What changed in this filing

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Item 1. Business

2025-03-31 compared with 2024-04-01 · 1047 added, 1077 removed, 90 unchanged (96% of the section changed)

are a company that provides esoteric molecular diagnostic testing, and pathology services to aid physicians in their evaluation of cancer

risk in patients with indeterminate biopsies and a perceived high risk of cancer from clinical features.

Utilizing the latest technology

in personalized medicine, we develop and commercialize genomic tests and related first-line assays that can help improve patient diagnosis

and management.

Company Overview

We are a company that provides

esoteric molecular diagnostic testing, and pathology services to aid physicians in their evaluation of cancer risk in patients with indeterminate

biopsies and a perceived high risk of cancer from clinical features.

We develop and commercialize genomic tests and related first-line

assays that can personalize medicine to help improve patient diagnosis and management.

Customer Category

Types of Customers

Nature of Services

Clinical services

● Cancer Centers

services that help guide patient management decisions by providing information on the diagnosis and prognosis of indeterminate specimens.

Clinical services that help guide patient management decisions by providing information on the diagnosis and prognosis of indeterminate specimens.

Guidance on genetic marker-related pharmaceutical treatment options, when available, is also provided.

1 unchanged sentence

● Pathology groups

clinical services’ customers consist primarily of physicians, hospitals, cancer centers, commercial laboratories, pathology groups

Our largest customer for ThyGeNEXT ® and ThyraMIR ® v2 products in 2022 was Laboratory Corporation

of America ® or LabCorp.

Our revenue channels include reimbursement by Medicare, Medicare Advantage, Medicaid, and direct

client billings (for example, hospitals and clinics), and commercial payers such as Blue Cross Blue Shield, Aetna, Cigna, United Healthcare

Disposition of Pharma Business

August 31, 2022, Interpace Biosciences, Inc.

(“Interpace” or the “Company”) and Interpace Pharma Solutions, Inc.

(the “Subsidiary) entered into an Asset Purchase Agreement (the “Purchase Agreement”) with Flagship Biosciences, Inc.

(the “Purchaser”) pursuant to which the Purchaser agreed to (i) acquire substantially all of the assets of the Subsidiary

used in Subsidiary’s business of complex molecular analysis for the early diagnosis and treatment of cancer and supporting the

development of targeted therapeutics (the “Business”) and (ii) assume and pay certain liabilities related to the purchased

assets as set forth in the Purchase Agreement (collectively, the “Transaction”).

The Transaction closed on August 31, 2022.

consideration for the Transaction, under the Purchase Agreement, the Company received a total purchase price of approximately $6.2 million

after working capital and other adjustments ($0.5 million of which was deposited into escrow), subject to the assumption by the Purchaser

of certain specified liabilities.

In addition, subject to the terms and conditions set forth in the Purchase Agreement, Purchaser was

obligated to pay the Company an earnout of up to $2.0 million based on revenue for the period beginning September 1, 2021, and ending

August 31, 2022.

The Company received an earnout payment of approximately $1.0 million in September 2022 which is the fully settled amount

and there will be no further earnout payments in the future.

In the third quarter of 2023, the $0.5 million funds in escrow were released

to the Company.

Purchase Agreement includes a one-year commitment of the Company not to compete with the Business, recruit or hire any former employees

of the Subsidiary who accept employment with the Purchaser in connection with the Transaction, or divert or attempt to divert from Purchaser

any business to be performed from any of the contracts or agreements with customers as set forth in the Purchase Agreement.

Agreement also contains customary representations and warranties, post-closing covenants and mutual indemnification obligations for,

among other things, any inaccuracy or breach of any representation or warranty and any breach or non-fulfillment of any covenant.

connection with the Transaction, on August 31, 2022, the Company, the Subsidiary and the Purchaser entered into a Shared Services Agreement

(the “Shared Services Agreement”) pursuant to which Interpace agreed to provide, or cause its affiliates to provide, to the

Purchaser certain services set forth in the Shared Services Agreement on a transitional basis and subject to the terms and conditions

set forth in the Shared Services Agreement (the “Services”).

As consideration for the Services provided by the Company, the

Purchaser is paying the Company the amounts specified for each Service as set forth in the Shared Services Agreement.

The Company’s

obligations to provide the Services will terminate with respect to each Service as set forth in the Shared Services Agreement.

Purchaser is identified as a related party of the Company and is an affiliate of both Ampersand 2018 Limited Partnership (“Ampersand”),

a private equity investor in the Company, and BroadOak Fund V, L.P.

(“BroadOak”), a secured lender to the Company.

and BroadOak have each provided equity financing to the Purchaser, collectively own a majority of the Purchaser’s outstanding equity

securities and are represented on its Board of Directors.

Company used the remaining net proceeds of the Transaction to fund its future business activities and for general working capital purposes.

As a result of the sale, the gain on sale and all operations from the Subsidiary have been classified as discontinued operations for

all periods presented.

of the ongoing military conflict between Russia and Ukraine and the war between Israel and Hamas.

February 2022, Russian military forces invaded Ukraine, and although the length, impact, and outcome of the ongoing war in Ukraine is

highly unpredictable, this war has led, and could continue to lead, to significant market and other disruptions, including instability

in financial markets, supply chain interruptions, political and social instability, and increases in cyberattacks, intellectual property

theft, and espionage.

We are actively monitoring the situation in Ukraine and assessing its impact on our business.

have no way to predict the progress or outcome of the war in Ukraine or its impacts in Ukraine, Russia, or Belarus as the war, and any

resulting government reactions, are rapidly developing and beyond our control.

on October 7, 2023, Hamas, a U.S.

designated Foreign Terrorist Organization, launched terrorist attacks against Israel.

Israel then declared

war on Hamas and there is currently an armed conflict in Israel and the Gaza Strip.

The extent and duration of the wars in Ukraine and

Israel/Gaza expanding geopolitical tensions and any resulting market disruptions could be significant and could potentially have a substantial

impact on the global economy and our business for an unknown period of time.

Any of the above-mentioned factors could materially adversely

affect our business, financial condition, and results of operations.

are also monitoring other macro-economic and geopolitical developments such as inflation and cybersecurity risks so that the Company

can be prepared to react to new developments as they arise.

Molecular Diagnostic Market

global esoteric molecular diagnostics market is estimated to be $25.9 billion (USD) in 2023 and is expected to grow to $54.9 billion

(USD) by 2030 with a Compound Annual Growth rate or CAGR of 11.3% between 2023 and 2030, according to Coherent Market Insights (Report

CMI6261, published November 2023).

believe that the specialty molecular diagnostics market offers significant growth and strong patient value given the substantial opportunity

it affords to lower healthcare costs by helping to reduce unnecessary surgeries and ensuring the appropriate frequency of monitoring.

We are keenly focused on growing our test volumes;

Our clinical services’

customers consist primarily of physicians, hospitals, cancer centers, commercial laboratories, pathology groups and clinics.

customer for ThyGeNEXT ® and ThyraMIR ® v2 products in 2024 was Laboratory Corporation of America ®

Our revenue channels include reimbursement by Medicare, Medicare Advantage, Medicaid, and direct client billings (for example,

hospitals and clinics), and commercial payers such as Blue Cross ® Blue Shield ® , Aetna ® , Cigna ® ,

United Healthcare ® and others.

Market Overview

Global Molecular Diagnostic

The global esoteric molecular

diagnostics market, valued at $29.9 billion (USD) in 2023 and is expected to grow to $48.3 billion (USD) by 2029 with a Compound Annual

Growth rate or CAGR of 8.5% between 2023 and 2029, according to MarketsandMarkets™ (Report Code:

MD5930, published June 2024).

We believe that the specialty

molecular diagnostics market offers significant growth and strong patient value given the substantial opportunity it affords to lower

healthcare costs by helping to reduce unnecessary surgeries and ensuring the appropriate frequency of monitoring.

We are keenly focused

on growing our test volumes;

securing additional insurance coverage and reimbursement;

maintaining and growing

our current reimbursement;

maintaining and growing our current reimbursement;

supporting revenue growth for our molecular diagnostic tests;

introducing related first-line product and service

and expanding our business by developing and promoting synergistic products in our markets.

We also believe that BarreGEN ®

is a potentially significant pipeline product, and we are continuing to support the development process.

States Clinical Oncology Market

many advances in the treatment of cancer, it remains one of the greatest areas of unmet medical need According to estimates from the

International Agency for Research on Cancer (IARC), by 2040 it is expected that there will be 16.3 million cancer deaths worldwide simply

due to the growth and aging of the global population.

Within the United States, cancer is the second most common cause of death, exceeded

only by heart disease.

2024, it is expected that there will be 2.0 million new cancer cases and almost 612,000 cancer-related deaths, or more than 1,600 deaths

In the United States, while pancreatic cancer represents only about 3% of all new cancer cases, it is the third leading cause

of cancer death.

The incidence, deaths and economic loss caused by cancer are staggering.

Cancer-attributed medical care costs in the

United States are substantial and projected to increase dramatically by 2030 to an estimated $246 billion (USD).

The following table

taken from Common Cancer Types, originally published by the National Cancer Institute (Updated:

March 7,2023) shows estimated new cases

and deaths in 2023 in the United States for selected major cancer types:

(Female – Male)

introducing related first-line product and service extensions;

and expanding

our business by developing and promoting synergistic products in our markets.

We also believe that BarreGEN ® is a potentially

significant pipeline product, and we are continuing to support the development process.

United States Clinical

Oncology Market

Despite many advances in

the treatment of cancer, it remains one of the greatest areas of unmet medical need.

The American Cancer Society annually estimates new

cancer cases and deaths within the United States.

In 2025, there will be an estimated 2,041,910 new cancer cases and 618,120 cancer deaths,

corresponding to ~1,700 deaths per day.

The cancer burden is also shifting from older to younger adults and from men to women.

Additionally,

while cancer is the second most common cause of death in the United States, exceeded only by heart disease, it is the leading cause of

death among men aged 60-79 years of age and women aged 40-79 years of age.

The incidence, deaths and

economic loss caused by cancer are staggering.

Cancer-attributed medical care costs in the United States are substantial and projected

to increase dramatically by 2030 to an estimated $246 billion (USD).

The following table taken from Common Cancer Types, originally published

by the National Cancer Institute (Updated:

May 10, 2024) shows estimated new cases and deaths in 2024 in the United States for selected

major cancer types:

Estimated New Cases

Estimated Deaths

Breast (Female – Male)

310,720-2,790

and Rectal (Combined)

(Renal Cell and Renal Pelvis)

and Intrahepatic Bile Duct

(Including Bronchus)

Non-Hodgkin’s

primary goal is to become a leader in providing high-quality and dependable personalized medicine with exceptional growth.

is to grow our business organically and by selectively partnering—which could potentially include licensing, acquisitions or mergers,

to generate positive returns for our shareholders.

We expect to not only continue to further develop our existing gastrointestinal and

endocrine assays but to also expand our presence in other markets where we have expertise and access.

Our existing customer base and

broad-based capabilities provide us a unique window not only into our current customers’ needs but also permit us to anticipate

their future needs.

key tactics to achieve our goals include:

awareness and use of our existing commercial products, especially PancraGEN ® , ThyGeNEXT ® and ThyraMIR ® v2

through omnichannel marketing programs;

the clinical development and commercialization of BarreGEN ® , our esophageal cancer risk classifier for Barrett’s

Esophagus, and accelerating and further expanding clinical studies for our inline assays;

Implementation

of automation and focus on improved operating efficiencies in the clinical laboratories to provide consistent superior quality testing

and reporting at reduced costs;

coverage and reimbursement for our clinical tests including:

Continuing support of an internal managed care team;

Colon and Rectal (Combined)

Kidney (Renal Cell and Renal Pelvis)

Leukemia (All Type)

Liver and Intrahepatic Bile Duct

Lung (Including Bronchus)

Non-Hodgkin’s Lymphoma

goal is to drive exceptional growth while becoming a leader in providing high-quality and dependable personalized medicine.

strategy is to grow our business organically and by selectively partnering—which could potentially include licensing,

acquisitions or mergers, to generate positive returns for our shareholders.

We expect to not only continue to further develop our

existing gastrointestinal and endocrine assays but to also expand our presence in other markets where we have expertise and access.

Our existing customer base and broad-based capabilities provide us a unique window not only into our current customers’ needs

but also permit us to anticipate their future needs.

Given the potential loss of PancraGEN ® reimbursement, we

will adapt our strategy to mitigate the impact and continue to drive growth.

The key tactics to achieve

our goals include:

Expanding awareness and use

of our existing commercial products, especially ThyGeNEXT ® and ThyraMIR ® v2 through omnichannel marketing

Continuing the clinical development and commercialization of BarreGEN ® , our esophageal cancer risk classifier for Barrett’s Esophagus, and accelerating and further expanding clinical studies for our inline assays;

Implementation of automation and focus on improved operating efficiencies in the clinical laboratories to provide consistent superior quality testing and reporting at reduced costs;

Broadening coverage and reimbursement for our clinical tests including:

support of an internal managed care team;

Key Opinion Leaders to educate on the validity and utility of our testing services;

Establishing payer relationship and in-network contracts serving our diagnostic

our commercial sales staff rationally, while supporting our products with high quality data and studies;

partnering opportunities to acquire new technologies;

understanding and utilization of our bioinformatics data to improve our assays and elevate scientific understanding of the genetic

drivers of cancer progression and aggressiveness.

Service Offerings

business is based on the increasing clinician demand for molecular- and biomarker-based characterization of cancers to help inform patient

management decisions.

Molecular-based

testing often produces higher value and more accurate cancer diagnostic information than traditional clinical assessments and non-genetic

diagnostic methods.

Our proprietary and unique disease-focused esoteric tests aim to provide actionable information that can guide patient

management decisions, potentially resulting in decreased costs.

continue to pursue the strategy of trying to demonstrate increased value and efficacy with payers who wish to contain costs and academic

collaborators seeking to develop new insights and treatments.

aim to provide physicians and patients with diagnostic options for detecting genomic and other molecular alterations that are associated

with gastrointestinal, endocrine, and lung cancers.

Our clinical services’ customers consist primarily of physicians, hospitals

clinical services business commercializes clinically useful molecular diagnostic tests and molecular pathology services.

We commercialize

genomic tests and related first-line assays principally focused on risk-stratification of cancer using the latest technology to help

personalize medicine and improve patient diagnosis and management.

Our tests and services provide mutational analysis of genomic material

contained in suspicious cysts, nodules, and lesions with the goal of better informing surgery or surveillance treatment decisions in

patients suspected of thyroid, pancreatic, and other cancers.

The molecular diagnostic tests we offer enable healthcare providers to

stratify cancer risk, helping to avoid unnecessary surgical treatment in patients at low risk, while also helping to identify patients

that would benefit from increased surveillance or surgical intervention.

mission is to assist healthcare providers in the diagnosis, triage, and treatment of patients through advanced diagnostics.

Our laboratory

is licensed pursuant to federal law under Clinical Laboratory Improvement Amendments of 1988 (“CLIA”) and are accredited

by College of American Pathologists (“CAP”) and our products are approved by New York State.

We are leveraging our laboratory

to refine and commercialize our assays and products.

We aim to provide physicians and patients with diagnostic options for detecting

genomic and other molecular alterations that are associated with gastrointestinal, endocrine, and other cancers.

Our customers consist

primarily of physicians, hospitals, and clinics.

currently have five commercialized molecular diagnostic tests in the marketplace:

PancraGEN ® , a pancreatic cyst and pancreaticobiliary

solid lesion genomic test that helps physicians better risk-stratify pancreaticobiliary cancers using our proprietary PathFinderTG ®

platform and full integration of clinical factors; PanDNA ® , an alternate reporting option of the PathFinderTG

platform, that provides physicians the “molecular only” information provided within PancraGEN;

ThyGeNEXT ® ,

an expanded oncogenic mutation panel that helps “rule-in” and “rule-out” malignancy in thyroid nodules;

ThyraMIR ® v2, used in combination with ThyGeNEXT ® , which further stratifies thyroid nodules for malignancy

risk utilizing a proprietary microRNA gene expression classifier;

and RespriDx ® a genomic test that also utilizes our

PathFinderTG ® platform, to help physicians differentiate metastatic or recurrent lung cancer from the presence of newly

formed primary lung cancer.

Gastrointestinal

Cancer Products

current diagnostic assay, PancraGEN ® , is a reporting option of our proprietary PathFinderTG ® platform.

This platform is designed to use advanced clinical algorithms to accurately risk-stratify patients suspected of having pancreatic cancer

by assessing panels of DNA abnormalities in patients who have pancreaticobiliary lesions (cysts or solid masses).

is a “molecular only” reporting option of PathFinderTG ® and is used by physicians who prefer to perform their

own integration of first-line testing results to stratify pancreatic cancer risk.

on the American Cancer Society Cancer 2024 Cancer Facts and Figures, pancreatic cancer is the third leading cause of cancer deaths in

(estimated) with an average five-year survival rate of 13%.

PancraGEN ® and PanDNA ® assess the

risk of malignancy in pancreatic cysts and pancreaticobiliary solid lesions, which have potential for developing into cancer.

that PancraGEN ® is the leader in the market for integrated molecular diagnostic tests for determining risk of pancreaticobiliary

We currently estimate that the immediate addressable market for PancraGEN ® is approximately 124,000 indeterminate

pancreaticobiliary lesions annually or approximately $200 million annually based on the current size of the patient population and reimbursement

To date, PancraGEN ® testing has been used in almost 70,000 clinical cases.

The National Pancreatic Cyst Registry

study published in Endoscopy in 2015 demonstrated that PancraGEN ® more accurately determined the malignancy potential

of pancreatic cysts than international consensus 2012 imaging criteria, helping to ensure that surgery is reserved for the most appropriate

This is important because pancreatic surgery is high-risk surgery with over 40% postoperative morbidity rates and 0%–15%

postoperative mortality rates.

(Ahola, et al, March 2020, doi.org/10.1177/1457496919900411 ) When molecular analysis is not performed,

the vast majority of all pancreatic cyst surgeries are performed on cystic lesions that do not harbor malignancy.

American Gastroenterological Association 2015 Guidelines have cautioned that many pancreatic surgeries have been performed unnecessarily

for lesions that will not progress to invasive adenocarcinoma.

In addition, the 2016 guidelines published by the American Society of

Gastroenterology Endoscopy (ASGE) in Gastrointestinal Endoscopy included a specific recommendation for use of molecular testing in specific

circumstances where other types of testing and analysis have not provided sufficient data on which to determine the best course of action

for patient treatment.

recently, the International Association of Pancreatology (IAP) reviewed and revised their guidelines with a main objective being to update

their patient management algorithm.

These revised guidelines indicate that molecular markers can be used when the diagnosis of a pancreatic

cyst is unclear and will alter surveillance.

Additionally, the guidelines further indicate that molecular markers, such as the ones found

within PancraGEN ® , can be useful in identifying the presence of high-grade dysplasia and invasive carcinoma.

payer relationships and in-network contracts serving our diagnostic customers.

Expanding our commercial sales staff rationally, while supporting our products with high quality data and studies;

Exploring partnering opportunities to acquire new technologies;

Expanding understanding and utilization of our bioinformatics data to improve our assays and elevate scientific understanding of the genetic drivers of cancer progression and aggressiveness.

Additionally, we will focus on diversifying

our product portfolio and exploring new revenue streams.

This includes investing in research and development to bring innovative diagnostic

solutions to market and strengthening our relationships with commercial payers to ensure broader coverage for our tests.

Our Service Offerings

Our business is based on

the increasing clinician demand for molecular- and biomarker-based characterization of cancers to help inform patient management decisions.

Molecular-based testing often

produces higher value and more accurate cancer diagnostic information than traditional clinical assessments and non-genetic diagnostic

Our proprietary and unique disease-focused esoteric tests aim to provide actionable information that can guide patient management

decisions, potentially resulting in decreased costs.

We continue to pursue the

strategy of trying to demonstrate increased value and efficacy with payers who wish to contain costs and academic collaborators seeking

to develop new insights and treatments.

We aim to provide physicians

and patients with diagnostic options for detecting genomic and other molecular alterations that are associated with gastrointestinal,

endocrine, and lung cancers.

Our clinical services’ customers consist primarily of physicians, hospitals and clinics.

Clinical services

Our clinical services business

commercializes clinically useful molecular diagnostic tests and molecular pathology services.

We commercialize genomic tests and related

first-line assays principally focused on risk-stratification of cancer to help personalize medicine and improve patient diagnosis and

Our tests and services provide mutational analysis of genomic material contained in suspicious cysts, nodules, and lesions

with the goal of better informing surgery or surveillance treatment decisions in patients suspected of pancreatic, thyroid and other cancers.

The molecular diagnostic tests we offer enable healthcare providers to stratify cancer risk, helping to avoid unnecessary surgical treatment

in patients at low risk, while also helping to identify patients that would benefit from increased surveillance or surgical intervention.

Our mission is to assist

healthcare providers in the diagnosis, triage, and treatment of patients through advanced diagnostics.

Our laboratory is licensed pursuant

to federal law under Clinical Laboratory Improvement Amendments of 1988 (“CLIA”) and are accredited by College of American

Pathologists (“CAP”) and our products are approved by New York State.

We are leveraging our laboratory to refine and commercialize

our assays and products.

We aim to provide physicians and patients with diagnostic options for detecting genomic and other molecular alterations

that are associated with gastrointestinal, endocrine, and other cancers.

Our customers consist primarily of physicians, hospitals, and

We currently have five commercialized

molecular diagnostic tests in the marketplace:

PancraGEN ® , a pancreatic cyst and pancreaticobiliary solid lesion genomic

test that helps physicians better risk-stratify pancreaticobiliary cancers using our proprietary PathFinderTG ® platform

and full integration of clinical factors; PanDNA ® , an alternate reporting option of the PathFinderTG platform, that

provides physicians the “molecular only” information provided within PancraGEN;

ThyGeNEXT ® , an oncogenic mutation

panel that helps “rule-in” and “rule-out” malignancy in thyroid nodules; ThyraMIR ® v2, used

in combination with ThyGeNEXT ® , which further stratifies thyroid nodules for malignancy risk utilizing a proprietary microRNA

gene expression classifier;

and RespriDx ® a genomic test that also utilizes our PathFinderTG ® platform,

to help physicians differentiate metastatic or recurrent lung cancer from the presence of newly formed primary lung cancer.

Gastrointestinal Cancer Products

Our current diagnostic assay,

PancraGEN ® , is a reporting option of our proprietary PathFinderTG ® platform.

This platform is designed to

use advanced clinical algorithms to accurately risk-stratify patients suspected of having pancreatic cancer by assessing panels of DNA

abnormalities in patients who have pancreaticobiliary lesions (cysts or solid masses).

PanDNA ® is a “molecular only”

reporting option of PathFinderTG ® and is used by physicians who prefer to perform their own integration of first-line testing

results to stratify pancreatic cancer risk.

Based on the American Cancer

Society Cancer 2025 Cancer Facts and Figures, pancreatic cancer is the third leading cause of cancer deaths in the U.S.

(estimated) with

an average five-year survival rate of 13%.

PancraGEN ® and PanDNA ® assess the risk of malignancy in pancreatic

cysts and pancreaticobiliary solid lesions, which have potential for developing into cancer.

We believe that PancraGEN ®

is the leader in the market for integrated molecular diagnostic tests for determining risk of pancreaticobiliary malignancy.

estimate that the immediate addressable market for PancraGEN ® is approximately 124,000 mucinous indeterminate pancreaticobiliary

lesions annually or approximately $200 million annually based on the current size of the patient population and reimbursement rates.

date, PancraGEN ® testing has been used in over 80,000 clinical cases.

The National Pancreatic Cyst Registry study published

in Endoscopy in 2015 demonstrated that PancraGEN ® more accurately determined the malignancy potential of pancreatic

cysts than international consensus 2012 imaging criteria, helping to ensure that surgery is reserved for the most appropriate patients.

This is important because pancreatic surgery is high-risk surgery with over 40% postoperative morbidity rates and 0%–15% postoperative

mortality rates.

(Ahola, et al, March 2020, doi.org/10.1177/1457496919900411 ) When molecular analysis is not performed, the vast

majority of all pancreatic cyst surgeries are performed on cystic lesions that do not harbor malignancy.

The American Gastroenterological

Association 2015 Guidelines have cautioned that many pancreatic surgeries have been performed unnecessarily for lesions that will not

progress to invasive adenocarcinoma.

In addition, the 2016 guidelines published by the American Society of Gastroenterology Endoscopy

(ASGE) in Gastrointestinal Endoscopy included a specific recommendation for use of molecular testing in specific circumstances where other

types of testing and analysis have not provided sufficient data on which to determine the best course of action for patient treatment.

Most recently, the International

Association of Pancreatology (IAP) reviewed and revised their guidelines with a main objective being to update their patient management

These revised guidelines indicate that molecular markers can be used when the diagnosis of a pancreatic cyst is unclear and

will alter surveillance.

Additionally, the guidelines further indicate that molecular markers, such as the ones found within PancraGEN ® ,

can be useful in identifying the presence of high-grade dysplasia and invasive carcinoma.

( Pancreatology .

1 unchanged sentence

10.1016/j.pan.2023.12.009).

Accordingly, we believe that PancraGEN ® provides

a highly reliable diagnostic and prognostic option that can accurately stratify cancer risk in circumstances where risk of cancer is

otherwise uncertain.

Cancer Products

currently market and sell a combination testing platform that can inform cancer risk in indeterminate thyroid nodules—those that

are not clearly malignant or benign by cytology.

ThyGeNEXT ® is a next generation DNA and RNA sequencing oncogene and mRNA

fusion panel.

The markers within the ThyGeNEXT ® oncogene panel provide clinical utility by informing diagnosis, prognosis,

and targeted treatment guidance aligned to FDA-approved therapies for RET, NTRK , and other markers found within the panel.

works with our unique microRNA-based endocrine cancer diagnostic test, ThyraMIR ® v2.

This assay measures the expression

of eleven distinct microRNAs.

The combined analysis of the ThyGeNEXT ® and ThyraMIR ® v2 test results provides

very narrow malignancy risk ranges to help guide patient management decision-making.

estimate the total market for our endocrine (thyroid) cancer assays is approximately $300 million (USD) annually based on the current

size of the patient population, estimated numbers of indeterminate biopsies and reimbursement rates.

The mutational analysis provided

by ThyGeNEXT ® can help inform treatment alone when strong driver BRAF V600E-like mutations are found.

reflex to ThyraMIR ® v2 occurs approximately 85% of the time to provide a greater understanding of malignancy risk and is

especially helpful when weaker drivers of malignancy, such as RAS -like mutations, are found.

Endocrinologists,

ear, nose and throat (“ENT”), and other specialists evaluate thyroid nodules for possible cancer by collecting cells through

Fine Needle Aspiration (“FNA”) that are then analyzed by cytopathologists to determine whether or not a thyroid nodule is

It is estimated that approximately 25% or well over 100,000 biopsies analyzed annually yield indeterminate results, meaning

they cannot be diagnosed as definitely being malignant or benign by cytopathology alone.

In the past, guidelines recommended that some

patients with indeterminate cytopathology results undergo surgery to remove all or part of their thyroid to obtain an accurate diagnosis

by looking directly at the thyroid tissue.

Accordingly, we believe that PancraGEN ® provides a highly reliable diagnostic and prognostic

option that can accurately stratify cancer risk in circumstances where risk of cancer is otherwise uncertain.

As described below, on January

9, 2025, the Company announced the new LCD established non-coverage for its PancraGEN ® test, and it would stop offering

the test and would not accept specimens for first-line fluid chemistry and PancraGEN ® testing after February 7, 2025.

January 27, 2025, the Company announced that CMS had directed its Medicare Administrative Contractors, Novitas and First Coast Service

Options, Inc., to delay implementation of the Genetic Testing for Oncology LCD (L39365), from February 23, 2025 until April 24, 2025.

For more information, please see Part I – Item 1 – “Business – Government Regulations and Industry Guidelines

- Third Party Coverage and Reimbursement for our Clinical Services – Novitas LCD for PancraGEN .”

Endocrine Cancer Products

We currently market and sell

a combination testing platform that can inform cancer risk in indeterminate thyroid nodules—those that are not clearly malignant

or benign by cytology.

ThyGeNEXT ® is a next generation DNA and RNA sequencing oncogene and mRNA fusion panel.

within the ThyGeNEXT ® oncogene panel provide clinical utility by informing diagnosis, prognosis, and targeted treatment

guidance aligned to FDA-approved therapies for RET, NTRK , and other markers found within the panel.

ThyGeNEXT ® works

with our unique microRNA-based endocrine cancer diagnostic test, ThyraMIR ® v2.

This assay measures the expression of eleven

distinct microRNAs.

The combined analysis of the ThyGeNEXT ® and ThyraMIR ® v2 test results provides very narrow

malignancy risk ranges to help guide patient management decision-making.

We estimate the total market

for our endocrine (thyroid) cancer assays is approximately $300 million (USD) annually based on the current size of the patient population,

estimated numbers of indeterminate biopsies and reimbursement rates.

The mutational analysis provided by ThyGeNEXT ® can

help inform treatment alone when strong driver BRAF V600E-like mutations are found.

However, reflex to ThyraMIR ® v2

occurs approximately 85% of the time to provide a greater understanding of malignancy risk and is especially helpful when weaker drivers

of malignancy, such as RAS -like mutations, are found.

Endocrinologists, ear, nose

and throat (“ENT”), and other specialists evaluate thyroid nodules for possible cancer by collecting cells through Fine Needle

Aspiration (“FNA”) that are then analyzed by cytopathologists to determine whether or not a thyroid nodule is cancerous.

is estimated that approximately 25% or well over 100,000 biopsies analyzed annually yield indeterminate results, meaning they cannot be

diagnosed as definitely being malignant or benign by cytopathology alone.

In the past, guidelines recommended that some patients with

indeterminate cytopathology results undergo surgery to remove all or part of their thyroid to obtain an accurate diagnosis by looking

directly at the thyroid tissue.

According to a study published by Wang, et al.

in 2011, in approximately 77% of these cases,

the thyroid nodule proved to be benign.

Current practice and guidelines, such as those from the National Comprehensive Cancer Network

(“NCCN”) and American Thyroid Association (“ATA”), support use of molecular analysis for nodules with indeterminate

cytology results as this testing can prove beneficial to further characterize these lesions and help support optimal patient management.

Cancer Product — RespriDx ® Test and Metastatic versus Primary Platform

compares the mutational fingerprint of two or more sites of cancer to determine whether the neoplastic deposits are representative

of a recurrence (metastasis) of lung cancer or a new primary or independent tumor.

The test, which currently provides only nominal revenues,

defines the presence or absence of cancer in atypical cytology by comparing the mutational profile with that of known previous cancer.

RespriDx ® assists in determining the most appropriate course of treatment, whether chemotherapy, surgery, or other modalities.

Certified and CAP Accredited Laboratory

testing is performed in our state-of-the-art CLIA certified and College of American Pathologists (“CAP”) accredited laboratory

in Pittsburgh, Pennsylvania.

CLIA is a federal law regulating clinical laboratories that perform testing on specimens derived from humans

for the purpose of providing information for the diagnosis, prevention or treatment of disease.

Clinical laboratories must be certified

under CLIA in order to perform testing on human specimens, unless they fall within an exception to CLIA certification, such as research

laboratories that test human specimens but do not report patient-specific results for the diagnosis, prevention or treatment of any disease

or impairment of, or the assessment of the health of individual patients.

CLIA certification is also required to be eligible to bill

Federal and State healthcare programs, as well as many private third-party payers, for diagnostic testing and services.

proprietary tests must also be recognized as part of an accredited program under CLIA so that they can be offered in a CLIA-certified

CLIA is intended to ensure the quality and reliability of clinical laboratories in the United States by mandating specific

standards in the areas of personnel qualifications, administration, and participation in proficiency testing, patient test management,

quality control, quality assurance and inspections.

For renewal of CLIA certification, clinical laboratories are subject to survey and

inspection every two years.

Moreover, CLIA inspectors may make random inspections of clinical laboratories outside of the renewal process.

and Marketing

sales and marketing efforts consist of both direct and indirect sales channels with efforts focused predominantly in the United States.

We also have collaborative arrangements with other laboratory services companies.

commercialization efforts for our clinical services are mainly focused on endocrine (thyroid), and gastroenterologic (pancreatic) cancers.

Communication of our marketing messaging and value propositions is accomplished through multiple channels, including two field-based

commercial sales teams of approximately 41 representatives and managers.

In addition, we employ medical science liaisons (MSLs)—therapeutic

specialists with advanced scientific training to aid in communicating complex scientific and medical information to leading physicians.

Other channels of communication include print, digital advertising, social media, a web presence, peer-reviewed publications, and trade

show exhibits.

We believe that our molecular diagnostic tests provide value to payers, physicians, and patients by improving patient

care and lowering healthcare costs through avoidance of unnecessary surgeries, reducing the morbidity associated with unnecessary surgeries

for patients, and providing better diagnostic and prognostic insights to physicians.

We support the value propositions of our tests through

rigorous science that supports the analytical and clinical validity as well as clinical utility of our tests.

We believe our repository

of bioinformatics data accumulated from our testing is a valuable tool in developing and refining our analytics while also potentially

being an even more valuable tool in the future.

also communicate to payers, integrated delivery systems and hospital systems about our molecular diagnostic tests’ value through

highly trained professionals who are experienced in reimbursement and business-to-business selling and through face-to-face meetings,

phone calls, digital communications and advisory boards.

compete on the basis of factors such as reputation, scientific expertise, service quality, management experience, performance record,

customer satisfaction, accessibility, flexibility, ability to respond to specific customer needs, integration skills, and product portfolio

Increased competition and/or a decrease in demand for our clinical and pharma services may also lead to other forms of competition.

We believe that our business has a variety of competitive advantages that allow us to compete successfully in the marketplace.

we believe we compete effectively with respect to each of these factors, certain competitors of ours are substantially larger than us

and have greater capital, personnel, and other resources than we have.

Many of our competitors also offer broader product lines outside

of the molecular diagnostic testing market, and many have greater brand recognition than we do.

Moreover, our competitors may make rapid

technological developments that may result in our technologies and products becoming obsolete before we recover the expenses incurred

to develop them or before they generate significant revenue.

Increased competition may lead to pricing pressures and competitive practices

that could have a material adverse effect on our market share and our ability to attract new business opportunities as well as our business,

financial condition and results of operations.

also compete with physicians and the medical community who use traditional methods or local institution-created tests to diagnose gastrointestinal

and endocrine cancers.

We believe that we will need to continue to educate physicians and the medical community on the value and benefits

of our molecular diagnostic tests in order to change clinical practices and continue to support the use of molecular diagnostic tests

in clinical guidelines.

Specifically,

in regard to our thyroid diagnostic tests, Veracyte, Inc., or Veracyte, has a molecular thyroid nodule cancer diagnostic test

(Afirma) that is the current market leader and competes with our ThyGeNEXT ® and ThyraMIR ® v2 tests.

Quest Diagnostics Incorporated, or Quest, currently offers a diagnostic test similar to the earlier version of our

ThyGeNEXT ® test and distributes the Afirma test in partnership with Veracyte.

CBLPath, Inc., or CBL, offers

ThyroSeq ® , a diagnostic test that analyzes genetic alterations using next-generation sequencing.

In addition, other

thyroid based endocrine competitors include Qualisure Diagnostics/Protean Biodiagnostics., or other companies we are not aware

are currently not aware of any direct competitors to PancraGEN ® that fully integrate clinical, imaging, cytology, and

molecular information to stratify patients’ risk for malignancy and inform physicians on the best course of action, i.e.,

surgery or surveillance and surveillance interval length.

The University of Pittsburgh Medical Center now offers

PancreaSeq ® , a Next Generation Sequencing “gene only” panel that focuses on the analysis of mutations in

oncogenes and tumor suppressor genes, most of which may help establish the type of pancreatic cyst present and some of which may

help establish the presence of malignancy.

in 2011, in approximately 77% of these cases, the thyroid

nodule proved to be benign.

Current practice and guidelines, such as those from the National Comprehensive Cancer Network (“NCCN”)

and American Thyroid Association (“ATA”), support use of molecular analysis for nodules with indeterminate cytology results

as this testing can prove beneficial to further characterize these lesions and help support optimal patient management.

We believe that our Endocrine

Cancer Products franchise for indeterminant thyroid nodules, ThyGeNEXT ® + ThyraMIR ® v2, is quite strong and

provides a solid foundation for continued growth and profitability should there be any change to existing test-specific local coverage

determinations for other Interpace testing services.

Lung Cancer Product — RespriDx ®

Test and Metastatic versus Primary Platform

RespriDx ® compares

the mutational fingerprint of two or more sites of cancer to determine whether the neoplastic deposits are representative of a recurrence

(metastasis) of lung cancer or a new primary or independent tumor.

The test, which currently provides only nominal revenues, defines the

presence or absence of cancer in atypical cytology by comparing the mutational profile with that of known previous cancer.

assists in determining the most appropriate course of treatment, whether chemotherapy, surgery, or other modalities.

CLIA Certified and CAP Accredited Laboratory

Our testing is performed

in our state-of-the-art CLIA certified and College of American Pathologists (“CAP”) accredited laboratory in Pittsburgh, Pennsylvania.

CLIA is a federal law regulating clinical laboratories that perform testing on specimens derived from humans for the purpose of providing

information for the diagnosis, prevention or treatment of disease.

Clinical laboratories must be certified under CLIA in order to perform

testing on human specimens, unless they fall within an exception to CLIA certification, such as research laboratories that test human

specimens but do not report patient-specific results for the diagnosis, prevention or treatment of any disease or impairment of, or the

assessment of the health of individual patients.

CLIA certification is also required to be eligible to bill Federal and State healthcare

programs, as well as many private third-party payers, for diagnostic testing and services.

In addition, proprietary tests must also be

recognized as part of an accredited program under CLIA so that they can be offered in a CLIA-certified laboratory.

CLIA is intended to

ensure the quality and reliability of clinical laboratories in the United States by mandating specific standards in the areas of personnel

qualifications, administration, and participation in proficiency testing, patient test management, quality control, quality assurance

and inspections.

For renewal of CLIA certification, clinical laboratories are subject to survey and inspection every two years.

CLIA inspectors may make random inspections of clinical laboratories outside of the renewal process.

Sales and Marketing

Our sales and marketing efforts

consist of both direct and indirect sales channels with efforts focused predominantly in the United States.

We also have collaborative

arrangements with other laboratory services companies.

Our commercialization efforts

for our clinical services are mainly focused on endocrine (thyroid), and gastroenterologic (pancreatic) cancers.

Communication of our

marketing messaging and value propositions is accomplished through multiple channels, including two field-based commercial sales teams

of approximately 40 representatives and managers.

In addition, we employ medical science liaisons (MSLs)—therapeutic specialists

with advanced scientific training to aid in communicating complex scientific and medical information to leading physicians.

Other channels

of communication include print, digital advertising, social media, a web presence, peer-reviewed publications, and trade show exhibits.

We believe that our molecular diagnostic tests provide value to payers, physicians, and patients by improving patient care and lowering

healthcare costs through avoidance of unnecessary surgeries, reducing the morbidity associated with unnecessary surgeries for patients,

and providing better diagnostic and prognostic insights to physicians.

We support the value propositions of our tests through rigorous

science that supports the analytical and clinical validity as well as clinical utility of our tests.

We also communicate to payers,

integrated delivery systems and hospital systems about our molecular diagnostic tests’ value through highly trained professionals

who are experienced in reimbursement and business-to-business selling and through face-to-face meetings, phone calls, digital communications

and advisory boards.

We compete on the basis of

factors such as reputation, scientific expertise, service quality, management experience, performance record, customer satisfaction, accessibility,

flexibility, ability to respond to specific customer needs, integration skills, and product portfolio and price.

Increased competition

and/or a decrease in demand for our clinical services may also lead to other forms of competition.

We believe that our business has a

variety of competitive advantages that allow us to compete successfully in the marketplace.

While we believe we compete effectively with

respect to each of these factors, certain competitors of ours are substantially larger than us and have greater capital, personnel, and

other resources than we have.

Many of our competitors also offer broader product lines outside of the molecular diagnostic testing market,

and many have greater brand recognition than we do.

Moreover, our competitors may make rapid technological developments that may result

in our technologies and products becoming obsolete before we recover the expenses incurred to develop them or before they generate significant

Increased competition may lead to pricing pressures and competitive practices that could have a material adverse effect on our

market share and our ability to attract new business opportunities as well as our business, financial condition and results of operations.

We also compete with physicians

and the medical community who use traditional methods or local institution-created tests to diagnose gastrointestinal and endocrine cancers.

We believe that we will need to continue to educate physicians and the medical community on the value and benefits of our molecular diagnostic

tests in order to change clinical practices and continue to support the use of molecular diagnostic tests in clinical guidelines.

Specifically, in regard to

our thyroid diagnostic tests, Veracyte, Inc., or Veracyte, has a molecular thyroid nodule cancer diagnostic test (Afirma) that is the

current market leader and competes with our ThyGeNEXT ® and ThyraMIR ® v2 tests.

Quest Diagnostics Incorporated,

or Quest, currently offers a diagnostic test similar to the earlier version of our ThyGeNEXT ® test and distributes the

Afirma test in partnership with Veracyte.

Sonic, Inc., or Sonic, offers ThyroSeq ® , a diagnostic test that analyzes genetic

alterations using next-generation sequencing.

We are currently not aware

of any direct competitors to PancraGEN ® that fully integrate clinical, imaging, cytology, and molecular information to

stratify patients’ risk for malignancy and inform physicians on the best course of action, i.e., surgery or surveillance and surveillance

interval length.

The University of Pittsburgh Medical Center now offers PancreaSeq ® , a Next Generation Sequencing panel

that focuses on the analysis of mutations in oncogenes and tumor suppressor genes, most of which may help establish the type of pancreatic

cyst present and some of which may help establish the presence of malignancy.

Some of these related genomic regions are included in PancraGEN ® .

competitive laboratory test also does not follow current physician patient management decision-making which includes the integration

This competitive laboratory test also does not follow current physician patient management decision-making which includes the integration

of clinical features to fully characterize a patient’s risk for pancreatic cancer.

Importantly, there has been no long-term

clinical validation or utility studies completed on any gene panel for pancreatic cyst fluid other than that associated with

PancraGEN ® .

PancraGEN ® has been validated in multiple studies and peer reviewed publications and has

been used in almost 70,000 patients with up to approximately 8 years of patient follow-up information.

the size of the Barrett’s Esophogus market, there are companies who are either in the process of developing assays and LDTs to

identify the condition or who have started to commercialize diagnostic tests, such as the methylated biomarker test currently being marketed

by Lucid Diagnostics.

We anticipate that this space will become increasingly competitive as new diagnostic tests come to market in the

is also possible that we face future competition from other laboratory-developed tests (LDT’s), developed by commercial laboratories

or by other diagnostic companies utilizing new, unforeseen technologies in the gastrointestinal and endocrine cancer molecular diagnostic

and Development

continue to generate and publish clinical evidence mainly related to our key products, including ThyGeNEXT ® and ThyraMIR ® v2

and PancraGEN ® .

conduct our research and development activities at our CLIA-certified and CAP-accredited laboratory in Pittsburgh, Pennsylvania.

research and development efforts primarily focus on providing data and analyses necessary to support and improve our existing products

on the market.

Additionally, our research and development activities provide product line extension of our existing products as well

as new product opportunities utilizing our proprietary platforms and extensive bioinformatics repositories and databases.

part of our growth strategy, we may enter into collaborative relationships with research and academic institutions for the development

of additional or enhanced tests to further increase the depth and breadth of our test offerings.

Where appropriate, we may also enter

into licensing agreements with our collaborative partners to both license intellectual property for use in our test panels as well as

licensing such intellectual property out.

research and development costs are primarily clinical costs and were approximately $0.6 million and $0.7 million in 2023 and 2022, respectively.

trademarks and other proprietary rights are important to us.

We generate our own intellectual property portfolio and hold numerous patents

and patent applications covering our existing and future products and technologies.

As of December 31, 2023, we owned nine issued United

States Patents.

patents are directed to, amongst other things, methods of measuring carcinoembryonic antigen in a biological

methods for treating subject with a high risk of disease progression from Barrett’s metaplasia to esophageal adenocarcinoma;

and methods of treating a subject identified with a papillary thyroid carcinoma.

As of December 31, 2023, we owned four issued patents

outside of the United States, one each in Australia, Canada, Japan, and Israel.

As of December 31, 2023, we owned two pending patent

applications in the United States.

Provided all maintenance fees and annuities are paid, our issued United States patents expire from

2031 through 2034, our foreign patents expire in 2031, and our pending patent applications, if issued, are expected to expire between

2027 and 2038, absent any disclaimers, adjustments or extensions.

Our patents are directed to certain of the technologies relating to

detecting, diagnosing, and classifying thyroid tumors, pancreatic cysts and other forms of gastrointestinal disorders, such as Barrett’s

Importantly, there has been no long-term clinical

validation or utility studies completed on any gene panel for pancreatic cyst fluid other than that associated with PancraGEN ® .

PancraGEN ® has been validated in multiple studies and peer reviewed publications and has been used in over 80,000 patients

with up to approximately ~8 years of patient follow-up information.

Given the size of the Barrett’s

Esophagus market, there are companies who are either in the process of developing assays and LDTs to identify the condition or who have

started to commercialize diagnostic tests, such as the methylated biomarker test currently being marketed by Lucid Diagnostics.

We anticipate

that this space will become increasingly competitive as new diagnostic tests come to market in the future.

It is also possible that

we face future competition from other laboratory-developed tests (LDT’s), developed by commercial laboratories or by other diagnostic

companies utilizing different technologies in the gastrointestinal and endocrine cancer molecular diagnostic tests space.

Research and Development

We continue to generate and

publish clinical evidence mainly related to our key products, including ThyGeNEXT ® and ThyraMIR ® v2 and PancraGEN ® .

We conduct our research and

development activities at our CLIA-certified and CAP-accredited laboratory in Pittsburgh, Pennsylvania.

Our research and development efforts

primarily focus on providing data and analyses necessary to support and improve our existing products on the market.

As part of our growth strategy,

we may enter into collaborative relationships with research and academic institutions for the development of additional or enhanced tests

to further increase the depth and breadth of our test offerings.

Where appropriate, we may also enter into licensing agreements with our

collaborative partners to both license intellectual property for use in our test panels as well as licensing such intellectual property

Our research and development

costs are primarily clinical costs and were approximately $0.7 million and $0.6 million in 2024 and 2023, respectively.

Intellectual Property

Patents, trademarks and other

proprietary rights are important to us.

We generate our own intellectual property portfolio and hold numerous patents and patent applications

covering our existing and future products and technologies.

As of December 31, 2024, we owned nine issued United States Patents.

patents are directed to, amongst other things, methods of measuring carcinoembryonic antigen in a biological sample;

methods for treating

subject with a high risk of disease progression from Barrett’s metaplasia to esophageal adenocarcinoma;

and methods of treating

a subject identified with a papillary thyroid carcinoma.

As of December 31, 2024, we owned four issued patents outside of the United States,

one each in Australia, Canada, Japan, and Israel.

As of December 31, 2024, we owned two pending patent applications in the United States.

Provided all maintenance fees and annuities are paid, our issued United States patents expire from 2031 through 2034, our foreign patents

expire in 2031, and our pending patent applications, if issued, are expected to expire between 2027 and 2038, absent any disclaimers,

adjustments or extensions.

Our patents are directed to certain of the technologies relating to detecting, diagnosing, and classifying

thyroid tumors, pancreatic cysts and other forms of gastrointestinal disorders, such as Barrett’s esophagus.

addition to our own molecular diagnostic test development efforts, we are currently using, and intend to use in the future, certain tests

and biomarkers that have been developed by third parties or by us in collaboration with third parties.

While a significant amount of

intellectual property in the field of molecular diagnostic tests is already in the public domain, ThyraMIR ® v2, ThyGeNEXT ® ,

While a significant amount of intellectual

property in the field of molecular diagnostic tests is already in the public domain, ThyraMIR ® v2, ThyGeNEXT ® ,

and some of the future tests developed by us, or by third parties on our behalf for use in our tests, may require, that we license the

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January 13, 2017.

We are further obligated to pay royalties on the future net sales of tests based on the miR Inform ®

pancreas platform, if developed, on the future net sales of tests based on the miR Inform ® thyroid platform

(i.e., ThyGeNEXT ® ) and potentially on certain other thyroid diagnostics tests.

October 2014, we acquired RedPath Integrated Pathology Inc.

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In addition, we require that all our employees sign confidentiality and intellectual property assignment

Material and Suppliers

procure reagents, equipment and other materials that we use to perform our tests from sole suppliers.

We also purchase components used

in our collection kits from sole-source suppliers.

Raw Material and Suppliers

We procure reagents, equipment

and other materials that we use to perform our tests from sole suppliers.

We also purchase components used in our collection kits from

sole-source suppliers.

Some of these items are unique to these suppliers and vendors.

Our most significant

suppliers for reagents and supplies include Thermo Fisher Scientific Inc., Illumina, Inc., Qiagen N.V., and F.

Our most significant suppliers for reagents and

supplies include Thermo Fisher Scientific Inc., Illumina, Inc., Qiagen N.V., and F.

Hoffmann-La Roche AG.

While we have developed alternate sourcing strategies for most of these materials and vendors, we cannot be certain whether these strategies

will be effective or the alternative sources will be available when we need them.

If these suppliers can no longer provide us with the

materials we need to perform the tests and for our collection kits, if the materials do not meet our quality specifications or are otherwise

unusable, if we cannot obtain acceptable substitute materials, or if we elect to change suppliers, an interruption in test processing

could occur, we may not be able to deliver patient reports and we may incur higher one-time switching costs.

Any such interruption may

significantly affect our future revenue, cause us to incur higher costs, and harm our customer relationships and reputation.

in order to mitigate these risks, we maintain inventories of these supplies at higher levels than would be the case if multiple sources

of supply were available.

If our test volume decreases or we switch suppliers, we may hold excess lab supplies with expiration dates

that occur before use which would adversely affect our losses and cash flow position.

As we introduce any new test, we may experience

supply issues as we ramp test volume.

Regulations and Industry Guidelines

healthcare industry, and thus our business, is subject to extensive Federal, State, local and foreign regulation.

Both Federal and State

governmental agencies continue to subject the healthcare industry to intense regulatory scrutiny, including heightened civil and criminal

enforcement efforts.

We believe that we have structured our business operations and relationships with our customers to comply with applicable

legal requirements.

However, it is possible that governmental entities or other third parties could interpret these laws differently

and assert otherwise.

We discuss below the statutes and regulations that are most relevant to our business and most frequently cited

in enforcement actions.

over Our Clinical Laboratory

conduct and provision of our services are regulated under the CLIA.

While we have developed alternate

sourcing strategies for most of these materials and vendors, we cannot be certain whether these strategies will be effective or the alternative

sources will be available when we need them.

If these suppliers can no longer provide us with the materials we need to perform the tests

and for our collection kits, if the materials do not meet our quality specifications or are otherwise unusable, if we cannot obtain acceptable

substitute materials, or if we elect to change suppliers, an interruption in test processing could occur, we may not be able to deliver

patient reports and we may incur higher one-time switching costs.

Any such interruption may significantly affect our future revenue, cause

us to incur higher costs, and harm our customer relationships and reputation.

In addition, in order to mitigate these risks, we maintain

inventories of these supplies at higher levels than would be the case if multiple sources of supply were available.

If our test volume

decreases or we switch suppliers, we may hold excess lab supplies with expiration dates that occur before use which would adversely affect

our losses and cash flow position.

As we introduce any new test, we may experience supply issues as we ramp test volume.

Government Regulations and Industry Guidelines

The healthcare industry,

and thus our business, is subject to extensive Federal, State, local and foreign regulation.

Both Federal and State governmental agencies

continue to subject the healthcare industry to intense regulatory scrutiny, including heightened civil and criminal enforcement efforts.

We believe that we have structured our business operations and relationships with our customers to comply with applicable legal requirements.

However, it is possible that governmental entities or other third parties could interpret these laws differently and assert otherwise.

We discuss below the statutes and regulations that are most relevant to our business and most frequently cited in enforcement actions.

Regulations over Our Clinical Laboratory

The conduct and provision

of our services are regulated under the CLIA.

CLIA requires us to maintain Federal certification.

requirements relating to test processes, personnel qualifications, facilities and equipment, recordkeeping, quality assurance and participation

in proficiency testing.

CLIA compliance and certification are also a condition for participation by clinical laboratories in the Medicare

Program and for eligibility to bill for services provided to governmental healthcare program beneficiaries.

CLIA imposes requirements relating to

test processes, personnel qualifications, facilities and equipment, recordkeeping, quality assurance and participation in proficiency

CLIA compliance and certification are also a condition for participation by clinical laboratories in the Medicare Program and

for eligibility to bill for services provided to governmental healthcare program beneficiaries.

As a condition of CLIA certification,

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biennial survey is typically conducted by a State agency, or, if the laboratory is accredited, a CMS-approved accreditation organization.

Potential sanctions for failure to meet these certification, accreditation and licensure requirements include suspension, revocation

or limitation of a laboratory’s CLIA certification, accreditation or license, which is necessary to conduct business, cancellation

Potential sanctions for failure to meet these certification, accreditation and licensure requirements include suspension, revocation or

limitation of a laboratory’s CLIA certification, accreditation or license, which is necessary to conduct business, cancellation

or suspension of the laboratory’s ability to receive Medicare or Medicaid reimbursement, as well as imposition of plans to correct

3 unchanged sentences

our business.

addition to CLIA requirements, we participate in the accreditation program of the College of American Pathologists (“CAP”).

Under CMS requirements, accreditation by CAP is sufficient to satisfy the requirements of CLIA.

Failure to maintain CAP accreditation

could have a material adverse effect on the sales of our tests and the results of our operations.

addition to CLIA certification, we are required to hold state licenses in certain states.

Some state licensing requirements differ from

federal regulation and may impose additional or different requirements.

In addition to CLIA requirements,

we participate in the accreditation program of the College of American Pathologists (“CAP”).

Under CMS requirements, accreditation

by CAP is sufficient to satisfy the requirements of CLIA.

Failure to maintain CAP accreditation could have a material adverse effect on

the sales of our tests and the results of our operations.

In addition to CLIA certification,

we are required to hold state licenses in certain states.

Some state licensing requirements differ from federal regulation and may impose

additional or different requirements.

CLIA does not preempt state laws that are more stringent.

we were to lose our CLIA certification, CAP Accreditation, or required state licenses for our laboratory, whether as a result of revocation,

suspension or limitation, we would no longer be able to provide our services, which would have a material adverse effect on our business,

financial condition and results of operations.

laboratory is also subject to licensing and regulation under Federal, State and local laws relating to hazard communication and employee

right-to-know regulations, and the safety and health of laboratory employees.

Additionally, our laboratory is subject to applicable Federal

and State laws and regulations and licensing requirements relating to the handling, storage and disposal of hazardous waste and laboratory

specimens, including the regulations of the Environmental Protection Agency, the Department of Transportation, and the National Fire

Protection Agency.

The regulations of the United States Department of Transportation, Public Health Service and Postal Service apply

to the surface and air transportation of laboratory specimens.

Typically, we use outside vendors who are contractually obligated to comply

with applicable laws and regulations to dispose of hazardous waste.

These vendors are licensed or otherwise qualified to handle and dispose

of such waste.

addition to its comprehensive regulation of safety in the workplace, the United States Occupational Safety and Health Administration

has established extensive requirements relating to workplace safety for healthcare employers whose workers may be exposed to blood-borne

pathogens such as HIV and the hepatitis B virus, by preventing or minimizing any exposure through needle stick or similar penetrating

Although we believe that we are currently in compliance in all material respects with such Federal, State and local laws, failure

to comply with such laws could subject us to denial of the right to conduct business, fines, criminal penalties and other enforcement

Food and Drug Administration Regulation of Laboratory Developed Tests (“LDTs”)

subject to oversight by CMS through its enforcement of CLIA, the FDA has claimed regulatory authority over all laboratories that produce

LDTs, a type of in vitro diagnostic test that is designed, manufactured and used within a single laboratory.

The FDA has regulatory responsibility

over, among other areas, instruments, test kits, reagents and other devices used in clinical laboratories to perform diagnostic testing

in the United States.

Historically,

the FDA has exercised enforcement discretion over most LDTs.

However, in July 2014, the FDA issued two draft guidance documents:

for Regulatory Oversight of Laboratory Developed Tests,” which provided an overview of how the FDA would regulate LDTs through

a risk-based framework, and “FDA Notification and Medical Device Reporting for Laboratory Developed Tests,” which described

how FDA would implement a proposed notification process applicable to LDT manufacturers, including adverse event reporting.

January 13, 2017, the FDA released a discussion paper on LDTs which outlined a substantially-revised approach for regulating LDTs.

to the 2017 discussion paper, previously marketed LDTs would not be expected to comply with most or all FDA oversight requirements (grandfathering),

except for adverse event and malfunction reporting.

Since many LDTs currently on the market would be grandfathered in, pre-market review

of new and significantly modified LDTs could be phased-in over a four-year period, as opposed to the nine years proposed in the Framework

for Regulatory Oversight draft guidance.

In addition, tests introduced after the effective date, but before their phase-in date, could

continue to be offered during pre-market review.

discussion paper notes that FDA will focus on analytical and clinical validity as the basis for marketing authorization.

of the analytical and clinical validity of all LDTs would be made publicly available.

Laboratories developing LDTs would be encouraged

to submit prospective change protocols in their pre-market submission that outline specific types of anticipated changes, the procedures

that will be followed to implement them and the criteria that will be met prior to implementation.

September 29, 2023, the FDA published a proposed rule on LDTs, in which FDA proposes to end enforcement discretion for virtually all

LDTs in five stages over a four-year period from the date FDA publishes a final rule.

In Phase 1 (effective one year post-finalization),

laboratories would be required to comply with medical device (adverse event) reporting and correction/removal reporting requirements.

In Phase 2 (effective two years post-finalization), laboratories would be required to comply with all other device requirements ( e.g.

registration/listing, labeling, investigational use), except for quality systems and premarket review.

In Phase 3 (effective three years

post-finalization), laboratories would be required to comply with quality systems requirements.

In Phase 4 (effective three and a half

years post-finalization, but not before October 1, 2027), laboratories would be required to comply with premarket review requirements

for high-risk tests ( i.e.

, tests subject to premarket approval (PMA) requirement).

Finally, in Phase 5 (effective four years post-finalization,

but not before April 1, 2028), laboratories would be required comply with premarket review requirements for moderate- and low-risk tests

, tests subject to de novo or 510(k) requirement).

Unlike previous proposals, the proposed rule does not “grandfather”

existing tests.

The content and timing of any final rule on LDTs is uncertain at this time.

the regulatory approaches proposed over the past decade, FDA currently exercises enforcement discretion over most LDTs.

If FDA ceases

to exercise enforcement discretion over LDTs, failure to comply with applicable requirements could result in warning letters, civil monetary

penalties, injunctions, criminal prosecution, recall or seizure, operating restrictions, partial suspension or total shutdown of operations,

and denial of or challenges to applications for clearance or approval, as well as significant adverse publicity.

and legislative proposals have been introduced alongside FDA’s regulatory proposals.

In March 2017, members of Congress posted

a discussion draft of “The Diagnostics Accuracy and Innovation Act” (DAIA).

The discussion draft included language that,

if enacted, would have established a new regulatory framework for the oversight of in vitro clinical tests (“IVCTs”) which

include LDTs.

In March 2020, members of Congress introduced “The Verifying Accurate, Leading-edge IVCT Development (VALID) Act.”

This bill was re-introduced in substantially similar forms over the years, and, most recently in March 2023.

Under the most recent version

of the VALID Act, a risk-based approach would be used to regulate IVCTs while grandfathering many existing IVCTs.

Each test will be classified

as high-risk, moderate-risk, or low-risk.

If we were to lose our CLIA certification,

CAP Accreditation, or required state licenses for our laboratory, whether as a result of revocation, suspension or limitation, we would

no longer be able to provide our services, which would have a material adverse effect on our business, financial condition and results

of operations.

Our laboratory is also subject

to licensing and regulation under Federal, State and local laws relating to hazard communication and employee right-to-know regulations,

and the safety and health of laboratory employees.

Additionally, our laboratory is subject to applicable Federal and State laws and regulations

and licensing requirements relating to the handling, storage and disposal of hazardous waste and laboratory specimens, including the regulations

of the Environmental Protection Agency, the Department of Transportation, and the National Fire Protection Agency.

The regulations of

the United States Department of Transportation, Public Health Service and Postal Service apply to the surface and air transportation of

laboratory specimens.

Typically, we use outside vendors who are contractually obligated to comply with applicable laws and regulations

to dispose of hazardous waste.

These vendors are licensed or otherwise qualified to handle and dispose of such waste.

In addition to its comprehensive

regulation of safety in the workplace, the United States Occupational Safety and Health Administration has established extensive requirements

relating to workplace safety for healthcare employers whose workers may be exposed to blood-borne pathogens such as HIV and the hepatitis

B virus, by preventing or minimizing any exposure through needle stick or similar penetrating injuries.

Although we believe that we are

currently in compliance in all material respects with such Federal, State and local laws, failure to comply with such laws could subject

us to denial of the right to conduct business, fines, criminal penalties and other enforcement actions.

Potential U.S.

Food and Drug Administration

Regulation of Laboratory Developed Tests (“LDTs”)

While subject to oversight

by CMS through its enforcement of the Clinical Laboratory Improvement Amendments of 1988 (“CLIA”), the Food and Drug Administration

(“FDA”) has claimed regulatory authority over laboratories that produce LDTs, a type of in vitro diagnostic test that is designed,

manufactured and used within a single laboratory.

The FDA has regulatory responsibility over, among other areas, instruments, test kits,

reagents and other devices used in clinical laboratories to perform diagnostic testing in the United States.

Historically, the FDA has

exercised enforcement discretion over most LDTs.

On April 29, 2024, however, the FDA published a final rule on LDTs, in which the FDA

outlines its plans to end enforcement discretion for many LDTs in five stages over a four-year period.

In Phase 1 (effective May 6, 2025),

clinical laboratories running LDTs will be required to comply with medical device (adverse event) reporting and correction/removal reporting

requirements, as well as requirements for maintenance of complaint files under the FDA’s quality systems regulation (QSR).

2 (effective May 6, 2026), clinical laboratories will be required to comply with all other device requirements (e.g., registration/listing,

labeling, investigational use), except for the remaining QSR requirements and premarket review.

In Phase 3 (effective May 6, 2027), clinical

laboratories will be required to comply with all remaining applicable QSR requirements.

In Phase 4 (effective November 6, 2027), clinical

laboratories will be required to comply with premarket review requirements for high-risk tests (i.e., tests subject to the premarket approval

(PMA) requirement).

Finally, in Phase 5 (effective May 6, 2028), clinical laboratories will be required to comply with premarket review

requirements for moderate- and low-risk tests (i.e., tests subject to the de novo or 510(k) requirement).

Under the final rule, several

types of tests will be eligible for some degree of continued enforcement discretion.

For example, LDTs approved by the New York State

Department of Health will be exempt from premarket review requirements but will remain subject to the requirements of Phases 1 through

Similarly, LDTs first marketed prior to May 6, 2024 that are not subsequently modified, or are modified only in certain limited ways,

will be exempt from the premarket review and most quality systems requirements, but will remain subject to the requirements of Phases

The FDA notes, however, that it retains discretion to pursue enforcement action for violations of the Federal Food, Drug and

Cosmetic Act at any time and intends to do so when appropriate.

The FDA further explains that it may update any of the enforcement discretion

policies set forth in the final rule as circumstances warrant or if the circumstances that inform those policies change, consistent with

the FDA’s good guidance practices.

To the extent the FDA ultimately

regulates certain LDTs, our LDTs may be subject to certain additional regulatory requirements.

Complying with the FDA’s requirements

can be expensive, time-consuming, and subject us to significant or unanticipated delays.

Insofar as we may be required to obtain premarket

clearance or approval to perform or continue performing an LDT, we cannot assure you that we will be able to obtain such authorization.

Even if we obtain regulatory clearance or approval where required, such authorization may not be for the intended uses that we believe

are commercially attractive or are critical to the commercial success of our tests.

As a result, the application of the FDA’s requirements

to our tests could materially and adversely affect our business, financial condition, and results of operations.

Failure to comply with applicable

requirements could result in a range of enforcement actions by the FDA, such as warning letters, civil monetary penalties, injunctions,

criminal prosecution, recall or seizure, operating restrictions, partial suspension or total shutdown of operations, and denial of or

challenges to applications for clearance or approval, as well as significant adverse publicity.

Legislative proposals have

also been introduced that, if enacted, would potentially supersede the final rule.

In March 2017, members of Congress posted a discussion

draft of “The Diagnostics Accuracy and Innovation Act”.

The discussion draft included language that, if enacted, would have

established a new regulatory framework for the oversight of in vitro clinical tests (“IVCTs”) which include LDTs.

2020, members of Congress introduced “The Verifying Accurate, Leading-edge IVCT Development (VALID) Act.” This bill has been

re-introduced in substantially similar forms over the years, and, most recently in March 2023.

Under the most recent version of the VALID

Act, a risk-based approach would be used to regulate IVCTs while grandfathering many existing IVCTs from certain requirements.

will be classified as high-risk, moderate-risk, or low-risk.

Pre-market review will be required for high-risk tests.

To market a high-risk IVCT, reasonable

assurance of analytical and clinical validity for the intended use must be established.

Under VALID, a precertification process would

be established which will allow a laboratory to establish that the facilities, methods, and controls used in the development of certain

IVCTs meet quality system requirements.

If pre-certified, IVCTs falling within the scope of a certification order will not be subject

to pre-market review.

The new regulatory framework will include quality control and post-market reporting requirements.

have the authority to withdraw from the market IVCTs if there is a reasonable likelihood that such tests will cause death or serious

adverse health consequences (among other criteria).

Failure to comply with applicable regulatory requirements can result in enforcement

action by the FDA, such as fines, product suspensions, warning letters, recalls, injunctions and other civil and criminal sanctions.

via statute, regulation, or sub-regulatory action, any FDA effort to end enforcement discretion for LDTs is likely to continue to be

met with resistance by certain sections of industry.

We cannot predict if September 2023 proposed rule, VALID (or any other bill or proposal)

will be finalized in its current (or any other) form and cannot quantify the effect of such proposals on our business.

Fraud, Abuse and Anti-Kickback Laws

Anti-Kickback Statute makes it a felony for a person or entity, including a laboratory, to knowingly and willfully offer, pay, solicit

or receive remuneration, directly or indirectly, in order to induce business that is reimbursable under any Federal healthcare program.

A violation of the Anti-Kickback Statute may result in imprisonment of up to 10 years and fines of up to $100,000 for each violation,

Convictions under the Anti-Kickback Statute result in mandatory exclusion from federal health care programs, generally for a

minimum of five years.

In addition, HHS has the authority to impose civil assessments and fines and to exclude healthcare providers and

others engaged in prohibited activities from Medicare, Medicaid and other federal healthcare programs.

Actions, which violate the Anti-Kickback

Statute, also incur liability under the Federal False Claims Act, discussed in more detail below, which prohibits, among other things,

knowingly presenting, or causing to be presented, a false or fraudulent claim for payment to the U.S.

the Anti-Kickback Statute applies only to federal health care programs, a number of states have passed statutes substantially similar

to the Anti-Kickback Statute, which prohibits similar conduct toward other payers, including some that apply to all other health plans

and third-party payers.

Federal and state law enforcement authorities scrutinize arrangements between healthcare providers and potential

referral sources to ensure that the arrangements are not designed as a mechanism to improperly induce patient care referrals or induce

the purchase or prescribing of particular products or services.

The law enforcement authorities, the courts and Congress have also demonstrated

a willingness to look behind the formalities of a transaction to determine the underlying purpose of payments between healthcare providers

and actual or potential referral sources.

Several courts have taken a broad interpretation of the scope of the Anti-Kickback Statute,

holding that the statute may be violated if merely one purpose of a payment arrangement is to induce referrals for or purchases of items

or services reimbursable by federal health care programs.

addition to the Anti-Kickback Statute, the U.S.

enacted the Eliminating Kickbacks in Recovery Act of 2018, or EKRA, as part of the

Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment for Patients and Communities Act (SUPPORT Act).

is an all-payer anti-kickback law that makes it a criminal offense to, among other things, pay any remuneration to induce referrals

to, or in exchange for an individual using the services of a recovery home, a substance use clinical treatment facility, or

Although it appears that EKRA was intended to reach patient brokering and similar arrangements to induce patronage of

substance use recovery and treatment, the language in EKRA is broadly written.

The term “laboratory” is defined broadly

and without reference to any connection to substance use disorder treatment.

EKRA is a criminal statute and violations can result in

fines of up to $200,000, up to 10 years in prison, or both, per violation.

As drafted, EKRA does not clearly protect incentive

compensation to sales employees, a practice that is common in the industry.

The government has not issued or proposed regulations or

other guidance interpreting EKRA.

other healthcare fraud and abuse laws could have an effect on our business.

For example, provisions of the Social Security Act permit

Medicare and Medicaid to exclude an entity that charges the federal healthcare programs substantially in excess of its usual charges

for its services.

The terms “usual charge” and “substantially in excess” are ambiguous and subject to varying

interpretations.

Further, the Federal False Claims Act, discussed in more detail below, prohibits, among other things, a person from

knowingly submitting a claim, making a false record or statement in order to secure payment or retaining an overpayment by the federal

In addition to actions initiated by the government itself, the statute authorizes actions to be brought on behalf of the

federal government by a private party, known as a relator, having knowledge of the alleged fraud.

Because the complaint is initially

filed under seal, the action may be pending for some time before the defendant is even aware of the action.

If the government is ultimately

successful in obtaining redress in the matter or if the relator succeeds in obtaining redress without the government’s involvement,

then the relator will receive a percentage of the recovery.

Penalties under the federal False Claims Act can include up to three times

the damages sustained by the federal program and up to almost $14,000 and $28,000 per claim (these per-claim penalties are adjusted for

inflation from time to time).

Further, numerous states have enacted state false claims acts that apply to state government programs.

Finally, the Social Security Act includes its own provisions that prohibit the filing of false claims or submitting false statements

in order to obtain payment.

Violation of these provisions may result in fines, imprisonment or both, and possible exclusion from Medicare

or Medicaid programs.

are also subject to the federal physician self-referral prohibitions, commonly known as the Stark Law, and state equivalents.

These restrictions

generally prohibit us from billing a patient or Medicare for any clinical laboratory services and certain other “designated health

services,” when the physician ordering the service, or any member of such physician’s immediate family, has an investment

interest in or compensation arrangement with us, unless the arrangement meets an exception to the prohibition.

The government has also

claimed in FCA litigation that the Stark Law applies to Medicaid claims.

Some states have also enacted state Stark Law equivalents that

can apply, for example, to that state’s Medicaid plan and/or commercial payors.

or entities found to violate the Stark Law are required to refund any payments received pursuant to a referral prohibited by these laws

to the patient, or the Medicare program, as applicable.

To market a high-risk

IVCT, reasonable assurance of analytical and clinical validity for the intended use must be established.

Under VALID, a precertification

process would be established which will allow a laboratory to establish that the facilities, methods, and controls used in the development

of certain IVCTs meet quality system requirements.

If pre-certified, IVCTs falling within the scope of a certification order will not

be subject to pre-market review.

The new regulatory framework would include quality control and post-market reporting requirements.

FDA would have the authority to withdraw from the market IVCTs if there is a reasonable likelihood that such tests will cause death or

serious adverse health consequences (among other criteria).

Failure to comply with applicable regulatory requirements could result in

enforcement action by the FDA, such as fines, product suspensions, warning letters, recalls, injunctions and other civil and criminal

However, we cannot predict if this (or any other bill) will be enacted in its current (or any other) form and cannot quantify

the effect of such proposals on our business.

Whether via statute, regulation, or sub-regulatory

action, any FDA effort to end enforcement discretion for LDTs is likely to continue to be met with resistance by certain sections of industry.

Multiple lawsuits have been filed challenging the April 2024 LDT final rule, in which the plaintiffs argue that the FDA lacks authority

to regulate LDTs as medical devices.

We cannot predict the likelihood of success of these or any other such actions, nor can we quantify

the effect of such efforts on our business.

Healthcare, Fraud, Abuse and Anti-Kickback

The federal Anti-Kickback

Statute makes it a felony for a person or entity, including a laboratory, to “knowingly and willfully” offer, pay, solicit

or receive remuneration, directly or indirectly, to another person or entity if the payment is intended to induce the recipient to refer

an individual to a person or to purchase, order, arrange for or recommend the purchase of any item or service that is reimbursable under

any federal health care program.

A violation of the Anti-Kickback Statute, which is an intent-based statute, may result in imprisonment

of up to 10 years and fines of up to $100,000 for each violation, or both.

Convictions under the Anti-Kickback Statute result in mandatory

exclusion from federal health care programs, generally for a minimum of five years.

In addition, the United States Department of Health

and Human Services (HHS) has the authority to impose civil monetary penalties and fines and to exclude healthcare providers and others

engaged in prohibited activities from Medicare, Medicaid and other federal health care programs.

Civil monetary penalties may be imposed

of up to $124,732 per violation and damages of up to three times the total amount of remuneration offered, paid, solicited or received

(these per-claim penalties are adjusted for inflation from time to time).

Violations of the Anti-Kickback Statute may, also incur liability

under the federal False Claims Act, discussed in more detail below, which prohibits, among other things, knowingly presenting, or causing

to be presented, a false or fraudulent claim for payment to the U.S.

Although the Anti-Kickback

Statute applies only to federal health care programs, a number of states have passed statutes substantially similar to the Anti-Kickback

Statute, which prohibit similar conduct toward other payers, including some that apply to all health plans, third-party payers, and cash-pay

Federal and state law enforcement authorities scrutinize arrangements between healthcare providers and potential referral sources

to ensure that the arrangements are not designed to improperly induce patient care referrals or induce the purchase or prescribing of

particular products or services.

The law enforcement authorities, the courts and Congress have also demonstrated a willingness to look

behind the formalities of a transaction to determine the underlying purpose of payments between healthcare providers and actual or potential

referral sources.

Several courts have taken a broad interpretation of the scope of the Anti-Kickback Statute, holding that the statute

may be violated if merely one purpose of a payment arrangement is to induce referrals for or purchases of items or services reimbursable

by federal health care programs.

In addition to the Anti-Kickback

Statute, the Eliminating Kickbacks in Recovery Act of 2018, (EKRA) was enacted as part of the Substance Use-Disorder Prevention that Promotes

Opioid Recovery and Treatment for Patients and Communities Act (SUPPORT Act).

EKRA is an all-payer anti-kickback law that makes it a criminal

offense to, among other things, pay any remuneration to induce referrals to, or in exchange for an individual using the services of a

recovery home, a substance use clinical treatment facility, or laboratory.

Although it appears that EKRA was intended to reach patient

brokering and similar arrangements to induce patronage of substance use recovery and treatment, the language in EKRA is broadly written.

The term “laboratory” is defined broadly and without reference to any connection to substance use disorder treatment.

is a criminal statute and violations can result in fines of up to $200,000, up to 10 years in prison, or both, per violation.

EKRA does not clearly protect incentive compensation to sales employees, a practice that is common in the industry.

The government has

not issued proposed or final regulations or other guidance interpreting EKRA.

Several other healthcare

fraud and abuse laws could have an effect on our business.

For example, provisions of the Social Security Act permit Medicare and Medicaid

to exclude an entity that charges the federal healthcare programs substantially in excess of its usual charges for its services.

“usual charge” and “substantially in excess” are ambiguous and subject to varying interpretations.

federal False Claims Act, discussed in more detail below, prohibits, among other things, a person from knowingly submitting a claim, making

a false record or statement in order to secure payment or retaining an overpayment by the federal government.

In addition to actions initiated

by the government itself, the False Claims Act authorizes actions to be brought on behalf of the federal government by a private party,

known as a relator, having knowledge of the alleged fraud.

Because the complaint is initially filed under seal, the action may be pending

for some time before the defendant is even aware of the action.

If the government is ultimately successful in obtaining redress in the

matter or if the relator succeeds in obtaining redress without the government’s involvement, then the relator will receive a percentage

of the recovery.

Penalties under the federal False Claims Act can include up to three times the damages sustained by the federal program

and between $13,946 and $27,894 per claim (these per-claim penalties are adjusted for inflation from time to time).

Further, numerous

states have enacted state false claims acts that apply to state government programs.

Finally, the Social Security Act includes its own

provisions that prohibit the filing of false claims or submitting false statements in order to obtain payment.

Violation of these provisions

may result in fines, imprisonment or both, and possible exclusion from Medicare or Medicaid programs.

We are also subject to the

federal physician self-referral prohibitions, commonly known as the Stark Law, and state equivalents.

These restrictions generally prohibit

us from billing a patient or Medicare for any clinical laboratory services and certain other “designated health services,”

when the physician ordering the service, or any member of such physician’s immediate family, has an investment interest in or compensation

arrangement with us, unless the arrangement meets an exception to the prohibition.

The government has also claimed in False Claims Act

litigation that the Stark Law applies to Medicaid claims.

Some states have also enacted state Stark Law equivalents that can apply, for

example, to that state’s Medicaid plan and/or commercial payors and self-pay patients.

Persons or entities found

to violate the Stark Law are required to refund any payments received pursuant to a referral prohibited by these laws to the patient,

or the Medicare program, as applicable.

Sanctions for a violation of the Stark Law include the following:

of payment for the services provided in violation of the prohibition;

of amounts collected by an entity in violation of the Stark Law;

civil penalty of up to $29,899 for each service arising out of the prohibited referral;

exclusion from federal healthcare programs, including Medicare and Medicaid;

civil penalty of up to $199,338 against parties that enter into a scheme to circumvent the Stark Law’s prohibition.

penalty amounts are adjusted each year for inflation.

The Stark Law prohibitions apply regardless of the reasons for the financial relationship

and the referral.

No finding of intent to violate the Stark Law is required for a violation.

In addition, violations of the Stark Law

may also serve as the basis for liability under the Federal False Claims Act.

Additionally,

the Federal Civil Monetary Penalties Law prohibits, among other things, the offering or transfer of remuneration to a Medicare or state

healthcare program beneficiary if the person knows or should know it is likely to influence the beneficiary’s selection of a particular

provider, practitioner, or supplier of services reimbursable by Medicare or a state healthcare program, unless an exception applies.

do retain healthcare practitioners as key opinion leaders providing consultation in various aspects of the business.

These arrangements,

as any arrangement that includes compensation to a healthcare provider may trigger Federal or State anti-kickback, Stark Law, and other

fraud and abuse liability.

Our arrangements with healthcare providers are designed to meet available safe harbors and exceptions provided

in the anti-kickback laws and Stark laws and other relevant laws or otherwise comply with such laws.

There is no guarantee that the government

will find that these arrangements are designed properly or that they do not trigger liability.

Under existing laws, all arrangements

must have a legitimate purpose and compensation must be fair market value.

denial of payment for the services provided in violation of the prohibition;

refunds of amounts collected by an entity in violation of the Stark Law;

a civil penalty of up to $30,868 for each service arising out of the prohibited referral;

possible exclusion from federal healthcare programs, including Medicare and Medicaid;

a civil penalty of up to $205,799 against parties that enter into a scheme to circumvent the Stark Law’s prohibition.

These penalty amounts are

adjusted each year for inflation.

The Stark Law prohibitions apply regardless of the reasons for the financial relationship and the referral.

Unlike the Anti-Kickback Statute or EKRA, no finding of intent to violate the Stark Law is required for a violation.

In addition, violations

of the Stark Law may also serve as the basis for liability under the federal False Claims Act.

Additionally, the federal

Civil Monetary Penalties Law prohibits, among other things, the offering or transfer of remuneration to a Medicare or state healthcare

program beneficiary if the person knows or should know it is likely to influence the beneficiary’s selection of a particular provider,

practitioner, or supplier of services reimbursable by Medicare or a state health care program, unless an exception applies.

We do retain healthcare practitioners

as key opinion leaders providing consultation in various aspects of the business.

These arrangements, as any arrangement that includes

compensation to a healthcare provider may trigger federal or state anti-kickback, EKRA, Stark Law, and other fraud and abuse liability.

Our arrangements with healthcare providers are designed to meet available safe harbors and exceptions provided in the anti-kickback laws

and self-referral laws and other relevant laws or otherwise comply with such laws.

There is no guarantee that the government will find

that these arrangements are designed properly or that they do not trigger liability.

Under existing laws, all arrangements must have a

legitimate purpose and compensation must be fair market value.

These terms require some subjective analysis.

in the anti-kickback laws do not necessarily equate to exceptions in the Stark Law;

and there is no guarantee that the government will

not have issue with the relationships between the laboratories and the healthcare providers.

Fraud and Privacy Regulations

Federal government’s efforts to combat fraud in the healthcare setting were consolidated and strengthened under Public Law 104-191,

the Health Insurance Portability and Accountability Act of 1996, or HIPAA.

HIPAA aimed to combat fraud committed against all health plans,

both public and private by, among other things creating two new Federal offenses:

Safe harbors in the anti-kickback

laws do not necessarily equate to exceptions in the Stark Law;

and there is no guarantee that the government will not take issue with

the relationships between the laboratories and the healthcare providers.

HIPAA, Fraud and Privacy Regulations

The Federal government’s

efforts to combat fraud in the healthcare setting were consolidated and strengthened under Public Law 104-191, the Health Insurance Portability

and Accountability Act of 1996, or HIPAA.

HIPAA aimed to combat fraud committed against all health plans, both public and private by,

among other things creating two new Federal offenses:

healthcare fraud (18 U.S.

Code § 1347) and false

statements relating to healthcare matters (18 U.S.

Code § 1347) and false statements relating to healthcare

matters (18 U.S.

Code § 1035).

These provisions prohibit:

(1) the knowing and willful execution,

or attempted execution, of a scheme or artifice (a) to defraud any healthcare benefit program (including private payers), or (b) to obtain,

by means of false or fraudulent pretenses, representations, or promises, any of the money or property owned by, or under the custody

or control of, any health care benefit program, in connection with the delivery of or payment for healthcare benefits, items, or services;

and (2) the knowing and willful (a) falsification, concealment or covering up of a material fact by any trick, scheme or device, or (b)

making of any materially false, fictitious or fraudulent statement or representation, or making or using any materially false writing

or document knowing the same to contain any materially false, fictitious, or fraudulent statement or entry, in connection with the delivery

of or payment for healthcare benefits, items or services.

A violation of these provisions is a felony and may result in fines, imprisonment

and/or exclusion from government-sponsored programs.

along with the Health Information Technology for Economic and Clinical Health Act (HITECH) and the various regulations promulgated thereunder,

also establish uniform standards governing the conduct of certain electronic healthcare transactions and the security and privacy of

individually identifiable health information maintained or transmitted by certain healthcare providers, health plans and healthcare clearinghouses,

which are referred to as “covered entities,” as well as individuals or entities to the extent they use such individually

identifiable health information perform functions as a “business associate” for or on behalf of a covered entity.

identifiable health information maintained by covered entities and business associates is referred to as “protected health information”

or “PHI.” The regulations promulgated under HIPAA governing covered entities and business associates include the following

“Privacy of Individually Identifiable Health Information”, which establishes conditions for the permissible use

and disclosure of protected health information by covered entities and establishes certain rights of individuals who are the subject

of such information (45 C.F.R.

(1) the knowing and willful execution, or attempted execution, of a scheme

or artifice (a) to defraud any healthcare benefit program (including private payers), or (b) to obtain, by means of false or fraudulent

pretenses, representations, or promises, any of the money or property owned by, or under the custody or control of, any health care benefit

program, in connection with the delivery of or payment for healthcare benefits, items, or services;

and (2) the knowing and willful (a)

falsification, concealment or covering up of a material fact by any trick, scheme or device, or (b) making of any materially false, fictitious

or fraudulent statement or representation, or making or using any materially false writing or document knowing the same to contain any

materially false, fictitious, or fraudulent statement or entry, in connection with the delivery of or payment for healthcare benefits,

items or services.

A violation of these provisions is a felony and may result in fines, imprisonment and/or exclusion from government-sponsored

HIPAA, along with the Health

Information Technology for Economic and Clinical Health Act (HITECH) and the various regulations promulgated thereunder, also establish

uniform standards governing the conduct of certain electronic healthcare transactions and the security and privacy of individually identifiable

health information maintained or transmitted by certain healthcare providers, health plans and healthcare clearinghouses, which are referred

to as “covered entities,” as well as individuals or entities to the extent they use such individually identifiable health

information perform functions as a “business associate” for or on behalf of a covered entity.

Individually identifiable health

information maintained by covered entities and business associates is referred to as “protected health information” or “PHI.”

The regulations promulgated under HIPAA governing covered entities and business associates include the following subparts:

of Individually Identifiable Health Information”, which establishes conditions for the permissible use and disclosure of protected

health information by covered entities and establishes certain rights of individuals who are the subject of such information (45 C.F.R.

§§ 164.500, et seq.);

“Administrative Requirements”, which establishes electronic

standards for common healthcare transactions, such as claims information, plan eligibility, payment information and the use of electronic

signatures (45 C.F.R.

“Administrative Requirements”, which establishes electronic standards for common healthcare

transactions, such as claims information, plan eligibility, payment information and the use of electronic signatures (45 C.F.R.

162.100, et seq.);

“Security Standards for the Protection of Electronic Protected Health Information”,

which requires covered entities and their business associates to implement and maintain certain security measures to safeguard certain

electronic protected health information (45 C.F.R.

“Security Standards for the Protection of Electronic Protected Health Information”, which requires covered

entities and their business associates to implement and maintain certain security measures to safeguard certain electronic protected health

information (45 C.F.R.

§§ 164.302, et seq.);

and “Notification in the Case of Breach of Unsecured

Protected Health Information”, which requires business associates to provide certain notifications to covered entities and covered

entities to provide certain notifications to affected individuals, HHS and, in some cases, relevant media outlets following a breach

of unsecured protected health information (45 C.F.R.

and “Notification in the Case of Breach of Unsecured Protected Health Information”,

which requires business associates to provide certain notifications to covered entities and covered entities to provide certain notifications

to affected individuals, HHS and, in some cases, relevant media outlets following a breach of unsecured protected health information (45

§§ 164.400, et seq.).

As a covered entity, and also in our capacity as

a business associate to certain of our customers, we are subject to these standards.

We may also be liable for violations of HIPAA by

any individual or entity, which may include a business associate, that is acting as our agent under the federal common law of agency.

While the government intended this legislation to reduce administrative expenses and burdens for the healthcare industry, our compliance

with certain provisions of these standards entails significant costs for us and requires us to follow specific policies and procedures

when we use and disclose protected health information.

If we are found to be in violation of HIPAA, HITECH, or their respective implementing

regulations, we may be subject to potentially significant penalties, including civil and criminal penalties, damages and fines, and may

incur damage to our reputation.

Such enforcement actions could have an adverse effect on our business.

addition to Federal regulations issued under HIPAA and HITECH, many states have enacted privacy and security statutes or regulations

regarding individually identifiable health information that, in some cases, are more stringent than those issued under HIPAA and HITECH.

In those cases, it may be necessary to modify our planned operations and procedures to comply with the more stringent laws as HIPAA and

HITECH do not preempt state laws to the extent such state laws are broader in scope, impose more stringent requirements for individually

identifiable health information, or give individuals more rights with respect to their individually identifiable health information.

If we fail to comply with applicable state laws, rules, or regulations, we could be subject to additional sanctions or other liabilities

under those laws, rules, and regulations.

and State Consumer Protection Laws

Federal Trade Commission, or FTC, is an independent U.S.

law enforcement agency charged with protecting consumers and enhancing competition

across broad sectors of the economy.

In 2022, the FTC has said that it will be evaluating new data privacy regulations, which, if adopted,

could impact our operations.

As a covered entity, and also in our capacity as a business associate to certain of our customers,

we are subject to these standards.

We may also be liable for violations of HIPAA by any individual or entity, which may include a business

associate, that is acting as our agent under the federal common law of agency.

While the government intended this legislation to reduce

administrative expenses and burdens for the healthcare industry, our compliance with certain provisions of these standards entails significant

costs for us and requires us to follow specific policies and procedures when we use and disclose protected health information.

found to be in violation of HIPAA, HITECH, or their respective implementing regulations, we may be subject to potentially significant

penalties, including civil and criminal penalties, damages and fines, and may incur damage to our reputation.

Such enforcement actions

could have an adverse effect on our business.

In addition to Federal regulations

issued under HIPAA and HITECH, many states have enacted privacy and security statutes or regulations regarding individually identifiable

health information that, in some cases, are more stringent than those issued under HIPAA and HITECH.

In those cases, it may be necessary

to modify our planned operations and procedures to comply with the more stringent laws as HIPAA and HITECH do not preempt state laws to

the extent such state laws are broader in scope, impose more stringent requirements for individually identifiable health information,

or give individuals more rights with respect to their individually identifiable health information.

If we fail to comply with applicable

state laws, rules, or regulations, we could be subject to additional sanctions or other liabilities under those laws, rules, and regulations.

Federal and State Consumer Protection Laws

The Federal Trade Commission,

or FTC, is an independent U.S.

law enforcement agency charged with protecting consumers and enhancing competition across broad sectors

of the economy.

In 2022, the FTC has said that it will be evaluating new data privacy regulations, which, if adopted, could impact our

The FTC’s authority with respect to data privacy and security comes from Section 5 of the FTC Act.

The FTC uses its broad grant of authority to regulate data privacy and security, using its powers to investigate and bring lawsuits.

Where appropriate, the FTC can seek a variety of remedies, such as but not limited to requiring the implementation of comprehensive privacy

and security programs, biennial assessments by independent experts, monetary redress to consumers, and provision of robust notice and

choice mechanisms to consumers.

addition to the FTC Act, many U.S.

states have unfair and deceptive acts and practices statutes, known as UDAP statutes, that are substantively

similar to the FTC Act and have been applied in the privacy and data security context.

These UDAP statutes vary in substance and strength

from state to state.

The FTC uses its

broad grant of authority to regulate data privacy and security, using its powers to investigate and bring lawsuits.

Where appropriate,

the FTC can seek a variety of remedies, such as but not limited to requiring the implementation of comprehensive privacy and security

programs, biennial assessments by independent experts, monetary redress to consumers, and provision of robust notice and choice mechanisms

to consumers.

In addition to the FTC Act,

states have unfair and deceptive acts and practices statutes, known as UDAP statutes, that are substantively similar to the

FTC Act and have been applied in the privacy and data security context.

These UDAP statutes vary in substance and strength from state

Many have broad prohibitions against unfair and deceptive acts and practices.

These statutes generally allow for

private rights of action, and are enforced by the states’ Attorneys General.

than a dozen states have adopted comprehensive consumer privacy laws that are in effect or will take effect within the next 12 to 24

months, and regulate how certain for-profit businesses collect, use, and disclose the personal information of consumers who reside in

each respective state.

While the specific consumer rights vary from state-to-state, generally these laws confer to consumers in the state

the right to:

receive notice of information collection and use practices;

access, delete, correct, or transfer personal information and

opt out of the “sale” of their personal information or the use of their information for targeted advertising.

also require companies to adopt reasonable measures to safeguard the personal information that is collected and regulate categories of

“sensitive” data such as information associated with minors, citizenship, and other personal data for which these state laws

have designated special protection.

These laws do not, however, apply to personal information that constitutes PHI under HIPAA, de-identified

data as defined under HIPAA or in some instances, HIPAA-regulated entities.

As a result, we do not or likely will not have compliance

obligations with respect to most testing and patient information we collect and process.

However, we are required to comply with these

consumer privacy laws insofar as we collect other categories of consumers’ personal information, for example from website visitors.

These state consumer privacy laws are generally enforced by the respective state Attorney General.

California’s law also includes

a private right of action for certain data breaches.

State has passed the My Health My Data Act or MHMDA, which comes into effect on March 31, 2024.

MHMDA regulates consumer health data

that is not otherwise subject to HIPAA.

The definition of “consumer health data” is broad and applies to a variety of health-related

information including non-health information that is used to infer some aspect of current or future medical conditions.

MHMDA requires

additional transparency requirements related to how companies handle non-HIPAA covered health data as well as additional technical safeguards

for “consumer health data.” MHMDA also requires that companies obtain the consent of individuals for certain uses of their

“consumer health data.” MHMDA also gives Washington residents a variety of rights, similar to those in the state consumer

privacy laws discussed above, and related to the resident’s “consumer health data.” Unlike the consumer state laws,

MHMDA includes a private right of action.

Should the company become subject to an action brought under MHMDA, it could have an impact

on our operations.

Nevada and Connecticut has passed substantially similar consumer privacy health laws that have or will come into effect

However, the Nevada and Connecticut laws do not include a private right of action.

of other states in the United States are currently considering similar, consumer data privacy laws, which could impact our operations

United States and many foreign jurisdictions have enacted or proposed legislative and regulatory changes affecting the healthcare system.

The United States government, state legislatures and foreign governments also have shown significant interest in implementing cost-containment

programs to limit the growth of government-paid healthcare costs, including price controls, restrictions on reimbursement and requirements

for substitution of generic products for branded prescription drugs.

March 2010, President Obama signed into law the Patient Protection and Affordable Care Act, or PPACA (also known as the Affordable Care

Act), as amended by the Health Care and Education Reconciliation Act, a sweeping law intended to broaden access to health insurance and

coverage for patients, reduce or constrain the growth of healthcare spending, enhance remedies against fraud and abuse, add new transparency

requirements for healthcare and health insurance industries, impose new taxes and fees on the health industry, coordinate and promote

research on comparative clinical effectiveness of different technologies and procedures, and impose additional health policy reforms.

PPACA, as well as other healthcare reform measures that have been and may be adopted in the future, may result in more rigorous coverage

criteria, new payment methodologies and in additional downward pressure on pricing and implemented changes which significantly affect

the pharmaceutical, medical device and clinical laboratory industries.

There have been legislative and administrative actions to make

changes to PPACA, including repeal and replacement of certain provisions.

PPACA has also been subject to challenges in the courts;

These statutes generally allow for private rights

of action, and are enforced by the states’ Attorneys General.

More than a dozen states

have adopted comprehensive consumer privacy laws that are in effect or will take effect within the next 12 to 24 months, and regulate

how certain for-profit businesses collect, use, and disclose the personal information of consumers who reside in each respective state.

While the specific consumer rights vary from state-to-state, generally these laws confer to consumers in the state the right to:

notice of information collection and use practices;

access, delete, correct, or transfer personal information and opt out of the “sale”

of their personal information or the use of their information for targeted advertising.

These laws also require companies to adopt reasonable

measures to safeguard the personal information that is collected and regulate categories of “sensitive” data such as information

associated with minors, citizenship, and other personal data for which these state laws have designated special protection.

do not, however, apply to personal information that constitutes PHI under HIPAA, de-identified data as defined under HIPAA or in some

instances, HIPAA-regulated entities.

As a result, we do not or likely will not have compliance obligations with respect to most testing

and patient information we collect and process.

However, we are required to comply with these consumer privacy laws insofar as we collect

other categories of consumers’ personal information, for example from website visitors.

These state consumer privacy laws are generally

enforced by the respective state Attorney General.

California’s law also includes a private right of action for certain data breaches.

Washington State has passed

the My Health My Data Act or MHMDA, which comes into effect on March 31, 2024.

MHMDA regulates consumer health data that is not otherwise

subject to HIPAA.

The definition of “consumer health data” is broad and applies to a variety of health-related information

including non-health information that is used to infer some aspect of current or future medical conditions.

MHMDA requires additional

transparency requirements related to how companies handle non-HIPAA covered health data as well as additional technical safeguards for

“consumer health data.” MHMDA also requires that companies obtain the consent of individuals for certain uses of their “consumer

health data.” MHMDA also gives Washington residents a variety of rights, similar to those in the state consumer privacy laws discussed

above, and related to the resident’s “consumer health data.” Unlike the consumer state laws, MHMDA includes a private

right of action.

Should the company become subject to an action brought under MHMDA, it could have an impact on our operations.

and Connecticut has passed substantially similar consumer privacy health laws that have or will come into effect in 2024.

Nevada and Connecticut laws do not include a private right of action.

Dozens of other states in

the United States are currently considering similar, consumer data privacy laws, which could impact our operations if enacted.

Healthcare Reform

The United States and many

foreign jurisdictions have enacted or proposed legislative and regulatory changes affecting the healthcare system.

The United States government,

state legislatures and foreign governments also have shown significant interest in implementing cost-containment programs to limit the

growth of government-paid healthcare costs, including price controls, restrictions on reimbursement and requirements for substitution

of generic products for branded prescription drugs.

In March 2010, President

Obama signed into law the Patient Protection and Affordable Care Act, or PPACA (also known as the Affordable Care Act), as amended by

the Health Care and Education Reconciliation Act, a sweeping law intended to broaden access to health insurance and coverage for patients,

reduce or constrain the growth of healthcare spending, enhance remedies against fraud and abuse, add new transparency requirements for

healthcare and health insurance industries, impose new taxes and fees on the health industry, coordinate and promote research on comparative

clinical effectiveness of different technologies and procedures, and impose additional health policy reforms.

PPACA, as well as other

healthcare reform measures that have been and may be adopted in the future, may result in more rigorous coverage criteria, new payment

methodologies and in additional downward pressure on pricing and implemented changes which significantly affect the pharmaceutical, medical

device and clinical laboratory industries.

There have been legislative and administrative actions to make changes to PPACA, including

repeal and replacement of certain provisions.

The PPACA has also been subject

to challenges in the courts;

however, the U.S.

Supreme Court most recently upheld the surviving elements

of the law in 2021.

changes to the PPACA remain possible, although the Biden Administration has signaled that it plans to build on the Affordable Care Act

and expand the number of people who are eligible for subsidies under it.

President Biden has used executive orders to undo changes to

the PPACA made by the Trump administration and indicated he would advocate for legislation to build on the PPACA.

It is unknown what

form any such changes or any law would take, and how or whether it may affect our business in the future.

We expect that changes or additions

to the PPACA, the Medicare and Medicaid programs, and changes stemming from other healthcare reform measures, especially with regard

to healthcare access, financing or other legislation in individual states, could have a material adverse effect on the healthcare industry.

expect that additional federal, state and foreign healthcare reform measures will be adopted in the future, any of which could limit

the amounts that federal and state governments will pay for healthcare products and services, which could result in limited coverage

and reimbursement and reduced demand for our products, once approved, or additional pricing pressures.

Party Coverage and Reimbursement for our Clinical Services

customers’ bills are paid by many different payer groups.

The majority of reimbursement dollars for traditional laboratory services

are provided by traditional commercial insurance products, most notably preferred provider organizations, or PPOs, and other managed

care plans, as well as government healthcare programs, such as Medicare and Medicaid.

PPOs, HMOs and other managed care plans typically

contract with a limited number of laboratories and then designate the laboratory or laboratories to be used for tests ordered by participating

We are currently an out-of-network provider with most payers, which means we do not have a contract with payers to pay a

specific rate for our tests.

We are subject to applicable state laws regarding who should be billed, how they should be billed, how business

should be conducted, and how patient obligations regarding cost sharing should be handled.

In addition, if we become an “in-network”

provider for certain payers in the future, we will also be subject to the terms of contracts (which could include reduced reimbursement

rates) and may be subject to discipline, breach of contract actions, non-renewal or other contractually provided remedies for non-compliance

with the contract’s requirements and/or applicable laws.

generally bill third-party payers and individual patients for testing services on a test-by-test basis.

Third-party payers include Medicare,

private insurance companies, institutional direct clients and Medicaid, each of which has different billing requirements.

Medicare reimbursement

programs are complex and often ambiguous, and are continuously being evaluated and modified by CMS.

Our ability to receive timely reimbursements

from third-party payers is dependent on our ability to submit accurate and complete billing statements, and/or correct and complete missing

and incorrect billing information.

Missing and incorrect information on reimbursement submissions slows down the billing process and

increases the aging of accounts receivable.

We must bill Medicare directly for tests performed for Medicare patients and must accept

Medicare’s fee schedule for the covered tests as payment in full.

State Medicaid programs are generally prohibited from paying

more than the Medicare fee schedule.

Supreme Court most recently upheld the surviving elements of the law in 2021.

Further changes to the PPACA

remain possible.

The Trump Administration has signaled it is unknown what form any such changes or any law would take, and how or whether

it may affect our business in the future.

We expect that changes or additions to the PPACA, the Medicare and Medicaid programs, and changes

stemming from other healthcare reform measures, especially with regard to healthcare access, financing or other legislation in individual

states, could have a material adverse effect on the healthcare industry.

We expect that additional

federal, state and foreign healthcare reform measures will be adopted in the future, any of which could limit the amounts that federal

and state governments will pay for healthcare products and services, which could result in limited coverage and reimbursement and reduced

demand for our products, once approved, or additional pricing pressures.

Third Party Coverage and Reimbursement for

our Clinical Services

Our customers’ bills

are paid by many different payer types.

The majority of reimbursement dollars for traditional laboratory services are provided by traditional

commercial insurance products, most notably preferred provider organizations, or PPOs, and other managed care plans, as well as government

health care programs, such as Medicare and Medicaid.

PPOs, HMOs and other managed care plans typically contract with a limited number

of laboratories and then designate the laboratory or laboratories to be used for tests ordered by participating physicians.

We are currently

an out-of-network provider with most payers, which means we do not have a contract with payers to pay a specific rate for our tests.

are subject to applicable state laws regarding who should be billed, how they should be billed, how business should be conducted, and

how patient obligations regarding cost sharing should be handled.

In addition, if we become an “in-network” provider for certain

payers in the future, we will also be subject to the terms of contracts (which could include reduced reimbursement rates) and may be subject

to discipline, breach of contract actions, non-renewal or other contractually provided remedies for non-compliance with the contract’s

requirements and/or applicable laws.

We generally bill third-party

payers and individual patients for testing services on a test-by-test basis.

Third-party payers include Medicare, private insurance companies,

institutional direct clients and Medicaid, each of which has different billing requirements.

Medicare reimbursement programs are complex

and often ambiguous and are continuously being evaluated and modified by the Centers for Medicare and Medicaid Services (CMS).

to receive timely reimbursements from third-party payers is dependent on our ability to submit accurate and complete billing statements,

and/or correct and complete missing and incorrect billing information.

Missing and incorrect information on reimbursement submissions

slows down the billing process and increases the aging of accounts receivable.

We must bill Medicare directly for tests performed for

Medicare patients and must accept Medicare’s fee schedule for the covered tests as payment in full.

State Medicaid programs are

generally prohibited from paying more than the Medicare fee schedule.

Since 2021, we have been contracted with XIFIN, Inc.

(“XIFIN”), a healthcare billing

services management company, to help manage our third-party billing.

billing arrangements require us to bill multiple payers, and there are several other factors that complicate billing (e.g., disparity

in coverage and information requirements among various payers;

and incomplete or inaccurate billing information provided by ordering

Several private payers have implemented pre-authorization requirements for molecular and genetic testing, including Anthem

Blue Cross Blue Shield and United Healthcare, as well as various lab benefit companies such as American Imaging Management, Inc., or

AIM, and Beacon Lab Benefits Solutions, or Beacon.

In addition, more commercial payers are contracting with and delegating risk for lab

services costs to lab benefits management companies (e.g.

a healthcare billing services management company, to help manage our third-party billing.

Some billing arrangements

require us to bill multiple payers, and there are several other factors that complicate billing (e.g., disparity in coverage and information

requirements among various payers;

and incomplete or inaccurate billing information provided by ordering physicians).

Several private

payers have implemented pre-authorization requirements for molecular and genetic testing, including Anthem Blue Cross Blue Shield and

United Healthcare, as well as various lab benefit companies such as American Imaging Management, Inc., or AIM, and Beacon Lab Benefits

Solutions, or Beacon.

In addition, more commercial payers are contracting with and delegating risk for lab services costs to lab benefits

management companies (e.g.

eviCore healthcare, AIM, and Beacon).

This requires us to go through their

technology assessment process to secure coverage and obtain a contract as an in-network lab provider for our services.

We incur additional

costs as a result of our participation in Medicare and Medicaid programs because diagnostic testing services are subject to complex,

stringent and frequently ambiguous federal and state laws and regulations, including those relating to coverage, billing and reimbursement.

Additionally, auditing for compliance with applicable laws and regulations as well as internal compliance policies and procedures adds

further cost and complexity to the billing process.

Further, our billing systems require significant technology investment and, as a

result of marketplace demands, we need to continually invest in our billing systems.

Changes in laws and regulations could further complicate

our billing and increase our billing expense.

CMS establishes procedures and continuously evaluates and implements changes to the reimbursement

process and requirements for coverage.

an integral part of our billing compliance program, we investigate reported failures or suspected failures to comply with federal and

state healthcare reimbursement requirements.

Any Medicare or Medicaid overpayments are reimbursed by us.

As a result of these efforts,

we have periodically identified and reported overpayments, reimbursed the payers for overpayments and taken appropriate corrective action.

Historically,

due to the nature of our business, we have performed requested testing and have reported test results regardless of collectability or

form of reimbursement.

We submit claims for reimbursement on a best efforts basis including the use of a third-party revenue cycle management

If at times the billing information is incorrect or incomplete, we subsequently attempt to contact the healthcare provider or patient

to obtain any missing information and to rectify incorrect billing information.

Missing or incorrect information on requisitions complicates

and slows down the billing process and may also impact revenue recognition.

The increased use of electronic ordering reduces the incidence

of missing or incorrect information, and we are seeking to electronically integrate with more and more payers and clients.

are a number of factors that influence coverage and reimbursement for molecular diagnostic tests.

In the United States, the American

Medical Association assigns specific CPT codes, which are necessary for reimbursement of molecular diagnostic tests.

Once the CPT code

is established, CMS establishes reimbursement payment levels and coverage rules under Medicare, and private payers establish rates and

coverage rules independently.

However, the availability of a CPT code is not a guarantee of coverage or adequate reimbursement levels,

and the revenues generated from our tests will depend, in part, on the extent to which third-party payers provide coverage and establish

adequate reimbursement levels.

States and other government regulations governing coverage and reimbursement for molecular diagnostic testing may affect, directly or

indirectly, the design of our tests and the potential market for their use.

The availability of third-party reimbursement for our tests

and services may be limited or uncertain.

Third-party payers may deny coverage if they determine that the tests or service has not received

appropriate FDA or other government regulatory clearances, is not used in accordance with cost-effective treatment methods as determined

This requires us to go through their technology assessment process to

secure coverage and obtain a contract as an in-network lab provider for our services.

We incur additional costs as a result of our participation

in Medicare and Medicaid programs because diagnostic testing services are subject to complex, stringent and frequently ambiguous federal

and state laws and regulations, including those relating to coverage, billing and reimbursement.

Additionally, auditing for compliance

with applicable laws and regulations as well as internal compliance policies and procedures adds further cost and complexity to the billing

Further, our billing systems require significant technology investment and, as a result of marketplace demands, we need to continually

invest in our billing systems.

Changes in laws and regulations could further complicate our billing and increase our billing expense.

CMS establishes procedures and continuously evaluates and implements changes to the reimbursement process and requirements for coverage.

As an integral part of our

billing compliance program, we investigate reported failures or suspected failures to comply with federal and state healthcare reimbursement

requirements.

Any Medicare or Medicaid overpayments are timely reimbursed by us.

As a result of these efforts, we have periodically identified

and reported overpayments, reimbursed the payers for overpayments and taken appropriate corrective action.

Historically, due to the

nature of our business, we have performed requested testing and have reported test results regardless of collectability or form of reimbursement.

We submit claims for reimbursement on a best efforts basis including the use of a third-party revenue cycle management firm.

the billing information is incorrect or incomplete, we subsequently attempt to contact the healthcare provider or patient to obtain any

missing information and to rectify incorrect billing information.

Missing or incorrect information on requisitions complicates and slows

down the billing process and may also impact revenue recognition.

The increased use of electronic ordering reduces the incidence of missing

or incorrect information, and we are seeking to electronically integrate with more and more payers and clients.

There are a number of factors

that influence coverage and reimbursement for molecular diagnostic tests.

In the United States, the American Medical Association assigns

specific CPT codes, which are necessary for reimbursement of molecular diagnostic tests.

Once the CPT code is established, CMS establishes

reimbursement payment levels and coverage rules under Medicare, and private payers establish rates and coverage rules independently.

the availability of a CPT code is not a guarantee of coverage or adequate reimbursement levels, and the revenues generated from our tests

will depend, in part, on the extent to which third-party payers provide coverage and establish adequate reimbursement levels.

United States and other government

regulations governing coverage and reimbursement for molecular diagnostic testing may affect, directly or indirectly, the design of our

tests and the potential market for their use.

The availability of third-party reimbursement for our tests and services may be limited

or uncertain.

Third-party payers may deny coverage if they determine that the tests or service has not received appropriate Food and Drug

Administration (FDA) or other government regulatory clearances, is not used in accordance with cost-effective treatment methods as determined

by the payer, or is deemed by the third-party payer to be experimental, unnecessary or inappropriate.

Furthermore, third-party payers,

including Federal and State healthcare programs, government authorities, private managed care providers, private health insurers and

other organizations, frequently challenge the prices, medical necessity, and cost-effectiveness of healthcare products and services,

including laboratory tests.

Such payers may limit coverage of our tests to specific, limited circumstances, may not provide coverage

at all, or may not provide adequate reimbursement rates, if covered.

Further, one payer’s determination to provide coverage does

not assure that other payers will also provide coverage for the test.

Adequate third-party reimbursement may not be available to enable

us to maintain price levels sufficient to maintain our revenue and growth.

Coverage policies and third-party reimbursement rates may

change at any time.

payers, such as Medicare and Medicaid, have taken steps and are expected to continue to take steps to control the cost, utilization and

delivery of healthcare services, including clinical test services.

For example, Medicare has adopted policies under which it does not

pay for many commonly ordered clinical tests unless the ordering physician has provided an appropriate diagnosis code supporting the

medical necessity of the test.

Physicians are required by law to provide diagnostic information when they order clinical tests for Medicare

and Medicaid patients.

Medicare does not require the beneficiary to pay a co-payment for diagnostic information services reimbursed under the Clinical Laboratory

Fee Schedule.

including federal and state healthcare programs, government authorities, private managed care providers, private health insurers and other

organizations, frequently challenge the prices, medical necessity, and cost-effectiveness of healthcare products and services, including

laboratory tests.

Such payers may limit coverage of our tests to specific, limited circumstances, may not provide coverage at all, or

may not provide adequate reimbursement rates, if covered.

Further, one payer’s determination to provide coverage does not assure

that other payers will also provide coverage for the test.

Adequate third-party reimbursement may not be available to enable us to maintain

price levels sufficient to maintain our revenue and growth.

Coverage policies and third-party reimbursement rates may change at any time.

Government payers, such as

Medicare and Medicaid, have taken steps and are expected to continue to take steps to control the cost, utilization and delivery of healthcare

services, including clinical test services.

For example, Medicare has adopted policies under which it does not pay for many commonly ordered

clinical tests unless the ordering physician has provided an appropriate diagnosis code supporting the medical necessity of the test.

Physicians are required by law to provide diagnostic information when they order clinical tests for Medicare and Medicaid patients.

Currently, Medicare does

not require the beneficiary to pay a co-payment for diagnostic information services reimbursed under the Clinical Laboratory Fee Schedule.

Certain Medicaid programs require Medicaid recipients to pay co-payment amounts for diagnostic information services.

Medicare Part B program contains fee schedule payment methodologies for clinical testing services performed for covered patients.

Historically,

the Medicare Clinical Laboratory Fee Schedule, or CLFS, has been subject to local variations in pricing.

In April 2014, President Obama

signed the Protecting Access to Medicare Act of 2014, or PAMA, which included a substantial new payment system for clinical laboratory

tests under the CLFS.

The Medicare Part

B program contains fee schedule payment methodologies for clinical testing services performed for covered patients.

Historically, the

Medicare Clinical Laboratory Fee Schedule, or CLFS, has been subject to local variations in pricing.

In April 2014, President Obama signed

the Protecting Access to Medicare Act of 2014, or PAMA, which included a substantial new payment system for clinical laboratory tests

under the CLFS.

Under PAMA, CLFS rates are based upon the weighted median of private payor rates reported for each type of laboratory

4 unchanged sentences

became effective on January 1, 2018.

CMS published final rules implementing these changes in 2016 and 2018.

The result of the PAMA calculations

was an increase in our reimbursement rate for ThyGenX ® of approximately 40% for our Medicare volume.

However, on July

26, 2018, we received a coding update from CMS, which changed the billable procedure code (CPT) for ThyGeNEXT ® .

change resulted in a reduction of the fee schedule for payments to us.

We have recently presented clinical data to CMS adding additional

markers to the panel that we run that increase our gene families above 50.

If approved, reimbursement for the new panel will exceed the

previously approved rate.

There can be no assurances that our request will be successful and that the rate will be escalated.

as amended by the Protecting Medicare and American Farmers from Sequester Cuts Act, among other laws, revised payment reductions and

the data reporting schedule for approved Clinical Diagnostic Laboratory Tests (“CDLTs”) that are not ADLTs.

PAMA, as amended by the Protecting

Medicare and American Farmers from Sequester Cuts Act, among other laws, revised payment reductions and the data reporting schedule for

approved Clinical Diagnostic Laboratory Tests (“CDLTs”) that are not Advanced Diagnostic Laboratory Tests.

Under these laws,

4 unchanged sentences

Payments will not be reduced

for 2021-2024 for CDLTs.

the revised Medicare Clinical Laboratory Fee Schedule, reimbursement for clinical laboratory testing was reduced for most tests in 2018,

2019, and 2020.

PAMA (as amended) calls for further revisions of the Medicare Clinical Laboratory Fee Schedule for years after 2024,

based on surveys of market rates.

for violations of laws relating to billing government healthcare programs and for violations of federal and state fraud and abuse laws

(1) exclusion from participation in Medicare/Medicaid programs;

for 2021through 2024 for CDLTs.

Under the revised Medicare

Clinical Laboratory Fee Schedule, reimbursement for clinical laboratory testing was reduced for most tests in 2018, 2019, and 2020.

(as amended) calls for further revisions of the Medicare Clinical Laboratory Fee Schedule for years after 2024, based on surveys of market

Penalties for violations

of laws relating to billing government healthcare programs and for violations of federal and state fraud and abuse laws include:

(1) exclusion

from participation in Medicare/Medicaid programs;

(2) asset forfeitures;

(3) civil and criminal fines and penalties;

and (4) the loss of various licenses, certificates and authorizations necessary to operate our business.

Civil monetary penalties for

a wide range of violations may be assessed on a per violation basis.

A parallel civil remedy under the federal False Claims Act provides

for penalties on a per violation basis, plus damages of up to three times the amount claimed.

Historically,

most Medicare and Medicaid beneficiaries were covered under the traditional Medicare and Medicaid programs administered by the federal

Reimbursement from traditional Medicare and Medicaid programs represented approximately 51% and 45% of our consolidated net

revenues during 2023 and 2022, respectively.

Over the last several years, the federal government has continued to expand its contracts

with private health insurance plans for Medicare beneficiaries and has encouraged such beneficiaries to switch from the traditional programs

to the private programs, called “Medicare Advantage” programs.

There has been growth of health insurance providers offering

Medicare Advantage programs and of beneficiary enrollment in these programs.

Commercial health plans that might not cover one or all

of our tests for their commercially insured members are required to follow the Novitas LCD coverage policy for their Medicare Advantage

To the extent we maintain the LCD coverage policies with Novitas for our products, any shift of members from traditional Medicare

to Medicare Advantage plans doesn’t represent a risk of lost revenue.

In recent years, in an effort to control costs, states also

have mandated that Medicaid beneficiaries enroll in private managed care arrangements.

current position of our laboratory is that it does not meet the definition of an “Applicable Manufacturer” under the “Sunshine

Act” section of PPACA and therefore is not subject to the disclosure requirements contained in PPACA.

However, as new regulations

are implemented and diagnostic tests reclassified, this may change and the laboratory business may be subject to PPACA as are other companies.

There is no guarantee that our interpretation of the law is now or will be in the future consistent with government guidance and interpretation.

December 2019, our Medicare Administrative Contractor (MAC) issued a new draft local coverage determination (LCD) for our ThyGeNEXT ®

test, representing an increase of approximately $2,400 per assay over previous reimbursement coverage.

This increase in reimbursement

rates reflected the expansion of the ThyGeNEXT ® panel to aid in identifying the appropriate patients for surgery.

January 2022, the Company announced that CMS issued a new billing policy whereby CMS would no longer reimburse for the use of the Company’s

ThyGeNEXT ® and ThyraMIR ® tests when billed together by the same provider/supplier for the same beneficiary

on the same date of service.

On February 28, 2022, the Company announced that the National Correct Coding Initiative (NCCI) program issued

a response on behalf of CMS stating that the January 2022 billing policy reimbursement change for ThyGeNEXT ® (0245U) and

ThyraMIR ® (0018U) tests has been retroactively reversed to January 1, 2022.

CMS was previously reimbursing the Company

for one of its two thyroid tests, and had agreed to retroactively reimburse for the second test once they had completed their internal

administrative adjustments.

We were notified by CMS/NCCI that processing of claims for dates of service after January 1, 2022 would be

completed beginning July 1, 2022.

As of the date of this filing, the Company has no remaining outstanding collections regarding this

matter and is fully up to date with CMS.

and (4) the loss

of various licenses, certificates and authorizations necessary to operate our business.

Civil monetary penalties for a wide range of violations

may be assessed on a per violation basis.

A parallel civil remedy under the federal False Claims Act provides for penalties on a per violation

basis, plus damages of up to three times the amount claimed.

Historically, most Medicare

and Medicaid beneficiaries were covered under the traditional Medicare and Medicaid programs administered by the federal government.

Reimbursement

from traditional Medicare and Medicaid programs represented approximately 53% and 51% of our consolidated net revenues during 2024 and

2023, respectively.

Over the last several years, the federal government has continued to expand its contracts with private health insurance

plans for Medicare beneficiaries and has encouraged such beneficiaries to switch from the traditional Medicare fee-for-service programs

to the private health insurance plans, called “Medicare Advantage” plans.

There has been growth of health insurance payors

offering Medicare Advantage plans and of beneficiary enrollment in these plans.

Commercial health plans that

might not cover one or all of our tests for their commercially insured members are required to follow the Novitas LCD coverage policy

for their Medicare Advantage members.

To the extent we maintain the LCD coverage policies with Novitas for our products, any shift of

members from traditional Medicare to Medicare Advantage plans does not represent a risk of lost revenue.

In recent years, in an effort

to control costs, states also have mandated that Medicaid beneficiaries enroll in private managed care arrangements.

The current position of our

laboratory is that it does not meet the definition of an “Applicable Manufacturer” under the “Sunshine Act” section

of PPACA and therefore is not subject to the disclosure requirements contained in PPACA.

However, as new regulations are implemented and

diagnostic tests reclassified, this may change and the laboratory business may be subject to PPACA.

There is no guarantee that our interpretation

of the law is now or will be in the future consistent with government guidance and interpretation.

In December 2019, our Medicare

Administrative Contractor (MAC) issued a new draft local coverage determination (LCD) for our ThyGeNEXT ® test, representing

an increase of approximately $2,400 per assay over previous reimbursement coverage.

This increase in reimbursement rates reflected the

expansion of the ThyGeNEXT ® panel to aid in identifying the appropriate patients for surgery.

In January 2022, the Company

announced that CMS issued a new billing policy whereby CMS would no longer reimburse for the use of the Company’s ThyGeNEXT ®

and ThyraMIR ® tests when billed together by the same provider/supplier for the same beneficiary on the same date

On February 28, 2022, the Company announced that the National Correct Coding Initiative (NCCI) program issued a response on

behalf of CMS stating that the January 2022 billing policy reimbursement change for ThyGeNEXT ® (0245U) and ThyraMIR ®

(0018U) tests has been retroactively reversed to January 1, 2022.

CMS was previously reimbursing the Company for one of its two

thyroid tests, and had agreed to retroactively reimburse for the second test once they had completed their internal administrative adjustments.

We were notified by CMS/NCCI that processing of claims for dates of service after January 1, 2022 would be completed beginning July 1,

As of the date of this filing, the Company has no remaining outstanding collections regarding this matter and is fully up to date

Effective January 1, 2023, the gapfill price for ThyGeNEXT ® was set at $1,266.07.

along with many laboratories, we may be affected by the Proposed LCD DL39365, which is currently under consideration by Novitas.

If finalized,

this Proposed LCD, which governs “Genetic Testing for Oncology,” could impact the existing Medicare coverage for one of our

molecular tests, PancraGEN ® .

On June 5, 2023 we announced that Novitas issued the final LCD of Genetic Testing for Oncology

(L39365) which if implemented, would have established non-coverage for the Company’s widely used PancraGEN ® test

effective July 17, 2023.

On July 6, 2023, Novitas announced that it would not be implementing the final Genetic Testing for Oncology

LCD (L39365) as scheduled on July 17, 2023.

Novitas then issued a new, virtually identical proposed LCD affecting the same companies

and tests and reaching the same conclusions as noted in the previously rescinded LCD on July 27, 2023.

In response, we participated in

a public meeting presentation and submitted detailed written comments supporting the use of PancraGEN ® .

The timing and

content of any final, implemented LCD is uncertain at this time;

the process could potentially take a year or longer from issuance the

updated proposed LCD to reach a conclusion.

As a result, we are able to continue offering PancraGEN ® and the related Point2 ®

fluid chemistry tests for amylase, CEA, and glucose.

Novitas LCD for PancraGEN

On June 5, 2023 we announced

that Novitas issued the final LCD of Genetic Testing for Oncology (L39365) which, if implemented, would have established non-coverage

for the Company’s widely used PancraGEN ® test effective July 17, 2023.

On July 6, 2023, Novitas announced that it

would not be implementing the final Genetic Testing for Oncology LCD (L39365) as scheduled on July 17, 2023.

Novitas then issued a new,

virtually identical proposed LCD affecting the same companies and tests and reaching the same conclusions as noted in the previously rescinded

LCD on July 27, 2023.

In response, we participated in a public meeting presentation and submitted detailed written comments supporting

the use of PancraGEN ® .

The timing and content of any final, implemented LCD was uncertain at that time.

As a result, we

are able to continue offering PancraGEN ® and the related Point2 ® fluid chemistry tests for amylase, CEA,

and glucose throughout 2024.

On January 9, 2025, the Company announced the new LCD established non-coverage for its PancraGEN ®

test, and it would stop offering the test and would not accept specimens for first-line fluid chemistry and PancraGEN ® testing

after February 7 th , 2025.

On January 27, 2025, the Company announced that CMS had directed its MACs, Novitas and First Coast

Service Options, Inc., to delay implementation of the Genetic Testing for Oncology LCD (L39365), from February 23, 2025 until April 24,

The Company stated that this change of effective date will allow the Trump Administration time to fully review the proposed policy

changes, re-evaluate for themselves the supporting clinical evidence for the PancraGEN ® assay, and fully assess the negative

impact on patient care if the currently proposed LCD comes into effect.

In the event Novitas ultimately restricts coverage for the PancraGEN ®

test, our liquidity could be negatively impacted.

operate under one segment which is the business of developing and selling diagnostic clinical services.

of February 29, 2024, we had 108 full time employees and 108 total employees.

We are not party to a collective bargaining agreement with

any labor union.

were originally incorporated in New Jersey in 1986 and began commercial operations as PDI, Inc., a contract sales organization or CSO

In connection with PDI, Inc.’s initial public offering, it reincorporated in Delaware in 1998.

In 2015 the CSO business

and assets were sold, and we operated our molecular diagnostics business as Interpace Diagnostics Group, Inc.

We conduct our

business through our wholly-owned subsidiaries, Interpace Diagnostics, LLC, which was formed in Delaware in 2013 and Interpace Diagnostics

Corporation (formerly known as RedPath Integrated Pathology, Inc.), which was formed in Delaware in 2007, On November 12, 2019, we changed

the name of Interpace Diagnostics Group, Inc.

Reporting Segments

We operate under one segment

which is the business of developing and selling diagnostic clinical services.

As of March 21, 2025, we

had 111 full time employees and 111 total employees.

We are not party to a collective bargaining agreement with any labor union.

Corporate Information

We were originally incorporated

in New Jersey in 1986 and began commercial operations as PDI, Inc., a contract sales organization or CSO in 1987.

In connection with PDI,

Inc.’s initial public offering, it reincorporated in Delaware in 1998.

In 2015 the CSO business and assets were sold, and we operated

our molecular diagnostics business as Interpace Diagnostics Group, Inc.

We conduct our business through our wholly-owned subsidiaries,

Interpace Diagnostics, LLC, which was formed in Delaware in 2013 and Interpace Diagnostics Corporation (formerly known as RedPath Integrated

Pathology, Inc.), which was formed in Delaware in 2007, On November 12, 2019, we changed the name of Interpace Diagnostics Group, Inc.

to Interpace Biosciences, Inc.

Our executive offices are located at Waterview Plaza, Suite

310, 2001 Route 46, Parsippany, New Jersey 07054.

Our executive offices are located at Waterview Plaza, Suite 310, 2001 Route 46, Parsippany, New Jersey

Our telephone number is (855) 776-6419.

B Preferred Stock Investment by 1315 Capital and Ampersand

January 10, 2020, we entered into a Securities Purchase and Exchange Agreement (the “Securities Purchase and Exchange Agreement”)

with 1315 Capital II, L.P., a Delaware limited partnership (“1315 Capital”), and Ampersand (together with 1315 Capital, the

“Investors”) pursuant to which we sold to the Investors, in a private placement pursuant to Regulation D and Section 4(a)(2)

under the Securities Act, an aggregate of $20,000,000 in Series B Preferred Stock, at an issuance price per share of $1,000.

to the Securities Purchase and Exchange Agreement, 1315 Capital purchased 19,000 shares of Series B Preferred Stock at an aggregate purchase

price of $19,000,000 and Ampersand purchased 1,000 shares of Series B Preferred Stock at an aggregate purchase price of $1,000,000.

addition, we exchanged $27,000,000 of the Company’s existing Series A Preferred Stock held by Ampersand, represented by 270 shares

of Series A Preferred Stock, which represented all of the Company’s issued and outstanding Series A Preferred Stock, for 27,000

newly created shares of Series B Preferred Stock (such shares of Series B Preferred Stock, the “Exchange Shares” and such

transaction, the “Exchange”).

Following the Exchange, no shares of Series A Preferred Stock remain designated, authorized,

issued or outstanding.

Under the terms of the Securities Purchase and Exchange Agreement, Ampersand also agreed to waive all dividends

and weighted-average anti-dilution adjustments accrued to date on the Series A Preferred Stock.

so long as each of Ampersand and 1315 Capital holds at least sixty percent (60%) of the Series B Preferred Stock issued to it on January

15, 2020, such Investor will be entitled to elect two directors to the Board, provided that one of the directors qualifies as an “independent

director” under Rule 5605(a)(2) of the listing rules of the Nasdaq Stock Market (or any successor rule or similar rule promulgated

by another exchange on which the Company’s securities are then listed or designated) (“Independent Director”).

if at any time such Investor holds less than sixty percent (60%), but at least forty percent (40%), of the Series B Preferred Stock issued

to them on January 15, 2020, such Investor would only be entitled to elect one director to the Board.

Any director elected pursuant to

the terms of the Certificate of Designation may be removed without cause by, and only by, the affirmative vote of the holders of Series

B Preferred Stock.

A vacancy in any directorship filled by the holders of Series B Preferred Stock may be filled only by vote or written

consent in lieu of a meeting of such holders of Series B Preferred Stock or by any remaining director or directors elected by such holders

of Series B Preferred Stock.

As previously disclosed in Current Reports on Form 8-K filed with the SEC on November 16, 2023 and December

12, 2023, Edward Chan, a director designated by 1315 Capital, and Robert Gorman, a director designated by Ampersand, resigned from the

Board on November 15, 2023 and December 7, 2023, respectively.

Following these resignations, 1315 Capital and Ampersand have two designated

directors out of the five directors currently serving on the Board.

Certificate of Designation of Preferences, Rights and Limitations of Series B Convertible Preferred Stock (the “Certificate of

Designation”) provides that each share of Series B Preferred Stock is convertible, at any time and from time to time, at the option

of the holder into a number of shares of our common stock equal to dividing the amount equal to the greater of the stated value of $1,000

of such Series B Preferred Stock, plus any dividends declared but unpaid thereon, or such amount per share as would have been payable

had each such share been converted into our common stock immediately prior to a liquidation, by six dollars ($6.00) (subject to adjustment

in the event of any stock dividend, stock split, combination, or other similar recapitalization affecting such shares).

The aggregate

number of shares of our common stock that may be issued through conversion of the currently outstanding Series B Preferred Stock is 7,833,334

shares (subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization

affecting such shares).

On any matter presented to our stockholders for their action or consideration at any meeting of stockholders

of the Company (or by written consent of stockholders in lieu of meeting), each holder of outstanding shares of Series B Preferred Stock

will be entitled to cast the number of votes equal to the number of whole shares of our common stock into which the shares of Series

B Preferred Stock held by such holder are convertible as of the record date for determining stockholders entitled to vote on such matter.

Except as provided by law or by the Certificate of Designation, holders of Series B Preferred Stock will vote together with the holders

of common stock as a single class and on an as-converted to common stock basis.

Series B Preferred Stock entitles the holders thereof to certain protective provisions.

In particular, for so long as any shares of Series

B Preferred Stock are outstanding, the written consent of the holders of at least seventy five percent (75%) of the then outstanding

shares of Series B Preferred Stock (voting as a single class) is required for us to amend, waive, alter or repeal the preferences, rights,

privileges or powers of the holders of the Series B Preferred Stock, amend, alter or repeal any provision of the Certificate of Designation

in a manner adverse to the holders of the Series B Preferred Stock, authorize, create or issue any equity securities senior to or pari

passu with the Series B Preferred Stock, or increase or decrease the number of directors constituting the Board.

Moreover, for so long

as thirty percent (30%) of the Series B Preferred Stock outstanding as of January 15, 2020 remains outstanding (subject to appropriate

adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization affecting such shares, including

the Reverse Stock Split effected in January 2020), the written consent of the holders representing at least seventy-five percent (75%)

of the of the outstanding shares of Series B Preferred Stock (voting as a single class) is required for us to:

(A) authorize, create

or issue any debt securities for borrowed money or funded debt (1) pursuant to which we issue shares, warrants or any other convertible

security, or (2) in excess of $4,500,000 initially, with such amount to be increased in connection with an aggregate consolidated revenue

milestone, but excluding certain specified permitted transactions;

(B) merge with or acquire all or substantially all of the assets of

one or more other companies or entities with a value in excess of $20,000,000, to be increased in connection with an aggregate consolidated

revenue milestone;

(D) consummate any Liquidation (as defined in the Certificate of Designation);

(E) transfer material intellectual property rights other than in the ordinary course of business;

(F) declare or pay any cash dividend

or make any cash distribution on any of our equity interests other than the Series B Preferred Stock;

(G) repurchase or redeem any shares

of our capital stock, except for the redemption of the Series B Preferred Stock pursuant to the terms of the Certificate of Designation,

or repurchases of our common stock under agreements previously approved by the Board with employees, consultants, advisors or others

who performed services for us in connection with the cessation of such employment or service;

(H) incur any additional individual debt,

indebtedness for borrowed money or other additional liabilities pursuant to we issue shares, warrants or any other convertible security,

or incur any individual debt, indebtedness for borrowed money or other liabilities pursuant to which we do not issue shares, warrants

or any other convertible security exceeding, in each case, $4,500,000 initially, with such amount to be increased in connection with

an aggregate consolidated revenue milestone, but excluding certain specified permitted transactions;

(I) change any of our accounting

methods, except for those changes required by GAAP or applicable regulatory agencies or authorities;

or (J) conduct a public offering

of common stock registered with the SEC, including any at-the-market offering of our common stock.

holders of our Series B Preferred Stock have preferential rights with respect to distributions upon a liquidation or sale of the Company,

including certain business combinations or sales of assets deemed to be a liquidation.

Accordingly, no distributions upon liquidation

may be made to the holders of common stock until the holders of the Series B Preferred Stock have been paid their liquidation preference.

As a result, it is possible that, on a liquidation event (including a sale of the Company) and depending on the price thereof, all amounts

available for the holders of equity of the Company would be paid to the holders of Series B Preferred Stock, and that the holders of

common stock would not receive any payment.

Upon any voluntary or involuntary liquidation, dissolution or winding up of the Company or

Deemed Liquidation (as defined in the Certificate of Designation) (a “Liquidation”), the holders of shares of Series B Preferred

Stock then outstanding will be entitled to be paid out of the assets of the Company available for distribution to its stockholders (on

a pari passu basis with the holders of any class or series of preferred stock ranking on liquidation on a parity with the Series B Preferred

Stock), and before any payment will be made to the holders of common stock or any other class or series of preferred stock ranking on

liquidation junior to the Series B Preferred Stock by reason of their ownership thereof, an amount per share of Series B Preferred Stock

equal to the greater of (i) the Stated Value of such share of Series B Preferred Stock, plus any dividends declared but unpaid thereon,

or (ii) such amount per share as would have been payable had each such share been converted into common stock immediately prior to such

April 2020, the Company applied for various federal stimulus loans, grants and advances made available under Title 1 of the Coronavirus

Aid, Relief, and Economic Security (CARES) Act, including a loan request under the Small Business Administration (SBA) Paycheck Protection

Program (PPP).

In connection with the Company’s application for the PPP loan, both Ampersand and 1315 Capital consented to, and

agreed to vote their shares of Series B Preferred Stock in favor of any “Fundamental Action” taken by the Company as determined

by the Company’s Board of Directors.

“Fundamental Actions” include the Company’s ability to a) authorize, create

or issue any debt securities for borrowed money or funded debt;

b) merge with or acquire all or substantially all of the assets of one

or more other companies or entities with a value in excess of $20 million;

c) transfer, by sale, exclusive license or otherwise, material

intellectual property rights of the Company or any of its direct or indirect subsidiaries, other than those accomplished in the ordinary

course of business;

d) declare or pay any cash dividend or make any cash distribution on any equity interests of the Company other than

the Series B Shares;

e) incur any additional individual debt, indebtedness for borrowed money or other additional liabilities;

change any accounting methods or practices of the Company, except for those changes required by GAAP or applicable regulatory agencies

or authorities.

Subsequently, the Company and Ampersand agreed that Ampersand no longer was required to vote its shares of Series B Preferred

Stock in favor of any “Fundamental Action” taken by the Company as determined by the Company’s Board of Directors.

maintain an internet website at www.interpace.com.

Our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on

Form 8-K, and amendments to those reports are available free of charge through the “Investor Relations” portion of our website,

as soon as reasonably practicable after they are filed with the SEC.

The content contained in, or that can be accessed through, our website

is not incorporated into this Form 10-K.

Business Development

Series C Preferred Stock Investment by 1315

Capital and Ampersand

October 10, 2024, the Company, Ampersand 2018 Limited Partnership (“Ampersand”) and 1315 Capital II, L.P.

(“1315 Capital

and, together with Ampersand, the “Investors”) entered into an Exchange Agreement (the “Exchange Agreement”) pursuant

to which the Company exchanged (the “Exchange”) an aggregate of 47,000 shares of the Company’s existing Series B convertible

preferred stock of the Company, par value $0.01 per share (the “Series B Preferred Stock”), comprised of 28,000 shares of

Series B Preferred Stock held by Ampersand and 19,000 shares of Series B Preferred Stock held by 1315 Capital, which represented all of

the Company’s issued and outstanding Series B Preferred Stock, for 47,000 newly created shares of Series C Preferred Stock, par

value $0.01 per share (the “Series C Preferred Stock”), at an issuance price per share of $1,000 (the “Stated Value”).

In the Exchange, Ampersand received 28,000 shares of Series C Preferred Stock and 1315 received 19,000 shares of Series C Preferred Stock.

Series C Preferred Stock is convertible into the Company’s common stock, par value $0.01 per share (the “Common Stock”)

at a conversion price of $2.02 per share of Common Stock (subject to further adjustment in the event of any stock dividend, stock split,

combination, or other similar recapitalization affecting such shares) (the “Series C Conversion Price”) which was the closing

price of the Common Stock on the date of the Exchange Agreement.

The Series C Preferred Stock does not have a liquidation preference over

the Common Stock in the event of a sale or dissolution of the Company, does not have director designation rights and includes limited

customary protective provisions.

The Series B Preferred Stock had a conversion price of $6.00 per share of Common Stock and included additional

protective provisions not applicable to the Series C Preferred Stock, including (i) limitations on the Board of Directors of the Company

(the “Board”) to declare dividends, (ii) director designation rights for each of the Investors, (iii) liquidation rights of

holders upon “deemed liquidation” events, including a liquidation preference over the Common Stock, (iv) limitations on the

ability to authorize, issue or create debt securities, (v) limitations on the ability to enter into mergers or acquisitions and (vi) limitations

on the ability to conduct public offerings of the Company’s Common Stock.

closing of the transactions contemplated by the Exchange Agreement occurred on October 11, 2024 following the satisfaction of customary

conditions set forth in the Exchange Agreement and did not result in the receipt of any cash proceeds by the Company.

Certificate of Designation

of Series C Convertible Preferred Stock

connection with the Exchange, on October 11, 2024, the Company filed a Certificate of Designation of Preferences, Rights and Limitations

of Series C Convertible Preferred Stock (the “Certificate of Designation”), with the Secretary of State of the State of Delaware.

Each capitalized term used herein and not otherwise defined shall have the meaning ascribed to it in the Certificate of Designation.

any matter presented to the stockholders of the Company for their action or consideration at any meeting of stockholders of the Company

(or by written consent of stockholders in lieu of meeting), each holder of outstanding shares of Series C Preferred Stock will be entitled

to cast the number of votes equal to the number of whole shares of Common Stock, into which the shares of Series C Preferred Stock held

by such holder are convertible as of the record date for determining stockholders entitled to vote on such matter.

Except as provided

by law or by the Certificate of Designation, holders of Series C Preferred Stock will vote together with the holders of Common Stock as

a single class and on an as-converted to Common Stock basis.

Certificate of Designation provides that from and after the Issuance Date and subject to the terms of the Certificate of Designation,

each share of Series C Preferred Stock is convertible, at any time and from time to time, at the option of the holder into a number of

shares of Common Stock equal to the product of the Series C Conversion Ratio (the “ Series C Conversion Ratio ”) and

the number of shares of Series C Preferred Stock to be converted.

The Series C Conversion Ratio is calculated by dividing the Stated Value

per share of Series C Preferred Stock by the Series C Conversion Price.

The Series C Conversion Ratio is subject to adjustment in the

event of any stock dividend, stock split, combination, or other similar recapitalization which results in the adjustment of the Series

C Conversion Price.

aggregate number of shares of Common Stock that may be issued through conversion of all of the Exchange Shares is 23,267,326 shares (subject

to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization affecting such

Mandatory Conversion

prior to the Company’s listing of Common Stock on The Nasdaq Stock Market, all outstanding shares of Series C Preferred Stock shall

automatically convert into a number of shares of Common Stock equal to the product of the Series C Conversion Ratio and the number of

shares of Series C Preferred Stock owned by each holder.

Certificate of Designation does not provide for mandatory dividends on the Series C Preferred Stock.

Dividends may be declared and paid

on the Series C Preferred Stock from funds lawfully available and as determined by the Board.

Protective Provisions

so long as any shares of Series C Preferred Stock are outstanding, the written consent of each holder of the then outstanding shares of

Series C Preferred Stock is required for the Company or its subsidiaries to (i) amend, waive, alter or repeal the preferences, rights,

privileges or powers of the holders of the Series C Preferred Stock, (ii) amend, alter or repeal any provision of the Certificate of Designation

in a manner adverse to the holders of the Series C Preferred Stock or (iii) authorize, create or issue any equity securities senior to

or pari passu with the Series C Preferred Stock.

any voluntary or involuntary liquidation, dissolution or winding up of the Company, the holders of shares of Series C Preferred Stock

then outstanding will be entitled to be paid out of the assets of the Corporation available for distribution to its stockholders on a

pari passu basis with the holders of the Common Stock of the Company.

Amended and Restated

Investor Rights Agreement

connection with the Exchange, on October 10, 2024, the Company and the Investors entered into an amended and restated investor rights

agreement (the “Amended and Restated Investor Rights Agreement”), which amended and restated that certain Amended and Restated

Investor Rights Agreement, dated as of January 15, 2020, among the Company and the Investors (the “Prior Investor Rights Agreement”).

Pursuant to the Amended and Restated Investor Rights Agreement, the Company and the Investors established certain terms and conditions

concerning the rights of and restrictions on the Investors with respect to the ownership of the Series C Preferred Stock of the Company.

Amended and Restated Investor Rights Agreement provides the Investors with (1) demand registration rights exercisable beginning on the

date of the Closing and subject to certain limitations described therein, (2) piggy-back registration rights at any time the Company proposes

to file a registration statement under the Securities Act, with respect to an offering of equity securities, or securities or other obligations

exercisable or exchangeable for, or convertible into, equity securities, subject to certain exceptions described therein, and (3) shelf

registration rights.

Available Information

We maintain an internet website

at www.interpace.com.

Our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those

reports are available free of charge through the “Investor Relations” portion of our website, as soon as reasonably practicable

after they are filed with the SEC.

The content contained in, or that can be accessed through, our website is not incorporated into this

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

What changed 10-K

Item 1. Business