WGS 10-K & 10-Q changes, risk factors and insider trading

•We need to scale our infrastructure in advance of demand for our products and services, and our failure to generatesustain sufficient demand for our products and services would have a negative impact on our business and our ability to attainmaintain profitability.

•Changes in FDA enforcement discretionoversight for LDTs could subject our operations to much more significant regulatory requirements.

We need to scale our infrastructure in advance of demand for our tests, and our failure to generatesustain sufficient demand for our tests would have a negative impact on our business and our ability to attainmaintain profitability.

Our success depends in large part on our ability to extend our market position, to provide customers with high-quality test reports quickly and at a lower price than our competitors, and to achieve sufficient test volume to realize economies of scale. In addition, we regularly evaluate and refine our testing process, often significantly updating our workflows, including with respect to exome sequencing and whole genome sequencing. In order to execute our business model, we intend to continue to invest heavily in order to significantly scale our infrastructure, including our testing capacity, particularly with respect to exome sequencing and whole genome sequencing to supplement our panel testing capabilities and information systems, expand our commercial operations, customer service, billing and systems processes and enhance our internal quality assurance program. We expect that much of this growth will be in advance of demand for our tests. Our current and future expense levels are to a large extent fixed and are largely based on investment plans and estimates of future revenue. Because the timing and amount of revenue from our tests is difficult to forecast, when revenue does not meet expectations, we may not be able to adjust our spending promptly or reduce spending to levels commensurate with our revenue. Even if we successfully scale our infrastructure and operations, there can be no assurance that tests will increase at levels consistent with the growth of our infrastructure. If we fail to generatesustain demand commensurate with this growth or if we fail to scale our infrastructure sufficiently in advance of demand to successfully meet such demand, our business, prospects, financial condition and results of operations could be adversely affected.

If we are not able to continue to generatesustain substantial demand for our tests, our commercial success will be negatively affected.

Our business model assumes that we will be able to generatesustain significant test volume, particularly with respect to exome sequencing and whole genome sequencing in addition to our panel testing offerings, and we may not succeed in continuing to drive adoption of our tests to achieve sufficient volumes. Inasmuch as detailed genetic data from exome and whole genome sequencing has only recently become available at relatively affordable prices, the continued pace and degree of clinical acceptance of the utility of such testing is uncertain. Specifically, it is uncertain how much genetic data will be accepted as necessary or useful, as well as how detailed that data should be, particularly since medical practitioners may have become accustomed to genetic testing that is specific to one or a few genes and may not embrace the utility of exome sequencing and whole genome sequencing. Given the substantial amount of additional information available from a broad-based testing panel such as ours, there may be distrust as to the reliability of such information when compared with more limited and focused genetic tests. To generate further demand for our tests, we will need to continue to make clinicians aware of the benefits of our tests, including the price, the breadth of our testing options, and the benefits of having additional genetic data available from which to make treatment decisions. A lack of or delay in clinical acceptance of our exome sequencing and whole genome sequencing testing, or our legacy broad-based panels testing, would negatively impact sales and market acceptance of our tests and limit our revenue growth and potential profitability. Genetic testing is expensive, and many potential customers may be sensitive to pricing. In addition, potential customers may not adopt our tests if adequate reimbursement is not available, or if we are not able to maintain low prices relative to our competitors.

If we are not able to generatesustain demand for our tests at sufficient volume, or if it takes significantly more time to generate this demand than we anticipate, our business, prospects, financial condition and results of operations could be materially harmed.

If our laboratories become inoperable due to disasters, health epidemics or for any other reasons, we will be unable to perform teststests, and our business will be harmed.

We perform all of our exome sequencing and whole genome sequencing tests at our production facilities in Gaithersburg, Maryland. This concentration heightens our exposure to risks associated with this region, including natural disasters, severe weather conditions, public health crises, acts of terrorism, political or social instability, regulatory changes, and failures of local infrastructure or utilities. In the event of a disruption affecting this location, we may experience interruptions to operations, loss of productivity, data or systems outages, delays in service delivery, and reputational harm. While we have business continuity and disaster recovery plans in place, such plans may not be sufficient to fully mitigate the impact of all potential disruptions, particularly those that are prolonged or widespread. Our laboratories and the equipment we use to perform our tests would be costly to replace and could require substantial lead time to replace and qualify for use. Our laboratories may be harmed or rendered inoperable by natural or man-made disasters, including flooding, fire and power outages, or by health epidemics, which may render it difficult or impossible for us to perform our tests for some period of time. The inability to perform our tests or the backlog that could develop if our laboratories are inoperable for even a short period of time may result in the loss of customers or harm our reputation. Although we maintain insurance for damage to our property and the disruption of our business, this insurance may not be sufficient to cover all potential losses and may not continue to be available to us on acceptable terms, if at all.

We may be unable to compete effectively against our competitors either because their products and services are perceived to be superior or because they may have more expertise, experience, financial resources, or stronger business relationships. These competitors may have broader product lines and greater name recognition than we do. Furthermore, we must compete successfully in our existing markets, including exome and whole genome sequencing, but also in any new markets we expand into. Even if we successfully develop new marketable products or services, our current and future competitors may develop products and services that are more commercially attractive than ours, and they may bring those products and services to market earlier or more effectively than we are able to. If we are unable to compete successfully against current or future competitors, we may be unable to increase market acceptance for and sales of our tests and services, which could prevent us from increasing or sustaining our revenues or achieving sustained profitability.

Our business environment is rapidly evolving and intensely competitive. Our businesses face changing technologies, shifting provider and patient needs, and frequent introductions of rival products and services. To compete successfully, we must accurately anticipate technologytechnological developments and deliver innovative, relevant and useful products, services, and technologies in a timely manner. As our businesses evolve, the competitive pressure to innovate will encompass a wider range of products and services. We must continue to invest significant resources in research and development, including through acquisitions and collaborations, joint ventures and partnerships, in order to enhance our current diagnostics and health information and data science technologies, and existing and new products and services based off these technologies.

We have many competitors in different industries. Our current and potential domestic and international competitors range from large and established companies to emerging start-ups in addition to academic and scientific institutions, and public and private research organizations. Some competitors have longer operating histories than our Company in various sectors. They can use their experience and resources in ways that could affect our competitive position, including by making acquisitions, continuing to invest heavily in research and development and in talent, initiating intellectual property claims (whether or not meritorious), and continuing to compete aggressively for our customers and partners in the market for genetic testing and screening, health information and data science products and services. Our competitors may be able to innovate and provide products and services faster than we can or may foresee the need for products and services before we do.

Furthermore, in cases where we or our partners have established reimbursement rates with third-party payors, we face additional challenges in complying with their procedural requirements for reimbursement. These requirements often vary from payor to payor and are reassessed by third-party payors on a regular basis, and we have needed additional time and resources to comply with them. We have also experienced, and may continue to experience, delays in or denials of coverage if we do not adequately comply with these requirements. Our third-party payors have also requested, and in the future may request, audits of the amounts paid to us. In the past, we have been required to repay certain amounts to payors as a result of such audits. For more information regarding this matter, seeSee Note 3,4, “Revenue Recognition” to our consolidated financial statements includedfor withinmore this Annual Report.information. In addition to potential repayment obligations, failure to comply with payor reimbursement policies could result in government enforcement actions and, potentially, exclusion from certain payor programs, which could have a material adverse effect on our business.

We currently incorporate artificial intelligence (“AI”) solutions into our workflows and these applications may become increasingly important in our operations over time. Further, we are in the process of enhancing and broadening our offerings with AI technologies, including through the use of Fabric Genomics’ AI-based platform for Next Generation Sequencing analysis, which provides interpretation and clinical reporting for rare disease, hereditary risk, and cancer testing. In addition, we are exploring potential third-party partnerships to help us offer more robust solutions for providers and patients. Our competitors or other third parties may incorporate AI into their products and offerings more quickly or more successfully than us, which could impair our ability to compete effectively and adversely affect our results of operations. Additionally, if the content, analyses, or recommendations that AI applications assist in producing are or are alleged to be inaccurate, deficient, or biased, our business, financial condition and results of operations may be adversely affected. The use of AI applications has resulted in, and may in the future may result in,in cybersecurity incidents that implicate the personal medical and genetic data of patients analyzed within such applications.applications, including the risk that we might not be able to effectively manage the use of AI technologies by our employees, consultants and vendors. Any such cybersecurity incidents related to our use of AI applications to analyze personal data could adversely affect our reputation and results of operations. AI also presents emerging ethical issues and if our use of AI becomes controversial, we may experience brand or reputational harm, competitive harm, or legal liability. The rapid evolution of AI, including potential government regulation of AI and its various uses, may require significant resources to develop, test and maintain offerings, services, and features to help us implement AI ethically in order to minimize unintended, harmful impact. Several governmental authorities have already proposed or enacted laws and other guidance governing AI, such as the EU Artificial Intelligence Act. These and other developing obligations may prevent or make it harder for us to conduct or enhance our business using AI, or lead to regulatory fines, penalties, or other liability.

We have incurred net losses and negative cash flows from operations since our inception, with an accumulated deficit of approximately $1.4 billion as of December 31, 2024.2025.

We may seek to sell common or preferred equity or convertible debt securities, enter into credit facilities or other forms of third-party funding or debt financing, or dispose of assets or businesses. For example, in October 2025, we havefiled an effectiveautomatic universal shelf registration statement that weprovides filed withfor the SEC in August of 2022, registering $300 million of sharessale of our Class A common stock and other securities.securities, Asand up to an aggregate of December 31, 2024, approximately $102$100.0 million of securitiesour remainedClass availableA common stock that may be issued from time to time under this registration statement. Further, we have entered into a salesSales agreementAgreement (the “Sales Agreement”) with TD Securities (USA) LLC (“TD Cowen”). pursuantThe Sales Agreement was implemented following the use in full of a prior sales agreement for up to which$75.0 we may, but are not obligated to, offer and sell, from time to time, sharesmillion of our Class A common stock with an aggregate offering price up to $75.0 million through TD Cowen, as sales agent, subject to the terms and conditions described in the Sales Agreement and SEC rules and regulations (our “ATM offering”).Cowen. As of December 31, 2024,2025, approximately $26.8$78.2 million of capacity remained available under this ATM offering.

We are subject to Clinicalthe Laboratory Improvement Amendments of 1988 (“CLIA”),CLIA, a federal law that regulates clinical laboratories that perform testing on specimens derived from humans for the purpose of providing information for the diagnosis, prevention or treatment of disease. CLIA regulations establish specific standards with respect to personnel qualifications, facility administration, proficiency testing, quality control, quality assurance and inspections. CLIA certification is also required in order for us to be eligible to bill state and federal healthcare programs, as well as many private third-party payors, for our tests. We have current CLIA, College of American Pathologists (“CAP”), and other certifications to conduct our tests at our laboratory in Maryland. To renew these certifications, we are subject to survey and inspection on a regular basis and at the request of the certifying bodies. Moreover, CLIA inspectors may make random inspections of our clinical reference laboratory.

In addition to having a laboratory license in New York, our clinical reference laboratory is approved on test-specific bases for the tests it runs as laboratory-developed tests (“LDTs”),LDTs, by the New York State Department of Health (“NYDOH”). Other states may adopt similar licensure requirements in the future, which may require us to modify, delay or stop our operations in such jurisdictions. We may also be subject to regulation in foreign jurisdictions as we seek to expand international utilization of our tests or such jurisdictions adopt new licensure requirements, which may require review of our tests in order to offer them or may have other limitations such as restrictions on the transport of samples necessary for us to perform our tests that may limit our ability to make our tests available outside of the U.S. Complying with licensure requirements in new jurisdictions may be expensive, time-consuming, and subject us to significant and unanticipated delays.

The CAP maintains a clinical laboratory accreditation program. CAP asserts that its program is “designed to go well beyond regulatory compliance” and helps laboratories achieve the highest standards of excellence to positively impact patient care. While not required to operate a CLIA-certified laboratory, many private insurers require CAP accreditation as a condition to contracting with clinical laboratories to cover their tests. In addition, some countries outside the U.S. require CAP accreditation as a condition to permitting clinical laboratories to test samples taken from their citizens. We have a CAP accreditationsaccreditation for our laboratory. Failure to maintain CAP accreditation could have a material adverse effect on the sales of our tests and the results of our operations.

When cleared, authorized or approved, we and our collaborators may market, sell, and distribute our products and services outside of the U.S., and our business would be subject to risks associated with doing business outside of the U.S., including an increase in our expenses and diversion of our management’s attention from the development of future products and services. In addition, we plan to use Fabric Genomics as our platform for international expansion. Accordingly, our business and financial results in the future could be adversely affected due to a variety of factors, including:

•multiple, conflicting and changing laws and regulations such as AI, privacy, security and data use regulations, tax laws, export and import restrictions, economic sanctions and embargoes, employment laws, anticorruption laws, regulatory requirements, reimbursement or payor regimes and other governmental approvals, permits and licenses;

•difficulties in staffing and managing foreign operations, including repatriating foreign earnedforeign-earned profits;

In particular, challenging macroeconomic conditions, including cost inflation, decreases in per capita income and levels of disposable income, tariffs, increased and/or prolonged unemployment or a decline in consumer confidence, as well as limited or significantly reduced points of access of our tests, could have a material adverse effect on the demand for our tests. Under difficult economic conditions, consumers may seek to reduce discretionary spending by forgoing our tests. Decreased demand for our tests,tests could negatively affect our overall financial performance.

We currently rely upon third-party services for data storage and workflow management, including cloud storage solution providers, such as Microsoft Azure (“Azure”), Amazon Web Services (“AWS”), and Oracle Cloud Infrastructure (“OCI”).providers. We rely on each of these providers to complete several vital workflows in our health information and data science service delivery. To varying degrees some of those services are proprietary to how each platform performs in connection with our current usage of the services.

Nearly all of our data storage and analytics are conducted on, and the data and content we generate on our platforms are processed through, servers hosted by these providers, particularly Azure, AWS and OCI.providers. We also rely on email service providers, bandwidth providers, internet service providers and mobile networks to deliver communications to patients, physicians and partners and to allow patients, physicians and our partners to access various offerings from our platforms. If our third-party vendors are unable or unwilling to provide the services necessary to support our business, or if our agreements with such vendors are terminated, our operations could be significantly disrupted. Some of our vendor agreements may be unilaterally terminated by the licensor for convenience, including with respect to Azure, AWS or OCI, and if such agreements are terminated, we may not be able to enter into similar relationships in the future on reasonable terms or at all.

Our projections are subject to significant risks, assumptions, estimates and uncertainties, including assumptions regarding the adoption of our products and services.services and their estimated global market opportunity. As a result, our projected revenues, market share, expenses and profitability may differ materially from our expectations in any given fiscal quarter or year.

OurIn addition, our estimates of the global market opportunity for our current products and services and those under development are based on a number of internal and third-party estimates, including, the market opportunity for rare disease and pediatric developmental disorders, adult disorders and newborn screening. The estimates also depend on whether we or our collaborators are able to engage, diagnose or treat patients through or using our products and services, the number of potential clinical tests utilized per treatment course per patient, the ongoing engagement by patients, physicians and health systems on our platforms, and the assumed prices at which we can sell our current and future products and services for markets that have not been established. While we believe our assumptions and the data underlying our estimates are reasonable, these assumptions and estimates may not be correct and the conditions supporting our assumptions or estimates may change at any time, thereby reducing the predictive accuracy of these underlying factors. As a result, our estimates of the annual addressable market for our current or future products and services may prove to be incorrect. If the actual number of patients who would benefit from our products or services, the price at which we can sell future products and services or the annual addressable market for our products or services is smaller than we have estimated, it may impair our sales growth and have an adverse impact on our business.

The success of our products depends on the market’s confidence that we can provide reliable products and services that enable high quality diagnostic testing and health information services with high sensitivity and specificity and short turnaround times. There is no guarantee that the accuracy and reproducibility we have demonstrated to date will continue to meet customer expectations as our product deliveries increase and our product and service portfolio expands.

If our relationships are not successful, our ability to develop and improve ofour products, services and technologies, and to successfully execute our commercial strategy regarding such products, services and technologies, could be compromised.

•our success in marketing and selling, and changes in demand for,for our tests, and the level of reimbursement and collection obtained for such tests;

•circumstances affecting our ability to provide health information and data science services to biopharma partners, including software or hardware failures, insufficient capacity, regulatory changes or other circumstances that adversely affect theour ability of us to deliver these services;

Our ability to useutilize our net operating loss carry forwards and certain other tax attributes may be limited.

Our core business depends on our ability to quickly and reliably deliver test results to our customers. We typically receive blood and saliva samples for analysis at our laboratory facilities within days of collection from the patient. Disruptions andor errors in these delivery service and accessioning errors and breaches, whether due to error by the delivery service, labor disruptions, bad weather, natural disaster, terrorist acts or threats, outbreaks of disease or for other reasons, could adversely affect specimen integrity, our ability to process or store samples in a timely manner and to service our customers, and ultimately our reputation and our business. In addition, if we are unable to continue to obtain expedited delivery services on commercially reasonable terms, our operating results may be adversely affected.

We may also consider disposing of assets or business in the future. Dispositions may similarly involve risks associated with the potential disruption of our ongoing business and distraction of our management team, and the anticipated benefits and cost savings of these transactions may not be realized fully, or at all, or take longer to realize than anticipated. In addition, dispositions may involve our continued financial involvement in a divested business, such as through continuing equity ownership, transition service agreements, guarantees, indemnities or other current or contingent financial obligations. Under these arrangements, performance by the acquired or divested business, or other conditions outside our control, could affect our future financial results.

Changes in FDA enforcement discretionoversight for laboratory developed tests LDTs could subject our operations to much more significant regulatory requirements.

We currently offer an LDT version of certain tests. Historically, the FDA has exercised a policy of enforcement discretion with respect to most LDTs, whereby the FDA did not actively enforce its medical device regulatory requirements for such tests. However, at various points in recent years, the FDA has indicated that it intends to end enforcement discretion for many tests offered as LDTs, and to require such tests to comply with certain FDA regulatory requirements. Agency officials have previously expressed significant concerns regarding performance disparities between some LDTs and in vitro diagnostics that have been reviewed, cleared, authorized or approved by the FDA.

Legislative proposals addressing the FDA’s oversight of LDTs have also been introduced in previous Congresses, and we expect that new legislative proposals will be introduced from time-to-time. If the FDA wereultimately regulates certain LDTs, or we voluntarily choose to determine thatsubmit certain tests offered by us as LDTs are no longer eligibletest(s) for enforcementFDA discretion for any reason, including new rules, policies or guidance, or due to changes in statute,review, our tests may become subject to extensive FDA requirements orand our business may otherwise be adversely affected. If the FDA were to actively regulate our LDTs, we could experience reduced revenue or increased costs, which could adversely affect our business, prospects, results of operations and financial condition. If required, theThe regulatory marketing authorization process required to bring our current or future LDTs into compliance may involve, among other things, successfully completing additional clinical validations and submittingpreparing tosubmissions andthat obtainingcomply clearancewith from the FDA for aapplicable premarket clearancereview (510(k)) submission or authorization for a de novo submission or approval of a premarket approval application.requirements. Furthermore, pending legislative proposals, if enacted, such as the VALID Act, could create new or different regulatory and compliance burdens on us and could have a negative effect on our ability to keep products on the market or develop new products, which could have a material effect on our business. In the event that the FDA requires or we voluntarily seek marketing authorization of our LDTs in the future, the FDA may not ultimately grant any clearance, authorization or approval requested by us in a timely manner, may limit our indication in a way that is not commercially desirable, or refuse to provide such authorization at all. In addition, if the FDA inspects our laboratory in relation to the marketing of any FDA-authorized test, any enforcement action the FDA takes might not be limited to the FDA-authorized test carried by us and could encompass our other testing services.

If we or our partners,partners fail to comply with these laws and regulations, it could incur significant fines and penalties and our reputation and prospects could suffer. Additionally, any such partners could be forced to cease offering our products and services in certain jurisdictions, which could materially disrupt our business. An adverse outcome could include us being required to pay treble damages, incur civil and criminal penalties, paying attorneys’ fees, entering into a corporate integrity agreement, being excluded from participation in government healthcare programs, including Medicare and Medicaid, and other adverse actions that could materially and adversely affect our business, financial condition and results of operations.

We are also required to comply with applicable state privacy, security and breach notification laws and regulations, which may be more stringent than federal HIPAA requirements. In addition, for healthcare data transfers from other countries relating to citizens and/or residents of those countries, we are also required to comply with the laws of those countries. Furthermore, on December 1, 2022, the U.S. Department of Health and Human Services, Office for Civil Rights (“OCR”) issued a Bulletin highlighting the obligations of HIPAA covered entities and business associates with respect to the use of online tracking technologies. OCR updated this Bulletin on March 18, 2024. To the extent that a covered entity or business associate permits a tracking technology vendor to collect PHI of its customers, the parties must enter into a business associate agreement. In addition, the PHI collected may only be used for treatment or health care operation purposes, in accordance with HIPAA. The PHI cannot be used for marketing purposes that are not connected with treatment or health care operationsoperations, absent a HIPAA compliant authorization from each customer whose information is being shared.

In 2018, Congress passed the Eliminating Kickbacks in Recovery Act (“EKRA”), as part of the Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment for Patients and Communities Act. Similar to the Anti-Kickback Statute, EKRA imposes criminal penalties for knowing or willful payment or offer, or solicitation or receipt, of any remuneration, whether directly or indirectly, overtly or covertly, in cash or in kind, in exchange for the referral or inducement of laboratory testing (among other healthcare services) unless a specific exception applies. However, unlike the Anti-Kickback Statute, EKRA is not limited to services covered by federal or state healthcare programs but applies more broadly to services covered by “healthcare benefit programs,” including commercial insurers. As currently drafted, EKRA potentially expands the universe of arrangements that could be subject to government enforcement under federal fraud and abuse laws. In addition, while the Anti-Kickback Statute,Statute includes certain exceptions that are widely relied upon in the healthcare industry, including safe harbors applicable to certain employees and personal service contracts, and not all of those same exceptions apply under EKRA. EKRA expressly does not protect employee compensation that varies by the number of individuals referred to a laboratory, the number of tests performed by a laboratory, or the amount billed to or received from a health benefit program from individuals referred to a laboratory. Because EKRA is a relatively new law, there is no agency guidance and only twoa few courts have addressed the application of EKRA and those courts reached opposite conclusions.conclusions One Court ruled thaton the commission-based compensation provisionsissue of awhether laboratory employee’spayments contractto didemployees notfor sales and marketing activities implicate or violate EKRA while the other court expressly disagreed.EKRA. Given the conflicting opinions, we cannot be assured that courts in our jurisdiction will reach the same conclusion or that the decision will not be overturned if there is an appeal. We cannot assure you that our relationships with healthcare providers, hospitals, customers, our own sales representatives, or any other party will not be subject to scrutiny or will survive regulatory challenge under EKRA or other anti-kickback laws.

•the CCPA ,CCPA, and similar consumer privacy laws in Colorado,other Connecticut, Utah, and Virginia,states, which, among other things, regulate how subject businesses may collect, use, disclose and/or sell the personal information of consumers who reside in each state, affords rights to consumers that they may exercise against businesses that collect their information, and requires implementation of reasonable security measures to safeguard personal information of consumers;

See Note 1, “Organization and Description of Business” includedto withinour thisconsolidated Annualfinancial Reportstatements for further information.

We believe several important factors have impacted, and will continue to impact, our performance and results of operations. While each of these areas presents significant opportunities for us, they also pose significant risks and challenges that we must address. See the section titled “Item 1A. Risk Factors” for more information.

We believe the number of resulted exome and genome tests in any period is important and useful to our investors because it directly correlates with long-term patient relationships and the size of our genomic database. During the year ended December 31, 2024,2025, we resulted 97,271 exome and genome tests, which represented 43% of all test results, compared to the years ended December 31, 2024 and 2023, in which we resulted 74,547 and 49,439 exome and genome tests, which represented 33% of all test results, compared to the year ended December 31, 2023, in which we resulted 49,439 exome and genome22%, tests, which represented 22%respectively, of all test results.

Third-party payors may decide to deny payment or seek to recoup payments for tests performed by us that they contend were improperly billed, not medically necessary or against their coverage determinations, or for which they believe they have otherwise overpaid. As a result, we may be required to refund payments already received, and our revenues may be subject to retroactive adjustment as a result of these factorsfactors, among others.

We expect to continue to focus our resources on increasing the adoption of, and expanding coverage and reimbursement forfor, exome and genome, and any future tests we may develop or acquire. If we fail to expand and maintain broad adoption of, and coverage and reimbursement for, our tests, our ability to generate revenue and our future business prospects may be adversely affected.

Research and development expenses represent costs incurred to develop our technology and future test offerings. These costs are principally associated with our efforts to develop the software we use to analyze data and process customer orders. These costs primarily consist of compensation expenses for employees performing research and development, innovation and product development activities, costs of reagents and laboratory supplies, costs of consultants and third-party services, equipment and related depreciation expenses, non-capitalizable software development costs, research funding to our research partners as part of research and development agreements and allocated facility and information technology costs associated with genomics medical research. Research and development costs are generally expensed as incurred and certain non-refundable advanced payments provided to our research partners are expensed as the related activities are performed.

Gross profit increased by $104.4$103.8 million for the year ended December 31, 2024,2025, driven by a combination of a favorable shift in volumetest mix to highermore marginprofitable whole exome and genome tests, an improvement in exome average reimbursement ratesrates, and continued cost per test leverage.

Selling and marketing expenses increased by $6.4$21.0 million, or 11%,31%, to $88.4 million for the year ended December 31, 2025, from $67.4 million for the year ended December 31, 2024, from $61.0 million for the year ended December 31, 2023.2024. The increase was primarily attributable to higher compensation related costs of $16.5 million, which reflects our investment to support growth in our commercial teamteam, as well as incrementalthe variableinclusion billingof selling and sellingmarketing costcosts of Fabric Genomics.

Non-Operating (Expense) Income,Expense, Net

Non-operating expense, net of $29.4$8.1 million for the year ended December 31, 20242025 primarily reflected a legal settlement, netsettlement of insurance, of $12.8 million, a non-cash charge of $10.1$4.8 million associated with the exercise of the Perceptive warrant and a non-cash charge of $3.3$1.2 million to account for the increase in fair value of our warrantfinancial liabilities. Net interest expense for the year ended December 31, 20242025 was $3.0$2.5 million.

The following is a reconciliation of revenue to our adjusted gross profit and adjusted gross margin for the years ended December 31, 20242025, 2024, and 2023 (in thousands):

Adjusted net income (loss) is a non-GAAP financial measure that we define as net income (loss) adjusted for depreciation and amortization, stock-based compensation expenses, restructuring costs, impairment loss, restructuring and business exit related charges, change in fair market value of financial liabilities, transactioninterest costsexpense (income), net, income tax expense (benefit), net, and other (income) expense, net. We believe adjusted net income (loss) is useful in evaluating our operating performance compared to that of other companies in our industry, as this metric generally eliminates the effects of certain factors that may vary from company to company for reasons unrelated to overall operating performance.

The following is a reconciliation of our net loss to adjusted net income (loss) for the years ended December 31, 20242025, 2024, and 2023 (in thousands):

__________________ (1)Represents the impairment of certain capital and right-of-use asset leases.

WeIn haveOctober 2025, we filed an effectiveautomatic universal shelf registration statement that weprovides filed withfor the SEC in August of 2022, registering $300 million of sharessale of our Class A common stock and other securities.securities, Asand up to an aggregate of December 31, 2024, approximately $102$100.0 million of securitiesour remainedClass availableA common stock that may be issued from time to time under this registration statement. Further, we have entered into a salesSales agreementAgreement (the “Sales Agreement”) with TD Securities (USA) LLC (“TD Cowen”). pursuantThe Sales Agreement was implemented following the use in full of a prior sales agreement for up to which$75.0 we may, but are not obligated to, offer and sell, from time to time, sharesmillion of our Class A common stock with an aggregate offering price up to $75.0 million through TD Cowen, as sales agent, subject to the terms and conditions described in the Sales Agreement and SEC rules and regulations (our “ATM offering”).Cowen. As of December 31, 2024,2025, approximately $26.8$78.2 million of capacity remained available under this ATMSales offering.Agreement.

The following is a description of commitments for known and reasonably likely cash requirements as of December 31, 2024 and December 31, 2023.2025. We anticipate fulfilling such commitments with our existing cash and cash equivalents and available-for-sale marketable securities or through additional capital raised to finance our operations.

Our future minimum payments under non-cancellable operating lease and finance lease agreements were $62.3$57.2 million and $31.9$29.2 million, respectively as of December 31, 2024.2025. The timing of these future payments, by year, can be found in Note 10, “Leases” to our consolidated financial statements in Note 9, “Leases”, included within this Annual Report.statements.

As discussed in the notes to our consolidated financial statements, in 2022, we entered into an agreement with one of our third-party payors to settle for $42.0 million claims related to coverage and billing matters allegedly resulting in overpayments by the payor to Legacy Sema4. As of December 31, 2024,2025, remaining payments due to the payor were $12.0$2.0 million. For more information regarding this matter, see Note 3,4, “Revenue Recognition” includedto withinour thisconsolidated Annualfinancial Report.statements.

Our future contractual purchase commitments were $37.6$35.7 million as of December 31, 2024.2025. The timing of these future payments, by year, can be found in our consolidated financial statements in Note 10,11, “Purchase Commitments and Contingencies”, includedto withinour thisconsolidated Annualfinancial Report.statements.

Net cash usedprovided inby operating activities during the year ended December 31, 20242025 was $28.5$33.3 million, driven by lowerimproved cashgross expendituresmargin profitability in the current year asand comparedfavorable net working capital attributable to the timing of collections and payments associated with theoperating prior year, which reflected improved gross margin profitability, as well as the realization of cost savings from the exited Legacy Sema4 businessassets and previously executed cost reduction initiatives.liabilities.

Net cash used in investing activities during the year ended December 31, 20242025 was $30.1$61.5 millionmillion, which included purchases$32.9 million for the acquisition of marketableFabric securities of $66.3 million and $5.5 million inGenomics, purchases of property and equipment,equipment partiallyof offset$19.0 by $41.7 million in proceeds from the salesmillion, and maturitiesnet marketable securities activity of marketable$9.6 securities.million.

Net cash used in investing activities during the year ended December 31, 20232024 was $43.7$30.1 million,million which included purchases ofnet marketable securities activity of $47.7 million, $12.1$24.6 million in consideration held in escrow paid for the Acquisition and $5.3 million in purchases of property and equipment, which was offset partially by $17.8 million in proceeds from maturitiesequipment of marketable$5.5 securities and $4.0 million in proceeds from the sale of assets.million.

Net cash provided by financing activities during the year ended December 31, 20242025 was $44.2$48.0 million, which includedprimarily $46.5 million inreflected proceeds from our prior at-the-market offering (“prior ATM offering,offering”) of $46.7 million, net of issuance costs, partially offset by $2.7 million of finance lease payments and $0.5 million of principal payments on the DECD loan.costs.

Net cash provided by financing activities during the year ended December 31, 20232024 was $186.2$44.2 million, which wasincluded primarily driven by the $143.0$46.5 million netin proceeds from theour underwrittenprior public offering and concurrent registered directATM offering, net of issuance costs, and $48.5 million from the term loan facility with Perceptive (the “Perceptive Term Loan Facility”), which was partially offset partially by the DECD loan payment of $2.0 million and $3.6$2.7 million of finance lease payments.payments and $0.5 million of principal payments on the DECD loan.

Information on recent accounting pronouncements can be found in Note 2, “Summary of Significant Accounting Policies”. to our consolidated financial statements.

Except for as set forth below, there have been no material changes in our risk factors from those disclosed in Part I, Item 1A “Risk Factors” of our 2025 Form 10-K: and in Part II, Item 1A “Risk Factors” of our Quarterly Report for the quarterly period ended March 31, 2026, filed with the SEC on May 4, 2026, which sections are incorporated by reference herein.

Future volatility in the market price for our securities may occur in response to factors beyond our control, including actual or anticipated fluctuations in our quarterly financial results, changes in market expectations regarding our operating performance, public reaction to our press releases and SEC filings, competitive developments, changes in financial estimates or recommendations by securities analysts which may result in the loss of investor confidence, and general economic and political conditions such as the war in the Middle East. These risk factors, and any other risk factors described in thisour Annualfilings Report,with the SEC, could materially adversely affect our business and the market price of our securities, which may trade at prices significantly below the price paid for them and may not recover. A decline in the market price of our securities also could adversely affect our ability to issue additional securities and our ability to obtain additional financing in the future.

We believe the number of resulted exome and genome tests in any period is important and useful to our investors because it directly correlates with long-term patient relationships and the size of our genomic database. During the three months ended MarchJune 31,30, 2026, we resulted 27,48830,785 exome and genome tests, which represented 50%49% of all test results, compared to the three months ended MarchJune 31,30, 2025, in which we resulted approximately 20,56223,246 exome and genome tests, which represented 40% of all test results. During the six months ended June 30, 2026, we resulted 58,273 exome and genome tests, which represented 49% of all test results, compared to the six months ended June 30, 2025, in which we resulted approximately 43,808 exome and genome tests, which represented 40% of all test results.

In addition, with the acquisition of Fabric Genomics, we generate revenues through software and interpretation services related to rare disease, hereditary risk, and cancer testing. Our customers include clinical laboratories, hospitals, and research institutions. Our ability to increase this revenue will depend on our ability to expand our customer base among hospitals and genomic centers, along with increased adoption of whole genome sequencing and AI-enabled interpretation in clinical workflows.

Comparison of the three months ended MarchJune 31,30, 2026 and 2025

Total revenue increased by $15.1$11.7 million, or 17%,11%, to $102.3$114.4 million for the three months ended MarchJune 31,30, 2026, from $87.1$102.7 million for the three months ended MarchJune 31,30, 2025.

Diagnostic test revenue increased by $15.5$11.8 million, or 18%,12%, to $101.3$111.9 million for the three months ended MarchJune 31,30, 2026, from $85.8$100.1 million for the three months ended MarchJune 31,30, 2025. The increase isprimarily attributablereflected toan increase of 27%17% in whole exome and genome sequencing revenues driven by a 34%32% increase in test volumes. This was partially offset by a 5%12% decrease in average reimbursement rates and declines in other non-exome test revenues.

Gross profit increased by $9.7$7.3 million or 10%, to $78.2 million for the three months ended MarchJune 31,30, 2026, primarilyfrom $70.9 million for the three months ended June 30, 2025, driven by thea 34%combination increaseof a shift in test mix to more profitable whole exome and genome test volumes.and continued cost per test leverage.

Research and development expense increased by $7.2$4.6 million, or 57%,30%, to $19.8$19.7 million for the three months ended MarchJune 31,30, 2026, from $12.6$15.1 million for the three months ended MarchJune 31,30, 2025. The increase was primarilydriven attributable toby higher compensation-relatedoverall compensation costs of $6.2$3.1 million and software-related expenses of $1.2 million, which primarily reflects an investment to expand our product development team and the inclusion of research and development costs of Fabric Genomics. In addition, an increase in costs related to sponsored research programs of $0.6 million and an increase in software-related expenses of $0.4 million contributed to the overall increase in research and development expenses.team.

Selling, general and administrative expense increased by $24.1$29.2 million, or 48%,62%, to $74.6$76.0 million for the three months ended MarchJune 31,30, 2026, from $50.5$46.9 million for the three months ended MarchJune 31,30, 2025. TheThis increase was primarily attributablereflects strategic investments to highersupport compensation-relatedfuture growth, including a significant expansion of our commercial organization through increased sales representative headcount which resulted in increased compensation costs of $16.6$12.9 million. In addition, we incurred higher marketing expenditures of $1.8 million which reflects our investment to support growththe continued investment in ournew commercialcustomer team,experience as well as the inclusion of selling, general and administrative costs of Fabric Genomics in the current period.capabilities. The increase also reflected higher third-party consulting costs of $3.8 million and IT software and infrastructure costs of $1.9$1.1 million,million. third-partyThe consultingprior costsperiod included a one-time sales-and-use tax refund of $2.0$8.4 million and increased amortization expense for acquired intangible assets established in connection with purchase accounting.million.

During the first quarter of 2026, we recorded non-cash impairment charges totaling $31.3 million related to the goodwill and intangible assets ofassociated itswith the Fabric Genomics reporting unit.acquisition. This consists of a $11.9 million goodwill impairment charge, a $10.2 million impairment of developed technology, a $5.0 million impairment of customer relationships, and a $4.2 million impairment of tradenames and trademarks. See Note 6, “Goodwill and Intangible assets” for further information.

Non-operating expense, net of $4.9$5.8 million for the threesix months ended MarchJune 31,30, 2026 primarily reflected a $6.6 million loss on extinguishment of the Perceptive long-term debt.debt and increased interest expense of $0.4 million as a result of the Blackstone loan agreement. This was offset by a gain in the change in the fair value of warrants of $0.9$1.1 million and a gain of $1.6 million in the change in fair value of contingent consideration relatedassociated towith the Fabric Genomics.Genomics acquisition.

Non-operating expense, net of $1.5$0.1 million for the threesix months ended MarchJune 31,30, 2025 primarily reflected a lossgain in the change in fair value of warrants of $1.1$2.0 million and a realized gain on marketable securities of $0.5 million. This was offset by a loss of $0.9 million for the change in fair value of the contingent consideration and interest expense, net of $1.5 million.

Adjusted gross profit is a non-GAAP financial measure that we define as revenue less cost of services, excluding depreciation and amortization expense andexpense, stock-based compensation expense.expense, and restructuring costs. We define adjusted gross margin as our adjusted gross profit divided by our revenue. We believe these non-GAAP financial measures are useful in evaluating our operating performance compared to that of other companies in our industry, as these metrics generally eliminate the effects of certain items that may vary from company to company for reasons unrelated to overall operating performance.

The following is a reconciliation of gross profit to our adjusted gross profit and of our gross margin to adjusted gross margin for the three and six months ended MarchJune 31,30, 2026 and 2025:

Adjusted Net Income (Loss) Income

Adjusted net income (loss) is a non-GAAP financial measure that we define as net income (loss) income adjusted for depreciation and amortization, stock-based compensation expenses, restructuring costs, change in fair value of financial liabilities, non-core lease costs, loss on extinguishment of debt, interest expense (net), income tax expense (benefit), transaction costs and costs related to a legal reserve. We believe adjusted net income (loss) is useful in evaluating our operating performance compared to that of other companies in our industry, as this metric generally eliminates the effects of certain factors that may vary from company to company for reasons unrelated to overall operating performance.

The following is a reconciliation of our net (loss) income to adjusted net income (loss) income for the three and six months ended MarchJune 31,30, 2026 and 2025:

(1)Non-core lease costs represent occupancy and related expenses associated with vacant laboratory facilities and office space in Connecticut that are no longer utilized as part of the Company’s operations.

(2)For the three and six months ended MarchJune 31,30, 2026, represents interest expense, net, income tax expense, net, and costs related to a certain litigation matter.matters. For the three and six months ended MarchJune 31,30, 2025, represents interest expense, net, income tax expense, net, and transaction costs associated with the Merger Agreement.Agreement, and a sales-and-use tax refund.

As of MarchJune 31,30, 2026, our existing cash and cash equivalents and available-for-sale marketable securities were $170.7$132.5 million.

In October 2025, we filed an automatic universal shelf registration statement that provides for the sale of our Class A common stock and other securities, and up to an aggregate of $100.0 million of our Class A common stock that may be issued from time to time under a Sales Agreement (the “Sales Agreement”) with TD Securities (USA) LLC (“TD Cowen”). As of MarchJune 31,30, 2026, approximately $78.2 million of capacity remained available under this Sales Agreement.

As discussed in the notes to our condensed consolidated financial statements, in 2022, we entered into an agreement with one of our third-party payors to settle claims related to coverage and billing matters allegedly resulting in overpayments by the payor to Legacy Sema4. As of MarchJune 31,30, 2026, remaining payments duehad tobeen the payor were $2.0 million.settled. For more information regarding this matter, see Note 4, “Revenue Recognition” to our consolidated financial statements included in our 2025 Form 10-K and Note 3, “Revenue Recognition,” to our condensed consolidated financial statements included within this Quarterly Report, respectively.

Net cash used in operating activities during the threesix months ended MarchJune 31,30, 2026 was $32.4$61.4 million, driven by a net loss of $63.3$81.1 million, net adjustments of $54.1$65.5 million and a change in operating assets and liabilities of $23.2$45.8 million. The impact of the change in operating assets and liabilities was primarily driven by decreased accounts payables and accrued expenses due to the timing of vendor payments and a decrease in other assets and liabilities due to the timing of associated payments.

Net cash provided by operating activities during the threesix months ended MarchJune 31,30, 2025 was $10.2$20.6 million, driven by a net lossincome of $6.5$4.3 million, net adjustments of $13.4$29.3 million anddriven aby change in operating assetsdepreciation and liabilitiesamortization ofexpense $3.4and million.stock-based compensation expense. The impact of the changes in operating assets and liabilities was primarily attributable to increased accounts receivables driven by the growth of the whole exome and genome testing volumes and partially offset by increased accounts payables and accrued expensesaccruals due to the timing of vendor payments and orders with suppliers which was partially offset by an increase in accounts receivable, driven by growth in exome and genome test volumes.payments.

Net cash used in investing activities during the threesix months ended MarchJune 31,30, 2026 was $17.3$22.9 million, which included purchases of marketable securities of $20.2$29.1 million and purchases of property and equipment and development of internal-use software of $6.5$16.6 million. This was partially offset by proceeds from maturities and sales of marketable securities of $8.5$22.7 million.

Net cash used in investing activities during the threesix months ended MarchJune 31,30, 2025 was $9.4$45.8 million, which included $33.2 million for the acquisition of Fabric Genomics, purchases of marketable securities of $17.2$30.8 million and property and equipment of $6.1$8.5 million, partially offset by $13.9$26.7 million in proceeds from the maturities of marketable securities.

Net cash provided by financing activities during the threesix months ended MarchJune 31,30, 2026 was $38.6$39.6 million, which primarily reflected proceeds from long term debt, net of issuance costs, of $97.0$96.7 million and partially offset by the repayment of existing long-term debts in the amounts of $54.0 million and $4.4 million. For more information regarding our long-term debt, see Note 8, “Long-term Debt.”

Net cash provided by financing activities during the threesix months ended MarchJune 31,30, 2025 was $13.7$14.1 million, which primarily driven by the $13.9 million netreflected proceeds from our priorthe ATM offering, netoffering of issuance$13.8 costs.million.