Prospects The following discussion of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and the related notes to those statements included elsewhere in this Annual Report. In addition to historical consolidated financial information, the following discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results and timing of selected events may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those discussed under “Item 3. Key Information—D. Risk Factors” and elsewhere in this Annual Report. The audited consolidated financial statements for the years ended December 31, 2025, 2024 and 2023 in this Annual Report have been prepared in accordance with IFRS as issued by the IASB. 88 Overview We are a global biopharmaceutical company with a portfolio of marketed products indicated for rare and serious conditions and a leader in the specialty plasma-derived therapies field. Our strategy is focused on driving profitable growth through four primary growth pillars: First, organic growth of our commercial portfolio, including continued investment in the commercialization and life cycle management of our Proprietary Products, which consist of six FDA-approved specialty plasma-derived products: KEDRAB, GLASSIA, CYTOGAM, WINRHO SDF, VARIZIG, and HEPAGAM B, as well as KAMRAB, and two types of equine-based ASV products. Second, distribution of third party pharmaceutical products in Israel through in-licensing partnerships, including through the launch of several biosimilar products in Israel, as well as expansion, during 2026, of such distribution activities to the MENA region. Third, we are ramping up our plasma collection operations to support revenue growth through the sale of NSP to other plasma-derived manufacturers, and to support our increasing demand for hyper-immune plasma. We currently own three operating plasma collection centers in the United States, located in Beaumont and Houston, Texas (the Houston center obtained FDA approval in August 2025), and San Antonio, Texas (which completed an FDA site audit in February 2026, and for which we expect to receive FDA approval during the first half of 2026). We are in the process of ramping up plasma collection at these three collection centers and are in active discussions with potential customers to secure long-term sales agreements for NSP. Lastly, we aim to secure new mergers and acquisitions, business development, in-licensing and/or collaboration opportunities, which are anticipated to enhance the Company’s marketed products portfolio and leverage its financial strength and existing commercial infrastructure to drive long-term profitable growth. In addition, we are leveraging our research and development expertise to advance the development and commercialization of additional product candidates, targeting areas of significant unmet medical need. Our Commercial Activities Our commercial activities operate in two segments: the Proprietary Products segment and the Distribution segment. Proprietary Products Segment. The Proprietary Products segment includes our six FDA approved plasma-derived biopharmaceutical products: KEDRAB, GLASSIA, CYTOGAM, WINRHO SDF, VARIZIG and HEPAGAM B, as well as KAMRAB and two types of equine-based ASV products. We distribute these products directly and through strategic partners or third-party distributors in over 30 countries. We manufacture our Proprietary Products at our FDA-approved cGMP production facility in Beit Kama, Israel, using our proprietary platform technology and know-how for the extraction and purification of proteins and IgGs from human plasma, as well as at third party contract manufacturing facilities. In addition, our Proprietary Products segment includes our plasma collection operations, where we collect Anti-Rabies and Anti-D hyper-immune plasma for the manufacture of some of our Proprietary Products (WINRHO SDF, KEDRAB and KAMRAB) as well as NSP for sale to third parties. For further information regarding our proprietary products, see “Item 4. Information on the Company—Business Overview—Our Business—Commercial Activities.” Our Proprietary Products sales totaled $156.2 million, 141.4 million and $115.5 million for the years ended December 31, 2025, 2024 and 2023, respectively. Most revenues from the Proprietary Products segment are generated from sales in the United States, which accounted for 64%, 71% and 64% of the segment’s revenues for the years ended December 31, 2025, 2024 and 2023, respectively. Distribution Segment In the Distribution segment, we leverage our expertise and presence in the Israeli biopharmaceutical market to distribute in Israel more than 25 pharmaceutical products, exclusively licensed from international manufacturers. Sales generated by our Distribution segment during 2025 totaled $24.3 million, as compared to $19.5 million and $27.1 million during 2024 and 2023, respectively. The increase in revenues during 2025 is primarily the result of the launch of two biosimilar products as well as increase demand for certain other products in our portfolio. 89 As part of our Distribution segment, we have licensed a portfolio of biosimilar products from multiple international companies for distribution in Israel. Through the end of 2025, we launched two products of this portfolio in Israel and generated $2.4 million in sales during 2025 associated with the sales of these products. Two additional biosimilar products are expected to be launched during 2026 and the remaining biosimilar products are expected to be launched in Israel over the coming years, at a rate of 1-3 products per year, subject to the EMA and subsequently the IMOH approvals, while continuing to explore opportunities to in-license additional biosimilar products and expand the portfolio. We believe that sales generated by the launch of biosimilar products will serve as a major growth and profitability catalyst for our Distribution segment. We estimate that revenues from the sales of our existing biosimilar products portfolio in Israel will increase to between approximately $15 million to $20 million within the next four to five years and will continue to grow thereafter, subject to the continued launch of the entire portfolio as scheduled. We are currently expanding the distribution operation of in-licensed products to the MENA region by engaging third-party pharmaceutical companies to register and distribute their products in the region. Strategic Transactions We are actively seeking new business development, in-licensing and/or M&A opportunities. These anticipated transactions aim to leverage our financial strength, enhance our marketed products portfolio and leverage synergies with our existing commercial operations. We are targeting the acquisition or in-licensing of commercial products for distribution by us in markets we currently operate, particularly the U.S. market. These products may be plasma derived, allowing us to utilize manufacturing synergies, or non-plasma derived, leveraging our commercial, marketing and distribution capabilities to diversify our offerings and address a broader range of specialty, rare and serious conditions. We may also explore manufacturing services agreements to manufacture plasma-derived products for other companies, which can provide additional revenue streams and leverage our expertise in plasma-derived biopharmaceuticals. 2026 Financial Guidance We currently expect to generate total revenues for the fiscal year 2026 in the range of $200 million to $205 million and adjusted EBITDA in the range of $50 million to $53 million. The midpoint of the projected 2026 revenue and adjusted EBITDA forecast represents a year-over-year increase of 13% in revenues and 23% in adjusted EBITDA. For details regarding the use of non-IFRS measures, see “Item 5. Operating and Financial Review and Prospects—Non-IFRS Financial Measures.” Non-IFRS Financial Measures We present EBITDA and adjusted EBITDA because we use these non-IFRS financial measures to assess our operational performance, for financial and operational decision-making, and as a means to evaluate period-to-period comparisons on a consistent basis. Management believes these non-IFRS financial measures are useful to investors because: (1) they allow for greater transparency with respect to key metrics used by management in its financial and operational decision-making and provide investors with a meaningful perspective on the current underlying performance of the Company’s core ongoing operations; and (2) they exclude the impact of certain items that are not directly attributable to our core operating performance and that may obscure trends in the core operating performance of the business. Non-IFRS financial measures have limitations as an analytical tool and should not be considered in isolation from, or as a substitute for, our IFRS results. We expect to continue reporting non-IFRS financial measures, adjusting for the items described below, and we expect to continue to incur expenses similar to certain of the non-cash, non-IFRS adjustments described below. Accordingly, unless otherwise stated, the exclusion of these and other similar items in the presentation of non-IFRS financial measures should not be construed as an inference that these items are unusual, infrequent or non-recurring. EBITDA and adjusted EBITDA are not recognized terms under IFRS and do not purport to be an alternative to IFRS terms as an indicator of operating performance or any other IFRS measure. Moreover, because not all companies use identical measures and calculations, the presentation of EBITDA and adjusted EBITDA may not be comparable to other similarly titled measures of other companies. EBITDA and adjusted EBITDA are defined as net income (loss), plus income tax expense, plus or minus financial income or expenses, net, plus depreciation and amortization expense, plus non-cash share-based compensation expenses and certain other costs. 90 For the projected 2026 adjusted EBITDA, the company is unable to provide a reconciliation of this forward measure to the most comparable IFRS financial measure because the information for this measure is dependent on future events, many of which are outside of our control. Additionally, estimating such forward-looking measures and providing a meaningful reconciliation consistent with our accounting policies for future periods is meaningfully difficult and requires a level of precision that is unavailable for these future periods and cannot be accomplished without unreasonable effort. Forward-looking non-IFRS measures are estimated in a manner consistent with the relevant definitions and assumptions noted in the company’s non-IFRS measures for historical periods. Key Components of Our Results of Operations Business Combination In November 2021, we acquired a portfolio of the following four FDA approved plasma-derived hyperimmune commercial products from Saol: CYTOGAM, HEPAGAM B, VARIZIG and WINRHO SDF. Under the terms of the agreement, we paid Saol a $95.0 million upfront payment and agreed to pay up to an additional $50.0 million of contingent consideration subject to the achievement of sales thresholds for the period commencing on the acquisition date and ending on December 31, 2034. Through the end of 2025, the first three sales thresholds were achieved, and the related milestone payments were subsequently paid. We expect to meet the fourth sales threshold during 2026. Subject to certain conditions defined in the agreement between the parties, we may be entitled to up to a $3.0 million credit, which is deductible from the contingent consideration payments due through 2027. The entitlement for such credit was not met though the end of 2025. In addition to accounting for the contingent consideration described above, we assumed certain of Saol’s liabilities for the future payment of milestone payments to third parties, which as of the end of 2025 were met in full, as well royalties (some of which are perpetual) on CYTOGAM related net sales which includes: 10% of the annual global net sales of CYTOGAM up to $25.0 million and 5% of net sales that are greater than $25.0 million, in perpetuity; 2% of the annual global net sales of CYTOGAM in perpetuity; and 8% of the annual global net sales of CYTOGAM for period of six years commencing in October 2023, subject to a maximum aggregate of $5.0 million per year and a maximum aggregate amount of $30.0 million throughout the entire six year period. The contingent consideration and assumed liabilities are presented in the consolidated balance sheet as long-term liabilities in the amounts of $30.1 million and $34.2 million as of December 31, 2025 and 2024, respectively. Such liabilities are being remeasured at the end of each reporting period, and for the years ended December 31, 2025 and 2024, we accounted for revaluation of such contingent consideration and assumed liabilities. For the years ended December 31, 2025 and 2024, we recognized financial expenses of $2.7 million and $8.1 million with respect to such revaluation, respectively. The acquisition was categorized as a business combination and accounted for by applying the acquisition method, pursuant to which we identified and valued the acquired assets and assumed liabilities. The excess amount of the acquisition cost over the net value of the acquired assets and assumed liabilities is recorded as goodwill. The fair value of the intangible assets acquired as of the acquisition date totaled $121.1 million. Intangible assets with a finite useful life are amortized on a straight-line basis over their useful life (estimated 6-20 years). For each of the years ended December 31, 2025 and 2024, we accounted for $7.1 million of amortization expenses associated with such intangible assets. Intangible assets and goodwill are reviewed for impairment whenever there is an indication that the asset may be impaired. Revenues In our Proprietary Products segment, we generate revenues from the sale of products to wholesalers in the U.S. market, strategic partners (specifically KEDRAB to Kedrion), local distributors in ex-U.S. markets, HMOs and local hospitals. Revenues from our Proprietary Products segment also include royalty income from our strategic partner, Takeda, on account of their sales of GLASSIA, as well as income from the sales of plasma collected and sold to third parties. In our Distribution segment, we generate revenues from the sale in Israel of imported products produced by third parties. Revenues are presented net of any discounts, chargebacks, fees, dues and/or marketing contribution payments extended to our partners, distributors or end users of our products. 91 The following table sets forth the geographic breakdown of our total revenues for the periods indicated: Year Ended December 31, 2025 2024 United States 55 % 62 % Israel 16 % 16 % Latin America 14 % 12 % Canada 6 % 6 % Europe 5 % 3 % Rest of World 4 % 1 % 100 % 100 % Cost of Revenues Cost of revenues in our Proprietary Products segment includes expenses related to the manufacturing of products such as raw materials (including plasma), payroll (including bonus, equity-based compensation, and other benefits), utilities, laboratory costs and depreciation. In addition, part of the cost of revenues is derived from payment on account of manufacturing services provided by third parties. Cost of revenues also includes provisions for the costs associated with manufacturing scraps and inventory write-downs. Cost of revenues includes amortization expenses related to intangible assets recognized pursuant to the acquisition of CYTOGAM, WINRHO SDF, HEPAGAM B and VARIZIG. Intangible assets which amortization are accounted for in the costs of revenues include the acquired products intellectual property and an assumed contract manufacturing agreement. A significant portion of our manufacturing costs are for raw materials consisting of plasma and plasma fraction. To ensure the availability of plasma and plasma fraction, we secured supply agreements with multiple suppliers, including Kedrion, for the manufacturing of KEDRAB and KAMRAB, CSL Behring for the manufacturing of CYTOGAM, and Takeda for the manufacturing of GLASSIA. In addition, we are leveraging our plasma collection experience to expand our plasma collection capacity in the United States to support our continued plasma needs and reduce our dependency on third party plasma suppliers. We currently own and operate three plasma collection centers located in Beaumont, Houston, and San Antonio, Texas. The centers in Beaumont and Houston are FDA-approved, and the FDA site audit of the San Antonio center was completed in February 2026. We expect that the plasma collection center in San Antonio, Texas, will receive FDA approval during the first half of 2026. Costs of revenues in our Distribution segment consists of costs of products acquired, packaging and labeling for sales by us in Israel. Gross Profit Gross profit is the difference between total revenues and the cost of revenues. Overall gross profit is mainly affected by sales price, volume and mix of sales, as well as manufacturing efficiencies, cost of raw materials and plant maintenance and overhead costs. Our gross margins in our Proprietary Products segment, which were 46% and 48% for the years ended December 31, 2025 and 2024, respectively, are generally higher than in our Distribution segment, which were 17% and 11% for the years ended December 31, 2025 and 2024, respectively. The decrease in gross profitability in our Proprietary Products segment during the year ended December 31, 2025, was primarily attributable to changes in product sales mix. The increase in gross profitability in our Distribution segment during the year ended December 31, 2025, was primarily attributable to favorable product sales mix, led by increased sales of the recently launched biosimilar products in the Israeli market. 92 Research and Development Expenses The development of pharmaceutical products, including plasma-derived protein therapeutics, is characterized by significant up-front product development costs. Research and development expenses are incurred for the development of new products and newly revised processes for existing products and includes expenses for pre-clinical and clinical trials, development activities in the different fields, the advanced understanding of the mechanism of action of our products, improving existing products and processes, development work at the request of regulatory authorities and strategic partners, as well as communication with regulatory authorities related to our commercial products and clinical programs. In addition, such expenses include development materials, payroll for research and development personnel (including payroll, bonus, equity-based compensation and other benefits), including scientists and professionals for product registration and approval, external advisors, and the allotted cost of our manufacturing facility for research and development purposes. While research and development expenses are unallocated on a segment basis, the activities generally relate to our existing or in-development proprietary products. Product development costs may fluctuate from period to period, as our product candidates proceed through various stages of development. We expect to continue to incur research and development expenses related to clinical trials, as well as other ongoing, planned, or future clinical trials with regard to our product pipeline. See “Item 4. Information on the Company Information on the Company—Business Overview—Our Development Product Pipeline.” Selling and Marketing Expenses Selling and marketing expenses principally consist of compensation for employees and executives in sales and marketing related positions (including payroll, bonuses, equity-based compensation and other benefits), expenditures incurred for sales incentive, advertising, marketing or promotional activities, shipping and handling costs, 3PL services fees, product liability insurance and business development activities, as well as marketing authorization fees to regulatory agencies, including the FDA and similar regulatory bodies in other markets in which we operate. Selling and marketing expenses include amortization expenses related to intangible assets recognized pursuant to the acquisition of CYTOGAM, WINRHO SDF, HEPAGAM B and VARIZIG. Such intangible assets include customer relations. General and Administrative Expenses General and administrative expenses consist of compensation for employees in executive and administrative functions (including payroll, bonuses, equity compensation and other benefits), office expenses, professional consulting services, public company related costs, directors’ and officer’s liability insurance and other insurance costs, legal, audit fees, other professional services as well as employee welfare costs. Financial Income Financial income is comprised of interest income on amounts invested in bank deposits. Income (expense) in respect of currency exchange differences and derivatives instruments, net Income (expense) in respect of currency exchange differences and derivatives instruments, net is comprised of changes in balances denominated in currencies other than our functional currency. Changes in the fair value of derivatives instruments not designated as hedging instruments are reported under profit or loss. 93 Financial income (expense) in respect of contingent consideration and other long- term liabilities Financial income (expense) in respect of contingent consideration and other long-term liabilities is comprised of the revaluation of the outstanding balances of the contingent consideration and other long-term liabilities associated with expected future payments related to the acquisition of CYTOGAM, WINRHO SDF, HEPAGAM B and VARIZIG (for details, see above under “Key Components of Our Results of Operations—Business Combination”). Financial Expenses Financial expenses are comprised of bank charges, changes in the time value of provisions, the portion of changes in the fair value of financial assets or liabilities at fair value through other comprehensive income and interest and amortization of bank loans and leases. Taxes on Income Taxes on income in profit or loss comprise of current taxes, deferred taxes and taxes in respect of prior years. In addition, we evaluate potential uncertain tax positions, including additional tax and interest expenses, and recognize a provision when it is more probable than not that we will have to use our economic resources to pay such obligation. Deferred tax assets are reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that they will be utilized. Deductible carryforward losses and temporary differences for which deferred tax assets have not been recognized are reviewed at the end of each reporting period, and a respective deferred tax asset is recognized to the extent that their utilization is probable. We operate in multiple tax jurisdictions and account for taxes on income per each jurisdiction. As of December 31, 2025, we have NOLs for Israeli tax purposes of approximately $12.1 million. These NOLs have no expiration date. Following the full utilization of these NOLs, we expect that our effective income tax rate in Israel will reflect the tax benefits discussed below. On June 9, 2025, we obtained a tax ruling from the ITA according to which, among other things, our activity is qualified as an “industrial activity,” as defined in the Investment Law, and we may be eligible for tax benefits under the Investment Law, and our income from sales of our Proprietary Products (including royalty-based income) would be deemed “Preferred Income” or “Preferred Technology Income” (in each case, within the meaning of the Investment Law), to the extent we meet the requirements of being a Preferred Technology Enterprise as defined under the Investment Law). The tax ruling is valid for the years 2024 through 2028 (inclusive). There can be no assurance that we will comply with the conditions required to remain eligible for benefits under the Investment Law in the future, including under the tax ruling, or that we will be entitled to any additional benefits thereunder. As of the date of this Annual Report, we have not utilized any tax benefits under the Investment Law. See “Item 10. Additional Information — E. Taxation — Israeli Tax Considerations and Government Programs.” We may be subject to withholding taxes for payments we receive from foreign countries. If certain conditions are met, these taxes may be credited against future tax liabilities pursuant to tax treaties and Israeli tax laws. Since 2021, we conduct commercial operations in the United States through our subsidiaries Kamada Inc. and Kamada Plasma LLC. The two entities are subject to U.S. federal and certain state income taxes and file a combined tax return. Income tax expenses due in connection with such activities are included as part of taxes on income in our consolidated statement of operations. As of December 31, 2025, the two entities had NOLs and other temporary differences for U.S. tax purposes of approximately $2.0 million. As we further expand our commercial operations into other countries, we could become subject to taxation based on such a country’s statutory rates and our effective tax rate could fluctuate accordingly. 94 A. Operating Results For a discussion of our results of operations for the year ended December 31, 2023, including a year-to-year comparison between 2023 and 2024, and a discussion of our liquidity and capital resources for the year ended December 31, 2023, see “Item 5. Operating and Financial Review and Prospects” in our Annual Report on Form 20-F for the year ended December 31, 2024.” The following table sets forth certain statements of operations data: Year Ended December 31, 2025 2024 Revenues from Proprietary Products segment $ 156,206 $ 141,447 Revenues from Distribution segment 24,254 19,506 Total revenues 180,460 160,953 Cost of revenues from Proprietary Products segment 83,928 73,708 Cost of revenues from Distribution segment 20,125 17,278 Total cost of revenues 104,053 90,986 Gross profit 76,407 69,967 Research and development expenses 12,995 15,185 Selling and marketing expenses 18,455 18,428 General and administrative expenses 18,724 15,702 Other expense - 601 Operating income 26,233 20,051 Financial income 1,921 2,118 Income (expense) in respect of currency exchange differences and derivatives instruments, net (1,171 ) (94 ) Financial income (expense) in respect of contingent consideration and other long- term liabilities (2,652 ) (8,081 ) Financial expenses (864 ) (660 ) Income before taxes on income 23,467 13,334 Taxes on income (3,269 ) (1,128 ) Net income $ 20,198 $ 14,462 Year Ended December 31, 2025 Compared to Year Ended December 31, 2024 Segment Results Change 2025 vs. 2024 2025 2024 Amount Percent (U.S. Dollars in thousands) Revenues: Proprietary Products $ 156,206 $ 141,447 $ 14,759 10.4 % Distribution 24,254 19,506 4,748 24.3 % Total 180,460 160,953 19,507 12.1 % Cost of Revenues: Proprietary Products 83,928 73,708 10,221 13.9 % Distribution 20,125 17,278 2,847 16.5 % Total 104,053 90,986 13,068 14.4 % Gross Profit: Proprietary Products $ 72,278 $ 67,739 $ 4,538 6.7 % Distribution 4,129 2,228 1,901 85.3 % Total $ 76,407 $ 69,967 $ 6,439 9.2 % 95 Revenues For the year ended December 31, 2025, we generated $180.5 million of total revenues, as compared to $161.0 million for the year ended December 31, 2024, an increase of $19.5 million, or approximately 12%, due to an increase in revenues in both the Proprietary Products segment and the Distribution Segment. Sales generated by our Proprietary Products segment totaled $156.2 million for the year ended December 31, 2025, a $14.8 million increase compared to $141.4 million for the year ended December 31, 2024. The increase in revenues in the Proprietary Products segment in 2025 was primarily attributable to increased sales of KAMRAB and GLASSIA in ex-U.S. markets and increased VARIZIG and KEDRAB sales in the U.S. market. KAMRAB and GLASSIA sales in ex-U.S. markets for the year ended December 31, 2025, totaled $17.2 million and $19.4 million, respectively, a $5.5 million and a $4.2 million increase compared to the year ended December 31, 2024. GLASSIA revenues for the year ended December 31, 2025, included the recognition of a $1.2 million sales milestone on account of achieving a certain sales threshold by our distributor in Russia. VARIZIG sales for the year ended December 31, 2025, totaled $11.1 million, a $5.4 million increase compared to the year ended December 31, 2024, and KEDRAB sales for the year ended December 31, 2025 totaled $53.6 million, a $3.6 million increase compared to the year ended December 31, 2024. CYTOGAM sales for the year ended December 31, 2025, decreased by $5.4 million compared to the year ended December 31, 2024, to a total of $17.1 million. We believe that the decline in CYTOGAM sales in 2025 compared to 2024 was primarily due to increased usage of antivirals such as letermovir and maribavir resulting from improvements in their market access coverage. Our promotional efforts for CYTOGAM are focused on enhancing awareness among the medical community of the benefits of using CYTOGAM in conjunction with the antivirals due to the complementary mechanisms of action of both treatments, as well as identifying specific solid organ transplant patient profiles that are at higher risk for CMV post-transplant and may benefit from additional CMV protection with CYTOGAM. We believe that our current promotional activities, supported by new clinical data, will lead to increased demand for the product in the coming years. For the year ended December 31, 2025, we accounted for $15.8 million of sales-based royalty income from Takeda, as compared to $16.9 million for the year ended December 31, 2024, a decrease of $1.1 million, primarily due to the decrease in the royalty rate of 12% to 6% effective August 2025. Sales of all other products in the Proprietary Products segment for the year ended December 31, 2025, totaled $22.0 million, as compared to $19.3 million for the year ended December 31, 2024, a $2.7 million increase compared to the year ended December 31, 2024. Sales generated by our Distribution segment during the year ended December 31, 2025, totaled $24.3 million, as compared to $19.5 million during the year ended December 31, 2024. The increase in revenues during 2025 is primarily the result of increased sales of the two biosimilar products launched during 2024 and 2025 as well as increased sales of other portfolio products. Cost of Revenues For the year ended December 31, 2025, we incurred $104.1 million of cost of revenues, as compared to $91.0 million for the year ended December 31, 2024, an increase of $13.1 million, or approximately 14.4%. The increase in costs of revenues is mainly attributable to increased sales in both of our reporting segments. Cost of revenues for each of the years ended December 31, 2025 and 2024 included an intangible assets amortization cost of $5.9 million. Gross Profit Gross profit and gross margins in our Proprietary Products segment for the year ended December 31, 2025, were $72.3 million and 46%, respectively, as compared to $67.7 million and 48% for the year ended December 31, 2024, respectively, representing an increase of $4.6 million and 6.7%, respectively. Such increase is primarily attributed to the overall increased commercial scale and a change in the product sales mix resulting in a reduction of 2.0% in the gross margins, reflecting higher sales of KAMRAB and GLASSIA in ex-U.S. markets and sales of VARIZIG and KEDRAB in the U.S. market, offset in part by the decrease in sales of CYTOGAM in the U.S. market. 96 Gross profit and gross margins in our Distribution segment for the year ended December 31, 2025, were $4.1 million and 17%, respectively, as compared to $2.2 million and 11% for the year ended December 31, 2024, respectively, representing an increase of $1.9 million and 85.3%, respectively. Such increase is primarily attributed to increased sales of distribution products in Israel during 2025 as well as an improved product mix. Research and Development Expenses For the year ended December 31, 2025, we incurred $13.0 million of research and development expenses, as compared to $15.2 million for the year ended December 31, 2024, a decrease of $2.2 million, or approximately 14.5%. The decrease was primarily due to timing changes in development projects, including the termination of the Phase 3 InnovAATe trial for Inhaled AAT. During the year ended December 31, 2025, prior to conducting the futility analysis, we entered into an exclusivity letter with an international biopharmaceutical company associated with the potential out-licensing of the distribution rights of the Inhaled AAT product. In consideration of the terms of the exclusivity letter, we received a non-refundable payment of $3.0 million. Following the decision to discontinue the InnovAATe clinical trial, the exclusivity letter was voided and the payment received was recorded as an offset to the 2025 research and development expenses associated with the clinical trial. Selling and Marketing Expenses For the year ended December 31, 2025, we incurred $18.5 million of selling and marketing expenses, as compared to $18.4 million for the year ended December 31, 2024. Selling and marketing expenses for each of the years ended December 31, 2025 and 2024 included $1.7 million of amortization expenses related to intangible assets recognized pursuant to a business combination. Selling and marketing expenses accounted for approximately 10.2% and 11.4% of total revenues for the years ended December 31, 2025 and 2024, respectively. General and Administrative Expenses For the year ended December 31, 2025, we incurred $18.7 million of general and administrative expenses, as compared to $15.7 million for the year ended December 31, 2024, an increase of $3.0 million, or approximately 19.1%. This increase is primarily attributable to increased administrative support for the growth of the overall commercial operation, specifically associated with information technology costs increase. General and administrative expenses accounted for approximately 10.4% and 9.8% of total revenues for the years ended December 31, 2025 and 2024, respectively. Other expenses We did not incur other expenses for the year ended December 31, 2025. For the year ended December 31, 2024, we incurred $0.6 million of other expenses which included costs associated with write downs of certain upfront licensing fees associated with products licensed for distribution as part of our Distribution segment. Operating Profit Operating profit and operating margin for the year ended December 31, 2025, were $26.2 million and 14.5%, respectively, as compared to $20.1 million and 12.5% for the year ended December 31, 2024, respectively, representing an increase of $6.1 million and 30.3%, respectively. Such increase is attributed to the continued improved product sales mix and overall increased commercial scale. Financial Income For the years ended December 31, 2025 and 2024, we generated $1.9 million and $2.1 million of financial income, respectively. Financial income is primarily comprised of interest income on bank deposits. The decrease in financial income is attributed to changes in prevailing interest rates. 97 Income (expenses) in respect of currency exchange differences and derivatives instruments, net For the years ended December 31, 2025 and 2024, we generated $1.2 million and $0.1 million of expenses in respect of currency exchange differences on balances in other currencies, respectively. Income and expenses with respect to currency exchange differences primarily relate to assets and liabilities denominated in NIS and Euro, which are translated into the U.S. dollar, as well as the impact of derivatives. The increase in such expenses is attributable to the appreciation of the NIS and Euro compared to the U.S. dollar during 2025. Financial income (expenses) in respect of contingent consideration and other long- term liabilities For the years ended December 31, 2025 and 2024, we recognized $2.7 million and $8.1 million of financial expenses in respect of the reevaluation of contingent consideration and other long-term liabilities, respectively. Financial expenses are in respect of revaluation of contingent consideration and other long-term liabilities associated with the acquisition of CYTOGAM, HEPAGAM B, VARIZIG and WINRHO SDF (for details regarding the description of such contingent consideration and other long-term liabilities, see above under “Key Components of Our Results of Operations—Business Combination” and for details regarding the payments made on account of these liabilities see below under “Liquidity and Capital Resources”). The change between the years is attributed to the reduced sales of CYTOGAM in 2025, that reduced the reevaluation expenses. Financial Expenses For the years ended December 31, 2025 and 2024, we incurred $0.9 million and $0.7 million of financial expenses, respectively. Financial expenses for the years ended December 31, 2025 and 2024, were primarily related to outstanding lease obligations. Taxes on Income For the year ended December 31, 2025, we recorded $3.3 million of tax expense, consisting of $2.0 million of deferred taxes related to changes in deferred tax liabilities, net; a $1.2 million provision for uncertain tax positions; and $0.1 million of current taxes, primarily associated with Kamada Inc., our U.S. subsidiary. For the year ended December 31, 2024, we recorded $1.3 million of tax income due to accounting for a deferred tax asset on NOLs and other temporary differences that we anticipated utilizing in the future. B. Liquidity and Capital Resources Our primary uses of cash are to fund working capital requirements, research and development expenses and capital expenditures, as well as for acquisitions of new products, product candidates and assets. Historically, we have funded our operations primarily through cash flow from operations (including sales of our Proprietary Products and distribution products), payments received in connection with strategic partnerships (including milestone payments from collaboration agreements), issuances of ordinary shares (including our 2005 initial public offering and listing on the TASE, our 2013 initial public offering in the United States and listing on Nasdaq, our 2017 underwritten public offering and our 2020 and 2023 private placements), and the issuance of convertible debentures and warrants to purchase our ordinary shares as well as through commercial debt financing for the funding of certain acquisitions. While we have historically retained our earnings to finance operations and expand our business, in April 2025, we paid a special cash dividend of approximately $11.5 million in the aggregate. The balance of cash and cash equivalents as of December 31, 2025, and 2024, totaled $75.5 million and $78.4 million, respectively. We plan to fund our future operations and strategic initiatives (see “Item 4. Information on the Company”) through our financial resources, cash generated from our operational activities, which generated $25.5 million and $47.6 million during the years ended December 31, 2025 and 2024, respectively, and, to the extent required, by raising additional capital through the issuance of equity or debt. 98 Our capital expenditure for the years ended December 31, 2025 and 2024, were $9.8 million and $10.7 million, respectively. Our capital expenditure during the year ended December 31, 2025, related primarily to the construction of our plasma collection facility in San Antonio, Texas, as well as the upgrades and improvements of our facilities and manufacturing and plasma collection equipment, including for the establishment of a new filling line at our Beit Kama facility. We expect our capital expenditures to increase in the coming years mainly in connection with the establishment of the new filling line and to facilitate the transition of manufacturing of HEPAGAM B, VARIZIG and WINRHO SDF to our manufacturing facility in Beit Kama, Israel, which will require possible upgrades to plant infrastructure as well as to upgrade manufacturing automation. In 2025, we engaged a third-party supplier to construct the new filling line. In addition to our capital expenditure, in November 2021, we acquired CYTOGAM, HEPAGAM B, VARIZIG and WINRHO SDF from Saol. Under the terms of the agreement, we paid Saol a $95.0 million upfront payment and agreed to pay up to an additional $50.0 million of contingent consideration subject to the achievement of sales thresholds for the period commencing on the acquisition date and ending on December 31, 2034. During 2023, we made the first payment of the contingent consideration in the amount of $3.0 million following achievement of the first sales threshold. The second sales threshold was met, and the second $3.0 million milestone payment was paid during February 2024. The third sales threshold was met and the third $3.0 million milestone payment was paid during April 2025. Subject to certain conditions defined in the agreement between the parties, we may be entitled to up to a $3.0 million credit, which is deductible from the contingent consideration payments due for the years 2023 through 2027. The entitlement for such credit was not met though the end of 2025. In addition, we acquired inventory in the amount of $14.2 million and agreed to pay the consideration to Saol in ten quarterly installments of $1.5 million each or the remaining balance at the final installment. Through the first half of 2024, we completed all payments due on account of such inventory commitment. We also assumed certain of Saol’s liabilities for the future payment of royalties (some of which are perpetual) and milestone payments to third parties subject to the achievement of corresponding CYTOGAM related net sales thresholds and milestones. During the years ended December 31, 2025 and 2024, we paid approximately $5.9 million and $12.7 million, respectively, on account of such contingent consideration, inventory related liability and the assumed liabilities, and the outstanding balance of the contingent consideration and the assumed liabilities as of December 31, 2025, totaled $60.4 million. During the next 12 months we anticipate paying approximately $9.9 million on account of such contingent consideration and the assumed liabilities, which are expected to be funded by our existing financial resources and cash to be generated through our operational activities. Payments on account of such liabilities expected to be made beyond the next 12 months, are expected to be funded from cash generated by our operating activities, and, to the extent required, by raising additional capital through the issuance of equity or debt. For additional information also see above under “Key Components of Our Results of Operations—Business Combination” and Note 13a to our consolidated financial statements included in this Annual Report. We have entered into long-term lease agreements with respect to office facilities, storage spaces, plasma collection centers, vehicles and certain office equipment. The terms of such lease arrangements are between 3 to 20 years. The outstanding lease obligation as of December 31, 2025, totaled $11.6 million. For additional information see Note 14 to our consolidated financial statements included in this Annual Report. We are also obligated to make certain severance or pension payments to our Israeli employees upon their retirement in accordance with Israeli law. For additional information, see “Post-Employment Benefits Liabilities” and Note 2k and Note 16 to our consolidated financial statements included in this Annual Report. We believe our current cash and cash equivalents, along with the expected future cash to be generated by our operational activities, will be sufficient to satisfy our liquidity requirements for at least the next 12 months. Credit Facility and Loan Agreement with Bank Hapoalim B.M. In connection with the acquisition of CYTOGAM, HEPAGAM B, VARIZIG and WINRHO SDF from Saol, on November 15, 2021, we secured a $40 million debt facility from Bank Hapoalim B.M., which was comprised of a $20 million five-year loan and a $20 million short-term revolving credit facility. The long-term loan bore interest at a rate of SOFR + 2.18% and was repayable in 54 equal monthly installments commencing on June 16, 2022. In September 2023, we repaid in full the outstanding balance of the $20 million five-year loan. 99 The revolving credit facility was in effect for an initial period of 12 months. Thereafter, on January 1, 2023, the credit facility was reduced to NIS 35 million (equivalent to approximately $10 million) and extended for an additional period of 12 months and subsequently on January 1, 2024, it was extended for an additional period of 12 months. Borrowings under the credit facility accrued interest at a rate of PRIME + 0.55 and were repayable no later than 12 months from the date advanced. We were required to pay Bank Hapoalim an annual fee of 0.275% for the credit allocation. The terms of the credit facility included certain financial covenants, including that we maintain: (i) minimum equity capital of 30% of the balance sheet and no less than $120 million, examined on a quarterly basis, (ii) a maximum working capital to debt ratio of 0.8, examined on a quarterly basis, and (iii) a minimum debt coverage ratio of 1.1 during 2022-2024 and 1.25 in 2025 and onwards, examined on an annual basis. In addition, the terms of the credit facility contained certain restrictive covenants including, among others, limitations on restructuring, the sale of purchase of assets, material licenses, certain changes of control and the creation of floating charges over our property and assets. In addition, we undertook not to create any first ranking floating charge over all or materially all of our property and assets in favor of any third party unless certain conditions, as defined in the loan agreement, have been satisfied. On February 17, 2025, we converted the credit facility to a NIS 35 million on-call credit facility from Bank Hapoalim, with each loan thereunder bearing interest at a rate of 6.3%. As part of the conversion, we undertook not to create a floating charge over all or materially all of our assets. In addition, the previous credit facility, as described above, was terminated, together with our obligations to meet the financial covenants. Cash Flows from Operating Activities Net cash provided by operating activities was $25.5 million and $47.6 million for the years ended December 31, 2025 and 2024. respectively. Net cash provided by operating activities for 2025 and 2024 was primarily generated through our commercial operations, including the sales of our commercial products, mainly KEDRAB, GLASSIA and CYTOGAM, as well as cash generated from royalties payable by Takeda on account of their GLASSIA sales, net of our operational costs. Cash Flows used in Investing Activities Net cash used in investing activities was $9.8 million for the year ended December 31, 2025, comprised of capital expenditures primarily associated with the construction of our new plasma collection center in San Antonio, Texas, as well as upgrades and improvements of our facilities and manufacturing and plasma collection equipment, including the establishment of the new filling line at the Beit Kama, Israel facility. Net cash used in investing activities was $10.7 million for the year ended December 31, 2024, comprised of capital expenditures primarily associated with the construction of our plasma collection centers in Houston, Texas and San Antonio, Texas, as well as upgrades and improvements of our facilities and manufacturing and plasma collection equipment. Cash Flows used in Financing Activities Net cash used in financing activities was $18.3 million for the year ended December 31, 2025, and included a $11.5 million dividend paid to our shareholders in April 2025, a $3.0 million milestone payment related to the contingent consideration for achieving the third sales threshold, and $2.9 million for assumed royalty payment obligations to third parties on CYTOGAM net sales. Net cash used in financing activities was $13.9 million for the year ended December 31, 2024, and included the payment to Saol of $3.0 million on account of the contingent consideration for the second sales threshold and a total of $9.7 million on account of assumed liabilities generated by the November 2021 Saol acquisition, comprised of $2.2 million for the remaining acquired deferred inventory liability and $7.5 million for assumed royalty payment obligations to third parties on CYTOGAM net sales. 100 C. Research and Development, Patents and Licenses, Etc. Research and development expenses accounted for approximately 7.2% and 9.4% of total revenues for the years ended December 31, 2025 and 2024, respectively. Set forth below are the research and development expenses associated with our major development programs in the years ended December 31, 2025 and 2024: Year ended December 31, 2025 2024 Inhaled AAT $ 3,000 $ 6,889 Other early stage development programs 188 91 Unallocated salary 5,913 5,621 Unallocated facility cost allocated to research and development 2,912 1,559 Unallocated other expenses 982 1,025 Total research and development expenses $ 12,995 $ 15,185 In 2019, we commenced a global, randomized, double-blind, placebo-controlled Phase 3 InnovAATe pivotal study, to test our inhaled AAT therapy as a potential alternative to the current standard of care for AATD patients of weekly intravenous (IV) infusions, under the guidance of the FDA and the EMA. In December 2025, we announced that the DSMB advised us that, based on a prespecified interim futility analysis, the Phase 3 InnovAATe trial is unlikely to demonstrate a statistically significant benefit in its primary endpoint—lung function measured by FEV1. Based on the futility analysis outcome, we announced our decision to discontinue the trial. The discontinuation was solely due to the low likelihood of achieving the efficacy outcome and was not reflective of any safety concerns. Following our announcement, we took appropriate steps to inform all participating sites and other stakeholders of our decision to discontinue the study, and we are currently carrying out the discontinuation process in an organized and efficient manner. In connection with the termination of the study, in 2025, we accounted for costs totaling $2.6 million on account of study closeout costs. During the year ended December 31, 2025, prior to conducting the futility analysis, we entered into an exclusivity letter with an international biopharmaceutical company associated with the potential out-licensing of the distribution rights of the Inhaled AAT product. In consideration of the terms of the exclusivity letter, we received a non-refundable payment of $3.0 million. Following our decision to discontinue the InnovAATe clinical trial, the exclusivity letter was voided and the payment received was recorded as an offset to the 2025 research and development expenses associated with the clinical trial. Our current development programs are described in “Item 4. Information on the Company— Information on the Company—Business Overview—Our Development Product Pipeline”. We will determine which programs to pursue and how much to fund each program in response to the scientific, pre-clinical and clinical outcome and results of each product candidate, as well as an assessment of each product candidate’s commercial potential. See “Item 3. Key Information — D. Risk Factors — Risks Related to Development, Regulatory Approval and Commercialization of Product Candidates.” D. Trend Information. Adverse macroeconomic conditions, including inflation, slower economic growth, changes in fiscal and monetary policies, volatility in interest rates, and currency fluctuations, have impacted companies in Israel and globally. As future market conditions and fiscal and monetary policies remain highly uncertain, we cannot predict the extent to which a potential recessionary environment or continued economic volatility may affect demand for our Proprietary Products and Distribution segment products, or our ability to sustain our forecasted growth and other business and operational objectives. See also “Item 3.D. “Risk Factors–General Risks– Developments in the economy may adversely impact our business.” 101 E. Critical Accounting Estimates This discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with IFRS as issued by the IASB. The preparation of these financial statements requires management to make estimates that affect the reported amounts of our assets, liabilities, revenues and expenses. Material accounting policies employed by us, including the use of estimates, are presented in the notes to the consolidated financial statements included elsewhere in this Annual Report. We periodically evaluate our estimates, which are based on historical experience and on various other assumptions that management believes to be reasonable under the circumstances. Critical accounting policies are those that are most important to the portrayal of our financial condition and results of operations and require management’s subjective or complex judgments, resulting in the need for management to make estimates about the effect of matters that are inherently uncertain. If actual performance should differ from historical experience or if the underlying assumptions were to change, our financial condition and results of operations may be materially impacted. In addition, some accounting policies require significant judgment to apply complex principles of accounting to certain transactions, such as acquisitions, in determining the most appropriate accounting treatment. A detailed description of our accounting policies is provided in Note 2 to our consolidated financial statements appearing elsewhere in this Annual Report. The following provides an overview of certain accounting policies that we believe are the most critical for understanding and evaluating our financial condition and results of operations. Revenue Recognition Revenues are recognized when the customer obtains control over the promised goods or services. On the date of the contract’s inception, we assess the goods or services promised in the contract with the customer and identify the performance obligations. Revenues are recognized at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer. We include variable consideration, such as variable prices, discounts, chargeback, rebates, adjustments to the net market price, volume rebates, and, under certain conditions, a right to return option, in the transaction price, only to the extent it is highly probable that its inclusion will not result in a significant revenue reversal in the future once the uncertainty has been resolved. For contracts that consist of more than one performance obligation, at contract inception we allocate the contract transaction price to each performance obligation identified in the contract on a relative stand-alone selling price basis. We sell CYTOGAM, WINRHO SDF, VARIZIG and HEPAGAM B through our wholly owned subsidiary Kamada Inc. in the U.S. market to wholesalers/distributors for redistribution/sale of these products to other parties, such as hospitals and pharmacies. Revenue recognition occurs at a point in time when control of the product is transferred to the wholesalers/distributors, generally on delivery of the goods. Our gross sales are subject to various deductions, which are primarily composed of rebates and discounts to group purchasing organizations, government agencies, wholesalers, health insurance companies and managed healthcare organizations. These deductions represent estimates of the related obligations, requiring the use of judgment when estimating the effect of these sales deductions on gross sales for a reporting period. These adjustments are deducted from gross sales to arrive at net sales. We monitor the obligation for these deductions on at least a quarterly basis and record adjustments when rebate trends, rebate programs and contract terms, legislative changes, or other significant events indicate that a change in the obligation is appropriate. The Company has elected to apply the practical expedient such that it does not evaluate payment terms less than one year for the existence of a significant financing component. The following summarizes the nature of the most significant adjustments to revenues generated from the sales of these products in the U.S. market: Wholesaler chargebacks: We have arrangements with certain indirect customers whereby the customer is able to buy products from wholesalers at reduced prices. A chargeback represents the difference between the invoice price to the wholesaler and the indirect customer’s contractual discounted price. Provisions for estimating chargebacks are calculated based on historical experience and product demand. The provision for chargebacks is recorded as a deduction of revenue and of the trade receivables on the consolidated statements of financial position. 102 Fees for service: Consists of wholesaler/distributor fees associated with the redistribution of the products to hospitals and pharmacies. These fees are outlined in each wholesaler/distributor contract. The fees are invoiced on a monthly or quarterly basis by the wholesaler/distributor. The provisions for fees for service are recorded in the same period that the corresponding revenues are recognized. Right to return option: We offer a right to return option under certain conditions, primarily when goods are sold with a short expiry date. The revenue recognized reflects the amount of consideration that we expect to be entitled to, excluding the estimated returns. We also generate revenue in the form of royalty payments, due from the grant of a license for the use of our IP, knowhow and patents. Royalty revenue is recognized when the underlying sales have occurred. Business combinations and goodwill In November 2021, we acquired a portfolio of four FDA-approved plasma-derived hyperimmune commercial products from Saol. For details, see “Item 5. Operating and Financial Review and Prospects—Key Components of Our Results of Operations—Business Combination.” The acquisition was accounted for as a business combination, for which a key element of the consideration was contingent. The contingent consideration was recognized at fair value on the acquisition date and classified as a financial liability in accordance with IFRS 9. Contingent consideration is measured at fair value. The fair value is determined using valuation techniques and method, using future cash flows discounted. Subsequent changes in the fair value of the contingent consideration are recognized in profit or loss as finance income or finance expense. As part of the acquisition, we also assumed certain of Saol’s liabilities for the future payment of royalties (some of which are perpetual) and milestone payments to a third party subject to the achievement of corresponding CYTOGAM related net sales. Such assumed liabilities were accounted for as a financial liability on the acquisition date. Subsequently, the financial liability is measured at amortized cost, per IFRS 9. Remeasurement of the financial liability is recognized as finance income or expense in the statement of operations. For more information see Note 13a and Note 2e in our consolidated financial statements included in this Annual Report. Inventories Inventories are measured at the lower of cost and net realizable value. The cost of inventories is comprised of costs required to purchase raw materials and other indirect costs required to manufacture the product (including salaries), in addition, such costs may include the costs of purchase and shipping and handling. Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated selling costs. We determine a standard manufacturing capacity for each quarter. To the extent the actual manufacturing capacity in a quarter is lower than the predetermined standard, then a portion of the indirect costs which is equal to the product of the overall quarterly indirect costs multiplied by the quarterly manufacturing shortfall rate is recognized as costs of revenues. The determination of the standard manufacturing capacity is subject to significant assumptions such as expected demand for our products, expected industry sales growth and manufacturing schedules. Management’s determination of deviations from quality standards is based on qualitative assessment, historical data and our experience. 103 We periodically evaluate the condition and analyze the age of inventories and make provisions for slow-moving inventories accordingly. Unfavorable changes in market conditions may result in a need for additional inventory reserves that could adversely impact our gross margins. Conversely, favorable changes in demand could result in higher gross margins when we sell products or the reversal of previously recorded write-downs. We periodically assess the potential effect on inventory in cases of deviations from quality standards in the manufacturing process to identify potential required inventory write offs. Such assessment is subject to our professional judgment. Inventory that is produced following a change in manufacturing process prior to final approval of regulatory authorities is subject to our assessment as to the probability of obtaining such approval. We periodically reassess the probability of such approval and the remaining shelf life of such inventory. If regulatory approval is not probable, the cost of this inventory will be charged to research and development expenses. Impairment of Non-financial Assets, other than Goodwill We evaluate the need to record an impairment of the carrying amount of non-financial assets whenever events or changes in circumstances indicate that the carrying amount is not recoverable. If the carrying amount of non-financial assets exceeds their recoverable amount, the assets are reduced to their recoverable amount. The recoverable amount is the higher of fair value less costs of disposal and value in use. The recoverable amount of an asset that does not generate independent cash flows is determined for the cash-generating unit to which the asset belongs. Impairment losses are recognized in profit or loss. An impairment loss of an asset, other than goodwill, is reversed only if there have been changes in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognized. Reversal of an impairment loss, as above, will not be increased above the lower of the carrying amount that would have been determined (net of depreciation or amortization) had no impairment loss been recognized for the asset in prior years and its recoverable amount. The reversal of impairment loss of an asset presented at cost is recognized in profit or loss. During the year ended December 31, 2024, we recognized a $0.6 million impairment loss on intangible assets associated with distribution rights of certain pharmaceutical products in our Distribution segment. Goodwill impairment We review goodwill for impairment once a year, on December 31, or more frequently if events or changes in circumstances indicate that our goodwill may be impaired. Goodwill is tested for impairment by assessing the recoverable amount of the cash-generating unit (or group of cash-generating units) to which the goodwill has been allocated. An impairment loss is recognized if the recoverable amount of the cash-generating unit (or group of cash-generating units) to which goodwill has been allocated is less than the carrying amount of the cash-generating unit (or group of cash-generating units). Any impairment loss is allocated first to goodwill. Impairment losses recognized for goodwill cannot be reversed in subsequent periods. The goodwill is attributed to the Proprietary Products segment, which represents the lowest level within the Company at which goodwill is monitored for internal management purposes. As of December 31, 2025, we performed an assessment for goodwill impairment for our Proprietary Products segment, which is the level at which goodwill is monitored for internal management purposes and concluded that the fair value of the Proprietary Products segment exceeds the carrying amount by approximately 40%. The carrying amount of goodwill assigned to this segment is $30.3 million. When evaluating the fair value of the Proprietary Products segment, the Company used a discounted cash flow model which utilized Level 3 measures that represent unobservable inputs. Key assumptions used to determine the estimated fair value include: (a) internal cash flows forecasts for five years following the assessment date, including expected revenue growth, costs to produce, operating profit margins and estimated capital needs; (b) an estimated terminal value using a terminal year long-term future growth rate of -5.0% determined based on the long-term expected prospects of the reporting unit; and (c) a discount rate (post-tax) of 10.6% which reflects the weighted-average cost of capital adjusted for the relevant risk associated with the Proprietary Products segment’s operations. 104 Actual results may differ from those assumed in our valuation method. It is reasonably possible that our assumptions described above could change in future periods. If any of these were to vary materially from our plans, we may record impairment of goodwill allocated to the Proprietary Products segment reporting unit in the future. A hypothetical decrease in the growth rate of 1% or an increase of 1% to the discount rate would have reduced the fair value of the Proprietary Products segment reporting unit by approximately $6.5 million and $25.2 million, respectively. The sensitivity analysis described above did not lead to an increase of the recoverable amount over the carrying amount. Based on our assessment as of December 31, 2025, no goodwill was determined to be impaired. For more information see Note 10 to our consolidated financial statements included in this Annual Report for more details. Research and development costs Research and development costs include preclinical and clinical costs (as well as cost of materials associated with the development of new products or existing products for new therapeutic indications). In addition, these costs include additional product development activities with respect to approved and distributed products as well as post marketing commitment research and development activities. Research expenses are recognized when incurred. Costs incurred on development projects are recognized as intangible assets as of the date that it can be established that it is probable that future economic benefits attributable to the relevant project will be realized, considering factors including the technological and commercial feasibility of the project. Specifically, intangible assets arising from our development projects are recognized on our balance sheet if all of the following criteria are met: ● the development project is clearly defined and identifiable; ● the attributable costs can be measured reliably during the development period; ● the technological feasibility, adequate resources to complete and a market for the product or an internal use of the product can be demonstrated; and ● management has the intent to produce and market the product or otherwise utilize it. Development costs are capitalized as of the date when these criteria are met. Until such criteria are met, development costs incurred are recognized as an expense. Our development projects are often subject to regulatory approval procedures and other uncertainties. Therefore, the conditions for the capitalization of costs incurred before receipt of approvals are not normally satisfied, and development expenditures are recognized in profit or loss when incurred. Under limited circumstances, when development projects pertain to existing therapeutic indications, development costs are eligible for capitalization. Share-based Payment Transactions Our employees and directors are entitled to remuneration in the form of equity-settled share-based payment transactions (options and restricted share units). The cost of equity-settled transactions is measured at the fair value of the equity instruments granted at grant date. We use the binomial model when estimating the grant date fair value of equity settled share options. We selected the binomial option pricing model as the most appropriate method for determining the estimated fair value of our share-based awards without market conditions. We use the share price at the grant date when estimating the grant date fair value of equity settled restricted share units. The determination of the grant date fair value of options using an option pricing model is affected by estimates and assumptions regarding several complex and subjective variables. These variables include the expected volatility of our share price over the expected term of the options, share option exercise and expiration behaviors, expected exercise multiple, risk-free interest rates, expected dividends and the price of our ordinary shares on the TASE (or Nasdaq for persons who are subject to U.S. federal income tax), which are estimated as follows: ● Expected Life. The expected life of the share options is based on historical data and is not necessarily indicative of the exercise patterns of share options that may occur in the future. 105 ● Volatility. The expected volatility of the share prices reflects the assumption that the historical volatility of the share prices on the TASE and NASDAQ is reasonably indicative of expected future trends. ● Risk-free interest rate. The risk-free interest rate is based on the yields of non-index-linked Bank of Israel treasury bonds with maturities similar to the expected term of the options for each option group. ● Expected forfeiture rate. The post-vesting forfeiture rate is based on the weighted average historical forfeiture rate. ● Dividend yield and expected dividends. While on March 5, 2025, we announced a special cash dividend of $0.20 per share (approximately $11.5 million in the aggregate), with a record date (ex-dividend date) of March 17, 2025, which was paid on April 7, 2025, we have historically retained our earnings to finance operations and expand our business and may not pay additional cash dividends in the future. Through the end of 2025, we assumed a dividend yield and expected dividends of zero. ● Share price. The price of our ordinary shares on the TASE (or Nasdaq for persons who are subject to U.S. federal income tax) used in determining the grant date fair value of options is based on the price on the grant date. If any of the assumptions used in the binomial model change significantly, share-based compensation for future awards may differ materially compared with the awards granted previously. The cost of equity-settled transactions is recognized in profit or loss, together with a corresponding increase in equity, during the period which the performance and/or service conditions are to be satisfied, ending on the date on which the relevant grantee become fully entitled to the award. The cumulative expense recognized for equity-settled transactions at the end of each reporting period until the vesting date reflects the extent to which the vesting period has expired and our best estimate of the number of equity instruments that will ultimately vest. The expense or income recognized in profit or loss represents the change between the cumulative expense recognized at the end of the reporting period and the cumulative expense recognized at the end of the previous reporting period. No expense is recognized for awards that do not ultimately vest. If we modify the conditions on which equity instruments were granted, an additional expense is recognized for any modification that increases the total fair value of the share-based payment arrangement or is otherwise beneficial to the grantee at the modification date. If a grant of an equity instrument is cancelled, it is accounted for as if it had vested on the cancellation date, and any expense not yet recognized for the grant is recognized immediately. However, if a new grant replaces the cancelled grant and is identified as a replacement grant on the grant date, the cancelled and new grants are accounted for as a modification of the original grant, as described above. Post-employment Benefits Liabilities Our post-retirement benefit plans are normally financed by contributions to pension funds or similar entities, including insurance companies, and are classified as defined contribution plans or defined benefit plans. We operate a defined benefit plan in respect of severance pay pursuant to the Israeli Severance Pay Law, 1963. See Note 2k and Note 16 to our consolidated financial statements included in this Annual Report for more details. 106 The present value of our severance pay depends on several factors that are determined on an actuarial basis using several assumptions. The assumptions used in determining the net cost or income for severance pay and plan assets include a discount rate. Any changes in these assumptions will impact the carrying amount of severance pay and plan assets. Other key assumptions inherent to the valuation include employee turnover, inflation, expected long term returns on plan assets and future payroll increases. The expected return on plan assets is determined by considering the expected returns available on assets underlying the current investments policy. These assumptions are given a weighted average and are based on independent actuarial advice and are updated on an annual basis. Actual circumstances may vary from these assumptions, giving rise to a different severance pay liability. A sensitivity analysis was performed based on reasonably possible changes of the principal assumptions (discount rate and future salary increases) underlying the defined benefit plan. If the discount rate would be one percent higher or lower, and all other assumptions were held constant, the defined benefit obligation would decrease by $110,000 or increase by $169,000, respectively. If the expected salary growth would increase or decrease by one percent, and all other assumptions were held constant, the defined benefit obligation would increase by $159,000 or decrease by $104,000, respectively. Since August 2022, Kamada Inc., our U.S. wholly owned subsidiary has a 401(k) defined contribution plan covering certain employees in the United States. All eligible employees may elect to contribute up to 100% of their annual compensation to the plan through salary deferrals, subject to the U.S. Internal Revenue Service (“IRS”) limits. For the year ended December 31, 2025, the contribution limit was $23,500 per year (for certain employees over 50 years of age the maximum contribution was $31,000 per year). The U.S. subsidiary matches 3% of employee contributions up to the combined maximum employee and employer contributions totaling $70,000 (for certain employees over 50 years of age the maximum contribution was $77,500 per year). Taxes on income Current and Deferred taxes Taxes on income in profit or loss comprise of current taxes, deferred taxes and taxes in respect of prior years, which are mainly recognized in profit or loss. Deferred tax assets are reviewed at the end of each reporting period and reduced to the extent that it is not probable that they will be utilized. Deductible carryforward losses and temporary differences for which deferred tax assets have not been recognized are reviewed at the end of each reporting period, and a respective deferred tax asset is recognized to the extent that their utilization is probable. We operate in multiple tax jurisdictions. Deferred taxes are offset in the statement of financial position if there is a legally enforceable right to offset a current tax asset against a current tax liability and the deferred taxes relate to the same taxpayer and the same taxation authority. As of December 31, 2025, we recorded $2.0 million of tax expense associated with deferred tax asset on account of the remaining NOLs and other temporary differences as we estimated that their utilization is probable in the foreseeable future. Uncertain tax positions We evaluate potential uncertain tax positions, including additional tax and interest expenses, and recognize a provision when it is more probable than not that we will have to use our economic resources to pay such obligation. As of December 31, 2025 we accounted for tax expenses associated with uncertain tax positions in the amount of $1.2 million. 107