What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-08-13 compared with 2025-05-14 · 274 added, 117 removed, 350 unchanged (53% of the section changed)

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The forward-looking statements are not historical facts, but rather are based on current expectations, estimates, assumptions and projections about our industry and our business and financial results.

Our actual results could differ materially from the results contemplated by these forward-looking statements due to a number of factors, including those discussed in the sections entitled “Risk Factors” in Part II, Item 1A of this Form 10-Q and in Part I, Item 1A of our Form 10-K and the section entitled “Cautionary Statement Concerning Forward-Looking Statements” of this Form 10-Q.

Our actual results could differ materially from the results contemplated by these forward-looking statements due to a number of factors, including those discussed in the sections entitled “Risk Factors” in Part II, Item 1A of this Form 10-Q and in Part I, Item 1A of our Annual Report on Form 10-K (filed on March 5, 2025) for the year ended December 31, 2024 (the “2024 Form 10-K”) and the section entitled “Cautionary Statement Concerning Forward-Looking Statements” of this Form 10-Q.

GRAIL, LLC, previously named SDG Ops, LLC, was formed in the state of Delaware as a wholly owned subsidiary of Illumina, Inc .

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According to the terms and conditions of the Merger Agreement, SDG Ops, LLC became the surviving company and was renamed GRAIL, LLC.

On June 24, 2024, Illumina completed the previously announced spin-off of GRAIL (the “Spin-Off”) through a distribution of approximately 85.5% of our 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”).

On June 24, 2024, Illumina completed the spin-off of GRAIL (the “Spin-Off”) through a distribution of approximately 85.5% of our 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”).

As a result of this Distribution, GRAIL became an independent public entity.

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Our Galleri test is a commercially available screening test for early detection of multiple types of cancer, which we termed multi-cancer early detection (“MCED”).

We believe Galleri is clinically validated based on the results of its clinical studies completed to date, including the results of its foundational case-control Circulating Cell-free Genome Atlas (“CCGA”) study and interventional PATHFINDER study which together enrolled more than 21,000 participants.

In these studies, Galleri demonstrated an ability to detect a shared cancer signal across more than 50 types of cancer, accurately predict the specific organ or tissue type where the cancer signal originated, and yield high positive predictive values and low false positive rates, all from a simple blood draw.

We believe Galleri is clinically validated based on the results of its clinical studies completed to date, including the results of its foundational case-control Circulating Cell-free Genome Atlas (“CCGA”) study and interventional PATHFINDER study in the intended use population, which together enrolled more than 21,000 participants.

In these studies, Galleri demonstrated an ability to detect a shared cancer signal across more than 50 types of cancer, accurately predict the specific organ or tissue type where the cancer signal originated, and yield high positive predictive values (“PPV”) and low false positive rates, all from a simple blood draw.

As announced in May 2025 and June 2025, respectively, data from the NHS-Galleri prevalent screening round and initial data from approximately 25,000 PATHFINDER 2 participants demonstrated consistent performance as

compared to PATHFINDER in c ancer signal of origin (“ CSO”) accuracy and specificity, and substantially higher PPV.

Galleri results can help guide next steps for diagnosis of cancer by healthcare providers in required follow-up diagnostic testing.

We launched Galleri in the United States in mid-2021.

We have sold more than 325,000 commercial tests to-date, including more than

37,000 in the first quarter of 2025, which have detected some of the most aggressive cancers in early stages including, among others, endometrial, esophageal, gastric, head and neck, liver, pancreatic, and rectal cancers.

We have sold more than 370,000 commercial tests to-date, including more than 80,000 in the first half of 2025, which have detected some of the most aggressive cancers in early stages including, among others, endometrial, esophageal, gastric, head and neck, liver, pancreatic, and rectal cancers.

Since our inception, we have incurred net losses each year.

We incurred net losses of $106.2 million and $218.9 million for the three months ended March 31, 2025 and March 31, 2024, respectively (see “Basis of Presentation” below for a description of applicable fiscal periods).

Adjusted EBITDA was $(98.7) million and $(152.0) million for the three months ended March 31, 2025 and March 31, 2024, respectively.

We incurred net losses of $114.0 million and $1.6 billion for the three months ended June 30, 2025 and June 30, 2024, respectively and $220.2 million and $1.8 billion for the six months ended June 30, 2025 and June 30, 2024, respectively (see “Basis of Presentation” below for a description of applicable fiscal periods).

Adjusted EBITDA was $(78.3) million and $(139.4) million for the three months ended June 30, 2025 and June 30, 2024, respectively and $(177.1) million and $(291.4) million for the six months ended June 30, 2025 and June 30, 2024 , respectively .

Adjusted EBITDA is a n on-GAAP financial measure.

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generally accepted accounting principle (“GAAP”) financial measure, information about why we consider Adjusted EBITDA useful and a discussion of the material risks and limitations of these measures, please see “Non-GAAP Financial Measures” below.

Substantially all of our net losses resulted from the application of pushdown accounting, including goodwill and intangible assets impairment, amortization of intangible assets, as well as our research and development programs, general and administrative (“G&A”) costs associated with our operations and sales and marketing costs associated with commercializing our products.

Substantially all of our net losses resulted from the application of pushdown accounting, including goodwill and intangible assets impairments, amortization of intangible assets, as well as our research and development programs, general and administrative (“G&A”) costs associated with our operations and sales and marketing costs associated with commercializing our products.

Additionally, due to the application of pushdown accounting, our balance sheet includes intangible assets recognized by Illumina in connection with their acquisition of us that may be subject to additional impairment over time.

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On June 21, 2024, in connection with the Spin-Off, we received a cash contribution of $932.3 million from Illumina.

In connection with the Spin-Off, we incurred $6.3 million of legal and professional fees in the three month period ended March 31, 2024 related to the 2021 acquisition of GRAIL by Illumina, and corresponding antitrust litigation, including compliance with the hold separate arrangements imposed by the European Commission, and divestiture of GRAIL from Illumina through the Spin-Off.

In connection with the Spin-Off, we incurred $21.9 million of legal and professional fees in the six month period ended June 30, 2024 related to the 2021 acquisition of GRAIL by Illumina, and corresponding antitrust litigation, including compliance with the hold separate arrangements imposed by the European Commission, and divestiture of GRAIL from Illumina through the Spin-Off.

See “Non-GAAP Financial Measures — Adjusted EBITDA” for further details.

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Restructuring Plan

On Augu st 9, 2024, following a portfolio review, our Board of Directors (the “Board”) approved a restructuring plan (“Restructuring Plan”) designed to reprioritize our resources to focus on our core MCED business and reduce overall spend as we progress towards completion of registrational studies and premarket approval application (“PMA”) submission to the U.S.

overall spend as we progress towards completion of registrational studies and premarket approval application (“PMA”) submission to the U.S.

Food and Drug Administration (“FDA”) for Galleri.

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Galleri provider engagement.

We also substantially decreased investment and planned investment in research and development activities related to our product programs beyond Galleri, including our diagnostic aid for cancer and minimal residual disease programs.

In addition, we made reductions in general and administrative expenses to reflect the focus on the MCED opportunity.

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The Restructuring Plan was substantially completed in the fourth quarter of 2024, and we incurred $18.3 million of total charges through the fourth quarter of 2024, consisting primarily of employee severance, benefits, payroll taxes, and other associated costs .

For the three months ended March 31, 2025 , we incurred an immaterial amount of restructuring charges.

Prevalent Screening Round Results for NHS-Galleri

For the three and six months ended June 30, 2025 , we incurred an immaterial amount of restructuring charges.

Prevalent Screening Round Results from the NHS-Galleri Trial

In May 2025, we completed a review of Galleri test performance results in the intervention arm from the prevalent screening round of the registrational NHS-Galleri trial.

The prevalent screening round is the first round of blood draws (of the three total blood draw rounds in the trial) with one year of follow up.

Data from the prevalent screening round showed a substantially higher positive predictive value (PPV) than that observed in the PATHFINDER study, which was previously published in the Lancet .

Cancer signal of origin (CSO) accuracy and specificity were consistent with that observed in the PATHFINDER study.

Data from the prevalent screening round showed a substantially higher PPV than that observed in the PATHFINDER study, which was previously published in The Lancet .

CSO accuracy and specificity were consistent with that observed in the PATHFINDER study.

In PATHFINDER, Galleri demonstrated a PPV of 43%, CSO accuracy of 88%, and specificity of 99.5%.

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This and other factors are likely to cause final results of the three year trial to differ from a review of the first round results.

We plan to submit data from the prevalent screening round of the NHS-Galleri trial, the first 25,000 participants in the PATHFINDER 2 study, and a bridging study (comparing the version of Galleri used in the NHS-Galleri and the PATHFINDER 2 trials to the updated version that we plan to submit to the FDA for premarket approval) as part of our PMA in the first half of 2026.

Final clinical utility results from all three years of the trial are expected in mid-2026.

Top-Line Results from the PATHFINDER 2 Registrational Study

In June 2025, we announced positive top-line performance and safety results from a pre-specified analysis of the first 25,578 participants in the registrational PATHFINDER 2 study.

PATHFINDER 2 was initiated in 2021 to evaluate the safety and performance of the Galleri test when added to standard of care single cancer screening in 35,878 adults over 50 years of age with no clinical suspicion of cancer.

In the previously published PATHFINDER study, adding Galleri to standard of care cancer screening more than doubled the overall number of cancers detected by screening.

Data from evaluable PATHFINDER 2 participants with 12 months of follow-up showed that adding Galleri to standard of care screening demonstrated substantially greater additional cancer detection than in the original PATHFINDER study.

In addition, Galleri’s PPV was substantially higher than the 43% observed in the PATHFINDER study, with consistent specificity and CSO accuracy.

There were no serious safety concerns reported in PATHFINDER 2.

PATHFINDER 2 study results will be submitted to the FDA as part of the Galleri PMA, along with a bridging analysis to compare performance of the version of Galleri used in the PATHFINDER 2 study to the updated version that GRAIL plans to submit to the FDA for premarket approval.

Detailed results from the pre-specified analysis of the first 25,000 patients in the registrational PATHFINDER 2 study will be submitted for presentation at the European Society for Medical Oncologists Congress 2025.

Real World Evidence Results

In April 2025, we presented results from more than 100,000 patients at the American Association for Cancer Research (AACR) Annual Meeting collected in a real-world setting from over 9,000 healthcare providers across all U.S.

states who ordered Galleri tests and had results returned to their patients.

Clinical cancer outcomes were voluntarily provided by ordering providers to us in compliance with the requirements of the US Health Insurance Portability and Accountability Act (HIPAA) of 1996 and its implementing regulations through our quality assurance program.

In April 2025, we presented results from more than 100,000 patients at the American Association for Cancer Research Annual Meeting collected in a real-world setting from over 9,000 healthcare providers across the U.S.

who ordered Galleri tests and had results returned to their patients.

Clinical cancer outcomes were voluntarily provided by ordering providers to GRAIL.

In this population, 1,011 patients received a positive Galleri test result.

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411 of those patients had a completed diagnostic workup, 259 of whom had received their Galleri test for asymptomatic screening.

Test performance in these 259 patients was consistent with that observed in our prior clinical studies for asymptomatic screening, with a positive predictive value of the Galleri test of 49% and cancer signal of origin accuracy of 87%.

Because of differences in sample

size, age distributions, the limitations of collecting data in a real-world setting through voluntary reporting, the importance of work ups and other factors, these results are not directly comparable to the results of our clinical studies, such as our PATHFINDER trial or the prevalent screening round or full trial results of our NHS-Galleri trial.

Test performance in these 259 patients was consistent with that observed in our prior clinical studies for asymptomatic screening, with a PPV of the Galleri test of 49% and CSO accuracy of 87%.

Because of differences in sample size, age distributions, the limitations of collecting data in a real-world setting through voluntary reporting, the importance of work ups and other factors, these results are not directly comparable to the results of our clinical studies, such as our PATHFINDER or PATHFINDER 2 trials or the prevalent screening round or full trial results of our NHS-Galleri trial.

Basis of Presentation

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While GRAIL was a subsidiary of Illumina, GRAIL’s fiscal year was the 52 or 53 weeks ending the Sunday closest to December 31, with quarters of 13 or 14 weeks ending the Sunday closest to March 31, June 30, September 30, and December 31.

The three months ended March 31, 2025 and March 31, 2024, respectively, were both 13 weeks.

The three months ended June 30, 2025 and June 30, 2024, respectively, were both 13 weeks.

Upon the closing of the Spin-Off, GRAIL adopted a fiscal year end of December 31.

Illumina’s acquisition of GRAIL on August 18, 2021 (“the Acquisition”) represented a change of control with respect to GRAIL.

Illumina’s acquisition of GRAIL on August 18, 2021 represented a change of control with respect to GRAIL.

Given GRAIL, Inc.

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Intangible assets included developed technology, in-process research and development, and trade names, as well as goodwill.

We have incurred and expect to incur additional costs as a separate public company.

We have incurred and expect to incur additional costs as a separate public company, and particularly as we transition to a large accelerated filer as of December 31, 2025 and are subject to enhanced reporting and internal control requirements under the Sarbanes-Oxley Act of 2002.

These additional costs are primarily related to certain supporting functions that may differ from and be higher than the costs historically incurred or allocated to us.

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Obtaining PMA approval can take several years from the time an application is submitted, if at all.

Moreover, the FDA requirements that will govern MCED tests, as well as the breadth and nature of data we must provide the FDA to support the proposed intended use, may be subject to change, and as such it is difficult to predict what information we will need to submit to obtain approval of a PMA from the FDA for a proposed intended use or at all.

Moreover, the regulatory requirements surrounding the pathway to PMA for LDTs like Galleri may be subject to change, including through a recent court decision that has successfully challenged the FDA’s authority to implement medical device requirements with respect to LDTs.

it is difficult to predict what information we will need to submit to obtain approval of a PMA from the FDA for a proposed intended use or at all.

Moreover, the regulatory requirements surrounding the pathway to PMA for LDTs may be subject to change, including through a recent court decision that has successfully challenged the FDA’s authority to implement medical device requirements with respect to LDTs.

We continue to interact with the FDA regarding the data we must provide the FDA to support our PMA submission for the proposed intended use.

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Over time, to the extent Galleri becomes more accessible in the United States, we may opt to reduce pricing in order to access a broader population base and accelerate adoption.

In the United Kingdom, we are working with NHS England to complete our NHS-Galleri Trial.

The NHS will evaluate the final results from the NHS-Galleri Trial, which are expected to be available in 2026, before determining whether to implement the Galleri test in the NHS.

In the United Kingdom, we are working with NHS England (the “NHS”) to complete our NHS-Galleri Trial.

The NHS will evaluate the final results from the NHS-Galleri Trial, which are expected to be available in mid-2026, before determining whether to implement the Galleri test in the NHS.

We believe the decision will include considerations such as NHS budget, political priorities, cost-effectiveness and implementation constraints in addition to an evaluation of the final results.

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Our performance depends on the extent to which key stakeholders, including current and potential commercial partners, payors and health systems, regulators, policy makers, academic and community medical centers, and key opinion leaders and advocates, understand and support MCED testing as an effective solution for cancer screening.

We make significant efforts to educate these key stakeholders regarding the benefits of MCED and the

clinical and economic value of our products, which we believe will continue to drive awareness of MCED and expand the commercial opportunity for our products.

We make significant efforts to educate these key stakeholders regarding the benefits of MCED and the clinical and economic value of our products, which we believe will continue to drive awareness of MCED and expand the commercial opportunity for our products.

• Demand for our products and customer mix .

A key factor to our future success is and will be our ability to increase demand for, and sales of, Galleri from new and existing customers.

Our commercial strategy is focused on innovative value-oriented partnerships and targets health systems, employers, payors, and life insurance providers.

Our commercial strategy is focused on innovative value-oriented partnerships and targets primary care physicians, health systems, employers, payors, and life insurance providers.

As Galleri is not currently broadly reimbursed, our ability to drive demand from these customers is directly linked to our ability to demonstrate the clinical and economic value of our test through clinical validation and real-world experience.

As of March 31, 2025, we have entered into commercial partnerships, including with leading healthcare systems, employers, payors, and life insurance providers, and have established a network of over 14,000 prescribers across the United States in a pre-reimbursement setting.

As of June 30, 2025, we have entered into commercial partnerships, including with leading healthcare systems, employers, payors, and life insurance providers, and have established a network of over 15,000 prescribers across the United States in a pre-reimbursement setting.

We believe this commercial network represents a significant opportunity to drive further demand for Galleri.

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Galleri test pricing is generally based on our list price or, for certain customers, such as larger, higher-volume customers, negotiated contractual rates.

For certain customers, we also offer rebates or discounts from time to time.

For certain customers, we also offer rebates or discounts.

Revenue generated from customers with negotiated contractual rates, or with rebates or discounts, is generally lower margin as compared to revenue generated based on list pricing.

We expect the number or magnitude of these rates, discounts and rebates to reduce our average selling price over time.

We expect the number or magnitude of these rates, discounts and rebates to reduce our average selling price (“ASP”) over time.

In addition, we have entered into a number of biopharmaceutical research partnerships for our research-use-only (“RUO”) offering under our precision oncology portfolio.

Large customers, such as healthcare systems, employers, and biopharmaceutical partners, generally begin using our products by initiating pilots involving a limited number of tests.

Large customers, such as healthcare systems, employers, and biopharmaceutical partners, generally

begin using our products by initiating pilots involving a limited number of tests.

We believe that our ability to convert these initial pilots into long-term customer relationships has the potential to drive substantial long-term revenue.

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We expect our research and development expenses to decrease over the next three years as, in conjunction with our portfolio review, we determined to decrease investment in product programs beyond Galleri.

Additionally, some of our large clinical trials are moving into follow-up phase and the development of our automated platform is expected to substantially conclude in 2025.

We will continue to prioritize key objectives for Galleri, including completion of our registrational studies and our premarket approval application.

Additionally, some of our large clinical trials are moving into the data follow-up phase and the development of our automated platform is expected to substantially conclude in 2025.

We will continue to prioritize key objectives for Galleri, including completion of our registrational studies and submission of our PMA application.

• Leverage our operational infrastructure .

We have made significant investments to build a scalable infrastructure capable of meeting significant demand of up to one million tests per year while satisfying applicable certification requirements.

Our Durham, North Carolina facility is CAP-accredited and CLIA-certified.

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As demand for our products increases, we expect to further leverage the scale efficiencies of our infrastructure and platform technology, which we believe will positively impact margins over time.

In late 2024, we began use of a new version of Galleri, for which we are submitting our PMA, in commercial channels that incorporates an industrial scale platform with significant automation and is intended to enable us to scale more efficiently with future demand.

In connection with implementation of this new version of Galleri, we have experienced and may continue to experience increased turnaround times, re-processing costs and sample failures.

We continually monitor and evaluate laboratory operations and performance in an effort to achieve our intended sample processing metrics and costs;

however from time to time, processing issues may arise that could impact our operations.

In the future, it is possible that we may invest significant amounts in infrastructure to support new products or existing products in new markets.

While each of these areas presents significant opportunities for us, they also pose significant risks and challenges that we must address.

See the “Risk Factors” section of our 2024 Form 10-K for the year ended December 31, 2024 (filed on March 5, 2025) and the “Risk Factors” section of this Form 10-Q, alongside other information set forth in this Form 10-Q and in other documents that we file with the SEC, for more information.

Seasonal fluctuations, underlying business trends have also affected, and are likely to continue to affect, our business.

See the “Risk Factors” section of our 2024 Form 10-K (filed on March 5, 2025) and the “Risk Factors” section of this Form 10-Q, alongside other information set forth in this Form 10-Q and in other documents that we file with the SEC, for more information.

Seasonal fluctuations and underlying business trends have also affected, and are likely to continue to affect, our business.

We may experience this seasonality, in particular in the third quarter due to primary care physician and patient summer vacation period, with relatively lower volume in the first and third quarters, and relatively higher volume in the second and fourth quarters.

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As a result of the application of pushdown accounting, intangible assets recognized in our standalone financial statements relate to our own technology, and consist of developed technologies and in-process research and development that were measured at fair value upon the Acquisition.

Our developed technology includes intangible assets related to Galleri, designed as a cancer screening test for asymptomatic individuals over 50 years of age, as well as our diagnostic aid for cancer (“DAC”) that is being designed to accelerate diagnostic

resolution for patients for whom there is a clinical suspicion of cancer.

As part of our Restructuring Plan, we are reducing investment in the development of products beyond Galleri, including DAC.

Our developed technology includes intangible assets related to Galleri, designed as a cancer screening test for asymptomatic individuals over 50 years of age, as well as our DAC that is being designed to accelerate diagnostic resolution for patients for whom there is a clinical suspicion of cancer.

As part of our Restructuring Plan, we have reduced investment in the development of products beyond Galleri, including DAC.

The cost of identifiable intangible assets with finite lives, such as developed technology assets, are amortized on a straight-line basis over the assets’ respective estimated useful lives of 18 years.

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As a result of the application of pushdown accounting, the separately issued financial statements of GRAIL reflect the goodwill recorded by Illumina upon the Acquisition.

We evaluate goodwill impairment annually or more frequently if an event occurs or circumstances change in the interim that would more likely than not reduce the fair value of the asset below its carrying amount.

See Note 2 — Summary of Significant Accounting Policies — Goodwill and Intangible Assets to our Consolidated Financial Statements filed with our 2024 Form 10-K (filed on March 5, 2025).

We evaluate intangible assets for impairment annually or more frequently if an event occurs or circumstances change in the interim that would more likely than not reduce the fair value of the asset below its carrying amount.

See Note 2 — Summary of Significant Accounting Policies — Goodwill and Intangible Assets to our Consolidated Financial Statements filed with our 2024 Form 10-K.

Interest Income

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income tax was combined into Illumina’s consolidated income tax return as a subsidiary of Illumina.

However, for financial statement purposes, we have elected to compute our income tax provision, including current and deferred taxes, as if we filed a separate income tax return and were not included in Illumina’s consolidated return for the period GRAIL was owned by Illumina.

However, for financial statement purposes, between the closing of the Acquisition and the Spin-Off, we elected to compute our income tax provision, including current and deferred taxes, as if we filed a separate income tax return and were not included in Illumina’s consolidated return for the period GRAIL was owned by Illumina.

Including the provision for income taxes in our standalone financials is more representative of our financial position as a standalone company.

As such, the income tax provisions and related deferred tax assets and liabilities reflected in our financial statements for the period ending March 31, 2024 has been estimated as if we were a separate taxpayer.

As such, the income tax provisions and related deferred tax assets and liabilities reflected in our financial statements for the period ending June 30, 2024 has been estimated as if we were a separate taxpayer.

Under this method, various tax attributes, such as net operating losses and tax credits, are also presented on a separate return basis.

For income tax purposes, since we were not a separate taxpayer and merely a subsidiary of Illumina, these tax attributes, including net operating losses and tax credits, are the property of Illumina and have either already been utilized by Illumina in its consolidated or combined income tax returns or will be utilized by Illumina in its returns in the future.

For income tax purposes, since prior to the Spin-Off, we were not a separate taxpayer and merely a subsidiary of Illumina, these tax attributes, including net operating losses and tax credits, are the property of Illumina and have either already been utilized by Illumina in its consolidated or combined income tax returns or will be utilized by Illumina in its returns in the future.

Accordingly, such tax attributes will not be available to us as a standalone entity on our income tax returns in t he future;

therefore, in connection with the Spin-off, we recorded an entry to additional paid in capital in order to remove the tax-effected deferred tax assets, net of any valuation allowance, for the tax attributes that remained the property of Illumina.

Beginning in 2024 after the Spin-off, as a

standalone entity, GRAIL will file tax returns on its own behalf and its deferred taxes and actual income tax rate

may differ from those in historical periods.

Beginning in 2024 after the Spin-off, as a standalone entity, GRAIL will file tax returns on its own behalf and its deferred taxes and actual income tax rate may differ from those in historical periods.

During 2025 the Company is no longer a subsidiary of Illumina and computes its tax provision in accordance with ASC 740 and has computed the income tax provision, including the current and deferred taxes under Grail, Inc., as a publicly traded company.

Results of Operations

Comparisons of the Three Months Ended March 31, 2025 and March 31, 2024

The following table summarizes our results of operations for the three months ended March 31, 2025 and March 31, 2024.

Three Months Ended

(in thousands) March 31,

2025 March 31,

Comparisons of the Three and Six Months Ended June 30, 2025 and June 30, 2024

The following table summarizes our results of operations for the three and six months ended June 30, 2025 and June 30, 2024.

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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General and administrative 37,914 67,258 82,988 124,327

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

Comparison of the Three Months Ended March 31, 2025 and March 31, 2024

Comparison of the Three Months Ended June 30, 2025 and June 30, 2024

Three Months Ended Change

(in thousands) March 31,

2025 March 31,

(in thousands) June 30,

2025 June 30,

Screening revenue

$ 34,379 $ 28,163 $ 6,216 22 %

Development services revenue

1,165 3,807 (2,642) (69 %)

Total revenue 35,544 31,970 3,574 11 %

Screening Revenue

The increase in screening revenue of $5.6 million was primarily attributable to a 31% increase in Galleri sales volume, offset by a 5% decrease in average selling price (“ASP”).

The Galleri sales volume increased in the first three months of 2025 as a result of the continued ramp in our commercial activity and partnerships, expansion of our network of ordering providers, and new promotional campaigns.

The increase in screening revenue of $6.2 million was primarily attributable to a 29% increase in Galleri sales volume, offset by a 6% decrease in ASP.

The Galleri sales volume increased in the second quarter of 2025 as a result of the continued ramp in our commercial activity, expansion of our network of ordering providers, additional commercial partnerships and new promotional campaigns.

Development Services Revenue

The decrease in development services revenue of $2.6 million was primarily due to a decrease of $1.2 million in revenue from pilots with biopharmaceutical partners, a decrease of $0.7 million in revenue earned from research services, and a decrease of $0.5 million in other services revenue.

Cost of Screening Revenue (Exclusive of Amortization of Intangible Assets)

Three Months Ended Change

(in thousands) March 31,

2025 March 31,

(in thousands) June 30,

2025 June 30,

Cost of screening revenue (exclusive of amortization of intangible assets)

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The increase in cost of screening revenue (exclusive of amortization of intangible assets) of $3.6 million was primarily attributable to an increase in test volume.

Cost of screening revenue (exclusive of amortization of intangible assets) as a percent of revenue decreased in 2025 primarily due to the launch of our automated platform, however this decrease was offset by the 5% decrease in average selling price.

Cost of screening revenue (exclusive of amortization of intangible assets) as a percent of revenue decreased in the second quarter of 2025 compared to the same period in 2024 primarily due to the reduction in variable costs of Galleri testing performed on our automated platform;

however, this decrease was offset by the 6% decrease in ASP and additional sample reprocessing costs.

Research and Development

Research and development expenses for the three months ended March 31, 2025 and March 31, 2024 were as follows:

Research and development expenses for the three months ended June 30, 2025 and June 30, 2024 were as follows:

Three Months Ended Change

(in thousands) March 31,

2025 March 31,

(in thousands) June 30,

2025 June 30,

Compensation expenses $ 23,982 $ 44,790 $ (20,808) (46 %)

Allocated expenses 6,384 9,787 (3,403) (35) %

Clinical studies 6,263 16,327 (10,064) (62) %

Laboratory supplies and research collaboration expenses 4,607 12,026 (7,419) (62 %)

Allocated expenses 4,541 9,930 (5,389) (54) %

Depreciation expenses 2,663 2,766 (103) (4 %)

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Total research and development $ 46,626 $ 94,196 $ (47,570) (51 %)

$ 53,625 $ 101,625 $ (48,000) (47 %)

The decrease in research and development expenses by $48.0 million was primarily attributable to decreases in compensation expenses, laboratory supplies and research collaboration expenses and clinical study expenses.

The decrease of $20.6 million in compensation expenses was primarily related to a decrease of $12.4 million in salaries and wages, a decrease of $7.9 million in stock-based compensation, and a decrease of $1.0 million in variable compensation expense primarily due to the reduction in workforce related to the Restructuring Plan, partially offset by an increase of $0.7 million in severance and benefits.

The decrease of $3.4 million in allocated expenses was primarily attributable to lower software, IT, and facilities expenses being allocated to the research and development function.

The decrease in research and development expenses by $47.6 million was primarily attributable to decreases in compensation expenses, clinical study expenses, and laboratory supplies and research collaboration expenses.

The decrease of $20.8 million in compensation expenses was primarily related to a decrease of $13.2 million in salaries and wages, a decrease of $5.9 million in stock-based compensation, and a decrease of $1.7 million in variable compensation expense primarily due to the reduction in workforce related to the Restructuring Plan.

The decrease in clinical studies of $10.1 million was primarily due to a decrease of $11.0 million primarily related to completion of enrollment in our PATHFINDER 2 study and completion of final study visits in our NHS-Galleri Trial, partially offset by an increase of $0.9 million due to enrollment in our REACH/Galleri-Medicare study.

The decrease in laboratory supplies and research collaboration expenses of $7.4 million was primarily driven by the completion of the development and validation of our automated platform at the end of 2024 as well as the completion of enrollment in our PATHFINDER 2 study and completion of final study visits in our NHS-Galleri Trial.

The decrease of $1.4 million in other expenses was primarily driven by a decrease in the use of contractors and temporary labor due to cost optimization efforts.

The decrease of $5.4 million in allocated expenses was primarily attributable to lower software, IT, and facilities expenses being allocated to the research and development function.

The decrease of $3.8 million in other expenses was primarily driven by a decrease in professional services and in the use of contractors and temporary labor due to cost optimization efforts.

Sales and Marketing

Three Months Ended Change

(in thousands) March 31,

2025 March 31,

(in thousands) June 30,

2025 June 30,

Sales and marketing $ 28,539 $ 40,989 $ (12,450) (30 %)

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Three Months Ended Change

(in thousands) March 31,

2025 March 31,

(in thousands) June 30,

2025 June 30,

General and administrative

$ 37,914 $ 67,258 $ (29,344) (44 %)

The decrease in general and administrative expenses of $12.0 million was primarily attributable to a decrease of $9.1 million in compensation expenses primarily related to a decrease in salaries and wages of $5.8 million and a decrease of $3.2 million in stock-based compensation primarily due to the reduction in workforce related to the Restructuring Plan.

Legal and professional services expenses decreased by $2.5 million due to no longer incurring legal and professional service fees related to compliance with the European Commission hold separate order and transaction costs related to our Spin-Off, which completed on June 24, 2024.

The decrease in general and administrative expenses of $29.3 million was primarily attributable to a decrease of $19.1 million in legal and professional services expenses due to no longer incurring legal and professional service fees related to compliance with the European Commission hold separate order and transaction costs related to our Spin-Off, which completed on June 24, 2024.

Compensation expenses decreased by $7.5 million primarily related to a decrease of $3.7 million in stock-based compensation, a decrease in salaries and wages of $3.0 million, and a decrease of $0.8 million in variable compensation primarily due to the reduction in workforce related to the Restructuring Plan.

Costs associated with the use of contractors and temporary labor decreased by $2.5 million due to cost optimization efforts.

Goodwill and Intangible Assets Impairment

Three Months Ended Change

(in thousands) June 30,

2025 June 30,

Goodwill and intangible impairment

$ 28,000 $ 1,420,936 $ (1,392,936) (98 %)

In the second quarter of 2025, we identified a change in market conditions in relation to our IPR&D asset which is in development, which represented a potential impairment indicator.

An impairment assessment was performed which resulted in an impairment charge of $28 million primarily due to a decrease in projected cash flows and a higher discount rate.

As a result of a goodwill impairment assessment performed by Illumina in the second quarter of 2024, a goodwill impairment charge of $888.9 million was recorded, which represents the amount by which the net carrying value of GRAIL exceeded the fair value of GRAIL at the time the quantitative test was performed, primarily due to changes to the forecast of GRAIL’s value and the method for valuing GRAIL .

In conjunction with the goodwill impairment assessment, an impairment assessment for our IPR&D intangible assets was performed by Illumina which resulted in an impairment charge of $420.0 million primarily due to changes to revenue projections and the discount rate utilized .

Subsequent to the Spin-Off in the second quarter of 2024, in conjunction with a portfolio review, we determined to reduce investment in the development of the IPR&D asset, which impacted the amount and timing of expected future cash flows attributable to IPR&D which we concluded was a possible indicator of impairment

and another IPR&D impairment test was performed.

The impairment assessment resulted in an additional impairment charge of $112.0 million primarily due to a decrease in projected cash flows .

Interest Income

Three Months Ended Change

(in thousands) March 31,

2025 March 31,

(in thousands) June 30,

2025 June 30,

Interest income $ 6,809 $ 2,805 $ 4,004 143 %

$ 7,779 $ 2,901 $ 4,878 168 %

The increase in interest income of $4.0 million was primarily driven by an increase in interest earned on our money market funds and short-term marketable securities primarily due to an increase in the balance on hand as a result of the disposal funding provided by Illumina in connection with the Spin-Off.

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Three Months Ended Change

(in thousands) March 31,

2025 March 31,

(in thousands) June 30,

2025 June 30,

Benefit from income taxes

$ 38,871 $ 53,144 $ (14,273) (27 %)

The increase in benefit from income taxes was primarily driven by the increase in effective tax rate for the three months ended March 31, 2025 when compared to the effective tax rate for the three months ended March 31, 2024.

The increase in effective tax rate 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 decrease in benefit from income taxes of $14.3 million was primarily driven by the increase in effective tax rate for the three months ended June 30, 2025 when compared to the effective tax rate for the three months ended June 30, 2024.

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

Comparison of the Six Months Ended June 30, 2025 and June 30, 2024

Six Months Ended Change

(in thousands) June 30,

2025 June 30,

Screening revenue

$ 63,512 $ 51,702 $ 11,810 23 %

Development services revenue

3,869 6,989 (3,120) (45 %)

Total revenue 67,381 58,691 8,690 15 %

Screening Revenue

The increase in screening revenue of $11.8 million was primarily attributable to a 30% increase in Galleri sales volume, offset by a 5% decrease in ASP.

The Galleri sales volume increased in the first six months of 2025 as a result of the continued ramp in our commercial activity and partnerships, expansion of our network of ordering providers, and new promotional campaigns.

Development Services Revenue

The decrease in development services revenue of $3.1 million was primarily due to a decrease of $1.5 million in revenue from pilots with biopharmaceutical partners, a decrease of $0.6 million in revenue earned from research services, a decrease of $0.5 million in clinical development revenue, and a decrease of $0.5 million in other services revenue.

Cost of Screening Revenue (Exclusive of Amortization of Intangible Assets)

Six Months Ended Change

(in thousands) June 30,

2025 June 30,

Cost of screening revenue (exclusive of amortization of intangible assets)

$ 36,469 $ 29,511 $ 6,958 24 %

The increase in cost of screening revenue (exclusive of amortization of intangible assets) of $7.0 million was primarily attributable to an increase in test volume.

Cost of screening revenue (exclusive of amortization of intangible assets) as a percent of revenue decreased in 2025 primarily due to the reduction in variable costs of Galleri testing performed on our automated platform;

however, this decrease was offset by the 5% decrease in ASP and increased sample re-processing costs.

Research and Development

Research and development expenses for the six months ended June 30, 2025 and June 30, 2024 were as follows:

Six Months Ended Change

(in thousands) June 30,

2025 June 30,

Compensation expenses $ 53,687 $ 95,081 $ (41,394) (44 %)

Clinical studies 12,185 31,232 (19,047) (61 %)

Allocated expenses 10,731 19,718 (8,987) (46) %

Laboratory supplies and research collaboration expenses 9,136 29,437 (20,301) (69 %)

Depreciation expenses 5,406 6,047 (641) (11 %)

Other expenses 9,106 14,306 (5,200) (36 %)

Total research and development

$ 100,251 $ 195,821 $ (95,570) (49 %)

The decrease in research and development expenses by $95.6 million was primarily attributable to decreases in compensation expenses, laboratory supplies and research collaboration expenses, and clinical study expenses.

The decrease of $41.4 million in compensation expenses was primarily related to a decrease of $26.1 million in salaries and wages, a decrease of $13.3 million in stock-based compensation, and a decrease of $2.7 million in variable compensation expense primarily due to the reduction in workforce related to the Restructuring Plan, partially offset by an increase of $0.7 million in severance and benefits.

The decrease in laboratory supplies and research collaboration expenses of $20.3 million was primarily driven by the completion of the development and validation of our automated platform at the end of 2024 as well as the completion of enrollment in our PATHFINDER 2 study and completion of final study visits in our NHS-Galleri Trial.

The decrease in clinical studies of $19.0 million was primarily due to a decrease of $21.0 million primarily related to completion of enrollment in our PATHFINDER 2 study and completion of final study visits in our NHS-Galleri Trial, partially offset by an increase of $2.0 million due to enrollment in our REACH/Galleri-Medicare study.

The decrease of $9.0 million in allocated expenses was primarily attributable to lower software, IT, and facilities expenses being allocated to the research and development function.

The decrease of $5.2 million in other expenses was primarily driven by a decrease of $2.3 million in the use of contractors and temporary labor, a decrease of $1.7 million in professional services, and a decrease of $0.9 million in cloud computing expenses due to cost optimization efforts.

Sales and Marketing

Six Months Ended Change

(in thousands) June 30,

2025 June 30,

Sales and marketing $ 63,518 $ 87,808 (24,290) (28) %

The decrease in sales and marketing expenses of $24.3 million was primarily attributable to a decrease of $18.9 million in compensation expenses primarily related to a decrease in salaries and wages of $14.0 million and a decrease in stock-based compensation of $4.6 million primarily due to the reduction in workforce related to the Restructuring Plan.

Third-party marketing professional services expenses decreased by $4.3 million due to cost optimization efforts.

General and Administrative

Six Months Ended Change

(in thousands) June 30,

2025 June 30,

General and administrative

$ 82,988 $ 124,327 $ (41,339) (33 %)

The decrease in general and administrative expenses of $41.3 million was primarily attributable to a decrease of $21.7 million in legal and professional services expenses due to no longer incurring legal and professional service fees related to compliance with the European Commission hold separate order and transaction costs related to our Spin-Off, which completed on June 24, 2024.

Compensation expenses decreased by $16.6 million primarily related to a decrease in salaries and wages of $8.2 million and a decrease of $7.0 million in stock-based compensation primarily due to the reduction in workforce related to the Restructuring Plan.

Other general and administrative costs decreased by $3.0 million primarily driven by decreases in the use of contractors and temporary labor due to cost optimization efforts.

Goodwill and Intangible Impairment

Six Months Ended Change

(in thousands) June 30,

2025 June 30,

Goodwill and intangible impairment

$ 28,000 $ 1,420,936 $ (1,392,936) (98 %)

In the second quarter of 2025, we identified a change in market conditions in relation to our IPR&D asset which is in development, which represented a potential impairment indicator.

An impairment assessment was performed which resulted in an impairment charge of $28 million primarily due to a decrease in projected cash flows and a higher discount rate.

The impairment assessment resulted in an additional impairment charge of $112.0 million primarily due to a decrease in projected cash flows .

Interest Income

Six Months Ended Change

(in thousands) June 30,

2025 June 30,

Interest income

$ 14,588 $ 5,706 $ 8,882 156 %

The increase in interest income of $8.9 million was primarily driven by an increase in interest earned on our money market funds and short-term marketable securities primarily due to an increase in the balance on hand as a result of the disposal funding provided by Illumina in connection with the Spin-Off.

Other Income (Expense)

Six Months Ended Change

(in thousands) June 30,

2025 June 30,

Other income (expense), net

$ (1,395) $ 47 $ (1,442) (3068 %)

The decrease in other income of $1.4 million was primarily a result the fluctuation of foreign currency exchange rates.

Benefit from Income Taxes

Six Months Ended Change

(in thousands) June 30,

2025 June 30,

Benefit from income taxes

$ 79,070 $ 58,709 $ 20,361 35 %

The increase in benefit from income taxes of $20.4 million was primarily driven by the increase in effective tax rate for the six months ended June 30, 2025 when compared to the effective tax rate for the six months ended June 30, 2024.

The increase in effective tax rate 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.

Non-GAAP Financial Measures

2025 and March 31, 2024, which information should be read in conjunction with our unaudited Condensed Consolidated Financial Statements and the related notes included elsewhere in this Form 10-Q:

In addition to our results provided throughout this Form 10-Q that are determined in accordance with GAAP, this Form 10-Q also includes the following non-GAAP financial measures for the three and six months ended June 30, 2025 and June 30, 2024, which information should be read in conjunction with our unaudited Condensed Consolidated Financial Statements and the related notes included elsewhere in this Form 10-Q:

Adjusted Gross Profit/(Loss)

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The following table presents a reconciliation of gross loss, the most directly comparable financial measure calculated in accordance with GAAP, to Adjusted Gross Profit.

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,

Gross loss (1)

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GAAP, to Adjusted EBITDA on a consolidated basis.

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,

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

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Depreciation 4,592 4,805 9,287 10,218

Goodwill and intangible impairment (2)

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

Illumina/GRAIL merger & divestiture legal and professional services costs (3)

— 15,624 — 21,932

Stock-based compensation (4)

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(1) Represents amortization of intangible assets, including developed technology and trade names.

(2) Reflects impairment of goodwill and intangible assets recognized as a result of the Acquisition.

(3) Represents legal and professional services costs associated with the Acquisition and corresponding antitrust litigation, including compliance with the hold separate arrangements imposed by the European Commission, and legal and professional services costs associated with the divestiture.

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Post- Acquisition until completion of the Spin-Off, we received funding on a quarterly basis directly from Illumina.

While we generate revenue from screening and development services, these revenues have not been sufficient to fund all operations.

On June 21, 2024, in connection with the Spin-Off we received a cash contribution of $932.3 million from Illumina.

As of March 31, 2025, our cash, cash equivalents and restricted cash totaled $137.2 million and our short-term marketable securities totaled $540.7 million.

As of June 30, 2025, our cash, cash equivalents and restricted cash totaled $130.8 million and our short-term marketable securities totaled $475.3 million.

Future Funding Requirements

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We believe that our existing cash, cash equivalents and short-term marketable securities will be sufficient to meet our working capital and capital expenditure needs for at least the next 12 months, as of the date of this Form 10-Q.

However, we anticipate that we will need to raise additional financing in the future to fund our operations.

However, we anticipate that we will need to raise additional financing in the future to fund our

Our future capital requirements will depend on many factors, including the timing and extent of spending to support commercialization, market acceptance of our products prior to broad reimbursement, the timing of broad reimbursement, and launch of pipeline products.

We are subject to typical risks associated with an

early-stage commercial company and are developing the market for multi-cancer early detection.

We are subject to typical risks associated with an early-stage commercial company and are developing the market for multi-cancer early detection.

We may encounter complications with executing our business plans that may cause unforeseen expenses and adversely affect our business.

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The following table summarizes our cash flows for the periods presented:

Three Months Ended

(in thousands) March 31,

2025 March 31,

Six Months Ended

(in thousands) June 30,

2025 June 30,

Net cash used in operating activities $ (171,977) $ (379,085)

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Net (decrease) increase in cash, cash equivalents, and restricted cash $ (86,807) $ 861,251

Generally, our net cash provided by financing activities is used to fund our day to day operating activities.

First quarter operating cash requirements are generally higher due to payment in the first quarter of our annual bonuses accrued during the prior year.

During the six months ended June 30, 2025 and June 30, 2024, cash paid for annual bonuses accrued during the prior year was $24.2 million and $25.9 million, respectively.

Net Cash Used in Operating Activities

During the three months ended March 31, 2025, net cash used by operating activities consisted of a net loss of $106.2 million offset by non-cash charges of $9.7 million and cash provided by changes in our operating assets and liabilities of $1.5 million.

The non-cash adjustments primarily consisted of depreciation and amortization of $39.3 million, and stock-based compensation expense of $16.2 million, which was partially offset by a non-cash benefit of $40.2 million relating to deferred taxes and amortization of discount on marketable securities of $6.4 million.

Changes in operating assets and liabilities was predominantly driven by a decrease in prepaids and other current assets of $2.8 million, a decrease in accounts receivable of $0.7 million, an increase in accounts payable of $0.9 million and a decrease in net operating lease assets and liabilities of $0.2 million, partially offset by a decrease in accrued and other liabilities of $3.1 million.

During the three months ended March 31, 2024, net cash used by operating activities consisted of a net loss of $218.9 million, $42.9 million cash payments for equity awards, and cash used by changes in our operating assets and liabilities of $9.8 million, partially offset by non-cash charges of $64.4 million.

The non-cash adjustments primarily consisted of depreciation and amortization of $40.0 million and stock-based compensation expense of $29.1 million, which was partially offset by a non-cash benefit of $4.8 million relating to deferred taxes.

Changes in operating assets and liabilities was predominantly driven by a decrease in accounts payable of $7.7 million, an increase in prepaids and other current assets of $3.6 million, and a decrease in accrued and other liabilities of $1.1 million, partially offset by a decrease in accounts receivable of $1.9 million, a decrease in net operating lease assets and liabilities of $0.6 million, and a decrease in supplies of $0.1 million.

During the six months ended June 30, 2025, net cash used in operating activities consisted of a net loss of $220.2 million offset by non-cash charges of $47.5 million and cash provided by changes in our operating assets and liabilities of $0.8 million.

The non-cash adjustments primarily consisted of depreciation and amortization of $78.5 million, stock-based compensation expense of $30.4 million, and intangible impairment expense of $28.0 million, which was partially offset by a non-cash benefit of $79.1 million relating to deferred taxes and amortization of discount on marketable securities of $11.8 million.

Changes in operating assets and liabilities was predominantly driven by a decrease in prepaids and other current assets of $4.8 million, a decrease in accounts receivable of $3.6 million, an increase in accounts payable of $1.4 million and a decrease in net operating lease assets and liabilities of $0.4 million, partially offset by a decrease in accrued and other liabilities of $8.5 million and an increase in supplies of $0.9 million.

During the six months ended June 30, 2024, net cash used in operating activities consisted of a net loss of $1.8 billion, $53.8 million cash payments for equity awards, and cash used by changes in our operating assets and liabilities of $18.8 million, partially offset by non-cash charges of $1.5 billion.

The non-cash adjustments primarily consisted of goodwill and intangible impairment expense of $1.4 billion, depreciation and amortization of $79.4 million and stock-based compensation expense of $55.1 million, which was partially offset by a non-cash

benefit of $57.9 million relating to deferred taxes.

Changes in operating assets and liabilities was predominantly driven by a decrease in accrued and other liabilities of $14.3 million, an increase in supplies of $3.8 million, a decrease in accounts payable of $3.3 million, and an increase in prepaids and other current assets of $2.5 million, partially offset by a decrease in accounts receivable of $3.5 million, and a decrease in net operating lease assets and liabilities of $1.6 million.

Net Cash Provided by (Used in) Investing Activities

During the three months ended March 31, 2025, net cash provided by investing activities primarily consisted of proceeds from maturities of marketable securities of $235.2 million, partially offset by purchases of marketable

securities of $220.5 million and $0.1 million for capital expenditures primarily related to purchases of machinery and equipment for use in our laboratories.

During the three months ended March 31, 2024, net cash used by investing activities primarily consisted of $2.5 million for capital expenditures primarily related to purchases of machinery and equipment for use in our laboratories.

During the six months ended June 30, 2025, net cash provided by investing activities primarily consisted of proceeds from maturities of marketable securities of $587.9 million, partially offset by purchases of marketable securities of $502.5 million and $0.4 million for capital expenditures primarily related to purchases of machinery and equipment for use in our laboratories.

During the six months ended June 30, 2024, net cash used in investing activities primarily consisted of $3.9 million for capital expenditures primarily related to purchases of machinery and equipment for use in our laboratories.

Net Cash Provided by Financing Activities

During the three months ended March 31, 2025, there was no cash provided by or used in financing activities.

During the three months ended March 31, 2024, net cash provided by financing activities primarily consisted of $312.0 million in funding received from Illumina.

During the six months ended June 30, 2025, there was no cash provided by or used in financing activities.

During the six months ended June 30, 2024, net cash provided by financing activities primarily consisted of $1.2 billion in funding received from Illumina.

Material Cash Requirements

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Refer to Notes 8 and 9 to our Consolidated Financial Statements for a discussion of our operating lease obligations and purchase commitments, respectively.

Critical Accounting Estimates

Critical Accounting Policies and Estimates

This discussion and analysis of our financial condition and results of operations is based on our unaudited Condensed Consolidated Financial Statements, which have been prepared in accordance with U.S.

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Actual results may differ from these estimates under different assumptions or conditions.

During the three months ended March 31, 2025, there were no material changes to our critical accounting policies from those disclosed within the consolidated financial statements for the year ended December 31, 2024 included in our 2024 Form 10-K (filed on March 5, 2025).

During the six months ended June 30, 2025, there were no material changes to our critical accounting policies and estimates from those disclosed within the consolidated financial statements for the year ended December 31, 2024 included in our 2024 Form 10-K (filed on March 5, 2025), except as described below.

Stock- Based Compensation Expense - 2024 Employee Stock Purchase Plan

Our first ESPP offering period began in May 2025 with the first purchase date expected to take place in November 2025.

The fair value of shares to be issued under our ESPP is determined using the Black-Scholes-Merton option-pricing model at the commencement of 6-month purchase periods in May and November of each year.

The model assumptions include expected volatility, term, dividends, and the risk-free interest rate.

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

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

The expected term represents the term from the first day of the offering period to the purchase date.

The expected dividend yield is determined to be 0% given that we have never declared or paid cash dividends on our common

stock and do not anticipate paying such cash dividends.

The risk-free interest rate is based upon U.S.

Treasury securities with remaining terms similar to the expected term of the share-based awards.

Stock-based compensation for our ESPP is expensed using a straight-line attribution method over the offering period.

Additionally, forfeitures are accounted for as incurred.

Indefinite-Lived Intangible Assets Impairment

Indefinite-lived intangible assets consist of GRAIL’s IPR&D and were measured by Illumina at fair value as of the Closing Date.

We test indefinite-lived intangible assets for impairment annually or more frequently if an event occurs or circumstances change in the interim that would more likely than not reduce the fair value of the asset below its carrying amount.

Indefinite-lived intangible assets are considered to be impaired when the carrying value of a reporting unit or asset exceeds its fair value.

The estimates and assumptions used in our assessment represent a Level 3 measurement because they are supported by little or no market activity and reflect our own assumptions in measuring fair value.

For the indefinite-lived intangible assets impairment analysis performed during the quarter, the discount rate estimate was derived from the American Institute of Certified Public Accountants (“AICPA”) Accounting and Valuation Guide.

The assumptions used are inherently subject to uncertainty and we note that small changes in these assumptions could have a significant impact on the concluded value.

We are an emerging growth company under the Jumpstart our Business Startups Act of 2012 (the “JOBS Act”).

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We have nonetheless irrevocably elected not to avail ourselves of this exemption and, as a result, we will adopt new or revised accounting standards on the relevant dates on which adoption of such standards is required for other public companies.

We will remain an emerging growth company until the earliest to occur of the following:

We will remain an emerging growth company (“EGC”) until the earliest to occur of the following:

(i) the last day of the fiscal year in which our total annual gross revenues first meet or exceed at least $1.235 billion (as adjusted for inflation), (ii) the date on which we have, during the prior three-year period, issued more than $1.0 billion in non-convertible debt, (iii) the last day of the fiscal year in which we (a) have an aggregate worldwide market value of common stock held by non-affiliates of $700 million or more (measured at the end of each fiscal year) as of the last business day of our most recently completed second fiscal quarter and (b) have been a reporting company under the Exchange Act for at least one year (and have filed at least one annual report under the Exchange Act), or (iv) the last day of the fiscal year following the fifth anniversary of the date of the first sale of our common stock pursuant to an effective registration statement under the Securities Act.

As of June 30, 2025, the market value of our common stock that is held by non-affiliates exceeded $700.0 million;

therefore, as of December 31, 2025, we expect that we will cease to be an EGC.

Recent Accounting Pronouncements

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis