What changed in this filing

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Item 1A. Risk Factors

2026-02-24 compared with 2025-02-28 · 190 added, 152 removed, 696 unchanged (33% of the section changed)

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• We may not be able to generate sufficient revenue from our existing tests or develop new tests to be profitable.

• Our strategic growth plan may not achieve the anticipated results, and we may not be able to achieve or maintain revenue growth or operate our business on a profitable basis.

• Our strategic plan may not achieve the anticipated results, and we may not be able to achieve or maintain revenue growth or operate our business on a profitable basis.

• If the government and other third-party payors fail to provide coverage and adequate payment for our existing and future tests, if any, our revenue and prospects for profitability will be harmed.

• If we do not generate sufficient cash flow from operations and are unable to secure additional funding, we may have to reduce our operations.

• If we do not generate sufficient cash flow from operations and are unable to secure additional funding, we may have to reduce the scale of our operations.

• We are subject to debt covenants that impose operating and financial restrictions on us and if we are not able to comply with them, it could have a material adverse impact on our operations and liquidity.

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• We have acquired and we may continue to acquire technologies, assets or other businesses that could cause us to incur significant expense and expose us to a number of unanticipated operational and financial risks, which could adversely affect our financial condition, results of operations and business prospects.

• We may sell or discontinue certain existing products or services, which may adversely impact our business, results of operations, and financial condition.

• Failure to comply with laws and regulations related to submission of claims for our services could result in significant monetary damages and penalties and exclusion from the Medicare and Medicaid programs and corresponding foreign reimbursement programs.

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• Our international business exposes us to business, regulatory, political, operational, financial, and economic risks associated with doing business outside of the United States.

• International trade disputes, including United States trade tariffs and retaliatory tariffs, could adversely impact our business.

• Ethical, legal and social concerns related to the use of genetic information could reduce demand for our tests.

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• We may from time to time be subject to government investigation(s), the unfavorable outcome of which may have a material adverse effect on our financial condition, results of operations and cash flows.

• Changes in health care policy could increase our costs, decrease our revenue and impact sales of and reimbursement for our tests.

• Our business could be harmed by the loss, suspension, or other restriction on a license, certification, or accreditation, or by the imposition of a fine or penalties, under CLIA, its implementing regulations, or other state, federal and foreign laws and regulations affecting licensure or certification, or by future changes in these laws or regulations.

• Planned changes in the way the FDA regulates tests performed by laboratories like ours will result in delay and/or additional expense in offering our tests and tests that we may develop in the future.

• Changes in health care policy could increase our costs and impact sales of and reimbursement for our tests.

• Our business could be harmed by the loss, suspension, or other restriction of a license, certification, or accreditation, or by the imposition of a fine or penalties, under CLIA, its implementing regulations, or other state, federal and foreign laws and regulations affecting licensure or certification, or by future changes in these laws or regulations.

• Planned or potential changes in the way the FDA regulates tests performed by laboratories like ours could result in delay and/or additional expense in offering our tests and tests that we may develop in the future.

• FDA regulation of our GeneSight Psychotropic test could be disruptive to our business.

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• Anti-takeover provisions of Delaware law, provisions in our charter and bylaws and re-adoption of our stockholders’ rights plan, or poison pill, could make a third-party acquisition of us difficult.

• Shareholder activism can have a significant impact on our operations, strategy, and overall performance.

• Future sales and issuances of our common stock would result in dilution of the percentage ownership of our stockholders and could cause the price of our common stock to decline.

• We do not intend to pay dividends so any returns will be limited to changes in the value of our common stock.

• If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, our stock price and trading volume could decline.

• Increasing scrutiny and evolving expectations from regulators, business partners, investors, and other stakeholders with respect to our environmental, social, and governance practices may impose additional costs on us or expose us to new or additional risks.

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The demand for our existing tests may decrease or may not continue to increase at historical rates due to sales of new tests that may replace or cannibalize our existing product portfolio, or for other reasons such as the introduction of competing testing products by competitors.

For example, because most of our tests are only utilized once per patient, we will need to sell our products to new patients or develop new tests in order to continue to generate revenue.

For example, because most of our tests are only utilized once per patient, we will need to sell our products to new patients or develop new tests to continue to generate revenue.

Our average reimbursement rate per test may also decline, which may cause our revenue to decrease.

Our pipeline of new test candidates, such as FirstGene, Precise Liquid, and Precise MRD, are in various stages of development, some of which may take many more years to develop and must undergo extensive clinical validation.

Our pipeline of new test candidates, such as FirstGene, Prolaris with PathomIQ AI, and Precise MRD, are in various stages of development, some of which may take many more years to develop and must undergo extensive clinical validation.

We may be unable to discover or develop any additional tests through the utilization of our technologies or technologies we license or acquire from others.

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Even if we succeed in marketing our existing tests to physicians for use in new patients and in developing and commercializing any new tests, we may not be able to generate sufficient revenue to be profitable.

Our strategic growth plan may not achieve the anticipated results, and we may not be able to achieve or maintain revenue growth or operate our business on a profitable basis.

We are currently executing upon a multi-year strategic growth plan in which we intend to continue growing by accelerating our EMR integrations, expanding our sales channels, including into large health systems, cross selling our portfolio of testing products to providers, enhancing our testing products within medical guidelines, demonstrating our clinical differentiation and value against the standard of care, and optimizing our revenue cycle processes.

For example, in June 2024, we launched the Universal Plus Panel to our Foresight Carrier Screen Test, which is an expanded carrier screening test.

We also continue to invest in clinical evidence development to support the growth of our existing products and launch of new products, such as FirstGene, Precise Liquid, and Precise MRD, which we expect will help us continue to grow.

Our future performance and growth depend on the success of our growth plan, including management's ability to execute upon that plan and the ability of our employees to respond quickly and effectively to strategic projects and changes in our operations and business practices.

The implementation of our strategic growth plan has resulted, and is expected to continue to result, in changes to business priorities and operations, capital allocation priorities, operational and organizational structures, and increased demands on management.

The execution of our strategic growth plan may take longer than anticipated, and we may not realize, in full or part, our anticipated growth targets in our testing volumes and revenue, or such growth may be realized more slowly than anticipated.

Our strategic plan may not achieve the anticipated results, and we may not be able to achieve or maintain revenue growth or operate our business on a profitable basis.

Our current strategic plan is focused on three pillars.

First, we plan to drive accelerated growth and profitability by focusing on the Cancer Care Continuum, or CCC, market.

We plan to do so by increasing investment in research and development and enhancing our commercial capabilities and customer digital experience to better serve the CCC market.

We also plan to leverage strategic partnerships and biopharma services to unlock new growth drivers and expand our portfolio of testing solutions to other high-growth cancer segments such as molecular residual disease.

Second, we aim to grow our Prenatal Health and Mental Health revenues at or above market growth by leveraging our expanded prenatal offerings, including FirstGene Multiple Prenatal Screen, to drive increased volume and by focusing on high value GeneSight accounts and leveraging state biomarker laws to improve our reimbursement rates.

Third, we plan to complement the revenue growth drivers outlined above with an enhanced focus and commitment to delivering sustained, profitable growth.

Our future performance and growth depend on the success of our strategic plan, including management's ability to execute upon that plan and the ability of our employees to respond quickly and effectively to strategic projects and changes in our operations and business practices.

The implementation of our strategic plan has resulted, and is expected to continue to result, in changes to business priorities and operations, capital allocation priorities, operational and organizational structures, and increased demands on management.

The execution of our strategic plan may take longer than anticipated, and we may not realize, in full or part, our anticipated growth targets in our testing volumes and revenue, or such growth may be realized more slowly than anticipated.

In recent years we have not operated our business profitably, and we may not be able to achieve or maintain profitability in the future.

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• the efforts of third-party payors to limit or decrease the amounts that they are willing to pay for our tests, recoup amounts already paid, not cover our tests, or institute burdensome administrative requirements for reimbursement, such as prior authorization requirements;

• our ability to execute on our strategic growth plan;

• our ability to execute on our strategic plan;

• increased costs of reagents and other consumables required for testing;

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• material litigation costs, settlements, and judgments;

• changes in federal and state legislation that could increase the number of uninsured and under-insured individuals;

• our increased investment in research and development, including the possibility that new products may fail to achieve clinical validation, regulatory clearance, or market acceptance;

• our inability to successfully execute our plan to leverage strategic collaborations and biopharma partnerships, which arrangements may not be available on acceptable terms, or at all, delayed, modified, or terminated, any of which could potentially affect our ability to launch or commercialize new testing solutions.

The failure to achieve our growth targets and achieve and/or maintain revenue growth and profitability for our business could have a material adverse effect on our business, prospects, financial condition, results of operations, cash flows, as well as the trading price of our common stock.

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We have experienced coverage limitations and price reductions for many of our products, including for our GeneSight Psychotropic Mental Health Medication Test, and we may continue to experience future coverage limitations and price reductions from CMS, managed care organizations, and other third-party payors.

We do not receive reimbursement from third-party payers or payment from patients for many of the tests we perform.

We do not receive reimbursement from third-party payors or payment from patients for many of the tests we perform.

The fact that a test has been approved for reimbursement in the past, for any particular indication or in any particular jurisdiction, does not guarantee that such a test will be approved or remain approved for reimbursement, that the reimbursement amount approved for such test will not be reduced in the future, or that similar or additional tests will be approved for reimbursement in the future.

For example, UnitedHealthcare updated its medical policy for pharmacogenetic testing to no longer provide coverage for certain multi-gene panel pharmacogenetic tests, including our GeneSight test, under its commercial and individual exchange benefit plans and certain managed Medicaid plans.

The change took effect for commercial and individual exchange benefit plans on January 1, 2025, and is expected to take effect for impacted managed Medicaid plans during the first half of 2025.

For the year ended December 31, 2024, we recognized approximately $45.0 million of revenue for GeneSight testing from UnitedHealthcare, consisting of approximately $40.0 million for UnitedHealthcare commercial and approximately $5.0 million for impacted UnitedHealthcare managed Medicaid plans.

We anticipate that the change in UnitedHealthcare coverage will negatively impact our revenue, profitability and cash flow in 2025 and thereafter.

While we intend to continue our engagement with UnitedHealthcare regarding its decision to change its GeneSight coverage policy, there is no guarantee that our efforts will be successful or that our GeneSight test will be covered by UnitedHealthcare in the future.

If unchanged, UnitedHealthcare's updated medical policies will prevent us from sustaining previous GeneSight revenue or profitability levels and may materially and adversely affect our business and financial results as a whole and could lead to coverage changes in other UnitedHealthcare plans and at other payors.

For example, in 2024, UnitedHealthcare updated its medical policy for pharmacogenetic testing to no longer provide coverage for certain multi-gene panel pharmacogenetic tests, including our GeneSight test, under its commercial, individual exchange and certain managed Medicaid plans.

The change in UnitedHealthcare coverage negatively impacted our revenue, profitability, and cash flow in 2025 and we expect that these negative impacts may continue in 2026 and thereafter.

We have undertaken, and intend to continue to undertake, certain engagement efforts with certain payors regarding their coverage policy for GeneSight.

There is no guarantee, however, that our efforts will be successful or that our GeneSight test will be covered by UnitedHealthcare or other payors in the future.

In addition, the lack of reimbursement for our GeneSight test may discourage providers from ordering it for their patients.

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Since December 2019, Congress has passed a series of laws to modify PAMA’s statutory requirements related to the data reporting period and phase-in of payment reductions under the CLFS for CDLTs that are not ADLTs.

Most recently, the Further Continuing Appropriations and Extensions Act, 2025 (Pub.L.

118-83, enacted on September 26, 2024) further delayed the reporting requirement as well as the application of the 15% phase-in reduction.

Under these statutory provisions, the next data reporting period for CDLTs that are not ADLTs will be January 1, 2026 through March 31, 2026.

The same series of laws modified the phase-in of payment reductions resulting from private payor rate implementation so that a 0.0 percent reduction limit was applied for calendar years 2021 through 2024.

The Further Continuing Appropriations and Extensions Act, 2025 further applied a 0.0 percent reduction limit for calendar year 2025.

Consequently, payment may not be reduced by more than 15 percent per year for calendar years 2026 through 2028 as compared to payment amount established for a test the prior year.

Most recently, on February 3, 2026, Section 6226 of the Continuing Appropriations Act, 2026 further delayed the reporting requirement as well as the application of the 15% phase-in reduction.

The next data reporting period for CDLTs that are not ADLTs will be May 1, 2026 through July 31, 2026, and the reporting will be based on an updated data collection period of January 1, 2025 through June 30, 2025.

The same series of laws modified the phase-in of payment reductions resulting from private payor rate implementation.

A 0% reduction limit will be applied until January 30, 2027.

Consequently, payment may not be reduced by more than 15 percent per year for January 31, 2027 through December 31, 2028, as compared to the payment amount established for a test the prior year.

While legislation is currently pending in Congress that would, among other things, lead to permanent PAMA reform, we cannot predict whether or when reform will be implemented.

Any declines in average selling prices of our products due to pricing pressures may have an adverse impact on our business, results of operations, and financial condition.

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Cost control initiatives could decrease the price that we would receive for any tests in the future, which would limit our revenue and profitability.

If we do not generate sufficient cash flow from operations and are unable to secure additional funding, we may have to reduce our operations.

While we believe that our existing cash and cash equivalents, future cash flow from operations, and amounts available for borrowing under our ABL Facility (as defined below) will be sufficient to meet our anticipated cash requirements for at least the next 12 months, changes could occur that would consume available capital resources more quickly than we currently expect and we may need or want to raise additional financing.

On June 30, 2023, we entered into an asset-based revolving credit facility (the ABL Facility) with an initial maximum principal amount of $90.0 million with JPMorgan Chase Bank, N.A.

as administrative agent and issuing bank, and the other lender parties thereto.

On October 31, 2023, we entered into an amendment to the ABL Facility to increase the maximum principal amount of the available revolving line of credit under the ABL Facility by $25.0 million for a total maximum principal commitment under the ABL Facility of $115.0 million.

As of December 31, 2024, we had $40.5 million of outstanding borrowings under the ABL Facility.

The ABL Facility limits our ability to incur additional indebtedness and requires us to comply with certain minimum liquidity and availability covenants.

The ABL Facility matures on June 30, 2026, and there is no guarantee that the ABL Facility will be extended or that we will be able to secure additional funding or other financing options in a timely manner or on favorable terms, if at all.

If we do not generate sufficient cash from operations, if our capital resources are consumed more rapidly than expected, or if we no longer have access to additional funds under our ABL Facility and are unable to secure additional funding, on acceptable terms or at all, we may be forced to delay, scale back or eliminate some of our sales and marketing activities, research and development activities, or other operations, and potentially delay development of our tests in an effort to provide sufficient funds to continue our operations.

If we do not generate sufficient cash flow from operations and are unable to secure additional funding, we may have to reduce the scale of our operations.

While we believe that our existing cash and cash equivalents, future cash flow from operations, and amounts available for borrowing under our Credit Facility (as defined below) will be sufficient to meet our anticipated cash requirements for at least the next 12 months, changes could occur that would consume available capital resources more quickly than we currently expect and we may need or want to raise additional financing.

On July 31, 2025 (the “Closing Date”), we entered into Credit Agreement (the "Credit Agreement") with the lenders from time to time party thereto, and OrbiMed Royalty & Credit Opportunities IV, LP., as administrative agent (the "Administrative Agent") and as initial lender (“OrbiMed”).

The Credit Agreement consists of a $200 million term loan credit facility with an initial term loan of $125 million (the "Initial Loan"), which amount was funded on the Closing Date, and delayed draw term loans (the "Delayed Draw Loans" and together with the Initial Loan, the "Loans"), at our election on or prior to June 30, 2027, in a maximum principal amount of $75 million (the "Credit Facility").

The proceeds of the Credit Facility were or will be used for working capital needs and general corporate purposes, including, without limitation, refinancing existing indebtedness.

Concurrent with the closing of the Credit Facility, we used $60.2 million of the proceeds to repay our previous debt facility, an asset-based revolving credit facility (the “ABL Facility”), in full and terminated the ABL Facility agreement.

The Credit Facility is secured by substantially all of our assets and those of our subsidiary guarantors.

The Credit Facility matures on July 31, 2030, and there is no guarantee that the Credit Facility will be extended or that we will be able to secure additional funding or other financing options in a timely manner or on favorable terms, if at all if required to fund our future operations or to service then existing indebtedness.

If we do not generate sufficient cash from operations, if our capital resources are consumed more rapidly than expected, or if we no longer have access to additional funds under our Credit Facility and are unable to secure additional funding, on acceptable terms or at all, we may be forced to delay, scale back or eliminate some of our sales and marketing activities, research and development activities, or other operations, and potentially delay development of our tests in an effort to provide sufficient funds to continue our operations.

For example, in recent years, we have generated cash outflows from operations.

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• the costs to satisfy our current and future obligations.

In addition, we anticipate that UnitedHealthcare’s recent update to its medical policy for pharmacogenetic testing to no longer cover certain multi-gene panel tests, including our GeneSight test, under it commercial, individual exchange, and certain managed Medicaid plans will negatively impact our revenue, profitability, and cash flow in 2025 and thereafter.

In addition, we expect that UnitedHealthcare’s October 2024 update to its medical policy for pharmacogenetic testing to no longer cover certain multi-gene panel tests, including our GeneSight test, under its commercial, individual exchange, and certain managed Medicaid plans will continue to negatively impact our revenue, profitability, and cash flow in 2026 and thereafter.

We are subject to debt covenants that impose operating and financial restrictions on us and if we are not able to comply with them, it could have a material adverse impact on our operations and liquidity.

Covenants in the ABL Facility impose operating and financial restrictions on us.

Covenants in the Credit Facility impose operating and financial restrictions on us.

These restrictions may prohibit or place limitations on, among other things, our ability to incur liens, incur indebtedness, dispose of assets, make investments, make certain restricted payments, merge or consolidate and enter into certain speculative hedging arrangements.

We are also required to maintain a fixed charge coverage ratio of at least 1.0 to 1.0 if availability under the ABL Facility is less than the greater of (a) $10.6 million and (b) 12.5% of the lesser of the maximum commitment amount and the borrowing base.

In addition, the ABL Facility includes a number of customary events of default.

If any event of default occurs (subject, in certain instances, to specified grace periods), the principal, premium, if any, interest and any other monetary obligations on all the then outstanding amounts under the ABL Facility may become due and payable immediately, which could have a material adverse impact on our operations and liquidity.

In addition, the Credit Facility requires us and our subsidiaries, on a consolidated basis, to comply with a minimum trailing twelve month revenue test as of the end of the last month of each fiscal quarter, which commenced with the month ended December 31, 2025, increasing quarterly from $615.0 million as of December 31, 2025 to $974.0 million on December 31, 2029 and thereafter.

The Credit Facility also includes a number of customary events of default.

If any event of default occurs (subject, in certain instances, to specified grace periods), the principal, premium, if any, interest and any other monetary obligations on all the then outstanding amounts under the Credit Facility may become due and payable immediately, which could have a material adverse impact on our operations and liquidity.

If our existing capital resources and expected net cash to be generated from sales of our tests is not sufficient for us to maintain our currently planned operations, we may find it necessary to raise additional funding, which may not be available on favorable terms, or at all.

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Because of our potential long-term capital requirements, we may access the public or private equity or debt markets whenever conditions are favorable, even if we do not have an immediate need for additional capital at that time.

Under Securities and Exchange Commission rules, we currently qualify as a well-known seasoned issuer (WKSI) and can at any time file a registration statement registering securities to be sold to the public which would become effective and available for use upon filing.

If additional funds are raised by issuing equity or equity-based securities, existing stockholders may suffer significant dilution.

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Our compensation arrangements, such as our short-term incentive and equity award programs, may not be successful in attracting new employees and retaining and motivating our existing employees, particularly in instances where the value of our common stock has declined since the time that incentive awards were granted.

Our agreements with our employees generally provide for employment that can be terminated by either party without cause at any time, subject to specified notice requirements.

Our agreements with our employees generally provide that employment can be terminated by either party without cause at any time, subject to specified notice requirements.

Further, the non-competition provision that certain key employees are subject to may not be enforceable under certain state laws, particularly California, or federal laws or such provisions may be prohibitively expensive to enforce.

Our growth and commercial activities have placed a greater workload and strain on our existing employees, increasing the risk that our employees experience fatigue or burnout or terminate their employment with us.

Moreover, such provisions may not deter or prevent employees from leaving our company.

Our growth and commercial expansion have increased demands on our workforce, which has placed additional strain on our employees and may heighten the risk of fatigue, burnout, or employee attrition.

In addition, inflation has had an impact on the costs that we incur to attract and retain qualified personnel and may make it more difficult for us to attract and retain such personnel.

Our success also depends on the skills, experience and performance of key members of our senior management team, who are critical to directing and managing our growth and development in the future.

On February 24, 2025, Paul J.

Diaz, our current President and Chief Executive Officer, announced that he will step down from those positions on April 30, 2025.

Our Board of Directors appointed Samraat S.

Raha, our current Chief Operating Officer, to succeed Mr.

Diaz as our President and Chief Executive Officer on April 30, 2025.

Our Board of Directors also appointed Mark S.

Verratti, our current Chief Commercial Officer, as our Chief Operating Officer as of April 30, 2025 to succeed Mr.

Raha in this position.

A search for a new Chief Commercial Officer is underway.

Our success also depends on the skills, experience and performance of key members of our senior management team, who are critical to directing and managing our growth, profitability and development in the future.

Our senior management team has recently undergone significant changes.

On April 30, 2025, Paul J.

Diaz stepped down from serving as our President and Chief Executive Officer.

On the same date, Samraat S.

Raha, our former Chief Operating Officer, succeeded Mr.

Diaz as our President and Chief Executive Officer and Mark S.

Verratti, our former Chief Commercial Officer, succeeded Mr.

Raha as our Chief Operating Officer.

On May 1, 2025, Brian Donnelly was appointed as our new Chief Commercial Officer.

In addition, on August 16, 2025, Benjamin R.

Wheeler, our former Senior Vice President, Chief Financial Officer, Operations, was appointed as our new Chief Financial Officer.

Although we have taken steps to help ensure a smooth and successful transition of our senior leadership, there can be no assurance that these steps will be successful.

The transition of our senior leadership team or the loss of any member of our senior management team may create uncertainty, involve a diversion of resources and management attention, or cause us to experience difficulties in competing effectively, developing our technologies, and implementing our business strategies.

In addition, there is no guarantee we will be successful in recruiting a suitable new Chief Commercial Officer.

Furthermore, the loss of the services of or failure to recruit key scientific and technical personnel and other qualified personnel who are necessary to operate our business would adversely affect our business and it may have a material adverse effect on our business as a whole.

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In addition to organic growth, we intend to continue to pursue growth through the acquisition of technology, assets or other businesses that may enable us to enhance our technologies and capabilities, expand our geographic market and sales channels, add experienced management personnel and increase our test offerings.

For example, on February 1, 2024, we acquired the Precise Tumor Test, the Precise Liquid Test, and a CLIA certified laboratory from Intermountain Healthcare and on November 1, 2022, we acquired Gateway Genomics, LLC (Gateway), a personal genomics company and developer of consumer genetic tests that gives families genetic insight into their future children.

For example, on February 1, 2024, we acquired the Precise Tumor Test and a CLIA certified laboratory from Intermountain Healthcare and on November 1, 2022, we acquired Gateway Genomics, LLC (Gateway), a personal genomics company and developer of consumer genetic tests that gives families genetic insight into their future children.

These acquisitions may not generate a positive return on our investment and we may not realize, and in certain cases, have not realized, all of the benefits that we expected to achieve from these acquisitions.

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In addition, if we are unable to integrate any acquired businesses, tests or technologies effectively, our business, financial condition and results of operations may be adversely affected.

We may also seek to divest assets from time to time, including but not limited to, large capital equipment, diagnostic tests, intellectual property, business units, or corporate affiliates.

For example, we completed the sale of our EndoPredict business on August 1, 2024.

The prices that we receive for such assets may not be high and, in some cases, has been lower than the amount we invested in or paid for such assets.

We may sell or discontinue certain existing products or services, which may adversely impact our business, results of operations, and financial condition.

We may determine to sell, limit, or discontinue certain existing products or services, which could adversely affect our business, results of operations, and financial condition.

For example, we currently expect to discontinue sales of our EndoPredict test in the United States during the first half of 2026.

As part of our regular evaluation of product performance and strategic fit, and in response to changes in clinical practice, reimbursement, regulatory requirements, competitive dynamics, or other market conditions, we may decide that certain offerings no longer meet our objectives and should be modified, transitioned, or discontinued.

We cannot assure that we have correctly forecasted, or will correctly forecast in the future, which products or services to modify or discontinue, or that any such decision will achieve its intended objectives.

A discontinuation or transition may not reduce operating expenses and could result in additional costs and liabilities, including costs associated with operational changes (such as changes to ordering, billing, logistics, and customer support), inventory or supply chain adjustments, and potential disputes with customers, distributors, suppliers, or other partners.

If we elect to sell a product line or related assets, we may be unable to find a suitable buyer on acceptable terms, or at all.

In addition, discontinuing an offering could disrupt relationships with customers and providers and adversely impact future sales.

If we are unable to effectively manage product discontinuations or transitions, our business and results of operations could be materially adversely affected.

Failure to comply with laws and regulations related to submission of claims for our services could result in significant monetary damages and penalties and exclusion from the Medicare and Medicaid programs and corresponding foreign reimbursement programs.

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If we experience a significant disruption in our information technology systems, or those of third-parties upon which we rely, including cloud-based services, our business operations and financial condition could be adversely affected.

Information technology (IT) and communication systems are an important part of our business operations.

These IT and communications systems support a variety of functions, including sample processing, tracking, quality control, customer service and support, billing, research and development activities, and various general and administrative activities.

Information technology and communication systems are an important part of our business operations.

These information technology and communications systems support a variety of functions, including sample processing, tracking, quality control, customer service and support, billing, research and development activities, and various general and administrative activities.

The availability of our products and services and fulfillment of our customer contracts depends on the continuing operation of these systems.

In addition to our internally managed IT and communication systems, we rely on third-party IT and communication systems, some of which include cloud-based services, including data center hosting facilities.

Our IT and communication systems, and those of third-parties upon which we rely, may be susceptible to damage, disruptions or shutdowns due to power outages, hardware failures, computer viruses, attacks by computer hackers, telecommunication failures, user errors, natural disasters, or other unforeseen events.

Our IT and communication systems, and those of third-parties upon which we rely, also may experience interruptions, delays or cessations of service or produce errors in connection with system implementation, integration, upgrades or system migration work that takes place from time to time.

In addition, we may face challenges in maintaining the operational effectiveness of such IT and communication systems due to aging, accumulated technical debt, and gaps in our software release processes.

If we were to experience a prolonged IT system disruption involving our interactions with customers, providers or suppliers, it could result in material adverse effects on our business.

Furthermore, cybersecurity incidents impacting our IT systems, and those of third-parties upon which we rely, could result in the misappropriation or unauthorized disclosure of personal, sensitive, proprietary or other confidential information relating to us, our employees, partners, customers, suppliers, or other third-parties, which could result in our suffering significant financial or reputational damage .

Additionally, any disruption, failure, or breach of our IT and communications systems, or those of third-parties upon which we rely, could significantly impact our operations.

In addition to our internally managed information technology and communication systems, we rely on third-party information technology and communication systems, some of which include cloud-based services, including data center hosting facilities.

Our information technology and communication systems, and those of third-parties upon which we rely, may be susceptible to damage, disruptions or shutdowns due to power outages, hardware failures, computer viruses, attacks by computer hackers, telecommunication failures, user errors, natural disasters, or other unforeseen events.

Our information technology and communication systems, and those of third-parties upon which we rely, also may experience interruptions, delays or cessations of service or produce errors in connection with system implementation, integration, upgrades or system migration work that takes place from time to time, including with respect to electronic medical record (EMR) integrations.

New information technology and communication systems, such as EMR integrations and our new order management system, may not work as intended or achieve the benefits we anticipated, which could negatively impact our ability to meet customer demands and grow or maintain revenue.

In addition, we may face challenges in maintaining the operational effectiveness of such information technology and communication systems due to aging, accumulated technical debt, and gaps in our software release processes.

Any disruptions or failures in our new or existing information technology and communication systems involving our customers, providers or suppliers, could result in material adverse effects on our business.

Furthermore, cybersecurity incidents impacting our information technology systems, and those of third-parties upon which we rely, could result in the misappropriation or unauthorized disclosure of personal, sensitive, proprietary or other confidential information relating to us, our employees, partners, customers, suppliers, or other third-parties, which could result in our suffering significant financial or reputational damage.

Additionally, any disruption, failure, or breach of our information technology and communications systems, or those of third-parties upon which we rely, could significantly impact our operations.

For instance, if a key third-party vendor experiences a cybersecurity incident, it could compromise our data security and lead to financial losses, regulatory penalties, and reputational damage.

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Artificial intelligence (AI) is increasingly shaping industries worldwide, including life sciences and healthcare.

We have implemented certain AI technologies into our operations to improve efficiency and drive innovation, and we may further expand our use of AI as the technology continues to evolve.

We have implemented certain AI technologies into our operations to improve efficiency and drive innovation, and we may further expand our use of AI as the technology continues to evolve, including in connection with data analytics, laboratory processes, and the development of AI-enabled products or decision-support tools.

However, AI innovation also introduces risks and challenges that could impact our business.

Our employees and contractors may also use AI technologies in the course of their work, including tools provided by third parties that we do not fully control.

AI algorithms may be flawed, datasets may be insufficient or biased, and ineffective AI development or deployment could lead to compliance violations, cybersecurity risks, and other adverse consequences.

AI-based systems may also be subject to model drift over time or unanticipated use cases.

Potential risks include breaches of confidentiality and privacy obligations, noncompliance with applicable laws and regulations, threats to intellectual property rights, including not only the leakage of our proprietary information but also the risk that AI-generated outputs may infringe third-party intellectual property rights, and the misuse of personally identifiable information, including protected health information.

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Any of these issues could materially and adversely affect our business, financial condition, and results of operations.

AI technologies, including generative AI, are complex and rapidly evolving, and we face competition from other companies as well as an evolving regulatory landscape.

Several jurisdictions around the globe, including Europe and the United States, have already proposed or enacted laws governing AI, and we may need to commit significant resources to maintain business practices that comply with the evolving regulatory landscape.

Our competitors or other third parties may incorporate AI into their products more quickly and successfully than us, which could impair our ability to compete effectively and adversely affect our results of operations.

A growing number of legislators and regulators in the U.S.

and globally are adopting laws and regulations and have focused enforcement efforts on the adoption of artificial intelligence, and use of such technologies in compliance with ethical standards and societal expectations.

These developments may increase our compliance burden and costs in connection with use of artificial intelligence and lead to legal liability if we fail to meet evolving legal standards or if use of such technologies results in harms or other causes of action we did not predict.

For example, the EU’s Artificial Intelligence Act, or AI Act, entered into force on August 1, 2024, with most provisions becoming effective on August 2, 2026.

This legislation imposes significant obligations on providers and deployers of artificial intelligence systems and encourages providers and deployers of artificial intelligence systems to account for EU ethical principles in their development and use of these systems.

The scope of requirements depends on legal and risk determinations that rely on novel legal provisions that have not yet been interpreted by courts or regulators, and non-compliance can lead to significant fines.

Likewise, in the U.S., several states, including Colorado and California, passed laws that will take effect in 2026, to regulate various uses of artificial intelligence, including to make consequential decisions.

In addition, various federal regulators have issued guidance and focused enforcement efforts on the use of AI in regulated sectors.

If we develop or use AI systems governed by these rapidly developing laws or regulations, we will need to meet higher standards of data quality, transparency, monitoring, and human oversight, and we may need to adhere to specific and potentially burdensome and costly ethical, accountability, and administrative requirements, with the potential for significant enforcement or litigation in the event of any perceived non-compliance.

Each of our tests is processed in a single one of our laboratory facilities, and any loss or prolonged interruption of our ability to use these laboratories or failure to maintain their operation in compliance with applicable regulations would seriously harm our business.

We rely on a CLIA-certified facility in Salt Lake City, Utah to perform most of our tests;

a CLIA-certified laboratory in South San Francisco, California to perform our Foresight and Prequel tests;

a CLIA-certified laboratory in South San Francisco, California to perform our Foresight, Prequel and FirstGene tests;

a CLIA-certified laboratory in Mason, Ohio to perform our GeneSight test;

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Our laboratories and the equipment we use to perform our tests would be difficult to replace and may require significant lead time to replace and qualify for use if they become inoperable.

Some of our laboratories are located near active earthquake fault lines and in a region affected by wildfires and flooding.

Some of our laboratories are located near active earthquake fault lines and in a region affected by wildfires, tornadoes, and flooding.

We currently have no backup or redundant facility to perform each of our tests.

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In addition, any interruption in our business would result in a loss of goodwill, including damage to our reputation.

If our business were interrupted, it would seriously harm our business.

If our laboratory processes were interrupted, it would seriously harm our business.

We depend on a limited number of third parties, or, in some cases, single-source suppliers, for equipment, reagents, other supplies, and specimen collection services.

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If we are unable to obtain when needed additional or alternative equipment or robots, or an adequate supply of reagents or other ingredients or supplies at commercially reasonable rates, our ability to continue to identify genes and perform testing would be adversely affected.

In addition, any loss of, or the failure to perform by, a single-source supplier could have a disruptive effect on our business, including our ability to perform testing, and could adversely affect our results of operations.

In addition, any loss of, or failure to perform by, a single-source supplier could have a disruptive effect on our business, including our ability to perform testing, and could adversely affect our results of operations.

Furthermore, we rely on third-party laboratories and phlebotomy clinics to perform specimen collection services for us for patients taking some of our tests such as our Prequel non-invasive prenatal screening test.

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In addition, the consolidation of large laboratories and phlebotomy clinics may decrease the specimen collection facility options that are available to us, thus amplifying the risk if access to the remaining laboratories and phlebotomy clinics is denied or delayed.

Further, disruption in the global supply chain related to hostilities in Ukraine and the Middle East could impact our supply chain.

For example, Houthi forces have attacked freighters in the Red Sea due to the ongoing conflict between Israel and Gaza.

Further, disruption in the global supply chain related to hostilities in Ukraine and the Middle East or elsewhere could impact our supply chain.

While we have not experienced material supply chain disruptions related to these global hostilities to date, we are unable to predict how these conflicts will develop or guarantee that we will not experience material supply chain disruptions in the future.

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We also distribute certain of our products through international distributors.

We may establish additional operations or acquire additional properties outside the United States in order to advance our international sales.

We may establish additional operations or acquire additional properties outside the United States to advance our international sales.

Doing business internationally involves a number of risks, including:

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Also, the failure to comply with applicable legal and regulatory obligations could result in the disruption of our distribution and sales activities.

International trade disputes, including United States trade tariffs and retaliatory tariffs, could adversely impact our business.

Changes in United States trade policy, including recently announced or potential future tariffs, could have a material adverse impact on our business, financial condition, and results of operations.

The imposition of new tariffs or increases in existing tariffs on goods imported from or expected to be imported from countries where we or our suppliers operate could result in higher costs for materials or components essential to our operations.

These increased costs may reduce our margins, necessitate price adjustments, or impact the affordability and competitiveness of our offerings.

Additionally, retaliatory tariffs imposed by other countries on U.S.

exports could delay delivery of supplies to us and adversely affect our ability to operate or grow in certain international markets.

If we are unable to effectively mitigate these risks through supply chain adjustments, pricing strategies, or other measures, our financial performance and growth trajectory could be materially affected.

Ethical, legal and social concerns related to the use of genetic information could reduce demand for our tests.

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In addition, if we are unable to continue to obtain expedited delivery services on commercially reasonable terms, our operating results may be adversely affected.

We also rely on commercial courier delivery services to transport some of our tests directly to customers and any disruptions in delivery service could adversely affect our ability obtain and process samples in a timely manner and to service our customers.

We also rely on commercial courier delivery services to transport some of our tests directly to customers and any disruptions in delivery service could adversely affect our ability to obtain and process samples in a timely manner and to service our customers.

Our financial condition and results of operations could be adversely affected by adverse public health developments.

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dollar strengthens against foreign currencies, the translation of these foreign currency denominated transactions will result in decreased revenue and operating expenses.

During the year ended December 31, 2024, our revenue was not materially impacted due to foreign currency fluctuations, but may be in the future.

During the year ended December 31, 2025, our revenue was not materially impacted due to foreign currency fluctuations, but it may be in the future.

We may not be able to offset adverse foreign currency impact with increased revenue.

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Intangible assets with definite lives are reviewed for impairment when events or circumstances indicate that their carrying value may not be recoverable.

Declines in operating results, divestitures, sustained market declines and other factors that impact the fair value of an asset could result in an impairment of goodwill or intangible assets and, in turn, a charge to net income.

For example, we recognized $43.0 million of impairment expense during the twelve months ended December 31, 2024 after UnitedHealthcare updated its medical policy for pharmacogenetic testing to no longer provide coverage for certain multi-gene panel pharmacogenetic tests, including our GeneSight test, under its commercial, individual exchange, and certain managed Medicaid plans.

This impairment expense and any other such charges could have a material adverse effect on our results of operations or financial condition.

For example, in 2025, our stock price and market capitalization decreased, which we believe was in part due to market volatility related to economic uncertainty as well as our actual and expected operating results.

As a result of the decline in our stock price, we recorded impairment expense of $316.7 million during the twelve months ended December 31, 2025.

If our stock price and market value continue to decline or remain at the reduced levels recently experienced, we may be required to record one or more additional impairment losses to goodwill or other intangible assets, any of which could be material.

An impairment loss and any other su ch charges, individually or in the aggregate, could have a material adverse effect on our results of operations or financial condition.

Our estimates of actionable market size and forecasts of market growth may prove to be inaccurate, and even if the market in which we compete achieves the forecasted growth, our business could fail to grow at expected rates.

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If our tests or the technology underlying our current or future tests do not receive sufficient favorable exposure in peer-reviewed publications, the rate of clinician adoption of our tests and positive reimbursement coverage determinations for our tests could be negatively affected.

In addition, for any of the foregoing reasons or otherwise, our anticipated timeline to launch new test offerings, such as First Gene, Precise Liquid, and Precise MRD, may not occur at the time we expect, which could negatively impact our ability to gain commercial market acceptance or successfully commercialize any new test offerings.

In addition, for any of the foregoing reasons or otherwise, our anticipated timeline to launch new test offerings, such as First Gene and Precise MRD, may not occur at the time we expect, which could negatively impact our ability to gain commercial market acceptance or successfully commercialize any new test offerings.

If we do not compete effectively with scientific and commercial competitors, we may not be able to successfully commercialize our tests, increase our revenue or achieve and sustain profitability.

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We may not be able to develop additional tests successfully and we or our licensors may not obtain or enforce patents covering these tests that provide protection against our competitors.

Moreover, our competitors may succeed in developing tests that circumvent our technologies or tests.

Furthermore, our competitors may succeed in developing technologies or tests that are more effective or less costly than those developed by us or that would render our technologies or tests less competitive or obsolete.

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These research collaborators are not our employees.

As a result, we have limited control over their activities and, except as otherwise required by our collaboration agreements, can expect only limited amounts of their time to be dedicated to our activities.

As a result, we have limited control over their activities and, except as otherwise required by our collaboration or research agreements, can expect only limited amounts of their time to be dedicated to our activities.

Our ability to discover genes, proteins, and biomarkers involved in human disease and validate and commercialize tests will depend in part on the continuation of these collaborations.

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Our commercial success will depend, in part, on our ability to obtain additional patents and licenses and protect our existing patent position, both in the United States and in other countries, for compositions, processes, methods and other inventions that we believe are patentable.

Our ability to preserve our trade secrets, proprietary data bases and other intellectual property is also important to our long-term success.

Our ability to preserve our trade secrets, proprietary databases and other intellectual property is also important to our long-term success.

If our intellectual property is not adequately protected, competitors may be able to use our technologies and erode or negate any competitive advantage we may have, which could harm our business and ability to achieve profitability.

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We will be able to protect our proprietary rights from unauthorized use by third parties only to the extent that our proprietary technologies and any future tests are covered by valid and enforceable patents or are effectively maintained as trade secrets.

Our patent applications may never issue as patents, and the claims of any issued patents may not afford meaningful protection for our technology or tests.

Our patent applications may never be issued as patents, and the claims of any issued patents may not afford meaningful protection for our technology or tests.

In addition, any patents issued to us or our licensors may be challenged, and subsequently narrowed, invalidated or circumvented.

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For example, on December 21, 2020, Ravgen, Inc.

(Ravgen) filed a lawsuit against us and our wholly owned subsidiary, Myriad Women's Health, Inc., in the U.S.

District Court for the District of Delaware, alleging infringement of two patents relating to blood collection tubes and non-invasive prenatal testing analysis.

On October 23, 2023, we and Ravgen entered into a settlement agreement pursuant to which the parties agreed to settle the lawsuit.

Pursuant to the terms of the settlement agreement, we agreed to pay Ravgen a minimum of $12.75 million in three installment payments of $5 million, $5 million, and $2.75 million on or before October 31, 2023, October 31, 2024, and October 31, 2025, respectively.

We also agreed to pay Ravgen $21.25 million in five annual installments beginning no earlier than January 1, 2026 if certain conditions are satisfied but we do not currently believe that those conditions will be satisfied.

(Ravgen) filed a lawsuit against us alleging infringement of two patents relating to blood collection tubes and non-invasive prenatal testing analysis.

On October 23, 2023, we and Ravgen entered into a settlement agreement pursuant to which the parties agreed to settle the lawsuit for $12.75 million.

Any intellectual property litigation that we may become involved with in the future could consume a substantial portion of our managerial and financial resources.

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• CLIA and the implementing regulations, which require that laboratories obtain certification from the federal government, and state licensure laws and regulations;

• FDA laws and regulations that apply to medical devices such as our companion diagnostics and other IVDs as well as LDTs, following the July 2024 effective date of the agency's LDT final rule;

• FDA laws and regulations that apply to medical devices such as our companion diagnostics and other IVDs as well as LDTs;

• HIPAA, which imposes comprehensive federal standards with respect to the privacy and security of protected health information and requirements for the use of certain standardized electronic transactions;

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We may also be subject to or affected by current or future federal, state, local and foreign laws and regulations, including laws relating to reproductive health care, which could restrict our business, reduce demand for our products, and adversely affect our operations, revenue, and results of operations.

Various federal and state laws, such as the Physician Payments Sunshine Act and state gift bans, that apply to medical device manufacturers could extend to our laboratory facilities now that LDTs are treated by FDA as medical devices pursuant to the 2024 final rule and clinical laboratories furnishing LDTs are considered to be device manufacturers as a result.

We have begun the process of evaluating whether and to what extent those kinds of medical device-specific state requirements may be applicable to our operations.

As a clinical laboratory, our business practices may face heightened scrutiny from government enforcement agencies such as the Department of Justice, OIG, and CMS.

The OIG has issued fraud alerts in recent years, including a fraud alert relating to speaker programs in November 2020, that identify certain arrangements between medical device and drug companies and referring physicians as implicating the Anti-Kickback Statute.

The OIG has issued fraud alerts in recent years, including a fraud alert relating to speaker programs in November 2020, that identify certain arrangements between medical device and drug companies as well as clinical laboratories and referring physicians as implicating the Anti-Kickback Statute.

Moreover, the provision of payments or other items of value by a clinical laboratory to a referral source could be prohibited under the federal self-referral prohibition, commonly known as the Stark Law or the Physician Self-Referral Law, unless the arrangement meets all criteria of an applicable exception.

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The legislative and regulatory landscape for data protection continues to rapidly evolve, and in recent years there has been an increasing focus on privacy and data security issues with the potential to affect our business.

In the United States, numerous federal and state laws and regulations, including state data breach notification laws, state genetic testing laws, state health information privacy laws and federal and state consumer protection laws govern the collection, use, disclosure and protection of health-related and other personal and protected health information.

In the United States, numerous federal and state laws and regulations, including HIPAA, state data breach notification laws, state genetic testing laws, state health information privacy laws and federal and state consumer protection laws govern the collection, use, disclosure and protection of health-related and other personal and protected health information.

Implementation standards and enforcement practices are likely to remain uncertain for the foreseeable future, which may create uncertainty in our business, affect our or our service providers’ ability to operate in certain jurisdictions or to collect, store, transfer, use and share personal data, result in liability, or impose additional compliance or other costs on us.

Failure, or perceived failure, to comply with these laws and regulations, where applicable, could result in government enforcement actions, which could include civil or criminal penalties, private litigation and/or adverse publicity, diversion of management time and effort, and could negatively affect our operating results and business.

Our business relies on the collection, storage, analysis, and use of genetic and other sensitive health-related data, which may be subject to heightened privacy, consent, and data-use requirements.

Laws and regulations governing genetic privacy and the permissible use of such data are evolving and may limit our ability to use genetic or health-related data for research, product development, quality improvement, or other secondary purposes, even where such data is anonymized or de-identified.

Any failure, perceived failure, or alleged failure to comply with applicable genetic privacy or data-use requirements could result in regulatory enforcement actions, litigation, fines, reputational harm, or loss of customer and patient trust, which could adversely affect our business.

HIPAA requires organizations like ours to develop and implement policies and procedures with respect to information that is protected under HIPAA, called protected health information, or PHI, that is created, used or disclosed in connection with our services, including the adoption of administrative, physical and technical safeguards to protect such information.

HIPAA further requires organizations subject to HIPAA, called “covered entities” to notify affected individuals without unreasonable delay and in no case later than 60 calendar days following discovery, of certain unauthorized access, uses, or disclosures of PHI.

If a breach affects 500 individuals or more in a particular state or jurisdiction, covered entities must report it to the HHS and local media contemporaneously with notice to affected individuals, and HHS will post information regarding the breach, including the name of the entity reporting the breach, on its public website.

If a breach affects fewer than 500 individuals, the covered entity must notify HHS within the first 60 days of the following calendar year in which the breach occurred.

Penalties for failure to comply with HIPAA are substantial and could include corrective action plans, and/or the imposition of civil monetary or criminal penalties.

HIPAA also authorizes state attorneys general to enforce HIPAA on behalf of state residents.

Courts can award damages, costs and attorneys’ fees related to violations of HIPAA in such cases.

While HIPAA does not create a private right of action allowing individuals to sue us in civil court for HIPAA violations, its standards have been used as the basis for a duty of care claim in state civil suits such as those for negligence or recklessness in the misuse or breach of PHI.

states now regulate the processing of personal information.

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GDPR is applicable to part of our business and has increased our responsibility and liability in relation to personal data that we process, and we may be required to put in place additional procedures to comply.

GDPR is complex and regulatory guidance continues to evolve.

GDPR is complex and regulatory guidance relating to GDPR compliance continues to evolve.

Furthermore, national GDPR variations, including the fields of clinical study and other health-related information may raise our costs of compliance and result in greater legal risks.

Relatedly, following Brexit and the expiry of the Brexit transition period, which ended on December 31, 2020, the EU GDPR has been implemented in the United Kingdom (as the UK GDPR).

The UK GDPR sits alongside the United Kingdom Data Protection Act 2018 which implements certain derogation in the GDPR into UK law.

Under the UK GDPR, companies not established in the United Kingdom but who process personal data in relation to the offering of goods or services to individuals in the United Kingdom, or to monitor their behavior will be subject to the UK GDPR – the requirements of which are (at this time) largely aligned with those under the GDPR and as such, may lead to similar compliance and operational costs with potential fines of up to £17.5 million or 4% of global turnover.

Relatedly, following Brexit and the expiration of the Brexit transition period, which ended on December 31, 2020, the EU GDPR has been implemented in the United Kingdom (as the UK GDPR).

The UK GDPR sits alongside the United Kingdom Data Protection Act 2018 which implements certain derogations in the GDPR into UK law.

At this time, the requirements of the UK GDPR are largely aligned with those under the GDPR and as such, may lead to similar compliance and operational costs with potential fines of up to £17.5 million or 4% of global turnover.

We are also subject to evolving GDPR requirements on data export, because we transfer data to third countries outside of the EU that are not deemed “adequate.” GDPR only permits exports of personal data outside of the EU to “non-adequate” countries where there is a suitable data transfer mechanism in place to safeguard personal data (e.g., the EU Commission approved Standard Contractual Clauses or certification under the newly-adopted Data Privacy Framework).

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District Court for the Northern District of California unsealed a qui tam complaint, filed on April 16, 2016 against CBI, alleging violations of the federal and California False Claims Acts and the California Insurance Fraud Prevention Act (CIFPA).

On January 22, 2020, after a multi-year investigation into CBI’s and our alleged conduct, the United States declined to intervene.

On January 22, 2020, after a multi-year investigation into CBI’s and our alleged conduct, the government declined to intervene in the case.

On January 27, 2020, the State of California likewise filed its notice of declination.

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We may be subject to future claims or investigations under the Federal False Claims Act or a similar state law, and any unfavorable outcome arising from such claims or investigation could have a material adverse effect on our financial condition, results of operations and cash flows.

Changes in health care policy could increase our costs, decrease our revenue and impact sales of and reimbursement for our tests.

Changes in health care policy could increase our costs and impact sales of and reimbursement for our tests.

In March 2010, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Affordability Reconciliation Act, collectively called the ACA, became law, which was upheld by the U.S.

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Future changes or additions to the ACA or the Medicare and Medicaid programs, such as changes stemming from other health care reform measures, especially with regard to health care access, financing or other legislation in individual states, could have a material adverse effect on the health care industry in the United States.

The impact to reimbursement levels and the number of insured individuals under the ACA may lead to delay in the purchasing decisions of our customers, which may in turn negatively impact our product sales.

The impact on reimbursement levels and the number of insured individuals under the ACA may lead to delay in the purchasing decisions of our customers, which may in turn negatively impact our product sales.

Further, if reimbursement levels are inadequate, our business and results of operations could be adversely affected.

In addition to the ACA, there will continue to be proposals by legislators at both the federal and state levels, regulators and private third-party payors to reduce costs while expanding individual health care benefits.

The ACA has also been the focus of ongoing legal challenges that could materially affect insurance coverage for our products and services.

For example, in June 2024, in the case of Braidwood Management v.

Becerra, the Fifth Circuit Court of Appeals upheld a lower court ruling that found the ACA’s mandate requiring insurance coverage for certain preventive services without cost sharing to be unconstitutional.

However, in June 2025, the U.S.

Supreme Court overturned the Fifth Circuit’s decision in Braidwood Management v.

Becerra and upheld the ACA’s requirement that insurance cover certain preventive services, in a ruling now captioned Kennedy v.

Braidwood Management, Inc.

Future health care reform initiatives, whether at the federal or state level, intended to reduce health care costs may instead have the effect of discouraging third-party payors from covering certain types of medical products and services.

In addition, recently enacted federal legislation, the “One Big Beautiful Bill Act”, is expected to reduce enrollments in Medicaid and ACA marketplace exchanges, which could limit access to insurance coverage for certain patient populations.

To the extent these changes decrease the number of insured individuals or alter reimbursement rates for our tests, our test volumes and revenues could be adversely affected.

Beyond the ACA, there will continue to be proposals by legislators at both the federal and state levels, regulators and private third-party payors to reduce costs while expanding individual health care benefits.

Certain of these changes could impose additional limitations on the prices we will be able to charge for our tests or the amounts of reimbursement available for our tests from governmental agencies or private third-party payors.

Any future changes to legal or regulatory requirements or new cost containment initiatives could have a materially adverse effect on our business, financial condition, results of operation, and cash flows.

Our business could be harmed by the loss, suspension, or other restriction on a license, certification, or accreditation, or by the imposition of a fine or penalties, under CLIA, its implementing regulations, or other state, federal and foreign laws and regulations affecting licensure or certification, or by future changes in these laws or regulations.

Our business could be harmed by the loss, suspension, or other restriction of a license, certification, or accreditation, or by the imposition of a fine or penalties, under CLIA, its implementing regulations, or other state, federal and foreign laws and regulations affecting licensure or certification, or by future changes in these laws or regulations.

The diagnostic testing industry is subject to extensive laws and regulations, many of which have not been interpreted by the courts.

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If the CLIA certificate of any one of our laboratories is revoked, CMS could seek revocation of the CLIA certificates of our other laboratories based on their common ownership or operation, even though they are separately certified.

Planned changes in the way the FDA regulates tests performed by laboratories like ours will result in delay and/or additional expense in offering our tests and tests that we may develop in the future.

Historically, the FDA had exercised enforcement discretion with respect to most LDTs and generally not required laboratories that furnish LDTs to comply with the agency’s requirements for medical devices (e.g., establishment registration, device listing, quality systems regulations, premarket clearance or premarket approval, and post-market controls).

However, in May 2024, the FDA issued a final rule to regulate LDTs under the current medical device framework and phasing out its existing enforcement discretion policy for this category of diagnostic tests over several years.

The effective date of the agency’s final rule was July 5, 2024.

The agency’s final rule provides that the LDT enforcement policy phase-out process will occur in gradual stages over a total period of four years, with premarket approval applications for high-risk tests to be submitted by the 3.5-year mark.

Moderate-risk and low-risks tests are expected to be in compliance at the 4-year mark, although FDA has stated that if premarket submissions are pending review it will continue to exercise enforcement discretion with respect to those tests.

As of December 31, 2024, none of our products other than MyChoice CDx and BRACAnalysis CDx are marketed by us under the FDA's requirements for medical devices.

The FDA’s final rule is complex and, concurrently, the agency announced several exceptions from the requirement to comply with full medical device regulatory controls, depending upon the specific nature of the LDT and the clinical laboratory that is offering such LDT for use by health care providers.

Of potential relevance is the agency’s position on LDTs that were marketed prior to the official publication date of the final rule.

Such “currently marketed” tests are subject to many of the device regulatory controls but are exempted from the premarket review and FDA authorization requirements (unless or until significant modifications are made to such “currently marketed” tests).

Similarly, the FDA has created a partial enforcement discretion policy for tests approved by New York’s Clinical Laboratory Evaluation Program whereby such tests also do not need to undergo FDA premarket review but must come into compliance with all other device general controls in a stagged fashion between 2025 and 2027.

We have begun the process of evaluating the final rule's potential impact on our tests, our operations, and our business more generally.

On May 29, 2024, the ACLA and one of its members filed a complaint against the FDA in the Eastern District of Texas, alleging that the agency does not have authority to promulgate the LDT final rule and seeking to vacate the FDA’s action.

A second lawsuit was also filed against FDA by the AMP on August 19, 2024 in the Southern District of Texas, and subsequently the two cases were consolidated into a single action pending in the Eastern District of Texas.

Briefing is ongoing in the consolidated case, and the outcome of such litigation is uncertain.

The litigation could potentially affect FDA’s plans to implement these new LDT requirements, making the potential implementation timeline somewhat uncertain, although no preliminary injunction has been issued to date.

Accordingly, the agency has continued its implementation efforts by actively providing guidance and training to clinical laboratories on how to comply with medical device general controls.

Affected stakeholders also continue to press for a comprehensive legislative solution to create a harmonized paradigm for oversight of LDTs by both the FDA and CMS, instead of implementation of the FDA's final rule, which may be disruptive to the industry and to patient access to certain diagnostic tests.

However, this FDA rulemaking was initiated after years of failed congressional attempts to harmonize the regulatory paradigms applicable to LDTs and other IVDs, making it unclear whether any legislative efforts would be successful going forward.

If FDA prevails in the Texas litigation and is able to fully implement the multi-year phase-in plan for the LDT final rule or Congress enacts comprehensive legislation to regulate in vitro diagnostics that moots the need for the LDT final rule, it could have a materially adverse impact on our results of operations.

Failure to comply with any applicable FDA requirements could trigger a range of enforcement actions by the FDA, including 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.

Planned or potential changes in the way the FDA regulates tests performed by laboratories like ours could result in delay and/or additional expense in offering our tests and tests that we may develop in the future.

Historically, the FDA has exercised enforcement discretion with respect to most LDTs and has generally not required laboratories that furnish LDTs to comply with the agency’s requirements for medical devices (e.g., establishment registration, device listing, quality systems regulations, premarket clearance or premarket approval, and post-market controls).

However, in May 2024, the FDA issued a final rule to regulate LDTs under the existing medical device framework and to phase out its longstanding enforcement discretion policy over a four-year period.

Following issuance of the final rule, the American Clinical Laboratory Association (ACLA) and one of its members filed a complaint against the FDA in the Eastern District of Texas, alleging that the agency does not have authority to promulgate the LDT final rule and seeking to vacate the FDA’s action.

A second lawsuit was also filed against FDA by the Association for Molecular Pathology on August 19, 2024 in the Southern District of Texas, and subsequently the two cases were consolidated into a single action.

On March 31, 2025, the U.S.

District Court for the Eastern District of Texas vacated the final rule in its entirety and remanded the matter to the FDA, holding that the rule exceeded the agency’s authority under the Federal Food, Drug, and Cosmetic Act.

The FDA did not appeal the decision.

As a result, the phase-in deadlines established by the rule are no longer operative, and in September 2025 the FDA implemented the court’s vacatur of the final rule with a formal public notice.

The court’s decision striking down the final rule preserves the existing enforcement-discretion policy for LDTs, which reduces the immediate regulatory burden for laboratories such as ours.

However, uncertainty remains regarding the future of federal oversight in this area, as Congress could enact new legislation establishing a statutory framework for regulating in vitro diagnostics, including LDTs.

Any such actions could impose new requirements on our operations and may result in increased compliance costs, delays in test development or commercialization, and other operational disruptions.

If future legislative or regulatory changes expand FDA’s oversight of LDTs, we may be required to obtain premarket clearance or approval for some of our existing or future tests, modify our quality-system procedures, or make other costly changes to our operations.

Failure to comply with any applicable FDA requirements, or future comparable regulatory regimes, could trigger a range of enforcement actions by the FDA, including 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.

FDA regulation of our GeneSight Psychotropic test could be disruptive to our business.

As described further above, the FDA has long claimed authority to regulate LDTs but had exercised its “enforcement discretion” to limit enforcement of in vitro diagnostic regulatory requirements on this category of products.

In May 2024, the FDA issued a final rule to regulate LDTs under the current medical device framework and phasing out the historical enforcement discretion policy over several years.

As described further above, the FDA has long claimed authority to regulate LDTs but has exercised its “enforcement discretion” to limit enforcement of in vitro diagnostic regulatory requirements on this category of products.

Further, the FDA has from time to time appeared to increase its attention to the marketing of pharmacogenomic tests.

For example, in late 2018, the FDA issued a safety communication regarding “genetic tests that claim results can be used to help physicians identify which antidepressant medication would have increased effectiveness or side effects compared to other antidepressant medications.” This safety communication explained that the FDA had reached out to several firms marketing such pharmacogenomic tests where the FDA believed the relationship between genetic variations and a medication’s effects had not been established, including a warning letter to Inova Genomics Laboratory.

It is unclear at this time whether the FDA will take a different approach to pharmacogenomic tests developed as LDTs following the 2025 vacatur of its LDT final rule on the grounds that the agency lacked statutory authority to treat such tests as medical devices .

In early 2019, we provided the FDA with clinical evidence and other information to support our GeneSight test.

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• failure of any of our recently launched tests and any new test candidates to achieve commercial success;

• changes in the structure of healthcare payment systems and changes in governmental or private insurer reimbursement levels for our tests, including UnitedHealthcare's decision to no longer provide coverage for certain multi-gene panel genetic tests, including our GeneSight test, under its commercial, individual exchange, and certain managed Medicaid plans;

• changes in the structure of healthcare payment systems and changes in governmental or private insurer reimbursement levels for our tests;

• introduction of new commercial tests or technological innovations by competitors;

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• missing or changing the financial guidance we provide;

• failure of analysts to initiate or maintain coverage of our company;

• failure of securities or industry analysts to initiate or maintain coverage of our company, publish reports on us regularly, or publish accurate and favorable research, or downgrades of our common stock by such analysts;

• removal of our common stock from, or failure to be included in, one or more indexes, or changes in the methodologies of such indexes;

• negative publicity, including misinformation, about our company, our tests or the industry in which we operate;

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• general market conditions, including as a result of changes in the rate of inflation and interest rates;

• potential seasonal slowness in sales, particularly in the quarters ending September 30 and March 31, the effects of which may be difficult to understand during periods of growth;

• potential seasonal slowness in sales, the effects of which may be difficult to understand during periods of growth;

• economic, health care and diagnostic trends, disasters or crises and other external factors;

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In addition, if as a result of the ineffectiveness of our internal control over financial reporting and disclosure controls and procedures, we cannot provide reliable financial statements, our business decision processes may be adversely affected, our business and results of operations could be harmed, investors could lose confidence in our reported financial information, and our ability to obtain additional financing, or additional financing on favorable terms, could be adversely affected.

Although we determined that our internal controls over financial reporting were effective as of December 31, 2024, we may in the future identify internal control deficiencies that could rise to the level of a material weakness or we may uncover other errors in our financial reporting.

Although we determined that our internal controls over financial reporting were effective as of December 31, 2025, we may identify internal control deficiencies in the future that could rise to the level of a material weakness or we may uncover other errors in our financial reporting.

During the course of our evaluation of these material weaknesses, we may identify areas requiring improvement and may be required to design additional enhanced processes and controls to address issues identified through this review.

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• the inability of our stockholders to call a special meeting or act by written consent;

• requiring advance notice in accordance with our bylaws for stockholder proposals that can be acted upon at annual stockholder meetings and nomination to our Board of Directors;

• requiring advance notice in accordance with our bylaws for stockholder proposals that can be acted upon at annual stockholder meetings and nomination of directors to our Board of Directors;

• only our Board of Directors can fill vacancies on the Board of Directors.

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The provisions in a stockholders’ rights plan, as well as Section 203, may discourage certain types of transactions in which our stockholders might otherwise receive a premium for their shares over the then-current market price, and may limit the ability of our stockholders to approve transactions that they think may be in their best interests.

Shareholder activism can have a significant impact on our operations, strategy, and overall performance.

We may become subject to shareholder activism, including efforts to influence our corporate governance, business strategy, or financial decisions.

Responding to activist demands could be costly and time-consuming, divert the attention of our management team and Board, and create uncertainty regarding our strategic direction, including through efforts to change our Board composition, executive compensation, or other governance practices.

Shareholder activism may also increase scrutiny, contribute to stock price volatility, and encourage actions such as divestitures, acquisitions, or cost reductions that may conflict with our long-term plans.

In addition, shareholder activism could increase the risk of proxy contests, litigation, or regulatory inquiries and may adversely affect employee retention and key stakeholder relationships.

Any of these factors could materially and adversely affect our business, financial condition, and results of operations.

Future sales and issuances of our common stock would result in dilution of the percentage ownership of our stockholders and could cause the price of our common stock to decline.

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We currently intend to retain any future earnings for the development, operation and expansion of our business and do not anticipate declaring or paying any cash dividends for the foreseeable future.

In addition, the terms of our ABL Facility restrict our ability to pay dividends.

Any determination to pay dividends in the future will be made at the discretion of our Board of Directors and will depend on our financial condition, operating results, capital requirements, general business conditions and other factors that our Board of Directors may deem relevant.

In addition, the terms of our Credit Facility restrict our ability to pay dividends.

Any determination to pay dividends in the future will be made at the discretion of our Board of Directors and will depend on the restrictive covenants in any lending facility, including our Credit Facility, our financial condition, operating results, capital requirements, general business conditions and other factors that our Board of Directors may deem relevant.

As a result, capital appreciation, if any, of our common stock will be the sole source of gain for our stockholders for the foreseeable future.

If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, our stock price and trading volume could decline.

The trading market for our common stock will depend in part on the research and reports that securities or industry analysts publish about us or our business.

We do not have any control over these analysts.

If only a few analysts provide coverage of us, the trading of our stock would likely decrease.

Even if we do maintain sufficient analyst coverage, there can be no assurance that analysts will provide favorable coverage.

If one or more of the analysts who covers us downgrades our stock or publishes inaccurate or unfavorable research about our business, our stock price may decline.

If one or more of these analysts ceases coverage of us or fails to publish reports on us regularly, demand for our stock could decrease, which might cause our stock price and trading volume to decline.

Increasing scrutiny and evolving expectations from regulators, business partners, investors, and other stakeholders with respect to our environmental, social, and governance, or ESG, practices may impose additional costs on us or expose us to new or additional risks.

Companies across many industries are facing increasing scrutiny related to their ESG practices and disclosure.

Companies across many industries have faced increased scrutiny related to their ESG practices and disclosure.

We are subject to evolving ESG-related disclosure obligations from governmental and regulatory organizations, which may impact our business.

These disclosure obligations are often complex and not always consistent, making compliance difficult and uncertain.

For example, in 2022, the SEC proposed rules requiring companies to provide significantly expanded climate-related disclosures in their periodic reporting, the final adoption of which is uncertain.

Additionally, California has enacted climate disclosure laws that may require us to report on our greenhouse gas emissions, climate-related financial risks, and other climate-related matters.

For example, California has enacted climate disclosure laws that may require us to report on our greenhouse gas emissions, climate-related financial risks, and other climate-related matters.

Compliance with such regulations may require us to incur significant additional costs, including for the implementation of significant additional internal controls processes and procedures regarding matters that have not been subject to such controls in the past, and impose increased oversight obligations on our management and Board of Directors.

Furthermore, industry and market practices, as well as expectations from our business partners, may further develop to become even more robust than what is required under any new laws and regulations, and we may have to expend significant efforts and resources to keep up with market trends, stay competitive among our peers, and comply with such requirements, which could result in higher associated compliance costs and penalties for failure to comply with such laws and regulations.

At the same time, stakeholders and regulators have increasingly expressed or pursued opposing views, legislation and investment expectations regarding ESG initiatives, including the enactment or proposal of anti-ESG legislation or policies.

We could face criticism for the scope or nature of our ESG initiatives or for making adjustments to these initiatives.

At the same time, certain stakeholders and regulators have increasingly expressed or pursued opposing views, legislation and investment expectations regarding ESG initiatives, including the enactment or proposal of anti-ESG legislation or policies.

As such, we could face criticism for the scope or nature of our ESG initiatives or for making adjustments to these initiatives.

Any failure or perceived failure to meet evolving stakeholder expectations and standards related to our ESG initiatives, accurately track and report ESG-related progress, or comply with environmental regulations and disclosure requirements, as well as our inability to satisfy all stakeholders with divergent views, could adversely affect our business, the willingness of our partners to do business with us, employee retention efforts, and our brand and reputation.

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

What changed 10-K

Item 1A. Risk Factors