Annual Report for Fiscal Year Ending July 31, 2025 (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. 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™, which is being evaluated in clinical trials for the potential treatment of Niemann-Pick Disease Type C1 ("NPC1"), a rare, fatal and progressive genetic disorder. 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 cancer research focused entity whose operations have been substantially curtailed; (iii) a majority interest in Cornerstone Pharmaceuticals, Inc. ("Cornerstone"), formerly known as Rafael Pharmaceuticals Inc., a cancer metabolism-based therapeutics company; (iv) a majority 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 interest in Day Three Labs, Inc. ("Day Three"), a company which empowers third-party manufacturers to reimagine their existing product offerings by utilizing Day Three's technology and innovation like Unlokt™. Our primary focus has been the continued development of Trappsol^® Cyclo™ through the completion of its ongoing pivotal Phase 3 clinical trial, the potential filing for regulatory approval and ultimately, if approved, commercialization of the product. We also look to expand our investment portfolio through opportunistic and strategic investments including that address high unmet medical needs. We continuously evaluate our other holdings to ensure the focus of our resources are on core assets and specifically the continued development of Trappsol^® Cyclo™.

Historically, we owned real estate assets. As of July 31, 2025, we hold a portion of a commercial building in Jerusalem, Israel as our sole remaining real estate asset.

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 beta cyclodextrin), a treatment for NPC1. NPC1 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, the FDA granted Fast Track designation to Trappsol^® Cyclo™ for the treatment of NPC1. 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 is currently conducting a Phase 3 Clinical Trial evaluating Trappsol^® Cyclo™ in Pediatric and Adult Patients with Niemann-Pick Disease, Type C1. On March 25, 2025, we consummated the Merger with Cyclo whereby Cyclo became a wholly-owned subsidiary of the Company. See Note 3 to our Consolidated Financial Statements for more information on the Merger with Cyclo.

LipoMedix is a clinical stage company based in Israel that is focused on the development of a product candidate that holds the potential to be an innovative, safe, and effective cancer therapy based on liposome delivery. As of July 31, 2025, 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 is 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 our early-stage development efforts, including pre-clinical research at Barer. Since then, we have sought partners for Farber programs and has 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 has 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. Going forward, we expect that Barer will primarily operate as an entity holding interest in these two cancer-focused opportunities.

We own a 37.5% equity interest in RP Finance LLC ("RP Finance"), which was, until March 13, 2024 (the date of the RP Finance Consolidation (as described in Note 6 to the Consolidated Financial Statements)), accounted for under the equity method. RP Finance is an entity in which vehicles associated with members of the family of Howard S. Jonas (Executive Chairman, Chief Executive Officer, President, Chairman of the Board, and controlling stockholder of the Company), hold an aggregate 37.5% equity interest. RP Finance holds debt and equity investments in Cornerstone. In October 2021, Cornerstone received negative results of its Avenger 500 Phase 3 study for Devimistat in pancreatic cancer as well as a recommendation to stop its ARMADA 2000 Phase 3 study due to a determination that the trial would be unlikely to achieve its primary endpoint (the "Data Events"). Due to the Data Events, RP Finance fully impaired its then debt and equity investments in Cornerstone.

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. See Note 6 to the Consolidated Financial Statements for additional information on the Cornerstone Restructuring, Cornerstone Acquisition, and RP Finance Consolidation. The Company is currently reviewing Cornerstone's current efforts, prospects and available resources to determine its 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. We currently hold a 73% 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. The 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 opportunities in the marketplace.

In April 2023, we first invested in Day Three, a company which empowers third-party manufacturers to reimagine their existing product offerings enabling those third-party manufacturers to bring to market better, cleaner, more precise and predictable versions of their products by utilizing Day Three's technology and innovation like Unlokt™. 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, a majority owned subsidiary of Day Three, entered into an Asset Purchase Agreement and Licensing Agreement (the "DTLM Sale Agreement"), pursuant to which they sold assets and licensed certain applications of their Unlokt™ technology used in their cannabinoid ingredient manufacturing business. See Note 13 in the Notes to our Consolidated Financial Statements for additional information.

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
		2025				2024				$				%
		(in thousands)
Product revenue		$	515			$	-			$	515				100	%
Cost of product revenue			(28	)			-				(28	)			(100	)%
General and administrative			(13,165	)			(8,338	)			(4,827	)			(58	)%
Research and development			(12,568	)			(3,668	)			(8,900	)			(243	)%
In-process research and development			-				(89,861	)			89,861				100	%
Depreciation and amortization			(48	)			(165	)			117				71	%
Loss from operations		$	(25,294	)		$	(102,032	)		$	76,738				75	%

The Healthcare segment is comprised of the activities of Barer, LipoMedix, Farber, Cornerstone, Cyclo, and Rafael Medical Devices. As of July 31, 2025, 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 a 73% interest in Rafael Medical Devices.

Product revenue. Total revenue for the Healthcare segment for the year ended July 31, 2025, increased to approximately $515 thousand compared to $0 for the year ended July 30, 2024. This increase is primarily due to the inclusion of product revenue generated by Cyclo following the Cyclo Merger in March 2025.

General and administrative expenses. General and administrative expenses consist mainly of payroll, stock-based compensation expense, benefits, facilities, consulting and professional fees. The increase in general and administrative expenses during the year ended July 31, 2025 compared to the year ended July 31, 2024 is primarily due to the consolidation of Cyclo's general and administrative expenses, amounting to $3.6 million, following the Cyclo Merger in March 2025. In addition, legal and other professional fees increased by $0.6 million compared to the year ended July 31, 2024, primarily due to services related to the Cyclo Merger.

Research and development expenses. Research and development expenses increased for the year ended July 31, 2025 compared to the year ended July 31, 2024. Research and development expenses are derived from activity at Cyclo, Barer, LipoMedix, Farber, Cornerstone, and Rafael Medical Devices. The increase is primarily due to the consolidation of Cyclo's research and development expenses, amounting to $8.4 million, following the Cyclo Merger in March 2025.

Infusion Technology segment

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

		Year Ended July 31,								Change
		2025				2024				$				%
		(in thousands)
Infusion Technology revenue		$	93			$	355			$	(262	)			(74	)%
Cost of Infusion Technology revenue			(106	)			(154	)			48				31	%
Loss on impairment of goodwill			(3,050	)			-				(3,050	)			(100	)%
General and administrative			(320	)			(374	)			54				14	%
Research and development			(255	)			(502	)			247				49	%
Depreciation and amortization			(177	)			-				(177	)			(100	)%
Loss from operations		$	(3,815	)		$	(675	)		$	(3,140	)			(465	)%

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 they sold assets and licensed certain applications of their Unlokt™ technology used in Infusion Technology services (see Note 13 to the accompanying consolidated financial statements).

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
		2025				2024				$				%
		(in thousands)
Rental - Third Party		$	197			$	174			$	23				13	%
Rental - Related Party			112				108				4				4	%
General and administrative			(296	)			(142	)			(154	)			(108	)%
Depreciation and amortization			(63	)			(60	)			(3	)			(5	)%
Income (loss) from operations		$	(50	)		$	80			$	(130	)			(163	)%

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. The increase in general and administrative expenses during the year ended July 31, 2025 compared to the year ended July 31, 2024 is primarily the result of an increase in accounting and legal fees as well as building operating expenses and office rent.

Consolidated Operations

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

		Year Ended July 31,								Change
		2025				2024				$				%
		(in thousands)
Loss from operations		$	(29,159	)		$	(102,627	)		$	73,468				72	%
Interest income			1,996				2,383				(387	)			(16	)%
Loss on initial investment in Day Three upon acquisition			-				(1,633	)			1,633				(100	)%
Realized gain on available-for-sale securities			178				1,772				(1,594	)			(90	)%
Realized loss on investment in equity securities			-				(46	)			46				(100	)%
Realized gain on investment - Cyclo			-				424				(424	)			(100	)%
Unrealized (loss) gain on investment - Cyclo			(5,144	)			37				(5,181	)			14,003	%
Unrealized (loss) gain on convertible notes receivable, due from Cyclo			(719	)			1,191				(1,910	)			(160	)%
Unrealized gain on investment - Hedge Funds			-				63				(63	)			(100	)%
Recovery of receivables from Cornerstone			-				31,305				(31,305	)			(100	)%
Interest expense			(658	)			(248	)			(410	)			(165	)%
Other income, net			310				118				192				163	%
Loss before income taxes			(33,196	)			(67,261	)			34,065				51	%
Benefit from income taxes			2,553				2,680				(127	)			(5	)%
Equity in loss of Day Three			-				(422	)			422				(100	)%
Consolidated net loss			(30,643	)			(65,003	)			34,360				53	%
Net loss attributable to noncontrolling interests			(123	)			(30,593	)			30,470				100	%
Net loss attributable to Rafael Holdings, Inc.		$	(30,520	)		$	(34,410	)		$	3,890				11	%

Interest income. We recorded interest income of $2.0 million and $2.4 million for the years ended July 31, 2025 and 2024, 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 earned on these assets.

Loss on initial investment in Day Three upon acquisition. We recognized a loss of $0 and $1.6 million on initial investment in Day Three upon acquisition for the years ended July 31, 2025 and 2024. In January 2024, we acquired Day Three. See Note 13 to our accompanying consolidated financial statements for more information.

Realized gain on available-for-sale securities. We recognized a realized gain of $0.2 million for the year ended July 31, 2025 related to the maturity of certain available-for-sale securities and the sale of our available-for-sale securities in November 2024. We recognized a realized gain on available-for-sale securities of $1.8 million for the year ended July 31, 2024, related to the sale and maturity activity.

Unrealized (loss) gain on investment - Cyclo. Unrealized gains and losses on investment - Cyclo are 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. We recorded an unrealized loss of $5.1 million during the year ended July 31, 2025, prior to the Cyclo Merger. We recorded an unrealized gain of $37 thousand for the year ended July 31, 2024.

Unrealized (loss) gain on convertible notes receivable, due from Cyclo. We recorded an unrealized loss of $0.7 million for the year ended July 31, 2025, on our convertible notes receivable, due from Cyclo. The outstanding principal and accrued interest on the Cyclo Convertible Notes were forgiven in the Cyclo Merger.

Unrealized gain on investment - Hedge Funds. We recorded an unrealized gain of approximately $63 thousand for the year ended July 31, 2024. During the year ended July 31, 2025, we requested a withdrawal of its remaining balance in Hedge Fund Investments, and no longer hold any hedge fund investments.

Recovery of receivables from Cornerstone Pharmaceuticals. We recorded an increase in recovery of receivables from Cornerstone Pharmaceuticals of approximately $31.3 million for the year ended July 31, 2024. See Note 6 to our accompanying consolidated financial statements for more information related to this matter.

Interest expense. Interest expense was $0.7 million and $0.2 million for the years ended July 31, 2025 and 2024, respectively. Interest expense is attributable to liabilities assumed in the Cornerstone Acquisition in March 2024, therefore the increase during the year ended July 31, 2025 is due to a full year of activity.

Other income, net. Other income, net was $0.3 million for the year ended July 31, 2025 primarily due to Cornerstone's Employee Retention Credits ("ERC") of $0.2 million and the gain on sale of Cornerstone's IPR&D of $0.1 million. Other income, net was $0.1 million for the year ended July 31, 2024, related primarily to the dissolution of a majority owned subsidiary.

Equity in loss of Day Three. We recognized a loss of $0.4 million from our ownership interest in Day Three due to operating results for the year ended July 31, 2024. As of January 2, 2024, Day Three is a majority-owned subsidiary which is consolidated.

Net loss attributable to noncontrolling interests. The change in the net loss attributable to noncontrolling interests is primarily attributed to acquisition of Cornerstone and Day Three and the consolidation of their activity.

Liquidity and Capital Resources

		As of July 31,								Change
		2025				2024				$				%
Balance Sheet Data:		(in thousands)
Cash and cash equivalents		$	52,769			$	2,675			$	50,094				1873	%
Convertible notes receivable classified as available-for-sale			1,858				1,146				712				62	%
Installment note payable			-				1,700				(1,700	)			(100	)%
Working capital			45,114				64,988				(19,874	)			(31	)%
Total assets			114,109				96,832				17,277				18	%
Total equity attributable to Rafael Holdings, Inc.			94,391				82,185				12,206				15	%
Noncontrolling interests			3,980				4,073				(93	)			2	%
Total equity		$	98,371			$	86,258			$	12,113				14	%

		Year Ended July 31,								Change
		2025				2024				$				%
Cash flows (used in) provided by:		(in thousands)
Operating activities		$	(18,924	)		$	(7,802	)		$	(11,122	)			(143	)%
Investing activities			44,035				(10,820	)			54,855				507	%
Financing activities			24,830				(179	)			25,009				13972	%
Effect of exchange rates on cash and cash equivalents			153				(22	)			175				795	%
Increase (decrease) in cash and cash equivalents		$	50,094			$	(18,823	)		$	68,917				(366	)%

Capital Resources

As of July 31, 2025, we held cash and cash equivalents of approximately $52.8 million. We expect the balance of cash and cash equivalents to be sufficient to meet our obligations for at least the next 12 months from the filing of this Annual Report on Form 10-K.

Operating Activities

For the year ended July 31, 2025, cash used in operating activities was $18.9 million, impacted by a net loss of $30.6 adjusted for non-cash items totaling $10.9 million. Cash generated from 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.

For the year ended July 31, 2024, cash used in operating activities was $7.8 million, impacted by a net loss of $65.0 adjusted for non-cash items totaling $57.8 million. Cash used from operating assets and liabilities included the addition of $150 thousand of accounts receivable and $139 thousand of interest receivables, plus a decrease of accounts payable and accrued expenses of $146 thousand.

Investing Activities

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.

Cash used in investing activities for the year ended July 31, 2024 was primarily due to purchases of available-for-sale securities of approximately $155.7 million, purchases of $4.0 million in convertible notes receivable, due from Cyclo, and the investment in Cyclo common stock and warrants of $6.8 million, partially offset by proceeds of $153.4 million from sales and maturities of available-for-sale securities and $2.5 million in proceeds from hedge funds.

Financing Activities

Cash used in 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.

Cash provided by financing activities for the year ended July 31, 2024 was primarily related to the proceeds from sale of Rafael Medical Devices membership units of $0.9 million, and partially offset by a principal payment of $0.8 million on the installment note acquired during the Day Three Acquisition.

We do not anticipate paying dividends on our common stock 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, intangible assets, in-process research and development 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.

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 18 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.