You should read the following discussion and analysis of our financial condition and results of operations together with (i) our unaudited condensed consolidated financial statements and related notes that are included elsewhere in this Quarterly Report on Form 10-Q and (ii) our 2025 Annual Report filed with the U.S. Securities and Exchange Commission, or the SEC, on February 25, 2026. This discussion contains forward-looking statements based upon current plans, expectations and beliefs that involve risks and uncertainties. The words “anticipates,” “believes,” “could,” “estimates,” “expects,” “intends,” “may,” “might,” “plans,” “potential,” “predicts,” “projects,” “seeks,” “should,” “target,” “will,” “would” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including, but not limited to, those discussed in the section entitled “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q, and you should not place undue reliance on our forward-looking statements. We do not assume any obligation to update any forward-looking statements. In preparing this Management's Discussion and Analysis ("MD&A"), we presume that readers have access to and have read the MD&A in our 2025 Annual Report on Form 10-K, pursuant to Instruction 2 to paragraph (b) of Item 303 of Regulation S-K. Our MD&A is organized into the following sections: •Overview and Outlook •Results of Operations •Liquidity and Capital Resources •Critical Accounting Policies and Estimates •Recent Accounting Pronouncements •Off Balance Sheet Arrangements OVERVIEW AND OUTLOOK About PacBio We are a premier life science technology company that designs, develops, and manufactures advanced sequencing solutions that enable scientists and clinical researchers to improve their understanding of the genome and ultimately, resolve genetically complex problems. Our products and technology, which primarily consist of our HiFi long-read sequencing systems, address a broad set of applications including human germline sequencing, plant and animal sciences, infectious disease and microbiology, oncology, and other emerging applications. Our focus is on creating some of the world's most advanced sequencing systems to provide our customers with the most complete and accurate view of genomes, transcriptomes, and epigenomes. Our customers include academic and governmental research institutions, commercial testing and service laboratories, genome centers, public health labs, hospitals and clinical research institutes, contract research organizations ("CROs"), pharmaceutical companies, and agricultural companies. Q2 Fiscal 2026 Form 10-Q 27 Table of Contents Strategic Objectives Our 2026 main objectives are to grow revenue and expand gross margins through the following five activities. These initiatives are designed to improve the economics of HiFi sequencing, expand adoption across clinical and research markets, and drive durable growth across our platform portfolio. •Accelerate samples onto the Revio platform through SPRQ-Nx chemistry and application kits. SPRQ-Nx is designed to lower the cost of sequencing and improve sequencing efficiency, which we believe will support higher throughput, increased sample volumes, and broader adoption of HiFi sequencing in large-scale research studies and clinical applications. •Expand the capabilities of the Vega benchtop platform to broaden our market reach. We plan to enable faster run times and enhanced user experience through software improvements, which are intended to support broader adoption and improve the overall economics of HiFi sequencing. •Progress our clinical strategy to improve outcomes and create durability. Revio is increasingly being adopted in laboratory-developed test ("LDT") and clinical research settings, supporting consolidation of multiple tests, addressing complex genetic challenges, and driving sustained utilization of HiFi sequencing. This includes in the Americas, where we continue to aggressively shift our strategy to clinical and commercial accounts where we believe the funding dynamics are more favorable and HiFi sequencing can provide meaningful improvements in diagnostic yield, particularly in rare disease cohorts, resolution of previously unsolved Mendelian disease cases, characterization of repeat expansion disorders, and structural variant detection, among others, relative to currently known short-read sequencing technologies. •Advance data-driven interpretation through scalable HiFi datasets and analytics. We are focused on leveraging the accuracy of HiFi sequencing and growing datasets to support advanced data analysis and AI-assisted interpretation approaches. Collaborative initiatives such as the HiFi Solves Global Consortium are designed to aggregate large, well-characterized HiFi datasets, which we believe can support improved understanding of complex genetic variation and disease biology while maintaining expert oversight. •Invest in future product launches to drive platform innovation. We continue to develop sequencing solutions designed to increase throughput, simplify workflows, lower the cost to sequence a genome, and enhance downstream data analysis and interpretation capabilities, which we believe will allow us to address a larger portion of the market. Q2 Fiscal 2026 Form 10-Q 28 Table of Contents We continue to believe that with the capabilities of our technology, we can be a market leader in whole-genome clinical sequencing. Leading institutions have adopted our products to study rare and inherited disease. We believe the market opportunity for clinical sequencing is significant and could drive substantial revenue growth for the Company. We plan to continue to pursue partner collaborations where the technologies being developed or applications being considered extend beyond whole-genome clinical sequencing. Collaborative arrangements add to the awareness of our products and service offerings and may drive new applications for use of our technology. Recent Developments Restructuring On July 30, 2026, our Board of Directors approved a restructuring plan to continue to better align our organizational structure and resources with our strategic initiatives. The restructuring includes operating expense reductions and a reduction in force (the “Reduction in Force”). These restructuring actions are expected to result in a workforce reduction of approximately 40 employees, or approximately 8% of our workforce, as we align our organizational structure with our strategic priorities. Including the Reduction in Force and related non-headcount cost actions, we expect to reduce our annualized operating expenses by $30 million to $40 million by the end of 2027. We estimate that we will incur aggregate pre-tax charges of approximately $2.0 million in connection with the Reduction in Force, primarily consisting of severance payments, employee benefits, outplacement services and related costs. We expect that the Reduction in Force will be completed and that these charges will be incurred in the third quarter of 2026. Appointments and Resignations Our Board of Directors appointed Mark Van Oene as President and Chief Executive Officer and as a member of our Board of Directors, effective August 5, 2026. Mr. Van Oene succeeds Christian Henry, who stepped down as our President and Chief Executive Officer effective August 5, 2026. Mr. Henry will continue to serve as a member of our Board of Directors. Financial Overview Key highlights of the six months ended June 30, 2026 consolidated financial results include the following: Revenue of Gross profit of Operating loss of Cash, cash equivalents, and investments of $76.2 M $25.5 M $53.0 M $236.9 M compared to $76.9 M during the same period of 2025 compared to $13.3 M during the same period of 2025 compared to $473.8 M during the same period of 2025 compared to $279.5 M at December 31, 2025 •Revenue was comprised of $22.6 million in instrument revenue, $41.9 million in consumables revenue and $11.7 million in service and other revenue during the six months ended June 30, 2026. Revenue was comprised of $25.2 million in instrument revenue, $39.0 million in consumables revenue and $12.7 million in service and other revenue during the six months ended June 30, 2025. Lower Vega unit sales and a decrease in service and other revenue were partially offset by an increase in consumables revenue and higher Revio unit sales. •We recorded a gross profit of $25.5 million during the six months ended June 30, 2026 compared to $13.3 million during the same period of 2025. We recorded approximately $12.4 million of restructuring charges during the six months ended June 30, 2025. See Note 5. Restructuring in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional information. Gross margins may be affected by product mix, manufacturing efficiencies, changes in warranty costs, average selling price fluctuations, product promotions, future product launches, changes to inventory reserves, costs of raw materials, increased computing component costs, specifically memory, and tariffs. Q2 Fiscal 2026 Form 10-Q 29 Table of Contents •Loss from operations decreased $420.8 million during the six months ended June 30, 2026, compared with the same period of 2025, primarily due to a $408.7 million decrease in operating expenses. Operating expenses of $78.4 million for the six months ended June 30, 2026 included litigation settlement expenses of $15.4 million. Operating expenses were partially offset by a $45.8 million gain on disposal of assets to Illumina Cambridge Limited due to the Asset Sale. See Note 2. Financial Instruments in Part I, Item 1 of this Quarterly Report on Form 10-Q for more information. Operating expenses of $487.1 million during the six months ended June 30, 2025 included $382.4 million of costs incurred in connection with the restructuring and strategic shift, which primarily included $359.3 million of accelerated amortization of acquired intangibles, $15.0 million of impairment charges, and $4.8 million of employee separation costs, partially offset by an $18.7 million decrease in the change in the fair value of the contingent consideration. •Cash, cash equivalents, and investments were $236.9 million at June 30, 2026, which represents a 15% decrease compared to the balance at December 31, 2025. During the six months ended June 30, 2026 we received net cash proceeds of approximately $48.1 million in conjunction with the gain on disposal of assets discussed above. We also paid $8.0 million related to the settlement agreement with Personal Genomics of Taiwan, Inc. (“PGI”). See Note 3. Balance Sheet Components in Part I, Item 1 of this Quarterly Report on Form 10-Q for further details regarding the settlement with PGI. We believe that demand for our instruments (particularly Vega) remains constrained due to, among other reasons, the funding environment in the United States, contributing to elongated sales cycles, or in certain cases, customers not placing instrument orders. Additionally, sales cycles have been and continue to be impacted by, among other reasons, continued capital funding constraints in academic and research markets, procurement timing considerations, and longer adoption cycles among new customers, which have affected the timing of certain instrument orders. However, we believe that revenues will be greater in the second half of 2026, which we expect will be driven by continued clinical adoption, SPRQ-Nx consumable growth, and revenue associated with the Basecamp Research program. Macroeconomic dynamics that have impacted and could continue to impact the Company include rising inflation, higher computing component costs, specifically memory, which has resulted in material cost pressures and supply constraints, geopolitical tensions, including recent conflicts in the Middle East (including Iran), volatile capital markets, tariffs, uncertainty in the United States related to NIH and academic funding, and fluctuating exchange rates. These factors could continue to impact our revenues and results of operations in future periods; however, the magnitude and duration of these impacts is highly uncertain and inherently unpredictable. On an ongoing basis, we evaluate our significant estimates, including those related to the valuation of goodwill, indefinite-lived and finite-lived assets. However, these estimates could change in future periods based on events or changes in circumstances, which could result in material future impairment charges. We recorded $15.0 million of impairment charges during the six months ended June 30, 2025. See additional discussion below in Results of Operations, as well as Note 3. Balance Sheet Components in Part I, Item 1 of this Quarterly Report on Form 10-Q for further information. Additionally, refer to the Critical Accounting Policies and Estimates section of our 2025 Annual Report for further discussion on the Company's asset impairment assessments. See the Risk Factors section for further discussion. Q2 Fiscal 2026 Form 10-Q 30 Table of Contents RESULTS OF OPERATIONS Comparison of the Three Months Ended June 30, 2026 and 2025 Three Months Ended June 30, (In thousands, except percentages) 2026 2025 $ Change % Change Revenue: Product revenue $ 32,950 $ 33,083 $ (133) — % Service and other revenue 6,057 6,683 (626) (9 %) Total revenue 39,007 39,766 (759) (2 %) Cost of Revenue: Cost of product revenue 20,944 20,022 922 5 % Cost of service and other revenue 5,242 4,853 389 8 % Amortization of acquired intangible assets 183 183 — — % Loss on purchase commitment — 24 (24) (100 %) Total cost of revenue 26,369 25,082 1,287 5 % Gross profit 12,638 14,684 (2,046) (14 %) Operating Expense: Research and development 23,022 22,529 493 2 % Sales, general and administrative 33,393 36,175 (2,782) (8 %) Amortization of acquired intangible assets 833 833 — — % Total operating expense 57,248 59,537 (2,289) (4 %) Operating loss (44,610) (44,853) 243 (1 %) Interest expense (2,110) (1,738) (372) 21 % Other income, net 2,037 4,696 (2,659) (57 %) Loss before income taxes (44,683) (41,895) (2,788) 7 % Income tax provision 58 35 23 66 % Net loss $ (44,741) $ (41,930) $ (2,811) 7 % Q2 Fiscal 2026 Form 10-Q 31 Table of Contents Revenue Total Revenue Total revenue decreased $0.8 million, or 2%, for the second quarter of 2026 compared with the same quarter of 2025. Product revenue decreased $0.1 million primarily due to a decrease of $1.3 million, or 9%, in instrument revenue partially offset by an increase of $1.2 million, or 6%, in consumable revenue. Service and other revenue decreased $0.6 million, or 9%. Consumables Revenue The increase in consumables revenue for the second quarter of 2026 was primarily driven by higher Revio consumables sales, reflecting the continued expansion of the Revio instrument installed base. We also launched SPRQ-Nx during the second quarter of 2026. Shipments of Vega consumables also contributed to the increase in consumables revenue during the period, and we anticipate increased contributions as customers continue ramping usage of the Vega platform and the installed base expands. Looking ahead, we expect continued growth in consumables revenue as Revio and Vega installed bases continue to grow, along with increased demand in connection with the recent launch of SPRQ-Nx. This anticipated growth reflects increasing instrument placements, improving consumable utilization, broadening addressable applications for our platforms, and further expanding adoption across our research, clinical and commercial customers. Instrument Revenue Instrument revenue decreased for the second quarter of 2026 reflecting lower Revio average selling prices associated with strategic multi-system customer placements. Instrument revenue was also impacted by variability in customer purchasing behavior resulting from uncertainty surrounding the funding for new capital equipment, particularly among academic and research institutions. Sales of Vega systems decreased for the second quarter of 2026. We sold 26 units compared to 38 units in the same quarter of 2025. Sales of Revio systems increased with 20 units sold compared to 15 units in the same quarter of 2025. We expect that instrument revenue may fluctuate quarter-to-quarter based on timing of customer purchasing decisions, sales mix, promotional activities, and funding dynamics. Q2 Fiscal 2026 Form 10-Q 32 Table of Contents Cost of Revenue and Gross Profit Total cost of revenue increased $1.3 million, or 5%, in the second quarter of 2026 compared to the same quarter of 2025. Total cost of revenue included share-based compensation expense of $0.7 million and $0.9 million during the second quarter of 2026 and 2025, respectively. Cost of product revenue increased $0.9 million, or 5%, in the second quarter of 2026 compared to the same quarter of 2025 primarily due to exit costs associated with a contract manufacturer, increased memory costs, product transition costs related to the disposition of assets in the first quarter of 2026, and amortization of the patent license obtained through the legal settlement with PGI. These increases were partially offset by lower Instrument volumes and a shifting Consumables product mix. Gross profit decreased $2.0 million, or 14%, during the second quarter of 2026 compared to the same period of 2025. The decrease was driven primarily by slightly lower revenue and the increase in cost of revenue described above. While higher consumables mix and the introduction of SPRQ-Nx remain important drivers of margin expansion, rising computing component costs will temper the pace of margin improvement in the near term. Gross margins may be affected by product mix, manufacturing efficiencies, changes in warranty costs, average selling price fluctuations, including promotional pricing, future product launches, changes to inventory reserves, costs of raw materials and increased computing component costs, specifically memory, which may result in material cost pressures and supply constraints in future periods, and tariffs. Research and Development Expense Research and development expense increased by $0.5 million, or 2%, for the second quarter of 2026, compared to the same quarter of 2025. The increase was primarily driven by higher product development costs associated with ongoing investments in future sequencing platform development, partially offset by lower personnel and related expenses, including share-based compensation expense. Research and development expense included share-based compensation expense of $2.4 million and $3.3 million during the second quarter of 2026 and 2025, respectively. We anticipate research and development expense to decrease during the remainder of 2026 in connection with our recently announced expense reduction initiatives, primarily due to headcount reductions. Sales, General, and Administrative Expense Sales, general and administrative expense decreased by $2.8 million, or 8%, for the second quarter of 2026, compared to the same quarter of 2025. The decrease was primarily driven by lower personnel and related expenses, including share-based compensation. We also recorded $0.6 million of restructuring-related charges in the second quarter of 2025. Sales, general, and administrative expense included share-based compensation expense of $6.2 million and $7.7 million during the second quarter of 2026 and 2025, respectively. We anticipate sales, general, and administrative expense to decrease during the remainder of 2026 in connection with our recently announced expense reduction initiatives, primarily due to headcount reductions. Amortization of Acquired Intangible Assets Amortization of acquired intangible assets included in operating expenses for the second quarter of 2026 and 2025 consists of amortization expense attributable to acquired intangible assets that are not directly related to sales generating activities. Interest Expense Interest expense for the second quarter of 2026 and 2025 was primarily comprised of interest on the convertible senior notes. Interest expense for the second quarter of 2026 also included interest related to the liability recorded for the license and settlement agreement with PGI. Other Income, Net Other income, net for the second quarter of 2026 decreased compared to the same quarter of 2025 primarily driven by lower investment income due to lower cash and investment balances. Q2 Fiscal 2026 Form 10-Q 33 Table of Contents Comparison of the Six Months Ended June 30, 2026 and 2025 Six Months Ended June 30, (In thousands, except percentages) 2026 2025 $ Change % Change Revenue: Product revenue $ 64,484 $ 64,196 $ 288 — % Service and other revenue 11,701 12,723 (1,022) (8 %) Total revenue 76,185 76,919 (734) (1 %) Cost of Revenue: Cost of product revenue 40,916 46,355 (5,439) (12 %) Cost of service and other revenue 9,424 8,631 793 9 % Amortization of acquired intangible assets 366 4,528 (4,162) (92 %) Loss on purchase commitment — 4,092 (4,092) (100 %) Total cost of revenue 50,706 63,606 (12,900) (20 %) Gross profit 25,479 13,313 12,166 91 % Operating Expense: Research and development 42,630 51,582 (8,952) (17 %) Sales, general and administrative 64,546 76,343 (11,797) (15 %) Impairment charges — 15,000 (15,000) (100 %) Settlement charges 15,400 — 15,400 — Gain on disposal of assets (45,796) — (45,796) — Amortization of acquired intangible assets 1,666 362,875 (361,209) (100 %) Change in fair value of contingent consideration — (18,700) 18,700 (100 %) Total operating expense 78,446 487,100 (408,654) (84 %) Operating loss (52,967) (473,787) 420,820 (89 %) Interest expense (3,850) (3,475) (375) 11 % Other income, net 4,043 8,990 (4,947) (55 %) Loss before income taxes (52,774) (468,272) 415,498 (89 %) Income tax provision (benefit) 242 (267) 509 (191 %) Net loss $ (53,016) $ (468,005) $ 414,989 (89 %) Q2 Fiscal 2026 Form 10-Q 34 Table of Contents Revenue Total Revenue Total revenue decreased $0.7 million, or 1%, during the six months ended June 30, 2026 compared with the same period of 2025. Product revenue increased $0.3 million primarily due to an increase of $2.9 million, or 7%, in consumable revenue partially offset by a decrease of $2.6 million, or 10%, in instrument revenue. Service and other revenue decreased $1.0 million, or 8%. Consumables Revenue The increase in consumables revenue during the six months ended June 30, 2026 was primarily driven by higher Revio consumables sales, reflecting the continued expansion of the Revio instrument installed base. We also launched SPRQ-Nx during the second quarter of 2026. Shipments of Vega consumables also contributed to the increase in consumables revenue during the period, and we anticipate increased contributions as customers continue ramping usage of the Vega platform and the installed base expands. Looking ahead, we expect continued growth in consumables revenue as Revio and Vega installed bases continue to grow, along with increased demand in connection with the recent launch of SPRQ-Nx. This anticipated growth reflects increasing instrument placements, improving consumable utilization, broadening addressable applications for our platforms, and further expanding adoption across our research, clinical and commercial customers. Instrument Revenue Instrument revenue decreased during the six months ended June 30, 2026 reflecting lower Revio average selling prices associated with strategic multi-system customer placements. Instrument revenue was also impacted by variability in customer purchasing behavior resulting from uncertainty surrounding the funding for new capital equipment, particularly among academic and research institutions. Sales of Vega systems decreased during the six months ended June 30, 2026. We sold 53 units compared to 66 units in the same period of 2025. Sales of Revio systems increased with 35 units sold compared to 27 units in the same period of 2025. We expect that instrument revenue may fluctuate quarter-to-quarter based on timing of customer purchasing decisions, sales mix, promotional activities, and funding dynamics. Q2 Fiscal 2026 Form 10-Q 35 Table of Contents Cost of Revenue and Gross Profit Total cost of revenue decreased $12.9 million, or 20%, during the six months ended June 30, 2026, compared to the same period of 2025 primarily due to decreases in cost of product revenue, amortization of acquired intangible assets, and share-based compensation expense. We recorded $12.4 million of restructuring-related costs during the six months ended June 30, 2025, which included $3.8 million relating to loss on purchase commitments which was based on an estimate of future excess inventory related to supply agreements for which we did not expect to have related sales. See Note 5. Restructuring in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional information about restructuring activities. Total cost of revenue included share-based compensation expense of $1.3 million and $2.1 million during the six months ended June 30, 2026 and 2025, respectively. Cost of product revenue decreased $5.4 million, or 12%, during the six months ended June 30, 2026, compared to the same period of 2025 primarily due to the restructuring-related costs that were recorded in the prior period, lower Instrument volumes, and a shifting Consumables product mix partially offset by exit costs associated with a contract manufacturer, increased memory costs, product transition costs related to the disposition of assets in the first quarter of 2026, and amortization of the patent license obtained through the legal settlement with PGI. Gross profit increased $12.2 million, or 91%, during the six months ended June 30, 2026, compared to the same period of 2025 in line with the decrease in total cost of revenue described above and relatively flat revenue. While higher consumables mix and the introduction of SPRQ-Nx remain important drivers of margin expansion, rising computing component costs will temper the pace of margin improvement in the near term. Gross margins may be affected by product mix, manufacturing efficiencies, changes in warranty costs, average selling price fluctuations, including promotional pricing, future product launches, changes to inventory reserves, costs of raw materials and increased computing component costs, specifically memory, which may result in material cost pressures and supply constraints in future periods, and tariffs. Research and Development Expense Research and development expense decreased by $9.0 million, or 17%, during the six months ended June 30, 2026, compared to the same period of 2025. The decrease was primarily driven by lower personnel and related expenses, including share-based compensation expense, partially offset by an increase in product development costs associated with ongoing investments in future sequencing platform development. We also recorded $2.7 million of restructuring-related charges during the six months ended June 30, 2025. Research and development expense included share-based compensation expense of $1.6 million and $5.9 million during the six months ended June 30, 2026 and 2025, respectively. We anticipate research and development expense to decrease during the remainder of 2026 in connection with our recently announced expense reduction initiatives, primarily due to headcount reductions. Sales, General, and Administrative Expense Sales, general and administrative expense decreased by $11.8 million, or 15%, during the six months ended June 30, 2026, compared to the same period of 2025. The decrease was primarily due to a decrease in personnel and related expenses, including share-based compensation expense, and lower marketing expense, partially offset by legal expenses related to the settlement with PGI. We also recorded $5.4 million of restructuring-related charges during the six months ended June 30, 2025. Sales, general, and administrative expense included share-based compensation expense of $10.7 million and $13.1 million during the six months ended June 30, 2026 and 2025, respectively. We anticipate sales, general, and administrative expense to decrease during the remainder of 2026 in connection with our recently announced expense reduction initiatives, primarily due to headcount reductions. Impairment Charges We recorded impairment charges of $15.0 million during the six months ended June 30, 2025, related to in-process research and development (“IPR&D”). These charges resulted from an interim impairment assessment performed in response to identified indicators of impairment during the period. The impairment test concluded that the carrying amount of our IPR&D assets exceeded their estimated fair value. See Note 3. Balance Sheet Components in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional information. Q2 Fiscal 2026 Form 10-Q 36 Table of Contents Settlement Charges In the first quarter of 2026, the Company entered into a license and settlement agreement with PGI in connection with the PGI Settlement. Under the fixed payment structure pursuant to the agreement, the Company paid PGI $8.0 million in the second quarter of 2026, and will pay $5.0 million in the first quarter of each of 2027, 2028 and 2029, with the payment in 2027 increasing by $1.0 million if the Company’s 2026 revenue is at least $165.0 million and another $1.0 million if it is at least $180.0 million. See Note 3. Balance Sheet Components in Part I, Item 1 of this Quarterly Report on Form 10-Q for further details. Gain on Disposal of Assets On January 30, 2026, we completed a disposition of certain assets to Illumina Cambridge Limited (the “Buyer”) pursuant to an Asset Purchase Agreement dated January 30, 2026. Under the agreement, Buyer acquired certain intellectual property and other assets related to our short-read DNA sequencing technology and related clustering, sequencing reagent, and detection technologies. In consideration, Buyer paid $50.0 million in cash, assumed certain liabilities, and granted us a non-exclusive license to certain intellectual property included in the purchased assets. During the first quarter of 2026, in connection with the Asset Sale, Buyer paid, at our direction, 4% of the net cash proceeds to the former equity holders of Apton Biosystems, Inc. ("Apton") in connection with the waiver of remaining milestone obligations from our August 2023 acquisition of Apton. As a result, we received approximately $48.1 million in net cash proceeds from the Asset Sale. In connection with the transaction, the Company incurred transaction costs of $2.3 million in the first quarter of 2026 that are offset against the gain on disposal of assets on our condensed consolidated statements of operations and comprehensive loss. See Note 2. Financial Instruments in Part I, Item 1 of this Quarterly Report on Form 10-Q for further details. Amortization of Acquired Intangible Assets Amortization of acquired intangible assets included in operating expenses for the six months ended June 30, 2026 and 2025 consists of amortization expense attributable to acquired intangible assets that are not directly related to sales generating activities. Amortization of acquired intangible assets included in operating expenses during the six months ended June 30, 2025 included $359.3 million of accelerated amortization related to developed technology from the 2021 Omniome, Inc. acquisition, reflecting our revised estimate that the asset will no longer generate economic benefit beyond March 31, 2025. Change in Fair Value of Contingent Consideration During the first quarter of 2025 we recognized a change in fair value of contingent consideration of $18.7 million, resulting in a contingent consideration liability of $0. This was primarily due to management's decision to cease development of the high-throughput short-read system, the associated changes in expected future revenues, and the requirement that the milestone event occur prior to the five-year anniversary of the acquisition closing date. Interest Expense Interest expense during the six months ended June 30, 2026 and 2025 was primarily comprised of interest on the convertible senior notes. Interest expense for the six months ended June 30, 2026 also included interest related to the liability recorded for the license and settlement agreement with PGI. Other Income, Net Other income, net during the six months ended June 30, 2026 decreased compared to the same period of 2025 primarily driven by lower investment income due to lower cash and investment balances. Q2 Fiscal 2026 Form 10-Q 37 Table of Contents LIQUIDITY AND CAPITAL RESOURCES As of June 30, 2026, we had cash, cash equivalents and investments of $236.9 million compared to $279.5 million as of December 31, 2025. We believe that our existing cash, cash equivalents and investments will be sufficient to fund our projected operating requirements beyond the next 12 months from the date of filing of this Quarterly Report on Form 10-Q for the quarter ended June 30, 2026. Our primary sources of liquidity, other than our holdings of cash, cash equivalents, and investments, have primarily been through the issuance of debt or equity securities, together with cash flow from operating activities. We have historically incurred, and expect to continue to incur, operating losses and generate negative cash flows from operations on an annual basis, and as a result, we may require additional capital resources to execute our strategic initiatives to grow our business. During the third quarter of 2026, we announced a restructuring plan to continue to better align our organizational structure and resources with our strategic initiatives. These restructuring actions are expected to result in a workforce reduction of approximately 40 employees, or approximately 8% of our workforce, as we align our organizational structure with our strategic priorities. Including the Reduction in Force and related non-headcount cost actions, we expect to reduce our annualized operating expenses by $30 million to $40 million by the end of 2027. We estimate that we will incur aggregate pre-tax charges of approximately $2.0 million in connection with the Reduction in Force, primarily consisting of severance payments, employee benefits, outplacement services and related costs. We expect that the Reduction in Force will be completed and that these charges will be incurred in the third quarter of 2026. We also approved and implemented certain efficiency and expense reduction initiatives during 2025 and 2024. These expense reduction initiatives included workforce reductions, facilities downsizing and a refined pipeline of development programs. PGI License and Settlement In the first quarter of 2026, the Company entered into a license and settlement agreement with PGI in connection with the PGI Settlement. Under the fixed payment structure pursuant to the agreement, the Company paid PGI $8.0 million in the second quarter of 2026, and will pay $5.0 million in the first quarter of each of 2027, 2028 and 2029, with the payment in 2027 increasing by $1.0 million if the Company’s 2026 revenue is at least $165.0 million and another $1.0 million if it is at least $180.0 million. See Note 3. Balance Sheet Components in Part I, Item 1 of this Quarterly Report on Form 10-Q for further details. Convertible Senior Notes As of June 30, 2026, we had outstanding approximately $200.0 million aggregate principal amount of our 2029 Notes and $441.0 million aggregate principal amount of our 2030 Notes. The 2029 Notes will mature on August 15, 2029, subject to earlier conversion, redemption or repurchase, including upon a fundamental change. The 2030 Notes will mature on December 15, 2030, subject to earlier conversion, redemption or repurchase, including upon a fundamental change. See Note 4. Convertible Senior Notes in Part I, Item 1 of this Quarterly Report on Form 10-Q for further details. Our future capital requirements and the adequacy of our available funds will depend on many factors, including: •our ability to successfully commercialize products and solutions that address customer needs; •the pace of adoption of our products and our ability to obtain new customers in markets; •the progress of our research and development programs and our ability to initiate or expand research programs; •the effectiveness of our expense reduction initiatives; •the purchase of patent licenses; •the costs involved in preparing, filing, prosecuting, defending and enforcing intellectual property rights; Q2 Fiscal 2026 Form 10-Q 38 Table of Contents •our ability to manage manufacturing and production costs, especially costs related to the compute requirements of our instrument platforms, including purchase obligations; and •the extent to which we engage in collaborations with partners and acquire other businesses or technologies. If economic, financial, business, or other factors adversely affect our ability to fund our projected operating cash requirements, we may be required to obtain funding through traditional or alternative sources of financing. Raising additional funds may result in dilution to existing shareholders. We cannot be certain that funds will be available on favorable terms, or at all. If we are required and unable to raise additional capital when desired, our business, operating results, and financial condition may be adversely affected. See our risk factor captioned “We are not cash flow positive and may not have sufficient cash to make required payments under the terms of our debt or fund our long-term planned operations” in Part II, Item 1A of this Quarterly Report on Form 10-Q for more information. Cash Flow Summary Six Months Ended June 30, (In thousands) 2026 2025 Net cash used in operating activities $ (80,274) $ (73,433) Net cash provided by investing activities 75,930 70,517 Net cash provided by financing activities 1,692 1,959 Net decrease in cash, cash equivalents, and restricted cash $ (2,652) $ (957) Operating Activities Our primary uses of cash in operating activities include the development of future products and product enhancements, manufacturing, and support functions related to our sales, general and administrative activities. Cash used in operating activities during the six months ended June 30, 2026 of $80.3 million was due primarily to a $53.0 million net loss that included non-cash items such as share-based compensation of $13.7 million, depreciation expense of $4.5 million, and amortization of acquired intangible assets of $2.0 million, which were offset by a $48.1 million gain on disposal of assets and $2.8 million in net changes to operating assets and liabilities. Cash flow impact from changes in net operating assets and liabilities was primarily driven by an increase in inventory and a decrease in accrued expenses. These uses of cash were partially offset by increases in other liabilities and operating lease liabilities as well as a decrease in accounts receivable. Cash used in operating activities during the six months ended June 30, 2025 of $73.4 million was due primarily to a $468.0 million net loss that included non-cash items such as amortization of acquired intangible assets of $367.4 million, an impairment charge of $15.0 million, share-based compensation of $21.1 million, $8.5 million of inventory adjustments, depreciation expense of $7.8 million, and $6.3 million in net changes to operating assets and liabilities, partially offset by an $18.7 million decrease in the change in the fair value of the contingent consideration. Cash flow impact from changes in net operating assets and liabilities was primarily driven by increases in accounts receivable and inventory, as well as decreases in accrued expenses and operating lease liabilities. These uses of cash were partially offset by a decrease in prepaid expenses and other assets. Investing Activities Our investing activities consist primarily of capital expenditures and investment purchases and maturities. Cash provided by investing activities during the six months ended June 30, 2026 was primarily from $97.0 million of maturities of investments and $50.0 million of gross proceeds from a disposal of assets partially offset by $57.5 million of purchases of investments, $5.0 million of purchases of intangible assets, and $4.6 million of purchases of property and equipment. Cash provided by investing activities during the six months ended June 30, 2025, was primarily from $195.4 million of maturities of investments partially offset by $118.0 million of purchases of investments and $5.0 million in purchases of intangible assets. Q2 Fiscal 2026 Form 10-Q 39 Table of Contents Financing Activities Cash provided by financing activities during the six months ended June 30, 2026 resulted from $1.7 million of proceeds from the issuance of common stock through our equity compensation plans. Cash provided by financing activities during the six months ended June 30, 2025 resulted from $2.0 million from the issuance of common stock through our equity compensation plans. Contractual Obligations We presented our contractual obligations at December 31, 2025 in our 2025 Annual Report. There were no material changes outside the ordinary course of business to our contractual obligations during the six months ended June 30, 2026. CRITICAL ACCOUNTING POLICIES AND ESTIMATES The discussion and analysis of our financial condition and results of operations are based upon our unaudited condensed consolidated financial statements, which have been prepared in accordance with the rules and regulations of the SEC. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. We evaluate our critical accounting policies and estimates on an ongoing basis. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. There have been no changes to our significant accounting policies and estimates as disclosed in our 2025 Annual Report. RECENT ACCOUNTING PRONOUNCEMENTS Please see Note 1. Organization and Significant Accounting Policies, subsection titled “Recent Accounting Pronouncements”, in Part I, Item 1 of this Quarterly Report on Form 10-Q for information regarding applicable recent accounting pronouncements. OFF-BALANCE SHEET ARRANGEMENTS As of June 30, 2026, we did not have any off-balance sheet arrangements. In the ordinary course of business, we enter into standard indemnification arrangements. Pursuant to these arrangements, we indemnify, hold harmless, and agree to reimburse the indemnified parties for losses suffered or incurred by the indemnified party in connection with any trade secret, copyright, patent or other intellectual property infringement claim by any third party with respect to its technology, or from claims relating to our performance or non-performance under a contract, any defective products supplied by us, or any acts or omissions, or willful misconduct, committed by us or any of our employees, agents or representatives. The term of these indemnification agreements is generally perpetual after the execution of the agreement. The maximum potential amount of future payments we could be required to make under these agreements is not determinable because it involves claims that may be made against us in future periods but have not yet been made. To date, we have not incurred costs to defend lawsuits or settle claims related to these indemnification agreements. We also enter and have entered into indemnification agreements with our directors and officers that may require us to indemnify them against liabilities that arise by reason of their status or service as directors or officers, except as prohibited by applicable law. In addition, we may have obligations to hold harmless and indemnify third parties involved with our fundraising efforts and their respective affiliates, directors, officers, employees, agents or other representatives against any and all losses, claims, damages and liabilities related to claims arising against such parties pursuant to the terms of agreements entered into between us and such third parties in connection with such fundraising efforts. To the extent that such indemnification obligations apply to the lawsuits described in Note 6. Commitments and Contingencies in Part I, Item 1 of this Quarterly Report on Form 10-Q, any associated expenses incurred are included within the related accrued litigation expense Q2 Fiscal 2026 Form 10-Q 40 Table of Contents amounts. No additional liability associated with such indemnification agreements has been recorded as of June 30, 2026. Q2 Fiscal 2026 Form 10-Q 41 Table of Contents