Annual Report for Fiscal Year Ending July 31, 2026 (Form 10-K)

Management's Discussion and Analysis of Financial Condition and Results of Operations

This Annual Report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including statements that contain the words "believes," "anticipates," "expects," "plans," "intends" and similar words and phrases, including statements regarding FDA's review of our New Drug Application for Trappsol® Cyclo™ (remibetadex), including whether it will be filed, granted priority review, be approved, or be eligible for or receive a rare pediatric disease priority review voucher. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from the results projected in any forward-looking statement. In addition to the factors specifically noted in the forward-looking statements, other important factors, risks and uncertainties that could result in those differences include, but are not limited to, those discussed under Item 1A to Part I "Risk Factors" in this Annual Report. The forward-looking statements are made as of the date of this Annual Report, and we assume no obligation to update the forward-looking statements, or to update the reasons why actual results could differ from those projected in the forward-looking statements. Investors should consult all of the information set forth in this report and the other information set forth from time to time in our reports filed with the Securities and Exchange Commission pursuant to the Securities Act of 1933 and the Securities Exchange Act of 1934, including our reports on Forms 10-Q and 8-K.

The following discussion should be read in conjunction with the Consolidated Financial Statements and Notes thereto included in Item 8 of this Annual Report.

Overview

Rafael Holdings, Inc. ("Rafael Holdings", "Rafael", "we" or the "Company") is a biotechnology company that develops pharmaceuticals and holds interests in clinical and early-stage companies that develop pharmaceuticals and medical devices. Our lead candidate is Trappsol® Cyclo™ (remibetadex), an investigational therapy for the potential treatment of Niemann-Pick Disease Type C ("NPC"), a rare, fatal and progressive genetic disorder. We have completed the pivotal Phase 3 clinical trial of Trappsol® Cyclo™ and on October 28, 2026 submitted a New Drug Application to the U.S. Food and Drug Administration. We also hold: (i) a majority equity interest in LipoMedix Pharmaceuticals Ltd. ("LipoMedix"), a clinical stage pharmaceutical company; (ii) Barer Institute Inc. ("Barer"), a wholly-owned subsidiary holding equity interests in early stage cancer assets; (iii) a majority equity, and debt, interest in Cornerstone Pharmaceuticals, Inc. ("Cornerstone"), formerly known as Rafael Pharmaceuticals Inc., a cancer metabolism-based therapeutics company; (iv) a majority equity interest in Rafael Medical Devices, LLC ("Rafael Medical Devices"), an orthopedic-focused medical device company developing instruments to advance minimally invasive surgeries; and (v) a majority equity interest in Day Three Labs, Inc. ("Day Three"), which empowers third-party manufacturers to bring to market better, cleaner, more precise and predictable versions of their product by utilizing Day Three's technology and which holds equity and debt interests in two industry related companies. Our primary focus is to obtain FDA approval of Trappsol® Cyclo™, for which we submitted a New Drug Application on October 28, 2026 following the recent completion of Cyclo's pivotal Phase 3 clinical trial, and, if approved, to bring that product to market. We also evaluate opportunities to expand our investment portfolio through strategic investments, including in therapeutics, that address high unmet medical needs. We continuously evaluate our other holdings to ensure the future focus of our resources is on core assets and specifically the Trappsol® Cyclo™ clinical development and commercialization efforts.

Historically, we owned real estate assets. As of July 31, 2026, we hold a portion of a commercial building in Jerusalem, Israel as our sole remaining real estate asset.

On March 25, 2025, we consummated the Merger (as defined below) with Cyclo whereby Cyclo became a wholly-owned subsidiary. In May 2023, we first invested in Cyclo, a clinical-stage biotechnology company that develops cyclodextrin-based products for the potential treatment of neurodegenerative diseases. Cyclo's lead drug candidate is Trappsol® Cyclo™ (hydroxypropyl-β-cyclodextrin, IV), a treatment for NPC. NPC is a rare and fatal autosomal recessive genetic disease resulting in disrupted cholesterol metabolism that impacts the brain, lungs, liver, spleen, and other organs. In January 2017, FDA granted Fast Track designation to Trappsol® Cyclo™ for the treatment of NPC. Initial patient enrollment in the U.S. Phase I study commenced in September 2017 and, in May 2020, Cyclo announced Top Line data indicating Trappsol® Cyclo™ was well tolerated in this study. Cyclo has completed its pivotal Phase 3 Clinical Trial evaluating Trappsol® Cyclo™ in Pediatric and Adult Patients with Niemann-Pick Disease, Type C and announced topline data from the study on September 30, 2026. The study did not meet its primary endpoint in the overall population; a prespecified analysis in patients receiving background miglustat and/or leucine therapy demonstrated a statistically significant treatment benefit. On October 28, 2026, Cyclo submitted a New Drug Application ("NDA") to FDA seeking approval of Trappsol® Cyclo™ for the treatment of the neurovisceral manifestations of NPC in adult and pediatric patients from birth. Within 60 days of receipt, the FDA will determine whether the application is complete and acceptable for filing and, if accepted, whether Priority Review will be granted. If the application is accepted, the FDA will assign a Prescription Drug User Fee Act (PDUFA) target action date. The NDA includes a request for a rare pediatric disease priority review voucher. The United States Adopted Names ("USAN") Council has assigned the nonproprietary name "remibetadex" to Trappsol® Cyclo™. In addition, on April 16, 2026, Cyclo entered into an exclusive, worldwide, royalty-bearing Patent License Agreement with the Massachusetts Institute of Technology ("MIT") for certain patent rights relating to small molecules to improve myelination in Alzheimer's disease and APOE4 carriers, under which Cyclo may develop and commercialize products containing hydroxypropyl-β-cyclodextrin for Alzheimer's disease.

LipoMedix is a clinical stage Israeli company based in Israel that is focused on the development of a product candidate, Promitil, that holds the potential to be a therapy for cancer based on liposome delivery. As of July 31, 2026, our ownership interest in LipoMedix was approximately 95%. As needed, we provide debt or equity funding to LipoMedix to support its development and clinical efforts. LipoMedix has recently initiated an IST (investigator sponsored study) specifically an open-label, Phase II Single-Arm Trial of PROMITIL Combined with Radiotherapy in patients with Cisplatin-Ineligible Head and Neck Cancer. LipoMedix is also currently exploring strategic options for its lead candidate, including potential licensing opportunities, collaborations with industry partners, and investigator-initiated studies.

In 2019, we established Barer, originally as a preclinical cancer metabolism research operation, to focus on developing a pipeline of novel therapeutic compounds, including compounds designed to regulate cancer metabolism with potentially broader application in other indications beyond cancer. Barer was comprised of scientists and academic advisors that are experts in cancer metabolism, chemistry, and drug development. In addition to its own internal discovery efforts, Barer pursued collaborative research agreements and in-licensing opportunities with leading scientists from top academic institutions. Barer's majority owned subsidiary, Farber Partners, LLC ("Farber"), was formed around one such agreement with Princeton University's Office of Technology Licensing ("Princeton") for technology from the laboratory of Dr. Joshua Rabinowitz, in the Department of Chemistry, Princeton University, for an exclusive worldwide license to its SHMT (serine hydroxymethyltransferase) inhibitor program. In November 2022, we resolved to curtail its early-stage development efforts, including pre-clinical research at Barer and have, since that date, ceased almost all of such activity. Since then, we have sought partners for Farber programs and have entered into a license agreement for one of its technologies that is in the pre-clinical research stage with the Ludwig Institute of Cancer Research and have transferred majority ownership of another one of its technologies, SHMT, to a new company, Forme Therapeutics, that is being managed by Dr. Joshua Rabinowitz with the goal of developing SHMT while seeking out external investment and partnerships. Going forward, we expect that Barer will primarily operate as an entity holding interest in these two cancer-focused opportunities.

On March 13, 2024, Cornerstone consummated a restructuring of its outstanding debt and equity interests (the "Cornerstone Restructuring"). As a result of the Cornerstone Restructuring, Rafael became a 67% owner of the issued and outstanding common stock of Cornerstone (the "Cornerstone Acquisition"), and Cornerstone became a consolidated subsidiary of Rafael. We are currently reviewing Cornerstone's current efforts, prospects and available resources to determine the optimal operational direction.

In May 2021, we formed Rafael Medical Devices, an orthopedic-focused medical device company developing instruments to advance minimally invasive surgeries. In August 2023, Rafael Medical Devices sold an aggregate 31.6% equity interest to third parties for $925,000. In February 2025, we invested approximately $582,000 in cash, and Rafael Medical Devices raised approximately $44,000 from third parties in exchange for Rafael Medical Devices' Class A Units. In July 2026, we converted the balance of an intercompany promissory note plus accrued interest, totaling $2,087,086, in exchange for Rafael Medical Devices' Class A Units. As a result, we currently hold an 83% equity interest in Rafael Medical Devices. On December 11, 2024, Rafael Medical Devices received a substantial equivalence determination for the VECTR System from the Food and Drug Administration ("FDA") in response to Rafael Medical Devices' 510(k) premarket notification. FDA's clearance of the VECTR System is for use in minimally invasive ligament or fascia release surgeries, such as carpal tunnel release in the wrist and cubital tunnel release in the elbow. The VECTR System has been classified into Class II and is subject to special controls (performance standards). Rafael Medical Devices' development of future products will depend upon the success of the VECTR System and our Company's ability to identify attractive investment and development opportunities.

In January 2024, we entered into a series of transactions with Day Three and certain of its shareholders, acquiring a controlling interest in Day Three and subsequently consolidating Day Three's results (the "Day Three Acquisition"). On March 14, 2025, Day Three Labs Manufacturing ("DTLM"), a majority-owned subsidiary of Day Three, entered into an Asset Purchase Agreement and Licensing Agreement, pursuant to which DTLM sold assets and licensed certain applications of their Unlokt™ technology used in their cannabinoid ingredient manufacturing business in exchange for equity and debt interests in these companies.

Results of Operations

Our business consists of three reportable segments - Healthcare, Infusion Technology and Real Estate. We evaluate the performance of our Healthcare segment based primarily on results of clinical trials and loss from operations, and the Infusion Technology and Real Estate segments based primarily on revenues and income (loss) from operations. Accordingly, the income and expense line items below loss from operations are only included in the discussion of consolidated results of operations.

Healthcare segment

Results of operations for our Healthcare segment were as follows:

		Year Ended July 31,								Change
		2026				2025				$				%
		(in thousands)
Product revenue		$	519			$	515			$	4				0	%
Cost of product revenue			(42	)			(28	)			(14	)			50	%
General and administrative			(9,405	)			(13,165	)			3,760				(29	)%
Research and development			(24,322	)			(12,568	)			(11,754	)			94	%
Depreciation and amortization			(131	)			(48	)			(83	)			173	%
Loss from operations		$	(33,381	)		$	(25,294	)		$	(8,087	)			32	%

The Healthcare segment is comprised of the activities of Cyclo, Rafael Medical Devices, Barer, LipoMedix, Farber, and Cornerstone. As of July 31, 2026, we held a 100% interest in Barer and Cyclo, a 95% interest in LipoMedix, a 93% interest in Farber, a 67% interest in Cornerstone and an 83% interest in Rafael Medical Devices.

Product revenue. Total revenue for the Healthcare segment for the year ended July 31, 2026, was approximately $519 thousand compared to $515 thousand for the year ended July 31, 2025. Product revenue is generated by Cyclo's specialty chemicals business and VECTR System devices sold by Rafael Medical Devices.

Cost of product revenue. Cost of product revenue for the Healthcare segment for the year ended July 31, 2026, was $42 thousand compared to $28 thousand for the year ended July 31, 2025.

General and administrative expenses. General and administrative expenses consist mainly of payroll, stock-based compensation expense, benefits, facilities, consulting and professional fees. The decrease of $3.8 million in general and administrative expenses for the year ended July 31, 2026 compared to the year ended July 31, 2025 is primarily attributable to decreases: in professional fees of $1.3 million, primarily due to merger-related costs in the prior year; in payroll expense of $0.6 million; in stock based compensation expense of $1.2 million; in other expenses of $0.6 million; and in Cyclo's general and administrative expenses of $0.1 million.

Research and development expenses. Research and development expenses are derived from activity at Cyclo, Barer, LipoMedix, Farber, Cornerstone and Rafael Medical Devices. Research and development expenses increased by $11.8 million for the year ended July 31, 2026 compared to the year ended July 31, 2025. For the year ended July 31, 2026, the increase was attributable to the increase in Cyclo's research and development expenses which amounted to $13.4 million in fiscal 2026, as well as an increase in R&D stock-based compensation expense of $0.4 million, offset by decreases: in R&D payroll of $1.5 million; and in clinical trial and other expenses of $0.6 million.

Infusion Technology segment

Results of operations for our Infusion Technology segment were as follows:

		Year Ended July 31,								Change
		2026				2025				$				%
		(in thousands)
Infusion Technology revenue		$	-			$	93			$	(93	)			(100	)%
Cost of Infusion Technology revenue			-				(106	)			106				(100	)%
Loss on impairment of goodwill			-				(3,050	)			3,050				(100	)%
General and administrative			(43	)			(320	)			277				(87	)%
Research and development			(11	)			(255	)			244				(96	)%
Depreciation and amortization			-				(177	)			177				(100	)%
Loss from operations		$	(54	)		$	(3,815	)		$	3,761				(99	)%

The Infusion Technology segment is comprised of our majority equity interest in Day Three, which was acquired in January 2024. Revenues associated with the Infusion Technology segment consist of Infusion Technology revenue derived from Day Three's Unlokt™ technology. Cost of Infusion Technology revenue includes supplies, materials, production labor and travel costs. General and administrative expenses for the Infusion Technology segment consist mainly of payroll, insurance, software and licenses. Research and development expenses for the Infusion Technology segment include costs related to the development of new products and services.

Due to reductions in certain operations, including a layoff within the Company's Infusion Technology segment, we concluded that a triggering event occurred during November 2024, that required us to assess if there was an impairment under ASC 350 and ASC 360. We completed an analysis pursuant to ASC 360 and determined that the expected undiscounted cash flows of the asset group exceeded its carrying amount, indicating that the long-lived assets were not impaired. In accordance with ASC 350, we performed a quantitative goodwill impairment test, which indicated that the carrying amount of the reporting unit exceeded the estimated fair value of the reporting unit, indicating that the goodwill of the reporting unit was impaired. We recorded an impairment charge of $3.1 million related to the Infusion Technology segment's goodwill during the year ended July 31, 2025.

On March 14, 2025, Day Three Labs Manufacturing entered into the DTLM Sale Agreement, pursuant to which it sold assets and licensed certain applications of their Unlokt™ technology used in Infusion Technology services, causing an overall reduction in revenues and operating expenses during the year ended July 31, 2026 compared to the prior year period.

Real Estate segment

The Real Estate segment consists of a portion of a commercial building in Israel. Consolidated revenue, expenses and loss for our Real Estate segment were as follows:

		Year Ended July 31,								Change
		2026				2025				$				%
		(in thousands)
Rental - Third Party		$	236			$	197			$	39				20	%
Rental - Related Party			119				112				7				6	%
General and administrative			(256	)			(296	)			40				(14	)%
Depreciation and amortization			(73	)			(63	)			(10	)			16	%
Income (loss) from operations		$	26			$	(50	)		$	76				(152	)%

General and administrative expenses. General and administrative expenses consist mainly of real estate taxes, payroll, accounting and legal fees, as well as building operating and office expenses.

Consolidated Operations

Our consolidated income and expense line items below loss from operations were as follows:

		Year Ended July 31,								Change
		2026				2025				$				%
		(in thousands)
Loss from operations		$	(33,409	)		$	(29,159	)		$	(4,250	)			15	%
Interest income			1,236				1,996				(760	)			(38	)%
Realized gain on available-for-sale securities			-				178				(178	)			(100	)%
Unrealized loss on investment - Cyclo			-				(5,144	)			5,144				(100	)%
Unrealized loss on convertible notes receivable, due from Cyclo			-				(719	)			719				(100	)%
Interest expense			(333	)			(658	)			325				(49	)%
Gain on settlement of accounts payable and convertible notes payable			4,422				-				4,422				100	%
Other income, net			117				310				(193	)			(62	)%
Loss before income taxes			(27,967	)			(33,196	)			5,229				(16	)%
Benefit from income taxes			13				2,553				(2,540	)			(99	)%
Consolidated net loss			(27,954	)			(30,643	)			2,689				(9	)%
Net income (loss) attributable to noncontrolling interests			1,681				(123	)			1,804				1467	%
Net loss attributable to Rafael Holdings, Inc.		$	(29,635	)		$	(30,520	)		$	885				(3	)%

Interest income. We recorded interest income of $1.2 million and $2.0 million for the years ended July 31, 2026 and 2025, respectively. In November 2024, we sold our investments in available-for-sale securities and cash equivalents to reallocate assets to better align with our strategic goals. Accordingly, interest income has decreased due to a lower interest rate and decreased cash and other interest income earning balances.

Realized gain on available-for-sale securities. We recognized a realized gain on available-for-sale securities of $0.2 million for the year ended July 31, 2025. No such realized gains were recognized during the year ended July 31, 2026 as the available-for-sale portfolio was sold in November 2024.

Unrealized loss on investment - Cyclo. Unrealized gains and losses on investment - Cyclo were recognized as a result of changes in the fair value of our investments in Cyclo common stock and warrants which fluctuated due to the volatility of the market price of Cyclo common stock leading up to the Cyclo Merger during the year ended July 31, 2025.

Unrealized loss on convertible notes receivable, due from Cyclo. We recorded an unrealized loss of $0.7 million for the year ended July 31, 2025, related to the change in fair value of our convertible notes receivable due from Cyclo, which were forgiven as part of the Cyclo merger.

Interest expense. We recorded interest expense of $0.3 million and $0.7 million related to Cornerstone's convertible notes and creditor payable for the years ended July 31, 2026 and 2025, respectively. The decrease during these periods is primarily attributable to the settlement of the creditor payable and certain convertible notes during the year ended July 31, 2026.

Gain on settlement of accounts payable and convertible notes payable. We recorded a gain of $4.4 million for the year ended July 31, 2026, related to settlements between Cornerstone and various vendors and convertible notes holders.

Other income, net. Other income, net was $0.1 million for the year ended July 31, 2026 due to a gain on the sale of certain equipment held by Cornerstone. Other income, net was $0.3 million for the year ended July 31, 2025, due to the gain on sale of certain Cornerstone IPR&D.

Benefit from income taxes. We recorded a net benefit from income taxes of an insignificant amount for the year ended July 31, 2026. For the year ended July 31, 2025, we recorded an income tax benefit of $2.6 million, primarily related to the sale of state net operating losses.

Net income (loss) attributable to noncontrolling interests. The change in the net income (loss) attributable to noncontrolling interests is primarily attributed to net income at Cornerstone during the year ended July 31, 2026, driven by gains on the settlement of accounts payable and convertible notes payable.

Liquidity and Capital Resources

		As of July 31,								Change
		2026				2025				$				%
Balance Sheet Data:		(in thousands)
Cash and cash equivalents		$	22,074			$	52,769				(30,695	)			(58	)%
Convertible notes receivable classified as available-for-sale			2,044				1,858				186				10	%
Working capital			14,830				45,114				(30,284	)			(67	)%
Total assets			83,055				114,109				(31,054	)			(27	)%
Total equity attributable to Rafael Holdings, Inc.			66,309				94,391				(28,082	)			(30	)%
Noncontrolling interests			5,661				3,980				1,681				42	%
Total equity			71,970				98,371				(26,401	)			(27	)%

		Year Ended July 31,								Change
		2026				2025				$				%
Cash flows (used in) provided by:		(in thousands)
Operating activities		$	(29,987	)		$	(18,924	)		$	(11,063	)			58	%
Investing activities			(676	)			44,035				(44,711	)			(102	)%
Financing activities			(116	)			24,830				(24,946	)			(100	)%
Effect of exchange rates on cash and cash equivalents			84				153				(69	)			(45	)%
(Decrease) increase in cash and cash equivalents		$	(30,695	)		$	50,094			$	(80,789	)			(161	)%

Capital Resources

As of July 31, 2026, we had a working capital surplus of approximately $14.8 million, an accumulated deficit of approximately $261.9 million and cash and cash equivalents of approximately $22.1 million. Throughout our history as an independent company, we have incurred recurring losses from operations and, for the years ended July 31, 2026 and 2025, had consolidated net losses of approximately $28.0 million and $30.6 million, respectively, and net cash used in operating activities of approximately $30.0 million and $18.9 million, respectively. We expect to incur significant expenses in connection with our ongoing activities to support FDA's review of our NDA for Trappsol® Cyclo™, submitted on October 28, 2026, and, if approved, to commercialize Trappsol® Cyclo™. As a result, management has concluded that substantial doubt exists regarding our ability to continue as a going concern for at least 12 months from the date of issuance of the accompanying consolidated financial statements.

Our ability to continue operations depends on our ability to raise additional capital through equity financings, debt financings, strategic collaborations, or other sources. While we are actively pursuing additional financing, there can be no assurance that such funding will be available on acceptable terms, or at all. If we are unable to obtain sufficient capital, we may be required to delay, reduce, or discontinue our clinical development programs or other operations, which could materially adversely affect our business.

Operating Activities

For the year ended July 31, 2026, cash used in operating activities was $30.0 million due to our net loss of $28.0 million adjusted for non-cash items totaling $3.0 million. Cash generated from changes in operating assets and liabilities primarily included the collection of other receivables of $1.2 million and an increase in accounts payable and accrued expenses of $0.3 million offset by an increase in prepaid expenses and other current assets of $0.3 million and a decrease in accrued expenses, noncurrent of $0.4 million.

For the year ended July 31, 2025, cash used in operating activities was $18.9 million, due to our net loss of $30.6 million adjusted for non-cash items totaling $10.9 million. Cash generated from changes in operating assets and liabilities included the collection of interest receivables of $0.5 million and a decrease in prepaid expenses and prepaid clinical costs of $0.9 million.

Investing Activities

Cash used in investing activities for the year ended July 31, 2026 of $0.7 million was primarily due to the purchase of preferred shares and warrants from Nina Medical Ltd. for $0.8 million, offset by proceeds of $0.1 million from the sale of property and equipment.

Cash provided by investing activities for the year ended July 31, 2025 was primarily due to proceeds of $80.7 million from sales and maturities of available-for-sale securities and $2.5 million in proceeds from hedge funds, offset by purchases of available-for-sale securities of approximately $17.0 million, purchases of $19.5 million in convertible notes receivable, due from Cyclo, and net cash used in the Cyclo Merger of $2.7 million.

Financing Activities

Cash used in financing activities for the year ended July 31, 2026 was related to payment for taxes related to shares withheld for employee taxes of $0.1 million and cash paid to settle convertible notes payable of an insignificant amount.

Cash provided by financing activities for the year ended July 31, 2025 was primarily related to net proceeds from the issuance of common stock in the Rights Offering of $25 million offset by a payment related to shares withheld for employee taxes of $0.2 million.

We do not anticipate paying dividends on our common stock unless and until we achieve sustainable profitability and retain certain minimum cash reserves. The payment of dividends in any specific period will be at the sole discretion of our Board of Directors.

Critical Accounting Estimates

We have chosen accounting policies that we believe are appropriate to accurately and fairly report our operating results and financial condition in conformity with U.S. GAAP. We apply these accounting policies in a consistent manner. Our significant accounting policies are discussed in Note 2, "Summary of Significant Accounting Policies", in our accompanying consolidated financial statements.

The application of critical accounting policies requires that we make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosures. These estimates and assumptions are based on historical and other factors believed to be reasonable under the circumstances. We evaluate these estimates and assumptions on an ongoing basis and may retain outside consultants to assist in our evaluation. If actual results ultimately differ from previous estimates, the revisions are included in results of operations in the period in which the actual amounts become known. The critical accounting policies that involve the most significant management judgments and estimates used in preparation of our consolidated financial statements, or are the most sensitive to change from outside factors are:

Business Combinations

The purchase price for acquisitions are allocated to the assets acquired and liabilities assumed based on their estimated fair values at the date of acquisition. The fair value of identifiable intangible assets, in-process research and development ("IPR&D") and customer relationships, is based on detailed valuations that use information and assumptions provided by management, including expected future cash flows. We allocate any excess purchase price over the fair value of the identifiable net assets and liabilities acquired to goodwill. Acquired IPR&D pursuant to an asset acquisition that has no alternative future use is expensed immediately as a component of in-process research and development expense in the consolidated statements of operations and comprehensive loss.

Impairment of Long-Lived Assets

In accordance with ASC 360, Property, Plant, and Equipment, we assess the recoverability of long-lived assets, which include property and equipment, amortizable intangible assets, and patents, whenever significant events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable. If indicators of impairment exist, projected future undiscounted cash flows associated with the asset group are compared to its carrying amount to determine whether the asset group's carrying value is recoverable. Any resulting impairment is recorded as a reduction in the carrying value of the related asset in excess of fair value and a charge to operating results.

Due to reductions in certain operations including a layoff within our Infusion Technology segment, we concluded that a triggering event occurred during November 2024, that required us to evaluate long-lived assets within the Infusion Technology segment for potential impairment under ASC 360. Accordingly, we completed an analysis pursuant to ASC 360 and determined that the expected undiscounted cash flows of the asset group exceeded its carrying amount, indicating that the long-lived assets were not impaired.

Impairment of IPR&D

We evaluate our IPR&D assets for impairment annually and whenever significant events or changes in circumstances indicate that the carrying amount of such assets may be impaired. In performing our annual IPR&D impairment test, we are permitted to first assess the qualitative factors to determine whether it is more likely than not that the fair value of an IPR&D asset is less than its carrying amount. As part of the qualitative assessment, we consider the results of clinical trials, among other factors, in evaluating whether an IPR&D asset is impaired.

Goodwill

We assess goodwill for impairment on an annual basis as of May 31, or more frequently when events and circumstances occur indicating that the recorded goodwill may be impaired. Management regularly monitors current business conditions and other factors including, but not limited to, adverse industry or economic trends and lower projections of profitability that may impact future operating results. The process of evaluating the potential impairment of goodwill requires significant judgment. In performing our annual goodwill impairment test, we are permitted to first assess qualitative factors to determine whether it is more likely than not that the fair value of any of our reporting units is less than its carrying amount, including goodwill. In performing the qualitative assessment, management considers certain events and circumstances specific to the reporting unit and the entity as a whole, such as macroeconomic conditions, industry and market considerations, overall financial performance and cost factors when evaluating whether it is more likely than not that the fair value of any of the reporting units is less than its carrying amount. We are also permitted to bypass the qualitative assessment and proceed directly to the quantitative test. If we choose to undertake the qualitative assessment and conclude that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, we would then proceed to the quantitative impairment test. In the quantitative assessment, we compare the fair value of the reporting unit to its carrying amount, which includes goodwill. If the fair value exceeds the carrying value, no impairment loss exists. If the fair value is less than the carrying amount, a goodwill impairment loss is measured and recorded.

Due to reductions in certain operations including a layoff within our Infusion Technology segment, we concluded that a triggering event occurred during November 2024, that required us to assess if there was an impairment under ASC 350, Intangibles - Goodwill and Other ("ASC 350"). In accordance with ASC 350, we performed a quantitative goodwill impairment test, which indicated that the carrying amount of the reporting unit exceeded the estimated fair value of the reporting unit, indicating that the goodwill of the reporting unit was impaired. We recorded an impairment charge of $3.1 million during the year ended July 31, 2025, representing a full write-off of the goodwill balance associated with the Infusion Technology operating segment.

See Note 13 to our Consolidated Financial Statements for further information.

Clinical Trial Accruals

We estimate clinical trial accruals related to obligations for services performed on our behalf by third-party vendors. The amount recorded for the clinical trial accrual represents our evaluation of the progress to completion of specific tasks, unbilled patient visits and the facts and circumstances known at the time of the estimate as it relates to clinical trial activities.

Off-Balance Sheet Arrangements

We do not have any "off-balance sheet arrangements", as defined in relevant SEC regulations, that are reasonably likely to have a current or future effect on our financial condition, results of operations, liquidity, capital expenditures or capital resources.