ for the fiscal ~~first~~quarter ended April 3, 2022 compared with the fiscal quarter ended April 4, 2021, ~~compared with the fiscal first quarter ended March 29, 2020,~~ due to the ~~timing~~completion of ~~certain~~our performance obligations inrelated to a contract manufacturing ~~arrangement.~~arrangement in the prior year.

Collaboration and other revenue for the fiscal ~~first~~quarter ended April 3, 2022 increased by $1.5 million compared with the fiscal quarter ended April 4, 2021, ~~decreased by $0.4 million, or 11.1%, compared with the fiscal first quarter ended March 29, 2020. The decrease was~~ primarily due to ~~lower revenues related to~~the timing of shipments under one of our ~~HCV/HIV~~ license agreements.

Cost of revenue, excluding amortization of intangible assets ~~and Gross profit~~

The ~~decrease~~increase in ~~cost~~Cost of revenue, excluding amortization of intangible assets ~~and increase in gross profit as a percentage of net revenue~~ for the fiscal ~~first~~quarter ended April 3, 2022 compared with the fiscal quarter ended April 4, 2021 ~~compared with the fiscal first quarter ended March 29, 2020~~ was primarily due to ~~favorable product mix, including~~higher freight costs and the decrease in sales of COVID-19 antibody and antigen tests ~~as well as lower manufacturing costs and~~with favorable ~~manufacturing absorption.~~margin.

Selling, marketing and administrative expenses were $129.5 million for the fiscal quarter ended April 3, 2022, or 25.9% of net revenue, as compared with $131.5 million for the fiscal ~~first~~ quarter ended April 4, 2021, or 25.9% of net revenue, ~~as compared with $117.4 million for the fiscal first quarter ended March 29, 2020, or 28.8%~~a decrease of ~~net revenue, an increase of $14.1~~$2.0 million. The ~~increase~~decrease in ~~selling,~~Selling, marketing and administrative expenses was primarily due to ~~higher~~lower employee-related ~~costs, including stock-based compensation, increased distribution costs due to higher shipment volumes~~ and ~~higher shipping rates as a result of the ongoing global COVID-19 pandemic and increased third-party~~facilities costs, ~~related to our IPO,~~ partially offset by ~~decreased travel-related costs for our employees~~increased travel expenses due to ~~global~~the lifting of travel ~~restrictions.~~restrictions that were in place during the prior year period.

Research and development expense was $32.2 million for the fiscal quarter ended April 3, 2022, or 6.4% of net revenue, as compared with $28.9 million for the fiscal ~~first~~ quarter ended April 4, 2021, or 5.7% of net revenue, ~~as compared with $23.6 million for the fiscal first quarter ended March 29, 2020, or 5.8% of net revenue,~~ an increase of ~~$5.3~~$3.3 million. The increase was primarily due to anhigher employee-related costs and increased ~~investment~~investments in ~~costs to develop new assays, including an increase in employee-related costs.~~certain research and development projects.

Amortization of intangible assets was $33.2 million for the fiscal quarter ended April 3, 2022 as compared with $33.4 million for the fiscal ~~first~~ quarter ended April 4, ~~2021 as compared with $33.0 million for the fiscal first quarter ended March 29, 2020.~~2021. There were no ~~major~~significant changes in the composition of our intangible assets in the fiscal ~~first~~quarter ended April 3, 2022 compared to the fiscal quarter ended April 4, ~~2021 compared to the fiscal first quarter ended March 29, 2020.~~2021.

Other operating expense, net was $8.6 million, or 1.7% of net revenue, for the fiscal quarter ended April 3, 2022, as compared with $7.4 million, or 1.5% of net revenue, for the fiscal ~~first~~ quarter ended April 4, 2021, ~~as compared with $8.8 million, or 2.2%~~an increase of ~~net revenue, for the fiscal first quarter ended March 29, 2020, a decrease of $1.5~~$1.2 million. The ~~decrease~~increase in Other operating expense, net was primarily due to ~~timing~~$5.7 million of ~~government subsidies earned.~~acquisition and integration-related costs in the current year period related to the proposed acquisition by Quidel, partially offset by a decrease in profit share expense in the current year period related to our Joint Business.

Interest expense, net was $32.5 million for the fiscal quarter ended April 3, 2022, as compared with $43.4 million for the fiscal ~~first~~ quarter ended April 4, ~~2021, as compared with $52.2 million for the fiscal first quarter ended March 29, 2020.~~2021. The decrease of ~~$8.8~~$10.9 million was primarily related to lower borrowings due to the use of the net

proceeds from our IPO in the ~~IPO~~prior year period to (i) to redeem $160 million of our 2025 Notes, (ii) to redeem $270 million of our 2028 Notes, and (iii) to repay $892.7 million in aggregate principal amount of borrowings under our Dollar Term Loan ~~Facility, as well as lower interest rates on the Dollar Term Loan~~ Facility.

Tax indemnification income was $0.2 million ~~for~~in each of the fiscal ~~first quarter~~quarters ended April 3, 2022 and April 4, 2021 ~~as compared with $2.5 million for the fiscal first quarter ended March 29, 2020,~~and was primarily related to interest on our indemnification receivables related to certain tax matters included in our pre-acquisition audit reserves. ~~The decrease in tax indemnification~~

Other income, net was $3.5 million for the fiscal ~~first~~ quarter ended April ~~4, 2021 as compared with the fiscal first quarter ended March 29, 2020 relates to the resolution~~3, 2022, comprised primarily of ~~certain pre-Acquisition U.S. federal~~$1.7 million of net foreign currency gains and ~~state tax positions during the fiscal third and fiscal fourth quarters~~fair value gains of ~~2020.~~$1.9 million from interest rate caps.

Other expense, net was $50.0 million for the fiscal ~~first~~ quarter ended April 4, 2021 and was comprised primarily of loss on early extinguishment of debt of $50.3 million, related to the use of proceeds from the IPO to redeem portions of our outstanding 2025 Notes, 2028 Notes and Dollar Term Loan Facility. This was partially offset by $0.9 million of net foreign currency gains, of which $22.9 million of realized gains were partially offset by $22.0 million of unrealized losses, primarily related to the unwinding of our cross currency swaps.

During the fiscal quarter ended April 3, 2022, we reported income before provision for income taxes of $18.3 million and recognized a provision for income taxes of $3.5 million, resulting in an effective tax rate of 19.1%. The effective tax rate for the fiscal quarter ended April 3, 2022 differs from the U.S. federal statutory rate primarily due to (i) a net ~~was $59.3~~cost of $2.5 million for the ~~fiscal first quarter ended March 29, 2020~~impacts of operating losses in certain subsidiaries not being benefited due to the establishment of valuation allowances and ~~was comprised primarily~~(ii) a net benefit of $48.3 million of net foreign currency losses, of which $49.9 million was unrealized, primarily related to intercompany loans denominated in currencies other than the functional currency of the affected subsidiaries and loss on early extinguishment of our 2022 Notes of $10.0$2.5 million related to ~~debt refinancing activities.~~non-U.S. earnings being taxed at rates that are different than the U.S. statutory rate.

During the fiscal ~~first~~ quarter ended April 4, 2021, we incurred a loss before provision ~~from~~for income taxes of $35.8 million and recognized aan provision for income taxes of $3.3 million, resulting in a negative effective tax rate of 9.2%. The effective tax rate for the fiscal quarter ended April 4, 2021 differs from the U.S. federal statutory rate primarily due to ~~(1)~~(i) a net cost of $14.8 million for the ~~impact~~impacts of operating losses in certain subsidiaries not being benefited due to the establishment of valuation allowances and (ii) a ~~valuation allowance and (2)~~net benefit of $4.9 million due to the non-U.S. earnings being taxed at rates that are different than the U.S. statutory ~~rate.~~

During the fiscal first quarter ended March 29, 2020, we incurred a loss before provision for income taxes of $97.1 million and recognized a provision for income taxes of $4.1 million resulting in a negative effective tax rate of 4.2%. The effective tax rate for the period differs from the U.S. federal statutory rate primarily due to (1) the impact of operating losses in certain subsidiaries not being benefitted due to the establishment of a valuation allowance (2) an increase in the Company’s interest expense on prior year reserves for uncertain tax positions and (3) non-U.S. earnings being taxed at rates that are different than the U.S. statutory rate.

We believe that our financial statements and the other financial data included in this Quarterly Report on Form 10-Q have been prepared in a manner that complies, in all material respects, with GAAP, and are consistent with current practice, with the exception of the inclusion of financial measures that differ from measures calculated in accordance with ~~GAAP.~~GAAP, including Adjusted EBITDA. Adjusted EBITDA consists of net ~~loss~~income (loss) before interest expense, net, provision for ~~(benefit from)~~ income taxes and depreciation and amortization and eliminates (i) certain non-operating income or expense and (ii) impacts of certain ~~non-cash,~~noncash, unusual or other items that are included in net ~~loss~~income (loss) that we do not consider indicative of our ongoing operating performance.

We use these financial measures in the analysis of our financial and operating performance because they assist in the evaluation of underlying trends in our business. Additionally, Adjusted EBITDA is the basis we use for assessing the profitability of our geographic-based reportable segments and is also utilized as a basis for calculating certain management incentive compensation programs. In the case of Adjusted EBITDA, we believe that making such adjustments provides management and investors meaningful information to understand our operating performance and ability to analyze financial and business trends on a period-to-period basis. We believe that the presentation of these financial measures enhances an investor’s understanding of our financial performance. We use certain of these financial measures for business planning purposes and measuring our performance relative to that of our competitors.

Other companies in our industry may calculate Adjusted EBITDA differently than we do. As a result, these financial measures have limitations as analytical and comparative tools and you should not consider these items in isolation, or as a substitute for analysis of our results as reported under GAAP. Adjusted EBITDA should not be considered as measures of discretionary cash available to us to invest in the growth of our business. In calculating these financial measures, we make certain adjustments that are based on

assumptions and estimates that may prove to have been inaccurate. In addition, in evaluating these financial measures, you should be aware that in the future we may incur expenses similar to those eliminated in the presentation of these metrics included in this Quarterly Report on Form 10-Q. Our presentation of Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual or non-recurring itemsor changes in our customer base. Additionally, our presentation of Adjusted EBITDA may differ from that included in the Credit Agreement, the indenture ~~for~~governing the 2025 Notes and the indenture ~~for~~governing the 2028 Notes for purposes of covenant calculation.

Adjusted EBITDA has important limitations as an analytical tool and you should not consider it in isolation or as substitutes for analysis of our results as reported under GAAP. Some of these limitations include the fact that Adjusted EBITDA:

We compensate for these limitations by relying primarily on our GAAP results and using these financial measures only as a supplement to our GAAP results.

The following tables reconcile Net ~~loss~~income (loss) to Adjusted EBITDA for the periods presented:

(e) European Medical Device Regulation costs represent incremental consulting costs and R&D manufacturing site costs for our previously registered products under the In Vitro Diagnostic Regulation (“IVDR”) to align existing, on-market products, with the revised expectations under the IVDR. IVDR is a replacement of the existing European In Vitro Diagnostics Directive regulatory framework, and manufacturers of currently marketed medical devices are required to comply with EU IVDR beginning in May 2022.

Net revenue was ~~$321.4~~$315.4 million for the fiscal ~~first~~ quarter ended April ~~4, 2021~~3, 2022 compared to net revenue of ~~$250.5~~$321.4 million for the fiscal ~~first~~ quarter ended ~~March 29, 2020~~April 4, 2021, including a decrease in revenue of $13.7 million from our COVID-19 antibody and antigen test sales. The decrease of $6.0 million, or 1.9%, which was minimally impacted by the impact of foreign currency exchange rates, was also driven by lower reagent revenue in our Clinical Laboratories business, primarily related to the decrease in revenues related to sales of our COVID-19 tests. Excluding the impact of the $13.7 million decrease in our COVID-19 antibody and antigen test sales, net revenues increased $7.7 million, or 2.5%, primarily driven by increased reagent revenues in our Immunohematology business in the United States and Latin America and our Donor Screening business in the United States..

Adjusted EBITDA was $143.2 million for the fiscal quarter ended April 3, 2022 compared to $141.1 million for the fiscal quarter ended April 4, 2021. The increase of ~~$70.8~~$2.1 million, or ~~28.3%~~1.5%, was primarily due to the lower overall expenses in the current year period.

Net revenue was $68.7 million for the fiscal quarter ended April 3, 2022 compared to net revenue of $68.5 million for the fiscal quarter ended April 4, 2021, including a decrease in revenue of $2.9 million from our COVID-19 antibody and antigen test sales. The increase of $0.2 million, or 0.3%, which included operational net revenue growth of ~~28.8%~~6.7%, partially offset by a negative impact of ~~0.6% from foreign currency fluctuations, was~~ ~~primarily~~ due to higher reagent revenue in our Clinical Laboratories business, including $24.0 million from our COVID-19 antibody and antigen tests, higher instrument sales in our Clinical Laboratories business, a new customer in our Donor Screening business in the United States and grant revenue related to development of our COVID-19 antibody and antigen tests.

~~Adjusted EBITDA was $141.1 million for the~~ ~~fiscal first quarter ended April 4, 2021~~ ~~compared to Adjusted EBITDA of $108.1 million for the~~ ~~fiscal first quarter ended March 29, 2020. The increase of $33.0 million, or 30.5%, was primarily due to higher revenues and lower~~ ~~travel-related~~ ~~costs.~~

~~Net revenue was $68.5 million for the~~ ~~fiscal first quarter ended April 4, 2021~~ ~~compared to net revenue of $58.7 million for the~~ ~~fiscal first quarter ended March 29, 2020. The increase of $9.8 million, or 16.8%, which~~ ~~included operational net revenue growth of 8.2% and a positive impact of 8.6% from foreign currency fluctuations,~~ ~~was~~ ~~primarily~~ due to higher reagent revenue in our Clinical Laboratories business, including $4.1 million from our COVID-19 antibody and antigen tests, and higher instrument sales in our Clinical Laboratories business.

~~Adjusted EBITDA was $17.5 million for the~~ ~~fiscal first quarter ended April 4, 2021~~ ~~compared to Adjusted EBITDA of $11.7 million for the~~ ~~fiscal first quarter ended March 29, 2020. The increase of $5.8 million, or 49.6%, was~~ ~~primarily~~ ~~due to higher revenues and lower~~ ~~travel-related~~ ~~costs, partially offset by increased distribution costs due to higher shipment volumes and higher shipping rates as a result of the ongoing global COVID-19 pandemic.~~

~~Net revenue was $55.0 million for the~~ ~~fiscal first quarter ended April 4, 2021~~ ~~compared to net revenue of $46.3 million for the~~ ~~fiscal first quarter ended March 29, 2020. The increase of $8.7 million, or 18.7%, which~~ ~~included operational net revenue growth of 10.5% and a positive impact of 8.2% from foreign currency fluctuations,~~ ~~was~~ ~~primarily~~ ~~due to higher reagent revenue in our Clinical Laboratories and Immunohematology businesses.~~

~~Adjusted EBITDA was $25.2 million for the~~ ~~fiscal first quarter ended April 4, 2021~~ ~~compared to Adjusted EBITDA of $18.8 million for the~~ ~~fiscal first quarter ended March 29, 2020. The increase of $6.4 million, or 34.0%, was~~ ~~primarily~~ ~~due to higher revenues.~~

Net revenue was $61.9 million for the fiscal first quarter ended April 4, 2021 compared to net revenue of $52.4 million for the fiscal first quarter ended March 29, 2020. The increase of $9.5 million, or 18.2%, ~~which~~ ~~included operational net revenue growth of 15.1% and a positive impact of 3.1%~~6.4% from foreign currency fluctuations, was primarily due to higher reagent and instrument revenue in our Immunohematology business.

Adjusted EBITDA was $19.7 million for the fiscal quarter ended April 3, 2022 compared to Adjusted EBITDA of $17.5 million for the fiscal quarter ended April 4, 2021. The increase of $2.2 million, or 12.7%, was primarily due to increased revenues and favorable cost of revenues, excluding amortization of intangible assets.

Net revenue was $54.5 million for the fiscal quarter ended April 3, 2022 compared to net revenue of $55.0 million for the fiscal quarter ended April 4, 2021. The decrease of $0.4 million, or 0.8%, which included operational net revenue decline of 2.9%, partially offset by a positive impact of 2.1% from foreign currency fluctuations, was primarily due to lower instrument revenue in our Clinical Laboratories business, primarily due to supply chain constraints, and to a lesser extent the impact of the recent COVID-19 related lockdowns. These decreases partially offset by increased reagent revenues in our Clinical Laboratories business..

Adjusted EBITDA was $24.7 million for the fiscal quarter ended April 3, 2022 compared to Adjusted EBITDA of $25.2 million for the fiscal quarter ended April 4, 2021. The decrease of $0.5 million, or 2.0%, was primarily due to lower revenues.

Net revenue was $61.4 million for thefiscal quarter ended April 3, 2022 compared to net revenue of $61.9 million for the fiscal quarter ended April 4, 2021. The decrease of $0.5 million, or 0.8%, which included operational net revenue growth of 6.0%, more than offset by the negative impact of 6.8% from foreign currency fluctuations, was primarily due to higher reagent and instrument revenues in our Clinical Laboratories business in our Asia Pacific region.

Adjusted EBITDA was $17.0 million for the fiscal quarter ended April 3, 2022 compared to Adjusted EBITDA of $19.4 million for the fiscal ~~first~~ quarter ended April 4, 2021 ~~compared to Adjusted EBITDA~~. The decrease of ~~$15.2 million for the fiscal first quarter ended March 29, 2020. The increase of $4.2~~$2.4 million, or ~~27.6%~~12.4%, was primarily due to ~~higher revenues and lower~~ ~~travel-related~~ ~~costs~~.unfavorable foreign currency fluctuations.

During the fiscal first quarter ended April 4, 2021, we completed our IPO of ordinary shares at a price of $17.00 per share, generating net proceeds of $1,426.4 million after deducting underwriting discounts and commissions and estimated offering expenses. We used a portion of the net proceeds from the IPO (i) to redeem $160 million of its 2025 Notes, plus accrued interest thereon and $11.8 million of redemption premium, (ii) to redeem $270 million of its 2028 Notes, plus accrued interest thereon and $19.6 million of redemption premium, (iii) to repay $892.7 million in aggregate principal amount of borrowings under its Dollar Term Loan Facility and (iv) for working capital and general corporate purposes.

During January 2020, we amended our Revolving Credit Facility, entered into the Euro Term Loan Facility and issued the 2028 Notes. Concurrently with the issuance of the 2028 Notes, we entered into a $350 million U.S. Dollar-equivalent swap to Japanese Yen-denominated interest at a weighted average rate of 5.56% with a five-year term. During June 2020, we issued the 2025 Notes. On April 1, 2021, we terminated the cross currency swaps which resulted in a net settlement of $12.8 million, with cash received subsequent to April 4, 2021.

As of April ~~4, 2021~~3, 2022 and January ~~3, 2021,~~2, 2022, we ~~have no outstanding borrowings under the Revolving Credit Facility. Letters of credit issued under the Revolving Credit Facility totaled $37.0~~had $281.1 million and ~~$37.5~~$309.7 million asof Cash and cash equivalents, respectively. As of April ~~4, 2021~~3, 2022 and January ~~3, 2021, respectively. Our availability under the Revolving Credit Facility was $463.0~~2, 2022, $224.7 million and ~~$312.5~~$157.5 million, asrespectively, of ~~April 4, 2021~~these Cash and ~~January 3, 2021, respectively.~~cash equivalents were maintained in non-U.S. jurisdictions, primarily held in foreign currencies. We believe our organizational structure allows us the necessary flexibility to move funds throughout our subsidiaries to meet our operational working capital needs.

~~In fiscal year 2016, we entered into~~Notwithstanding the ~~Financing Program with Wells Fargo Bank, N.A. The Financing Program is secured by receivables from~~foregoing, until the Ortho U.S. business that are sold or contributed to a wholly-owned, consolidated, bankruptcy remote subsidiary. The bankruptcy remote subsidiary’s sole business consists of the purchase or receipt of the receivables and subsequent granting of a security interest to the financial institution under the program, and its assets are available first to satisfy obligations and are not available to pay creditors of our other legal entities. Under the Financing Program, we may borrow up to the lower of $75 million or 85% of the eligible accounts receivable borrowing base. At April 4, 2021 and January 3, 2021, the eligible accounts receivable borrowing base was $75.0 million and $81.4 million, respectively. Interest on outstanding borrowing under the Financing Program is charged based on a per annum rate equal to LIBOR Rate (with a floor of zero percent and as defined in the agreement) plus the LIBOR Rate Margin (2.25 percentage points) if the related loan is a LIBOR Rate Loan. Otherwise, the per annum rate is equal to a Base RateQuidel Effective Time (as defined in the ~~agreement) plus~~Business Combination Agreement) or termination of the ~~Base Rate Margin (1.25 percentage points). Interest is due and payable,~~Business Combination Agreement in ~~arrears,~~accordance with its terms, subject to certain specified exceptions, we are subject to a variety of restrictions as specified under the Business Combination Agreement. Unless Quidel approves in writing (which approval will not be unreasonably withheld, conditioned or delayed, subject to certain exceptions), we may not, among other things, engage in another merger, restructuring or reorganization; incur indebtedness for borrowed money or issued debt securities, except for borrowing in amounts not to exceed $25.0 million in the aggregate (including pursuant to drawdowns of credit facilities outstanding on the first day of each month. The Financing Program is also subject to termination under standard events of default as defined. Costs related to the Financing Program of $1.0 million were recorded as a reductiondate of the ~~principal amount~~Business Combination Agreement) (excluding with respect to financing required in order to consummate the Combinations); or lease, license, transfer, exchange or swap, mortgage, pledge, abandon, allow to lapse or otherwise dispose of the borrowings and are amortized using the effective interest method as a component of interest expense over the life of the Financing Program. As of April 4, 2021 and January 3, 2021, the remaining unamortized balance was $0.1 million and $0.2 million, respectively. On January 24, 2019, we extended the maturityany of our ~~Financing Program from September 23, 2019 to January 24, 2022. In addition, we amended~~assets, except for dispositions individually or in the aggregate that have a fair market value of less than $25.0 million, transactions between us and any of our ~~Financing Program terms to increase availability under~~subsidiaries, or in the ~~terms~~ordinary course of ~~the program within the existing $75 million limit of the agreement.~~business.

The following table presents a summary of our net cash inflows (outflows) for the periods shown:

Net cash used in operating activities was $4.0 million for the fiscal quarter ended April 3, 2022. Factors resulting in Cash used in operating activities included settlement of accrued liabilities, payment of $29.2 million of interest on borrowings, and an increase in our investment in inventories, which includes $21.9 million of instrument inventories that were transferred from Inventories to Property, plant and equipment, net. These activities were partially offset by strong collections on Accounts receivable, and cash inflows from earnings before interest, taxes, depreciation and amortization expense.

Net cash used in investing activities was $27.2 million for the fiscal quarter ended April 3, 2022 primarily related to purchases of property, plant and equipment.

Net cash provided by financing activities was $2.1 million for the fiscal quarter ended April 3, 2022. During the fiscal quarter ended April 3, 2022, we received proceeds from the exercise of stock options of $3.4 million, which was partially offset by $1.3 million of payments on long-term borrowings.

Net cash used in operating activities was $9.9 million for the fiscal ~~first~~ quarter ended April 4, 2021. Factors resulting in cash used in operating activities included payment of interest on borrowings of $53.8 million, settlement of accounts payable and an increased investment in inventories of $41.7 million, which includes $25.6 million of instrument inventories that were transferred from Inventories to Property, plant and equipment, net, related to customer leased instruments as well as an increase in accounts receivable of $10.3

million. These cash outflows were offset by cash inflows from earnings before interest, taxes, depreciation and amortization expense and other non-cash items.

Net cash used in investing activities was $10.7 million for the fiscal quarter ended April 4, 2021. Purchases of property, plant and equipment during the fiscal ~~first~~ quarter ended April 4, 2021 were $13.4 million. In addition, we made noncash transfers of $25.6 million of instrument inventories from ~~“Inventories”~~Inventories to ~~“Property,~~Property, plant and equipment, net,” further increasing our investment in property, plant and equipment.

During the ~~fiscal first~~ quarter ended April 4, 2021, net proceeds from our ~~initial public offering~~IPO of $1,421.4 million were partially offset by payments of long-term borrowings of $1,375.9 million.

Net cash used in operating activities was $17.5 million for the fiscal first quarter ended March 29, 2020. Factors resulting in cash used in operating activities included payment of interest on borrowings of $66.6 million, settlement of accounts payable and an increased investment in inventories of $40.9 million, which includes $27.7 million of instrument inventories that were transferred from “Inventories” to “Property, plant and equipment, net,”. These cash outflows were offset by cash inflows from earnings before interest, taxes, depreciation and amortization expense and net collections of accounts receivable of $21.6 million.

Purchases of property, plant and equipment during the fiscal first quarter ended March 29, 2020 were $18.1 million. In addition, we made noncash transfers of $27.7 million of instrument inventories from “Inventories” to “Property, plant and equipment, net,” further increasing our investment in property, plant and equipment.

During the fiscal first quarter ended March 29, 2020, net short-term borrowings were $299.3 million. Net proceeds from the issuance of the 2028 Notes and Euro Term Loan of $1,032.2 million were offset by payments on the 2022 Notes of $1,015.5 million.

As of April 4, 2021 and January 3, 2021, we had $153.8 million and $132.8 million of cash and cash equivalents, respectively. As of April 4, 2021 and January 3, 2021, $114.1 million and $108.8 million, respectively, of these cash and cash equivalents were maintained in non-U.S. jurisdictions in foreign currencies. We believe our organizational structure allows us the necessary flexibility to move funds throughout our subsidiaries to meet our operational working capital needs.

The following table details our debt outstanding as of April ~~4, 2021~~3, 2022 and January ~~3, 2021:~~2, 2022:


(Dollars in millions)	April 4, 2021			January 3, 2021			April 3, 2022			January 2, 2022
Senior Secured Credit Facilities
Dollar Term Loan Facility	$	1,292.8		$	2,185.5		$	1,292.8		$	1,292.8
Euro Term Loan Facility		392.9			408.9			324.8			335.8
Revolving Credit Facility		—			—			—			—
2028 Notes		405.0			675.0			405.0			405.0
2025 Notes		240.0			400.0			240.0			240.0
Accounts Receivable Financing		72.2			75.0
Sale and Leaseback Financing		-			20.5
Capital lease obligation		0.9			1.0
Other short-term borrowings		3.7			0.9
Finance lease obligation								0.8			0.7
Other long-term borrowings		3.6			3.9			2.2			2.6
Unamortized deferred financing costs		(25.1	)		(40.9	)		(20.2	)		(21.4	)
Unamortized original issue discount		(6.3	)		(11.3	)		(4.9	)		(5.3	)
Total borrowings		2,379.7			3,718.5			2,240.4			2,250.2
Less: Current portion		(139.4	)		(160.0	)		(63.2	)		(63.4	)
Long-term borrowings	$	2,240.3		$	3,558.5		$	2,177.1		$	2,186.7

As of April ~~4, 2021~~3, 2022 and January ~~3, 2021,~~ 2, 2022, there were no outstanding borrowings under the Revolving Credit ~~Facility.~~Facility. As of April ~~4, 2021~~3, 2022 and January ~~3, 2021,~~2, 2022, letters of credit issued under the Revolving Credit Facility totaled ~~$37.0~~$43.7 million and ~~$37.5~~$46.3 million, respectively, which reduced the availability under the Revolving Credit Facility. Availability under the Revolving Credit Facility was ~~$463.0~~$456.3 million and ~~$312.5~~$453.7 million as of April ~~4, 2021~~3, 2022 and January ~~3, 2021.~~2, 2022, respectively. Our debt agreements contain various covenants that may restrict our ability to borrow on available credit facilities and future financing arrangements or require us to remain below a specific credit coverage threshold. We believe that we are and will continue to be in compliance with these covenants.

On February 5, 2021, we entered into a fifth amendment of our Credit Agreement governing our Senior Secured Credit Facilities, which increased the Revolving Credit Facility contained in the credit agreement by $150 million to an aggregate amount of $500 million and extended the maturity date to February 5, 2026, provided that such date may be accelerated subject to certain circumstances as set forth in the fifth amendment. To the extent that the aggregate principal amount of the Dollar Term Loan Facility and Euro Term Loan Facility (and any Refinancing Indebtedness (as defined in the Credit Agreement) with respect thereto that matures on or prior to June 30, 2025) outstanding as of March 31, 2025 exceeds $500 million then the maturity date with respect to the Revolving Credit Facility shall be March 31, 2025. All other terms of the Senior Secured Credit Facilities will remain substantially the same except as otherwise amended by the fifth amendment.

As of April ~~4, 2021~~3, 2022 and January ~~3, 2021,~~2, 2022, the remaining balance of deferred financing costs related to the Dollar Term Loan Facility was ~~$9.7~~$7.5 million and ~~$17.3~~$8.1 million, respectively. As of April ~~4, 2021~~3, 2022 and January ~~3, 2021,~~2, 2022, the remaining balance of deferred financing costs related to the Euro Term Loan Facility was ~~$4.3~~$3.4 million and ~~$4.6~~$3.6 million, respectively. As of April ~~4, 2021~~3, 2022 and January ~~3, 2021,~~2, 2022, the remaining unamortized balance related to the Revolving Credit Facility was ~~$4.0~~$2.2 million and ~~$3.4~~$2.7 million, respectively. The effective interest rate of the Dollar Term Loan Facility and Euro Term Loan Facility as of April ~~4, 2021~~ 3, 2022 is 5.76% and 3.88%, ~~respectively.~~respectively.

On January 27, 2020, we issued ~~$675~~$675.0 million aggregate principal amount of 7.250% Senior Notes due 2028 (“2028 Notes”), on which interest is payable semi-annually in arrears on February 1 and August 1 of each year. The 2028 Notes will mature on February 1, 2028. The 2028 Notes and the guarantees thereof are our senior unsecured obligations and the 2028 Notes and the guarantees rank equally in right of payment with all of ~~the Lux Co-Issuer’s~~Ortho-Clinical Diagnostics S.A.’s and ~~U.S. Co-Issuer’s~~Ortho-Clinical Diagnostics, Inc.’s (together, the “Issuers”) and guarantors’ existing and future senior debt, including the 2025 Notes. The 2028 Notes and the guarantees thereof are effectively subordinated to any of the Issuers’ and guarantors’ existing and future secured debt, including the Senior Secured Credit Facilities, ~~and the Financing Program,~~ to the extent of the value of the assets securing such debt. In addition, the 2028 Notes and the guarantees thereof rank senior in right of payment to all of the Issuers’ and guarantors’ future subordinated debt and will be structurally subordinated to the liabilities of our non-guarantor subsidiaries. We incurred deferred financing costs of $12.9 million related to the 2028 Notes, which were capitalized as deferred financing costs and are being amortized using the effective interest method as a component of interest expense over the life of the 2028 Notes. On February 5, 2021, we used a portion of the proceeds from ~~its~~our IPO to redeem ~~$270~~$270.0 million aggregate principal amount of the 2028 Notes, plus accrued interest thereon and $19.6 million of redemption premium. The redemption resulted in an

extinguishment loss recognized of $24.3 million for the fiscal quarter ended April 4, 2021, which consisted of $4.7 million of unamortized deferred issuance costs and $19.6 million of the redemption ~~premium, respectively.~~premium.

Concurrent with the issuance of the ~~$675 million aggregate principal amount of~~ 2028 Notes, we entered into a ~~$350~~$350.0 million U.S. Dollar equivalent swap to Japanese Yen-denominated interest at a weighted average rate of 5.56%, for a five-year term. ~~On April 1, 2021, we~~We terminated the cross currency swaps ~~which resulted in a~~on April 1, 2021 and received $12.8 million of cash from net settlement ~~of $12.8 million, with cash received~~ subsequent to April 4, 2021.

On June 11, 2020, we issued ~~$400~~$400.0 million aggregate principal amount of 7.375% Senior Notes due 2025 (“2025 Notes”) on which interest is payable semi-annually in arrears on June 1 and December 1 of each year. The 2025 Notes will mature on June 1, 2025. The 2025 Notes and the guarantees thereof are our unsecured obligations and the 2025 Notes and the guarantees thereof rank equally in right of payment with all of the Issuers’ and guarantors’ existing and future senior debt, including the 2028 Notes. The 2025 Notes and the guarantees thereof are effectively subordinated to any of the Issuers’ and guarantors’ existing and future secured debt, including the Senior Secured Credit Facilities, ~~and the Financing Program,~~ to the extent of the value of the assets securing such debt. In addition, the 2025 Notes and the guarantees thereof rank senior in right of payment to all of the Issuers’ and guarantors’ future subordinated debt and will be structurally subordinated to the liabilities of the Issuers’ non-guarantor subsidiaries. We incurred deferred financing costs of $7.5 million related to the 2025 Notes, which were capitalized as deferred financing costs and are being amortized using the effective interest method as a component of interest expense over the life of the 2025 Notes. On February 5, 2021, we used a portion of the proceeds from ~~its~~our IPO to redeem ~~$160~~$160.0 million aggregate principal amount of the 2025 Notes, plus accrued interest thereon and $11.8 million of redemption premium. The redemption resulted in an extinguishment loss recognized of $14.5 million during the quarter ended April 4, 2021, which consisted of $2.7 million of unamortized deferred issuance costs and $11.8 million of the redemption ~~premium, respectively.~~premium.

We or our affiliates, including investment funds affiliated with Carlyle, at any time and from time to time, may purchase ~~Senior~~the 2025 Notes, the 2028 Notes or other indebtedness of the Company. Any such purchases may be made through the open market or privately negotiated transactions with third parties or pursuant to one or more tender or exchange offers or otherwise, upon such terms and at such prices, as well as with such consideration, as we, or any of our affiliates, may determine. Such purchases could result in a change to the allocation between the Issuers of the indebtedness represented by the ~~Senior~~2025 Notes and the 2028 Notes and could have important tax consequences for holders of the ~~Senior~~2025 Notes and the 2028 Notes.

We expect that our cash and cash equivalents, cash flows from operations and amounts available under the Revolving Credit Facility will be sufficient to meet debt service requirements, working capital requirements, and capital expenditures ~~through~~for the ~~end~~next 12 months from the issuance of ~~2021.~~these unaudited consolidated financial statements. Our ability to make scheduled payments of principal or interest on, or to refinance, our indebtedness or to fund working capital requirements, capital expenditures and other current obligations will depend on our ability to generate cash from operations. Such cash generation is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control.

We are focused on expanding the number of instruments placed in the field and solidifying long-term contractual relationships with customers. In order to achieve this goal, in certain jurisdictions where it is permitted, we have leveraged a reagent rental model that has been recognized as more attractive to certain customers. In this model, we lease, rather than sell, instruments to our customers. Over the term of the contract, the purchase price of the instrument is embedded in the price of the assays and reagents. Going forward, we intend to increase the number of reagent rental placements in developed markets, a strategy that we believe is beneficial to our commercial goals because it lowers our customers’ upfront capital costs and therefore allows purchasing decisions to be made at the lab manager level. For these same reasons, the reagent rental model also benefits our commercial strategy in emerging markets. We believe that the shift in our sales strategy will grow our installed base, thereby increasing sales of higher-margin assays, reagents and other consumables over the life of the customer contracts and enhancing our recurring revenue and cash flows. During the fiscal ~~first~~ quarter ended April ~~4, 2021,~~3, 2022, we transferred ~~$25.6~~$21.9 million of instrument inventories from Inventories to Property, plant and equipment, further increasing our investment in property, plant and equipment. We currently estimate that we will transfer additional instrument inventories of approximately ~~$121~~$125 million during the remainder of fiscal ~~2021.~~year 2022.

Based on our forecasts, we believe that cash flow from operations, available cash on hand and available borrowing capacity under our Revolving Credit Facility will be sufficient to fund continuing operations for the next 12 ~~months.~~months from the issuance of these unaudited consolidated financial statements. Our debt agreements contain various covenants that may restrict our ability to borrow on available credit facilities and future financing arrangements and require us to remain below a specific credit coverage threshold. Our credit agreement has a financial covenant (ratio of Net First Lien Secured Debt to Adjusted EBITDA not to exceed ~~6-to-1,~~5.5-to-1, subject to ~~two~~a 50 basis point ~~step-downs~~step-down on ~~June 30, 2021 and~~ September 30, 2022) that is tested when borrowings and letters of credit issued under the Revolving Credit Facility exceed 30% of the committed amount at any period end reporting date. As of April ~~4, 2021,~~3, 2022, we had no outstanding borrowings under our Revolving Credit Facility. Due to the current economic and business uncertainty resulting from the ongoing COVID-19

pandemic, from time to time we may borrow from our Revolving Credit Facility, if needed, for the remainder of fiscal year ~~2021.~~2022. We believe that we will continue to comply with the financial covenant for the next 12 months. In the event we do not comply with the financial covenant of the Revolving Credit Facility,

the lenders will have the right to call on all of the borrowings under the ~~revolving facility.~~Revolving Credit Facility. If the lenders on the ~~revolving facility~~Revolving Credit Facility terminate their commitments and accelerate the loans, this would become a cross default to other material indebtedness. We believe that we will continue to be in compliance with these covenants. However, should it become necessary, we may seek to raise additional capital within the next 12 months through borrowings on credit facilities, other financing activities and/or the private sale of equity securities.

~~UK Holdco is~~We are a holding company with no business operations or assets other than cash, the capital stock of our direct and indirect subsidiaries, miscellaneous administrative costs and intercompany loan receivables. Consequently, ~~UK Holdco is~~we are dependent on loans, dividends, interest and other payments from its subsidiaries to make principal and interest payments on our indebtedness, meet working capital requirements and make capital expenditures. As presently structured, ~~its~~our operating subsidiaries are the sole source of cash for such payments and there is no assurance that the cash for those interest payments will be available. We believe our organizational structure will allow the necessary flexibility to move funds throughout our subsidiaries to meet our operational working capital needs. In the future, the Issuers and borrowers under our Senior Secured Credit Facilities may also need to refinance all or a portion of the borrowings under the ~~Senior~~2025 Notes, the 2028 Notes and the Senior Secured Credit Facilities on or prior to maturity. If refinancing is necessary, there can be no assurance that we will be able to secure such financing on acceptable terms, or at all.

Our ability to make payments on and to refinance our indebtedness and to fund planned capital expenditures will depend on our ability to generate cash in the future. This is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control as well as the factors described in Part 1, Item 1A, “Risk ~~factors”~~Factors” and ~~“Special note regarding forward-looking~~“Forward-looking statements” in our Annual Report on Form 10-K for the fiscal year ended January ~~3, 2021.~~2, 2022.

Information regarding new accounting pronouncements is included in Note ~~3 – Summary of Significant Accounting~~3–Recent accounting pronouncements to the unaudited consolidated financial statements.

Significant accounting policies are those accounting policies that can have a significant impact on the presentation of our financial condition and results of operations and that require the use of complex and subjective estimates based upon past experience and management’s judgment. Because of the uncertainty inherent in such estimates, actual results may differ materially from these estimates. The policies applied preparing our interim unaudited consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q are those that management believes are the most dependent on estimates and assumptions. There have been no changes to our critical accounting estimates and significant accounting policies previously disclosed in our Annual Report on Form 10-K for the fiscal year ended January ~~3, 2021~~.2, 2022.

Our business and financial results are affected by fluctuations in world financial markets, including interest rates and currency exchange rates. We manage these risks through normal operating and financing activities and, when deemed appropriate, through the use of derivative financial instruments. We have policies governing our use of derivative instruments, and we do not enter into financial instruments for trading or speculative purposes.

We are subject to interest rate market risk in connection with our long-term debt. Our principal interest exposure will relate to outstanding amounts under our Senior Secured Credit Facilities. Our Senior Secured Credit Facilities provide for variable rate borrowings of up to ~~$2,185.8~~$2,325.0 million ~~including up to~~under the Dollar Term Loan Facility, €337.4 million under the Euro Term Loan Facility and $500.0 million under our Revolving Credit Facility. Assuming our Senior Secured Credit Facilities are fully drawn (and to the extent that LIBOR is in excess of the 0.00% floor rate of our Senior Secured Credit Facilities), each one-eighth percentage point increase or decrease in the applicable interest rates would correspondingly change our interest expense on our Senior Secured Credit Facilities by approximately ~~$2.7~~$2.6 million per year before considering the impact of derivative instruments. For further discussion of the risks related to our Senior Secured Credit Facilities, see “Risk factors—Risks related ~~with~~to our indebtedness—Our substantial indebtedness could adversely affect our financial condition, limit our ability to raise additional capital to fund our operations and prevent us from fulfilling our obligations under our ~~indebtedness.”~~indebtedness” in our Annual Report on Form 10-K for the fiscal year ended January 2, 2022.

We selectively use derivative instruments to reduce market risk associated with changes in interest rates. The use of derivatives is intended for hedging purposes only and we do not enter into derivative instruments for speculative purposes. As of April ~~4, 2021,~~3, 2022, we have an interest rate cap agreement to hedge our interest rate exposures related to our variable rate borrowings under the Senior Secured Credit Facilities with an interest rate cap amount of 3.5%, with caplets that mature through December 31, 2023.

We also have entered into an interest rate swap agreement, which fixed a portion of the variable interest due on our variable rate debt. Under the terms of the agreement, we will pay a fixed rate of 1.635% and receive a variable rate of interest based on one-month LIBOR (as defined) from the counterparty which is reset every month through December 31, 2023. As of April ~~4, 2021,~~3, 2022, the notional amount of the interest rate swap was ~~$700.0~~$1,000.0 million. The notional value of this instrument is expected to be ~~$1,500~~$500.0 million in fiscal ~~2021, $1,000 million in fiscal 2022 and $500 million in fiscal~~ 2023.

We are exposed to foreign currency risk by virtue of our international operations. We derived approximately 46% of our revenue for the fiscal quarter ended April ~~4, 2021~~3, 2022 outside the United States. ~~As discussed previously, we completed the acquisition of certain Day 2 Countries during fiscal year 2017.~~ For translation of operations in non-U.S. Dollar currencies, the local currency of most entities is the functional currency. Our foreign assets and liabilities are translated into U.S. Dollars at the exchange rates existing at the respective balance sheet dates, and income and expense items are translated at the average exchange rate for each relevant period. Foreign exchange effects from the translation of our balance sheet resulted in a comprehensive loss of ~~$8.8~~$6.6 million ~~for the fiscal first quarter ended April 4, 2021. Foreign exchange effects from the translation of our balance sheet resulted in a comprehensive loss of $10.8~~and $8.8 million for the fiscal quarter ended ~~March 29, 2020.~~April 3, 2022 and April 4, 2021, respectively. Adjustments resulting from the re-measurement of transactions denominated in foreign currencies other than the functional currency of our subsidiaries are expensed as incurred.

In the majority of our jurisdictions, we earn revenue and incur costs in the currency used in such jurisdiction. We incur significant costs in foreign currencies including Brazilian Real, British Pound, Chinese Yuan/Renminbi, Euro, Indian Rupee, Japanese Yen, Mexican Peso, and the Swiss Franc. As a result, movements in exchange rates cause our revenue and expenses to fluctuate, impacting our profitability and cash flows. Future business operations and opportunities, including the continued expansion of our business outside North America, may further increase the risk that cash flows resulting from these activities may be adversely affected by changes in currency exchange rates.

Like many multi-national companies, we have exposure to the British Pound. We are negatively impacted by a lower British Pound exchange rate from translation impact when compared to the U.S. Dollar, but we also benefit from expenses denominated in British Pound, as well as some cross-border transactions at a lower exchange rate. The magnitude of the impact is dependent on our business volumes in the ~~UK,~~U.K., forward contract hedge positions, cross currency volume and the exchange rate.

Additionally, in order to fund the purchase price for the assets and capital stock of certain non-U.S. entities, a combination of equity contributions and intercompany loans were utilized to capitalize certain non-U.S. subsidiaries. In many instances, the intercompany loans are denominated in currencies other than the functional currency of the affected subsidiaries. Where intercompany loans are not a component of permanently invested capital of the affected subsidiaries, increases or decreases in the value of the

subsidiaries’ functional currency against other currencies will affect our results of operations. During the fiscal ~~first quarters~~quarter ended April 3, 2022 and April 4, 2021 ~~and March 29, 2020,~~ we recorded net foreign currency exchange gains of ~~$0.9~~$1.7 million and ~~losses of $48.3~~$0.9 million, respectively. The foreign currency gains/losses in each period primarily consist of unrealized gains/losses related to intercompany loans denominated in currencies other than the functional currency of the affected subsidiaries. We may enter into derivative instruments to manage our foreign currency exposure on these intercompany loans in the future.

Foreign exchange risk is also managed through the use of foreign currency debt. During the fiscal quarter ended April 3, 2022, €260.0 million ($287.1 million) of our senior secured Euro Term Loan Facility has been designated as, and is effective as, economic hedges of the net investment in a foreign operation. Accordingly, foreign currency transaction gains or losses due to spot rate fluctuations on the Euro-denominated debt instruments are included in foreign currency translation adjustments within AOCI.

We have entered into foreign-currency forward contracts to manage our foreign currency exposures on foreign currency denominated firm commitments and forecasted foreign currency denominated intercompany and third-party transactions. We had forward contracts outstanding with total notional amount of ~~$1,897.5~~$689.6 million as of April ~~4, 2021,~~3, 2022, with maturity dates through ~~February 2025.~~November 2022. Foreign-currency forward contracts that qualified and were designated for hedge accounting are recorded at their fair value as of April ~~4, 2021~~3, 2022 and the unrealized loss of ~~$1.3~~$1.1 million is reported as a component of other comprehensive loss, all of which is expected to be reclassified to earnings in the next 12 months. Actual gains (losses) upon settlement will be recognized in earnings, within the line item impacted, during the estimated time in which the transactions are incurred. Actual losses upon settlement of $1.5 million and gains upon settlement of $3.5 ~~million and $5.4~~ million were recognized in earnings during the fiscal ~~first quarters~~quarter ended April 3, 2022 and April 4, 2021, ~~and March 29, 2020,~~ respectively.

~~Our management,~~As required by Rule 13a-15 under the Exchange Act, as amended, we carried out an evaluation under the supervision and with the participation of our management, including the Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), ~~has evaluated~~of the effectiveness of the design and operation of our disclosure controls and procedures. Regulations under the Exchange Act require public companies, including us, to maintain “disclosure controls and procedures, ~~(as~~” as defined in ~~Rules~~Rule 13a-15(e) and 15d-15(e) under the ~~Securities~~ Exchange Act to mean a company’s controls and other procedures that are designed to ensure that information required to be disclosed in reports that it files or submits under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to management, including our CEO and CFO, or persons performing similar functions, as appropriate to allow timely decisions regarding required or necessary disclosures.

There are inherent limitations to the effectiveness of ~~1934, as amended (“Exchange Act”))~~any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives. Based on such evaluation, our CEO and CFO have concluded that, as of the end of the period covered by this Quarterly Report on Form ~~10-Q. Based on such evaluation, our CEO and CFO have concluded that as of such date,~~10-Q, our disclosure controls and procedures were effective at the reasonable assurance level.

In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

There has been no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter ended April ~~4, 2021~~3, 2022 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

We are from time to time a party to legal proceedings which arise in the normal course of business. We do not believe any pending litigation to be material, the outcome of which would, in management’s judgment based on information currently available, have a material adverse effect on our results of operations or financial condition. See Note ~~14 -~~ 14–Commitments and contingencies to the interim unaudited consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

~~There~~Except as set forth herein, there are no other material changes from the risk factors as previously disclosed in our Annual Report on Form 10-K for our fiscal year ended January ~~3, 2021~~2, 2022 or any of our subsequently filed reports.

The ongoing military action between Russia and Ukraine, and the global response to it, could adversely affect our business, financial condition and results of operations.

On February 24, 2022, Russian military forces commenced military operations in Ukraine, and sustained conflict and disruption in the region is likely. The length, impact and outcome of the ongoing military conflict in Ukraine is highly unpredictable and could lead to significant market and other disruptions, including significant volatility in commodity prices and supply of energy resources, instability in financial markets, supply chain interruptions, political and social instability, changes in consumer or purchaser preferences as well as increase in cyberattacks and espionage.

The military conflict in Ukraine has led to an unprecedented expansion of sanction programs imposed against Russia by the United States, Canada, the European Union, the United Kingdom, Switzerland, and Japan, among others, that in relevant part, impose sanctions against some of the largest state-owned and private Russian financial institutions (and their subsequent removal from the Society for Worldwide Interbank Financial Telecommunication (“SWIFT”) payment system) and certain Russian businesses, some of which have significant financial and trade ties to the European Union. In response to new international sanctions, and as part of measures to stabilize and support the volatile Russian financial and currency markets, the Russian authorities imposed significant currency control measures aimed at restricting the outflow of foreign currency and capital from Russia, imposed various restrictions on transacting with non-Russian parties, banned exports of various products and imposed other economic and financial restrictions. The situation is rapidly evolving, and the United States, the European Union, the United Kingdom and other countries may implement additional sanctions, export controls or other measures against Russia and other countries, regions, officials, individuals or industries in the respective territories. Such sanctions and measures, as well as existing and potential further responses from Russia or other countries, could adversely affect the global economy and financial markets, as well as our business, financial condition and results of operations, which may also magnify the impact of other risks described in our Annual Report on Form 10-K for our fiscal year ended January 2, 2022.

We are actively monitoring the situation in Ukraine and assessing its impact on our business, including our business partners and customers, although our business operations involving Russia and Ukraine do not constitute a material portion of our business. However, the extent and duration of the military action, sanctions and resulting market disruptions could be significant and could potentially have substantial impact on the global economy and our business for an unknown period of time.

SIGNATURES ~~31.1~~	~~Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.~~	~~Filed Herewith~~

~~31.2~~	~~Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.~~	~~Filed Herewith~~

~~32.1~~	~~Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.~~	~~Furnished Herewith~~

~~32.2~~	~~Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.~~	~~Furnished Herewith~~

~~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~~	~~Filed Herewith~~

~~101.CAL~~	~~Inline XBRL Taxonomy Extension Calculation Linkbase Document~~	~~Filed Herewith~~

~~101.DEF~~	~~Inline XBRL Taxonomy Extension Definition Linkbase Document~~	~~Filed Herewith~~

~~101.LAB~~	~~Inline XBRL Taxonomy Extension Label Linkbase Document~~	~~Filed Herewith~~

~~101.PRE~~	~~Inline XBRL Taxonomy Extension Presentation Linkbase Document~~	~~Filed Herewith~~

~~Exhibit 104~~	~~Cover Page Interactive Data File––the cover page interactive data file does not appear in the Interactive Data File because~~ ~~its XBRL tags are embedded within the Inline XBRL document~~

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.


England and Wales	98-1574150
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

~~1001 Route 202~~ ~~Raritan, New Jersey~~	~~08869~~

1001 Route 202 Raritan, New Jersey	08869
(Address of principal executive offices)	(Zip Code)


		Page
PART I.	FINANCIAL INFORMATION	1
Item 1.	Financial Statements (Unaudited)	1
	Consolidated Statements of Operations	1
	Consolidated Statements of Comprehensive Income (Loss)	2
	Consolidated Balance Sheets	3
	Consolidated ~~Statement~~Statements of Changes in ~~Stockholders’~~Shareholders’ Equity ~~(deficit)~~(Deficit)	4
	Consolidated Statements of Cash Flows	5
	Notes to Unaudited Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2421
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3632
Item 4.	Controls and Procedures	3734
PART II.	OTHER INFORMATION	3835
Item 1.	Legal Proceedings	3835
Item 1A.	Risk Factors	3835
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3835
Item 3.	Defaults Upon Senior Securities	3836
Item 4.	Mine Safety Disclosures	3836
Item 5.	Other Information	3836
Item 6.	Exhibits	38
		3837


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


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

	Ordinary shares issued		Ordinary share par value		Preferred redeemable shares issued		Preferred redeemable shares par value		Additional paid-in capital		Accumulated deficit			Accumulated other comprehensive loss			Total
Balance as of January 3, 2021		147,295,511	$	0		0	$	0	$	975.1	$	(1,917.5	)	$	(68.4	)	$	(1,010.8	)
Net loss		—		—		—		—		—		(39.1	)		—			(39.1	)
Issuance of ordinary shares upon completion of initial public offering, net of commissions, underwriting discounts and offering costs		87,400,000		—		—		—		1,414.7		—			—			1,414.7
Issuance of incorporation shares consisting of ordinary share and preferred redeemable shares		1		—		50,000		0.1		—		—			—			0.1
Exercise of stock options		147,540		—		—		—		1.0		—			—			1.0
Recognition of stock-based compensation		—		—		—		—		3.5		—			—			3.5
Foreign currency derivatives, net of tax of $0.0		—		—		—		—		—		—			3.6			3.6
Interest rate derivatives, net of tax of $0.0		—		—		—		—		—		—			12.4			12.4
Foreign currency translation adjustments		—		—		—		—		—		—			(8.8	)		(8.8	)
Balance as of April 4, 2021		234,843,052	$	0		50,000	$	0.1	$	2,394.3	$	(1,956.6	)	$	(61.2	)	$	376.6

	April 4, 2021		March 29, 2020
Reconciliation to amounts within the consolidated balance sheets:
Cash and cash equivalents	$	153.8	$	349.8
Restricted cash included in Other assets		10.7		12.1
Cash, cash equivalents and restricted cash	$	164.5	$	361.9

Remainder of 2021	$	123.7
2022		63.2
2023		62.8
2024		62.5
2025		1,453.9
Thereafter		645.0
	$	2,411.1


	April 3, 2022		January 2, 2022
Accrued compensation and employee-related obligations	$	79.2	$	123.9
Accrued commissions and rebates		34.4		32.6
Accrued taxes other than income		22.9		22.9
Accrued interest		16.5		19.8
Derivatives		12.5		5.4
Current portion of operating lease liabilities		12.5		13.4
Income taxes payable		7.3		7.3
Other accrued liabilities		74.3		74.4
Total accrued liabilities	$	259.5	$	299.6

Description (a)	Notional amount		Hedge designation
Forward Foreign Currency Contracts	$	331.4	Cash Flow Hedge
Forward Foreign Currency Contracts	$	1,566.1	Not designated

Derivatives in cash flow hedging relationships	Amount of Loss (gain) recognized in OCI on derivatives			Location of loss reclassified from accumulated OCI into income	Amount of loss (gain) reclassified from accumulated OCI into income
Fiscal first quarter ended April 4, 2021
Foreign currency forward contracts	$	(3.5	)	Cost of revenue	$	0.1
Interest rate derivatives		(3.3	)	Interest expense		9.1

	Fiscal quarter ended April 4, 2021					Fiscal quarter ended March 29, 2020
		Interest expense		Cost of revenue			Interest expense			Cost of revenue
Total amounts of financial statement line item presented in the statements of operations and comprehensive loss in which the effects of cash flow hedges are recorded		$	43.4	$	248.2		$	52.2		$	213.2
The effects of cash flow hedging
Loss (Gain) on cash flow hedging relationships:
Foreign currency forward contracts
Amount of Loss (Gain) Reclassified from Accumulated OCI Into Income		N/A		$	0.1		N/A			$	(0.5	)
Amount Reclassified from Accumulated OCI into Income due to a Forecast Transaction That is No Longer Probable of Occurring		N/A		$	0		N/A			$	0
Interest Rate Derivatives
Amount of Loss (Gain) Reclassified from Accumulated OCI Into Income		$	9.1	N/A			$	(2.2	)	N/A
Amount Reclassified from Accumulated OCI into Income due to a Forecast Transaction That is No Longer Probable of Occurring (a)		$	3.7	N/A			$	0		N/A

		Fiscal quarter ended
Derivatives not designated as hedging instruments under ASC 815	Location of loss recognized in earnings on derivatives	April 4, 2021			March 29, 2020
Interest rate derivatives	Other (income) expense, net	$	0.2		$	(1.1	)
Foreign currency derivatives	Other (income) expense, net		30.4			0.7
Cross currency swaps	Other (income) expense, net		(24.0	)		(0.8	)


	April 3, 2022		January 2, 2022
Interest rate derivatives:
Other assets	$	6.7	$	0
Other liabilities		0		13.9
Foreign currency forward contracts:
Other current assets		7.6		4.5
Accrued liabilities		8.7		4.3

	Fiscal First Quarter Ended
($ in millions)	April 4, 2021		March 29, 2020
EU medical device regulation transition costs	$	0.9	$	1.1
Principal shareholder management fee		0.8		0.8
Derivative mark-to-market loss		0.6		1.0
Other		4.9		3.4
Total other adjustments	$	7.2	$	6.3


Period	(a) Total Number of Shares Purchased (1)		(b) Average Price Paid Per Share (1)		(c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		(d) Maximum Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs
First Quarter:
1/3/2022 - 1/30/2022		214	$	21.12		—	$	—
1/31/2022 - 2/27/2022		—	$	—		—	$	—
2/28/2022 - 4/3/2022		214	$	18.66		—	$	—
Total as of and for the quarter ended April 3, 2022		428	$	19.89		—	$	—

(1) The 428 shares acquired as of and for the quarter ended April 3, 2022 represent ordinary shares acquired by us from a director who surrendered shares to satisfy his minimum statutory tax withholding requirements on equity awards granted under our 2021 Incentive Award Plan.


Exhibit Number	Description	Form	File No.	Exhibit	Filing Date

10.1	Form of Retention/Loyalty Bonus Opportunity and Agreement	8-K	001-39956	99.1	January 18, 2022

10.2	Omnibus Amendment to Award Agreements, approved by the Compensation Committee on April 1, 2022	8-K	001-39956	99.1	April 7, 2022

10.3	Letter Agreement dated April 7, 2022 between the Company and Michael Schlesinger	8-K	001-39956	99.2	April 7, 2022

10.4	Letter Agreement dated April 3, 2022 between the Company and Christopher Smith	8-K	001-39956	99.3	April 7, 2022

10.5	Amended and restated Special Advisor Agreement dated April 3, 2022 between Christopher Smith and Coronado Topco, Inc.	8-K	001-39956	99.4	April 7, 2022

31.1	Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002				Filed Herewith

31.2	Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002				Filed Herewith

32.1	Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002				Furnished Herewith

32.2	Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002				Furnished Herewith

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				Filed Herewith

101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document				Filed Herewith

101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document				Filed Herewith

101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document				Filed Herewith

101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document				Filed Herewith

104	Cover Page Interactive Data File––the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document


	~~Company Name~~Ortho Clinical Diagnostics Holdings plc

Date: May ~~18, 2021~~9, 2022	By:	/s/ ~~Chris~~Christopher M. Smith
		~~Chris~~Christopher M. Smith
		Chairman and Chief Executive Officer
		(Principal Executive Officer)

Date: May ~~18, 2021~~9, 2022	By:	/s/ Joseph M. Busky
		Joseph M. Busky
		Chief Financial Officer
		(Principal Financial Officer and Principal Accounting Officer)

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company