UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM (Mark One) For the quarterly period ended or For the transition period from to Commission File Number: (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) (Address of principal executive offices) (Zip code) ( (Registrant’s telephone number, including area code) | ||
| Securities registered pursuant to Section 12(b) of the Act: | ||||||||
| Title of each class | Trading symbol(s) | Name of each exchange on which registered | ||||||
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. 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). 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. | ||
| x | Non-accelerated filer | ☐ | ||||||||||||
| 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 As of July 31, 2026, there were | ||
TABLE OF CONTENTS
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| Item 2. | ||||||||
| Item 3. | ||||||||
| Item 4. | ||||||||
| Item 1. | ||||||||
| Item 1A. | ||||||||
| Item 2. | ||||||||
| Item 5. | ||||||||
| Item 6. | ||||||||
i
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q contains “forward-looking statements” about us and our industry within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical facts are forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “would,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential,” or “continue” or the negative of these terms or other similar expressions. Forward-looking statements contained in this report may include without limitation those regarding:
•our research and development programs;
•the initiation, timing, progress, results, and cost of our current and future preclinical and clinical studies, including statements regarding the design of, and the timing of initiation and completion of, studies and related preparatory work, as well as the period during which the results of the studies will become available and key milestones will be met;
•our continued ability to achieve milestones and receive associated milestone payments and royalties from current and future collaborations;
•our ability to use our combined assets from our business combination to create a fully integrated, technology-first drug discovery platform;
•our ability to reduce our cash burn;
•the timing and likelihood of our ability to shift our wet-lab from a source of data generation to a model for validating data from AI-generated results and the projected impact of our ClinTech platform on our business;
•the ability and willingness of our collaborators to continue research and development activities relating to our development candidates and investigational medicines;
•future agreements with third parties in connection with the commercialization of our investigational medicines and any other approved product;
•the timing, scope, and likelihood of regulatory filings and approvals, including the timing of Investigational New Drug applications and final approval by the U.S. Food and Drug Administration, or FDA, of our current drug candidates and any other future drug candidates, as well as our ability to maintain any such approvals;
•the timing, scope, or likelihood of foreign regulatory filings and approvals, including our ability to maintain any such approvals;
•the size of the potential market opportunity for TechBio companies, including the expected impact of AI-enabled technologies;
•the size of the potential market opportunity for our drug candidates, including our estimates of the number of patients who suffer from the diseases we are targeting;
•our ability to identify viable new drug candidates for clinical development and the rate at which we expect to identify such candidates, whether through an inferential approach or otherwise;
•our expectation that the assets that will drive the most value for us are those that we will identify in the future using our datasets and tools;
•our ability to develop and advance our current drug candidates and programs into, and successfully complete, clinical studies;
•our ability to reduce the time or cost or increase the likelihood of success of our research and development relative to the traditional drug discovery paradigm, including the use of data sets from our partners to accelerate the development of our AI-enabled technologies;
•our ability to improve, and the rate of improvement in, our infrastructure, datasets, biology, technology tools, and drug discovery platform, and our ability to realize benefits from such improvements;
•our ability to effectively use machine learning and artificial intelligence in our drug development process;
•our ability to leverage our collaborations and partnerships to develop our products and grow our business;
•our expectations related to the performance and benefits of our BioHive-2 supercomputer, Recursion OS, and our digital chemistry platform;
•our ability to realize a return on our investment of resources and cash in our drug discovery collaborations;
•our ability to sell or license assets and re-invest proceeds into funding our long-term strategy;
•our ability to scale like a technology company and to add more programs to our pipeline each year;
•our ability to acquire and generate datasets to train and develop our AI-enabled technologies;
•our ability to successfully compete in a highly competitive market;
•our manufacturing, commercialization, and marketing capabilities and strategies;
•our plans relating to commercializing our drug candidates, if approved, including the geographic areas of focus and sales strategy;
•our expectations regarding the approval and use of our drug candidates in combination with other drugs;
•the rate and degree of market acceptance and clinical utility of our current drug candidates, if approved, and other drug candidates we may develop;
ii
•our competitive position and the success of competing approaches that are or may become available, including with respect to our AI-enabled technologies;
•our estimates of the number of patients that we will enroll in our clinical trials and the timing of their enrollment;
•the beneficial characteristics, safety, efficacy, and therapeutic effects of our drug candidates;
•our plans for further development of our drug candidates, including additional indications we may pursue;
•our ability to adequately protect and enforce our intellectual property and proprietary technology, including the scope of protection we are able to establish and maintain for intellectual property rights covering our current drug candidates and other drug candidates we may develop, receipt of patent protection, the extensions of existing patent terms where available, the validity of intellectual property rights held by third parties, the protection of our trade secrets, and our ability not to infringe, misappropriate or otherwise violate any third-party intellectual property rights;
•the impact of any intellectual property disputes and our ability to defend against claims of infringement, misappropriation, or other violations of intellectual property rights;
•our ability to keep pace with new technological developments, including with respect to AI;
•our ability to utilize third-party open source software and cloud-based infrastructure, on which we are dependent;
•the adequacy of our insurance policies and the scope of their coverage;
•the potential impact of a pandemic, epidemic, or outbreak of an infectious disease, such as COVID-19, or natural disaster, global political instability, or warfare, and the effect of such outbreak or natural disaster, global political instability, or warfare on our business and financial results;
•our ability to maintain our technical operations infrastructure to avoid errors, delays, or cybersecurity breaches;
•our continued reliance on third parties to conduct additional clinical trials of our drug candidates, and for the manufacture of our drug candidates for preclinical studies and clinical trials;
•our ability to obtain, and negotiate favorable terms of, any collaboration, licensing or other arrangements that may be necessary or desirable to research, develop, manufacture, or commercialize our platform and drug candidates;
•the pricing and reimbursement of our current drug candidates and other drug candidates we may develop, if approved;
•our estimates regarding expenses, future revenue, capital requirements, and need for additional financing;
•our financial performance;
•the period over which we estimate our existing cash and cash equivalents will be sufficient to fund our future operating expenses and capital expenditure requirements;
•our ability to raise substantial additional funding;
•the impact of current and future laws and regulations, and our ability to comply with all regulations that we are, or may become, subject to;
•the need to hire additional personnel and our ability to attract and retain such personnel;
•the impact of any current or future litigation, which may arise during the ordinary course of business and be costly to defend;
•our ability to maintain effective internal control over financial reporting and disclosure controls and procedures, including our ability to remediate the material weaknesses in internal control over financial reporting;
•our anticipated use of our existing resources and the net proceeds from our public offerings; and
•other risks and uncertainties, including those listed in the section titled “Risk Factors.”
We have based these forward-looking statements largely on our current expectations and projections about our business, the industry in which we operate, and financial trends that we believe may affect our business, financial condition, results of operations, and prospects. These forward-looking statements are not guarantees of future performance or development. These statements speak only as of the date of this report and are subject to a number of risks, uncertainties and assumptions described in the section titled “Risk Factors” and elsewhere in this report. Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, you should not rely on these forward-looking statements as predictions of future events. The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. Except as required by applicable law, we undertake no obligation to update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, or otherwise.
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 report. While we believe such information forms a reasonable basis for such statements, the 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 them.
iii
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
Recursion Pharmaceuticals, Inc.
Condensed Consolidated Balance Sheets (unaudited)
(in thousands, except share and per share amounts)
| June 30, | December 31, | |||||||
| 2026 | 2025 | |||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Restricted cash | ||||||||
| Other receivables | ||||||||
| Prepaid data assets | ||||||||
| Other current assets | ||||||||
| Total current assets | ||||||||
| Restricted cash, non-current | ||||||||
| Property and equipment, net | ||||||||
| Operating lease right-of-use assets | ||||||||
| Financing lease right-of-use assets | ||||||||
| Intangible assets, net | ||||||||
| Goodwill | ||||||||
| Deferred tax assets | ||||||||
| Other assets, non-current | ||||||||
| Total assets | $ | $ | ||||||
| Liabilities and stockholders’ equity | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued expenses and other liabilities | ||||||||
| Unearned revenue | ||||||||
| Operating lease liabilities | ||||||||
| Notes payable and financing lease liabilities | ||||||||
| Total current liabilities | ||||||||
| Unearned revenue, non-current | ||||||||
| Operating lease liabilities, non-current | ||||||||
| Notes payable and financing lease liabilities, non-current | ||||||||
| Deferred tax liabilities | ||||||||
| Other liabilities, non-current | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies (Note 7) | ||||||||
| Stockholders’ equity | ||||||||
Common stock, $ | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ( | ||||||
| Accumulated other comprehensive income | ||||||||
| Total stockholders’ equity | ||||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||
See the accompanying notes to these condensed consolidated financial statements.
1
Recursion Pharmaceuticals, Inc.
Condensed Consolidated Statements of Operations (unaudited)
(in thousands, except share and per share amounts)
| Three months ended June 30, | Six months ended June 30, | ||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||
| Revenue | |||||||||||||||||
| Operating revenue | $ | $ | $ | $ | |||||||||||||
| Grant revenue | |||||||||||||||||
| Total revenue | |||||||||||||||||
| Operating costs and expenses | |||||||||||||||||
| Cost of revenue | |||||||||||||||||
| Research and development | |||||||||||||||||
| General and administrative | |||||||||||||||||
| Total operating costs and expenses | |||||||||||||||||
| Loss from operations | ( | ( | ( | ( | |||||||||||||
Other income (loss), net | ( | ||||||||||||||||
| Loss before income tax benefit | ( | ( | ( | ( | |||||||||||||
Income tax benefit | |||||||||||||||||
| Net loss | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||
| Per share data | |||||||||||||||||
| Net loss per share of Class A, B and Exchangeable common stock, basic and diluted | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||
| Weighted-average shares (Class A, B and Exchangeable) outstanding, basic and diluted | |||||||||||||||||
See the accompanying notes to these condensed consolidated financial statements.
2
Recursion Pharmaceuticals, Inc.
Condensed Consolidated Statements of Comprehensive Loss (unaudited)
(in thousands)
| Three months ended | Six months ended | ||||||||||||||||
| June 30, | June 30, | ||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||
| Net loss | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||
Other comprehensive income (loss): | |||||||||||||||||
| Currency translation adjustments | ( | ||||||||||||||||
Other comprehensive income (loss) | ( | ||||||||||||||||
| Comprehensive loss | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||
See the accompanying notes to these condensed consolidated financial statements
3
Recursion Pharmaceuticals, Inc.
Condensed Consolidated Statements of Stockholders’ Equity (unaudited)
(in thousands, except share amounts)
| Common Stock | Additional Paid-in-Capital | Accumulated Deficit | Accumulated other comprehensive income (loss) | Stockholders’ Equity | ||||||||||||||||
(Class A, B and Exchangeable) | ||||||||||||||||||||
Shares | Amount | |||||||||||||||||||
| Balance as of March 31, 2026 | $ | $ | $ | ( | $ | $ | ||||||||||||||
| Net loss | — | — | — | ( | — | ( | ||||||||||||||
Other comprehensive income (loss) | — | — | — | — | ||||||||||||||||
| Stock option exercises and other | — | — | — | |||||||||||||||||
| Stock-based compensation | — | — | — | — | ||||||||||||||||
| Balance as of June 30, 2026 | $ | $ | $ | ( | $ | $ | ||||||||||||||
| Common Stock | Additional Paid-in-Capital | Accumulated Deficit | Accumulated other comprehensive income (loss) | Stockholders’ Equity | ||||||||||||||||
(Class A, B and Exchangeable) | ||||||||||||||||||||
Shares | Amount | |||||||||||||||||||
| Balance as of December 31, 2025 | $ | $ | $ | ( | $ | $ | ||||||||||||||
| Net loss | — | — | — | ( | — | ( | ||||||||||||||
Other comprehensive income (loss) | — | — | — | — | ( | ( | ||||||||||||||
| Stock option exercises and other | — | ( | — | — | ( | |||||||||||||||
| Stock-based compensation | — | — | — | — | ||||||||||||||||
| Balance as of June 30, 2026 | $ | $ | $ | ( | $ | $ | ||||||||||||||
See the accompanying notes to these condensed consolidated financial statements
4
Recursion Pharmaceuticals, Inc.
Condensed Consolidated Statements of Stockholders’ Equity (unaudited)
(in thousands, except share amounts)
| Common Stock | Additional Paid-in-Capital | Accumulated Deficit | Accumulated other comprehensive income (loss) | Stockholders’ Equity | ||||||||||||||||
(Class A, B and Exchangeable) | ||||||||||||||||||||
Shares | Amount | |||||||||||||||||||
| Balance as of March 31, 2025 | $ | $ | $ | ( | $ | $ | ||||||||||||||
| Net loss | — | — | — | ( | — | ( | ||||||||||||||
Other comprehensive income (loss) | — | — | — | — | ||||||||||||||||
| Stock option exercises and other | — | — | ||||||||||||||||||
| Stock-based compensation | — | — | — | — | ||||||||||||||||
| Common stock sales issuances, net of issuance costs | — | — | — | |||||||||||||||||
| Balance as of June 30, 2025 | $ | $ | $ | ( | $ | $ | ||||||||||||||
| Common Stock | Additional Paid-in-Capital | Accumulated Deficit | Accumulated other comprehensive income (loss) | Stockholders’ Equity | ||||||||||||||||
(Class A, B and Exchangeable) | ||||||||||||||||||||
Shares | Amount | |||||||||||||||||||
| Balance as of December 31, 2024 | $ | $ | $ | ( | $ | ( | $ | |||||||||||||
| Net loss | — | — | — | ( | — | ( | ||||||||||||||
Other comprehensive income (loss) | — | — | — | — | ||||||||||||||||
| Stock option exercises and other | — | — | ||||||||||||||||||
| Stock-based compensation | — | — | — | — | ||||||||||||||||
| Common stock sales issuances, net of issuance costs | — | — | — | |||||||||||||||||
| Balance as of June 30, 2025 | $ | $ | $ | ( | $ | $ | ||||||||||||||
See the accompanying notes to these condensed consolidated financial statements
5
Recursion Pharmaceuticals, Inc.
Condensed Consolidated Statements of Cash Flows (unaudited) (in thousands)
| Six months ended June 30, | ||||||||
| 2026 | 2025 | |||||||
| Cash flows from operating activities | ||||||||
| Net loss | $ | ( | $ | ( | ||||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Stock-based compensation | ||||||||
| Asset impairment | ||||||||
| Lease expense | ||||||||
| Loss on disposal of a business | ||||||||
Deferred income taxes | ( | |||||||
| Other, net | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Other receivables and assets | ||||||||
Prepaid data assets | ||||||||
Accrued data liability | ||||||||
| Unearned revenue | ( | ( | ||||||
| Accounts payable | ( | ( | ||||||
| Accrued development expense | ( | ( | ||||||
| Accrued expenses and other current liabilities | ( | ( | ||||||
| Lease liabilities | ( | ( | ||||||
| Net cash used in operating activities | ( | ( | ||||||
| Cash flows from investing activities | ||||||||
| Purchases of property and equipment | ( | ( | ||||||
Purchase of an intangible asset | ( | ( | ||||||
Decrease in cash related to disposal of a business | ( | |||||||
| Purchases of investments | ( | |||||||
| Net cash used in investing activities | ( | ( | ||||||
| Cash flows from financing activities | ||||||||
| Proceeds from issuance of common shares, net of issuance costs | ||||||||
Equity incentive plans | ( | |||||||
| Repayment of long-term debt and finance lease liabilities | ( | ( | ||||||
| Purchase of an intangible asset | ( | |||||||
Net cash provided by (used in) financing activities | ( | |||||||
| Effect of exchange rate changes on cash, cash equivalents and restricted cash | ( | |||||||
Net change in cash, cash equivalents and restricted cash | ( | ( | ||||||
| Cash, cash equivalents and restricted cash, beginning of period | ||||||||
| Cash, cash equivalents and restricted cash, end of period | $ | $ | ||||||
| Supplemental schedule of non-cash investing and financing activities | ||||||||
| Accrued property and equipment | ||||||||
| Purchase of an equity investment | ||||||||
See the accompanying notes to these condensed consolidated financial statements.
6
Recursion Pharmaceuticals, Inc.
Notes to Condensed Consolidated Financial Statements (unaudited)
Note 1. Description of the Business
Recursion Pharmaceuticals, Inc. (Recursion, the Company, we or our) is a clinical stage TechBio company decoding biology and chemistry to industrialize drug discovery. The Recursion Operating System (Recursion OS), a platform built across diverse technologies, enables the Company to map and navigate trillions of biological and chemical relationships within the Recursion Data Universe, one of the world’s largest proprietary biological and chemical datasets. The Company integrates physical and digital components as iterative loops of atoms and bits scaling wet lab biology and chemistry data organized into virtuous cycles with computational tools to rapidly translate in silico hypotheses into validated insights and novel chemistry.
As of June 30, 2026, the Company had an accumulated deficit of $2.3 billion. The Company expects to incur substantial operating losses in future periods and will require additional capital to advance its drug candidates. The Company does not expect to generate significant revenue until the Company successfully completes significant drug development milestones or in collaboration with third parties, which the Company expects will take a number of years. In order to commercialize its drug candidates, the Company or its partners need to complete clinical development and comply with comprehensive regulatory requirements. The Company is subject to a number of risks and uncertainties similar to those of other companies of the same size within the biotechnology industry, such as the uncertainty of clinical trial outcomes, uncertainty of additional funding and a history of operating losses.
The Company has funded its operations to date primarily through the issuance of Class A common stock (see Note 8, “Common Stock” for additional details). Additionally, the Company has received payments from its strategic partnerships (see Note 9, “Collaborative Development Contracts” for additional details). Recursion will likely be required to raise additional capital. As of June 30, 2026, the Company did not have any unconditional outstanding commitments for additional funding. If the Company is unable to access additional funds when needed, it may not be able to continue the development of its products or the Company could be required to delay, scale back or abandon some or all of its development programs and other operations. The Company’s ability to access capital when needed is not assured and, if not achieved on a timely basis, could materially harm its business, financial condition and results of operations.
Recursion believes that the Company’s existing cash and cash equivalents will be sufficient to fund the Company’s operating expenses and capital expenditures for at least the next 12 months from the issuance date of these financial statements.
Note 2. Basis of Presentation
Basis of Presentation
The unaudited interim condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (SEC). Accordingly, certain information and footnote disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles in the United States (U.S. GAAP) have been condensed or omitted. These unaudited interim condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes for the year ended December 31, 2025.
It is management’s opinion that these condensed consolidated financial statements include all normal and recurring adjustments necessary for a fair statement of the financial position, results of operations and cash flows for the periods presented. Revenue and net loss for any interim period are not necessarily indicative of future or annual results.
Recent Accounting Pronouncements
In December 2025, the Financial Accounting Standards Board (FASB) issued ASU No. 2025-10, Government Grants (Topic 832). The new standard adds guidance to ASC 832 on the recognition, measurement and presentation of government grants. This standard will be effective for Recursion starting the annual period of 2029
7
and for interim reporting periods within that annual reporting period. Early adoption is permitted. The amendments can be applied on a prospective, modified prospective or retrospective basis. Recursion is currently assessing the impact of adopting this guidance on its consolidated financial statements.
In September 2025, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2025-07, Derivatives and Hedging (Topic 815) and Revenue from Contracts with Customers (Topic 606). The new standard refines the scope of the guidance on derivatives in Topic 815 and clarifies the guidance on share-based payments from a customer in ASC 606. This standard will be effective for Recursion starting the annual period of 2027 and for interim reporting periods within that annual reporting period. Early adoption is permitted. Recursion is currently assessing the impact of adopting this guidance on its consolidated financial statements.
In September 2025, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2025-06, Accounting for internal-use software costs (Topic 350). The new standard amends specific aspects of the accounting for internal-use software costs including the criteria for capitalizing software costs. It also amends the related disclosure requirements. This standard will be effective for Recursion starting the annual period ending 2028 and for interim reporting periods within that annual reporting period. Early adoption is permitted. The amendments can be applied on a prospective, modified prospective or retrospective basis. Recursion is currently assessing the impact of adopting this guidance on its consolidated financial statements.
In November 2024, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2024-03, Disaggregation of Income Statement Expenses (Topic 220). The standard requires new disclosures in the notes to the financial statements about certain caption expenses presented on the face of the Income Statement including information on: purchases of inventory; employee compensation; depreciation and intangible asset amortization. Recursion must also disclose a qualitative description of the amounts remaining in expense captions that are not separately disaggregated. This standard will be effective for Recursion starting the annual period of 2027. Early adoption is permitted. The amendments can be applied on a prospective or retrospective basis. Recursion is currently assessing the impact of adopting this guidance on its consolidated financial statements.
Note 3. Supplemental Financial Information
Tempus agreement
In November 2023, Recursion entered into a five-year agreement (the Tempus Agreement) with Tempus AI, Inc. (Tempus) to purchase access to their records of patient-centric multimodal oncology data and use rights for therapeutic development purposes. This data will be used to improve the training of Recursion’s artificial intelligence and machine learning models and is expected to accelerate Recursion’s drug discovery process. Recursion is making annual payments, ranging between $22.0 million and $42.0 million, up to $160.0 million in aggregate, to Tempus in cash or equity at the Company’s option. The equity value is determined by using the -trading day period dollar volume-weighted average price (VWAP) for Recursion Class A common stock ending on the day immediately preceding the date that is business days prior to the payment date.
Recursion is expensing the record purchases based on a contractually agreed price as “Research and Development” expenses in the Condensed Consolidated Statements of Operations as the records are downloaded. To the extent that the Recursion payments to Tempus are greater than or less than the records purchased amount, Recursion records the applicable amount to “Prepaid data assets” or “Accrued data liability” on the Condensed Consolidated Balance Sheet, respectively. For the three and six months ended June 30, 2026, record purchases were $3.1 22.7 million and $49.9 million, respectively.
8
Accrued Expenses and Other Liabilities
| June 30, | December 31, | |||||||
| (in thousands) | 2026 | 2025 | ||||||
| Accrued compensation | $ | $ | ||||||
Accrued compute liabilities | ||||||||
| Accrued development expenses | ||||||||
Accrued early discovery expenses | ||||||||
Accrued professional fees | ||||||||
Materials received not invoiced | ||||||||
| Accrued taxes, other than income taxes | ||||||||
| Unearned grants | ||||||||
Accrued license fees | ||||||||
| Accrued other expenses | ||||||||
| Accrued expense and other liabilities | $ | $ | ||||||
Interest Income, Net
| Three months ended June 30, | Six months ended June 30, | ||||||||||||||||
| (in thousands) | 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Interest income | $ | $ | $ | $ | |||||||||||||
| Interest expense | ( | ( | ( | ( | |||||||||||||
| Interest income, net | $ | $ | $ | $ | |||||||||||||
For the three and six months ended June 30, 2026 and 2025, interest income primarily related to earnings on cash and cash equivalents in money market funds. Interest expense primarily related to the Company’s supercomputer financing lease. Interest income, net was included in “Other income (loss), net” on the Condensed Consolidated Statements of Operations.
Note 4. Acquisitions
RE Ventures I
In July 2025, Recursion acquired Rallybio’s interest in the joint venture, RE Ventures I, such that Recursion now owns 100 % of the interest in RE Ventures I for total consideration of $20.2 million. Recursion determined that this transaction met the criteria to be accounted for as an asset acquisition since the lead asset, ENPP1 (Rec-102), an inhibitor program for the treatment of hypophosphatasia (HPP), represented substantially all of the fair value of the gross assets acquired.
Subsequent to closing, in August 2025, Recursion issued additional consideration as part of a required milestone payment. As a result, Recursion recorded an additional expense of $2.4 million.
As part of the agreement, Rallybio is eligible to receive additional milestone payments under certain conditions. Milestone payment obligations that are incurred prior to regulatory approval of the compound will be expensed as acquired IPR&D when recognized.
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Sale of Exscientia GmbH
In March 2025, Recursion completed the sale of its Austrian operations (Exscientia GmbH) to Alpha Biotechnology GmbH (Alpha). As part of the sale, Recursion obtained a 49 % equity interest in Alpha. For the year ended December 31, 2025, Recursion recorded a loss on the disposal of Exscientia GmbH of $4.5 million, which was classified as “Other income (loss), net” on the Condensed Consolidated Statement of Operations. Recursion also recorded a $4.4 million investment on the Condensed Consolidated Balance Sheet within “Other assets, non-current” related to its 49 % equity interest in Alpha, which was determined to be an equity method investment.
Note 5. Leases
The Company has entered into various long-term real estate operating leases primarily related to office, research and development and operating activities and an equipment financing lease related to the supercomputer. The Company’s leases have remaining terms from under one year to six years and some of those leases include options that provide Recursion with the ability to extend the lease term, generally for five years . The options are included in the lease term when it is reasonably certain that the option will be exercised.
For the six months ended June 30, 2025, Recursion entered into operating lease modifications and terminations resulting in a decrease to the right-of-use asset and lease liability of $10.1
Supplemental cash flow information related to leases were:
| Six months ended June 30, | ||||||||
(in thousands) | 2026 | 2025 | ||||||
| Cash paid for amount included in the measurement of lease liabilities: | ||||||||
Operating cash flows from operating leases | $ | $ | ||||||
Operating cash flows from financing leases | ||||||||
Financing cash flows from financing leases | ||||||||
Right-of-use assets additions, modifications and termination: | ||||||||
Operating leases | $ | $ | ( | |||||
Note 6. Goodwill and Intangible Assets
Goodwill
The following table summarizes the changes in the carrying amount of goodwill:
| (in thousands) | |||||
| Balance as of December 31, 2025 | $ | ||||
| Foreign currency translation adjustments | ( | ||||
| Balance as of June 30, 2026 | $ | ||||
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Intangible Assets, Net
The following table summarizes intangible assets:
| June 30, 2026 | December 31, 2025 | ||||||||||||||||||||||
| (in thousands) | Gross carrying amount | Accumulated Amortization | Net carrying amount | Gross carrying amount | Accumulated Amortization | Net carrying amount | |||||||||||||||||
| Definite-lived technology intangible assets | $ | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||
| Definite-lived licensed intangible assets | ( | ( | |||||||||||||||||||||
| Indefinite-lived intangible assets | — | — | |||||||||||||||||||||
| Total intangible assets | $ | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||
Amortization expense was $11.7 million and $24.4 million during the three and six months ended June 30, 2026, respectively. Amortization expense was $12.3 million and $24.0 million during the three and six months ended June 30, 2025, respectively. Amortization expense was included in “Research and Development” in the Condensed Consolidated Statements of Operations. Intangible assets, net decreased by $27.0 million during the six months ended June 30, 2026 of which $4.5 million was attributable to foreign currency translation adjustments.
Note 7. Commitments and Contingencies
Contract Obligations
In the normal course of business, the Company enters into contracts with clinical research organizations, drug manufacturers and other vendors for preclinical and clinical research studies, research and development supplies and other services and products for operating purposes. These contracts generally provide for termination on notice and are cancellable contracts.
Indemnification
The Company has agreed to indemnify its officers and directors for certain events or occurrences, while the officer or director is or was serving at the Company’s request in such capacity. The Company purchases directors and officers liability insurance coverage that provides for reimbursement to the Company for covered obligations and this is intended to limit the Company’s exposure and enable it to recover a portion of any amount it pays under its indemnification obligations. The Company had no
Employee Agreements
The Company has signed employment agreements with certain key employees pursuant to which, if their employment is terminated following a change of control of the Company, the employees are entitled to receive certain benefits, including accelerated vesting of equity incentives.
Legal Matters
The Company may, from time to time, be involved in various legal proceedings arising in the normal course of business. An unfavorable resolution of any such matter could materially affect the Company’s future financial position, results of operations or cash flows.
In February 2021, the Company entered into a lease agreement for laboratory and office space (the Industry Lease) with Industry Office SLC, LLC (the landlord). In March 2023, the Company sent a letter to the landlord detailing numerous construction delays and irregularities, deficiencies and deviations from applicable structural drawings
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and/or non-conforming conditions with applicable building codes (collectively, the Claims). On June 23, 2023, the landlord filed a lawsuit against the Company (Industry Office SLC, LLC v. Recursion Pharmaceuticals, Inc., Case No. 230904627) amended in October 2023, in the Third District Court for Salt Lake County, State of Utah (the Court), alleging anticipatory repudiation, breach of contract and breach of the implied covenant of good faith and fair dealing and seeks monetary damages and attorney’s fees. As of June 30, 2026, the Company had no liability recorded for these events as an unfavorable outcome was not probable. In September 2023, the Company filed claims in the Court against the landlord alleging, among other things, breach of contract and fraudulent misrepresentation (the Counterclaims). In October 2023, the landlord filed an answer and denied the Company’s allegations asserted in the Counterclaims. The Company and the landlord are currently engaged in discovery. The Company is unable to estimate the possible amount or range of damages associated with the Counterclaims.
Pledged Assets
As of June 30, 2026, assets pledged as collateral against finance leases totaled $13.8 million. Assets pledged as collateral are Lab Equipment reported in “Property and Equipment, net” on the Condensed Consolidated Balance Sheet. As of June 30, 2026, the liabilities associated with collateral pledged were solely comprised of a finance lease and had a carrying value of $13.9 million. The collateral pledged under the lease agreement may only be operated by the Company within the continental United States and must maintain a good title. The assets cannot be sold, disposed of or repledged by the Company.
Note 8. Common Stock
Each share of Class A common stock entitles the holder to one vote per share and each share of Class B common stock entitles the holder to 10 votes per share on all matters submitted to a vote of the Company’s stockholders. Common stockholders are entitled to receive dividends, as may be declared by the Company’s Board of Directors. As of June 30, 2026 and December 31, 2025, no
At-The-Market Offerings
In February 2026, the Company entered into a Sales Agreement (the TD Cowen Sales Agreement) with TD Securities (USA), LLC (the TD Cowen Sales Agent), to provide for the offering, issuance and sale of up to an aggregate amount of $300.0 million of its Class A common stock from time to time in at-the-market offerings (the TD Cowen ATM Offering). The TD Cowen ATM Offering was made under a prospectus supplement dated February 24, 2026 and related prospectus filed with the Securities and Exchange Commission pursuant to the Company’s automatically effective shelf registration statement on Form S-3 (Registration No. 333-284878).
For the six months ended June 30, 2026, the Company sold no shares. As of June 30, 2026, an amount of $300.0 million remained available for future sales under the Sales Agreement.
Prior to February 2026, Recursion had entered into sales agreements with Citigroup Capital Markets Inc. and Jefferies LLC. See Note 8, “Common Stock,” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.
Valence Acquisition Exchangeable Shares
In May 2023, in connection with the acquisition of Valence Discovery Inc. (Valence), the Company entered into an agreement to issue up to 5.9 million shares of Class A common stock (the Exchangeable Shares), that may be issued upon exchange of exchangeable shares of a subsidiary of Recursion. The Exchangeable Shares are substantially the economic equivalent of the Class A shares and classified as common stock within the Company’s stockholders’ equity. The Company’s calculation of weighted-average shares outstanding includes the exchangeable shares. As of June 30, 2026, 4.9 million Exchangeable Shares have been redeemed for Class A shares.
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Registration Rights Agreements
Tempus agreement
In November 2023, in connection with the Tempus Agreement, the Company filed a registration statement for resale of the shares of Class A common stock issued or issuable under the Tempus Agreement. A new registration statement (333-284878) was filed in February 2025 and a prospectus supplement covering all shares that have been issued under the Tempus Agreement and remained held by Tempus was filed in May 2025 and in November 2025, a prospectus supplement was filed to register shares issued to Tempus in payment for the 2025 annual fee.
After registration of any shares issued to Tempus under the Tempus Agreement, the Company has agreed to use commercially reasonable efforts to keep such registration statement effective until such date that all shares issued to Tempus covered by such registration statement have been sold.
Acquisitions
In November 2024, in connection with the acquisition of Exscientia plc (Exscientia), the Company filed a Registration Agreement providing for the resale of the shares of Class A common stock issued for Recursion stock options and RSUs. A registration statement on Form S-8 (File No. 333-283347) was filed to register the shares for resale by the holders. The registration statement must remain effective as long as such Recursion stock options and RSUs remain outstanding.
In May 2023, in connection with the acquisition of Valence, the Company entered into a Registration Agreement providing for the resale of the shares of Class A common stock and Exchange Shares issued or issuable in such transaction. A registration statement on Form S-3ASR (File No. 333-272281) was filed to register the shares for resale by the holders. The Company’s obligation to keep the registration statement effective expired in May 2026 in accordance with the terms of the Registration Agreement.
Class A and B Common Shares Authorization
Note 9. Collaborative Development Contracts
Sanofi
Description
In January 2022, the Company and Sanofi entered into a collaboration agreement to develop an AI-driven pipeline of precision-engineered medicines. The research is focused on up to 15 novel small molecule candidates across oncology and immunology and utilizes the Company’s AI platform. The Company is leading small molecule drug design and lead optimization activities with Sanofi assuming responsibility for preclinical and clinical development, manufacturing and commercialization.
Pricing
The Company received a $100.0 million non-refundable upfront payment. The Company has received multiple milestone payments related to this agreement totaling approximately $34.0 million. These related to the advancement of several of the discovery programs within the collaboration and the addition of an existing Company program into the collaboration. Recursion is eligible for additional milestone payments based on performance progress of the collaboration and tiered royalties ranging from high-single-digits to mid-teens. Recursion could earn a maximum of $555.0 million from all research milestones and $1.8 billion from all development and regulatory milestones.
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Accounting
Recursion has determined that it has at least eight performance obligations related to the small molecule projects. These performance obligations are for performing research and development services for Sanofi to design small molecules and perform lead optimization activities. The performance obligations also include potential licenses related to the intellectual property. The Company concluded that licenses within the contract are not distinct from the research and development services as they are interrelated due to the fact that the research and development services significantly impact the potential licenses. Any additional services are considered customer options and will be considered as separate contracts for accounting purposes.
The Company has determined the transaction price to be $154.7 million, for the initial performance obligations, comprised of the upfront payment, several milestones that have been achieved and estimated additional target exercises. Recursion has fully constrained the amounts of remaining variable consideration to be received from potential milestones considering the stage of development and the risks associated with the remaining development required to achieve each milestone. Recursion will re-evaluate the transaction price each reporting period.
The Company recognizes revenue over time based on costs incurred relative to total expected costs to perform the research and development services. Recursion was unable to estimate the completion date of the performance obligations due to the current stage of work.
Merck KGaA (Merck)
Description
In September 2023, the Company and Merck entered into a collaboration agreement to discover novel small molecule drug candidates across oncology, neuroinflammation and immunology. The collaboration utilizes the Company’s AI platform and the Company is performing drug design and discovery while Merck will be assuming responsibility for the preclinical and clinical development.
Pricing
The Company received a $20.1 million non-refundable upfront payment. Recursion is eligible for additional milestone payments based on performance progress of the collaboration and tiered royalties from the mid-single-digits to low-double-digits. The Company could earn a maximum of $73.0 million for discovery, development and sales milestones per project.
Accounting
Recursion has determined that it has three performance obligations related to the small molecule projects and the transaction price to be $20.1 million. Recursion has fully constrained the amounts of remaining variable consideration to be received from potential milestones. Recursion will re-evaluate the transaction price each reporting period.
The Company recognizes revenue over time based on costs incurred relative to total expected costs to perform the research and development services. Recursion was unable to estimate the completion date of the performance obligations due to the current stage of work.
Roche and Genentech
Description
In December 2021, Recursion entered into a collaboration and license agreement with Roche and Genentech (collectively referred to as Roche). Recursion is constructing, using the Company’s imaging technology and proprietary machine-learning algorithms, unique maps of the inferred relationships amongst perturbation phenotypes in a given cellular context with the goal to discover and develop therapeutic small molecule programs in a gastrointestinal cancer indication and in key areas of neuroscience. Roche and Recursion will collaborate to select certain novel inferences with respect to small molecules or targets generated from the Phenomaps for further validation and optimization as collaboration programs. Roche and Recursion may also combine sequencing datasets from Roche with Recursion’s Phenomaps and collaborate to generate new algorithms to produce multi-modal maps from which additional collaboration programs may be initiated. For every collaboration program that successfully identifies potential therapeutic small molecules or validates a target, Roche will have an option to obtain an exclusive license to develop and commercialize such potential therapeutic small molecules or to exploit such target in the applicable exclusive field.
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Pricing
In January 2022, Recursion received a $150.0 million non-refundable upfront payment from the Company’s collaboration with Roche. In September 2024, Recursion received a $30.0 million milestone payment ( “acceptance fee 1”), which was an acceptance fee related to the first accepted neuroscience Phenomap. In October 2025, Recursion received another $30.0 million milestone payment (“acceptance fee 2”), which was an acceptance fee related to the second accepted neuroscience Phenomap. Recursion is eligible for additional milestone payments based on performance progress of the collaboration. Each of the Phenomaps requested by Roche and created by Recursion may be subject to either an initiation fee, acceptance fee or both. Such fees could exceed $250.0 million for 16 accepted Phenomaps. In addition, for a period of time after Roche’s acceptance of certain Phenomaps, Roche will have the option to obtain, subject to payment of an exercise fee, rights to use outside the collaboration the raw images generated in the course of creating those Phenomaps. If Roche exercises its external use option for all 12 eligible Phenomaps, Roche’s associated exercise fee payments to Recursion could exceed $250.0 million. Under the collaboration, Roche may initiate up to 40 programs, each of which, if successfully developed and commercialized, could yield more than $300.0 million in development, commercialization and net revenue milestones for Recursion, as well as tiered royalties on net revenue.
Accounting
Recursion has determined that it has three performance obligations, one related to gastrointestinal cancer and two in neuroscience. These performance obligations are for performing research and development services for Roche to identify targets and medicines. The performance obligations also include potential licenses related to the intellectual property. The Company concluded that licenses within the contract are not distinct from the research and development services as they are interrelated due to the fact that the research and development services significantly impact the potential licenses. Any additional services are considered customer options and will be considered as separate contracts for accounting purposes.
The Company has determined the transaction price to be $210.0 million, comprised of the upfront payment and the acceptance fees. The consideration did not include the $30.0 million variable consideration for the first acceptance fee until the map was accepted, which was during the third quarter of 2024. As a result of Roche’s acceptance of the neuroscience Phenomap, Recursion is now recognizing the acceptance fee as part of the transaction price over the completion period of one of the neuroscience performance obligations. The consideration did not include the $30.0 million variable consideration for the second acceptance fee until the map was accepted, which was during the fourth quarter of 2025. As a result of Roche’s acceptance of the neuroscience Phenomap, Recursion is now recognizing the acceptance fees as part of the transaction price over the completion period of one of the neuroscience performance obligations. Recursion has fully constrained the remaining amounts of variable consideration to be received from potential milestones considering the stage of development and the risks associated with the remaining development required to achieve each milestone. Recursion will re-evaluate the transaction price each reporting period.
The Company recognizes revenue over time based on costs incurred relative to total expected costs to perform the research and development services. Recursion has estimated the completion of the performance obligations by 2028.
Additional Revenue Disclosures
Of the revenue recognized during the three and six months ended June 30, 2026, $7.0 million and $11.4 million was included in the unearned revenue balance as of December 31, 2025. Of the revenue recognized during the three and six months ended June 30, 2025, $15.4 million and $30.2 million was included in the unearned revenue balance as of December 31, 2024, respectively. Revenue recognized was from the upfront and variable consideration payments received from the related contracts, which decreased the aggregate unearned revenue recognized. As of June 30, 2026, the Company had $5.3 million of costs incurred to fulfill a contract on its Condensed Consolidated Balance Sheet within “Other Current Assets.”
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Note 10. Stock-Based Compensation
In April 2021, the Board of Directors and the stockholders of the Company adopted the 2021 Equity Incentive Plan (the 2021 Plan). The Company may grant stock options, restricted stock units (RSUs), stock appreciation rights, restricted stock awards and other forms of stock-based compensation. As of June 30, 2026, 29.3 million shares of Class A common stock were available for grant in the 2021 plan. In November 2024, the Board of Directors and the stockholders of the Company adopted the 2024 Inducement Equity Incentive Plan (the 2024 Plan) as part of the Exscientia acquisition. As of June 30, 2026, 8.5 million shares of Class A common stock were available for grant in the 2024 plan.
The following table presents the classification of stock-based compensation expense for stock options and RSUs for employees and non-employees within the Condensed Consolidated Statements of Operations:
| Three months ended June 30, | Six months ended June 30, | ||||||||||||||||
(in thousands) | 2026 | 2025 | 2026 | 2025 | |||||||||||||
Cost of revenue | $ | $ | $ | $ | |||||||||||||
| Research and development | |||||||||||||||||
| General and administrative | |||||||||||||||||
| Total | $ | $ | $ | $ | |||||||||||||
RSUs
Equity awards granted to employees primarily consist of RSUs and generally vest over four years . The weighted-average grant-date fair value of RSUs generally is determined based on the number of units granted and the quoted price of Recursion’s common stock on the date of grant.
The following table summarizes Recursion’s RSU activity during the six months ended June 30, 2026:
| Stock units | Weighted-average grant date fair value | |||||||
| Outstanding as of December 31, 2025 | $ | |||||||
| Granted | ||||||||
| Vested | ( | |||||||
| Forfeited | ( | |||||||
| Outstanding as of June 30, 2026 | $ | |||||||
The fair market value of RSUs vested was $36.1 million during the six months ended June 30, 2026. As of June 30, 2026, $142.6 million of unrecognized compensation cost related to RSUs is expected to be recognized as expense over approximately the next three years .
Note 11. Income Taxes
The Company did not incur a significant amount of U.S. income tax expense during the three and six months ended June 30, 2026 and 2025. The Company has historically incurred operating losses and continues to maintain a full valuation allowance against most of its U.S. net deferred tax assets. Foreign income tax benefits were insignificant for the three months ended June 30, 2026 and $5.5 million for the six months ended June 30, 2026. The Company did not
The Company’s U.S. net operating loss (“NOL”) and tax credit carryforwards are subject to review and adjustment by the Internal Revenue Service (“IRS”) and may be subject to annual limitations under Section 382 of the Internal Revenue Code, as amended and similar state provisions in the event of certain ownership changes. These ownership changes may limit the amount of NOLs and other tax attributes that can be utilized annually to offset future taxable income. In general, an ownership change, as defined by Section 382, occurs when the ownership of
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Note 12. Net Loss Per Share
For the three and six months ended June 30, 2026 and 2025, Recursion calculated net loss per share of Class A, Class B and the Exchangeable common stock. Basic net loss per share is computed using the weighted-average number of shares outstanding during the period. Diluted net loss per share is computed using the weighted-average number of shares and the effect of potentially dilutive securities outstanding during the period. Potentially dilutive securities consist of stock options and other contingently issuable shares. For periods presented in which the Company reports a net loss, all potentially dilutive shares are anti-dilutive and as such are excluded from the calculation. For the three and six months ended June 30, 2026 and 2025, the Company reported a net loss and therefore basic and diluted loss per share were the same.
The rights, including the liquidation and dividend rights, of the holders of the Company’s Class A, Class B and the Exchangeable common stock are identical, except with respect to voting. As a result, the undistributed earnings for each period are allocated based on the contractual participation rights of the Class A, Class B and the Exchangeable common stock as if the earnings for the period had been distributed. As the liquidation and dividend rights are identical, the undistributed earnings are allocated on a proportionate basis and the resulting amount per share for Class A, Class B and the Exchangeable common stock was the same during the three and six months ended June 30, 2026 and 2025.
The following tables set forth the computation of basic and diluted net loss per share of Class A, Class B and Exchangeable common stock:
| Three Months Ended June 30, | Six months ended June 30, | ||||||||||||||||
(in thousands, except share and per share amounts) | 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Numerator: | |||||||||||||||||
| Net loss | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||
| Denominator: | |||||||||||||||||
| Weighted average common shares outstanding | |||||||||||||||||
| Net loss per share, basic and diluted | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||
The Company excluded the following potential common shares from the computation of diluted net loss per share for the periods indicated because including them would have had an anti-dilutive effect:
| Three Months Ended June 30, | Six months ended June 30, | ||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||
Stock based compensation | |||||||||||||||||
| Tempus agreement | |||||||||||||||||
| Total | |||||||||||||||||
Note 13. Fair Value Measurements
The fair value hierarchy consists of the following three levels:
•Level 1 — Valuations based on unadjusted quoted prices in active markets for identical assets that the Company has the ability to access;
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•Level 2 — Valuations based on quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-based valuations in which all significant inputs are observable in the market; and
•Level 3 — Valuations using significant inputs that are unobservable in the market and include the use of judgment by the Company's management about the assumptions market participants would use in pricing the asset or liability.
The Company is required to maintain a cash balance in a collateralized account to secure the Company’s credit cards. Additionally, the Company holds restricted cash related to an outstanding letter of credit issued by J.P. Morgan, which was obtained to secure certain Company obligations relating to tenant improvements. Recursion also holds restricted cash as required by a lease agreement. The Company also holds restricted cash as required by several grant agreements.
The following tables summarize the Company’s assets and liabilities that are measured at fair value on a recurring basis:
| June 30, 2026 | Basis of fair value measurement | |||||||||||||
| (in thousands) | Level 1 | Level 2 | Level 3 | |||||||||||
| Assets | ||||||||||||||
| Cash and cash equivalents: | ||||||||||||||
| Cash | $ | $ | $ | $ | ||||||||||
| Money market funds | ||||||||||||||
| Restricted cash | ||||||||||||||
Total | $ | $ | $ | $ | ||||||||||
| December 31, 2025 | Basis of fair value measurement | |||||||||||||
| (in thousands) | Level 1 | Level 2 | Level 3 | |||||||||||
| Assets | ||||||||||||||
| Cash and cash equivalents: | ||||||||||||||
| Cash | $ | $ | $ | $ | ||||||||||
| Money market funds | ||||||||||||||
| Restricted cash | ||||||||||||||
Total | $ | $ | $ | $ | ||||||||||
In addition to the financial instruments that are recognized at fair value on the Condensed Consolidated Balance Sheet, the Company has certain financial instruments that are recognized at amortized cost or some basis other than fair value. The carrying amount of these instruments are considered to be representative of their approximate fair values.
The following tables summarize the Company’s financial instruments that are not measured at fair value:
| Book values | Fair values | ||||||||||||||||
| (in thousands) | June 30, 2026 | December 31, 2025 | June 30, 2026 | December 31, 2025 | |||||||||||||
| Liabilities | |||||||||||||||||
| Notes payable and financing lease liabilities, current | $ | $ | $ | $ | |||||||||||||
| Notes payable and financing lease liabilities, non-current | |||||||||||||||||
| Total liabilities | $ | $ | $ | $ | |||||||||||||
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Note 14. Segment Information
Segment loss
Recursion operates as a single operating segment that is managed on a consolidated basis. The Company’s chief operating decision maker (CODM) is its Chief Executive Officer. The CODM uses segment net loss to evaluate the performance of its segment, analyze financial trends, compare the budget to the actual operating results and make resource allocation decisions. Segment net loss represents the Company’s consolidated net loss. All corporate costs, global function support costs, overhead costs and other shared costs are included within this segment. The salaries and consumables segment expenses contain all related Company amounts. The consumables category includes all Tempus record costs. Other segment items primarily include general and administrative expenses including facilities, information technology, professional fees (including auditing, tax and legal) and insurance.
The following table presents Recursion’s segment revenue, significant segment expenses and segment net loss:
| Three months ended June 30, | Six months ended June 30, | ||||||||||||||||
| (In thousands) | 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Revenue | $ | $ | $ | $ | |||||||||||||
| Significant segment expenses | |||||||||||||||||
| Salaries | |||||||||||||||||
| Consumables | |||||||||||||||||
| Platform | |||||||||||||||||
| Discovery | |||||||||||||||||
| Clinical development | |||||||||||||||||
| Depreciation and amortization | |||||||||||||||||
| Other segment items | |||||||||||||||||
| Loss from operations | |||||||||||||||||
| Other non-operating income (loss), net | ( | ||||||||||||||||
| Income tax benefit | |||||||||||||||||
| Total segment loss | $ | $ | $ | $ | |||||||||||||
| Supplemental asset information | |||||||||||||||||
| Total expenditures for additions to long-lived assets | $ | $ | $ | $ | |||||||||||||
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following is a discussion and analysis of the financial condition of Recursion Pharmaceuticals, Inc. (Recursion, the Company, we, us or our) and the results of our operations. This commentary should be read in conjunction with the unaudited Condensed Consolidated Financial Statements and accompanying notes appearing in Item 1, “Financial Statements” and the Company’s audited consolidated financial statements and accompanying notes and "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in the Annual Report on Form 10-K for the year ended December 31, 2025 (the 2025 Annual Report). This discussion, particularly information with respect to our future results of operations or financial condition, business strategy and plans and objectives of management for future operations, includes forward-looking statements that involve risks and uncertainties as described under the heading "Note About Forward-Looking Statements" in this Quarterly Report on Form 10-Q. You should review the disclosure under the heading "Risk Factors" in the 2025 Annual Report and in our subsequent Quarterly Reports on Form 10-Q, including this Quarterly Report on Form 10-Q, for a discussion of important factors that could cause our actual results to differ materially from those anticipated in these forward-looking statements. We assume no obligation to revise or publicly release any revision to any forward-looking statements contained in this Quarterly Report on Form 10-Q, unless required by law.
Investors and others should note that we announce material financial and other information to our investors using our investor relations website (https://ir.recursion.com/), SEC filings, press releases, public conference calls and webcasts. We use these channels as well as social media and blogs to communicate with our stakeholders and the public about our company, our services and other issues. It is possible that the information we post on social media and blogs could be deemed to be material information. Therefore, we encourage investors, the media and others interested in our company to review the information we post on the social media channels and blogs listed on our investor relations website. Information contained in, or that can be accessed through, our website is not a part of, and is not incorporated into, this report.
Overview
Recursion is a clinical-stage TechBio company with a mission to decode biology to radically improve lives. We have advanced a portfolio of differentiated internal programs and strategic partnerships powered by our integrated drug discovery and development platform, the Recursion Operating System (OS). This platform provides end-to-end, AI-native capabilities that span from novel biological ideas through the clinic, integrating multimodal biological data
generation, AI-powered small molecule synthesis, and AI-enabled clinical development. All of our technologies are designed to translate complex science into medicines that matter — faster, better, and at scale — for patients who are waiting.
Business Highlights
Genentech Advances First Neuroscience Target into Early Discovery Program
Genentech has exercised the first Validated Target Option under the companies' neuroscience collaboration, advancing a previously unexplored neuroscience target into a small molecule early discovery program.
The milestone provides additional early evidence that Recursion's AI-native platform can both discover and play a key role experimentally validating novel therapeutic targets in neuroscience, one of medicine's most challenging therapeutic areas, where decades of research have largely focused on a limited number of well-studied targets.
In partnership with Roche and Genentech, Recursion built the first whole-genome CRISPR knockout map generated from a subset of over 1 trillion internally manufactured iPSC-derived neuronal cells. Predictions generated from the Maps were experimentally evaluated through a rigorous validation process developed jointly with Genentech. Candidate targets advanced through successive stages of pathway validation, functional validation, and disease validation to determine whether modulating the target altered neurological disease phenotype. Only targets that consistently demonstrated compelling evidence across each stage advanced into a validation package.
Next steps will include advancing the target through small molecule design, hit generation and validation using Recursion's AI-native chemistry platform. More broadly, the neuronal and microglial maps of biology remain reusable assets capable of being utilized with biological, genetics, and computational expertise to generate and experimentally validate additional therapeutic hypotheses. To date, Recursion has achieved $216 million in upfront and milestones payments from the Roche and Genentech collaboration. The collaboration includes up to 40
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potential small molecule discovery programs, each carrying the potential for more than $300 million in development, commercialization, and net sales milestones as well as tiered royalties up to high single digits per small molecule program for Recursion.
Advancing joint portfolio with Sanofi across I&I and oncology
Recursion, in collaboration with Sanofi, made significant progress toward development candidate milestones over the past 12 months. Recursion and Sanofi are advancing a joint portfolio of differentiated molecules for challenging targets in I&I and oncology.
To date, Recursion has achieved $134 million in upfront and milestone payments from the Sanofi collaboration and has the potential for $343 million in milestone payments per program plus tiered double digit royalties.
Potential upcoming milestones across partnered discovery:
–Potential for differentiated AI-enabled oral molecules to reach development candidate and late-stage discovery milestones with Sanofi over the next 6-12 months
–Translating AI-driven insights from maps of biology into new potentially novel targets from reusable high-dimensional data/maps
–Using Recursion’s Chemistry Platform to design a potential first-in-class molecule for the collaboration's neuroscience target announced today with Genentech
–Continuing to combine our phenomics dataset with Genentech’s proprietary transcriptomics data to build multi-modal maps designed to explore potential novel targets and pathways by systematically linking gene perturbations to cellular phenotypes
Internal Pipeline Updates
Continued Momentum for REC-4881 (MEK1/2): REC-4881, Recursion’s MEK1/2 inhibitor, is a potential first-in-class drug designed to address both known drivers of FAP polyp growth: the Wnt/β-catenin initiation pathway and the MAPK evolution pathway. This dual mechanism differentiates REC-4881 from other investigational FAP therapies, which to date have targeted only a single pathway.
REC-4881 is being developed for FAP, an orphan disease affecting an estimated >50,000 diagnosed patients across the US and EU5, representing a >$10 billion total addressable market opportunity. FAP is a serious, lifelong chronic disease with no approved medicines today. REC-4881 has received both Orphan Drug Designation and
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Fast Track Designation from the US FDA. REC-4881 has demonstrated meaningful activity across the GI tract, including the Upper GI, an area of particularly high unmet need.
Key updates:
•Discussions with FDA were initiated in 1H26 and an update to define the registrational path is expected in 2H26
•TUPELO now enrolling patients ages 18 and older, as well as a cohort with an alternative dosing schedule
•Additional Phase 2 safety and efficacy data from the TUPELO clinical trial contextualized with real world data will be presented at the Collaborative Group of the Americas on Inherited Gastrointestinal Cancer (CGA-IGC) Annual Meeting in November. CGA-IGC is a leading annual meeting dedicated specifically to hereditary GI cancer syndromes including FAP.
◦Presentation title: Updated safety and efficacy data of REC-4881 monotherapy in familial adenomatous polyposis: Phase 1b/2 trial results contextualized with real-world registry data
◦Session name: Presidential Plenary I
◦Session date and time: Monday November 2, 2026; 13:30 - 15:00 MST
Phase 1/2 Trial Initiation for REC-7735 expected in 2H26:
•REC-7735, Recursion’s AI-designed PI3Kα H1047R inhibitor, was built to improve therapeutic index for a validated oncology target
•REC-7735 was precision designed to show >100-fold selectivity for the H1047R mutant over wild type in order to drive high, sustained target inhibition while avoiding hyperinsulinemia-driven reactivation
•The differentiated development candidate was delivered in 10 months and 242 compounds from first novel hit through Recursion’s AI-native design platform, demonstrating the Company’s ability to rapidly translate platform insights into optimized clinical candidates
•With the IND cleared, the Phase 1/2 ZINNIA clinical study for patients with select PIK3CA H1047R-mutant solid tumors will be initiated in the second half of 2026
For the rest of the portfolio, programs continue to progress as planned.
Additional expected upcoming milestones across Recursion’s internal pipeline:
•REC-1245 (RBM39): Additional Phase 1 dose escalation data expected in 2H26
•REC-617 (CDK7): Early Phase 1 safety and PK combination data expected in 1H27
•REC-3565 (MALT1): Early Phase 1 safety and PK monotherapy data expected in 1H27
•REC-4539 (LSD1): Early Phase 1 safety and PK monotherapy data expected in 2H27
Agentic AI is compounding Recursion's advantage across Biology, Design, and ClinTech:
•Target Discovery Agent pairs frontier AI reasoning with Recursion's proprietary multimodal maps to surface novel drug targets, enabling scientists to mine and extract insights from proprietary maps in hours rather than weeks.
•Drug Design Agents reason across Recursion's full set of structure-activity relationship (SAR) and structural data to identify what to solve next and how, with structural analysis time reduced from 4 hours to 30 minutes and agent-generated hypotheses now driving design cycles in active programs.
•Clinical Strategy Orchestration Agent coordinates patient, site, operational, CMC, and biometrics data to inform clinical development decisions, with agent-supported enrollment strategies contributing to a 1.3 to 1.6x increase in enrollment rates versus historical benchmarks.
Continuing to strengthen our leadership team:
•Hoifung Poon, Ph.D., appointed Chief AI Officer: Poon brings more than 15 years of experience at Microsoft, where he led groundbreaking work in biomedical AI, including foundation models in digital pathology and spatial omics published in Nature and Cell. His open-weight models have been downloaded tens of millions of times and deployed at major health systems.
•Donovan Chin, Ph.D., appointed Senior Vice President, Drug Design: Chin brings more than 20 years of experience spanning small molecules, RNA-targeted therapeutics, proximity approaches and novel peptide modalities. At Parabilis Medicines, he led the AI and physics-based computational drug discovery
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strategy behind Helicons, a novel class of constrained ⍺-helical peptides. Earlier, at Arrakis Therapeutics, he pioneered computational approaches for RNA-targeted drug discovery, unlocking small-molecule engagement of previously inaccessible RNA structures.
Financing and Operations
Since 2024, our financing and operations activities include the following: In June 2024, we issued an aggregate of 35.4 million shares of our Class A common stock at a purchase price of $6.50 per share and received net proceeds of $216.5 million, after deducting transaction costs of $13.6 million. In September 2024, we received a Phenomap acceptance fee of $30.0 million from our collaboration with Roche. In February 2025, the Company terminated the Sales Agreement with Jefferies LLC and entered into a Sales Agreement with Citigroup Capital Markets Inc., to provide for the offering, issuance and sale of up to an aggregate amount of $500.0 million of its Class A common stock. In 2025, the Company sold 99.9 million shares and received net proceeds of $491.7 million under the agreement. Pursuant to its terms, the Sales Agreement was completed and no amount remained available for future sales. In 2025, we received multiple milestone payments related to our collaborative development contracts totaling $37.0 million, with aggregate milestone inflows in 2026 of $4.0 million. In February 2026, the Company entered into a Sales Agreement with TD Securities (USA) LLC (TD Cowen), to provide for the offering, issuance and sale of up to an aggregate amount of $300.0 million of its Class A common stock. As of June 30, 2026, no amounts have been sold under the Sales Agreement with TD Cowen.
We use the capital we have raised to fund operating and investing activities across platform research operations, drug discovery, clinical development, digital and other infrastructure, creation of our portfolio of intellectual property and administrative support. We do not have any products approved for commercial sale and have not generated any revenues from product sales. Cash, cash equivalents and restricted cash totaled $556.8 million as of June 30, 2026. Based on our current operating plan, we believe that our cash and cash equivalents will be sufficient to fund our operations for at least the next twelve months.
Since inception, we have incurred significant operating losses. Our net losses were $131.0 million and $248.5 million during the three and six months ended June 30, 2026, respectively. Our net losses were $171.9 million and $374.4 million during the three and six months ended June 30, 2025, respectively. As of June 30, 2026, our accumulated deficit was $2.3 billion.
As of June 30, 2026, we did not have any unconditional outstanding commitments for additional funding. We anticipate that we will need to raise additional financing in the future to fund our operations, including the potential commercialization of any approved product candidates. Until such time, if ever, as we can generate significant product revenue, we expect to finance our operations with our existing cash and cash equivalents, any future equity or debt financings and upfront, milestone and royalty payments, if any, received under current or future license or collaboration agreements. We may not be able to raise additional capital on terms acceptable to us or at all. If we are unable to raise additional capital when desired, our business, results of operations and financial condition may be adversely affected.
We had a valuation allowance against all of our Canadian subsidiary deferred tax assets (DTAs) as of June 30, 2026, and December 31, 2025. We intend to continue maintaining a full valuation allowance on the Canadian DTAs until there is sufficient evidence to support the reversal of all or some portion of these allowances. However, given our current earnings and anticipated future earnings of our Canadian operations, we believe that there is a reasonable possibility that within the next 12 months, sufficient positive evidence may become available to allow us to reach a conclusion that a significant portion of the valuation allowance will no longer be needed. Release of the valuation allowance would result in the recognition of certain DTAs and a decrease to income tax expense for the period the release is recorded. However, the exact timing and amount of the valuation allowance release are subject to change on the basis of the level of profitability that we are able to actually achieve.
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Results of Operations
The following table summarizes our results of operations:
| (in thousands, except percentages) | Three months ended June 30, | Change | Six months ended June 30, | Change | |||||||||||||||||||||||||
| 2026 | 2025 | $ | % | 2026 | 2025 | $ | % | ||||||||||||||||||||||
| Revenue | |||||||||||||||||||||||||||||
| Operating revenue | $ | 7,303 | $ | 19,103 | $ | (11,800) | (62) | % | $ | 13,605 | $ | 33,921 | $ | (20,316) | (60) | % | |||||||||||||
| Grant revenue | 367 | 120 | 247 | >100% | 538 | 47 | 491 | >100% | |||||||||||||||||||||
| Total revenue | 7,670 | 19,223 | (11,553) | (60) | % | 14,143 | 33,968 | (19,825) | (58) | % | |||||||||||||||||||
| Operating costs and expenses | |||||||||||||||||||||||||||||
| Cost of revenue | 11,491 | 20,161 | (8,670) | (43) | % | 23,981 | 41,990 | (18,009) | (43) | % | |||||||||||||||||||
| Research and development | 89,614 | 128,636 | (39,022) | (30) | % | 177,510 | 258,269 | (80,759) | (31) | % | |||||||||||||||||||
| General and administrative | 41,533 | 46,653 | (5,120) | (11) | % | 76,124 | 101,304 | (25,180) | (25) | % | |||||||||||||||||||
| Total operating costs and expenses | 142,638 | 195,450 | (52,812) | (27) | % | 277,615 | 401,563 | (123,948) | (31) | % | |||||||||||||||||||
| Loss from operations | (134,968) | (176,227) | 41,259 | 23 | % | (263,472) | (367,595) | 104,123 | 28 | % | |||||||||||||||||||
| Other income (loss), net | 3,962 | 4,330 | (368) | (8) | % | 10,359 | (6,947) | 17,306 | >100% | ||||||||||||||||||||
| Loss before income tax benefit | (131,006) | (171,897) | 40,891 | 24 | % | (253,113) | (374,542) | 121,429 | 32 | % | |||||||||||||||||||
| Income tax benefit (expense) | 1 | — | 1 | n/m | 4,604 | 158 | 4,446 | >100% | |||||||||||||||||||||
| Net loss | $ | (131,005) | $ | (171,897) | $ | 40,892 | 24 | % | $ | (248,509) | $ | (374,384) | $ | 125,875 | 34 | % | |||||||||||||
n/m = Not meaningful
Revenue
The following table summarizes our components of revenue:
| Three months ended June 30, | Change | Six months ended June 30, | Change | ||||||||||||||||||||||||||
| (in thousands, except percentages) | 2026 | 2025 | $ | % | 2026 | 2025 | $ | % | |||||||||||||||||||||
| Revenue | |||||||||||||||||||||||||||||
| Operating revenue | $ | 7,303 | $ | 19,103 | $ | (11,800) | (62) | % | $ | 13,605 | $ | 33,921 | $ | (20,316) | (60) | % | |||||||||||||
| Grant revenue | 367 | 120 | 247 | >100% | 538 | 47 | 491 | >100% | |||||||||||||||||||||
| Total revenue | $ | 7,670 | $ | 19,223 | $ | (11,553) | (60) | % | $ | 14,143 | $ | 33,968 | $ | (19,825) | (58) | % | |||||||||||||
Operating revenue is generated through research and development agreements derived from strategic alliances. We are entitled to receive variable consideration as certain milestones are achieved. The timing of revenue recognition is not directly correlated to the timing of cash receipts.
For the three and six months ended June 30, 2026, the decrease in revenue compared to the prior period was due to a decrease in revenue recognized from Roche due to the successful completion of certain project phases in the prior period.
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Cost of Revenue
The following table summarizes our cost of revenue:
| (in thousands, except percentages) | Three months ended June 30, | Change | Six months ended June 30, | Change | |||||||||||||||||||||||||
| 2026 | 2025 | $ | % | 2026 | 2025 | $ | % | ||||||||||||||||||||||
| Total cost of revenue | $ | 11,491 | $ | 20,161 | $ | (8,670) | (43) | % | $ | 23,981 | $ | 41,990 | $ | (18,009) | (43) | % | |||||||||||||
Cost of revenue consists of the Company’s costs to provide services for drug discovery required under performance obligations with partnership customers. These primarily include materials costs, service hours performed by our employees and depreciation of property and equipment.
For the three and six months ended June 30, 2026, the change in cost of revenue compared to the prior period was due to a decrease in costs of revenue recognized from Roche, which was due to the shifting scope of work across our various performance obligations as certain phases of the projects reached completion.
Research and Development
The following table summarizes our components of research and development expense:
| (in thousands, except percentages) | Three months ended June 30, | Change | Six months ended June 30, | Change | |||||||||||||||||||||||||
| 2026 | 2025 | $ | % | 2026 | 2025 | $ | % | ||||||||||||||||||||||
| Research and development expense | |||||||||||||||||||||||||||||
| Platform | $ | 42,084 | $ | 80,023 | $ | (37,939) | (47) | % | $ | 83,237 | $ | 148,774 | $ | (65,537) | (44) | % | |||||||||||||
| Discovery | 14,753 | 22,586 | (7,833) | (35) | % | 32,693 | 43,436 | (10,743) | (25) | % | |||||||||||||||||||
| Clinical | 23,661 | 19,568 | 4,093 | 21 | % | 41,256 | 37,125 | 4,131 | 11 | % | |||||||||||||||||||
| Stock based compensation | 10,934 | 14,089 | (3,155) | (22) | % | 23,849 | 31,889 | (8,040) | (25) | % | |||||||||||||||||||
| UK R&D tax credit | (1,913) | (2,064) | 151 | (7) | % | (3,673) | (4,345) | 672 | (15) | % | |||||||||||||||||||
| Other | 95 | (5,566) | 5,661 | n/m | 148 | 1,390 | (1,242) | (89) | % | ||||||||||||||||||||
| Total research and development expense | $ | 89,614 | $ | 128,636 | $ | (39,022) | (30) | % | $ | 177,510 | $ | 258,269 | $ | (80,759) | (31) | % | |||||||||||||
n/m = Not meaningful
Research and development expenses account for a significant portion of our operating expenses. We recognize research and development expenses as they are incurred. Research and development expenses consist of costs incurred in performing activities including:
•costs to develop and operate our platform;
•costs of discovery efforts which may lead to development candidates, including research materials and external research;
•costs for clinical development of our investigational products;
•costs for materials and supplies associated with the manufacture of active pharmaceutical ingredients, investigational products for preclinical testing and clinical trials;
•personnel-related expenses, including salaries, benefits, bonuses and stock-based compensation for employees engaged in research and development functions;
•costs associated with operating our digital infrastructure;
•other direct and allocated expenses incurred as a result of research and development activities, including those for facilities, depreciation, amortization and insurance; and
•certain cash refundable research and development tax credits including the research and development expenditure credit (RDEC) in the United Kingdom.
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We recognize expenses associated with third-party contracted services as they are incurred. Upon termination of contracts with third parties, our financial obligations are generally limited to costs incurred or committed to date. Any advance payments for goods or services to be used or rendered in future research and product development activities pursuant to a contractual arrangement are classified as prepaid expenses until such goods or services are rendered.
Significant components of research and development expense include the following allocated by development phase: Platform, which refers primarily to expenses related to screening of product candidates through hit identification, this also includes expenses related to Tempus records purchased; Discovery, which refers primarily to expenses related to hit identification through development of candidates; and Clinical, which refers primarily to expenses related to development of candidates and beyond.
For the three months ended June 30, 2026, the decrease in research and development expenses compared to the prior period was primarily driven by platform expense. Platform expense decreased due to a decrease in personnel cost as well as a decrease due to Tempus records purchases of $19.6 million. Discovery costs also decreased primarily due to personnel costs.
For the six months ended June 30, 2026, the decrease in research and development expenses compared to the prior period was primarily driven by platform expense. Platform expense decreased due to a decrease in personnel cost as well as a decrease due to Tempus records purchases of $46.8 million. Discovery costs also decreased primarily due to personnel costs.
General and Administrative Expense
The following table summarizes our general and administrative expense:
| (in thousands, except percentages) | Three months ended June 30, | Change | Six months ended June 30, | Change | |||||||||||||||||||||||||
| 2026 | 2025 | $ | % | 2026 | 2025 | $ | % | ||||||||||||||||||||||
| Total general and administrative expense | $ | 41,533 | $ | 46,653 | $ | (5,120) | (11) | % | $ | 76,124 | $ | 101,304 | $ | (25,180) | (25) | % | |||||||||||||
We expense general and administrative costs as incurred. General and administrative expenses consist primarily of salaries; including employee benefits and stock-based compensation. General and administrative expenses also include facilities, depreciation, information technology, professional fees for auditing and tax, legal fees for corporate and patent matters and insurance costs.
For the three months ended June 30, 2026, the decrease in general and administrative expense compared to the prior period was primarily driven by a decrease in salaries of $4.9 million as a result of headcount reductions in the year.
For the six months ended June 30, 2026, the decrease in general and administrative expense compared to prior period was primarily driven by a decrease in salaries of $11.8 million as a result of headcount reductions in the year, in addition to one-time transaction costs in the prior year associated with the Exscientia acquisition including impairment charges of $6.0 million in relation to leasehold improvements.
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Other Income (loss), Net
The following table summarizes our components of other income (loss), net:
| (in thousands, except percentages) | Three months ended June 30, | Change | Six months ended June 30, | Change | |||||||||||||||||||||||||
| 2026 | 2025 | $ | % | 2026 | 2025 | $ | % | ||||||||||||||||||||||
| Interest income | $ | 5,306 | $ | 5,443 | $ | (137) | (3) | % | $ | 11,269 | $ | 11,001 | $ | 268 | 2 | % | |||||||||||||
| Interest expense | (309) | (480) | 171 | (36) | % | (659) | (988) | 329 | (33) | % | |||||||||||||||||||
| Other | (1,035) | (633) | (402) | 64 | % | (251) | (16,960) | 16,709 | n/m | ||||||||||||||||||||
Other income (loss), net | $ | 3,962 | $ | 4,330 | $ | (368) | (8) | % | $ | 10,359 | $ | (6,947) | $ | 17,306 | n/m | ||||||||||||||
n/m = Not meaningful
For the three months ended June 30, 2026, the decrease in other income (loss) was not significant.
For the six months ended June 30, 2026, the increase in other income (loss), net compared to the prior period related to our loss on disposal of Exscientia GmbH and our Vienna lease termination for the six months ended June 30, 2025.
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Liquidity and Capital Resources
Sources of Liquidity
We have not yet commercialized any products and do not expect to generate revenue from the sales of any product candidates for at least several years. Cash, cash equivalents and restricted cash totaled $556.8 million and $753.9 million as of June 30, 2026 and December 31, 2025, respectively.
We have incurred operating losses and experienced negative operating cash flows and we anticipate that the Company will continue to incur losses for at least the foreseeable future. Our net loss was $131.0 million and $248.5 million during the three and six months ended June 30, 2026, respectively. Our net loss was $171.9 million and $374.4 million during the three and six months ended June 30, 2025, respectively. As of June 30, 2026, we had an accumulated deficit of $2.3 billion.
Since 2024, we have financed our operations primarily through Class A common stock issuances. As of June 30, 2026, we have received net proceeds of $829.0 million from Class A common stock issuances. See Note 8, “Common Stock” to the Condensed Consolidated Financial Statements for additional details on Class A common stock issuances. Additionally, as of June 30, 2026, we have received proceeds of $78.0 million from our strategic partnerships. See Note 9, “Collaborative Development Contracts” to the Condensed Consolidated Financial Statements for additional details on the strategic partnerships.
Cash Flows
The following table is a summary of the Condensed Consolidated Statements of Cash Flows for each of the periods presented below:
| Six months ended June 30, | ||||||||
| (in thousands) | 2026 | 2025 | ||||||
| Cash used in operating activities | (187,048) | (208,375) | ||||||
| Cash used in investing activities | (2,297) | (13,078) | ||||||
Cash provided by (used in) financing activities | (4,737) | 138,186 | ||||||
Operating Activities
Cash used by operating activities decreased during the six months ended June 30, 2026 as a result of lower costs incurred for research and development and general and administrative primarily due to improved operating efficiency and the strategic reprioritization of our clinical portfolio.
Cash used by operating activities increased during the six months ended June 30, 2025 as a result of higher costs incurred for research and development and general and administrative primarily due to the Company’s acquisition of Exscientia. This included Exscientia GmbH disposal related payments of $9.7 million and severance payments of $10.4 million.
Investing Activities
Cash used by investing activities during the six months ended June 30, 2026 consisted primarily of the purchase of an intangible asset of $2.0 million
Cash used by investing activities during the six months ended June 30, 2025 consisted primarily of the disposal of Exscientia GmbH of $4.4 million and property and equipment purchases of $5.0 million.
Financing Activities
Cash used by financing activities during the six months ended June 30, 2026 primarily included repayment of long-term debt and financing lease liabilities of $4.5 million.
Cash provided by financing activities during the six months ended June 30, 2025 primarily included proceeds of $141.0 million from common stock issuances. Financing outflows included a $3.0 million payment for the purchase of an intangible asset that was not soon after the purchase.
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Critical Accounting Estimates and Policies
A summary of the Company’s significant accounting estimates and policies is included in Note 2, “Summary of Significant Accounting Policies” in our 2025 Annual Report. There were no significant changes in the Company’s application of its critical accounting policies during the six months ended June 30, 2026.
Recently Issued and Adopted Accounting Pronouncements
See Note 2, “Basis of Presentation” in Item 1 of this Quarterly Report on Form 10-Q for information regarding recently issued and adopted accounting pronouncements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Interest Rate Risk
We are exposed to market risk related to changes in interest rates on our investment portfolio of cash and cash equivalents. As of June 30, 2026, our cash and cash equivalents consisted of money market funds. Our primary exposure to market risk is interest income sensitivity, which is affected by changes in interest rates. A hypothetical 100 basis point decrease in interest rates as of June 30, 2026, would have an insignificant effect on net loss in the ensuing year.
Foreign Currency Exchange Risk
Our employees and our operations are primarily located in the United States, United Kingdom and Canada and our expenses are primarily denominated in U.S. dollars, Great British pounds and Canadian dollars. We also have entered into a limited number of contracts with vendors for research and development services that have underlying payment obligations denominated in foreign currencies. We are subject to foreign currency transaction gains or losses on our contracts denominated in foreign currencies. To date, foreign currency transaction gains and losses have not been material to our financial statements and we do not have a formal hedging program with respect to foreign currency. A 10% increase or decrease in current exchange rates would have an insignificant effect on our financial results during the three and six months ended June 30, 2026 and 2025.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
The Company has established disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act)) designed to provide reasonable assurance that information required to be disclosed in the reports that the Company files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and is accumulated and communicated to management, including the principal executive officer (our Chief Executive Officer) and principal financial officer (our Chief Financial Officer), to allow timely decisions regarding required disclosure. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.
Our management has evaluated, with the participation of our Chief Executive Officer and Chief Financial Officer, the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives as management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Our disclosure controls and procedures have been designed to provide reasonable assurance of achieving their objectives. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of June 30, 2026, our disclosure controls and procedures were ineffective due to the material weaknesses in internal control over financial reporting disclosed in Part II, Item 9A of our Annual Report on Form 10-K for the year ended December 31, 2025.
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Remediation of Material Weaknesses
The following remediation actions have been taken as of June 30, 2026 related to the material weaknesses for the acquired Exscientia business:
•We have designed and implemented certain information technology general controls.
•We have designed and implemented certain processes and controls to appropriately analyze, record and disclose accounting matters timely and accurately while maintaining appropriate segregation of duties.
•We completed an implementation of a new enterprise resource planning ("ERP") system and a Purchase to Pay (P2P) system. In the process of deploying these new systems, we designed and implemented new, or otherwise enhanced existing, internal control activities to complement operational and administrative process changes required to support the functionality of our new ERP and P2P systems.
In connection with the remediation actions described above, we are in the process of integrating Exscientia’s operations into our overall system of internal control over financial reporting.
We believe the above actions will be effective in remediating the material weaknesses described above. However, the material weaknesses cannot be considered remediated until controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively. As such, we were unable to conclude that the material weaknesses have been remediated as of June 30, 2026.
Changes in Internal Control Over Financial Reporting
For the three months ended June 30, 2026, management was in the process of integrating the internal controls of the acquired business (Exscientia) into Recursion's existing operations as part of planned integration activities. There were no other changes in internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the quarter ended June 30, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
The Company may, from time to time, be involved in various legal proceedings arising in the normal course of business. An unfavorable resolution of any such matter could materially affect the Company’s future financial position, results of operations or cash flows. For more information pertaining to legal proceedings, see Part I, Item 1, Note 7, “Commitments and Contingencies,” which is incorporated herein by reference.
Item 1A. Risk Factors.
Investing in our common stock involves a high degree of risk. For a detailed discussion of the risks that affect our business. Please refer to the section titled Part I, Item 1A. “Risk Factors” of our 2025 Annual Report.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
(a) Sales of Unregistered Securities
Stock Option Exercises
For the six months ended June 30, 2026, we issued 4,800 shares of our Class A common stock to our employees, directors, advisors and consultants upon the exercise of stock options under our Key Personnel Incentive Stock Plan for aggregate consideration of approximately $2 thousand, in reliance on the exemption provided by Rule 701(b)(2) promulgated under the Securities Act, or pursuant to Section 4(a)(2) under the Securities Act, relative to transactions by an issuer not involving any public offering, to the extent an exemption from such registration was required. All recipients either received adequate information about our company or had access, through employment or other relationships, to such information.
Item 5. Other Information
On July 31, 2026, Recursion entered into an Eleventh Amendment to the Office Lease by and between Vestar Gateway, LLC (“Vestar”) and Recursion (the "Eleventh Amendment"), extending the term of the Lease as to the Premises for six years, from June 01, 2028 through May 31, 2034. In connection with the Eleventh Amendment, Vestar consented to Recursion's sublease of approximately 66,000 square feet of the Expansion Premises (as defined in the original agreement), with the sublease term presently scheduled to expire on May 31, 2032. The foregoing summary of the Eleventh Amendment is subject to, and qualified in its entirety by, the full text of such agreement, which will be filed as an exhibit to the Company’s quarterly report filed on Form 10-Q for the quarter in which it was executed.
Item 6. Exhibits.
Exhibit Index:
| Incorporated by Reference | ||||||||||||||||||||
| Exhibit number | Description | Form | File No. | Exhibit No. | Filing Date | Filed / Furnished Herewith | ||||||||||||||
| 2.1* | 8-K | 001-40323 | 2.1 | August 8, 2024 | ||||||||||||||||
| 3.1 | 8-K | 001-40323 | 3.1 | April 21, 2021 | ||||||||||||||||
| 3.2 | 8-K | 001-40323 | 3.1 | January 31, 2024 | ||||||||||||||||
| 4.1 | S-1/A | 333-254576 | 4.2 | April 15, 2021 | ||||||||||||||||
| 4.2 | S-3ASR | 333-272281 | 4.2 | May 30, 2023 | ||||||||||||||||
| 4.3 | 8-K | 001-40323 | 10.2 | October 25, 2022 | ||||||||||||||||
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| 4.4 | S-3ASR | 333-272281 | 4.3 | May 30, 2023 | ||||||||||||||||
| 4.5 | 8-K | 001-40323 | 4.1 | June 9, 2023 | ||||||||||||||||
| 4.6 | 8-K | 001-40323 | 10.2 | July 12. 2023 | ||||||||||||||||
| 10.1+ | X | |||||||||||||||||||
| 10.2+ | X | |||||||||||||||||||
| 10.3+ | X | |||||||||||||||||||
| 31.1 | X | |||||||||||||||||||
| 31.2 | X | |||||||||||||||||||
| 32.1** | X | |||||||||||||||||||
| 101.INS | XBRL Instance Document | X | ||||||||||||||||||
| 101.SCH | XBRL Taxonomy Extension Schema Document | X | ||||||||||||||||||
| 101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | X | ||||||||||||||||||
| 101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | X | ||||||||||||||||||
| 101.LAB | XBRL Taxonomy Extension Label Linkbase Document | X | ||||||||||||||||||
| 101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document | X | ||||||||||||||||||
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) | X | ||||||||||||||||||
| + | Indicates a management contract or compensatory plan. | |||||||||||||||||||
^ | Certain schedules and exhibits have been omitted pursuant to Item 601(a)(5) of Regulation S-K. A copy of any omitted schedule and/or exhibit will be furnished to the SEC upon request. | |||||||||||||||||||
| * | Exhibits and/or schedules have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The registrant hereby undertakes to furnish supplementally copies of any of the omitted exhibits and schedules upon request by the SEC; provided, however, that the registrant may request confidential treatment pursuant to Rule 24b-2 under the Exchange Act for any exhibits or schedules so furnished. | |||||||||||||||||||
| ** | The certifications furnished in Exhibit 32.1 hereto are deemed to accompany this Quarterly Report on Form 10-Q and will not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended. Such certifications will not be deemed to be incorporated by reference into any filings under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that the Registrant specifically incorporates it by reference. | |||||||||||||||||||
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized on August 5, 2026.
| RECURSION PHARMACEUTICALS, INC. | ||||||||
| By: | /s/ Najat Khan | |||||||
Najat Khan | ||||||||
| Chief Executive Officer | ||||||||
| (Principal Executive Officer) | ||||||||
| By: | /s/ Ben Taylor | |||||||
| Ben Taylor | ||||||||
| Chief Financial Officer | ||||||||
| (Principal Financial and Accounting Officer) | ||||||||
33