ANIK

You should read the following discussion in conjunction with our financial statements and related notes appearing elsewhere in this report and our audited consolidated financial statements and related notes contained in our Annual Report on Form 10-K for the year ended December 31, 2025, or our 2025 Form 10-K. In addition to historical information, this report contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, concerning our business, consolidated financial condition, and results of operations. The Securities and Exchange Commission, or the SEC, encourages companies to disclose forward-looking statements so that investors can better understand a company’s future prospects and make informed investment decisions. Forward-looking statements are subject to risks and uncertainties, many of which are outside our control, which could cause actual results to differ materially from these statements. Therefore, you should not rely on any of these forward-looking statements. Forward-looking statements can be identified by words such as "will," "likely," "may," "believe," "expect," "anticipate," "intend," "seek," "designed," "develop," "would," "future," "can," "could," and other expressions that are predictions of or indicate future events and trends and that do not relate to historical matters. All statements other than statements of historical facts included in this report regarding our strategies, prospects, financial condition, operations, costs, plans, and objectives are forward-looking statements. Examples of forward-looking statements include, among others, express or implied statements regarding expected future operating results, expectations regarding the timing and receipt of regulatory results, anticipated levels of capital expenditures, and expectations of the effect on our financial condition of claims, litigation, and governmental and regulatory proceedings. Please also refer to “Item 1A. Risk Factors” of our 2025 Form 10-K for important factors that we believe could cause actual results to differ materially from those in our forward-looking statements. Any forward-looking statement made by us in this report is based only on information currently available to us and speaks only as of the date on which it is made. We undertake no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise. Management Overview We are a global leader in the design, development, manufacturing and commercialization of hyaluronic acid, or HA, innovations. In partnership with our clinicians, our sole focus is dedicated to delivering and advancing osteoarthritis, or OA, pain management and orthopedic regenerative solutions. At our core is a passion to deliver a differentiated portfolio that improves patient outcomes around the world. We have over 30 years of global expertise developing, manufacturing and commercializing products based on our technology platform, HA. HA is a naturally occurring polymer found throughout the body that is vital for proper joint health and tissue function. Our proprietary technologies for modifying the HA molecule allow product properties to be tailored specifically to multiple uses, including enabling longer residence time to support OA pain management and creating a solid form of HA called Hyaff, which is a platform utilized in our Regenerative Solutions portfolio. As we look forward to the future, our business is positioned to capture value within our target markets of OA Pain Management and Regenerative Solutions. We believe our future success will be driven by our: ● Over 30 years of experience in HA and HA-based regenerative solutions and early intervention orthopedics, combined with seasoned leadership with a strong financial foundation for future investment in meaningful solutions for our customers and their patients; 18 ● Utilizing proprietary HA-based technology and manufacturing expertise to provide new and differentiated solutions in next generation OA pain management (e.g., Cingal) and regenerative (e.g., Integrity Implant System and Hyalofast) markets; ● Growth of the Integrity Implant System, our HA-based scaffold for rotator cuff and other tendon repairs, with first commercial cases in 2023; ● Targeting to introduce key HA-based products into the U.S. market upon U.S. Food and Drug Administration, or FDA, approval/clearance, such as Cingal and Hyalofast, and developing additional products that leverage our proprietary Hyaff regenerative platform; ● Robust network of stakeholders in our target markets to identify evolving unmet patient treatment needs; ● Global commercial expertise, which we will leverage to drive growth across our product portfolio, including continued international expansion; ● Opportunity to pursue strategic inorganic growth opportunities, including potential partnerships and smaller acquisitions, technology licensing, and leveraging our strong financial foundation and operational capabilities; and ● Energized and experienced team focused on strong values, talent, and culture. Products OA Pain Management Our OA Pain Management product family consists of Monovisc and Orthovisc, our injectable, HA-based OA pain management offerings that are indicated to provide pain relief from osteoarthritis conditions; and Cingal, our novel, single-injection OA Pain Management product consisting of our proprietary cross-linked HA material combined with a fast-acting steroid. Cingal is our next generation fast-acting, long-lasting, non-opioid, clinically proven OA pain product that is designed to provide both short- and long-term pain relief through at least six months. It is currently sold outside the United States in over 35 countries. In 2022, we completed a third Phase 3 clinical trial for Cingal, which achieved its primary endpoint. We have been actively engaging with FDA, on next steps for U.S. regulatory approval. We have made significant progress in addressing the FDA's requirements for Cingal's approval. In April 2023, we held a Type-C meeting with the FDA, which led to an advice letter received from the FDA in April 2024. The letter included positive feedback and new challenges that we are actively addressing. We also received confirmation that the clinical data for Cingal is a review issue and not a filing issue. Additionally, in September 2024, we acquired the Aristospan New Drug Application, or NDA, which allowed us to address a recent FDA requirement and will enable us to source the reference drug for a bioequivalence study. In April 2025, we subsequently sold the Aristospan NDA to a third-party manufacturer who will supply the reference drug for the bioequivalence study. We had another Type-C meeting with the FDA in February 2025 to discuss finalizing NDA submission requirements, including bioequivalence study requirements. We are continuing to advance NDA preparation activities and are working towards a submission to the FDA. Chemistry, Manufacturing and Controls (“CMC”) activities required for approval of HA as a drug remain a key milestone in the regulatory pathway and are expected to be a primary focus as we advance toward filing. While we remain confident in the clinical profile and commercial opportunity for Cingal, the timing of any potential NDA submission or regulatory approval remains subject to the completion of these development and regulatory requirements. We are committed to bringing this revolutionary pain management therapy to the approximate $1 billion U.S. addressable market. Regenerative Solutions Our Regenerative Solutions product family consists of: (a) our portfolio of orthopedic regenerative solutions products utilizing HA, including Integrity, our hyaluronic acid-based scaffold for rotator cuff repair and other tendon procedures, Tactoset, an HA-enhanced, flowable, injectable and settable bone void filler used to facilitate bone regeneration and augment hardware in poor quality bone, and Hyalofast, a hyaluronic acid scaffold for cartilage repair, sold outside of the United States in over 30 countries. Hyalofast is not currently approved for commercial use in the United States and is not available for commercial sale. Anika submitted a Premarket Approval (“PMA”) application to the FDA on October 31, 2025, following completion of its pivotal Investigational Device Exemption (“IDE”) clinical trial. The Company remains actively engaged with the FDA as it works through the ongoing PMA review process and responses to the deficiency letter that the Company received in January 2026. Results of Operations Three and Six Months Ended June 30, 2026, Compared to Three and Six Months Ended June 30, 2025 Three Months Ended June 30, Six Months Ended June 30, 2026 2025 $ Change % Change 2026 2025 $ Change % Change (in thousands, except percentages) (in thousands, except percentages) Revenue $ 32,610 $ 28,219 $ 4,391 16 % $ 62,222 $ 54,387 $ 7,835 14 % Cost of revenue 11,366 13,856 (2,490 ) (18 %) 21,981 25,343 (3,362 ) (13 %) Gross profit 21,244 14,363 6,881 48 % 40,241 29,044 11,197 39 % Gross margin 65 % 51 % 65 % 53 % Operating expenses: Research & development 7,341 6,313 1,028 16 % 14,054 12,372 1,682 14 % Selling, general & administrative 10,949 12,230 (1,281 ) (10 %) 28,721 25,136 3,585 14 % Total operating expenses 18,290 18,543 (253 ) (1 %) 42,775 37,508 5,267 14 % Income (loss) from operations 2,954 (4,180 ) 7,134 (171 %) (2,534 ) (8,464 ) 5,930 (70 %) Interest and other income, net 426 214 212 99 % 1,093 629 464 74 % Income (loss) before income taxes 3,380 (3,966 ) 7,346 (185 %) (1,441 ) (7,835 ) 6,394 (82 %) Provision for income taxes 71 681 (610 ) (90 %) 306 770 (464 ) (60 %) Income (loss) from continuing operations 3,309 (4,647 ) 7,956 (171 %) (1,747 ) (8,605 ) 6,858 (80 %) Income (loss) from discontinued operations, net of tax - 677 (677 ) (100 %) - (238 ) 238 (100 %) Net income (loss) $ 3,309 $ (3,970 ) $ 7,279 (183 %) $ (1,747 ) $ (8,843 ) $ 7,096 (80 %) 19 Revenue The following table presents revenue by product family for the three and six-month periods ended June 30, 2026, and 2025: Three Months Ended June 30, 2026 2025 $ Change % Change (in thousands, except percentages) Original Equipment Manufacturer (“OEM”) Channel $ 18,705 $ 16,340 $ 2,365 14 % Commercial Channel 13,905 11,879 2,026 17 % $ 32,610 $ 28,219 $ 4,391 16 % Six Months Ended June 30, 2026 2025 $ Change % Change (in thousands, except percentages) Original Equipment Manufacturer (“OEM”) Channel $ 35,740 $ 31,249 $ 4,491 14 % Commercial Channel 26,482 23,138 3,344 14 % $ 62,222 $ 54,387 $ 7,835 14 % Revenue for the three- and six- month periods ended June 30, 2026, was $32.6 million and $62.2 million, respectively. Revenue increased $4.4 million and $7.8 million, or 16% and 14%, for the three- and six- month periods ended June 30, 2026, compared to the same periods in 2025, respectively. The increase in revenue was driven by higher sales activity with our Original Equipment Manufacturer, or OEM Channel partners, primarily J&J MedTech, as well as higher Commercial Channel revenue due to international OA Pain Management revenues and Integrity revenues. Revenue from our OEM Channel product family increased by 14% for each of the three- and six-month periods ended June 30, 2026, respectively, compared to the same periods in 2025. For the three-month period ended June 30, 2026, the $2.4 million increase was primarily due to a $3.2 million increase in J&J MedTech revenue due to $6.1 million increase in sales volume, offset by a $2.9 million decrease due to lower pricing. This was offset by a $0.9 million decline in non-orthopedic revenue, largely attributable to shipment timing of veterinary products. For the six-month period ended June 30, 2026, OEM revenue increased as result of a $4.2 million increase in J&J MedTech revenue, due to $8.9 million increase in sales volume, offset by a $4.7 million decrease due to lower pricing. Non-orthopedic product revenue also increased by $0.3 million, due to timing on surgical product sales. Revenue from our Commercial Channel product family increased 17% and 14% for the three- and six-month periods ended, June 30, 2026, respectively. For the three-month period ended June 30, 2026, regenerative product revenue increased by $0.4 million, primarily due to higher sales of Integrity and Hyalofast. International OA pain management product revenue increased by $1.6 million, due to higher sales of Cingal and Monovisc. For the six-month period ended June 30, 2026, regenerative revenue increased by $1.0 million, primarily due to higher sales in Integrity and Hyalofast sales. International OA pain management product revenue increased $2.3 million, driven by higher sales of Monovisc and Cingal. Gross Profit and Margin Gross profit for the three- and six-months periods ended June 30, 2026, increased $6.9 million and $11.2 million to $21.2 million and $40.2 million, respectively. Gross profit for the three- and six-month periods ended June 30, 2025, was $14.4 million and $29.0 million, respectively. The increase in gross profit for the three- and six-month periods ended June 30, 2026, was primarily related to higher sales volume. Gross margin for each of the three- and six-month periods ended June 30, 2026, was 65%. Gross margin for the three- and six-month period ended June 30, 2025, was 51% and 53%, respectively. The increase in gross margin was due to higher sales volume, increased manufacturing production and improved sales mix due to higher J&J MedTech revenues. 20 Research and Development Research and development expenses for the three- and six-month periods ended June 30, 2026, were as follows: Three Months Ended June 30, 2026 2025 $ Change % Change (in thousands, except percentages) External costs by program Hyalofast clinical study $ 275 $ 967 $ (692 ) (72 %) Integrity development costs 376 241 135 56 % Cingal clinical study 921 746 175 23 % Regulatory external costs 295 293 2 1 % Other early programs and unallocated expenses 1,122 524 598 114 % Total external costs 2,989 2,771 218 8 % Internal costs: Employee compensation and benefits 3,785 3,119 666 21 % Facility and other 567 423 144 34 % Total internal costs 4,352 3,542 810 23 % Total research and development expense $ 7,341 $ 6,313 $ 1,028 16 % Six Months Ended June 30, 2026 2025 $ Change % Change (in thousands, except percentages) External costs by program Hyalofast clinical study $ 614 $ 1,464 $ (850 ) (58 %) Integrity development costs 635 407 228 56 % Cingal clinical study 1,585 1,039 546 53 % Regulatory external costs 599 556 43 8 % Other early programs and unallocated expenses 2,020 1,649 371 22 % Total external costs 5,453 5,115 338 7 % Internal costs: Employee compensation and benefits 7,473 6,324 1,149 18 % Facility and other 1,128 933 195 21 % Total internal costs 8,601 7,257 1,344 19 % Total research and development expense $ 14,054 $ 12,372 $ 1,682 14 % Research and development external costs for the three- and six-month periods ended June 30, 2026, were $3.0 million and $5.5 million, respectively. Research and development external costs for the three- and six-month periods ended June 30, 2025, were $2.8 million and $5.1 million, respectively. The increase in research and development external costs was primarily due to increased spending on Cingal clinical study and Integrity development costs offset somewhat by Hyalofast clinical trial costs. Research and development internal costs for the three- and six-month periods ended June 30, 2026, were $4.4 million and $8.6 million, respectively. Research and development internal costs for the three- and six-month periods ended June 30, 2025, were $3.5 million and $7.3 million, respectively. The increase in internal research and development costs was primarily due to higher headcount to support Cingal clinical activities. 21 Selling, General and Administrative Selling, general and administrative expenses for the three- and six-month periods ended June 30, 2026, were $10.9 million and $28.7 million, respectively. Selling, general and administrative expenses for the three- and six-month periods ended June 30, 2025, were $12.2 million and $25.1 million, respectively. The decrease for the three-month period ended June 30, 2026, was due primarily to reduced headcount with severance actions announced in the first quarter of 2026 and lower legal fees. The increase for the six-month period ended June 30, 2026, was primarily due to $2.4 million in severance costs recorded in 2026 and $2.4 million increase in stock-based compensation, primarily related to a charge during the three-month period ended March 31, 2026, for the transition of the Company’s former Chief Executive Officer. This was offset by lower legal and professional fees. Income (Loss) from Continuing Operations For the three- and six- month periods ended June 30, 2026, the income (loss) from continuing operations was $3.3 million and ($1.7) million, respectively. For the three- and six-month periods ended June 30, 2025, the loss from continuing operations was $4.6 million and $8.6 million, respectively. The increase in the income from continuing operations was primarily due to higher revenue and increased manufacturing production and efficiency. Income Taxes The income tax expense was $0.1 million and $0.3 million for the three- and six-month periods ended June 30, 2026, resulting in effective tax rates of 2.1% and (21.2) %, respectively. The income tax expense was $0.7 million and $0.8 million for the three- and six-month periods ended June 30, 2025, resulting in an effective tax rate of (17.2) % and (9.8) %, respectively. The decrease in income tax expense was due to lower taxable income expected in the U.S. in 2026 due to the ability to deduct more research and development costs. The Company’s effective tax rate for the three-month and six-month periods ended June 30, 2026, was primarily driven by the full valuation on the Company's deferred tax assets in the US and the projected taxable income for the Company resulting in current tax expense in 2026. Non-GAAP Financial Measures We present certain information with respect to adjusted Earnings Before Interest, Tax, Depreciation and Amortization, or EBITDA, adjusted net income, (loss) from continuing operations, and adjusted diluted earnings per share or adjusted EPS, which are financial measures not based on any standardized methodology prescribed by accounting principles generally accepted in the United States, or GAAP, and are not necessarily comparable to similarly titled measures presented by other companies. We have presented adjusted EBITDA, adjusted net income, (loss) from continuing operations, and adjusted EPS, because they are key measures used by our management and board of directors to understand and evaluate our operating performance and to develop operational goals for managing our business. We believe these financial measures help identify underlying trends in our business that could otherwise be masked by the effect of the expenses that we exclude. In particular, we believe that the exclusion of these items in calculating these measures can provide a useful tool for period-to-period comparisons of our core operating performance. Accordingly, we believe that these measures provide useful information to investors and others in understanding and evaluating our operating results, enhancing the overall understanding of our past performance and future prospects and allowing for greater transparency with respect to key financial metrics used by our management in their financial and operational decision-making. Adjusted EBITDA We present information below with respect to adjusted EBITDA, which we define as our net income (loss) from continuing operations excluding interest and other (income) expense, net, income tax benefit (provision), depreciation and amortization, share-based compensation, and severance costs. Adjusted EBITDA is not prepared in accordance with GAAP, and should not be considered in isolation of, or as an alternative to, measures prepared in accordance with GAAP. There are a number of limitations related to the use of adjusted EBITDA rather than net income (loss) from continuing operations, which is the nearest GAAP equivalent. Some of these limitations are: ● adjusted EBITDA excludes depreciation and amortization, and, although these are non-cash expenses, the assets being depreciated or amortized may have to be replaced in the future, the cash requirements for which are not reflected in adjusted EBITDA; ● we exclude share-based compensation expense from adjusted EBITDA although (a) it has been, and will continue to be for the foreseeable future, a significant recurring expense for our business and an important part of our compensation strategy and (b) if we did not pay out a portion of our compensation in the form of share-based compensation, the cash salary expense included in operating expenses would be higher, which would affect our cash position; ● the expenses and other items that we exclude in our calculation of adjusted EBITDA may differ from the expenses and other items, if any, that other companies may exclude from adjusted EBITDA when they report their operating results; 22 The following is a reconciliation of adjusted EBITDA, a non-GAAP metric, to net loss, the most directly comparable GAAP financial measure, for the three and six-month periods ended June 30, 2026, and 2025, respectively: For the Three Months Ended June 30, For the Six Months Ended June 30, 2026 2025 2026 2025 Net loss from continuing operations $ 3,309 $ (4,647 ) $ (1,747 ) $ (8,605 ) Interest and other income, net (426 ) (331 ) (1,093 ) (746 ) Provision for income taxes 71 681 306 770 Depreciation and amortization 1,505 1,444 2,912 2,860 Share-based compensation 1,833 2,548 8,474 5,543 Non-recurring professional fees - - 169 - Severance costs 772 - 2,359 - Adjusted EBITDA $ 7,064 $ (305 ) $ 11,380 $ (178 ) Adjusted EBITDA in the three-month period ended June 30, 2026, increased by $7.4 million as compared with the same period in 2025. The increase in Adjusted EBITDA for the period was primarily due to higher revenue and gross profit as well as lower selling, general and administrative expenses with the cost actions taken in early 2026. Adjusted EBITDA in the six-month period ended June 30, 2026, increased $11.6 million as compared with the same period in 2025. The increase in Adjusted EBITDA for the period was primarily due to higher revenue and gross profit. Adjusted Net Income (Loss)From Continuing Operations and Adjusted EPS We present information below with respect to adjusted net income (loss) from continuing operations and adjusted EPS. We define adjusted net income (loss) as our net income (loss) from continuing operations excluding amortization and depreciation of acquired assets, share-based compensation, and other non-recurring items, such as professional fees and severance costs. We define adjusted EPS as GAAP diluted earnings per share excluding the above adjustments to net income (loss) from continuing operations used in calculating adjusted net income (loss), each on a per share and tax effected basis. 23 The following is a reconciliation of adjusted net income (loss) from continuing operations, a non-GAAP metric, to net income (loss) from continuing operations, the most directly comparable GAAP financial measure, for the three and six-month periods ended June 30, 2026, and 2025, respectively: For the Three Months Ended June 30, For the Six Months Ended June 30, 2026 2025 2026 2025 Net income (loss) from continuing operations $ 3,309 $ (4,647 ) $ (1,747 ) $ (8,605 ) Share based compensation, tax effected 1,794 2,986 10,274 6,088 Severance costs, tax effected 756 - 2,860 - Non-recurring professional fees, tax effected - - 205 - Adjusted net income (loss) from continuing operations $ 5,859 $ (1,661 ) $ 11,592 $ (2,517 ) The following is a reconciliation of adjusted diluted EPS, a non-GAAP metric, to diluted EPS, the most directly comparable GAAP financial measure, for the three and six-month periods ended June 30, 2026, and 2025, respectively: For the Three Months Ended June 30, For the Six Months Ended June 30, 2026 2025 2026 2025 Diluted income (loss) from continuing operations per share (EPS) $ 0.24 $ (0.33 ) $ (0.13 ) $ (0.60 ) Share based compensation, tax effected 0.13 0.20 0.76 0.43 Non-recurring professional fees, tax effected - - 0.02 - Severance costs, tax effected 0.05 - 0.21 - Adjusted diluted income (loss) income from continuing operations per share (EPS) $ 0.42 $ (0.13 ) $ 0.86 $ (0.17 ) Adjusted net income (loss) from continuing operations and adjusted diluted earnings per share in the three-month period ended June 30, 2026, increased $7.5 million and $0.55, respectively, as compared with the same period in 2025. The increase for the period was primarily due to higher revenue and gross profit and lower selling, general and administrative expenses. Adjusted net income (loss) from continuing operations and adjusted diluted earnings per share in the six-month period ended June 30, 2026, increased $14.1 million and $1.03, respectively, as compared with the same period in 2025. The increase for the period was primarily due to higher revenues and gross profit. Liquidity and Capital Resources We require cash to fund our operating activities and to make capital expenditures and other investments in the business. We expect that our requirements for cash to fund these uses will increase as our operations expand. We continue to generate cash from operating activities and believe that our operating cash flows, cash currently on our balance sheet and availability under our credit facility will be sufficient to allow us to continue to invest in our existing business, to manage our capital structure on a short and long-term basis, and to meet our anticipated operating cash needs. Cash and cash equivalents aggregated $38.4 million and $57.5 million, and working capital totaled $77.0 million and $80.2 million, at June 30, 2026, and December 31, 2025, respectively. On July 10, 2026, we entered into a Fifth Amendment to Credit Agreement with Bank of America N.A. as administrative agent, which amended our existing revolving line of credit agreement dated October 24, 2017, which provides up to $50.0 million in the form of a senior revolving line of credit. Subject to certain conditions, we may request up to an additional $50.0 million for a maximum aggregate commitment of $100.0 million. As of June 30, 2026, and December 31, 2025, there were no outstanding borrowings, and we are in compliance with the terms of the credit facility. 24 Summary of Cash Flows (in thousands): Six Months Ended June 30, 2026 2025 Cash (used in) provided by Operating activities $ (5,530 ) $ (319 ) Investing activities (2,519 ) 1,133 Financing activities (11,048 ) (5,259 ) Effect of exchange rate changes on cash 28 453 Net decrease in cash and cash equivalents $ (19,069 ) $ (3,992 ) The following changes contributed to the net change in cash and cash equivalents in the six-month period ended June 30, 2026, as compared to the same period in 2025. Operating Activities Cash used in operating activities was $5.5 million and $0.3 million for the six-month periods ended June 30, 2026, and 2025, respectively. The increase in cash used in operating activities was primarily due higher inventory purchases with increased manufacturing production and the building up safety stock and higher accounts receivable due to higher revenues. This was offset somewhat by higher stock-based compensation expense primarily related to the acceleration of stock-based compensation associated with the departure of our former Chief Executive Officer and an income tax refund received in the U.S. Investing Activities Cash used in investing activities was $2.5 million for the six-month period ended June 30, 2026, as compared to cash provided in investing activities of $1.1 million for the same period in 2025. The change was primarily due to $4.5 million received from the sale of Parcus Medical in March 2025. Capital expenditures were $2.9 million in the six-month period ended June 30, 2026, compared to $4.3 million for the same period in 2025. The decrease in capital expenditures was due to timing of purchases related to our continued manufacturing capacity expansion at our facility in Bedford, Massachusetts. Financing Activities Cash used in financing activities was $11.0 million and $5.3 million for the six-month periods ended June 30, 2026, and 2025, respectively. The increase in cash used in financing activities was primarily attributable to higher share repurchases and employee tax withholding in exchange for shares surrendered by employees in the six-month period ended June 30, 2026. Critical Accounting Policies and Estimates The preparation of our condensed consolidated financial statements in conformity with GAAP requires management to use judgment in making estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. We believe that our accounting policies for revenue recognition, accounts receivable and allowance for credit losses, goodwill, acquired in-process research and development, inventory and contingencies are based on, among other things, judgments and assumptions made by management that include inherent risks and uncertainties. There have been no significant changes to the above critical accounting policies or in the underlying accounting assumptions and estimates used in such policies from those disclosed in our annual consolidated financial statements and accompanying notes included in our 2025 Form 10-K. We monitor our estimates on an ongoing basis for changes in facts and circumstances, and material changes in these estimates could occur in the future. Changes in estimates are recorded in the period in which they become known. We base our estimates on historical experience and other assumptions that we believe to be reasonable under the circumstances. Actual results may differ from our estimates if past experience or other assumptions do not turn out to be substantially accurate. Recent Accounting Pronouncements A discussion of Recent Accounting Pronouncements is included in our 2025 Form 10-K and is updated in the Notes to the condensed consolidated financial statements included in this report. 25