The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited consolidated financial statements and the related notes and other financial information included elsewhere in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 filed with the Securities and Exchange Commission (the “SEC”) on February 26, 2026 (our “Annual Report”). In addition to historical consolidated financial information, the following discussion contains forward-looking statements that reflect our plans, estimates, and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. You should review the sections titled “Note Regarding Forward-Looking Statements” for a discussion of forward-looking statements and in Part II, Item 1A, “Risk Factors” for a discussion of factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis and elsewhere in this Quarterly Report on Form 10-Q and in our Annual Report. Overview We develop, market, and sell advanced cancer genomic testing services. Our testing services are used by physicians to detect residual or recurrent cancer in patients, monitor cancer response to therapy, and uncover insights for therapy selection. Our testing services are also used by pharmaceutical companies for translational research, biomarker discovery, the development of personalized cancer therapies, and clinical trials. We also provide whole exome sequencing services for other diagnostic companies and whole genome sequencing services for population sequencing initiatives. We are working with a growing number of leading cancer centers and world-class academic research institutions to build and publish clinical, evidence-based support for our testing services and our key indications, as well as to obtain reimbursement coverage from Medicare and other payors. Because of the ultra-high analytical sensitivity of our technology, we are primarily focusing on three indications: breast cancer, lung cancer, and immunotherapy (IO) monitoring. We have collaborations with Cancer Research UK, University College London, and the Francis Crick Institute (the TRACERx study); Institut Curie; The Royal Marsden; the Vall d'Hebron Institute of Oncology (VHIO); the University of California, San Diego; Duke University; Vanderbilt University and Johns Hopkins University (the PREDICT study); the Dana-Farber Cancer Institute; the University of Texas M.D. Anderson Cancer Center; University Medical Center Hamburg-Eppendorf (also known as UKE); Criterium and the Academic Breast Cancer Consortium; Yale Cancer Center; Aarhus University; British Columbia Cancer; and University Health Network, that will focus on building the evidence-base for our technology and these indications. Currently, our testing services are routinely used by many of the largest oncology-focused pharmaceutical companies for analysis of patient samples in their clinical trials and drug development programs. Our advanced genomic sequencing and analytics also support the development of personalized neoantigen therapies for cancer and other next-generation cancer immunotherapies. For example, we are providing genomic testing services to ModernaTX, Inc. ("Moderna") in its ongoing clinical trials evaluating a personalized cancer therapy. In addition, we have partnered with diagnostics companies by providing our advanced tumor profiling and analysis capabilities as an input to their products. We also have a collaboration with Tempus that enables Tempus to market our NeXT Personal® Dx test to physicians for breast cancer, lung cancer, colorectal cancer and immuno-oncology monitoring, and to market and sell NeXT Personal to Tempus' pharmaceutical and biotech customers who wish to bundle MRD testing with other Tempus offerings in a given study, through November 25, 2029. We have also pursued non-cancer related business opportunities, specifically within the population sequencing market, by providing whole genome sequencing ("WGS") services under contract with the U.S. Department of Veterans Affairs Million Veteran Program ("VA MVP"). Our work in oncology is underpinned by our experience and capacity for next-generation sequencing at scale. We have the capacity to sequence and analyze over 350 trillion bases of DNA per week in our facility. We believe that our capacity is already larger than most cancer genomics companies, and we continue to build automation and other infrastructure to scale further as demand increases. To date, we have sequenced approximately 605,000 human samples, of which approximately 237,000 were whole human genomes. On July 20, 2026, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Tempus (sometimes referred to as Parent), Aviary Development, Inc., a Delaware corporation and a wholly owned subsidiary of Parent (“Merger Sub I”) and Toucan Development, LLC, a Nevada limited liability company and a wholly owned subsidiary of Parent (“Merger Sub II”). Pursuant to the Merger Agreement, and upon the terms and subject to the conditions therein, (a) Merger Sub I will be merged with and into Personalis (the “First Merger”), with Personalis surviving the First Merger as a wholly owned subsidiary of Parent (the “First Surviving Corporation”), and (b) as part of the same overall transaction, immediately after the First Merger, the First Surviving Corporation will merge with and into Merger Sub II (together, with the First Merger, referred to collectively as the “Merger”), with Merger Sub II surviving as a wholly owned subsidiary of Parent (see Note 13, Subsequent Events, in Part 1, Item 1 of this Form 10-Q in our Consolidated Financial Statements for additional information). Second Quarter 2026 Strategic and Operational Highlights Total revenue of $22.4 million increased 30%, or $5.2 million, during the second quarter of 2026 compared to the second quarter of 2025, due to (i) higher revenue from pharma testing services and (ii) higher clinical test revenue as a result of obtaining Medicare reimbursement coverage decisions in November 2025, February 2026 and May 2026 for breast cancer, lung cancer, immunotherapy monitoring for patients with late-stage solid tumors and neoadjuvant therapy (NAT) monitoring for breast cancer, respectively. These 30 Table of Contents increases were partially offset by (i) the expected revenue decline from Enterprise sales due to the completion of the project with Natera, and (ii) planned lower population sequencing revenue from the VA MVP. Key business accomplishments and financial updates in the second quarter of 2026 include: •Secured Medicare Coverage for IO Monitoring: Received Medicare coverage approval for NeXT Personal® for immunotherapy monitoring for patients with late-stage solid tumors; •Secured Medicare Coverage for Neoadjuvant Therapy Monitoring for Breast Cancer: Received Medicare coverage approval for NeXT Personal for monitoring treatment response to NAT in patients diagnosed with Stage II-III Triple-Negative Breast Cancer (TNBC) or HER2-positive (HER2+) breast cancer; •Presented Compelling Colorectal Cancer Recurrence Detection: The prospective VICTORI study led by the University of British Columbia showed NeXT Personal detected 100% of all patient relapses, including all distant metastases in historically difficult-to-detect regions like the lung. Notably, just four weeks after surgery, NeXT Personal detected over 80% of patients who later relapsed, providing clinicians with an early signal of cancer to inform treatment pathways; •Highlighted Importance of Sub-10 ppm Sensitivity in Lung Cancer: Approximately 21% of pre-operative adenocarcinoma and 18% of post-operative landmark detections in the TRACERx study were below 10 ppm—thresholds frequently missed by less sensitive assays. Patients detected in this range experienced a three-fold increased risk of recurrence compared to patients with undetectable ctDNA, potentially enabling much earlier clinical intervention. Components of Operating Results Revenue We derive our revenue primarily from sales of genomic testing services to the following five customer types: •Pharma testing services includes sales of testing services and data analytics for clinical trials and research to pharmaceutical companies in support of their oncology drug development programs. •Enterprise sales includes sales of tumor profiling and diagnostic tests directly to other businesses as an input to their products. Revenue from our previous commercial relationship with Natera to provide advanced tumor analysis for use in Natera's MRD test made up substantially all of the revenue in this category. •Population sequencing includes sales of genomic sequencing services and data analytics to support large-scale genetic research programs. All of the revenue in this category is from our partnership with the VA MVP. •Clinical diagnostic includes sales of comprehensive tumor profiling test that is used to help select therapy for a cancer patient and identify potential clinical trials for a patient, and sales of ultrasensitive, tumor-informed diagnostic tests, ordered by healthcare providers for cancer patients. Revenue in this category is derived from Medicare and private insurance reimbursements. •Other includes sales of genomic tests and analytics to universities and non-profits. Our ability to increase revenue will depend on our ability to further increase sales to these groups of customers and expand our customer base within each group. To do this, we are developing a growing set of state-of-the-art services; advancing our operational infrastructure; building our regulatory credentials; focusing our marketing efforts on large pharmaceutical companies; building and publishing the clinical evidence-base to support our testing services in our key indications, pursuing reimbursement coverage from Medicare and other payors; and seeking additional partnerships. We market to biopharma customers and doctors through a small direct sales force and through our collaboration and partnership with Tempus where we are leveraging Tempus' significantly larger sales force to commercialize NeXT Personal Dx in the clinical diagnostics market as a key vector to grow our clinical diagnostic business. We have one reportable segment which is to provide advanced cancer genomic testing services for precision oncology applications, personalized testing, and other tests. Most of our revenue to date has been derived from sales in the United States. Costs and Expenses Cost of Revenue Cost of revenue includes costs for materials, personnel (salaries, bonuses, stock-based compensation, payroll taxes, and benefits), laboratory supplies and consumables, depreciation and equipment maintenance, allocated facilities and information technology (“IT”) costs and clinical diagnostic test costs. We expect variability in our gross margins over the medium-term due to fluctuations in customer mix and volume, investments in newer sequencing platforms and new capabilities, such as automation of laboratory workflows, 31 Table of Contents and processing of diagnostic tests for the clinical market while we work to secure reimbursement. Over the long-term, we anticipate gross margin expansion as we expect increases in revenue to result in economies of scale. Research and Development Expenses Research and development expenses includes costs incurred to develop technology and offerings, expenses for conducting clinical studies with collaborators and partners to validate the clinical benefits of our offerings and develop and implement workflow automation technologies. The expenses primarily consist of personnel costs (salaries, bonuses, stock-based compensation, payroll taxes, and benefits); laboratory supplies and consumables; costs of processing samples for research, product development, collaborations and studies; depreciation and maintenance on equipment; and allocated facilities and IT costs. We include in research and development expenses the costs to further develop software we use to operate our laboratory, analyze the data it generates, and automate our operations. We expense our research and development costs in the period in which they are incurred. We expect research and development expenses to continue to increase over time to support the growth of our clinical diagnostic offerings. Selling, General and Administrative Expenses Selling expenses consist of personnel costs (salaries, commissions, bonuses, stock-based compensation, payroll taxes, and benefits), customer support expenses, fees paid to Tempus (see Note 8, Related Party Transactions, in Part 1, Item 1 of this Form 10-Q in our Consolidated Financial Statements for additional information), marketing communication expenses, and market research. Our general and administrative expenses include costs for administration, finance and accounting, legal, and human resources functions. These expenses consist of personnel costs (salaries, bonuses, stock-based compensation, payroll taxes, and benefits), corporate insurance, audit and legal expenses, consulting costs, and facilities and IT costs. We expense all selling, general and administrative costs as incurred. We expect selling, general and administrative expenses to continue to increase over time to support the growth of our clinical diagnostic offerings. Interest Income and Interest Expense Interest income consists primarily of interest earned on our cash, cash equivalents, and short-term investments. Interest expense is the recognition of imputed interest on noninterest bearing loans. Other Income (Expense), Net Other income (expense), net consists primarily of foreign currency exchange gains and losses. Results of Operations The following sets forth, for the periods presented, our unaudited consolidated statements of operations and selected financial data (in thousands, except share and per share data): Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Consolidated Statements of Operations: Revenue (1) $ 22,357 $ 17,203 $ 37,829 $ 37,808 Costs and expenses Cost of revenue 17,614 12,447 32,805 25,845 Research and development 16,336 12,381 30,875 25,021 Selling, general and administrative (2) 21,998 14,179 39,901 26,442 Total costs and expenses 55,948 39,007 103,581 77,308 Loss from operations (33,591 ) (21,804 ) (65,752 ) (39,500 ) Interest income 1,966 1,878 4,138 3,905 Interest expense (37 ) (48 ) (84 ) (76 ) Other income (expense), net (16 ) (80 ) 4 (126 ) Loss before income taxes (31,678 ) (20,054 ) (61,694 ) (35,797 ) Provision for income taxes 5 2 21 9 Net loss $ (31,683 ) $ (20,056 ) $ (61,715 ) $ (35,806 ) Net loss per share, basic and diluted $ (0.30 ) $ (0.23 ) $ (0.59 ) $ (0.41 ) Weighted-average shares outstanding, basic and diluted 105,424,708 88,517,498 104,808,285 87,990,691 (1) Includes related party revenue of $8.4 million and $1.9 million for the three months ended June 30, 2026 and 2025, respectively, and $11.5 million and $2.4 million for the six months ended June 30, 2026 and 2025, respectively. 32 Table of Contents (2) Includes related party sales and marketing expenses of $3.8 million and $0.9 million for the three months ended June 30, 2026 and 2025, respectively, and $6.7 million and $1.5 million for the six months ended June 30, 2026 and 2025, respectively. June 30, 2026 December 31, 2025 Cash and cash equivalents, and short-term investments $ 212,658 $ 239,953 Working capital 198,667 228,321 Total assets (1) 312,135 334,164 Total debt 898 2,052 Long-term obligations 30,589 33,349 Total liabilities (2)(3) 76,974 72,979 Total stockholders' equity 235,161 261,185 (1) Includes related party accounts receivable of $7.5 million and $2.5 million as of June 30, 2026 and December 31, 2025, respectively. (2) Includes related party liabilities of $5.4 million and $5.7 million as of June 30, 2026 and December 31, 2025, respectively. (3) Includes related party contract liabilities of $1.7 million and nil as of June 30, 2026 and December 31, 2025, respectively. Revenue The following table shows revenue by customer type (in thousands, except percentages): Three Months Ended June 30, Six Months Ended June 30, 2026 2025 Change 2026 2025 Change Pharma testing services (1) $ 16,789 $ 11,023 52% $ 27,513 $ 24,617 12% Enterprise sales - 2,315 (100%) 393 4,780 (92%) Population sequencing 3,000 3,308 (9%) 5,500 7,521 (27%) Clinical diagnostic 2,541 469 442% 3,972 777 411% Other 27 88 (69%) 451 113 299% Total revenue $ 22,357 $ 17,203 30% $ 37,829 $ 37,808 0% (1) Includes related party revenue of $8.4 million and $1.9 million for the three months ended June 30, 2026 and 2025, respectively, and $11.5 million and $2.4 million for the six months ended June 30, 2026 and 2025, respectively. The following table shows customers that made up at least 10% of total revenue in at least one of the periods presented: Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Merck & Co., Inc. (1) 37% 11% 30% * VA MVP 13% 19% 15% 20% ModernaTX, Inc. 12% 29% 14% 28% Natera, Inc. * 13% * 13% * Less than 10% of revenue (1) Consists of related party revenue. Pharma testing services The increase in pharma testing services revenue in the second quarter of 2026 and the first half of 2026 compared to the same periods of 2025 was primarily due to an increase in the number of clinical trial samples processed for Merck. We expect variability in revenue from pharmaceutical companies in the future due to the timing of their patient enrollment for clinical trials or project schedules. Enterprise sales The decrease in revenue from enterprise sales in the second quarter of 2026 and the first half of 2026 compared to the same periods of 2025 was due to the expected decrease in the number of samples processed for Natera after the second quarter of 2025 when the minimum volume commitments in our agreement with Natera expired. We no longer have a commercial relationship with Natera and do not expect to have one going forward. Population sequencing Revenue recognized each period from population sequencing is impacted by timing of our fulfillment of samples under each annual task order. The decrease in revenue in the second quarter of 2026 and in the first half of 2026 compared to the same periods of 2025 was due to a planned decrease in the number of samples we processed. Our annual task orders received in 2025 and 2024 were $13.5 million and $7.5 million, respectively. Our contract with the VA MVP does not include specific testing turnaround times. Therefore, we may modulate the volume of samples processed from the VA MVP to accommodate sample volumes from other customers, which can vary from period to period. We anticipate fulfilling the task order received in August 2025 during the first three quarters of 2026. 33 Table of Contents Clinical diagnostic Clinical diagnostic revenue is generated from Medicare and private insurance payors. In January 2024, we received a Medicare coverage determination for NeXT Dx, our ultra-comprehensive tumor genomic profiling assay. In November 2025, we received Medicare coverage determination for NeXT Personal Dx for post-treatment surveillance of cancer recurrence in patients with Stage II and III breast cancer, with an effective date of October 7, 2025. In February 2026, we received Medicare coverage for NeXT Personal Dx for surveillance of patients with Stage I to III NSCLC, with an effective date of January 9, 2026. In May 2026, we received Medicare coverage for NeXT Personal Dx for immunotherapy monitoring for patients with late-stage solid tumors, with an effective date of March 16, 2026. In May 2026, we also received Medicare coverage for NeXT Personal Dx for monitoring treatment response to NAT in patients diagnosed with Stage II-III TNBC or HER2+ breast cancer, with an effective date of April 6, 2026. The increases in clinical diagnostic revenue in the second quarter of 2026 and in the first half of 2026 compared to the same periods of 2025 were mainly attributable to an increase in NeXT Dx test volume and NeXT Personal Dx reimbursements received from certain private payors and Medicare for breast cancer, NSCLC surveillance, immunotherapy monitoring for patients with late-stage solid tumors and NAT monitoring for breast cancer. Costs and Expenses The following table shows costs and expenses (in thousands, except percentages): Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Cost of revenue $ 17,614 $ 12,447 42% $ 32,805 $ 25,845 27% Research and development 16,336 12,381 32% 30,875 25,021 23% Selling, general and administrative 21,998 14,179 55% 39,901 26,442 51% Total costs and expenses $ 55,948 $ 39,007 43% $ 103,581 $ 77,308 34% Cost of revenue The increase in cost of revenue in the second quarter of 2026 and in the first half of 2026 compared to the same periods of 2025 was primarily due to increased clinical diagnostic test costs where the corresponding revenue and reimbursement amounts were less than the cost of the testing services due to selling testing services in advance of Medicare reimbursement in order to gain market share. Specific components of the increase in the second quarter of 2026 were a $3.2 million increase in diagnostic test costs, a $1.6 million increase in direct material costs due to higher biopharma revenue, a $1.1 million increase in personnel costs, and a $0.3 million increase in equipment maintenance costs, offset partially by a $1.0 million decrease in laboratory supplies costs. Specific components of the increase in the first half of 2026 were a $3.8 million increase in diagnostic test costs, a $1.2 million increase in direct material costs due to higher biopharma revenue, a $1.8 million increase in personnel costs, a $0.4 million increase in equipment maintenance costs, and a $0.3 million increase in facilities costs, offset partially by a $0.5 million decrease in laboratory supplies costs. Research and development The increases in research and development in the second quarter of 2026 and in the first half of 2026 compared to the same periods of 2025 were primarily due to increased personnel and personnel-related costs due to higher compensation costs and increased headcount and R&D lab activities. These expenses increased in order to further and complete clinical evidence studies, process development work to enhance laboratory operations’ productivity, and technology development. Specific components of the increase in the second quarter of 2026 were a $2.2 million increase in personnel and personnel-related costs driven by increased headcount and employee compensation and a $1.8 million increase due to higher lab supplies utilized, IT and internal operation supports, and consulting services for R&D projects. Specific components of the increase in the first half of 2026 were a $3.7 million increase in personnel and personnel-related costs driven by increased headcount and employee compensation and a $2.2 million increase in lab supplies utilized, IT related expenses, and consulting services to support R&D projects and volume growth. Selling, general and administrative The increases in selling, general and administrative expenses in the second quarter of 2026 and in the first half of 2026 compared to the same periods of 2025 were primarily due to increased personnel and personnel related expenses due to higher compensation costs and increased headcount and marketing expenses associated with increases in testing volume for NeXT Personal Dx. Specific components of the increase in the second quarter of 2026 were a $3.3 million increase in Tempus' sales and marketing expenses and commercial-related expenses associated with higher NeXT Personal Dx testing volume, a $3.5 million increase in 34 Table of Contents personnel and personnel related expenses due to higher headcount and employee compensation, and a $1.3 million increase in professional services primary associated with the Merger Agreement, partially offset by a $0.3 million decrease in depreciation expenses. Specific components of the increase in the first half of 2026 were a $6.6 million increase in Tempus' sales and marketing expenses and commercial-related expenses associated with higher NeXT Personal Dx testing volume, a $5.9 million increase in personnel and personnel-related expenses due to higher sales commission, headcount, and employee compensation, and a $1.6 million increase in professional services primarily associated with the Merger Agreement, partially offset by a $0.6 million decrease in depreciation expenses. Interest Income, Interest Expense, and Other Income (Expense), Net The following table shows interest income and expense, and other income (expense), net (in thousands, except percentages): Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Interest income $ 1,966 $ 1,878 5% $ 4,138 $ 3,905 6% Interest expense (37 ) (48 ) (23%) (84 ) (76 ) 11% Other income (expense), net (16 ) (80 ) (80%) 4 (126 ) (103%) Total $ 1,913 $ 1,750 9% $ 4,058 $ 3,703 10% Interest income and interest expense The increases in interest income in the second quarter of 2026 and the first half of 2026 compared to the same periods of 2025 were driven by higher average investment balances, partially offset by decreased yields. Interest expense is the recognition of imputed interest on noninterest bearing loans. Other income (expense), net Other income (expense), net, in the periods presented, consisted mainly of foreign currency remeasurements. Liquidity and Capital Resources The following table presents selected financial information (in thousands): June 30, 2026 December 31, 2025 Cash and cash equivalents, and short-term investments $ 212,658 $ 239,953 Contract liabilities 3,395 1,562 Working capital 198,667 228,321 From our inception through June 30, 2026, we have funded our operations primarily from net proceeds from issuance of redeemable convertible preferred stock, IPO, follow-on equity offerings, At-the-Market ("ATM") facility (see Note 9, At-the-Market Equity Offerings, in Part 1, Item 1 of this Form 10-Q in our Consolidated Financial Statements for additional information), Tempus exercising warrants and purchasing additional shares under an investment agreement, and Merck purchasing shares of our common stock under an investment agreement (see Note 8, Related Party Transactions, in Part 1, Item 1 of this Form 10-Q in our Consolidated Financial Statements for additional information), as well as debt financings. As of June 30, 2026, we had cash and cash equivalents of $94.0 million and short-term investments of $118.7 million. We have incurred net losses since our inception. We anticipate that our current cash and cash equivalents and short-term investments, are sufficient to fund our near-term capital and operating needs for at least the next 12 months. We have based these future funding requirements on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we expect. If the Merger is not completed and our available cash balances and anticipated cash flow from operations are insufficient to satisfy our liquidity requirements, including because of lower demand for our testing services or other risks described in this Quarterly Report on Form 10-Q, we may seek to sell additional common or preferred equity or convertible debt securities, enter into an additional credit facility or another form of third-party funding or seek other debt financing. We filed a sales agreement prospectus supplement in May 2026, pursuant to which we may offer and sell $150.0 million of shares of our common stock through our ATM facility, of which approximately $145.4 million remains available for sale as of June 30, 2026, provided that we may not sell any shares through the ATM facility while the closing of the Merger is pending. The sale of equity and convertible debt securities may result in dilution to our stockholders and, in the case of convertible debt, those securities could provide for rights, preferences or privileges senior to those of our common stock. The terms of debt securities issued or borrowings pursuant to a credit agreement could impose significant restrictions on our operations. Additional capital may not be available on reasonable terms, or at all. 35 Table of Contents Our short-term investments portfolio is primarily invested in highly rated securities, with the primary objective of minimizing the potential risk of principal loss. Our investment policy generally requires securities to be investment grade and limits the amount of credit exposure to any one issuer. Cash Flows Six Months Ended June 30, 2026 2025 Net cash used in operating activities $ (48,248 ) $ (30,896 ) Net cash used in investing activities (7,849 ) (26,913 ) Net cash provided by financing activities 25,818 19,760 The increase in cash used in operating activities was primarily due to an increase in net loss. The decrease in cash used by investing activities was primarily due to a $14.2 million decrease in investment of our cash into short-term investments, $9.0 million higher proceeds from the maturity of short-term investments, partially offset by a $4.0 million increase in capital expenditures. The increase in cash provided by financing activities was primarily due to $7.7 million higher net proceeds from sales of common stock under our ATM facility and $3.1 million higher proceeds from issuance of common stock under equity incentive plans, partially offset by a $2.6 million decrease in proceeds from loans and a $2.1 million payment of a finance lease. Material Cash Requirements Our material cash requirements in the short- and long-term consist primarily of variable costs of revenue, operating expenditures, capital expenditures, property leases, and other spend. We plan to fund our material cash requirements with our existing cash and cash equivalents and short-term investments, which amounted to $212.7 million as of June 30, 2026, as well as anticipated cash receipts from customers. If the Merger is not completed, to fund our material cash requirements in the short- and long-term, we may also seek to sell additional common or preferred equity or convertible debt securities, enter into an additional credit facility or another form of third-party funding or seek other debt financing. Variable costs of revenue. From time to time in the ordinary course of business, we enter into agreements with vendors for the purchase of raw materials, laboratory supplies and consumables to be used in the sequencing of customer samples. However, we generally do not have binding and enforceable purchase orders beyond the short term, and the timing and magnitude of purchase orders beyond such period is difficult to accurately project. We currently expect spending in this area to increase compared to the levels in 2025 in order to support expected higher levels of revenue. Operating expenditures. Our primary use of cash relates to employee compensation, spend on professional services, spend related to research and development projects, and other costs to support our research and development and selling, general and administrative functions. We currently expect our spending in all of these areas to increase compared to the levels in 2025 to support the growth of our clinical diagnostic offerings. On a long-term basis, we manage future cash requirements relative to our long-term business plans. Capital expenditures. Capital expenditures are expected to increase from 2025 levels as we expect to expand NeXT Personal Dx test volume capacity. Going forward, our capital expenditures are expected to consist primarily of laboratory equipment and computer equipment. We currently expect capital expenditures to be between $8.0 million and $10.0 million in 2026 and between $10.0 million to $12.0 million in each of the years 2027 and 2028. Property leases. Our noncancelable operating lease payments were $58.8 million as of June 30, 2026. The timing of these future payments, by year, can be found in Note 7, Leases, in Part I, Item 1 of this Form 10-Q in the Consolidated Financial Statements. Other. As of June 30, 2026, we have an outstanding noninterest bearing loan that was used to finance the purchase of equipment for our laboratory. We owe a total of $0.9 million, which is payable in 2027. Further discussion of the loan can be found in Note 6, Loans, in Part I, Item 1 of this Form 10-Q in the Consolidated Financial Statements. Critical Accounting Policies and Estimates Our consolidated financial statements are prepared in accordance with U.S. GAAP. The preparation of our consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs and expenses, and related disclosures. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. 36 Table of Contents An accounting policy is deemed to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, if different estimates reasonably could have been used, or if changes in the estimate that are reasonably possible could materially impact the financial statements. We believe that the assumptions and estimates associated with revenue recognition and leases have the greatest potential impact on our consolidated financial statements. Therefore, we consider these to be our critical accounting policies and estimates. There have been no material changes to our critical accounting policies and estimates as compared to the critical accounting policies and estimates described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 under the caption “Critical Accounting Policies and Estimates” in Management’s Discussion and Analysis of Financial Condition and Results of Operations, set forth in Part II, Item 7. Recent Accounting Pronouncements See the section titled “Recent Accounting Pronouncements” in Note 2, Summary of Significant Accounting Policies, in Part I, Item 1 of this Form 10-Q in the Consolidated Financial Statements for additional information. 37 Table of Contents