What changed in this filing

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Item 1. Financial Statements

2025-08-13 compared with 2025-05-14 · 298 added, 123 removed, 477 unchanged (47% of the section changed)

33 unchanged sentences

Preferred stock, par value of $ 0.001 per share;

50,000,000 shares authorized, no shares issued and outstanding as of March 31, 2025 and December 31, 2024

Common stock $ 0.001 par value per share, 1,500,000,000 shares authorized, 35,296,858 shares issued and outstanding as of March 31, 2025, 33,893,409 shares issued and outstanding as of December 31, 2024

50,000,000 shares authorized, no shares issued and outstanding as of June 30, 2025 and December 31, 2024

Common stock $ 0.001 par value per share, 1,500,000,000 shares authorized, 36,047,799 shares issued and outstanding as of June 30, 2025, 33,893,409 shares issued and outstanding as of December 31, 2024

Additional paid-in capital 12,335,832 12,305,250

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(4) Includes related party property and equipment, net of $ 1,768 and $ 2,227 , respectively.

(5) Includes related party accounts payable of $ 5 and $ — , respectively.

(5) Includes related party accounts payable of $ 567 and nil , respectively.

(6) Includes related party accrued liabilities of $ 50 and $ 104 , respectively.

See accompanying notes to condensed consolidated financial statements.

See accompanying notes to unaudited condensed consolidated financial statements.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(amounts in thousands, except share and per share data)

Three Months Ended

2025 March 31,

Three Months Ended Six Months Ended

2025 June 30,

2024 June 30,

2025 June 30,

Screening revenue (1)

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Cost of development services revenue (3)

501 621 1,672 2,057

Cost of revenue — amortization of intangible assets 33,472 33,472 66,944 66,944

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37,914 67,258 82,988 124,327

Goodwill and intangible assets impairment 28,000 1,420,936 28,000 1,420,936

Total costs and operating expenses 194,398 1,673,261 379,842 1,927,404

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35,793,154 31,049,148 35,054,896 31,049,148

(1) I ncludes related party screening revenue of $ 77 and $ 129 , respectively.

(2 ) I ncludes related party cost of screening revenue of $ 1,511 and $ 2,669 , respectively.

(3) Includes related party cost of development services revenue of $ 163 and $ 45 , respectively.

(4) Includes related party research and development expenses of $ 1,396 and $ 4,802 , respectively.

(5) Includes related party general and administrative expenses of $ — and $ 51 , respectively.

See accompanying notes to condensed consolidated financial statements.

(1) I ncludes related party screening revenue of $ 52 and $ 129 for the three and six months ended June 30, 2025 and $ 108 and $ 237 for the three and six months ended June 30, 2024, respectively.

(2) I ncludes related party cost of screening revenue of $ 1,176 and $ 2,687 for the three and six months ended June 30, 2025 and $ 3,457 and $ 6,126 for the three and six months ended June 30, 2024, respectively.

(3) Includes related party cost of development services revenue of $ 19 and $ 182 for the three and six months ended June 30, 2025 and $ 71 and $ 116 for the three and six months ended June 30, 2024, respectively.

(4) Includes related party research and development expenses of $ 578 and $ 1,974 for the three and six months ended June 30, 2025 and $ 5,310 and $ 10,112 for the three and six months ended June 30, 2024, respectively.

(5) Includes related party general and administrative expenses of $ — and $ — for the three and six months ended June 30, 2025 and $ 52 and $ 103 for the three and six months ended June 30, 2024, respectively.

See accompanying notes to unaudited condensed consolidated financia l statements.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(amounts in thousands)

Three Months Ended

2025 March 31,

Three Months Ended Six Months Ended

2025 June 30,

2024 June 30,

2025 June 30,

Net loss $ ( 113,985 ) $ ( 1,585,337 ) $ ( 220,198 ) $ ( 1,804,251 )

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Comprehensive loss $ ( 113,348 ) $ ( 1,584,965 ) $ ( 219,346 ) $ ( 1,803,931 )

See accompanying notes to condensed consolidated financial statements.

See accompanying notes to unaudited condensed consolidated financial statements.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’/ MEMBER’S EQUITY

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Balance as of March 31, 2025 35,296,858 $ 35 $ 12,321,510 $ 1,666 $ ( 9,909,543 ) $ 2,413,668

See accompanying notes to condensed consolidated financial statements.

Equity Accumulated

Net loss — — — — ( 113,985 ) ( 113,985 )

Stock-based compensation expense — — 14,323 — — 14,323

Other comprehensive income — — — 637 — 637

Release of restricted stock units 750,941 1 ( 1 ) — — —

Balance as of June 30, 2025 36,047,799 $ 36 $ 12,335,832 $ 2,303 $ ( 10,023,528 ) $ 2,314,643

See accompanying notes to unaudited condensed consolidated financial statements.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’/ MEMBER’S EQUITY

(amounts in thousands, except share data)

Shares Amount Member’s

Equity Additional Paid in Capital Accumulated

Comprehensive

Income (Loss) Accumulated

Deficit Total Member's

Deficit Total Stockholders’/Member’s Equity

Balance as of December 31, 2023 — $ — $ 11,421,446 $ — $ 1,066 $ ( 7,776,325 ) $ 3,646,187

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Balance as of March 31, 2024 — $ — $ 11,733,616 $ — $ 1,014 $ ( 7,995,239 ) $ 3,739,391

See accompanying notes to condensed consolidated financial statements.

Net loss — — — — — ( 1,585,337 ) ( 1,585,337 )

Stock-based compensation expense — — 156 640 — — 796

Other comprehensive income — — — — 372 — 372

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 — — —

Balance as of June 30, 2024 31,049,148 $ 31 $ — $ 12,274,286 $ 1,386 $ ( 9,580,576 ) $ 2,695,127

See accompanying notes to unaudited condensed consolidated financial statements.

* See Note 1 — Organization And Description Of Business for more information on the Spin-Off

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW

(amounts in thousands)

Three Months Ended

2025 March 31,

Six Months Ended

2025 June 30,

Cash flows from operating activities

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Amortization of discount on marketable securities ( 11,811 ) —

Bad debt expense 273 —

Goodwill and intangible assets impairment 28,000 1,420,936

Credit loss expense 412 —

Other 1,094 361

Changes in operating assets and liabilities:

Accounts receivable, net (1)

( 902 ) ( 3,811 )

Operating lease right-of-use assets and liabilities, net 363 1,586

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(5) Includes changes in related party accrued liabilities of $( 54 ) and $( 95 ), respectively.

See accompanying notes to condensed consolidated financial statements.

See accompanying notes to unaudited condensed consolidated financial statements.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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GRAIL was previously acquired by Illumina, Inc.

(”Illumina”) in August 2021, 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.

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• Employee Matters Agreement — addressed employment, compensation, and benefits matters, including the allocation and treatment of assets and liabilities relating to employees and compensation and benefits plan s 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 7 — Stock-Based Compensation for further details regarding the 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.

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See Note 13 — Related Party Transactions for more information regarding the royalty arrangements with Illumina.

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, subject to a clawback feature in the event that the Company (i) consummates a change in control transaction, sells or licenses substantially all of its assets

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

or adopts a plan of liquidation (collectively, a “GRAIL Change of Control”), or (ii) (1) pays any dividend on, or makes any other distribution in respect of, any shares of its capital stock or other equity or voting interests (other than a stock dividend or a stock split), or otherwise consummates a return of capital from the Company to any of its equity holders or (2) redeems, purchases or otherwise acquires any of its outstanding shares of capital stock or other equity or voting interests (other than the acquisition of any shares in order to effectuate a “net settlement” transaction for the purposes of satisfying tax withholding obligations arising in connection with the grant, vesting, exercise and/or settlement of any outstanding incentive equity awards of GRAIL held by its current or former employees), in each case, prior to September 24, 2025 (the 15 -month anniversary of the Distribution Date).

that the Company (i) consummates a change in control transaction, sells or licenses substantially all of its assets or adopts a plan of liquidation (collectively, a “GRAIL Change of Control”), or (ii) (1) pays any dividend on, or makes any other distribution in respect of, any shares of its capital stock or other equity or voting interests (other than a stock dividend or a stock split), or otherwise consummates a return of capital from the Company to any of its equity holders or (2) redeems, purchases or otherwise acquires any of its outstanding shares of capital stock or other equity or voting interests (other than the acquisition of any shares in order to effectuate a “net settlement” transaction for the purposes of satisfying tax withholding obligations arising in connection with the grant, vesting, exercise and/or settlement of any outstanding incentive equity awards of GRAIL held by its current or former employees), in each case, prior to September 24, 2025 (the 15 -month anniversary of the Distribution Date).

If the Company consummates a transaction described in the foregoing clause (i), the Company must return to Illumina a cash amount decreasing over time calculated by reference to the number of months which have elapsed since the Distribution Date at the time of the public announcement of the event giving rise to the change of control.

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Our Ability to Continue as a Going Concern

The accompanying condensed 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 accompanying unaudited condensed 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 $ 137.2 million of cash, cash equivalents and restricted cash and $ 540.7 million of short-term marketable securities as of March 31, 2025.

The Company believes that its existing cash , cash equivalents and short-term marketable securities will be sufficient to meet its working capital and capital expenditure needs for at least the next 12 months, as of the date these condensed consolidated financial statements were filed.

The Company had $ 130.8 million of cash, cash equivalents and restricted cash and $ 475.3 million of short-term marketable securities as of June 30, 2025.

The Company believes that its existing cash , cash equivalents and short-term marketable securities will be sufficient to meet its working capital and capital expenditure needs for at least the next 12 months, as of the date these unaudited condensed consolidated financial statements were filed.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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Certain a ssets and liabilities were reflected at fair value under the new basis of accounting established at the closing of Illumina’s acquisition of the Company in August 2021 (“the Acquisition”).

Management considered the need to allocate any historical shared costs incurred by the parent, Illumina, to the accompanying condensed consolidated financial statements.

Management considered the need to allocate any historical shared costs incurred by the parent, Illumina, to the accompanying unaudited condensed consolidated financial statements.

As previously discussed, the European Commission adopted an order requiring Illumina and GRAIL to be held and operated as distinct and separate entities.

As no integration ever occurred, management concluded that no material allocations were required.

As of March 31, 2024 , the Company had generated net operating loss carryforwards for federal and state tax purposes of $ 4.1 billion and $ 2.6 billion , respectively.

As a single member LLC disregarded for tax purposes, these tax attributes are the sole property of Illumina and remained the assets of Illumina following the Spin-off in accordance with the Internal Revenue Code.

However, amounts recognized by the Company are not necessarily representative of the amounts that would have been reflected in the financial statements had the Company operated independently of the parent.

Related party transactions with Illumina are discussed further in Note 12 — Related Party Transactions .

Prior to the Spin-Off, the Company had generated net operating loss carryforwards for federal and state tax purposes, however, as a single member LLC disregarded for tax purposes, these tax attributes are the sole property of Illumina and remained the assets of Illumina following the Spin-off in accordance with the Internal Revenue Code.

However, amounts recognized by the Company are not necessarily representative of the amounts that would have been reflected in the financial statements had the Company operated independently of

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

These condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the U.S.

Related party transactions with Illumina are discussed further in Note 13 — Related Party Transactions .

These unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the U.S.

for interim financial information and pursuant to Form 10-Q and Article 10 of Regulation S-X of the Securities and Exchange Commission (“SEC”).

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All intercompany balances have been eliminated in consolidation.

The results for the interim periods presented are not necessarily indicative of the results expected for any future period.

The following information should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s 2024 Form 10-K.

Significant Accounting Policies

During the three months ended March 31, 2025, there were no material changes to the Company’s significant accounting policies disclosed in Note 2 — Summary of Significant Accounting Policies , within the consolidated financial statements for the year ended December 31, 2024 included in its Annual Report on Form 10-K (filed on March 5, 2025).

During the six months ended June 30, 2025, there were no material changes to the Company’s significant accounting policies disclosed in Note 2 — Summary of Significant Accounting Policies , within the consolidated financial statements for the year ended December 31, 2024 included in its 2024 Form 10-K, except as described below.

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”).

The Company’s trade names, GRAIL and Galler 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 (“DAC”) test.

The developed technology underpins both Galler i , designed as a cancer screening test for asymptomatic individuals over 50 years of age, and DAC that is being designed to accelerate diagnostic resolution 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 includes assets related to GRAIL’s development of a minimal residual disease (“MRD”) test, a post-diagnostic test, that is currently under development.

IPR&D is considered indefinit e -lived and therefore is not amortized until completed and placed into service, at which point it will begin to be amortized over its estimated useful life or expensed upon abandonment of the associated research and development efforts.

While IPR&D is not amortize d , it is reviewed for impairment at least annually, or more frequently if events or circumstances indicate a potential for impairment.

IPR&D is considered impaired if the carrying value of the reporting unit or IPR&D asset exceeds its respective fair value.

During the indefinite-lived intangible asset impairment review, the Company assesses the qualitative factors to determine whether it is more likely than not that the fair value of the indefinite-lived intangible asset fair value is less than the carrying amount.

The qualitative factors considered include, but are not limited to, macroeconomic conditions, industry and market considerations, and the Company’s overall financial performance.

If the Company determines that it is not more likely than not that the intangible asset is less than the carrying amount, no additional assessment is necessary.

If the carrying amount of the intangible asset exceeds its fair value, the Company records an impairment loss based on the excess.

The Company may elect to bypass the qualitative assessment in a period and proceed to perform the quantitative indefinite-lived intangible asset impairment test.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Stock- Based Compensation Expense - 2024 Employee Stock Purchase Plan

The fair value of shares to be issued under the Company’s 2024 Employee Stock Purchase Plan (“ESPP”), is derived using the Black-Scholes-Merton option-pricing model at the commencement of six-month purchase periods in May and November of each year.

The Company’s first offering period began in May 2025 with the first purchase date expected to take place in November 2025.

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.

Concentration Risk

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Three Months Ended

2025 March 31,

Six Months Ended

2025 June 30,

2024 June 30,

2025 June 30,

* 10 % * 10 %

*less than 10%

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Reclassification

Certain amounts relating to related party transactions in the condensed consolidated statements of operations and statements of cash flows for the three-month period ended March 31, 2024 have been conformed to the current period presentation of related party transactions.

Certain amounts relating to related party transactions in the unaudited condensed consolidated statements of operations and statements of cash flows for the respective periods ended June 30, 2024 have been conformed to the current period presentation of related party transactions.

Accounting Pronouncements Not Yet Adopted

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The Company is currently evaluating the potential impact of this guidance on its condensed consolidated financial statements and related disclosures.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

In November 2024, the FASB issued ASU No.

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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 our consolidated financial statements and related disclosures.

The Company is currently evaluating the impact of this guidance on its consolidated financial statements and related disclosures.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Three Months Ended

(in thousands) March 31,

2025 March 31,

Three Months Ended Six Months Ended

(in thousands) June 30,

2025 June 30,

2024 June 30,

2025 June 30,

United States

1 unchanged sentence

Development Services

— 500 255 665

International (1)

1 unchanged sentence

1,165 3,307 3,614 6,324

$ 35,544 $ 31,970 $ 67,381 $ 58,691

(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:

Three Months Ended

(in thousands) March 31,

2025 March 31,

Three Months Ended Six Months Ended

(in thousands) June 30,

2025 June 30,

2024 June 30,

2025 June 30,

$ 33,472 $ 28,163 $ 62,253 $ 51,702

Government (1)

$ 907 $ — $ 1,259 $ —

Development Services

1 unchanged sentence

$ 35,544 $ 31,970 $ 67,381 $ 58,691

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

(1) Government screening revenue primarily consists of revenue earned as part of the Company’s Galleri-Medicare clinical study.

GOODWILL AND INTANGIBLE ASSETS

Due to the application of pushdown accounting, the Company’s balance sheet includes goodwill and intangible assets recognized by Illumina in connection with Illumina’s acquisition of the Company.

Goodwill Impairment

Goodwill represents the excess of purchase price Illumina paid over the fair value of the net identifiable assets acquired upon the acquisition of the Company.

During the three months ended June 30, 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 comparable companies.

The implied discount rate for the goodwill impairment assessment was 51.5 %.

These estimates and assumptions 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

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

slight changes in these rates and assumptions could have a significant impact on the concluded value of goodwill.

The Company recognized a goodwill impairment of $ 888.9 million as a result of the impairment assessment, primarily due to changes to the forecast of GRAIL’s value and the method for valuing GRAIL .

Intangible Assets

Intangible assets identified in the Acquisition include trade names, developed technology, and IPR&D and were measured at fair value as of the closing date of Illumina’s acquisition of the Company ( “Closing Date”) .

The following roll-forward indicates the fair values assigned to finite-lived intangible assets from the Acquisition and the resulting amortization:

June 30, 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 $ ( 513,241 ) $ 1,896,759 $ 2,410,000 $ ( 446,297 ) $ 1,963,703

Trade Names 40,000 ( 17,036 ) 22,964 40,000 ( 14,813 ) 25,187

Total Finite-Lived Intangible Assets $ 2,450,000 $ ( 530,277 ) $ 1,919,723 $ 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, 2024

Balance as of December 31, 2024

Balance as of June 30, 2025

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.

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 % .

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.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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 % .

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 write off of the entire carrying value of the IPR&D asset.

The estimates and assumptions updated in each of these evaluations 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 IPR&D intangible asset.

The IPR&D intangible asset is not currently subject to amortization.

Amortization expense related to finite-lived intangible assets was $ 34.6 million for the three month periods ended June 30, 2025 and 2024 and $ 69.2 million for the six month periods ended June 30, 2025 and 2024.

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

Remainder of 2025 $ 69,166

2030 and thereafter 1,297,225

Total $ 1,919,723

BALANCE SHEET COMPONENTS

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

Accounts receivable, net March 31,

Accounts receivable, net June 30,

2025 December 31,

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Accrued liabilities March 31,

Accrued liabilities June 30,

2025 December 31,

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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 March 31, 2025 and December 31, 2024:

March 31, 2025

The following tables represent the fair value hierarchy for the Company’s financial assets measured at fair value on a recurring basis as of June 30, 2025 and December 31, 2024:

June 30, 2025

(in thousands) Fair Value

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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:

March 31, 2025

June 30, 2025

(in thousands) Amortized Cost

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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 March 31, 2025 and December 31, 2024 and none of the Company’s marketable securities had been in an unrealized loss position for more than one year as of March 31, 2025 and December 31, 2024.

The Company had 7 securities with a fair value of $ 291.7 million in an unrealized loss position as of June 30, 2025 and no securities in unrealized loss position as of December 31, 2024.

None of the Company’s marketable securities had been in an unrealized loss position for more than one year as of June 30, 2025 and December 31, 2024.

The Company evaluates investments that are in an unrealized loss position for impairment as a result of credit loss.

It was determined that no credit losses exist as of March 31, 2025 and December 31, 2024 because no securities were in an unrealized loss position.

It was determined that no credit losses exist as of June 30, 2025 and December 31, 2024 because the change in market value for those securities that were in an unrealized loss position resulted from fluctuating interest rates rather than a deterioration of the credit worthiness of the issuers.

The Company does not intend to sell the money market funds and short term investments and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost basis.

STOCK-BASED COMPENSATION

Stock-based compensation expense, which includes expense for both equity and liability-classified awards, reported in the condensed consolidated statements of operations, was as follows:

Three Months Ended

(in thousands) March 31,

2025 March 31,

Three Months Ended Six Months Ended

(in thousands) June 30,

2025 June 30,

2024 June 30,

2025 June 30,

Cost of screening revenue (exclusive of amortization of intangible assets) $ 417 $ 451 $ 1,162 $ 921

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The maximum number of shares authorized for issuance under the 2024 Plan increased by 1,694,670 shares to 10,351,487 shares on January 1, 2025 pursuant to the annual automatic evergreen increase provision of the 2024 Plan.

As of March 31, 2025, approximately 291,756 shares remained available for future grants under the 2024 Plan.

As of June 30, 2025, approximately 382,005 shares remained available for future grants under the 2024 Plan.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

2024 Inducement Award Plan

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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.

On May 14, 2025, GRAIL registered an additional 500,000 shares of common stock that may be offered under the 2024 Inducement Plan.

The 2024 Inducement Plan does not have a specified limit on the number of shares authorized for issuance.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

A summary of the Company’s restricted stock unit activity, issued under the 2024 Plan and 2024 Inducement Plan, is as follows:

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Forfeited ( 396 ) $ 20.41

Outstanding at March 31, 2025 6,062 $ 22.69

2024 Employee Stock Purchase Program

The GRAIL, Inc.

2024 Employee Stock Purchase Plan (the “ESPP”) was adopted by GRAIL and approved by Illumina’s Board of Directors, in its capacity as GRAIL’s sole stockholder, in May 2024.

Outstanding at June 30, 2025 5,289 $ 24.53

Cash-Based Equity Awards and 2024 Transition Incentive Award

In connection with the Spin-Off in June 2024, outstanding cash-based equity incentive award (the “Cash-Based Equity Awards”) and certain Cash-Based Equity Awards granted to GRAIL employees, including executives, for retention purposes in the second quarter of 2024 (the “2024 Transition Incentive Awards”) were converted into Company restricted stock units 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.

As a result of the modification, the Cash-Based Equity Awards and 2024 Transition Awards, which were liability-classified awards prior to the Spin-Off, were reclassified as equity-classified awards.

The Cash-Based Equity Awards and the 2024 Transition Incentive Awards in the amount of $ 50.3 million and $ 4.4 million, respectively, were reclassified to Additional Paid-In Capital and converted into 4.0 million and 2.5 million RSUs, respectively.

See Note 7 - Stock-based compensation in the Company’s Annual Report on Form 10-K (filed on March 5, 2025) for the year ended December 31, 2024 for further details.

2024 Employee Stock Purchase Plan

The ESPP was adopted by GRAIL and approved by Illumina’s Board of Directors, in its capacity as GRAIL’s sole stockholder, in May 2024.

The maximum number of shares authorized for issuance under the ESPP increased by 338,934 shares to 752,955 shares on January 1, 2025 pursuant to the annual automatic evergreen increase provision of the ESPP.

As of March 31, 2025, no shares had been granted under the ESPP plan.

As of June 30, 2025, 752,955 shares were available for issuance under the ESPP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Under the ESPP as currently implemented, eligible employees are offered shares through a six-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 the fair market value of the Company’s common stock on the beginning of each offering period or the fair market value of the Company’s common stock on the end of the six-month offering period.

The Company’s first offering period began in May 2025 with the first purchase date expected to take place in November 2025.

No shares were offered under the ESPP during the three- and six-month periods ended June 30, 2024.

No shares were issued under the ESPP during the three- and six-month periods ended June 30, 2025 or the three- and six-month periods ended June 30, 2024.

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:

Three and Six Months Ended

June 30, 2025

Weighted-average assumptions:

Expected life (in years)

Risk-free interest rate

Expected volatility

Expected dividend

Weighted-average estimated grant date fair value per share $ 17.68

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 on Treasury bills appropriate for the expected term.

The expected stock price volatility assumption was estimated using the average of the Company’s historical volatility and average volatility of the Company’s peer companies.

The average of the Company’s peer companies and its own volatility is more representative of future stock price trends than the Company’s historical volatility due to its limited history as a public company.

Expected dividend yield was 0 % as the Company has not paid and does not anticipate paying dividends on its common stock.

As of June 30, 2025, unrecognized compensation costs related to the ESPP was $ 1.9 million and is expected to be recognized over a weighted average period of 0.4 years.

Performance-Based Award

The Company has one performance-based award outstanding for a former employee for which vesting is based on future revenues.

During the quarter ended June 30, 2025, the Company granted performance-based restricted stock unit (“PSU”) awards under the 2024 Plan with vesting conditions tied to achievement of Company-specific performance and continued service.

One-third of the PSUs subject to the awards vest upon the achievement of a Company-specific performance condition and the remaining two-thirds of the PSUs subject to the awards vest in substantially equal installments upon each of the first and second anniversaries of the initial vesting date, in each case, subject to the holder’s continued service with the Company through the applicable vesting date.

The PSU awards have an aggregate potential value of up to $ 1.0 million and expire, to the extent unvested, in May 2035.

As of June 30, 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 unaudited condensed consolidated financial statements.

The Company also has one performance-based award outstanding for 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.

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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 shall 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 March 31, 2025, it was not probable that the performance conditions associated with the award will be achieved and, therefore, no stock-based compensation expense, or corresponding loss recovery asset or liability, has been recognized in the condensed consolidated financial statements.

Eastern Time December 24, 2026 (the “Disposal Funding

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Period”) and paid by GRAIL, in cash, during the Disposal Funding Period, Illumina shall 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 June 30, 2025, it was not probable that the performance conditions associated with the award will be achieved and, therefore, no stock-based compensation expense, or corresponding loss recovery asset or liability, has been recognized in the unaudited condensed consolidated financial statements.

LEGAL AND REGULATORY PROCEEDINGS

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SEC Inquiry Letter

We may also be a party or otherwise involved in new litigation proceedings regarding the Acquisition.

For example, in July 2023, Illumina was informed that the staff of the SEC was conducting an investigation relating to Illumina and was requesting documents and communications primarily related to Illumina’s acquisition of GRAIL and certain statements and disclosures concerning GRAIL, our products and the acquisition, and related to the conduct and compensation of certain members of Illumina and GRAIL management, among other things.

GRAIL may also be a party or otherwise involved in new litigation proceedings regarding the Acquisition.

For example, in July 2023, Illumina was informed that the staff of the SEC was conducting an investigation relating to Illumina and was requesting documents and communications primarily related to Illumina’s acquisition of GRAIL and certain statements and disclosures concerning GRAIL, its products and the acquisition, and related to the conduct and compensation of certain members of Illumina and GRAIL management, among other things.

GRAIL has cooperated with the SEC in this investigation.

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Federal Securities Class Actions

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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.

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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.

The motion to dismiss is currently pending before the federal district court.

The Company denies the allegations in the complaints and intends to vigorously defend the litigation.

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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, and has certain indemnification obligations under the Company’s charter and bylaws to these individuals, that provide these directors and officers with indemnification rights that may give rise to liability for the Company even if the Company is not directly named.

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.

There can be no assurance that existing or future legal proceedings arising in the

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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 condensed 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.

A liability is recorded in the unaudited condensed 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.

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The Company may change its estimates if its assessment of the various factors changes and the amount of ultimate loss may differ from estimates, resulting in a material effect on the Company’s business, financial condition, results of operations, and/or cash flows.

As of March 31, 2025, there were no pending litigation with any probable losses that can be reasonably estimated .

As of June 30, 2025, the Company is unable to estimate a range of possible loss in excess of the amounts accrued .

Contingencies

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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, subject to a clawback feature.

The clawback is triggered if, prior to September 24, 2025 (the 15 -month anniversary of the Distribution Date), the

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Company (i) consummates a change in control of the Company or (ii) (1) pays any dividend on, or makes any other distribution in respect of, any shares of its capital stock or other equity or voting interests (other than a stock dividend or a stock split), or otherwise consummates a return of capital from GRAIL to any of its equity holders or (2) redeems, purchases or otherwise acquires any of its outstanding shares of capital stock or other equity or voting interests (other than the acquisition of any shares in order to effectuate a “net settlement” transaction for the purposes of satisfying tax withholding obligations arising in connection with the grant, vesting, exercise and/or settlement of any outstanding incentive equity awards of GRAIL held by its current or former employees).

The clawback is triggered if, prior to September 24, 2025 (the 15 -month anniversary of the Distribution Date), the Company (i) consummates a change in control of the Company or (ii) (1) pays any dividend on, or makes any other distribution in respect of, any shares of its capital stock or other equity or voting interests (other than a stock dividend or a stock split), or otherwise consummates a return of capital from GRAIL to any of its equity holders or (2) redeems, purchases or otherwise acquires any of its outstanding shares of capital stock or other equity or voting interests (other than the acquisition of any shares in order to effectuate a “net settlement” transaction for the purposes of satisfying tax withholding obligations arising in connection with the grant, vesting, exercise and/or settlement of any outstanding incentive equity awards of GRAIL held by its current or former employees).

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The amount of clawback payments made cannot exceed the amount of the initial disposal funding.

As of March 31, 2025 , no contingency liability was recorded as the contingent loss is not probable.

As of June 30, 2025 , no contingency liability was recorded as the contingent loss is not probable.

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.

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Breach of any covenant or representation contained in the Tax Matters Agreement will result in liability to specific separation taxes.

As of March 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.

As of June 30, 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.

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 (“PMA”) submission .

The Restructuring Plan was substantially completed in the fourth quarter of 2024, and the Company incurred $ 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.

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 multi-cancer early detection (“MCED”) business and reduce overall spend as the Company progresses towards completion of registrational studies and premarket approval application (“PMA”) submission .

The Restructuring Plan was

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

substantially completed in the fourth quarter of 2024, and the Company incurred $ 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 period indicated:

Three Months Ended March 31, 2025

(in thousands) Severance and related benefit costs Other Costs Total

Three Months Ended June 30, 2025 Six Months Ended June 30, 2025

(in thousands) Severance and related benefit costs Other Costs Total Severance and related benefit costs Other Costs Total

Research and development

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$ — $ — $ — $ ( 161 ) $ 127 $ ( 34 )

As of March 31, 2025, the Company had no remaining restructuring liability.

As of June 30, 2025, the Company had no remaining restructuring liability.

The following table summarizes the restructuring-related liabilities:

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Amount recorded in accrued liabilities as of December 31, 2024 $ 806 $ 222 $ 1,028

Restructuring charges ( 161 ) 127 ( 34 )

Restructuring charges (adjustments), net ( 161 ) 127 ( 34 )

Cash payments made ( 645 ) ( 349 ) ( 994 )

Amount recorded in accrued liabilities as of March 31, 2025 $ — $ — $ —

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Amount recorded in accrued liabilities as of June 30, 2025 $ — $ — $ —

NET LOSS PER SHARE

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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 three months ended March 31, 2024, 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 attributable to common stockholders:

Three Months Ended

(in thousands, except share and per share data) March 31,

2025 March 31,

For the three and six months ended June 30, 2024, 31.0 million 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 to common stockholders:

Three Months Ended Six Months Ended

(in thousands, except share and per share data) June 30,

2025 June 30,

2024 June 30,

2025 June 30,

Net loss $ ( 113,985 ) $ ( 1,585,337 ) $ ( 220,198 ) $ ( 1,804,251 )

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35,793,154 31,049,148 35,054,896 31,049,148

Net loss per share attributable to common stockholders

Net loss per share to common stockholders

Basic $ ( 3.18 ) $( 51.06 ) $ ( 6.28 ) $ ( 58.11 )

Diluted $ ( 3.18 ) $( 51.06 ) $ ( 6.28 ) $ ( 58.11 )

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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:

Three Months Ended

2025 March 31,

Three and Six Months Ended

2025 June 30,

Unvested restricted stock units 5,261,148 6,564,282

Employee stock purchase plan

Shares subject to options to purchase common stock 104,315 104,315

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The Company’s estimated annual effective income tax rate may be revised, if necessary, in each interim period.

The worldwide effective income tax rates for the three months ended March 31, 2025 and March 31, 2024 were 27.41 % and 2.50 %, respectively.

The increase for the three months ended March 31, 2025 as compared to the three months ended March 31, 2024 primarily relates to the Company’s 2024 valuation allowance impacts against pre-tax losses prior to the Spin-off.

The worldwide effective income tax rate for the six months ended June 30, 2025 and June 30, 2024 was 26.40 % and 3.37 %, respectively.

The increase for the six months ended June 30, 2025 as compared to the six months ended June 30, 2024 primarily relates to the Company’s 2024 valuation allowance impacts against pre-tax losses prior to the Spin-off.

The effective tax rate was higher than the 21% U.S.

federal statutory rate for the three months ended March

31, 2025, primarily due to state taxes, offset by discrete tax benefits from stock-based compensation.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

federal statutory rate for the six months ended June 30, 2025, primarily due to state taxes, offset by discrete tax benefits from stock-based compensation.

The Company accounts for uncertain tax positions using a more-likely-than-not threshold for recognizing and

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penalties related to unrecognized tax benefits are included within income tax expense.

For the three months

ended March 31, 2025, the Company recorded income tax expense related to its Federal and California R&D

Credits of $ 0.2 million and $ 0.1 million, respectively.

For the three months ended June 30, 2025, the Company recorded income tax expense related to its Federal and California research and development credits of $ 0.2 million and $ 0.1 million, respectively.

The Company files income tax returns in the U.S.

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years, respectively, from the date of utilization of any net operating loss or credits.

As discussed in Note 1 — Organization And Description Of Business and Note 2 — Summary Of Significant Accounting Policies — Basis of Presentation , prior to the Spin-Off, for tax purposes, the Company operated as a subsidiary of Illumina and not as a separately regarded taxable entity.

Accordingly, the effective worldwide income tax rate for the three months ended March 31, 2024 was calculated using the separate return method as if the Company filed income tax returns on both a standalone basis and on a carve-out basis.

As discussed in Note 1 — Organization And Description Of Business , prior to the Spin-Off, for tax purposes, the Company operated as a subsidiary of Illumina and not as a separately regarded taxable entity.

Accordingly, the effective worldwide income tax rate for the period prior to the Spin-Off was calculated using the separate return method as if the Company filed income tax returns on both a standalone basis and on a carve-out basis.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEGMENT INFORMATION

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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 three months ended March 31, 2025 and March 31, 2024 is included in the table below:

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Three Months Ended

(in thousands) March 31,

2025 March 31,

A reconciliation to the consolidated net loss for the three and six months ended June 30, 2025 and June 30, 2024 is included in the table below:

Three Months Ended Six Months Ended

(in thousands) June 30,

2025 June 30,

2024 June 30,

2025 June 30,

Screening revenue $ 34,379 $ 28,163 $ 63,512 $ 51,702

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Cost of development services revenue (1)

501 621 1,672 2,057

Compensation 56,209 82,116 119,726 171,737

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8,497 20,419 27,846 40,236

Goodwill and intangible assets impairment

28,000 1,420,936 28,000 1,420,936

Total costs and operating expenses

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Other income (expense), net

Benefit from income taxes 40,199 5,565

( 811 ) 5 ( 1,395 ) 47

Benefit from income taxes 38,871 53,144 79,070 58,709

Net Loss $ ( 113,985 ) $ ( 1,585,337 ) $ ( 220,198 ) $ ( 1,804,251 )

(1) Cost of screening revenue (exclusive of amortization of intangible assets) and cost of development services revenue include stock-based compensation expense.

See Note 7 — Stock-Based Compensation for further details.

(2) Other segment expenses primarily includes costs related to contractors and temporary labor, marketing expenses, legal expenses, and bad debt expense

(2) Other segment expenses primarily includes costs related to contractors and temporary labor, marketing expenses, legal expenses, and credit loss expense

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

RELATED PARTY TRANSACTIONS

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Subsequent to the Spin-Off, Illumina retained a 14.5 % stake in the Company.

As of March 31, 2025, Illumina held 4,502,126 shares of common stock representing a 12.8 % stake in the Company.

As of June 30, 2025, Illumina held 4,502,126 shares of common stock representing a 12.5 % stake in the Company.

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.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Goods and services transactions with Illumina have been reflected in the condensed consolidated financial statements as follows:

(in thousands) March 31,

Goods and services transactions with Illumina have been reflected in the unaudited condensed consolidated financial statements as follows:

(in thousands) June 30,

2025 December 31,

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Three Months Ended

(in thousands) March 31,

2025 March 31,

Six Months Ended

(in thousands) June 30,

2025 June 30,

2024 June 30,

2025 June 30,

Screening revenue

$ 52 $ 108 $ 129 $ 237

Cost of screening revenue

1,176 3,457 2,687 6,126

Cost of development services revenue

19 71 182 116

Operating expenses—Research and development

578 5,310 1,974 10,112

Operating expenses—General and administrative

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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.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Contributions from Member, Net

The following related party transactions between the Company and Illumina have been included in these condensed consolidated financial statements.

As there was no intercompany loan agreement between Illumina and GRAIL and because these transactions had no history of being settled and were not settled per the terms of the Separation and Distribution Agreement, the total net effect of these transactions are reflected in the condensed consolidated statements of cash flows as cash provided by financing activities and in the condensed consolidated balance sheets as contribution from member, net, in member’s equity.

The following related party transactions between the Company and Illumina have been included in these unaudited condensed consolidated financial statements.

The following table presents the components of the net transfers to and from Illumina prior to the Spin-Off:

Three Months Ended

(in thousands) March 31,

Six Months Ended

(in thousands) June 30,

Cash funding received from Illumina $ 1,244,300

Total contribution from member, net $ 312,000

Total contributions from member, net $ 1,244,300

SUBSEQUENT EVENTS

On July 4, 2025, the president signed into law the H.R.1, One Big Beautiful Bill Act (“the Act”).

Among other things, the Act allows for the immediate expensing of domestic research and development expenditures, permanent 100% bonus depreciation on fixed assets placed in service after January 19, 2025, alters the calculation of the 163(j) limitation on the deductibility of interest expense, modifies the limitation on deductions for charitable contributions and expands the application of 162(m) limitations on the deductibility of executive compensation.

These provisions are not expected to have a material impact on the company’s financial statements, however the Company will monitor the potential impact as additional guidance is available.

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

What changed 10-Q

Item 1. Financial Statements