VERACYTE, INC.

Previous wording

Recent macroeconomic factors, such as interest rate fluctuations and inflation in the United States and other markets, evolving international trade policies and government actions relating to tariffs, as well as volatility in the global banking and finance systems, have resulted in volatility in the capital and credit markets globally. Moreover, the continued fluctuation and reduced valuation of the U.S. dollar compared to other currencies has impacted and may continue to impact our results of operations. We intend to continue to monitor macroeconomic conditions closely and may determine to take certain financial or operational actions in response to such conditions as appropriate. In addition, regional conflicts like those between Russia and Ukraine and in Israel may adversely impact our business and operating results. Finally, the ongoing conflict in the Middle East and related political, military and security conditions in and around Israel may disrupt our Israel business operations and employees that we acquired through the Company’s acquisition of 100% of the outstanding equity interests of C2i, or the C2i Acquisition.

Current wording

Recent macroeconomic factors, such as interest rate fluctuations and inflation in the United States and other markets, evolving international trade policies and government actions relating to tariffs, as well as volatility in the global banking and finance systems, have resulted in volatility in the capital and credit markets globally. Moreover, the continued fluctuation and reduced valuation of the U.S. dollar compared to other currencies has impacted and may continue to impact our results of operations. Further, the U.S. federal government has been shut down since October 1, 2025, and the impact of a prolonged government shutdown on business and economic conditions generally, and our results of operations, is uncertain. We intend to continue to monitor macroeconomic conditions closely and may determine to take certain financial or operational actions in response to such conditions as appropriate. In addition, regional conflicts like those between Russia and Ukraine and in Israel may adversely impact our business and operating results. Finally, the ongoing conflict in the Middle East and related political, military and security conditions in and around Israel may disrupt our Israel business operations and employees that we acquired through the Company’s acquisition of 100% of the outstanding equity interests of C2i, or the C2i Acquisition.

Previous wording

We enter into arrangements to license or provide access to our assets or services to third parties, including clinical and testing services, research and development, contract manufacturing and development, as well as other services. Such arrangements may require us to deliver various rights, data, services, manufactured diagnostic test kits, access and/or testing services to partner biopharmaceutical and other companies. The underlying terms of these arrangements generally provide for consideration paid to us in the form of nonrefundable fees; payments on delivery of data, test results or manufactured products; costs of service plus margin; performance milestone payments; expense reimbursements and possibly royalty and/or other payments. Net sales of data or other services to our customers are recognized in accordance with ASC 606 and are classified under biopharmaceutical and other revenue. Payments received that are not related to sales or services to a customer are recorded as offsets against research and development expense or cost of biopharmaceutical and other revenue in our consolidated statements of operations.

Current wording

We enter into arrangements to license or provide access to our assets or services to third parties, including clinical and testing services, research and development, as well as other services. Such arrangements may require us to deliver various rights, data, services, access and/or testing services to partner biopharmaceutical and other companies. The underlying terms of these arrangements generally provide for consideration paid to us in the form of nonrefundable fees; payments on delivery of data or test results; costs of service plus margin; performance milestone payments; expense reimbursements and possibly royalty and/or other payments. Net sales of data or other services to our customers are recognized in accordance with ASC 606 and are classified under biopharmaceutical and other revenue. Payments received that are not related to sales or services to a customer are recorded as offsets against research and development expense or cost of biopharmaceutical and other revenue in our consolidated statements of operations.

Previous wording

The components of our cost of testing revenue are sample collection kit costs, reagent expenses, compensation expense, license fees and royalties, depreciation, other expenses such as equipment and laboratory supplies, and allocations of facility and information technology expenses. We expect cost of testing revenue in absolute dollars to increase as the number of tests we perform increases. However, we expect that the cost per test will decrease over time due to leveraging fixed costs, efficiencies we may gain as test volume increases and process enhancements such as automation, and other cost reductions. As we introduce new tests, initially our cost of testing revenue will be high as we expect to run suboptimal batch sizes, run quality control batches, test batches, registry samples, and generally incur costs that may suppress or reduce gross margins. This will disproportionately increase our aggregate cost of testing revenue until we achieve processing efficiencies.

Current wording

The components of our cost of testing revenue are sample collection kit costs, reagent expenses, compensation expense, license fees and royalties, depreciation, other expenses such as equipment and laboratory supplies, and allocations of facility and information technology expenses. We expect cost of testing revenue in absolute dollars to increase as the number of tests we perform increases. However, we expect that the cost per test will decrease over time due to leveraging fixed costs, efficiencies we may gain as test volume increases and process enhancements such as automation, and other cost reductions. As we introduce new tests, initially our cost per test will be high as we expect to run suboptimal batch sizes, quality control batches, test batches, registry samples, and generally incur costs that may suppress or reduce gross margins. This will disproportionately increase our aggregate cost of testing revenue until we achieve processing efficiencies.

Previous wording

Our cost of product revenue consists primarily of costs of purchasing diagnostic kit components, labor, installation, service and packaging and delivery costs. In addition, cost of product revenue includes royalty costs for licensed technologies included in our products. As our Prosigna test kits are sold in various configurations with different numbers of tests, our product cost per test will continue to vary based on the specific kit configuration purchased by customers.

Current wording

Our cost of product revenue consists primarily of costs of diagnostic kit components and reagents, labor, delivery costs and royalties for licensed technologies included in our products. Subsequent to the restructuring proceedings affecting Veracyte SAS in August 2025, these costs are paid to a third-party contract manufacturer. As our Prosigna test kits are sold in various configurations with different numbers of tests, our product cost per test will continue to vary based on the specific kit configuration purchased by customers.

Previous wording

Our cost of biopharmaceutical and other revenue are the costs of performing activities under arrangements that require us to perform research and development, contract testing services, commercialization, and contract manufacturing and development. This expense is mainly composed of compensation, manufacturing and laboratory supplies, and pass-through costs.

Current wording

Our cost of biopharmaceutical and other revenue consists of costs of performing activities under arrangements that require us to license or provide access to our assets or laboratory testing services, as well as cost incurred in providing contracted research and development and manufacturing activities. These costs are mainly composed of compensation, manufacturing and laboratory supplies, and pass-through costs. Subsequent to the to the restructuring proceedings affecting Veracyte SAS in August 2025, Veracyte SAS will no longer perform biopharmaceutical services, and contract manufacturing and development services.

Previous wording

Research and development expenses include expenses incurred to collect clinical samples and conduct clinical studies to develop and support our products and pipeline, as well as develop future technology. These expenses consist of compensation expenses, direct research and development expenses such as laboratory supplies and costs associated with setting up and conducting clinical studies at domestic and international sites, professional fees, depreciation and amortization, other miscellaneous expenses and allocation of facility and information technology expenses. We expense all research and development costs in the periods in which they are incurred. We incurred a majority of our research and development expenses in the six months ended June 30, 2025 and the year ended December 31, 2024 in support of our early-stage products, including Percepta Nasal Swab, support for the development and validation of our MRD tests, and the development of new IVD products and discovery. Going forward, we expect to incur significant expense as we invest in the continued development of our innovation engine, early-stage products including our MRD tests, required clinical studies and the development of current IVD tests.

Current wording

Research and development expenses include expenses incurred to collect clinical samples and conduct clinical studies to develop and support our products and pipeline, as well as develop future technology. These expenses consist of compensation expenses, direct research and development expenses such as laboratory supplies and costs associated with setting up and conducting clinical studies at domestic and international sites, professional fees, depreciation and amortization, other miscellaneous expenses and allocation of facility and information technology expenses. We expense all research and development costs in the periods in which they are incurred. We incurred a majority of our research and development expenses in the nine months ended September 30, 2025 and the year ended December 31, 2024 in support of our early-stage products, including Percepta Nasal Swab, support for the development and validation of our MRD tests, and the development of new IVD products and discovery. Going forward, we expect to incur significant expense as we invest in the continued development of our innovation engine, early-stage products including our MRD tests, required clinical studies and the development of current IVD tests.

Previous wording

Other income (loss), net consists primarily of interest income from our cash held in interest bearing accounts, realized and unrealized gains and losses on foreign currency transactions, and French research tax credits.

Current wording

Other income (loss), net consists primarily of interest income from our cash held in interest bearing accounts, realized and unrealized gains and losses on foreign currency transactions and loss on the deconsolidation of Veracyte SAS.

Previous wording

Comparison of the three and six months ended June 30, 2025 and 2024 (in thousands of dollars, except percentages and test volume):

Current wording

Comparison of the three and nine months ended September 30, 2025 and 2024 (in thousands of dollars, except percentages and test volume):

Previous wording

Revenue increased $15.7 million for the three months ended June 30, 2025 compared to the same period in 2024. This was primarily due to a $15.3 million increase in testing revenue and a $0.8 million increase in our biopharmaceutical and other revenue, partially offset by a $0.3 million decrease in our product revenue. The 14% growth in testing revenue was primarily driven by an 18% volume increase, partially offset by lower prior period collections compared to the prior year period.

Current wording

Revenue increased $16.0 million for the three months ended September 30, 2025 compared to the same period in 2024. This was primarily due to a $18.2 million increase in testing revenue partially offset by a $2.3 million decrease in our biopharmaceutical and other revenue. The $2.3 million decrease was due to continued decline in the biopharma business conducted in France and the ultimate deconsolidation of Veracyte SAS in August 2025. The 17% growth in testing revenue was primarily driven by a 19% volume increase, partially offset by lower prior period collections compared to the prior year period.

Previous wording

Revenue increased $33.4 million for the six months ended June 30, 2025 compared to the same period in 2024. This was primarily due to a $32.3 million increase in testing revenue and a $1.3 million increase in our biopharmaceutical and other revenue, partially offset by a $0.3 million decrease in our product revenue. The 16% growth in testing revenue was primarily driven by a 20% volume increase, partially offset by lower prior period collections compared to the prior year period.

Current wording

Revenue increased $49.4 million for the nine months ended September 30, 2025 compared to the same period in 2024. This was primarily due to a $50.5 million increase in testing revenue and a $1.0 million decrease in our biopharmaceutical and other revenue. The 16% growth in testing revenue was primarily driven by a 20% volume increase, partially offset by lower prior period collections compared to the prior year and the decision to stop marketing Envisia. The Biopharmaceutical and other revenue decrease was driven primarily by a continued decline in biopharmaceutical services, as well as contract development and manufacturing services projects as a result of the restructuring proceedings affecting Veracyte SAS that were underway throughout 2025.

Previous wording

Cost of testing revenue increased $4.5 million, or 16%, for the three months ended June 30, 2025 compared to the same period in 2024. The increase in cost of testing revenue was due to increased volume in testing, higher staffing to support testing performance and the build out of infrastructure related to current and future growth expectations, primarily related to Decipher Prostate and Afirma tests, partially offset by lab efficiencies.

Current wording

Cost of testing revenue increased $4.7 million, or 16%, for the three months ended September 30, 2025 compared to the same period in 2024. The increase in cost of testing revenue was due to increased volume in testing, higher staffing to support higher volume and the build out of infrastructure related to current and future growth expectations, primarily related to Decipher Prostate and Afirma tests, partially offset by lab efficiencies.

Previous wording

Cost of testing revenue increased $6.8 million, or 13%, for the six months ended June 30, 2025 compared to the same period in 2024. The increase in cost of testing revenue was due to increased volume in testing, higher staffing to support testing performance and the build out of infrastructure related to current and future growth expectations, primarily related to Decipher Prostate and Afirma tests, partially offset by lab efficiencies.

Current wording

Cost of testing revenue increased $11.5 million, or 14%, for the nine months ended September 30, 2025 compared to the same period in 2024. The increase in cost of testing revenue was due to increased volume in testing, higher staffing to support higher volume and the build out of infrastructure related to current and future growth expectations, primarily related to Decipher Prostate and Afirma tests, partially offset by lab efficiencies.

Previous wording

Cost of biopharmaceutical and other revenue includes labor costs, laboratory supplies and pass-through expenses incurred. Cost of biopharmaceutical and other revenue for the three and six months ended June 30, 2025 decreased by $0.2 million and $0.4 million, respectively, compared to the same periods in 2024, driven by reductions of staffing and variable expenses related to projects.

Current wording

Cost of biopharmaceutical and other revenue includes labor costs, laboratory supplies and pass-through expenses incurred. Cost of biopharmaceutical and other revenue for the three and nine months ended September 30, 2025 decreased by

Previous wording

Research and development expense decreased $0.2 million, or 1%, for the three months ended June 30, 2025 compared to the same period in 2024. The decrease was primarily due to the timing of direct research and product development expense related to our on-going development costs for our IVD and MRD strategies, as well as projects to enhance laboratory efficiencies that were offset by increased headcount expenses. In addition to these costs, there was an increase in our allocated costs from general and administrative expenses.

Current wording

Research and development expense decreased $1.6 million, or 9%, for the three months ended September 30, 2025 compared to the same period in 2024. The decrease was primarily due the deconsolidation of Veracyte SAS and the timing of direct research and product development expense related to our on-going development costs for our IVD and MRD strategies, partially offset by increased headcount expenses.

Previous wording

Research and development expense increased $1.6 million, or 5%, for the six months ended June 30, 2025 compared to the same period in 2024. The increase was primarily driven by annual compensation expense increases and partially offset by timing of spend related to direct research and product development expense related to our on-going development costs for our U.S. CLIA, IVD and MRD strategies. In addition to these costs, there was an increase in our allocated costs from general and administrative expenses.

Current wording

Research and development expense for the nine months ended September 30, 2025 was unchanged compared to the same period in 2024. A decrease due to the timing of spend related to direct research and product development expense related to our on-going development costs for our U.S. CLIA, IVD and MRD strategies was offset by increases in annual compensation expense and our allocated costs from general and administrative expenses.

Previous wording

Selling and marketing expense increased $1.1 million, or 5%, for the three months ended June 30, 2025 compared to the same period in 2024. The increase in compensation expense was primarily related to annual merit increases. Direct marketing expense decreased primarily due to timing of trade shows and market research. Further, there was an increase in allocated costs from general and administrative expenses.

Current wording

Selling and marketing expense increased $1.8 million, or 8%, for the three months ended September 30, 2025 compared to the same period in 2024. The increase in compensation expense was primarily related to annual merit increases and headcount additions. Further, there was an increase in allocated costs from general and administrative expenses.

Previous wording

Selling and marketing expense increased $1.8 million, or 4%, for the six months ended June 30, 2025 compared to the same period in 2024. The increase was primarily due to annual merit increases, headcount additions and the impact of stock-based compensation related to employee exits in the prior year period, offset in part by the reduction of Envisia sales support.

Current wording

Selling and marketing expense increased $3.6 million, or 5%, for the nine months ended September 30, 2025 compared to the same period in 2024. The increase was primarily due to annual merit increases and headcount additions offset in part by the reduction of Envisia sales support and associated restructuring costs. Direct marketing expense decreased primarily due to the timing of trade show events. Further, there was an increase in allocated costs from general and administrative expenses.

Previous wording

General and administrative expense increased by $0.6 million for the three months ended June 30, 2025, compared to the same period in 2024. The results were impacted primarily by an increase of $4.2 million in professional fees mainly related to the Veracyte SAS collective proceedings petition filing, as well as information technology expense increases related to our cloud infrastructure and software development investments. These increases were offset by reductions in the revaluation of contingent consideration related to the acquisitions of C2i and nCounter diagnostic rights, and compensation expense given the prior year expense related to the voluntary Veracyte SAS employee exits. General and administrative expenses related to occupancy costs and information technology costs are allocated to general and administrative expense, selling and marketing expense, research and development expense, and cost of revenue based on the number of employees by location.

Current wording

General and administrative expense increased by $1.5 million for the three months ended September 30, 2025, compared to the same period in 2024. The results were impacted primarily by an increase in stock-based compensation and professional fees, related to the Veracyte SAS collective proceedings petition filing, as well as information technology expense increases related to our cloud infrastructure and software development investments. These increases were offset by a favorable legal settlement associated with a vendor dispute. General and administrative expenses related to occupancy costs and information technology costs are allocated to general and administrative expense, selling and marketing expense, research and development expense, and cost of revenue based on the number of employees by location.

Previous wording

General and administrative expense increased by $8.2 million for the six months ended June 30, 2025, compared to the same period in 2024. The results were impacted primarily by an increase of $7.9 million in professional fees mainly related to the Veracyte SAS collective proceedings petition filing, as well as information technology expense increases related to our cloud infrastructure and software development investments. Compensation expense increased primarily due to annual merit increases, additional headcount and higher stock-based compensation and was partially offset by the prior year expense related to the voluntary exits related to our Veracyte SAS employees. These increases were offset by reductions in the revaluation of contingent consideration related to the acquisitions of C2i and nCounter diagnostic rights. General and administrative expenses related to occupancy costs and information technology costs are allocated to general and administrative expense, selling and marketing expense, research and development expense, and cost of revenue based on the headcount and employee location.

Current wording

General and administrative expense increased by $9.7 million for the nine months ended September 30, 2025, compared to the same period in 2024. The results were impacted primarily by an increase of $8.6 million in professional fees related to the Veracyte SAS collective proceedings petition filing, as well as information technology expense increases related to our cloud infrastructure and software development investments. Compensation expense increased primarily due to annual merit increases, additional headcount and higher stock-based compensation and was partially offset by the prior year expense related to the voluntary exits related to our Veracyte SAS employees. These increases were offset by reductions in the revaluation of contingent consideration related to the acquisitions of C2i and nCounter diagnostic rights and the impact of the deconsolidation of Veracyte SAS. General and administrative expenses related to occupancy costs and information technology costs are allocated to general and administrative expense, selling and marketing expense, research and development expense, and cost of revenue based on the headcount and employee location.

Previous wording

On July 16, 2025, the Marseille Commercial Court published a decision approving the divestiture of certain portions of our French subsidiary, Veracyte SAS, to Helio Diagnostics SAS, effective August 1, 2025. The remaining assets will be managed by the judicial administrator until such time that the Marseille Commercial Court appoints a judicial liquidator to solely initiate and manage liquidation proceedings. Effective August 1, 2025, the Company no longer has the power to control the financial and operating policies of Veracyte SAS. We assessed the associated assets as of June 30, 2025 for impairment and determined that the value of the remaining assets of Veracyte SAS including accounts receivable; supplies and inventory; right-of-use assets; property, plant, and equipment; and other receivables were not recoverable. As a result, we recorded a $20.5 million non-cash impairment charge during the three months ended June 30, 2025.

Current wording

On July 16, 2025, the Marseille Commercial Court published a decision approving the divestiture of the contract manufacturing portion of our French subsidiary, Veracyte SAS, to Helio Diagnostics SAS, effective August 1, 2025. The remaining assets of Veracyte SAS will be managed by the judicial administrator until such time that the Marseille Commercial Court appoints a judicial liquidator to solely initiate and manage liquidation proceedings. Effective August 1, 2025, we ceased to have a controlling interest in Veracyte SAS. As we began judicial restructuring proceedings affecting Veracyte SAS with the Marseille Commercial Court in the second quarter of 2025, we evaluated whether the associated assets of Veracyte SAS were impaired. We concluded, during the second quarter of 2025, that the long-lived assets of the Veracyte SAS asset group were not recoverable. As a result, we recorded a $20.5 million non-cash impairment charge during the three months ended June 30, 2025. The impairment related primarily to the Company's right-of-use assets; property, plant, and equipment; and certain tax credits.

Previous wording

Other income, net, increased $3.8 million for the three months ended June 30, 2025 compared to the same period in 2024, primarily due to increased gain of $3.5 million due to unrealized foreign currency gain(loss) and an increase of $0.2 million from interest income.

Current wording

Other income, net, decreased $8.9 million for the three months ended September 30, 2025 compared to the same period in 2024, primarily due to a loss of $6.7 million due to the deconsolidation of Veracyte SAS and a decrease of $2.3 million due to foreign currency revaluation, partially offset by an increase of $0.6 million from interest income.

Previous wording

We recorded income tax expense of $2.2 million and $1.6 million for the three months ended June 30, 2025 and 2024, respectively, and recorded income tax expense of $2.6 million and $1.6 million for the six months ended June 30, 2025 and 2024, respectively.

Current wording

We recorded income tax benefit of $0.2 million and expense of $1.7 million for the three months ended September 30, 2025 and 2024, respectively, and recorded income tax expense of $2.4 million and $3.3 million for the nine months ended September 30, 2025 and 2024, respectively.

Previous wording

On July 4, 2025, the U.S. government enacted the One Big Beautiful Bill Act, or the OBBBA, which includes numerous changes to existing tax law including extending or making permanent certain business and international tax measures initially established under the 2017 Tax Cuts and Jobs Act, which were set to expire. The OBBBA permanently eliminates the requirement to capitalize and amortize U.S.-based research and experimental expenditures over five years, making these expenditures fully deductible in the period incurred. The OBBBA also permanently extends the full expensing of qualifying assets through accelerated bonus depreciation in the period acquired. The OBBBA has multiple effective dates, with certain provisions effective in 2025 and others to be implemented through 2027. We will continue to analyze the OBBBA and its impact on our financial statements and will reflect any impact in the period of enactment.

Current wording

On July 4, 2025, the U.S. government enacted the One Big Beautiful Bill Act, or the OBBBA, which includes numerous changes to existing tax law including extending or making permanent certain business and international tax measures initially established under the 2017 Tax Cuts and Jobs Act, which were set to expire. The OBBBA permanently eliminates the requirement to capitalize and amortize U.S.-based research and experimental expenditures over five years, making these expenditures fully deductible in the period incurred. The OBBBA also permanently extends the full expensing of qualifying assets through accelerated bonus depreciation in the period acquired. The OBBBA has multiple effective dates, with certain provisions effective in 2025 and others to be implemented through 2027. The enactment of certain provisions in the period ending September 30, 2025 resulted in a reduction of current income tax liabilities and a corresponding reduction to income tax expense.

Previous wording

As of June 30, 2025, we had cash and cash equivalents and short-term investments of $320.7 million. During the six months ended June 30, 2025, our cash and cash equivalents and short-term investments increased by $31.3 million. Historically, we have obtained financing primarily through sales of our equity securities. Beginning in 2023, our operations have been financed primarily by cash flows generated by our revenue. For the six months ended June 30, 2025, we had net income of $6.1 million, but we may not sustain profitability in the future. As of June 30, 2025, we had an accumulated deficit of $437.9 million.

Current wording

As of September 30, 2025, we had cash and cash equivalents and short-term investments of $366.4 million. During the nine months ended September 30, 2025, our cash and cash equivalents and short-term investments increased by $77.0 million. Historically, we have obtained financing primarily through sales of our equity securities. Beginning in 2023, our operations have been financed primarily by cash flows generated by our revenue. For the nine months ended September 30, 2025, we had net income of $25.2 million, but we may not sustain profitability in the future. As of September 30, 2025, we had an accumulated deficit of $418.8 million.

Previous wording

We believe our existing cash and cash equivalents and short-term investments as of June 30, 2025, and cash flows generated by our revenue during the next 12 months will be sufficient to meet our anticipated cash requirements for at least the next 12 months from the filing date of this report. We expect that our near- and longer-term liquidity requirements will continue to consist of costs to run our laboratories, research and development expenses, selling and marketing expenses, general and administrative expenses, working capital, capital expenditures, lease obligations, potential milestones associated with the C2i Acquisition, and general corporate expenses associated with the growth of our business. However, we may also use cash to acquire or invest in complementary businesses, technologies, services or products that would change our cash requirements. If we are not able to generate cash flows from our revenue to finance our cash requirements, we will need to finance future cash needs primarily through public or private equity offerings, debt financings, borrowings or strategic collaborations or licensing arrangements. If we are not able to secure additional financing when needed, or on terms that are favorable to us, we may have to delay, reduce the scope of or eliminate one or more research and development programs or selling and marketing initiatives, or forgo potential acquisitions or investments. In addition, we may have to work with a partner on one or more of our products or development programs, which could lower the economic value of those programs to us. Moreover, any instability in the global credit markets or the banking system may impact our liquidity both in the short term and long term.

Current wording

We expect to continue to generate cash and our near- and longer-term liquidity requirements will continue to consist of costs to run our laboratories, research and development expenses, selling and marketing expenses, general and administrative expenses, working capital, capital expenditures, lease obligations, potential milestones associated with the C2i Acquisition, and general corporate expenses associated with the growth of our business. However, we may also use cash to acquire or invest in complementary businesses, technologies, services or products that would change our cash requirements. If we are not able to generate cash flows from our revenue to finance our cash requirements, we will need to finance future cash needs primarily through public or private equity offerings, debt financings, borrowings or strategic collaborations or licensing arrangements. If we are not able to secure additional financing when needed, or on terms that are favorable to us, we may have to delay, reduce the scope of or eliminate one or more research and development programs or selling and marketing initiatives, or forgo potential acquisitions or investments. In addition, we may have to work with a partner on one or more of our products or development programs, which could lower the economic value of those programs to us. Moreover, any instability in the global credit markets or the banking system may impact our liquidity both in the short term and long term.

Previous wording

We lease office and laboratory facilities in the U.S., including in South San Francisco and San Diego, California and Austin, Texas, and prior to the liquidation of Veracyte SAS assets, in Marseille, France, and lease certain equipment under various non-cancelable lease agreements. The lease terms extend to March 2040 and contain extension of lease term and expansion options. As of June 30, 2025, the leases have a weighted average remaining lease term of 11.3 years and total future minimum lease payments of $92.5 million.

Current wording

We lease office and laboratory facilities in the U.S., including in South San Francisco and San Diego, California and Austin, Texas, and lease certain equipment under various non-cancelable lease agreements. Effective August 2025, in connection with the restructuring proceeding in Veracyte SAS, we are no longer a party to the lease in Marseille, France. The lease terms of our leases as of September 30, 2025 extend to March 2040 and contain extension of lease term and expansion options. As of September 30, 2025, the leases have a weighted average remaining lease term of 11.3 years and total future minimum lease payments of $74.7 million.

Previous wording

Pursuant to the Agreement and Plan of Merger, dated as of January 5, 2024, by and among the Company, C2i, Canary Merger Sub I, Inc., a Delaware corporation and wholly owned subsidiary of the Company, Veracyte Diagnostics, LLC, a Delaware limited liability company and a wholly owned subsidiary of the Company, and Fortis Advisors LLC, as the C2i securityholders’ agent, or the Merger Agreement, we may be required to pay to certain noteholders of C2i up to an additional $16.0 million in cash or shares of our common stock, at our election, upon the achievement of certain milestones. During the six months ended June 30, 2025, one of the milestones was achieved resulting in the payment of $0.7 million. As of June 30, 2025, we expect to achieve a portion or all of the remaining milestones contained in the Merger Agreement within the next 12 months, requiring payments totaling up to $16.0 million.

Current wording

Pursuant to the Agreement and Plan of Merger, dated as of January 5, 2024, by and among the Company, C2i, Canary Merger Sub I, Inc., a Delaware corporation and wholly owned subsidiary of the Company, Veracyte Diagnostics, LLC, a Delaware limited liability company and a wholly owned subsidiary of the Company, and Fortis Advisors LLC, as the C2i securityholders’ agent, or the Merger Agreement, we may be required to pay to certain noteholders of C2i up to an additional $16.0 million in cash or shares of our common stock, at our election, upon the achievement of certain milestones. During the nine months ended September 30, 2025, one of the milestones was achieved resulting in the payment of $0.7 million. As of September 30, 2025, we expect to potentially achieve a portion of all of the remaining milestones contained in the Merger Agreement within the next 12 months, requiring payments totaling up to $16.0 million.

Previous wording

The following table summarizes our cash flows for the six months ended June 30, 2025 and 2024 (in thousands of dollars):

Current wording

The following table summarizes our cash flows for the nine months ended September 30, 2025 and 2024 (in thousands of dollars):

Previous wording

Cash provided by operating activities for the six months ended June 30, 2025 was $39.0 million. Our net income of $6.1 million includes non-cash charges of $21.9 million of stock-based compensation expense, $10.9 million of depreciation and amortization, of which $6.5 million was related to intangible asset amortization, $20.5 million tied to the impairment of assets, non-cash lease expense of $1.6 million, non-cash gains of $2.9 million from the revaluation of contingent consideration and $5.1 million from the effect of foreign currency changes on operations. Cash used as a result of changes in operating assets and liabilities was $14.2 million, primarily composed of an increase in prepaid expenses and other current assets of $5.5 million, an increase in accounts receivable of $4.3 million, a decrease in accrued liabilities and deferred revenue of $2.1 million, and an increase in supplies and inventory of $2.9 million partially offset by an increase in accounts payable of $3.1 million.

Current wording

Cash provided by operating activities for the nine months ended September 30, 2025 was $83.7 million. Our net income of $25.2 million includes non-cash charges of $32.7 million of stock-based compensation expense, $16.1 million of depreciation and amortization, of which $9.8 million was related to intangible asset amortization, $20.5 million tied to the impairment of assets, $3.9 million loss on the deconsolidation of Veracyte SAS, non-cash lease expense of $2.3 million, non-cash gains of $2.7 million from the revaluation of contingent consideration, $3.8 million from the effect of foreign currency changes on operations and amortization of discount on short-term investments of $2.6 million. Cash used as a result of changes in operating assets and liabilities was $7.8 million, primarily composed of an increase in prepaid expenses and other current assets of $6.4 million, an increase in accounts receivable of $3.9 million, an increase in supplies and inventory of $2.6 million, a decrease in operating lease liabilities of $1.7 million, and an increase in accounts payable of $0.5 million, partially offset by an increase in accrued liabilities and deferred revenue of $7.0 million and a decrease in other assets of $0.3 million.

Previous wording

Cash provided by operating activities for the six months ended June 30, 2024 was $20.6 million. Our net income of $3.9 million includes non-cash charges of $17.9 million of stock-based compensation expense, $11.3 million of depreciation and amortization, of which $7.4 million was related to intangible asset amortization, and the remainder was due to a non-cash lease expense of $2.3 million. Cash used as a result of changes in operating assets and liabilities was $17.0 million, primarily composed of an increase in accounts receivable of $10.1 million, an increase in supplies and inventory of $3.3 million, a decrease in operating lease liability of $2.4 million, an increase in prepaids and other current assets of $2.2 million, a decrease in accounts payable of $1.7 million, and an increase in other assets of $1.2 million. Cash used as a result of changes in operating assets and liabilities was partially offset by cash provided by an increase in accrued liabilities and deferred revenue of $3.9 million.

Current wording

Cash provided by operating activities for the nine months ended September 30, 2024 was $50.6 million. Our net income of $19.0 million includes non-cash charges of $26.6 million of stock-based compensation expense, $17.2 million of depreciation and amortization, of which $11.2 million was related to intangible asset amortization, and the remainder was due to a non-cash lease expense of $3.6 million. Cash used as a result of changes in operating assets and liabilities was $17.1 million, primarily composed of an increase in accounts receivable of $8.4 million, an increase in supplies and inventory of $4.2 million, a decrease in operating lease liability of $3.9 million, a decrease in accounts payable of $3.0 million, and an increase in other assets of $1.7 million, partially offset by a decrease in accrued liabilities and deferred revenue of $3.9 million.

Previous wording

Cash used in investing activities for the six months ended June 30, 2025 was $52.0 million, consisting of $48.9 million from the purchase and maturity of short-term investments and $3.1 million used in the purchase of property, plant and equipment.

Current wording

Cash used in investing activities for the nine months ended September 30, 2025 was $3.8 million, consisting of $5.9 million used in the purchase of property, plant and equipment, partially offset by net proceeds of $2.1 million from the purchase and maturity of short-term investments.

Previous wording

Cash provided by investing activities for the six months ended June 30, 2024 was $0.1 million, consisting of $5.0 million net cash acquired from C2i excluding post-close transactions costs, partially offset by $4.9 million used in the purchase of property, plant and equipment

Current wording

Cash used in investing activities for the nine months ended September 30, 2024 was $2.1 million, consisting of $7.1 million used in the purchase of property, plant and equipment, partially offset by $5.0 million net cash acquired from C2i excluding post-close transactions costs.

Previous wording

Cash used in financing activities for the six months ended June 30, 2025 was $7.1 million, consisting of $11.8 million in tax payments during the period related to the vesting of restricted stock units granted to employees, partially offset by $4.8 million in proceeds from the exercise of options to purchase our common stock and the purchase of stock under our Employee Stock Purchase Plan, or ESPP.

Current wording

Cash used in financing activities for the nine months ended September 30, 2025 was $4.1 million, consisting of $14.6 million in tax payments during the period related to the vesting of restricted stock units granted to employees, partially offset by $10.6 million in proceeds from the exercise of options to purchase our common stock and the purchase of stock under our Employee Stock Purchase Plan, or ESPP.

Previous wording

Cash used in financing activities for the six months ended June 30, 2024 was $0.9 million, consisting of $5.1 million in tax payments during the period related to the vesting of restricted stock units granted to employees, partially offset by $4.3 million in proceeds from the exercise of options to purchase our common stock and the purchase of stock under our ESPP.

Current wording

Cash provided by financing activities for the nine months ended September 30, 2024 was $9.4 million, consisting of $16.7 million in proceeds from the exercise of options to purchase our common stock and the purchase of stock under our ESPP, partially offset by $7.3 million in tax payments during the period related to the vesting of restricted stock units granted to employees.