Unless the context otherwise requires, all references in this section to the “Company,” “Virgin Galactic,” “we,” “us,” or “our” refer to Virgin Galactic Holdings, Inc. and its subsidiaries. You should read the following discussion and analysis of our financial condition and results of operations together with the condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q, as well as the audited financial statements and the related notes thereto, and the discussion under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business” included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 (the “Annual Report on Form 10-K”). This discussion contains forward-looking statements that reflect our plans, estimates, and beliefs that involve risks and uncertainties. As a result of many factors, such as those set forth under the “Risk Factors” sections of our Annual Report on Form 10-K and Quarterly Report on Form 10-Q for the quarter ended March 31, 2026 and under the “Cautionary Note Regarding Forward-Looking Statements” section and elsewhere in this Quarterly Report on Form 10-Q, our actual results may differ materially from those anticipated in these forward-looking statements. Overview We are an aerospace and space travel company offering access to space for private individuals, researchers and government agencies. Our missions include flying passengers to space, as well as flying scientific payloads and researchers to space in order to conduct experiments for scientific and educational purposes. Our operations include the design and development, manufacturing, ground and flight testing, spaceflight operation and post-flight maintenance of our spaceflight system. Our spaceflight system was developed using our proprietary technology and processes and is focused on providing space travel experiences for private astronauts, researcher flights and professional astronaut training. To expand capacity, we are currently developing our next-generation spaceflight vehicles. These spaceflight vehicles, which include our next-generation spaceships and launch vehicles, are expected to dramatically increase our annual flight rate. In addition, we are exploring the opportunity to use a derivative model of our launch vehicle as a High-Altitude, Long-Endurance (“HALE”) aircraft, which we believe could be utilized for several types of government and research purposes. Recent Developments We are continuing the production of our next-generation spaceships and are progressing through our build milestones. We currently expect our flight test program to commence in October 2026 in advance of restarting commercial service, which is expected to begin in February 2027. During May and June 2026, we completed the redemption of an aggregate of $40.5 million in principal amount of our 9.80% First Lien Notes due 2028 (the “2028 Notes”), and accrued interest thereon, by issuing 10.5 million shares of our common stock. See Note 8 to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional information. In June 2026, we completed an exchange of $52.5 million in principal amount of our 2.50% convertible senior notes due 2027 (the “2027 Notes”), and accrued interest thereon, by issuing 7.0 million shares of our common stock and pre-funded warrants to purchase 10.3 million shares of our common stock. See Note 8 to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional information. On April 23, 2026, the parties executed a stipulation of settlement to resolve the derivative matters captioned In re Virgin Galactic Holdings, Inc. Derivative Litigation (“Consolidated Derivative Action”) and St. Jean v. Branson et al. (“St. Jean Action”) that are pending against the Company. The settlement, if approved, will resolve all claims pending in the Consolidated Derivative Action and the St. Jean Action, and will also release all claims that were or could have been asserted on behalf of the Company, derivatively, by plaintiffs or any of the Company’s stockholders that are related to or based upon any of the allegations in the Consolidated Derivative Action and the St. Jean Action. If the settlement is approved by the court, it will result in the adoption of certain corporate reforms and a monetary payment of $2.75 million by the Company’s insurers to the Company, half of which the Company will retain. On May 19, 2026, the Court entered an order granting preliminary approval of the settlement. On June 30, 2026, plaintiffs filed a motion seeking final approval of the parties’ settlement. The proposed settlement remains subject to final approval by the Court. See Note 14 to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional information. 25 Table of Contents Factors Affecting Our Performance We believe that our performance and future success depend on a number of factors that present significant opportunities for us but also pose risks and challenges, including those discussed below and in Part I, Item 1A. of our Annual Report on Form 10-K titled “Risk Factors.” Customer Demand As of June 30, 2026, we have reservations for spaceflights for approximately 675 future astronauts, which represent approximately $203 million in expected future spaceflight revenue upon completion of the spaceflights. In April 2026, we opened bookings for a limited tranche of 50 spaceflight expeditions at a higher price of $750,000 per individual astronaut. As of August 12, 2026, this tranche of spaceflight reservations was oversubscribed, and we have now closed active bookings. As a result, we have added over $50 million to our expected future spaceflight revenue for these spaceflights, which brings our total to over $240 million in expected future spaceflight revenue as of August 12, 2026, which will be recognized upon completion of the related booked spaceflights. Available Capacity and Annual Flight Rate In 2023, we commenced our commercial operations with VSS Unity and VMS Eve, which together comprised our initial commercial spaceflight system. Our annual flight rate was constrained by the availability and capacity of this commercial spaceflight system. To expand capacity, we developed and are assembling our next-generation spaceships. These spaceships are expected to dramatically increase our annual flight rate. With our first two next-generation spaceships, we expect to ramp to a targeted rate of 125 commercial space missions per year. Safety Performance of Our Spaceflight Systems Our spaceflight systems are highly specialized with sophisticated and complex technology. We have built operational processes to ensure that the design, manufacture, performance and service of our spaceflight systems meet rigorous quality standards. However, our spaceflight systems are still subject to operational and process risks, such as manufacturing and design issues, human errors, or cyber-attacks. Any actual or perceived safety issues may result in significant reputational harm to our business and our ability to generate spaceflight revenue. 26 Table of Contents Results of Operations The following tables set forth our results of operations for the periods presented. The period-to-period comparisons of financial results are not necessarily indicative of future results. Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 (In thousands) Revenue $ 134 $ 406 $ 361 $ 867 Operating expenses: Spaceline operations 28,182 14,206 57,822 35,032 Research and development 4,339 20,121 11,051 53,431 Selling, general and administrative 28,556 31,850 54,107 62,400 Depreciation and amortization 3,983 4,171 7,899 8,394 Total operating expenses 65,060 70,348 130,879 159,257 Operating loss (64,926) (69,942) (130,518) (158,390) Interest income 2,396 5,832 5,097 13,047 Interest expense (1,994) (3,247) (3,822) (6,487) Gain on extinguishment of debt 8,639 — 8,639 — Other income, net 26 40 60 74 Loss before income taxes (55,859) (67,317) (120,544) (151,756) Income tax expense (benefit) 30 (37) 60 11 Net loss $ (55,889) $ (67,280) $ (120,604) $ (151,767) For the Three and Six Months Ended June 30, 2026 Compared to the Three and Six Months Ended June 30, 2025 Revenue Revenue for the three and six months ended June 30, 2026 and 2025 was primarily attributable to access fees related to our astronaut community. Spaceline Operations Three Months Ended June 30, $ Change % Change Six Months Ended June 30, $ Change % Change 2026 2025 2026 2025 (In thousands, except %) Spaceline operations $ 28,182 $ 14,206 $ 13,976 98 % $ 57,822 $ 35,032 $ 22,790 65 % Spaceline operations expense includes costs to maintain and operate our spaceflight system; non-capitalizable costs to build our new vehicles and manufacture items required to support the making of our vehicles, such as rocket motors and spare parts; the consumption of rocket motors, fuel and other consumables; costs to maintain and support our astronaut community; and costs to provide payload cargo and engineering services. Spaceline operations expense increased from $14.2 million for the three months ended June 30, 2025 to $28.2 million for the three months ended June 30, 2026. The increase is attributable to the completion of the development phase of our next-generation spaceflight vehicles and moving primarily into manufacturing and testing operations, which resulted in a $10.1 million increase in cash compensation and other employee benefit costs and a $3.4 million increase in materials, sub-contractor and contract labor costs. 27 Table of Contents Spaceline operations expense increased from $35.0 million for the six months ended June 30, 2025 to $57.8 million for the six months ended June 30, 2026. The increase is attributable to the completion of the development phase of our next-generation spaceflight vehicles and moving primarily into manufacturing and testing operations, which resulted in a $16.9 million increase in cash compensation and other employee benefit costs and a $5.0 million increase in materials, sub-contractor and contract labor costs. Research and Development Three Months Ended June 30, $ Change % Change Six Months Ended June 30, $ Change % Change 2026 2025 2026 2025 (In thousands, except %) Research and development $ 4,339 $ 20,121 $ (15,782) (78) % $ 11,051 $ 53,431 $ (42,380) (79) % Research and development expenses represent costs incurred to support activities that advance our future fleet towards commercialization, including basic research, applied research, concept formulation studies, design, development, and related testing activities. Research and development costs consist primarily of equipment, material, and labor costs (including from third-party contractors) for designing the spaceflight system’s structure, spaceflight propulsion system, and flight profiles for our next-generation spaceships and launch vehicles, as well as allocated facilities and other supporting overhead costs. Research and development expenses decreased from $20.1 million for the three months ended June 30, 2025 to $4.3 million for the three months ended June 30, 2026. The decrease is attributable to the completion of the development phase of our next-generation spaceflight vehicles, which resulted in a $8.1 million decrease in cash compensation and other employee benefit costs and a $7.0 million decrease in materials, sub-contractor and contract labor costs. Research and development expenses decreased from $53.4 million for the six months ended June 30, 2025 to $11.1 million for the six months ended June 30, 2026. The decrease is attributable to the completion of the development phase of our next-generation spaceflight vehicles, which resulted in a $30.3 million decrease in materials, sub-contractor and contract labor costs and a $10.9 million decrease in cash compensation and other employee benefit costs. Selling, General and Administrative Three Months Ended June 30, $ Change % Change Six Months Ended June 30, $ Change % Change 2026 2025 2026 2025 (In thousands, except %) Selling, general and administrative $ 28,556 $ 31,850 $ (3,294) (10) % $ 54,107 $ 62,400 $ (8,293) (13) % Selling, general and administrative expenses consist primarily of compensation and other employee benefit costs for employees involved in general corporate functions, including executive management and administration, accounting, finance, legal, information technology, sales and marketing, and human resources. Non-compensation components of selling, general and administrative expenses include accounting, legal and other professional fees, facilities expenses, and other corporate expenses. Selling, general and administrative expenses decreased from $31.9 million for the three months ended June 30, 2025 to $28.6 million for the three months ended June 30, 2026. The decrease was primarily driven by a $2.9 million expense recorded in 2025 associated with the settlement of the Lavin Action. Selling, general and administrative expenses decreased from $62.4 million for the six months ended June 30, 2025 to $54.1 million for the six months ended June 30, 2026. The decrease was primarily driven by a $3.5 million decrease in cash compensation and other employee benefit costs, a $2.9 million expense recorded in 2025 associated with the settlement of the Lavin Action, and a $1.6 million decrease in professional fees and other corporate costs. 28 Table of Contents Depreciation and Amortization Depreciation and amortization expense decreased from $4.2 million for the three months ended June 30, 2025 to $4.0 million for the three months ended June 30, 2026. Depreciation and amortization expense decreased from $8.4 million for the six months ended June 30, 2025 to $7.9 million for the six months ended June 30, 2026. The decreases were primarily due to older assets becoming fully depreciated. Interest Income Interest income decreased from $5.8 million for the three months ended June 30, 2025 to $2.4 million for the three months ended June 30, 2026. Interest income decreased from $13.0 million for the six months ended June 30, 2025 to $5.1 million for the six months ended June 30, 2026. These decreases were primarily driven by decreased average balances of marketable securities and deposits in interest-bearing accounts. Interest Expense Interest expense was $2.0 million and $3.2 million for the three months ended June 30, 2026 and 2025, respectively. Interest expense was $3.8 million and $6.5 million for the six months ended June 30, 2026 and 2025, respectively. Interest expense primarily consists of interest expense and amortization of debt issuance costs related to our 2027 Notes and 2028 Notes. Gain on Extinguishment of Debt Gain on extinguishment of debt of $8.6 million for the three and six months ended June 30, 2026 relates to the partial redemption of our 2028 Notes and partial exchange of our 2027 Notes. See Note 8 to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional information. Income Tax Expense Income tax expense was immaterial for the three and six months ended June 30, 2026 and 2025. We have accumulated net operating losses at the U.S. federal and state levels. We maintain a full valuation allowance against our net U.S. federal and state deferred tax assets. The income tax expense is primarily related to corporate income taxes for our operations in the United Kingdom, which operates on a cost-plus arrangement. Liquidity and Capital Resources As of June 30, 2026, we had cash, cash equivalents and restricted cash of $218.4 million and marketable securities of $67.7 million. Our principal sources of liquidity have come from sales of our common stock and offering of our 2027 Notes. Historical Cash Flows Six Months Ended June 30, 2026 2025 (In thousands) Net cash provided by (used in): Operating activities $ (103,673) $ (131,364) Investing activities 14,984 30,634 Financing activities 131,386 83,572 Net increase (decrease) in cash, cash equivalents and restricted cash $ 42,697 $ (17,158) 29 Table of Contents Operating Activities Net cash used in operating activities was $103.7 million for the six months ended June 30, 2026, and consisted primarily of $120.6 million of net losses, adjusted for non-cash items, which primarily included stock-based compensation expense of $10.9 million and depreciation and amortization expense of $7.9 million, partially offset by an $8.6 million gain on extinguishment of debt and $6.6 million of net changes in operating assets and liabilities. Net cash used in operating activities was $131.4 million for the six months ended June 30, 2025, and consisted primarily of $151.8 million of net losses, adjusted for non-cash items, which primarily included stock-based compensation expense of $9.6 million and depreciation and amortization expense of $8.4 million, partially offset by $4.0 million of accretion of marketable securities purchased at a discount and $5.3 million of net changes in operating assets and liabilities. Investing Activities Net cash provided by investing activities was $15.0 million for the six months ended June 30, 2026, and consisted primarily of $163.5 million in proceeds from maturities and calls of marketable securities, partially offset by $80.4 million in capital expenditures and $68.1 million in purchases of marketable securities. Net cash provided by investing activities was $30.6 million for the six months ended June 30, 2025, and consisted primarily of $356.0 million in proceeds from maturities and calls of marketable securities, partially offset by $220.9 million in purchases of marketable securities and $104.4 million in capital expenditures. Financing Activities Net cash provided by financing activities was $131.4 million for the six months ended June 30, 2026, and consisted primarily of $141.3 million in net cash proceeds from the sale and issuance of common stock pursuant to our at-the-market offering program, partially offset by $8.2 million of payments of long-term debt. Net cash provided by financing activities was $83.6 million for the six months ended June 30, 2025, and consisted primarily of net cash proceeds from the sale and issuance of common stock pursuant to our at-the-market offering program. Issuances of Common Stock In November 2024, we entered into an open market sale agreement with Jefferies LLC (“Jefferies”) providing for the offer and sale of up to $300 million of shares of our common stock from time to time through Jefferies, acting as sales agent, or directly to Jefferies, acting as principal, through an “at-the-market offering” program (the “2024 ATM Program”). During the six months ended June 30, 2026, we sold 45.0 million shares of common stock under the 2024 ATM Program and generated $145.0 million in gross proceeds, before deducting $3.7 million in commissions and other expenses. As of June 30, 2026, we had sold a total of 82.6 million shares of common stock under the 2024 ATM Program, generating $295.8 million in gross proceeds since its inception, before deducting $8.1 million in commissions and other expenses. 2025 Capital Realignment Transactions In December 2025, we completed privately negotiated repurchase agreements (the “2027 Notes Repurchase Agreements”) with a limited number of holders of our 2027 Notes, pursuant to which we repurchased $354.6 million in aggregate principal amount of our 2027 Notes (the “Repurchases”) with cash proceeds received from the Registered Offering (as defined below) and the Private Placement (as defined below). Concurrently with the Repurchases, we completed the issuance and sale for cash in a registered direct offering, pursuant to separate, privately negotiated subscription agreements with certain investors, of (i) 2.2 million shares of our common stock, and (ii) pre-funded warrants (the “Pre-Funded Warrants”) to purchase 8.4 million shares of our common stock (collectively, the “Registered Offering”). In connection with the Registered Offering, we received cash proceeds of $45.6 million. As of March 31, 2026, all Pre-Funded Warrants had been exercised and 8.4 million shares of common stock had been issued in connection with the exercise of the Pre-Funded Warrants. Concurrently with the Registered Offering, we issued and sold for cash, in a private placement, (i) $212.5 million aggregate principal amount of our 2028 Notes and (ii) warrants to purchase 31.7 million shares of our common stock (the “Purchase Warrants”), with an exercise price equal to $6.696 per share. The Purchase Warrants are exercisable at any time on or after June 30 Table of Contents 18, 2026 until December 18, 2030. The Purchase Warrants are exercisable only for cash and are subject to appropriate adjustment in the event of cash or share dividends, share splits, share repurchases, reorganizations or similar events affecting our common stock. 2026 Debt Redemptions and Exchange Transactions During the three months ended June 30, 2026, we took proactive steps to improve our liquidity and enhance our financial flexibility. We undertook the transactions described below as part of our broader capital management and cash management strategies. Management believes market conditions provided an opportunity to execute these transactions to reduce our indebtedness, as well as reduce our ongoing cash interest obligations. During May and June 2026, we completed the redemption of an aggregate of $40.5 million in principal amount of our 2028 Notes, and accrued interest thereon, which reduced the outstanding balance of our 2028 Notes to $172.0 million. By completing these redemptions in advance of the mandatory redemption dates by issuing 10.5 million shares of our common stock to holders of the 2028 Notes, we now have no mandatory principal payments due on these notes until March 2028. In June 2026, we completed an exchange of $52.5 million in principal amount of our 2027 Notes, and accrued interest thereon, and reduced the outstanding balance of our 2027 Notes by 75%, from $70.4 million to $17.9 million. The remaining outstanding balance of our 2027 Notes is due upon their maturity in February 2027. The exchange was comprised of (i) 7.0 million shares of our common stock, and (ii) pre-funded warrants to purchase 10.3 million shares of our common stock. The pre-funded warrants are exercisable at any time on or after June 29, 2026 at an exercise price of $0.0001 per share. Liquidity Outlook For at least the next twelve months, we expect our principal demand for funds will be for our ongoing operating activities described below and the repayment of $17.9 million of principal payments due upon the maturity of our 2027 Notes. Beyond the next twelve months, our principal demand for funds will be to sustain our operations, operate our spaceline at Spaceport America in New Mexico, expand our fleet of spaceships, launch vehicles and supporting facilities, and repay outstanding debt. We are currently in the pre-commercial service phase and accordingly have no spaceflight revenue. We expect to generate revenue from our spaceflight program once commercial service begins. We currently expect the flight test program of our next-generation spaceships to commence in October 2026, followed by our first commercial spaceflight which is expected to occur in February 2027. Before recognizing revenue for commercial spaceflights, we expect to receive cash payments in connection with spaceflights after we deliver the conditions of carriage to customers and receive customer executed informed consents. We have recently used significant cash for operating activities and capital expenditures primarily related to the development of our next-generation spaceships and expect to continue to incur significant operating expenses and capital expenditures to complete the production of these spaceships and place them into commercial operation. We expect our future expenditures to continue to decrease in connection with our ongoing activities in the near term, particularly since we have completed investments in tooling to produce our spaceships. Our plans to fund our operations for the next twelve months include implementing some or all of the following initiatives: •Commencing commercial service in February 2027. •Generating significant cash from the current backlog of future astronauts as their final payments become due in advance of their spaceflight. •Offering the sale of a limited number of early spaceflights at a premium to historical prices. •Increasing cash on hand through additional debt or equity financing, including use of our existing “at-the-market” equity offering program. •Partnering with third parties to fund and accelerate the pace of future space vehicle development. •Settling debt through the issuance of equity and/or extending maturities of certain debt payments that are due within the period. 31 Table of Contents The plans discussed above are subject to market conditions and, while we intend to apply our best efforts to the execution of these plans, they are not fully within our control. As a result, it is uncertain whether we will have sufficient cash and marketable securities to maintain our planned operations for the next twelve months following the issuance date of the condensed consolidated financial statements and we have concluded that there are conditions present in the aggregate that raise substantial doubt about our ability to continue as a going concern. There are significant risks and uncertainties associated with our planned operations and there is no assurance that our future plans will be successful or, if successful, will be sufficient to fully fund our planned operations. For more information regarding our risks and uncertainties, see Part I, Item 1A. of our Annual Report on Form 10-K titled “Risk Factors.” Contractual Obligations and Commitments Except as set forth in the notes to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q, there have been no material changes outside the ordinary course of business to our contractual obligations and commitments as described in Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K. Critical Accounting Policies and Estimates Our discussion and analysis of our financial condition and results of operations are based upon our condensed consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of our condensed consolidated financial statements and related disclosures requires us to make estimates, assumptions and judgments that affect the reported amounts of assets, liabilities, revenues, costs and expenses and related disclosures. We believe that the estimates, assumptions and judgments involved in the accounting policies referred to below have the greatest potential impact on our condensed consolidated financial statements and, therefore, we consider these to be our critical accounting policies. Accordingly, we evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates under different assumptions and conditions. During the fiscal quarter ended June 30, 2026, there were no significant changes to our critical accounting policies and estimates compared to those previously disclosed in “Critical Accounting Policies and Estimates” included in Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our 2025 Annual Report on Form 10-K.