Alexandria Real Estate Equities提交截至2026年9月30日季度的10-Q：第三季度净亏损6.385亿美元，房地产减值6.379亿美元

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q 

(Mark One)

    ☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

          EXCHANGE ACT OF 1934 

For the quarterly period ended September 30, 2026

OR

    ☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the transition period from ____________ to ____________

Commission file number 1-12993

ALEXANDRIA REAL ESTATE EQUITIES, INC.

(Exact name of registrant as specified in its charter)

 26 North Euclid Avenue, Pasadena, California 91101

(Address of principal executive offices) (Zip code)

(626) 578-0777

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Exchange Act:

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities

Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports),

and (2) has been subject to such filing requirements for the past 90 days. Yes ☒  No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and

posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period

that the registrant was required to submit and post such files). Yes ☒  No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting

company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting

company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for

complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐  No ☒

As of October 15, 2026, 174,160,645 shares of common stock, par value $0.01 per share, were outstanding.

i

TABLE OF CONTENTS

ii

GLOSSARY

The following abbreviations or acronyms that may be used in this document

have the meanings set forth below:

1

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)

Alexandria Real Estate Equities, Inc.

Consolidated Balance Sheets

(In thousands)

The accompanying notes are an integral part of these consolidated financial statements.

2

Alexandria Real Estate Equities, Inc.

Consolidated Statements of Operations

(In thousands, except per share amounts)

(Unaudited)

The accompanying notes are an integral part of these consolidated financial statements.

3

Alexandria Real Estate Equities, Inc.

Consolidated Statements of Comprehensive Income

(In thousands)

(Unaudited)

The accompanying notes are an integral part of these consolidated financial statements.

4

Alexandria Real Estate Equities, Inc.

Consolidated Statement of Changes in Stockholders’ Equity and Noncontrolling Interests

(Dollars in thousands)

(Unaudited)

The accompanying notes are an integral part of these consolidated financial statements.

5

Alexandria Real Estate Equities, Inc.

Consolidated Statement of Changes in Stockholders’ Equity and Noncontrolling Interests

(Dollars in thousands)

(Unaudited)

The accompanying notes are an integral part of these consolidated financial statements.

6

Alexandria Real Estate Equities, Inc.

Consolidated Statement of Changes in Stockholders’ Equity and Noncontrolling Interests

(Dollars in thousands)

(Unaudited)

The accompanying notes are an integral part of these consolidated financial statements.

7

Alexandria Real Estate Equities, Inc.

Consolidated Statement of Changes in Stockholders’ Equity and Noncontrolling Interests

(Dollars in thousands)

(Unaudited)

The accompanying notes are an integral part of these consolidated financial statements.

8

9

The accompanying notes are an integral part of these consolidated financial statements.

10

Alexandria Real Estate Equities, Inc.

Notes to Consolidated Financial Statements

(Unaudited)

1.ORGANIZATION AND BASIS OF PRESENTATION

Alexandria Real Estate Equities, Inc. (NYSE: ARE), an S&P 500® life science REIT, is the pioneer of the life science real estate

niche since its founding in 1994. Alexandria is the preeminent and longest-tenured owner, operator, and developer of collaborative

Megacampus™ ecosystems in AAA life science and advanced technology innovation cluster locations, including Greater Boston, San

Diego, the San Francisco Bay Area, Seattle, Maryland, Research Triangle, and New York City. As of September 30, 2026, Alexandria

has a total market capitalization of $21.01 billion and an asset base that includes 36.5 million RSF of operating properties and 1.9

million RSF of Class A/A+ properties undergoing construction. As used in this quarterly report on Form 10-Q, references to the

“Company,” “Alexandria,” “ARE,” “we,” “us,” and “our” refer to Alexandria Real Estate Equities, Inc. and its consolidated subsidiaries.

The accompanying unaudited consolidated financial statements include the accounts of Alexandria Real Estate Equities, Inc. and its

consolidated subsidiaries. All significant intercompany balances and transactions have been eliminated.

We have prepared the accompanying interim consolidated financial statements in accordance with GAAP and in conformity

with the rules and regulations of the SEC. In our opinion, these interim consolidated financial statements presented herein reflect all

adjustments of a normal recurring nature necessary to fairly present the interim consolidated financial statements. The results of

operations for the interim period are not necessarily indicative of the results that may be expected for the year ending December 31,

2026. These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial

statements and the notes thereto included in our annual report on Form 10-K for the year ended December 31, 2025. Any references to

our total market capitalization, number or quality of buildings or tenants, quality of location, square footage, number of leases, or

occupancy percentage, and any amounts derived from these values in these notes to consolidated financial statements are outside the

scope of our independent registered public accounting firm’s procedures.

2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Consolidation

On an ongoing basis, as circumstances indicate the need for reconsideration, we evaluate each legal entity that is not wholly

owned by us in accordance with the consolidation accounting guidance. Our evaluation considers all of our variable interests, including

equity ownership, as well as fees paid to us for our involvement in the management of each partially owned entity. To fall within the

scope of the consolidation guidance, an entity must meet both of the following criteria:

•The entity has a legal structure that has been established to conduct business activities and to hold assets; such entity

can be in the form of a partnership, limited liability company, or corporation, among others; and

•We have a variable interest in the legal entity — i.e., variable interests that are contractual, such as equity ownership, or

other financial interests that change with changes in the fair value of the entity’s net assets.

If an entity does not meet both criteria above, we apply other accounting literature, such as the equity method of accounting. If

an entity does meet both criteria above, we evaluate such entity for consolidation under either the variable interest model if the legal

entity meets any of the characteristics below to qualify as a VIE, or under the voting model for all other legal entities that are not VIEs.

A legal entity is determined to be a VIE if it has any of the following three characteristics:

1)The entity does not have sufficient equity to finance its activities without additional subordinated financial support;

2)The entity is established with non-substantive voting rights (i.e., the entity deprives the majority economic interest

holder(s) of voting rights); or

3)The equity holders, as a group, lack the characteristics of a controlling financial interest. Equity holders meet this criterion

if they lack any of the following:

•The power, through voting rights or similar rights, to direct the activities of the entity that most significantly influence

the entity’s economic performance, as evidenced by:

•Substantive participating rights in day-to-day management of the entity’s activities; or

•Substantive kick-out rights over the party responsible for significant decisions;

•The obligation to absorb the entity’s expected losses; or

•The right to receive the entity’s expected residual returns.

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2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

For an entity, including our real estate joint ventures, structured as a limited partnership or a limited liability company, our

evaluation of whether the equity holders (equity partners other than the general partner or the managing member of a joint venture) lack

the characteristics of a controlling financial interest includes the evaluation of whether the limited partners or non-managing members

(the noncontrolling equity holders) lack both substantive participating rights and substantive kick-out rights, defined as follows:

•Participating rights provide the noncontrolling equity holders the ability to direct significant financial and operating

decisions made in the ordinary course of business that most significantly influence the entity’s economic performance.

•Kick-out rights allow the noncontrolling equity holders to remove the general partner or managing member without cause.

If we conclude that any of the three characteristics of a VIE is met, including that the equity holders lack the characteristics of a

controlling financial interest because they lack both substantive participating rights and substantive kick-out rights, we conclude that the

entity is a VIE and evaluate it for consolidation under the variable interest model.

Variable interest model

If an entity is determined to be a VIE, we evaluate whether we are the primary beneficiary. The primary beneficiary analysis is

a qualitative analysis based on power and benefits. We consolidate a VIE if we have both power and benefits — that is, (i) we have the

power to direct the activities of a VIE that most significantly influence the VIE’s economic performance (power) and (ii) we have the

obligation to absorb losses of or the right to receive benefits from the VIE that could potentially be significant to the VIE (benefits). We

consolidate VIEs whenever we determine that we are the primary beneficiary. Refer to Note 4 – “Consolidated and unconsolidated real

estate joint ventures” and Note 7 – “Investments” to our unaudited consolidated financial statements for information on specific entities

that qualify as VIEs. If we have a variable interest in a VIE but are not the primary beneficiary, we account for our investment using the

equity method.

Voting model

If a legal entity fails to meet any of the three characteristics of a VIE (i.e., insufficiency of equity, existence of non-substantive

voting rights, or lack of a controlling financial interest), we then evaluate such entity under the voting model. Under the voting model, we

consolidate the entity if we determine that we, directly or indirectly, have greater than 50% of the voting shares (or own a majority of the

limited partnership’s kick-out rights through voting interests), and that other equity holders do not have substantive participating rights.

Refer to Note 4 – “Consolidated and unconsolidated real estate joint ventures” to our unaudited consolidated financial statements for

information on specific real estate joint ventures that qualify for evaluation under the voting model.

Noncontrolling interests in consolidated real estate joint ventures

Noncontrolling interests represent the third-party interests in consolidated real estate joint ventures in which we have a

controlling interest. Certain of our partners’ noncontrolling interests have the right to require us to redeem their ownership interests in

the respective entities. We classify the ownership interests in these entities as redeemable noncontrolling interests outside of total

equity in our consolidated balance sheets. Redeemable noncontrolling interests are adjusted for additional contributions and

distributions, the proportionate share of net earnings or losses, and other comprehensive income or loss. If the amount of a redeemable

noncontrolling interest is less than the maximum redemption value at the balance sheet date, such amount is adjusted to the maximum

redemption value. Subsequent declines in the redemption value are recognized only to the extent that previous increases have been

recognized.

Use of estimates

The preparation of consolidated financial statements in conformity with GAAP requires us to make estimates and assumptions

that affect the reported amounts of assets, liabilities, and equity; the disclosure of contingent assets and liabilities as of the date of the

consolidated financial statements; and the amounts of revenues and expenses during the reporting period. Actual results could

materially differ from those estimates.

12

2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Investments in real estate

Evaluation of business combination or asset acquisition

We evaluate each acquisition of real estate or in-substance real estate (including equity interests in entities that predominantly

hold real estate assets) to determine whether the integrated set of assets and activities acquired meets the definition of a business and

must be accounted for as a business combination. An acquisition of an integrated set of assets and activities that does not meet the

definition of a business is accounted for as an asset acquisition. If either of the following criteria is met, the integrated set of assets and

activities acquired would not qualify as a business:

•Substantially all of the fair value of the gross assets acquired is concentrated in either a single identifiable asset or a group

of similar identifiable assets; or

•The integrated set of assets and activities is lacking, at a minimum, an input and a substantive process that together

significantly contribute to the ability to create outputs (i.e., revenue generated before and after the transaction).

An acquired process is considered substantive if:

•The process includes an organized workforce (or includes an acquired contract that provides access to an organized

workforce) that is skilled, knowledgeable, and experienced in performing the process;

•The process cannot be replaced without significant cost, effort, or delay; or

•The process is considered unique or scarce.

Generally, our acquisitions of real estate or in-substance real estate do not meet the definition of a business because

substantially all of the fair value is concentrated in a single identifiable asset or group of similar identifiable assets (i.e., land, buildings,

and related intangible assets) or because the acquisition does not include a substantive process in the form of an acquired workforce or

an acquired contract that cannot be replaced without significant cost, effort, or delay. When evaluating acquired service or management

contracts, we consider the nature of the services performed, the terms of the contract relative to similar arm’s-length contracts, and the

availability of comparable vendors in evaluating whether the acquired contract constitutes a substantive process.

Recognition of real estate acquired

We evaluate each acquisition of real estate or in-substance real estate (including equity interests in entities that predominantly

hold real estate assets) to determine whether the integrated set of assets and activities acquired meets the definition of a business and

must be accounted for as a business combination. An acquisition of an integrated set of assets and activities that does not meet the

definition of a business is accounted for as an asset acquisition.

For acquisitions of real estate or in-substance real estate that are accounted for as business combinations, we allocate the

acquisition consideration (excluding acquisition costs) to the assets acquired, liabilities assumed, noncontrolling interests, and

previously existing ownership interests at fair value as of the acquisition date. Assets include intangible assets such as tenant

relationships, acquired in-place leases, and favorable intangibles associated with in-place leases in which we are the lessor. Liabilities

include unfavorable intangibles associated with in-place leases in which we are the lessor. In addition, for acquired in-place finance or

operating leases in which we are the lessee, acquisition consideration is allocated to lease liabilities and related right-of-use assets,

adjusted to reflect favorable or unfavorable terms of the lease when compared with market terms. Any excess (deficit) of the

consideration transferred relative to the fair value of the net assets acquired is accounted for as goodwill (bargain purchase gain).

Acquisition costs related to business combinations are expensed as incurred.

Generally, we expect that acquisitions of real estate or in-substance real estate will not meet the definition of a business

because substantially all of the fair value is concentrated in a single identifiable asset or group of similar identifiable assets (i.e., land,

buildings, and related intangible assets). The accounting model for asset acquisitions is similar to the accounting model for business

combinations, except that the acquisition consideration (including acquisition costs) is allocated to the individual assets acquired and

liabilities assumed on a relative fair value basis. Any excess (deficit) of the consideration transferred relative to the sum of the fair value

of the assets acquired and liabilities assumed is allocated to the individual assets and liabilities based on their relative fair values. As a

result, asset acquisitions do not result in the recognition of goodwill or a bargain purchase gain. Incremental and external direct

acquisition costs related to acquisitions of real estate or in-substance real estate (such as legal and other third-party services) are

capitalized.

13

2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

We exercise judgment to determine the key assumptions used to allocate the purchase price of real estate acquired among its

components. The allocation of the consideration to the various components of properties acquired during the year can have an effect on

our net income due to the useful depreciable and amortizable lives applicable to each component and the recognition of the related

depreciation and amortization expense in our consolidated statements of operations. We apply judgment in utilizing available

comparable market information to assess relative fair value. We assess the relative fair values of tangible and intangible assets and

liabilities based on available comparable market information, including estimated replacement costs, rental rates, and recent market

transactions. In addition, we may use estimated cash flow projections that utilize appropriate discount and capitalization rates.

Estimates of future cash flows are based on a number of factors, including the historical operating results, known and anticipated

trends, and market/economic conditions that may affect the property.

The value of tangible assets acquired is based upon our estimation of fair value on an “as if vacant” basis. The value of

acquired in-place leases includes the estimated costs during the hypothetical lease-up period and other costs that would have been

incurred in the execution of similar leases under the market conditions at the acquisition date of the acquired in-place lease. If there is a

bargain fixed-rate renewal option for the period beyond the noncancelable lease term of an in-place lease, we evaluate intangible

factors, such as the business conditions in the industry in which the lessee operates, the economic conditions in the area in which the

property is located, and the ability of the lessee to sublease the property during the renewal term, in order to determine the likelihood

that the lessee will renew. When we determine that the lessee is reasonably certain to exercise such bargain renewal option, we

consider the option in determining the intangible value of such lease and its related amortization period. We also recognize the relative

fair values of assets acquired, the liabilities assumed, and any noncontrolling interest in acquisitions of less than a 100% interest when

the acquisition constitutes a change in control of the acquired entity.

Depreciation and amortization

The values allocated to buildings and building improvements, land improvements, tenant improvements, and equipment are

depreciated on a straight-line basis. For buildings and building improvements, we depreciate using the shorter of the respective ground

lease terms or their estimated useful lives, not to exceed 40 years. Land improvements are depreciated over their estimated useful

lives, not to exceed 20 years. Tenant improvements are depreciated over their respective lease terms or estimated useful lives, and

equipment is depreciated over the shorter of the lease term or its estimated useful life. Right-of-use assets are amortized on a straight-

line basis over the remaining terms of each related lease. The values of acquired in-place leases and associated favorable intangibles

(i.e., acquired above-market leases) are classified in other assets in our consolidated balance sheets and are amortized over the

remaining terms of the related leases as a reduction of income from rentals in our consolidated statements of operations. The values of

unfavorable intangibles (i.e., acquired below-market leases) associated with acquired in-place leases are classified in accounts

payable, accrued expenses, and other liabilities in our consolidated balance sheets and are amortized over the remaining terms of the

related leases as an increase in income from rentals in our consolidated statements of operations.

Capitalized project costs

We capitalize project costs, including pre-construction costs, interest, property taxes, insurance, and other costs directly

related and essential to the development, redevelopment, pre-construction, or construction of a project. Capitalization of development,

redevelopment, pre-construction, and construction costs is required while activities are ongoing to prepare an asset for its intended use.

Fluctuations in our development, redevelopment, pre-construction, and construction activities could result in significant changes to total

expenses and net income. Costs incurred after a project is substantially complete and ready for its intended use are expensed as

incurred. Should development, redevelopment, pre-construction, or construction activity cease, interest, property taxes, insurance, and

certain other costs would no longer be eligible for capitalization and would be expensed as incurred. Expenditures for repairs and

maintenance are expensed as incurred.

Real estate sales

A property is classified as held for sale when all of the following criteria for a plan of sale have been met: (i) management,

having the authority to approve the action, commits to a plan to sell the property; (ii) the property is available for immediate sale in its

present condition, subject only to terms that are usual and customary; (iii) an active program to locate a buyer and other actions

required to complete the plan to sell have been initiated; (iv) the sale of the property is probable and is expected to be completed within

one year; (v) the property is being actively marketed for sale at a price that is reasonable in relation to its current fair value; and

(vi) actions necessary to complete the plan of sale indicate that it is unlikely that significant changes to the plan will be made or that the

plan will be withdrawn. Depreciation of assets ceases upon designation of a property as held for sale.

If the disposal of a property represents a strategic shift that has (or will have) a major effect on our operations or financial

results, such as (i) a major line of business, (ii) a major geographic area, (iii) a major equity method investment, or (iv) other major parts

of an entity, then the operations of the property, including any interest expense directly attributable to it, are classified as discontinued

operations in our consolidated statements of operations, and amounts for all prior periods presented are reclassified from continuing

operations to discontinued operations. The disposal of an individual property generally will not represent a strategic shift and therefore

will typically not meet the criteria for classification as a discontinued operation.

14

2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

We recognize gains or losses on real estate sales in accordance with the accounting standard on the derecognition of

nonfinancial assets arising from contracts with noncustomers. Our ordinary output activities consist of the leasing of space to our

tenants in our operating properties, not the sales of real estate. Therefore, sales of real estate (in which we are the seller) qualify as

contracts with noncustomers. In our transactions with noncustomers, we apply certain recognition and measurement principles

consistent with our method of recognizing revenue arising from contracts with customers. Derecognition of the asset is based on the

transfer of control. If a real estate sales contract includes our ongoing involvement with the property, then we evaluate each promised

good or service under the contract to determine whether it represents a separate performance obligation, constitutes a guarantee, or

prevents the transfer of control. If a good or service is considered a separate performance obligation, an allocated portion of the

transaction price is recognized as revenue as we transfer the related good or service to the buyer.

The recognition of gain or loss on the sale of a partial interest also depends on whether we retain a controlling or

noncontrolling interest in the property. If we retain a controlling interest in the property upon completion of the sale, we continue to

reflect the asset at its book value, record a noncontrolling interest for the book value of the partial interest sold, and recognize additional

paid-in capital for the difference between the consideration received and the partial interest at book value. Conversely, if we retain a

noncontrolling interest upon completion of the sale of a partial interest of real estate, we recognize a gain or loss as if 100% of the asset

were sold.

Impairment of long-lived assets

Prior to and subsequent to the end of each quarter, we review current activities and changes in the business conditions of all of

our long-lived assets to determine the existence of any triggering events or impairment indicators requiring an impairment analysis. If

triggering events or impairment indicators are identified, we review an estimate of the future undiscounted cash flows, including, if

necessary, a probability-weighted approach if multiple outcomes are under consideration.

Long-lived assets to be held and used, including our rental properties, CIP, land held for development, right-of-use assets

related to operating leases in which we are the lessee, and intangibles, are individually evaluated for impairment when conditions exist

that may indicate that the carrying amount of a long-lived asset may not be recoverable. The carrying amount of a long-lived asset to be

held and used is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual

disposition of the asset. Triggering events or impairment indicators for long-lived assets to be held and used are assessed by project

and include significant fluctuations in estimated net operating income, occupancy changes, significant near-term lease expirations,

current and historical operating and/or cash flow losses, construction costs, estimated completion dates, rental rates, and other market

factors. We assess the expected undiscounted cash flows based upon numerous factors, including, but not limited to, projected rental

rates, estimated exit capitalization rates, and anticipated construction costs for projects under construction, which are based on

available market information, current and historical operating results, known trends, current market/economic conditions that may affect

the asset, and our assumptions about the use of the asset, including, if necessary, a probability-weighted approach if multiple outcomes

are under consideration.

Upon determination that an impairment has occurred, a write-down is recognized to reduce the carrying amount of the asset to

its estimated fair value. If an impairment charge is not required to be recognized, the recognition of depreciation or amortization is

adjusted prospectively, as necessary, to reduce the carrying amount of the asset to its estimated disposition value over the remaining

period that the asset is expected to be held and used. We may adjust depreciation of properties that are expected to be disposed of or

redeveloped prior to the end of their useful lives.

We use the held for sale impairment model for our properties classified as held for sale, which is different from the held and

used impairment model. Under the held for sale impairment model, an impairment charge is recognized if the carrying amount of the

long-lived asset classified as held for sale exceeds its fair value less cost to sell. Because of these two different models, it is possible for

a long-lived asset previously classified as held and used to require the recognition of an impairment charge upon classification as held

for sale.

International operations

As of September 30, 2026, in addition to operating properties in the U.S., we had 11 properties in Canada. The functional

currency for our subsidiaries operating in the U.S. is the U.S. dollar. The local currency of a foreign subsidiary serves as its functional

currency. The assets and liabilities of our foreign subsidiaries are translated into U.S. dollars at the exchange rate in effect as of the

financial statement date. Revenue and expense accounts of our foreign subsidiaries are translated using the weighted-average

exchange rate for the periods presented. Gains or losses resulting from the translation are classified in accumulated other

comprehensive income (loss) as a separate component of total equity and are excluded from net income (loss).

15

2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Whenever a foreign investment meets the criteria for classification as held for sale, we evaluate the recoverability of the

investment under the held for sale impairment model. We may recognize an impairment charge if the carrying amount of the investment

exceeds its fair value less cost to sell. In determining an investment’s carrying amount, we consider its net book value and any

cumulative unrealized foreign currency translation adjustment related to the investment. The appropriate amounts of foreign exchange

rate gains or losses classified in accumulated other comprehensive income (loss) are reclassified to net income (loss) when realized

upon the sale of our investment or upon the complete or substantially complete liquidation of our investment.

Investments

We hold investments in publicly traded companies and privately held entities primarily involved in the life science industry. As a

REIT, we generally limit our ownership of each individual entity’s voting stock to less than 10%. We evaluate each investment to

determine whether we have the ability to exercise significant influence, but not control, over an investee. We evaluate investments in

which our ownership is equal to or greater than 20%, but less than or equal to 50%, of an investee’s voting stock with a presumption

that we have this ability. For our investments in limited partnerships that maintain specific ownership accounts, we presume that such

ability exists when our ownership interest exceeds 3% to 5%. In addition to our ownership interest, we consider whether we have a

board seat or whether we participate in the investee’s policy-making process, among other criteria, to determine if we have the ability to

exert significant influence, but not control, over an investee. If we determine that we have such ability, we account for the investment

under the equity method, as described below. From time to time, we may hold equity investments in publicly traded companies that are

subject to temporary contractual sale restrictions. We do not recognize a discount related to a contractual sale restriction.

Investments accounted for under the equity method

Under the equity method of accounting, we initially recognize our investment at cost and subsequently adjust the carrying

amount of the investment for our share of earnings or losses reported by the investee, distributions received, and other-than-temporary

impairments. For additional information about our investments accounted for under the equity method, refer to Note 7 – “Investments” to

our unaudited consolidated financial statements.

Investments that do not qualify for the equity method of accounting

For investees over which we determine that we do not have the ability to exercise significant influence or control, we account

for each investment depending on whether it is an investment in a (i) publicly traded company, (ii) privately held entity that reports NAV

per share, or (iii) privately held entity that does not report NAV per share, as described below.

Investments in publicly traded companies

Our investments in publicly traded companies are classified as investments with readily determinable fair values and are

presented at fair value in our consolidated balance sheets, with changes in fair value classified in investment income (losses) in our

consolidated statements of operations. The fair values for our investments in publicly traded companies are determined based on sales

prices or quotes available on securities exchanges.

Investments in privately held companies

Our investments in privately held entities without readily determinable fair values consist of (i) investments in privately held

entities that report NAV per share and (ii) investments in privately held entities that do not report NAV per share. These investments are

accounted for as follows:

Investments in privately held entities that report NAV per share

Investments in privately held entities that report NAV per share, such as our privately held investments in limited partnerships,

are presented at fair value using NAV as a practical expedient, with changes in fair value classified in investment income (losses) in our

consolidated statements of operations. We use NAV per share reported by limited partnerships generally without adjustment, unless we

are aware of information indicating that the NAV reported by a limited partnership does not accurately reflect the fair value of the

investment at our reporting date.

Investments in privately held entities that do not report NAV per share

Investments in privately held entities that do not report NAV per share are accounted for using a measurement alternative

under which these investments are measured at cost, adjusted for observable price changes and impairments, with changes classified

in investment income (losses) in our consolidated statements of operations.

16

2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

An observable price arises from an orderly transaction for an identical or similar investment of the same issuer, which is

observed by an investor without expending undue cost and effort. Observable price changes result from, among other things, equity

transactions of the same issuer executed during the reporting period, including subsequent equity offerings or other reported equity

transactions related to the same issuer. To determine whether these transactions are indicative of an observable price change, we

evaluate, among other factors, whether these transactions have similar rights and obligations, including voting rights, distribution

preferences, and conversion rights to the investments we hold.

Impairment evaluation of equity method investments and investments in privately held entities that do not report NAV per share

We monitor equity method investments and investments in privately held entities that do not report NAV per share for new

developments, including operating results, prospects and results of clinical trials, new product initiatives, new collaborative agreements,

capital-raising events, and merger and acquisition activities. These investments are evaluated on the basis of a qualitative assessment

for indicators of impairment by monitoring the presence of the following triggering events or impairment indicators:

(i)a significant deterioration in the earnings performance, credit rating, asset quality, or business prospects of the investee;

(ii)a significant adverse change in the regulatory, economic, or technological environment of the investee;

(iii)a significant adverse change in the general market condition, including the research and development of technology and

products that the investee is bringing or attempting to bring to the market;

(iv)significant concerns about the investee’s ability to continue as a going concern; and/or

(v)a decision by investors to cease providing support or reduce their financial commitment to the investee.

If such indicators are present, we are required to estimate the investment’s fair value and immediately recognize an

impairment charge in an amount equal to the investment’s carrying value in excess of its estimated fair value.

Investment income/loss recognition and classification

We recognize both realized and unrealized gains and losses in our consolidated statements of operations, classified in

investment income (losses) in our consolidated statements of operations. Unrealized gains and losses represent:

(i)changes in fair value for investments in publicly traded companies;

(ii)changes in NAV for investments in privately held entities that report NAV per share;

(iii)observable price changes for investments in privately held entities that do not report NAV per share; and

(iv)our share of unrealized gains or losses reported by our equity method investees.

Realized gains and losses on our investments represent the difference between proceeds received upon disposition of

investments and their historical or adjusted cost basis. For our equity method investments, realized gains and losses represent our

share of realized gains or losses reported by the investee. Impairments are realized losses, which result in an adjusted cost basis, and

represent charges to reduce the carrying values of investments in privately held entities that do not report NAV per share and equity

method investments, if impairments are deemed other than temporary, to their estimated fair value.

Revenues

The table below provides details of our consolidated total revenues for the three and nine months ended September 30, 2026

and 2025 (in thousands):