VERACYTE, INC.

1. Organization, Description of Business and Summary of Significant Accounting Policies

Veracyte, Inc., or Veracyte, or the Company, is a global diagnostics company that provides clinicians with tests for patients with, or potentially facing, a cancer diagnosis. Veracyte's tests are used by clinicians for diagnostic, prognostic, predictive and treatment decisions, as well as the detection of disease recurrence.

The Company’s headquarters are in South San Francisco, California, and it has operations in San Diego, California, Morgan Hill, California, Austin, Texas, and Haifa, Israel.

The Company currently offers tests in prostate cancer (Decipher Prostate); thyroid cancer (Afirma); breast cancer (Prosigna); and bladder cancer (Decipher Bladder and TrueMRD for muscle-invasive bladder cancer, or MIBC).

The Company serves global markets with two complementary models. In the United States, it offers laboratory developed tests, or LDTs, through its centralized, CLIA certified laboratories in South San Francisco and San Diego, California, supported by its cytopathology expertise in Austin, Texas. Additionally, outside of the United States, the Company provides its Prosigna test to patients through distribution to laboratories and hospitals that can perform the tests locally as an in vitro diagnostic, or IVD, test.

In September 2026, the Company acquired Convergent Genomics, Inc., a diagnostics company focused on urine-based genomic testing. Refer to Note 4, Business Combination for additional information.

Basis of Presentation

The Company’s condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States, or GAAP. Certain information and note disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. The condensed consolidated balance sheet as of September 30, 2026, the condensed consolidated statements of operations for the three and nine months ended September 30, 2026 and 2025, the condensed consolidated statements of comprehensive income for the three and nine months ended September 30, 2026 and 2025, the condensed consolidated statements of stockholders' equity for the three and nine months ended September 30, 2026 and 2025, and the condensed consolidated statements of cash flows for the nine months ended September 30, 2026 and 2025 are unaudited, but include all adjustments, consisting only of normal recurring adjustments, which the Company considers necessary for a fair presentation of its financial position, operating results, stockholders' equity and cash flows for the periods presented. The condensed consolidated balance sheet as of December 31, 2025 has been derived from audited financial statements. The results for the three and nine months ended September 30, 2026 are not indicative of the results expected for the full year or any other period. The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. The Company operates inone segment.

Effective August 1, 2025, the Company ceased to have a controlling financial interest in its wholly-owned French subsidiary, Veracyte SAS. Accordingly, the Company derecognized the related assets and liabilities from its condensed consolidated financial statements. Prior to deconsolidation, the operating results and cash flows of Veracyte SAS were included in the Company’s condensed consolidated financial statements.

The accompanying interim period condensed consolidated financial statements and related financial information included in this Quarterly Report on Form 10-Q should be read in conjunction with the audited financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.

Use of Estimates

The preparation of unaudited interim financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities as of the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Significant items subject to such estimates include: revenue recognition; the useful lives of property, plant and equipment; the recoverability of long-lived assets; the incremental borrowing rates for leases; accounting for acquisitions; the estimation of the fair value of intangible assets and contingent consideration; stock-based compensation; income tax uncertainties, including a valuation allowance for deferred tax assets; credit related losses on investments; and allowance for credit losses and contingencies. The Company bases these estimates on historical and anticipated results, trends, and various other assumptions that the Company believes are reasonable under the circumstances, including assumptions as to future events. These estimates form the basis for making judgments about the carrying values of assets and liabilities and recorded revenue and expenses that are not readily apparent from other sources. Actual results could differ from those estimates and assumptions.

Concentrations of Credit Risk and Other Risks and Uncertainties

The majority of the Company’s cash and cash equivalents are deposited with three major financial institutions in the United States. Deposits in these institutions may exceed the amount of insurance provided on such deposits. The Company has not realized any losses on its deposits of cash and cash equivalents other than exchange rate losses related to foreign currency denominated accounts.

Several of the components of the Company’s sample collection kits and CLIA test reagents, IVD products and associated systems, as well as the systems service and service kits, are obtained from single-source suppliers. If these single-source suppliers fail to satisfy the Company’s requirements on a timely basis, or are unable to provide the Company with reagents that perform to specifications, the Company could suffer delays in being able to deliver its diagnostic solutions, suffer a possible loss of revenue, or incur higher costs, any of which could adversely affect its operating results.

Through September 30, 2026, the Company has derived most of its revenue from the sale of Decipher Prostate and Afirma testing. To date, Decipher Prostate and Afirma testing have been delivered primarily to physicians in the United States.

The Company is also subject to credit risk from its accounts receivable related to its sales. Credit risk for accounts receivable from testing revenue is incorporated in testing revenue accrual rates as the Company assesses historical collection rates and current developments to determine accrual rates and amounts the Company will ultimately collect. The Company generally does not perform evaluations of customers’ financial condition for testing revenue and generally does not require collateral. The Company assesses credit risk and the amount of accounts receivable the Company will ultimately collect for product, biopharmaceutical and other revenue based on collection history, current developments and credit worthiness of the customer. The estimate of credit losses is not material as of September 30, 2026.

The Company’s total third-party payers and other customers in excess of 10% of total revenue and their related revenue as a percentage of total revenue were as follows:

In the above table, Medicare Advantage plans are included with their associated private payer amounts and Medicare amounts do not include Medicare Advantage.

The Company's significant third-party payers in excess of 10% of total accounts receivable and their related accounts receivable balance as a percentage of total accounts receivable were as follows:

Cash and Cash Equivalents

The Company considers demand deposits in a bank, money market funds and highly liquid investments with maturities at the time of purchase of three months or less to be cash equivalents.

Short-Term Investments

The Company's short-term investments consist of United States treasury securities and certificates of deposit with maturities at the time of purchase that were between three months and one year. The Company classifies these investments as held-to-maturity debt securities, which are reported at amortized cost. Discounts or premiums from the purchase of the securities are recognized as a component of interest income in other income, net in the consolidated statements of operations. Investments are initially recorded net of an allowance for expected credit losses, if any, which are remeasured each period and any impairments are recognized as an expense. Unrealized gains and losses are not recognized in income. As of both September 30, 2026 and December 31, 2025, no allowances for expected credit losses had been recorded and there have been no impairment or credit losses on the Company's short-term investments.

Restricted Cash

The Company had deposits of $1.6 million included in long-term assets as of both September 30, 2026 and December 31, 2025 restricted from withdrawal and held by banks primarily in the form of collateral for irrevocable standby letters of credit held as security for the Company's leases.

Acquisitions

The Company first determines whether a set of assets acquired and liabilities assumed constitute a business and should be accounted for as a business combination. If the assets acquired are not a business, the Company accounts for the transaction as an asset acquisition. Business combinations are accounted for by using the acquisition method of accounting. Under the acquisition method, assets acquired, and liabilities assumed are recorded at their respective fair values as of the acquisition date in the Company's consolidated financial statements. The estimated fair value of intangible assets acquired are based on discounted cash flows utilizing certain assumptions including revenues (such as projected testing volumes, growth rates), discount rates and expected economic life/obsolescence factors of the respective assets. The excess of the fair value of consideration transferred over the fair value of the net assets acquired is recorded as goodwill. Contingent consideration obligations incurred in connection with a business combination are recorded at fair value on the acquisition date and remeasured at each subsequent reporting period until the related contingencies are resolved, with the resulting changes in fair value recorded in general and administrative expense in the consolidated statements of operations.

Revenue Recognition

The Company recognizes revenue in accordance with the provisions of the Financial Accounting Standards Board, or FASB, Accounting Standards Codification, or ASC, 606, Revenue from Contracts with Customers, or ASC 606. This process involves identifying the contract with a customer, determining the performance obligations in the contract, determining the contract price, allocating the contract price to the distinct performance obligations in the contract, and recognizing revenue when the performance obligations have been satisfied. A performance obligation is considered distinct from other obligations in a contract when it provides a benefit to the customer either on its own or together with other resources that are readily available to the customer and is separately identified in the contract. Performance obligations are considered satisfied once the Company has completed a service or transferred control of a product to the customer.

In arrangements involving more than one service or good, each required service or good is evaluated to determine whether it qualifies as a distinct performance obligation based on whether (i) the customer can benefit from the service or good either on its own or together with other resources that are readily available and (ii) the service or good is separately identifiable from other promises in the contract. The consideration under the arrangement is then allocated to each separate distinct performance obligation based on its respective relative stand-alone selling price. The estimated selling price of each deliverable reflects the Company's best estimate of what the selling price would be if the deliverable was regularly sold by the Company on a stand-alone basis or using an adjusted market assessment approach if selling price on a stand-alone basis is not available. The consideration allocated to each distinct performance obligation is recognized as revenue when control is transferred which may be at a point in time or over time.

Testing Revenue

The Company recognizes testing revenue from the sale of tests performed for customers, including patients and institutions, at the time test results are reported to physicians. Most tests requested by customers are sold without a written agreement; however, the Company determines that an implied contract exists with its customers for whom a physician will order the test. The Company identifies each sale of its test to a customer as a single performance obligation. A stated contract price does not exist and the transaction price for each implied contract with a customer represents variable consideration. The Company uses the expected value method of estimating variable consideration. The Company estimates the variable consideration under the portfolio approach and considers the historical reimbursement data from third-party commercial and governmental payers and patients, as well as known or anticipated reimbursement trends not reflected in the historical data. The Company monitors the estimated amount to be collected in the portfolio at each reporting period based on actual cash collections in order to assess whether a revision to the estimate is required. Both the estimate and any subsequent revision contain uncertainty and require the use of significant judgment in the estimation of the variable consideration and application of the constraint for such variable consideration. The Company analyzes its actual cash collections over the expected reimbursement period and compares it with the estimated variable consideration for each payer group and any difference is recognized as an adjustment to estimated revenue after the expected reimbursement period, subject to assessment of the risk of future revenue reversal. For the three and nine months ended September 30, 2026, the Company recorded $2.4 million and $11.1 million, respectively, and for the three and nine months ended September 30, 2025 the Company recorded $1.5 million and $3.7 million, respectively, resulting from cash collections exceeding the estimated variable consideration related to tests reported in previous years, including revenue received from successful appeals of reimbursement denials, net of recoupments.

Product Revenue

The Company's product revenue primarily consists of the Prosigna IVD breast cancer assay and, to a much lesser extent, related diagnostic kits and services. Product revenue from diagnostic kits is generally recognized upon shipment from the contract manufacturer. Shipping and handling costs incurred for product shipments are included in product revenue. Revenue is presented net of the taxes that are collected from customers and remitted to governmental authorities.

Biopharmaceutical and Other Revenue

Accounts receivable from biopharmaceutical and other revenue was $2.2 million at September 30, 2026 and $3.6 million at December 31, 2025. Deferred revenue related to these agreements was $0.9 million at September 30, 2026 and $1.2 million at December 31, 2025. Following the restructuring proceedings affecting Veracyte SAS, as of August 2025 Veracyte SAS no longer provides biopharmaceutical services, contract manufacturing or contract development services. Revenue included in biopharmaceutical and other revenue for the three and nine months ended September 30, 2026 and 2025 was as follows (in thousands of dollars):

Cost of Testing Revenue

The components of the Company's cost of testing revenue are laboratory expenses, sample collection expenses, compensation expense, license fees and royalties, depreciation, customer service, other expenses such as equipment and laboratory supplies, and allocations of facility and information technology expenses. Costs associated with performing tests are expensed as the test is processed regardless of whether and when revenue is recognized with respect to that test.

Cost of Product Revenue

Cost of product revenue consists primarily of costs of diagnostic kit components and reagents, labor, delivery costs and royalties for licensed technologies included in the Company's products. Subsequent to the restructuring proceedings affecting

Veracyte SAS in August 2025, the costs of diagnostic kit components and reagents and labor costs are paid to a third-party contract manufacturer. The cost of the finished product is recognized in the period the related revenue is recognized.

Cost of Biopharmaceutical and Other Revenue

Cost of biopharmaceutical and other revenue consists of costs of performing activities under arrangements that require the Company to license or provide access to its assets or laboratory testing services, as well as costs 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. Following the restructuring proceedings affecting Veracyte SAS, as of August 2025 Veracyte SAS no longer provides biopharmaceutical services, contract manufacturing or contract development services.

Recent Accounting Pronouncements

In November 2024, the FASB issued Accounting Standards Update, or ASU, 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. ASU 2024-03 will require public business entities to disclose in the notes to the financial statements, at each interim and annual reporting period, specific information about certain costs and expenses, including purchases of inventory, employee compensation, depreciation, and intangible asset amortization included in each expense caption presented on the face of the income statement, and the total amount of an entity's selling expenses. ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027, and may be applied either prospectively or retrospectively. Early adoption is permitted. The Company is currently evaluating the impact of adopting this guidance on the consolidated financial statements.

2. Net Income Per Common Share

Basic earnings per share, or EPS, is computed based on the weighted average number of common shares outstanding during the period. Diluted EPS is computed based on the sum of the weighted average number of common shares and potentially dilutive common shares outstanding during the period. In loss periods, basic and diluted loss per share are identical since the effect of potentially dilutive common shares is antidilutive and therefore excluded. Potentially dilutive common shares from equity awards are determined using the average share price for each period under the treasury stock method. In addition, proceeds from exercises of equity awards and the average amount of unrecognized compensation expense for equity awards are assumed to be used to repurchase shares. The following table sets forth the computation of basic and diluted EPS (in thousands, except per-share amounts):

3. Balance Sheet Components

Goodwill

The changes in the carrying amounts of goodwill were as follows (in thousands of dollars):

Intangible Assets, Net

Intangible assets include finite-lived product technology, customer relationships, licenses and trade names and indefinite-lived in-process research and development. Intangible assets consisted of the following (in thousands of dollars):

Acquisition-related intangibles are generally finite-lived and are carried at cost less accumulated amortization. Amortization of the finite-lived intangible assets is recognized on a straight-line basis over their estimated lives, which approximates the pattern in which the economic benefits of the intangible assets are expected to be realized. During the second quarter of 2026 following the launch of TrueMRD, in-process research and development intangibles of $6.2 million were reclassified to C2i developed technology intangibles and is being amortized over its estimated useful life.

On August 31, 2026, the Company closed a transaction to acquire certain assets for $5.3 million in cash andtwo mandatory annual license fee payments of $3.0 million due following the first and second anniversaries of the closing date. The acquisition was accounted for as a business combination and resulted in the recording of $9.0 million of intangible assets for manufacturing know-how.

Amortization of $3.7 million and $3.3 million was recognized for the three months ended September 30, 2026 and 2025, respectively, and an expense of $10.1 million and $9.8 million was recognized for the nine months ended September 30, 2026 and 2025, respectively.

The estimated future aggregate amortization expense as of September 30, 2026 is as follows (in thousands of dollars):

Impairment of Assets

The Company concluded, during the second quarter of 2025, that the long-lived assets of the Veracyte SAS asset group were not recoverable. As a result, the Company recorded a $20.5 million non-cash impairment charge for the nine months ended September 30, 2025. The impairment related primarily to the Company's right-of-use assets; property, plant, and equipment; and certain tax credits. The impairment is included within the impairment of assets in the consolidated statement of operations.

Deconsolidation of Wholly-Owned Subsidiary

Effective August 1, 2025, the Company ceased to have a controlling interest in its wholly-owned French subsidiary, Veracyte SAS. Accordingly, the Company derecognized the related assets and liabilities from its condensed consolidated financial statements. Prior to deconsolidation, the operating results and cash flows of Veracyte SAS were included in the Company’s condensed consolidated financial statements. In accordance with ASC 810, Consolidation, the Company recognized a loss on deconsolidation of approximately $6.7 million, which is included in other income, net in the condensed consolidated statements of operations for the three months ended September 30, 2025.

Accrued Liabilities

Accrued liabilities consisted of the following (in thousands of dollars):

4. Business Combination

Convergent Genomics, Inc.

On September 14, 2026, or the Closing Date, the Company acquired 100% of the outstanding equity interests of Convergent Genomics, Inc., or Convergent, a privately held company, through a merger under an Agreement and Plan of Merger, dated September 10, 2026, by and among the Company, Convergent, Compass Merger Sub, Inc., and Shareholder Representative Services LLC, which we refer to as the Convergent Acquisition. Convergent is a molecular diagnostics company that develops and commercializes UroAmp, a urine-based test for bladder cancers, including minimal residual disease, or MRD, monitoring in bladder cancer. The Convergent Acquisition adds Convergent’s UroAmp platform, including its proprietary urinary tumor DNA technology, to the Company’s development portfolio.

The total consideration for the Convergent Acquisition was $178.2 million, comprised of $154.7 million of cash consideration which includes amounts relating to the settlement of vested stock options of $13.1 million, amounts placed in escrow of $16.0 million, and net of cash acquired of $6.8 million. Other components of the cash consideration include $0.2 million deposited into a fund to cover the Convergent securityholders’ representative’s costs of administering post-closing matters and $1.4 million of seller transaction costs paid by the Company on behalf of Convergent. In addition to the cash consideration, the Company agreed to pay to Convergent securityholders up to $30.0 million in milestone-driven payments that are dependent on the achievement of reimbursement related milestones. The Company recognized a $23.5 million contingent consideration liability for the estimated fair value of the milestone payments which was included within within consideration transferred. The Company determined the estimated fair value of the contingent consideration based on a probability weighted expected return method. The fair value of the contingent milestone payments will be remeasured each quarter, with changes in fair value recognized within general and administrative expense.

In connection with the Convergent Acquisition, the Company deposited $16.0 million into escrow, consisting of $1.0 million to settle post-closing purchase price adjustments and $15.0 million to secure the Convergent securityholders’ indemnification obligations. The indemnification portion, net of pending claims, is released to the Convergent securityholders 12 months after the Closing Date. These escrowed amounts are included in the purchase price.

The Company also entered into retention arrangements with certain employees of Convergent, consisting of $1.6 million of cash retention and $2.7 million of restricted stock units. These arrangements are accounted for separately from the

Convergent Acquisition and recognized as post-combination compensation expense over the service period. The Company incurred $1.7 million of transaction costs related to the Convergent Acquisition during the three months ended September 30, 2026, which were recorded as general and administrative expense.

The Company included financial results of Convergent in its consolidated financial statements from the Closing Date, which contributedno revenue and $0.3 million of operating loss, including $0.2 million of intangible asset amortization during the three months ended September 30, 2026.

Assets acquired and liabilities assumed are recorded based on valuations derived from estimated fair value assessments and assumptions used by the Company. While the Company believes that its estimates and assumptions underlying the valuations are reasonable, different estimates and assumptions could result in different valuations assigned to the individual assets acquired and liabilities assumed, and the resulting amount of goodwill. The following table summarizes the preliminary fair values of assets acquired and liabilities assumed in the Convergent Acquisition at the Closing Date (in thousands of dollars):

Based on the guidance provided in ASC 805, Business Combinations, the Company accounted for the Convergent Acquisition as a business combination in which the Company determined that Convergent was a business which combines inputs and processes to create outputs, and substantially all of the fair value of gross assets acquired was not concentrated in a single identifiable asset or group of similar identifiable assets.

The Company's purchase price allocation for the Convergent Acquisition is preliminary and subject to revision as additional information about the fair value of the assets and liabilities becomes available. The fair values assigned to tangible and intangible assets acquired, and liabilities assumed, are based on management’s estimates and assumptions and may be subject to change as additional information is received. The purchase price allocation involves significant judgment in estimating the fair values of acquired assets and liabilities, including intangible assets, goodwill and related tax impacts. As the analysis is finalized and additional information becomes available, these preliminary estimates may be revised during the measurement period, which could materially impact the Company's results of operations and financial position.

The intangible assets acquired included developed technology, trademarks and trade names and customer relationships. The preliminary fair value of the Company's intangible assets as of the acquisition date and the method used to value these assets as well as the estimated economic lives for amortizable intangible assets were as follows (in thousands of dollars, except useful life which is in years):

The fair value of the finite-lived acquired developed technology intangible asset was determined using the multi-period excess earnings income approach. This approach determines fair value based on estimated cash flow projections which are discounted to present value using a risk-adjusted rate of return. Management’s estimated cash flow projections include significant assumptions, including forecasted revenue, the related revenue growth rates and the discount rate. The discount rate used to determine the fair value of the developed technology was 15%.

The amortization expense for all acquired intangible assets will be recognized on a straight-line basis and recorded within intangible asset amortization.

Goodwill represents the excess of the purchase price over the fair value of the net tangible and intangible assets acquired. The Convergent Acquisition resulted in the recognition of $88.4 million of goodwill, which the Company believes primarily consists of expected synergies arising from the integration of the UroAmp platform with the Company's existing urologic cancer testing portfolio, anticipated future technologies and products, assembled workforce and expected growth opportunities. Goodwill created as a result of the Convergent Acquisition is not deductible for tax purposes.

5. Fair Value Measurements

The Company records certain of its financial assets and liabilities at fair value. The accounting guidance for fair value provides a framework for measuring fair value and clarifies the definition of fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the reporting date. The accounting guidance establishes a three-tiered hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value as follows:

•Level I: Inputs which include quoted prices in active markets for identical assets and liabilities;

•Level II: Inputs other than Level I that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and

•Level III: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The carrying amounts of certain financial instruments of the Company, including cash and cash equivalents, prepaid expenses and other current assets, accounts payable and accrued liabilities, approximate fair value due to their relatively short maturities. The fair value of the Company’s financial assets include treasury bills, money market funds and deposits for leases of the Company's facilities. As of September 30, 2026 and December 31, 2025, the Company had the following financial instruments measured at fair value (in thousands of dollars):

There were no transfers between Levels 1, 2 or 3 for the nine months ended September 30, 2026 and 2025.

The contingent consideration related to the Convergent Acquisition as discussed in Note 4, Business Combination, is dependent on the achievement of certain milestones and is payable in cash of up to $30 million and was valued at $23.5 million. The fair value of the contingent consideration related to the Convergent Acquisition will be remeasured to fair value at each reporting date until the contingent consideration is settled, with the corresponding changes included in general and administrative expense. As of September 30, 2026, the achievement of one of the milestones is forecasted to occur within the next 12 months. As a result, $6.4 million of the contingent consideration is included in short term liabilities at September 30, 2026.

As of September 30, 2026 and December 31, 2025, the contingent consideration related to the acquisition of the exclusive global diagnostic license to the nCounter Analysis System was remeasured to $0.5 million and $1.6 million, respectively. For the three and nine months ended September 30, 2026, reversal of expense of $0.4 million and $1.1 million, respectively, was recorded, and for the three and nine months ended September 30, 2025, reversal of expense ofzero and $1.0 million, respectively, was recorded. As of September 30, 2026, the achievement of one of the milestones is forecasted to occur within the next 12 months. As a result, $0.3 million of the contingent consideration is included in short term liabilities at September 30, 2026.

The fair value of contingent consideration includes inputs that are not observable in the market. The estimation of the fair value of the contingent consideration is based on the present value of the expected payments calculated by assessing the likelihood of when the related milestones would be achieved and estimating the Company's borrowing rate. These estimates form the basis for making judgments about the carrying value of the contingent consideration that are not readily apparent from other sources. Changes to the forecasts for the achievement of the milestones and the borrowing rate can significantly affect the estimated fair value of the contingent consideration. As of September 30, 2026 and December 31, 2025, the Company calculated the estimated fair value of the milestones using the following significant unobservable inputs:

Short-Term Investments Held-to-Maturity

The Company's short-term investments consist of United States treasury securities and certificates of deposit with maturities, at the time of purchase, that were between three months and one year. Based upon the Company's intent and ability to hold its short-term investments to maturity, the Company classified these investments as held-to-maturity and recorded them at amortized cost. As of September 30, 2026 and December 31, 2025, the Company had the following short-term investments (in thousands of dollars):

6. Commitments and Contingencies

Operating Leases

The Company leases office and laboratory facilities in the U.S., including in South San Francisco, San Diego and Morgan Hill, California and Austin, Texas, and, prior to August 2025, in Marseille, France. Effective August 2025, in connection with the restructuring proceeding in Veracyte SAS, the Company is no longer a party to the lease in Marseille, France. The lease terms of the Company’s leases as of September 30, 2026 extend to March 2040 and contain extension of lease terms and expansion options. The leases have a weighted average remaining lease term of 10.6 years as of September 30, 2026. The Company had deposits of $1.6 million included in long-term assets as of both September 30, 2026 and December 31, 2025 restricted from withdrawal and held by banks in the form of collateral for irrevocable standby letters of credit held as security for the leases.

The Company determined its operating lease liabilities using payments through their current expiration dates and a weighted average discount rate of 11.4% based on the rate that the Company would have to pay to borrow, on a collateralized basis, an amount equal to the lease payments in a similar economic environment. Operating lease liabilities along with the associated right-of-use assets are disclosed in the accompanying condensed consolidated balance sheets. The Company classified its deferred rent for tenant improvements with its operating lease right-of-use assets on the consolidated balance sheets.

Future minimum lease payments under non-cancelable operating leases as of September 30, 2026 are as follows (in thousands of dollars):

The Company recognizes operating lease expense on a straight-line basis over the non-cancelable lease period. The following table summarizes operating lease expense and cash paid for amounts included in the measurement of lease liabilities (in thousands of dollars):

Contingencies

From time to time, the Company may be involved in various legal proceedings and claims arising in the ordinary course of business. Although the outcomes of such matters cannot be predicted with certainty, the Company believes there is no litigation pending that could have, either individually or in the aggregate, a material adverse impact on the Company's consolidated financial statements.

On May 1, 2025, the Company filed a complaint in federal court in the Eastern District of Texas alleging that Sonic Healthcare USA, Inc., the healthcare company that is believed to offer ThyroSeq v3, is infringing three of the Company’s patents related to molecular testing of thyroid nodules. The complaint seeks treble damages, attorneys’ fees and costs as well as injunctive relief. On June 4, 2025, the Company filed an amended complaint assertingtwo additional patents. On July 21, 2025, Sonic Healthcare USA, Inc. filed an answer and a motion to dismiss. The court denied Sonic Healthcare USA, Inc.’s motion to dismiss on January 20, 2026. The parties attended the claim construction hearing on July 15, 2026. On July 21, 2026 and October 22, 2026, ex parte reexaminations oftwo of the asserted patents were granted by the United States Patent and Trademark Office. Both parties filed summary judgment motions on October 26, 2026. The jury trial in the litigation is currently scheduled for the first quarter of next year.

7. Stockholders’ Equity

Common Stock

The Company had reserved shares of common stock for issuance as follows:

8. Components of Other Income

Other income, net consists of the following (in thousands of dollars):

9. Segment

The chief operating decision maker for the Company is the Chief Executive Officer, who reviews financial information presented on a consolidated basis for purposes of allocating resources and assessing financial performance. The Company has a single reporting unit associated with the development and commercialization of diagnostic tests and biopharmaceutical services. The accounting policies of the Company's single segment are the same as those described in the summary of significant accounting policies in Note 1, Organization, Description of Business and Summary of Significant Accounting Policies. The chief operating decision maker assesses performance of the Company's single segment and decides how to allocate resources based on consolidated net income. Under the current organizational structure, this measure is not discretely available or required individually for any of the Company’s business activities and is only available at the consolidated level. The monitoring of budgeted versus actual results are used in assessing performance of the Company's single segment, allocating resources and in establishing management’s compensation. The Company's chief operating decision maker intends for all revenue generating activities to rely on cross-functional activities across the consolidated entity in order to operate. No individual besides the chief operating decision maker has been tasked with reviewing discrete operating results of the business activities, nor is there any intent to bifurcate the overall business review process to produce discrete operating results specific to any of the Company's business activities. The measure of segment assets is reported on the consolidated balance sheet as total consolidated assets. Consolidated revenue does not include any inter-segment sales or transfers.

Information about reported segment revenue, measures of segment profit or loss, significant segment expenses and reconciliation to income from operations was as follows (in thousands of dollars):

(1)Other cost of testing revenue includes cytopathology services, depreciation and amortization and other expenses.

(2)Other cost of product revenue includes contract manufacturing fees, license fees and royalties, depreciation and amortization and other expenses.

(3)Other cost of biopharmaceutical and other revenue includes professional fees, information technology expense, depreciation and amortization and other expenses.

(4)Other research and development expenses include depreciation and amortization and other expenses.

(5)Other selling and marketing expenses include travel, entertainment, conference and other expenses.

(6)Other general and administrative expenses include professional fees, information technology expense, occupancy costs, depreciation and amortization, contingent consideration and other expenses.

10. Income Taxes

The provision (benefit) for income taxes is based on the current estimate of the annual effective tax rate applied to the Company’s year to date income and is adjusted for discrete items recorded in the period. For the three months ended September 30, 2026 and 2025, the Company’s effective tax rate was (49.2)% and (1.3)%, respectively. For the nine months ended September 30, 2026 and 2025, the Company’s effective tax rate was (10.4)% and 8.6%, respectively. For the nine months ended September 30, 2026, the primary difference between the effective tax rate and the federal statutory rate is primarily attributable to the release of a pre‑existing valuation allowance on the Company's federal and state deferred tax assets. For the nine months ended September 30, 2025, the primary difference between the effective tax rate and the federal statutory rate is driven by unfavorable permanent differences, offset by benefits from the One Big Beautiful Bill Act, or the OBBBA, and the full valuation allowance the Company has established on its federal, state and foreign net operating losses and credits.

The Company recorded income tax benefit of $10.4 million and $0.2 million for the three months ended September 30, 2026 and 2025, respectively, and recorded income tax benefit of $8.1 million and expense of $2.4 million for the nine months ended September 30, 2026 and 2025, respectively. The benefit for income taxes recorded in the nine months ended September 30, 2026 consists primarily of a discrete income tax benefit related to the release of certain valuation allowances on the Company's deferred tax assets upon recording of the deferred tax liabilities for the acquisition of Convergent. The provision for income taxes recorded in the nine months ended September 30, 2025 consists primarily of federal, state and foreign income taxes incurred by a subsidiary associated with the Company’s Decipher product line.