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Item 7. Management’s Discussion and Analysis

2026-02-26 compared with 2025-02-27 · 289 added, 278 removed, 312 unchanged (65% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

You should read the following discussion and analysis of financial condition and results of operations together with our consolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-K.

You should read the following discussion and analysis of financial condition and results of operations together with our consolidated financial statements and the related notes included elsewhere in this Annual Report on Form 10-K.

This discussion and other parts of this Annual Report on Form 10-K contain forward-looking statements that involve risk and uncertainties, such as statements of our plans, objectives, expectations and intentions.

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A detailed discussion comparing our results of operations for the years ended December 31, 2024 and 2023 can be found in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the year ended December 31, 2024 filed with the SEC on February 27, 2025.

Castle Biosciences is a molecular diagnostics company offering innovative test solutions to aid clinicians in the diagnosis and treatment of dermatologic cancers, Barrett’s esophagus (“BE”), uveal melanoma (“UM”), and in the treatment of mental health conditions.

Castle Biosciences is a molecular diagnostics company offering innovative test solutions to aid clinicians in the diagnosis and treatment of dermatologic cancers, Barrett’s esophagus (“BE”), atopic dermatitis (“AD”), and uveal melanoma (“UM”).

Our Test Portfolio

We currently offer five commercially available proprietary multi-analyte assays with algorithmic analysis (“MAAA”) tests for use in the fields of dermatology, gastroenterology and ophthalmology.

We also offer a proprietary a pharmacogenomic (“PGx”) test to guide optimal drug treatment for patients diagnosed with depression, anxiety and other mental health conditions.

Currently, our revenue is primarily generated by our DecisionDx-Melanoma risk stratification test for cutaneous melanoma (“CM”) and our DecisionDx-SCC risk stratification test for cutaneous squamous cell carcinoma (“SCC”), which is supplemented by revenue generated from our TissueCypher risk stratification test for BE and our DecisionDx-UM risk stratification test for UM.

All five of our MAAA tests have been granted Advanced Diagnostic Laboratory Test (“ADLT”) status by the Centers for Medicare and Medicaid (“CMS”) which means each test has demonstrated that (i) when combined with an empirically derived algorithm, it yields a result that predicts the probability a specific individual patient will develop a certain condition or conditions, or will respond to a particular therapy or therapies;

We currently offer six commercially available proprietary multi-analyte assays with algorithmic analysis (“MAAA”) tests for use in the fields of dermatology, gastroenterology and ophthalmology, and most recently includes a test to guide systemic treatment decisions in moderate-to-severe atopic dermatitis.

Our revenue is primarily generated by our DecisionDx-Melanoma risk stratification test for cutaneous melanoma (“CM”), our TissueCypher risk stratification test for BE which is supplemented by revenue generated from our DecisionDx-SCC risk stratification test for cutaneous squamous cell carcinoma (“SCC”), and our DecisionDx-UM risk stratification test for UM.

All of our MAAA tests, excluding our recently launched AdvanceAD-Tx test, have been granted Advanced Diagnostic Laboratory Test (“ADLT”) status by the Centers for Medicare and Medicaid (“CMS”) which means each test has demonstrated that (i) when combined with an empirically derived algorithm, it yields a result that predicts the probability a specific individual patient will develop a certain condition or conditions, or will respond to a particular therapy or therapies;

and (ii) it provides new clinical diagnostic information that cannot be obtained from any other test or combination of tests.

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Our Dermatology Tests

DecisionDx-Melanoma is our proprietary risk stratification gene expression profile (“GEP”) test that predicts the risk of metastasis or recurrence, including a positive sentinel lymph node, for patients diagnosed with invasive CM.

In a typical year, we estimate approximately 130,000 patients are diagnosed with invasive CM in the United States, representing an estimated U.S.

DecisionDx-Melanoma is our proprietary risk stratification gene expression profile (“GEP”) test designed to predict the likelihood of a positive sentinel lymph node and the risk of metastasis or recurrence, for patients diagnosed with invasive CM.

In a typical year, we estimate approximately 130,000 patients are diagnosed with invasive CM in the U.S., representing an estimated U.S.

total addressable market (“TAM”) of approximately $540 million.

We estimate that approximately 50% of patients diagnosed with CM are 65 years of age or older.

AdvanceAD-Tx is a non-invasive GEP test designed to guide systemic treatment selection for patients aged 12 years and older with moderate-to-severe atopic dermatitis (“AD”).

The test evaluates the expression of 487 genes across 12 known immune, inflammatory and skin-related pathways to identify the underlying biology driving an individual patient’s disease.

Results classify patients into one of two molecular profiles:

Janus Kinase (“JAK”) Inhibitor Responder Profile or T helper 2 (“Th2”) Molecular Profile.

Using multiple data sources focused on one-year prevalence, we estimate there are approximately 10.0 million individuals ages 12 and older in the U.S.

with moderate-to-severe AD, representing an estimated U.S.

TAM of approximately $33 billion.

We commenced a limited access launch of the AdvanceAD-Tx test in November 2025.

DecisionDx‑SCC is our proprietary GEP test for use in patients with SCC with one or more risk factors (also referred to as “high-risk” SCC) that both predicts the risk of metastasis as well as response to adjuvant radiation therapy.

We estimate 20% of SCC, or 200,000 annually in the United States, are classified as high risk, representing an estimated U.S.

We estimate 20% of SCC patients, or approximately 200,000 annually in the U.S., are classified as high risk, representing an estimated U.S.

TAM of approximately $820 million.

MyPath Melanoma is our proprietary GEP test for use in patients with a melanocytic lesion and uncertainty related to the malignancy of the lesion.

We estimate that approximately 300,000 patients each year present with a diagnostically ambiguous lesion, representing an estimated U.S.

MyPath Melanoma is our proprietary, diagnostic GEP test for use in patients with difficult-to-diagnose melanocytic lesions.

Of the 2 million suspicious pigmented lesions biopsied annually in the U.S., we estimate approximately 300,000 of those present difficult-to-diagnose melanocytic lesion, representing an estimated U.S.

TAM of approximately $600 million.

We began offering MyPath Melanoma following our acquisition of the Myriad MyPath Laboratory in May 2021 at which point we offered both our MyPath Melanoma test and our DiffDx-Melanoma test under an offering that we referred to as our Diagnostic GEP offering.

However, following an internal assessment of the clinical value of offering both tests, we made the decision to suspend the clinical offering of DiffDx-Melanoma in February 2023 and now the focus of this offering is MyPath Melanoma.

Our Gastroenterology Test

TissueCypher is our proprietary risk stratification spatial-omics test designed to predict future development of progression of high-grade dysplasia (“HGD”) and/or esophageal cancer in patients with non-dysplastic (“ND”), indefinite dysplasia (“IND”) or low-grade dysplasia (“LGD”) BE.

TissueCypher is our proprietary risk stratification spatialomics test designed to predict future development of high-grade dysplasia (“HGD”) and/or esophageal cancer in patients with non-dysplastic (“ND”), indefinite dysplasia (“IND”) or low-grade dysplasia (“LGD”) BE.

We estimate a U.S.

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Our Ophthalmology Test

DecisionDx-UM is a proprietary, risk stratification GEP test that predicts the risk of metastasis for patients with UM.

DecisionDx-UM is our proprietary, risk stratification GEP test that predicts the risk of metastasis for patients with UM.

We believe DecisionDx-UM is the standard of care in the management of newly diagnosed UM in the majority of ocular oncology practices in the United States.

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Our Mental Health Test

IDgenetix is a PGx test that guides personalized mental health medication selection and management for patients with depression, anxiety and other mental health conditions.

IDgenetix was a pharmacogenomic (“PGx”) test that guided personalized mental health medication selection and management for patients with depression, anxiety and other mental health conditions.

We discontinued IDgenetix in May 2025 following further evaluation.

Commercial Expansion Efforts

During the year ended December 31, 2023, we expanded our dermatologic and gastrointestinal commercial sales forces through territory and headcount expansions with focus being on our dermatology and gastroenterology teams.

During the year ended December 31, 2024, we further expanded our dermatology and gastroenterology teams.

In late 2024, we changed our commercial strategy for our IDgenetix test, shifting resources to inside sales and non-personal promotion.

During the year ended December 31, 2025, we made several strategic acquisitions and partnerships to expand our clinical capabilities and product portfolio.

In May 2025, we acquired Previse.

This acquisition was intended to expand our GI diagnostic offerings beyond our existing TissueCypher test, representing a growth strategy through acquisition as well as organic product expansion.

In June 2025, we entered into a collaboration and license agreement with SciBase to develop a diagnostic test aimed at predicting disease flares in patients with atopic dermatitis.

In November 2025, we launched AdvanceAD-Tx, a new gene expression profile test designed to guide systemic treatment decisions for patients with moderate-to-severe AD.

This launch represents a material expansion of our product portfolio into a significant new clinical area and a substantial potential market.

We will continue to assess market response in determining further commercial expansions and commercial team structure.

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We bill third-party payors and patients for the tests we perform.

We have received Medicare coverage for our DecisionDx-Melanoma, DecisionDx-SCC, TissueCypher, MyPath Melanoma, DecisionDx-UM and IDgenetix tests which meet certain criteria for Medicare and Medicare Advantage beneficiaries.

We have received Medicare coverage for our DecisionDx-Melanoma, TissueCypher, MyPath Melanoma, DecisionDx-UM and IDgenetix tests which meet certain criteria for Medicare and Medicare Advantage beneficiaries.

DecisionDx-SCC previously received Medicare coverage, which was subsequently impacted by LCD changes finalized in 2025.

The Medicare rates discussed below are prior to giving effect to applicable sequestration in effect from time to time as described in further detail under “Government Regulation and Product Approval—Healthcare Reform” included in Item 1, Business, of this Annual Report on Form 10-K.

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For example, the rate for 2025 was set using median private payor rate data from January 1, 2023 to June 30, 2023.

Our rate for 2022, 2023 and 2024 was $7,193 per test.

Our rate for 2025 is $7,193 per test.

DecisionDx‑SCC

We issue our DecisionDx-SCC tests from our Pittsburgh and Phoenix labs, with a majority of tests being issued from our Pittsburgh lab.

Palmetto’s MolDX program oversees MAAA tests that are reported from our Phoenix laboratory and Noridian is the MAC responsible for administering claims for test reports issued by our Phoenix laboratory.

In the second quarter of 2022, following the completion of a requested medical review and pricing of our DecisionDx-SCC test by Novitas, we obtained a PLA code and began receiving reimbursement from Novitas for DecisionDx-SCC at a rate of $3,873 per test.

On July 4, 2024, Palmetto and Noridian finalized an LCD recommending no coverage for DecisionDx-SCC with an effective date of August 18, 2024.

On January 9, 2025, Novitas finalized an oncology biomarker LCD that will become effective on April 24, 2025.

If the LCD becomes effective as is, then we would anticipate not receiving Medicare reimbursement for DecisionDx-SCC tests performed on or after April 24, 2025.

DecisionDx-SCC was reimbursed at a rate of $3,873 per test under a Proprietary Laboratory Analyses (“PLA”) code from second quarter of 2022 through June 30, 2023 when CMS determined DecisionDx-SCC meets the criteria for “new ADLT” status.

ADLT status determines the process by which the rate is set and is not an indication of Medicare coverage.

Effective July 1, 2023 and through March 31, 2024, CMS set the initial period rate equal to the list price of $8,500 per test.

Effective April 1, 2024 and through December 31, 2025, the published Clinical Laboratory Fee Schedule (“CLFS”) rate for DecisionDx-SCC will be based on the median private payor rates received between July 1, 2023 and November 30, 2023.

We submitted the median private payor data to CMS during the data reporting period in December 2023.

Effective April 1, 2024, the updated CLFS rate will continue at $8,500 through December 31, 2025.

Future rates will be set annually based upon the median private payor rate for the first half of the second preceding calendar year.

Most of our TissueCypher tests are processed in our Pittsburgh laboratory under the Medicare jurisdiction managed by Novitas.

On March 24, 2022, CMS determined that TissueCypher meets the criteria for “new ADLT” status.

Our rate for 2023 through 2025 was $7,193 per test and remains $7,193 per test for 2026.

Our TissueCypher tests are processed in our Phoenix and Pittsburgh laboratories.

Palmetto’s MolDX program oversees MAAA tests that are reported from our Phoenix laboratory and Noridian is the MAC responsible for administering Medicare claims for test reports issued by our Phoenix laboratory.

Novitas is the MAC responsible for administering Medicare claims for test reports issued by our Pittsburgh laboratory.

On March 24, 2022, CMS determined TissueCypher meets the criteria for “new ADLT” status.

ADLT status exempts TissueCypher from what is called the “14-day rule,” which simplifies the billing process for Medicare patients.

Effective January 1, 2023, the published CLFS rate for TissueCypher was set at $4,950 per test, which will remain effective through December 31, 2024.

Effective January 1, 2023, the published CLFS rate for TissueCypher was set at $4,950 per test and remained effective through December 31, 2024.

This rate is based on the median private payor rates received between April 1, 2022 and August 31, 2022.

Thereafter, the rate will be set annually based upon the median private payor rate for the first half of the second preceding calendar year.

Our 2025 rate will continue to be $4,950 per test based on the median private payor rate data from January 1, 2023 to June 30, 2023.

MyPath Melanoma and DiffDx-Melanoma

Beginning with 2025, the rate for TissueCypher has been set annually based on the median private payor rate for the first half of the second preceding calendar year.

Our 2025 rate was $4,950 per test based on the median private payor rate data from January 1, 2023 to June 30, 2023 and remains $4,950 per test for 2026.

DecisionDx‑SCC

We issue our DecisionDx-SCC tests from our Pittsburgh and Phoenix laboratories.

Palmetto’s MolDX (“MolDX”) program oversees MAAA tests that are reported from our Phoenix laboratory and Noridian is the MAC responsible for administering Medicare claims for test reports issued by our Phoenix laboratory.

Novitas is the MAC responsible for administering Medicare claims for test reports issued by our Pittsburgh laboratory.

DecisionDx-SCC has met “new ADLT” status since 2023.

Effective July 1, 2023 and through March 31, 2024, CMS set the initial period rate equal to the list price of $8,500 per test.

Effective April 1, 2024, and through December 31, 2025, the published Clinical Laboratory Fee Schedule (“CLFS”) rate for DecisionDx-SCC will continue at $8,500 based on the median private payor rates received between July 1, 2023 and November 30, 2023.

On July 4, 2024, Palmetto and Noridian finalized an LCD recommending no coverage for DecisionDx-SCC with an effective date of August 18, 2024.

On January 9, 2025, Novitas finalized an oncology biomarker LCD, Genetic Testing for Oncology:

Specific Tests, which also lists DecisionDx-SCC as non-covered;

that LCD became effective on April 24, 2025.

In July 2025, we submitted reconsideration requests for both Novitas and MolDX LCDs.

Both Novitas and MolDX subsequently confirmed that our requests were valid.

These confirmations represent an important procedural step in the reconsideration process, but it does not indicate coverage or a favorable review outcome.

MyPath Melanoma

MyPath Melanoma was covered under a test-specific LCD policy through Noridian that became effective in June 2019.

Effective August 6, 2023, Palmetto and Noridian issued LCDs that converted the test-specific MyPath Melanoma LCD to a “foundational” LCD and provided coverage for both MyPath Melanoma and DiffDx-Melanoma.

MyPath Melanoma was approved as a “new ADLT” in September 2019.

The rate for our MyPath Melanoma test is set annually based upon the median private payor rate for the first half of the second preceding calendar year.

Effective August 6, 2023, Palmetto and Noridian issued LCDs that converted the test-specific MyPath Melanoma LCD to a “foundational” LCD and provided coverage for MyPath Melanoma.

We estimate that a significant majority of the MyPath Melanoma tests performed for Medicare patients will meet the coverage criteria.

On September 6, 2019, MyPath Melanoma was approved as a “new ADLT”.

Our rate is set annually based upon the median private payor rate for the first half of the second preceding calendar year.

For example, the rate for 2025 was set using median private payor rate data from January 1, 2023 to June 30, 2023.

Our rates for 2022, 2023, and 2024 were $1,950 per test, $1,755 per test, and $1,950 per test, respectively.

Our rate for 2025 is $1,950 per test.

In the second quarter of 2022, we obtained a PLA code for DiffDx-Melanoma.

In 2023, DiffDx-Melanoma went through the CMS gapfill process which concluded in September 2023 with CMS posting a final MAC-specific gapfill rate of $1,950 per test.

Our rate for 2024 was $1,950 per test and will continue to be $1,950 per test in 2025.

Diagnostic GEP Offering

Our Diagnostic GEP offering included MyPath Melanoma and DiffDx-Melanoma.

We began offering MyPath Melanoma following our acquisition of the Myriad MyPath Laboratory on May 28, 2021.

Our internal data indicates that we have improved the technical performance of MyPath Melanoma and that it is comparable to the technical performance of DiffDx-Melanoma.

As such, following an internal assessment of the clinical value of offering both tests, we made the decision to suspend the clinical offering of DiffDx-Melanoma in February 2023.

Our rates for 2023, 2024 and 2025 were $1,755, $1,950 and $1,950 per test, respectively.

Our 2026 rate remains $1,950 per test.

DecisionDx-UM

DecisionDx-UM tests are processed from our Phoenix laboratory and are covered under LCDs finalized by MAC administrators Palmetto and Noridian in July 2017.

DecisionDx-UM has met the criteria of “existing advanced diagnostic laboratory test” status, also referred to as “existing ADLT” status, as determined by the CMS, since May 2019.

We estimate that a significant majority of the DecisionDx-UM tests performed for Medicare patients will meet the coverage criteria.

On May 17, 2019, CMS determined that DecisionDx-UM meets the criteria for “existing ADLT” status.

Our rate is set annually based upon the median private payor rate for the first half of the second preceding calendar year.

For example, the rate for 2025 was set using median private payor rate data from January 1, 2023 to June 30, 2023.

Our rate for 2022, 2023 and 2024 was $7,776 per test.

Our 2025 rate is $7,776 per test.

Our rate for 2023 through 2025 was $7,776 per test and remains $7,776 per test for 2026.

IDgenetix is currently covered under a Noridian LCD policy and accompanying billing and coding article developed by MolDX.

Our IDgenetix multi-gene panel was reimbursed by Medicare at approximately $1,500 per test from April 2022 through February 2023, when MolDX notified us that as part of its annual Current Procedural Terminology (“CPT”) code updates, IDgenetix should shift billing to a different generic gene sequencing CPT code (the “New CPT Code”) and continue using the IDgenetix Z-Code beginning in March 2023.

The New CPT Code was set at $917 per test while the test went through CMS’s Gapfill pricing process.

We believed the new CPT Code, in conjunction with the IDgenetix Z-Code, did not describe all of the components of the IDgenetix test and thus, was not appropriate for IDgenetix.

We subsequently obtained a test-specific PLA CPT code which became effective October 1, 2023.

In November 2023, CMS posted its final CLFS determination which crosswalks our PLA CPT code to an existing PLA code at a rate of $1,336 per test effective January 1, 2024.

Our reimbursement rate for 2024 was $1,336 per test, and our rate will continue to be $1,336 per test in 2025.

During 2023, we obtained a test-specific PLA CPT code for IDgenetix which became effective October 1, 2023.

The CLFS rate of $1,336 per test was effective January 1, 2024.

Our reimbursement rate for 2024 was $1,336 per test and remained at $1,336 per test in the first quarter of 2025.

Our IDgenetix test was discontinued in May 2025.

Government Regulation and Oversight of Laboratory Developed Tests

On May 6, 2024, the U.S.

Food and Drug Administration (“FDA”) published a final rule on the regulation of LDTs which amends the FDA's regulations to make explicit that LDT's are devices under the FD&C Act.

The FDA issued a policy to phaseout, over the course of four years, its general enforcement discretion approach to LDTs and also issued targeted enforcement discretion policies for certain categories of LDTs.

The FDA is continuing enforcement discretion for currently marketed tests offered as LDTs (that were first marketed before May 6, 2024) that are approved by NYSDOH.

Our proprietary tests, outlined above, are all NYSDOH approved.

We believe this final ruling will have no material impact on our existing test offerings given all of our tests were marketed before May 6, 2024.

Food and Drug Administration (“FDA”) published a final rule on the regulation of LDTs which amended the FDA’s regulations to make explicit that LDT’s are devices under the FD&C Act.

However, on March 31, 2025, the U.S.

District Court for the Eastern District of Texas vacated the FDA’s LDT final rule.

government did not appeal the ruling, and the FDA rescinded the rule on September 19, 2025.

Accordingly, the FDA’s phased enforcement approach and related requirements are no longer in effect.

Our proprietary tests, which were first marketed prior to May 6, 2024, remain approved by and under the oversight of the New York State Department of Health (“NYSDOH”), and we continue to believe that changes in FDA’s regulatory approach to LDTs will have no material impact on our existing test offerings.

In July 2025, the FDA granted Breakthrough Device designation to our DecisionDx-Melanoma test.

We believe this designation highlights the test’s potential to improve melanoma care through individualized prognostic insights.

The Breakthrough Device designation is intended to expedite the development and review of certain medical devices that may offer more effective diagnosis or treatment of life-threatening conditions.

Delivered Test Reports

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A test report is generated when we receive a sample in our laboratory, and then the relevant test information is entered into our Laboratory Information Management System, the laboratory portion of the test is performed, including proprietary algorithmic analysis of the combined biomarkers and a report is then delivered to the clinician who ordered the test.

The number of test reports delivered by us during the years ended December 31, 2024 and 2023 are presented in the table below:

Proprietary Dermatologic GEP Tests

Melanoma DecisionDx-SCC Diagnostic GEP offering (1)

Dermatologic Total DecisionDx-UM TissueCypher (2)

IDgenetix (3)

Q1 2024 8,384 3,577 998 12,959 422 3,429 4,078 20,888

Q2 2024 9,585 4,277 1,099 14,961 456 4,782 4,903 25,102

Q3 2024 9,367 4,195 933 14,495 397 6,073 5,045 26,010

Q4 2024 8,672 4,299 879 13,850 424 6,672 3,125 24,071

The number of test reports delivered by us are presented in the table below:

For the Year Ended December 31, 2025

Q1 2023 7,583 2,411 980 10,974 409 1,383 2,150 14,916

Q2 2023 8,597 2,681 953 12,231 461 1,447 2,681 16,820

Q3 2023 8,559 2,820 1,011 12,390 399 2,829 2,791 18,409

Q4 2023 8,591 3,530 1,018 13,139 405 3,441 3,299 20,284

Q1 Q2 Q3 Q4 FY 2025

DecisionDx-Melanoma

8,621 9,981 10,459 10,022 39,083

DecisionDx‑SCC

4,375 4,762 4,186 3,971 17,294

MyPath Melanoma 926 1,166 1,151 1,045 4,288

Dermatologic Total 13,922 15,909 15,796 15,038 60,665

TissueCypher 7,432 9,170 10,609 11,803 39,014

DecisionDx-UM

470 468 436 395 1,769

IDgenetix (1)

2,578 1,027 — — 3,605

Grand Total 24,402 26,574 26,841 27,236 105,053

For the Year Ended December 31, 2024

(1) Our GEP offering included our MyPath Melanoma and DiffDx-Melanoma until we suspended our DiffDx-Melanoma in February 2023.

We continue to offer our MyPath Melanoma test.

(2) We temporarily paused accepting additional orders in July 2023 and resumed accepting new orders in a phased approach in September 2023.

We completed processing of our pre-existing backlog orders in October 2023 and continue to accept new orders as of December 31, 2023.

(3) We began offering the IDgenetix test in April 2022, following our acquisition of AltheaDx.

Q1 Q2 Q3 Q4 FY 2024

DecisionDx-Melanoma

8,384 9,585 9,367 8,672 36,008

DecisionDx‑SCC

3,577 4,277 4,195 4,299 16,348

MyPath Melanoma 998 1,099 933 879 3,909

Dermatologic Total 12,959 14,961 14,495 13,850 56,265

TissueCypher 3,429 4,782 6,073 6,672 20,956

DecisionDx-UM

422 456 397 424 1,699

IDgenetix 4,078 4,903 5,045 3,125 17,151

Grand Total 20,888 25,102 26,010 24,071 96,071

(1) The IDgenetix test was discontinued effective May 2025.

For the years ended December 31, 2025 and 2024, our dermatologic test report volume increased by 7.8% and 15.5%, respectively, largely driven by continued growth from our DecisionDx-Melanoma and DecisionDx-SCC tests.

Increases from our other tests (non-dermatologic), primarily IDgenetix and TissueCypher, also contributed to the overall volume increase.

For a discussion of how we recognize revenue derived from our tests, refer to “Net Revenues” under “Components of Results of Operations” below.

In August 2024, we amended our Pittsburgh commercial real estate lease to add 23,821 square feet to our existing facilities, most of which will be used as dedicated lab space for processing our TissueCypher test.

As of December 31, 2024, substantially all leasehold improvements for this added space were complete and the added

lab space was ready for use.

We expect the additional space will allow us to continue developing our business through our TissueCypher product line.

TissueCypher increased by 86.2% for the year ended December 31, 2025, further contributing to the overall volume increase.

For a discussion of how we recognize revenue derived from our tests, refer to “—Components of Results of Operations—Net Revenues” below.

For our AdvanceAD-Tx product line, test reports delivered during the year ended December 31, 2025 were de minimis due to the timing of the launch.

Of the approximately 150 clinician offices that were granted access, more than 50% ordered AdvanceAD-Tx during the first five weeks of clinical availability.

We plan to expand availability in a phased manner throughout 2026.

For our DecisionDx-SCC product line, we continue to see opportunities for leverage, where many of the clinicians ordering our DecisionDx-Melanoma are the same clinicians who order our DecisionDx-SCC test.

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Test reports delivered represent the number of completed test reports delivered by us during the reporting period indicated.

The period in which a test report is delivered does not necessarily correspond with the period in which the related revenue, if any, is recognized, due to the timing and amount of adjustments for variable consideration under Accounting Standards Codification (‘‘ASC’’) Topic 606, Revenue from Contracts with Customers (“ASC 606”).

The period in which a test report is delivered does not necessarily correspond with the period in which the related revenue, if any, is recognized, due to the timing and amount of adjustments for variable consideration under ASC Topic 606, Revenue from Contracts with Customers .

We use this metric to evaluate the growth in adoption of our tests and to measure against our internal performance objectives.

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Impact of Macroeconomic Conditions

Macroeconomic conditions, including uncertainties associated with the Israel-Hamas war, the ongoing conflict between Ukraine and Russia, economic slowdowns, public health crises, labor shortages, recessions or market corrections, supply chain disruptions, inflation and monetary policy shifts, liquidity concerns at, and failures of, banks and other financial institutions or other disruptions in the banking system or financing markets, higher interest rates and financial and credit market fluctuations, volatility in the capital markets or other evolving macroeconomic developments, continue to have direct and indirect impacts on our business and could in the future materially impact our results of operations and financial condition.

Macroeconomic conditions, including uncertainties associated with the ongoing conflicts in the Middle East, the ongoing conflict between Ukraine and Russia, economic slowdowns, the recent shutdown of the federal government including regulatory agencies, public health crises, labor shortages, recessions or market corrections, supply chain disruptions, inflation and monetary policy shifts, international tariffs, liquidity concerns at, and failures of, banks and other financial institutions or other disruptions in the banking system or financing markets, higher interest rates and financial and credit market fluctuations, volatility in the capital markets and other evolving macroeconomic developments, continue to have direct and indirect impacts on our business and could in the future materially impact our results of operations and financial condition.

We continue to actively monitor the impact of these macroeconomic factors on our results of operations, financial condition and cash flows.

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Our Financial Results

Our net income (loss) may fluctuate significantly from period to period, depending on the timing of our planned development activities, the growth of our sales and marketing activities and the timing of revenue recognition under ASC 606.

Our net (loss) income may fluctuate significantly from period to period, depending on the timing of our planned development activities, the growth of our sales and marketing activities and the timing of revenue recognition under ASC 606.

We expect our expenses will increase substantially over time as we:

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• seek to discover and develop additional product candidates;

• hire additional scientific and research and development staff;

• hire additional scientific and R&D staff;

• add additional operational, financial and management information systems and personnel;

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Our revenue and costs are affected by the volume of testing and mix of customers.

Our performance depends on our ability to retain and broaden

adoption with existing prescribing clinicians, as well as attract new clinicians.

Our performance depends on our ability to retain and broaden adoption with existing prescribing clinicians, as well as attract new clinicians.

Our report volume could be negatively impacted by developments related to evolving macroeconomic developments, as discussed above.

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We believe that our gross margin is an important indicator of the operating performance of our business.

Higher gross margins reflect the average selling price of our tests, as well as the operating efficiency of our laboratory operations.

Higher gross margins reflect the average selling price (“ASP”) of our tests, as well as the operating efficiency of our laboratory operations.

• Expansion of our sales force and marketing programs.

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• New product development.

A significant aspect of our business is our investment in research and development activities, including activities related to the development of new products.

A significant aspect of our business is our investment in R&D activities, including activities related to the development of new products.

In addition to the development of new product candidates, we believe these studies are critical to gaining clinician adoption of new products and driving favorable coverage decisions by payors for such products.

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We generate revenues from the sale of our products.

Currently, our revenues are primarily derived from the sale of DecisionDx-Melanoma, DecisionDx-SCC, TissueCypher and DecisionDx-UM.

Currently, our revenues are primarily derived from the sale of DecisionDx-Melanoma, TissueCypher, DecisionDx-SCC and DecisionDx-UM.

We bill third-party payors and patients for the tests we perform.

Under ASC 606, we recognize revenue at the amount we expect to be entitled, subject to a constraint for variable consideration, in the period in which our tests are delivered to the treating clinicians.

Under ASC 606, we recognize revenue at the amount we expect to be entitled to receive, subject to a constraint for variable consideration, in the period in which our tests are delivered to the treating clinicians.

We have determined that our contracts contain variable consideration under ASC 606 because the amounts paid by third-party payors may be paid at less than our standard rates or not paid at all, with such differences considered implicit price concessions.

Variable consideration is recognized only to the extent it is probable that a significant reversal of revenue will not occur in future periods when the uncertainties are resolved.

Variable consideration is evaluated each reporting period and adjustments are recorded as increases or decreases in revenues.

Variable consideration for Medicare claims that are not covered by Medicare, including those claims undergoing appeal, is deemed to be fully constrained due to factors outside our influence (e.g., judgment or actions of third parties) and the uncertainty of the amount to be received is not expected to be resolved for a long period of time.

Variable consideration is evaluated and reassessed each reporting period and adjustments are recorded as increases or decreases in revenue.

Variable consideration for Medicare claims that are not covered by Medicare, including those claims undergoing appeal, is deemed to be fully constrained due to factors outside our influence (e.g., judgment or actions of third parties) and because the uncertainty of the amount to be received is not expected to be resolved for a long period of time.

For these fully constrained claims, we generally recognize revenue in the period the uncertainty is favorably resolved, if at all.

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Our ability to recognize revenue for a test is dependent on the development of reimbursement experience and obtaining coverage decisions.

For tests with limited reimbursement experience or no coverage, we recognize revenues on the basis of actual cash collections.

Our ability to increase our revenues will depend on our ability to further penetrate our target markets, and, in particular, generate sales through our direct sales force, maintain Medicare coverage for our currently marketed products , develop and commercialize additional tests, including through acquisitions, obtain reimbursement from additional third-party payors and increase our reimbursement rate for tests performed.

For tests with limited reimbursement experience or no coverage, we recognize revenues based on actual cash collections.

Cost of Sales (exclusive of amortization of acquired intangible assets)

The components of our cost of sales are material and service costs associated with testing samples, personnel costs (including salaries, bonuses, benefits and stock-based compensation expense), electronic medical record set up costs, order and delivery systems, shipping charges to transport samples, third-party test fees, and allocated overhead including rent, information technology costs, equipment and facilities depreciation and utilities.

associated with testing samples are recorded when the test is processed regardless of whether and when revenues are recognized with respect to that test.

As a result, our cost of sales as a percentage of revenues may vary significantly from period to period because we do not recognize all revenues in the period in which the associated costs are incurred.

The components of our cost of sales are material and service costs associated with processing testing samples, personnel costs (including salaries, bonuses, benefits and stock-based compensation expense), electronic medical record setup costs, order and delivery systems, shipping charges for sample transport, third-party test fees, and allocated overhead including rent, information technology costs, equipment and facilities depreciation and utilities.

Costs associated with testing samples are recorded when the test is processed regardless of whether and when revenues are recognized with respect to that test.

As a result, our cost of sales as a percentage of revenue may vary significantly from period to period because we do not recognize all revenues in the period in which the associated costs are incurred.

We expect cost of sales in absolute dollars to increase as the number of tests we perform increases.

Additionally, we expect cost of sales to increase prior to our launching of new tests, or prior to our initiating significant commercial expansion efforts, as we ready our operations to support anticipated business growth.

For example, prior to opening our new Pittsburgh facilities during the second quarter of 2023, we incurred additional rent expense as we readied the space for future use.

Additionally, we expect cost of sales to increase prior to the launch of new tests or the initiation of significant commercial expansion efforts, as we ready our operations to support anticipated business growth.

This includes continued investment in and expansion of our laboratory facilities.

Gross margin and gross margin percentage are key indicators we use to assess our business.

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Research and Development

Research and development expenses include costs incurred to develop our tests, collect clinical samples and conduct clinical studies to develop and support our products.

These costs consist of personnel costs (including salaries, bonuses, benefits and stock-based compensation expense), prototype materials, laboratory supplies, consulting costs, regulatory costs, electronic medical records set up costs, costs associated with setting up and conducting clinical studies and allocated overhead, including rent, information technology, equipment depreciation and utilities.

We expense all research and development costs in the periods in which they are incurred.

We expect our research and development expenses to increase in absolute dollars as we continue to invest in research and development activities related to developing enhanced and new products.

We expect to use a portion of our cash and cash equivalents and marketable investment securities to further support and accelerate our ongoing and future clinical studies and pipeline initiatives.

R&D expenses include costs incurred to develop our tests, collect clinical samples and conduct clinical studies to develop and support our products.

These costs consist of personnel costs (including salaries, bonuses, benefits and stock-based compensation expense), prototype materials, laboratory supplies, consulting costs, regulatory costs, electronic medical records setup costs, costs associated with setting up and conducting clinical studies and allocated overhead, including rent, information technology, equipment depreciation and utilities.

We expense all R&D costs in the periods in which they are incurred.

We expect our R&D expenses to increase in absolute dollars as we continue to invest in R&D activities related to developing enhanced and new products.

We expect R&D expenses to increase as we continue to invest in clinical studies and pipeline initiatives.

Selling, General and Administrative

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These expenses consist of personnel costs (including salaries, bonuses, benefits and stock-based compensation expense), direct marketing expenses, audit and legal expenses, consulting costs, payor outreach programs and allocated overhead, including rent, information technology, equipment depreciation and utilities.

Other administrative and professional services expenses within SG&A are expected to increase with the scale of our business, but selling and marketing-related expenses are expected to increase significantly, consistent with our growth strategy.

Other administrative and professional services expenses within SG&A are expected to increase as the scale of our business grows, but selling and marketing-related expenses are expected to increase at a higher rate, consistent with our growth strategy.

Amortization of Acquired Intangible Assets

Amortization of acquired intangible assets is primarily associated with developed technology obtained through acquisitions, such as our acquisitions of Cernostics in December 2021 and AltheaDx in April 2022.

Amortization of acquired intangible assets is primarily associated with developed technology obtained through acquisitions, such as our acquisitions of the Myriad MyPath Laboratory in May 2021, Cernostics in December 2021, AltheaDx in April 2022 and Previse in May 2025.

Interest Income

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government obligations are a component of our marketable investment securities.

Change in Fair Value of Trading Securities

Change in fair value of trading securities is primarily attributable to unrealized gains and losses on our equity securities which we present as marketable investment securities.

Net Gains on Equity Securities

Net gains on equity securities are primarily attributable to realized and unrealized gains and losses on our equity securities which we present as marketable investment securities.

Interest Expense

Interest expense is primarily attributable to long-term debt and finance leases.

Income Tax Expense

Income tax expense consists primarily of income taxes related to federal and state jurisdictions in which we conduct business.

Other income is primarily attributable to unrealized foreign currency gains and losses on our foreign currency-denominated investments and loan receivable, which are presented as marketable investment securities and other assets, respectively.

Income Tax (Benefit) Expense

On July 4, 2025, the OBBBA was enacted into law.

The OBBBA includes a broad range of tax reform provisions affecting businesses, including reinstatement of permanent expensing of domestic research and development costs, higher EBITDA cap on the deduction for interest expense and 100% bonus depreciation.

We will benefit from the reinstatement of permanent expensing of domestic research and development costs and 100% bonus depreciation.

Income tax (benefit) expense consists primarily of income taxes related to federal and state jurisdictions in which we conduct business.

We maintain a full valuation allowance for deferred tax assets including operating loss carryforwards and research and development credits and other tax credits.

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NET REVENUES $ 344,229 $ 332,069 $ 12,160 3.7 %

OPERATING EXPENSES AND OTHER OPERATING INCOME

OPERATING EXPENSES

Cost of sales (exclusive of amortization of acquired intangible assets) 71,028 60,205 10,823 18.0 %

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Total operating expenses, net 387,039 323,399 63,640 19.7 %

Operating income (loss) 8,670 (67,977) 76,647 112.8 %

Operating (loss) income (42,810) 8,670 (51,480) (593.8) %

Interest income 11,772 12,916 (1,144) (8.9) %

Changes in fair value of trading securities 555 — 555 NA

Interest expense (577) (11) (566) NM

Income (loss) before income taxes 21,564 (57,365) 78,929 137.6 %

Income tax expense 3,319 101 3,218 NM

Net income (loss) $ 18,245 $ (57,466) $ 75,711 131.7 %

Net gains on equity securities 1,466 555 911 164.1 %

Interest expense (86) (577) 491 85.1 %

Other income 144 — 144 NA

(Loss) income before income taxes (29,514) 21,564 (51,078) (236.9) %

Income tax (benefit) expense

(5,356) 3,319 (8,675) (261.4) %

Net (loss) income $ (24,158) $ 18,245 $ (42,403) (232.4) %

NA = Not applicable

(2) NM = Not meaningful

The following table indicates the amount of stock-based compensation expense (non-cash) reflected in the line items above (in thousands):

Years Ended December 31,

2024 2023 Change

Cost of sales (exclusive of amortization of acquired intangible assets) $ 5,529 $ 4,938 $ 591

Research and development 9,598 10,119 (521)

Selling, general and administrative 35,193 36,162 (969)

Total stock-based compensation expense $ 50,320 $ 51,219 $ (899)

The following table provides a disaggregation of net revenues by type (in thousands):

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Total net revenues $ 344,229 $ 332,069 $ 12,160

(1) Consists of DecisionDx-Melanoma, DecisionDx-SCC and our Diagnostic Gene Expression Profile offering (MyPath Melanoma and DiffDx-Melanoma).

(1) Consists of DecisionDx-Melanoma, DecisionDx-SCC and MyPath Melanoma.

(2) Consists of TissueCypher, DecisionDx-UM and IDgenetix.

Net revenues for the year ended December 31, 2025 increased by $12.2 million, or 3.7%, to $344.2 million compared to the year ended December 31, 2024 due to a $52.8 million increase in revenue from our non-dermatologic tests offset by a $40.6 million decrease in revenue from our dermatologic tests.

The $52.8 million increase in revenues from our non-dermatologic tests was largely attributable to an 86.2% increase in test report volumes for our TissueCypher test, and, to a much lesser extent, a higher realized ASP.

Increases in our TissueCypher test report volumes reflect growth through our sales force efforts.

Net revenue from our non-dermatologic tests as a percentage of total net revenue increased from 22.6% for the year ended December 31, 2024 to 37.1% for the year ended December 31, 2025.

The $40.6 million decrease in net revenues from our dermatologic tests was primarily due to a lower ASP for our DecisionDx-SCC test, following the loss of Medicare LCD coverage effective April 24, 2025, partially offset by increases in test report volumes for our DecisionDx-SCC and DecisionDx-Melanoma tests of 5.8% and 8.5%, respectively.

Cost of Sales (exclusive of amortization of acquired intangible assets)

Cost of sales (exclusive of amortization of acquired intangible assets) for the year ended December 31, 2025 increased by $10.8 million, or 18.0%, compared to the year ended December 31, 2024, primarily attributable to higher personnel costs, and higher expenses related to services, supplies and depreciation.

The increases in personnel costs reflected higher headcount to support business growth in response to increased test report volumes, as well as merit and annual inflationary wage adjustments for existing employees.

Higher expenses related to services and supplies were driven by increased test report volumes, while the increase in depreciation expense reflected continued investment in and expansion of our laboratory facilities.

Due to the nature of our business, a significant portion of our cost of sales expenses represents fixed costs associated with our testing operations.

Accordingly, our cost of sales expense may not necessarily increase or decrease commensurately with change in net revenues from period to period.

We expect our cost of sales expenses (exclusive of amortization of acquired intangible assets) to continue to increase in future periods as we hire additional laboratory personnel and invest in related resources to support our expected operational growth and higher test volumes.

The following table presents the calculation of gross margin (in thousands, except percentages):

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Gross margin percentage 69.2 % 78.5 % (9.3) %

Net revenues for the year ended December 31, 2024 increased by $112.3 million, or 51.1%, to $332.1 million compared to the year ended December 31, 2023 due to a $73.6 million increase in revenue from our dermatologic tests and a $38.7 million increase in revenue from our non-dermatologic tests.

The $73.6 million increase in net revenues for our dermatologic tests was primarily attributable to our DecisionDx-SCC test, which was due to higher test report volumes and a higher realized average selling price (“ASP”), as well as our DecisionDx-Melanoma test which had higher test report volumes and a slightly higher realized ASP.

For the year ended December 31, 2024 compared to the year ended December 31, 2023, test report volumes for our DecisionDx-SCC and DecisionDx-Melanoma tests increased by 42.9% and 8.0%, respectively.

Increases in realized ASP for our DecisionDx-SCC test were primarily attributable to receiving Medicare reimbursement at a higher rate beginning in July 2023.

The $38.7 million increase in net revenues from our non-dermatologic tests was largely attributable to a 130.3% increase in test report volumes for our TissueCypher test, and, to a lesser extent, to our IDgenetix test which also had higher test report volumes.

Increases in our TissueCypher test report volumes reflect growth through our sales force efforts.

Net revenue from our non-dermatologic tests as a percentage of total net revenue increased from 16.6% for the year ended December 31, 2023 to 22.6% for the year ended December 31, 2024.

Cost of Sales (exclusive of amortization of acquired intangible assets)

Cost of sales (exclusive of amortization of acquired intangible assets) for the year ended December 31, 2024 increased by $15.2 million, or 33.8%, compared to the year ended December 31, 2023, primarily due to higher personnel costs and higher expense for supplies and depreciation.

Increases in personnel costs reflect higher headcount to support business growth in response to growing test report volumes, commencement operations at our new Pittsburgh laboratory in the second quarter of 2023, as well as merit and annual inflationary wage adjustment for existing employees.

Higher expense for supplies and lab services also reflects higher test report volumes.

Due to the nature of our business, a significant portion of our cost of sales expenses represents fixed costs associated with our testing operations.

Accordingly, our cost of sales expense will not necessarily increase or decrease commensurately with the change in net revenues from period to period.

We expect our cost of sales expenses (exclusive of amortization of acquired intangible assets) to continue to increase in future periods as we hire additional laboratory personnel and related resources to support expected operational growth and higher test volumes.

Our gross margin percentage was 78.5% for the year ended December 31, 2024, compared to 75.4% the same period in 2023.

The increase was primarily due to higher revenues, partially offset by higher personnel costs, higher expense for supplies and depreciation and higher expense incurred through our expanded laboratory capacity and higher test report volumes.

Our gross margin percentage was 69.2% for the year ended December 31, 2025, compared to 78.5% for the same period in 2024.

The decrease was primarily due to lower ASP for our DecisionDx-SCC test and higher amortization expense related to the acceleration of our IDgenetix test.

In addition, gross margin was impacted by higher cost of sales, as discussed above, driven by increased personnel costs, higher expenses related to services, supplies and depreciation expense resulting from continued investment in and expansion of our laboratory facilities.

Research and Development

Research and development expenses decreased by $1.6 million, or 2.9%, for the year ended December 31, 2024, compared to the year ended December 31, 2023, primarily reflecting lower clinical studies costs, lower organizational development costs, and lower expense for laboratory supplies, partially offset by higher personnel costs.

We expect to continue incurring research and development expenses through our continued investments in our ongoing pipeline initiatives and as we seek opportunities to build evidentiary support and new tests where commercial opportunities exist.

R&D expenses for the year ended December 31, 2025 remained comparable to the year ended December 31, 2024, primarily due to higher personnel costs offset by lower clinical studies cost.

The increase in higher personnel cost is driven by increased headcount to support ongoing research activities and continued business growth.

We expect to continue incurring R&D expenses through our continued investments in our ongoing pipeline initiatives and as we seek opportunities to build evidentiary support and new tests where commercial opportunities exist.

Selling, General and Administrative

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Sales and marketing expenses increased by $14.6 million, or 11.9%, for the year ended December 31, 2025 compared to the year ended December 31, 2024.

The increase is primarily due to higher personnel costs, higher sales related travel expense, and higher incurred organizational and business development activities.

The increase is primarily due to higher personnel costs, higher expenses associated training events and speaker conferences and higher sales related travel expenses.

Increases in personnel costs reflect a higher headcount as well as merit and annual inflationary wage adjustment for existing employees.

The higher test report volumes are a result of our continued investments in human capital for our sales organization.

Higher test report volumes are a result of our continued investments in human capital for our sales organization.

Stock-based compensation expense included in sales and marketing expense was $15.3 million for the year ended December 31, 2025, compared to $17.3 million for the year ended December 31, 2024.

General and administrative expenses increased by $14.6 million, or 19.1%, for the year ended December 31, 2025, compared to the year ended December 31, 2024.

The increase is primarily due to higher personnel costs, professional fees and information technology-related cost expenses.

The increase is primarily due to higher personnel costs and higher information technology-related costs.

Increases in personnel costs reflect headcount expansions in our administrative support functions as well as merit and annual inflationary wage adjustment for existing employees.

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Amortization of Acquired Intangible Assets

Amortization expense increased by approximately $2.1 million for the year ended December 31, 2024, compared to the year ended December 31, 2023, due primarily to our revision of the estimated useful life of our IDgenetix developed technology intangible assets in December 2024, where we determined the estimated remaining useful life was 13 months, with the useful life now expected to end on December 31, 2025.

We expect amortization expense will increase by approximately $24.3 million for the year ended December 31, 2025 due to this change in estimate.

Amortization expense increased by approximately $23.7 million for the year ended December 31, 2025, compared to the year ended December 31, 2024, primarily due to our decision to discontinue the IDgenetix test offering beginning in May 2025.

As a result of this decision, we revised the estimated useful life of the related developed technology intangible asset and fully amortized the remaining carrying value as of March 31, 2025.

To a lesser extent, the increase is also attributable to amortization of the developed technology intangible asset recognized in association with the Esopredict test following our acquisition of Previse in May 2025.

Interest Income

Interest income increased by $2.3 million for the year ended December 31, 2024, compared to the year ended December 31, 2023, primarily as a result of higher balances held in marketable investment securities.

Changes in Fair Value of Trading Securities

The change in fair value of trading securities increased by $0.6 million for the year ended December 31, 2024, compared to the year ended December 31, 2023, and was entirely associated with our investments in equity securities in October 2024 where we had no such investments during the comparative period.

Interest income decreased by $1.1 million for the year ended December 31, 2025, compared to the year ended December 31, 2024, primarily as a result of lower interest rates on our cash, cash equivalents and marketable investment securities.

Net Gains on Equity Securities

The net gains on equity securities increased by $0.9 million for the year ended December 31, 2025, compared to the year ended December 31, 2024, primarily due to changes in the fair value of our equity securities, including both unrealized and realized gains recognized during the period.

Interest Expense

Interest expense increased by $0.6 million for the year ended December 31, 2024, compared to the year ended December 31, 2023, primarily due to interest incurred on our long-term debt where we had no debt outstanding during the comparative period.

Income Tax Expense

Income tax expense increased by $3.2 million for the year ended December 31, 2024, compared to the year ended December 31, 2023, primarily as a result of state income taxes and the realization of pre-tax income during the year ended December 31, 2024 and a net operating loss in the year ended December 31, 2023.

Interest expense decreased by $0.5 million for the year ended December 31, 2025, compared to the year ended December 31, 2024, primarily due to the capitalization of interest expense related to the construction of our Friendswood headquarters.

Construction of the headquarters commenced in late 2024, resulting in a higher level of capitalized interest in 2025 compared to the prior year.

Income Tax (Benefit) Expense

Income tax benefit increased by $8.7 million for the year ended December 31, 2025, compared to the year ended December 31, 2024, primarily due to the partial release of the valuation allowance on our federal deferred tax assets resulting from new deferred tax liabilities recognized upon consolidating Previse in the current period.

The increase also reflected revised estimates of pre-tax income due to uncertainty regarding Medicare coverage for our DecisionDx-SCC test and updated financial information, along with changes in stock-based compensation, permanent differences, valuation allowance adjustments, research and development tax credits, and state income taxes.

The prior-year period reflected net income compared to a net loss in the current period.

Stock-Based Compensation Expense

Stock-based compensation expense, which is allocated among cost of sales, research and development expense and SG&A expense, totaled $50.3 million for the year ended December 31, 2024 compared to $51.2 million for the

year ended December 31, 2023.

We expect material increases in stock-based compensation expense in future periods, attributable to both existing awards outstanding and anticipated additional grants to our current and future employees.

We had 761 employees as of December 31, 2024, compared to 610 as of December 31, 2023.

The following table indicates the amount of stock-based compensation expense (non-cash) included in the consolidated statements of operations (in thousands):

Years Ended December 31,

2025 2024 Change

Cost of sales (exclusive of amortization of acquired intangible assets) $ 5,666 $ 5,529 $ 137

Research and development 7,555 9,598 (2,043)

Selling, general and administrative 32,672 35,193 (2,521)

Total stock-based compensation expense $ 45,893 $ 50,320 $ (4,427)

Stock-based compensation expense, which is allocated among cost of sales, R&D expense and SG&A expense, totaled $45.9 million for the year ended December 31, 2025 compared to $50.3 million for the year ended December 31, 2024.

The decrease was primarily attributable to lower expense associated with stock option awards, reflecting our transition to granting only restricted stock units (“RSUs”) beginning 2023 and the continued amortization of higher-fair-value stock option grants issued in prior years.

We expect stock-based compensation expense will continue to be material in future periods, attributable to both existing awards outstanding and anticipated additional grants to our current and future employees.

As of December 31, 2025, we had 883 employees compared to 761 as of December 31, 2024.

As of December 31, 2025, total unrecognized stock-based compensation cost related to outstanding awards was $64.7 million, which is expected to be recognized over a weighted-average period of 2.4 years.

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Sources of Liquidity

Our principal sources of liquidity are our cash and cash equivalents, marketable investment securities, and cash generated from the sale of our products and our line-of-credit under the 2024 LSA.

All of our marketable investment securities are considered investment grade, are readily available for use in current operations and have contractual maturities of one year or less.

Our principal sources of liquidity are our cash and cash equivalents, marketable investment securities and cash generated from the sale of our products.

Our marketable investment securities consist primarily of investment-grade debt securities and equity securities, all of which are readily available for use in current operations.

As of December 31, 2025 and 2024, we had marketable investment securities of $182.8 million and $173.4 million, respectively, and cash and cash equivalents of $116.7 million and $119.7 million, respectively.

Additionally, as of December 31, 2024, we had a $25.0 million credit line available under the 2024 LSA.

Our liquidity has been primarily derived from the revenue generated from the sale of our products, and proceeds from our IPO in July 2019 and our follow-on public offerings of common stock in June and December of 2020.

We believe that our existing cash and cash equivalents, marketable investment securities and anticipated cash generated from sales of our products will be sufficient to fund our operations for at least the next 12 months.

On April 4, 2025, we amended the 2024 Loan and Security Agreement (the “2024 LSA”) to modify certain terms, including the extension of the draw period for our line of credit from March 31, 2025 to September 30, 2025.

In August 2025, we exercised the interest-only milestone provision under the 2024 LSA to extend the interest-only period on the term loan from November 30, 2025 to December 1, 2026.

We had not made any draws on the line of credit.

The line of credit under the 2024 LSA expired on September 30, 2025 and was no longer available as a source of liquidity thereafter.

Our liquidity has been primarily derived from the revenue generated from the sale of our products.

As discussed under the caption “Material Cash Requirements,” below, we believe that our existing cash and cash equivalents, marketable investment securities and anticipated cash generated from sales of our products will be sufficient to fund our planned operations for at least the next 12 months.

However, we have based these estimates on assumptions that may prove to be wrong, and could result in us depleting our capital resources sooner than expected.

As mentioned above, we expect to use a portion of our cash and cash equivalents and marketable investment securities to further support and accelerate our research and development activities, including the clinical studies noted above in “—Components of the Results of Operations—Research and Development.”

As mentioned above, we expect to use a portion of our cash and cash equivalents and marketable investment securities to further support and accelerate our R&D activities, including the clinical studies noted above in “—Components of the Results of Operations—Research and Development.”

Material Cash Requirements

Our primary uses of capital are, and we expect will continue to be, compensation and related expenses, clinical research and development services, laboratory operations, equipment and related supplies, legal and other regulatory expenses, general administrative costs and, from time to time, expansion of our laboratory and office facilities in support of our growth, such as the construction of our future corporate headquarters.

We anticipate that a substantial portion of our cash requirements in the foreseeable future will relate to the further commercialization of our currently marketed products, the development of our future product candidates in our pipeline and the potential commercialization of these pipeline products, should their development be successful and the construction of our future corporate headquarters.

In July 2023, we entered into a definitive agreement to purchase a plot of land located in Friendswood, Texas for a purchase price of $7.6 million, subject to certain adjustments, for the purpose of developing a commercial office building where our future corporate headquarters will be located.

In February 2024, we closed on the purchase of the land for cash consideration of $7.2 million.

The development project will include a four-story building, which will encompass approximately 80,000 square feet of Class A office space.

Construction began in May 2024 and is expected to continue through early 2026, at which time the building is expected to be ready for occupancy and use.

Over the duration of this project, we expect to make significant capital expenditures in the form of payments to the developer under a percentage of completion basis.

Our primary uses of capital are, and we expect will continue to be, compensation and related expenses, clinical R&D services, laboratory operations, equipment and related supplies, legal and other regulatory expenses, general administrative costs and, from time to time, expansion of our laboratory and office facilities in support of our growth.

In February 2024, we purchased a plot of land in Friendswood, Texas for cash consideration of $7.2 million, for the purpose of developing a commercial office building to serve as our corporate headquarters.

The development project included a four-story building, comprising approximately 80,000 square feet of Class A office space.

Construction began in May 2024 and we completed the portions of the building that serves as our headquarters in January 2026, at which time we began occupying the building.

Over the duration of this project, we incurred significant capital expenditures through payments to the developer under a percentage-of-completion basis.

As of December 31, 2025, the development project is expected to cost a total of approximately $42.8 million.

During the year ended December 31, 2024, we made $9.3 million in capital expenditures for this development project.

We intend to use the proceeds from the 2024 Term Loan (as defined below), the 2024 Credit Line (as defined below) and our existing cash and cash equivalents to pay for this project.

During the years ended December 31, 2025 and 2024, we incurred capital expenditures of $31.0 million and $9.3 million, respectively, related to this development project.

We expect to incur the remaining cost for the building in the first quarter of 2026.

We intend to use our existing cash and cash equivalents to pay for remainder of this project.

Since our inception, we have generally incurred significant losses and negative operating cash flows, and we have relied heavily on proceeds from our financing activities to fund capital expenditures, business expansion campaigns and to offset operating deficits.

For the year ended December 31, 2024, we recognized net income of $18.2 million and had positive operating cash flow of $64.9 million, though we may be unable to sustain profitability and positive cash flows in future periods.

Collections on Medicare claims for our DecisionDx-SCC test represented a significant portion of our 2024 operating cash flows.

We will lose Medicare coverage for our DecisionDx-SCC test in April 2025 and decreases in revenues and cash inflows from this test are expected to follow.

For the year ended December 31, 2025, we recognized net loss of $24.2 million and had positive operating cash flow of $64.3 million;

however, we may be unable to sustain positive cash flows in future periods.

Collections on Medicare claims for our DecisionDx-SCC test represented a significant portion of our operating cash flows during 2024.

Medicare coverage for the DecisionDx-SCC test was discontinued in April 2025, which has resulted in reduced revenues and cash inflows from this test during 2025, and these reductions are expected to continue unless our reconsideration requests related to both the MolDX and Novitas LCDs are approved.

Our ability to maintain profitability will heavily depend on us maintaining Medicare coverage for our currently marketed products, on the successful commercialization of the products we plan to launch in the future, and our ability to manage operating expenses.

We expect to incur additional expenses in the future as we invest in the commercialization of our existing products and the development and commercialization of our current pipeline products and future product candidates.

believe that our existing cash and cash equivalents, marketable investment securities and anticipated cash generated from the sale of our commercial products will be sufficient to fund our operations for at least the next 12 months.

We believe that our existing cash and cash equivalents, marketable investment securities and anticipated cash generated from the sale of our commercial products will be sufficient to fund our operations for at least the next 12 months.

We believe we will meet longer-term expected cash requirements and obligations through a combination of existing cash and cash equivalents, marketable investment securities and anticipated cash generated from sales of our products and issuances of equity securities or debt offerings.

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Long-Term Debt

We had no debt as of December 31, 2023.

Our long-term debt as of December 31, 2024 is presented in the table below (in thousands):

Our long-term debt is presented in the table below (in thousands):

As of December 31,

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Unamortized discount (143) (177)

Total debt, net 10,057 10,023

Current portion of long-term debt (417) (278)

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2024 Loan and Security Agreement

On March 26, 2024 (the ‘‘Closing Date’’), we entered into the 2024 LSA, by and between the Company, its wholly owned subsidiary, Castle Narnia Real Estate Holding 1, LLC and Silicon Valley Bank, a division of First-Citizens Bank & Trust Company (the “Lender’’).

The 2024 LSA provides for (i) on the Closing Date, $10.0 million aggregate principal amount of Term Loans (the “2024 Term Loan,” as more fully discussed in the ‘‘2024 Term Loan’’ section below), and (ii) from the Closing Date until March 31, 2025, an additional line of credit of $25.0 million with the same interest rate and maturity as the term debt available (the “2024 Credit Line,” as more fully discussed in ‘‘2024 Credit Line’’ below) at our option.

The obligations under the 2024 LSA are secured by substantially all of our assets, excluding intellectual property, the real property held by the Company, and are subject to certain other exceptions and limitations.

On March 26, 2024 (the “Closing Date”), we entered into the 2024 LSA, as amended in April 2025, by and between us, our wholly owned subsidiary, Castle Narnia Real Estate Holding 1, LLC and Silicon Valley Bank, a division of First-Citizens Bank & Trust Company (the “Lender”).

The 2024 LSA provides for a term loan in the principal amount of $10.0 million, which was drawn on the Closing Date (the “2024 Term Loan”) and provided for a $25.0 million line of credit that was available at our option from the Closing Date through September 30, 2025, with the same interest rate and maturity as the 2024 Term Loan (the “2024 Credit Line”), which expired on September 30, 2025, as discussed below.

The Consent and First Amendment executed on April 4, 2025, modified certain terms of the 2024 LSA, including the extension of the draw period for the line of credit from March 31, 2025 to September 30, 2025.

The obligations under the 2024 LSA are secured by substantially all of our assets, excluding intellectual property, the real property held by us, and are subject to certain other exceptions and limitations.

We have the right to prepay the 2024 LSA in whole, subject to a prepayment fee of approximately 1.50% if paid prior to March 26, 2026.

Amounts repaid under the 2024 LSA may not be reborrowed.

In addition, the 2024 LSA contains customary conditions of borrowing, events of default and covenants, including covenants that restrict our ability to dispose of assets, merge with or acquire other entities, incur indebtedness and make distributions to holders of our capital stock.

Should an event of default occur, including the occurrence of a

material adverse change, we could be liable for immediate repayment of all obligations under the 2024 LSA.

Should we seek to amend the terms of the 2024 LSA, the consent of the Lender would be required.

As of December 31, 2024, we were in compliance with these covenants.

Amounts repaid may not be reborrowed.

The 2024 LSA contains customary conditions of borrowing, events of default and covenants, including covenants that restrict our ability to dispose of assets, merge with or acquire other entities, incur indebtedness and make distributions to holders of our capital stock.

Should an event of default occur, including the occurrence of a material adverse change, we could be liable for immediate repayment of all obligations under the 2024 LSA.

Should we seek to further amend the terms of the 2024 LSA, the consent of the Lender would be required.

As of December 31, 2025, we were in compliance with all of the covenants.

The 2024 LSA bears interest at a floating rate equal to the greater of (a) the WSJ Prime Rate plus 0.25% or (b) 6.00% per annum.

The Term Loans are interest only from the Closing Date through November 30, 2025, which may be extended at our option through November 30, 2026 as long as no event of default under the 2024 LSA has occurred.

After the end of the interest only period, we are required to pay equal monthly installments of principal through the maturity date of November 1, 2028.

We are also obligated to make an additional final payment of 2.00% of the aggregate original principal amounts of Term Loans advanced by the Lender, due at the earlier of the maturity date or date the Term Loans are repaid in full.

The 2024 Term Loan is interest-only from the Closing Date through November 30, 2025, subject to extension under the Interest-Only Extension Milestone provision (as defined in the 2024 LSA).

On August 26, 2025, we elected to extend the interest-only period to December 1, 2026.

Beginning in December 2026, the principal payments will be made in equal monthly installments through the maturity date of November 1, 2028.

In addition, we are required to make a final payment equal to 2.00% of the aggregate original principal amounts of the 2024 Term Loan, due at maturity or upon full repayment.

2024 Term Loan

On the Closing Date, we drew $10.0 million in Term Loans under the terms and provisions of the 2024 LSA.

On the Closing Date, we drew $10.0 million under the 2024 Term Loan.

We are obligated to make a final payment of $0.2 million under the terms of the 2024 LSA final payment provisions.

A discount on debt equal to this obligation was recorded on the draw date and is being amortized as additional interest expense using the effective interest method over the term of the debt.

As of December 31, 2024, the effective interest rate for all outstanding debt under the 2024 Term Loan was 8.19%.

As of December 31, 2025, no principal payments have been made and the weighted-average effective interest rate for all outstanding debt under the 2024 Term Loan was 7.69%.

2024 Credit Line

We have a $25.0 million line of credit under the terms and provisions of the 2024 LSA available from the Closing Date until March 31, 2025.

Amounts repaid under the 2024 Credit Line may not be reborrowed.

As of December 31, 2024, no draws had been made on the 2024 Credit Line.

We had a $25.0 million line of credit under the terms and provisions of the 2024 LSA from the Closing Date through September 30, 2025.

On September 30, 2025, the 2024 Credit Line expired and no draws had been made on it.

We have entered into various operating and finance leases, which are primarily associated with our laboratory facilities and office space.

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Years Ended December 31,

Net cash provided by (used in) operating activities $ 64,866 $ (5,626)

Net cash provided by operating activities

$ 64,347 $ 64,866

Net cash used in investing activities (60,367) (50,137)

Net cash provided by (used in) financing activities 6,139 (2,298)

Net cash (used in) provided by financing activities (6,960) 6,139

Net change in cash and cash equivalents (2,980) 20,868

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Operating Activities

Net cash provided by operating activities was $64.3 million for the year ended December 31, 2025, and was primarily attributable to non-cash stock-based compensation expense of $45.9 million, depreciation and amortization of $40.8 million, decreases in accounts receivable of $6.9 million, increases in accrued compensation of $5.7 million and increases in accounts payable of $3.1 million partially offset by the net loss of $24.2 million, decreases in deferred income taxes of $6.2 million, increases in accretion of discounts on marketable investment securities of $4.2 million, net gains on equity securities of $1.5 million, and increases in inventory of $2.1 million.

Net cash provided by operating activities was $64.9 million for the year ended December 31, 2024, and was primarily attributable to the net income of $18.2 million, non-cash stock-based compensation expense of $50.3 million, depreciation and amortization of $16.0 million, increases in accrued compensation of $3.6 million, increases in deferred income taxes of $1.4 million, partially offset by increases in accounts receivable of $12.6 million, increases in accretion of discounts on marketable investment securities of $6.7 million, increases in accounts payable of $4.4 million and increases in prepaid expenses and other current assets of $1.1 million.

Net cash used in operating activities was $5.6 million for the year ended December 31, 2023, and was primarily attributable to the net loss of $57.5 million, increases in accounts receivable of $14.9 million, increases in accretion of discounts on marketable investment securities of $5.5 million and increases in inventory of $4.0 million, partially offset by non-cash stock-based compensation expense of $51.2 million, depreciation and amortization of $12.3 million, increases in accounts payable of $5.7 million, increases in accrued compensation of $4.6 million and increases in other accrued and current liabilities of $2.1 million.

The $70.5 million increase in net cash provided by operating activities for the year ended December 31, 2024 compared to the year ended December 31, 2023 is primarily due to increases in collections from customers attributable to higher net revenues partially offset by increases in operating expenditures.

In part, the cash used during the year ended December 31, 2024 reflects the payment of annual cash bonuses to our employees as well as certain health care benefit payments totaling $20.8 million.

In comparison, we paid $17.7 million during the same period in 2023 towards annual cash bonuses and certain health care benefits.

The $0.5 million decrease in net cash provided by operating activities for the year ended December 31, 2025 compared to the year ended December 31, 2024 is primarily due to increases in collections from customers attributable to higher net revenues partially offset by increases in operating expenditures.

In part, the cash used during the year ended December 31, 2025 reflects the payment of annual cash bonuses to our employees as well as certain health care benefit payments totaling $22.5 million compared to $20.8 million during the same period in 2024.

Investing Activities

Net cash used in investing activities was $50.1 million for the year ended December 31, 2024 and consisted primarily of purchases of marketable investment securities of $205.7 million, and purchases of property and equipment of $28.3 million, partially offset by the maturity of marketable investment securities of $183.9 million.

Net cash used in investing activities was $60.4 million for the year ended December 31, 2025 and consisted primarily of purchases of marketable investment securities of $188.7 million, purchases of property and equipment of $36.0 million, our asset acquisition of Previse for $18.7 million, purchases of debt securities classified as held-to-market of $5.6 million and $2.1 million from the issuance of a loan receivable, partially offset by the maturity of marketable investment securities of $189.2 million and $1.5 million in proceeds from the sale of equity securities.

Net cash used in investing activities was $50.1 million for the year ended December 31, 2024 and consisted primarily of purchases of marketable investment securities of $205.7 million and purchases of property and equipment of $28.3 million, partially offset by the maturity of marketable investment securities of $183.9 million.

The $34.0 million increase in cash used in investing activities for the year ended December 31, 2024 compared to the year ended December 31, 2023 was primarily due to purchasing $16.7 million more in marketable investment securities and collecting $2.6 million fewer proceeds from maturing marketable investment securities.

We also increased our purchases of property and equipment by $14.7 million for the year ended December 31, 2024 compared to the year ended December 31, 2023, primarily due to our purchase of land for cash consideration of $7.2 million on February 9, 2024 and $6.8 million in cash payments relating to the development of our future corporate headquarters.

The $10.2 million increase in cash used in investing activities for the year ended December 31, 2025 compared to the year ended December 31, 2024 was primarily due to our acquisition of Previse for $18.7 million, which includes both the cash consideration and direct transaction costs, $7.7 million in increased purchases of property and equipment, $5.6 million in purchases of debt securities classified as held-to-market and $2.1 million from the issuance of a loan receivable, partially offset by an increase of $5.3 million in proceeds from maturing marketable investment securities and $17.0 million fewer purchases of such securities.

Financing Activities

Net cash provided by financing activities was $6.1 million for the year ended December 31, 2024, and consisted primarily of $10.0 million of proceeds from issuance of long-term debt and $3.0 million of proceeds from contributions to our 2019 Employee Stock Purchase Plan (the “ESPP”) and $2.0 million of proceeds from the exercise of stock options, partially offset by the $8.8 million payment of employee taxes attributable to the vesting of RSUs.

Net cash used in financing activities was $2.3 million for the year ended December 31, 2023, and consisted primarily of payment of employees’ taxes on vested RSUs of $5.1 million, partially offset by $2.7 million of proceeds from contributions to our 2019 ESPP.

In 2021, the rate of inflation in the United States significantly increased until the second half of 2022 when the rate began to subside.

In 2023 and 2024, the inflation rate continued to subside but remained higher than rates experience between 2025 and 2020.

Net cash used in financing activities was $7.0 million for the year ended December 31, 2025, and consisted primarily of the $11.7 million payment of employee taxes attributable to the vesting of RSUs, partially offset by $2.4 million of proceeds from contributions to our 2019 Employee Stock Purchase Plan (the “ESPP”) and $2.2 million of proceeds from the exercise of stock options.

Net cash provided by financing activities was $6.1 million for the year ended December 31, 2024, and consisted primarily of $10.0 million of proceeds from issuance of long-term debt and $3.0 million of proceeds from contributions to our ESPP and $2.0 million of proceeds from the exercise of stock options, partially offset by the $8.8 million payment of employee taxes attributable to the vesting of RSUs.

In 2021, the rate of inflation in the U.S.

significantly increased until the second half of 2022 when the rate began to subside.

In 2023 through 2025, the inflation rate continued to subside but remained higher than rates experienced in 2020.

We continue to experience inflationary pressures, primarily in increased personnel costs and price increases for certain lab supplies.

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Our consolidated financial statements are prepared in accordance with U.S.

The preparation of our consolidated financial statements and related disclosures requires us to make estimates and judgments that affect

the reported amounts of assets, liabilities, costs and expenses, and the disclosure of contingent assets and liabilities in our consolidated financial statements.

The preparation of our consolidated financial statements and related disclosures requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, costs and expenses, and the disclosure of contingent assets and liabilities in our consolidated financial statements.

We base our estimates on historical experience, known trends and events and various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.

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All of our revenues from contracts with customers are associated with the provision of diagnostic, prognostic, and predictive testing services.

Our revenues are primarily attributable to DecisionDx-Melanoma for CM and our DecisionDx-SCC test for SCC.

We also provide a test for patients diagnosed with BE, the TissueCypher test, a test for patients with suspicious pigmented lesions, MyPath Melanoma and DiffDx-Melanoma, and a test for UM, DecisionDx-UM.

We also began offering a PGx testing service focused on mental health, IDgenetix, following a business combination completed in April 2022.

Our revenues are primarily attributable to our DecisionDx-Melanoma test for CM, our TissueCypher test for patients diagnosed with BE and our DecisionDx-SCC test for SCC.

We also provide our MyPath Melanoma test for patients with melanocytic lesions, our DecisionDx-UM test for UM and IDgenetix, a PGx testing service focused on mental health.

We discontinued offering our IDgenetix test in May 2025.

Once we satisfy our performance obligations and bill for the service, the timing of the collection of payments may vary based on the payment practices of the third-party payor and the existence of contractually established reimbursement rates.

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Certain contracts contain a contractual commitment of a reimbursement rate that differs from our list prices.

However, absent a contractually committed reimbursement rate with a commercial carrier or governmental program, our diagnostic tests may or may not be covered by these entities’ existing reimbursement policies.

However, absent a positive coverage policy, with or without a contractually committed reimbursement rate, with a commercial carrier or governmental program, our diagnostic tests may or may not be paid by these entities.

In addition, patients do not enter into direct agreements with us that commit them to pay any portion of the cost of the tests in the event that their insurance provider declines to reimburse us.

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These situations may result in a delay in the collection of payments.

The Medicare claims that are covered are generally paid at the established rate by our Medicare contractor within 30 days from receipt.

Medicare claims that were either submitted to Medicare prior to a medical review and coverage, or an LCD’s effective date, or are not covered, but meet the definition of being medically reasonable and necessary pursuant to the controlling Section 1862(a)(1)(A) of the Social Security Act may be paid upon initial claim submission or if denied for payment are generally appealed and may ultimately be paid at the first (termed “redetermination”), second (termed “reconsideration”) or third level of appeal ( de novo hearing with an ALJ).

A successful appeal at any of these levels results in payment.

In the absence of Medicare coverage or contractually established reimbursement rates, we have concluded that our contracts include variable consideration because the amounts paid by Medicare or commercial health insurance carriers may be paid at less than our standard rates or not paid at all, with such differences considered implicit price concessions.

The Medicare claims that are covered by Medicare are generally paid at a rate established on Medicare’s Clinical Laboratory Fee Schedule or by the respective Medicare contractor within 30 days from receipt.

Medicare claims that were either submitted to Medicare prior to the LCD or other coverage commencement date or are not covered but meet the definition of being medically reasonable and necessary pursuant to the controlling Section 1862(a)(1)(A) of the Social Security Act are generally appealed and may ultimately be paid at the first (termed “redetermination”), second (termed “reconsideration”) or third level of appeal ( de novo hearing with an ALJ).

A successful appeal at any of these levels may result in prompt payment.

In the absence of Medicare coverage, contractually established reimbursement rates or other coverage, we have concluded that our contracts include variable consideration because the amounts paid by Medicare or commercial health insurance carriers may be paid at less than our standard rates or not paid at all, with such differences considered implicit price concessions.

Variable consideration attributable to these price concessions is measured at the expected value using the “most likely amount” method under ASC 606.

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Such variable consideration is included in the transaction price only to the extent it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainties with respect to the amount are resolved.

Variable consideration may be constrained and excluded from the transaction price in situations where there is no contractually agreed upon reimbursement coverage or in the absence of a

predictable pattern and history of collectability with a payor.

Variable consideration for Medicare claims for which there are no existing positive coverage decisions, including those claims subject to approval by an ALJ at an appeal hearing, is deemed to be fully constrained due to factors outside our influence (i.e., judgment or actions of third parties) and the uncertainty of the amount to be received is not expected to be resolved for a long period of time.

Variable consideration may be constrained and excluded from the transaction price in situations where there is no contractually agreed upon reimbursement coverage or in the absence of a predictable pattern and history of collectability with a payor.

Accordingly, in such situations revenues are recognized on the basis of actual cash collections.

Variable consideration is evaluated each reporting period and adjustments are recorded as increases or decreases in revenues.

Included in revenues for the years ended December 31, 2024 and 2023 were $1.8 million of net negative revenue adjustments and $4.5 million of net negative revenue adjustments, respectively, associated with changes in estimated variable consideration related to performance obligations satisfied in previous periods.

Included in revenues for the years ended December 31, 2025 and 2024 were $7.6 million and $1.8 million of net negative revenue adjustments, respectively, associated with changes in estimated variable consideration related to performance obligations satisfied in previous periods.

These amounts include (i) adjustments for actual collections versus estimated amounts and (ii) cash collections and the related recognition of revenue in current period for tests delivered in prior periods due to the release of the constraint on variable consideration.

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The requisite service period for PSUs is based on an analysis of vesting requirements and performance conditions for the particular award.

Under specific circumstances, certain employees may be eligible for accelerated vesting of a portion of their awards upon retirement, contingent upon meeting predefined criteria related to age, tenure, and notice.

The determination of the requisite service period considers the employee's retirement eligibility and is reassessed at each reporting date.

Forfeitures are accounted for as they occur.

Certain employees are entitled to acceleration of vesting of a portion of their awards upon retirement, subject to age, service and notice requirements.

Under specific circumstances, certain employees are entitled to acceleration of vesting of a portion of their awards upon retirement, subject to age, service and notice requirements.

In these cases, the requisite service period takes into consideration the employee’s retirement eligibility, and is reassessed at each reporting date.

For the ESPP, the requisite service period is generally the period of time from the offering date to the purchase date.

Forfeitures are accounted for as they occur.

Set forth below is a description of the significant assumptions used in the option pricing model:

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The expected term is the period of time that granted options are expected to be outstanding.

For stock options, we have set the expected term using the simplified method based on the weighted average of both the period to vesting and the period to maturity for each option, as we have concluded that our stock option exercise history does not provide a reasonable basis upon which to estimate the expected term.

For stock options, we have set the expected term using the simplified method based on the weighted-average of both the period to vesting and the period to maturity for each option as we have concluded that its stock option exercise history does not provide a reasonable basis upon which to estimate the expected term.

For the ESPP, the expected term is the period of time from the offering date to the purchase date.

• Expected volatility .

Previously, because of the limited period of time our stock had been traded in an active market, we calculated expected volatility by using the historical stock prices of a group of similar companies looking back over the estimated life of the option or the purchase rights under the ESPP and averaging the volatilities of these companies.

In the third quarter of 2021, we adjusted this calculation to include our own stock price on a relative basis to the peer group in the calculation of expected volatility, as our common stock has now been traded in an active market for more than two years.

Previously, because of the limited period of time our stock had been traded in an active market, we calculated expected volatility by using the historical stock prices of a group of similar companies looking back over the estimated life of the option or the ESPP purchase right and averaging the volatilities of these companies.

In the third quarter of 2021, we revised this approach to include our own stock price on a relative basis to the peer group, as our common stock had been actively traded for more than two years.

By the third quarter of 2025, our stock price has been fully incorporated as the sole input in the calculation.

• Risk-free interest rate .

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The fair value of our common stock is also an assumption used to determine the fair value of stock options.

Prior to our IPO, the estimated fair value of our common stock had been determined by our board of directors as of the date of each award, with input from management, considering our most recently available third-party valuations of common stock and our board of directors’ assessment of additional objective and subjective factors that it believed

were relevant and which may have changed from the date of the most recent valuation through the date of the grant, which intended all options granted to be exercisable at price per share not less than the per share fair value of our common stock underlying those options on the grant date.

Subsequent to our IPO, the fair value of our common stock is the closing selling price per share of our common stock as reported on the Nasdaq Global Market on the date of grant or other relevant determination date.

The fair value of our common stock is the closing selling price per share of our common stock as reported on the Nasdaq Global Market on the date of grant or other relevant determination date.

The following table sets forth the assumptions used to determine the fair value of stock options:

Years Ended December 31,

Average expected term (years) N/A

Expected stock price volatility N/A

80.20% - 80.20%

Average expected term (years) 5.0 5.0 5.8

Expected stock price volatility 80.20% - 80.20%

75.57% - 76.01%

Risk-free interest rate N/A

4.39% - 4.39%

Risk-free interest rate 4.39% - 4.39%

3.57% - 3.57%

Dividend yield —% —% —%

Dividend yield N/A

(1) For the year ended December 31, 2025, no stock options were granted.

The following table sets forth assumptions used to determine the fair value of the purchase rights issued under the ESPP:

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3.82% - 5.14%

4.74% - 5.33%

Dividend yield —% —% —%

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In December 2024, we observed month-to-month decreases in IDgenetix test reports, which persisted through year-end.

We continue to offer the IDgenetix test and monitor its performance;

nevertheless, we anticipate that test report volumes and net revenues will decrease in 2025.

Long-term projections about the performance of this test remain uncertain.

We believe these factors indicated a need to revise the remaining useful life of our IDgenetix developed technology intangible asset.

On December 1, 2024, we adjusted the estimated remaining useful life from approximately 12 years to 13 months, with the useful life now expected to end on December 31, 2025.

Our goodwill is not amortized but is tested for impairment annually and whenever events or changes in circumstances indicate that it may be impaired.

We perform annual impairment reviews of our goodwill balance during the fourth quarter of each year, or more frequently if management believes indicators of impairment exist.

We may perform a qualitative assessment to determine if it is necessary to perform a quantitative impairment test.

If we determine that a quantitative impairment test is necessary, we apply the guidance in Accounting Standards Update (“ASU”) No.

2017-04, Intangibles—Goodwill and Other (Topic 350):

Simplifying the Test for Goodwill Impairment , by comparing the fair value of the reporting unit to its carrying value, including the goodwill.

If the carrying value exceeds the fair value, we recognize an impairment loss for the amount by which the carrying value exceeds fair value, up to the total amount of goodwill allocated to the reporting unit.

We did not incur any goodwill impairment losses in any of the periods presented.

We have concluded that our business is comprised of a single reporting unit.

For our annual impairment test for the year ended December 31, 2024, we elected to bypass the qualitative assessment and proceeded directly to the quantitative assessment by comparing our reporting unit’s fair value to its

carrying value.

Factors that could result in an impairment of goodwill in the future include declines in the price of our common stock, increased competition, changes in macroeconomic developments and unfavorable government or regulatory developments.

We conducted annual impairment testing of goodwill in the fourth quarter which indicated that the fair value of our reporting unit exceeded its carrying value by 117% and therefore no impairment was indicated.

To measure the fair value of our single reporting unit, we used a market approach whereby we calculated our total market capitalization on the impairment test date, based on the closing price of our common stock as reported on the Nasdaq Global Market, and applied a reasonable control premium.

The control premium was based on an analysis of control premiums paid in recent acquisitions of companies in the same or similar industry as us.

On December 1, 2024, we adjusted the estimated remaining useful life from approximately 12 years to 13 months.

During the first quarter of 2025, we made the decision to discontinue our IDgenetix test offering, effective May 2025.

As a result of this decision, we further revised the estimated useful life of the asset and determined that the intangible asset should be fully amortized as of March 31, 2025.

This change resulted in an acceleration of amortization expense of approximately $20.1 million.

Recent Accounting Pronouncements

In November 2023, the FASB issued ASU No.

2023-07, Segment Reporting (Topic 280)—Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which require public companies disclose significant segment expenses and other segment items on an annual and interim basis and to provide in interim periods all disclosures about a reportable segment’s profit or loss and assets that are currently required annually.

The guidance was effective for public entities for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

Early adoption was permitted.

The guidance was applied retrospectively to all periods presented in the financial statements, unless it was impracticable.

We have adopted the guidance under this ASU 2023-07 on a retrospective basis with an effective date January 1, 2022.

Please refer to Note 17 - Segment and Related Information, to our Consolidated Financial Statements for details.

In December 2023, the FASB issued ASU No.

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The amendments in ASU 2023-09 provide for enhanced income tax information primarily through changes to the rate reconciliation and income taxes paid information.

ASU 2023-09 is effective for the Company prospectively to all annual periods beginning after December 15, 2024.

Early adoption is permitted.

We are currently evaluating the impact this update will have on the consolidated financial statements and disclosures.

The guidance was effective for public entities for fiscal years beginning after December 15, 2024.

We adopted ASU 2023-09 prospectively in fiscal year 2025 for the annual reporting period ending December 31, 2025.

Please refer to Note 15 - Income Taxes, to our Consolidated Financial Statements for details.

In November 2024, the FASB issued ASU No.

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We are currently evaluating the impact this update will have on the consolidated financial statements and disclosures.

In July 2025, the FASB issued ASU No.

2025-05, Financial Instruments— Credit Losses (Topic 326):

Practical Expedient for Certain Current Receivables (“ASU 2025-05”), which provides a practical expedient for estimating expected credit losses on current accounts receivable and contract assets arising from transactions under ASC 606.

The practical expedient allows entities to assume that current conditions remain unchanged over the remaining life of the receivables.

ASU 2025-05 is effective for annual periods beginning after December 15, 2025, including interim periods within those annual periods.

Early adoption is permitted.

We are currently evaluating the impact this update will have on the consolidated financial statements and disclosures.

W e have evaluated all other recently issued, but not yet effective, accounting pronouncements and do not believe that these accounting pronouncements will have any material impact on our consolidated financial statements or disclosures upon adoption.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis