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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_________________________________________

FORM 10-Q

_________________________________________

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2025


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____ to ____

Commission file number: 001-42706

_________________________________________

CARIS LIFE SCIENCES, INC.

(Exact name of registrant as specified in its charter)

_________________________________________


Texas			85-2077369
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification Number)

750 W. John Carpenter Freeway

Suite 800

Irving, TX 75039

(Address of principal executive offices, including ZIP code)

Registrant’s telephone number, including area code: (866) 771-8946

Not applicable

(Former name or former address, if changed since last report)

_________________________________________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading
Symbol(s)

Name of each exchange on which registered

Common Stock, $0.001 par value

CAI

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☐ No ☒

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☐
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of August 7, 2025, the registrant had 281,224,124 shares of common stock, par value $0.001 par per share, outstanding.

Table of Cont e n t s

CARIS LIFE SCIENCES, INC.

FORM 10-Q

TABLE OF CONTENTS


		Page
Special Note Regarding Forward-Looking Statements		1
Part I - Financial Information
Item 1.	Condensed Consolidated Financial Statements (Unaudited)	2
	Condensed Consolidated Balance Sheets	2
	Condensed Consolidated Statements of Operations and Comprehensive Loss	3
	Condensed Consolidated Statements of Redeemable Convertible Preferred Stock and Shareholders’ Deficit	4
	Condensed Consolidated Statements of Cash Flows	6
	Notes to Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	36
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	54
Item 4.	Controls and Procedures	55
Part II - Other Information
Item 1.	Legal Proceedings	57
Item 1A.	Risk Factors	57
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	123
Item 3.	Defaults Upon Senior Securities	124
Item 4.	Mine Safety Disclosures	125
Item 5.	Other Information	125
Item 6.	Exhibits	125
Signatures		129

Table of Cont e n t s

Special Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q (this “Quarterly Report”) contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. All statements other than statements of historical facts contained in this Quarterly Report, including statements regarding our expectations of future results of operations and financial condition, business strategy, solutions, technology, R&D costs, regulatory approvals, potential market opportunity, anticipated trends in our business, timing and likelihood of success, as well as plans and objectives of management for future operations, are forward-looking statements. These statements involve known and unknown risks, uncertainties, and other important factors that are in some cases beyond our control and may cause our actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by the forward-looking statements.

The words “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will,” or “would,” or the negative of these terms or other similar expressions, are intended to identify forward looking statements. Forward-looking statements contained in this Quarterly Report include, but are not limited to, statements about:

•developments in the precision oncology industry, including our biopharma partners’ use of molecular information and the market size for molecular information services;

•our expectations as to our addressable U.S. market in oncology, future financial performance, results of operations, or other operational results or metrics;

•the ability of the Caris platform to help our biopharma partners and physicians improve the efficiency and success of their therapeutic development, and clinical programs;

•our ability to scale the Caris platform and develop new solutions or enhancements to existing solutions;

•our ability to capture, aggregate, analyze, or otherwise utilize molecular information in novel ways;

•our ability to compete with companies that are currently in, or may in the future enter, the industry in which we operate;

•third-party payer reimbursement and coverage decisions;

•our ability to establish, maintain, protect, and enforce our intellectual property rights of our solutions;

•federal, state, and foreign regulatory requirements, including FDA regulation of our solutions;

•the timing, likelihood, or conditions of regulatory filings and approvals;

•our ability to hire and retain key personnel;

•our anticipated cash needs and our estimates regarding our capital requirements;

•our estimates regarding our expenses, future revenue, and capital requirements; and

•remediating the material weakness in our internal control over financial reporting.

These forward-looking statements are subject to a number of risks, uncertainties, and assumptions, including those described in the section titled “Risk Factors” and elsewhere in this Quarterly Report and in other filings we make with the Securities and Exchange Commission from time to time. Moreover, we operate in a competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties, and assumptions, the forward-looking events and circumstances discussed in this Quarterly Report may not occur, and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.

Although we believe that the expectations reflected in our forward-looking statements are reasonable based on the information available to us when they are made, we cannot guarantee that the future results, advancements, discoveries, levels of activity, performance, or events and circumstances reflected in the forward-looking statements will be achieved or occur. In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Quarterly Report, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain, and you are cautioned not to unduly rely upon these forward-looking statements. We undertake no obligation to update any forward-looking statements, which speak only as the date they are made, for any reason after the date of this Quarterly Report.

Table of Cont e n t s

Part I - Financial Information

Item 1. Condensed Consolidated Financial Statements (Unaudited)

CARIS LIFE SCIENCES, INC

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)


(amounts in thousands, except share data)	As of June 30,		As of December 31,
	2025		2024

Assets
Current assets:
Cash, cash equivalents, and restricted cash	$	720,444	$	65,442
Short-term marketable securities	2,249		2,201
Accounts receivable	50,889		88,244
Supplies	40,613		39,572
Prepaid expenses and other current assets	19,124		20,270
Total current assets	833,319		215,729
Property and equipment, net	61,315		67,817
Goodwill	19,344		19,344
Other assets	41,080		40,844
Total assets	$	955,058	$	343,734
Liabilities, Redeemable Convertible Preferred Stock, and Shareholders' Equity (Deficit)
Current liabilities:
Accounts payable	$	28,728	$	27,791
Accrued expenses and other current liabilities	61,357		77,542
Current portion of indebtedness	95		60,090
Total current liabilities	90,180		165,423
Long-term indebtedness, net of debt discounts	373,611		319,438
Warrant liabilities	—		91,642
Other long-term liabilities	38,363		44,418
Total liabilities	502,154		620,921
Commitments and contingencies (see note 9)
Redeemable convertible preferred stock:
Series A preferred stock, par value $0.001: no and 490,000,000 shares authorized as of June 30, 2025 and December 31, 2024; no and 485,795,293 shares issued and outstanding as of June 30, 2025 and December 31, 2024; and $296,335 aggregate liquidation preference as of December 31, 2024	—		709,261
Series B preferred stock, par value $0.001: no and 30,000,000 shares authorized as of June 30, 2025 and December 31, 2024; no and 29,629,630 shares issued and outstanding as of June 30, 2025 and December 31, 2024; and $16,000 aggregate liquidation preference as of December 31, 2024	—		42,963
Series C preferred stock, par value $0.001: no and 142,000,000 shares authorized as of June 30, 2025 and December 31, 2024; no and 116,200,835 shares issued and outstanding as of June 30, 2025 and December 31, 2024; $408,715 aggregate liquidation preference as of December 31, 2024	—		408,715
Series D preferred stock, par value $0.001: no and 102,600,000 shares authorized as of June 30, 2025 and December 31, 2024; no and 102,516,283 shares issued and outstanding as of June 30, 2025 and December 31, 2024; and $1,060,712 aggregate liquidation preference as of December 31, 2024	—		1,060,712
Redeemable convertible preferred stock	—		2,221,651
Shareholders' equity (deficit):
Preferred stock, $0.001 par value per share; 100,000,000 and no shares authorized as of June 30, 2025 and December 31, 2024, respectively; no shares issued and outstanding as of June 30, 2025 and December 31, 2024	—		—
Common stock $0.001 par value; 2,800,000,000 and 1,150,000,000 shares authorized as of June 30, 2025 and December 31, 2024, respectively; 282,711,176 and 36,686,819 shares issued as of June 30, 2025 and December 31, 2024, respectively; 281,090,538 and 36,504,319 shares outstanding as of June 30, 2025 and December 31, 2024, respectively; shares issued and outstanding include 43,605 and 662,000 unvested shares subject to repurchase as of June 30, 2025 and December 31, 2024, respectively	282		38
Treasury stock at cost, 1,620,638 and 182,500 shares of common stock as of June 30, 2025 and December 31, 2024, respectively	(16,917)		(330)
Additional paid-in capital	3,123,888		—
Related party promissory note receivable (see note 7)	—		(26,456)
Accumulated deficit	(2,655,018)		(2,472,300)
Accumulated other comprehensive income	669		210
Total shareholders' equity (deficit)	452,904		(2,498,838)
Total liabilities, redeemable convertible preferred stock, and shareholders' equity (deficit)	$	955,058	$	343,734

The accompanying notes are an integral part of these condensed consolidated financial statements

Table of Cont e n t s


CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (UNAUDITED)


(amounts in thousands, except share and per share data)	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024

Revenue:
Molecular profiling services	$	162,924	$	87,656	$	277,006	$	160,890
Pharma research and development services	18,474		12,393		25,308		19,837
Total revenue	181,398		100,049		302,314		180,727
Costs and operating expenses:
Cost of Services - Molecular profiling services	65,321		59,431		126,215		112,324
Cost of Services - Pharma research and development services	2,392		3,064		5,350		4,732
Selling and marketing expense	42,260		38,710		82,089		78,319
General and administrative expense (see n ote 10)	64,367		41,068		116,486		85,422
Research and development expense	25,047		24,787		48,114		59,164
Total costs and operating expenses	199,387		167,060		378,254		339,961
Loss from operations	(17,989)		(67,011)		(75,940)		(159,234)
Other income (expense), net:
Interest income	1,618		2,640		2,121		4,408
Interest expense	(19,208)		(13,674)		(31,990)		(22,964)
Changes in fair value of financial instruments	(17,870)		12,000		(50,203)		936
Other expense, net	(18,341)		(141)		(18,358)		(360)
Total other income (expense), net	(53,801)		825		(98,430)		(17,980)
Loss before income taxes and provision for income taxes	(71,790)		(66,186)		(174,370)		(177,214)
Provision for income taxes	—		—		—		—
Net loss	(71,790)		(66,186)		(174,370)		(177,214)
Other comprehensive income, net of tax:
Unrealized gain on available-for-sale securities	—		—		—		7
Foreign currency translation adjustments	424		92		459		100
Comprehensive loss	(71,366)		(66,094)		(173,911)		(177,107)

Net loss attributable to common shareholders:
Net loss	(71,790)		(66,186)		(174,370)		(177,214)
Deemed dividend from Series D redeemable convertible preferred stock (see n ote 6)	(384,436)		—		(384,436)		—
Adjustments of redeemable convertible preferred stock to redemption value	(60,971)		(23,594)		(85,433)		(46,707)
Net loss attributable to common shareholders	$	(517,197)	$	(89,780)	$	(644,239)	$	(223,921)

Net loss per share attributable to common shareholders, basic and diluted	$	(7.97)	$	(2.54)	$	(12.80)	$	(6.34)
Weighted-average shares used in computing net loss per share attributable to common shareholders, basic and diluted	64,918,988		35,371,424		50,348,947		35,342,180

The accompanying notes are an integral part of these condensed consolidated financial statements

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CONDENSED CONSOLIDATED STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED STOCK AND SHAREHOLDERS’ DEFICIT (UNAUDITED)


	Three Months Ended June 30, 2025
	Redeemable Convertible Preferred Stock			Common Stock			Treasury Stock			Additional Paid-In Capital		Related Party Promissory Note Receivable		Accumulated Deficit		Accumulated Other Comprehensive Income		Total Shareholders' Equity (Deficit)
(amounts in thousands, except share data)	Shares	Amount		Shares	Amount		Shares	Amount
Balances at March 31, 2025	734,142,041	$	2,246,113	35,237,531	$	38	1,620,638	$	(16,917)	$	—	$	—	$	(2,583,231)	$	245	$	(2,599,865)
Issuance of Series E Preferred Stock, net of issuance costs	12,345,674	57,493		—	—		—	—		—		—		—		—		—
Issuance of Series F Preferred Stock, net of issuance costs	4,657,401	21,721		—	—		—	—		—		—		—		—		—
Stock-based compensation	—	—		—	—		—	—		28,293		—		—		—		28,293
Issuance of common stock upon exercise of stock options	—	—		514,771	—		—	—		1,190		—		—		—		1,190
Common stock withheld for taxes and net exercises	—	—		(134,959)	—		—	—		(2,066)		—		—		—		(2,066)



Adjustment of preferred stock to redemption value	—	60,971		—	—		—	—		(60,974)		—		3		—		(60,971)
Conversion of preferred stock to common stock, including the derecognition of associated embedded derivatives of $60,086	(751,145,116)	(2,386,298)		211,378,638	211		—	—		2,446,173		—		—		—		2,446,384

Issuance of common stock in connection with initial public offering, net of offering costs, underwriting discounts and commissions	—	—		27,058,823	27		—	—		519,425		—		—		—		519,452
Net exercise of the 2018 and 2020 Warrants in connection with initial public offering	—	—		4,174,907	4		—	—		131,742		—		—		—		131,746
Net exercise of the 2025 Warrants in connection with initial public offering	—	—		784,231	—		—	—		16,499		—		—		—		16,499
Conversion of the 2025 Convertible Note, including the derecognition of associated embedded derivatives of $13,082	—	—		2,076,596	2		—	—		43,606		—		—		—		43,608
Other comprehensive income	—	—		—	—		—	—		—		—		—		424		424
Net loss	—	—		—	—		—	—		—		—		(71,790)		—		(71,790)
Balances at June 30, 2025	—	$	—	281,090,538	$	282	1,620,638	$	(16,917)	$	3,123,888	$	—	$	(2,655,018)	$	669	$	452,904


	Three Months Ended June 30, 2024
	Redeemable Convertible Preferred Stock			Common Stock			Treasury Stock			Additional Paid-In Capital		Related Party Promissory Note Receivable		Accumulated Deficit		Accumulated Other Comprehensive Income		Total Shareholders' Deficit
(amounts in thousands, except share data)	Shares	Amount		Shares	Amount		Shares	Amount
Balances at March 31, 2024	734,142,041	$	2,148,397	35,336,582	$	38	182,500	$	(330)	$	—	$	(25,887)	$	(2,248,648)	$	233	$	(2,274,594)
Stock-based compensation	—	—		—	—		—	—		4,485		—		—		—		4,485
Issuance of common stock upon exercise of stock options	—	—		81,802	—		—	—		393		—		—		—		393
Interest income from related party promissory notes	—	—		—	—		—	—		—		(186)		—		—		(186)

Adjustment of preferred stock to redemption value	—	23,594		—	—		—	—		(4,878)		—		(18,716)		—		(23,594)
Other comprehensive income	—	—		—	—		—	—		—		—		—		92		92
Net loss	—	—		—	—		—	—		—		—		(66,186)		—		(66,186)
Balances at June 30, 2024	734,142,041	$	2,171,991	35,418,384	$	38	182,500	$	(330)	$	—	$	(26,073)	$	(2,333,550)	$	325	$	(2,359,590)

The accompanying notes are an integral part of these condensed consolidated financial statements

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CONDENSED CONSOLIDATED STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED STOCK AND SHAREHOLDERS’ DEFICIT (UNAUDITED)


	Six Months Ended June 30, 2025
	Redeemable Convertible Preferred Stock			Common Stock			Treasury Stock			Additional Paid-In Capital		Related Party Promissory Note Receivable		Accumulated Deficit		Accumulated Other Comprehensive Income		Total Shareholders' Equity (Deficit)
(amounts in thousands, except share data)	Shares	Amount		Shares	Amount		Shares	Amount
Balances at December 31, 2024	734,142,041	$	2,221,651	35,842,319	$	38	182,500	$	(330)	$	—	$	(26,456)	$	(2,472,299)	$	210	$	(2,498,837)
Issuance of Series E Preferred Stock, net of issuance costs	12,345,674	57,493		—	—		—	—		—		—		—		—		—
Issuance of Series F Preferred Stock, net of issuance costs	4,657,401	21,721		—	—		—	—		—		—		—		—		—
Stock-based compensation	—	—		—	—		—	—		42,984		—		—		—		42,984
Issuance of common stock upon exercise of stock options	—	—		1,348,121	—		—	—		2,623		—		—		—		2,623
Common stock withheld for taxes and net exercises	—	—		(134,959)	—		—	—		(2,066)		—		—		—		(2,066)
Interest income from related party promissory notes	—	—		—	—		—	—		—		(128)		—		—		(128)
Payment of related party promissory notes	—	—		—	—		—	—		—		26,584		—		—		26,584
Repurchases of common stock	—	—		(1,438,138)	—		1,438,138	(16,587)		—		—		—		—		(16,587)
Adjustment of preferred stock to redemption value	—	85,433		—	—		—	—		(77,084)		—		(8,349)		—		(85,433)
Conversion of preferred stock to common stock, including the derecognition of associated embedded derivatives of $60,086	(751,145,116)	(2,386,298)		211,378,638	211		—	—		2,446,173		—		—		—		2,446,384

Issuance of common stock in connection with initial public offering, net of offering costs, underwriting discounts and commissions	—	—		27,058,823	27		—	—		519,425		—		—		—		519,452
Net exercise of the 2018 and 2020 Warrants in connection with initial public offering	—	—		4,174,907	4		—	—		131,742		—		—		—		131,746
Net exercise of the 2025 Warrants in connection with initial public offering	—	—		784,231	—		—	—		16,499		—				—		16,499
Conversion of the 2025 Convertible Note, including the derecognition of associated embedded derivatives of $13,082	—	—		2,076,596	2		—	—		43,606		—				—		43,608
Other comprehensive income	—	—		—	—		—	—		(14)		—		—		459		445
Net loss	—	—		—	—		—	—		—		—		(174,370)		—		(174,370)
Balances at June 30, 2025	—	$	—	281,090,538	$	282	1,620,638	$	(16,917)	$	3,123,888	$	—	$	(2,655,018)	$	669	$	452,904


	Six Months Ended June 30, 2024
	Redeemable Convertible Preferred Stock			Common Stock			Treasury Stock			Additional Paid-In Capital		Related Party Promissory Note Receivable		Accumulated Deficit		Accumulated Other Comprehensive Income		Total Shareholders' Deficit
(amounts in thousands, except share data)	Shares	Amount		Shares	Amount		Shares	Amount
Balances at December 31, 2023	734,142,041	$	2,125,284	35,297,278	$	38	182,500	$	(330)	$	—	$	(25,701)	$	(2,119,175)	$	218	$	(2,144,950)
Stock-based compensation	—	—		—	—		—	—		8,943		—		—		—		8,943
Issuance of common stock upon exercise of stock options	—	—		121,106	—		—	—		603		—		—		—		603
Interest income from related party promissory notes	—	—		—	—		—	—		—		(372)		—		—		(372)

Adjustment of preferred stock to redemption value	—	46,707		—	—		—	—		(9,546)		—		(37,161)		—		(46,707)
Other comprehensive income	—	—		—	—		—	—		—		—		—		107		107
Net loss	—	—		—	—		—	—		—		—		(177,214)		—		(177,214)
Balances at June 30, 2024	734,142,041	$	2,171,991	35,418,384	$	38	182,500	$	(330)	$	—	$	(26,073)	$	(2,333,550)	$	325	$	(2,359,590)

The accompanying notes are an integral part of these condensed consolidated financial statements

Table of Cont e n t s


CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)


(amounts in thousands)	Six Months Ended June 30,
	2025		2024

Cash flows from operating activities
Net loss	$	(174,370)	$	(177,214)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	13,454		29,315
Stock-based compensation expense	42,984		8,943
Non-cash operating lease expense	2,936		2,888
Amortization of debt discounts	9,700		3,322
Changes in fair value of financial instruments	50,203		(937)
Loss on debt extinguishment	17,930		—
Other	1,231		2,133
Changes in operating assets and liabilities:
Accounts receivable	37,040		(16,904)
Supplies	(2,621)		7,504
Prepaid expenses and other current assets	(2,265)		(1,383)
Other assets	334		430
Accounts payable	(1,925)		2,623
Accrued expenses and other liabilities	(18,681)		2,429
Net cash used in operating activities	(24,050)		(136,851)

Cash flows from investing activities
Maturities of marketable securities	—		61,376

Purchases of property and equipment	(4,075)		(4,326)
Net cash provided by (used in) investing activities	(4,075)		57,050

Cash flows from financing activities
Payments made on finance lease obligations	(44)		(110)
Proceeds from exercise of stock options	2,624		603
Payment of taxes withheld from net settlement of exercised options	(1,658)		—
Payment of deferred offering costs	(2,045)		(492)

Proceeds from the 2023 term loan, net of issuance costs	—		199,978
Purchase of treasury stock	(22)		—
Issuance of Series E Preferred Stock, net of issuance costs	87,637		—
Issuance of Series F Preferred Stock, net of issuance costs	33,601		—
Issuance of the 2025 Convertible Notes, net of issuance costs	27,865		—
Issuance of the 2025 Warrants	10,270		—
Payments from 2023 term loan amendment fee	(4,000)		—
Proceeds from initial public offering, net of underwriting discounts and commissions	528,459		—
Net cash provided by financing activities	682,687		199,979

Effect of exchange rate changes on cash, cash equivalents, and restricted cash	97		13
Net increase in cash, cash equivalents, and restricted cash	654,659		120,191

Cash, cash equivalents, and restricted cash at beginning of period	68,028		60,007
Cash, cash equivalents, and restricted cash at end of period	$	722,687	$	180,198

The accompanying notes are an integral part of these condensed consolidated financial statements

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Nature of the Business

Caris Life Sciences, Inc. (the “Company” or “Caris”) is a patient-centric, next-generation artificial intelligence ("AI") TechBio company and precision medicine pioneer. The Company commercializes and develops innovative solutions to transform healthcare through the use of comprehensive molecular information, AI, and machine learning (“ML”) algorithms.

The Company’s current molecular profiling services portfolio is focused on oncology and consists of MI Profile, a tissue-based molecular profiling solution, and Caris Assure, a novel, universal blood-based molecular profiling solution, with the aim to address the entire continuum of cancer treatment.

The Company also collaborates with biopharmaceutical companies to provide commercial services and prospective and retrospective testing, along with data and bioinformatics collaborations and novel target identification and discovery solutions.

The Company was incorporated under the laws of the Cayman Islands in November 2011 (Caris Life Sciences, Ltd.) and re-domiciled to be incorporated in Texas in July 2020 (Caris Life Sciences, Inc.) and is headquartered in Irving, Texas. The Company also has locations in Phoenix, Arizona; New York, New York; Cambridge, Massachusetts; Basel, Switzerland; and Tokyo, Japan.

Note 2. Summary of Significant Accounting Policies and Estimates

Basis of Financial Statement Presentation

The condensed consolidated financial statements include the accounts of Caris and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

The Company’s condensed consolidated financial statements have been prepared in conformity with generally accepted accounting principles in the United States (“GAAP”). Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASUs”) of the Financial Accounting Standards Board (“FASB”).

Unaudited Interim Consolidated Financial Information

The unaudited condensed consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and reflect, in the opinion of management, all adjustments of a normal and recurring nature that are necessary for the fair statement of the Company’s financial position as of June 30, 2025, its results of operations for the three and six months ended June 30, 2025 and 2024, and cash flows for the six months ended June 30, 2025 and 2024. The results of operations for the six months ended June 30, 2025 are not necessarily indicative of the results to be expected for the year ending December 31, 2025, or for any other future annual or interim period. The condensed consolidated balance sheet as of December 31, 2024 included herein was derived from the audited financial statements as of that date. Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with GAAP have been condensed or omitted from these unaudited condensed consolidated financial statements.

Pre-IPO Financing

On April 1, 2025, the Company closed a private financing in which we issued a combination of senior convertible notes (the “2025 Convertible Notes”) with warrants (the “2025 Warrants”) to acquire shares of common stock, Series E redeemable convertible preferred stock (“Series E Preferred Stock”) and Series F redeemable convertible preferred stock (“Series F Preferred Stock”), for an aggregate of $167.7 million. Investors in the private financing generally participated in each of the instruments. The 2025 Convertible Notes had an aggregate principal amount of $30.0 million. The 2025 Convertible Notes accrued interest at a rate of 8% per annum, payable quarterly in cash, and were scheduled to mature on January 1, 2026. The 2025 Warrants were not initially exercisable for any shares of common stock, but such warrants became exercisable for a specified dollar value of shares on a monthly basis commencing on June 1, 2025 if we had not completed an IPO by such date. The Series E Preferred Stock and Series F Preferred Stock both were issued at an original issue price of $8.10 per share for gross proceeds of approximately $137.7 million. Additionally, the gross proceeds of $167.7 million, less issuance costs of $8.3 million, were allocated as follows: $27.9 million to the 2025 Convertible Notes,

Table of Cont e n t s

$10.3 million to the 2025 Warrants, $87.6 million to the Series E Preferred Stock, and $33.6 million to the Series F Preferred Stock.

Upon the closing of the IPO, the 2025 Convertible Notes (plus accrued interest), Series E Preferred Stock and Series F Preferred Stock (plus an 8% accrued dividend in connection with the preferred stock) converted into common stock at a price equal to 70% of the initial public offering price per share. Although structured and referred to as a legal-form conversion, this feature effectively functions as a share-settled redemption provision for accounting purposes.

Reverse Stock Split

Effective June 1, 2025, the Company’s Board approved a one-for-four reverse stock split of the Company’s common stock. This also resulted in an adjustment to the conversion price for each series of the Company’s convertible preferred stock, to the underlying number of shares outstanding with respect to the restricted stock units, and to the exercise prices and number of shares of common stock underlying the outstanding stock options and warrants. Accordingly, all share and per share information relating to common stock for all periods presented in the accompanying consolidated financial statements and notes thereto have been retroactively adjusted. The shares of common stock retain a par value of $0.001 per share. Accordingly, an amount equal to the excess was reclassified from common stock to additional paid-in capital or, in the absence of additional paid-in-capital, accumulated deficit.

Initial Public Offering

On June 20, 2025, the Company completed its IPO of common stock, in which the Company issued and sold 23,529,412 shares of its common stock at an IPO price of $21.00 per share, which resulted in net proceeds of $459.5 million after deducting underwriting discounts and commissions of $39.8 million and before deducting offering costs of $9.0 million. Additionally, on June 25, 2025, the underwriters exercised in full their over-allotment option and purchased from the Company an additional 3,529,411 shares of common stock at the IPO price, which resulted in net proceeds to the Company of $68.9 million after deducting discounts and commissions.

An amended and restated certificate of formation, which authorized 2,800,000,000 shares of common stock and 100,000,000 shares of preferred stock, became effective on June 20, 2025 in connection with the closing of the Company’s initial public offering (“IPO”). As of June 30, 2025, no shares of preferred stock are outstanding.

In connection with the IPO, all outstanding shares of the Company’s then-outstanding redeemable convertible preferred stock, inclusive of accrued dividends, automatically converted into 211,378,638 shares of common stock. Refer to Note 6 for additional information. Additionally, all of the Company’s then-outstanding 2025 Convertible Notes converted into an aggregate of 2,076,596 shares of common stock upon the IPO. As the IPO was not completed by June 1, 2025, 784,231 shares of common stock were issued on June 20, 2025 at an exercise price of $0.04 per share in connection with the automatic net exercise of the warrants issued in connection with the 2025 Convertible Notes. Lastly, the 2018 and 2020 warrants were net exercised into 4,174,907 shares of common stock as outlined in the terms of the applicable warrant agreements.

In connection with the IPO, the Company recognized $19.5 million of stock-based compensation expense due to vesting of previously-granted restricted stock units. The vesting of such restricted stock units was contingent upon the Company completing either an IPO of its common stock or through a change of control. The vested restricted stock units were not settled as of June 30, 2025. Refer to Note 7 for additional information.

Prior to the IPO, deferred offering costs, which consisted of accounting, legal and other fees directly related to the IPO, were capitalized as prepaid expenses and other current assets on the condensed consolidated balance sheets. In connection with the IPO, $9.0 million of deferred offering costs were reclassified to additional paid-in capital as a reduction of the net proceeds received from the IPO.

Use of Estimates

The preparation of the condensed consolidated financial statements in conformity with GAAP in the United States requires the use of estimates and assumptions about future events that affect the amounts reported in the Company's condensed consolidated financial statements and related notes, including the amounts of assets and liabilities, the disclosure of contingent liabilities at the date of the condensed consolidated financial statements, and the reported amounts of revenues and expenses during the periods reported.

Table of Cont e n t s

Significant estimates and assumptions are used for, but not limited to:

•revenue recognition

•fair value of stock-based awards and common stock

•fair value of financial assets and liabilities

Future events and their effects cannot be predicted with certainty. Accordingly, the accounting estimates require the exercise of judgment. These estimates and assumptions are based on current facts, historical experience and various other factors believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the recording of expenses that are not readily apparent from other sources. The accounting estimates used in the preparation of the Company’s condensed consolidated financial statements may change as new events occur, additional information is obtained, and the operating environment changes. The Company will evaluate and update the assumptions and estimates on an ongoing basis and may employ outside experts to assist in its evaluation, as considered necessary. Actual results could materially differ from those estimates.

Cash, Cash Equivalents, and Restricted Cash

The Company considers all highly liquid investments with original maturities of three months or less from date of acquisition to be cash equivalents. Refer to Note 4 for information on the Company's restricted cash.

Revenue Recognition

The Company recognizes revenue under ASC Topic 606, Revenue from Contracts with Customers ("ASC 606"). Revenue is recognized when control of goods and services are transferred to customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those services.

ASC 606 provides for a five-step model that includes:

Step 1: Identify the contract(s) with a customer.

Step 2: Identify performance obligations in the contract.

Step 3: Determine the transaction price.

Step 4: Allocate the transaction price to the performance obligations in the contract.

Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation.

The Company derives revenue from two distinct channels:

•Molecular profiling services involving the provision of precision oncology solutions utilizing MI Profile and Caris Assure

•Pharma research and development services involving delivery of laboratory, strategic data, and research services to biopharmaceutical customers

Molecular Profiling Services

For the majority of its molecular profiling services, the Company recognizes revenue from the sale of its precision oncology solutions, provided to customers, including certain hospitals, institutions and patients, at the point in time when the results of the profiling services are delivered to ordering physicians. Most cases requested on behalf of customers are provided without a written agreement; however, the Company determines that an implied contract exists with its customers for whom a physician orders the case. Results from molecular profiling services are delivered via fax, electronically, or in hard copy. Shipping and handling activities are considered fulfillment activities and as such, amounts incurred are recorded within Cost of Services - Molecular profiling services on the condensed consolidated statements of operations and comprehensive loss. The Company identifies each sale of the Company's profiling service as a distinct performance obligation. Payment terms are a function of a patient’s existing insurance benefits and applicable reimbursement contracts established between the Company and payers. Collection of consideration the Company expects to receive typically occurs within 90 to 120 days of billing. Occasionally, payers may recoup or we may refund consideration, mainly as a result of claim processing.

The total consideration to which the Company expects to be entitled in exchange for the Company’s services may be fixed or variable. Consideration includes reimbursement from patients, hospitals, and third-party commercial and governmental payers, such as insurance companies, adjusted for variable consideration related to implicit price concessions that the Company may grant. The Company estimates the variable consideration under a portfolio approach

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for third-party payers, hospitals and patients with similar reimbursement characteristics. This includes analysis of an average reimbursement per case per portfolio and a percentage of cases reimbursed by considering the historical reimbursement data (including any refunds and recoupments) from such third-party payers, hospitals and patients. Specifically, the Company calculates the historical average reimbursement rates for each portfolio and applies an estimated reimbursement rate, based on historical trends, to the number of cases delivered each period. The period for which historical data is drawn upon is determined on a by- portfolio basis for each payer group, taking into consideration the average collection period. Additionally, the estimate also considers current contractual and statutory requirements, patient insurance eligibility and payer reimbursement contracts, and any known current or anticipated reimbursement trends not reflected in the historical data and only recognizes revenue for variable consideration that the Company determines is probable will not result in a significant reversal in the future. The Company monitors the estimated amount to be collected at each reporting period based on actual cash collections in order to assess whether a revision to the estimate is required. Subsequent changes to the estimate of the transaction price are recorded as adjustments to molecular profiling services revenue in the period where such changes occur. Both the estimate and any subsequent revision are uncertain and require the use of management’s judgment in the estimation of the variable consideration and application of the constraint for such variable consideration.

Pharma Research and Development Services

The Company collaborates with biopharmaceutical companies to provide commercial services and prospective and retrospective testing, along with data and bioinformatics collaborations and novel target identification and discovery solutions.

Contracts with biopharmaceutical customers may include multiple distinct performance obligations, such as molecular profiling services, pharma research and development services, and strategic data services. The Company evaluates the terms and conditions included within its contracts with biopharmaceutical customers for proper revenue recognition, including whether services are capable of being distinct and considered distinct within the context of the contract. The performance obligations for biopharmaceutical customers vary by contract. Such contracts may include a performance obligation to provide molecular profiling services, to facilitate the development and regulatory approval of drugs, or to provide target discovery services. Under those contracts, the Company receives payments upon the achievement of milestones, as well as provision of on-going support. The transaction price of the development services contracts may include variable consideration, due to the uncertainty associated with the achievement of the milestones. In making the assessment of whether variable consideration should be included in the transaction price, the Company considers its historical experience with similar milestones, the degree of complexity and uncertainty associated with each milestone, and whether achievement of the milestone is dependent on parties other than the Company. The Company recognizes pharma research and development services revenue over the period in which biopharmaceutical research and development services are provided. Depending on the nature of the service, the Company recognizes revenue using either the output or input method to measure progress, whichever provides a more faithful depiction of the transfer of goods or services. Use of an output method or input method to depict the transfer of services generally does not result in a material difference with respect to the timing of revenue recognition because most services commence and end within the same reporting period. A constraint for variable consideration is applied such that it is probable a significant reversal of revenue will not occur when the uncertainty associated with the contingency is resolved. Application of the constraint for variable consideration is updated at each reporting period as a revision to the estimated transaction price.

Standalone Selling Price

The Company determines standalone selling prices by considering the historical selling prices of its performance obligations in similar transactions, where applicable, as well as other factors, including, but not limited to, the price that customers in the market would be willing to pay, competitive pricing from other vendors, industry publications, current pricing practices and management estimates.

Contract Balances

The timing of revenue recognition may differ from the timing of invoicing to customers. Accounts receivable are recorded at the invoiced amount, net of an allowance for credit losses. A receivable is recognized in the period the Company delivers goods or provides services, or when the right to consideration is unconditional. In situations where revenue recognition occurs before invoicing, an unbilled receivable is created, which represents a contract asset. As of June 30, 2025 and December 31, 2024, the unbilled receivable balance was $11.2 million and $4.6 million, respectively, which is included in accounts receivable on the condensed consolidated balance sheets.

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The Company recognizes contract liabilities primarily related to payments received in advance of satisfaction of performance obligations from contracts with customers. Contract liabilities are relieved as the Company fulfills its obligations under the contract and revenue is recognized. As of June 30, 2025 and December 31, 2024, the contract liability balance was $5.3 million and $7.5 million, respectively, which is included in accrued expenses and other current liabilities on the condensed consolidated balance sheets.

The following table shows the changes in the contract liabilities during the period:


	(amounts in thousands)
Balance at December 31, 2024	$	7,470
Increase in contract liabilities	6,952
Revenue recognized during the period that was included in deferred revenues at the beginning of the period	(5,459)
Revenue recognized from performance obligations satisfied within the same period	(3,623)
Balance at June 30, 2025	$	5,340

The amount of revenue recognized during the six months ended June 30, 2024 pertaining to amounts deferred as of December 31, 2023 was $5.1 million.

Transaction Price Allocated to Remaining Performance Obligations

The transaction price allocated to remaining performance obligations represents contracted revenue that has not yet been recognized, which includes contract liabilities and non-cancelable amounts that will be invoiced and recognized as revenue in future periods and excludes performance obligations that are subject to cancellation terms. The Company has elected not to disclose information regarding the transaction price allocated to the remaining performance obligations for which the original expected duration of the contract is one year or less. The amount of transaction price allocated to the remaining performance obligations for contracts with original expected duration over one year as of June 30, 2025 was $2.6 million. The Company expects to recognize the amounts within twelve months from the respective balance sheet dates.

Additionally, for the three and six months ended June 30, 2025, the Company recorded $12.0 million and $15.9 million, respectively, of adjustments to revenue related to services delivered in prior periods, which is based on variability that was subsequently resolved. For the three and six months ended June 30, 2024, the Company recorded $(3.9) million of adjustments to revenue related to services delivered in prior periods, which is based on variability that was subsequently resolved.

Practical Expedients and Contract Costs

Payment terms and conditions vary by contract and customer. In instances where the timing of the Company’s revenue recognition differs from the timing of its invoicing, the Company does not assess whether a contract has a significant financing component if the expectation at contract inception is such that the period between payment by the customer and the transfer of the promised services to the customer will be one year or less.

As a practical expedient, the Company recognizes the incremental costs of obtaining contracts, such as sales commissions, as expenses when incurred, if the amortization period of the asset that the Company otherwise would have recognized for the capitalized costs is one year or less. Sales commissions are recorded within selling and marketing expense on the condensed consolidated statements of operations and comprehensive loss. The Company did not capitalize any sales commissions or contract fulfillment costs as of June 30, 2025 and December 31, 2024.

Collaboration Agreements

The Company is party to various collaboration and licensing agreements under which the Company out-licenses certain know-how and molecular data. The collaboration arrangements are intended to solidify the Company’s third-party partnerships to align oncology capabilities and create industry-leading molecular oncology research platforms to accelerate drug development and novel research. Under these collaboration arrangements, the Company generally receives a split of fees from its collaborative partners that are earned pursuant to statements of work (“SOWs”) executed with end users of the Company’s licensed molecular data.

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The Company’s collaboration and licensing agreements are within the scope of ASC Topic 808, Collaborative Arrangements ("ASC 808") and ASC 606 because the counterparty to these agreements meets the definition of a customer. As such, the Company recognizes revenue earned from the licenses of molecular data granted to the Company’s collaborative partners in accordance with ASC 606. Each license of molecular data granted by the Company to a collaborative partner represents a distinct performance obligation in the contract. The transaction price for a given arrangement is entirely variable and depends on the SOWs executed by the counterparty with end users. The amount of revenue allocated to each license is equal to the amount of revenue to which the Company expects to be entitled. The Company recognizes revenue at the point in time that it delivers the molecular data to the third-party collaborative partner. For the three months ended June 30, 2025 and 2024, the Company recognized collaboration revenue of $5.5 million and $5.2 million, respectively, and $6.9 million and $6.7 million for the six months ended June 30, 2025 and 2024, respectively, which is included in revenue from pharma research and development services on the condensed consolidated statements of operations and comprehensive loss.

Cost of Services - Molecular profiling services

Cost of services for molecular profiling services generally consists of cost of materials, direct labor including bonus and stock-based compensation, and equipment maintenance and depreciation expenses associated with processing cases (including accessioning, sequencing, quality control analyses and shipping charges to transport tissue samples), freight and profile results for ordering physicians. Costs associated with completing the molecular profiling services are recorded as the service is performed, regardless of when revenue is recognized with respect to the service.

Cost of Services - Pharma research and development services

Cost of services for pharma research and development services generally consists of cost incurred for the performance of the services requested by the Company's biopharmaceutical customers related to the delivery of laboratory, strategic data and research services, and will vary depending on the nature, timing, and scope of customer projects. Costs associated with delivering pharma research and development services are recorded as incurred.

Concentration of Credit Risk

Financial instruments that potentially expose the Company to concentration of credit risk consist primarily of cash, cash equivalents, marketable securities, and accounts receivable. The Company maintains its cash primarily with domestic financial institutions of high credit quality, with balances that exceed amounts insured by the Federal Deposit Insurance Corporation as of June 30, 2025 and December 31, 2024, respectively.

The Company invests in treasury bills issued by the U.S. Government. U.S. treasury bills with original maturities of three months or less are classified within cash equivalents. Short-term marketable securities are comprised of U.S. treasury bills with original maturities between three and twelve months. The Company believes it is not exposed to any significant credit risk on cash, cash equivalents, and marketable securities and performs periodic evaluations of the credit standing of such institutions. The goal of the Company’s investment policy is to ensure safety and preservation of the principal balance, and diversification of risk over cash balances held on deposit.

The Company is subject to credit risk from its accounts receivable. The Company’s accounts receivable arise from the provision of molecular profiling services and pharma research and development services, primarily with biopharmaceutical companies, all of which have high credit ratings. The Company has not experienced any material losses related to receivables from individual customers, or groups of customers. The Company does not require collateral. Accounts receivable are recorded net of allowance for credit losses, if any. Concentrations of credit risk are limited due to the number of payers and their dispersion across multiple geographic regions.

For the three and six months ended June 30, 2025 and 2024, the Company's revenues were primarily derived from the sale of Caris molecular profiling services. As discussed above, payment terms of the services are a function of a patient’s existing insurance benefits and applicable reimbursement contracts established between the Company and payers. Revenue associated with each payer, including its affiliated entities, as a percentage of the Company’s total revenue for the respective period, and accounts receivable balance attributable to each payer, including its affiliated entities, as a percentage of the Company’s total accounts receivable balance at the respective condensed consolidated balance sheet date, are as follows:

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	% Revenue for the three months ended June 30,		% Revenue for the six months ended June 30,		% Accounts receivable as of
Major Payer	2025	2024	2025	2024	June 30, 2025	December 31, 2024

Payer 1	44.7%	35.1%	47.3%	35.9%	68.3%	16.1%
Payer 2	14.9%	13.5%	14.3%	13.6%	*	19.3%
Payer 3	11.5%	*	*	*	*	*

*Represents major payers below 10.0%.

Accounts Receivable

Accounts receivable includes billed and unbilled receivables, net of an allowance for expected credit losses. Accounts receivable primarily represent receivables from biopharmaceutical customers and third-party payers. Accounts receivable for pharmaceutical services are established based on the amounts outstanding per the contractual arrangements with biopharmaceutical customers. The Company applies the current expected credit loss standard in ASC Subtopic 326-20, Financial Instruments—Credit Losses ("ASC 326-20") and reserves a portion of the accounts receivable based on assessment of the collectability of customer accounts at the time of revenue recognition. The Company regularly reviews the reserve by considering factors such as historical experience, credit quality, the age of the accounts receivable balances, and current economic conditions that may affect a customer’s ability to pay.

Receivables deemed to be uncollectible are written-off against the allowance for credit losses at the time such receivables are deemed to be uncollectible under a specific identification or estimated method. Recoveries of accounts receivable previously written off are recorded when received. As of June 30, 2025 and December 31, 2024, the Company had an immaterial allowance for credit losses related to its accounts receivable.

Supplies

Supplies consist primarily of laboratory items and reagents used by the Company in providing services. All supplies are raw materials and are stated at the lower of cost or net realizable value on a first-in, first-out basis. The Company periodically reviews its supplies for excess or obsolescence and writes down obsolete or otherwise unmarketable supplies to their estimated net realizable value. As of June 30, 2025 and December 31, 2024, the amount of write downs associated with the Company’s supplies was immaterial.

Deferred Offering Costs

Deferred offering costs consist primarily of accounting, legal, and other fees related to the Company’s proposed IPO. The Company had $4.5 million of deferred offering costs as of December 31, 2024. Prior to the IPO, deferred offering costs were capitalized on the consolidated balance sheet. Upon the consummation of the IPO, $9.0 million of deferred offering costs were reclassified into additional paid-in capital as an offset against IPO proceeds.

Property and Equipment, Net

The Company reports property and equipment at cost, net of accumulated depreciation, amortization, and any asset impairments. The cost of properties held under finance leases is equal to the present value of lease payments not yet paid, adjusted for initial direct costs, prepaid lease payments and lease incentives received. Major improvements which add to productive capacity or extend the life of an asset are capitalized. Normal repairs and maintenance are expensed as incurred. When assets are retired or otherwise disposed of, the cost and related accumulated depreciation and amortization are removed from the accounts, and any resulting gain or loss is reflected in the accompanying condensed consolidated statements of operations and comprehensive loss for the period.

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Depreciation and amortization expenses are calculated on a straight-line basis and applied to asset classes based upon the Company’s estimate of the asset class’s useful life, as summarized below:


			Estimated Useful Life
Laboratory equipment			3 years
Computer equipment and software			3 years
Furniture and fixtures			5 years
Aircraft			15 years
Leasehold improvements/leased buildings			Lesser of remaining lease term or useful life
Leased equipment			Lesser of initial lease term or 5 years

Computer equipment and software includes the purchases of hardware, software and capitalized labor costs associated with internally developed software.

The Company capitalizes purchased software which is ready-for-service and capitalizes qualifying internal software development costs incurred on significant projects. Capitalization of costs begins when two criteria are met: (1) the preliminary project stage is completed, management with relevant authority authorizes and commits to funding the software project, and (2) it is probable that the software will be completed and used for its intended function. Capitalization ceases when the software is substantially complete and ready for its intended use, including the completion of all significant testing. Costs related to preliminary project activities and post-implementation operating activities are expensed as incurred.

Research and development costs and other computer software maintenance costs related to software development are expensed as incurred.

Capitalized software costs are included in property and equipment, net. These costs are amortized using the straight-line method over the estimated useful life of the underlying software, which is three years.

Fair Value Measurements

Fair value is defined as the exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions market participants would use in pricing an asset or liability.

The basis for these assumptions establishes a three-level fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

•Level 1 - Observable inputs such as quoted prices in active markets for identical assets and liabilities;

•Level 2 - Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and

•Level 3 - Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

Assets and liabilities measured at fair value are based on one or more of three valuation techniques. The three valuation techniques are as follows:

•Market approach – Prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities;

•Cost approach – Amount that would be required to replace the service capacity of an asset (i.e., replacement cost); and

•Income approach – Techniques to convert future amounts to a single present amount based on market expectations (including present value techniques, option-pricing models, and lattice models).

Financial instruments consist of cash, cash equivalents, restricted cash, short-term marketable securities, accounts receivable, prepaid expenses and other current assets, accounts payable, accrued expenses and other current liabilities, debt, warrants, and derivative instruments.

As of June 30, 2025 and December 31, 2024, the carrying amounts of the Company’s cash equivalents, restricted cash, accounts receivable, prepaid expenses and other current assets, accounts payable, accrued expenses and other

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current liabilities approximate their fair value based on the short-term nature of these items. There were no transfers between Levels 1, 2 or 3 for the periods ended June 30, 2025 and December 31, 2024.

The Company’s financial assets and liabilities subject to fair value measurements on a recurring basis and the level of inputs used in such measurements were as follows:


	As of June 30, 2025
	Fair Value		Level 1		Level 2		Level 3

Financial assets	(amounts in thousands)
Short-term marketable securities	$	2,249	$	2,249	$	—	$	—


	As of December 31, 2024
	Fair Value		Level 1		Level 2		Level 3

Financial assets	(amounts in thousands)
Short-term marketable securities	$	2,201	$	2,201	$	—	$	—

Financial liabilities
Warrant liability	$	91,642	$	—	$	—	$	91,642
Derivative liability	$	6,058	$	—	$	—	$	6,058

2018 and 2020 Warrant Liability

The Company utilized a probability-weighted scenario approach factoring in various exit strategies and the related timing of such to estimate the fair value of its warrant liability. For each scenario, the Company utilized a Black-Scholes option pricing model with the following assumptions:

•Fair value per share of the underlying stock—The fair value of the underlying stock represents the fair value of the Company's Series C preferred stock that the warrants are convertible into.

•Volatility—The volatility is derived from historical volatilities of several unrelated publicly-listed peer companies, since the Company has no trading history. When making the selections of industry peer companies to be used in the volatility calculation, the Company considers the size, operational and economic similarities to the Company’s principal business operations.

•Risk-free interest rate—The risk-free interest rate is based on U.S. treasury yield as of the measurement dates interpolated to match the maturity equal to the respective term to exit.

•Dividend yield—The expected dividend assumption is based on the Company’s current expectations about the Company’s anticipated dividend policy.

•Expected term (years)—Based on expected term under various exit strategies.

The below table summarizes the significant unobservable inputs used in the fair value measurement of the 2018 and 2020 warrant liabilities as of December 31, 2024. The warrants were reclassified from liability to equity upon the IPO as they were exercised into Series C preferred stock, which was converted to common stock. The difference between the fair value of the warrants immediately prior to the reclassification and its prior fair value was recorded in the condensed consolidated statement of operations and comprehensive loss as changes in fair value of financial instruments. The fair

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value immediately prior to the reclassification is based on the total number of common stock issued upon exercise and conversion, multiplied by the public offering price of $21.00 per share.


	As of December 31, 2024
	2018 Warrants	2020 Warrants

Fair value per share of the underlying stock	$3.66 - $5.65	$3.66 - $5.65
Expected volatility	47.6% - 63.0%	61.2% - 63.0%
Risk-free interest rate	4.2% - 4.3%	4.3%
Expected dividend yield	—%	—%
Expected term (years)	0.29 - 0.75	0.29 - 2.25

2025 Warrant Liability - Pre-IPO Financing

The Company utilized a probability-weighted scenario approach factoring in various exit scenarios and the related timing of such to estimate the fair value of its warrants that were issued in conjunction with the 2025 Convertible Notes. Upon issuance as of April 1, 2025, the fair value of these warrants was $10.3 million. Immediately prior to the IPO, the fair value of these warrants was $16.5 million.

Derivative Liability - 2023 Term Loan

On January 18, 2023, the Company entered into a credit agreement (the “New Term Loan Agreement”) under which the Company issued senior, secured promissory notes (the “2023 Term Loan”) by which the New Term Loan lenders agreed to lend the Company up to an aggregate principal amount of $400.0 million, $200.0 million of which was received by the Company upon issuance, and $200.0 million of which was drawn down in March 2024. The Company identified certain embedded features in the 2023 Term Loan, including various contingent prepayment, compensatory payment, and default interest rate features, that are required to be bifurcated from the 2023 Term Loan and separately accounted for in the condensed consolidated financial statements as a compound derivative liability.

Fair value of the derivative liability as of December 31, 2024 was estimated using the discounted cash flow method under the income approach. This approach involves significant Level 3 inputs and assumptions including an estimated probability and timing of certain contingent events, such as events of default, change of control, sale of assets, etc. The analysis also required the selection of a discount rate representative of the Company's credit risk. The discount rate used for the initial fair value was calibrated to the transaction. The value of the derivative liability in connection with the 2023 Term Loan reduced to zero upon the IPO, as the contingent prepayment is no longer required.

Refer to Note 8 for additional information about the compound embedded derivative liability.

Derivative Liability - Pre-IPO Financing

In estimating the fair value of the bifurcated derivatives related to the Series E Preferred Stock, Series F Preferred Stock and the 2025 Convertible Notes, the Company applied the with-and-without methodology as of April 1, 2025. This approach calculates the value of the bifurcated embedded derivative as the difference between the value of each instrument including the derivative and the value of each instrument excluding the derivative. Upon issuance on April 1, 2025, the fair values of the bifurcated embedded derivatives relating to the Series E Preferred Stock, Series F Preferred Stock, and 2025 Convertible Notes were $30.1 million, $11.9 million, and $21.2 million, respectively. Immediately prior to the IPO, the fair values of these bifurcated derivatives were $43.6 million, $16.5 million, and $13.1 million, respectively, determined as the excess of each instrument’s fair value immediately prior to the IPO over the sum of its original proceeds and any accrued interest or dividends. Upon the IPO, the derivative liabilities were derecognized in conjunction with the conversion of the 2025 Convertible Notes, Series E Preferred Stock, and Series F Preferred Stock, and the issuance of the associated shares was recorded in common stock and additional paid-in capital.

Debt - 2023 Term Loan

As of June 30, 2025, the estimated fair value of the 2023 Term Loan, was $384.7 million, compared to a carrying value of $373.4 million. As of December 31, 2024, the estimated fair value of the 2023 Term Loan, excluding the bifurcated embedded derivative, was $380.9 million, compared to a carrying value of $373.1 million. The Company

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estimated the fair value of the 2023 Term Loan as of June 30, 2025 was based on a discounted cash flow analysis, and an income approach, which represented the use of Level 3 inputs in the fair value hierarchy.

2025 Convertible Notes, Series E Preferred Stock, and Series F Preferred Stock - Pre-IPO Financing

The Company calculated the fair value of the 2025 Convertible Notes, as well as the Series E Preferred Stock, Series F Preferred Stock, and warrants as of April 1, 2025 using a calibrated approach that aligned the total fair value of the instruments with the cash proceeds received. Upon issuance as of April 1, 2025, the fair value of the 2025 Convertible Notes, the Series E Preferred Stock and the Series F Preferred Stock were $29.4 million, $92.5 million, and $35.5 million respectively. Immediately prior to the IPO, the fair value of the 2025 Convertible Notes was $43.6 million, based on the total number of common stock issued upon conversion, multiplied by the initial public offering price of $21.00 per share.

Goodwill

Goodwill represents the excess of the purchase price over the fair value of net identifiable assets and liabilities acquired through a business combination. The Company evaluates goodwill for impairment in accordance with ASC Topic 350, Intangibles – Goodwill and Other on an annual basis on October 1, or more frequently if events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. The Company first assesses qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount, or the Company may determine to proceed directly to the quantitative impairment test.

If the Company assesses qualitative factors and concludes that it is more likely than not that the fair value of a reporting unit is less than its carrying amount or if the Company determines not to use the qualitative assessment, then a quantitative impairment test is performed. The factors utilized in the qualitative assessment include macroeconomic conditions, industry and market considerations, cost factors, overall financial performance, and Company-specific events. The quantitative impairment test requires comparing the fair value of the reporting unit to its carrying value, including goodwill. The fair value of the reporting unit is determined based on the present value of estimated cash flows using available information regarding expected cash flows of each reporting unit, discount rates, and the expected long-term cash flow growth rates.

The Company has identified that its business operates as a single operating segment which is also a single reporting unit for purposes of testing goodwill for impairment. An impairment exists if the fair value of the reporting unit is lower than its carrying value. If the fair value of the reporting unit is lower than its carrying value, the Company would record an impairment loss equal to the excess of the reporting unit's carrying value over its fair value.

There were no impairment losses for the three and six months ended June 30, 2025 and 2024.

Research and Development Costs

Research and development costs are expensed as incurred. Research and development expenses consist of costs incurred in performing research and development activities. The costs include direct costs for salaries and benefits, materials, contract services and other outside costs, and costs to acquire in-process research and development projects and technologies that have no alternative future use.

Advertising

The Company expenses advertising costs as incurred. The Company incurred advertising costs of $0.1 million and $0.3 million for the three months ended June 30, 2025 and 2024, respectively, and $0.2 million and $0.6 million for the six months ended June 30, 2025 and 2024, respectively.

Self-Insurance

The Company offers medical insurance coverage to eligible employees under a self-insured program managed by a third-party administrator, leveraging stop-loss insurance policies to mitigate risk. The Company records an estimate of its liability for medical claims, which includes the incurred claims amount plus an estimate of incurred, but not reported claims. Self-insurance liability of $2.1 million and $1.9 million as of June 30, 2025 and December 31, 2024, respectively, is included within accrued expenses and other current liabilities on the condensed consolidated balance sheets.

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Net Loss per Share Attributable to Common Shareholders

The Company calculates its basic and diluted net loss per share attributable to common shareholders in conformity with the two-class method required for companies with participating securities. Each series of the Company’s redeemable convertible preferred stock is considered to be a participating security because the preferred shareholders have a right to receive dividends on a pari passu basis with the Company’s common shareholders. The two-class method determines net income (loss) per share for each class of common stock and participating security according to dividends declared or accumulated and participating rights in undistributed earnings. The two-class method requires income (loss) available to common shareholders for the period to be allocated between common and participating securities based upon the respective rights of each to share in earnings as if all income (loss) for the period had been distributed. The participating securities are not required to participate in the losses of the Company, and therefore during periods of loss there is no allocation required under the two-class method between common and participating securities.

Because the Company has reported a net loss for the three and six months ended June 30, 2025 and 2024, basic net loss per share attributable to common shareholders is calculated by dividing net loss attributable to common shareholders by the weighted-average common stock outstanding during the period, without consideration for potential common stock equivalents. Net loss attributable to common shareholders is equal to net loss, less the deemed dividend and accretion on preferred securities to their redemption value to the extent such securities are outstanding during the period. Diluted net loss per share attributable to common shareholders is calculated by adjusting the weighted-average stock outstanding for the dilutive effect of potential common stock equivalents outstanding. For purposes of calculating the diluted net loss per share attributable to common shareholders, convertible preferred stock, convertible promissory notes, warrants, restricted stock units, and stock options are considered to be potential common stock equivalents but are excluded from the calculation of diluted net loss per share attributable to common shareholders because their effect would be anti-dilutive. Therefore, basic and diluted net loss per share attributable to common shareholders was the same for all periods presented.

Income Taxes

The Company accounts for income taxes under the asset and liability method as set forth in ASC 740 “Income Taxes” ("ASC 740"). Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statement and tax bases of assets and liabilities by using enacted tax rates in effect for the year in which the differences are expected to reverse. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts expected to be realized.

The calculation of the Company’s tax liabilities involves dealing with uncertainties in the application of complex tax laws and regulations in a multitude of jurisdictions across its global operations. The Company records uncertain tax positions in accordance with ASC 740 on the basis of a two-step process in which (1) we determine whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, we recognize the largest amount of tax benefit that is more than 50% likely to be realized upon ultimate settlement with the related taxing authority. For tax positions not meeting the more-likely-than-not test, no tax benefit is recorded.

At June 30, 2025 and December 31, 2024, the Company has accumulated net operating loss carryforwards in both the U.S. and foreign jurisdictions, and no provision for income taxes is required. The Company's deferred tax assets are subject to a full valuation allowance.

Recently Issued Accounting Pronouncements Not Yet Adopted

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures which requires presentation of specific categories of reconciling items, as well as reconciling items that meet a quantitative threshold, in the reconciliation between the income tax provision and the income tax provision using statutory tax rates. The standard also requires disclosure of income taxes paid disaggregated by jurisdiction with separate disclosure of income taxes paid to individual jurisdictions that meet a quantitative threshold. For public business entities, the ASU is effective for annual periods beginning after December 15, 2024, with early adoption permitted. For entities other than public business entities, the ASU is effective for annual periods beginning after December 15, 2025. The amendments of the ASU should be applied on a prospective basis; however, entities have the option to apply retrospectively for each period presented. The Company does not expect the adoption of this new standard in 2025 to have an impact on its condensed consolidated financial position, results of operations, or cash flow.

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In November 2024, the FASB issued ASU No. 2024-03, Income Statement- Reporting Comprehensive Income-Expense disaggregation disclosures (Subtopic 220-40) Disaggregation of Income Statement Expenses. This ASU requires disclosure of specified information about certain costs and expenses in the notes to financial statements. This ASU is effective for annual periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Adoption of this ASU should be applied on a prospective basis. Early adoption is permitted. We are currently evaluating the impact that this guidance will have on the disclosures within our financial statements, and expect to adopt this ASU for the year ending December 31, 2027.

Note 3. Condensed Consolidated Balance Sheet and Statement of Operations and Comprehensive Loss Components

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consist of the following:


	As of June 30, 2025		As of December 31, 2024

	(amounts in thousands)
Prepaid expenses	$	16,575	$	13,562
Other current assets	2,549		6,708
Total prepaid expenses and other current assets	$	19,124	$	20,270

Property and Equipment, Net

Property and equipment, net consist of the following:


	As of June 30, 2025		As of December 31, 2024

	(amounts in thousands)
Computer equipment and software	$	74,791	$	73,312
Capitalized software	26,312		25,921
Laboratory equipment	108,576		103,795
Furniture and fixtures	9,129		9,110
Leasehold improvements/Leased buildings	63,295		63,039
Aircraft and leased equipment	21,249		21,249
Total property and equipment	303,352		296,426
Less: accumulated depreciation and amortization	(242,037)		(228,609)
Property and equipment, net	$	61,315	$	67,817

Total depreciation and amortization expense was $6.4 million and $11.6 million for the three months ended June 30, 2025 and 2024, respectively, and $13.5 million and $29.3 million for the six months ended June 30, 2025 and 2024, respectively.

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Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consist of the following:


	As of June 30, 2025		As of December 31, 2024

	(amounts in thousands)
Trade accruals	$	5,749	$	7,131
Accrued payroll and employee medical	18,308		17,882
Accrued bonus	13,516		25,736
Current portion of early exercise stock option liability	327		4,957
Contract liability	5,340		7,470
Current portion of operating lease liabilities	7,291		6,080

Other accrued expenses	10,826		8,286
Total accrued expenses and other current liabilities	$	61,357	$	77,542

Other Long-Term Liabilities

Other long-term liabilities consist of the following:


	As of June 30, 2025		As of December 31, 2024

	(amounts in thousands)
Long-term operating lease liabilities, net of current portion	$	37,983	$	38,651
Long-term portion of early exercise stock option liability	380		5,767
Total other long-term liabilities	$	38,363	$	44,418

Other Expense, Net

Other expense, net, consists of the following:


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024

	(amounts in thousands)
Loss on debt extinguishment	$	(17,930)	$	—	$	(17,930)	$	—
Other	(411)		(141)		(428)		(360)
Total other expense, net	$	(18,341)	$	(141)	$	(18,358)	$	(360)

Note 4. Restricted Cash

The Company entered into a lease agreement with KCP NNN II Leasehold 4, LLC on July 25, 2019 to lease 114,500 square feet of space in Irving, Texas. As part of the lease agreement, the Company delivered an unconditional, irrevocable letter of credit for $3.4 million from a nationally recognized bank. The Company obtained this letter of credit and placed $3.4 million in a security deposit account. As of June 30, 2025 and December 31, 2024, amounts outstanding are $2.4 million and $2.7 million, respectively, and are included within cash, cash equivalents, and restricted cash and other assets on the condensed consolidated balance sheets.

The remaining restricted cash amounts are not material individually.

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the condensed consolidated balance sheet that sum to the total of the amounts shown in the condensed consolidated

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statements of cash flows. Restricted cash is presented within cash, cash equivalents, and restricted cash and other assets on the condensed consolidated balance sheets.


	Condensed consolidated balance sheet line item	As of June 30, 2025		As of December 31, 2024

		(amounts in thousands)
Cash and cash equivalents	Cash, cash equivalents, and restricted cash	$	718,934	$	63,950
Restricted cash - short-term	Cash, cash equivalents, and restricted cash	1,510		1,492
Restricted cash - long-term	Other assets	2,243		2,586
Total		$	722,687	$	68,028

Note 5. Income Taxes

The Company is subject to tax liabilities imposed by multiple jurisdictions. The Company determines our best estimate of the annual effective tax rate at each interim period using expected annual pre-tax earnings, statutory tax rates, and available tax planning opportunities. Certain significant or unusual items are separately recognized in the quarter in which they occur, which can cause variability in the effective tax rate from quarter to quarter. The Company recognizes interest and penalties related to uncertain tax positions, if any, as an income tax expense. The effective tax rate on income for the six months ended June 30, 2025 and 2024 is shown in the table below. For the six months ended June 30, 2025 and 2024, the tax rates differed from the U.S. federal statutory rate of 21.0% primarily due to the impact of net operating losses and valuation allowances.


	Three Months Ended June 30,						Six Months Ended June 30,
	2025			2024			2025			2024

	(amounts in thousands)
Income (loss) before provision for income taxes	$	(71,790)		$	(66,186)		$	(174,370)		$	(177,214)
Provision for income taxes	—			—			—			—
Effective tax rate	—		%	—		%	—		%	—		%

The Company is subject to taxation in the United States and various states and foreign jurisdictions. As of June 30, 2025, all loss years remain open to examination by the taxing authorities.

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for temporary differences between the financial reporting bases and tax bases of assets and liabilities based on enacted tax rates expected to be in effect when such amounts are realized or settled. However, deferred tax assets are recognized only to the extent that it is more likely than not that they will be realized based upon consideration of available evidence, including future reversals of existing taxable temporary differences, future projected taxable income, the length of the tax asset carryforward periods and tax planning strategies. The effects of remeasurement of deferred tax assets and liabilities resulting from changes in tax rates are recognized in income in the period of enactment.

On July 4, 2025, H.R. 1, known as the One Big Beautiful Bill Act (the “OBBBA”), was signed into law. The OBBBA includes a broad range of tax reform provisions, including extending and modifying certain key provisions from the 2017 Tax Cuts & Jobs Act (both domestic and international). The Company is currently evaluating the potential impacts of the OBBBA on its condensed consolidated financial statements.

Note 6. Redeemable Convertible Preferred Stock

As of June 30, 2025, there were no shares of redeemable convertible preferred stock outstanding.

On April 1, 2025, the Company entered into a preferred stock purchase agreement with certain investors pursuant to which it issued a total of 12,345,674 and 4,657,401 shares of Series E Preferred Stock and Series F Preferred Stock, respectively, at $8.10 per share for gross proceeds of approximately $137.7 million. Allocated issuance costs paid in connection with the Series E Preferred Stock and Series F Preferred Stock were approximately $6.8 million.

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The Company has previously issued shares of Series A, Series B, Series C, and Series D convertible preferred stocks. Upon the closing of the IPO on June 20, 2025, all outstanding shares of the Company’s redeemable convertible preferred stock, including Series E and F, converted into an aggregate of 211,378,638 shares of common stock.

The following table summarizes the redeemable convertible preferred stock outstanding immediately prior to their conversion into common stock (excluding the 2018 and 2020 warrants that, prior to our IPO, were exercisable for Series C convertible preferred stock), and the rights and preferences of the Company’s respective series preceding the Company’s IPO in June 2025:


	As of June 20, 2025
(amounts in thousands, except share and per share amounts)	Shares Authorized	Shares Issued and Outstanding	Original Issue Price Per Share		Aggregate Liquidation Preference		Net Carrying Value

Series A Preferred Stock	490,000,000	485,795,293	$	0.61	$	296,335	$	709,261
Series B Preferred Stock	30,000,000	29,629,630	$	0.54	16,000		42,963
Series C Preferred Stock	142,000,000	116,200,835	$	2.76	415,616		415,616
Series D Preferred Stock	102,600,000	102,516,283	$	8.10	1,078,273		1,078,273
Series E Preferred Stock	12,345,678	12,345,674	$	8.10	101,786		145,412
Series F Preferred Stock	10,493,827	4,657,401	$	8.10	38,399		54,857
Total redeemable convertible preferred stock	787,439,505	751,145,116			$	1,946,409	$	2,446,382

As of December 31, 2024, redeemable convertible preferred stock consisted of the following:


	As of December 31, 2024
(amounts in thousands, except share and per share amounts)	Shares Authorized	Shares Issued and Outstanding	Original Issue Price Per Share		Aggregate Liquidation Preference		Net Carrying Value

Series A Preferred Stock	490,000,000	485,795,293	$	0.61	$	296,335	$	709,261
Series B Preferred Stock	30,000,000	29,629,630	$	0.54	16,000		42,963
Series C Preferred Stock	142,000,000	116,200,835	$	2.76	408,715		408,715
Series D Preferred Stock	102,600,000	102,516,283	$	8.10	1,060,712		1,060,712
Total redeemable convertible preferred stock	764,600,000	734,142,041			$	1,781,762	$	2,221,651

The redeemable convertible preferred stock is classified as mezzanine equity pursuant to the guidance in ASC 480. The rights, preferences, and privileges of the redeemable convertible preferred stock were as follows:

Voting Rights

On any matter presented to the shareholders of the Company for their action or consideration at any meeting of shareholders of the Company (or by written consent of shareholders in lieu of meeting), each holder of outstanding shares of preferred stock will be entitled to cast the number of votes equal to the number of whole shares of common stock into which the shares of preferred stock held by such holder are convertible as of the record date for determining shareholders entitled to vote on such matter.

Dividends

All classes of preferred stock are entitled to receive dividends out of any assets legally available only when, as, and if declared by the Company’s board of directors, prior to and in preference to any declaration or payment of any dividend on the common stock.

Liquidation Preference

In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company, the holders of shares of Series C, Series D and Series E preferred stock then outstanding will be entitled to be paid out of the assets of

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the Company available for distribution to its shareholders at an amount per share equal to the greater of (i) the Series C, Series D and Series E original issue price, plus (A) any dividends declared but unpaid thereon and (B) a 7.0% cumulative accruing dividend, compounding annually from the date of issuance of such share of Series C, Series D and Series E preferred stock, (ii) the amount that the holder of a share of Series C, Series D and Series E preferred stock would have received upon conversion to common stock, or (iii) solely with respect to the Series D preferred stock, 1.2 times the Series D original issue price.

The Series F Preferred Stock then outstanding will then be entitled to be paid out of the assets of the Company available for distribution to its shareholders at an amount per share equal to the greater of (i) the Series F Preferred Stock original issue price, plus (A) any dividends declared but unpaid thereon and (B) a 8.0% cumulative accruing dividend, compounding annually from the date of issuance of such share of Series F Preferred Stock, (ii) 1.5 times the Series F Preferred Stock original issue price, or (iii) the amount that the holder of a share of Series F Preferred Stock would have received upon conversion to common stock.

The Series A and Series B preferred stock are then paid on a pro rata, pari passu basis an amount equal to the greater of (i) the respective original issue price plus any dividends declared but unpaid thereon, and (ii) the amount that the holder of a share of Series A or Series B preferred stock, respectively, would receive upon conversion to common stock. The remaining proceeds will be distributed to the holders of common stock.

Conversion Rights

The holders of the Company’s Series A, Series B, Series C, Series D, Series E and Series F preferred stock have the right to convert their shares into a number of fully paid and nonassessable shares of common stock as determined by dividing the respective Series A, Series B, Series C, Series D, Series E and Series F preferred stock original issue price by the conversion price in effect at the time. The initial conversion price of the Series A, Series B, Series C, Series D, Series E and Series F preferred stock was $0.61, $0.54, $2.76, $8.10, $8.10, and $8.10, respectively, and is subject to adjustment in accordance with anti-dilution provisions provided for in the Company’s Certificate of Formation. In connection with and shortly before the closing of the Pre-IPO Financing, the Company amended and restated its Certificate of Formation. Under this amended and restated Certificate of Formation, and solely for purposes of calculating the conversion of the Series C preferred stock in connection with an initial public offering, both the original issue price and the initial conversion price of the Series C preferred stock were revised from $2.76 to $4.58.

Upon the closing of the IPO, the Series E and Series F Preferred Stock will convert into common stock at a price equal to 70% of the initial public offering price per share. This legal-form conversion upon an initial public offering effectively functions as a share-settled redemption provision for accounting purposes and is accounted for as a bifurcated derivative liability in accordance with ASC 815.

As a result of the IPO, the aforementioned conversion price adjustment for Series D preferred stock was triggered due to the IPO price being less than 1.11111 times the then-current conversion price. Consequently, the Company recorded a deemed dividend, which increased net loss attributable to common shareholders by $384.4 million. The deemed dividend equals the fair value of incremental shares of common stock resulting the triggering of this feature.

Redemption Rights

At any time on or after March 2026 with respect to our Series C preferred stock, and May 2026 in respect of our Series D and Series E preferred stock, upon written notice from the applicable shareholders, the Series C, Series D and Series E shares shall be redeemed by the Company at a price per share equal to the greater of (i) the original issue price plus (a) all declared by unpaid dividends thereon and (b) a 7.0% cumulative accruing dividend, compounding annually, or (ii) the fair market value as determined by an independent appraiser.

Anti-dilution

Subject to certain exceptions, the conversion price of the Series A, Series B, Series D, Series E and Series F preferred stock is subject to broad-based weighted average adjustment to prevent dilution in the event that the Company issues additional shares at a purchase price less than the then-applicable conversion price. Subject to certain exceptions, in the event the Company sells additional shares of stock at a price per share less than the Series C original issue price, the conversion price of the Series C preferred stock is adjusted to the lower price that the Company sells shares in such offering. In the event the Company sells shares in an initial public offering for less than 1.11111 times the applicable Series C conversion price, then the Series C conversion price will be reduced (but never increased), concurrently with such issuance to 90.0% of the purchase price in such initial public offering. In the event the Company

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sells shares in an initial public offering for less than 110.0% of the applicable Series D conversion price, then the Series D conversion price will be reduced (but never increased), concurrently with such issuance to 90.0% of the purchase price in such initial public offering.

Note 7. Shareholders’ Equity and Equity Compensation

Preferred Stock

In connection with the IPO, the Company's amended and restated certificate of formation became effective, which authorized the issuance of 100,000,000 shares of preferred stock with a par value of $0.001 per share. As of June 30, 2025, there were no shares of preferred stock issued and outstanding.

Common Stock

As of June 30, 2025 and December 31, 2024, 2,800,000,000 and 1,150,000,000 shares of common stock with a $0.001 par value were authorized, respectively. There were 281,090,538 and 35,842,319 shares outstanding at June 30, 2025 and December 31, 2024, respectively.

Each share of common stock entitles the holder to one vote on all matters submitted to a vote of the Company's shareholders. Common shareholders are entitled to receive dividends if and when declared by the Company's board of directors, subject to the preferential dividend rights of any preferred stock then outstanding and compliance with our contractual obligations. No dividends have been declared or paid by the Company since its inception.

Treasury Stock

During the six months ended June 30, 2025, the Company repurchased 1,438,138 shares of common stock for an amount of $16.6 million, mainly associated with previously early-exercised options. Refer to below under “Option Activity —Modifications to Stock Options” for further details. No common shares were repurchased during the year ended December 31, 2024. Repurchased common stock is shown on the condensed consolidated balance sheets and condensed consolidated statements of redeemable convertible preferred stock and shareholders' deficit as treasury stock. The Company had 1,620,638 and 182,500 shares of treasury stock as of June 30, 2025 and December 31, 2024, respectively. These shares have not been retired. The Company has not issued any shares of treasury stock as of June 30, 2025 and December 31, 2024.

2020 Incentive Plan

Pursuant to the 2020 Incentive Plan (the "2020 Plan"), the Company may grant awards of options, restricted awards, performance awards or share appreciation rights to employees, consultants, and directors of the Company. A total of 24,788,884 shares of common stock are reserved for issuance upon the exercise of all awards granted or available to be granted under the 2020 Plan as of June 30, 2025. In June 2025, in connection with the IPO and the adoption of the 2025 Plan (as defined below), the Company will not make any additional grants under the 2020 Plan. Any outstanding awards granted under the 2020 Plan remain subject to the terms of the 2020 Plan, and any shares underlying outstanding wards under the 2020 Plan that expire or are repurchased, forfeited, canceled, or withheld will become available for issuance under the 2025 Plan.

To the extent permitted by applicable laws or any exchange rule, any shares of common stock issued under this Plan that are issued (a) in connection with the Company's acquisition of an unaffiliated business entity, (b) to the employees of such entity, and (c) in substitution of equity incentive awards previously issued to such employees by such entity shall not reduce the number of shares of common stock available for issuance under the Plan.

2025 Incentive Plan

Effective May 23, 2025, the Company’s Board of Directors adopted, and the shareholders approved, the 2025 Incentive Plan (the “2025 Plan”). The 2025 Plan provides for the grant of incentive stock options (“ISOs”), nonstatutory stock options (“NSOs”), share appreciation rights, restricted awards, performance awards, and other awards. As of June 30, 2025, a total of 4,127,172 shares of common stock were reserved for issuance in settlement of awards granted under the 2025 Plan. The material terms of the 2025 Plan are substantially similar to the 2020 Plan, except with respect to the number of authorized shares, which initially equaled 15,125,002 shares, plus the number of shares that would return to the share reserve of the 2020 Plan following the pricing of the Company's initial public offering.

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The 2025 Plan’s share reserve will increase on January 1 of each calendar year during the term of the 2025 Plan, beginning in 2026, by a number of shares as determined by the administrator of the 2025 Plan and in consultation with the Company, provided, that such increase (if any) will be no greater than the amount by which (y) 4% of the aggregate number of outstanding shares of our common stock as of the last day of the immediately preceding fiscal year exceeds (z) the aggregate number of shares remaining available for grant under the 2025 Plan on the last day of the immediately preceding fiscal year.

Employee Stock Purchase Plan

The Company’s Board of Directors has adopted, and the shareholders approved, the 2025 Employee Stock Purchase Plan (the “ESPP”), which became effective in connection with the IPO. The ESPP enables eligible employees to purchase shares of the Company’s common stock with payroll deductions. A total of 2,571,250 shares of the Company’s common stock were initially reserved for issuance under the ESPP.

The number of shares reserved for issuance and sale under the ESPP will increase automatically on January 1 of each calendar year during the term of this Plan beginning in 2026, by a number of Shares equal to 1% of the Common Stock outstanding on the last day of the immediately preceding fiscal year, unless the ESPP administrator should decide to increase the number of shares available under the ESPP by a lesser amount.

The purchase price designated by the ESPP administrator will be no less than the lower of 85% of the closing trading price per share of our common stock on the first trading date of an offering period in which a participant is enrolled or 85% of the closing trading price per share on the purchase date, which will occur on the last trading day of each purchase period within an offering period.

The initial enrollment and offering periods have not begun as of June 30, 2025.

Option Activity

Under the Plan, the Company has granted incentive stock options and non-qualified stock options to its employees and other service providers (non-employees). Most of the Company’s stock options vest incrementally over five years, subject to the grantee's continuous employment with the Company (“time-vesting options”). The Company recognizes compensation cost on a straight-line basis over the requisite service period for its time-vesting options. In addition to its time-vesting options, the Company has also granted stock options to certain non-employees for which vesting is tied to the grantee’s performance (“performance-vesting options”). The Company evaluates whether it is probable that the performance metric will be achieved for its performance-vesting options and recognizes compensation cost on a straight-line basis over the implied service period if achievement of the performance metric is deemed probable. No option shall be exercisable after the expiration of 10 years from the date it was granted. The exercise price of each option shall be not less than 100.0% of the fair market value of the common stock subject to the option on the date the option is granted.

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The following tables summarize the Company's stock option activity during the six months ended June 30, 2025:


	Options Outstanding
		Weighted		Weighted
		Average		Average
		Exercise		Remaining	Aggregate
	Number of	Price		Contract	Intrinsic
	Options	Per Share		Term	Value
				(in years)	(in thousands)
Total outstanding as of December 31, 2024:	21,770,225	$	9.06	5.40	$	226,117
Granted	3,085,295	18.79			1,040
Exercised	(686,254)	6.14			12,613
Cancelled/forfeited	(665,134)	12.56			6,292
Expired	(156)	2.44			4
Total outstanding as of June 30, 2025	23,503,976	$	10.33	5.55	$	348,605
Total exercisable as of June 30, 2025	17,018,261	$	7.53	4.37	$	299,962
Total vested or expected to vest as of June 30, 2025	22,478,922	$	9.99	5.41	$	341,097


	Unvested/Vested Activity
				Weighted
		Weighted		Average
		Average		Grant Date		Average
		Exercise		Fair		Remaining
	Options	Price		Value		Life
						(in years)
Unvested outstanding, as of December 31, 2024	6,658,321	$	15.79	$	9.39	3.30
Granted	3,085,295	18.79		15.43
Cancelled/forfeited	(362,227)	15.52		9.62
Vested, outstanding shares	(2,203,174)	14.41		8.88
Unvested outstanding, as of June 30, 2025	7,178,215	17.52		12.13		3.34
Early exercised unvested, end of period	43,605	$	16.20	$	10.37

Aggregate intrinsic value represents the difference between the estimated fair value of the underlying common stock and the exercise price of outstanding, in-the-money options.

The weighted average grant date fair value of options granted during the three months ended June 30, 2025 and 2024 was $14.02 and $11.76 per option, respectively, and $15.43 and $11.76 per option for the six months ended June 30, 2025 and 2024, respectively.

The total grant date fair value of options vested was $5.2 million and $3.5 million during the three months ended June 30, 2025 and 2024, respectively, and $19.6 million and $4.8 million for the six months ended June 30, 2025 and 2024, respectively.

The total intrinsic value of options exercised was $10.8 million and $1.1 million during the three months ended June 30, 2025 and 2024, respectively, and was $12.6 million and $1.5 million during the six months ended June 30, 2025 and 2024, respectively.

Modification to stock options

On November 9, 2021 and February 23, 2022, the Company granted stock options to certain executives that are exercisable upon vesting for 331,250 shares and 2,000,000 shares of the Company’s common stock, respectively (the "Prior Stock Options"). The Prior Stock Options vested over five years. On August 11, 2022, the Company’s Compensation Committee approved a modification to the Prior Stock Options, which was communicated to holders of the Prior Stock

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Options on September 1, 2022. The modification reduced the exercise price to $16.20 and modified the vesting conditions such that 20.0% vest upon grant, while the remainder vest over the following four years. The total number of grantees affected by this modification was twelve. The modification was not mandatory, but rather could be elected by holders of the Prior Stock Options on an individual holder basis. If the holder elected to participate, the holder’s Prior Stock Options were immediately canceled, and the Company issued the holder an equivalent number of new stock options in exchange (the “New Stock Options”) which could be early exercised prior to vesting. All of the holders elected to participate in the modification and exchanged their Prior Stock Options for New Stock Options. In addition, as an alternative to paying cash, holders of the New Stock Options that elected to exercise their options were able to pay for the exercise price by executing a full recourse promissory note with the Company that is secured by the holder’s restricted shares that are issued upon early exercise. Five grantees elected to early exercise 1,530,000 options utilizing the promissory note.

The principal of each note was equal to the exercise price of the New Stock Options. Interest on the unpaid balance compounded annually and accrued at a fixed rate per annum equal to the mid-term applicable federal rate in effect on the issuance of the note. The maturity date of the notes was the earlier of (1) December 31, 2030 or (2) the occurrence of a change in control event, unless an acceleration event occurs sooner. An acceleration event would generally occur if required to ensure compliance with Section 402 of the Sarbanes-Oxley Act of 2022, the termination of the holder's employment, the insolvency of the holder or the breach of any warranty of the holder. The holder may elect to prepay the outstanding principal and accrued interest balance of the promissory note at any time without penalty.

In addition to the outstanding balance of the note becoming due and payable immediately, upon the occurrence of an acceleration event, if the holder defaults on payment of the note, then interest would accrue at the maximum rate permitted by applicable law. The Company would have full recourse against the holder for failure to pay the note as and when due. Such promissory notes were secured by the restricted shares issued to the holder that were underlying the note. If the note is not repaid upon an event of default or acceleration event, the Company had the right to repurchase the restricted shares issued upon the exercise of the note for fair market value, which proceeds will apply to repayment of the note (with any remaining balance remaining due).

The Company accounted for the modification as a Type I (Probable to Probable) modification under ASC 718 that does not change the classification of the award (i.e., the New Stock Options continue to be classified within equity). The Company calculated the fair value of the Prior Stock Options and New Stock Options immediately prior to and after the modification using the Black-Scholes option pricing model. The incremental fair value was added to the original unrecognized compensation cost to arrive at the new unrecognized compensation cost, to be recognized over the remaining requisite service period.

Unvested stock received from early exercises of the New Stock Options are subject to a right of repurchase at the lesser of (i) original issuance price or (ii) then-current fair market value in the event of the employee's termination, either voluntary, or involuntary. The Company’s repurchase right with respect to these shares typically lapse over four years as the shares become vested. Early exercises of stock options are not deemed to be substantive exercises for accounting purposes and accordingly, consideration received for exercises of unvested stock options is initially recorded as a liability and subsequently reclassified into shareholders’ deficit as the related shares vest. As of June 30, 2025 and December 31, 2024, 43,605 and 662,000 shares from options exercised to date were subject to repurchase at a price of $16.20 per share. Of the amount subject to repurchase as of June 30, 2025 and December 31, 2024, $0.3 million and $5.0 million was recorded within other accrued expenses and current liabilities, respectively, and $0.4 million and $5.8 million was recorded within other long-term liabilities on the condensed consolidated balance sheets, respectively. In addition, as the early exercise was performed via issuance of a promissory note, a corresponding debt amount, plus related interest income was recorded as contra-equity. The total amount presented as contra-equity as of December 31, 2024 was $26.5 million, which includes interest income and the impact from exercises of both the vested portion of the New Stock Options and early exercises.

On March 3, 2025, the Company repurchased 1,429,213 common stock shares issued upon early exercise of stock options at $18.60 per share and proceeds were used to pay off the promissory notes and accrued interests. Repurchased common stock shares included 810,816 and 618,397 common stock shares, respectively, that were for options vested and unvested at the time of the repurchase, respectively. On the same day, the Company granted 1,530,000 new stock options to the same employees. New options were issued at an exercise price of $18.60 per share, have the same vesting status as cancelled options and are not early exercisable. The other terms of the new options are substantially the same as the original options.

Table of Cont e n t s

The Company accounted for the repurchase of the shares and grant of the new options as a Type I (Probable to Probable) modification under ASC 718. The Company calculated the fair value of the original options and new options immediately prior to and after the modification using the Black-Scholes option pricing model based on the following assumptions: risk-free interest rate of 3.93% - 3.99%; dividend yield of 0.00%; stock price volatility of 68.96% - 69.48%; and an expected life of 5.0 - 5.3 years. The total incremental fair value was $15.1 million, of which $8.6 million corresponding to the vested options was immediately recognized as compensation expense, with the remaining $6.5 million and the original unrecognized compensation cost of $5.7 million being recognized over the remaining requisite service period.

Restricted Awards Activity

The Company grants restricted stock units that will be settled in shares of the Company's common stock upon vesting to its employees, consultants and non-employee directors.

Vesting of the restricted stock units granted prior to the IPO was generally contingent upon the Company completing either an initial public offering of its common stock or a change of control. Vesting of restricted stock units granted after the IPO generally occurs incrementally over four years, subject to the grantee's continuous service with the Company.

The following table summarizes the Company's restricted stock unit activity for the six months ended June 30, 2025:


		Weighted
	Number of	Average Grant
	Restricted Stock Units	Date Fair Value

Unvested as of December 31, 2024	762,500	$	18.19
Granted	4,657,014	$	20.73
Vested	(1,048,250)	$	18.60
Cancelled/forfeited	(7,802)	$	21.00
Unvested as of June 30, 2025	4,363,462	$	20.88

Stock-Based Compensation Expense

The Company recorded stock-based compensation expense in the condensed consolidated statements of operations and comprehensive loss as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024

	(amounts in thousands)
Cost of services - Molecular profiling services	$	882	$	399	$	1,348	$	826
Cost of services - Pharma research and development services	2		2		3		4
Selling and marketing expense	1,990		967		3,232		2,085
General and administrative expense	22,392		2,053		33,027		3,998
Research and development expense	3,027		1,064		5,374		2,030
Total	$	28,293	$	4,485	$	42,984	$	8,943

There was no tax benefit associated with the above stock-based compensation expense.

Valuation of Stock-Based Awards

The Company records stock-based compensation expense for stock-based awards based on the estimated fair value of the awards on the date of the grant.

Table of Cont e n t s

The Company estimates the fair value of stock options using a Black-Scholes option pricing model. Prior to the IPO, the absence of a public market for the Company’s common stock required the Company’s Board of Directors to estimate the fair value of its common stock for purposes of granting options and for determining stock-based compensation expense by considering several objective and subjective factors, including contemporaneous third-party valuations, actual and forecasted operating and financial results, market conditions and performance of comparable publicly traded companies, developments and milestones in the Company, the rights and preferences of common and convertible preferred stock, transactions involving the Company’s common stock, and assumptions for a discount for lack of marketability. The fair value of the Company’s common stock was determined in accordance with the applicable elements of the American Institute of Certified Public Accountants Accounting and Valuations Guide, Valuation of Privately Held Company Equity Securities Issued as Compensation.

The key assumptions used in determining the fair value of options granted and a summary of the methodology applied to develop each assumption are as follows:


	Three Months Ended June 30,		Six Months Ended June 30,
	2025	2024	2025	2024

Expected volatility	68.3%	62.5% - 63.2%	68.3% - 69.5%	62.5% - 63.2%
Risk-free interest rate	4.2%	4.4% - 4.6%	3.9% - 4.2%	4.4% - 4.6%
Expected term (years)	6.50	5.97 - 6.55	5.00 - 6.55	5.97 - 6.55
Expected dividend rate	—%	—%	—%	—%
Expected forfeiture rate	8.5%	8.5%	0.0% - 8.5%	8.5%

Expected volatility. This is a measure of the amount by which the share price has fluctuated or is expected to fluctuate. An increase in the expected price volatility will increase the fair value of the option granted and the related compensation expense. As the Company was not publicly traded prior to June 2025, the expected price volatility for the Company's options was determined by using an average of historical volatilities of selected industry peers deemed to be comparable to the business corresponding to the expected term of the awards.

Risk-free interest rate. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for U.S. Treasury notes with maturities corresponding to the expected term of the awards.

Expected term. This is the period of time over which the options granted are expected to remain outstanding and is based on the Company’s estimate, taking into consideration vesting term, contractual term and historical actual lives. Options granted have a maximum term of ten years. An increase in the expected life will increase the fair value of the option granted and the related compensation expense. Due to the lack of historical share option exercise data, the Company utilizes the simplified method for determining the expected term.

Dividend rate. The Company has not made any dividend payments, nor does it have plans to pay dividends in the foreseeable future. Therefore, an expected dividend yield of zero is utilized.

Forfeitures. Forfeitures are estimated at the time of grant and reduce compensation expense ratably over the vesting period. This estimate is adjusted periodically based on the extent to which actual forfeitures differ, or are expected to differ, from the previous estimate.

Table of Cont e n t s

Note 8. Long-Term Debt

The carrying value of debt presented within current portion of notes payable and long-term indebtedness, net of debt discounts on the condensed consolidated balance sheets as of June 30, 2025 and December 31, 2024 includes the following components:


	As of June 30, 2025		As of December 31, 2024

	(amounts in thousands)
Term loan Initial Draw - January 18, 2023	$	200,000	$	200,000
Exit fee on term loan - January 18, 2023	2,000		2,000
Term loan Subsequent Draw - March 5, 2024	200,000		200,000
Exit fee on term loan - March 5, 2024	2,000		2,000
Less: Amortized debt discounts and financing costs (1)	(30,583)		(30,863)
Net debt	$	373,417	$	373,137
Compound bifurcated derivative liability	$	—	$	6,058

(1) Includes debt discounts of $28.3 million associated with the initial carrying value of compound bifurcated derivative liability.

Maturities of the Company’s debt are expected to be as follows as of June 30, 2025:


	Amount

Years Ending December 31,
Remainder of 2025	$	—
2026	—
2027	—
2028	400,000
2029	—

Term Loan

On January 18, 2023, the Company entered into the New Term Loan Agreement with OrbiMed Royalty & Credit Opportunities III, LP, OrbiMed Royalty & Credit Opportunities IV, LP (collectively, “OrbiMed”), and Braidwell Transaction Holdings LLC (“Braidwell", and collectively with OrbiMed, the “New Term Loan Lenders”). Pursuant to the New Term Loan Agreement, the Company issued senior, secured promissory notes by which the New Term Loan Lenders agree to lend the Company up to an aggregate principal amount of $400.0 million (the “2023 Term Loan”), $200.0 million of which was received by the Company upon issuance (the “Initial Draw"), and the remaining $200.0 million was received by the Company in March 2024 (the "Delayed Draw").

Until the earlier of December 31, 2024 or the date on which the 2023 Term Loan amount was fully drawn, which occurred on March 5, 2024, the undrawn balance of the New Term Loan Commitment was subject to a fee of 0.5% per annum. The outstanding principal amount of the 2023 Term Loan is due and payable on January 18, 2028. If an event of default occurs and is continuing, the New Term Loan Lenders may declare all amounts outstanding under the New Term Loan Agreement to be immediately due and payable. A final payment exit fee equal to 1.0% of the amount funded under the New Term Loan Agreement is due upon prepayment or maturity. Amounts borrowed pursuant to the New Term Loan Agreement may be prepaid at any time. Upon prepayment, the Company is subject to a prepayment penalty based on the timing of repayment.

The 2023 Term Loan bears interest at a rate per annum equal to a fixed margin of 6.5% plus the greater of (a) forward-looking three-month secured overnight financing rate ("SOFR") and (b) 2.5%. In the event of default, the fixed margin shall increase by 3.0% per annum. As of June 30, 2025, the interest rate was 10.8%. Regular quarterly payments are interest-only for the 60-month term of the New Term Loan Agreement, with the principal due at maturity. The

Table of Cont e n t s

effective interest rate for the Initial Draw of the 2023 Term Loan is 17.0%, and the effective interest rate for the Delayed Draw of the 2023 Term Loan is 12.0%.

The Company’s obligations under the New Term Loan Agreement are secured by a first lien security interest in substantially all of the assets of the Company and its subsidiaries. The New Term Loan Agreement contains certain customary representations and warranties, affirmative and negative covenants, financial covenants, and events of default applicable to the Company and its subsidiaries. Additional covenants include those restricting dispositions, fundamental changes to its business, mergers or acquisitions, indebtedness, encumbrances, distributions, investments, transactions with affiliates and subordinated debt. At June 30, 2025, the Company is in compliance with all covenants.

On April 1, 2025, the Company entered into an amendment of the 2023 Term Loan agreement. The amendment allowed for various consents from the lenders of the 2023 Term Loan as it relates to the 2025 Convertible Note, issued as part of the Pre-IPO financing. As part of the amendment, the Company paid an amendment fee of 1%, or $4.0 million. The Company evaluated the transaction and accounted for the amendment as a debt modification.

The Company identified multiple embedded derivatives that require bifurcation from the 2023 Term Loan. They are separately accounted for in the condensed consolidated financial statements as one compound derivative liability. Those embedded features include various contingent prepayment and compensatory payment features as well as interest rate increases upon an event of default.

Interest Expense

The components of interest expense associated with the Company’s long-term indebtedness and the 2025 Convertible Note, excluding finance leases, are as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024

	(amounts in thousands)
Debt discount amortization	$	7,755	$	1,731	$	9,700	$	3,322
Interest expense	11,446		11,933		22,275		19,623
Interest expense on long-term indebtedness, excluding finance leases	$	19,201	$	13,664	$	31,975	$	22,945

Warrant Liability

On September 21, 2018, the Company entered into a secured term loan agreement (the “Original Term Loan Agreement”) with Sixth Street Specialty Lending, Inc. and Barnett Debt Holdings, LLC. As part of the Original Term Loan Agreement, the Company issued a warrant to purchase 13,694,623 shares of Series C preferred stock (the “2018 Warrants"). In connection with the amendment to the Original Term Loan Agreement in 2020, the Company issued an additional warrant to purchase 11,399,814 shares of Series C preferred stock (the “2020 Warrants”) and amended the 2018 Warrants. Furthermore, these amendments also permitted the exercise of both the 2018 Warrants and 2020 Warrants into Series C preferred stock or common stock at the option of the holder. The 2018 Warrants are exercisable into Series C preferred stock at a price of $1.61 and into common stock at a price of $6.44. The 2020 Warrants are exercisable into Series C preferred stock at a price of $1.93 and into common stock at a price of $7.73. As a result of the amendment to permit exercise of the warrants into redeemable preferred stock, the warrants are classified as a liability pursuant to the guidance in ASC 480. Therefore, the warrants were reported at fair value within warrant liabilities on the condensed consolidated balance sheets, with changes in fair value reported within changes in fair value of financial instruments on the condensed consolidated statements of operations and comprehensive loss.

As discussed in Note 2, the warrants were reclassified from liability to equity upon the IPO. The difference between the fair value of the warrants immediately prior to the reclassification and its prior fair value was recorded in the consolidated statement of operations and comprehensive loss as changes in fair value of financial instruments. The fair value immediately prior to the reclassification was $131.7 million, and is based on the total number of common stock issued upon exercise and conversion, multiplied by the public offering price of $21.00 per share.

For the six months ended June 30, 2024, the Company recorded $5.3 million in changes in fair value of financial instruments, associated with the fair value changes of the 2018 and 2020 warrants.

Table of Cont e n t s

2025 Convertible Notes

On April 1, 2025, the Company issued 2025 Convertible Notes to certain investors in aggregate principal amount of $30.0 million. The 2025 Convertible Notes were scheduled to mature on January 1, 2026, accrued interest at a rate of 8% per annum, and, upon the closing of the IPO, converted at a conversion price equal to 70% of the initial public offering price per share, or into 2,076,596 shares of the Company’s common stock (inclusive of accrued interest), based on the initial public offering price of $21.00 per share. This legal-form conversion upon an initial public offering effectively functions as a share-settled redemption provision for accounting purposes and is accounted for as a bifurcated derivative liability in accordance with ASC 815. The 2025 Convertibles Notes were classified as a liability pursuant to the guidance in ASC 470 as they represented legal-form debt with a stated maturity and an obligation for the issuer to repay both principal and interest.

Upon the closing of the initial public offering, the 2025 Convertible Notes converted into common stock at a price equal to 70% of the initial public offering price per share. A loss on extinguishment of approximately $17.9 million was recognized, representing the excess of the fair value of the common stock issued over the combined carrying amount of the 2025 Convertible Notes and the related bifurcated derivative liability.

2025 Warrant Liability

On April 1, 2025, the Company also issued warrants to acquire shares of common stock to the holders of the 2025 Convertible Notes. These warrants were not initially exercisable for any shares of common stock, but such warrants became exercisable for a specified dollar value of shares on a monthly basis commencing on June 1, 2025 if the Company did not complete an initial public offering by such date. Additional warrants would have been issued each subsequent month that an initial public offering fails to occur based on a certain percentage. These warrants were classified as a liability pursuant to the guidance in ASC 480 as they represented a conditional obligation to issue a variable number of shares based on a fixed monetary amount known at inception. Therefore, these warrants were reported at fair value within warrant liabilities on the condensed consolidated balance sheets, with changes in fair value reported within changes in fair value of financial instruments on the condensed consolidated statements of operations and comprehensive loss. As discussed in Note 2, the 2025 warrants were net exercised into 784,231 shares of the Company’s common stock connection with the IPO. The difference between the fair value of the warrants immediately prior to the IPO and its initial fair value was recorded in the consolidated statement of operations and comprehensive loss as changes in fair value of financial instruments. The fair value immediately prior to the IPO was $16.5 million, and was based on the total number of common stock issued upon exercise and conversion, multiplied by the public offering price of $21.00 per share. The initial allocated proceeds of the warrant was $10.3 million, which represents the fair value of the warrants on April 1, 2025.

Note 9. Commitments and Contingencies

Purchase Obligations

The Company enters into various supply agreements that contains purchase commitments. Most of the commitments are based on a binding forecast for an agreed-upon period, which is 12-month or less.

Corporate Liability and Insurance

The Company maintains professional liability, general liability, and other customary insurance on a claims-made basis in amounts deemed appropriate by the Company’s management based upon historical claims and the nature and risks of the Company. The Company’s business may subject the Company to litigation and liability for damages. The Company believes that current insurance protection is adequate for present business operations, but there can be no assurance that the Company will be able to maintain professional and general liability insurance coverage in the future or that such insurance coverage will be available on acceptable terms or adequate to cover any or all potential product or professional liability claims. A successful liability claim in excess of insurance coverage could have a material adverse effect on the Company.

Litigation

During the ordinary course of business, the Company has become and may in the future become subject to pending and threatened legal and regulatory actions and proceedings. While it is not feasible to predict or determine the ultimate outcome of these matters, the Company believes that none of its current legal proceedings are likely to have a material adverse effect on its financial position as of June 30, 2025 and December 31, 2024, nor its results of operations

Table of Cont e n t s

or cash flows for both the three months ended June 30, 2025 and 2024 and the six months ended June 30, 2025 and 2024.

Note 10. Related Parties

The Company's officers and directors have ownership interests in certain vendors providing services to the Company. During the three months ended June 30, 2025 and 2024, the Company made payments to these entities for services and expenses for $0.8 million and $0.3 million, respectively. During the six months ended June 30, 2025 and 2024, the Company made payments to these entities for services and expenses for $1.4 million and $0.8 million, respectively.

Additionally, during the three months ended June 30, 2025 and 2024, the Company recorded general and administrative expenses due to related parties of $0.7 million and $0.4 million, respectively. During the six months ended June 30, 2025 and 2024, the Company recorded general and administrative expenses due to related parties of $1.2 million and $0.9 million, respectively.

Note 11. Net Loss Per Share Attributable to Common shareholders

The following table sets forth the computation of the basic and diluted net loss per share attributable to common shareholders:


	Three Months Ended June 30,				Six Months Ended June 30,
(amounts in thousands, except share and per share data)	2025		2024		2025		2024

Net loss	$	(71,790)	$	(66,186)	$	(174,370)	$	(177,214)
Deemed dividend from Series D redeemable convertible preferred stock	(384,436)		—		(384,436)		—
Adjustments of redeemable convertible preferred stock to redemption value	(60,971)		(23,594)		(85,433)		(46,707)
Net loss attributable to common shareholders	$	(517,197)	$	(89,780)	$	(644,239)	$	(223,921)
Net loss per share attributable to common shareholders, basic and diluted	$	(7.97)	$	(2.54)	$	(12.80)	$	(6.34)
Weighted-average shares used in computing net loss per share attributable to common shareholders, basic and diluted	64,918,988		35,371,424		50,348,947		35,342,180

The following common stock equivalents were excluded from the calculation of diluted net loss per share attributable to common shareholders for the periods presented as they had an anti-dilutive effect:


	Six Months Ended June 30,
	2025	2024

Series A preferred stock	—	121,448,823
Series B preferred stock	—	7,407,408
Series C preferred stock	—	29,050,209
Series D preferred stock	—	25,629,071
Outstanding warrants	—	6,273,609
Unvested RSUs	4,363,462	180,125
Outstanding stock options	23,503,976	21,191,043
Unvested shares subject to repurchase	43,603	968,000
Total	27,911,041	212,148,288

Table of Cont e n t s

Note 12. Segment and Geographic Information

The Company operates as a single operating segment. An operating segment is defined as a component of an entity for which discrete financial information is available and regularly reviewed by the entity's chief operating decision maker ("CODM") in deciding how to allocate resources and in assessing performance. The Company’s CODM, its Chairman and Chief Executive Officer, manages the Company’s operations on a consolidated basis for the purposes of allocating resources, making operating decisions and evaluating financial performance.

Net loss as reported on the condensed consolidated statements of operations and comprehensive loss is used by the CODM to assess segment performance against management budgets and prior period operating results for the purpose of making results-driven decisions about organizational resource allocation.

Segment revenues are derived from molecular profiling, strategic data, and research services that are delivered to the Company’s biopharmaceutical and clinical customers, who are predominantly located in the United States. The Company provides these services primarily by leveraging the Company’s proprietary technologies and clinico-genomic database, which are core to the Company’s operations and are deployed similarly across the service offerings.

The table below is a summary of the segment profit or loss, including significant segment expenses:


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024

	(amounts in thousands)



Revenue	$	181,398	$	100,049	$	302,314	$	180,727

Less:

Cost of services - Molecular profiling services	65,321		59,431		126,215		112,324
Cost of services - Pharma research and development services	2,392		3,064		5,350		4,732
Selling and marketing expense	42,260		38,710		82,089		78,319
General and administrative expense	64,367		41,068		116,486		85,422
Research and development expense	25,047		24,787		48,114		59,164



Interest income	1,618		2,640		2,121		4,408
Interest expense	(19,208)		(13,674)		(31,990)		(22,964)
Changes in fair value of financial instruments	(17,870)		12,000		(50,203)		936
Other expense, net	(18,341)		(141)		(18,358)		(360)
Segment and consolidated net loss	$	(71,790)	$	(66,186)	$	(174,370)	$	(177,214)

The following table sets forth the Company’s revenue by geographic areas based on the customer’s location:


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024

	(amounts in thousands)
United States	$	178,177	$	97,381	$	296,611	$	175,811
International	3,221		2,668		5,703		4,916
Total revenue	$	181,398	$	100,049	$	302,314	$	180,727

No single country outside of the United States accounted for more than 10.0% of total revenue during each of the three months ended June 30, 2025 and 2024, or the six months ended June 30, 2025 and 2024. As of June 30, 2025 and December 31, 2024, approximately 99.0% of the Company’s total assets are located in the United States.

Table of Cont e n t s

Note 13. Employee Benefit Plan

The Company sponsors a 401(k) plan, and pursuant to its terms, eligible employees can elect to contribute to the 401(k) plan, subject to certain limitations, up to the lesser of the statutory maximum or 100.0% of eligible compensation on a pre-tax basis. For the three months ended June 30, 2025 and 2024, the Company contributed $2.8 million and $2.0 million, respectively, to match employee contributions as permitted by the plan. For the six months ended June 30, 2025 and 2024, the Company contributed $4.7 million and $4.2 million, respectively, to match employee contributions as permitted by the plan. The Company pays the administrative costs for the plan.

Note 14. Subsequent Events

There were no significant subsequent events identified through the date that the condensed consolidated financial statements were issued, that could impact the financial statements.

Table of Cont e n t s

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and the related notes included in Item 1 of in this Quarterly Report. In addition to historical financial information, the following discussion and analysis contains forward-looking statements that involve risks, uncertainties, and assumptions. Our actual results and timing of selected events may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those discussed under the section titled “Risk Factors” and elsewhere in this Quarterly Report See the section titled “Special Note Regarding Forward-Looking Statements” elsewhere in this Quarterly Report. Our historical results are not necessarily indicative of the results that may be expected for any period in the future. Unless context requires otherwise, references to “we,” “us,” “our,” “Caris,” or “the Company” here refer to Caris Life Sciences, Inc. together with its wholly owned subsidiaries.

Overview

We are a leading, patient-centric, next-generation AI TechBio company and precision medicine pioneer. We develop and commercialize innovative solutions to transform healthcare through the use of comprehensive molecular information and AI/ML algorithms at scale. Our entire portfolio of precision medicine solutions is designed to benefit patients, with an initial focus on oncology, and serves the clinical, academic, and biopharma markets.

We founded Caris in 2008 with the belief and vision that combining a vast set of consistently generated molecular information with robust data-driven insights could realize the potential of precision medicine for patients. We have spent the last 17 years developing and building our portfolio of comprehensive, proprietary molecular profiling solutions and generating what we believe to be one of the largest and most comprehensive multi-modal clinico-genomic datasets in oncology based on the more than 6.5 million tests we have run on over 849,000 cases, which have generated measurements of over 38 billion molecular markers. Our platform is purpose-built to leverage the convergence of next-generation sequencing (“NGS”), artificial intelligence (“AI”) and machine learning (“ML”) technologies, and high-performance computing. The power of our differentiated Caris platform has enabled us to develop the latest generation of advanced precision medicine diagnostic solutions designed to address the entire cancer care continuum, including early detection, minimal residual disease (“MRD”) tracking, therapy selection, and treatment monitoring, as well as to create molecular signatures and discover and develop novel precision medicine therapeutics.

Our current commercial product portfolio consists of MI Profile, our tissue-based molecular profiling solution that has generated the majority of our revenue to date, and Caris Assure, our novel, universal blood-based molecular profiling solution that was broadly launched in the first quarter of 2024 for therapy selection. Our purpose-built, proprietary multi-omic profiling solutions capture and analyze molecular information from tissue and blood in a comprehensive manner. We believe this approach best positions us to provide actionable treatment pathways from targeted therapies to drive superior clinical outcomes for patients while also generating a rich dataset to power insights and innovation. Our molecular profiling solutions and the data generated by our multi-omic technology platform also provide value to our biopharma partners, such as Moderna, AbbVie, Xencor, and Merck KGaA, through partnerships that aim to increase the probability of technical and regulatory success of their therapeutic pipelines.

We believe that our early foresight to generate comprehensive data at scale over the past many years and build a robust, foundational infrastructure have uniquely positioned Caris to leverage the benefits of biological and technological advances to deliver transformative and advanced innovations in precision medicine and patient care into the future.

To our knowledge, we remain the only genomic profiling company to consistently utilize whole exome sequencing (“WES”) and whole transcriptome sequencing (“WTS”) as standard practice on every eligible patient sample. Our in-depth profiling of patient samples has led to the creation of what we believe to be one of the largest and most comprehensive multi-modal clinico-genomic datasets in oncology.

Our global annual clinical case volume has been growing rapidly, with year-over-year growth of 29% in 2022, 32% in 2023, 26% in 2024, and 26% through the second quarter of 2025. With our broad commercial launch of Caris Assure for therapy selection in the first quarter of 2024 and the FDA approval of MI Cancer Seek as a companion diagnostic in the fourth quarter of 2024 followed by the broad commercial launch of MI Cancer Seek in the first quarter of 2025 as the NGS component of MI Profile, we believe that increased profiling volumes will meaningfully contribute to our growth in 2025 and beyond.

Table of Cont e n t s

Our Caris platform is designed to create a virtuous cycle that can enable continued innovation and improved impact for patients and physicians. We believe our comprehensive approach to profiling will continue to drive demand for our genomic profiling capabilities, leading to further expansion of our clinico-genomic datasets, which provide additional valuable inputs to develop and enhance our solutions, with the ultimate goal of contributing to improved patient results. This continuous feedback loop enabled us to develop Caris Assure, which utilized genomic data generated by MI Profile to inform our blood-based bioinformatics algorithms, allowing us to detect previously unknown features and signals in the blood that provide advanced insights into disease development. We believe we will be able to further leverage this process to continue meaningful innovation in precision oncology as well as other chronic disease states, including cardiology, neurology, and metabolic conditions.

For the three months ended June 30, 2025 and 2024, we generated total revenue of $181.4 million and $100.0 million, respectively, and incurred net losses of $71.8 million and $66.2 million, respectively. For the six months ended June 30, 2025 and 2024, we generated total revenue of $302.3 million and $180.7 million, respectively, and incurred net losses of $174.4 million and $177.2 million, respectively. Our Adjusted EBITDA was $16.7 million and $(50.9) million for the three months ended June 30, 2025 and 2024, respectively, and $(19.5) million and $(121.0) million for the six months ended June 30, 2025 and 2024. While we have achieved positive Adjusted EBITDA for the three months ended June 30, 2025, we may incur additional net losses in the near future, and our expenses will increase as we continue to invest in developing new solutions, expand our organization, and increase our marketing efforts to continue to drive market adoption of our solutions. These investments, together with general and administrative expenses, have resulted in negative cash flows from operations of $24.0 million and $136.9 million for the six months ended June 30, 2025 and 2024, respectively. Our free cash flow was $(28.1) million and $(141.2) million for the six months ended June 30, 2025 and 2024, respectively. For additional information regarding Adjusted EBITDA and free cash flow, non-GAAP financial measures, see “—Non-GAAP Financial Measures.” Additionally, as of June 30, 2025, we had cash, cash equivalents, restricted cash and marketable securities of $724.9 million, and the aggregate principal amount of debt outstanding under our existing term loan was $400.0 million. For additional information regarding our liquidity and capital resources, see “—Liquidity and Capital Resources.”

On June 20, 2025, we completed our initial public offering (“IPO”) of our common stock, in which the Company issued and sold 23,529,412 shares of its common stock at a price of $21.00 per share, which resulted in net proceeds of $459.5 million after deducting underwriting discounts and commissions and before deducting offering costs of $9.0 million. Additionally, on June 25, 2025, the underwriters exercised their full over-allotment option and purchased from the Company an additional 3,529,411 shares of common stock at the IPO price, which resulted in net proceeds to the Company of $68.9 million after deducting discounts and commissions.

Key Factors Affecting Our Performance

We believe that our operating performance and future success depend on a number of factors that present significant opportunities for us and may pose risks and challenges, including those discussed below and in the “Risk Factors” section of this Quarterly Report.

•Market acceptance and commercial success of our solutions. Our success and future growth will depend on maintaining and expanding market acceptance of our molecular profiling solutions along with commercial success of these solutions across existing and new customers. Our MI Profile and Caris Assure case volumes have continued to increase over time. Such changes in our case volumes and the pricing of our solutions, however, are not impacted by the cancer type. For the three months ended June 30, 2025 and 2024, the number of clinical cases was 50,032 and 40,998, respectively. For the six months ended June 30, 2025 and 2024, the number of clinical cases was 95,890 and 75,900, respectively. We commercially launched our MI Cancer Seek solution in January 2025 as the WES/WTS NGS component of MI Profile. We initiated the broad commercial launch of Caris Assure for therapy selection in the first quarter of 2024, and realizing the potential of Caris Assure across the cancer treatment continuum is a key component of our business strategy. The commercial success of Caris Assure will depend upon, among other things, additional clinical trials that demonstrate the effectiveness of Caris Assure, particularly for early detection, multi-cancer early detection (“MCED”), MRD tracking, and treatment monitoring, and the continued adoption of Caris Assure by patients, the medical community, and third-party payers. In addition, we expect that our ability to maintain and expand our sales, marketing, and distribution capabilities to support the increased adoption of our molecular profiling solutions will play a key factor in our success.

•Biopharma partners. Our revenue also depends on our ability to maintain and expand relationships with our biopharma partners and attract new biopharma partners. As we continue to develop these relationships, we expect to support a growing number of projects and continue to have opportunities to offer our platform to such

Table of Cont e n t s

customers for development and research services. For the three months ended June 30, 2025 and the six months ended June 30, 2025, our year-over-year growth in pharma research and development services revenue has been 49% and 28%, respectively.

•Development and introduction of new solutions. Our business success will also depend on our ability to develop and commercialize new solutions. We plan to continue to invest in the enhancement of our molecular profiling solutions, the development of new solutions to achieve meaningful innovation in precision oncology and other disease states, and the expansion of our clinico-genomic datasets to drive breakthrough science. We intend to expand the application of Caris Assure to early detection, MCED, MRD tracking, and treatment monitoring. Our ability to develop and commercialize new solutions and services could face many challenges that could impact our future performance and results of operations. Such challenges include, but are not limited to, obtaining regulatory approvals; completing certain clinical development activities, validation studies, and/or clinical trials; having guidelines or recommendations for healthcare providers, administrators, payers, and patient communities relating to such solutions; and receiving favorable exposure in peer-reviewed publications and from key opinion leaders (“KOLs”).

•Payer coverage and reimbursements. Our revenue and future revenue growth will depend on our success in achieving broad coverage and adequate reimbursement for our solutions from third-party payers. Coverage and reimbursement by third-party payers, including managed care organizations, private health insurers, and government healthcare programs for the types of solutions we offer can be limited and uncertain and may depend on a number of factors, including a payer’s determination that a product is appropriate, medically necessary, and cost-effective. Each payer will make its own decision as to whether to establish a policy or enter into a contract to cover our products and the amount it will reimburse for such products. While the average selling prices (“ASPs”) for Caris Assure, MI Tumor Seek Hybrid and MI Cancer Seek reimbursed by a particular payer are determined by our arrangements with that payer and do not materially differ by cancer type, any fluctuation or differences in coverage and reimbursement among our third-party payers may impact our ASPs and gross margins. Moreover, if we are unable to obtain and/or maintain broad coverage and adequate reimbursement for our solutions from third-party payers, we may not be able to effectively increase our clinical case volume and our revenue would be impacted.

•Scaling infrastructure to meet increasing demand. Our financial results are also dependent upon our ability to support current and future levels of demand for our solutions, including MI Profile and Caris Assure. As the volumes of our current and new molecular profiling solutions continue to grow, we will need to simultaneously increase our capacity for sample intake and storage, enhance our customer service, improve our billing and general processes, expand our internal quality assurance programs, incorporate new equipment, implement new technology systems and processes, expand laboratory capacity, and otherwise extend our operational capabilities to support comprehensive genomic analyses at a larger scale while retaining expected turnaround times. This may result in us purchasing additional equipment, constructing additional facilities, hiring additional qualified labor, and implementing new systems, technology, controls, and procedures. As such, our capital expenditures and cost of services may increase as we continue our efforts to expand capacity. In addition, revenue may be impacted in the event that we are not able to meet the increase in demand.

Components of Results of Operations

Revenue

Revenue consists primarily of the following:

Molecular Profiling Services

Molecular profiling services revenue is generated from the provision of precision oncology solutions to ordering physicians utilizing MI Profile, MI Cancer Seek (NGS component of MI Profile), and Caris Assure. Revenue is recorded when performance obligations are satisfied, which is deemed to be when the results of the profiling services are provided to the ordering physicians, including certain hospitals, cancer centers, and institutions. Revenue is recorded at the amount that reflects the consideration to which we expect to be entitled from customers and third-party payers in exchange for providing such services.

Pharma Research and Development Services

Pharma research and development services revenue is generated from the provision of research and development services for biopharma partners utilizing our Caris platform. Given the nature of these services, each contract may contain multiple performance obligations, such as molecular profiling solutions, target discovery services,

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and strategic data services. Each performance obligation is analyzed, and revenue is recognized as or when such performance obligations are satisfied. The timing and extent of revenue recognized may vary from contract to contract.

Costs and Operating Expenses

We allocate certain overhead expenses, such as rent, utilities, and depreciation to cost of services and operating expense categories based on headcount and facility usage. As a result, an overhead expense allocation is reflected in cost of services and operating expenses.

Cost of Services - Molecular profiling services

Cost of molecular profiling services generally consists of cost of materials, direct labor (including bonus and stock-based compensation), equipment maintenance and depreciation expenses associated with processing cases (including accessioning, sequencing, quality control analyses, and shipping charges to transport samples), and freight. Costs associated with completing the molecular profiling services are recorded as the service is performed, regardless of whether revenue is recognized with respect to the service.

Cost of Services - Pharma research and development services

Cost of services for pharma research and development services generally consists of costs incurred for the performance of the services requested by our biopharma partners related to research and development services. For the development of new products, costs incurred before technological feasibility has been achieved are reported as research and development expenses, while costs incurred thereafter are reported as cost of services. Cost of services for pharma research and development services will vary depending on the nature, timing, and scope of customer projects.

We expect cost of services to increase in absolute dollars as our revenue grows. In the short term, increases to cost of services may outpace revenue growth as we invest in expanding our laboratory capacity and implementing new processes. However, over time, the cost per clinical case is expected to decrease due to economies of scale.

Selling and Marketing Expense

Our selling and marketing expense includes costs associated with our sales organization, including our direct sales force and sales management, marketing, and business development personnel. These expenses consist principally of salaries, incentive compensation, bonuses, employee benefits, travel, and stock- based compensation, as well as marketing and educational activities. We expense all selling and marketing expenses as incurred.

We believe that our marketing activities continue to drive awareness and differentiate our existing solutions and future solutions. We expect our selling and marketing expenses to continue to increase in absolute dollars as we expand our sales force and continue to grow our presence within and outside of the United States.

General and Administrative Expense

Our general and administrative expense includes costs for our executive, accounting and finance, legal, information technology, billing, and human resources functions. These expenses consist principally of salaries, bonuses, employee benefits, travel, and stock-based compensation, as well as professional services fees (such as audit and tax consulting), general corporate costs, and allocated overhead expenses. While we expect our general and administrative expenses will increase in absolute dollars as we continue to invest in our growth and operate as a public company, we expect them to decline as a percentage of revenue over time as we scale our business and leverage our investments already made.

We expect to incur additional expenses, primarily due to the additional costs of operating as a public company, which include additional legal, accounting, corporate governance, and investor relations expenses, as well as higher directors’ and officers’ insurance premiums. In addition, as a public company, we also expect to incur increased stock-based compensation expense related to our long-term equity incentive plan.

Research and Development Expense

Our research and development expense consists of costs incurred in performing research and development activities. These expenses include direct costs for salaries and benefits, supplies used in research and development, contract services and other outside costs, costs to acquire in-process research and development projects and technologies that have no alternative future use, and allocated overhead expenses.

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We expect that our overall research and development expenses will vary from period to period as a percentage of revenue, as projects are initiated and completed.

Other Income (Expense), Net

Interest Income

Interest income consists primarily of interest earned on our cash and cash equivalents and marketable securities.

Interest Expense

Interest expense consists primarily of contractual interest expense on our term loan, amortization of the debt discount related to our term loan and convertible notes, and interest expense on our finance leases.

Changes in Fair Value of Financial Instruments

Changes in fair value of financial instruments consists of changes in the fair value of the warrant liability and changes in the fair value of derivative liabilities. Our warrants are classified as a liability on our condensed consolidated balance sheets and re-measured to fair value at each balance sheet date with the corresponding changes in fair value recorded within changes in fair value of financial instruments. All warrants were exercised upon the closing of the IPO.

Other Expense, Net

Other expense, net consists of items related to foreign currency gains and losses, debt extinguishment expense and additional immaterial items.

Results of Operations

The following table sets forth a summary of our results of operations for the periods presented:

Table of Cont e n t s


(amounts in thousands)	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024

Revenue:
Molecular profiling services	$	162,924	$	87,656	$	277,006	$	160,890
Pharma research and development services	18,474		12,393		25,308		19,837
Total revenue	181,398		100,049		302,314		180,727
Costs and operating expenses (1):
Cost of Services - Molecular profiling services	65,321		59,431		126,215		112,324
Cost of Services - Pharma research and development services	2,392		3,064		5,350		4,732
Selling and marketing expense	42,260		38,710		82,089		78,319
General and administrative expense	64,367		41,068		116,486		85,422
Research and development expense	25,047		24,787		48,114		59,164
Total costs and operating expenses	199,387		167,060		378,254		339,961
Loss from operations	(17,989)		(67,011)		(75,940)		(159,234)
Other income (expense), net:
Interest income	1,618		2,640		2,121		4,408
Interest expense	(19,208)		(13,674)		(31,990)		(22,964)
Changes in fair value of financial instruments	(17,870)		12,000		(50,203)		936
Other expense, net	(18,341)		(141)		(18,358)		(360)
Total other expense, net	(53,801)		825		(98,430)		(17,980)
Loss before income taxes and provision for income taxes	(71,790)		(66,186)		(174,370)		(177,214)
Provision for (benefit from) income taxes	—		—		—		—
Net loss	$	(71,790)	$	(66,186)	$	(174,370)	$	(177,214)

____________________________

(1)Costs and operating expenses contains the following stock-based compensation expense:


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024

	(amounts in thousands)
Cost of services - Molecular profiling services	$	882	$	399	$	1,348	$	826
Cost of services - Pharma research and development services	2		2		3		4
Selling and marketing expense	1,990		967		3,232		2,085
General and administrative expense	22,392		2,053		33,027		3,998
Research and development expense	3,027		1,064		5,374		2,030
Total	$	28,293	$	4,485	$	42,984	$	8,943

Table of Cont e n t s

The following table sets forth our results of operations as a percentage of revenue for the periods presented:


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024

Revenue:
Molecular profiling services	90	%	88	%	92	%	89	%
Pharma research and development services	10	%	12	%	8	%	11	%
Total revenue	100	%	100	%	100	%	100	%
Costs and operating expenses:
Cost of services - Molecular profiling services	36	%	59	%	42	%	62	%
Cost of Services - Pharma research and development services	1	%	3	%	2	%	3	%
Selling and marketing expense	23	%	39	%	27	%	43	%
General and administrative expense	35	%	41	%	39	%	47	%
Research and development expense	14	%	25	%	16	%	33	%
Total costs and operating expenses	110	%	167	%	125	%	188	%
Loss from operations	(10)	%	(67)	%	(25)	%	(88)	%
Other income (expense), net:
Interest income	1	%	3	%	1	%	2	%
Interest expense	(11)	%	(14)	%	(11)	%	(13)	%
Changes in fair value of financial instruments	(10)	%	12	%	(17)	%	1	%
Other expense, net	(10)	%	—	%	(6)	%	—	%
Total other expense, net	(30)	%	1	%	(33)	%	(10)	%
Loss before income taxes and provision for income taxes	(40)	%	(66)	%	(58)	%	(98)	%
Provision for (benefit from) income taxes	—	%	—	%	—	%	—	%
Net loss	(40)	%	(66)	%	(58)	%	(98)	%

Comparison of the Three Months Ended June 30, 2025 and 2024

Revenue


	Three Months Ended June 30,
					Change
	2025		2024		$		%

	(amounts in thousands)
Molecular profiling services	$	162,924	$	87,656	$	75,268	85.9	%
Pharma research and development services	18,474		12,393		6,081		49.1	%
Total revenue	$	181,398	$	100,049	$	81,349	81.3	%

Total revenue was $181.4 million for the three months ended June 30, 2025, compared to $100.0 million for the three months ended June 30, 2024, an increase of $81.3 million, or 81.3%.

Molecular Profiling Services Revenue

Molecular profiling services revenue increased to $162.9 million for the three months ended June 30, 2025, from $87.7 million for the three months ended June 30, 2024, an increase of $75.3 million, or 85.9%.

Table of Cont e n t s

9,034 cases, or 22.0%. We believe the growth in MI Profile clinical case volume is driven by increased market acceptance and adoption of MI Profile by ordering physicians year over year, and increased market acceptance and adoption of Caris Assure following its broad commercial launch in the first quarter of 2024.

Revenue from clinical cases for patients covered by Medicare represented approximately 49.7% and 40.1% of our molecular profiling services revenue for the three months ended June 30, 2025 and 2024, respectively due to mix.

The following table sets forth the relative impacts of clinical volume and ASP on our increase in molecular profiling services revenue.


	(In thousands)
Molecular profiling services revenue for the three months ended June 30, 2024	$	87,656
MI Profile volume increase	14,256
MI Profile ASP increase due to solution and payer mix	50,270
Caris Assure for therapy selection volume and ASP increase	10,742
Molecular profiling services revenue for the three months ended June 30, 2025	$	162,924

Pharma Research and Development Services Revenue

Pharma research and development services revenue increased to $18.5 million for the three months ended June 30, 2025, from $12.4 million for the three months ended June 30, 2024, an increase of $6.1 million, or 49.1%. The increase is mainly driven by increased deal activities in the strategic data pillar.

Cost of Services


	Three Months Ended June 30,
					Change
	2025		2024		$		%

	(amounts in thousands)
Cost of services - Molecular profiling services	$	65,321	$	59,431	$	5,890	9.9	%
Cost of services - Pharma research and development services	$	2,392	$	3,064	$	(672)	(21.9)	%

Cost of Services - Molecular Profiling Services

Cost of services - Molecular profiling services was $65.3 million for the three months ended June 30, 2025, compared to $59.4 million for the three months ended June 30, 2024, an increase of $5.9 million, or 9.9%.

The Caris Assure laboratory contributed to the majority of the increase. The Caris Assure increase was primarily driven by an increase in materials and related testing costs of $3.1 million, $0.8 million increase in utilities, rent, and allocated overhead, and an increase in labor costs of $0.6 million, due to the increased volume.

Cost of Services - Pharma Research and Development Services

Cost of services - Pharma research and development services was $2.4 million for the three months ended June 30, 2025, compared to $3.1 million for the three months ended June 30, 2024, a decrease of $0.7 million, or (21.9)%. The decrease was driven primarily by a decrease within costs associated with the research services of $0.7 million.

Gross Profit

Gross profit, calculated as total revenue less cost of services, was $113.7 million for the three months ended June 30, 2025, compared to $37.6 million for the three months ended June 30, 2024, an increase of $76.1 million, or 202.7%, primarily due to the increase in molecular profiling services revenue.

Table of Cont e n t s

Selling and Marketing Expense


	Three Months Ended June 30,
					Change
	2025		2024		$		%

	(amounts in thousands)
Selling and marketing expense	$	42,260	$	38,710	$	3,550	9.2	%

Selling and marketing expenses were $42.3 million for the three months ended June 30, 2025, compared to $38.7 million for the three months ended June 30, 2024, an increase of $3.5 million, or 9.2%. This increase was primarily due to a $2.9 million increase in personnel costs to support existing solutions, and a $0.5 million increase in professional services and travel and marketing expenses.

General and Administrative Expense


	Three Months Ended June 30,
					Change
	2025		2024		$		%

	(amounts in thousands)
General and administrative expense	$	64,367	$	41,068	$	23,299	56.7	%

General and administrative expenses were $64.4 million for the three months ended June 30, 2025, compared to $41.1 million for the three months ended June 30, 2024, an increase of $23.3 million, or 56.7%. This increase was primarily due to an increase of $20.3 million in stock-based compensation expense, primarily driven by awards with an IPO-related vesting condition, $2.0 million increase in labor costs and benefits associated with an expansion of personnel, a $0.7 million increase in consulting, audit and legal professional fees, a $1.4 million increase related to utilities and cloud computing usages, offset by a $2.0 million decrease in depreciation expense.

Research and Development Expense


	Three Months Ended June 30,
					Change
	2025		2024		$		%

	(amounts in thousands)
Research and development expense	$	25,047	$	24,787	$	260	1.0	%

Research and development expenses were $25.0 million for the three months ended June 30, 2025, compared to $24.8 million for the three months ended June 30, 2024, an increase of $0.3 million, or 1.0%. The increase was primarily driven by an increase of $3.5 million in labor costs, benefits and stock-based compensation, offset by a reduction of $2.5 million in material and reference testing costs associated with the development of Caris Assure and FDA submission of MI Cancer Seek.

Other Income (Expense), Net


	Three Months Ended June 30,				Change
	2025		2024		$		%

	(amounts in thousands)
Interest income	$	1,618	$	2,640	$	(1,022)	(38.7)	%
Interest expense	(19,208)		(13,674)		(5,534)		40.5	%
Changes in fair value of financial instruments	(17,870)		12,000		(29,870)		(248.9)	%
Other income (expense), net	(18,341)		(141)		(18,200)		12,897.9	%
Total other income (expense), net	$	(53,801)	$	825	$	(54,626)	(6,624.6)	%

Table of Cont e n t s

Interest Income

Interest income was $1.6 million for the three months ended June 30, 2025, compared to $2.6 million for the three months ended June 30, 2024, a decrease of $1.0 million, or 38.7%. This decrease was primarily due to reduced interest rates.

Interest Expense

Interest expense was $19.2 million for the three months ended June 30, 2025, compared to $13.7 million for the three months ended June 30, 2024, an increase of $5.5 million, or 40.5%. This increase was primarily due to increased amortization of debt discount associated with the 2025 Convertible Notes.

Changes in Fair Value of Financial Instruments

Changes in fair value of financial instruments was $(17.9) million for the three months ended June 30, 2025, compared to $12.0 million for the three months ended June 30, 2024, a decrease of $29.9 million, or 248.9%. This decrease is mainly driven by the increase in warrant and derivative fair values associated with the IPO that occurred during the three months ended June 30, 2025.

Other Expense, Net

Other expense, net was $18.3 million for the three months ended June 30, 2025, compared to $0.1 million for the three months ended June 30, 2024, an increase of $18.2 million, or 12,897.9%. This increase was primarily due to the debt extinguishment expense of the 2025 Convertible Note recorded of $17.9 million upon the IPO, incurred during the three months ended June 30, 2025.

Comparison of the Six Months Ended June 30, 2025 and 2024

Revenue


	Six Months Ended June 30,				Change
	2025		2024		$		%

	(amounts in thousands)
Molecular profiling services	$	277,006	$	160,890	$	116,116	72.2	%
Pharma research and development services	25,308		19,837		5,471		27.6	%
Total revenue	$	302,314	$	180,727	$	121,587	67.3	%

Total revenue was $302.3 million for the six months ended June 30, 2025, compared to $180.7 million for the six months ended June 30, 2024, an increase of $121.6 million, or 67.3%.

Molecular Profiling Services Revenue

Molecular profiling services revenue increased to $277.0 million for the six months ended June 30, 2025, from $160.9 million for the six months ended June 30, 2024, an increase of $116.1 million, or 72.2%.

This increase in revenue was primarily due to the increase in ASP of our MI Profile solution, driven by the launch of MI Cancer Seek and associated higher reimbursement, as well as the increase in clinical cases associated with MI Profile and Caris Assure for therapy selection from 69,521 and 6,379 cases, respectively, for the six months ended June 30, 2024, to 82,934 and 12,956 cases, respectively, for the six months ended June 30, 2025, a total increase of 19,990 cases, or 26.3%. We believe the growth in MI Profile clinical case volume is driven by increased market acceptance and adoption of MI Profile by ordering physicians year over year, and increased market acceptance and adoption of Caris Assure following its broad commercial launch in the first quarter of 2024.

Revenue from clinical cases for patients covered by Medicare represented approximately 51.6% and 40.3% of our molecular profiling services revenue for the six months ended June 30, 2025 and 2024, respectively.

Table of Cont e n t s

The following table sets forth the relative impacts of clinical volume and ASP on our increase in molecular profiling services revenue.


	(amounts in thousands)
Molecular profiling services revenue for the six months ended June 30, 2024	$	160,890
MI Profile volume increase	29,150
MI Profile ASP increase due to solution and payer mix	65,974
Caris Assure for therapy selection volume and ASP increase	20,992
Molecular profiling services revenue for the six months ended June 30, 2025	$	277,006

Pharma Research and Development Services Revenue

Pharma research and development services revenue increased to $25.3 million for the six months ended June 30, 2025, from $19.8 million for the six months ended June 30, 2024, an increase of $5.5 million, or 27.6%. The increase is mainly driven by increased deal activities in the strategic data pillar.

Cost of Services


	Six Months Ended June 30,
					Change
	2025		2024		$		%

	(amounts in thousands)
Cost of services - Molecular profiling services	$	126,215	$	112,324	$	13,891	12.4	%
Cost of services - Pharma research and development services	$	5,350	$	4,732	$	618	13.1	%

Cost of Services - Molecular Profiling Services

Cost of services - Molecular profiling services was $126.2 million for the six months ended June 30, 2025, compared to $112.3 million for the six months ended June 30, 2024, an increase of $13.9 million, or 12.4%.

The Caris Assure laboratory contributed to $12.3 million of the increase. The Caris Assure increase was primarily driven by an increase in materials and related testing costs of $8.0 million, $2.1 million increase in utilities, rent, and allocated overhead, and an increase in labor costs of $1.7 million, due to the increased volume from broad launch in the first quarter of 2024.

Cost of Services - Pharma Research and Development Services

Cost of services - Pharma research and development services was $5.4 million for the six months ended June 30, 2025, compared to $4.7 million for the six months ended June 30, 2024, an increase of $0.6 million, or 13.1%. The increase was driven primarily by an increase within costs associated with the delivery of data licensing and target discovery services of $2.5 million, offset by a reduction in delivering research services of $1.9 million, driven by lower research volume.

Gross Profit

Gross profit, calculated as total revenue less cost of services, was $170.7 million for the six months ended June 30, 2025, compared to $63.7 million for the six months ended June 30, 2024, an increase of $107.1 million, or 168.2%, primarily due to the increase in molecular profiling services revenue.

Table of Cont e n t s

Selling and Marketing Expense


	Six Months Ended June 30,
					Change
	2025		2024		$		%

	(amounts in thousands)
Selling and marketing expense	$	82,089	$	78,319	$	3,770	4.8	%

Selling and marketing expenses were $82.1 million for the six months ended June 30, 2025, compared to $78.3 million for the six months ended June 30, 2024, an increase of $3.8 million, or 4.8%. This increase was primarily due to a $5.1 million increase in personnel costs to support existing solutions, offset by a $1.7 million decrease in travel and marketing expenses.

General and Administrative Expense


	Six Months Ended June 30,
					Change
	2025		2024		$		%

	(amounts in thousands)
General and administrative expense	$	116,486	$	85,422	$	31,064	36.4	%

General and administrative expenses were $116.5 million for the six months ended June 30, 2025, compared to $85.4 million for the six months ended June 30, 2024, an increase of $31.1 million, or 36.4%. This increase was primarily due to an increase of $29 million in stock-based compensation, primarily driven by expense from awards with an IPO-related vesting condition, a $4.9 million increase in labor costs and benefits associated with an expansion of personnel, a $2.1 million increase in consulting, audit and legal professional fees, and a $3.4 million increase related to utilities and cloud computing usages, offset by a $9.2 million decrease in depreciation expense.

Research and Development Expense


	Six Months Ended June 30,
					Change
	2025		2024		$		%

	(amounts in thousands)
Research and development expense	$	48,114	$	59,164	$	(11,051)	(18.7)	%

Research and development expenses were $48.1 million for the six months ended June 30, 2025, compared to $59.2 million for the six months ended June 30, 2024, a decrease of $11.1 million, or 18.7%. The decrease was primarily driven by a reduction of $12.2 million in material and reference testing costs associated with the development of Caris Assure and FDA submission of MI Cancer Seek, a reduction of $0.6 million in labor costs and benefits, and a $0.8 million reduction in allocated overhead, offset by an increase in stock-based compensation of $3.3 million from awards with an IPO-related vesting condition.

Table of Cont e n t s

Other Income (Expense), Net


	Six Months Ended June 30,				Change
	2025		2024		$		%

	(amounts in thousands)
Interest income	$	2,121	$	4,408	$	(2,287)	(51.9)	%
Interest expense	(31,990)		(22,964)		(9,026)		39.3	%
Changes in fair value of financial instruments	(50,203)		936		(51,139)		(5,464.4)	%
Other income (expense), net	(18,358)		(360)		(17,998)		5,003.9	%
Total other income (expense), net	$	(98,430)	$	(17,980)	$	(80,450)	447.4	%

Interest Income

Interest income was $2.1 million for the six months ended June 30, 2025, compared to $4.4 million for the six months ended June 30, 2024, a decrease of $2.3 million, or 51.9%. This decrease was primarily due to reduced investments in marketable securities.

Interest Expense

Interest expense was $32.0 million for the six months ended June 30, 2025, compared to $23.0 million for the six months ended June 30, 2024, an increase of $9.0 million, or 39.3%. This increase was primarily due to increased interest expense associated with $200.0 million of additional borrowing under the 2023 Term Loan, which was drawn on March 5, 2024, and increased amortization of debt discount associated with the 2025 Convertible Notes.

Changes in Fair Value of Financial Instruments

Changes in fair value of financial instruments was $(50.2) million for the six months ended June 30, 2025, compared to $0.9 million for the six months ended June 30, 2024, a decrease of $51.1 million, or 5,464.4%. This decrease is mainly driven by the increase in warrant and derivative fair values during the six months ended June 30, 2025.

Other Expense, Net

Other expense, net was $18.4 million for the six months ended June 30, 2025, compared to $0.4 million for the six months ended June 30, 2024, an increase of $18.0 million, or 5,003.9%. This increase was primarily due to the debt extinguishment expense of the 2025 Convertible Notes recorded of $17.9 million upon the IPO, during the six months ended June 30, 2025.

Non-GAAP Financial Measures

We use certain non-GAAP financial measures to supplement our condensed consolidated financial statements, which are presented in accordance with GAAP. We believe the non-GAAP financial measures we use, Adjusted EBITDA and free cash flow, are useful in evaluating our performance and liquidity. Our non-GAAP financial measures have limitations as analytical tools, however, and you should not consider them in isolation or as substitutes for analysis of our results as reported under GAAP.

Adjusted EBITDA

We define Adjusted EBITDA as net loss, adjusted to exclude interest income, interest expense, changes in fair value of financial instruments, other expense, net, the provision for (benefit from) income taxes, depreciation and amortization, and stock-based compensation expense.

We use Adjusted EBITDA in conjunction with GAAP measures as part of our overall assessment of our performance, including the preparation of our annual operating budget and quarterly forecasts, to evaluate the effectiveness of our business strategies, and to communicate with our board of directors concerning our financial performance. We believe that Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating results in the same manner as our management team and board of directors. In addition, it provides a useful measure for period-to-period comparisons of our business, as it removes the effect of certain non-cash

Table of Cont e n t s

expenses and certain variable charges. Some of the limitations related to the use of Adjusted EBITDA as an analytical tool include:

•it does not reflect interest income, interest expense or other non-operating gains and losses, which may represent an increase to or reduction in cash available to us;

•it does not reflect recurring, non-cash expenses of depreciation of property and equipment and amortization of right-of-use assets and intangible assets, and although these are non-cash expenses, the assets being depreciated and amortized may have to be replaced in the future;

•it does not reflect the impact of stock-based compensation expense, which has been, and will continue to be a part of our compensation strategy; and

•it may be calculated differently than similarly titled measures used by other companies, which reduces its usefulness as a comparative measure.

Because of these limitations, you should consider Adjusted EBITDA alongside other financial performance measures, including net loss and our other GAAP results. In evaluating Adjusted EBITDA, you should be aware that in the future we may incur expenses that are the same as, or similar to, some of the adjustments in this presentation. Our presentation of Adjusted EBITDA should not be construed to imply that our future results will be unaffected by the types of items excluded from the calculation of Adjusted EBITDA.

The following table provides a reconciliation of net loss, the most directly comparable financial measure presented in accordance with GAAP, to Adjusted EBITDA for the periods presented:


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024

	(amounts in thousands)
Net loss	$	(71,790)	$	(66,186)	$	(174,370)	$	(177,214)
Interest income	(1,618)		(2,640)		(2,121)		(4,408)
Interest expense	19,208		13,674		31,990		22,964
Changes in fair value of financial instruments	17,870		(12,000)		50,203		(936)
Other expense, net	18,341		141		18,358		360
Provision for income taxes	—		—		—		—
Depreciation and amortization expense	6,409		11,610		13,454		29,315
Stock-based compensation expense	28,293		4,485		42,984		8,943

Caris Life Sciences, Inc. 10-Q