Financial Analysis

Commitments and Contingencies Operating Leases The Company leases office and laboratory facilities in the U.S., including in South San Francisco and San Diego, California and Austin, Texas, and, prior to August 2025, in Marseille, France. Effective August 2025, in connection with the restructuring proceeding in Veracyte SAS, the Company is no longer a party to the lease in Marseille, France. The lease terms of the Companys leases as of June 30, 2026 extend to March 2040 and contain extension of lease terms and expansion options. The leases have a weighted average remaining lease term of 10.9 years as of June 30, 2026. The Company had deposits of $1.7 million and $1.6 million included in long-term assets as of June 30, 2026 and December 31, 2025, respectively, restricted from withdrawal and held by banks in the form of collateral for irrevocable standby letters of credit held as security for the leases. The Company determined its operating lease liabilities using payments through their current expiration dates and a weighted average discount rate of 11.4% based on the rate that the Company would have to pay to borrow, on a collateralized basis, an amount equal to the lease payments in a similar economic environment. Operating lease liabilities along with the associated right-of-use assets are disclosed in the accompanying condensed consolidated balance sheets. The Company classified its deferred rent for tenant improvements with its operating lease right-of-use assets on the c …

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Revenue included in biopharmaceutical and other revenue for the three and six months ended June 30, 2026 and 2025 was as follows (in thousands of dollars): Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Biopharmaceutical revenue $ 802 $ 2,630 $ 1,103 $ 4,927 Contract manufacturing and testing 1,673 2,960 Total $ 802 $ 4,303 $ 1,103 $ 7,887 …

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Fair Value Measurements The Company records certain of its financial assets and liabilities at fair value. The accounting guidance for fair value provides a framework for measuring fair value and clarifies the definition of fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the reporting date. The accounting guidance establishes a three-tiered hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value as follows: Level I: Inputs which include quoted prices in active markets for identical assets and liabilities; Level II: Inputs other than Level I that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; 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 assets or liabilities; and Level III: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The carrying amounts of certain financial instruments of the Company, including cash and cash equivalents, prepaid expenses and other current assets, accounts payable and accrued liabilities, approximate fair value due to their relatively short maturities. The fair value of the Companys financial assets …

FairValueDisclosuresTextBlock · excerpt; the full note is in the filing

Income Taxes The provision for income taxes is based on the current estimate of the annual effective tax rate applied to the Companys year to date income and is adjusted for discrete items recorded in the period. For the three months ended June 30, 2026 and 2025, the Companys effective tax rate was 3.9% and 178.5%, respectively. The non-cash impairment of $20.5 million recorded in the three months ended June 30, 2025 was treated as a discrete item for provisioning purposes and excluded from income thus the Companys effective tax rate for the three months ended June 30, 2025 was substantially higher when compared to prior periods. For the six months ended June 30, 2026 and 2025, the Companys effective tax rate was 4.1% and 30.1%, respectively. For the six months ended June 30, 2026 and 2025, the primary difference between the effective tax rate and the federal statutory rate is driven by unfavorable permanent differences, offset by the full valuation allowance the Company has established on its federal, state and foreign net operating losses and credits. The Company recorded income tax expense of $1.0 million and $2.2 million for the three months ended June 30, 2026 and 2025, respectively, and recorded income tax expense of $2.3 million and $2.6 million for the six months ended June 30, 2026 and 2025, respectively. The provision for income taxes recorded in the six months ended June 30, 2026 and 2025 consists primarily of federal, state and foreign income taxes. …

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Recent Accounting Pronouncements In November 2024, the FASB issued Accounting Standards Update, or ASU, 2024-03, Income StatementReporting Comprehensive IncomeExpense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. ASU 2024-03 will require public business entities to disclose in the notes to the financial statements, at each interim and annual reporting period, specific information about certain costs and expenses, including purchases of inventory, employee compensation, depreciation, and intangible asset amortization included in each expense caption presented on the face of the income statement, and the total amount of an entity's selling expenses. ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027, and may be applied either prospectively or retrospectively. Early adoption is permitted. The Company is currently evaluating the impact of adopting this guidance on the consolidated financial statements. …

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Segment The chief operating decision maker for the Company is the Chief Executive Officer, who reviews financial information presented on a consolidated basis for purposes of allocating resources and assessing financial performance. The Company has a single reporting unit associated with the development and commercialization of diagnostic tests and biopharmaceutical services. The accounting policies of the Company's single segment are the same as those described in the summary of significant accounting policies in Note 1, Organization, Description of Business and Summary of Significant Accounting Policies. The chief operating decision maker assesses performance of the Company's single segment and decides how to allocate resources based on consolidated net income. Under the current organizational structure, this measure is not discretely available or required individually for any of the Companys business activities and is only available at the consolidated level. The monitoring of budgeted versus actual results are used in assessing performance of the Company's single segment, allocating resources and in establishing managements compensation. The Company's chief operating decision maker intends for all revenue generating activities to rely on cross-functional activities across the consolidated entity in order to operate. No individual besides the chief operating decision maker has been tasked with reviewing discrete operating results of the business activities, nor is there an …

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Stockholders Equity Common Stock The Company had reserved shares of common stock for issuance as follows: June 30, 2026 December 31, 2025 Stock options and restricted stock units issued and outstanding 5,158,954 4,806,993 Stock options and restricted stock units available for grant under stock option plans 13,059,710 10,937,821 Common stock available for the Employee Stock Purchase Plan 798,732 895,255 Total 19,017,396 16,640,069 …

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