VERACYTE, INC.

Previous wording

We are a global diagnostics company that empowers clinicians with the high-value insights they need to guide and assure patients at pivotal moments in the race to diagnose and treat cancer. Our high-performing tests enable clinicians to make more confident diagnostic, prognostic and predictive treatment decisions, as well as the detection of disease recurrence. Insights from these tests help patients avoid unnecessary procedures and interventions and accelerate time to appropriate treatment, thereby improving outcomes for patients across our global markets.

Current wording

We are a global diagnostics company whose mission is to transform cancer care for patients all over the world. We do that by empowering clinicians with the high-value insights they need to guide and assure patients at pivotal moments along their cancer journey. Our high-performing tests enable clinicians to make more confident diagnostic, prognostic and predictive treatment decisions, as well as to detect disease recurrence. Insights from our tests help patients avoid unnecessary procedures and interventions and accelerate time to appropriate treatment, thereby improving outcomes and personalizing care decisions.

Previous wording

We serve global markets with two complementary models. In the United States, we offer LDTs through our centralized CLIA certified laboratories in South San Francisco and San Diego, California, supported by our cytopathology expertise in Austin, Texas. Additionally, outside of the United States, we provide IVD tests to patients through distribution to laboratories and hospitals that can perform the tests locally. Our international distribution of IVDs is currently focused on our Prosigna test and, in the future, we intend to offer Decipher Prostate as an IVD test. We believe our broad menu of advanced diagnostic tests, combined with our ability to deliver them globally, differentiates us in the diagnostics industry.

Current wording

We serve global markets with two complementary models. In the United States, we offer laboratory developed tests, or LDTs, through our centralized CLIA certified laboratories in South San Francisco and San Diego, California, supported by our cytopathology lab in Austin, Texas. Additionally, outside of the United States, we provide in vitro diagnostic, or IVD, tests to patients through diagnostic kits sold to laboratories and hospitals that can perform the tests locally. Our international distribution of IVDs is currently focused on breast cancer with our Prosigna Breast Cancer Assay kits and, in the future, we intend to offer Decipher Prostate as an IVD test. In the United States, we currently offer tests in prostate cancer (Decipher Prostate), thyroid cancer (Afirma), breast cancer (Prosigna) and bladder cancer (Decipher Bladder and TrueMRD for MIBC).

Previous wording

We are aiming to expand our role across the cancer continuum with the addition of our minimal residual disease, or MRD platform, TrueMRD platform, and our assays. This will broaden our portfolio of tests to help monitor the success of a therapeutic or surgical intervention, and support the determination of the best course of action for each patient.

Current wording

We are also aiming to further expand our role across the cancer continuum by extending the use of our TrueMRD test into new indications. This will broaden the use of our portfolio of tests from prognosis and prediction to monitoring the success of a therapeutic or surgical intervention. In this way, across the cancer continuum, we can support the determination of the best course of action for each patient.

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, geopolitical challenges and other measures that restrict international trade, 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, macroeconomic effects of regional conflicts like those in the Middle East and between Russia and Ukraine 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 our 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, geopolitical challenges and other measures that restrict international trade, 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, macroeconomic effects of regional conflicts like those in the Middle East and between Russia and Ukraine 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 our acquisition of 100% of the outstanding equity interests of C2i.

Previous wording

A significant aspect of our business is our investment in development activities, including activities related to the development of new tests, as well as modifications and enhancements to our current tests, including the ongoing development of our Prosigna LDT test and TrueMRD platform. In addition to these development activities, we also perform clinical evidence studies which are critical to gaining clinician adoption of our tests, driving favorable coverage decisions by payers, as well as gaining guideline inclusion for such tests.

Current wording

A significant aspect of our business is our investment in development activities, including activities related to the development of new tests, as well as modifications and enhancements to our current tests, including the ongoing development of our TrueMRD platform. In addition to these development activities, we also perform clinical evidence studies which are critical to gaining clinician adoption of our tests, driving favorable coverage decisions by payers, as well as gaining guideline inclusion for such tests.

Previous wording

Research and development expenses primarily include compensation expense, direct research and development expenses such as laboratory supplies and costs associated with setting up and conducting clinical studies at domestic and international sites, software development expenses, professional fees, depreciation and amortization, other miscellaneous expenses and allocation of facility and information technology expenses. Further, research and development expenses include costs to collect clinical samples and conduct clinical studies to develop and support our products and pipeline, as well as develop future technology. 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 three months ended March 31, 2026 and the year ended December 31, 2025 in support of our early-stage products, including support for the development and validation of our TrueMRD platform, as well as our Prosigna LDT test, 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 TrueMRD platform, required clinical studies and the development of current IVD tests.

Current wording

Research and development expenses primarily include compensation expense, direct research and development expenses such as laboratory supplies and costs associated with setting up and conducting clinical studies at domestic and international sites, software development expenses, professional fees, depreciation and amortization, other miscellaneous expenses and allocation of facility and information technology expenses. Further, research and development expenses include costs to collect clinical samples and conduct clinical studies to develop and support our products and pipeline, as well as develop future technology. 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, 2026 and the year ended December 31, 2025 in support of our early-stage products, including support for the development and validation of our TrueMRD platform, as well as our Prosigna LDT test, 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 TrueMRD platform, required clinical studies and the development of current IVD tests.

Previous wording

Selling and marketing expenses consist of compensation expenses, direct marketing expenses, professional fees, other expenses such as travel and communications costs, as well as allocation of facility and information technology expenses. Our sales team of approximately 120 representatives is organized by business unit in the U.S., with separate teams calling on thyroid cancer and urologic cancer physicians. The business units have dedicated marketing support, as well as a marketing operations team that serves the commercial organization broadly. Prosigna sales outside of the U.S. are led by country managers and sales teams that call on laboratories and breast cancer oncologists.

Current wording

Selling and marketing expenses consist of compensation expenses, direct marketing expenses, professional fees, other expenses such as travel and communications costs, as well as allocation of facility and information technology expenses. Our sales team of approximately 130 representatives is organized by business unit in the U.S., with separate teams calling on thyroid cancer physicians, urologic cancer physicians and breast medical oncologists. The business units have dedicated marketing support, as well as a marketing operations team that serves the commercial organization broadly. Prosigna sales outside of the U.S. are led by country managers and sales teams that call on laboratories and breast cancer oncologists.

Previous wording

General and administrative expenses include compensation expenses for executive officers and administrative, billing personnel, professional fees for legal and audit services, occupancy costs, depreciation and amortization, and other expenses such as information technology, acquisition related costs and miscellaneous expenses, offset by allocation of facility and information technology expenses to other functions. We expect general and administrative expenses to continue to increase as we build our infrastructure to scale revenue growth, and to decline as a percentage of revenue thereafter.

Current wording

General and administrative expenses include compensation expenses for executive officers and administrative, billing personnel, professional fees for legal and audit services, occupancy costs, depreciation and amortization, and other expenses such as information technology, acquisition related costs and miscellaneous expenses, offset by allocation of facility and information technology expenses to other functions. We expect general and administrative expenses to continue to increase in absolute terms as we build our infrastructure to scale revenue growth while declining as a percentage of revenue.

Previous wording

Comparison of the three months ended March 31, 2026 and 2025 (in thousands of dollars, except percentages and test volume):

Current wording

Comparison of the three and six months ended June 30, 2026 and 2025 (in thousands of dollars, except percentages and test volume):

Previous wording

Revenue increased $24.6 million for the three months ended March 31, 2026 compared to the same period in 2025. This was primarily due to a $27.8 million increase in testing revenue partially offset by a $3.3 million decrease in our biopharmaceutical and other revenue. The 26% growth in testing revenue was primarily driven by a 19% volume increase, as well as improved ASP and prior period collections. The Biopharmaceutical and other revenue decrease wasdue to the discontinuation of biopharmaceutical services, contract manufacturing or contract development services previously conducted in France, following the restructuring proceedings affecting Veracyte SAS, as of August 2025.

Current wording

Revenue increased $20.2 million for the three months ended June 30, 2026 compared to the same period in 2025. This was primarily due to a $23.4 million increase in testing revenue, partially offset by a $3.5 million decrease in our biopharmaceutical and other revenue. The 19% growth in testing revenue was primarily driven by a 14% volume increase, as well as improved ASP and prior period collections. The Biopharmaceutical and other revenue decrease wasdue to the discontinuation of biopharmaceutical services, contract manufacturing or contract development services previously conducted in France, following the restructuring proceedings affecting Veracyte SAS, as of August 2025.

Previous wording

Comparison of the three months ended March 31, 2026 and 2025 is as follows (in thousands of dollars, except percentages):

Current wording

Comparison of the three and six months ended June 30, 2026 and 2025 is as follows (in thousands of dollars, except percentages):

Previous wording

Cost of testing revenue increased $5.0 million, or 18%, for the three months ended March 31, 2026 compared to the same period in 2025. The increase in cost of testing revenue was due to increased volume in testing, higher staffing to support higher volume, the build out of infrastructure related to current and future growth expectations, primarily related to Decipher Prostate and Afirma tests, and the assignment of customer service expenses directly to cost of revenue. These increases were partially offset by lab efficiencies and lower allocated expenses.

Current wording

Cost of testing revenue increased $8.9 million, or 15%, for the six months ended June 30, 2026 compared to the same period in 2025. The increase in cost of testing revenue was due to increased volume in testing, higher staffing to support higher volume, the build out of infrastructure related to current and future growth expectations, and the assignment of customer service expenses directly to cost of revenue. These increases were partially offset by lab efficiencies and lower allocated expenses.

Previous wording

Cost of product revenue increased $0.5 million, or 33%, for the three months ended March 31, 2026 compared to the same periods in 2025. The increase for the three months ended March 31, 2026 is primarily related to the transition to contract manufacturing of Prosigna kits.

Current wording

Cost of product revenue increased $0.8 million, or 44%, for the three months ended June 30, 2026 and increased $1.2 million, or 39%, for the six months ended June 30, 2026 compared to the same periods in 2025. The increase for the three and six months ended June 30, 2026 is primarily related to the transition to contract manufacturing of Prosigna kits.

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 months ended March 31, 2026 decreased by $2.7 million compared to the same periods in 2025, 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.

Current wording

$6.1 million, respectively, compared to the same periods in 2025, 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

Research and development expense increased $9.4 million, or 53%, for the three months ended March 31, 2026 compared to the same period in 2025. The increase was primarily due to a $6.0 million increase from the assignment of research and development related software expenses previously accounted for in general and administrative and partially allocated. This was due to the addition of the Chief Development and Technology Officer and that these expenses are now fully dedicated to product development objectives. General and administrative expense allocations and compensation expense associated with added headcount and annual merit increases also increased. Spend supporting direct research and product development expense related to our ongoing development costs for our CLIA tests and MRD strategies increased but was partially offset by the impact of the deconsolidation of Veracyte SAS in August 2025.

Current wording

Research and development expense increased $13.2 million, or 81%, for the three months ended June 30, 2026 compared to the same period in 2025. The increase was primarily due to a $6.5 million increase from the assignment of research and development related software expenses previously accounted for in general and administrative which had been partially allocated. This was due to these expenses now being fully dedicated to product development objectives. General and administrative expense allocations and compensation expense associated with added headcount and annual merit increases also increased. Spend supporting direct research and product development expense related to our ongoing development costs for our CLIA tests increased but was partially offset by the impact of the deconsolidation of Veracyte SAS in August 2025.

Previous wording

Selling and marketing expense increased $2.7 million, or 11%, for the three months ended March 31, 2026 compared to the same period in 2025. The increase was primarily due to annual merit increases and headcount additions. Direct marketing expense increased primarily due to website design costs and expenses related to the anticipated launch of new tests.

Current wording

Selling and marketing expense increased $2.9 million, or 12%, for the three months ended June 30, 2026 compared to the same period in 2025. The increase was primarily due to annual compensation increases and headcount additions. Direct marketing expense increased primarily due to tradeshow costs and expenses related to the launch of new tests.

Previous wording

General and administrative expense decreased by $10.1 million for the three months ended March 31, 2026, compared to the same period in 2025. The results were impacted primarily by a $6.0 million decrease related to the assignment of software development expenses, previously included in General and administrative expense allocations, directly to research and development, the assignment of customer service expenses directly to cost of revenue, as well as a decline in professional fees related to lower legal, audit and tax fees in the quarter. These decreases were offset by fewer allocations and reductions in the revaluation of contingent consideration related to the acquisition of C2i recognized in the prior year. General and administrative expenses related to occupancy costs and information technology costs, excluding software development, 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 decreased by $15.0 million for the six months ended June 30, 2026, compared to the same period in 2025. The results were impacted primarily by a $12.5 million decrease related to the assignment of software development expenses, previously included in General and administrative expense allocations, directly to research and development, the assignment of customer service expenses directly to cost of revenue, as well as a decline in professional fees related to lower legal, audit and tax fees. These decreases were offset by fewer allocations and reductions in the revaluation of contingent consideration related to the acquisition of C2i recognized in the prior year. General and administrative expenses related to occupancy costs and information technology costs, excluding software development, 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

Other income, net, increased $2.8 million for the three months ended March 31, 2026 compared to the same period in 2025, primarily due to the settlement of escrow claims of $4.2 million and an increase of $0.7 million from interest income, partially offset by a decrease of $1.5 million due to foreign currency revaluation.

Current wording

Other income, net, decreased $0.2 million for the six months ended June 30, 2026 compared to the same period in 2025, primarily due to a decrease of $5.2 million due to foreign currency revaluation, partially offset by the settlement of escrow claims of $4.2 million and an increase of $1.7 million from interest income.

Previous wording

We recorded income tax expense of $1.3 million and $0.4 million for the three months ended March 31, 2026 and 2025, respectively.

Current wording

We recorded income tax expense of $1.0 million and $2.2 million for the three months ended June 30, 2026 and 2025, respectively, and recorded income tax expense of $2.3 million and $2.6 million for the six months ended June 30, 2026 and 2025, respectively.

Previous wording

As of March 31, 2026, we had cash and cash equivalents and short-term investments of $439.1 million. During the three months ended March 31, 2026, our cash and cash equivalents and short-term investments increased by $26.2 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 three months ended March 31, 2026, we had net income of $28.7 million, but we may not sustain profitability in the future. As of March 31, 2026, we had an accumulated deficit of $348.9 million.

Current wording

As of June 30, 2026, we had cash and cash equivalents and short-term investments of $485.2 million. During the six months ended June 30, 2026, our cash and cash equivalents and short-term investments increased by $72.3 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, 2026, we had net income of $54.2 million, but we may not sustain profitability in the future. As of June 30, 2026, we had an accumulated deficit of $323.4 million.

Previous wording

We lease office and laboratory facilities in the U.S., including in South San Francisco and San Diego, California and Austin, Texas. 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 March 31, 2026 extend to March 2040 and contain extension of lease term and expansion options. As of March 31, 2026, the leases have a weighted average remaining lease term of 11.0 years and total future minimum lease payments of $71.4 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. 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 June 30, 2026 extend to March 2040 and contain extension of lease term and expansion options. As of June 30, 2026, the leases have a weighted average remaining lease term of 10.9 years and total future minimum lease payments of $71.1 million.

Previous wording

The following table summarizes our cash flows for the three months ended March 31, 2026 and 2025 (in thousands of dollars):

Current wording

The following table summarizes our cash flows for the six months ended June 30, 2026 and 2025 (in thousands of dollars):

Previous wording

Cash provided by operating activities for the three months ended March 31, 2026 was $35.2 million. Our net income of $28.7 million includes non-cash charges of $12.8 million of stock-based compensation expense, $5.4 million of depreciation and amortization, of which $3.3 million was related to intangible asset amortization, non-cash lease expense of $0.7 million, amortization of discount on short-term investments of $0.6 million, non-cash gains of $0.4 million from the revaluation of contingent consideration, loss of $0.4 million on the disposal of fixed assets, and $0.1 million from the effect of foreign currency changes on operations. Cash used as a result of changes in operating assets and liabilities was $11.7 million, primarily composed of a decrease in accrued liabilities and deferred revenue of $6.1 million, an increase in accounts receivable of $5.6 million, an increase in prepaid expenses and other current assets of $1.3 million, an increase in supplies of $0.9 million, a decrease in operating lease liabilities of $0.3 million partially offset by an increase in accounts payable of $2.6 million.

Current wording

Cash provided by operating activities for the six months ended June 30, 2026 was $81.0 million. Our net income of $54.2 million includes non-cash charges of $26.8 million of stock-based compensation expense, $10.3 million of depreciation and amortization, of which $6.4 million was related to intangible asset amortization, non-cash lease expense of $1.4 million, amortization of discount on short-term investments of $1.3 million, non-cash gains of $0.7 million from the revaluation of contingent consideration, loss of $0.4 million on the disposal of fixed assets, and $0.1 million from the effect of foreign currency changes on operations. Cash used as a result of changes in operating assets and liabilities was $10.0 million, primarily composed of an increase in accounts receivable of $9.7 million, an increase in prepaid expenses and other current assets of $2.4 million and an increase in supplies of $2.1 million, partially offset by an increase in accounts payable of $3.8 million.

Previous wording

Cash provided by operating activities for the three months ended March 31, 2025 was $5.4 million. Our net income of $7.0 million includes non-cash charges of $11.0 million of stock-based compensation expense, $5.4 million of depreciation and amortization, of which $3.2 million was related to intangible asset amortization, non-cash lease expense of $0.9 million, non-cash gains of $2.0 million from the revaluation of contingent consideration and $1.6 million from the effect of foreign currency changes on operations. Cash used as a result of changes in operating assets and liabilities was $14.5 million, primarily composed of a decrease in accrued liabilities and deferred revenue of $8.9 million, an increase in accounts receivable of $7.1 million, an increase in prepaid expenses and other current assets of $2.9 million, and an increase in supplies and inventory of $2.3 million partially offset by an increase in accounts payable of $7.1 million.

Current 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, amortization of discount on short-term investments of $1.9 million 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 $12.2 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.

Previous wording

Cash used in investing activities for the three months ended March 31, 2026 was $128.0 million, consisting of the purchase of $125.0 million of short-term investments and $3.0 million used in the purchase of property, plant and equipment.

Current wording

Cash used in investing activities for the six months ended June 30, 2026 was $141.5 million, primarily consisting of the purchase of $134.1 million of short-term investments and $5.8 million used in the purchase of property, plant and equipment.

Previous wording

Cash used in investing activities for the three months ended March 31, 2025 was $51.8 million, consisting of $50.0 million from the purchase of short-term investments and $1.8 million used in the purchase of property, plant and equipment.

Current 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.

Previous wording

Cash used in financing activities for the three months ended March 31, 2026 was $6.6 million, consisting of $9.4 million in tax payments during the period related to the vesting of restricted stock units granted to employees, partially offset by $2.7 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 six months ended June 30, 2026 was $2.5 million, consisting of $13.7 million in tax payments during the period related to the vesting of restricted stock units granted to employees, partially offset by $11.2 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 three months ended March 31, 2025 was $6.5 million, consisting of $9.5 million in tax payments during the period related to the vesting of restricted stock units granted to employees, partially offset by $3.0 million in proceeds from the exercise of options to purchase our common stock and the purchase of stock under our ESPP.

Current 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 ESPP.