GRAIL, Inc. 10-K

Item 8. Financial Statements and Supplementary Data INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page Report of Independent Registered Public Accounting Firm (PCAOB ID: 42 ) 152 Audited Consolidated Financial Statements Consolidated Balance Sheets 153 Consolidated Statements of Operations 154 Consolidated Statements of Comprehensive Loss 155 Consolidated Statements of Stockholders’/ Member’s Equity 156 Consolidated Statements of Cash Flows 157 Notes to Consolidated Financial Statements 158 151 Table of Contents Report of Independent Registered Public Accounting Firm To the Stockholders and the Board of Directors of GRAIL, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of GRAIL, Inc. (the Company) as of December 31, 2025 and 2024, the related consolidated statements of operations, comprehensive loss, stockholders’/member’s equity and cash flows for each of the three years in the period ended December 31, 2025, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with U.S. generally accepted accounting principles. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. /s/ Ernst & Young LLP We have served as the Company’s auditor since 2023. San Mateo, California March 12, 2026 152 Table of Contents GRAIL, Inc. CONSOLIDATED BALANCE SHEETS (Amounts in thousands, except share and per share data) As of December 31, 2025 2024 Assets Current assets: Cash and cash equivalents $ 249,727 $ 214,234 Short-term marketable securities 654,703 549,236 Accounts receivable, net (1) 18,295 20,312 Supplies (2) 16,017 18,632 Prepaid expenses and other current assets (3) 15,107 17,447 Total current assets 953,849 819,861 Property and equipment, net (4) 51,813 69,061 Operating lease right-of-use assets 52,070 66,373 Restricted cash 6,974 3,349 Intangible assets, net 1,850,556 2,016,890 Other non-current assets 6,753 7,773 Total assets $ 2,922,015 $ 2,983,307 Liabilities and stockholders’ equity Current liabilities: Accounts payable $ 2,083 $ 4,844 Accrued liabilities (5) 63,945 57,241 Operating lease liabilities, current portion 11,715 13,260 Other current liabilities 1,927 1,580 Total current liabilities 79,670 76,925 Operating lease liabilities, net of current portion 43,148 54,881 Deferred tax liability, net 218,583 345,860 Other non-current liabilities 2,752 2,236 Total liabilities 344,153 479,902 Commitments and contingencies (Note 10) Stockholders’ equity: Preferred stock, par value of $ 0.001 per share; 50,000,000 shares authorized, no shares issued and outstanding as of December 31, 2025 and December 31, 2024 — — Common stock $ 0.001 par value per share, 1,500,000,000 shares authorized, 40,331,360 and 33,893,409 shares issued and outstanding as of December 31, 2025 and December 31, 2024. 40 34 Additional paid-in capital 12,786,848 12,305,250 Accumulated other comprehensive income 2,655 1,451 Accumulated deficit ( 10,211,681 ) ( 9,803,330 ) Total stockholders’ equity 2,577,862 2,503,405 Total liabilities and stockholders’ equity $ 2,922,015 $ 2,983,307 (1) Includes related party accounts receivable, net of nil and $ 65 , respectively. (2) Includes related party supplies of nil and $ 3,130 , respectively. (3) Includes related party prepaid expenses and other current assets of nil and $ 77 , respectively. (4) Includes related party property and equipment, net of nil and $ 2,227 , respectively. (5) Includes related party accrued liabilities of nil and $ 104 , respectively. See accompanying notes to consolidated financial statements. 153 Table of Contents GRAIL, Inc. CONSOLIDATED STATEMENTS OF OPERATIONS (Amounts in thousands, except per share data) Year Ended December 31, 2025 December 31, 2024 December 31, 2023 Revenue Screening revenue (1) $ 138,601 $ 108,627 $ 74,999 Development services revenue 8,571 16,968 18,106 Total revenue 147,172 125,595 93,105 Costs and operating expenses Cost of screening revenue (exclusive of amortization of intangible assets) (2) 73,251 63,284 47,966 Cost of development services revenue (3) 2,605 6,444 6,861 Cost of revenue — amortization of intangible assets 133,889 133,889 133,889 Research and development (4) 195,794 322,380 338,745 Sales and marketing 116,693 153,958 162,292 General and administrative (5) 159,103 213,862 200,268 Goodwill and intangible assets impairment 28,000 1,420,936 718,466 Total costs and operating expenses 709,335 2,314,753 1,608,487 Loss from operations ( 562,163 ) ( 2,189,158 ) ( 1,515,382 ) Other income Interest income 28,652 26,733 7,954 Other income (expense), net ( 993 ) 64 ( 208 ) Total other income, net 27,659 26,797 7,746 Loss before income taxes ( 534,504 ) ( 2,162,361 ) ( 1,507,636 ) Benefit from income taxes 126,153 135,356 41,951 Net loss $ ( 408,351 ) $ ( 2,027,005 ) $ ( 1,465,685 ) Net loss per share — Basic and Diluted $ ( 11.11 ) $ ( 63.54 ) $ ( 47.21 ) Weighted-average shares of common stock used in computing net loss per share: 36,753,751 31,901,259 31,049,148 (1) Includes related party screening revenue of $ 208 , $ 460 and $ 652 , respectively. (2) Includes related party cost of screening revenue of $ 4,617 , $ 13,091 and $ 8,532 , respectively. (3) Includes related party cost of development services revenue of $ 275 , $ 637 and $ 238 , respectively. (4) Includes related party research and development expenses of $ 3,306 , $ 18,843 and $ 19,508 , respectively. (5) Includes related party general and administrative expenses of nil , $ 104 and $ 206 , respectively. See accompanying notes to consolidated financial statements. 154 Table of Contents GRAIL, Inc. CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Amounts in thousands) Year Ended (in thousands) December 31, 2025 December 31, 2024 December 31, 2023 Net loss $ ( 408,351 ) $ ( 2,027,005 ) $ ( 1,465,685 ) Other comprehensive income: Net unrealized gain on marketable securities, net of tax 110 266 — Foreign currency translation adjustment 1,094 119 172 Comprehensive loss $ ( 407,147 ) $ ( 2,026,620 ) $ ( 1,465,513 ) See accompanying notes to consolidated financial statements. 155 Table of Contents GRAIL, Inc. CONSOLIDATED STATEMENTS OF STOCKHOLDERS’/ MEMBER’S EQUITY (Amounts in thousands, except share data) Common Stock Shares Amount Member’s Equity Additional Paid in Capital Accumulated Other Comprehensive Income Accumulated Deficit Total Stockholders’/Member’s Equity Balance as of January 1, 2023 — $ — $ 10,955,907 $ — $ 894 $ ( 6,310,640 ) $ 4,646,161 Net loss — — — — — ( 1,465,685 ) ( 1,465,685 ) Stock-based compensation expense — — 1,773 — — — 1,773 Other comprehensive income — — — — 172 — 172 Contribution from member, net — — 463,766 — — — 463,766 Balance as of December 31, 2023 — — 11,421,446 — 1,066 ( 7,776,325 ) 3,646,187 Net loss — — — — — ( 2,027,005 ) ( 2,027,005 ) Stock-based compensation expense — — 326 31,607 — — 31,933 Other comprehensive income — — — — 385 — 385 Contribution from member, net — — 312,000 — — — 312,000 Recognition of deferred tax liability in connection with the Spin-Off* — — ( 447,190 ) — — — ( 447,190 ) Reclassification of incentive plan liabilities to additional paid-in capital — — — 54,795 — — 54,795 Disposal funding received in connection with the Spin-Off* — — 932,300 — — — 932,300 Issuance of common stock in connection with the Spin-Off and reclassification of contribution from member, net* 31,049,148 31 ( 12,218,882 ) 12,218,851 — — — Vesting of restricted stock units 2,844,261 3 — ( 3 ) — — — Balance as of December 31, 2024 33,893,409 34 — 12,305,250 1,451 ( 9,803,330 ) 2,503,405 Net loss — — — — — ( 408,351 ) ( 408,351 ) Stock-based compensation expense — — — 58,283 — — 58,283 Other comprehensive income — — — — 1,204 — 1,204 Vesting of restricted stock units 2,491,212 2 — ( 2 ) — — — Issuance of common stock under ESPP 136,551 — — 4,525 — — 4,525 Issuance of common stock and pre-funded warrants in connection with the PIPE, net of issuance costs 2,640,970 3 — 311,316 — — 311,319 Issuance of common stock in connection with the ATM program, net of issuance costs 1,169,218 1 — 107,476 — — 107,477 Balance as of December 31, 2025 40,331,360 $ 40 $ — $ 12,786,848 $ 2,655 $ ( 10,211,681 ) $ 2,577,862 *See Note 1 — Organization And Description Of Business for more information on the Spin-Off. See accompanying notes to consolidated financial statements. 156 Table of Contents GRAIL, Inc. CONSOLIDATED STATEMENTS OF CASH FLOWS (Amounts in thousands) Year Ended December 31, 2025 December 31, 2024 December 31, 2023 Cash flows from operating activities Net loss $ ( 408,351 ) $ ( 2,027,005 ) $ ( 1,465,685 ) Adjustments to reconcile net loss to net cash used by operating activities: Amortization of intangibles assets 138,334 138,333 138,333 Depreciation 18,010 19,723 20,364 Stock-based compensation expense 58,283 86,084 97,235 Deferred income taxes ( 126,153 ) ( 134,251 ) ( 38,153 ) Amortization of discount on marketable securities ( 21,217 ) ( 3,167 ) — Goodwill and intangible assets impairment 28,000 1,420,936 718,466 Credit loss expense 332 — — Cash payment for equity awards — ( 53,807 ) ( 76,910 ) Other 1,347 276 2,829 Changes in operating assets and liabilities: Accounts receivable (1) 1,685 ( 3,370 ) ( 1,383 ) Supplies (2) 2,615 3,073 ( 1,940 ) Operating lease right-of-use assets and liabilities, net 1,025 1,747 6,712 Prepaid expenses and other assets (3) 3,360 1,823 ( 908 ) Accounts payable (4) ( 2,733 ) ( 14,635 ) 2,889 Accrued and other liabilities (5) 6,456 ( 12,916 ) 2,351 Net cash used by operating activities ( 299,007 ) ( 577,156 ) ( 595,800 ) Cash flows from investing activities Purchases of property and equipment (6) ( 909 ) ( 5,208 ) ( 12,887 ) Purchases of marketable securities ( 1,308,340 ) ( 545,803 ) — Proceeds from maturities of marketable securities 1,224,200 — — Net cash used in investing activities ( 85,049 ) ( 551,011 ) ( 12,887 ) Cash flows from financing activities Proceeds from issuance of common stock and pre-funded warrants in connection with the PIPE, net of issuance costs 311,319 — — Proceeds from issuance of common stock in connection with the ATM program, net of issuance costs 107,477 — — Issuance of common stock under ESPP 4,525 — — Cash funding received from Illumina — 1,244,300 464,000 Other — — ( 234 ) Net cash provided by financing activities 423,321 1,244,300 463,766 Effect of exchange rate changes on cash, cash equivalents, and restricted cash ( 147 ) ( 62 ) 305 Net increase (decrease) in cash, cash equivalents, and restricted cash 39,118 116,071 ( 144,616 ) Cash, cash equivalents and restricted cash — beginning of period 217,583 101,512 246,128 Cash, cash equivalents and restricted cash — end of period 256,701 217,583 101,512 Represented by: Cash and cash equivalents 249,727 214,234 97,287 Restricted cash 6,974 3,349 4,225 Total $ 256,701 $ 217,583 $ 101,512 Supplemental cash flow information: Property and equipment included in accounts payable and accrued liabilities $ ( 42 ) $ — $ ( 1,326 ) Operating cash flows from operating leases, net $ ( 17,174 ) $ ( 19,272 ) $ ( 18,733 ) (1) Includes changes in related party accounts receivable of $( 65 ), $ 15 and $ 133 , respectively. (2) Includes changes in related party supplies of $( 3,130 ), $ 2,725 and $( 871 ), respectively. (3) Includes changes in related party prepaid and other current assets of $( 77 ), $( 36 ) and $ 27 , respectively. (4) Includes changes in related party accounts payable of nil , $( 168 ) and $( 2,965 ), respectively. (5) Includes changes in related party accrued liabilities of $ 104 , $ 9 and $ 91 , respectively. (6) Includes related party purchases of property and equipment of $( 591 ), nil and $( 2,644 ), respectively. See accompanying notes to Consolidated financial statements . 157 Table of Contents GRAIL, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1. ORGANIZATION AND DESCRIPTION OF BUSINESS GRAIL, Inc. (“GRAIL” or the “Company”), headquartered in Menlo Park, Californi a , is an innovative commercial-stage healthcare company focused on shifting the paradigm of early cancer detection. The Company’s Galleri blood test is a commercially available screening test for early detection of multiple types of cancer. GRAIL’s common stock is listed under the ticker symbol “GRAL” on the Nasdaq Stock Exchange. GRAIL was previously acquired by Illumina, Inc. (”Illumina”) in August 2021 (the “Acquisition”), at which point it became a 100 % owned subsidiary of Illumina, and held separate as a part of binding hold separate commitments implemented pursuant to orders issued by the European Commission. GRAIL separated from Illumina on June 24, 2024, as described below. GRAIL was a limited liability company (“LLC”) from August 19, 2021 to June 21, 2024 when it was converted into a corporation (the “Conversion”) in anticipation of such separation. Separation from Illumina On June 24, 2024, (the “Distribution Date”), Illumina completed the previously announced spin-off of GRAIL (the “Spin-Off”). The Spin-Off was completed through a distribution of 85.5 % of the Company’s outstanding common stock to the holders of record of Illumina’s common stock as of the close of business on June 13, 2024 (the “Distribution”), which resulted in the distribution of 31.0 million shares of common stock. As a result of the Distribution, the Company became an independent public entity. Illumina’s ownership of GRAIL reduced to 4,502,126 shares of common stock representing 14.5 % ownership of the Company after the Spin-Off. Unless the context otherwise requires, references to the Company or GRAIL, refer to (i) GRAIL, LLC prior to the Conversion and (ii) GRAIL, Inc. and its subsidiaries following the Conversion. In connection with the Spin-Off, the Company entered into or adopted agreements that provide a framework for the relationship between the Company and Illumina, including, but not limited to the following: • Separation and Distribution Agreement — governed the terms and conditions of the Spin-Off and sets forth aspects of the Company’s and Illumina’s relationship following the Spin-Off. See Note 11 — Legal And Regulatory Proceedings for more information regarding the contingencies related to this agreement. • Tax Matters Agreement — governs the respective rights, responsibilities and obligations of Illumina and the Company after the Spin-Off with respect to all tax matters and includes restrictions to preserve the tax-free status of the Distribution. See Note 14 — Taxes and Note 11 — Legal And Regulatory Proceedings regarding income taxes and the contingencies related to this agreement. • Employee Matters Agreement — addresses employment, compensation, and benefits matters, including the allocation and treatment of assets and liabilities relating to employees and compensation and benefits plans and programs in which GRAIL employees participate, as well as the treatment of cash-based incentive awards in connection with the Spin-Off. See Note 8 — Stock-Based Compensation for further details regarding treatment of equity awards. • Stockholder and Registration Rights Agreement — governs the respective rights, responsibilities and obligations of Illumina and the Company after the Spin-Off with respect to Illumina’s continuing ownership of GRAIL common stock. • Supply and Commercialization Agreement Amendment — amends the Company’s supply and commercialization agreement with Illumina, which governs the ongoing supply and commercial relationship, including licensing, royalty payments and intellectual property between GRAIL and Illumina. See Note 16 — Related Party Transactions for more information regarding the royalty arrangements with Illumina. 158 Table of Contents GRAIL, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Illumina provided the Company with disposal funding (the “Disposal Funding”) in the amount of $ 932.3 million in accordance with the Separation and Distribution Agreement, which was subject to a clawback feature that lapsed on September 24, 2025. See Note 11 — Legal And Regulatory Proceedings — Contingencies for details. Our Ability to Continue as a Going Concern The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The realization of assets and the satisfaction of liabilities in the normal course of business are dependent on, among other things, the Company’s ability to manage its net loss and to become profitable and operate profitably, to manage the Company’s negative cash flows from operations and to generate positive cash flows from operations, and the Company’s ability to obtain financing to support working capital requirements. The Company had $ 249.7 million of cash and cash equivalents and $ 654.7 million of short-term marketable securities as of December 31, 2025 . The Company believes that its existing cash and cash equivalents and short-term marketable securities will be sufficient to meet its working capital and capital expenditure needs for at least the next 12 months, as of the date these consolidated financial statements were filed. NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation and Principles of Consolidation After the Spin-Off, the Company became a standalone publicly-traded company, and the Company’s financial statements are presented on a consolidated basis. Prior to the Spin-Off, the accompanying consolidated financial statements represented the historical operations of the standalone GRAIL legal entity and included purchase accounting adjustments and certain tax adjustments as if the Company filed a separate income tax return and was not included in Illumina’s consolidated return for the period of time the Company was owned by Illumina. All revenues and costs as well as assets and liabilities directly associated with the business activity of the Company were included in the consolidated financial statements. Certain assets and liabilities were reflected at fair value under the new basis of accounting established at the closing of the Acquisition. Management considered the need to allocate any shared costs incurred by the parent, Illumina, to the accompanying consolidated financial statements. However, since the European Commission had adopted an order requiring Illumina and GRAIL to be held and operated as distinct and separate entities, no material allocations were required. The financial statements for all periods presented, including the historical results of the Company prior to the Spin-Off, are referred to as “Consolidated Financial Statements” and have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”) and include the accounts of the Company and its wholly owned subsidiaries. All intercompany balances have been eliminated in consolidation. The Company’s significant accounting policies are summarized below. Use of Estimates The preparation of the consolidated financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the amounts of assets and liabilities, disclosure of contingent assets and liabilities, and the reported amounts of revenues and expenses in the consolidated financial statements and accompanying notes. The Company bases its estimates on historical experience and other market- specific or other relevant assumptions that it believes to be reasonable under the circumstances. On an ongoing basis, management evaluates its estimates, including, but not limited to, those related to estimation of variable consideration, standalone selling price included in contracts with multiple performance obligations, measure of progress toward the completion and satisfaction of performance obligations, accrued clinical studies and research and development expenses, stock-based compensation expense, measurement of liability- 159 Table of Contents GRAIL, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS classified awards, valuation of intangible assets, useful lives of intangible assets and property and equipment, determination of incremental borrowing rate for operating leases, contingencies, and the provision for income taxes, among others. These estimates generally involve complex issues and require judgments, involve the analysis of historical results and prediction of future trends, can require extended periods of time to resolve and are subject to change from period to period. Actual results could differ from those estimates, and such differences could be material to the consolidated financial statements. Concentration of Credit Risk Financial Instruments The Company is subject to credit risk from its portfolio of cash, cash equivalents and short-term marketable sec urities held at three accredited financial institutions. As of December 31, 2025, the Company had $ 249.7 million of cash and cash equivalents, and short-term marketable securities of $ 654.7 million . The Company limits its exposure to credit losses by investing in money market funds and United States (“U.S.”) government treasury securities through U.S. banks with high credit ratings. The Company’s cash consi sts of deposits held with banks that may at times exceed federally insured limits, however, its exposure to credit risk in the event of default by the financial institution is limited to the extent of amounts recorded on the consolidated balance sheets. The Company performs evaluations of the relative credit standing of these financial institutions to limit the amount of credit exposure. The Company has not experienced any losses in such accounts. The Company has policy limits for the amount it can invest in any one type of security, except for securities issued or guaranteed by the U.S. government. The goals of the Company’s investment policy, in order of priority, are as follows: minimize risk of the invested capital (including credit risk, interest rate risk and concentration risk), provide liquidity in a timely manner to accommodate operational and capital needs, and subject to the foregoing, seek to generate a reasonable return based on market conditions given these risk and liquidity guidelines. As of December 31, 2025, the Company had no off-balance sheet concentrations of credit risk. Under its investment policy, the Company limits amounts invested in such securities by credit rating, maturity, investment type and issuer, as a result, the Company is not exposed to any significant concentrations of credit risk from these financial instruments. Customers The Company is subject to credit risk related to its accounts receivable. Accounts receivable primarily arise from testing services performed in the U.S. and are primarily with biopharmaceutical companies, healthcare organizations, employers, digital health platforms, concierge medicine practices, life insurance companies, Centers for Medicare & Medicaid Services, and individuals. The Company does not require collateral. Accounts receivable are recorded net of the allowance for credit losses. Significant customers are those that represent more than ten percent of total revenue or accounts receivable, net balances for the periods and as of each consolidated balance sheet date presented, respectively. For the year ended December 31, 2025, no single customer accounted for 10% or more of the Company’s revenue. For the years ended December 31, 2024, and December 31, 2023, one customer accounted for 11 % and 14 % of the Company’s revenue. 160 Table of Contents GRAIL, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS As of December 31, 2025, no single customer accounted for 10% or more of the Company’s account receivable, net. As of December 31, 2024 one customer accounted for 32 % of the Company’s account receivable, net. Suppliers The Company is subject to a concentration risk for equipment, supplies and reagents that are available from a limited number of sources. The Company sources certain laboratory equipment, supplies and reagents used to perform testing services and research and development from single vendors. Historically, the Company has not experienced significant issues sourcing equipment and supplies needed to perform testing services. Cash and Cash Equivalents Cash and cash equivalents consist of cash on deposit with banks denominated in U.S. Dollars and British Pounds, money market funds, and all highly liquid investments with an original maturity of three months or less. Restricted Cash Restricted cash is comprised of cash that is restricted as to withdrawal or use related to letters of credit for the Company’s operating lease agreements. Short-term marketable securities The Company classifies its investments as available-for-sale, which consist of high-grade U.S. government treasury bills and are reported at fair value. Management determines the appropriate classification of investments at the time of purchase and re-evaluates such designation as of each balance sheet date. Marketable securities that mature within twelve months from the balance sheet date are classified as short-term marketable securities and those with maturities over twelve months from the balance sheet date are classified as long-term marketable securities. Unrealized holding gains and losses are reflected as a separate component of shareholders’ equity in accumulated other comprehensive gain (loss) until realized. Realized gains and losses on the sale of these securities are recognized in net income or loss. The Company regularly evaluates its investment portfolio under the available-for-sale debt securities impairment model guidance for indications of possible impairment from credit losses or other factors. For available-for-sale debt securities in an unrealized loss position, the Company evaluates whether a current expected credit loss exists based on available information relevant to the credit rating of the security, current economic conditions and reasonable and supportable forecasts. The Company’s investment portfolio is composed of low-risk, investment grade securities and thus the Company has not recorded an expected credit loss for its investment portfolio. Fair Value of Financial Instruments The fair value of financial assets and liabilities is determined using the fair value hierarchy established in Accounting Standards Codification Topic 820, Fair Value Measurement (“ASC 820”). ASC 820 identifies fair value as the exchange price, or exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. The hierarchy describes three levels of inputs that may be used to measure fair value, as follows: Level 1 —Observable inputs, such as quoted prices in active markets for identical assets and liabilities. Level 2 —Observable inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. 161 Table of Contents GRAIL, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Level 3 —Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. The carrying amounts for financial instruments such as accounts receivable, net, prepaid expenses and other current assets, accounts payable, and accrued liabilities approximate fair value due to their short-term natur e . Accounts Receivable, Net Accounts receivable represent unconditional rights to consideration from customers. Accounts receivable are evaluated regularly for collectability and potential credit losses. Allowance for credit losses is estimated based on management’s assessment of historical collection trends and the financial conditions of customer s , among other factors. These reserves are re-evaluated on a regular basis and adjusted, as needed. Once a receivable is deemed to be uncollectible, the receivable balance is charged against the reserve. As of December 31, 2025, and December 31, 2024, the Company had $ 3.6 million and $ 3.8 million of allowance for credit losses. Supplies Supplies consists of materials and reagents consumed in the performance of testing services. The Company periodically analyzes supply levels and expiration dates, and writes down supply that has become obsolete or that has a cost basis in excess of expected sales requirements as cost of revenue. The Company records an allowance for excess or obsolete supplies using an estimate based on historical trends, usage forecasts and evaluation of near-term expirations. Property and Equipment, Net Property and equipment, net is stated at cost less accumulated depreciation and amortization. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets. Leasehold improvements are amortized using the straight-line method over the shorter of the lease term or the useful life of the improvements. Repair expenses and maintenance costs are expensed as incurred. When an item is sold or disposed of, the cost and related accumulated depreciation or amortization is eliminated and the resulting gain or loss, if any, is recorded in the consolidated statements of operations. The estimated useful lives of the major classes of property and equipment are generally as follows: Useful Life (in Years) Laboratory equipment 3 to 5 Computer hardware 3 Computer software 3 Furniture and fixtures 5 Leasehold improvements Lease Term Leases Leases are classified as operating or financing at lease inception and, as necessary, at modification. Leased assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent its obligation to make lease payments arising from the lease. 162 Table of Contents GRAIL, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Operating leases are included in operating lease right-of-use (“ROU”) assets and operating lease liabilities in the consolidated balance sheets. Operating lease ROU assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. When readily determinable, the Company uses the rate implicit in the lease to discount lease payments; however, when the rate is not readily determinable, the Company uses the incremental borrowing rate based on the information available at the commencement date. The incremental borrowing rate is the rate of interest that a company would have to pay to borrow an amount equal to the lease payments on a collateralized basis over a similar term and in a similar economic environment. The operating lease ROU asset also includes any initial direct costs, lease payments made prior to lease commencement, and lease incentives received. Variable lease payments are expensed as incurred and are not included within the ROU asset and lease liability calculation. Variable lease payments primarily include reimbursements of costs incurred by lessors for common area maintenance and utilities. For each lease, the determined lease term is based on a noncancellable period, including any rent-free periods provided by the lessor, and may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease cost for lease payments is recognized on a straight-line basis over the lease term. Certain lease agreements contain lease and non-lease components. The Company accounts for non-lease components as part of the lease component to which they relate. The Company does not recognize ROU assets and lease liabilities for short-term leases, which have a lease term of twelve months or less and do not include an option to purchase the underlying asset that the Company is reasonably certain to exercise. Goodwill and Intangible Assets Intangible assets identified in the Acquisition include GRAIL trade names, developed technology, and GRAIL in-process research and development (“IPR&D”) and were measured at fair value as of the closing date of Illumina’s acquisition of GRAIL (“ Closing Date”). Goodwill represented the excess of purchase price paid over fair value of the net identifiable assets acquired. The Company’s trade names, GRAIL and Gal ler i , have brand recognition in the market related to the services GRAIL provides customers and the research and development activities GRAIL performs. GRAIL’s developed technology includes intangible assets related to Galler i , its multi-cancer early detection test that was launched as a laborator y -developed test (“LDT”) in 2021, as well as a diagnostic aid for cancer test. The developed technology underpins both Galler i , designed as a cancer screening test for asymptomatic individuals over 50 years of age, and a diagnostic aid for cancer test for patients for whom there is a clinical suspicion of cancer. The cost of identifiable intangible assets with finite lives, such as trade names and developed technology assets, are amortized on a straight-line basis over the assets’ respective estimated useful lives of 9 years and 18 years, respectively. The Company’s IPR&D includ es assets related to GRAIL’s development of a minimal residual disease (“MRD”) test, a post-diagnostic test, that is under development. IPR&D is considered indefinit e -lived and therefore i s not amortized until completed and placed into service or expensed upon abandonment of the associated research and development efforts. Goodwill and IPR&D, which were not amortize d , were reviewed for impairment at least annually or more frequently if events or circumstances indicated a potential for impairment. Goodwill and IPR&D were considered impaired if the carrying value of the reporting unit or IPR&D asset exceeded its respective fair value. The Company performed its goodwill impairment analysis at the reporting unit level. The Company has one reporting unit, which aligns with its reporting structure and availability of discrete financial information. During the goodwill impairment review, the Company assessed qualitative factors to determine whether it was more likely than not that the fair value of the Company’s reporting unit wa s less than the carrying amount, including goodwill. During the indefinite-lived intangible asset impairment review, the Company assessed the qualitative factors to determine whether it was more likely than not that the fair value of the indefinite-lived intangible asset was less 163 Table of Contents GRAIL, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS than the carrying amount. The qualitative factors considered included, but were not limited to, macroeconomic conditions, industry and market considerations, and the Company’s overall financial performance. If the carrying amount of the reporting unit or intangible asset exceeded its fair value, the Company recorded an impairment loss based on the excess. The Company fully impaired goodwill as of December 31, 2024, resulting in no remaining carrying value. In addition, the Company fully impaired its IPR&D assets as of December 31, 2025, resulting in no remaining carrying value as of that date. Impairment of Long-Lived Assets Long-lived assets, other than goodwill and IPR&D (as described above), are evaluated for indications of possible impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability is measured by comparison of the carrying amounts to the future undiscounted cash flows attributable to these assets. Should impairment exist, the impairment would be measured as the amount by which the carrying amount of the assets exceeds the fair value of those assets. Segments The Company operates and manages its business as one reportable operating segment which provides multi-cancer early detection testing and services. The chief operating decision maker (“CODM”) reviews financial information on an aggregate basis for the purposes of evaluating financial performance and allocating the company resources. Substantially all of the Company’s long-lived assets are located in the U.S. Revenue Recognition Revenue is accounted for in accordance with Topic 606, which provides for a five-step model that includes identifying the contract with a customer, identifying the performance obligations in the contract, determining the transaction price, allocating the transaction price to the performance obligations, and recognizing revenue when, or as, an entity satisfies a performance obligation. Revenues are derived from screening and development services. The Company’s revenues were primarily generated in the U.S. Screening Revenue Th e Compan y recognize s screenin g revenu e fro m th e sal e o f cance r screenin g testin g service s fo r patients. Patient s obtai n test s vi a healthcar e systems , employers , digital health platforms, payors , concierg e medicin e practices , lif e insurance provider s o r directl y vi a telemedicine . Patient s receiv e th e multi-cance r earl y detectio n ki t afte r th e orde r i s placed an d complet e th e bloo d draw . Th e specime n i s the n sen t t o th e Company’ s lab , th e tes t i s processed , an d th e resul t is electronicall y delivere d t o th e patients ’ physician . Th e tes t pric e is generally based on our list price, with discounts in certain channels, or, for certain customers, such as larger, higher-volume customers or international distributors, negotiated contractual rates. F or certain customers, we also offer rebates. Th e Compan y identifie s each sal e o f it s tes t t o a custome r a s a singl e performanc e obligation ; therefore , revenu e i s recognize d a t th e poin t o f time whe n th e tes t resul t repor t i s delivered . Invoice s ar e generall y du e withi n 3 0 day s o f receipt. For self-pay patients, the Company has concluded that an implied contract exists, however the transaction price for the implied contract represents variable consideration as there are situations in which the Company is not expected to collect the full invoiced amounts from self-pay patients due to price concessions. The Company utilizes the expected value approach to estimate the transaction price and applies a constraint for such variable consideration, on a portfolio basis. The Company monitors the estimated amounts to be collected at each reporting period based on actual cash collections in order to assess whether a revision to the estimate is required. Both the estimate and any subsequent revision contain uncertainty and require the use of significant judgment in the estimation of the variable consideration and application of the constraint for such variable consideration. The Company analyzes its actual cash collections over the expected collection period and compares it with the 164 Table of Contents GRAIL, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS estimated variable consideration for each portfolio and any difference is recognized as an adjustment to estimated revenue after the expected collection period, subject to assessment of the risk of future revenue reversal. Development Services Revenue Development services revenue includes development activities performed in partnership with biopharmaceutical companies. The Company’s targeted methylation-based technology enables development of products and services to optimize treatment once a cancer has been diagnosed. Biopharmaceutical partners engage the Company to run pilots and research studies to evaluate and learn about the technology’s application. The Company evaluates the terms and conditions included within its development services contracts with biopharmaceutical customers to ensure appropriate revenue recognition, including whether services are considered distinct performance obligations. The Company first identifies material promises under the contract and then evaluates whether these promises are capable of being distinct within the context of the contract. In assessing whether a promised service is capable of being distinct, the Company considers whether the customer could benefit from the service either on its own or together with other resources that are readily available to the customer, including factors such as the research, development, and commercialization capabilities of a third party as well as the availability of the associated expertise in the general marketplace. For contracts with multiple performance obligations, the transaction price is allocated to the separate performance obligations on a relative standalone selling price basis. The Company determines the standalone selling price by considering the historical selling price of these performance obligations in similar transactions as well as other factors, including, but not limited to, the price that customers in the market would be willing to pay, competitive pricing of other vendors, industry publications and current pricing practices, and expected costs of satisfying each performance obligation plus appropriate margin; or by using the residual approach if standalone selling price is not observable, by reference to the total transaction price less the sum of the observable standalone selling prices of other performance obligations promised in the contract. Biopharmaceutical partners engage the Company to run pilot and research studies by sending patient samples and comparing the Company’s test result to their expected result for evaluation of performance and application. The Company recognizes revenue as performance obligations are completed. Following favorable results from pilot and research studies, biopharmaceutical partners and the Company may enter into development service agreements related to clinical trial and companion diagnostic device development and regulatory submissions for the developed product(s). These agreements typically have multiple commitments of services and therefore have longer performance periods. The Company uses an input method based on costs incurred to measure its progress toward the completion and satisfaction of the performance obligations. The Company assesses the changes to the total expected cost estimates as well as any incremental fees negotiated resulting from changes to the scope of the original contract in determining the revenue recognized at each reporting period. Invoices are generally due within 60 days. Deferred Revenue Deferred revenue, which is a contract liability, consists primarily of payments received in advance of revenue recognition from contracts with customers. For example, prepayments received from patients for screening testing services and development services and other contracts with biopharmaceutical customers often contain upfront payments which results in the recording of deferred revenue to the extent cash is received prior to the Company’s performance of the related development services. Contract liabilities are relieved as the Company performs its obligations under the contract and revenue is recognized. Deferred revenue was $ 1.9 million and $ 1.6 million as of December 31, 2025 and December 31, 2024, all of which is considered short-term and was recorded within other current liabilities on the accompanying consolidated balance sheets. Cost of Screening Revenue Cost of screening revenue generally consists of cost of materials, labor including salaries and wages, bonus, benefits and stock-based compensation , amortization of GRAIL intangible assets, blood collection kits and shipping, phlebotomy, royalties, electronic medical records, equipment depreciation, and allocations of overhead 165 Table of Contents GRAIL, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS expenses such as facilities and information technology costs . Per the terms of the Separation and Distribution Agreement with Illumina, the royalty arrangement with Illumina is suspended until the earlier of December 24, 2026, or any change of control of the Company, at which time a high-single digit royalty will be payable on screening revenue . Cost of Development Services Revenue Cost of development services revenue generally consists of materials and patient sample acquisition, labor including salaries and wages, bonus, benefits and stock-based compensation, royalties, equipment depreciation, and allocations of overhead expenses such as facilities and information technology costs . Per the terms of the Separation and Distribution Agreement with Illumina, the royalty arrangement with Illumina is suspended until the earlier of December 24, 2026 or any change of control of the Company, at which time a high-single digit royalty will be payable on development services revenue . Accrued Clinical Studies and Research and Development Expenses Estimates of unbilled costs of research and development activities for clinical studies conducted by third- party service providers are accrued. The estimated costs of research and development activities are recorded based upon the estimated amount of services provided. These costs are included in accrued liabilities in the consolidated balance sheets and within research and development expenses in the consolidated statements of operations. These costs are a significant component of research and development expenses. The costs are accrued based on factors such as estimates of the work completed and in accordance with agreements established with third-party service providers. The judgments and estimates in determining the accrued liabilities balance are assessed in each reporting period. Research and Development Research and development expenses include costs incurred to develop the Company’s technology (prior to establishing technological feasibility), collect clinical samples, and conduct clinical studies to develop and support the Company’s multi-cancer test s . These costs consist of personnel costs, including salaries, benefits, and stock-based compensation expense associated with the research and development personnel, laboratory supplies, consulting costs, costs associated with setting up and conducting clinical studies at domestic and international sites, and allocated overhead expenses including rent, information technology, and equipment depreciation. Both internal and external research and development costs are expensed in the periods in which they are incurred. Nonrefundable advance payments for goods and services that will be used or rendered in future research and development activities are deferred and recognized as expense in the period in which the related goods are delivered, or services are performed. Advertising Costs Advertising costs are expensed as incurred. Advertising costs were $ 15.1 million, $ 17.7 million and $ 21.9 million for the years ended December 31, 2025, December 31, 2024 , and December 31, 2023 . Stock-Based Compensation Expense The Company’s stock-based compensation expense includes expenses related to restricted stock units (“RSUs”), performance stock units (“PSUs”), deferred stock units (“DSUs”), performance stock options (“PSOs”), Employee Stock Purchase Plan (“ESPP”) and Cash-Based Equity Awards. Forfeitures are accounted for as incurred. The grant date fair values of RSUs and PSUs are generally determined based on the closing market price of GRAIL’s common stock on the date of the grant and in the case of DSUs resulting from deferrals of director cash fees, based on the closing market price of GRAIL’s common stock on the date that such cash fees would have been otherwise paid. Generally, awards of RSUs are granted subject to service conditions and PSUs are granted subject to service and performance based-conditions, with vesting periods ranging between 18 and 48 months. 166 Table of Contents GRAIL, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Stock-based compensation expense is recognized based on the fair value of the award on a straight-line basis over the requisite service periods of the RSUs. The fair value of the PSUs begins to be recognized when it is probable that the performance-based condition will be met. The fair value of shares to be issued under the ESPP, is derived using the Black-Scholes-Merton option-pricing model at the commencement of 6-month purchase periods in May and November of each year. Stock-based compensation for the ESPP is expensed using a straight-line attribution method over the offering period. Additionally, forfeitures are accounted for as incurred. The fair value of PSOs that continue to be subject to service conditions was determined using the Black-Scholes-Merton option-pricing model. The model assumptions include expected volatility, term, dividends, and the risk-free interest rate. The expected volatility was determined by weighting the historical and implied volatility of peer companies’ common stock. The expected term was the Company’s best estimates based on the vesting period and contractual term. Given that cash dividends were never declared or paid on the Illumina nor GRAIL common stock, the expected dividend yield is determined to be 0 %. The risk-free interest rate was based upon U.S. Treasury securities with remaining terms similar to the expected term of the stock-based awards. The fair value of the PSOs begins to be recognized when it is probable that the performance-based condition will be met. A cash-based equity incentive award (the “Cash-Based Equity Award”) program was adopted following Illumina’s acquisition of GRAIL in 2021 to provide GRAIL employees with dollar-denominated long-term incentive awards that were indexed to the value of GRAIL. In connection with the Spin-Off, in accordance with the Employee Matters Agreement, the Cash-Based Equity Awards, which were cash-settled, liability-classified awards, were modified to become RSUs that will be settled in shares of the Company’s common stock upon vesting (the “Award Modification”). Unvested PSOs that were previously held by certain GRAIL employees to purchase Illumina common stock were converted to options to purchase GRAIL common stock in connection with the Spin-Off. Prior to the Award Modification, the Cash-Based Equity Awards were liability-classified awards because the Cash-Based Equity Awards could be (and were) settled in cash. Until April 30, 2024, GRAIL’s stand-alone value calculation was estimated by the Company based on its analysis and the input from independent valuation advisors. The value of the Cash-Based Equity Awards was recorded over the applicable vesting periods, with recognition of a corresponding liability recorded in incentive plan liabilities in the consolidated balance sheets. The Cash-Based Equity Awards were remeasured at each reporting date until settlement with changes in fair value recognized in stock-based compensation expense. On April 30, 2024, Illumina’s Compensation Committee approved an adjustment of the ordinary course payouts of the Cash-Based Equity Awards providing that the Cash-Based Equity Awards would be paid based on their nominal (face) value without adjustment based on changes in equity value. Subsequent to this adjustment to the Cash-Based Equity Awards and continuing until the Award Modification, the Cash-Based Equity Awards were expensed in accordance with their applicable vesting schedules. There were no Cash-Based Equity Awards outstanding as of December 31, 2024 . See Note 8 — Stock-Based Compensation for further details. Deferred Offering Costs The Company capitalizes certain legal, professional accounting and other third-party fees that are directly associated with in-process equity financings as deferred offering costs until such financings are consummated. After the consummation of an equity financing, these costs are recorded as a reduction of additional paid-in capital. Should the in-process equity financing be abandoned, the deferred offering costs will be expensed immediately as a charge to operating expenses in the consolidated statements of operations. 167 Table of Contents GRAIL, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Pre-funded Warrants Pre-funded warrants are classified as a component of stockholders’ equity within additional paid-in capital and are recorded at the issuance date. The pre-funded warrants are equity classified because they (i) are freestanding financial instruments that are legally detachable and separately exercisable from the equity instruments, (ii) are immediately exercisable, (iii) do not embody an obligation for the Company to repurchase its shares, (iv) permit the holders to receive a fixed number of shares of common stock upon exercise, (v) are indexed to the Company’s common stock and (vi) meet the equity classification criteria. In addition, such pre-funded warrants do not provide any guarantee of value or return. The value of the pre-funded warrants is known at issuance, as their sales price approximates their fair value, and net proceeds from the sale are recorded as a component of additional paid-in capital. Defined Contribution Plan The Company sponsors a defined contribution plan under Section 401(k) of the Internal Revenue Code (the “401(k) Plan”) pursuant to which, eligible employees can elect to contribute eligible compensation to the 401(k) Plan, subject to certain limitations. On January 1, 2023, the 401K Plan was modified to provide for a 100 % employer match of employee contributions up to a maximum of three thousand dollars per employee. For the years ended December 31, 2025 and December 31, 2024, the Company contributed $ 2.6 million and $ 3.9 million to match employee contributions. The Company pays the administrative costs for the 401(k) plan. Benefit from Income Taxes Income taxes are accounted for under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the future tax consequences of events that have been included in the consolidated financial statements. Deferred tax assets are recognized for deductible temporary differences and tax credit carryforwards, and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portions or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. We recognize the impact of a tax position in our consolidated financial statements only if that position is more likely than not of being sustained upon examination by taxing authorities, based on the technical merits of the position. Due to the complexity of some of the uncertainties, the ultimate resolution may result in payments that are materially different from our current estimate of the tax liability. These differences, as well as any interest and penalties, will be reflected in the provision for income taxes in the period in which they are determined. As a standalone entity, the Company files tax returns on its own behalf, and tax balances and the effective income tax rate may differ from the amounts reported in historical periods. As of June 24, 2024 and in connection with the Spin-Off, the Company adjusted its deferred tax balances and computed its related tax provision to reflect operations as a standalone entity. During the period that Illumina held the Company, the Company’s activity generated various tax attributes recognized as deferred tax assets, due primarily to the generation of net operating losses, IRC 174 capitalized research and experimental expenditures, and research and development (“R&D”) tax credits that could not be specifically utilized by the Company as it did not generate positive taxable income and it was not a separately regarded tax paying entity from Illumina. Since the Company was not a separately regarded taxable entity from Illumina, these tax attributes were either utilized by or will be utilized by Illumina when filing its consolidated tax return. Historically, the tax attributes were o nly presented in the Company’s standalone financial statements to allow the users to understand the financial position of the Company as a standalone taxable entity under the Separate-Return Method. The total tax-effected value of the tax attributes, net of Financial Accounting Standards Board Interpretation No. 48 liabilities and valuation allowance that were deemed to be the property of Illumina, was $ 447.2 million. In connection with the Spin-off, the 168 Table of Contents GRAIL, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS underlying $ 447.2 million of tax attributes were adjusted through an entry of $ 447.2 million to additional paid in capital. Net Loss Per Share The Company calculates basic net loss per share by dividing the net loss by the weighted-average number of shares of common stock outstanding for the period. The weighted-average shares number of shares of common stock outstanding as of December 31, 2025 included pre-funded warrants, as the shares underlying the warrants are issuable for little cash consideration and are immediately exercisable . Diluted net loss per share is computed based on the sum of the weighted average number of common shares and potentially dilutive common shares outstanding during the period. In loss periods, basic and diluted net loss per share are identical since the effect of potentially dilutive common shares is antidilutive and therefore excluded. Potentially dilutive common shares consist of shares issuable under equity awards. Potentially dilutive common shares from equity awards are determined using the average share price for each period under the treasury stock method. In addition, proceeds from exercise of equity awards and the average amount of unrecognized compensation expense for equity awards are assumed to be used to repurchase shares. Restructuring Charges Restructuring charges consist primarily of severance, benefits, payroll taxes, and other related costs. The Company records a liability for ongoing employee termination benefits when it is probable that an employee is entitled to them and the amount of the benefits can be reasonably estimated. One-time employee termination costs are recognized when management has communicated the termination plan to employees, unless future service is required, in which case the costs are recognized ratably over the future service period. All other related costs are recognized when incurred. Restructuring charges are recognized as an operating expense within the consolidated statements of operations and are classified based on each employee’s respective function. Foreign Currency The functional currency of the foreign subsidiary is the British Pound. Adjustments resulting from translating the financial statements of the United Kingdom subsidiary into U.S. Dollars are recorded as a component of other comprehensive loss in the consolidated statements of comprehensive loss. Monetary assets and liabilities denominated in a foreign currency are translated into U.S. Dollars at the exchange rate on the balance sheet date. Revenues and expenses are translated at the weighted-average exchange rates during the period. Equity transactions are translated using historical exchange rates. Gains and losses resulting from translation of foreign currency monetary transactions are reported in other income (expense), net in the consolidated statements of operations and comprehensive loss. Gains and losses resulting from foreign currency transactions that are deemed to be of a long-term investment nature are reported as a separate component of other comprehensive loss. 169 Table of Contents GRAIL, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Reclassification Certain amounts within the segment disclosure in the footnote to the consolidated financial statements for the respective periods ended December 31, 2024 and December 31, 2023 have been conformed to the current period presentation. Recent Accounting Pronouncements The Company evaluates all Accounting Standards Updates (“ASUs”) issued by the Financial Accounting Standards Board (the "FASB") for consideration of their applicability. ASUs not included in the disclosures in this report were assessed and determined to be either not applicable or are not expected to have a material impact on the Company’s consolidated financial statements. Recently Adopted Accounting Pronouncements In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. This update improves income tax disclosure requirements, primarily through enhanced transparency and decision usefulness of disclosures. The Company adopted the standard on its effective date in 2025, on a retroactive basis, and has included the required disclosures in Note 14 — Taxes . Accounting Pronouncements Not Yet Adopted In November 2024, the FASB issued ASU No. 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures. This update intends to improve financial reporting by requiring disclosure of additional information about specific expense categories. This guidance is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027. Early adoption is permitted and the guidance is to be applied prospectively and may be applied retrospectively. The Company is currently evaluating the impact of this guidance on its consolidated financial statements and related disclosures. In May 2025, the FASB issued No. ASU 2025-04, Compensation-Stock Compensation (Topic 718) and Revenue from Contracts with Customers (Topic 606). This update address diversity in practice and improves the operability of accounting for share-based consideration granted to customers. The amendments clarify how to distinguish between service and performance conditions for vesting, require entities to estimate forfeitures for all share-based consideration payable to customers, and specifies that variable consideration guidance in ASC 606 does not apply when measuring such awards. This guidance is effective for fiscal years beginning after December 15, 2026, and interim reporting periods within those annual reporting periods, with early adoption permitted. The transition method may be modified retrospective or on a retrospective basis. The Company is currently evaluating the impact of this guidance on its consolidated financial statements and related disclosures. In July 2025, the FASB issued ASU No. 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. This update provides entities with a practical expedient related to developing reasonable and supportable forecasts as part of estimating expected credit losses, in which entities may elect to assume that current conditions as of the balance sheet date do not change for the remaining life of the asset. This guidance is effective for fiscal years beginning after December 15, 2025 and interim reporting periods within those annual reporting periods. Early adoption is permitted. The Company is currently evaluating the impact of this guidance on its consolidated financial statements and related disclosures. In September 2025, the FASB issued ASU No. 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. This update removes all references to software development project stages and requires entities to start capitalizing software costs when both of the following occur: (i) management has authorized and committed to funding the software project and (ii) it is probable that the project will be completed and the software will be used to perform the function intended. This guidance is effective for fiscal years beginning after December 15, 2027 and interim 170 Table of Contents GRAIL, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS reporting periods within those annual reporting periods. Early adoption is permitted. The transition method may be prospective, modified, or retrospective. The Company is currently evaluating the impact of this guidance on its consolidated financial statements and related disclosures. In December 2025, the FASB issued ASU No. 2025-10 (ASC Topic 832), Accounting for Government Grants Received by Business Entities. This ASU establishes the accounting and presentation for government grants received by a business entity. This guidance is effective for fiscal years beginning after December 15, 2028 and interim reporting periods within those annual reporting periods. Early adoption is permitted. This ASU provides for adoption either on a modified prospective, modified retrospective, or retrospective basis. The Company is currently evaluating the impact of this guidance on its consolidated financial statements and related disclosures. In December 2025, the FASB issued ASU No. 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements. This update enhances consistency in interim reporting for all entities by clarifying interim disclosure requirements and the form and content of interim financial statements in accordance with GAAP. This guidance is effective for interim reporting periods with annual reporting periods beginning after December 15, 2027. Early adoption is permitted and must be applied either prospectively or retrospectively to any or all prior periods presented in the financial statements. The Company is currently evaluating the impact of this guidance on its consolidated financial statements and related disclosures. In December 2025, the FASB issued ASU No. 2025-12, Codification Improvements. This update includes a series of technical amendments intended to clarify guidance, correct unintended application issues, and improve consistency and operability across various Topics within the FASB Accounting Standards Codification. This guidance is effective for fiscal years beginning after December 15, 2026 and interim reporting periods within those annual reporting periods. Early adoption is permitted. The Company is currently evaluating the impact of this update on its consolidated financial statements and related disclosures. 171 Table of Contents GRAIL, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 3. REVENUE The following table presents the Company’s revenue disaggregated by geographic areas based on the customers’ locations: Year Ended (in thousands) December 31, 2025 December 31, 2024 December 31, 2023 United States Screening $ 136,760 $ 108,536 $ 75,000 Development Services 333 2,280 3,679 International (1) Screening 1,841 91 — Development Services 8,238 14,688 14,426 Total $ 147,172 $ 125,595 $ 93,105 _________ (1) International region includes revenue earned from customers located outside of the United States. The following table presents the Company’s revenue disaggregated by revenue source: Year Ended (in thousands) December 31, 2025 December 31, 2024 December 31, 2023 Screening Commercial $ 133,933 $ 108,467 $ 75,000 Government (1) 4,668 160 — Development Services Commercial 8,571 16,968 18,105 Total $ 147,172 $ 125,595 $ 93,105 _________ (1) Government screening revenue primarily consists of revenue earned as part of our REACH/Galleri-Medicare clinical study. 172 Table of Contents GRAIL, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 4. GOODWILL AND INTANGIBLE ASSETS Due to the application of pushdown accounting, the Company’s consolidated balance sheet included goodwill and intangible assets recognized by Illumina in connection with Illumina’s acquisition of the Company. Goodwill Impairment Goodwill represented the excess of purchase price Illumina paid over the fair value of the net identifiable assets acquired upon the Acquisition of the Company. (in thousands) Goodwill Balance as of January 1, 2023 $ 1,497,402 Impairment ( 608,466 ) Balance as of December 31, 2023 888,936 Impairment ( 888,936 ) Balance as of December 31, 2024 $ — 2023 Goodwill Impairment In Q3 2023, Illumina concluded the sustained decrease in Illumina’s stock price and overall market capitalization during the quarter was a triggering event indicating the fair value of GRAIL might be less than its carrying amount which led the Company to test goodwill for impairment. The assessment was performed using a combination of both an income and a market approach to determine the fair value of goodwill. The income approach utilized estimated discounted cash flows, while the market approach utilized comparable company information. Estimates and assumptions used in the income approach included projected cash flows and a discount rate . The discount rate selected at the time of the goodwill impairment assessment was 24.0 % . The Company recognized a goodwill impairment of $ 608.5 as a result of the impairment assessment, primarily due to changes to expected timing of revenue and a higher discount rate selected for the fair value calculation of GRAIL. 2024 Goodwill Impairment In Q2 2024, prior to the Spin-Off, the approval of the Spin-Off by Illumina’s board of directors represented a potential indicator of impairment, which also aligned with the timing of Illumina’s annual goodwill impairment test date for 2024. The assessment was performed using a market approach to determine the fair value of goodwill which utilized the valuation ranges prepared by the divestment financial advisors engaged by Illumina in connection with the Spin-Off. The valuation ranges were determined using revenue multiples from public company peers for 2024 and 2025. The implied discount rate for the goodwill impairment assessment was 51.5 %. The Company recognized a goodwill impairment of $ 888.9 as a result of the impairment assessment, primarily due to changes to the forecast of GRAIL’s value and the method for valuing GRAIL . These estimates and assumptions in each of the evaluations described above represent a Level 3 measurement because they include unobservable inputs that are supported by little or no market activity and reflect Company-determined and judgmental factors for these assumptions in measuring fair value. The assumptions in the assessment of an impairment analysis are inherently subjective due to uncertainty and any slight changes in these rates and assumptions could have a significant impact on the concluded value of goodwill. 173 Table of Contents GRAIL, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Intangible Assets Intangible assets identified in connection with Illumina’s acquisition of the Company include developed technology, trade names and IPR&D and were measured at fair value as of the Closing Date. The following roll-forward indicates the fair values assigned to finite-lived intangible assets and the resulting amortization: As of December 31, 2025 December 31, 2024 (in thousands) Gross Carrying Amount Accumulated Amortization Net Intangible Assets Gross Carrying Amount Accumulated Amortization Net Intangible Assets Developed Technologies $ 2,410,000 $ ( 580,185 ) $ 1,829,815 $ 2,410,000 $ ( 446,297 ) $ 1,963,703 Trade Names 40,000 ( 19,259 ) 20,741 40,000 ( 14,813 ) 25,187 Total Finite-Lived Intangible Assets $ 2,450,000 $ ( 599,444 ) $ 1,850,556 $ 2,450,000 $ ( 461,110 ) $ 1,988,890 The following roll-forward indicates the carrying value of the indefinite-lived intangible asset from the Acquisition and the impairment expenses recorded: (in thousands) IPR&D Balance as of January 1, 2023 $ 670,000 Impairment ( 110,000 ) Balance as of December 31, 2023 560,000 Impairment ( 532,000 ) Balance as of December 31, 2024 28,000 Impairment ( 28,000 ) Balance as of December 31, 2025 $ — In conjunction with the Q3 2023 goodwill impairment assessment described above, the Company also evaluated the IPR&D intangible asset for potential impairment. The evaluation for a potential impairment of the IPR&D intangible asset was performed by comparing its carrying value to the assessed estimated fair value, which was determined by the income approach, using a discounted cash flow model. Estimates and assumptions used in the income approach included projected cash flows and a discount rate. The discount rate selected at the time of the IPR&D intangible impairment assessment was 19.0 %. Based on the impairment test performed, the Company assessed and determined that the carrying value of the IPR&D intangible asset exceeded its estimated fair value. As a result, the Company recognized an impairment of $ 110.0 million, primarily due to a decrease in projected cash flows and a higher discount rate selected for the fair value calculation. In conjunction with Illumina’s Q2 2024 goodwill impairment assessment, the IPR&D intangible asset of the GRAIL reporting unit was evaluated for potential impairment by Illumina prior to the Spin-Off. The evaluation for a potential impairment of the IPR&D intangible asset was performed by comparing its carrying value to the assessed estimated fair value, which was determined by the income approach, using a discounted cash flow model. Estimates and assumptions used in the income approach included projected cash flows and a discount rate. The discount rate selected at the time of the IPR&D intangible impairment assessment was 46.5 %. Based on the impairment test performed, Illumina assessed and determined that the carrying value of GRAIL’s IPR&D intangible asset exceeded its estimated fair value. As a result of push down accounting, the Company recognized an impairment of $ 420.0 million primarily due to changes to revenue projections and the discount rate utilized. 174 Table of Contents GRAIL, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS In Q2 2024, subsequent to the Spin-Off, the Company performed a portfolio review and determined to decrease investment in the development of the IPR&D asset, which impacted the amount and timing of expected future cash flows attributable to IPR&D. This determination was driven by the impact of the Company’s post-Spin-Off capital structure, constitution of the Company’s Board at the time of the Spin-Off as the key decision maker for the determination, and increased ability to revisit the Company’s business strategy and portfolio as a standalone public company without regulatory oversight. This represented a potential impairment indicator. An impairment assessment was performed using a discounted cash flow model utilizing the updated projected cash flows and discount rate. The discount rate selected was 20.0 %. Based on the impairment test performed, the Company assessed and determined that the carrying value of the IPR&D intangible asset exceeded its estimated fair value. As a result, the Company recognized an additional impairment of $ 112.0 million, primarily due to a decrease in projected cash flows. In Q2 2025, the Company identified a change in market conditions in relation to its IPR&D asset which is in development. The change is expected to impact the amount of future cash flows attributable to the technology underlying the IPR&D asset. This represented a potential impairment indicator. An impairment assessment was performed using a discounted cash flow model utilizing the updated projected cash flows and discount rate. The discount rate selected was 21.0 %. Based on the impairment test performed, the Company assessed and determined that the carrying value of the IPR&D intangible asset exceeded its estimated fair value. As a result, the Company recognized an impairment of $ 28.0 million, resulting in the write off of the entire carrying value of the IPR&D asset. The estimates and assumptions updated in each of the evaluations described above represent a Level 3 measurement because they include unobservable inputs that are supported by little or no market activity and reflect Company-determined and judgmental factors for these assumptions in measuring a fair value. The assumptions in the assessment of an impairment analysis are inherently subjective due to uncertainty and any slight changes in these rates and assumptions could have a significant impact on the concluded value of the Goodwill and IPR&D intangible assets. During 2024, the Company performed a recoverability test of its finite-lived intangible assets, and no impairment was identified. In 2025, the Company determined that no triggering events occurred that would require performing a recoverability test, and accordingly, no impairment charge was recorded. See Note 17, Subsequent Events, for information regarding a possible impairment indicator related to the Company’s finite-lived intangible assets identified during the three months ending March 31, 2026. Amortization expense related to finite-lived intangible assets was $ 138.3 million for each of the years ended December 31, 2025, December 31, 2024 , and December 31, 2023 . The estimated future annual amortization of finite-lived intangible assets is shown in the following table. Actual amortization expense to be reported in future periods could differ from these estimates as a result of acquisitions, divestitures, and asset impairments, among other factors. (in thousands) Estimated Annual Amortization 2026 $ 138,333 2027 138,333 2028 138,333 2029 138,333 2030 136,852 Thereafter 1,160,372 Total $ 1,850,556 175 Table of Contents GRAIL, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 5. BALANCE SHEET COMPONENTS The following tables present financial information of certain consolidated balance sheets components: As of December 31, (in thousands) 2025 2024 Property and equipment, net Laboratory equipment $ 54,113 $ 53,550 Computer hardware 3,993 4,682 Furniture and fixtures 2,515 2,577 Computer software 1,072 1,072 Leasehold improvements 59,769 59,764 Construction-in-process 804 1,296 Property and equipment, gross 122,266 122,941 Less accumulated depreciation and amortization ( 70,453 ) ( 53,880 ) Total property and equipment, net $ 51,813 $ 69,061 As of December 31, (in thousands) 2025 2024 Accounts Receivable, net Trade accounts receivable, gross $ 21,899 $ 24,099 Allowance for credit losses ( 3,604 ) ( 3,787 ) Total accounts receivable, net $ 18,295 $ 20,312 As of December 31, (in thousands) 2025 2024 Accrued liabilities Accrued compensation expenses $ 36,299 $ 34,530 Accrued clinical studies and research and development expenses 15,656 13,027 Accrued legal and professional service expenses 3,650 2,966 Accrued other expenses 8,340 6,718 Total accrued liabilities $ 63,945 $ 57,241 176 Table of Contents GRAIL, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 6. FAIR VALUE MEASUREMENTS, CASH EQUIVALENTS AND MARKETABLE SECURITIES The following tables represent the fair value hierarchy for the Company’s financial assets measured at fair value on a recurring basis as of December 31, 2025 and December 31, 2024 : December 31, 2025 (in thousands) Fair Value Level 1 Level 2 Level 3 Financial Assets: Money market funds $ 63,195 $ 63,195 $ — $ — U.S. government treasury bills 184,041 184,041 — — Total cash equivalents 247,236 247,236 — — U.S. government treasury bills 654,703 654,703 — — Total short-term marketable securities 654,703 654,703 — — Total $ 901,939 $ 901,939 $ — $ — December 31, 2024 (in thousands) Fair Value Level 1 Level 2 Level 3 Financial Assets: Money market funds $ 94,697 $ 94,697 $ — $ — U.S. government treasury bills 117,442 117,442 — — Total cash equivalents 212,139 212,139 — — U.S. government treasury bills 549,236 549,236 — — Total short-term marketable securities 549,236 549,236 — — Total $ 761,375 $ 761,375 $ — $ — The following tables summarize the Company’s cash equivalents and marketable securities’ amortized costs, gross unrealized gains, gross unrealized losses and estimated fair values by significant investment category: December 31, 2025 (in thousands) Amortized Cost Gross Unrealized Gains Estimated Fair Value Money market funds $ 63,195 $ — $ 63,195 U.S. government treasury bills 838,368 376 838,744 Total $ 901,563 $ 376 $ 901,939 December 31, 2024 (in thousands) Amortized Cost Gross Unrealized Gains Estimated Fair Value Money market funds $ 94,697 $ — $ 94,697 U.S. government treasury bills 666,412 266 666,678 Total $ 761,109 $ 266 $ 761,375 All of the Company’s marketable securities had maturities of less than one year. There were no marketable securities in an unrealized loss position as of December 31, 2025 and December 31, 2024. Accordingly, no credit loss impairment was recognized as of December 31, 2025 and December 31, 2024 . 177 Table of Contents GRAIL, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 7. COMMON STOCK Private Investment of Public Equity (the “PIPE”) On October 18, 2025, the Company entered into a securities purchase agreement (the "Purchase Agreement") with certain investors for the private placement of (i) 2,640,970 shares of GRAIL's common stock at a price of $ 70.05 per share and (ii) pre-funded warrants to purchase an aggregate of 1,998,573 shares of GRAIL’s common stock (the "Pre-Funded Warrants") at a purchase price of $ 70.049 per Pre-Funded Warrant, which represents the per share price for the common stock less the $ 0.001 exercise price. The PIPE closed on October 21, 2025, at which time the Company received aggregate net proceeds of $ 311.3 million, after deducting issuance costs of $ 13.7 million. All of the Pre-Funded Warrants issued in the PIPE were outstanding as of December 31, 2025. At the Market Equity Distribution Program (the “ATM Program”) On November 14, 2025, the Company entered into an equity distribution agreement (“Equity Distribution Agreement”), with certain sales agents, establishing an ATM Program under which the Company may offer and sell shares of its common stock, having an aggregate offering price of $ 300.0 million or up to 6,900,000 shares of common stock. During 2025, the Company issued 1,169,218 shares of its common stock and the Company received aggregate net proceeds of $ 107.5 million, after deducting issuance costs of $ 3.2 million. As of December 31, 2025, $ 189.3 million worth of shares of common stock remained available for sale pursuant to the ATM Program. Samsung Stock Purchase Agreement (the “Samsung SPA”) On October 16, 2025, the Company entered into a stock purchase agreement (the “Samsung SPA”), by and among the Company, Samsung C&T Corporation (“Samsung C&T”), Samsung Electronics Singapore Pte. Ltd. (together with Samsung C&T, the “Samsung Investors”) and Samsung Electronics Co., Ltd. (“Samsung Electronics”), providing for the issuance and sale by the Company to the Samsung Investors in a private placement of an aggregate of 1,570,308 shares of GRAIL’s common stock, at a purchase price of $ 70.05 per share, upon the terms and conditions set forth in the Samsung SPA, including closing conditions, for aggregate gross proceeds of approximately $ 110.0 million (the “Samsung Investment”). The Company is also subject to a number of obligations described in the Samsung Stock Purchase Agreement. The Samsung Stock Purchase Agreement contains customary representations, warranties and agreements by the Company, indemnification obligations of the Company and the Samsung Investors for liabilities under the Securities Act of 1933, as amended (the “Securities Act”), and other obligations of the parties. The Company intends to use the net proceeds from the Samsung Investment to fund its commercial activities and reimbursement efforts, as well as for working capital and other general corporate purposes. 178 Table of Contents GRAIL, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 8. STOCK-BASED COMPENSATION The components of stock-based compensation expense for both equity and liability-classified awards recognized in our consolidated statements of operations was as follows: Year Ended (in thousands) December 31, 2025 December 31, 2024 December 31, 2023 RSUs $ 54,564 $ 29,774 $ 1,127 ESPP 3,059 — — PSOs 660 1,514 577 Cash-based equity awards — 54,796 95,531 Stock-based compensation expense, before taxes 58,283 86,084 97,235 Related income tax benefits ( 13,708 ) ( 20,890 ) ( 23,455 ) Stock-based compensation expense, net of taxes $ 44,575 $ 65,194 $ 73,780 Stock-based compensation expense for both equity and liability-classified awards, reported in our consolidated statements of operations was as follows: Year Ended (in thousands) December 31, 2025 December 31, 2024 December 31, 2023 Cost of screening revenue (exclusive of amortization of intangible assets) $ 2,226 $ 1,724 $ 1,932 Cost of development services revenue 36 230 38 Research and development 15,986 30,701 39,792 Sales and marketing 10,871 15,310 17,506 General and administrative 29,164 38,119 37,967 Stock-based compensation expense, before taxes 58,283 86,084 97,235 Related income tax benefits ( 13,708 ) ( 20,890 ) ( 23,455 ) Stock-based compensation expense, net of taxes $ 44,575 $ 65,194 $ 73,780 Unamortized compensation cost and weighted average service period of all unvested equity classified awards as of December 31, 2025 was as follows: Unamortized Compensation Costs Weighted Average Service Period (in thousands) (in years) RSUs and PSUs $ 76,895 1.5 PSOs 432 1.2 ESPP 1,719 0.4 Total unamortized compensation costs $ 79,046 179 Table of Contents GRAIL, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 2024 Incentive Award Plan The GRAIL, Inc. 2024 Incentive Award Plan (the “2024 Plan”) was adopted by the Company and approved by Illumina, in its capacity as GRAIL’s sole stockholder, in May 2024 to facilitate the grant of cash and equity incentive awards to non-employee directors, employees, and consultants of the Company and its subsidiaries and to enhance the ability of the Company and any of its subsidiaries to obtain and retain the services of these individuals following the Spin-Off. This plan authorizes the issuance of stock options, stock appreciation rights, restricted stock, restricted stock units, dividend equivalents, performance-based awards, and other stock or cash based awards . T he 2024 Plan is subject to an annual increase on the first day of each calendar year ending on January 1, 2034, equal to the lesser of (i) 5 % of the aggregate number of shares outstanding on the final day of the immediately preceding calendar year and (ii) such smaller number of shares as is determined by the GRAIL board of directors. 2024 Deferred Compensation Plan The GRAIL, Inc. Deferred Compensation Plan for Directors (the “2024 Deferred Compensation Plan”) was adopted by the Company’s board of directors on July 15, 2024 to provide the Company’s non-employee directors with an opportunity to defer payment of all or a portion of their eligible compensation, consisting of cash fees and/or equity awards granted during a given year. Each director may make an irrevocable deferral election with respect to all or a portion of their eligible compensation in accordance with the terms and conditions of the 2024 Deferred Compensation Plan, deferring payment until the earlier of (i) a fixed date elected by the director (if any), (ii) the director’s separation from service, (iii) a “change in control” (as defined in the 2024 Plan) or (iv) the director’s death or permanent disability. If a director elects to defer all or a portion of their cash fees, the Company will issue a number of deferred stock units (“DSUs”) to the director equal to the portion of cash fees deferred divided by the fair market value of a share of the Company’s common stock on the date that such fees would have otherwise been paid, rounded down to the nearest whole share. If a director elects to defer their equity awards, the Company will issue a number of DSUs to the director equal to the number of shares of Company common stock underlying the deferred awards and subject to the same vesting, forfeiture and other restrictions that would have otherwise applied to such equity award absent the deferral. All DSUs will be issued under the 2024 Plan. As of December 31, 2025 , three of our directors elected to defer their 2025 cash fees and two of our directors elected to defer their equity awards granted in 2025 . A summary of the Company’s shares available for grant under the 2024 Plan, was as follows: Shares Available for Grant (in thousands) Balance as of December 31, 2024 479,339 Annual increase 1,694,670 Awarded ( 2,152,456 ) Forfeited 491,833 Balance as of December 31, 2025 513,386 180 Table of Contents GRAIL, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 2024 Inducement Award Plan The GRAIL, Inc. 2024 Inducement Award Plan (the “2024 Inducement Plan”) was adopted by the Company’s board of directors on August 9, 2024. The 2024 Inducement Plan was adopted to enhance the ability of the Company and any of its subsidiaries to attract, retain and motivate eligible employees by providing these employees with equity ownership opportunities and/or equity-linked compensatory opportunities. The 2024 Inducement Plan is used exclusively for the grant of equity awards to prospective employees who (i) were not previously employees of the Company, or (ii) are returning to the Company following a bona fide period of non-employment, in any case, in connection with and as an inducement material to such prospective employee’s entering into employment with the Company pursuant to Nasdaq Listing Rule 5635(c)(4). The 2024 Inducement Plan authorizes the issuance of stock options, stock appreciation rights, restricted stock, restricted stock units, dividend equivalents, performance-based awards, and other stock or cash based awards. On May 14, 2025, the Company registered an additional 500,000 shares of common stock that may be issued pursuant to awards granted under the 2024 Inducement Plan. The 2024 Inducement Plan does not have a specified limit on the number of shares authorized for issuance. 2024 Employee Stock Purchase Plan The GRAIL, Inc. 2024 Employee Stock Purchase Plan (the “ESPP”) was adopted by the Company and approved by Illumina, in its capacity as the Company’s sole stockholder, in May 2024. The number of shares of common stock available under the ESPP is subject to an annual increase on the first day of each calendar year ending on January 1, 2034, equal to the lesser of (i) 1 % of the aggregate number of shares outstanding on the final day of the immediately preceding calendar year and (ii) such smaller number of shares as is determined by the Company’s board of directors. Under the ESPP, eligible employees are offered the opportunity to purchase shares by participating in a 6-month offering period commencing in May and November of each year. Employees who participate in the ESPP may elect to have up to 15 % of their eligible compensation withheld to purchase shares of the Company’s common stock. The purchase price of the Company’s common stock will be equal to 85 % of the lower of (i) the fair market value of the Company’s common stock at the beginning of the applicable 6-month offering period or (ii) the fair market value of the Company’s common stock at the end of the applicable 6-month offering period. Our first offering period began in May 2025 with our first purchase date in November 2025. There were no shares issued under the ESPP during the year ended December 31, 2024. A summary of the Company’s shares available for grant under the ESPP, was as follows: Shares Available for Grant (in thousands) Balance as of December 31, 2024 414,021 Annual increase 338,934 Issued (1) ( 136,551 ) Balance as of December 31, 2025 616,404 (1) Represent $ 4.5 million in cash received for the issuance of common stock under the ESPP 181 Table of Contents GRAIL, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Equity-Classified Awards Restricted Stock Units During the year ended December 31, 2025, the Company granted two PSU awards (the “PSU Awards”) under the 2024 Plan with vesting conditions tied to achievement of Company-specific performance and continued service. The PSU Awards have differing vesting schedules. The first PSU Award, covering 26,000 shares, vests as to one-third of the shares subject thereto upon the achievement of a Company-specific performance condition, with the remaining two-thirds of the shares subject thereto vesting in substantially equal installments on each of the first and second anniversaries of the initial vesting date, subject to continued service through the applicable vesting date. The second PSU Award, covering 5,000 shares, vests as to 60 % of the shares subject thereto upon the achievement of a Company-specific performance condition, with the remaining 40 % of the shares subject thereto vesting on the first anniversary of the initial vesting date, subject to continued service through the applicable vesting date. The PSU Awards had an aggregate grant-date fair value of $ 1.6 million and expire, to the extent unvested, in May and November 2035, respectively. As of December 31, 2025, it was not probable that the performance conditions associated with the PSU Awards will be achieved and, therefore, no stock-based compensation expense has been recognized in the consolidated financial statements. In February 2026, the performance condition of the first PSU Award was met. As a result, the Company will commence recognizing stock-based compensation expense in the consolidated financial statements for this PSU Award in Q1 2026. A summary of the Company’s RSUs, PSUs, and DSUs, issued under the 2024 Plan and 2024 Inducement Award Plan, were as follows: Restricted Stock Units (1) Weighted-Average Grant-Date Fair Value Per Share (in thousands) Outstanding at January 1, 2024 — $ — Conversion 6,485 $ 15.37 Awarded 2,833 $ 13.07 Released ( 2,844 ) $ 15.37 Forfeited ( 951 ) $ 15.22 Outstanding at December 31, 2024 5,523 $ 14.22 Awarded (1) 2,407 $ 40.79 Released ( 2,491 ) $ 15.21 Forfeited ( 576 ) $ 22.83 Outstanding at December 31, 2025 4,863 $ 25.84 (1) Includes 31,000 PSU awarded and 30,865 DSUs vested but unreleased related to three directors that had elected to defer their 2025 cash fees and two directors that had elected to defer release of their equity awards The aggregate fair value of restricted stock units outstanding as of December 31, 2025 and December 31, 2024 was $ 416.2 million and $ 98.6 million. The fair value of all RSUs that vested during the years ended December 31, 2025, December 31, 2024, and December 31, 2023 was $ 93.8 million , $ 45.5 million, and $ 0.5 million . 182 Table of Contents GRAIL, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Performance Stock Options The Company has two PSOs outstanding. The outstanding PSOs, have contractual terms of ten years from the respective grant dates, generally vest monthly over three years upon the achievement of Company-specified performance targets, and are subject to continued service through the applicable vesting date. The performance condition for one of the outstanding awards of PSOs covering 63,484 shares that has an exercise price of $ 14.00 per share was met on November 1, 2024, meaning that this option now vests and becomes exercisable in thirty-six equal monthly installments on the monthly anniversaries of November 1, 2024, subject to continued service through the vesting date. As of December 31, 2025, 22,925 shares subject to this PSO were vested and exercisable. The second outstanding award of PSOs covers 40,831 shares has an exercise price of $ 12.80 per share and will commence vesting upon meeting certain performance-based conditions; achievement of this performance condition is not considered probable as of December 31, 2025. As such, there has been no expense recognized for this PSO. PSOs activity, issued under the 2024 Plan, were as follows: Performance Options Weighted-Average Exercise Price Per Share Weighted-Average Contractual Term (in thousands) (in years) Outstanding at December 31, 2025 104 $ 13.53 4.2 Vested and Exercisable at December 31, 2025 23 $ 14.00 4.2 The aggregate intrinsic value of the PSOs outstanding as of December 31, 2025 and December 31, 2024 was $ 7.5 million and $ 0.5 million. Fair Value Valuation Assumptions The fair value of employee stock purchase rights under the ESPP have been estimated with the following assumptions using the Black-Scholes-Merton option-pricing model: December 31, 2025 Weighted-average assumptions: Expected life (in years) 0.5 Risk-free interest rate 4.0 % Expected volatility 97.4 % Expected dividend — % Weighted-average estimated grant date fair value per share $ 59.31 The expected term represents the term from the first day of the offering period to the purchase date. The risk-free interest rate assumption was based upon observed interest rates of Treasury bills appropriate for the expected term. For the Company’s first offering, the expected stock price volatility was estimated using the average of the Company’s historical volatility and the average historical volatility of comparable peer companies, as the Company had limited trading history as a public company. For the current offering and future offerings, the expected stock price volatility is estimated using the Company’s historical volatility, as sufficient trading history has been established and is considered representative of expected future stock price trends. Expected dividend yield was 0 % as the Company has not paid and does not anticipate paying dividends on its common stock. 183 Table of Contents GRAIL, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Liability-classified Awards Performance-Based Award The Company has one performance-based award outstanding held by a former employee for which vesting is based on future revenues. The award has an aggregate potential value of up to $ 78.0 million and expires, to the extent unvested, in August 2030. One-fourth of the total potential value of the award vests immediately upon the achievement of cumulative net revenues in any period of four consecutive fiscal quarters of $ 500.0 million, $ 750.0 million, $ 1.5 billion, and $ 2.0 billion. The Company assesses the probability of achieving the performance conditions associated with the award on a quarterly basis at each reporting period. If and to the extent that the liability becomes due and payable prior to 12:01 a.m. Eastern Time December 24, 2026 (the “Disposal Funding Period”) and paid by GRAIL, in cash, during the Disposal Funding Period, Illumina will reimburse GRAIL all or such portion of the liability paid by GRAIL in accordance of the terms of the Separation and Distribution Agreement. As of December 31, 2025 , it was not probable that the performance conditions associated with the award would be achieved and, therefore, no stock-based compensation expense, or corresponding loss recovery asset or liability, has been recognized in the consolidated financial statements. Cash-Based Equity Awards The Cash-Based Equity Award program was adopted following Illumina’s acquisition of GRAIL in 2021 to provide GRAIL employees with dollar-denominated long-term incentive awards that increased or decreased in value based on corresponding changes in GRAIL’s calculated value. GRAIL’s standalone value calculation was estimated by the Company based on its analysis and input from independent valuation advisors. To estimate the value of GRAIL for the purposes of the Cash-Based Equity Awards, various assumptions were used, including long-range financial projections, as well as the discount rate and terminal growth rate. The awards generally vested in four equal installments on the first four anniversaries of the grant date, subject to continued employment through the applicable vesting date. In April 2024, Illumina’s Compensation Committee and Board of Directors (as applicable) approved an adjustment of the ordinary course payouts for all outstanding Cash-Based Equity Awards providing that the Cash-Based Equity Awards would be paid based on their nominal (face) values without adjustment based on changes in equity value. Subsequent to this adjustment to the Cash-Based Equity Awards and continuing until the Award Modification, the Cash-Based Equity Awards were expensed based on such nominal (face) value in accordance with their applicable vesting schedules. The payments in respect of the Cash-Based Equity Awards between the adoption of such adjustment and the Distribution Date were paid out in cash at the applicable Cash-Based Equity Awards’ nominal (face) value. Payments in respect of the Cash-Based Equity Awards before such adjustment were paid out in cash based on the adjusted value of the Cash-Based Equity Award on the applicable vesting date. 184 Table of Contents GRAIL, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS During the second quarter of 2024, one-time Cash-Based Equity Awards were granted to GRAIL employees, including executives, for retention purposes (“2024 Transition Incentive Awards”) with a total grant date fair value of $ 40.2 million. Each 2024 Transition Incentive Awards vested entirely in one year or less from its grant date, subject to the applicable holder’s continued service through the vesting date. In connection with the Spin-Off, the 2024 Transition Incentive Awards were converted into RSUs covering 2.5 million shares in accordance with the Employee Matters Agreement by dividing the aggregate award value by the volume-weighted average share price over the first four trading days following the Spin-Off. On the modification date, June 28, 2024, these 2024 Transition Incentive Awards in the amount of $ 4.4 million were reclassified to Additional Paid-In Capital. In connection with the Spin-Off, all outstanding Cash-Based Equity Awards, with the exception of the 2024 Transition Incentive Awards described above, were modified and converted into RSUs in accordance with the Employee Matters Agreement, with the number of RSUs determined by dividing the Aggregate Award Value (as discussed below) for such Cash-Based Equity Award by the volume-weighted average share price of GRAIL stock on the first four trading days following the Spin-Off. All other terms and conditions of the awards, including vesting and payment terms, were unaffected by the conversion. For each Cash-Based Equity Award, the “Aggregate Award Value” was equal to, (i) for the portion of such award originally scheduled to vest in 2024, the initial grant value of such portion, and (ii) for the remaining unvested portion of such award, the initial grant value of such portion adjusted up or down based on a percentage, with such percentage determined by (A) GRAIL’s average closing market capitalization for the four trading days immediately following the distribution date minus the aggregate equity value of GRAIL at the time the Cash-Based Equity Award was granted, as reflected in the consolidated financial statements of Illumina (the “Baseline Equity Value”), divided by (B) the Baseline Equity Value. Upon modification, the awards became equity-classified. The value of tranches of the Cash-Based Equity Awards (exclusive of the 2024 Transition Incentive Awards described above) was reduced and, as a result, there was no incremental compensation cost. Approximately 1,300 grantees were impacted by this modification. On the modification date, June 28, 2024, the liability-classified awards were reclassified to Additional Paid-In Capital at their fair value in the amount of $ 50.3 million. Due to the higher value of the 2024 tranche of the Cash-Based Equity Awards, compensation cost was recognized over the vesting period to ensure compensation cost had been recognized at least equal to the amount that was legally vested. As the result of this modification, the Cash-Based Equity Awards that were outstanding on the Distribution Date (in addition to the 2024 Transition Incentive Awards) were converted to 4.0 million RSUs that were settled in shares of the Company’s common stock. There were no Cash-Based Equity Award outstanding as of December 31, 2025. Cash-Based Equity Award activity for the periods presented was as follows: Year Ended (in thousands) December 31, 2024 Beginning balance $ 292,189 Granted 66,864 Cancelled ( 11,751 ) Vested and paid in cash ( 53,807 ) Change in fair value ( 9,535 ) Conversion of outstanding awards to GRAIL RSUs ( 283,960 ) Outstanding balance $ — 185 Table of Contents GRAIL, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 9. LEASES The Company has entered into operating leases for facilities utilized for commercial and research and development. Operating leases have remaining lease terms which range from less than 1 year to 8 years, and often include one or more options to renew. These renewal terms can extend the lease term from 5 to 15 years and are included in the lease term when it is reasonably certain that the option will be exercised. The exercise of lease renewal and termination options are at the sole discretion of the Company. The Company also has variable lease payments that are primarily comprised of common area maintenance and utility charges. The components of lease costs are as follows: Year Ended (in thousands) December 31, 2025 December 31, 2024 December 31, 2023 Operating lease costs $ 17,767 $ 18,577 $ 24,357 Variable lease costs 4,061 4,666 3,676 Total lease costs $ 21,828 $ 23,243 $ 28,033 The Company’s weighted average remaining lease term and weighted average discount rate for operating leases were as follows: As of December 31, 2025 2024 Weighted-average remaining lease term 6.9 years 7.3 years Weighted average discount rate 2.6 % 2.5 % Future undiscounted lease payments under operating leases as of December 31, 2025 were as follows: (in thousands) Amount 2026 $ 13,590 2027 8,442 2028 8,232 2029 8,448 2030 8,260 Thereafter 23,871 Total undiscounted lease payments 70,843 Less: Imputed interest ( 6,290 ) Less: Tenant improvement allowance* ( 9,690 ) Total operating lease liabilities $ 54,863 * Tenant improvement allowance is estimated to be received as follows: approximately $ 0.3 million in 2026 and $ 9.4 million thereafter. Excluded from the lease obligation table above is a commercial lease agreement (the “Lease”) entered into by and between the Company and Sunnyvale Office Acquisition, LLC, as of September 11, 2025, pursuant to which the Company agreed to lease an aggregate of approximately 75,556 square feet for a new corporate headquarters in Sunnyvale, California, which will be recognized as an operating lease upon the lease commencement date. The actual timing of lease commencement for accounting purposes, as well as the Company’s obligation to begin making payments and recognizing rental and other expenses, is dependent upon when the space is made available to the Company and the Company obtains control of the underlying asset. The Company’s current estimate of the total estimated undiscounted lease payments, excluding the renewal option and option to expand into additional space, for this leased office space is approximately $ 61.7 million. 186 Table of Contents GRAIL, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 10. COMMITMENTS AND CONTINGENCIES The future non-lease commitments over the next five years and thereafter were as follows: As of December 31, 2025 (in thousands) Purchase Commitments 2026 $ 25,023 2027 23,927 2028 3,633 2029 258 Total $ 52,841 Licensing Agreements The Company has entered into licensing agreements related to its research efforts. These agreements contain minimum annual royalty payments which are cancellable at the Company’s discretion, therefore they are not reflected in the above chart. Additionally, some of these licensing agreements include royalties that would be payable on net sales of Galler i , and any future products, pursuant to existing agreements and licenses with Illumina, the Chinese University of Hong Kong, and other third parties in excess of minimum annual royalty payments. Purchase Commitments The purchase commitments primarily relate to contractual commitments for future use of web services, and laboratory supplies in the normal course of business. Intellectual Property The Company entered into an agreement with a third party for exclusive option rights to certain intellectual property. The Company exercised those option rights to license intellectual property in December 2022. Under the terms of the agreement, the Company may be obligated to make future milestone payments if certain milestone events, such as new product launches or expansion into new regions, are achieved with respect to products covered by the licensed intellectual property. Two such milestones were achieved within 2024 and $ 1.0 million paid as of December 31, 2024 . The remaining milestones are based on net sales over a minimum threshold in specified geographic regions, which were not probable of achievement as of December 31, 2025. Indemnification The Company has agreed to indemnify its directors and officers for certain events or occurrences while the director or officer is (or was) serving in such capacity. The indemnification period covers all pertinent events and occurrences during the director’s or officer’s service. The maximum potential amount of future payments the Company could be required to make under the applicable indemnification agreements is not specified in the agreements. The Company enters into standard indemnification arrangements in the ordinary course of business. Pursuant to these arrangements, the Company indemnifies, holds harmless, and agrees to reimburse the indemnified parties for losses suffered or incurred by the indemnified party, in connection with any trade secret, copyright, patent or other intellectual property infringement claim by any third party with respect to the Company’s technology. The term of these indemnification agreements is generally perpetual after the execution of the agreement. The maximum potential amount of future payments that the Company could be required to make under these arrangements is not determinable. The Company has not incurred material costs to defend lawsuits or settle claims related to these indemnification agreements. As a result, the Company believes the estimated fair value of these agreements is minimal. 187 Table of Contents GRAIL, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 11. LEGAL AND REGULATORY PROCEEDINGS The Company is subject to various claims, complaints, regulatory proceedings, and legal actions that arise from time to time in the ordinary course of business. Federal Securities Class Actions On November 11, 2023, the first of three securities class action complaints was filed against Illumina and certain of its current and former executive officers in the United States District Court for the Southern District of California. The first-filed case is captioned Kangas v. Illumina, Inc. et al., the second-filed case is captioned Roy v. Illumina, Inc. et al., and the third-filed case is captioned Louisiana Sheriffs’ Pension & Relief Fund v. Illumina, Inc. et al. (collectively, the “Actions”). The complaints generally allege, among other things, that defendants made materially false and misleading statements and omitted material facts relating to Illumina’s acquisition of Grail. The complaints seek unspecified damages, interest, fees, and costs. On January 9, 2024, four movants filed motions to consolidate the Actions and to appoint a lead plaintiff (“Lead Plaintiff Motions”). On April 11, 2024, the Court issued an order consolidating the Actions into a single action (captioned in re Illumina, Inc. Securities Litigation No. 23-cv-2082-LL-MMP), and appointed Universal-Investment-Gesellschaft mbH, UI BVK Kapitalverwaltungsgesellschaft mbH, and ACATIS Investment Kapitalverwaltungsgesellschaft mbH as lead plaintiffs. (the “Lead Plaintiffs”). On June 21, 2024, the Lead Plaintiffs filed a consolidated amended complaint. The amended complaint alleges that GRAIL, in addition to Illumina, and certain of their respective current and former directors and others violated sections 10(b) and 20(a) of the Securities Exchange Act and SEC Rule 10b-5 in connection with Illumina's acquisition of GRAIL and disclosures concerning the same. GRAIL has an indemnification obligation for certain current and former directors and officers involved in the matter pursuant to indemnification agreements entered into by these individuals and GRAIL. On September 13, 2024 the plaintiffs further amended the complaint. On November 12, 2024, the Company moved to dismiss Lead Plaintiffs’ second amended complaint for failure to state a claim under Sections 10(b) and 20(a) of the Exchange Act. Lead Plaintiffs filed their opposition to the motion to dismiss on December 20, 2024, and the Company filed its reply in support of its motion to dismiss on February 3, 2025. On September 26, 2025, the court granted the motion to dismiss for failure to state a claim with leave to amend, and ordered the plaintiffs to file an amended complaint, if any, by October 27, 2025. On October 27, 2025, the Lead Plaintiffs filed their third amended complaint. On December 12, 2025, the Company filed a motion to dismiss Lead Plaintiffs’ third amended complaint. In light of the fact that the lawsuits are in an early stage, the Company cannot predict the ultimate outcome of the suits. Other Legal Matters Legal matters include various claims, complaints, and legal actions that arise from time to time. In addition to direct involvement in legal matters, the Company has entered into indemnification agreements with each of its current and former directors, executive officers, and certain other officers to provide these directors and officers, and has certain indemnification obligations under the Company’s charter and bylaws to these individuals, which may give rise to liability for the Company even if the Company is not directly named. The Company has indemnification obligations in respect of the Actions and with respect to other legal matters that may arise, or have arisen, from time to time. There can be no assurance that existing or future legal proceedings arising in the ordinary course of business or otherwise will not have a material adverse effect on the Company’s business, financial position, results of operations, or cash flows. The Company is involved in various lawsuits and claims arising in the ordinary course of business, including actions with respect to employment matters. In connection with these matters, the Company assesses, on a regular basis, the probability and range of possible loss based on the developments in these matters. A liability is recorded in the consolidated financial statements if it is believed to be probable that a loss has been incurred and the amount of the loss can be reasonably estimated. Since litigation is inherently unpredictable and unfavorable resolutions could occur, assessing contingencies is highly subjective and requires judgments about future events. The Company regularly reviews outstanding legal matters to determine the adequacy of the liabilities accrued and related disclosures. The Company may change its estimates if its assessment of the various factors changes and the amount of ultimate loss may differ from estimates, resulting in a material effect on the Company’s business, 188 Table of Contents GRAIL, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS financial condition, results of operations, and/or cash flows. As of December 31, 2025 , the Company is unable to estimate a range of possible loss in excess of the amounts accrued . Contingencies Contingencies primarily correspond to claims arising in the ordinary course of business. If necessary, these contingencies will be accrued, to the extent believed to be reasonably estimable to resolve the matter. The accrued contingency amounts are included in other current liabilities. Should the Company not be able to secure the terms it expects, these estimates may change and will be recognized in the period in which they are identified. In connection with the Spin-Off, Illumina provided the Company with disposal funding in the amount of $ 932.3 million in accordance with the Separation and Distribution Agreement, which was subject to a clawback feature that lapsed on September 24, 2025. On June 21, 2024, in connection with the Spin-Off, Illumina and the Company also entered into the Tax Matters Agreement to govern the respective rights, responsibilities and obligations of Illumina and the Company after the Spin-Off with respect to all tax matters and will include restrictions to preserve the tax-free status of the Distribution. The Tax Matters Agreement included a number of restrictions on the Company to preserve the intended tax treatment of the Spin-Off. Breach of any covenant or representation contained in the Tax Matters Agreement will result in liability to specific separation taxes. As of December 31, 2025, as it was not probable that the Company will breach the agreement, no contingent liability was recorded in connection with the Tax Matters Agreement. NOTE 12. RESTRUCTURING On August 9, 2024, following a portfolio review, the Company’s Board of Directors approved a restructuring plan (“Restructuring Plan”) designed to re-prioritize the Company’s resources to focus on its core MCED business and reduce overall spend as the Company progresses towards completion of registrational studies and premarket approval application submission. The Restructuring Plan was substantially completed in the fourth quarter of 2024, and the Company incurred approximately $ 18.3 million of total restructuring charges from August 9, 2024 through December 31, 2024, consisting primarily of employee severance, benefits, payroll taxes, asset impairments and other associated costs. The following table presents the total restructuring charges by function for the periods indicated: Year Ended December 31, 2025 (in thousands) Severance and related benefit costs Other Costs Total Research and development $ ( 47 ) $ 111 $ 64 Sales and marketing ( 83 ) — ( 83 ) General and administrative ( 31 ) 16 ( 15 ) Total $ ( 161 ) $ 127 $ ( 34 ) Year Ended December 31, 2024 (in thousands) Severance and related benefit costs Other Costs Total Research and development $ 8,783 $ 297 $ 9,080 Sales and marketing 4,858 — 4,858 General and administrative 3,897 478 4,375 Total $ 17,538 $ 775 $ 18,313 189 Table of Contents GRAIL, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS As of December 31, 2025, the Company had no remaining restructuring liability. The following table summarizes the restructuring-related liabilities: (in thousands) Severance and related benefit costs Other Costs Total Restructuring charges $ 17,538 $ 775 $ 18,313 Cash payments made ( 16,732 ) ( 454 ) ( 17,186 ) Non-cash charges — ( 99 ) ( 99 ) Amount recorded in accrued liabilities as of December 31, 2024 806 222 1,028 Restructuring charges ( 161 ) 127 ( 34 ) Cash payments made ( 645 ) ( 349 ) ( 994 ) Amount recorded in accrued liabilities as of December 31, 2025 $ — $ — $ — NOTE 13. NET LOSS PER SHARE Prior to the Spin-Off, the Company had no common shares issued and outstanding. In connection with the Spin-Off, on June 24, 2024, there were 31.0 million shares of GRAIL common stock distributed to Illumina stockholders. This share amount is utilized for the calculation of basic and diluted earnings per share for all periods presented prior to the Spin-Off. For the year ended December 31, 2023 these shares are treated as issued and outstanding for purposes of calculating historical earnings per share. The following table presents the calculation of the Company’s basic and diluted net loss per share : Year Ended (in thousands, except share and per share data) December 31, 2025 December 31, 2024 December 31, 2023 Numerator Net loss $ ( 408,351 ) $ ( 2,027,005 ) $ ( 1,465,685 ) Denominator Weighted average shares of common stock—basic and diluted 36,753,751 31,901,259 31,049,148 Net loss per share Basic $ ( 11.11 ) $ ( 63.54 ) $ ( 47.21 ) Diluted $ ( 11.11 ) $ ( 63.54 ) $ ( 47.21 ) Since the Company was in a loss position for all periods presented, basic net loss per share is the same as diluted net loss per share, as the inclusion of all potential shares of common stock outstanding would have been anti-dilutive. The following common stock equivalents were excluded from the calculation of diluted net loss per share for the periods presented as they had an anti-dilutive effect: Year Ended December 31, 2025 December 31, 2024 December 31, 2023 Unvested restricted stock units 4,831,956 5,523,029 6,564,282 Unvested performance options 104,315 104,315 104,315 Unvested performance stock units 31,000 — — Shares issuable under ESPP 74,453 — — Total 5,041,724 5,627,344 6,668,597 190 Table of Contents GRAIL, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 14. TAXES Loss before income taxes summarized by region was as follows: Year Ended (in thousands) December 31, 2025 December 31, 2024 December 31, 2023 United States $ ( 540,192 ) $ ( 2,165,006 ) $ ( 1,509,885 ) Foreign 5,688 2,645 2,249 Loss before benefit from income taxes $ ( 534,504 ) $ ( 2,162,361 ) $ ( 1,507,636 ) The benefit from income taxes consisted of the following: Year Ended (in thousands) December 31, 2025 December 31, 2024 December 31, 2023 Current taxes: Federal $ 1,125 $ — $ — Foreign — ( 1,628 ) ( 3,798 ) Total current income tax expense/(benefit) $ 1,125 $ ( 1,628 ) $ ( 3,798 ) Deferred taxes: Federal $ ( 111,750 ) $ ( 92,184 ) $ ( 22,019 ) State ( 15,528 ) ( 41,544 ) ( 16,134 ) Total deferred income tax benefit ( 127,278 ) ( 133,728 ) ( 38,153 ) Benefit from income taxes $ ( 126,153 ) $ ( 135,356 ) $ ( 41,951 ) The benefit from income taxes reconciles to the amount computed by applying the federal statutory rate to loss before income taxes as follows: Year Ended December 31, 2025 December 31, 2024 December 31, 2023 (in thousands) Tax at federal statutory rate $ ( 112,246 ) 21.0 % $ ( 454,122 ) 21.0 % $ ( 316,603 ) 21.0 % State, net of federal benefit (1) ( 11,190 ) 2.1 % ( 29,235 ) 1.4 % ( 13,283 ) 0.9 % Tax credits Research tax credits ( 3,589 ) 0.7 % ( 7,145 ) 0.3 % ( 1,827 ) 0.1 % Change in valuation allowance 111 — % 166,475 ( 7.7 ) % 160,664 ( 10.7 ) % Nontaxable or nondeductible items Goodwill impairment — — % 186,641 ( 8.6 ) % 127,778 ( 8.5 ) % Stock compensation ( 5,920 ) 1.1 % 88 — % 134 — % Other 6,681 ( 1.3 ) % 1,942 ( 0.1 ) % 1,186 — % Total tax benefit from income taxes $ ( 126,153 ) 23.6 % $ ( 135,356 ) 6.3 % $ ( 41,951 ) 2.8 % (1) State taxes in California, Georgia, New York, New York City, and Illinois made up the majority (greater than 50 percent) of the tax effect in this category. 191 Table of Contents GRAIL, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Significant components of deferred tax assets and liabilities were as follows: (in thousands) December 31, 2025 December 31, 2024 Deferred tax assets: Net operating losses $ 147,070 $ 43,707 Tax credits 14,047 7,963 Other accruals and reserves 6,671 5,727 Stock compensation 9,992 9,320 Capitalized U.S. research and development expenses 16,497 23,088 Other amortization 53,792 57,401 Operating lease liabilities 13,689 16,539 Property & equipment 392 2,063 Other 876 1,026 Total gross deferred tax assets 263,026 166,834 Valuation allowance on deferred tax assets ( 6,938 ) ( 7,744 ) Total deferred tax assets $ 256,088 $ 159,090 Deferred tax liabilities: Purchased intangible amortization $ ( 461,714 ) $ ( 488,874 ) Operating lease right-of-use assets ( 12,957 ) ( 16,076 ) Total deferred tax liabilities ( 474,671 ) ( 504,950 ) Deferred tax liability, net $ ( 218,583 ) $ ( 345,860 ) A valuation allowance is established when it is more likely than not that the future realization of all or some of the deferred tax assets will not be achieved. The evaluation of the need for a valuation allowance is performed on a jurisdiction-by-jurisdiction basis and includes a review of all available positive and negative evidence, including operating results and future reversals of existing taxable temporary differences such as the deferred tax liabilities related to purchased intangibles. Based on the available evidence as of December 31, 2025, the Company was not able to conclude it is more likely than not certain deferred tax assets will be realized. Therefore, a valuation allowance of $ 6.9 million was recorded against certain federal, state, and foreign deferred tax assets. As of December 31, 2025, the net operating loss carryforwards for federal and state tax purposes were $ 567.0 million and $ 424.2 million. Net operating loss carryforwards for state tax purposes will begin to expire in 2034 unless utilized prior. The federal and state tax credit carryforwards were $ 13.0 million and $ 6.8 million. The federal credits will begin to expire in 2044 unless utilized prior. The state credits do not expire and can be carried forward indefinitely. GRAIL’s UK subsidiary had $ 16.0 million of UK net operating losses that can generally be carried forward indefinitely provided that the UK entity maintains its existing trade or business. Pursuant to Section 382 and 383 of the Internal Revenue Code, utilization of net operating losses and credits may be subject to annual limitations in the event of any significant future changes in its ownership structure. These annual limitations may result in the expiration of net operating losses and credits prior to utilization. 192 Table of Contents GRAIL, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The following table summarizes the gross amount of uncertain tax positions: Year Ended (in thousands) December 31, 2025 December 31, 2024 December 31, 2023 Balance at beginning of year $ 3,859 $ 59,295 $ 51,843 Decreases related to the Spin-Off — ( 59,295 ) — Decreases related to prior year tax positions ( 46 ) — — Increases related to current year tax positions 3,823 3,859 7,452 Balance at end of year $ 7,636 $ 3,859 $ 59,295 Included in the balance of uncertain tax positions as of December 31, 2025, December 31, 2024 , and December 31, 2023 were $ 7.1 million, $ 3.6 million, and $ 54.4 million, of net unrecognized tax benefits that, if recognized, would reduce the effective income tax rate in future periods. The Company has not recognized any interest or penalties related to uncertain tax positions. If interest and penalties are recognized in the future, such amounts will be included in the provision for income taxes. The following table presents the disaggregation of income taxes paid by jurisdiction: (in thousands) December 31, 2025 Federal $ — New York 492 Massachusetts 176 South Carolina 148 New York City 139 North Carolina 80 Tennessee 73 All Other States 23 Total taxes paid $ 1,131 Tax years 2019 to 2025 remain subject to future examination by the major tax jurisdictions in which the Company is subject to tax. 193 Table of Contents GRAIL, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 15. SEGMENT INFORMATION The Company operates and manages its business as one reportable operating segment. The Company's chief operating decision maker (“CODM”) is the chief executive officer. The CODM reviews financial information on an aggregate basis for the purposes of evaluating financial performance and allocating resources based on net income (loss), adjusted gross margin and adjusted EBITDA. Net income (loss) is the measure of segment profit most consistent with U.S. GAAP that is regularly reviewed by the CODM to allocate resources and assess performance. The CODM does not evaluate operating segment performance using asset information. The following table is representative of the significant expense categories regularly provided to the CODM when managing the Company’s single reporting segment. A reconciliation to the consolidated net loss for the years ended December 31, 2025 , December 31, 2024 and December 31, 2023 is included in the table below: Year Ended (in thousands) December 31, 2025 December 31, 2024 December 31, 2023 Revenue: Screening revenue $ 138,601 $ 108,627 $ 74,999 Development services revenue 8,571 16,968 18,106 Total revenue 147,172 125,595 93,105 Costs and operating expenses: Cost of screening revenue (exclusive of amortization of intangible assets) (1)(2) 73,251 63,284 47,966 Cost of development services revenue (1)(2) 2,605 6,444 6,861 Compensation 231,188 314,042 311,375 Depreciation and intangible assets amortization expense 149,794 153,228 148,920 Stock-based compensation 56,021 84,130 95,265 Professional services 36,821 63,443 48,994 Clinical studies 28,012 43,890 54,590 Goodwill and intangible assets impairment 28,000 1,420,936 718,466 Cloud computing and information technology 25,019 30,233 31,868 Facilities 21,666 25,983 30,276 Laboratory supplies and research collaborations 12,802 41,341 41,863 Other segment expenses (3) 44,156 67,799 72,043 Total costs and operating expenses 709,335 2,314,753 1,608,487 Loss from Operations ( 562,163 ) ( 2,189,158 ) ( 1,515,382 ) Other income (expense): Interest income 28,652 26,733 7,954 Other income (expense), net ( 993 ) 64 ( 208 ) Benefit from income taxes 126,153 135,356 41,951 Net Loss $ ( 408,351 ) $ ( 2,027,005 ) $ ( 1,465,685 ) (1) Cost of screening revenue (exclusive of amortization of intangible assets) and cost of development services revenue include stock-based compensation expense. See Note 8 — Stock-Based Compensation for further details. (2) Cost of screening revenue (exclusive of amortization of intangible assets) and cost of development services revenue include $ 6.6 million, $ 4.8 million and $ 9.8 million of depreciation expense for the year ended December 31, 2025, December 31, 2024 and December 31, 2023. (3) Other segment expenses include costs related to contractors and temporary labor, marketing expenses, and legal expenses . 194 Table of Contents GRAIL, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 16. RELATED PARTY TRANSACTIONS Illumina Purchases and Sales The Company was a subsidiary of Illumina, Inc. between August 19, 2021 to June 23, 2024. Subsequent to the Spin-Off, Illumina retained 4,502,126 shares which represented a 14.5 % stake in the Company as of the Spin-Off. During the fourth quarter of 2025, Illumina sold 2,000,000 shares of the Company’s common stock, reducing its ownership to 2,502,126 shares, which represented approximately 6.0 % of the Company’s outstanding common stock as of December 31, 2025. On February 17, 2026, Illumina filed a Schedule 13G reporting beneficial ownership of 1,302,126 shares of our common stock. As a result of the reduction in ownership, Illumina no longer meets the definition of a related party. Accordingly, following Illumina’s disposition on November 17, 2025, transactions and balances with Illumina are no longer considered related-party transactions. Illumina is both a customer of the Company and a major supplier of the Company’s reagents and capital equipment. Goods and services transactions with Illumina are invoiced and paid when due. Goods and services transactions with Illumina, have been reflected in the consolidated financial statements for the periods during which Illumina qualified as a related party of the Company, as follows: As of (in thousands) December 31, 2024 Accounts receivable $ 65 Supplies 3,130 Prepaid expenses and other current assets 77 Property and equipment, net 2,227 Accrued liabilities 104 Year Ended (in thousands) December 31, 2025 (1) December 31, 2024 December 31, 2023 Screening revenue $ 208 $ 460 $ 652 Cost of screening revenue 4,617 13,091 8,532 Cost of development services revenue 275 637 238 Operating expenses—Research and development 3,306 18,843 19,508 Operating expenses—General and administrative — 104 206 (1) Included transactions from January 1, 2025 through November 17, 2025 In June 2024, the Company entered into an amendment to its Supply and Commercialization Agreement with Illumina. Under the terms of the amended agreement, regardless of whether its products incorporate any Illumina technology, the Company has agreed to pay to Illumina a high single-digit royalty, subject to certain reductions, in perpetuity on net sales generated by its products or revenues otherwise generated or received by the Company, subject to certain exceptions, in the field of oncology. Per the terms of the Separation and Distribution Agreement with Illumina, the royalty arrangement is suspended until the earlier of December 24, 2026 or any earlier change of control of the Company, at which time a high-single digit royalty payments will be payable. 195 Table of Contents GRAIL, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 17. SUBSEQUENT EVENTS 2024 Incentive Award Plan On January 1, 2026, in accordance with the automatic evergreen provision of the 2024 Incentive Award Plan the maximum number of shares that can be issued under the plan was increased to 12,368,055 . Subsequent to December 31, 2025, the Company granted 1.7 million RSUs of Class A common stock to employees. The RSUs are subject to continued service, vest annually over a service period 4 years, and had a fair market value on the grant date of $ 88.5 million. 2024 Employee Stock Purchase Plan On January 1, 2026, in accordance with the automatic evergreen provision of the 2024 Employee Stock Purchase Plan the maximum number of shares that can be issued under the plan was increased to 1,156,269 . Potential Impairment of Long-Lived Intangible Assets On February 19, 2026, the Company issued a press release announcing top-line results from its NHS-Galleri trial, showing that, although the primary endpoint of statistically significant Stage 3 and 4 reduction was not observed, adding Galleri to standard of care screening resulted in a substantial reduction in Stage 4 cancer diagnoses, increased Stage 1 and 2 detection of deadly cancers, and four-fold higher cancer detection rate when compared to standard of care alone. Immediately following the release of this information, the Company’s market capitalization decreased materially. This decrease in market capitalization represents a possible impairment indicator that could result in an impairment of our long-lived intangible assets, which had a balance of $ 1.9 billion as of December 31, 2025. As a result, the Company expects to perform an interim impairment test during the first quarter of 2026 as this is the period in which such information was available to management. The Company has not yet completed this interim impairment test as of the date of this filing. See Note 2 Summary of Significant Accounting Policies for information about how long-lived intangible assets are tested for impairment. 196 Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure None.