This discussion should be read in conjunction with the information contained in both our consolidated financial statements for the year ended December 31, 2025 and the condensed consolidated financial statements for the three and six months ended June 30, 2026. Overview. We are a multinational developer, manufacturer and worldwide distributor of our own life science research and clinical diagnostics products. Our business is organized into two reportable segments: Life Science and Clinical Diagnostics, with the mission to provide scientists with specialized tools needed for biological research and health care specialists with products needed for clinical diagnostics. We sell more than 12,000 products and services to a diverse client base comprised of scientific research, healthcare, education and government customers worldwide. We do not disclose quantitative information about our different products and services as it is impractical to do so based primarily on the numerous products and services that we sell and the global markets that we serve. We manufacture and supply our customers with a range of reagents, apparatus and equipment to separate complex chemical and biological materials and to identify, analyze and purify components. As our customers require standardization for their experiments and test results, much of our revenues are recurring in nature. Approximately 39% of our 2026 consolidated net sales are derived from the United States and approximately 61% are derived from international locations, with Europe being our largest international region. The international sales are largely denominated in local currencies such as the Euro, Swiss Franc, Japanese Yen, Chinese Yuan and British Sterling. As a result, our consolidated net sales expressed in dollars benefit when the U.S. dollar weakens and suffer when the U.S. dollar strengthens. When the U.S. dollar strengthens, we benefit from lower cost of sales from our own international manufacturing sites, and from lower international operating expenses. We regularly discuss our changes in revenue and expense categories in terms of both changing foreign exchange rates and in terms of a currency-neutral basis, if notable, to explain the impact currency has on our results. We rely on the support of many governments for both research and healthcare. Current global economic and geopolitical conditions remain uncertain, and the need for governments to control their spending, along with ongoing challenges among small biotech companies, continues to limit opportunities for growth and negatively impact our business. The market in China, which represents a mid-single digit percentage of our year-to-date 2026 consolidated net sales, remains uncertain as a result of these factors. We expect these conditions to continue through the rest of 2026. Additionally, the recent escalation of regional conflicts in the Middle East has adversely affected demand and logistics in the EMEA region, particularly within our Clinical Diagnostics segment. These disruptions impacted our results during the first half of 2026 and, given the continued uncertainty regarding the duration and scope of the conflict, we expect these conditions to continue to adversely affect the EMEA region for the remainder of 2026. 31 Results of Operations The following table shows Cost of goods sold, Gross profit, components of operating expense, (Gains) losses from change in fair market value of equity securities and loan receivable, and Net income (loss) as a percentage of Net sales: Three Months Ended Six Months Ended June 30, June 30, 2026 2025 2026 2025 Net sales 100.0 % 100.0 % 100.0 % 100.0 % Cost of goods sold 46.9 47.0 47.3 47.3 Gross profit 53.1 53.0 52.7 52.7 Selling, general and administrative expense 32.6 31.9 34.1 33.7 Research and development expense 9.4 9.3 10.0 10.8 (Gains) losses from change in fair market value of equity securities and loan receivable (70.4) (51.3) 22.5 (29.6) Net income (loss) 57.1 48.8 (12.5) 30.9 Critical Accounting Policies and Estimates An accounting policy is deemed to be critical if it affects our financial statements materially and requires subjective or complex judgments by management. An accounting estimate is deemed to be critical if it requires assumptions about matters that are highly uncertain at the time the estimate is made, if different estimates reasonably could have been used, or if changes in the estimate that are reasonably likely to occur could materially impact the financial statements. Management believes that there have been no significant changes during the three and six months ended June 30, 2026 to the items that we disclosed as our critical accounting policies and estimates in Management's Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025. Three Months Ended June 30, 2026 Compared to Three Months Ended June 30, 2025 Results of Operations – Sales, Gross Margins and Expenses Percentage sales growth in currency-neutral amounts are calculated by translating prior period sales in each local currency using the current period monthly average foreign exchange rates for that currency and comparing that to current period sales. Net sales ("sales") for the second quarter of 2026 were $651.0 million compared to $651.6 million in the second quarter of 2025, essentially flat. On a currency-neutral basis, second quarter 2026 sales decreased approximately 1.9% compared to the same period in 2025. The decrease in sales was driven by lower sales in Life Science segment. The Life Science segment sales for the second quarter of 2026 were $252.0 million, a decrease of 4.1% compared to the same period in 2025. On a currency-neutral basis, sales decreased 5.1% compared to the second quarter in 2025, primarily driven by ongoing challenges in the academic research market. Currency-neutral sales decreased in the Americas and Asia Pacific, partially offset by increased sales in EMEA. 32 The Clinical Diagnostics segment sales for the second quarter of 2026 were $399.0 million, an increase of 2.6% compared to the same period in 2025. On a currency-neutral basis, sales increased 0.3% compared to the second quarter in 2025, primarily driven by growth in quality systems, diabetes and blood typing products, partially offset by lower sales of infectious disease products. Currency-neutral sales increased in the Americas, partially offset by decreased sales in Asia Pacific. Consolidated gross margin was 53.1% for the second quarter of 2026 compared to 53.0% for the second quarter of 2025. Gross margin for the Life Science segment for the second quarter of 2026 increased modestly by approximately 0.5 percentage points as compared to the same period in 2025. Gross margin for the Clinical Diagnostics segment for the second quarter of 2026 remained flat compared to the same period in 2025. Selling, general and administrative ("SG&A") expense for the second quarter of 2026 was $212.0 million or 32.6% of sales, compared to $207.7 million, or 31.9% of sales for the second quarter of 2025. The increase in SG&A expense was primarily due to higher employee related costs. Research and development ("R&D") expense for the second quarter of 2026 was $61.2 million or 9.4% of sales, compared to $60.5 million or 9.3% of sales in the second quarter of 2025. The increase in R&D expense was primarily due to higher project related spending. Results of Operations – Non-operating Interest expense for the second quarter of 2026 and 2025 was $12.1 million and $12.6 million, respectively, which primarily consisted of interest expense related to the $1.2 billion Senior Notes. Foreign currency exchange (gains) losses, net consist primarily of foreign currency transaction gains and losses on intercompany net receivables and payables and the change in fair value of our forward foreign exchange contracts used to manage our foreign currency exchange risk. Foreign currency exchange gains, net were $0.2 million for the second quarter of 2026 compared to foreign currency exchange losses, net of $1.1 million for the second quarter of 2025, respectively. Gains and losses are primarily due to the timing of product shipments and intercompany debt payments, market volatility, and the change in the fair value of our foreign exchange contracts. (Gains) losses from change in fair market value of equity securities and loan receivable was gain of $458.0 million and $334.4 million for the second quarter of 2026 and 2025, respectively. The change in the fair market value primarily resulted from the recognition of holding gains of $430.0 million in the second quarter of 2026 compared to holding gains of $326.6 million in the second quarter of 2025 on our investment in Sartorius. In addition, holding gains from the change in fair market value of our loan receivable of $15.1 million in the second quarter of 2026 compared to holding losses of $2.4 million in the second quarter of 2025 contributed to the change. Other income, net for the second quarter of 2026 was $23.4 million compared to $16.2 million for the second quarter of 2025. The increase in Other income, net of $7.2 million was primarily attributable to higher interest and investment income in the second quarter of 2026 compared to the second quarter of 2025. Our effective income tax rate was 31.5% and 23.2% for the second quarter of 2026 and 2025, respectively. The effective tax rate reported in these periods was primarily affected by the change in fair market value of our equity securities, shifts in the geographical mix of earnings and enactment of new tax legislation during the period. Six Months Ended June 30, 2026 Compared to Six Months Ended June 30, 2025 Results of Operations -- Sales, Margins and Expenses Percentage sales growth in currency-neutral amounts are calculated by translating prior period sales in each local currency using the current period monthly average foreign exchange rates for that currency and comparing that to current period sales. 33 Net sales ("sales") for the first six months of 2026 were $1.24 billion, an increase of 0.5% compared to the same period in 2025. On a currency-neutral basis, sales decreased 3.0% compared to the first six months of 2025. The decrease in sales was driven by lower sales in both Life Science and Clinical Diagnostics segments. The Life Science segment sales for the first six months of 2026 were $480.5 million, a decrease of 2.2% compared to the same period in 2025. On a currency-neutral basis, sales decreased 4.7% compared to the first six months of 2025, primarily driven by ongoing challenges in the academic research market, particularly in the Americas. Currency-neutral sales decreased in the Americas and EMEA, partially offset by increased sales in Asia Pacific. The Clinical Diagnostics segment sales for the first six months of 2026 were $762.6 million, an increase of 2.3% compared to the same period in 2025. On a currency-neutral basis, sales decreased 1.9% compared to the first six months of 2025, primarily driven by lower sales of infectious disease products. Currency-neutral sales decreased in EMEA and Asia Pacific, partially offset by increased sales in the Americas. Consolidated gross margins were 52.7% for the first six months of 2026 and 2025. Gross margins for the Life Science segment and the Clinical Diagnostics segment for the first six months of 2026 remained essentially flat compared to the same period in 2025. Selling, general and administrative ("SG&A") expenses increased to $424.4 million or 34.1% of sales for the first six months of 2026 compared to $416.5 million or 33.7% of sales for the first six months of 2025. The increase in SG&A expense was primarily due to foreign exchange impact resulting from a weaker U.S. dollar on our international cost base, partially offset by lower restructuring costs. Research and development ("R&D") expenses decreased to $124.1 million or 10.0% of sales in the first six months of 2026 compared to $134.0 million or 10.8% of sales in the first six months of 2025. The decrease in R&D expense was primarily due to lower restructuring costs. Results of Operations – Non-operating Interest expense for the first six months of 2026 and 2025 was $24.4 million and $24.6 million, respectively, which primarily consisted of interest expense related to the $1.2 billion Senior Notes. Foreign currency exchange (gains) and losses consist primarily of foreign currency transaction gains and losses on intercompany net receivables and payables and the change in fair value of our forward foreign exchange contracts used to manage our foreign currency exchange risk. Foreign currency exchange gains, net were $2.6 million and $1.6 million for the first six months of 2026 and 2025. Gains and losses are primarily due to the timing of product shipments and intercompany debt payments, market volatility, and the change in the fair value of our foreign exchange contracts. (Gains) losses from change in fair market value of equity securities and loan receivable was a loss of $280.2 million and gain of $366.2 million for the first six months of 2026 and 2025, respectively. The change in the fair market value primarily resulted from the recognition of lower holding losses of $297.7 million in the first six months of 2026 compared to holding gains of $355.7 million in the first six months of 2025 on our position in Sartorius. This was partially offset by higher holding gains from the change in fair market value of our loan receivable of $6.7 million in the first six months of 2026 compared to holding gains of $2.2 million in the first six months of 2025 contributed to the change. Other income, net for the first six months of 2026 was $47.6 million compared to $53.4 million for the first six months of 2025. The decrease in Other income, net of $5.8 million was primarily attributable to lower interest and investment income in the first six months of 2026 compared to the first six months of 2025. Our effective income tax rate was (5.4)% and 23.2% for the first six months of 2026 and 2025, respectively. The effective tax rate reported in the first six months of both 2026 and 2025 was primarily affected by the change in fair market value of our equity securities. 34 Liquidity and Capital Resources Bio-Rad operates and conducts business globally, primarily through subsidiary companies established in the markets in which we trade. Goods are manufactured in a small number of locations, and are then shipped to local distribution facilities around the world. Our product mix is diversified, and certain products compete largely on product efficacy, while others compete on price. Gross margins are generally sufficient to exceed normal operating costs, and funding for research and development of new products, as well as routine outflows for capital expenditures, interest and taxes. As of June 30, 2026, we had available $1.62 billion in cash, cash equivalents and short-term investments, of which approximately 14% was held in our foreign subsidiaries. The amount of funds held in the United States can fluctuate due to the timing of receipts and payments in the ordinary course of business and due to other reasons, such as acquisitions and borrowings. As part of our ongoing liquidity assessments, we regularly monitor the mix of domestic and foreign cash flows (both inflows and outflows). It is generally our intention to repatriate certain foreign earnings to the extent that such repatriations are not restricted by local laws, and there are no substantial incremental costs. Additional liquidity is realized through positive cash flows from operating activities, and is readily available via the sale of short-term investments and access to our $200.0 million unsecured Revolving Credit Agreement, available through February 2029, and to a lesser extent international lines of credit. Borrowings under the Revolving Credit Agreement are available on a revolving basis and can be used to make acquisitions, for working capital and for other general corporate purposes. We had no outstanding borrowings under the Revolving Credit Agreement as of June 30, 2026, however, $6.0 million was utilized for domestic standby letters of credit that reduced our borrowing availability. In March 2022, we received $1.2 billion in cash proceeds from the issuance of Senior Notes. The $400 million and $800 million Senior Notes mature in March 2027 and March 2032, respectively, and interest on the Senior Notes is 3.3% and 3.7% per annum, respectively. Interest is payable semiannually in arrears on March 15 and September 15 of each year. The $400 million Senior Notes are classified as current as of June 30, 2026. We have sufficient liquidity available to repay this obligation, including $1.62 billion in cash, cash equivalents and short-term investments as of June 30, 2026. In addition to repayment at maturity, we may also consider refinancing all or a portion of the Senior Notes, though any such refinancing may be at a higher interest rate than the current Senior Notes, depending on market conditions at the time. Management believes that our cash, cash equivalents and short-term investments, together with cash flow from operations and the unsecured Revolving Credit Agreement, will be adequate to meet our current objectives for operations, research and development, capital additions for manufacturing and distribution, plant and equipment, information technology systems and acquisitions of reasonable proportion to our existing total available capital for the next twelve months and beyond. Cash Flows from Operations Net cash provided by operations was $206.8 million and $246.4 million for the six months ended June 30, 2026 and 2025, respectively. The decrease in operating cash flows was primarily due to lower cash received from customers and higher cash paid to suppliers and employees. Cash Flows from Investing Activities Net cash used in investing activities was $159.9 million and $112.5 million for the six months ended June 30, 2026 and 2025, respectively. The change is primarily due to the timing of our purchases, maturities and sales of marketable securities and investments partially offset by net cash outflows for the acquisition of Stilla on June 30, 2025. 35 Cash Flows from Financing Activities Net cash used in financing activities was $71.6 million and $234.0 million for the six months ended June 30, 2026, and 2025, respectively. The decrease in net cash used in financing activities was primarily attributable to lower share repurchases. During the six months ended June 30, 2026, we repurchased 286,685 shares of Class A common stock for $79.3 million and during the six months ended June 30, 2025, we repurchased 992,803 shares of Class A common stock for $242.1 million. We designated these repurchased shares as treasury stock. As of June 30, 2026, $206.0 million remained available for repurchases under the 2023 Share Repurchase Program. Repurchases under the 2023 Share Repurchase program may be made at management’s discretion from time to time on the open market, through trading plans in accordance with Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, or through privately negotiated transactions, which may include structured repurchases. Recent Accounting Pronouncements Adopted See Note 1 to the condensed consolidated financial statements for recent accounting pronouncements adopted and to be adopted.