GRAIL, Inc.

CONDENSED CONSOLIDATED BALANCE SHEETS

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

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CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

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CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

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NOTE 1. ORGANIZATION AND DESCRIPTION OF BUSINESS

GRAIL, Inc. (“GRAIL” or the “Company”), is an innovative commercial-stage healthcare company focused on shifting the paradigm of early cancer detection. The Company’s Galleri blood test is a commercially available screening test for early detection of multiple types of cancer. GRAIL’s stock is listed on the Nasdaq Global Select Market under the ticker symbol “GRAL”.

The Company had $29.0 million of cash and cash equivalentsand$759.7 million of short-term marketable securitiesas of September 30, 2026. The Company believes that its existing cash, cash equivalents and short-term marketable securities will be sufficient to meet its working capital and capital expenditure needs for at least the next 12 months, as of the date these condensed consolidated financial statements are filed.

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Principles of Consolidation

The accompanying condensed consolidated financial statements and related footnotes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). In the opinion of management, these condensed consolidated financial statements include all normal recurring adjustments necessary to fairly present the Company’s financial position and results of operations for the interim periods presented. The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, and all intercompany balances and transactions have been eliminated in consolidation. Due to the application of pushdown accounting, the Company’s balance sheet includes intangible assets recognized by Illumina, Inc. (“Illumina”) in connection with Illumina’s acquisition of the Company.

The Company’s accounting policies are described in Note 2 — Summary Of Significant Accounting Policies, included in the Company’s Annual Report on Form 10-K (filed on March 12, 2026) for the year ended December 31, 2025 (the “2025 Form 10-K”). There have been no changes to these accounting policies during the nine months ended September 30, 2026, except as described below.

Accounts Receivable, Net

Accounts receivable represent unconditional rights to consideration from customers. Accounts receivable are evaluated regularly for collectability and potential credit losses. Allowance for credit losses is estimated based on management’s assessment of historical collection trends and current financial conditions of customers assuming those conditions as of the balance sheet date do not change for the remaining life of the asset, among other factors. These reserves are re-evaluated on a regular basis and adjusted, as needed. Once a receivable is deemed to be uncollectible, the receivable balance is charged against the reserve. As of September 30, 2026, and December 31, 2025, the Company had $4.5 million and $3.6 million of allowance for credit losses.

Deferred assets

The Company recognizes a deferred asset for upfront share-based consideration payable to a customer when such consideration is recognized as an asset based on the substance of the arrangement. The deferred asset recognized in connection with the Samsung Stock Purchase Agreement, dated as of October 16, 2025, by and among the Company, Samsung C&T Corporation (“Samsung C&T”), Samsung Electronics Singapore Pte. Ltd. (together with Samsung C&T, the “Samsung Investors”), and Samsung Electronics Co., Ltd. (“Samsung Electronics”) (the “Samsung SPA”), represents upfront share-based consideration payable to a customer.

The Company evaluates the deferred asset for recoverability whenever facts and circumstances indicate that its carrying amount may not be recoverable. An impairment loss is recognized to the extent the carrying amount of the asset exceeds the remaining amount of consideration the Company expects to receive in exchange for the related goods or services, less the costs that relate directly to providing those goods or services and that have not yet been recognized as expenses. Impairment losses are recognized in the period in which they are identified and are not subsequently reversed.

The Company concluded that the deferred asset recognized in connection with the Samsung SPA was not recoverable. Accordingly, during the second quarter of 2026, the Company recognized an impairment loss of $25.4 million, which is included in the condensed consolidated statement of operations for the nine months ended September 30, 2026.

Concentration of Credit Risk

Financial Instruments

The Company is subject to credit risk from its portfolio of cash, cash equivalents and short-term marketable securities held atthree accredited financial institutions. As of September 30, 2026, the Company had $29.0 million of cash and cash equivalents, and short-term marketable securities of $759.7 million. The Company limits its exposure to credit losses by investing in money market funds and United States (“U.S.”) government treasury securities through U.S. banks with high credit ratings. The Company’s cash consists of deposits held with banks that may at times exceed federally insured limits, however, its exposure to credit risk in the event of default by the financial institution is limited to the extent of amounts recorded on the condensed consolidated balance sheets. The Company performs evaluations of the relative credit standing of these financial institutions to limit the amount of credit exposure. The Company has not experienced any losses in such accounts.

As of September 30, 2026, the Company had no off-balance sheet concentrations of credit risk.

Customers

The Company is subject to credit risk related to its accounts receivable. Accounts receivable primarily arise from testing services performedin the U.S. and are primarily with biopharmaceutical companies, healthcare organizations, employers, digital health platforms, concierge medicine practices, life insurance companies, international distributors, Centers for Medicare & Medicaid Services, and individuals. The Company does not require collateral. Accounts receivable are recorded net of the allowance for credit losses.

Significant customers are those that represent more than 10% of total revenue or accounts receivable, net for the periods and as of each consolidated balance sheet date presented, respectively.

For the three and nine months ended September 30, 2026, one customer accounted for approximately 10% of the Company’s revenue. For the three and nine months ended September 30, 2025, no single customer accounted for 10% or more of the Company’s revenue.

As of September 30, 2026, one customer accounted for approximately 11% of the Company's accounts receivable, net. As of December 31, 2025 no single customer accounted for 10% or more of the Company’s accounts receivable, net.

Suppliers

The Company is subject to a concentration risk for equipment, supplies and reagents that are available from a limited number of sources. The Company sources certain laboratory equipment, supplies and reagents used to perform testing services and research and development from single vendors. Historically, the Company has not experienced significant issues sourcing equipment and supplies needed to perform testing services.

Reclassification

Certain amounts for the period ended September 30, 2025, in Note 11 — Segment Information, of these condensed consolidated financial statements have been reclassified to conform to the current period presentation.

Recently Adopted Accounting Pronouncements

In July 2025, the FASB issued ASU No. 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. This update provides entities with a practical expedient related to developing reasonable and supportable forecasts as part of estimating expected credit losses, in which entities may elect to assume that current conditions as of the balance sheet date do not change for the remaining life of the asset. The Company adopted the standard on a prospective basis effective January 1, 2026, and elected the practical expedient. Adoption of this guidance did not have a material impact on the Company’s condensed consolidated financial statements.

Recently Issued Accounting Pronouncements Not Yet Adopted

In November 2024, the FASB issued ASU No. 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures. This update intends to improve financial reporting by requiring disclosure of additional information about specific expense categories. This guidance is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027. Early adoption is permitted and the guidance is to be applied prospectively and may be applied retrospectively. The Company is currently evaluating the impact of this guidance on its consolidated financial statements and related disclosures.

In May 2025, the FASB issued ASU No. 2025-04, Compensation-Stock Compensation (Topic 718) and Revenue from Contracts with Customers (Topic 606). This update addresses diversity in practice and improves the operability of accounting for share-based consideration granted to customers. The amendments clarify how to distinguish between service and performance conditions for vesting, require entities to estimate forfeitures for all share-based consideration payable to customers, and specify that variable consideration guidance in ASC 606 does not apply when measuring such awards. This guidance is effective for fiscal years beginning after December 15, 2026, and interim reporting periods within those annual reporting periods, with early adoption permitted. The transition method may be modified retrospective or on a retrospective basis. The Company is currently evaluating the impact of this guidance on its consolidated financial statements and related disclosures.

In September 2025, the FASB issued ASU No. 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. This update removes all references to software development project stages and requires entities to start capitalizing software costs when both of the following occur: (i) management has authorized and committed to funding the software project and (ii) it is probable that the project will be completed and the software will be used to perform the function intended. This guidance is effective for fiscal years beginning after December 15, 2027 and interim reporting periods within those annual reporting periods. Early adoption is permitted. The transition method may be prospective, modified, or retrospective. The Company is currently evaluating the impact of this guidance on its consolidated financial statements and related disclosures.

In December 2025, the FASB issued ASU No. 2025-10 (ASC Topic 832), Accounting for Government Grants Received by Business Entities. This ASU establishes the accounting and presentation for government grants received by a business entity. This guidance is effective for fiscal years beginning after December 15, 2028 and interim reporting periods within those annual reporting periods. Early adoption is permitted. This ASU provides for adoption either on a modified prospective, modified retrospective, or retrospective basis. The Company is currently evaluating the impact of this guidance on its consolidated financial statements and related disclosures.

In December 2025, the FASB issued ASU No. 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements. This update enhances consistency in interim reporting for all entities by clarifying interim disclosure requirements and the form and content of interim financial statements in accordance with GAAP. This guidance is effective for interim reporting periods with annual reporting periods beginning after December 15, 2027. Early adoption is permitted and must be applied either prospectively or retrospectively to any or all prior periods presented in the financial statements. The Company is currently evaluating the impact of this guidance on its consolidated financial statements and related disclosures.

In December 2025, the FASB issued ASU No. 2025-12, Codification Improvements. This update includes a series of technical amendments intended to clarify guidance, correct unintended application issues, and improve consistency and operability across various Topics within the FASB Accounting Standards Codification. This guidance is effective for fiscal years beginning after December 15, 2026 and interim reporting periods within those annual reporting periods. Early adoption is permitted. The Company is currently evaluating the impact of this update on its consolidated financial statements and related disclosures.

NOTE 3. REVENUE

The following table presents the Company’s revenue disaggregated by geographic areas based on the customers’ locations:

(1)International region includes revenue earned from customers located outside of the United States.

The following table presents the Company’s revenue disaggregated by revenue source:

(1)Government screening revenue primarily consists of revenue earned as part of our REACH/Galleri-Medicare clinical study.

NOTE 4. BALANCE SHEET COMPONENTS

The following tables present financial information of certain condensed consolidated balance sheet components:

Long-lived assets

On February 19, 2026, the Company issued a press release announcing top-line results from its NHS-Galleri trial (“NHS-Galleri Trial”). Immediately following the release of this information, the Company’s market capitalization decreased materially. This sustained decrease in market capitalization represented a possible impairment indicator that warranted a quantitative impairment analysis of the Company’s long-lived assets.

During the first quarter of 2026, the Company performed a recoverability test at the asset group level, which was determined to be equivalent to its reporting unit to assess potential impairment of long-lived assets, which consist primarily of intangible assets with finite lives.

The Company performed an undiscounted cash flow analysis to assess whether the expected cash flows generated over the remaining estimated useful life of the primary asset within the asset group are sufficient to recover its carrying value. Significant assumptions underlying the forecasted cash flows include estimates of future revenues, costs, and expenses. These estimates involve a high degree of judgment regarding future events and are based on assumptions that management believes are reasonable. Changes in these estimates or assumptions could materially affect the recoverability assessment.

The results of the recoverability test showed that the estimated undiscounted net cash flows to be generated from the use of the Company’s long-lived assets exceeded its net carrying value. As a result, no impairment losses on long-lived assets was recognized during the three and nine months ended September 30, 2026.

For information on the impairment loss recognized related to deferred assets, refer to Note 7 — Common Stock.

NOTE 5. FAIR VALUE MEASUREMENTS, CASH EQUIVALENTS AND MARKETABLE SECURITIES

The following tables represent the fair value hierarchy for the Company’s financial assets measured at fair value on a recurring basis for the periods presented:

The following tables summarize the Company’s cash equivalents and marketable securities’ amortized costs, gross unrealized gains, gross unrealized losses, and estimated fair values by significant investment category:

All of the Company’s marketable securities had maturities of less than one year.

The Company hadfifteen securities with a fair value of $759.7 million in an unrealized loss position as of September 30, 2026 andno securities in an unrealized loss position as of December 31, 2025. None of the Company’s marketable securities had been in an unrealized loss position for more than one year as of September 30, 2026. It was determined that no credit losses exist as of September 30, 2026 because the change in market value for those securities that were in an unrealized loss position resulted from fluctuating interest rates rather than a deterioration of the credit worthiness of the issuers. The Company does not intend to sell the U.S. government treasury bills before maturity, and it is not more likely than not that the Company will be required to sell these investments before recovery of their amortized cost basis.

NOTE 6. LEASES

The Company has entered into operating leases for facilities. Operating leases have remaining lease terms which range from less than 1 year to 11 years, and often include one or more options to renew. These renewal terms can extend the lease term from 5 to 15 years and are included in the lease term when it is reasonably certain that the option will be exercised. The exercise of lease renewal and termination options are at the sole discretion of the Company. The Company also has variable lease payments that are primarily comprised of common area maintenance and utility charges.

On September 11, 2025, the Company entered into a commercial lease agreement (the “Lease”) with Sunnyvale Office Acquisition, LLC for approximately 75,556 square feet of office space to serve as the Company’s new corporate headquarters in Sunnyvale, California. The Lease was subsequently amended in May 2026 to revise the leased premises to 74,901 square feet and to update the base rent and tenant’s share of expenses to reflect the revised rentable square footage. The leased premises became available for the Company’s use on June 1, 2026, at which time the Company obtained control of the underlying asset. Accordingly, the Lease commenced for accounting purposes on June 1, 2026.

The Lease has an initial term of approximately 11 years and expires on September 30, 2037. The Lease includesone option to renew for an additional five-year term.

Upon lease commencement, the Company recognized an operating lease right-of-use asset of $45.1 million and a corresponding operating lease liability of $44.9 million, measured using an incremental borrowing rate of 6.27%. Total estimated aggregate base rent payments under the Lease are approximately $61.5 million, excluding any payments associated with the renewal option.

The components of lease costs are as follows:

The Company’s weighted average remaining lease term and weighted average discount rate for operating leases were as follows:

Future undiscounted lease payments under operating leases as of September 30, 2026 were as follows:

*Tenant improvement allowance is estimated to be received as follows: approxima tely $0.4 million in the next twelve months and $9.3 million thereafter.

NOTE 7. COMMON STOCK

Samsung Stock Purchase Agreement

On June 25, 2026, the Company completed the issuance and sale of an aggregate of 1,570,308 shares of the Company's common stock to the Samsung Investors in a private placement at a purchase price of $70.05 per share, for aggregate gross proceeds of approximately $110.0 million, pursuant to the Samsung SPA. The Company intends to use the net proceeds to fund its commercial activities and reimbursement efforts, as well as for working capital and other general corporate purposes.

The closing of the Samsung SPA was contingent upon, among other things, (i) execution of the Business Collaboration Agreement by January 31, 2026, and (ii) receipt of required regulatory approvals, including approval from the Committee on Foreign Investment in the United States ("CFIUS"). On January 27, 2026, the Company executed a Business Collaboration Agreement with Samsung C&T (“Samsung BCA”) and on January 31, 2026 executed a Strategic and Operational Collaboration Agreement with Samsung Electronics. The Company subsequently received CFIUS approval in June 2026. The execution of these agreements and receipt of the required regulatory approval satisfied the conditions to closing under the Samsung SPA.

Management concluded that the Samsung SPA and the Samsung BCA represent a single commercial arrangement and that a portion of the consideration received under the Samsung SPA represents share-based consideration payable to a customer in exchange for distinct goods or services to be received under the Samsung BCA. Accordingly, the transaction was accounted for under ASC 718, Compensation—Stock Compensation (“ASC 718”) and ASC 606, Revenue from Contracts with Customers (“ASC 606”).

On October 16, 2025, the Company's common stock had a closing market price of $86.41 per share as compared to the contractual purchase price of $70.05 per share. The share-based consideration met the criteria for equity classification under ASC 718, and the closing conditions were determined to represent performance conditions of the award. The consideration in connection with this transaction was contingent upon the performance conditions becoming probable of being satisfied. These conditions were satisfied during the second quarter of 2026, and the Company recognized the transaction, upon closing, during the three months ended June 30, 2026.

Although the contractual purchase price of $70.05 per share represented a 10% premium to the 15-day volume-weighted average trading price of the Company's common stock immediately preceding execution of the Samsung SPA, ASC 718 requires the share-based consideration to be measured at its grant-date fair value. The grant-date fair value of the share-based consideration of $25.4 million was determined using a forward contract valuation methodology. The valuation primarily reflected the difference between the grant-date closing market price of the Company's common stock of $86.41 per share and the contractual purchase price of $70.05 per share. The excess of the grant-date fair value over the contractual purchase price was recognized as a deferred asset because the Company expected to recognize future revenue generated under the Samsung BCA, but no contract with a customer within the scope of ASC 606 existed at the recognition date.

During the second quarter of 2026, the Company evaluated the deferred asset for recoverability. Based on management's estimate, the carrying amount of the deferred asset was not recoverable under the executed Samsung BCA based on the estimated consideration expected to be received, less the remaining costs directly related to providing the associated goods and services. Accordingly, during the second quarter of 2026 the Company recognized a full impairment charge of $25.4 million, which is included in the condensed consolidated statement of operations for the nine months ended September 30, 2026.

NOTE 8. LEGAL PROCEEDINGS, COMMITMENTS, AND CONTINGENCIES

The Company is subject to various claims, complaints, regulatory proceedings, and legal actions that arise from time to time in the ordinary course of business.

Illumina Federal Securities Class Actions

On November 11, 2023, the first ofthree securities class action complaints was filed against Illumina and certain of its current and former executive officers in the United States District Court for the Southern District of California. The first-filed case is captioned Kangas v. Illumina, Inc. et al., the second-filed case is captioned Roy v. Illumina, Inc. et al., and the third-filed case is captioned Louisiana Sheriffs’ Pension & Relief Fund v. Illumina, Inc. et al.(collectively, the “Illumina Actions”). The complaints generally allege, among other things, that defendants made materially false and misleading statements and omitted material facts relating to Illumina’s acquisition of GRAIL. The complaints seek unspecified damages, interest, fees, and costs. On January 9, 2024, four movants filed motions to consolidate the Illumina Actions and to appoint a lead plaintiff (“Lead Plaintiff Motions”). On April 11, 2024, the Court issued an order consolidating the Illumina Actions into a single action (captioned in re Illumina, Inc. Securities Litigation No. 23-cv-2082-LL-MMP), and appointed Universal-Investment-Gesellschaft mbH, UI BVK Kapitalverwaltungsgesellschaft mbH, and ACATIS Investment Kapitalverwaltungsgesellschaft mbH as lead plaintiffs (the “Lead Plaintiffs”). On June 21, 2024, the Lead Plaintiffs filed a consolidated amended complaint. The amended complaint alleged that GRAIL, in addition to Illumina, and certain of their respective current and former directors and others violated sections 10(b) and 20(a) of the Securities Exchange Act and the U.S. Securities and Exchange Commission (the “SEC”) Rule 10b-5 in connection with Illumina's acquisition of GRAIL and disclosures concerning the same. GRAIL has an indemnification obligation for certain current and former directors and officers involved in the matter pursuant to indemnification agreements entered into by these individuals and GRAIL. On September 13, 2024 the plaintiffs further amended the complaint. On November 12, 2024, the Company moved to dismiss the Lead Plaintiffs’ second amended complaint for failure to state a claim under Sections 10(b) and 20(a) of the Exchange Act. On September 26, 2025, the court granted the motion to dismiss for failure to state a claim with leave to amend, and on October 27, 2025, the Lead Plaintiffs filed their third amended complaint. On December 11, 2025, the Company filed a motion to dismiss Lead Plaintiffs’ third amended complaint, which the Court granted without prejudice on September 30, 2026. On October 21, 2026, the Lead Plaintiffs filed a fourth amended complaint. In light of the fact that the lawsuits are in an early stage, the Company cannot predict the ultimate outcome of the suits.

NHS-Galleri Disclosures Federal Securities Class Action And Related Actions

On June 5, 2026, a putative securities class action captioned Robbins v. GRAIL, Inc. et alwas filed against the Company and certain of its current and former executive officers in the Northern District of California, alleging that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act and SEC Rule 10b‑5 by making materially false and misleading statements regarding the NHS‑Galleri Trial. The complaint seeks certification of a class of investors who purchased GRAIL stock during the alleged class period and monetary damages, plus interest, attorneys’ and experts’ fees, costs, and other relief that may be awarded by the court. The Company has an indemnification obligation for certain current and former officers involved in the matter pursuant to indemnification agreements entered into by these individuals and GRAIL. The action is at an early stage, and no responsive pleadings have yet been filed. Pursuant to the Private Securities Litigation Reform Act, competing motions for appointment of lead plaintiff and approval of lead counsel were filed byfour movants on August 4, 2026. The movants have completed briefing on those motions, but the court has not yet ruled. A hearing on the lead-plaintiff motions is currently scheduled for December 3, 2026. The parties have stipulated to extend defendants’ deadline to respond to the complaint until after the lead plaintiff process is complete, at which point a consolidated amended complaint is expected to be filed.

On June 23, 2026, a shareholder derivative action captioned Augitto v. Ragusa et al. was filed against the Company’s current members of our board of directors and certain current and former officers in the Northern District of California, alleging that the defendants breached their fiduciary duties by causing or permitting the Company to make materially false and misleading statements and omissions concerning the NHS‑Galleri Trial, tracking the same alleged misstatements, and omissions underlying the Robbins action. The complaint asserts claims for breach of fiduciary duty, unjust enrichment, abuse of control, gross mismanagement, waste of corporate assets, violations of Exchange Act Section 14(a) in connection with the Company’s 2025 proxy statement, and derivative contribution claims under Sections 10(b) and 21D. The complaint seeks relief on behalf of the Company, including damages, equitable relief, attorneys’ and experts’ fees, costs, and other relief that may be awarded by the court. The action is at an early stage, and no responsive pleadings have yet been filed. On July 16, 2026, the court issued an order relating the action to the Robbins v. GRAIL, Inc. et al. class action. On September 10, 2026, the court entered a stipulated order staying the action pending developments in the related Robbins class action. The matter is currently stayed.

In light of the fact that the Robbins and Augitto lawsuits are in an early stage, the Company cannot predict the ultimate outcome of the suits.

Other Legal Matters

Legal matters include various claims, complaints, and legal actions that arise from time to time. The Company has entered into indemnification agreements with each of its current and former directors, executive officers, and certain other officers, to provide, among other things, for indemnification to the fullest extent permitted by law and the Company’s certificate of incorporation and bylaws, and has certain obligations to these individuals, which may give rise to liability for the Company even if the Company is not directly named. The Company has indemnification obligations in respect of the Illumina Actions and with respect to other legal matters that may arise, or have arisen, from time to time. There can be no assurance that existing or future legal proceedings arising in the ordinary course of business or otherwise will not have a material adverse effect on the Company’s business, financial position, results of operations, or cash flows.

The Company is involved in various lawsuits and claims arising in the ordinary course of business, including actions with respect to employment matters and intellectual property matters. For example, a complaint was filed against the Company on September 11, 2026, alleging the Company’s infringement oftwo U.S. patents directed to detection of methylation. In connection with these matters, the Company assesses, on a regular basis, the probability and range of possible loss based on the developments in these matters. A liability is recorded in the consolidated financial statements if it is believed to be probable that a loss has been incurred and the amount of the loss can be reasonably estimated. Since litigation is inherently unpredictable and unfavorable resolutions could occur, assessing contingencies is highly subjective and requires judgments about future events. The Company regularly reviews outstanding legal matters to determine the adequacy of the liabilities accrued and related disclosures. The Company may change its estimates if its assessment of the various factors changes and the amount of ultimate loss may differ from estimates, resulting in a material effect on the Company’s business, financial condition, results of operations, and/or cash flows. As of September 30, 2026, the Company is unable to estimate a range of possible loss in excess of the amounts accrued.

Contingencies

Contingencies primarily correspond to claims arising in the ordinary course of business. If necessary, these contingencies will be accrued, to the extent believed to be reasonably estimable to resolve the matter. The accrued contingency amounts are included in other current liabilities. Should the Company not be able to secure the terms it expects, these estimates may change and will be recognized in the period in which they are identified.

On June 21, 2024, in connection with the Company’s spin-off from Illumina (the “Spin-Off”), Illumina and the Company entered into the Tax Matters Agreement, dated as of June 21, 2024 (the “Tax Matters Agreement”), which governs the respective rights, responsibilities and obligations of Illumina and the Company after the Spin-Off with respect to all tax matters and includes restrictions to preserve the tax-free status of the Spin-Off during the two-year period following the Spin-Off, which period has expired. The Company remains subject to certain continuing obligations under the Tax Matters Agreement, including an obligation to indemnify Illumina for certain taxes and related losses if the Spin-Off fails to qualify for its intended tax-free treatment as a result of certain actions or events involving the Company’s stock or assets. Breach of any covenant or representation contained in the Tax Matters Agreement will result in liability to specific separation taxes. As of September 30, 2026, as it was not probable that the Company will breach the agreement, no contingent liability was recorded in connection with the Tax Matters Agreement.

NOTE 9. NET LOSS PER SHARE

The following table presents the calculation of the Company’s basic and diluted net loss per share:

Since the Company was in a loss position for all periods presented, basic net loss per share is the same as diluted net loss per share, as the inclusion of all potential shares of common stock outstanding would have been anti-dilutive.

Pre-funded warrants issued in connection with the private investment in public equity transaction completed in 2025 are included in the denominator of basic net loss per share from their issuance date, as they are exercisable for nominal consideration and are considered outstanding common shares for purposes of calculating basic net loss per share.

The following table presents the total outstanding potentially dilutive shares excluded from the calculation of diluted net loss per share as their effect would be anti-dilutive for the periods presented:

NOTE 10. TAXES

The Company calculates its quarterly income tax provision by applying the annual estimated effective tax rate to the actual year-to-date profit or loss, adjusted for discrete items recognized in that period. The difference between the Company’s effective tax rate of 28.86% and the U.S. federal statutory rate for the nine months ended September 30, 2026 is primarily attributable to state taxes and discrete tax benefits associated with stock-based compensation.

NOTE 11. SEGMENT INFORMATION

The Company operates and manages its business asone reportable operating segment. The Company's chief operating decision maker (“CODM”) is the chief executive officer. The CODM reviews financial information on an aggregate basis for the purposes of evaluating financial performance and allocating resources based on net income (loss), adjusted gross profit, adjusted gross margin and adjusted EBITDA. Net income (loss) is the measure of segment profit most consistent with U.S. GAAP that is regularly reviewed by the CODM to allocate resources and assess performance. The CODM does not evaluate operating segment performance using asset information.

Effective June 1, 2026, Dr. Joshua Ofman was appointed chief executive officer and became the Company’s CODM. Following this leadership transition, the Company revised the internal management reporting package provided to the CODM, including changes to the presentation and composition of segment expenses, to align with how the CODM manages operations, assesses performance, allocates resources, and develops strategic priorities. As a result, the Company updated its segment reporting structure and has revised the presentation of segment information for the nine months ended September 30, 2026, and three and nine months ended September 30, 2025, to conform to the current-period presentation. The Company continues to operate and manage its business asone reportable segment and the revised presentation does not change total revenue, total costs and operating expenses, loss from operations, or net loss for any period presented.

The following table includes the significant expense categories regularly provided to the CODM when managing the Company’s single reporting segment. A reconciliation to the consolidated net loss for the three and nine months ended September 30, 2026 and September 30, 2025 is included in the table below:

(1) Cost of screening revenue (exclusive of amortization of intangible assets) and cost of development services revenue include stock-based compensation expense of $0.6 million and $1.7 million for the three and nine months ended September 30, 2026 and $0.3 million and $1.5 million for the three and nine months ended September 30, 2025.

NOTE 12. RELATED PARTY TRANSACTIONS

The Company was a subsidiary of Illumina, Inc. between August 19, 2021 and June 23, 2024. Subsequent to the Spin-Off, Illumina retained a 14.5% stake in the Company and was considered a related party. During the fourth quarter of 2025, Illumina reduced its ownership to less than 10%. As a result, Illumina is not, and was not in the three and nine months ended September 30, 2026, a related party of the Company.

Illumina was both a customer and a major supplier of the Company’s reagents and capital equipment during the relevant periods. Goods and services transactions with Illumina are invoiced and paid when due.

Goods and services transactions with Illumina for the period during which Illumina qualified as a related party of the Company were as follows:

In June 2024, the Company entered into an amendment to its Supply and Commercialization Agreement with Illumina (the “Illumina Supply Agreement”). Under the terms of the Illumina Supply Agreement, regardless of whether our products incorporate any Illumina technology, we will be obligated to pay Illumina a 9% royalty, subject to certain reductions and floors, in perpetuity on net sales generated by our products or revenues otherwise generated or received by us, subject to certain exceptions, in the field of oncology. The royalty is subject to anti-stacking provisions that allow royalty payments we make to other third parties to be deducted from the 9% royalty rate, to a floor of 7%. We expect that the royalty payments we will make to Illumina in the foreseeable future will result in a 7% royalty rate. After we have cumulatively paid Illumina royalties totaling $1 billion, the royalty rate will be reduced to 5%, without further adjustment.

Pursuant to the fourth amendment to the Illumina Supply Agreement, the perpetual royalty payment obligation to Illumina is suspended until December 24, 2026 or any earlier change of control of GRAIL, at which time royalty payments to Illumina will resume, without retroactive effect. Any royalty payments that we would have made under the Illumina Supply Agreement during the suspension period are deemed to have been paid for purposes of the cumulative $1 billion in royalty payments required to reduce the royalty rate to 5%.