EXAGEN INC. 10-Q

Item 1. Financial Statements Exagen Inc. Unaudited Condensed Balance Sheets (in thousands, except share and per share amounts) September 30, 2025 December 31, 2024 Assets Current assets: Cash and cash equivalents $ 35,652 $ 22,036 Accounts receivable, net 11,092 7,835 Prepaid expenses and other current assets 5,845 6,584 Total current assets 52,589 36,455 Property and equipment, net 7,494 5,283 Operating lease right-of-use assets 1,685 2,401 Other assets 1,055 550 Total assets $ 62,823 $ 44,689 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 3,559 $ 4,137 Accrued and other current liabilities 5,684 6,916 Deferred revenue 641 733 Finance lease liabilities, current 1,134 201 Operating lease liabilities, current 1,192 1,096 Borrowings, current 680 423 Total current liabilities 12,890 13,506 Borrowings, non-current, net of discounts and debt issuance costs 22,261 19,822 Finance lease liabilities, non-current 2,141 157 Operating lease liabilities, non-current 759 1,664 Warrant liability 6,634 — Total liabilities 44,685 35,149 Commitments and contingencies (Note 5) Stockholders' equity: Preferred stock, $ 0.001 par value per share; 10,000,000 shares authorized, no shares issued or outstanding as of September 30, 2025 and December 31, 2024 — — Common stock, $ 0.001 par value per share; 200,000,000 shares authorized as of September 30, 2025 and December 31, 2024; 22,510,313 and 17,640,328 shares issued and outstanding as of September 30, 2025 and December 31, 2024, respectively 23 18 Additional paid-in capital 327,724 303,853 Accumulated deficit ( 309,609 ) ( 294,331 ) Total stockholders' equity 18,138 9,540 Total liabilities and stockholders' equity $ 62,823 $ 44,689 The accompanying notes are an integral part of these unaudited condensed financial statements 1 Exagen Inc. Unaudited Condensed Statements of Operations (in thousands, except share and per share amounts) Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 Revenue $ 17,244 $ 12,507 $ 49,944 $ 41,986 Cost of revenue 7,169 5,526 20,351 17,351 Gross profit 10,075 6,981 29,593 24,635 Operating expenses: Selling, general and administrative expenses 11,445 10,163 34,191 31,169 Research and development expenses 1,730 1,481 4,497 3,719 Total operating expenses 13,175 11,644 38,688 34,888 Loss from operations ( 3,100 ) ( 4,663 ) ( 9,095 ) ( 10,253 ) Interest expense ( 1,319 ) ( 562 ) ( 2,988 ) ( 1,671 ) Loss on extinguishment of debt — — ( 295 ) — Change in fair value of warrant liability ( 2,670 ) — ( 3,108 ) — Interest income 3 197 246 570 Loss before income taxes ( 7,086 ) ( 5,028 ) ( 15,240 ) ( 11,354 ) Income tax expense ( 1 ) — ( 38 ) — Net loss $ ( 7,087 ) $ ( 5,028 ) $ ( 15,278 ) $ ( 11,354 ) Net loss per share, basic and diluted $ ( 0.31 ) $ ( 0.28 ) $ ( 0.73 ) $ ( 0.63 ) Weighted-average number of shares used to compute net loss per share, basic and diluted 22,940,412 18,254,937 20,878,373 18,127,549 The accompanying notes are an integral part of these unaudited condensed financial statements 2 Exagen Inc. Unaudited Condensed Statements of Stockholders' Equity (in thousands, except share amounts) Common Stock Additional Paid-In Capital Accumulated Deficit Total Stockholders' Equity Shares Amount Balances as of December 31, 2024 17,640,328 $ 18 $ 303,853 $ ( 294,331 ) $ 9,540 Issuance of stock from vested restricted stock units 229,151 — — — — Issuance of stock under Employee Stock Purchase Plan 80,554 — 198 — 198 Stock-based compensation — — 417 — 417 Net loss — — — ( 3,752 ) ( 3,752 ) Balances as of March 31, 2025 17,950,033 18 304,468 ( 298,083 ) 6,403 Issuance of stock from public offering, net of issuance costs of $ 1,598 3,852,500 4 18,623 — 18,627 Issuance of stock from warrant exercises 107,969 — — — — Issuance of stock from vested restricted stock units 88,129 — — — — Exercise of stock options 108 — — — — Stock-based compensation — — 443 — 443 Net loss — — — ( 4,439 ) ( 4,439 ) Balances as of June 30, 2025 21,998,739 22 323,534 ( 302,522 ) 21,034 Issuance of stock under ATM, net of issuance costs of $ 145 360,554 1 3,397 — 3,398 Issuance of stock from vested restricted stock units 74,235 — — — — Issuance of stock under Employee Stock Purchase Plan 76,785 — 200 — 200 Stock-based compensation — — 593 — 593 Net loss — — — ( 7,087 ) ( 7,087 ) Balances as of September 30, 2025 22,510,313 $ 23 $ 327,724 $ ( 309,609 ) $ 18,138 The accompanying notes are an integral part of these unaudited condensed financial statements 3 Exagen Inc. Unaudited Condensed Statements of Stockholders' Equity (in thousands, except share amounts) Common Stock Additional Paid-In Capital Accumulated Deficit Total Stockholders' Equity Shares Amount Balances as of December 31, 2023 17,045,954 $ 17 $ 301,893 $ ( 279,216 ) $ 22,694 Issuance of stock from vested restricted stock units 217,056 — — — — Exercise of stock options 326 — — — — Issuance of stock under Employee Stock Purchase Plan 54,605 — 104 — 104 Stock-based compensation — — 553 — 553 Net loss — — — ( 3,360 ) ( 3,360 ) Balances as of March 31, 2024 17,317,941 17 302,550 ( 282,576 ) 19,991 Issuance of stock from vested restricted stock units 62,998 — — — — Exercise of stock options 636 — — — — Stock-based compensation — — 560 — 560 Net loss — — — ( 2,966 ) ( 2,966 ) Balances as of June 30, 2024 17,381,575 17 303,110 ( 285,542 ) 17,585 Issuance of stock from vested restricted stock units 13,155 — — — — Exercise of stock options 84,162 — 22 — 22 Issuance of stock under Employee Stock Purchase Plan 41,443 1 71 — 72 Stock-based compensation — — 217 — 217 Net loss — — — ( 5,028 ) ( 5,028 ) Balances as of September 30, 2024 17,520,335 $ 18 $ 303,420 $ ( 290,570 ) $ 12,868 The accompanying notes are an integral part of these unaudited condensed financial statements 4 Exagen Inc. Unaudited Condensed Statements of Cash Flows (in thousands) Nine Months Ended September 30, 2025 2024 Cash flows from operating activities: Net loss $ ( 15,278 ) $ ( 11,354 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 1,518 1,309 Amortization of debt discount and debt issuance costs 247 112 Amortization of loan commitment fees 461 — Change in fair value of warrant liability 3,108 — Loss on extinguishment of debt 295 — Non-cash operating lease expense 717 656 Stock-based compensation 1,453 1,330 Other 147 317 Changes in assets and liabilities: Accounts receivable, net ( 3,257 ) ( 2,836 ) Prepaid expenses and other current assets 1,358 662 Other assets 494 50 Operating lease liabilities ( 808 ) ( 720 ) Accounts payable ( 545 ) ( 2,028 ) Deferred revenue ( 92 ) — Accrued and other current liabilities ( 430 ) ( 1,140 ) Net cash used in operating activities ( 10,612 ) ( 13,642 ) Cash flows from investing activities: Purchases of property and equipment ( 597 ) ( 369 ) Proceeds from disposal of property and equipment 6 — Net cash used in investing activities ( 591 ) ( 369 ) Cash flows from financing activities: Proceeds from common stock issued in public offering, net of issuance costs 18,627 — Proceeds from common stock issued under ATM, net of issuance costs 3,436 — Proceeds from common stock issued under Employee Stock Purchase Plan 398 176 Proceeds from exercise of stock options — 22 Principal payments on finance lease obligations ( 313 ) ( 379 ) Principal payments on notes payable obligations ( 427 ) ( 266 ) Proceeds from issuance of debt and warrants, net of discounts 23,672 — Payment to extinguish debt ( 19,705 ) — Payment of debt issuance costs ( 869 ) — Net cash provided by (used in) financing activities 24,819 ( 447 ) Net increase (decrease) in cash, cash equivalents and restricted cash 13,616 ( 14,458 ) Cash, cash equivalents and restricted cash, beginning of period 22,236 36,693 Cash, cash equivalents and restricted cash, end of period $ 35,852 $ 22,235 Supplemental disclosure of cash flow information: Cash paid for interest $ 2,107 $ 1,307 Cash paid for taxes $ 38 $ 12 Supplemental disclosure of non-cash items: Unpaid equipment settled under financing arrangement $ 682 $ — Right-of-use assets obtained in exchange for finance lease liabilities $ 3,231 $ — Recognition of warrant liability $ 3,525 $ — Equipment purchased under notes payable obligations $ — $ 706 Unpaid financing costs included in accounts payable and accrued liabilities $ 39 $ — Costs incurred, but not paid, in connection with capital expenditures $ 17 $ 20 The accompanying notes are an integral part of these unaudited condensed financial statements 5 Exagen Inc. Notes to Unaudited Interim Condensed Financial Statements Note 1. Organization Description of Business Exagen Inc. (the Company) is a medical technology company primarily focused on the design, development and commercialization of a next-generation portfolio of testing products under the AVISE ® brand, which allow for the differential diagnosis, prognosis and monitoring of complex rheumatic, autoimmune and autoimmune-related disease including, among others, systemic lupus erythematosus (SLE) and rheumatoid arthritis (RA). Liquidity The Company has incurred recurring losses and negative cash flows from operating activities since inception. The Company anticipates that it will continue to incur net losses in future periods. As of September 30, 2025, the Company had cash and cash equivalents of $ 35.7 million and had an accumulated deficit of $ 309.6 million. Since inception, the Company has financed its operations primarily through a combination of equity financings, debt financing arrangements, and revenue from sales of the Company's products. Based on the Company's current business plan, management believes that its existing capital resources will be sufficient to fund the Company's obligations for at least twelve months following the issuance of these condensed financial statements. On April 25, 2025, the Company and Perceptive Credit Holdings IV, LP (Perceptive) entered into the Credit Agreement (as defined below), under which an initial term loan of $ 25.0 million was funded, $ 19.7 million of which the Company used to repay the 2017 Term Loan (as defined below). The Company received $ 3.0 million in proceeds, net of issuance costs and repayment of the 2017 Term Loan. The term loan facility allows the Company to draw up to an aggregate principal amount of $ 75.0 million in several tranches, subject to specified milestone requirements. Additionally, pursuant to the Credit Agreement, the Company also issued a warrant certificate to purchase up to 1,150,000 shares of common stock (the Warrant Certificate), 400,000 of which vested and became exercisable upon issuance (the Tranche A Warrant Shares) and up to 750,000 of which will vest and become exercisable if and when the additional debt tranches are drawn by the Company. See “Note 4 Borrowings—Perceptive Term Loan Facility ” for more information. On May 9, 2025, the Company issued and sold an aggregate of 3,852,500 shares of its common stock at a public offering price of $ 5.25 per share, for aggregate net proceeds of $ 18.6 million after deducting underwriting discounts and commissions and other offering expenses. See “Note 7 Stockholders' Equity—2025 Public Offering ” for more information. To execute its business plans, the Company may need additional funding to support its continuing operations and pursue its growth strategy. Until such time as the Company can achieve significant cash flows from operations, if ever, it may need to finance its operations through the sale of its stock, debt financings or other strategic transactions. Although the Company has been successful in raising capital in the past, there is no assurance that it will be successful in obtaining such additional financing on terms acceptable to the Company, if at all. The terms of any financing may adversely affect the holdings or the rights of the Company's stockholders. Although management believes the Company's existing capital resources are adequate to fund operations for the next twelve months, if the Company is unable to obtain additional funding in the future, the Company could be forced to delay, reduce or eliminate some or all of its programs, product portfolio expansion plans or commercialization efforts, which could have a material adverse effect on the Company's business, operating results and financial condition and the Company's ability to achieve its intended business objectives. Note 2. Summary of Significant Accounting Policies Basis of Presentation and Use of Estimates The accompanying unaudited interim condensed balance sheets as of September 30, 2025, condensed statements of operations and stockholders' equity for the three and nine months ended September 30, 2025 and 2024, cash 6 flows for the nine months ended September 30, 2025 and 2024 and the related footnote disclosures are unaudited and have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (SEC), and with accounting principles generally accepted in the United States (GAAP) applicable to interim financial statements. These unaudited condensed financial statements and related footnote disclosures should be read in conjunction with the Company’s audited financial statements for the fiscal year ended December 31, 2024, included in its Annual Report on Form 10-K filed with the SEC on March 11, 2025 (the 2024 Annual Report). In management's opinion, the unaudited interim condensed financial statements have been prepared on the same basis as the audited financial statements included in the 2024 Annual Report and include all normal adjustments, necessary for the fair presentation of the Company's financial position as of September 30, 2025 and its results of operations for the periods presented. The results for the three and nine months ended September 30, 2025 are not necessarily indicative of the results expected for the full fiscal year or any other interim period. The year-end condensed balance sheet data was derived from audited financial statements, but does not include all disclosures required by GAAP. Certain reclassifications have been made to prior period amounts to conform to the current presentation. The preparation of the accompanying unaudited condensed financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities as of the date of the condensed financial statements, and the reported amounts of revenue and expenses during the reporting period. Actual results could materially differ from those estimates. Significant estimates and assumptions made in the accompanying unaudited condensed financial statements include, but are not limited to revenue recognition, the fair value of the warrant liability, the estimated incremental borrowing rate for the determination of the Company's operating and finance lease right-of-use (ROU) assets, and the recoverability of its long-lived assets and net deferred tax assets (and related valuation allowance). The Company evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors and adjusts those estimates and assumptions when facts and circumstances dictate. Actual results could materially differ from those estimates. Concentration of Credit Risk and Other Risk and Uncertainties Financial instruments that potentially subject the Company to credit risk consist principally of cash, cash equivalents and accounts receivable. Substantially all the Company's cash and cash equivalents are held at one financial institution that management believes is of high credit quality. Such deposits may, at times, exceed federally insured limits. The Company has not experienced any losses on its cash or cash equivalents. Significant payors and customers are those which represent more than 10% of the Company's total revenue or accounts receivable balance at each respective balance sheet date. For each significant payor and customer, revenue as a percentage of total revenue and accounts receivable as a percentage of total accounts receivable are as follows: Revenue Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 Customer A 24 % 20 % 23 % 24 % Customer B 21 % 22 % 19 % 21 % Customer C * * 10 % * Accounts Receivable, Net September 30, 2025 December 31, 2024 Customer A 14 % 13 % Customer B 17 % 25 % Customer C 16 % * * Less than 10%. 7 For the three months ended September 30, 2025 and 2024, approximately 87 % and 93 %, respectively, of the Company's revenue was related to the AVISE ® CTD test. Revenue related to AVISE ® CTD test for the nine months ended September 30, 2025 and 2024 was approximately 89 % and 91 %, respectively. The Company is dependent on key suppliers for certain laboratory materials, consisting primarily of reagents and biomarkers used in our diagnostic tests. For the three months ended September 30, 2025 and 2024 approximately 97 % and 98 %, respectively, of the Company's diagnostic testing supplies were purchased from two suppliers. For the nine months ended September 30, 2025 and 2024, approximately 95 % and 97 %, respectively, of the Company's diagnostic testing supplies were purchased from three suppliers. An interruption in the supply of these materials would impact the Company's ability to perform testing services. Disaggregation of Revenue The following table includes the Company's revenues as disaggregated by payor and customer category (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 Revenue: Commercial $ 9,454 $ 6,779 $ 27,025 $ 22,314 Government 3,988 2,633 11,621 10,276 Client direct bill(1) 3,733 2,981 11,100 9,175 Other(2) 69 114 198 221 Total revenue $ 17,244 $ 12,507 $ 49,944 $ 41,986 (1) Includes hospitals, other laboratories, etc. (2) Includes patient self-pay . Cash, Cash Equivalents and Restricted Cash The Company considers all highly liquid investments purchased with a remaining maturity date of three months or less upon acquisition to be cash equivalents. These investments are stated at cost, which approximates fair value. The Company has an arrangement with a financial institution with which it has an existing banking relationship, whereby in exchange for the issuance of corporate credit cards, the Company agreed to obtain a certificate of deposit with this financial institution in the amount of $ 0.2 million as collateral for the balances borrowed on these cards (the Credit Card Program). The Company has classified the value of this certificate of deposit (including all interest earned thereon) within other assets in the accompanying balance sheets. The Company has the right to terminate the Credit Card Program at any time. Upon termination of the Credit Card Program and repayment of all outstanding balances owed, the Company may redeem the certificate of deposit (and all interest earned thereon). Cash, cash equivalents, and restricted cash presented in the accompanying condensed statements of cash flows consist of the following (in thousands): September 30, 2025 December 31, 2024 Cash and cash equivalents $ 35,652 $ 22,036 Restricted cash 200 200 Total cash, cash equivalents and restricted cash $ 35,852 $ 22,236 Long-Lived Assets The Company’s long-lived assets are comprised principally of its property and equipment and operating lease assets. The Company amortizes all finite-lived intangible assets over their respective estimated useful lives. Operating lease assets are amortized over the term of the leases. In considering whether long-lived assets are impaired, the Company combines its long-lived assets into groupings, a determination which is made principally on the basis of whether the assets are specific to a particular test offered or technology being developed. If the 8 Company identifies a change in the circumstances related to its long-lived assets that indicates the carrying value of any such asset may not be recoverable, the Company will perform an impairment analysis. A long-lived asset is deemed to be impaired when the undiscounted cash flows expected to be generated by the asset (or asset group) are less than the asset’s carrying amount. Management’s estimates of future cash flows are impacted by projected test volume and levels of reimbursement, as well as expectations related to the future cost structure of the entity. Any required impairment loss would be measured as the amount by which the asset’s carrying value exceeds its fair value, and would be recorded as a reduction in the carrying value of the related asset and a charge to operating expense. Revenue Recognition Substantially all of the Company's revenue has been derived from sales of its testing products and is primarily comprised of a high volume of relatively low-dollar transactions. The Company primarily markets its testing products to rheumatologists and their physician assistants in the United States. The healthcare professionals who order the Company's testing products and to whom test results are reported are generally not responsible for payment for these products. The parties that pay for these services (each, a payor) consist of commercial payors (healthcare insurers), government payors (primarily Medicare and Medicaid), client payors (hospitals, other laboratories, etc.) and patient self-pay. The Company recognizes revenue in accordance with Accounting Standards Codification (ASC) Topic 606, Revenue from Contracts with Customers and follows a five-step process to determine the amount and timing of revenue recognized: (1) identify the contract with the customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to performance obligations in the contract, and (5) recognize revenue when (or as) the performance obligation is satisfied. The Company's service is a single performance obligation that is completed upon the delivery of test results to the prescribing physician which triggers revenue recognition. Payors are generally billed at the Company's list price, unless a separate pricing contract is in place. Net revenues recognized consist of amounts billed net of allowances for differences between amounts billed and the estimated consideration the Company expects to receive from such payors. The process for estimating revenues and the ultimate collection of accounts receivable involves significant judgment and estimation. The Company follows a standard process, which considers historical denial and collection experience, insurance reimbursement policies and other factors, to estimate allowances and implicit price concessions. Adjustments are recorded in the current period as changes in estimates occur. Further adjustments to the allowances, based on actual receipts, are recorded upon settlement. Included in revenues for the three months ended September 30, 2025 and 2024 was a $ 0.4 million and a $ 0.6 million net revenue increase, respectively, associated with changes in estimated variable consideration related to performance obligations satisfied in previous periods. Included in revenues for the nine months ended September 30, 2025 and 2024 was a $ 1.0 million and a $ 6.2 million net revenue increase, respectively, associated with changes in estimated variable consideration related to performance obligations satisfied in previous periods. The transaction price is estimated using an expected value method on a portfolio basis. Variable consideration is included in the transaction price only to the extent it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainties with respect to the amount are resolved. The Company's portfolios are grouped per payor (i.e. each individual commercial payor, Medicare, Medicaid, client payors, patient self-pay, etc.) and per test. Consideration may be constrained and excluded from the transaction price in situations where there is no contractually agreed upon reimbursement coverage or in absence of a predictable pattern and history of collectability with a payor. Accordingly, in such situations revenues are recognized on the basis of actual cash collections. Additionally, from time to time, the Company may issue refunds to payors for overpayments or amounts billed in error. Any refunds are accounted for as reductions in revenues in the condensed statements of operations as an element of variable consideration. The estimated expected refunds are accrued as a liability on the Company’s condensed balance sheets. Collection of the Company's net revenues from payors is normally a function of providing complete and correct billing information, along with any requested medical or other claims-related information to the healthcare insurers. This generally occurs within 30 to 90 days of billing, however, the amount and timing of any reimbursements or collections for the Company's billed tests may vary by payor and other circumstances. Contracts do not contain significant financing components based on the typical period of time between performance of services and collection of consideration. 9 Amounts received prior to satisfying the above revenue recognition criteria are recognized as deferred revenue until all applicable revenue recognition criteria are met. Deferred revenue represented the portion of payments received that have not been earned. During the fourth quarter of 2024 and the first half of 2025, the Company entered into various work orders to perform diagnostic testing services including identifying and evaluating biomarkers, and received nonrefundable, upfront payments for these services. The Company had deferred revenue related to these contracts of $ 0.6 million and $ 0.7 million as of September 30, 2025 and December 31, 2024, respectively. The Company recognized revenue of $ 0.4 million out of the beginning deferred revenue balance during the nine months ended September 30, 2025 and no revenue was recognized out of the beginning deferred revenue balance during the nine months ended September 30, 2024. The Company expects to recognize revenue from unfulfilled performance obligations associated with service contracts within one year or less. Accounts Receivable and Allowance for Credit Losses The Company accrues an allowance for credit losses against its accounts receivable based on management’s current estimate of amounts that will not be collected. Management’s estimates are typically based on historical loss information adjusted for current conditions. The Company generally does not perform evaluations of the financial condition of the Company's customers and generally does not require collateral. The allowance for credit losses was zero as of each of September 30, 2025 and 2024. Adjustments for implicit price concessions attributable to variable consideration, as discussed above, are incorporated into the measurement of the accounts receivable balances and are not part of the allowance for credit losses. Accounts receivable was $ 11.1 million and $ 7.8 million at September 30, 2025 and December 31, 2024, respectively. Loan Commitment Fees Loan commitment fees are generally included as a reduction of the proceeds from the outstanding debt. If there were no borrowings drawn on the related credit facility, the loan commitment fees are classified as assets until the related debt is drawn. The Company’s loan commitment fee is comprised of an upfront cash payment and a contingent obligation to issue future warrants to Perceptive in connection with the Credit Agreement (as defined below). The amounts have been recognized in prepaid expenses and other current assets for the short-term portion of $ 1.2 million and within other assets for the long-term portion of $ 0.4 million on the condensed balance sheets as of September 30, 2025. As the Company is not reasonably certain it will draw on the future debt tranches, the loan commitment fees are amortized ratably into interest expense over the outstanding draw periods. During the three and nine months ended September 30, 2025, the Company recognized $ 0.3 million and $ 0.5 million, respectively, in non-cash interest expense related to the amortization of the loan commitment fees within the Company's condensed statements of operations. Stock-Based Compensation The Company recognizes compensation expense for all stock-based awards to employees and directors based on the grant date estimated fair values over the requisite service period of the awards (usually the vesting period) on a straight-line basis. The fair value of stock options and purchases under the Company's 2019 Employee Stock Purchase Plan (ESPP) is determined using the Black-Scholes-Merton (BSM) option pricing model, which requires management to make certain assumptions regarding a number of complex and subjective variables. Equity award forfeitures are recorded as they occur. The BSM option pricing model incorporates various inputs, including the fair value of the Company's common stock, expected volatility, expected term and risk-free interest rates. Volatility is based on the Company's historical calculated volatility since being publicly traded. The Company computes the historical volatility data using the daily closing prices of the Company’s common stock during the equivalent period that approximates the calculated expected term of the stock options. The weighted-average expected term of options was calculated using the simplified method, as the Company has concluded that its stock option exercise history does not provide a reasonable basis upon which to estimate the expected term. The risk-free interest rate for periods within the contractual term of the option is based on the U.S. Treasury yield in effect at the time of grant. The dividend yield is zero, as the Company has never declared or paid dividends and has no plans to do so in the foreseeable future. The fair value of each restricted stock unit (RSU) is determined on the grant date using the closing price of the Company's common stock on that date. The Company's RSUs generally vest in equal annual installments over four years from the date of grant or, for grants to new hires, date of hire. Vesting of the RSU is subject to the holder's continued service with the Company. The Company issues new shares of common stock to satisfy the RSUs upon vesting. 10 Comprehensive Loss Comprehensive loss is defined as a change in equity of a business enterprise during a period, resulting from transactions from nonowner sources. There have been no items qualifying as other comprehensive loss and, therefore, for all periods presented, the Company's comprehensive loss was the same as its reported net loss. Net Loss Per Share Basic net loss per share attributable to common stockholders is calculated by dividing the net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period. Diluted net loss per share attributable to common stockholders is computed by dividing the net loss attributable to common stockholders by the weighted-average number of common stock equivalents outstanding for the period determined using the treasury-stock and if-converted methods. The weighted-average number of shares used to compute basic and diluted shares includes shares issuable upon the exercise of pre-funded warrants at a nominal price. Potentially dilutive common stock equivalents are comprised of warrants for the purchase of common stock, stock options, RSUs outstanding under the Company's 2019 Incentive Award Plan (the 2019 Plan) and shares of the Company's common stock pursuant to the ESPP. For the three and nine months ended September 30, 2025 and 2024, there is no difference in the number of shares used to calculate basic and diluted shares outstanding, as the inclusion of the potentially dilutive securities would be anti-dilutive. Potentially dilutive securities not included in the calculation of diluted net loss per share, because to do so would be anti-dilutive, are as follows (in common stock equivalent shares): September 30, 2025 September 30, 2024 Warrants to purchase common stock 580,339 325,330 Common stock options 526,889 576,151 Restricted stock units 1,764,912 1,810,468 Employee stock purchase plan 8,219 12,570 Total 2,880,359 2,724,519 Recent Accounting Pronouncements From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (FASB), or other standard setting bodies and adopted by the Company as of the specified effective date. Unless otherwise discussed, Accounting Standards Updates (ASU) not included in the Company’s disclosures were assessed and determined to be either not applicable or are not expected to have a material impact on the Company's financial statements or disclosures. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (ASU 2023-09), which requires additional income tax disclosures in the rate reconciliation table for federal, state and foreign income taxes, in addition to more details about the reconciling items in some categories when items meet a certain quantitative threshold. ASU 2023-09 is effective for annual periods beginning after December 15, 2024 with early adoption permitted. This update will result in enhanced income tax disclosures, and the Company does not expect any impact to income tax expense. In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40) (ASU 2024-03). This update requires entities to include more detailed information about the types of expenses, including purchases of inventory, employee compensation, depreciation, amortization, and depletion, in commonly presented expense captions such as cost of sales, research and development, and selling, general and administrative expenses. ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of this standard on its financial statement presentation and disclosures. In July 2025, the FASB issued ASU 2025-05, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets (ASU 2025-05). ASU 2025-05 amends ASC 326-20 to provide a practical expedient related to the estimation of expected credit losses for current accounts receivable and 11 current contract assets that arise from transactions accounted for under ASC 606. ASU 2025-05 is effective for annual periods beginning after December 15, 2025, and interim reporting periods within that annual period, with early adoption permitted. The Company is currently evaluating the impact of this standard on its financial statement presentation and disclosures. On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was enacted by the U.S. government. The OBBBA includes significant provisions, such as the permanent extension of expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. The Company is currently assessing the impact of the OBBBA on its financial statements. Note 3. Other Financial Information Prepaid Expenses and Other Current Assets Prepaid expenses and other current assets consist of the following (in thousands): September 30, 2025 December 31, 2024 Diagnostic testing supplies $ 3,525 $ 5,725 Prepaid maintenance and insurance contracts 1,120 829 Loan commitment fees 1,157 — Other prepaid expenses and other current assets 43 30 Prepaid expenses and other current assets $ 5,845 $ 6,584 Property and Equipment, net Property and equipment, net consist of the following (in thousands): September 30, 2025 December 31, 2024 Furniture and fixtures $ 121 $ 105 Laboratory equipment 5,199 4,248 Computer equipment and software 2,121 2,113 Leasehold improvements 3,336 3,286 Finance lease right-of-use assets 3,061 — Construction in progress 413 1,543 Total property and equipment 14,251 11,295 Less: accumulated depreciation and amortization ( 6,757 ) ( 6,012 ) Property and equipment, net $ 7,494 $ 5,283 Depreciation and amortization expense for the three months ended September 30, 2025 and 2024 was approximately $ 0.6 million and $ 0.4 million, respectively. For the nine months ended September 30, 2025 and 2024, depreciation and amortization expense was approximately $ 1.5 million and $ 1.3 million, respectively. At September 30, 2025 and December 31, 2024, the gross book value of assets under finance leases was $ 3.5 million and $ 2.0 million, respectively. 12 Accrued and Other Current Liabilities Accrued and other current liabilities consist of the following (in thousands): September 30, 2025 December 31, 2024 Accrued payroll and related expenses $ 4,907 $ 5,046 Other accrued liabilities 777 1,870 Accrued and other current liabilities $ 5,684 $ 6,916 Note 4. Borrowings Perceptive Term Loan Facility On April 25, 2025, the Company entered into a Credit Agreement and Guaranty (the Credit Agreement) with Perceptive, which provides for a senior secured delayed draw term loan facility in an aggregate principal amount of up to $ 75.0 million (the Perceptive Term Loan Facility) broken into four tranches. An initial tranche of $ 25.0 million (the Tranche A Loan) was funded on April 25, 2025, of which $ 19.7 million was used to repay the 2017 Term Loan (as defined below) with Innovatus Life Sciences Lending Fund I, LP (Innovatus). Additional tranches of up to $ 10.0 million (the Tranche B Loan), $ 10.0 million (the Tranche C Loan), and $ 30.0 million (the Tranche D Loan, and collectively with the Tranche A Loan, the Tranche B Loan and the Tranche C Loan, the Term Loans) may be drawn at the Company's option subject to the Company’s satisfaction of certain conditions, including specified revenue milestones. The Perceptive Term Loan Facility matures on April 25, 2030, and includes an interest-only period through maturity, with all outstanding principal and accrued interest due on the maturity date. The Perceptive Term Loan Facility accrues interest at an annual rate equal to the greater of (i) Term Secured Overnight Financing Rate ( SOFR ) or (ii) 4.75 %, plus a margin of 7.0 % (the Applicable Margin), payable monthly in arrears. Upon the occurrence and during the continuance of an event of default, the Applicable Margin may be increased by 4.0 % at Perceptive’s election. The Company may prepay the Term Loans at any time, subject to prepayment premiums ranging from 2.0 % to 10.0 % of the principal amount, depending on the date of prepayment. The Credit Agreement is secured by a first-priority lien on substantially all of the Company’s existing and future assets and includes customary affirmative, negative, and financial covenants. These include, among others, restrictions on additional indebtedness, liens, dividends, mergers and acquisitions, and affiliate transactions. The Credit Agreement also requires that the Company maintain a minimum unrestricted cash balance of $ 3.0 million and achieve specified net revenue levels on a quarterly basis. As of September 30, 2025, the Company was in compliance with all covenants required under the Credit Agreement. In addition, on April 25, 2025, as consideration for the Credit Agreement, the Company issued to Perceptive the Warrant Certificate. The 400,000 Tranche A Warrant Shares vested and became exercisable on the date of issuance, and warrants to purchase up to 750,000 shares of the Company's common stock will vest and become exercisable if and when the additional debt tranches are drawn by the Company. The Warrant Certificate has a ten-year term from the applicable vesting date and includes broad-based weighted anti-dilution protection for certain dilutive issuances and for certain recapitalization events and registration rights provisions. The Company concluded that the Warrant Certificate qualifies for liability classification and recorded the fair value of $ 2.2 million at issuance as a debt discount. The Company also recognized debt issuance costs of $ 1.4 million as additional debt discount. These amounts are amortized over the remaining term of the Perceptive Term Loan Facility under the effective interest method. The proportionate amount of the upfront closing fee paid of $ 1.1 million and the fair value of $ 1.3 million related to the contingent warrants that may be issued for future debt tranches are recorded as a loan commitment asset and amortized as discussed in "Note 2. Summary of Significant Accounting Policies." For the three and nine months ended September 30, 2025, the Company recognized $ 1.2 million and $ 2.0 million, respectively, of interest expense, including $ 0.1 million and $ 0.2 million, respectively, of debt discount amortization in connection with the Perceptive Term Loan Facility. The effective interest rate was 16.2 % per annum. As of September 30, 2025, the Perceptive Term Loan Facility had a carrying value of $ 21.6 million, classified within borrowings, non-current, net of discounts and debt issuance costs in the accompanying condensed balance sheets. 13 2017 Term Loan In September 2017, the Company executed a term loan agreement (the 2017 Term Loan) with Innovatus, as amended (the Amended Loan Agreement), pursuant to which the Company borrowed $ 25.0 million. As of March 31, 2025, the 2017 Term Loan was fully drawn with an outstanding principal balance of $ 19.8 million and a carrying value of $ 19.3 million. The interest rate on all borrowings under the Amended Loan Agreement was the sum of (a) the greater of 8.0 % or The Wall Street Journal prime rate plus (b) 2.0 %. Interest on any outstanding term loan advances was due and payable monthly, unless the Company elected to pay paid-in-kind interest. In addition to the monthly interest payments, a final payment equal to $ 1.0 million was due the earlier of the maturity date or the date the advance is repaid. Principal balances were required to be repaid in 24 equal installments which began on August 1, 2023. On April 25, 2025, the Company fully repaid all $ 19.7 million in outstanding indebtedness owed to Innovatus pursuant to its Amended Loan Agreement and terminated the agreement. During the nine months ended September 30, 2025, the Company recognized a $ 0.3 million loss on extinguishment of debt in connection with the early repayment of the 2017 Term Loan on the Company's condensed statements of operations. Equipment Notes Payable In May 2022, the Company purchased laboratory equipment in the normal course of business using notes payable. In January 2025, the Company entered into a financing arrangement to procure additional laboratory equipment. At September 30, 2025, the total liability balance related to the financed equipment was $ 1.4 million, with $ 0.7 million classified within borrowings, current and $ 0.7 million within borrowings, non-current, net of discounts and debt issuance costs in the accompanying condensed balance sheets. At December 31, 2024, the total liability balance related to the financed equipment was $ 1.1 million, with $ 0.4 million classified within borrowings, current and $ 0.7 million within borrowings, non-current, net of discounts and debt issuance costs in the accompanying condensed balance sheets. The financed equipment is subject to effective interest rates between 5.28 % and 10.50 %, and will mature between October 1, 2026 and April 1, 2028. Future Minimum Payments on the Outstanding Borrowings As of September 30, 2025, future minimum aggregate payments, including interest, for outstanding borrowings are as follows (in thousands): 2025 (remaining) $ 944 2026 3,700 2027 3,450 2028 3,117 2029 2,978 2030 25,930 Total 40,119 Less: Unamortized debt discount and issuance costs ( 3,434 ) Interest ( 13,744 ) Total borrowings, net of discounts and debt issuance costs 22,941 Less: Borrowings, current ( 680 ) Borrowings, non-current, net of discounts and debt issuance costs $ 22,261 Note 5. Commitments and Contingencies Licensing Agreements The Company has licensed technology for use in its diagnostic tests. In addition to the milestone payments required by these agreements, individual license agreements generally provide for ongoing royalty payments of less than 1 % on net sales of products which incorporate licensed technology, as defined in such agreements. Royalties are accrued when incurred and recorded in cost of revenue in the accompanying condensed statements of operations. 14 Supply Agreements In July 2025, the Company amended a supply agreement (the Amended Supply Agreement) with one of its suppliers for certain reagents, which includes updated pricing terms, an extended term through June 30, 2029, and minimum purchase commitments for consumable products used in the Company's diagnostic biomarkers. Pursuant to the Amended Supply Agreement, the Company is provided equipment by the supplier to be used by the Company in connection with the consumable products. The aggregate minimum annual purchase commitment for the duration of the Amended Supply Agreement is $ 24.0 million, including a minimum purchase commitment of $ 3.0 million for the year ending December 31, 2025, $ 6.0 million for each of the years ending December 31, 2026 through 2028 and $ 3.0 million for the six month period ending June 30, 2029. The Company accounts for the Amended Supply Agreement as an embedded finance lease for the equipment provided, with the reagents as a non-lease component accounted for separately. The minimum purchase commitments for the reagents represent in-substance fixed contract consideration and is recorded based on the relative fair value of the equipment of $ 3.1 million as a ROU asset and related lease liability. As of September 30, 2025, the Company had a finance lease ROU asset of $ 2.9 million and lease liabilities of $ 2.9 million on the Company's balance sheets related to the embedded finance lease. For the three and nine months ended September 30, 2025, the Company recorded interest expense of $ 0.1 million related to this embedded finance lease on the Company's statements of operations. Contingencies In the normal course of business, the Company enters into contracts and agreements that contain a variety of representations and warranties and provide for general indemnifications, including for subpoenas and other civil investigative demands, from governmental agencies, Medicare or Medicaid and managed care organizations reviewing billing practices or requesting comment on allegations of billing irregularities that are brought to their attention through billing audits or third parties. The Company's exposure under these agreements is unknown because it involves claims that may be made against the Company in the future, but have not yet been made or that the Company believes to be immaterial. The Company accrues a liability for such matters when it is probable that future expenditures will be made and such expenditures can be reasonably estimated. Litigation From time to time, the Company may be subject to various legal proceedings that arise in the ordinary course of business activities. The Company does not believe the outcome of any such matters will have a material effect on its financial position or results of operations. Pursuant to a settlement agreement with the Department of Justice (DOJ), which has been previously disclosed, the Company made a single lump-sum remittance to the government in the amount of $ 0.7 million plus interest in October 2023. The U.S. Attorney’s Office dismissed the “covered conduct” elements in the qui tam with prejudice, while non-covered conduct was dismissed without prejudice. The DOJ excused itself from the case in connection with the settlement. The Company’s ability to participate in federally funded healthcare programs was unaffected by the settlement. In November 2023, the complaint was unsealed and served on the Company. The Company filed a motion to dismiss the complaint. In February 2024, the relator filed a motion for leave to amend the complaint. The Company opposed this motion. In March 2025, the court granted the Company’s motion to dismiss with prejudice and denied the relator’s motion for leave to amend. On April 14, 2025, the relator filed an appeal with respect to this ruling. On July 15, 2025, the qui tam case was dismissed with prejudice by the presiding judge. Both the DOJ and the relator’s counsel filed a stipulation of dismissal in the matter. Note 6. Fair Value Measurements The carrying values of the Company's cash, cash equivalents and restricted cash, accounts receivable, prepaid expenses and other current assets, accounts payable and accrued and other current liabilities are determined to be a Level 1 measurement. The carrying values of these items approximate their fair values due to their short-term nature. The estimated fair value of the Company's long-term borrowings is determined by Level 2 inputs and based primarily on quoted market prices for the same or similar issues. As of September 30, 2025, the Perceptive Term Loan Facility had a carrying value of $ 21.6 million and a fair value of $ 24.7 million. The estimated fair value of the Perceptive Term Loan Facility was determined based on a discounted cash flow approach using available market information on discount and borrowing rates with similar terms, maturities, and credit ratings. The aggregate 15 carrying value of the Company's other long-term borrowings as of September 30, 2025 and December 31, 2024 was $ 1.4 million and $ 1.1 million, respectively, and approximated its fair value. Fair value is defined as the exchange price that would be received for an asset or an exit price paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of the valuation hierarchy for disclosure of fair value measurements are defined as follows: Level 1 - Unadjusted quoted prices in active markets for identical assets or liabilities; Level 2 - Inputs other than quoted prices included within Level 1 that are observable, unadjusted quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities; and Level 3 - Unobservable inputs that are supported by little or no market activity for the related assets or liabilities. The categorization of a financial instrument within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The following table sets forth the Company's financial instruments that were measured at fair value on a recurring basis within the fair value hierarchy (in thousands): September 30, 2025 Total Level 1 Level 2 Level 3 Assets: Money market funds, included in cash and cash equivalents $ — $ — $ — $ — Liabilities: Warrant liability $ 6,634 $ — $ — $ 6,634 December 31, 2024 Total Level 1 Level 2 Level 3 Assets: Money market funds, included in cash and cash equivalents $ 15,144 $ 15,144 $ — $ — The fair value of the Company's money market funds is based on quoted market prices. Warrant Liability The Company recorded a liability for the Warrant Certificate issued in connection with the Perceptive Term Loan Facility at fair value utilizing a probability-weighted BSM option pricing model using significant unobservable inputs consisting of the Company's probability assessment of drawing future debt tranches, the inputs used for the Company’s stock-based compensation expense adjusted for the Warrant Certificate’s expected term, which is calculated based on the remaining contractual term, and the fair value of the underlying common stock. As such, the Warrant Certificate liability was determined to be a Level 3 fair value measurement. The assumptions used in the BSM option pricing model to determine the fair value of the warrant liability were as follows: 16 April 25, 2025 (Warrant Certificate Issuance Date) September 30, 2025 Fair value of underlying common stock $ 6.21 $ 10.99 Exercise price $ 4.96 - $ 6.99 $ 4.96 - $ 12.36 Risk-free interest rate 4.3 % 4.1 % Expected volatility 88.8 % 86.9 % Expected term (in years) 10.0 9.6 - 10.0 Expected dividend yield — % — % The probability assessment considers both the likelihood of the Company satisfying certain conditions, including specified revenue milestones, which give the Company the option to draw future debt tranches as well as the likelihood that the Company will exercise the right to draw one or more future debt tranches. The Company assessed these factors at inception and as of September 30, 2025 and applied a weighted-average probability of approximately 38 % in the measurement of fair value, given current and forecasted capital needs. Significant increases or decreases in the probability assessment in future periods may increase or decrease the fair value estimate of the warrant liability, respectively. The interrelationship between these inputs is insignificant. The following table provides a reconciliation of the warrant liability measured at fair value using Level 3 significant unobservable inputs (in thousands): Warrant Liability Balance at December 31, 2024 $ — Fair value of warrant liability 3,525 Change in fair value of warrant liability 3,109 Balance at September 30, 2025 $ 6,634 Note 7. Stockholders' Equity Common Stock Shelf Registration Statement On November 17, 2023, the Company filed a registration statement on Form S-3, as amended (the 2023 Shelf Registration Statement), covering the offering, from time to time, of up to $ 150.0 million of the Company's common stock, preferred stock, debt securities, warrants and units. The 2023 Shelf Registration Statement became effective on November 29, 2023, and $ 129.8 million remain available for sale as of September 30, 2025. At The Market Sales Agreement On September 15, 2022, the Company entered into a sales agreement, as amended on November 17, 2023 (the Sales Agreement) with TD Securities (USA) LLC (TD Securities), as sales agent, pursuant to which the Company may offer and sell, from time to time, shares of the Company's common stock having an aggregate offering price of up to $ 50.0 million. The Company is not obligated to sell any shares of the Company's common stock in the offering. During the three months ended September 30, 2025, the Company has sold 360,554 shares of its common stock under the Sales Agreement at an average price per share of $ 9.82 , for gross proceeds of approximately $ 3.5 million and net proceeds of approximately $ 3.4 million after deducting $ 0.1 million in commissions paid to TD Securities and other offering expenses payable by the Company. 2025 Public Offering On May 8, 2025, the Company entered into an underwriting agreement (the Underwriting Agreement) with Canaccord Genuity LLC (the Underwriter) relating to the issuance and sale of an aggregate of 3,852,500 shares of its common stock, including 502,500 shares of the Company's common stock issued and sold pursuant to the exercise in full of the Underwriter’s option to purchase additional shares, to the Underwriter at a price to the public of 17 $ 5.25 per share (the 2025 Public Offering). The 2025 Public Offering closed on May 9, 2025. The net proceeds to the Company from the 2025 Public Offering were approximately $ 18.6 million after deducting $ 1.6 million of the underwriting discounts and commissions and other offering expenses payable by the Company. Outstanding Warrants The following equity classified warrants to purchase common stock of the Company were outstanding and exercisable as of September 30, 2025: Shares Weighted-Average Exercise Price Issuance date Expiration date Common stock warrants 124,848 $ 1.84 January 19, 2016 January 19, 2026 Common stock warrants 34,416 $ 1.84 March 31, 2016 March 31, 2026 Common stock warrants 131 $ 1.84 April 1, 2016 April 1, 2026 Common stock warrants 20,944 $ 14.32 December 7, 2018 December 7, 2025 Common stock warrants 804,951 $ 0.001 June 22, 2021 None Common stock warrants 400,000 $ 5.27 April 25, 2025 April 25, 2035 1,385,290 In connection with the Perceptive Term Loan Facility, the Company may issue warrants for the purchase of up to an additional 750,000 shares of the Company’s common stock if and when the Company satisfies certain conditions and chooses to draw additional debt tranches during the respective draw periods. The Company issued a total of zero and 107,969 shares of common stock upon the cashless exercise of certain warrants during the three and nine months ended September 30, 2025, respectively. No warrants to purchase common stock of the Company were exercised during the three and nine months ended September 30, 2024. Note 8. Stock Option Plan 2019 Incentive Award Plan In September 2019, the Company's Board of Directors (the Board) adopted, and the Company's stockholders approved, the 2019 Plan. Under the 2019 Plan, which expires in September 2029, the Company may grant stock options, stock appreciation rights, restricted stock, RSUs and other awards to individuals who are then employees, officers, non-employee directors or consultants of the Company or its subsidiaries. The options generally expire ten years after the date of grant and are exercisable to the extent vested. Vesting is established by the Board and is generally four years from the date of grant or, for grants to new hires, date of hire. The 2019 Plan contains an "evergreen provision" that allows annual increases in the number of shares available for issuance on the first day of each calendar year through January 1, 2029 in an amount equal to the lesser of: (i) 4 % of the outstanding capital stock on each December 31st, or (ii) such lesser amount determined by the Board. Pursuant to the evergreen provision, on January 1, 2025, an additional 705,613 shares of the Company's common stock became available for issuance under the 2019 Plan. As of September 30, 2025, 2,411,086 shares of the Company's common stock remained available for future awards under the 2019 Plan. Restricted Stock Units RSU activity under the Company's 2019 Plan is set forth below: Number of Shares Weighted- Average Grant Date Fair Value Outstanding, December 31, 2024 1,710,373 $ 2.48 Awards granted 692,932 $ 4.76 Awards released ( 391,515 ) $ 2.90 Awards canceled ( 246,878 ) $ 2.72 Outstanding, September 30, 2025 1,764,912 $ 3.25 18 As of September 30, 2025, all of the 1,764,912 outstanding RSUs were unvested. The fair value of RSUs vested in the nine months ended September 30, 2025 and 2024 was $ 1.9 million and $ 0.5 million, respectively. The weighted average grant date fair value for RSUs granted in the nine months ended September 30, 2025 and 2024 was $ 4.76 and $ 2.09 per RSU, respectively. As of September 30, 2025, total unrecognized compensation cost related to RSUs was $ 4.8 million, which is expected to be recognized over a remaining weighted-average vesting period of 2.6 years. Stock Options Stock option activity under the 2019 Plan is set forth below: Number of Options Weighted- Average Exercise Price Weighted- Average Remaining Contractual Term (Years) Aggregate Intrinsic Value (in thousands) Outstanding, December 31, 2024 489,296 $ 8.39 6.53 $ 370 Granted 169,570 $ 4.68 Exercised ( 108 ) $ 0.37 Expired ( 131,869 ) $ 9.73 Outstanding, September 30, 2025 526,889 $ 6.86 6.93 $ 2,583 Vested and expected to vest, September 30, 2025 526,889 $ 6.86 6.93 $ 2,583 Options exercisable, September 30, 2025 344,472 $ 8.11 5.62 $ 1,401 There were 169,570 and 55,500 stock options granted in the nine months ended September 30, 2025 and 2024, respectively. The intrinsic value is calculated as the difference between the fair value of the Company's common stock and the exercise price of the stock options. The aggregate intrinsic value of options exercised during the nine months ended September 30, 2025 and 2024 was negligible and $ 0.3 million, respectively. As of September 30, 2025, total unrecognized compensation cost related to option awards was $ 0.5 million, which is expected to be recognized over a remaining weighted-average vesting period of 2.5 years. 2019 Employee Stock Purchase Plan In September 2019, the Board adopted, and the Company's stockholders approved, the ESPP. The ESPP became effective on the day the ESPP was adopted by the Board. The ESPP permits participants to purchase shares of the Company's common stock through payroll deductions of up to 20.0 % of their eligible compensation. The number of shares of the Company's common stock available for issuance under the ESPP will be annually increased on the first day of each calendar year during the term of the ESPP through January 1, 2029 in an amount equal to the lesser of (i) 1.0 % of the outstanding capital stock on each December 31st, or (ii) such lesser amount determined by the Board. Pursuant to the evergreen provision, on January 1, 2025, an additional 176,403 shares of the Company's common stock became available for issuance under the ESPP. As of September 30, 2025, 542,808 shares of the Company's common stock remained available for issuance under the ESPP. During the nine months ended September 30, 2025, a total of 157,339 shares of the Company's common stock were issued under the ESPP. Stock-Based Compensation Expense Total non-cash stock-based compensation expense recorded related to options granted, RSUs granted and stock purchase rights granted under the ESPP in the condensed statements of operations is as follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 Cost of revenue $ 58 $ 47 $ 173 $ 103 Selling, general and administrative 425 114 1,095 1,058 Research and development 110 56 185 169 Total $ 593 $ 217 $ 1,453 $ 1,330 19 Note 9. Segment Reporting Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision maker (CODM) in making decisions regarding resource allocation and assessing performance. The Company views its operations as, and manages its business in, one operating segment focused on the design, development and commercialization of testing products which allow for the differential diagnosis, prognosis and monitoring of complex rheumatic, autoimmune and autoimmune-related disease. Segment revenue is primarily derived from the sale of the Company’s testing products, most of which is attributable to its AVISE® CTD test. The Company’s CODM is its Chief Executive Officer. The CODM assesses performance for the segment and decides how to allocate resources based on revenue and net loss as reported on the condensed statements of operations, after taking into account the Company’s strategic priorities, its cash balance and its expected use of cash. The CODM considers budget/forecast versus actual results on a quarterly basis when making decisions about the allocation of resources. The measure of segment assets is reported on the balance sheet as total assets and were $ 62.8 million and $ 44.7 million as of September 30, 2025 and December 31, 2024, respectively. Segment revenue and net loss, including significant segment expenses regularly provided to the CODM are as follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 Revenue $ 17,244 $ 12,507 $ 49,944 $ 41,986 Cost of revenue 7,169 5,526 20,351 17,351 Gross profit 10,075 6,981 29,593 24,635 Segment operating expenses: Employee expense 8,418 7,007 23,501 20,422 Outside services 1,103 992 3,567 3,181 Facilities related 921 859 2,739 2,824 Travel & entertainment 724 693 2,175 1,813 Stock compensation 535 170 1,280 1,227 Depreciation and amortization 281 256 810 787 Other 1 1,193 1,667 4,616 4,634 Total segment operating expenses 13,175 11,644 38,688 34,888 Loss from operations ( 3,100 ) ( 4,663 ) ( 9,095 ) ( 10,253 ) Interest expense ( 1,319 ) ( 562 ) ( 2,988 ) ( 1,671 ) Loss on extinguishment of debt — — ( 295 ) — Change in fair value of warrant liability ( 2,670 ) — ( 3,108 ) — Interest income 3 197 246 570 Loss before income taxes ( 7,086 ) ( 5,028 ) ( 15,240 ) ( 11,354 ) Income tax expense ( 1 ) — ( 38 ) — Segment net loss $ ( 7,087 ) $ ( 5,028 ) $ ( 15,278 ) $ ( 11,354 ) 1 Other segment items included in Segment net loss include insurance expenses, trade show and conference expenses, fulfillment expenses, board compensation, clinical trial expenses, collaboration expenses and bank fees, among others. 20