What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-07-30 compared with 2026-05-06 · 177 added, 90 removed, 351 unchanged (43% of the section changed)

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We currently offer six commercially available proprietary multi-analyte assays with algorithmic analysis (“MAAA”) tests for use in the fields of dermatology, gastroenterology, 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”) and our TissueCypher risk stratification test for BE which is supplemented by revenue generated from our DecisionDx-UM risk stratification test for UM.

Our revenue is primarily generated by our DecisionDx-Melanoma risk stratification test for cutaneous melanoma (“CM”) and our TissueCypher risk stratification test for BE.

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;

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TAM of approximately $600 million.

Our Gastroenterology Test

Our Gastroenterology Tests

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.

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TAM of approximately $10 million.

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.

After careful further assessments, we discontinued our IDgenetix test in May 2025.

Reimbursement

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Our rate for 2024 and 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.

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.

Delivered Test Reports

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

For the Three Months Ended March 31, 2026

Six Months Ended June 30, 2026

DecisionDx-Melanoma

10,021 10,280 20,301

DecisionDx‑SCC

3,702 4,011 7,713

MyPath Melanoma 973 1,061 2,034

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Grand Total 26,933 30,822 57,755

For the Three Months Ended March 31, 2025

Six Months Ended June 30, 2025

DecisionDx-Melanoma

8,621 9,981 18,602

DecisionDx‑SCC

4,375 4,762 9,137

MyPath Melanoma 926 1,166 2,092

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IDgenetix (1)

2,578 1,027 3,605

Grand Total 24,402 26,574 50,976

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

For the three months ended March 31, 2026, our test report volume increased by 10% compared to the same period in 2025.

Our dermatologic test report volume increased by 6% for the three months ended March 31, 2026 compared to the prior period in 2025, largely driven by continued growth from our DecisionDx-Melanoma test.

TissueCypher increased by 58% for the three months ended March 31, 2026, compared to the prior period in 2025, further contributing to the overall volume increase.

For the three and six months ended June 30, 2026, our test report volume increased by 16% and 13%, respectively, compared to the same periods in 2025.

The increase primarily reflects continued growth in our core revenue drivers, TissueCypher and DecisionDx-Melanoma.

TissueCypher test report volume increased by 63% and 61% for the three and six months ended June 30, 2026, respectively, reflecting continued commercial adoption.

We continue to invest in expanding our Pittsburgh laboratory operations to increase TissueCypher testing capacity and support future growth.

DecisionDx-Melanoma test report volume increased by 3% and 9% for the three and six months ended June 30, 2026, respectively.

Dermatologic test report volume decreased by 4% for the three months June 30, 2026 but increased by 1% for the six months ended June 30, 2026, primarily reflecting lower DecisionDx-SCC test report volume, partially offset by continued growth in DecisionDx-Melanoma.

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, we received approximately 650 orders during the three months ended March 31, 2026, while still in the initial limited access phase.

For our AdvanceAD-Tx product line, we received approximately 1,000 and 1,650 orders during the three and six months ended June 30, 2026, respectively, while still in the initial limited access phase.

We believe early adoption reflects clinician interest in integrating AdvanceAD-Tx into existing AD treatment pathways.

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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.

During the three months ended March 31, 2026, approximately 54% of all clinicians ordering DecisionDx-SCC had also ordered our DecisionDx-Melanoma test during that same period.

During the six months ended June 30, 2026, approximately 68% of all clinicians ordering DecisionDx-SCC had also ordered our DecisionDx-Melanoma test during that same period.

Information About Certain Metrics

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Impact of Macroeconomic Conditions

Macroeconomic conditions, including uncertainties associated with the ongoing conflicts in the Middle East, including the conflict between the U.S.

and Iran, the ongoing conflict between Ukraine and Russia and related sanctions, 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, current or proposed international tariffs, trade restrictions and retaliatory trade measures, cybersecurity threats, liquidity concerns at, and potential 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.

Macroeconomic conditions, including uncertainties associated with the ongoing conflicts in the Middle East, including the conflict between the U.S., Iran, and Israel, the ongoing conflict between Ukraine and Russia and related sanctions, economic slowdowns, recent shutdowns of the federal government including regulatory agencies, public health crises, labor shortages, recessions or market corrections, supply chain disruptions, inflation and monetary policy shifts, current or proposed international tariffs, trade restrictions and retaliatory trade measures, cybersecurity threats, liquidity concerns at, and potential 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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We generate revenues from the sale of our products.

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

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

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

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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, continued investment in and expansion of our laboratory facilities.

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

See the table in “Results of Operations—Comparison of the Three Months Ended March 31, 2026 and 2025” for details.

See the table in “Results of Operations—Comparison of the Six Months Ended June 30, 2026 and 2025” for details.

Research and Development

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government obligations are a component of our marketable investment securities.

Net Gains (Losses) on Equity Securities

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

Net (Losses) Gains on Equity Securities

Net (losses) 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

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Income Tax Expense (Benefit)

On July 4, 2025, the One Big Beautiful Bill Act (“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 expense consists primarily of income taxes related to federal and state jurisdictions in which we conduct business.

Income tax benefit is primarily due to the revised estimated useful life of our intangible asset related to the discontinuation of our IDgenetix test offering in May 2025, which resulted in a temporary difference and a corresponding deferred tax asset.

We maintain a full valuation allowance for deferred tax assets including operating loss carryforwards and R&D credits and other tax credits.

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Results of Operations

Comparison of the Three Months Ended March 31, 2026 and 2025

Comparison of the Three Months Ended June 30, 2026 and 2025

The following table summarizes our results of operations for the periods indicated (in thousands, except percentages):

Three Months Ended

March 31, Change

June 30, Change

NET REVENUES $ 103,546 $ 86,188 $ 17,358 20.1 %

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Interest income 2,356 2,944 (588) (20.0) %

Net (losses) gains on equity securities (630) 1,185 (1,815) (153.2) %

Interest expense (193) (21) (172) (819.0) %

Other loss (153) — (153) NA

Loss before income taxes (1,690) (143) (1,547) NM

Income tax expense (benefit) 370 (4,666) 5,036 107.9 %

Net (loss) income $ (2,060) $ 4,523 $ (6,583) (145.5) %

NA = Not applicable

NM = Not meaningful

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

Three Months Ended

2026 2025 Change

Dermatologic (1)

$ 48,704 $ 56,297 $ (7,593)

Non-Dermatologic (2)

54,842 29,891 24,951

Total net revenues $ 103,546 $ 86,188 $ 17,358

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

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

Net revenues for the three months ended June 30, 2026 increased by $17.4 million, or 20.1%, to $103.5 million compared to the three months ended June 30, 2025, primarily driven by a $25.0 million increase in revenue from our non-dermatologic tests, partially offset by a $7.6 million decrease in revenue from our dermatologic tests.

The $25.0 million increase in net revenues from our non-dermatologic tests was primarily attributable to higher test report volumes for our TissueCypher Barrett’s Esophagus test and, to a lesser extent, a higher realized average selling price (“ASP”).

The increases in our TissueCypher Barrett’s Esophagus 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 34.7% for the three months ended June 30, 2025 to 53.0% for the three months ended June 30, 2026.

The $7.6 million decrease in net revenues for our dermatologic tests was primarily attributable to our DecisionDx-SCC test, driven by lower realized ASP and lower test report volumes.

The reduction in ASP was primarily driven by the loss of Medicare LCD coverage in April 2025.

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

Cost of sales (exclusive of amortization of acquired intangible assets) for the three months ended June 30, 2026 increased by $6.1 million, or 34.5%, compared to the three months ended June 30, 2025, primarily due to higher expenses for lab supplies, higher personnel costs, and higher lab services costs.

The increase in lab supplies and lab services costs reflects higher test report volumes.

Increases in personnel costs reflect a higher headcount, due to additions made to support business growth in response to growing test report volumes, as well as merit and annual inflationary wage adjustment for existing employees.

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 expenses 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.

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

Three Months Ended

2026 2025 Change

Net revenues $ 103,546 $ 86,188 $ 17,358

Cost of sales (exclusive of amortization of acquired intangible assets) 23,700 17,626 6,074

Amortization of acquired intangible assets 2,251 1,961 290

Gross margin $ 77,595 $ 66,601 $ 10,994

Gross margin percentage 74.9 % 77.3 % (2.4) %

Our gross margin percentage was 74.9% for the three months ended June 30, 2026, compared to 77.3% for the same period in 2025.

The decrease primarily reflects higher expenses for lab supplies, higher personnel costs and higher lab services costs reflecting the shift in the mix of reports issued partially offset by the spread of fixed laboratory costs over higher test report volumes.

Research and Development

R&D expenses increased by $1.8 million, or 13.7%, for the three months ended June 30, 2026, compared to the three months ended June 30, 2025, primarily due to higher personnel costs driven by increased headcount to support continued business growth, as well as increased advisory board, clinical trial, and travel costs related to our pipeline initiatives.

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

The following table provides a breakdown of SG&A expenses (in thousands):

Three Months Ended

2026 2025 Change

Sales and marketing $ 40,915 $ 35,123 $ 5,792

General and administrative 25,207 22,942 2,265

Total selling, general and administrative expense $ 66,122 $ 58,065 $ 8,057

Sales and marketing expenses increased by $5.8 million, or 16.5%, for the three months ended June 30, 2026, compared to the three months ended June 30, 2025, primarily due to higher personnel costs, higher expenses associated with travel, and higher business admin costs.

Stock-based compensation expense included in sales and marketing was $3.9 million for both the three months ended June 30, 2026 and the three months ended June 30, 2025.

General and administrative expenses increased by $2.3 million, or 9.9%, for the three months ended June 30, 2026, compared to the three months ended June 30, 2025.

The increase is primarily due to higher personnel costs.

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

Stock-based compensation expense included in general and administrative expense was $4.6 million for the three months ended June 30, 2026, compared to $3.9 million for the three months ended June 30, 2025.

Interest Income

Interest income decreased by $0.6 million for the three months ended June 30, 2026, compared to the three months ended June 30, 2025, primarily due to lower interest earned on our money market funds and marketable securities, as well as lower premium amortization and discount accretion recognized on our marketable securities.

Net (Losses) Gains on Equity Securities

Net (losses) gains on equity securities decreased by $1.8 million for the three months ended June 30, 2026, compared to the three months ended June 30, 2025.

The decrease was primarily due to the absence of unrealized gains recognized on other equity securities during the prior-year period, as those securities were subsequently sold and were no longer held during the three months ended June 30, 2026.

The decrease also reflected an unrealized loss recognized on our equity investment in SciBase during the current-year period, which we did not hold during the prior-year period.

Income Tax Expense

Our income tax expense of $0.4 million for the three months ended June 30, 2026 consisted of income taxes related to state jurisdictions in which we conduct business.

Our income tax benefit for the three months ended June 30, 2025 was $4.7 million primarily due to a reduction of the valuation allowance previously recorded against our federal deferred tax assets.

The release resulted in a credit to income tax expense and was based on new deferred tax liabilities recognized upon consolidating Capsulomics.

Stock-Based Compensation Expense

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

Three Months Ended

2026 2025 Change

Cost of sales (exclusive of amortization of acquired intangible assets) $ 1,420 $ 1,422 $ (2)

Research and development 1,678 1,962 (284)

Selling, general and administrative 8,491 7,824 667

Total stock-based compensation expense $ 11,589 $ 11,208 $ 381

Stock-based compensation expense which is allocated among cost of sales, R&D expense and SG&A expense totaled $11.6 million and $11.2 million for the three months ended June 30, 2026 and 2025, respectively.

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 June 30, 2026, we had 1,002 employees, compared to 798 as of June 30, 2025.

As of June 30, 2026, the total unrecognized stock-based compensation cost related to outstanding awards was $90.4 million, which is expected to be recognized over a weighted-average period of 2.7 years.

Comparison of the Six Months Ended June 30, 2026 and 2025

The following table summarizes our results of operations for the periods indicated (in thousands, except percentages):

Six Months Ended

June 30, Change

NET REVENUES $ 187,225 $ 174,176 $ 13,049 7.5 %

OPERATING EXPENSES

Cost of sales (exclusive of amortization of acquired intangible assets) 44,233 34,009 10,224 30.1 %

Research and development 28,971 25,375 3,596 14.2 %

Selling, general and administrative 131,021 116,685 14,336 12.3 %

Amortization of acquired intangible assets 4,477 30,286 (25,809) (85.2) %

Total operating expenses, net 208,702 206,355 2,347 1.1 %

Operating loss (21,477) (32,179) 10,702 33.3 %

Interest income 4,901 6,043 (1,142) (18.9) %

Net gains (losses) on equity securities 1,392 (240) 1,632 680.0 %

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Income tax expense (benefit) 479 (5,089) 5,568 109.4 %

Net loss $ (14,522) $ (25,848) $ 11,326 43.8 %

Net (loss) income $ (16,582) $ (21,325) $ 4,743 22.2 %

NA = Not applicable

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

Three Months Ended

Six Months Ended

2026 2025 Change

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

Net revenues for the three months ended March 31, 2026 decreased by $4.3 million, or 4.9%, to $83.7 million compared to the three months ended March 31, 2025, due to a $21.9 million decrease in revenues from our dermatologic tests, partially offset by a $17.5 million increase in revenues from our non-dermatologic tests.

The $21.9 million decrease in revenues from our dermatologic tests was primarily due to the loss of Medicare coverage for our DecisionDx-SCC test effective April 24, 2025, partially offset by an increase in DecisionDx-Melanoma revenues, which was primarily driven by a 16% increase in test report volumes and, to a lesser extent, a higher realized average selling price (“ASP”).

The $17.5 million increase in revenues from our non-dermatologic tests was largely attributable to a 58% increase in test report volumes for our TissueCypher test, and, to a much lesser extent, a higher realized ASP.

The increase in TissueCypher test report volumes reflects growth driven by our sales force efforts.

Net revenues from our non-dermatologic tests as a percentage of total net revenues increased from 28.4% for the three months ended March 31, 2025 to 50.9% for the three months ended March 31, 2026.

Net revenues for the six months ended June 30, 2026 increased by $13.0 million, or 7.5%, to $187.2 million compared to the six months ended June 30, 2025, primarily driven by a $42.5 million increase in revenue from our non-dermatologic tests, partially offset by a $29.5 million decrease in revenue from our dermatologic tests.

The $42.5 million increase in revenues from our non-dermatologic tests was primarily attributable to a 61% increase in test report volumes for our TissueCypher test, and, to a much lesser extent, a higher realized ASP.

The increase in TissueCypher test report volumes reflects continued growth driven by our sales force efforts.

Net revenues from our non-dermatologic tests as a percentage of total net revenues increased from 31.5% for the six months ended June 30, 2025 to 52.0% for the six months ended June 30, 2026.

The $29.5 million decrease in revenues from our dermatologic tests was primarily attributable to our DecisionDx-SCC test, driven by lower realized ASP and lower test report volumes following the loss of Medicare coverage effective April 24, 2025.

The decrease was partially offset by higher DecisionDx-Melanoma revenues, which were primarily driven by a 9% increase in test report volumes and, to a lesser extent, a higher realized ASP.

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

Cost of sales (exclusive of amortization of acquired intangible assets) for the three months ended March 31, 2026 increased by $4.2 million, or 25.3%, compared to the three months ended March 31, 2025, primarily due to higher expenses for lab supplies, higher lab services cost, higher personnel costs, and higher depreciation expense.

The increase in expenses for lab supplies and lab services expense was driven by higher test report volumes.

Cost of sales (exclusive of amortization of acquired intangible assets) for the six months ended June 30, 2026 increased by $10.2 million, or 30.1%, compared to the six months ended June 30, 2025, primarily due to higher expenses for lab supplies, higher personnel costs, higher lab services costs, and higher depreciation expense.

The increase in expenses for lab supplies and lab services costs was driven by higher test report volumes reflecting the shift in the mix of reports issued.

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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.

Accordingly, our cost of sales expenses 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 our expected operational growth and higher test volumes.

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

Three Months Ended

Six Months Ended

2026 2025 Change

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Gross margin percentage 74.0 % 63.1 % 10.9 %

Our gross margin percentage was 72.8% for the three months ended March 31, 2026, compared to 49.2% for the three months ended March 31, 2025.

Our gross margin percentage was 74.0% for the six months ended June 30, 2026, compared to 63.1% for the six months ended June 30, 2025.

The increase was primarily driven by significantly lower amortization of acquired intangible assets.

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Research and Development

R&D expenses increased by $1.8 million, or 14.6%, for the three months ended March 31, 2026, compared to the three months ended March 31, 2025, primarily due to higher personnel costs and higher clinical studies costs.

R&D expenses increased by $3.6 million, or 14.2%, for the six months ended June 30, 2026, compared to the six months ended June 30, 2025, primarily due to higher personnel costs and higher clinical studies costs.

The increases in personnel costs reflect a higher headcount to support continued business growth and increases in clinical studies costs reflect investment in our pipeline products.

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The following table provides a breakdown of SG&A expenses (in thousands):

Three Months Ended

Six Months Ended

2026 2025 Change

2 unchanged sentences

Total selling, general and administrative expense $ 131,021 $ 116,685 $ 14,336

Sales and marketing expenses increased by $4.2 million, or 11.5%, for the three months ended March 31, 2026, compared to the three months ended March 31, 2025.

Sales and marketing expenses increased by $10.0 million, or 13.9%, for the six months ended June 30, 2026, compared to the six months ended June 30, 2025.

The increase is primarily due to higher personnel costs and higher sales related travel expenses.

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Higher sales related travel expenses reflect increased field activity to support growing test report volumes.

Stock-based compensation expense included in sales and marketing expense was $3.5 million for the three months ended March 31, 2026, compared to $4.0 million for the three months ended March 31, 2025.

General and administrative expenses increased by $2.1 million, or 9.4%, for the three months ended March 31, 2026, compared to the three months ended March 31, 2025.

The increase is primarily due to higher personnel costs, higher information technology-related costs, and higher travel costs partially offset by a decrease in professional fees.

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

Stock-based compensation expense included in general and administrative expense was $3.6 million for the three months ended March 31, 2026, compared to $3.8 million for the three months ended March 31, 2025.

Stock-based compensation expense included in sales and marketing expense was $7.4 million for the six months ended June 30, 2026, compared to $7.9 million for the six months ended June 30, 2025.

General and administrative expenses increased by $4.3 million, or 9.6%, for the six months ended June 30, 2026, compared to the six months ended June 30, 2025.

The increase is primarily due to higher personnel costs and higher information technology-related costs partially offset by a decrease in professional fees.

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

Stock-based compensation expense included in general and administrative expense was $8.2 million for the six months ended June 30, 2026, compared to $7.0 million for the six months ended June 30, 2025.

Amortization of Acquired Intangible Assets

Amortization decreased by approximately $26.1 million for the three months ended March 31, 2026, compared to the three months ended March 31, 2025, primarily due to our decision to discontinue the IDgenetix test offering beginning in May 2025.

Amortization expense decreased by approximately $25.8 million for the six months ended June 30, 2026, compared to the six months ended June 30, 2025, 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.

The decrease is partially offset by 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 decreased by $1.1 million for the six months ended June 30, 2026 , compared to the six months ended June 30, 2025, primarily due to lower interest earned on our money market funds and marketable securities, as well as lower premium amortization and discount accretion recognized on our marketable securities.

Net Gains (Losses) on Equity Securities

Net gains (losses) on equity securities increased by $3.4 million for the three months ended March 31, 2026, compared to the three months ended March 31, 2025.

The increase was primarily driven by unrealized gains on equity securities, including our investment in SciBase, partially offset by unrealized and realized losses on other equity securities.

Other loss increased by $0.4 million for the three months ended March 31, 2026, compared to the three months ended March 31, 2025 , primarily due to unrealized foreign currency losses on foreign currency-denominated assets.

Net gains (losses) on equity securities increased by $1.6 million for the six months ended June 30, 2026, compared to the six months ended June 30, 2025.

The increase was primarily driven by unrealized gains on our investment in SciBase, partially offset by realized losses on other equity securities sold during the period.

Other loss increased by $0.6 million for the six months ended June 30, 2026, compared to the six months ended June 30, 2025 , primarily due to unrealized foreign currency losses on foreign currency-denominated assets.

There were no comparable losses in the prior-year period.

Income Tax Expense (Benefit)

Income tax expense was $0.1 million for the three months ended March 31, 2026 and primarily consisted of income taxes related to federal and state jurisdictions in which we conduct business.

Our income tax benefit was $0.4 million for the three months ended March 31, 2025 , primarily driven by the revision of the estimated useful life of an intangible asset and our net operating loss position during the period.

Income tax expense was $0.5 million for the six months ended June 30, 2026 and primarily consisted of income taxes related to state jurisdictions in which we conduct business.

Our income tax benefit was $5.1 million for the six months ended June 30, 2025, primarily due to a reduction of the valuation allowance previously recorded against our federal deferred tax assets.

The release resulted in a credit to income tax expense and was based on new deferred tax liabilities recognized upon consolidating Capsulomics.

Stock-Based Compensation Expense

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

Three Months Ended

Six Months Ended

2026 2025 Change

3 unchanged sentences

Total stock-based compensation expense $ 21,365 $ 22,387 $ (1,022)

Stock-based compensation expense, which is allocated among cost of sales, R&D expense and SG&A expense, totaled $9.8 million for the three months ended March 31, 2026, compared to $11.2 million for the three months ended March 31, 2025.

Stock-based compensation expense, which is allocated among cost of sales, R&D expense and SG&A expense, totaled $21.4 million for the six months ended June 30, 2026, compared to $22.4 million for the six months ended June 30, 2025.

The decrease was primarily attributable to higher fair value awards granted in prior periods having substantially vested, resulting in a lower mix of higher fair value awards in the current period.

As of March 31, 2026, we had 942 employees compared to 784 as of March 31, 2025.

As of March 31, 2026, the total unrecognized stock-based compensation cost related to outstanding awards was $94.5 million, which is expected to be recognized over a weighted-average period of 2.8 years.

As of June 30, 2026, we had 1,002 employees compared to 798 as of June 30, 2025.

Liquidity and Capital Resources

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All of our marketable investment securities are considered investment grade and are readily available for use in current operations.

As of March 31, 2026 and December 31, 2025, we had marketable investment securities of $197.9 million and $182.8 million, respectively.

Additionally, as of March 31, 2026 and December 31, 2025, we had cash and cash equivalents of $63.8 million and $116.7 million, respectively.

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.

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

No draws were made on the line of credit.

As of June 30, 2026 and December 31, 2025, we had marketable investment securities of $204.7 million and $182.8 million, respectively.

Additionally, as of June 30, 2026 and December 31, 2025, we had cash and cash equivalents of $62.1 million and $116.7 million, respectively.

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

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

We completed the portions of the building that serves as our headquarters in February 2026, at which time we began occupying the building.

During the three months ended March 31, 2026 and 2025, we incurred capital expenditures of $2.7 million and $5.1 million, respectively, related to this development project.

We completed the portions of the building that serve as our headquarters in February 2026, at which time we began occupying the building.

Capital expenditures related to this development project were $0.4 million and $3.1 million during the three and six months ended June 30, 2026, respectively, compared to $8.8 million and $14.0 million during the corresponding periods in 2025.

As of June 30, 2026, the development project was substantially complete.

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.

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Because of the numerous risks and uncertainties associated with research, development and commercialization of product candidates, we are unable to estimate our exact working capital requirements.

Our future funding requirements will depend on and could increase significantly as a result of, many factors, including those listed above as well as those listed in Part I, Item 1A, “Risk Factors” in the 2025 10-K and Part II, Item 1A, “Risk Factors” in this Quarterly Report on Form 10-Q and in our other filings with the SEC.

Our future funding requirements will depend on and could increase significantly as a result of, many factors, including those listed above as well as those listed in Part I, Item 1A, “Risk Factors” in the 2025 10-K, Part II, Item 1A, “Risk Factors” in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2026 and Part II, Item 1A, “Risk Factors” in this Quarterly Report on Form 10-Q and in our other filings with the SEC.

In the event additional funding is required, we expect that we would use a combination of equity and debt financings, which may not be available to us when needed, on terms that we deem to be favorable or at all.

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

March 31, 2026 December 31, 2025

June 30, 2026 December 31, 2025

Term debt $ 10,200 $ 10,200

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

As of March 31, 2026, we were in compliance with all of the covenants.

As of June 30, 2026, 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.

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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 March 31, 2026, no payment on principal has been made and the weighted-average effective interest rate for all outstanding debt under the 2024 Term Loan was 7.69%.

As of June 30, 2026, no payment on principal has been made and the weighted-average effective interest rate for all outstanding debt under the 2024 Term Loan was 7.69%.

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

Total undiscounted future minimum payment obligations under our operating leases and finance leases as of March 31, 2026 totaled approximately $39.2 million, of which $1.9 million is payable through the remainder of 2026 and $37.3 million is payable through early 2037.

Total undiscounted future minimum payment obligations under our operating leases and finance leases as of June 30, 2026 totaled approximately $38.6 million, of which $1.3 million is payable through the remainder of 2026 and $37.3 million is payable through early 2037.

The leases expire on various dates through 2037 and provide certain options to renew for additional periods.

On March 19, 2026, we entered into a new lease agreement with an initial term of approximately 11 years for laboratory and office space located in Pittsburgh, Pennsylvania.

As of March 31, 2026, the lease had not yet commenced.

As of June 30, 2026, the lease had not yet commenced.

Upon commencement, we expect the leases to increase our undiscounted future minimum payment obligations by a total of approximately $7.7 million.

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The following table summarizes our sources and uses of cash and cash equivalents for each of the periods presented (in thousands):

Three Months Ended

Net cash used in operating activities $ (22,129) $ (6,036)

Six Months Ended

Net cash (used in) provided by operating activities $ (6,928) $ 14,785

Net cash used in investing activities (41,766) (50,809)

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Operating Activities

Net cash used in operating activities was $22.1 million for the three months ended March 31, 2026.

Net cash used in operating activities was $6.9 million for the six months ended June 30, 2026.

The net loss of $16.6 million includes non-cash charges of stock-based compensation expense of $21.4 million, depreciation and amortization of $8.0 million, offset by net gains on equity securities of $1.4 million.

Cash used as a result of changes in operating assets and liabilities was $19.4 million, primarily due to decreases in accrued compensation of $19.2 million, increases in prepaid expenses and other current assets of $6.7 million, offset by increases in accounts payable of $3.2 million, increases in other accrued and current liabilities of $2.8 million and a decrease in accounts receivable of $1.1 million.

Net cash used in operating activities was $6.0 million for the three months ended March 31, 2025.

The net loss of $25.8 million includes non-cash charges of depreciation and amortization of $29.8 million, stock-based compensation expense of $11.2 million, net losses on equity securities of $1.4 million and accretion of discounts on marketable investment securities of $1.4 million.

Cash used as a result of changes in operating assets and liabilities was $20.4 million, primarily due to decreases in accrued compensation of $14.7 million, increases in accounts receivable of $5.2 million, increases in prepaid expenses and other current assets of $3.4 million, partially offset by decreases in inventory of $1.3 million and increases in other accrued and current liabilities of $1.1 million.

The $16.1 million increase in net cash used in operating activities for the three months ended March 31, 2026, compared to the three months ended March 31, 2025, was primarily due to increases in operating expenditures and the timing of working capital changes, including higher payments of annual bonuses and employee benefits.

Cash used during the three months ended March 31, 2026 included $28.8 million of such payments, compared to $22.5 million in the prior-year period, and these payments are not expected to recur in the remainder of 2026.

Cash used as a result of changes in operating assets and liabilities was $18.2 million, primarily due to decreases in accrued compensation of $11.4 million, increases in prepaid expenses and other current assets of $7.5 million, increases in accounts receivable of $4.7 million, offset by increases in other accrued and current liabilities of $5.3 million and increases in accounts payable of $0.9 million.

Net cash provided by operating activities was $14.8 million for the six months ended June 30, 2025.

The net loss of $21.3 million includes non-cash charges of depreciation and amortization of $33.2 million, stock-based compensation expense of $22.4 million, offset by deferred income taxes of $5.4 million and accretion of discounts on marketable investment securities of $2.6 million.

Cash used as a result of changes in operating assets and liabilities was $11.9 million, primarily due to decreases in accrued compensation of $7.6 million, increases in prepaid expenses and other current assets of $4.7 million and increases in accounts receivable of $1.3 million, partially offset by decreases in account payable of $1.7 million.

The $21.7 million increase in net cash used in operating activities for the six months ended June 30, 2026, compared to the six months ended June 30, 2025, was primarily due to increases in operating expenditures and the timing of working capital changes, including higher payments of annual bonuses and employee benefits.

Cash used during the six months ended June 30, 2026 included $28.8 million of such payments, compared to $22.5 million in the prior-year period, and these payments are not expected to recur in the remainder of 2026.

Investing Activities

Net cash used in investing activities was $25.8 million for the three months ended March 31, 2026 and consisted primarily of purchases of marketable investment securities of $55.1 million, purchases of property and equipment of $12.5 million, partially offset by $39.1 million of proceeds from maturities of marketable investment securities, and $2.7 million of proceeds from the sale of equity securities.

Net cash used in investing activities was $22.4 million for the three months ended March 31, 2025 and consisted primarily of purchases of marketable investment securities of $48.4 million, purchases of debt securities classified as held-to-maturity of $5.6 million and purchases of property and equipment of $4.7 million, partially offset by $36.3 million of proceeds from maturities of marketable investment securities.

The $3.4 million increase in cash used in investing activities for the three months ended March 31, 2026, compared to the three months ended March 31, 2025, was primarily due to $7.7 million of higher purchases of property and equipment and $6.7 million of higher purchases of marketable investment securities, partially offset by no purchases of debt securities classified as held-to-maturity, higher proceeds from maturities of marketable investment securities of $2.8 million, and proceeds from the sale of equity securities of $2.7 million.

Net cash used in investing activities was $41.8 million for the six months ended June 30, 2026 and consisted primarily of purchases of marketable investment securities of $109.6 million, purchases of property and equipment of $21.1 million, partially offset by $80.1 million of proceeds from maturities of marketable investment securities, $5.6 million of proceeds from maturities of debt securities classified as held-to-maturity and $3.2 million of proceeds from the sale of equity securities.

Net cash used in investing activities was $50.8 million for the six months ended June 30, 2025 and consisted primarily of purchases of marketable investment securities of $92.8 million, our asset acquisition of Previse for $18.7 million, purchases of property and equipment of $14.0 million and purchases of debt securities classified as held-to-maturity of $5.6 million, partially offset by the maturity of marketable investment securities of $80.3 million.

The $9.0 million decrease in cash used in investing activities for the six months ended June 30, 2026, compared to the six months ended June 30, 2025, was primarily due to $18.7 million of acquisition related activity in the prior period with no comparable activity in the current period, $5.6 million of proceeds from held-to-maturity securities, offset by $16.8 million in higher purchases of marketable securities and $7.1 million of higher purchases of property and equipment.

Financing Activities

Net cash used in financing activities was $5.0 million for the three months ended March 31, 2026, and consisted primarily of $6.6 million of payments for employee taxes related to the vesting of Restricted Stock Units (“RSUs”) and Performance Stock Units (“PSUs”), partially offset by $1.3 million of proceeds from contributions to our 2019 Employee Stock Purchase Plan (the “ESPP”).

Net cash used in financing activities was $1.6 million for the three months ended March 31, 2025, and consisted primarily of $2.5 million of payments for employee taxes attributable to the vesting of RSUs, partially offset by the $1.0 million of proceeds from contributions to our ESPP.

Net cash used in financing activities was $5.9 million for the six months ended June 30, 2026, and consisted primarily of $7.4 million of payments for employee taxes related to the vesting of Restricted Stock Units (“RSUs”) and Performance Stock Units (“PSUs”) and $1.0 million of payments related to contingent consideration, partially offset by $2.1 million of proceeds from contributions to our 2019 Employee Stock Purchase Plan (the “ESPP”).

Net cash used in financing activities was $1.5 million for the six months ended June 30, 2025, and consisted primarily of the $3.1 million payment of employee taxes attributable to the vesting of RSUs, partially offset by the $1.5 million of proceeds from contributions to our ESPP and $0.2 million of proceeds from lease incentives received.

Critical Accounting Estimates

During the three months ended March 31, 2026, there were no significant changes to the information discussed under “Critical Accounting Estimates” included in the Management’s Discussion and Analysis of Financial Condition and Results of Operations section of our 2025 10-K.

During the six months ended June 30, 2026, there were no significant changes to the information discussed under “Critical Accounting Estimates” included in the Management’s Discussion and Analysis of Financial Condition and Results of Operations section of our 2025 10-K.

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-Q

Item 2. Management’s Discussion and Analysis