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TAXES | 9 Months Ended
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Sep. 30, 2025
Income Tax Disclosure [Abstract] |
TAXES | TAXES For interim financial statement purposes, U.S. GAAP provision (benefit) for taxes related to ordinary income is determined by applying an estimated annual effective income tax rate against a company’s ordinary income, subject to certain limitations on the benefit of losses. Provision (benefit) for taxes related to items not characterized as ordinary income is recognized as a discrete item when incurred. The estimation of the Company’s income tax provision requires the use of management forecasts and other estimates, application of statutory income tax rates, and an evaluation of valuation allowances. The Company’s estimated annual effective income tax rate may be revised, if necessary, in each interim period. The worldwide effective income tax rate for the nine months ended September 30, 2025 and September 30, 2024 was 26.03% and 5.45%, respectively. The increase for the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024 primarily relates to the Company’s 2024 valuation allowance impacts against pre-tax losses prior to the Spin-off. The effective tax rate was higher than the 21% U.S. federal statutory rate for the nine months ended September 30, 2025, primarily due to state taxes, offset by discrete tax benefits from stock-based compensation. The Company accounts for uncertain tax positions using a more-likely-than-not threshold for recognizing and resolving uncertain tax positions. This evaluation is based on factors including, but not limited to, changes in facts or circumstances, changes in tax law, effectively settled issues under audit, and new audit activity. Interest and penalties related to unrecognized tax benefits are included within income tax expense. For the three months ended September 30, 2025, the Company recorded income tax expense related to its Federal and California research and development credits of $0.5 million and $0.3 million, respectively. The Company files income tax returns in the U.S. federal jurisdiction and various states. As of the date of this filing, the Company is not currently under examination by income tax authorities in federal, state, or other jurisdictions. All tax returns will remain open for examination by the federal and state authorities for three and four years, respectively, from the date of utilization of any net operating loss or credits. As discussed in Note 1 — Organization And Description Of Business, prior to the Spin-Off, for tax purposes, the Company operated as a subsidiary of Illumina and not as a separately regarded taxable entity. Accordingly, the effective worldwide income tax rate for the period prior to the Spin-Off was calculated using the separate return method as if the Company filed income tax returns on both a standalone basis and on a carve-out basis.

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