
(In thousands)	September 30, 2025		December 31, 2024
Purchased materials	$	41,788	$	45,270
Work in process	25,189		22,172
Finished goods	16,435		14,081
Inventory, gross	83,412		81,523
Inventory reserve	(30,259)		(22,768)
Inventory, net	$	53,153	$	58,755

Goodwill is reviewed for impairment at least annually during the second quarter, or more frequently if an event occurs indicating the potential for impairment. Based on quantitative interim impairment tests performed in 2024, we recorded impairment charges of $93.2 million in the second quarter of 2024 and $51.3 million in the fourth quarter of 2024.

We conducted a quantitative interim impairment test as of March 31, 2025, based on a decline in stock price and market capitalization during the first quarter of 2025, macroeconomic uncertainties, and revised strategic plans emphasizing HiFi sequencing and discontinuing short-read platform development, and concluded there was no impairment.

Changes in our future operating results, cash flows, share price, market capitalization or discount rates used when conducting future goodwill impairment tests could affect the implied fair value of goodwill and may result in additional impairment charges in the future.

Intangible assets include developed technology, customer relationships, and acquired in-process research and development ("IPR&D"). In connection with the Apton acquisition in August 2023, we allocated $55.0 million of the purchase price to IPR&D. This asset is considered indefinite-lived until the associated research and development activities are either completed or abandoned, and it is tested for impairment annually and more

Based on our decision to cease development of the high-throughput short-read sequencing platform, which would utilize the IPR&D, and the resulting changes to the expected future cash flows, among other factors, we concluded that it was more likely than not that the fair value of the IPR&D was less than its carrying amount, requiring an interim impairment assessment. Using a discounted cash flow model under the income approach, we determined the fair value was below carrying value and recorded a $15.0 million impairment charge. The decline in the fair value of the IPR&D below its carrying amount as of March 31, 2025 resulted primarily from changes in the timing of expected future cash flows as compared to the fair value as of December 31, 2024, driven by the restructuring initiatives that prioritize the adoption of HiFi sequencing. The impairment charge is included in our consolidated statements of operations and comprehensive loss for the nine months ended September 30, 2025.

Significant estimates and assumptions used in the income approach include timing of future cash flows, revenue growth assumptions, a selected discount rate of 14.0%, and a selected obsolescence factor of 11 years. The discount rate was based primarily on the weighted average cost of capital, determined using market, peer company, industry data, and related risk factors. The assessment is a level 3 measurement due to its reliance on certain unobservable inputs and significant management judgment. The assumptions used were inherently subject to uncertainty and small changes in these assumptions could have had a significant impact on the concluded value. A decrease of 200 basis points to the discount rate used in our analysis would have resulted in an increase in the estimated fair value of the IPR&D of approximately $3 million, and an increase of one year to the obsolescence factor used in our analysis would have resulted in an increase in the estimated fair value of the IPR&D of approximately $3 million.


		As of September 30, 2025						As of December 31, 2024
(In thousands, except years)	Estimated Useful Life (in years)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Developed technology	3 — 15	$	421,179	$	(405,036)	$	16,143	$	411,179	$	(36,607)	$	374,572
Customer relationships	2	360		(360)		—		360		(360)		—
Total		$	421,539	$	(405,396)	$	16,143	$	411,539	$	(36,967)	$	374,572

Amortization of acquired intangible assets is included within our cost of revenue if the costs and expenses related to the intangible assets are attributable to revenue generating activities. Amortization expense for intangible assets that are not directly related to sales generating activities are amortized to operating expenses. For developed technology intangible assets that are utilized in both revenue generating activities and in research and development activities, we allocate the amortization expense between cost of revenue and operating expenses. The finite-lived intangible assets are amortized using the straight-line method over their estimated useful lives.

During the three months ended March 31, 2025, we revised the estimated useful life of the developed technology acquired in the 2021 Omniome, Inc. ("Omniome") acquisition. This change reflects updated strategic plans and restructuring initiatives focused on accelerating HiFi sequencing adoption, leading to ceased development of our high-throughput short-read platform and revised expectations for the timing and amount of future cash flows from short-read sequencing products and services. As a result of the change in estimate, during the three months ended March 31, 2025, we recognized accelerated amortization of $359.3 million within amortization of acquired intangible assets in operating expenses, reflecting our revised estimate that the asset will no longer generate economic benefit beyond March 31, 2025. This expense had a negative impact on basic and diluted net loss per share of $1.20 for the nine months ended September 30, 2025.

We review finite-lived intangible assets for impairment when indication of potential impairment exists, such as a significant reduction in cash flows associated with the assets. In the first quarter of 2025, as part of our interim goodwill impairment test, we also performed a recoverability test for the definite-lived asset group and noted no impairment.

On March 7, 2025, the Company entered into an agreement to acquire certain developed technology and related intellectual property from The Chinese University of Hong Kong for total consideration of $9.7 million. In addition, the Company entered into a license agreement for complementary developed technology during the three months ended March 31, 2025. Both the acquired technology and license are classified as intangible assets and are being amortized over an estimated useful life of three years. As of September 30, 2025, $5.0 million of these intangible assets remained unpaid. This amount is included in accrued liabilities on the condensed consolidated balance sheets and is expected to be paid in 2026.

As of September 30, 2025, we had a total of $20.4 million of deferred revenue, $16.0 million of which was recorded as deferred revenue, current, and $4.4 million of which was recorded as deferred revenue, non-current, which primarily relates to deferred service contract revenues and is scheduled to be recognized in the next four years. Revenue recorded in the three and nine months ended September 30, 2025 includes $2.4 million and $10.5 million, respectively, that was included in deferred revenue as of December 31, 2024.

We regularly enter into contracts with multiple performance obligations. These contracts are believed to be firm as of the balance sheet date. However, we may allow customers to make product substitutions or certain modifications at our discretion. The timing of shipments depends on several factors, including agreed upon shipping schedules, which may span multiple quarters. Most performance obligations are generally satisfied within a year of the contract execution date. As of September 30, 2025, the aggregate amount of the transaction price allocated to remaining performance obligations was $48.7 million, of which approximately 72% is expected to be converted to revenue over the next twelve months, approximately 23% in the following twelve months, and the remainder thereafter.

We generally provide a one-year warranty on instruments. In addition, we provide a limited warranty on consumables. At the time revenue is recognized, an accrual is established for estimated warranty costs based on historical experience as well as anticipated product performance. We periodically review the warranty reserve for adequacy and adjust the warranty accrual, if necessary, based on actual experience and estimated costs to be incurred. Warranties are recorded as part of accrued expenses on the condensed consolidated balance sheets and warranty expense is recorded as a component of cost of product revenue in the condensed consolidated statements of operations and comprehensive loss. There were no material changes in estimates for the periods presented below.


	Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands)	2025		2024		2025		2024
Balance at beginning of period	$	2,688	$	3,462	$	3,100	$	4,681
Additions charged to cost of product revenue	1,252		1,414		3,809		4,787
Repairs and replacements	(1,384)		(1,610)		(4,353)		(6,202)
Balance at end of period	$	2,556	$	3,266	$	2,556	$	3,266