What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2026-02-25 compared with 2025-02-28 · 320 added, 400 removed, 838 unchanged (46% of the section changed)

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Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheet of Recursion Pharmaceuticals, Inc.

and its subsidiaries (the "Company") as of December 31, 2024, and the related consolidated statements of operations, of comprehensive loss, of stockholders’ equity and of cash flows for the year then ended, including the related notes (collectively referred to as the "consolidated financial statements").

We have audited the accompanying consolidated balance sheets of Recursion Pharmaceuticals, Inc.

and its subsidiaries (the "Company") as of December 31, 2025 and 2024, and the related consolidated statements of operations, of comprehensive loss, of stockholders’ equity and of cash flows for the years then ended, including the related notes (collectively referred to as the "consolidated financial statements").

We also have audited the Company's internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2024, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

Also in our opinion, the Company did not maintain, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO because a material weakness in internal control over financial reporting existed as of that date related to the Company not designing and maintaining effective controls over the estimated costs and time to completion and controls to validate the completeness and accuracy of data used to calculate revenue and unearned revenue related to its license agreement.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

Also in our opinion, the Company did not maintain, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO because material weaknesses in internal control over financial reporting existed as of that date as the Company (i) did not design and maintain effective processes and controls at the Exscientia business, including with respect to consistent review procedures within its financial statement close process, to appropriately analyze, record and disclose accounting matters timely and accurately while maintaining appropriate segregation of duties and (ii) did not design and maintain effective information technology general controls at the Exscientia business for information systems that are significant to the preparation of its financial statements, including controls to verify that conflicting duties were appropriately segregated within such systems, in addition to controls over change management and program development.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis.

The material weakness referred to above is described in Management’s Annual Report on Internal Control Over Financial Reporting appearing under Item 9A.

We considered this material weakness in determining the nature, timing, and extent of audit tests applied in our audit of the 2024 consolidated financial statements, and our opinion regarding the effectiveness of the Company’s internal control over financial reporting does not affect our opinion on those consolidated financial statements.

The material weaknesses referred to above are described in Management’s Annual Report on Internal Control Over Financial Reporting appearing under Item 9A.

We considered these material weaknesses in determining the nature, timing, and extent of audit tests applied in our audit of the 2025 consolidated financial statements, and our opinion regarding the effectiveness of the Company’s internal control over financial reporting does not affect our opinion on those consolidated financial statements.

Basis for Opinions

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in management's report referred to above.

Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audit.

Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audit of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.

Our audit also included performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinions.

As described in Management’s Annual Report on Internal Control Over Financial Reporting, management has excluded Exscientia plc from its assessment of internal control over financial reporting as of December 31, 2024 because it was acquired by the Company in a purchase business combination during 2024.

We have also excluded Exscientia plc from our audit of internal control over financial reporting.

Exscientia plc is a wholly-owned subsidiary whose total assets and total net loss excluded from management’s assessment and our audit of internal control over financial reporting represent 27% and 4%, respectively, of the related consolidated financial statement amounts as of and for the year ended December 31, 2024.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

Our audit of internal control over financial reporting included obtaining an

understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.

Our audits also included performing such other procedures as we considered necessary in the circumstances.

We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control over Financial Reporting

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The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates

Acquisition of Exscientia plc – Valuation of Platform Technology and In-Process Research and Development

As described in Note 4 to the consolidated financial statements, on November 20, 2024, the Company acquired all of the equity interests of Exscientia plc for $630.1 million.

Of the acquired intangible assets, $182.0 million of platform technology and $129.0 million of in-process research and development (IPR&D) were recorded.

The fair value of each intangible asset was based on the present value of future discounted cash flows prepared under the multi-period excess earnings method, with the significant inputs being the estimates of future revenues, future expenses, discount rate, and probabilities of technological and regulatory success.

The principal considerations for our determination that performing procedures relating to the valuation of platform technology and IPR&D acquired in the acquisition of Exscientia plc is a critical audit matter are (i) the significant judgment by management when developing the fair value estimate of platform technology and IPR&D acquired;

(ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to (a) future revenues, future expenses, and discount rate for platform technology and (b) future revenues, future expenses, discount rate, and probabilities of technological and regulatory success for IPR&D;

and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

External Research and Development Expenses

As described in Note 2 to the consolidated financial statements, research and development expenses comprise of costs incurred in performing research and development activities (other than those performed pursuant to contracts with customers, which are recorded as revenue), including drug discovery and development studies, external research and the purchase of laboratory supplies.

The Company recognizes expenses associated with its third-party contracted services based on the completion of activities as specified in the applicable contracts.

The Company’s research and development expenses for the year ended December 31, 2025 were $475.3 million, a portion of which relates to external research and development expenses.

The principal consideration for our determination that performing procedures relating to external research and development expenses is a critical audit matter is a high degree of auditor effort in performing procedures related to the Company’s external research and development expenses.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to the acquisition accounting, including controls over management’s valuation of platform technology and IPR&D acquired.

These procedures also included, among others (i) reading the purchase agreement;

(ii) testing management’s process for developing the fair value estimate of platform technology and

IPR&D acquired;

(iii) evaluating the appropriateness of the multi-period excess earnings methods used by management;

(iv) testing the completeness and accuracy of the underlying data used in the multi-period excess earnings methods;

and (v) evaluating the reasonableness of the significant assumptions used by management related to (a) future revenues, future expenses, and discount rate for platform technology and (b) future revenues, future expenses, discount rate, and probabilities of technological and regulatory success for IPR&D.

Evaluating management’s assumptions related to (a) future revenues and future expenses for platform technology and (b) future revenues, future expenses, and probabilities of technological and regulatory success for IPR&D involved considering (i) the current and past performance of the Exscientia plc business;

(ii) the consistency with external market and industry data;

and (iii) whether the assumptions were consistent with evidence obtained in other areas of the audit.

Professionals with specialized skill and knowledge were used to assist in evaluating (i) the appropriateness of the multi-period excess earnings methods and (ii) the reasonableness of the discount rate assumptions for platform technology and IPR&D.

These procedures included testing the effectiveness of controls relating to management’s research and development expenses, including controls over external research and development expenses.

These procedures also included, among others (i) testing external research and development expenses on a sample basis by obtaining and inspecting source documents, such as the underlying agreements with external vendors, purchase orders, invoices received, and information from third-party service providers and (ii) testing the allocation and classification of external research and development expenses.

/s/ PricewaterhouseCoopers LLP

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Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of Recursion Pharmaceuticals, Inc.

(the Company) as of December 31, 2023, the related consolidated statements of operations, comprehensive loss, stockholders’ equity and cash flows for each of the two years in the period ended December 31, 2023, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2023, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2023, in conformity with U.S.

We have audited the accompanying consolidated statements of operations, comprehensive loss, stockholders’ equity and cash flows of Recursion Pharmaceuticals, Inc.

for December 31, 2023, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the results of its operations and its cash flows for the year ended December 31, 2023, in conformity with U.S.

generally accepted accounting principles.

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These financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial statements based on our audits.

Our responsibility is to express an opinion on the Company’s financial statements based on our audit.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audit provide a reasonable basis for our opinion.

/s/ Ernst & Young LLP

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Other receivables 24,649 49,166

Prepaid data assets 11,742 29,601

Other current assets 28,566 38,107

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Accumulated deficit ( 2,076,002 ) ( 1,431,283 )

Accumulated other comprehensive loss ( 7,637 ) —

Accumulated other comprehensive income (loss)

36,717 ( 7,637 )

Total stockholders’ equity 1,130,865 1,034,782

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Income tax benefit

136 1,127 4,062

Net loss $ ( 644,759 ) $ ( 463,661 ) $ ( 328,066 )

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Net loss $ ( 644,759 ) $ ( 463,661 ) $ ( 328,066 )

Other comprehensive loss:

Other comprehensive income (loss):

Currency translation adjustments 44,354 ( 7,637 ) —

Unrealized gain on investments — — 87

Net realized loss on investments reclassified into net loss — — 39

Other comprehensive income (loss):

44,354 ( 7,637 ) —

Comprehensive loss $ ( 600,405 ) $ ( 471,298 ) $ ( 328,066 )

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Additional Paid-in-Capital

Accumulated other comprehensive loss Stockholders’

Accumulated other comprehensive income (loss)

Stockholders’

Balance as of December 31, 2022 191,022,864 $ 2 $ 1,125,360 $ ( 639,556 ) $ — 485,806

Net loss — — — ( 328,066 ) — ( 328,066 )

Other comprehensive income — — — — 126 126

Common stock issuance for private placement, net of issuance costs 15,336,734 — 143,711 — — 143,711

Stock option exercises and other 9,058,817 — 12,831 — — 12,831

Stock-based compensation — — 53,503 — — 53,503

Common stock issuance for private placement, net of issuance costs 19,658,963 — 128,093 — — 128,093

Class A shares and stock options issued for acquisitions 11,303,838 — 89,269 — — 89,269

Common stock issued for Tempus agreement 3,225,902 — 22,000 — — 22,000

Balance as of December 31, 2023 234,270,384 2 1,431,056 ( 967,622 ) — 463,436

Net loss — — — ( 463,661 ) — ( 463,661 )

Other comprehensive loss — — — — ( 7,637 ) ( 7,637 )

Stock option exercises and other 11,359,808 — 8,299 — — 8,299

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Net loss — — — ( 644,759 ) — ( 644,759 )

Other comprehensive loss — — — — ( 7,637 ) ( 7,637 )

Other comprehensive income — — — — 44,354 44,354

Stock option exercises and other 15,637,988 — 4,046 40 — 4,086

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Common stock sales issuances, net of issuance costs 104,798,594 1 528,863 — — 528,864

Class A shares and stock compensation issued for acquisitions 102,138,419 1 630,123 — — 630,124

Class A shares issued for asset acquisition

3,854,975 — 20,315 — — 20,315

Common stock issued for Tempus agreement

7,088,742 — 32,000 — — 32,000

Balance as of December 31, 2025 528,182,693 $ 5 $ 3,170,145 $ ( 2,076,002 ) $ 36,717 $ 1,130,865

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Lease expense 22,249 16,616 8,063

Loss on disposal of a business

Acquired IPR&D

Other, net 9,550 16,339 ( 2,613 )

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Other receivables and assets 32,939 ( 6,071 ) ( 7,756 )

Prepaid data assets

49,859 ( 8,757 ) 6,000

Unearned revenue ( 36,771 ) ( 28,038 ) ( 41,076 )

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Purchases of intangible assets ( 2,158 ) ( 3,350 ) ( 597 )

Decrease in cash related to disposal of a business ( 4,438 ) — —

Purchases of investments ( 3,806 ) — —

Sales and maturities of investments — — 480

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Repayment of long-term debt and finance lease liabilities ( 8,425 ) ( 4,440 ) ( 766 )

Purchase of an intangible asset ( 3,000 ) — —

Net cash provided by financing activities 521,532 304,120 140,133

Effect of exchange rate changes on cash, cash equivalents and restricted cash

18,044 ( 3,406 ) 188

Net change in cash, cash equivalents and restricted cash

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Supplemental disclosure of non-cash investing and financing information

Issuance of shares for the acquisitions of businesses $ 630,124 $ 89,269 $ —

Issuance of shares for the acquisitions of businesses and assets

$ 20,315 $ 630,124 $ 89,269

Issuance of shares for Tempus agreement 32,000 22,000 22,000

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Description of the Business

Recursion Pharmaceutical, Inc.

Recursion Pharmaceuticals, Inc.

(Recursion, the Company, we or our) is a clinical stage TechBio company decoding biology and chemistry to industrialize drug discovery.

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Intercompany balances and transactions have been eliminated in consolidation.

Certain reclassifications have been made to conform the prior period consolidated financial statements to the current period presentation.

Segment Information

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Morgan, which was obtained to secure certain Company obligations relating to tenant improvements.

Additionally, the Company holds restricted cash related to some grants, for which the funds are contractually limited to specific research and development expenditures.

Recursion also holds restricted cash as required by a lease agreement.

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Recursion classifies leases as operating or finance at the lease commencement date.

The Co mpany has elected to apply the practical expedient for short-term leases whereby Recursion does not recognize a lease liability and right-of-use asset for leases with a term of less than 12 months.

The Company has elected to apply the practical expedient for short-term leases whereby Recursion does not recognize a lease liability and right-of-use asset for leases with a term of less than 12 months.

The Company has also elected to not separate consideration in the contract between lease and non-lease components of a contract that contains a lease.

Right-of-use assets and lease liabilities are remeasured upon certain remeasurement events using the present value of remaining lease payments and estimated incremental borrowing rate upon lease modification.

For operating leases that commenced prior to the Company’s adoption of Topic 842, Recursion measured the lease liabilities and right-of-use assets using the incremental borrowing rate as of January 1, 2022.

Revenue Recognition

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Most of the Company’s stock-based awards have been made to employees.

Recursion measures compensation expense for equity awards at their grant-date fair value and recognizes compensation expense over the requisite service period, generally on a straight-line basis.

Recursion measures compensation expense for equity awards at their grant-date fair value and recognizes compensation expense over the requisite service period on a straight-line basis or using the graded vesting method.

For stock-based awards with a performance condition , Recursion recognizes stock-based compensation expense based on the probable outcome of the performance condition.

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The grant date fair value of stock options is estimated using the Black-Scholes option pricing model, which requires inputs for the expected term, stock price volatility, dividend yield and the risk-free interest rate of the options.

expected term is based on the simplified method since the Company does not have sufficient historical exercise data to estimate the expected term.

The expected term is based on the simplified method since the Company does not have sufficient historical exercise

data to estimate the expected term.

The volatility is based on an average peer historical volatility over the expected term of the option.

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The Company records these as “Research and Development” in the Consolidated Statements of Operations as the credit is earned.

The amount included in the Consolidated Statements of Operations for the year ended December 31, 2024 was insignificant.

The amount included in the Consolidated Statements of Operations for the year ended December 31, 2025 was $ 7.7 million.

The Company records the amount receivable in “Other receivables” on the Consolidated Balance Sheet.

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Assets and liabilities for such entities are translated using exchange rates at the balance sheet date.

Foreign currency translation adjustments are reflected in stockholders’ equity as a component of other comprehensive loss.

Foreign currency translation adjustments are reflected in stockholders’ equity as a component of other comprehensive income (loss).

Foreign currency transaction gains and losses on transactions not denominated in functional currency are recorded in “Other income, net” in the Consolidated Statements of Operations.

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Recently Adopted Accounting Pronouncements

In November 2023, the FASB issued ASU No.

2023-7, Segment Reporting (Topic 280) .

The standard requires new disclosures related to ASC 280 including:

disclosing significant segment expenses by category, requiring all the ASC 280 disclosures for companies with a single reportable segment and requiring ASC 280 disclosures for interim financial statements.

Recursion adopted the standard for the annual period ending December 31, 2024.

Recursion applied the amendments retrospectively to each prior reporting period presented.

The adoption of this standard did not impact Recursion’s consolidated balance sheet and statement of operations.

In December 2023, the FASB issued ASU No.

2023-09, Income Taxes (Topic 740) .

The new standard updates disclosure requirements for Accounting Standards Codification (ASC) 740 primarily by requiring additional information in the income tax rate reconciliation and additional disclosures about income taxes paid.

Recursion adopted the standard in the fourth quarter of 2025.

Recursion has adopted the standard using the prospective approach and included the required disclosures in our notes to the financial statements for income taxes (See Note 12, “Income Tax”).

The adoption of the amendments in ASU 2023-09 impacted the Company's disclosures in the

notes to the consolidated financial statements and did not have a material impact on its Consolidated Balance Sheets, Consolidated Statements of Operations or Consolidated Statements of Cash Flows.

Recent Accounting Pronouncements Not Yet Adopted

In December 2025, the FASB issued ASU No.

2025-10, Government Grants (Topic 832).

The new standard adds guidance to ASC 832 on the recognition, measurement, and presentation of government grants.

This standard will be effective for Recursion starting the annual period of 2029 and for interim reporting periods within that annual reporting period.

Early adoption is permitted.

The amendments can be applied on a prospective, modified prospective or retrospective basis.

Recursion is currently assessing the impact of adopting this guidance on its consolidated financial statements.

In September 2025, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No.

2025-07, Derivatives and Hedging (Topic 350) and Revenue from Contracts with Customers (Topic 606).

The new standard refines the scope of the guidance on derivatives in Topic 815 and clarifies the guidance on shared-based payments from a customer in ASC 606.

This standard will be effective for Recursion starting the annual period of 2027 and for interim reporting periods within that annual reporting period.

Early adoption is permitted.

Recursion is currently assessing the impact of adopting this guidance on its consolidated financial statements.

In September 2025, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No.

2025-06, Accounting for internal-use software costs (Topic 350) .

The new standard amends specific aspects of the accounting for internal-use software costs including the criteria for capitalizing software costs.

It also amends the related disclosure requirements.

This standard will be effective for Recursion starting the annual period of 2029 and for interim reporting periods within that annual reporting period.

Early adoption is permitted.

The amendments can be applied on a prospective, modified prospective or retrospective basis.

Recursion is currently assessing the impact of adopting this guidance on its consolidated financial statements.

In November 2024, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No.

2024-03, Disaggregation of Income Statement Expenses (Topic 220) .

The standard requires new disclosures in

the notes to the financial statements about certain caption expenses presented on the face of the Income Statement including information on:

The standard requires new disclosures in the notes to the financial statements about certain caption expenses presented on the face of the Income Statement including information on:

purchases of inventory;

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Recursion must also disclose a qualitative description of the amounts remaining in expense captions that are not separately disaggregated.

This standard will be effective for Recursion starting the annual period ending December 31, 2027.

This standard will be effective for Recursion starting the annual period of 2027.

Early adoption is permitted.

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Recursion is currently assessing the impact of adopting this guidance on its consolidated financial statements.

In March 2024, the SEC issued rule 33-11275, The Enhancement and Standardization of Climate-Related Disclosures for Investors .

The new rule requires Recursion to provide certain disclosures in the footnotes to the financial statements of climate-related information.

These disclosures include the impact of severe weather and other natural conditions on the Company’s consolidated balance sheet and statement of operations, to the extent they are material.

Recursion will also need to disclose a rollforward of the beginning and ending balances of its carbon offsets and renewable energy credits or certificates (RECs), if they are a material component of meeting the Company’s climate-related targets and goals.

Additionally, the Company will need to disclose whether and, if so, how severe weather events and other natural conditions and disclosed climate-related targets or transition plans materially affected estimates and assumptions in the financial statements.

The final rule’s effective dates, if adopted, will be phased in depending on the disclosure requirement starting the annual period ending December 31, 2025.

In April 2024, the SEC voluntarily stayed implementation of the new climate-related disclosure requirements pending judicial review.

The Company is currently evaluating the impact this rule will have on its consolidated financial statements and related disclosures.

In December 2023, the FASB issued ASU No.

2023-9, Income Taxes (Topic 740) .

This standard will be effective for Recursion starting the annual period ending December 31, 2025.

The amendments can be applied on a prospective or retrospective basis.

The adoption of this standard will not impact Recursion’s consolidated balance sheet and statement of operations.

Supplemental Financial Information

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Recursion is expensing the record purchases based on a contractually agreed price as “Research and Development” expenses in the Consolidated Statements of Operations as the records are downloaded.

To the extent that the Recursion payments to Tempus are greater than or less than the records purchased amount, Recursion records the applicable amount to “Other Current Assets” or “Accrued Expenses and Other Liabilities” on the Consolidated Balance Sheet, respectively.

As of December 31, 2024, Recursion had recorded $ 29.6 million within “Other Current Assets” on the Consolidated Balance Sheet related to the Tempus agreement.

To the extent that the Recursion payments to Tempus are greater than or less than the records purchased amount, Recursion records the applicable amount to “Prepaid data assets” or “Accrued data liability” on the Consolidated Balance Sheet, respectively.

The expense for the record purchases was $ 49.9 million, $ 8.4 million and $ 6.0 million for the years ended December 31, 2025, 2024 and 2023 respectively.

Property and Equipment, net

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Depreciation expense on property and equipment was $ 33.7 million, $ 18.3 million and $ 15.9 million during the years ended December 31, 2025 , 2024 and 2023, respectively.

The Company recorded an impairment of $ 1.2 million during the year ended December 31, 2023 , related to construction projects for leasehold improvements as the Company no longer intended to use them.

The impairments were recorded in “General and Administrative” in the Consolidated Statements of Operations.

The increase in each category of property and equipment from the prior year was primarily driven by the Exscientia acquisition.

See Note 4, “Acquisitions” for additional information.

Accrued Expenses and Other Liabilities

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Accrued compensation $ 31,771 $ 50,853

Accrued compute liabilities

Accrued development expenses 2,693 5,812

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Accrued professional fees

Accrued construction

Materials received not invoiced

Accrued Helix fee

Accrued license fees

Accrued other expenses 17,972 13,662

Accrued expense and other liabilities $ 70,230 $ 81,872

For the year ended December 31, 2024, the increase in accrued compensation from the prior year was driven by the Company’s acquisition of Exscientia.

See Note 4, “Acquisitions” for additional information on the acquisition.

For the year ended December 31, 2025, the decrease in accrued compensation from the prior year was driven by the Company’s decrease in headcount and initiative around strategic prioritization and streamlined operations.

Restructuring

In June 2025, Recursion announced a reduction in personnel program to help streamline the Company's operating strategy and post-integration efficiencies.

These changes resulted in a workforce reduction of approximately 20 %.

As of December 31, 2025, the Company has substantially completed the plan, which consisted of severance payments and employee benefits.

Recursion recorded these costs in “ General and Administrative ” on the Consolidated Statement of Operations as incurred.

The following summarizes the activity related to these restructuring actions and the related accrual as of December 31, 2025:

(in thousands)

Balance as of December 31, 2024 —

Expense $ 9,836

Payments $ ( 8,521 )

Balance as of December 31, 2025

Interest Income, net

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For the years ended December 31, 2025, 2024 and 2023, interest income primarily related to earnings on cash and cash equivalents in money market funds.

Interest expense primarily related to the Company’s supercomputer

financing lease.

Interest expense primarily related to the Company’s supercomputer financing lease.

Interest income, net was included in “Other income, net” on the Consolidated Statements of Operations.

RE Ventures I

In July 2025, Recursion acquired Rallybio’s interest in the joint venture, RE Ventures I, such that Recursion now owns 100 % of the interest in RE Ventures I for total consideration of $ 20.2 million.

Recursion determined that this transaction met the criteria for as an asset acquisition since the lead asset, ENPP1 (Rec-102), an inhibitor program for the treatment of hypophosphatasia (HPP), represented substantially all of the fair value of the gross assets acquired.

For the year ended December 31, 2025, Recursion recorded an expense of $ 20.2 million, representing an acquired in-process research and development (IPR&D) asset with no alternative future use, to “Research and Development” on the Consolidated Statements of Operations.

Subsequent to closing, in August 2025, Recursion issued additional consideration as part of a required milestone payment related to the RE Ventures I transaction for the initiation of an additional preclinical study.

This included the settlement of the previously recorded contingent consideration liability.

As a result, Recursion recorded an additional expense of $ 2.4 million acquired IPR&D, which was recorded to “Research and Development” on the Consolidated Statements of Operations.

The following table summarizes the total consideration transferred at acquisition date:

(in thousands)

Recursion Class A common stock $ 7,815

Contingent consideration liability 11,875

Transactions costs 292

Cash paid 171

Total $ 20,153

The following table summarizes the consideration transferred for the milestone:

(in thousands)

Recursion Class A common stock $ 12,500

Cash paid 1,768

Total $ 14,268

As part of the agreement, Rallybio is eligible to receive additional milestone payments under certain conditions.

Milestone payment obligations that are incurred prior to regulatory approval of the compound will be expensed as acquired IPR&D when recognized.

Sale of Exscientia GmbH

In March 2025, Recursion completed the sale of its Austrian operations (Exscientia GmbH) to a newly formed company, Alpha Biotechnology GmbH (Alpha).

As part of the sale, Recursion obtained a 49 % equity interest in Alpha.

Recursion entered into this transaction as part of focusing its efforts and moderating spend.

Alpha is a company leveraging a patient-tissue platform for the development of precision therapeutics for the treatment of hematological and solid cancers.

For the year ended December 31, 2025, Recursion recorded a loss on the disposal of Exscientia GmbH of $ 4.5 million, which was classified as “Other income (loss), net” on the Consolidated Statement of Operations.

Recursion also recorded a $ 4.4 million investment on the Consolidated Balance Sheet within “Other assets, non-current” related to its 49 % equity interest in Alpha, which was determined to be an equity method investment.

Exscientia plc

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See Note 10, “Stock-Based Compensation” for additional information on the Exscientia share based awards.

For the year ended December 31, 2025, Recursion updated the deferred tax liabilities from the acquisition, which were incomplete as of December 31, 2024.

As a result, Recursion adjusted the provisional deferred tax liabilities to reflect the additional information obtained about the facts and circumstances that existed as of the acquisition date.

As a result, deferred tax liabilities and goodwill increased by $ 6.0 million.

The following table summarizes the fair value of assets acquired and liabilities assumed as of the acquisition date:

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Deferred revenue

Deferred tax liability

Other liabilities ( 1,572 )

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Acquired contract liabilities in the scope of ASC 606 are an exception to the ASC 805 fair value measurement principle and were measured as if Recursion had originated the acquired contract.

obligation as if Recursion has been party to the original contract and recognized the resulting contract liability as a liability assumed.

Two acquired customer contracts had contract liabilities and for each contract Recursion reassessed the identification of performance obligations, determination of transaction price, allocation of transaction price, and measure of progress for each performance obligation as if Recursion has been party to the original contract and recognized the resulting contract liability as a liability assumed.

No contract assets in the scope of ASC 606 were acquired.

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The goodwill is not deductible for tax purposes.

As the business combination occurred in November 2024, Recursion is still finalizing the allocation of the purchase price to assets acquired and liabilities assumed.

The preliminary purchase price allocation reflected in the December 31, 2024 balance sheet is based on the current best estimate of management and subject to change.

The Company will finalize the amounts recognized as the information necessary to complete the analysis is obtained and management estimates are further refined.

The primary areas subject to finalization are the valuation of intangible assets, right-of-use assets, property and equipment and the valuation of tax assets and liabilities.

The Company expects to finalize the purchase price allocation soon but will do so no later than one year from the acquisition date.

External specialists have been engaged to assist with certain elements of applying the acquisition method of accounting.

Recursion’s Consolidated Statement of Operations for the year ended December 31, 2025 includes $ 35.3 million of revenue and $ 158.4 million of operating loss from Exscientia operations.

The valuation of the assets acquired and liabilities assumed was finalized during the three months ended December 31, 2025.

Unaudited Pro forma financial information

The following unaudited pro forma summary presents consolidated revenue and earnings of Recursion as if the Exscientia business combination had occurred on January 1, 2023 .

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Recursion did not have any material, nonrecurring pro forma adjustments directly attributable to the Exscientia business combination that are included in the pro forma information.

Valence Discovery Inc.

On May 16, 2023, Recursion acquired all of the outstanding equity interests in Valence Discovery Inc.

(Valence), a privately-held machine learning (ML) / artificial intelligence (AI) digital chemistry company.

The integration of Valence’s AI-based chemistry engine into Recursion’s operating system will allow Recursion to expand its technology-enabled drug discovery process.

This will accelerate Recursion’s digital chemistry capabilities and its drug discovery process.

The acquisition of Valence was accounted for as a business combination using the acquisition method of accounting.

The aggregate upfront consideration for the acquisition of Valence consisted of 2.2 million shares of Recursion Class A common stock, 4.4 million shares of a subsidiary of Recursion, exchangeable for shares of Recursion’s Class A common stock, 792 thousand shares issuable upon exercise of stock options held by Valence equity award holders and deferred liabilities for additional consideration.

The following table summarizes total consideration:

(in thousands)

Fair value of Recursion Class A common stock $ 11,096

Fair value of Exchangeable stock 22,473

Fair value of equity awards issued to Valance equity award holders 1,933

Deferred liabilities for additional consideration 396

Total consideration $ 35,898

The following table summarizes the fair value of assets acquired and liabilities assumed as of the acquisition date:

(in thousands)

Other receivables 536

Intangible asset - technology 15,000

Accounts payable and accrued liabilities ( 872 )

Deferred income taxes ( 3,265 )

Total identifiable net assets $ 15,634

Goodwill 20,264

Total assets acquired and liabilities assumed $ 35,898

The intangible asset is related to Valence’s ML and AI digital chemistry platform.

The estimated fair value of the intangible asset was determined using a cost approach.

This valuation technique provides the fair value of an asset based on estimates of the total costs to develop the technology.

Significant inputs used to determine the total cost includes the length of time required and service hours performed by Company employees.

The technology intangible asset is being amortized on a straight-line basis over its four year useful life.

Goodwill was calculated as the excess of the consideration transferred over the net assets recognized.

The goodwill recognized represents the assembled workforce and expected synergies, including the ability to:

(i) leverage Valence’s digital chemistry platform across Recursion’s business;

(ii) leverage Valence’s ML and AI capabilities;

(iii) integrate Recursion’s data and operating system into Valence’s platform;

and (iv) accelerate Recursion’s pipeline.

Goodwill was also impacted by the establishment of a deferred tax liability for the acquired identifiable intangible assets which have no tax basis.

The goodwill is not deductible for tax purposes.

Recursion’s consolidated statement of operations does no t include significant revenue generated from Valence’s operations for the years ended December 31, 2024 and 2023.

Operating losses associated with Valence’s operations were $ 12.4 million and $ 6.8 million for the years ended December 31, 2024 and 2023, respectively.

The Company has finalized the amounts recognized disclosed in the above tables.

Cyclica Inc .

On May 25, 2023, Recursion acquired all of the outstanding equity interests in Cyclica Inc.

(Cyclica), a privately-held Company that has built a digital chemistry software suite which enables mechanism of action deconvolution and generative chemistry suggestions based on desired targets.

Cyclica’s platform is expected to enhance the optimization of Recursion’s compounds for efficacy while minimizing liabilities through generative machine learning approaches.

The acquisition of Cyclica was accounted for as a business combination using the acquisition method of accounting.

The aggregate upfront consideration for the acquisition of Cyclica consisted of 5.8 million shares of Recursion Class A common stock, cash payments, 1.0 million shares issuable upon exercise of stock options held by Cyclica equity award holders and deferred liabilities for additional consideration.

Approximately 167 thousand of the aforementioned shares of Class A common stock consideration had not yet been issued as of December 31, 2024.

The following table summarizes total consideration:

(in thousands)

Fair value of Recursion Class A common stock $ 49,915

Fair value of equity awards issued to Cyclica equity award holders 3,852

Deferred liabilities for additional consideration 345

Total consideration $ 60,617

The following table summarizes the fair value of assets acquired and liabilities assumed as of the acquisition date:

(in thousands)

Restricted cash 1,685

Other receivables 741

Investments 1,000

Other current assets 385

Intangible assets - technology 28,000

Accounts payable and accrued liabilities ( 579 )

Unearned revenue ( 1,754 )

Deferred income taxes ( 2,075 )

Other liabilities, current ( 66 )

Other liabilities, non-current ( 139 )

Total identifiable net assets $ 29,627

Goodwill 30,990

Total assets acquired and liabilities assumed $ 60,617

The intangible assets are related to Cyclica’s digital chemistry platforms.

The estimated fair value of the intangible assets was determined using a cost approach.

This valuation technique provides the fair value of an asset based on estimates of the total costs to develop the technology.

Significant inputs used to determine the total cost includes the length of time required and service hours performed by Company employees.

The technology intangible assets are being amortized on a straight-line basis over their three-year useful lives.

Goodwill was calculated as the excess of the consideration transferred over the net assets recognized.

The goodwill recognized represents the assembled workforce and expected synergies, including the ability to:

(i) leverage Cyclica’s digital chemistry platform across Recursion’s business;

(ii) leverage Cyclica’s ML and AI capabilities;

(iii) integrate Recursion’s data and operating system into Cyclica’s platform;

and (iv) accelerate Recursion’s pipeline.

Goodwill was also impacted by the establishment of a deferred tax liability for the acquired identifiable intangible assets.

The goodwill is not deductible for tax purposes.

Recursion’s consolidated statement of operations included $ 0.3 million net revenue and $ 14.7 million operating losses associated with Cyclica’s operations for the year ended December 31, 2024.

Recursion’s consolidated statement of operations included immaterial net revenue and $ 9.6 million operating losses for the year ended December 31, 2023.

The Company has finalized the amounts recognized disclosed in the above tables.

Pro forma financial information

The following table presents the unaudited pro forma combined results of operations of Recursion, Valence and Cyclica as if the acquisitions had occurred on January 1, 2022:

Years ended December 31,

(in thousands) 2023 2022

Net revenue $ 44,861 $ 40,517

Net loss ( 336,603 ) ( 273,889 )

The unaudited pro forma financial information was prepared using the acquisition method of accounting and was based on the historical financial information of Recursion, Valence and Cyclica.

In order to reflect the occurrence of the acquisitions on January 1, 2022 as required, the unaudited pro forma financial information includes adjustments to reflect the incremental amortization expense to be incurred based on the fair values of the identifiable intangible assets acquired and the additional stock compensation expense associated with the issuance of equity compensation related to the acquisitions.

The unaudited pro forma financial information is not necessarily indicative of what the consolidated results of operations would have been had the acquisitions been completed on January 1, 2022.

In addition, the unaudited pro forma financial information is not a projection of the future results of operations of the combined company nor does it reflect the expected realization of any cost savings or synergies associated with the acquisitions.

The Company has entered into various long-term real estate operating leases primarily related to office, research and development, operating activities and an equipment financing lease related to the supercomputer.

The Company’s leases have remaining terms from under one year to eight years and some of those leases include options that provide Recursion with the ability to extend the lease term, generally for five years .

The Company’s leases have remaining terms from under one year to seven years and some of those leases include options that provide Recursion with the ability to extend the lease term, generally for five years .

The options are included in the lease term when it is reasonably certain that the option will be exercised.

For the year ended December 31, 2024, Recursion entered into lease modifications resulting in a decrease to the right-of-use asset and lease liability of $ 3.1 million.

For the year ended December 31, 2025, Recursion entered into lease modifications and terminations resulting in a decrease to the right-of-use asset and lease liability of $ 10.1 million.

The modifications had no impact to the Consolidated Statements of Operations.

This impact included the lease surrender of the Vienna facilities of Exscientia GmbH in March 2025 , which resulted in a $ 5.2 million reduction to both the right-of-use asset and lease liability.

In connection with this surrender, the Company also incurred a lease termination fee of $ 5.2 million, which was classified as “Other income (loss), net” on the Consolidated Statement of Operations.

Additionally, the Company entered into a lease modification related to the Schrodinger leases to decrease the lease terms, which now ended during the second quarter of 2025 .

This resulted in a decrease to both the right-of-use asset and lease liability by $ 4.9 million.

As a part of the lease modifications and termination, Recursion recorded leasehold impairments of $ 6.0 million.

For the year ended December 31, 2024, Recursion entered into lease modifications resulting in a decrease to the right-of-use assets and lease liabilities of $ 3.1 million.

The modifications resulted in an insignificant impact to the Consolidated Statements of Operations.

Exscientia Acquisition

In November 2024, Recursion acquired Exscientia as part of a business combination.

As part of that transaction Recursion obtained several new leases as discussed below.

Each lease was recognized and measured at fair value on the acquisition date as if the acquired leases were new leases by applying ASC 842 - Leases.

See Note 4, “Acquisitions” for additional information on the acquisition.

The Company has an operating lease agreement for lab space at Milton Park in Oxfordshire, England with approximately 20,151 square feet (the “Milton Park Lease”).