Personalis, Inc.

Previous wording

We develop, market, and sell advanced cancer genomic tests and services. Our services are used by pharmaceutical companies for translational research, biomarker discovery, the development of personalized cancer therapies, and for clinical trials. Our tests are used by physicians to detect residual or recurrent cancer in patients, monitor cancer response to therapy, and uncover insights for therapy selection. We also provide whole exome and whole genome sequencing (“WGS”) services for other diagnostic companies and population sequencing initiatives.

Current wording

We develop, market, and sell advanced cancer genomic testing services. Our testing services are used by physicians to detect residual or recurrent cancer in patients, monitor cancer response to therapy, and uncover insights for therapy selection. Our testing services are used by pharmaceutical companies for translational research, biomarker discovery, the development of personalized cancer therapies, and clinical trials. We also provide whole exome sequencing services for other diagnostic companies and whole genome sequencing services for population sequencing initiatives.

Previous wording

We are working with a growing number of leading cancer centers and world-class academic research institutions to build and publish the clinical evidence-base to support our products and our key indications, as well as to obtain reimbursement coverage from Medicare and other payors. Because of the ultra-high analytical sensitivity of our technology, we are initially focusing on three indications: breast cancer, lung cancer, and immunotherapy (IO) monitoring. We have collaborations with Cancer Research UK, University College London, and the Francis Crick Institute (the TRACERx study); Institut Curie; The Royal Marsden; the Vall d'Hebron Institute of Oncology (VHIO); the University of California, San Diego; Duke University; Vanderbilt University and Johns Hopkins University (the PREDICT study); the Dana-Farber Cancer Institute; the University of Texas M.D. Anderson Cancer Center; University Medical Center Hamburg-Eppendorf (also known as UKE); and Criterium and the Academic Breast Cancer Consortium, that will focus on building the evidence-base for our technology and these indications.

Current wording

We are working with a growing number of leading cancer centers and world-class academic research institutions to build and publish clinical, evidence-based support for our testing services and our key indications, as well as to obtain reimbursement coverage from Medicare and other payors. Because of the ultra-high analytical sensitivity of our technology, we are primarily focusing on three indications: breast cancer, lung cancer, and immunotherapy (IO) monitoring. We have collaborations with Cancer Research UK, University College London, and the Francis Crick Institute (the TRACERx study); Institut Curie; The Royal Marsden; the Vall d'Hebron Institute of Oncology (VHIO); the University of California, San Diego; Duke University; Vanderbilt University and Johns Hopkins University (the PREDICT study); the Dana-Farber Cancer Institute; the University of Texas M.D. Anderson Cancer Center; University Medical Center Hamburg-Eppendorf (also known as UKE); Criterium and the Academic Breast Cancer Consortium; Yale Cancer Center; Aarhus University; British Columbia Cancer; and University Health Network, that will focus on building the evidence-base for our technology and these indications.

Previous wording

Today, our products are routinely used by many of the largest oncology-focused pharmaceutical companies for analysis of patient samples in their clinical trials and drug development programs. Our advanced genomic sequencing and analytics also support the development of personalized neoantigen therapies for cancer and other next-generation cancer immunotherapies. For example, we are providing genomic testing to ModernaTX, Inc. ("Moderna") in its ongoing clinical trials evaluating a personalized cancer therapy. In addition, we partner with diagnostics companies by providing our advanced tumor profiling and analysis capabilities as an input to their products. More recently, we launched new diagnostic offerings for the clinical setting and, in November 2023, entered into an agreement with Tempus AI, Inc. (“Tempus”) to commercialize our NeXT Personal Dx test. We have also pursued non-cancer related business opportunities, specifically within the population sequencing market, by providing WGS services under contract with the U.S. Department of Veterans Affairs Million Veteran Program ("VA MVP").

Current wording

Today, our testing services are routinely used by many of the largest oncology-focused pharmaceutical companies for analysis of patient samples in their clinical trials and drug development programs. Our advanced genomic sequencing and analytics also support the development of personalized neoantigen therapies for cancer and other next-generation cancer immunotherapies. For example, we are providing genomic testing services to ModernaTX, Inc. ("Moderna") in its ongoing clinical trials evaluating a personalized cancer therapy. In addition, we have partnered with diagnostics companies by providing our advanced tumor profiling and analysis capabilities as an input to their products. We also have a collaboration with Tempus that enables Tempus to market our NeXT Personal® Dx test to physicians for breast cancer, lung cancer, colorectal cancer and immuno-oncology monitoring, and to market and sell NeXT Personal to Tempus' pharmaceutical and biotech customers who wish to bundle MRD testing with other Tempus offerings in a given study, through November 25, 2029. We have also pursued non-cancer related business opportunities, specifically within the population sequencing market, by providing whole genome sequencing ("WGS") services under contract with the U.S. Department of Veterans Affairs Million Veteran Program ("VA MVP").

Previous wording

Our work in oncology is underpinned by our experience and capacity for next-generation sequencing at scale. We have the capacity to sequence and analyze over 350 trillion bases of DNA per week in our facility. We believe that our capacity is already larger than most cancer genomics companies, and we continue to build automation and other infrastructure to scale further as demand increases. To date, we have sequenced approximately 552,000 human samples, of which approximately 206,000 were whole human genomes.

Current wording

Our work in oncology is underpinned by our experience and capacity for next-generation sequencing at scale. We have the capacity to sequence and analyze over 350 trillion bases of DNA per week in our facility. We believe that our capacity is already larger than most cancer genomics companies, and we continue to build automation and other infrastructure to scale further as demand increases. To date, we have sequenced approximately 585,000 human samples, of which approximately 227,000 were whole human genomes.

Previous wording

Key business accomplishments and financial updates in the third quarter of 2025 include:

Current wording

Key business accomplishments and financial updates in the first quarter of 2026 include:

Previous wording

We derive our revenue primarily from sales of genomic tests and services to the following five customer types:

Current wording

We derive our revenue primarily from sales of genomic testing services to the following five customer types:

Previous wording

Pharma tests and services includes sales of testing services and data analytics for clinical trials and research to pharmaceutical companies in support of their oncology drug development programs.

Current wording

Pharma testing services includes sales of testing services and data analytics for clinical trials and research to pharmaceutical companies in support of their oncology drug development programs.

Previous wording

Enterprise sales includes sales of tumor profiling and diagnostic tests directly to other businesses as an input to their products. Revenue from our partnership with Natera to provide advanced tumor analysis for use in Natera's MRD test currently makes up substantially all of the revenue in this category.

Current wording

Enterprise sales includes sales of tumor profiling and diagnostic tests directly to other businesses as an input to their products. Revenue from our commercial relationship with Natera to provide advanced tumor analysis for use in Natera's MRD test currently makes up substantially all of the revenue in this category.

Previous wording

Clinical diagnostic includes sales of comprehensive tumor profiling test that is used to help select therapy for a cancer patient and identify potential clinical trials for a patient, and sales of ultra-sensitive, tumor-informed diagnostic tests, ordered by healthcare providers for cancer patients. Revenue in this category is derived from Medicare and private insurance reimbursements. As of September 30, 2025, we have not received Medicare coverage reimbursement for NeXT Personal Dx.

Current wording

Clinical diagnostic includes sales of comprehensive tumor profiling test that is used to help select therapy for a cancer patient and identify potential clinical trials for a patient, and sales of ultrasensitive, tumor-informed diagnostic tests, ordered by healthcare providers for cancer patients. Revenue in this category is derived from Medicare and private insurance reimbursements.

Previous wording

Our ability to increase revenue will depend on our ability to further increase sales to these groups of customers and expand our customer base within each group. To do this, we are developing a growing set of state-of-the-art services and products; advancing our operational infrastructure; building our regulatory credentials; focusing our marketing efforts on large pharmaceutical companies; building and publishing the clinical evidence-base to support our products and services in our key indications, pursuing reimbursement coverage from Medicare and other payors; and seeking additional partnerships. We market to biopharma customers and doctors through a small direct sales force. In late 2023, we entered into the Tempus Agreement to commercialize NeXT Personal Dx in the clinical diagnostics market and will be leveraging Tempus' significantly larger sales force as a key vector to grow our clinical diagnostic business. In late 2024, we expanded our collaboration partnership with Tempus to enable Tempus to market and sell NeXT Personal to Tempus' pharmaceutical and biotech customers who wish to bundle MRD testing with other Tempus offerings in a given study. In July 2025, we further expanded our collaboration partnership with Tempus to authorize Tempus to market NeXT Personal Dx for colorectal cancer and extend the term of the Tempus Agreement through November 25, 2029.

Current wording

Our ability to increase revenue will depend on our ability to further increase sales to these groups of customers and expand our customer base within each group. To do this, we are developing a growing set of state-of-the-art services; advancing our operational infrastructure; building our regulatory credentials; focusing our marketing efforts on large pharmaceutical companies; building and publishing the clinical evidence-base to support our testing services in our key indications, pursuing reimbursement coverage from Medicare and other payors; and seeking additional partnerships. We market to biopharma customers and doctors through a small direct sales force and through our collaboration and partnership with Tempus where we are leveraging Tempus' significantly larger sales force to commercialize NeXT Personal Dx in the clinical diagnostics market as a key vector to grow our clinical diagnostic business.

Previous wording

We have one reportable segment which is providing advanced cancer genomic tests and services for precision oncology applications, personalized testing, and other tests. Most of our revenue to date has been derived from sales in the United States.

Current wording

We have one reportable segment which is to provide advanced cancer genomic testing services for precision oncology applications, personalized testing and other tests. Most of our revenue to date has been derived from sales in the United States.

Previous wording

Cost of revenue consists of raw materials costs, personnel costs (salaries, bonuses, stock-based compensation, payroll taxes, and benefits), laboratory supplies and consumables, depreciation and maintenance on equipment, and allocated facilities and information technology (“IT”) costs. We expect variability in our gross margins over the medium-term due to fluctuations in customer mix and volume, investments in newer sequencing platforms and new capabilities such as automation of laboratory workflows, processing of diagnostic tests for the clinical market while we work to secure reimbursement, and costs related to our Fremont facility. Over the long-term, we anticipate higher gross margins as growing revenue leads to economies of scale.

Current wording

Cost of revenue consists of raw materials costs, personnel costs (salaries, bonuses, stock-based compensation, payroll taxes, and benefits), laboratory supplies and consumables, depreciation and maintenance on equipment, allocated facilities and information technology (“IT”) costs and clinical diagnostic test costs. We expect variability in our gross margins over the medium-term due to fluctuations in customer mix and volume, investments in newer sequencing platforms and new capabilities such as automation of laboratory workflows, processing of diagnostic tests for the clinical market while we work to secure reimbursement, and costs related to our Fremont facility. Over the long-term, we anticipate higher gross margins as growing revenue leads to economies of scale.

Previous wording

Research and development expenses consist of costs incurred for the research and development of our services and products and costs related to conducting studies and collaborations with partners to validate the clinical utility of our offerings. The expenses primarily consist of personnel costs (salaries, bonuses, stock-based compensation, payroll taxes, and benefits); laboratory supplies and consumables; costs of processing samples for research, product development, collaborations and studies; depreciation and maintenance on equipment; and allocated facilities and IT costs. We include in research and development expenses the costs to further develop software we use to operate our laboratory, analyze the data it generates, and automate our operations.

Current wording

Research and development expenses consist of costs incurred for the research and development of our testing services and costs related to conducting studies and collaborations with partners to validate the clinical utility of our offerings. The expenses primarily consist of personnel costs (salaries, bonuses, stock-based compensation, payroll taxes, and benefits); laboratory supplies and consumables; costs of processing samples for research, product development, collaborations and studies; depreciation and maintenance on equipment; and allocated facilities and IT costs. We include in research and development expenses the costs to further develop software we use to operate our laboratory, analyze the data it generates, and automate our operations.

Previous wording

We expense our research and development costs in the period in which they are incurred. We expect research and development expenses to increase over time to support the growth of our clinical diagnostic offerings.

Current wording

We expense our research and development costs in the period in which they are incurred. We expect research and development expenses to continue to increase over time to support the growth of our clinical diagnostic offerings.

Previous wording

We expect selling, general and administrative expenses to increase over time to support the growth of our clinical diagnostic offerings.

Current wording

We expect selling, general and administrative expenses to continue to increase over time to support the growth of our clinical diagnostic offerings and expected gain of market share.

Previous wording

Other income (expense), net includes foreign currency exchange gains and losses. Other income (expense), net during the three and nine months ended September 30, 2024 consisted primarily of a noncash loss related to the remeasurement of the warrants issued in connection with our November 2023 agreement with Tempus.

Current wording

Other income (expense), net consists primarily of foreign currency exchange gains and losses.

Previous wording

(2) Includes related party sales and marketing expenses of $1.2 million and $2.7 million for the three and nine months ended September 30, 2025, respectively.

Current wording

(2) Includes related party sales and marketing expenses of $2.9 million and $0.6 million for the three months ended March 31, 2026 and March 31, 2025, respectively.

Previous wording

(1) Includes related party accounts receivable of $2.6 million and $2.5 million as of September 30, 2025 and December 31, 2024, respectively.

Current wording

(1) Includes related party accounts receivable of $4.5 million and $2.5 million as of March 31, 2026 and December 31, 2025, respectively.

Previous wording

(2) Includes related party liabilities of $5.7 million and $2.9 million as of September 30, 2025 and December 31, 2024, respectively.

Current wording

(2) Includes related party liabilities of $4.4 million and $5.7 million as of March 31, 2026 and December 31, 2025, respectively.

Previous wording

The following table shows revenue by customer type (in thousands):

Current wording

The following table shows revenue by customer type (in thousands, except percentages):

Previous wording

The decreases in pharma tests and services revenue in the third quarter of 2025 and the first nine months of 2025 compared to the same periods of 2024 were primarily due to a decrease in the clinical trial samples processed for Moderna in addition to a small decline in selling prices. We expect variability in revenue from pharmaceutical companies in the future due to the timing of their trial enrollments or project schedules.

Current wording

The decrease in pharma testing services revenue in the first quarter of 2026 was primarily due to a decrease in the clinical trial samples processed for Moderna in addition to a small decline in selling prices. We expect variability in revenue from pharmaceutical companies in the future due to the timing of their patient enrollment for clinical trials or project schedules.

Previous wording

The decreases in revenue from enterprise sales in the third quarter of 2025 and the first nine months of 2025 were mainly due to the expected decrease in the number of samples processed for Natera compared to the same periods of 2024. Our agreement with Natera included minimum volume commitments through the second quarter of 2025 and we do not expect to continue a long-term commercial relationship with Natera beyond this year.

Current wording

The decrease in revenue from enterprise sales in the first quarter of 2026 was mainly due to the expected decrease in the number of samples processed for Natera after the second quarter of 2025 when the minimum volume commitments in our agreement with Natera expired. We no longer have a material commercial relationship with Natera and do not expect to have one going forward.

Previous wording

Our annual task order received from the VA MVP in 2024 was $7.5 million. Our contract with the VA MVP does not include specific testing turnaround times. Therefore, we may modulate the volume of samples processed from the VA MVP to accommodate sample volumes from other customers in order to utilize lab capacity efficiently, which may vary from period to period. In August 2025, we received a new annual task order from the VA MVP with a value of up to $13.5 million that is effective on September 30, 2025.

Current wording

Revenue recognized each period from population sequencing is impacted by timing of our fulfillment of samples under each annual task order. The decrease in revenue in the first quarter of 2026 was due to a planned decrease in the number of samples we processed. Our annual task orders received in 2025 and 2024 were $13.5 million and $7.5 million, respectively. Our contract with the VA MVP does not include specific testing turnaround times. Therefore, we may modulate the volume of samples processed from the VA MVP to accommodate sample volumes from other customers, which can vary from period to period. We anticipate fulfilling the task order received in August 2025 during the first three quarters of 2026.

Previous wording

Clinical diagnostic revenue is generated from Medicare and private insurance payors. In January 2024, we received a Medicare coverage determination for NeXT Dx, our ultra-comprehensive tumor genomic profiling assay. The increases in clinical diagnostic revenue in the third quarter of 2025 and in the first nine months of 2025 compared to the same periods of 2024 were mainly attributable to an increase in NeXT Dx test volume and NeXT Personal Dx reimbursements received from certain private payors.

Current wording

Clinical diagnostic revenue is generated from Medicare and private insurance payors. In January 2024, we received a Medicare coverage determination for NeXT Dx, our ultra-comprehensive tumor genomic profiling assay. In November 2025, we received Medicare coverage determination for NeXT Personal Dx for post-treatment surveillance of cancer recurrence in patients with Stage II and III breast cancer, with an effective date of October 7, 2025. In February 2026, we also received Medicare coverage for NeXT Personal Dx for surveillance of patients with Stage I to III NSCLC, with an effective date of January 9, 2026. The increase in clinical diagnostic revenue in the first three months of 2026 was mainly attributable to an increase in NeXT Dx test volume and NeXT Personal Dx reimbursements received from certain private payors and Medicare for breast cancer and NSCLC surveillance.

Previous wording

Specific components of the decrease in the third quarter of 2025 were a $6.5 million and a $0.3 million decrease in direct material and labor costs, respectively, due to reduced samples processed, and a $0.2 million decrease in depreciation expense, partially offset by a $1.2 million increase in laboratory supplies, a $1.3 million increase in diagnostic test costs and a $0.1 million increase in equipment repairs and maintenance.

Current wording

Specific components of the increase were a $1.3 million increase in diagnostic test costs, a $0.8 million increase in personnel costs, and a $0.2 million increase in facilities expenses, offset partially by a $0.5 million decrease in direct material costs due to lower biopharma revenue.

Previous wording

The increases in interest income in the third quarter of 2025 and the first nine months of 2025 compared to the same periods of 2024 were driven by higher average investment balances, partially offset by decreased yields. Interest expense is the recognition of imputed interest on noninterest bearing loans.

Current wording

The increase in interest income in the first quarter of 2026 compared to the same quarter in 2025 was driven by higher average investment balances, partially offset by decreased yields. Interest expense is the recognition of imputed interest on noninterest bearing loans.

Previous wording

Other income (expense), net, in the third quarter of 2025 and the first nine months of 2025, consisted mainly of foreign currency remeasurements. Other income (expense), net in the third quarter of 2024 and the first nine months of 2024 consisted mainly of a $26.0 million and a $18.3 million noncash loss, respectively, recognized as a result of remeasurement of the Tempus Warrants (classified as liability instruments).

Current wording

Other income (expense), net, in the periods presented consisted mainly of foreign currency remeasurements.

Previous wording

From our inception through September 30, 2025, we have funded our operations primarily from net proceeds from issuance of redeemable convertible preferred stock, issuance of common stock through our initial public offering, follow-on equity offerings and our ATM facility (see Note 2, Summary of Significant Accounting Policies, in Part 1, Item 1 of this Form 10-Q in our Consolidated Financial Statements for additional information). Additionally, we have funded our operations from Tempus exercising warrants and purchasing additional shares of our common stock under an investment agreement, and Merck & Co., Inc. (“Merck”) purchasing shares of our common stock under an investment agreement (see Note 8, Related Party Transactions, in Part 1, Item 1 of this Form 10-Q in our Consolidated Financial Statements for additional information), as well as cash from operations and debt financings. As of September 30, 2025, we had cash and cash equivalents of $50.0 million and short-term investments of $100.5 million.

Current wording

From our inception through March 31, 2026, we have funded our operations primarily from net proceeds from issuance of redeemable convertible preferred stock, IPO, follow-on equity offerings, At-the-Market ("ATM") facility (see Note 9, Stock-Based Compensation, in Part 1, Item 1 of this Form 10-Q in our Consolidated Financial Statements for additional information), Tempus exercising warrants and purchasing additional shares under an investment agreement, and Merck purchasing shares of our common stock under an investment agreement (see Note 8, Related Party Transactions, in Part 1, Item 1 of this Form 10-Q in our Consolidated Financial Statements for additional information), as well as debt financings. As of March 31, 2026, we had cash and cash equivalents of $73.6 million and short-term investments of $159.6 million.

Previous wording

We have incurred net losses since our inception. We anticipate that our current cash and cash equivalents and short-term investments, together with cash provided by operating activities, are sufficient to fund our near-term capital and operating needs for at least the next 12 months.

Current wording

We have incurred net losses since our inception. We anticipate that our current cash and cash equivalents and short-term investments are sufficient to fund our near-term capital and operating needs for at least the next 12 months.

Previous wording

We have based these future funding requirements on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we expect. If our available cash balances and anticipated cash flow from operations are insufficient to satisfy our liquidity requirements, including because of lower demand for our services or other risks described in this Quarterly Report on Form 10-Q, we may seek to sell additional common or preferred equity or convertible debt securities, enter into an additional credit facility or another form of third-party funding or seek other debt financing. We filed a sales agreement prospectus supplement in December 2024, pursuant to which we may offer and sell up to $50.0 million of shares of our common stock through our ATM facility, of which approximately $32.0 million remains available for sale as of September 30, 2025.The sale of equity and convertible debt securities may result in dilution to our stockholders and, in the case of preferred equity securities or convertible debt, those securities could provide for rights, preferences or privileges senior to those of our common stock. The terms of debt securities issued or borrowings pursuant to a credit agreement could impose significant restrictions on our operations. Additional capital may not be available on reasonable terms, or at all. Our ability to raise additional capital may be adversely impacted by potential worsening global economic conditions and the recent disruptions to, and volatility in, the credit and financial markets in the United States and worldwide resulting from tariffs, other restrictive trade policies, the current administration’s focus on reducing government research spending and federal cost-cutting initiatives, actual or perceived changes in interest rates and inflation, and other macroeconomic factors. If we are unable to raise additional capital when needed or on favorable terms, our business, results of operations and financial condition would be adversely affected.

Current wording

We have based these future funding requirements on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we expect. If our available cash balances and anticipated cash flow from operations are insufficient to satisfy our liquidity requirements, including because of lower demand for our testing services or other risks described in this Quarterly Report on Form 10-Q, we may seek to sell additional common or preferred equity or convertible debt securities, enter into an additional credit facility or another form of third-party funding or seek other debt financing. We filed a sales agreement prospectus supplement in November 2025, pursuant to which we offered and sold $100.0 million of shares of our common stock through our ATM facility. As of March 31, 2026, no shares of our common stock remain available for sale. The sale of equity and convertible debt securities may result in dilution to our stockholders and, in the case of convertible debt, those securities could provide for rights, preferences or privileges senior to those of our common stock. The terms of debt securities issued or borrowings pursuant to a credit agreement could impose significant restrictions on our operations. Additional capital may not be available on reasonable terms, or at all.

Previous wording

The decrease in cash used in investing activities was due to a $5.0 million decrease in investment of our cash into short-term investments, partially offset by a $4.3 million increase in capital expenditures.

Current wording

The increase in cash used by investing activities was due to a $2.7 million increase in investment of our cash into short-term investments, $20.2 million lower proceeds from the maturity of short-term investments, and a $0.6 million increase in capital expenditures.

Previous wording

The decrease in cash provided by financing activities was due to a $12.2 million lower net proceeds from sales of common stock under our ATM facility, a $35.5 million decrease from the proceeds of the Tempus warrant exercise and stock sale and a $0.9 million higher repayments of loans, partially offset by a $2.6 million increase in the loan receipts and $0.4 million higher proceeds from our employee stock purchase program.

Current wording

The decrease in cash provided by financing activities was due to a $2.6 million decrease in proceeds from loans, a $2.1 million payment of a finance lease, and $1.0 million higher repayments of loans, partially offset by $3.3 million higher net proceeds from sales of common stock under our ATM facility and our equity incentive plans, and $0.1 million lower payments of costs associated with the Tempus and Merck investment agreements.

Previous wording

Our material cash requirements in the short- and long-term consist primarily of variable costs of revenue, operating expenditures, capital expenditures, property leases, and other spend. We plan to fund our material cash requirements with our existing cash and cash equivalents and short-term investments, which amounted to $150.5 million as of September 30, 2025, as well as anticipated cash receipts from customers. To fund our material cash requirements in the short- and long-term, we may also seek to sell additional common or preferred equity or convertible debt securities, enter into an additional credit facility or another form of third-party funding or seek other debt financing.

Current wording

Our material cash requirements in the short- and long-term consist primarily of variable costs of revenue, operating expenditures, capital expenditures, property leases, and other spend. We plan to fund our material cash requirements with our existing cash and cash equivalents and short-term investments, which amounted to $233.2 million as of March 31, 2026, as well as anticipated cash receipts from customers. To fund our material cash requirements in the short- and long-term, we may also seek to sell additional common or preferred equity or convertible debt securities, enter into an additional credit facility or another form of third-party funding or seek other debt financing.

Previous wording

Variable costs of revenue. From time to time in the ordinary course of business, we enter into agreements with vendors for the purchase of raw materials, laboratory supplies and consumables to be used in the sequencing of customer samples. However, we generally do not have binding and enforceable purchase orders beyond the short term, and the timing and magnitude of purchase orders beyond such period is difficult to accurately project. We currently expect spending in this area to increase in 2025 in order to support the planned increase in clinical test volumes ahead of planned Medicare reimbursement.

Current wording

Variable costs of revenue. From time to time in the ordinary course of business, we enter into agreements with vendors for the purchase of raw materials, laboratory supplies and consumables to be used in the sequencing of customer samples. However, we generally do not have binding and enforceable purchase orders beyond the short term, and the timing and magnitude of purchase orders beyond such period is difficult to accurately project. We currently expect spending in this area to increase compared to the levels in 2025 to support expected higher levels of revenue.

Previous wording

Operating expenditures. Our primary use of cash relates to employee compensation, spend on professional services, spend related to research and development projects, and other costs to support our research and development and selling, general and administrative functions. We currently expect our spending in all of these areas to increase slightly above the levels in 2024. On a long-term basis, we manage future cash requirements relative to our long-term business plans.

Current wording

Operating expenditures. Our primary use of cash relates to employee compensation, spend on professional services, spend related to research and development projects, and other costs to support our research and development and selling, general and administrative functions. We currently expect our spending in all of these areas to increase compared to the levels in 2025 to support the growth of our clinical diagnostic offerings. On a long-term basis, we manage future cash requirements relative to our long-term business plans.

Previous wording

Capital expenditures. Capital expenditures are expected to increase from 2024 levels as we expect to expand NeXT Personal Dx capacity. Going forward, our capital expenditures are expected to consist primarily of laboratory equipment and computer equipment. We currently expect capital expenditures to be approximately $7.0 million in 2025 and between $13.0 million to $14.0 million in each of the years 2026 and 2027.

Current wording

Capital expenditures. Capital expenditures are expected to increase from 2025 levels as we expect to expand NeXT Personal Dx test volume capacity. Going forward, our capital expenditures are expected to consist primarily of laboratory equipment and computer equipment. We currently expect capital expenditures to be between $8.0 million and $10.0 million in 2026 and between $10.0 million to $12.0 million in each of the years 2027 and 2028.

Previous wording

Property leases. Our noncancelable operating lease payments were $64.3 million as of September 30,2025. The timing of these future payments, by year, can be found in Note 7, Leases, in Part I, Item 1 of this Form 10-Q in the Consolidated Financial Statements.

Current wording

Property leases. Our noncancelable operating lease payments were $60.6 million as of March 31, 2026. The timing of these future payments, by year, can be found in Note 7, Leases, in Part I, Item 1 of this Form 10-Q in the Consolidated Financial Statements.

Previous wording

Other. As of September 30, 2025, we have an outstanding noninterest bearing loan that was used to finance the purchase of lab equipment and software licenses. We owe a total of $2.5 million, of which the majority is payable in the next twelve months. Further discussion of the loan can be found in Note 6, Loans, in Part I, Item 1 of this Form 10-Q in the Consolidated Financial Statements.

Current wording

Other. As of March 31, 2026, we have an outstanding noninterest bearing loan that was used to finance the purchase of equipment for our laboratory. We owe a total of $0.9 million, which is payable in 2027. Further discussion of the loan can be found in Note 6, Loans, in Part I, Item 1 of this Form 10-Q in the Consolidated Financial Statements.

Previous wording

Our financial statements are prepared in accordance with U.S. GAAP. The preparation of our financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs and expenses, and related disclosures. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

Current wording

Our consolidated financial statements are prepared in accordance with U.S. GAAP. The preparation of our consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs and expenses, and related disclosures. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

Previous wording

An accounting policy is deemed to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, if different estimates reasonably could have been used, or if changes in the estimate that are reasonably possible could materially impact the financial statements. We believe that the assumptions and estimates associated with revenue recognition, leases, and common stock warrants have the greatest potential impact on our financial statements. Therefore, we consider these to be our critical accounting policies and estimates.

Current wording

An accounting policy is deemed to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, if different estimates reasonably could have been used, or if changes in the estimate that are reasonably possible could materially impact the financial statements. We believe that the assumptions and estimates associated with revenue recognition and leases have the greatest potential impact on our consolidated financial statements. Therefore, we consider these to be our critical accounting policies and estimates.