BIODESIX INC

Previous wording

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2024 (Form 10-K) and the Condensed Financial Statements as of March 31, 2025 and for the three months ended March 31, 2025 and 2024, included in Part I, Item 1 of this Form 10-Q, which provide additional information regarding our financial position, results of operations and cash flows. To the extent that the following MD&A contains statements which are not of a historical nature, such statements are forward-looking statements, which involve risks and uncertainties, including but not limited to those set forth under the caption “Special Note Regarding Forward-Looking Statements” and Item 1A. “Risk Factors” of Part II in this Quarterly Report on Form 10-Q and those discussed in our other filings with the Securities and Exchange Commission (SEC), including the risks described in Item 1A. “Risk Factors” of Part I of our Annual Report on Form 10-K for the year ended December 31, 2024, which was filed on March 3, 2025.

Current wording

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2024 (Form 10-K) and the Condensed Financial Statements as of June 30, 2025 and for the three and six months ended June 30, 2025 and 2024, included in Part I, Item 1 of this Form 10-Q, which provide additional information regarding our financial position, results of operations and cash flows. To the extent that the following MD&A contains statements which are not of a historical nature, such statements are forward-looking statements, which involve risks and uncertainties, including but not limited to those set forth under the caption “Special Note Regarding Forward-Looking Statements” and Item 1A. “Risk Factors” of Part II in this Quarterly Report on Form 10-Q and those discussed in our other filings with the Securities and Exchange Commission (SEC), including the risks described in Item 1A. “Risk Factors” of Part I of our Annual Report on Form 10-K for the year ended December 31, 2024, which was filed on March 3, 2025.

Previous wording

The following MD&A discussion is provided to supplement the Condensed Financial Statements as of March 31, 2025 and 2024 and for the three months then ended included in Part I, Item 1 of this Quarterly Report on Form 10-Q. We intend for this discussion to provide you with information that will assist you in understanding our financial statements, the changes in key items in those financial statements from period to period, and the primary factors that accounted for those changes.

Current wording

The following MD&A discussion is provided to supplement the Condensed Financial Statements as of June 30, 2025 and 2024 and for the three and six months then ended included in Part I, Item 1 of this Quarterly Report on Form 10-Q. We intend for this discussion to provide you with information that will assist you in understanding our financial statements, the changes in key items in those financial statements from period to period, and the primary factors that accounted for those changes.

Previous wording

Data for the three months ended March 31, 2025 and 2024 has been derived from our unaudited condensed financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Current wording

Data for the three and six months ended June 30, 2025 and 2024 has been derived from our unaudited condensed financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Previous wording

The ALTITUDE study is a randomized control study, launched during the fourth quarter 2020, seeking to further demonstrate the utility of the Nodify CDT and XL2 tests.

Current wording

The ALTITUDE study is a randomized control study, launched during the fourth quarter 2020, seeking to further demonstrate the utility of the Nodify CDT and XL2 tests. Patient enrollment requirements were reached in July 2025.

Previous wording

First Quarter 2025 Financial and Operational Highlights

Current wording

Second Quarter 2025 Financial and Operational Highlights

Previous wording

Diagnostic Testing revenue of $16.3 million for the first quarter, an increase of 18% over the respective prior year comparable period; primarily driven by an increase in total tests delivered;

Current wording

Lung Diagnostic Testing revenue of $17.9 million for the second quarter, an increase of 8% over the respective prior year comparable period; primarily driven by an increase in total tests delivered;

Previous wording

Development Services revenue of $1.7 million for the first quarter, an increase of 61% over the respective prior year comparable period;

Current wording

Development Services revenue of $2.1 million for the second quarter, an increase of 53% over the respective prior year comparable period;

Previous wording

Gross margin was $14.3 million, or 79.4%, for the first quarter 2025, as a percentage of revenue compared to 78.6% in the prior year comparable period, continuing to be driven by growth in Diagnostic testing and optimization of testing workflows that resulted in improvements in costs per test and the ongoing expansion of our Development Services business;

Current wording

Gross margin was $16.0 million, or 80% for the second quarter 2025, a 150-basis point improvement over the prior year comparable period, continuing to be driven by growth in Lung Diagnostic testing and optimization of testing workflows that resulted in improvements in costs per test, and the ongoing expansion of our Development Services business;

Previous wording

Operating expenses (excluding direct costs and expenses) of $23.4 million for the first quarter 2025, an increase of 3% over the respective prior year comparable period;

Current wording

Operating expenses (excluding direct costs and expenses) of $25.7 million for the second quarter 2025, an increase of 15% over the respective prior year comparable period;

Previous wording

Includes non-cash stock compensation expense of $1.0 million during the first quarter 2025, a decrease from $2.6 million in the prior year period.

Current wording

Includes non-cash stock compensation expense of $1.0 million during the second quarter 2025, a decrease of 15% over the respective prior year comparable period.

Previous wording

Development Services revenue is generated from the delivery of our on-market tests, pipeline tests, custom diagnostic testing, and other scientific services from contracts and business agreements with other diagnostics and life science tool partners for a purpose as defined by any individual customer. The performance obligations and related revenue for these sales is defined by a written agreement between us and our customer. These services are generally completed upon the delivery of testing results, or other contractually defined milestone(s), to the customer, which is considered the performance obligation. Customers for these services are typically mid-size to large pharmaceutical companies where collectability is reasonably assured and therefore revenue is accrued upon completion of the performance obligations. Revenue derived from services is often unpredictable and can cause significant swings in our overall net revenue line from quarter to quarter.

Current wording

Development Services revenue is generated from the delivery of our on-market tests, pipeline tests, custom diagnostic testing, and other scientific services from contracts and business agreements with other diagnostic and life sciences tool customers for a purpose as defined by the individual customer. The performance obligations and related revenue for these sales is defined by a written agreement between us and our customer. These services are generally completed upon the delivery of testing results, or other contractually defined milestone(s), to the customer, which is considered the performance obligation. Customers for these services are typically mid-size to large pharmaceutical companies where collectability is reasonably assured and therefore revenue is accrued upon completion of the performance obligations. Revenue derived from services is often unpredictable and can cause significant swings in our overall net revenue line from quarter to quarter.

Previous wording

Cost of diagnostic testing generally consists of cost of materials, direct labor, including bonuses, employee benefits, share-based compensation, equipment and infrastructure expenses associated with acquiring and processing test samples, including sample accessioning, test performance, quality control analyses, charges to collect and transport samples; curation of test results for physicians; and in some cases, license or royalty fees due to third parties. Costs associated with performing our tests are recorded as the tests are processed regardless of whether revenue was recognized with respect to the tests. Infrastructure expenses include allocated depreciation of laboratory equipment, rent costs, amortization of leasehold improvements and information technology costs. Royalties for licensed technology are calculated as a percentage of revenues generated using the associated technology and recorded as expense at the time the related revenue is recognized. One-time royalty payments related to signing of license agreements or other milestones, such as issuance of new patents, are amortized to expense over the expected useful life of the patents. While we do not believe the technologies underlying these licenses are necessary to permit us to provide our tests, we do believe these technologies are potentially valuable and of possible strategic importance to us or our competitors. Under these license agreements, we are obligated to pay aggregate royalties ranging from 1% to 8% of sales in which the patents or know-how are used in the product or service sold, sometimes subject to minimum annual royalties or fees in certain agreements.

Current wording

Cost of diagnostic testing generally consists of cost of materials, direct labor, including bonuses, employee benefits, share-based compensation, equipment and infrastructure expenses associated with acquiring and processing test samples, including sample accessioning, test performance, quality control analyses, charges to collect and transport samples; curation of test results for physicians; and in some cases, license or royalty fees due to third parties. Costs associated with performing our tests are recorded as the tests are processed regardless of whether revenue was recognized with respect to the tests. Infrastructure expenses include allocated depreciation of laboratory equipment, rent costs, amortization of leasehold improvements and information technology costs. Royalties for licensed technology are calculated as a percentage of revenues generated using the associated technology and recorded as expense at the time the related revenue is recognized. One-time royalty payments related to signing of license agreements or other milestones, such as issuance of new patents, are amortized to expense over the expected useful life of the patents. While we do not believe the technologies underlying these licenses are necessary to permit us to provide our tests, we do believe these technologies are potentially valuable and of possible strategic importance to us or our competitors. Under these license agreements, we are obligated to pay aggregate royalties ranging from

Previous wording

For the three months ended March 31, 2025 interest expense primarily consists of cash and non-cash interest from the Perceptive Term Loan Facility. For the three months ended March 31, 2024, interest expense consists of cash and non-cash interest from the Perceptive Term Loan Facility, contingent consideration, and changes in the fair value of our contingent consideration associated with the passage of time subsequent to the achievement of the gross margin target in the second quarter 2021. Interest income, which is included in ‘Other income, net’ in the statements of operations consists of income earned on our cash and cash equivalents.

Current wording

For the three and six months ended June 30, 2025 interest expense primarily consists of cash and non-cash interest from the Perceptive Term Loan Facility. For the three and six months ended June 30, 2024, interest expense consists of cash and non-cash interest from the Perceptive Term Loan Facility, contingent consideration, and changes in the fair value of our contingent consideration associated with the passage of time subsequent to the achievement of the gross margin target in the second quarter 2021. Interest income, which is included in ‘Other income, net’ in the statements of operations consists of income earned on our cash and cash equivalents.

Previous wording

Diagnostic Tests revenue increased $2.5 million or 18% for the three months ended March 31, 2025 compared to the same period in 2024. This increase is primarily due to an increase of $2.7 million in the Nodify Lung Nodule Risk Assessment testing strategy driven by an increase in tests delivered as our sales efforts continue to focus on Nodify CDT and XL2 tests. The increase in revenue was partially offset by a $0.1 million decrease in the IQLung testing strategy.

Current wording

Diagnostic Tests revenue increased $1.4 million or 8% and $3.9 million or 13% for the three and six months ended June 30, 2025, respectively, compared to the same periods in 2024. The increases are primarily due to an increase of $1.9 million and $4.5 million, respectively, in the Nodify Lung Nodule Risk Assessment testing strategy driven by an increase in tests delivered as our sales efforts continue to focus on Nodify CDT and XL2 tests. These increases were partially offset by $0.5 million and $0.7 million decreases, respectively, in the IQLung testing strategy sales.

Previous wording

Development Services revenue increased $0.6 million or 61% for the three months ended March 31, 2025 compared to the same period in 2024. The increase in revenue was primarily a result of delivering against our expanding book of business and securing new agreements.

Current wording

Development Services revenue increased $0.7 million or 53% and $1.4 million or 56% for the three and six months ended June 30, 2025, respectively, compared to the same periods in 2024. The increase in revenue was primarily a result of delivering against our expanding book of business and securing new agreements.

Previous wording

Direct costs and expenses related to revenue increased $0.5 million or 17% for the three months ended March 31, 2025 compared to the same period in 2024, primarily driven by the increase in testing volume compared to the same period in 2024, partially offset by the optimization of testing workflows that resulted in improvements in costs per test.

Current wording

Direct costs and expenses related to revenue increased $0.2 million or 4% and $0.7 million or 10% for the three and six months ended June 30, 2025, respectively, compared to the same periods in 2024, primarily driven by the increase in testing volume compared to the same periods in 2024, partially offset by the optimization of testing workflows that resulted in improvements in costs per test.

Previous wording

Research and development expenses increased $0.8 million or 41% for the three months ended March 31, 2025 compared to the same period in 2024. The increase in costs was primarily due to an increase in internal expenses associated with compensation and benefit costs resulting from an increase in headcount and an increase in external costs associated with clinical trials and data acquisition costs.

Current wording

Research and development expenses increased $0.7 million or 28% and $1.5 million or 34% for the three and six months ended June 30, 2025, respectively, compared to the same periods in 2024. The increase in costs was primarily due to an increase in internal expenses associated with employee compensation and benefit costs resulting from an increase in headcount and variable compensation as well as an increase in external costs associated with clinical trials.

Previous wording

The following table summarizes our external and internal costs for the three months ended March 31, 2025 and 2024 (in thousands, except percentages):

Current wording

The following table summarizes our external and internal costs for the three and six months ended June 30, 2025 and 2024 (in thousands, except percentages):

Previous wording

Interest expense decreased $0.8 million or 33% for the three months ended March 31, 2025 compared to the same period in 2024. The interest expense for the three months ended March 31, 2025 is primarily related to interest and amortization of debt issuance costs associated with the Perceptive Term Loan Facility of $1.7 million. The interest expense for the three months ended March 31, 2024 is primarily related to interest and amortization of debt issuance costs associated with the Perceptive Term Loan Facility of $1.8 million and interest associated with the contingent consideration of $0.7 million, which was paid in full on September 30, 2024.

Current wording

Interest expense decreased an insignificant amount and $0.9 million or 20% for the three and six months ended June 30, 2025, respectively, compared to the same periods in 2024. The interest expense for the six months ended June 30, 2025 is primarily related to interest and amortization of debt issuance costs associated with the Perceptive Term Loan Facility of $3.5 million. The interest expense for the six months ended June 30, 2024 is primarily related to interest and amortization of debt issuance costs associated with the Perceptive Term Loan Facility of $3.5 million and interest associated with the contingent consideration of $0.9 million, which was paid in full on September 30, 2024.

Previous wording

On February 28, 2025, the Company entered into the Fifth Amendment to the Credit Agreement with Perceptive, whereby subject to the terms and conditions of the Fifth Amendment, the Tranche C Loan Commitment Termination Date was extended, providing continued availability to the Tranche C Loan through December 31, 2025. In addition, on the Tranche C Loan Borrowing Date, the Tranche C Warrants, as amended, will become vested and exercisable at an exercise price equal to $0.793, the Company's closing stock price on February 28, 2025. During the three months ended March 31, 2025, the Company recorded a $0.4 million loss as a change in fair value of warrant liability through the condensed statements of operations due to changes in unobservable inputs. This was a result of changes in the probability of our ability to draw on the Tranche C Loan.

Current wording

On February 28, 2025, the Company entered into the Fifth Amendment to the Credit Agreement with Perceptive, whereby subject to the terms and conditions of the Fifth Amendment, the Tranche C Loan Commitment Termination Date was extended, providing continued availability to the Tranche C Loan through December 31, 2025. In addition, on the Tranche C Loan borrowing date, the Tranche C Warrants, as amended, would become vested and exercisable at an exercise price equal to $0.793, the Company's closing stock price on February 28, 2025. On May 8, 2025, the Company exercised its ability to draw the Tranche C loan under the Perceptive Term Loan Facility for $10.0 million. As consideration for drawing the Tranche C Loan, the Company agreed to modify the previously agreed upon per share exercise price of $0.793 for the Tranche C Warrants to a new per share exercise of $0.4191, which was equal to the 10-day VWAP of the Company’s common stock on May 9, 2025, the business day immediately preceding the Tranche C Loan borrowing date. In connection with the Tranche C draw, the Company remeasured the Tranche C Warrants through the Tranche C borrowing date and recorded the change in fair value through the statement of operations and, subsequently, reclassified the fair value to additional paid-in capital.

Previous wording

During the three months ended March 31, 2025, the Company recorded other income, net of $0.1 million primarily related to interest income. During the three months ended March 31, 2024, the Company expensed approximately $0.1 million of deferred offering costs to 'Other (expense) income, net' in the condensed statement of operations as a result of changes in the probability of our ability to fully utilize the LPC Facility prior to the termination date.

Current wording

During the three and six months ended June 30, 2025, the Company recorded other income, net of $0.1 million and $0.2 million, respectively, primarily related to interest income. During the three and six months ended June 30, 2024, the Company recorded other expense, net of $0.4 million and $0.5 million, respectively. The expense primarily consists of deferred offering costs of approximately $0.6 million and $0.7 million, respectively, as a result of changes in the probability of our ability to fully utilize the LPC Facility prior to the termination date. Partially offsetting this expense during the three and six months ended June 30, 2024 is $0.3 million of interest and other income.

Previous wording

On February 28, 2025 (the Fifth Amendment Effective Date), the Company entered into the Fifth Amendment to the Credit Agreement (the Fifth Amendment) with Perceptive, whereby subject to the terms and conditions of the Fifth Amendment, the Tranche C Loan revenue milestone was eliminated and the Commitment Termination Date (as defined in the Credit Agreement) was extended, providing continued availability to the Tranche C Loan in an aggregate amount equal to $10.0 million through December 31, 2025.

Current wording

On February 28, 2025 (the Fifth Amendment Effective Date), the Company entered into the Fifth Amendment to the Credit Agreement (the Fifth Amendment) with Perceptive, whereby subject to the terms and conditions of the Fifth Amendment, the Tranche C Loan revenue milestone was eliminated and the Commitment Termination Date (as defined in the Credit Agreement) was extended, providing continued availability to the Tranche C Loan in an aggregate amount equal to $10.0 million through December 31, 2025. On May 8, 2025, the Company exercised its ability to draw the Tranche C loan for $10.0 million.

Previous wording

Our cash flows resulted in a net decrease in cash and cash equivalents and restricted cash of $8.6 million during the three months ended March 31, 2025 as compared to the net decrease in cash of $14.8 million for the three months ended March 31, 2024. For the three months ended March 31, 2025, net cash used in operating activities totaled $8.6 million, an decrease of approximately $6.7 million compared to the same period in 2024 primarily due to favorable changes in net working capital of $6.2 million, which includes a decrease of $3.4 million in payments made for contingent consideration during the three months ended March 31, 2024. This also includes an improvement in net working capital for the timing of cash receipts from customers and payments to vendors of $2.8 million and a year-over-year decrease in net loss from operations of $2.9 million.

Current wording

Our cash flows resulted in a net decrease in cash and cash equivalents and restricted cash of $5.5 million during the six months ended June 30, 2025 as compared to a net increase in cash of $15.9 million for the six months ended June 30, 2024. For the six months ended June 30, 2025, net cash used in operating activities totaled $15.2 million, a decrease of approximately $18.7 million compared to the same period in 2024 primarily due to favorable changes in net working capital of $20.1 million, which includes a decrease of $17.2 million in payments made for contingent consideration during the six months ended June 30, 2024. This also includes an improvement in net working capital for the timing of cash receipts from customers and payments to vendors of $2.9 million and a year-over-year decrease in net loss from operations of $1.9 million.

Previous wording

Net cash used in investing activities during the three months ended March 31, 2025 totaled $0.1 million, a decrease of $0.2 million compared to the same period in 2024. The decrease in net cash used in investing activities was primarily due to decreases in purchases of property and equipment and capital expenditures.

Current wording

Net cash used in investing activities during the six months ended June 30, 2025 totaled $0.2 million, a decrease of $2.0 million compared to the same period in 2024. The decrease in net cash used in investing activities was primarily due to decreases in purchases of property and equipment and capital expenditures.

Previous wording

Net cash provided by financing activities during the three months ended March 31, 2025 totaled $0.1 million, a decrease of $0.7 million compared to the same period in 2024. The net cash provided by financing activities for the three months ended March 31, 2025 primarily resulted from $0.3 million in net proceeds from our ESPP, partially offset by payments of $0.2 million associated with our finance lease obligations. The net cash provided by financing activities for the three months ended March 31, 2024 primarily resulted from $0.9 million in net proceeds from the issuance of common stock under the ATM facility and the ESPP, partially offset by repayment of financing leases of $0.1 million.

Current wording

Net cash provided by financing activities during the six months ended June 30, 2025 totaled $9.9 million, a decrease of $42.2 million compared to the same period in 2024. The net cash provided by financing activities for the six months ended June 30, 2025 primarily resulted from $10.0 million in net proceeds from the issuance of Tranche C under the Perceptive Term Loan Facility and $0.3 million in net proceeds from our ESPP, partially offset by payments of $0.4 million associated with our finance lease obligations. The net cash provided by financing activities for the six months ended June 30, 2024 primarily resulted from $51.3 million in net proceeds from the issuance of common stock from an underwritten offering of common stock and a concurrent private placement, $0.6 million from the issuance of common stock from our ATM facility, and $0.3 million from our ESPP, partially offset by repayment of notes payable, debt issuance costs and financing leases of $0.2 million.