10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended March 31, 2025

OR

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

For the transition period from                       to                      

Commission File Number: 001-37478

NATERA, INC.

(Exact Name of Registrant as Specified in Its Charter)

Delaware	01-0894487
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)

13011 McCallen Pass Building A Suite 100 Austin, TX	78753
(Address of Principal Executive Offices)	(Zip Code)

(650) 980-9190

(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
Common Stock, par value $0.0001 per share	NTRA	The Nasdaq Stock Market LLC (Nasdaq Global Select Market)

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

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

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

Large accelerated filer	⌧	Accelerated filer	◻
Non-accelerated filer	◻	Smaller reporting company	◻
		Emerging growth company	◻

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

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

As of May 2, 2025, the number of outstanding shares of the registrant’s common stock, par value $0.0001 per share, was 136,546,580.

Natera, Inc.

FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2025

TABLE OF CONTENTS

		Page
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Part I — Financial Information
	Item 1. Financial Statements (unaudited)	5
	Condensed Consolidated Balance Sheets at March 31, 2025 and December 31, 2024	5
	Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three Months Ended March 31, 2025 and 2024	6
	Condensed Consolidated Statements of Stockholders’ Equity for the Three Months Ended March 31, 2025 and 2024	7
	Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2025 and 2024	8
	Notes to Unaudited Interim Condensed Consolidated Financial Statements	9
	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	33
	Item 3. Quantitative and Qualitative Disclosures About Market Risk	42
	Item 4. Controls and Procedures	43
Part II — Other Information
	Item 1. Legal Proceedings	43
	Item 1A. Risk Factors	44
	Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	44
	Item 3. Defaults Upon Senior Securities	44
	Item 4. Mine Safety Disclosures	44
	Item 5. Other Information	44
	Item 6. Exhibits	45
	Signatures	47

2

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements. The forward-looking statements are contained principally in the sections titled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” but are also contained elsewhere in this report. Forward-looking statements include information concerning our future results of operations and financial position, strategy and plans, and our expectations for future operations. Forward-looking statements include all statements that are not historical facts and, in some cases, can be identified by terms such as "believe," "may," "will," "estimate," "continue," "anticipate," "design," "intend," "expect," "could," "plan," "potential," "predict," "seek," "should," "would" or the negative version of these words and similar expressions.

These forward-looking statements include, but are not limited to, statements concerning the following:

● our expectations regarding revenue, expenses and other operating results;

● our expectation that, for the foreseeable future, a significant portion of our revenues will be derived from sales of Panorama, Horizon, and Signatera;

● our ability to increase demand and reimbursement for our tests;

● our expectation that Panorama will be adopted for the screening of microdeletions and that third-party payer reimbursement will be available for this testing, including our expectations that the results from our Single nucleotide polymorphism-based Microdeletion and Aneuploidy RegisTry, or SMART, Study may support broader use of and reimbursement for the use of Panorama for microdeletions;

● our expectations of the reliability, accuracy, and performance of our tests, as well as expectations of the benefits of our tests to patients, providers, and payers;

● our ability to successfully develop additional revenue opportunities and expand our product offerings to include new tests;

● our efforts to successfully develop and commercialize, or enhance, our products;

● our ability to comply with federal, state, and foreign regulatory requirements, programs and policies, our expectations regarding the potential impact of governmental regulations on our business and operations, and our ability to to successfully operate our business in response to changes in such requirements, programs, policies and regulations, including our expectations regarding the impact on our business and the regulation of our tests due to the final rule regarding LDTs published by the FDA in May 2024;

● our ability to respond to, defend, or otherwise favorably resolve litigation or other proceedings, including investigations, subpoenas, demands, disputes, requests for information, and other regulatory or administrative actions or proceedings, including associated litigation costs we may incur and our assumptions regarding any potential liabilities associated with our existing litigation matters;

● the effect of improvements in our cost of goods sold;

● our estimates of the total addressable markets for our current and potential product offerings;

● our ability and expectations regarding obtaining, maintaining and expanding third-party payer coverage of, and reimbursement for, our tests;

● the effect of changes in the way we account for our revenue;

● the scope of protection we establish and maintain for, and developments or disputes concerning, our intellectual property or other proprietary rights, including associated litigation costs we may incur and our assumptions regarding any potential liabilities associated with our existing litigation matters;

● our ability to successfully compete in the markets we serve;

● our reliance on collaborators such as medical institutions, contract laboratories, laboratory partners, and other third parties;

● our ability to operate our laboratory facilities and meet expected demand, and to successfully scale our operations;

● our reliance on a limited number of suppliers, including sole source suppliers, which may impact our ability to maintain a continued supply of laboratory instruments and materials and to run our tests;

● our expectations of the rate of adoption of our current or future tests by laboratories, clinics, clinicians, payers, and patients;

3

● our ability to complete clinical studies and publish compelling clinical data in peer-reviewed medical publications regarding our current and future tests, and the effect of such data or publications on professional society or practice guidelines or coverage and reimbursement determinations from third-party payers, including our SMART and CIRCULATE-Japan studies and our ongoing and planned trials in oncology and organ health;

● our reliance on our partners to market and offer our tests in the United States and in international markets;

● our expectations regarding acquisitions, dispositions and other strategic transactions;

● our ability to control our operating expenses and fund our working capital requirements;

● the factors that may impact our financial results, including our revenue recognition assumptions and estimates; and

● anticipated trends and challenges in our business and the markets in which we operate.

Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements, including those discussed in Part II, Item 1A, “Risk Factors” in this report and Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2024 filed with the Securities and Exchange Commission on February 28, 2025. Given these uncertainties, you should not place undue reliance on these forward-looking statements. In light of the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified time frame, or at all. You should read this report completely and with the understanding that our actual future results may be materially different from what we expect.

Also, forward-looking statements represent our beliefs and assumptions only as of the date of this report. Any forward-looking statement made by us in this report speaks only as of the date on which it is made. Except as required by law, we disclaim any obligation to update these forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.

As used in this Quarterly Report on Form 10-Q, the terms “Natera,” “Registrant,” “Company,” “we,” “us,” and “our” mean Natera, Inc. and its subsidiaries unless the context indicates otherwise.

4

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Natera, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

(in thousands except par value)

	March 31,		December 31,
	2025		2024
Assets
Current assets:
Cash, cash equivalents and restricted cash	$	973,768	$	945,587
Short-term investments		17,832		22,689
Accounts receivable, net of allowance of $7,434 and $7,259 at March 31, 2025 and December 31, 2024, respectively		318,233		314,165
Inventory		50,367		44,744
Prepaid expenses and other current assets, net		56,185		48,635
Total current assets		1,416,385		1,375,820
Property and equipment, net		180,453		162,046
Operating lease right-of-use assets		94,631		86,149
Other assets		40,897		36,720
Total assets	$	1,732,366	$	1,660,735
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	39,240	$	34,922
Accrued compensation		47,086		62,114
Other accrued liabilities		178,449		146,893
Deferred revenue, current portion		20,557		19,754
Short-term debt financing		80,345		80,362
Total current liabilities		365,677		344,045
Deferred revenue, long-term portion and other liabilities		23,958		24,682
Operating lease liabilities, long-term portion		103,056		96,588
Total liabilities		492,691		465,315
Commitments and contingencies (Note 8)
Stockholders’ equity:
Common stock, $0.0001 par value: 750,000 shares authorized at both March 31, 2025 and December 31, 2024; 135,932 and 132,646 shares issued and outstanding at March 31, 2025 and December 31, 2024, respectively		14		12
Additional paid-in capital		3,874,656		3,763,614
Accumulated deficit		(2,634,798)		(2,567,862)
Accumulated other comprehensive loss		(197)		(344)
Total stockholders’ equity		1,239,675		1,195,420
Total liabilities and stockholders’ equity	$	1,732,366	$	1,660,735

See accompanying notes to the unaudited interim condensed consolidated financial statements.

5

Natera, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(Unaudited)

(in thousands, except per share data)

	Three months ended
	March 31,
	2025		2024
Revenues
Product revenues	$	500,036	$	364,672
Licensing and other revenues		1,794		3,069
Total revenues		501,830		367,741
Cost and expenses
Cost of product revenues		184,613		158,833
Cost of licensing and other revenues		452		307
Research and development		129,078		88,637
Selling, general and administrative		266,864		194,278
Total cost and expenses		581,007		442,055
Loss from operations		(79,177)		(74,314)
Interest expense		(1,005)		(3,124)
Interest and other income, net		13,419		10,267
Loss before income taxes		(66,763)		(67,171)
Income tax expense		(173)		(428)
Net loss	$	(66,936)	$	(67,599)
Unrealized gain on available-for-sale securities, net of tax		147		893
Comprehensive loss	$	(66,789)	$	(66,706)
Net loss per share (Note 12):
Basic and diluted	$	(0.50)	$	(0.56)
Weighted-average number of shares used in computing basic and diluted net loss per share:
Basic and diluted		134,750		120,814

See accompanying notes to the unaudited interim condensed consolidated financial statements.

6

Natera, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(Unaudited)

(in thousands)

	Three months ended March 31, 2025
	Common Stock			Additional Paid-in		Accumulated		Accumulated Other Comprehensive		Total Stockholders'
	Shares	Amount		Capital		Deficit		Loss		Equity
Balance as of December 31, 2024	132,646	$	12	$	3,763,614	$	(2,567,862)	$	(344)	$	1,195,420
Issuance of common stock upon exercise of stock options	50		—		544		—		—		544
Vesting of restricted stock units	3,014		2		—		—		—		2
Stock-based compensation	—		—		78,435		—		—		78,435
Issuance of common stock for bonus	222				32,063						32,063
Unrealized gain on available-for sale securities	—		—		—		—		147		147
Net loss	—		—		—		(66,936)		—		(66,936)
Balance as of March 31, 2025	135,932	$	14	$	3,874,656	$	(2,634,798)	$	(197)	$	1,239,675

	Three months ended March 31, 2024
	Common Stock			Additional Paid-in		Accumulated		Accumulated Other Comprehensive		Total Stockholders'
	Shares	Amount		Capital		Deficit		Loss		Equity
Balance as of December 31, 2023	119,581	$	11	$	3,145,837	$	(2,377,436)	$	(3,085)	$	765,327
Issuance of common stock upon exercise of stock options	792		—		6,466		—		—		6,466
Vesting of restricted stock units	1,591		1		—		—		—		1
Stock-based compensation	—		—		64,952		—		—		64,952
Issuance of common stock for bonus	270		—		24,071		—		—		24,071
Unrealized gain on available-for sale securities	—		—		—		—		893		893
Net loss	—		—		—		(67,599)		—		(67,599)
Balance as of March 31, 2024	122,234	$	12	$	3,241,326	$	(2,445,035)	$	(2,192)	$	794,111

See accompanying notes to the unaudited interim condensed consolidated financial statements.

7

Natera, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

	Three Months Ended
	March 31,
	2025		2024
	(in thousands)
Operating activities
Net loss	$	(66,936)	$	(67,599)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		9,237		7,063
Amortization of premiums and accretion of purchase discounts on investment securities		9		(460)
Stock-based compensation		77,827		64,447
Non-cash lease expense		4,389		3,593
Non-cash expense recovery		(361)		—
Amortization of debt discount and issuance cost		—		328
Change in fair value of warrants and preferred stock		(3,235)		—
Foreign exchange adjustment		138		359
Non-cash interest expense		(17)		(1)
Changes in operating assets and liabilities:
Accounts receivable		(4,068)		(10,459)
Inventory		(5,623)		(2,265)
Prepaid expenses and other assets		(9,354)		14,428
Accounts payable		2,379		10,732
Accrued compensation		17,035		17,789
Operating lease liabilities		(4,505)		(4,122)
Other accrued liabilities		26,866		(7,625)
Deferred revenue		671		793
Cash provided by operating activities		44,452		27,001
Investing activities
Proceeds from maturity of investments		5,000		169,065
Purchases of property and equipment, net		(21,815)		(20,315)
Cash paid for acquisition of intangible assets		—		(10,495)
Cash provided by (used in) investing activities		(16,815)		138,255
Financing activities
Proceeds from exercise of stock options		544		6,466
Cash provided by financing activities		544		6,466
Net change in cash, cash equivalents and restricted cash		28,181		171,722
Cash, cash equivalents and restricted cash, beginning of period		945,587		642,095
Cash, cash equivalents and restricted cash, end of period	$	973,768	$	813,817
Supplemental disclosure of cash flow information:
Cash paid for interest	$	1,005	$	1,179
Non-cash investing and financing activities:
Purchases of property and equipment in accounts payable and accruals	$	4,223	$	112
Acquisition of warrants	$	—	$	1,884
Issuance of common stock for bonuses	$	32,063	$	24,071
Stock-based compensation included in capitalized software development costs	$	608	$	505

See accompanying notes to the unaudited interim condensed consolidated financial statements.

8

Natera, Inc.

Notes to Unaudited Interim Condensed Consolidated Financial Statements

1. Description of Business

Natera, Inc. (the “Company”) was formed in the state of California as Gene Security Network, LLC in November 2003 and incorporated in the state of Delaware in January 2007. The Company is a diagnostics company with proprietary molecular and bioinformatics technology that it is applying to change the management of disease worldwide. The Company’s cell-free DNA (“cfDNA”) technology combines its novel molecular assays, which reliably measure many informative regions across the genome from samples as small as a single cell, with its statistical algorithms which incorporate data available from the broader scientific community to identify genetic variations covering a wide range of serious conditions with high accuracy and coverage. The Company focuses on applying its technology to three main areas of healthcare – women’s health, oncology and organ health. In the women’s health space, the Company develops and commercializes non- or minimally- invasive tests to evaluate risk for, and thereby enable early detection of, a wide range of genetic conditions, such as Down syndrome. In oncology, the Company commercializes, among others, a personalized blood-based DNA test to detect molecular residual disease and monitor for disease recurrence across a broad range of cancer types. The Company’s third area of focus is organ health, with tests to assess kidney, heart, and lung transplant rejection as well as genetic testing for chronic kidney disease. The Company operates laboratories in Austin, Texas and San Carlos, California certified under the Clinical Laboratory Improvement Amendments of 1988 (“CLIA”) providing a host of cell-free DNA-based molecular testing services. The Company determines its operating segments based on the way it organizes its business to make operating decisions and assess performance. The Company operates one segment, the development and commercialization of molecular testing services, applying its proprietary technology in the fields of women’s health, oncology and organ health.

The Company’s key product offerings include its Panorama Non-Invasive Prenatal Test (“Panorama”) that screens for chromosomal abnormalities of a fetus in singleton and twin pregnancies, typically with a blood draw from the mother; Horizon Carrier Screening (“Horizon”) to determine carrier status for a large number of severe genetic diseases that could be passed on to the carrier’s children; its Signatera molecular residual disease test (“Signatera”) to detect circulating tumor DNA in patients previously diagnosed with cancer to assess molecular residual disease, monitor for recurrence, and evaluate treatment response; and its Prospera test, to assess organ transplant rejection in patients who have undergone kidney, heart, or lung transplantation. All testing is available principally in the United States. The Company also offers its Panorama test to customers outside of the United States, primarily in Europe. The Company also offers Constellation, a cloud-based software platform that enables laboratory customers to gain access through the cloud to the Company’s algorithms and bioinformatics in order to validate and launch their own tests based on the Company’s technology.

2. Summary of Significant Accounting Policies

During the three months ended March 31, 2025, there were no material changes to the Company’s significant accounting policies as disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 (filed on February 28, 2025).

Basis of Presentation

The accompanying unaudited interim condensed consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information. The unaudited interim condensed consolidated financial information includes only adjustments of a normal recurring nature necessary for a fair presentation of the Company’s results of operations, financial position, changes in stockholders’ equity, and cash flows. The results of operations for the three months ended March 31, 2025, are not necessarily indicative of the results for the full year or the results for any future periods. The condensed consolidated balance sheet as of December 31, 2024 has been derived from audited financial statements at that date. These financial statements should be read in conjunction with the audited financial statements, and related notes for the year ended December 31, 2024 included in the Company’s Annual Report on Form 10-K filed with the SEC on February 28, 2025.

9

Liquidity Matters

The Company has incurred net losses since its inception and anticipates net losses for the near future. The Company had a net loss of $66.9 million for the three months ended March 31, 2025 and an accumulated deficit of $2.6 billion as of March 31, 2025. As of March 31, 2025, the Company had $973.8 million in cash, cash equivalents, and restricted cash, $17.8 million in marketable securities, and an $80.3 million outstanding balance on its Credit Line (as defined in Note 10, Debt) including accrued interest. The Company is required to maintain a minimum of at least $150.0 million in its UBS accounts as collateral for its Credit Line, which is classified as cash, cash equivalents, and short-term investments in the condensed consolidated balance sheets. As of March 31, 2025, the Company had $20.0 million remaining and available on its Credit Line.

While the Company has introduced multiple products that are generating revenues, these revenues have not been sufficient to fund all operations and business plans. Accordingly, the Company has funded the portion of operating costs that exceeds revenues through a combination of equity issuances, debt issuances, and other financings.

The Company continues to invest in the development and commercialization of its existing and future products and, consequently, it will need to generate additional revenues to achieve future profitability and may need to raise additional equity or debt financing. If the Company raises additional funds by issuing equity securities, its stockholders will experience dilution. Additional debt financing, if available, may involve covenants restricting its operations or its ability to incur additional debt. Any additional debt financing or additional equity that the Company raises may contain terms that are not favorable to it or its stockholders and requires significant debt service payments, which diverts resources from other activities. Additional financing may not be available when necessary or in amounts or on terms acceptable to the Company. If the Company is unable to obtain additional financing, it may be required to delay or slow its investment in the development and commercialization of its products and significantly scale back its business and operations.

On July 19, 2024, the Company announced its decision to redeem all of its outstanding 2.25% Convertible Senior Notes (the “Convertible Notes”) due 2027. The redemption was completed on October 11, 2024 (the “Redemption Date”). The redemption price for the Convertible Notes equaled 100% of the principal amount of the Convertible Notes to be redeemed plus accrued and unpaid interest to, but excluding, the Redemption Date. The Company elected physical settlement with shares of its common stock as the settlement method to apply to all conversions of the Convertible Notes. On the Redemption Date, $287.4 million of Convertible Notes were redeemed for approximately 7.5 million shares of the Company’s common stock under the terms of the redemption notice. The remaining Convertible Notes not redeemed under the redemption notice were converted in exchange for cash at face value plus accrued interest totaling $0.1 million. As such, the Company’s redemption of its Convertible Notes did not have a material effect on its liquidity.

Based on the Company’s current business plan, the Company believes that its existing cash and marketable securities will be sufficient to meet its anticipated cash requirements for at least 12 months after May 8, 2025.

Principles of Consolidation

The accompanying condensed consolidated financial statements include all the accounts of the Company and its subsidiaries. All intercompany balances and transactions have been eliminated.

10

Use of Estimates

The preparation of financial statements in accordance with generally accepted accounting principles (GAAP) in the United States requires management to make estimates and assumptions about future events that affect the amounts of assets and liabilities reported, disclosures about contingent assets and liabilities, and reported amounts of revenues and expenses. Significant items subject to such estimates include stock-based compensation, the fair value of options, and the expected consideration (average selling price) to be received from contracts with customers, insurance payors, and patients. These estimates and assumptions are based on management's best estimates and judgment. Management regularly evaluates its estimates and assumptions using historical experience and other factors, including contractual terms and statutory limits; however, actual results could differ from these estimates and could have an adverse effect on the Company's financial statements.

Investments

Investments consist primarily of debt securities such as U.S. Treasuries, U.S. agency and municipal bonds. Management determines the appropriate classification of securities at the time of purchase and re-evaluates such determination at each balance sheet date. The Company generally classifies its entire investment portfolio as available-for-sale. The Company views its available-for-sale portfolio as available for use in current operations. Accordingly, the Company classifies all investments as short-term, irrespective of maturity date. Available-for-sale securities are carried at fair value, with unrealized gains and losses reported in accumulated other comprehensive income (loss), which is a separate component of stockholders’ equity.

The Company classifies its investments as Level 1 or 2 within the fair value hierarchy. Fair values determined by Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets that the Company has the ability to access. Fair values determined by Level 2 inputs utilize data points that are observable such as quoted prices, interest rates and yield curves. The Company holds Level 2 securities which are initially valued at the transaction price and subsequently valued by a third-party service provider using inputs other than quoted prices that are observable either directly or indirectly, such as yield curve, volatility factors, credit spreads, default rates, loss severity, current market and contractual prices for the underlying instruments or debt, broker and dealer quotes, as well as other relevant economic measures. The Company performs certain procedures to corroborate the fair value of these holdings. The Company also holds warrants issued by MyOme which are classified as Level 3 investments because the valuation methods include certain unobservable inputs. These warrants are accounted for as derivatives and recorded at fair value on a recurring basis.

Available-for-sale debt securities. The amended guidance from Accounting Standards Update (“ASU”) 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASC 326”), requires the measurement of expected credit losses for available-for-sale debt securities held at the reporting date over the remaining life based on historical experience, current conditions, and reasonable and supportable forecasts. The Company evaluated its investment portfolio under the available-for-sale debt securities impairment model guidance and determined the Company’s investment portfolio is composed of low-risk, investment grade securities and thus has not recorded an expected credit loss for its investment portfolio. Further, gross unrealized losses on available for sale securities were not material at March 31, 2025.

Accounts Receivable, net of allowance

Trade accounts receivable and other receivables. The allowance for expected credit losses for trade accounts receivable is based on the Company’s assessment of the collectability of accounts related to its clinics and laboratory partner customers. The Company regularly reviews the allowance by considering factors such as historical experience, the age of the accounts receivable balances, and current economic conditions that may affect a customer’s ability to pay. See Note 6, Balance Sheet Components, for a roll-forward of the allowance for expected credit losses related to trade accounts receivable for the three months ended March 31, 2025 and 2024.

11

With respect to revenue recognized related to genetic test services provided to patient customers whereby consideration is expected to be received from insurance or patient payors, the Company recognizes a constraint to the estimated variable consideration such that it is not probable that a significant revenue reversal will occur. When assessing the total consideration expected to be received from insurance carriers and patients, a certain percentage of revenues is further constrained for estimated refunds. After applying the ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing (“ASC 606”) constraint, the Company assessed for credit losses under ASC 326 and determined an incremental credit loss was not needed given the quality of the insurance payors from whom such receivables are expected to be collectible and the relatively short duration over which the majority of receivables are collected. Accordingly, the Company currently does not have an incremental credit loss reserve nor allowance for expected credit losses against accounts receivable for insurance and patient payors due to the average selling price calculations, which incorporate these risks as net receivables are recorded.

Inventory

Inventory is recorded at the lower of cost or net realizable value, determined on a first-in, first-out basis. Inventory consists entirely of supplies, which are consumed at the point biologic samples are collected and the Company provides genetic testing services; therefore, the Company does not maintain any work-in-process or finished goods inventory. The Company enters into inventory purchases commitments so that it can meet future delivery schedules based on forecasted demand for its tests.

The Company analyzes its inventory to determine whether the composition of its inventory is obsolete, slow-moving or unsalable. A write down of specifically identified unusable, or obsolete inventory in the period is recognized by considering product expiration dates and scrapped inventory. Any write-down of inventory to net realizable value establishes a new cost basis and will be maintained even if certain circumstances suggest the inventory is recoverable in subsequent periods. Costs associated with the write-down of inventory are recorded to cost of revenue on our consolidated statements of operations.

Accumulated Other Comprehensive Income (Loss)

Comprehensive loss and its components encompass all changes in equity other than those with stockholders, and include net loss, unrealized gains and losses on available-for-sale marketable securities and foreign currency translation adjustments.

	Three months ended
	March 31,
	2025		2024
	(in thousands)
Beginning balance	$	(344)	$	(3,085)
Net unrealized gain on available-for-sale securities, net of tax and foreign currency translation adjustment		147		893
Ending balance	$	(197)	$	(2,192)

The change in net unrealized loss on available-for-sale securities is due to the impact of changes in interest rates on the value of fixed-rate investments and not due to any credit deterioration. Further, due to the short-term nature of these investments, the Company has the ability and intention to hold any such investments until maturity and does not expect to realize any material investment losses. As such, the Company has assessed the unrealized loss position for available-for-sale securities and determined that an allowance for credit loss was not necessary.

Revenue Recognition

The Company recognizes revenue under ASC 606, using the following five step process:

● Identification of a contract, or contracts, with a customer;

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● Identification of the performance obligations in the contract;

● Determination of the transaction price;

● Allocation of the transaction price to the performance obligations in the contract; and

● Revenue recognition when, or as, the performance obligations are satisfied.

The Company uses the expected value amount method of estimating variable consideration. The total consideration which the Company expects to collect in exchange for the Company’s products is an estimate and may be fixed or variable, and is primarily based on historical cash collections for tests delivered, as adjusted for current expectations. Current expectations of cash collections factor in changes in reimbursement rate trends, past events not expected to recur, and future known changes such as anticipated contractual pricing changes or changes to insurance coverage.  For insurance carriers and product types with similar reimbursement characteristics, the Company uses a portfolio approach to estimate variable consideration. When assessing the total variable consideration expected to be received from insurance carriers and patients, the Company considers both the magnitude and likelihood of a revenue reversal in the determination of the percentage of revenues to further constrain for estimated refunds.

See Note 3, Revenue Recognition, for detailed discussions of product revenues, licensing and other revenues, and how the five steps described above are applied.

Fair Value

The Company discloses the fair value of financial instruments for financial assets and liabilities for which the value is practicable to estimate. Fair value is defined as the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price).

Related Party Transactions

On December 6, 2021, the Company participated along with certain other investors in the series B financing of MyOme, Inc. (“MyOme”), and purchased preferred shares and warrants in exchange for a cash payment of approximately $4.0 million which was allocated $2.2 million for preferred shares and $1.8 million for warrants. In August 2024, the Company participated in a subsequent round of the series B financing and purchased an additional $2.7 million of series B preferred shares at the same valuation as the initial round of financing in December 2021. The Company does not hold a seat on MyOme’s board of directors and does not participate or direct the day to day activities of MyOme. Because MyOme is a privately-held company without readily determinable fair values, the Company elected to account for its preferred Series B share investment in MyOme using the measurement alternative, which is cost, less any impairment, adjusted for changes in fair value resulting from observable transactions for identical or similar investments of the same issuer as of the respective transaction dates. When indicators exist and the estimated fair value of the investment is below its carrying amount, the Company would adjust the investment to fair value. The change in carrying value, resulting from the remeasurements, would be recognized in interest and other income, net on the consolidated statements of operations. During the three months ended March 31, 2024, no upward nor downward adjustments were recorded. The following are the Company’s related persons and the basis of each such related person’s relationship with MyOme:

● Matthew Rabinowitz, the Company’s executive chairman and co-founder, is the chairman of the board and founder of MyOme, and a beneficial holder of approximately 22.6% of the outstanding shares of MyOme on a fully dilutive basis;

● Jonathan Sheena, the Company’s co-founder and a member of the Company’s board of directors, is a stockholder and a member of the board of directors of MyOme;

● Daniel Rabinowitz, the Company’s Secretary and Chief Legal Officer, is a stockholder of MyOme; and

● Roelof Botha, the Lead Independent Director of the Company’s board of directors, is a managing member of Sequoia Capital. Certain funds affiliated with Sequoia Capital also participated in MyOme’s series B financing.

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None of the related party investments in MyOme by our executives and directors noted above were at the behest of the Company nor funded by the Company.

In February 2024, the Company entered into a collaboration and commercialization agreement (the “Collaboration Agreement”) with MyOme pursuant to which the parties agreed to partner to offer certain genetic testing services to be developed and funded solely by MyOme and overseen by a joint steering committee. The Company agreed to assist MyOme with commercial activities. In connection with the Collaboration Agreement, the Company received a 10-year warrant to purchase 3,058,485 shares of MyOme's common stock at an exercise price of $0.25 per share, which is exercisable in whole or in part, commencing in February 2024, and can be converted to MyOme’s common stock upon the occurrence of MyOme’s initial public offering or a liquidation event (as such terms are defined in MyOme's certificate of incorporation). Additionally, upon the achievement of certain product commercialization milestones, the Company is eligible to receive an additional warrant exercisable for 2,080,565 shares of MyOme’s series B preferred stock with an exercise price of $0.01 per share. During September 2024, the Company achieved certain product commercialization milestones such that the warrant for 2,080,565 shares of MyOme’s series B preferred stock was due from MyOme to the Company. These warrants were granted and issued by MyOme to the Company during the fourth quarter of 2024, and were exercisable in whole or in part in December 2024. However, the Company needs to perform ongoing collaboration in exchange for the warrant consideration. Accordingly, the warrants have been included within other assets and allocated between short-term and long-term liabilities on the consolidated balance sheets. The Company is amortizing the liability as a reduction of selling and marketing expense upon commercialization and sale of the products contemplated under the Collaboration Agreement over the life of the contract. For the three months ended March 31, 2025, the amortization of the non-cash liability was $0.4 million.

The warrants issued to the Company in 2021 and 2024 are accounted for as derivative instruments and recorded within other assets on the consolidated balance sheets at fair value. The warrants were valued using the Black-Scholes valuation model as of each reporting period, including the date of issuance. Subject to the Company's achievement of certain commercialization milestones, the Company may receive additional warrants to purchase MyOme’s series B preferred stock. To the extent the genetic testing services are successfully commercialized, the Company will owe certain royalty payments to MyOme. For the three months ended March 31, 2025, the royalties to MyOme were not material. As of March 31, 2025 and December 31, 2024, the Company’s carrying amount of preferred shares in MyOme was $6.6 million and $4.9 million, respectively, on its consolidated balance sheets. The fair market value of the warrants as of March 31, 2025 and December 31, 2024 was $12.7 million and $11.2 million, respectively, on the consolidated balance sheets.

Risk and Uncertainties

Financial instruments that potentially subject the Company to credit risk consist of cash, cash equivalents, and restricted cash, accounts receivable and investments. The Company limits its exposure to credit loss by placing its cash in financial institutions with high credit ratings. The Company's cash may consist of deposits held with banks that may at times exceed federally insured limits. The Company performs evaluations of the relative credit standing of these financial institutions and limits the amount of credit exposure with any one institution.

For the three months ended March 31, 2025, and 2024, there were no customers exceeding 10% of total revenues on an individual basis. As of March 31, 2025 and December 31, 2024, there were no customers with an outstanding balance exceeding 10% of net accounts receivable. 

For the three months ended March 31, 2025 and 2024, approximately 14.0% and 11.6%, respectively, of total revenue were paid by Medicare on behalf of multiple customers. As of March 31, 2025 and December 31, 2024, approximately 12.6% and 11.5%, respectively, of accounts receivable are expected to be paid by Medicare on behalf of multiple customers.

Recent Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”) under its accounting standard codifications or other standard setting bodies and are adopted by the Company as of the specified effective date.

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Recently Adopted Accounting Pronouncements

In March 2020, ASU 2020-04, Reference Rate Reform (Topic 848) (“Topic 848”) was issued which provides temporary optional guidance to ease the potential burden in accounting for reference rate reform. The new guidance provides optional expedients and exceptions for applying generally accepted accounting principles to transactions affected by reference rate reform if certain criteria are met. These transactions include contract modifications, hedging relationships, and sale or transfer of debt securities classified as held-to-maturity. ASU 2022-06, or Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848, defers the sunset date of Topic 848 from December 31, 2022 to December 31, 2024. Adoption of this standard occurred on January 1, 2025 and did not have a material impact on the Company’s consolidated financial statements.

New Accounting Pronouncements Not Yet Adopted

In December 2023, ASU 2023-09, Income Taxes - Improvements to Income Tax Disclosures, was issued, which requires enhanced disclosures in connection with an entity's effective tax rate reconciliation and income taxes paid disaggregated by jurisdiction. The standard became effective for annual periods beginning after December 15, 2024. The Company does not expect the adoption of this standard to have a significant impact on its consolidated financial statements.

In November 2024, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40) was issued which requires disaggregation of any relevant expense caption presented on the face of the income statement for certain expense categories. The new guidance is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact of the guidance on its consolidated financial statements. 

3. Revenue Recognition

The Company recognizes revenues when, or as, performance obligations in the contracts are satisfied, in the amount reflecting the expected consideration to be received from the goods or services transferred to the customers.

Product Revenues

Product revenues are derived by performing genetic testing services and the Company’s performance obligation is complete when test results are delivered to a laboratory or patient (each a customer).

Additionally, the Company enters into agreements with pharmaceutical companies to utilize the Company’s Signatera tests, typically to study new cancer treatments or to validate the outcomes of clinical trials for which the pharmaceutical companies are identified as customers. Such arrangements generally involve performing whole-exome sequencing services and the testing of patient samples to detect cancer mutations using its Signatera test. In addition to performing Signatera tests, these agreements typically include certain activities to fulfill the contract, such as customer data setup and management and ongoing reporting. Each test result is billable to customers upon delivery and the personalized cancer profile also makes each test distinct within the context of the contract as customers can exercise control over the test results upon delivery. Accordingly, the Company recognizes test processing revenue as individual test results are delivered to customers.

For certain contracts with pharmaceutical companies where the Company is developing a companion diagnostic test in addition to performing regular testing services, revenue is primarily recognized proportionally as services are performed and/or tests are delivered.

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A performance obligation represents a promise in a contract to transfer a distinct good or service to a customer, which represents a unit of accounting in accordance with ASC 606. A performance obligation is considered distinct from other obligations in a contract when it provides a benefit to the customer either on its own or together with other resources that are readily available to the customer and is separately identified in the contract. The Company considers a performance obligation satisfied once the Company has transferred control of a good or service to the customer, meaning the customer has the ability to use and obtain the benefit of the good or service. A portion of the consideration should be allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. The Company evaluates its contracts with laboratory partners and patients and identifies the performance obligations in those contracts, which are the delivery of the test results.

The total consideration the Company expects to collect in exchange for the Company’s products is an estimate and may be fixed or variable. Consideration includes reimbursement from both patients and insurance carriers, adjusted for variable consideration related to disallowed cases, percent of patient responsibility collected, refunds and reserves, and is estimated using the expected value method. For insurance carriers and product types with similar reimbursement characteristics, the Company uses a portfolio of relevant historical data to estimate variable consideration and total collections for the Company’s products. The Company constrains the estimated variable consideration when it determines it is probable that a significant reversal in the amount of cumulative revenue recognized may occur in future periods. The consideration expected from laboratory partners usually includes a fixed amount, but it can be variable depending on the volume of tests performed, and the Company determines the variable consideration using the expected value approach. For laboratory partners and patients, the Company allocates the total consideration to a single performance obligation, which is the delivery of the test results to the customers.

When assessing the total consideration expected to be received from insurance carriers and patients, a certain percentage of revenues is further constrained for estimated refunds.

The Company enters into contracts with insurance carriers, primarily with payment terms related to tests provided to patients who have health insurance coverage. Insurance carriers are considered third-party payers on behalf of the patients, and the patients are considered the customers who receive genetic test services. Tests may be billed to insurance carriers, patients, or a combination of insurance carriers and patients. Further, the Company sells tests to a number of domestic and international laboratory partners and identifies the laboratory partners as customers, provided that there is a test services agreement between the two parties.

The Company generally bills an insurance carrier, a laboratory partner or a patient upon delivery of test results. The Company also bills patients directly for out-of-pocket costs involving co-pays and deductibles that they are responsible for. The Company may or may not get reimbursed for the full amount billed. Further, the Company may not get reimbursed at all for tests performed if such tests are not covered under the insurance carrier’s reimbursement policies or the Company is not a qualified provider to the insurance carrier, or if the tests were not previously authorized.

Product revenue is recognized in an amount equal to the total consideration (as described above) expected to be received at a point in time when the test results are delivered. Approximately 90% of cash collections attributable to such product revenue occurs within nine months, with the remaining collections generally taking an additional six months. During this time, management routinely reassesses its estimates of actual to expected cash collections, which are based on historical collection rates and adjusted for current information and trends. To the extent cash collections for tests delivered in prior periods are trending higher than expectations, the Company will increase revenue recognized when sufficient evidence is obtained to conclude the additional revenue will not result in a significant reversal of revenue in a future period. If cash collections for tests delivered in prior periods are trending below expectations, the Company will reduce revenue to the amount expected to be collected based on the latest information and expectations. Increases or decreases to the amount of cash expected to be collected for tests delivered in prior periods are recognized in product revenue with a corresponding impact to accounts receivable during the period such determination is made. During the three months ended March 31, 2025 and 2024, the Company increased revenue by a net of $34.3 million and $33.7 million, respectively, for changes in estimate that increased revenue for tests delivered in prior periods that were fully collected, which increased revenue and decreased net loss by a corresponding amount and decreased loss per share by $0.25 and $0.28, respectively.

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Product revenue was constrained via refunds estimated to be paid to insurance carriers. Certain refunds were recognized in accrued liabilities until they are either paid to the respective insurance carrier or it is determined the refund will not ultimately be paid, at which time the related accrual is reduced with a corresponding increase to revenue. During the three months ended March 31, 2024, the reserves for refunds to insurance carriers were reduced and product revenue increased by $2.1 million for amounts the Company determined would not be refunded to insurance carriers. The increased revenue and corresponding decreased net loss resulted in a decrease in loss per share of $0.02 for the three months ended March 31, 2024. There were no such adjustments to reserves recorded in the same period in 2025.

Under the Company's current policy, certain estimated future refunds are recognized as a reduction to accounts receivable. The allowance will be released in future quarters to offset the future credits and refunds paid to insurance carriers and patients. During the three months ended March 31, 2025 and 2024, the net allowance for future refunds reduced revenue by $3.5 million and $1.5 million, respectively. The decreased revenue and corresponding increased net loss resulted in an increased loss per share of $0.03 and $0.01 for the three months ended March 31, 2025 and 2024, respectively.

Licensing and Other Revenues

The Company recognizes licensing revenues from its cloud-based distribution service offering, Constellation, by granting licenses to its licensees to use certain of the Company’s proprietary intellectual properties and cloud-based software and in vitro diagnostic (“IVD”) kits. The Company also recognizes revenues from its strategic collaboration agreements, such as those with BGI Genomics Co., Ltd. (“BGI Genomics”) and Foundation Medicine, Inc. (“Foundation Medicine”). The Company recognizes licensing and other revenues through agreements with pharmaceutical companies in support of potential clinical trials managed by the pharmaceutical companies.

Constellation

The laboratory partners with whom the Company enters into a licensing arrangement represent the licensees and are identified as customers. The licensees do not have the right to possess the Company’s software, but rather receive services through the cloud software. These arrangements often include: (i) the delivery of the services through the cloud software, (ii) the necessary support and training, and (iii) the IVD kits to be consumed as tests are processed. The Company does not consider the software as a service, the support or the training as being distinct in the context of such arrangements, and therefore, they are combined as a single performance obligation. The software, support and training are delivered simultaneously to the licensees over the term of the arrangement.

The Company bills the majority of licensees, who process the tests in their laboratories, a fixed price for each test processed. Licensing revenues are recognized as the performance obligations are satisfied (i.e., upon the delivery of each test) and reported in licensing and other revenues in the Company’s statements of operations and comprehensive loss.

BGI Genomics

In February 2019, the Company entered into a License Agreement (the “BGI Genomics Agreement”) with BGI Genomics to develop, manufacture, and commercialize next generation sequencing-based genetic testing assays for clinical and commercial use. The BGI Genomics Agreement has a term of ten years and expires in February 2029. Pursuant to the BGI Genomics Agreement, the Company licensed its intellectual property to and provided development services for BGI Genomics. Following completion of development services, the Company began providing assay interpretation services over the term of the agreement.

According to the BGI Genomics Agreement, the Company is entitled to a total of $50.0 million, comprised of upfront technology license fees, prepaid royalties relating to future sales of licensed products and performance of assay interpretation services, and milestone payments. Due to uncertainties in achieving certain milestones, $6.0 million of the $50.0 million was constrained. A net of $44.0 million has been collected by the Company in cash, which includes $20.0 million in prepaid royalties.

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The Company concluded that the license is not a distinct performance obligation as it does not have a stand-alone value to BGI Genomics apart from the related development services. Therefore, license and related development services, for each of the non-invasive prenatal tests (“NIPTs”) and Oncology products, representing two separate performance obligations, to which $24.0 million of transaction consideration was allocated. This performance obligation was fully satisfied in March 2023 and no further related amounts will be recognized as revenue.

As of December 31, 2024, the Company's performance obligation to provide ongoing NIPT assay interpretation services was removed. Therefore, the Company now has a single remaining performance obligation related to Oncology assay interpretation services, to which $20.0 million of transaction consideration was allocated and prepaid by BGI Genomics. During the three months ended March 31, 2024, the Company recognized $0.3 million related to oncology assay interpretation services, which was recognized against deferred royalties. During the three months ended March 31, 2025, the Company recognized an additional $0.1 million related to oncology assay interpretation services, which was recognized against deferred royalties. The Company has $17.2 million and $17.3 million in deferred revenue as of March 31, 2025 and December 31, 2024, respectively.

Disaggregation of Revenues

The following table shows disaggregation of revenues by payer types:

	Three months ended
	March 31,
	2025		2024
	(in thousands)
Insurance carriers	$	472,647	$	341,028
Laboratory partners		20,832		20,276
Patients		8,351		6,437
Total revenues	$	501,830	$	367,741

The following table presents total revenues by geographic area based on the location of the Company’s payers:

	Three months ended
	March 31,
	2025		2024
	(in thousands)
United States	$	492,305	$	359,413
Americas, excluding U.S.		1,692		1,481
Europe, Middle East, India, Africa		6,049		5,178
Asia Pacific and Other		1,784		1,669
Total revenues	$	501,830	$	367,741

The following table summarizes the Company’s beginning and ending balances of accounts receivable and deferred revenues:

	Balance at
	March 31,		December 31,
	2025		2024
	(in thousands)
Assets:
Accounts receivable, net	$	318,233	$	314,165
Liabilities:
Deferred revenue, current portion	$	20,557	$	19,754
Deferred revenue, long-term portion (1)		16,705		16,838
Total deferred revenues	$	37,262	$	36,592

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(1) The deferred revenue, long-term portion is included within the “Deferred revenue, long-term portion and other liabilities” line item on the consolidated balance sheets.

The following table shows the changes in the balance of deferred revenues during the three months ended March 31, 2025 and 2024:

	Balance at
	March 31,
	2025			2024
	(in thousands)
Beginning balance	$	36,592	$	35,740
Increase in deferred revenues		10,163		7,941
Revenue recognized during the period included in deferred revenues at the beginning of the period		(9,418)		(7,048)
Revenue recognized from performance obligations satisfied within the same period		(75)		(100)
Ending balance	$	37,262	$	36,533

During the three months ended March 31, 2025, revenue recognized that was included in the deferred revenue balance at the beginning of the period totaled $9.4 million with approximately $0.4 million related to BGI Genomics and Foundation Medicine and the remaining $9.0 million related to genetic testing services. The current portion of deferred revenue includes $18.6 million from genetic testing services and $0.5 million from BGI Genomics and $1.5 million from Foundation Medicine as of March 31, 2025. The non-current portion of deferred revenue includes $16.7 million from the BGI Genomics Agreement as of March 31, 2025.

4. Fair Value Measurements

The Company's financial assets and liabilities carried at fair value are comprised of investment assets that include money market and investments.

The fair value accounting guidance requires that assets and liabilities be carried at fair value and classified in one of the following three categories:

Level 1: Quoted prices in active markets for identical assets and liabilities that the Company has the ability to access;

Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data, such as quoted prices, interest rates, and yield curves; and

Level 3: Inputs that are unobservable data points that are not corroborated by market data.

This hierarchy requires the Company to use observable market data, when available, and to minimize the use of unobservable inputs when determining fair value.

Assets and Liabilities That Are Measured at Fair Value on a Recurring Basis

The MyOme warrants issued to the Company are accounted for as derivatives and recorded at fair value on a recurring basis and are classified within Level 3 of the fair value hierarchy because the valuation methods include certain unobservable inputs.

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The following table represents the fair value hierarchy for the Company’s financial assets and financial liabilities measured at fair value on a recurring basis:

	March 31, 2025								December 31, 2024
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
	(in thousands)
Financial Assets:
Cash, cash equivalents and restricted cash (1)	$	973,768	$	—	$	—	$	973,768	$	945,587	$	—	$	—	$	945,587
Municipal securities		—		17,832		—		17,832		—		22,689		—		22,689
Total financial assets	$	973,768	$	17,832	$	—	$	991,600	$	945,587	$	22,689	$	—	$	968,276

(1) Cash equivalents includes money market deposits and liquid demand deposits.

Fair Value of Short-Term and Long-Term Debt:

As of March 31, 2025 and December 31, 2024, the estimated fair value of the total principal outstanding and accrued interest of the Credit Line was $80.3 million and $80.4 million, respectively, and were based upon observable Level 2 inputs, including the interest rate based on the 30-day Secured Overnight Financing Rate (“SOFR”) average, plus 0.5%. The estimated fair value approximates the carrying value due to the short term duration and variable interest rate.

5. Financial Instruments

The Company elected to invest a portion of its cash assets in conservative, income earning, and liquid investments. Cash, cash equivalents, restricted cash and investments, which are classified as available-for-sale securities, consisted of the following:

	March 31, 2025								December 31, 2024
	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss		Estimated Fair Value		Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss		Estimated Fair Value
	(in thousands)
Cash, cash equivalents and restricted cash (2)	$	973,768	$	—	$	—	$	973,768	$	945,587	$	—	$	—	$	945,587
Municipal securities (1)		18,009		—		(177)		17,832		23,019		—		(330)		22,689
Total	$	991,777	$	—	$	(177)	$	991,600	$	968,606	$	—	$	(330)	$	968,276
Classified as:
Cash, cash equivalents and restricted cash (2)								973,768								945,587
Short-term investments								17,832								22,689
Total							$	991,600							$	968,276

(1) Per the Company’s investment policy, all debt securities are classified as short-term investments irrespective of holding period.  

(2) Cash equivalents includes liquid demand deposits and money market funds.

The Company invests in U.S. Treasuries, U.S. agency and high-quality municipal bonds which mature at par value and are all paying their coupons on schedule. The Company has therefore concluded an allowance for expected credit losses of its investments was not necessary and will continue to recognize unrealized gains and losses in other comprehensive income (loss). During the three months ended March 31, 2025 and 2024, the Company did not sell any investments. The Company uses the specific investment identification method to calculate realized gains and losses and amounts reclassified out of other comprehensive income (loss) to net loss. As of March 31, 2025, the Company had 6 investments in an unrealized loss position in its portfolio. Gross unrealized losses were not material as of March 31, 2025. Gross unrealized losses were primarily due to declines in the value of fixed rate instruments as interest rates in the broader market increased, and were not indictive of a decline in the credit worthiness of the underlying issuers. Accordingly, the Company did not record a credit loss reserve as of either March 31, 2025 or December 31, 2024.

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The following table presents debt securities available-for-sale that were in an unrealized loss position as of March 31, 2025, aggregated by major security type in a continuous loss position. There were no debt securities available-for-sale in an unrealized loss position for less than 12 months as of March 31, 2025.

		Total
		Fair Value		Unrealized Loss
	(in thousands)
Municipal securities			17,832		(177)
Total		$	17,832	$	(177)

As of March 31, 2025, the Company’s portfolio of available-for-sale securities all have contractual maturities less than or equal to one year.

6. Balance Sheet Components

Allowance for Expected Credit Losses

The following is a roll-forward of the allowances for expected credit losses related to trade accounts receivable for the three months ended March 31, 2025 and 2024:

	Three Months Ended
	March 31,
	2025		2024
		(in thousands)
Beginning balance	$	7,259	$	6,481
Provision for expected credit losses		195		929
Write-offs		(20)		(158)
Total	$	7,434	$	7,252

Property and Equipment, net

The Company’s property and equipment consists of the following:

		March 31,		December 31,
	Useful Life	2025		2024
		(in thousands)
Machinery and equipment	3-5 years	$	129,005	$	117,076
Computer equipment	3 years		3,287		3,178
Purchased and capitalized software held for internal use	3 years		14,587		13,178
Leasehold improvements	Lesser of useful life or lease term		48,883		48,569
Construction-in-process			71,271		58,461
			267,033		240,462
Less: Accumulated depreciation and amortization			(86,580)		(78,416)
Total property and equipment, net		$	180,453	$	162,046

The Company’s long-lived assets are located in the United States.

Depreciation expense for the three months ended March 31, 2025 and 2024 was $8.2 million and $6.3 million, respectively. The Company did not incur any impairment charges during either period.

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Other Accrued Liabilities

The Company’s other accrued liabilities consisted of the following:

	March 31,		December 31,
	2025		2024
	(in thousands)
Reserves for refunds to insurance carriers	$	10,171	$	11,276
Accrued charges for third-party testing		16,963		12,321
Testing and laboratory materials from suppliers		10,754		7,893
Marketing and corporate affairs		17,898		16,548
Legal, audit and consulting fees		66,097		54,208
Accrued shipping charges		1,945		1,625
Sales and income tax payable		5,602		4,416
Accrued third-party service fees		8,812		9,046
Clinical trials and studies		10,788		10,097
Operating lease liabilities, current portion		12,199		10,168
Property and equipment purchases		9,525		7,098
Other accrued expenses		7,695		2,197
Total other accrued liabilities	$	178,449	$	146,893

Reserves for refunds to insurance carriers include overpayments from and amounts to be refunded to insurance carriers, and additional amounts that the Company estimates for potential refund requests during the period. When and if these previously accrued amounts are no longer required based on actual refunds requested, any remaining reserve amounts are released. When the Company releases these previously accrued amounts, they are recognized as product revenues in the statements of operations and comprehensive loss.

The following table summarizes the reserve balance and activities for refunds to insurance carriers for the three months ending March 31, 2025 and 2024:

	March 31,
	2025		2024
	(in thousands)
Beginning balance	$	11,276	$	23,245
Additional (reversals) reserves		(622)		227
Refunds to carriers		—		(3,095)
Reserves released to revenue		(483)		(2,354)
Ending balance	$	10,171	$	18,023

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7. Leases

Operating Leases

In September 2015, the Company entered into a long-term lease agreement for laboratory and office space totaling approximately 94,000 square feet in Austin, Texas. The original lease term was 132 months beginning in December 2015 and expiring in November 2026, with monthly payments beginning in December 2016. In December 2021, the Company entered into an amendment of the Austin lease agreement, which extended the lease of the current premises through March 2033. The amendment also includes two additional office spaces (the “First Expansion Premises” and the “Second Expansion Premises”). The First Expansion Premises consists of 32,500 rentable square feet and commenced in February 2022. The Second Expansion Premises consists of 65,222 rentable square feet and commenced in September 2022. The terms of the First and Second Expansion Premises expire in March 2033. In March 2025, the Company entered into a lease agreement for additional premises of approximately 57,100 rentable square feet in Austin, Texas through March 2033 with an annual rent expense of approximately $0.9 million.

In October 2016, the Company entered into a lease directly with its landlord for laboratory and office spaces at its facilities located in San Carlos, California. The Company currently occupies approximately 136,000 square feet comprised of two office spaces (the “First Space” and the “Second Space”). The First Space covers approximately 88,000 square feet, and the Second Space totals approximately 48,000 square feet. In January 2021, the Company entered into an amendment of the lease to extend the term for 48 months to October 2027. The combined annual rent for the First Space and Second Space is $9.3 million, which commenced in October 2023. In July 2024, the Company entered into an amendment of the San Carlos lease to extend the term for 60 months to October 2032. The annual rent will be approximately $9.7 million beginning January 2025, escalating annually, and may be increased if the Company elects to utilize additional tenant improvement allowances. In January 2025, the Company entered into a lease agreement for additional premises of approximately 40,700 rentable square feet in San Carlos, California, through November 2028 with an annual rent expense of approximately $1.5 million.

The Company entered into a lease agreement in November 2020 to lease 11,395 square feet of space located in South San Francisco, California over a 36-month term. The premises are used for general office, laboratory and research use. The annual lease payment started at $0.9 million and escalates annually after commencing in December 2021. In December 2022, the Company exercised the renewal option of the South San Francisco lease agreement. In January 2023, the Company entered in an amendment to extend the lease term of the South San Francisco premises by three years, through November 2026.

The Company entered into a lease agreement in September 2023 to lease 16,319 square feet of space located in Pleasanton, California over a 60-month term. The premises are used for laboratory and research use and commenced in December 2023. The annual lease payment started at $0.5 million and escalates annually.

The Company has also historically entered into leases of individual workspaces and storage spaces at various locations on both a month-to-month basis without an established lease term, and more recently, for certain locations, has committed to terms approximating one to five years. For facilities without a committed lease term, the Company has elected to not recognize them as right-of-use assets on the consolidated balance sheets, as they are all considered short-term leases. For individual workspaces where the committed lease term exceeds one year, the Company has recorded a right-of-use asset on the consolidated balance sheets.

For the three months ended March 31, 2025, the Company had $10.9 million in noncash operating activities related to additional right-of-use assets resulting from entering into new lease agreements and extension of existing leases under ASC, Topic 842, Leases (“ASC 842”). For the three months ended March 31, 2024, the Company had $0.3 million in noncash operating activities related to additional right-of-use assets.

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The operating lease right-of-use assets are classified as noncurrent assets in the consolidated balance sheets. The corresponding lease liabilities are separated into current and long-term portions as follows:

	March 31,		December 31,
	2025		2024
		(in thousands)
Operating lease liabilities, current portion included in other accrued liabilities	$	12,199	$	10,168
Operating lease liabilities, long-term portion		103,056		96,588
Total operating lease liabilities	$	115,255	$	106,756

As of March 31, 2025, the weighted-average remaining lease term was 7.38 years and the weighted-average discount rate was 7.1%.

The Company continues to recognize lease expense on a straight-line basis. The lease expense includes the amortization of the right-of-use assets with the associated interest component estimated by applying the effective interest method. For the three months ended March 31, 2025 and 2024, total lease expense of $4.4 million and $3.6 million was recognized in the condensed consolidated statements of operations and comprehensive loss, respectively. Cash paid for amounts in the measurement of operating lease liabilities totaled $4.5 million and $4.1 million for the three months ended March 31, 2025 and 2024, respectively.

The present value of the future minimum lease payments under all non-cancellable operating leases as of March 31, 2025 are as follows:

	Operating Leases
	(in thousands)
As of March 31, 2025
2025 (remaining 9 months)	$	14,794
2026		20,287
2027		19,673
2028		19,779
2029		18,291
2030 and thereafter		56,602
Total future minimum lease payments		149,426
Less: imputed interest		(34,171)
Operating lease liabilities	$	115,255

8. Commitments and Contingencies

Legal Proceedings

The Company is or has been involved in legal matters, including investigations, subpoenas, demands, disputes, litigation, requests for information, and other regulatory or administrative actions or proceedings, including those with respect to intellectual property, testing and test performance, billing, reimbursement, marketing, short seller and media allegations, employment, and other matters. The Company is responding to ongoing regulatory and governmental investigations, subpoenas and inquiries, and contesting its current legal matters, but cannot provide any assurance as to the ultimate outcome with respect to any of the foregoing. There are many uncertainties associated with these matters.

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The Company assesses legal contingencies to determine the degree of probability and range of possible loss for potential accrual in its financial statements. When evaluating legal contingencies, the Company may be unable to provide a reasonable estimate due to a number of factors, including the procedural status of the matter in question, the presence of complex or novel legal theories, and/or the ongoing discovery and development of information important to the matters. In addition, damage amounts claimed in litigation or other matters may be unsupported, exaggerated or unrelated to possible outcomes, and as such are not meaningful indicators of its potential liability. Loss contingencies, including claims and legal actions arising in the ordinary course of business, are recorded as liabilities when the likelihood of loss is probable and an amount or range of loss can be reasonably estimated. As of March 31, 2025, the Company determined that the aggregate accrual for legal contingencies that are probable and reasonably estimable is approximately $22.6 million. The Company is unable to predict the ultimate outcome of the matters described below and is unable to make a reasonable estimate of the amount or range of loss, if any, that could result from an unfavorable outcome of any such matters in excess of the amounts accrued by the Company.

Intellectual Property Litigation Matters.

The Company has been involved in two patent litigations against CareDx, Inc. (“CareDx”) in the United States District Court for the District of Delaware (“CareDx Patent Cases”). In the first CareDx Patent Case, CareDx alleged, in a complaint filed jointly with the Board of Trustees of the Leland Stanford Junior University in March 2019 and amended in March 2020, that the Company infringed three patents (the “CareDx Patents”). The complaint sought unspecified damages and injunctive relief. In September 2021, the Court granted the Company’s motion for summary judgment, finding all three CareDx Patents invalid. This finding was affirmed on appeal by the United States Court of Appeals for the Federal Circuit. CareDx’s petition for rehearing by the Federal Circuit, and its subsequent petition for certiorari to the United States Supreme Court, were both denied. In the second CareDx Patent Case, the Company alleged, in suits filed in January 2020 and May 2022, infringement by CareDx of certain of the Company’s patents, seeking unspecified damages and injunctive relief. In January 2024, after trial, the jury returned a verdict in favor of the Company, finding both asserted patents valid and one patent infringed by CareDx (the “Infringed Patent”) and awarding damages to the Company for lost profits and past royalties totaling $96.3 million. In February 2025, the Court granted CareDx’s motion for judgment as a matter of law and invalidated both asserted Natera patents, including the Infringed Patent.  The Company filed a notice of appeal to the Court of Appeals for the Federal Circuit in March 2025. Separately, in October 2024, an ex-parte re-examination petition was filed by CareDx with the United States Patent and Trademark Office (“USPTO”) challenging the validity of the Infringed Patent; the USPTO issued an Office Action rejecting the challenged claims of the Infringed Patent.

In January 2020, the Company filed suit against ArcherDX, Inc. (“ArcherDX”) in the United States District Court for the District of Delaware. In January 2021, the Company named an additional Archer DX entity, ArcherDx LLC, and Invitae as defendants. The Company alleged, among other things, that certain ArcherDX products, including the Personalized Cancer Monitoring (“PCM”) test, infringed three of the Company’s patents (the “ArcherDX Case”) and sought unspecified monetary damages and injunctive relief. Following a jury trial in May 2023 and a bench trial in June 2023, all three asserted patents were found to be valid and infringed by ArcherDX and Invitae, and the jury awarded damages totaling $19.35 million to the Company. In November 2023, the Court granted in part the Company’s motion for a permanent injunction against the PCM test, which the defendants have appealed. In February 2024, Invitae and ArcherDX filed a voluntary Chapter 11 petition in the U.S. Bankruptcy Court for the District of New Jersey, resulting in an automatic bankruptcy stay in the case. The stay was lifted, and post-trial proceedings resumed, in November 2024. Defendants’ interim appeals remain stayed pending the Court’s final resolution of the post-trial motions.

The Company is the subject of a lawsuit filed against it by Ravgen, Inc. (“Ravgen”) in June 2020 in the United States District Court for the Western District of Texas, alleging infringement of two Ravgen patents and seeking monetary damages and injunctive relief. In January 2024, after trial, the jury returned a verdict of non-willful infringement by the Company and found damages of $57 million. Judgment has not been entered by the Court. The Company intends to appeal certain of the rulings. In addition, various parties, including the Company, have filed petitions challenging the validity of the asserted patents with the United States Patent and Trademark Office, all of which were instituted for review, and some of which were decided in favor of upholding the challenged claims. The petitions filed by the Company and certain others remain pending.

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In October 2020, the Company filed suit against Genosity Inc. (“Genosity”), in the United States District Court for the District of Delaware, alleging that various Genosity products infringe one of the Company’s patents and seeking unspecified monetary damages and injunctive relief. The case has been stayed pending the entry of a final judgment in the ArcherDX Case, in which the subject patent is also asserted. In February 2024, Genosity filed a voluntary Chapter 11 petition in the U.S. Bankruptcy Court for the District of New Jersey.

The Company is the subject of lawsuits filed against it by Invitae in the United States District Court of the District of Delaware alleging, in complaints filed in May and November of 2021, infringement of three patents and seeking monetary damages and injunctive relief. The parties have filed cross-motions for summary judgment, which motions are currently pending before the Court. In February 2024, as a result of Invitae’s voluntary Chapter 11 petition described above, the Court continued the trial, which is now scheduled for September 2025. Labcorp Holdings Inc. acquired the patents at issue in this case and is now the plaintiff.

The Company filed suits against Inivata, Inc. and Inivata Ltd. (collectively “Inivata”) in the United States District Court for the District of Delaware in January 2021 and December 2022, alleging that certain of Inivata’s oncology products infringe certain of the Company’s patents and seeking unspecified monetary damages and injunctive relief. The two suits have been consolidated. In March 2024, the Court stayed the case in light of the Company’s case against NeoGenomics Laboratories, Inc. (“NeoGenomics”), which acquired Inivata in 2021, discussed below.

In July 2023, the Company filed suit against NeoGenomics in the United States District Court for the Middle District of North Carolina (the “District Court”), alleging infringement of two Natera patents (the “’035 Patent” and the “’454 Patent”) by NeoGenomics’ commercialization of the RaDaR test and seeking monetary damages and injunctive relief. In December 2023, the Court denied NeoGenomics’ motion to dismiss the complaint, and granted the Company’s motion for preliminary injunction. The injunction went into effect as of January 12, 2024 and was affirmed on appeal in July 2024 by the Federal Circuit Court of Appeals. NeoGenomics filed a petition with the USPTO to review the validity of the ’454 Patent, which was denied in June 2024. NeoGenomics also filed a petition with the USPTO to review the validity of the ‘035 Patent, which proceeding was terminated in October 2024. Pursuant to the terms of a partial settlement of the case, the District Court entered a permanent injunction against NeoGenomics, and it has withdrawn its RaDaR test from the market. The case remains pending with respect to an updated version of the RaDaR test and the ‘454 Patent, as well as an additional Natera patent (the “596 patent”) that was added to the case in December 2024. Neogenomics has filed an inter partes review challenging the validity of the ‘596 patent; the USPTO has not yet instituted review. Trial is currently scheduled for October 2025.

Other Litigation Matters.

CareDx filed suit against the Company in April 2019 in the United States District Court for the District of Delaware, alleging false advertising, and related claims based on statements describing studies that concern the Company’s technology and CareDx’s technology, seeking unspecified damages and injunctive relief. The Company filed a counterclaim against CareDx in the United States District Court for the District of Delaware, alleging false advertising, unfair competition and deceptive trade practices and seeking unspecified damages and injunctive relief. In March 2022, after trial, the jury returned a verdict that the Company was liable to CareDx and found damages of $44.9 million. The jury also returned a verdict against CareDx, finding that CareDx had engaged in false advertising. In July 2023, the Court granted in part the Company’s motion for judgment as a matter of law requesting that the Court set aside the portions of the jury verdict adverse to the Company, ruling that CareDx is not entitled to any damages. The jury verdict of false advertising by CareDx remains in place. Both parties are appealing.

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The Company is involved in two lawsuits against Guardant Health, Inc. (“Guardant”). In May 2021, Guardant filed suit against the Company in the United States District Court of the Northern District of California alleging false advertising and related claims and seeking unspecified damages and injunctive relief. Also in May 2021, the Company filed suit against Guardant in the Western District of Texas, alleging false advertising and related claims. The Company has voluntarily dismissed its Texas suit against Guardant and has asserted the claims from the Texas action as counterclaims in the California action, seeking unspecified damages and injunctive relief. In August 2021, Guardant moved to dismiss the Company’s counterclaims, which motion was denied in all material respects. Both parties filed cross-motions for summary judgment, which were granted in part and denied in part. In November 2024, after trial, the jury returned a verdict finding the Company liable for false advertising and found damages of $292.5 million. A final judgment has not been entered by the Court; the Company plans to appeal any adverse judgment. In February 2025, Guardant filed suit against the Company and two of its former employees who recently joined the Company in the United States District Court for the Northern District of California, alleging trade secret misappropriation, breach of contract and related tort claims, seeking unspecified damages and injunctive relief. Concurrently with the filing of the complaint, Guardant also moved for a temporary restraining order and expedited discovery, which motions Guardant subsequently withdrew. In April 2025, Guardant voluntarily dismissed its claims against one of the employee defendants without prejudice.

In November 2021, a purported class action lawsuit was filed against the Company in the United States District Court for the Northern District of California, by a patient alleging various causes of action relating to the Company’s patient billing and seeks, among other relief, class certification, injunctive relief, restitution and/or disgorgement, attorneys’ fees, and costs. In May 2023, the Court granted the Company’s motion to dismiss the lawsuit, and the case was dismissed without prejudice. In July 2023, the plaintiff filed analogous claims in the Superior Court of California, County of San Mateo, and subsequently filed an amended claim with an additional plaintiff. Based on the additional plaintiff, the case was transferred back to the United States District Court for the Northern District of California. The parties subsequently agreed that claims brought by the original plaintiff be remanded back to the Superior Court of California, County of San Mateo, and that the action be stayed pending the outcome of the action in the United States District Court for the Northern District of California.

In February 2022, two purported class action lawsuits were filed against the Company in the United States District Court for the Northern District of California. Each suit was filed by an individual patient alleging various causes of action related to the marketing of Panorama and seeking, among other relief, class certification, monetary damages, attorneys’ fees, and costs. These matters have been consolidated. The Company filed a motion to dismiss the consolidated lawsuit, which resulted in the plaintiffs filing an amended complaint in April 2023.

In March 2022, a purported class action lawsuit was filed against the Company and certain of its management in the Supreme Court of the State of New York, County of New York, asserting claims under Sections 11, 12, and 15 of the Securities Act of 1933. The complaint alleged, among other things, that the Company failed to disclose certain information regarding its Panorama test. The complaint sought, among other relief, monetary damages, attorneys’ fees, and costs. This matter was dismissed and the claims raised in this matter have been included in the lawsuit discussed below.

A purported class action lawsuit was filed against the Company and certain of its management in the United States District Court for the Western District of Texas, asserting claims under Sections 10(b) and 20(a) of the Securities Act of 1934 and Rule 10b-5 thereunder. The complaint, filed in April 2022 and amended in October 2022 (to include, among others, the claims raised in the lawsuit discussed in the preceding paragraph), alleges, among other things, that the management defendants made materially false or misleading statements, and/or omitted material information that was required to be disclosed, about certain of the Company’s products and operations. The complaint seeks, among other relief, monetary damages, attorneys’ fees, and costs. The Company filed a motion to dismiss this lawsuit, which was granted in part and denied in part. The Court has certified the class.

In each of October 2023 and January 2024, shareholder derivative complaints were filed in the United States District Court for the Western District of Texas and the United States District Court for the District of Delaware, respectively, against the Company as nominal defendant and certain of the Company’s management. Each complaint alleges, among other things, that the management defendants made materially false or misleading statements, and/or omitted material information that was required to be disclosed, about certain of the Company’s products and operations. Each complaint seeks, among other relief, monetary damages, attorneys’ fees, and costs.

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In October 2024, a purported class action lawsuit was filed against the Company in the United States District Court for the Northern District of California, by patients alleging various causes of action relating to the Company’s preimplantation genetic test for aneuploidies. They request, among other relief, class certification, injunctive relief, restitution and/or disgorgement, attorneys’ fees, and costs. The Company has filed a motion to dismiss the lawsuit.

Director and Officer Indemnifications

As permitted under Delaware law, and as set forth in the Company’s Amended and Restated Certificate of Incorporation and its Amended and Restated Bylaws, the Company indemnifies its directors, executive officers, other officers, employees and other agents for certain events or occurrences that may arise while in such capacity. The maximum potential future payments the Company could be required to make under this indemnification is unlimited; however, the Company has insurance policies that may limit its exposure and may enable it to recover a portion of any future amounts paid. Assuming the applicability of coverage, the willingness of the insurer to assume coverage, and subject to certain retention, loss limits and other policy provisions, the Company believes any obligations under this indemnification would not be material, other than standard retention amounts for securities related claims. However, no assurances can be given that the covering insurers will not attempt to dispute the validity, applicability, or amount of coverage without expensive litigation against these insurers, in which case the Company may incur substantial liabilities as a result of these indemnification obligations.  

Third-Party Payer Reimbursement Audits

From time to time, the Company receives recoupment requests from third-party payers for alleged overpayments. The Company disagrees with the contentions of pending requests and/or has recorded an estimated reserve for the alleged overpayments if probable and estimable.

Contractual Commitments

The following table sets forth the material contractual commitments as of March 31, 2025:

Party	Commitments		Expiry Date
	(in thousands)
Laboratory instruments supplier	$	21,443	December 2027
Material suppliers		70,395	December 2026
Application service providers		4,733	January 2028
Cloud platform service provider		27,430	December 2028
Other material suppliers		44,570	Various
Total	$	168,571

During November 2024, the Company entered into an agreement to acquire clinical samples and data for oncology development. As of March 31, 2025, the Company has paid $14.0 million in cash, and is obligated to pay an additional $6.0 million, which is included in commitments above. An additional $50.0 million in potential payments owed to the third-party vendor, not included above, will depend on whether certain compliance approvals are obtained and commercial volume milestones are achieved.

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9. Stock-Based Compensation

Stock-Based Compensation Expense

The following table presents stock-based compensation expense recorded for equity-classified awards in the three months ended March 31, 2025 and 2024:

	Three months ended March 31,
		2025		2024
	(in thousands)
Cost of revenues	$	5,270	$	3,777
Research and development		26,511		20,649
Selling, general and administrative		46,046		40,021
Total	$	77,827	$	64,447

Stock Options

The following table summarizes option activity during the three months ended March 31, 2025:

		Weighted-
	Number of	Average
	Shares	Exercise
	Outstanding	Price
	(in thousands, except for per share data)
December 31, 2024	3,875	$	30.22
Options exercised	(50)	$	11.80
Options forfeited/cancelled	(3)	$	3.78
March 31, 2025	3,822	$	30.47

Restricted Stock Units and Performance-Based Awards

The following table summarizes unvested RSU and PSU activity during the three months ended March 31, 2025:

		Weighted-
		Average
		Grant Date
	Shares	Fair Value
	(in thousands, except for per share data)
Balance at December 31, 2024	10,593	$	61.28
Granted	2,721	$	171.72
Vested	(3,236)	$	59.65
Cancelled/Forfeited	(104)	$	74.42
Balance at March 31, 2025	9,974	$	86.75

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The Company grants certain senior-level executives performance stock units that vest based on performance and time-based service conditions, which are referred to herein as performance-based awards. During the three months ended March 31, 2025 and 2024, the Company granted 0.4 million and 0.8 million performance-based awards with an aggregate grant date fair value of $64.9 million and $55.0 million, respectively. As of March 31, 2025, the Company expects to recognize remaining stock-based compensation expense of $142.1 million over the requisite performance period for these performance-based awards. The future stock-based compensation expense recognized for these performance-based awards may be up to 200% of grant date fair value based on the achievement of certain targets.

For all performance-based awards, the Company has recognized total stock-based compensation of $18.7 million and $20.7 million for the three months ended March 31, 2025 and 2024, respectively.

10. Debt

Credit Line Agreement

In September 2015, the Company entered into a credit line with UBS (the “Credit Line”) providing for a $50.0 million revolving line of credit. The Credit Line was subsequently increased from $50.0 million to $150.0 million in 2020. In June 2023, the Credit Line decreased from $150.0 million to $100.0 million. The Credit Line is secured by a first priority lien and security interest in the Company’s money market and marketable securities held in its managed investment account with UBS. The Company is required to maintain a minimum of at least $150.0 million in its UBS accounts as collateral, which is classified as cash, cash equivalents, and short-term investments in the consolidated balance sheets. UBS has the right to demand full or partial payment of the Credit Line obligations and terminate the Credit Line, in its discretion and without cause, at any time. In October 2023, the interest rate for the Credit Line was changed to the 30-day SOFR average, plus 0.5%. As of March 31, 2025, the Company has drawn down a total of $80.0 million, and there is $20.0 million remaining and available on the Credit Line. The interest rate as of March 31, 2025 was 4.83%.

For the three months ended March 31, 2025 and 2024, the Company recorded interest expense on the Credit Line of $1.0 million and $1.2 million, respectively. Interest payments on the Credit Line were made within the same periods. As of March 31, 2025 and December 31, 2024, the total principal amount outstanding with accrued interest was $80.3 million and $80.4 million, respectively.

Convertible Notes

In April 2020, the Company issued $287.5 million aggregate principal amount of Convertible Notes due 2027 in a private placement offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended. The Convertible Notes were senior, unsecured obligations of the Company and bore interest at a rate of 2.25% per year, payable in cash semi-annually. The Convertible Notes mature in May 2027, unless earlier converted, repurchased or redeemed in accordance with their terms. Upon conversion, the Convertible Notes were convertible into cash, shares of the Company’s common stock or a combination of cash and shares of the Company’s common stock, at the Company’s election.

The Convertible Notes were convertible into shares of the Company’s common stock, par value $0.0001 per share, at an initial conversion rate of 25.7785 shares of common stock per $1,000 principal amount of the Convertible Notes, which is equivalent to an initial conversion price of approximately $38.79 per share of common stock, convertible to 7,411,704 shares of common stock. The conversion rate and corresponding conversion price were subject to adjustment upon the occurrence of certain events.

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On July 19, 2024, the Company elected to exercise its optional redemption right to redeem all $287.5 million aggregate principal amount of its outstanding 2.25% Convertible Notes due 2027 and instructed Wilmington Trust, National Association, as trustee under the Convertible Notes Indenture (the “Indenture Agreement”) governing the Convertible Notes, to issue a redemption notice to registered holders of the Convertible Notes. The date fixed for the redemption of the Convertible Notes was October 11, 2024 (the “Redemption Date”). The redemption price for the Convertible Notes was equal to 100% of the principal amount of the Convertible Notes to be redeemed plus accrued and unpaid interest to, but excluding, the Redemption Date. The Company elected physical settlement with the Company’s shares of common stock as the settlement method to apply to all conversions of the Convertible Notes. All terms and conditions associated with physical settlement are noted within the terms of the original Indenture Agreement. The conversion rate for holders who converted their Convertible Notes in connection with the Company’s election to redeem the Convertible Notes was increased by 0.4284 additional shares pursuant to the Indenture Agreement.

The following tables present total interest expense recognized related to the Convertible Notes during the three months ended March 31, 2025 and 2024:

	Three months ended
	March 31,
	2025		2024
	(in thousands)
Cash interest expense
Contractual interest expense	$	—	$	1,617
Non-cash interest expense
Amortization of debt discount and debt issuance cost		—		328
Total interest expense	$	—	$	1,945

11. Income Taxes

During the three months ended March 31, 2025 and 2024, the Company recorded total income tax expense of approximately $173,000 and $428,000, respectively. The income tax expense is primarily attributable to state income tax and foreign income tax. Due to the Company’s history of cumulative operating losses, the Company concluded that, after considering all the available objective evidence, it is not more likely than not that all of the Company’s net deferred tax assets will be realized. Accordingly, all of the Company’s deferred tax assets, which includes net operating loss carryforwards and tax credits related primarily to research and development, continue to be subjected to a full valuation allowance as of March 31, 2025. The Company will continue to maintain a full valuation allowance until there is sufficient evidence to support recoverability of its deferred tax assets.

Interest and/or penalties related to income tax matters are recognized as a component of income tax expense. As of March 31, 2025 and December 31, 2024, there were no accrued interest and penalties related to uncertain tax positions.

12. Net Loss per Share

The following table shows total outstanding potentially dilutive shares excluded from the computation of diluted loss per share as their effect would be anti-dilutive, as of March 31, 2025 and 2024:

	March 31,
	2025	2024
	(in thousands)
Options to purchase common stock	3,822	4,709
Performance-based awards and restricted stock units	9,974	11,901
Employee stock purchase plan	98	221
Convertible Notes	—	7,411
Total	13,894	24,242

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13. Segment Reporting

In November 2023, ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, was issued which requires disclosure of incremental segment information on an interim and annual basis that are regularly provided to the chief operating decision maker (the “CODM”) and included within each reported measure of segment profit or loss. The Company has adopted this ASU as of December 31, 2024. The Company currently operates as a single reporting segment entity with the Chief Executive Officer as the CODM. The CODM relies on the financial statements presented within the annual report Form 10-K and quarterly Form 10-Q to evaluate the Company’s financial performance and make key operating decisions. The key area of focus of the CODM for the allocation of resources is the cash used in operations. These financial statements provide a comprehensive view of the Company’s overall financial condition, including information on expenses, assets, and liabilities. The significant expense categories are consistent with those presented on the face of the statements of operations and comprehensive loss. The CODM does not receive or use any other segmented or disaggregated financial or any significant expense information for decision-making purposes. Additionally, gross margin is regularly provided to the CODM and is derived based on the consolidated statements of operations and comprehensive loss as follows:

	March 31,
	2025		2024
	(in thousands except percentages)
Revenue	$	501,830	$	367,741
Cost of product revenues		184,613		158,833
Cost of licensing and other revenues		452		307
Gross margin	$	316,765	$	208,601
Gross margin percentage		63.1%		56.7%

14. Subsequent Events

None.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our unaudited condensed consolidated financial statements and related notes included in Part I, Item 1 of this report. Our actual results could differ materially from those discussed below. Factors that could cause or contribute to such differences include, but are not limited to, those identified below and those discussed in “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the Securities and Exchange Commission on February 28, 2025.

Overview

We are a diagnostics company with proprietary molecular and bioinformatics technology that we are applying to change the management of disease worldwide. Our cell-free DNA, or cfDNA, technology combines our novel molecular assays, which reliably measure many informative regions across the genome from samples as small as a single cell, with our statistical algorithms which incorporate data available from the broader scientific community to identify genetic variations covering a wide range of serious conditions with high accuracy and coverage. We aim to make personalized genetic testing and diagnostics part of the standard of care to protect health and inform earlier and more targeted interventions that help lead to longer, healthier lives.

We currently provide a comprehensive suite of products in women’s health, as well as our oncology and organ health products, and our Constellation cloud-based platform. We generate a majority of our revenues from the sale of Panorama, our non-invasive prenatal test, or NIPT, as well as Horizon, our Carrier Screening, test. In addition to Panorama and Horizon, our product offerings in women’s health include Spectrum Preimplantation Genetics, our Anora miscarriage test, and Vistara single-gene NIPT, as well as our Empower hereditary cancer screening test, which we also plan to offer to oncologists through our oncology sales channel. We also offer our Signatera molecular residual disease test for oncology applications, which we commercialize as a test run in our CLIA (as defined below) laboratory and offer on a research use only basis to research laboratories and pharmaceutical companies; and our Prospera organ transplant assessment tests.

We process tests in our laboratories certified under the Clinical Laboratory Improvement Amendments of 1988, or CLIA, in Austin, Texas and San Carlos, California. A portion of our testing is performed by third-party laboratories. Our customers include independent laboratories, national and regional reference laboratories, medical centers and physician practices for our screening tests, and research laboratories and pharmaceutical companies. We market and sell our tests through our direct sales force and, for our women’s health tests, through our laboratory distribution partners. We bill clinics, laboratory distribution partners, patients, pharmaceutical companies and insurance payers for the tests we perform. In cases where we bill laboratory distribution partners, our partners in turn bill clinics, patients and insurers. The majority of our revenue comes from insurers with whom we have in-network contracts. Such insurers reimburse us for our tests pursuant to our in-network contracts with them, based on positive coverage determinations, which means that the insurer has determined that the test in general is medically necessary for this category of patient.

In addition to offering tests to be performed at our laboratories, either directly or through our laboratory distribution partners, we also establish licensing arrangements with laboratories under Constellation, our cloud-based distribution model, whereby our laboratory licensees run the molecular workflows themselves and then access our bioinformatics algorithms through our cloud-based software. This cloud-based distribution model results in lower revenues and gross profit per test than cases in which we process a test ourselves; however, because we do not incur the costs of processing the tests, our costs per test under this model are also lower. We began entering into these licensing arrangements starting in the fourth quarter of 2015.

The number of tests we accession—when a sample is received, entered into our computer system, and routed for processing—is a key business metric. It is a subset of total tests processed, which also includes tests distributed through our Constellation licensees. As our laboratory partners transition to our cloud-based distribution model, accessioned tests will decrease while processed tests continue to reflect overall volume growth.

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During the three months ended March 31, 2025, we processed approximately 855,100 tests, comprised of approximately 840,800 tests accessioned in our laboratory, compared to approximately 735,800 tests processed, comprised of approximately 718,700 tests accessioned in our laboratory, during the three months ended March 31, 2024. This increase in volume primarily represents continued commercial growth of Signatera, Panorama and Horizon, both as tests performed in our laboratory as well as through our Constellation software platform.

The percent of our revenues attributable to our U.S. direct sales force for the three months ended March 31, 2025 was 96%, an increase compared to 94% for the three months ended March 31, 2024. The percent of our revenues attributable to U.S. laboratory distribution partners for the three months ended March 31, 2025 was 2%, a decrease compared to 5% from the same period in the prior year. Our ability to increase our revenues and gross profit will depend on our ability to further penetrate the U.S. market with our direct sales force. The percent of our revenues attributable to international laboratory distribution partners and other international sales for the three months ended March 31, 2025 was 2%, approximately the same as in the three months ended March 31, 2024.

For the three months ended March 31, 2025, total revenues were $501.8 million compared to $367.7 million in the three months ended March 31, 2024. Product revenues accounted for $500.0 million, nearly 100% of total revenues for the three months ended March 31, 2025 compared to $364.7 million representing 99% of total revenues for the three months ended March 31, 2024. For the three months ended March 31, 2025 and 2024, no customers exceeded 10% of the total revenues on an individual basis. Revenues from customers outside the United States were $9.5 million, representing approximately 2% of total revenues for the three months ended March 31, 2025. For the three months ended March 31, 2024, revenues from customers outside the United States were $8.3 million, representing approximately 2% total revenues. Most of our revenues have been denominated in U.S. dollars, though we generate some revenue in foreign currency, primarily denominated in Euros and Singapore Dollars.

Our net loss for the three months ended March 31, 2025 and 2024 was $66.9 million and $67.6 million, respectively. This included non-cash stock compensation expense of $77.8 million and $64.4 million for the three months ended March 31, 2025 and 2024, respectively. As of March 31, 2025, we had an accumulated deficit of $2.6 billion.

Components of the Results of Operations

Revenues

Product Revenues

We generate revenues from the sale of our tests, primarily from the sale of our Panorama and Horizon tests. Our two primary distribution channels are our direct sales force and our laboratory partners. In cases where we promote our tests through our direct sales force, we generally bill directly to a patient, clinic or insurance carrier, or a combination of the insurance carrier and patient, for the fees.

Sales of our clinical tests are recorded as product revenues. Revenues recognized from tests processed through our Constellation model, and from our strategic partnership agreements, are reported in licensing and other revenues.

In cases where we sell our tests through our laboratory partners, the majority of our laboratory partners bill the patient, clinic or insurance carrier for the performance of our tests, and we are entitled to either a fixed price per test or a percentage of their collections.

Our ability to increase our revenues will depend on our ability to further penetrate the domestic and international markets and, in particular, generate sales through our direct sales force, develop and commercialize additional tests, obtain reimbursement from additional third-party payers and increase our reimbursement rates for tests performed. For example, our financial performance depends on reimbursement for microdeletions testing. Many third-party payers do not currently reimburse for microdeletions screening in part because there has historically been limited published data on the performance of microdeletions screening tests, with our single nucleotide polymorphism-based Microdeletion and Aneuploidy RegisTry, or SMART study results only being published in early 2022.

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Entering into in-network contracts continues to be an important part of our business strategy, as we believe that in-network coverage of our tests by third-party payers is crucial to our growth and long-term success, as in-network pricing is more predictable than out-of-network pricing, enables us to develop stable, long-term relationships with third-party payers, and provides access to a larger population of covered lives. However, the negotiated fees under our contracts with third-party payers are typically lower than the list price of our tests, and in some cases the third-party payers that we contract with have negative coverage determinations for some of our offerings, in particular Panorama for microdeletions screening. Therefore, being in-network with third-party payers has in the past had, and may in the future have, an adverse impact on our revenues and gross margins. We intend to mitigate any impact by driving more business from our most profitable accounts.

Licensing and Other Revenues

Revenues recognized from tests processed through our Constellation model, and from our strategic partnership agreements are reported in licensing and other revenues. We also recognize licensing revenues through the licensing and the provisioning of services to support the use of our proprietary technology by licensees under our cloud-based distribution model.

Our strategy to offer access to our algorithm to laboratory licensees via our Constellation cloud-based software platform may also cause our revenues to decrease because we do not process the tests and perform the molecular biology analysis in our own laboratory under this model, and therefore are not able to charge as high an amount, and as a result realize lower revenues per test than when we perform the entire test ourselves.

Cost of Product Revenues

The components of our cost of product revenues are material and service costs, impairment charges associated with testing equipment, personnel costs, including stock-based compensation expense, equipment and infrastructure expenses associated with testing samples, electronic medical records, order and delivery systems, shipping charges to transport samples, costs incurred from third party test processing fees, and allocated overhead such as rent, information technology costs, equipment depreciation and utilities. Costs associated with Whole Exome Sequencing, are also included, as well as labor costs, relating to our Signatera CLIA and Signatera research use only offerings. Costs associated with performing tests are recorded when the test is accessioned. We expect cost of product revenues in absolute dollars to increase as the number of tests we perform increases.

As we continue to achieve scale, we have increased our focus on more efficient use of labor, automation, and DNA sequencing. For example, we updated the molecular and bioinformatics process for Panorama to further reduce the sequencing reagents, test steps and associated labor costs required to obtain a test result, while increasing the accuracy of the test to allow it to run with lower fetal fraction input. These improvements also reduced the frequency of the need to require blood redraws from the patient.

Cost of Licensing and Other Revenues

The components of our cost of licensing and other revenues are material costs associated with test kits sold to Constellation clients, development and support services relating to our strategic partnership agreements and other costs.

We consider our cost of licensing and other revenues for the Constellation software platform to be relatively low, and therefore we expect its associated gross margin is higher. We expect our cost of licensing will increase in relation to volume growth.

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Expenses

Research and Development

Research and development expenses include costs incurred to develop our technology, collect clinical samples and conduct clinical studies to develop and support our products. These costs consist of personnel costs, including stock-based compensation expense; prototype materials; laboratory supplies; consulting costs; regulatory costs; electronic medical record set up costs; and costs associated with setting up and conducting clinical studies at domestic and international sites and allocated overhead, including rent, information technology, equipment depreciation and utilities. We expense all research and development costs in the periods in which they are incurred. We expect our research and development expenses to increase in absolute dollars as we continue to invest in research and development activities related to developing enhanced and new products.

Selling, General and Administrative

Selling, general and administrative expenses include executive, selling and marketing, legal, finance and accounting, human resources, billing and client services. These expenses consist of personnel costs, including stock-based compensation expense; direct marketing expenses; audit and legal expenses; consulting costs; training and medical education activities; payer outreach programs and allocated overhead, including rent, information technology, equipment depreciation, and utilities.

Interest Expense

Interest expense is attributable to borrowing under our Convertible Senior Notes (the “Convertible Notes”) and our credit line with UBS (the “Credit Line”), including the amortization of debt discounts.

Interest Income and Other (Expense) Income, Net

Interest income and other (expense) income, net is comprised of interest earned on our cash; realized gains and losses on investments and assets; sublease rental income; and warrant, preferred shares and foreign currency remeasurement gains and losses.

Critical Accounting Policies

Our management’s discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported revenue generated, and expenses incurred during the reporting periods. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. We consider our critical accounting policies and estimates to be revenue recognition and stock-based compensation attributable to performance-based awards.

There have been no material changes to our other critical accounting policies and estimates as compared to the disclosures in our Annual Report on Form 10-K for the year ended December 31, 2024.

Recent Accounting Pronouncements

In December 2023, ASU 2023-09, Income Taxes - Improvements to Income Tax Disclosures, was issued, which requires enhanced disclosures in connection with an entity's effective tax rate reconciliation and income taxes paid disaggregated by jurisdiction. The standard is effective for annual periods beginning after December 15, 2024. We do not expect the adoption of this standard to have a significant impact on our consolidated financial statements.

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In November 2024, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40) was issued which requires disaggregation of any relevant expense caption presented on the face of the income statement for certain expense categories. The new guidance is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. We are currently evaluating the impact of the guidance on our consolidated financial statements.

Results of Operations

Comparison of the three months ended March 31, 2025 and 2024

	Three Months Ended
	March 31,				Change
	2025		2024		Amount		Percent
	(in thousands except percentage)
Revenues
Product revenues	$	500,036	$	364,672	$	135,364	37.1	%
Licensing and other revenues		1,794		3,069		(1,275)	(41.5)
Total revenues		501,830		367,741		134,089	36.5
Cost and expenses
Cost of product revenues		184,613		158,833		25,780	16.2
Cost of licensing and other revenues		452		307		145	47.2
Research and development		129,078		88,637		40,441	45.6
Selling, general and administrative		266,864		194,278		72,586	37.4
Total cost and expenses		581,007		442,055		138,952	31.4
Loss from operations		(79,177)		(74,314)		(4,863)	(6.5)
Interest expense		(1,005)		(3,124)		2,119	67.8
Interest and other income, net		13,419		10,267		3,152	30.7
Loss before income taxes		(66,763)		(67,171)		408	0.6
Income tax expense		(173)		(428)		255	59.6
Net loss	$	(66,936)	$	(67,599)	$	663	1.0	%

Revenues

Total revenues are comprised of product revenues, which are primarily driven by sales of our Panorama and Horizon tests, oncology testing, and licensing and other revenues, which primarily includes development licensing revenue and licensing of our Constellation software. Total revenues for the three months ended March 31, 2025 increased by $134.1 million, or 36.5%, when compared to the three months ended March 31, 2024.

We derive our revenues from tests based on units reported to customers—tests delivered with a result. All reported units are either accessioned in our laboratory or processed outside of our laboratory. As noted in the section titled “Overview” above, the number of tests that we process is a key metric as it tracks our overall volume growth. During the three months ended March 31, 2025, total reported units were approximately 804,800, comprised of approximately 791,400 tests reported in our laboratory. Comparatively, during the three months ended March 31, 2024, total reported units were approximately 679,400, comprising of approximately 663,500 tests reported in our laboratory. During the three months ended March 31, 2025 and 2024, total oncology units processed were approximately 167,700 and 114,800, respectively.

Product Revenues

During the three months ended March 31, 2025, product revenues increased by $135.4 million, or 37.1%, compared to the three months ended March 31, 2024, primarily due to continued revenue growth from increased test volumes and average selling price improvements.

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Licensing and Other Revenues

Licensing and other revenues decreased by $1.3 million, or 41.5%, during the three months ended March 31, 2025 when compared to the three months ended March 31, 2024. The decrease was primarily due to a decrease in revenue from our collaborative agreements.

Cost of Product Revenues

During the three months ended March 31, 2025, cost of product revenues increased compared to the three months ended March 31, 2024 by approximately $25.8 million, or 16.2%, primarily due to higher costs related to inventory consumption of $11.6 million driven by an increase in accessioned cases, a $5.3 million increase in third-party fees, and a $8.9 million increase in labor, overhead, and other related costs driven by headcount growth and product support.

Cost of Licensing and Other Revenues

Cost of licensing and other revenues for the three months ended March 31, 2025, increased by $0.1 million, or 47.2%, compared to the three months ended March 31, 2024, primarily due to a net increase in costs to support our collaborative agreements.

Expenses

Research and Development

Research and development expenses during the three months ended March 31, 2025, increased by $40.4 million, or 45.6%, when compared to the three months ended March 31, 2024. The increase was attributable to a $24.9 million increase in salary and related compensation expenditures, which includes a $6.0 million increase in stock-based compensation expense, a $7.5 million net increase in lab and clinical trial related expenses, and a $8.0 million increase primarily due to consulting, travel, office, facilities, and other expenses.

Selling, General and Administrative

Selling, general and administrative expenses increased by $72.6 million, or 37.4%, during the three months ended March 31, 2025 compared to the three months ended March 31, 2024. The increase was primarily due to a $38.4 million increase in salary and related compensation expenditures, which includes a $6.0 million increase in stock-based compensation expense, a $8.1 million increase in consulting and legal expenses, a $4.6 million increase in office costs, a $4.3 million increase in marketing costs, a $4.2 million increase in vendor expenses, and a $13.0 million increase in travel, facilities, and other costs.

Interest Expense

Interest expense decreased by $2.1 million in the three months ended March 31, 2025, compared to the same period in the prior year, due to the redemption of the Convertible Notes in October 2024.

Interest and Other Income

Interest and other income for the three months ended March 31, 2025, increased $3.2 million compared to the same period in the prior year, primarily due to the $3.2 million gain on revaluation of warrants and preferred shares.

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Liquidity and Capital Resources

We have incurred net losses each year since our inception. For the three months ended March 31, 2025, we had a net loss of $66.9 million, and we expect to continue to incur losses in future periods as we continue to devote a substantial portion of our resources to our research and development and commercialization efforts for our existing and new products. As of March 31, 2025, we had an accumulated deficit of $2.6 billion, $973.8 million in cash and cash equivalents and restricted cash, $17.8 million in marketable securities, and $80.3 million of outstanding balance under the Credit Line including accrued interest. As of March 31, 2025, we had $20.0 million remaining and available on the Credit Line.

While we have introduced multiple products that are generating revenues, these revenues have not been sufficient to fund all operations. Accordingly, we have funded the portion of operating costs that exceeds revenues through a combination of equity issuances and debt and other financings. We expect to develop and commercialize future products and continue to invest in the growth of our business and, consequently, we will need to generate additional revenues to achieve future profitability and may need to raise additional equity or incur additional debt. If we raise additional funds by issuing equity securities, our stockholders would experience dilution. Additional debt financing, if available, may involve covenants restricting our operations or our ability to incur additional debt. Any additional debt financing or additional equity that we raise may contain terms that are not favorable to us or our stockholders and requires significant debt service payments, which diverts resources from other activities. Additional financing may not be available at all, or in amounts or on terms acceptable to us. If we are unable to obtain additional financing, we may be required to delay the development and commercialization of our products and significantly scale back our business and operations.

Our contractual obligations and other commitments have been satisfied by equity offerings, our convertible note financing conducted in April 2020 described below, the Credit Line described below, and our product, licensing, and other sales. For our commitments, refer to the “Contractual Obligations and Other Commitments” section below.

Refer to additional disclosures associated with risks and our ability to generate and obtain adequate amounts of cash to meet capital requirements for both short-term and long-term obligations.

Based on our current business plan, we believe that our existing cash and marketable securities will be sufficient to meet our anticipated cash requirements for at least 12 months after May 8, 2025.

Credit Line Agreement

In September 2015, we entered into a Credit Line with UBS, or the Credit Line, providing for a $50.0 million revolving line of credit which could be drawn in increments at any time. The Credit Line was amended in July 2017 and bears interest at 30-day LIBOR plus 1.10%, and it is secured by a first priority lien and security interest in our money market and marketable securities held in our managed investment account with UBS. UBS has the right to demand full or partial payment of the Credit Line obligations and terminate it, in its discretion and without cause, at any time. The interest rate was subsequently changed to the 30-day Secured Overnight Financing Rate, or SOFR, average, plus 1.21%. The SOFR rate is variable. The Credit Line was subsequently increased from $50.0 million to $150.0 million. In June 2023, the Credit Line decreased to $100.0 million. In October 2023, the interest rate for the Credit Line was changed to the 30-day SOFR average, plus 0.5%. As of March 31, 2025, the total principal amount outstanding with accrued interest was $80.3 million and $20.0 million is remaining as available under the Credit Line.

Convertible Notes

In April 2020, we issued $287.5 million aggregate principal amount of Convertible Notes in a private placement offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended. We received net proceeds from the Convertible Notes of $278.3 million, after deducting the initial purchasers’ discounts and debt issuance costs. We used approximately $79.2 million of the net proceeds from the Convertible Notes offering to repay our obligations under our credit agreement with OrbiMed Royalty Opportunities II, LP.

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The Convertible Notes were senior, unsecured obligations of the Company and bore interest at a rate of 2.25% per year, payable in cash semi-annually in arrears in May and November of each year, beginning in November 2020. The Convertible Notes mature in May 2027, unless earlier converted, repurchased or redeemed in accordance with their terms. Upon conversion, the Convertible Notes were convertible into cash, shares of our common stock or a combination of cash and shares of our common stock, at our election. On July 19, 2024, we elected to exercise our optional redemption right to redeem all $287.5 million aggregate principal amount of our outstanding 2.25% Convertible Notes due 2027 and instructed Wilmington Trust, National Association, as trustee under the Indenture Agreement governing the Convertible Notes, to issue a redemption notice to registered holders of the Convertible Notes. The Redemption Date fixed for the redemption of the Convertible Notes was October 11, 2024. The redemption price for the Convertible Notes was equal to 100% of the principal amount of the Convertible Notes redeemed plus accrued and unpaid interest to, but excluding, the Redemption Date. We elected physical settlement with shares of our common stock as the settlement method to apply to all conversions of the Convertible Notes. On the Redemption Date, $287.4 million of Convertible Notes were converted for approximately 7.5 million shares of our common stock under the terms of the redemption notice. The remaining Convertible Notes not converted under the redemption notice were redeemed in exchange for cash at face value plus any accrued interest totaling $0.1 million.

Cash Flows

The following table summarizes our condensed consolidated cash flows for the periods indicated:

	Three Months Ended
	March 31,
	2025		2024
	(in thousands)
Cash provided by operating activities	$	44,452	$	27,001
Cash provided by (used in) investing activities		(16,815)		138,255
Cash provided by financing activities		544		6,466
Net change in cash, cash equivalents and restricted cash		28,181		171,722
Cash, cash equivalents and restricted cash, beginning of period		945,587		642,095
Cash, cash equivalents and restricted cash, end of period	$	973,768	$	813,817

Cash Provided by Operating Activities

Cash provided by operating activities during the three months ended March 31, 2025 was $44.5 million. The net loss of $66.9 million includes $88.0 million in non-cash charges resulting from $9.2 million of depreciation and amortization, $77.8 million of stock-based compensation expense, $4.4 million of non-cash lease expense, and $0.1 million for foreign exchange adjustment, offset by a $0.3 million decrease in non-cash expense recovery and a $3.2 million change in fair value of warrants and preferred stock. Operating assets had cash outflows of $19.1 million resulting from a $9.4 million increase in prepaid expenses and other assets, a $4.1 million increase in accounts receivable, and a $5.6 million increase in inventory. Operating liabilities resulted in cash inflows of $42.5 million resulting from a $2.4 million increase in accounts payable, a $17.0 million increase in accrued compensation, a $26.9 million increase in other accrued liabilities and a $0.7 million increase in deferred revenue, offset by a $4.5 million decrease in lease liabilities.

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Cash provided by operating activities during the three months ended March 31, 2024 was $27.0 million. The net loss of $67.6 million includes $75.3 million in non-cash charges resulting from $7.1 million of depreciation and amortization, $64.4 million of stock-based compensation expense, $3.6 million of non-cash lease expense, $0.3 million for amortization of debt discount and issuance cost, $0.4 million for foreign exchange adjustment, offset by $0.5 million premium amortization and discount accretion on investment securities. Operating assets had cash inflows of $1.7 million resulting from a $14.4 million decrease in prepaid expenses and other assets, offset by a $10.5 million increase in accounts receivable, a $2.2 million increase in inventory. Operating liabilities resulted in cash inflows of $17.6 million resulting from a $10.7 million increase in accounts payable, a $17.8 million increase in accrued compensation, and a $0.8 million increase in deferred revenue, offset by a $4.1 million decrease in lease liabilities and a $7.6 million decrease in other accrued liabilities.

Cash (Used in) Provided by Investing Activities

Cash used in investing activities for the three months ended March 31, 2025 totaled $16.8 million, comprised of $21.8 million in acquisitions of property and equipment, offset by $5.0 million from proceeds of investments maturities.

Cash provided by investing activities for the three months ended March 31, 2024 totaled $138.3 million, which was comprised of $169.1 million from proceeds of investments maturities, offset by $20.3 million in acquisitions of property and equipment and $10.5 million in asset acquisition.

Cash Provided by Financing Activities

Cash provided by financing activities for the three months ended March 31, 2025, totaled $0.5 million which was comprised of proceeds from the exercise of stock options.

Cash provided by financing activities for the three months ended March 31, 2024, totaled $6.5 million which was comprised of proceeds from the exercise of stock options.

Contractual Obligations and Other Commitments

We have entered into arrangements that contractually obligate us to make payments that will affect our liquidity and cash flows in future periods. Such arrangements include those related to our lease commitments, Credit Line, commercial supply agreements and other agreements. Our purchase requirements are expected to be met through the normal course of business.

Credit Line

The short-term debt obligations consist of the $80.3 million principal amount drawn from the Credit Line with UBS and applicable interest. The Credit Line was amended in July 2017 and bears interest at 30-day LIBOR plus 1.10%, and it is secured by a first priority lien and security interest in our money market and marketable securities held in our managed investment account with UBS. The interest rate was subsequently changed to the 30-day SOFR average, plus 1.21%. The SOFR rate is variable. UBS has the right to demand full or partial payment of the Credit Line obligations and terminate it, in its discretion and without cause, at any time. In October 2023, the interest rate was subsequently changed to the 30-day SOFR average, plus 0.5%. Please refer to Note 10, Debt, for further details.

Inventory purchase and other contractual obligations

We enter into contracts in the normal course of business with various third parties for clinical trials, preclinical research studies, testing, manufacturing, and other services for operational purposes. Payments due upon cancellation generally consist only of payments for services provided or expenses incurred, including non-cancellable obligations of our service providers, up to the date of cancellation. These payments have not been included separately within these contractual and other obligations disclosures. Please refer to Note 8, Commitments and Contingencies in the Notes to Unaudited Interim Condensed Consolidated Financial Statements for further details.

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Operating leases

Our lease commitments consist of $3.4 million of payments, which will be paid over the terms of the leases. The leases have not commenced under Accounting Standards Codification, or ASC, Topic 842, Leases, as of March 31, 2025. As a result, these leases are not reflected within the consolidated balance sheets.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements during the periods presented.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk

We are exposed to market risks in the ordinary course of our business. These risks primarily relate to interest rates. Our Credit Line had an interest rate of 30-day LIBOR plus 1.10%. The interest rate was subsequently changed to the 30-day SOFR average, plus 1.21%. The SOFR rate is variable. In October 2023, the interest rate for the Credit Line was subsequently changed to the 30-day SOFR average, plus 0.5%. An incremental change in the borrowing rate of 100 basis points would increase our annual interest expense by $0.8 million based on our $80.3 million gross debt outstanding on our Credit Line, including principal and accrued interest as of March 31, 2025. Our investment portfolio is exposed to market risk from changes in interest rates. This risk is mitigated as we have maintained a relatively short average maturity for our investment portfolio. An incremental change in the investment yield of 100 basis points would increase our annual interest income by approximately $0.2 million annually in relation to amounts we would expect to earn, based on our short-term investments as of March 31, 2025.

Foreign Currency Exchange Rate Fluctuations

Our operations are currently conducted primarily in the United States. As we expand internationally, our results of operations and cash flows may become subject to fluctuations due to changes in foreign currency exchange rates. In periods when the U.S. dollar declines in value as compared to the foreign currencies in which we incur expenses, our foreign currency-based expenses will increase when translated into U.S. dollars. In addition, future fluctuations in the value of the U.S. dollar may affect the price at which we sell our tests outside the United States. To date, our foreign currency risk has been minimal, and we have not historically hedged our foreign currency risk; however, we may consider doing so in the future.

Inflation Risk

As of the date of filing of this Quarterly Report on Form 10-Q, we do not believe that inflation has had a material effect on our business, financial condition, or results of operations. If our costs were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs through increases in revenue as increases in core inflation rates may also negatively affect demand for our product offerings. Our inability or failure to do so could harm our business, financial condition, and results of operations.

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ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of March 31, 2025. The term “disclosure controls and procedures,” as defined in Rule 13a-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to our management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.

Based on the evaluation of our disclosure controls and procedures as of March 31, 2025, our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the period ended March 31, 2025, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations on Effectiveness of Controls

Our management, including our Chief Executive Officer and Chief Financial Officer, do not expect that our disclosure controls or our internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the controls. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

PART II – OTHER INFORMATION

ITEM 1.LEGAL PROCEEDINGS

From time to time, we are involved in legal proceedings. The results of such legal proceedings and claims cannot be predicted with certainty, and regardless of the outcome, legal proceedings could have an adverse impact on us because of defense and settlement costs, diversion of resources and other factors.

For information regarding certain current legal proceedings, see “Note 8—Commitments and Contingencies—Legal Proceedings” in the Notes to Unaudited Interim Condensed Consolidated Financial Statements, which is incorporated herein by reference.

43

ITEM 1A.RISK FACTORS

Investing in our common stock involves a high degree of risk. In addition to the information set forth in this Quarterly Report on Form 10-Q, including the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes, you should consider carefully the factors discussed in Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2024 filed with the Securities and Exchange Commission on February 28, 2025. The occurrence of any of the risks and uncertainties described in such Annual Report could materially and adversely affect our business, financial condition, results of operations and prospects. In that event, the price of our common stock could decline and you could lose part or all of your investment. Furthermore, such risks are not the only ones we face; additional risks and uncertainties not currently known or that we currently deem to be immaterial may also materially adversely affect our business, financial condition or results of operations.

ITEM 2         UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

(a)         Recent Sales of Unregistered Securities

              None.

(b)         Use of Proceeds

Not applicable.

(c)         Purchases of Equity Securities by the Issuer and Affiliated Purchasers

              None.

ITEM 3         DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4         MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5         OTHER INFORMATION

Securities Trading Plans of Directors and Executive Officers

On March 14, 2025, Matthew Rabinowitz, our co-founder and executive chairman, adopted a trading arrangement for the sale of securities of the Company’s common stock (a “Rule 10b5-1 Trading Plan”) that is intended to satisfy the affirmative defense conditions of Securities Exchange Act Rule 10b5-1(c). Dr. Rabinowitz’s Rule 10b5-1 Trading Plan provides for the sale of 80,000 shares of common stock pursuant to the terms of the plan between June 13, 2025 and December 13, 2025.

On March 14, 2025, Daniel Rabinowitz, our chief legal officer and secretary, amended a Rule 10b5-1 Trading Plan to provide for the sale of 19,908 shares of our common stock pursuant to the terms of the plan between June 13, 2025 and August 15, 2026.

44

ITEM 6         EXHIBITS

INDEX TO EXHIBITS

		Incorporated by Reference
Exhibit No.	Description	Form	File No.	Exhibit	Filing Date	Filed Herewith
10.1*+	Tenth Amendment to Supply Agreement, dated January 10, 2025, by and between the Registrant and Illumina, Inc.	10-K	001-37478	10.2.10	02/28/2025
31.1	Certification of Principal Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.					X
31.2	Certification of Principal Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.					X
32.1†	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.					X
32.2†	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.					X
101.INS	XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL 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

45

		Incorporated by Reference
Exhibit No.	Description	Form	File No.	Exhibit	Filing Date	Filed Herewith
104	Cover Page Interactive Data File - The cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.					X

†The certifications attached as Exhibits 32.1 and 32.2 that accompany this Quarterly Report on Form 10-Q are not deemed filed with the SEC and are not to be incorporated by reference into any filing of Natera, Inc. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Quarterly Report on Form 10-Q, regardless of any general incorporation language contained in any filing.

*Portions of this exhibit (indicated by asterisks) have been omitted pursuant to Item 601(b)(10) of Regulation S-K.

+Description updated to reflect correct date of the agreement as January 10, 2025.

46

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. 

	NATERA, INC.
Date: May 8, 2025	By:	/ s / Steve Chapman
	Name:	Steve Chapman
	Title:	Chief Executive Officer, President, and Director
		(Principal Executive Officer)
	By:	/ s / Michael Brophy
	Name:	Michael Brophy
	Title:	Chief Financial Officer
		(Principal Financial and Accounting Officer)

47

EX-31.1

Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Steve Chapman, certify that:

1. I have reviewed this quarterly report on Form 10-Q for the quarter ended March 31, 2025 of Natera, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)    designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)   designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)    evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)    disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)    all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)    any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

3
Date: May 8, 2025	By:	/s/ Steve Chapman
	Name:	Steve Chapman
	Title:	Chief Executive Officer and President
		(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER

PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Michael Brophy, certify that:

1. I have reviewed this quarterly report on Form 10-Q for the quarter ended March 31, 2025 of Natera, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)    designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)    designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)    evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)    disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)    all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)    any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

3
Date: May 8, 2025	By:	/ s / Michael Brophy
	Name:	Michael Brophy
	Title:	Chief Financial Officer
		(Principal Financial and Accounting Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Steve Chapman, Chief Executive Officer and President of Natera, Inc. (the “Company”), certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(1) The quarterly report on Form 10-Q for the Company for the quarter ended March 31, 2025 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

ovemb
Date: May 8, 2025	By:	/ s / Steve Chapman
	Name:	Steve Chapman
	Title:	Chief Executive Officer and President
		(Principal Executive Officer)

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Michael Brophy, Chief Financial Officer of Natera, Inc. (the “Company”), certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(1) The quarterly report on Form 10-Q for the Company for the quarter ended March 31, 2025 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

3
Date: May 8, 2025	By:	/ s / Michael Brophy
	Name:	Michael Brophy
	Title:	Chief Financial Officer
		(Principal Financial and Accounting Officer)

XML

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2025	May 02, 2025
Document and Entity Information
Document Type	10-Q
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Mar. 31, 2025
Entity File Number	001-37478
Entity Registrant Name	Natera, Inc.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	01-0894487
Entity Address, Address Line One	13011 McCallen Pass
Entity Address, Address Line Two	Building A Suite 100
Entity Address, City or Town	Austin
Entity Address, State or Province	TX
Entity Address, Postal Zip Code	78753
City Area Code	650
Local Phone Number	980-9190
Title of 12(b) Security	Common Stock, par value $0.0001 per share
Trading Symbol	NTRA
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		136,546,580
Entity Central Index Key	0001604821
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2025
Document Fiscal Period Focus	Q1
Amendment Flag	false

XML

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2025	Dec. 31, 2024
Current assets:
Cash, cash equivalents and restricted cash	$ 973,768	$ 945,587
Short-term investments	17,832	22,689
Accounts receivable, net of allowance of $7,434 and $7,259 at March 31, 2025 and December 31, 2024, respectively	318,233	314,165
Inventory	50,367	44,744
Prepaid expenses and other current assets, net	56,185	48,635
Total current assets	1,416,385	1,375,820
Property and equipment, net	180,453	162,046
Operating lease right-of-use assets	94,631	86,149
Other assets	40,897	36,720
Total assets	1,732,366	1,660,735
Current liabilities:
Accounts payable	39,240	34,922
Accrued compensation	47,086	62,114
Other accrued liabilities	178,449	146,893
Deferred revenue, current portion	20,557	19,754
Short-term debt financing	80,345	80,362
Total current liabilities	365,677	344,045
Deferred revenue, long-term portion and other liabilities	23,958	24,682
Operating lease liabilities, long-term portion	103,056	96,588
Total liabilities	492,691	465,315
Commitments and contingencies (Note 8)
Stockholders' equity:
Common stock, $0.0001 par value: 750,000 shares authorized at both March 31, 2025 and December 31, 2024; 135,932 and 132,646 shares issued and outstanding at March 31, 2025 and December 31, 2024, respectively	14	12
Additional paid-in capital	3,874,656	3,763,614
Accumulated deficit	(2,634,798)	(2,567,862)
Accumulated other comprehensive loss	(197)	(344)
Total stockholders' equity	1,239,675	1,195,420
Total liabilities and stockholders' equity	$ 1,732,366	$ 1,660,735

XML

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) shares in Thousands, $ in Thousands	Mar. 31, 2025	Dec. 31, 2024
Condensed Consolidated Balance Sheets
Allowances on accounts receivable	$ 7,434	$ 7,259
Common stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Common stock, shares authorized	750,000	750,000
Common stock, shares issued	135,932	132,646
Common stock, shares outstanding	135,932	132,646

XML

Condensed Consolidated Statements of Operations and Comprehensive Loss - USD ($) shares in Thousands	3 Months Ended
	Mar. 31, 2025	Mar. 31, 2024
Revenues
Total revenues	$ 501,830,000	$ 367,741,000
Cost and expenses
Research and development	129,078,000	88,637,000
Selling, general and administrative	266,864,000	194,278,000
Total cost and expenses	581,007,000	442,055,000
Loss from operations	(79,177,000)	(74,314,000)
Interest expense	(1,005,000)	(3,124,000)
Interest and other income, net	13,419,000	10,267,000
Loss before income taxes	(66,763,000)	(67,171,000)
Income tax expense	(173,000)	(428,000)
Net loss	(66,936,000)	(67,599,000)
Unrealized gain on available-for-sale securities, net of tax	147,000	893,000
Comprehensive loss	$ (66,789,000)	$ (66,706,000)
Net loss per share (Note 12):
Basic (in dollars per share)	$ (0.50)	$ (0.56)
Diluted (in dollars per share)	$ (0.50)	$ (0.56)
Weighted-average number of shares used in computing basic and diluted net loss per share:
Basic (in shares)	134,750	120,814
Diluted (in shares)	134,750	120,814
Product
Revenues
Total revenues	$ 500,036,000	$ 364,672,000
Cost and expenses
Cost of revenues	184,613,000	158,833,000
Licensing and other
Revenues
Total revenues	1,794,000	3,069,000
Cost and expenses
Cost of revenues	$ 452,000	$ 307,000

XML

Condensed Consolidated Statements of Stockholders' Equity - USD ($) shares in Thousands, $ in Thousands	Common stock	Additional Paid-in Capital	Accumulated Deficit	Accumulated Other Comprehensive Loss	Total
Balance at Dec. 31, 2023	$ 11	$ 3,145,837	$ (2,377,436)	$ (3,085)	$ 765,327
Balance (in shares) at Dec. 31, 2023	119,581
Issuance of common stock upon exercise of stock options		6,466			6,466
Issuance of common stock upon exercise of stock options (in shares)	792
Issuance of common stock for bonus		24,071			24,071
Issuance of common stock for bonus (in shares)	270
Vesting of restricted stock units	$ 1				1
Vesting of restricted stock units (in shares)	1,591
Stock based compensation		64,952			64,952
Unrealized gain loss on available-for sale securities				893	893
Net loss			(67,599)		(67,599)
Balance at Mar. 31, 2024	$ 12	3,241,326	(2,445,035)	(2,192)	794,111
Balance (in shares) at Mar. 31, 2024	122,234
Balance at Dec. 31, 2024	$ 12	3,763,614	(2,567,862)	(344)	$ 1,195,420
Balance (in shares) at Dec. 31, 2024	132,646				132,646
Issuance of common stock upon exercise of stock options		544			$ 544
Issuance of common stock upon exercise of stock options (in shares)	50
Issuance of common stock for bonus		32,063			32,063
Issuance of common stock for bonus (in shares)	222
Vesting of restricted stock units	$ 2				2
Vesting of restricted stock units (in shares)	3,014
Stock based compensation		78,435			78,435
Unrealized gain loss on available-for sale securities				147	147
Net loss			(66,936)		(66,936)
Balance at Mar. 31, 2025	$ 14	$ 3,874,656	$ (2,634,798)	$ (197)	$ 1,239,675
Balance (in shares) at Mar. 31, 2025	135,932				135,932

XML

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2025	Mar. 31, 2024
Operating activities:
Net loss	$ (66,936)	$ (67,599)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	9,237	7,063
Amortization of premiums and accretion of purchase discounts on investment securities	9	(460)
Stock-based compensation	77,827	64,447
Non-cash lease expense	4,389	3,593
Non-cash expense recovery	(361)
Amortization of debt discount and issuance cost		328
Change in fair value of warrants and preferred stock	(3,235)
Foreign exchange adjustment	138	359
Non-cash interest expense	(17)	(1)
Changes in operating assets and liabilities:
Accounts receivable	(4,068)	(10,459)
Inventory	(5,623)	(2,265)
Prepaid expenses and other assets	(9,354)	14,428
Accounts payable	2,379	10,732
Accrued compensation	17,035	17,789
Operating lease liabilities	(4,505)	(4,122)
Other accrued liabilities	26,866	(7,625)
Deferred revenue	671	793
Cash provided by operating activities	44,452	27,001
Investing activities:
Proceeds from maturity of investments	5,000	169,065
Purchases of property and equipment, net	(21,815)	(20,315)
Cash paid for acquisition of intangible assets		(10,495)
Cash provided by (used in) investing activities	(16,815)	138,255
Financing activities:
Proceeds from exercise of stock options	544	6,466
Cash provided by financing activities	544	6,466
Net change in cash, cash equivalents and restricted cash	28,181	171,722
Cash, cash equivalents and restricted cash, beginning of period	945,587	642,095
Cash, cash equivalents and restricted cash, end of period	973,768	813,817
Supplemental disclosure of cash flow information:
Cash paid for interest	1,005	1,179
Non-cash activities:
Purchases of property and equipment in accounts payable and accruals	4,223	112
Acquisition of warrants		1,884
Issuance of common stock for bonuses	32,063	24,071
Stock-based compensation included in capitalized software development costs	$ 608	$ 505

XML

Description of Business

3 Months Ended

Mar. 31, 2025

Description of Business

Description of Business

1. Description of Business

Natera, Inc. (the “Company”) was formed in the state of California as Gene Security Network, LLC in November 2003 and incorporated in the state of Delaware in January 2007. The Company is a diagnostics company with proprietary molecular and bioinformatics technology that it is applying to change the management of disease worldwide. The Company’s cell-free DNA (“cfDNA”) technology combines its novel molecular assays, which reliably measure many informative regions across the genome from samples as small as a single cell, with its statistical algorithms which incorporate data available from the broader scientific community to identify genetic variations covering a wide range of serious conditions with high accuracy and coverage. The Company focuses on applying its technology to three main areas of healthcare – women’s health, oncology and organ health. In the women’s health space, the Company develops and commercializes non- or minimally- invasive tests to evaluate risk for, and thereby enable early detection of, a wide range of genetic conditions, such as Down syndrome. In oncology, the Company commercializes, among others, a personalized blood-based DNA test to detect molecular residual disease and monitor for disease recurrence across a broad range of cancer types. The Company’s third area of focus is organ health, with tests to assess kidney, heart, and lung transplant rejection as well as genetic testing for chronic kidney disease. The Company operates laboratories in Austin, Texas and San Carlos, California certified under the Clinical Laboratory Improvement Amendments of 1988 (“CLIA”) providing a host of cell-free DNA-based molecular testing services. The Company determines its operating segments based on the way it organizes its business to make operating decisions and assess performance. The Company operates one segment, the development and commercialization of molecular testing services, applying its proprietary technology in the fields of women’s health, oncology and organ health.

The Company’s key product offerings include its Panorama Non-Invasive Prenatal Test (“Panorama”) that screens for chromosomal abnormalities of a fetus in singleton and twin pregnancies, typically with a blood draw from the mother; Horizon Carrier Screening (“Horizon”) to determine carrier status for a large number of severe genetic diseases that could be passed on to the carrier’s children; its Signatera molecular residual disease test (“Signatera”) to detect circulating tumor DNA in patients previously diagnosed with cancer to assess molecular residual disease, monitor for recurrence, and evaluate treatment response; and its Prospera test, to assess organ transplant rejection in patients who have undergone kidney, heart, or lung transplantation. All testing is available principally in the United States. The Company also offers its Panorama test to customers outside of the United States, primarily in Europe. The Company also offers Constellation, a cloud-based software platform that enables laboratory customers to gain access through the cloud to the Company’s algorithms and bioinformatics in order to validate and launch their own tests based on the Company’s technology.

XML

Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2025

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

During the three months ended March 31, 2025, there were no material changes to the Company’s significant accounting policies as disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 (filed on February 28, 2025).

Basis of Presentation

The accompanying unaudited interim condensed consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information. The unaudited interim condensed consolidated financial information includes only adjustments of a normal recurring nature necessary for a fair presentation of the Company’s results of operations, financial position, changes in stockholders’ equity, and cash flows. The results of operations for the three months ended March 31, 2025, are not necessarily indicative of the results for the full year or the results for any future periods. The condensed consolidated balance sheet as of December 31, 2024 has been derived from audited financial statements at that date. These financial statements should be read in conjunction with the audited financial statements, and related notes for the year ended December 31, 2024 included in the Company’s Annual Report on Form 10-K filed with the SEC on February 28, 2025.

Liquidity Matters

The Company has incurred net losses since its inception and anticipates net losses for the near future. The Company had a net loss of $66.9 million for the three months ended March 31, 2025 and an accumulated deficit of $2.6 billion as of March 31, 2025. As of March 31, 2025, the Company had $973.8 million in cash, cash equivalents, and restricted cash, $17.8 million in marketable securities, and an $80.3 million outstanding balance on its Credit Line (as defined in Note 10, Debt) including accrued interest. The Company is required to maintain a minimum of at least $150.0 million in its UBS accounts as collateral for its Credit Line, which is classified as cash, cash equivalents, and short-term investments in the condensed consolidated balance sheets. As of March 31, 2025, the Company had $20.0 million remaining and available on its Credit Line.

While the Company has introduced multiple products that are generating revenues, these revenues have not been sufficient to fund all operations and business plans. Accordingly, the Company has funded the portion of operating costs that exceeds revenues through a combination of equity issuances, debt issuances, and other financings.

The Company continues to invest in the development and commercialization of its existing and future products and, consequently, it will need to generate additional revenues to achieve future profitability and may need to raise additional equity or debt financing. If the Company raises additional funds by issuing equity securities, its stockholders will experience dilution. Additional debt financing, if available, may involve covenants restricting its operations or its ability to incur additional debt. Any additional debt financing or additional equity that the Company raises may contain terms that are not favorable to it or its stockholders and requires significant debt service payments, which diverts resources from other activities. Additional financing may not be available when necessary or in amounts or on terms acceptable to the Company. If the Company is unable to obtain additional financing, it may be required to delay or slow its investment in the development and commercialization of its products and significantly scale back its business and operations.

On July 19, 2024, the Company announced its decision to redeem all of its outstanding 2.25% Convertible Senior Notes (the “Convertible Notes”) due 2027. The redemption was completed on October 11, 2024 (the “Redemption Date”). The redemption price for the Convertible Notes equaled 100% of the principal amount of the Convertible Notes to be redeemed plus accrued and unpaid interest to, but excluding, the Redemption Date. The Company elected physical settlement with shares of its common stock as the settlement method to apply to all conversions of the Convertible Notes. On the Redemption Date, $287.4 million of Convertible Notes were redeemed for approximately 7.5 million shares of the Company’s common stock under the terms of the redemption notice. The remaining Convertible Notes not redeemed under the redemption notice were converted in exchange for cash at face value plus accrued interest totaling $0.1 million. As such, the Company’s redemption of its Convertible Notes did not have a material effect on its liquidity.

Based on the Company’s current business plan, the Company believes that its existing cash and marketable securities will be sufficient to meet its anticipated cash requirements for at least 12 months after May 8, 2025.

Principles of Consolidation

The accompanying condensed consolidated financial statements include all the accounts of the Company and its subsidiaries. All intercompany balances and transactions have been eliminated.

Use of Estimates

The preparation of financial statements in accordance with generally accepted accounting principles (GAAP) in the United States requires management to make estimates and assumptions about future events that affect the amounts of assets and liabilities reported, disclosures about contingent assets and liabilities, and reported amounts of revenues and expenses. Significant items subject to such estimates include stock-based compensation, the fair value of options, and the expected consideration (average selling price) to be received from contracts with customers, insurance payors, and patients. These estimates and assumptions are based on management's best estimates and judgment. Management regularly evaluates its estimates and assumptions using historical experience and other factors, including contractual terms and statutory limits; however, actual results could differ from these estimates and could have an adverse effect on the Company's financial statements.

Investments

Investments consist primarily of debt securities such as U.S. Treasuries, U.S. agency and municipal bonds. Management determines the appropriate classification of securities at the time of purchase and re-evaluates such determination at each balance sheet date. The Company generally classifies its entire investment portfolio as available-for-sale. The Company views its available-for-sale portfolio as available for use in current operations. Accordingly, the Company classifies all investments as short-term, irrespective of maturity date. Available-for-sale securities are carried at fair value, with unrealized gains and losses reported in accumulated other comprehensive income (loss), which is a separate component of stockholders’ equity.

The Company classifies its investments as Level 1 or 2 within the fair value hierarchy. Fair values determined by Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets that the Company has the ability to access. Fair values determined by Level 2 inputs utilize data points that are observable such as quoted prices, interest rates and yield curves. The Company holds Level 2 securities which are initially valued at the transaction price and subsequently valued by a third-party service provider using inputs other than quoted prices that are observable either directly or indirectly, such as yield curve, volatility factors, credit spreads, default rates, loss severity, current market and contractual prices for the underlying instruments or debt, broker and dealer quotes, as well as other relevant economic measures. The Company performs certain procedures to corroborate the fair value of these holdings. The Company also holds warrants issued by MyOme which are classified as Level 3 investments because the valuation methods include certain unobservable inputs. These warrants are accounted for as derivatives and recorded at fair value on a recurring basis.

Available-for-sale debt securities. The amended guidance from Accounting Standards Update (“ASU”) 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASC 326”), requires the measurement of expected credit losses for available-for-sale debt securities held at the reporting date over the remaining life based on historical experience, current conditions, and reasonable and supportable forecasts. The Company evaluated its investment portfolio under the available-for-sale debt securities impairment model guidance and determined the Company’s investment portfolio is composed of low-risk, investment grade securities and thus has not recorded an expected credit loss for its investment portfolio. Further, gross unrealized losses on available for sale securities were not material at March 31, 2025.

Accounts Receivable, net of allowance

Trade accounts receivable and other receivables. The allowance for expected credit losses for trade accounts receivable is based on the Company’s assessment of the collectability of accounts related to its clinics and laboratory partner customers. The Company regularly reviews the allowance by considering factors such as historical experience, the age of the accounts receivable balances, and current economic conditions that may affect a customer’s ability to pay. See Note 6, Balance Sheet Components, for a roll-forward of the allowance for expected credit losses related to trade accounts receivable for the three months ended March 31, 2025 and 2024.

With respect to revenue recognized related to genetic test services provided to patient customers whereby consideration is expected to be received from insurance or patient payors, the Company recognizes a constraint to the estimated variable consideration such that it is not probable that a significant revenue reversal will occur. When assessing the total consideration expected to be received from insurance carriers and patients, a certain percentage of revenues is further constrained for estimated refunds. After applying the ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing (“ASC 606”) constraint, the Company assessed for credit losses under ASC 326 and determined an incremental credit loss was not needed given the quality of the insurance payors from whom such receivables are expected to be collectible and the relatively short duration over which the majority of receivables are collected. Accordingly, the Company currently does not have an incremental credit loss reserve nor allowance for expected credit losses against accounts receivable for insurance and patient payors due to the average selling price calculations, which incorporate these risks as net receivables are recorded.

Inventory

Inventory is recorded at the lower of cost or net realizable value, determined on a first-in, first-out basis. Inventory consists entirely of supplies, which are consumed at the point biologic samples are collected and the Company provides genetic testing services; therefore, the Company does not maintain any work-in-process or finished goods inventory. The Company enters into inventory purchases commitments so that it can meet future delivery schedules based on forecasted demand for its tests.

The Company analyzes its inventory to determine whether the composition of its inventory is obsolete, slow-moving or unsalable. A write down of specifically identified unusable, or obsolete inventory in the period is recognized by considering product expiration dates and scrapped inventory. Any write-down of inventory to net realizable value establishes a new cost basis and will be maintained even if certain circumstances suggest the inventory is recoverable in subsequent periods. Costs associated with the write-down of inventory are recorded to cost of revenue on our consolidated statements of operations.

Accumulated Other Comprehensive Income (Loss)

Comprehensive loss and its components encompass all changes in equity other than those with stockholders, and include net loss, unrealized gains and losses on available-for-sale marketable securities and foreign currency translation adjustments.

	Three months ended
	March 31,
	2025		2024
	(in thousands)
Beginning balance	$	(344)	$	(3,085)
Net unrealized gain on available-for-sale securities, net of tax and foreign currency translation adjustment		147		893
Ending balance	$	(197)	$	(2,192)

The change in net unrealized loss on available-for-sale securities is due to the impact of changes in interest rates on the value of fixed-rate investments and not due to any credit deterioration. Further, due to the short-term nature of these investments, the Company has the ability and intention to hold any such investments until maturity and does not expect to realize any material investment losses. As such, the Company has assessed the unrealized loss position for available-for-sale securities and determined that an allowance for credit loss was not necessary.

Revenue Recognition

The Company recognizes revenue under ASC 606, using the following five step process:

● Identification of a contract, or contracts, with a customer;

● Identification of the performance obligations in the contract;

● Determination of the transaction price;

● Allocation of the transaction price to the performance obligations in the contract; and

● Revenue recognition when, or as, the performance obligations are satisfied.

The Company uses the expected value amount method of estimating variable consideration. The total consideration which the Company expects to collect in exchange for the Company’s products is an estimate and may be fixed or variable, and is primarily based on historical cash collections for tests delivered, as adjusted for current expectations. Current expectations of cash collections factor in changes in reimbursement rate trends, past events not expected to recur, and future known changes such as anticipated contractual pricing changes or changes to insurance coverage.  For insurance carriers and product types with similar reimbursement characteristics, the Company uses a portfolio approach to estimate variable consideration. When assessing the total variable consideration expected to be received from insurance carriers and patients, the Company considers both the magnitude and likelihood of a revenue reversal in the determination of the percentage of revenues to further constrain for estimated refunds.

See Note 3, Revenue Recognition, for detailed discussions of product revenues, licensing and other revenues, and how the five steps described above are applied.

Fair Value

The Company discloses the fair value of financial instruments for financial assets and liabilities for which the value is practicable to estimate. Fair value is defined as the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price).

Related Party Transactions

On December 6, 2021, the Company participated along with certain other investors in the series B financing of MyOme, Inc. (“MyOme”), and purchased preferred shares and warrants in exchange for a cash payment of approximately $4.0 million which was allocated $2.2 million for preferred shares and $1.8 million for warrants. In August 2024, the Company participated in a subsequent round of the series B financing and purchased an additional $2.7 million of series B preferred shares at the same valuation as the initial round of financing in December 2021. The Company does not hold a seat on MyOme’s board of directors and does not participate or direct the day to day activities of MyOme. Because MyOme is a privately-held company without readily determinable fair values, the Company elected to account for its preferred Series B share investment in MyOme using the measurement alternative, which is cost, less any impairment, adjusted for changes in fair value resulting from observable transactions for identical or similar investments of the same issuer as of the respective transaction dates. When indicators exist and the estimated fair value of the investment is below its carrying amount, the Company would adjust the investment to fair value. The change in carrying value, resulting from the remeasurements, would be recognized in interest and other income, net on the consolidated statements of operations. During the three months ended March 31, 2024, no upward nor downward adjustments were recorded. The following are the Company’s related persons and the basis of each such related person’s relationship with MyOme:

● Matthew Rabinowitz, the Company’s executive chairman and co-founder, is the chairman of the board and founder of MyOme, and a beneficial holder of approximately 22.6% of the outstanding shares of MyOme on a fully dilutive basis;

● Jonathan Sheena, the Company’s co-founder and a member of the Company’s board of directors, is a stockholder and a member of the board of directors of MyOme;

● Daniel Rabinowitz, the Company’s Secretary and Chief Legal Officer, is a stockholder of MyOme; and

● Roelof Botha, the Lead Independent Director of the Company’s board of directors, is a managing member of Sequoia Capital. Certain funds affiliated with Sequoia Capital also participated in MyOme’s series B financing.

None of the related party investments in MyOme by our executives and directors noted above were at the behest of the Company nor funded by the Company.

In February 2024, the Company entered into a collaboration and commercialization agreement (the “Collaboration Agreement”) with MyOme pursuant to which the parties agreed to partner to offer certain genetic testing services to be developed and funded solely by MyOme and overseen by a joint steering committee. The Company agreed to assist MyOme with commercial activities. In connection with the Collaboration Agreement, the Company received a 10-year warrant to purchase 3,058,485 shares of MyOme's common stock at an exercise price of $0.25 per share, which is exercisable in whole or in part, commencing in February 2024, and can be converted to MyOme’s common stock upon the occurrence of MyOme’s initial public offering or a liquidation event (as such terms are defined in MyOme's certificate of incorporation). Additionally, upon the achievement of certain product commercialization milestones, the Company is eligible to receive an additional warrant exercisable for 2,080,565 shares of MyOme’s series B preferred stock with an exercise price of $0.01 per share. During September 2024, the Company achieved certain product commercialization milestones such that the warrant for 2,080,565 shares of MyOme’s series B preferred stock was due from MyOme to the Company. These warrants were granted and issued by MyOme to the Company during the fourth quarter of 2024, and were exercisable in whole or in part in December 2024. However, the Company needs to perform ongoing collaboration in exchange for the warrant consideration. Accordingly, the warrants have been included within other assets and allocated between short-term and long-term liabilities on the consolidated balance sheets. The Company is amortizing the liability as a reduction of selling and marketing expense upon commercialization and sale of the products contemplated under the Collaboration Agreement over the life of the contract. For the three months ended March 31, 2025, the amortization of the non-cash liability was $0.4 million.

The warrants issued to the Company in 2021 and 2024 are accounted for as derivative instruments and recorded within other assets on the consolidated balance sheets at fair value. The warrants were valued using the Black-Scholes valuation model as of each reporting period, including the date of issuance. Subject to the Company's achievement of certain commercialization milestones, the Company may receive additional warrants to purchase MyOme’s series B preferred stock. To the extent the genetic testing services are successfully commercialized, the Company will owe certain royalty payments to MyOme. For the three months ended March 31, 2025, the royalties to MyOme were not material. As of March 31, 2025 and December 31, 2024, the Company’s carrying amount of preferred shares in MyOme was $6.6 million and $4.9 million, respectively, on its consolidated balance sheets. The fair market value of the warrants as of March 31, 2025 and December 31, 2024 was $12.7 million and $11.2 million, respectively, on the consolidated balance sheets.

Risk and Uncertainties

Financial instruments that potentially subject the Company to credit risk consist of cash, cash equivalents, and restricted cash, accounts receivable and investments. The Company limits its exposure to credit loss by placing its cash in financial institutions with high credit ratings. The Company's cash may consist of deposits held with banks that may at times exceed federally insured limits. The Company performs evaluations of the relative credit standing of these financial institutions and limits the amount of credit exposure with any one institution.

For the three months ended March 31, 2025, and 2024, there were no customers exceeding 10% of total revenues on an individual basis. As of March 31, 2025 and December 31, 2024, there were no customers with an outstanding balance exceeding 10% of net accounts receivable. 

For the three months ended March 31, 2025 and 2024, approximately 14.0% and 11.6%, respectively, of total revenue were paid by Medicare on behalf of multiple customers. As of March 31, 2025 and December 31, 2024, approximately 12.6% and 11.5%, respectively, of accounts receivable are expected to be paid by Medicare on behalf of multiple customers.

Recent Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”) under its accounting standard codifications or other standard setting bodies and are adopted by the Company as of the specified effective date.

Recently Adopted Accounting Pronouncements

In March 2020, ASU 2020-04, Reference Rate Reform (Topic 848) (“Topic 848”) was issued which provides temporary optional guidance to ease the potential burden in accounting for reference rate reform. The new guidance provides optional expedients and exceptions for applying generally accepted accounting principles to transactions affected by reference rate reform if certain criteria are met. These transactions include contract modifications, hedging relationships, and sale or transfer of debt securities classified as held-to-maturity. ASU 2022-06, or Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848, defers the sunset date of Topic 848 from December 31, 2022 to December 31, 2024. Adoption of this standard occurred on January 1, 2025 and did not have a material impact on the Company’s consolidated financial statements.

New Accounting Pronouncements Not Yet Adopted

In December 2023, ASU 2023-09, Income Taxes - Improvements to Income Tax Disclosures, was issued, which requires enhanced disclosures in connection with an entity's effective tax rate reconciliation and income taxes paid disaggregated by jurisdiction. The standard became effective for annual periods beginning after December 15, 2024. The Company does not expect the adoption of this standard to have a significant impact on its consolidated financial statements.

In November 2024, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40) was issued which requires disaggregation of any relevant expense caption presented on the face of the income statement for certain expense categories. The new guidance is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact of the guidance on its consolidated financial statements. 

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Revenue Recognition

3 Months Ended

Mar. 31, 2025

Revenue Recognition

Revenue Recognition

3. Revenue Recognition

The Company recognizes revenues when, or as, performance obligations in the contracts are satisfied, in the amount reflecting the expected consideration to be received from the goods or services transferred to the customers.

Product Revenues

Product revenues are derived by performing genetic testing services and the Company’s performance obligation is complete when test results are delivered to a laboratory or patient (each a customer).

Additionally, the Company enters into agreements with pharmaceutical companies to utilize the Company’s Signatera tests, typically to study new cancer treatments or to validate the outcomes of clinical trials for which the pharmaceutical companies are identified as customers. Such arrangements generally involve performing whole-exome sequencing services and the testing of patient samples to detect cancer mutations using its Signatera test. In addition to performing Signatera tests, these agreements typically include certain activities to fulfill the contract, such as customer data setup and management and ongoing reporting. Each test result is billable to customers upon delivery and the personalized cancer profile also makes each test distinct within the context of the contract as customers can exercise control over the test results upon delivery. Accordingly, the Company recognizes test processing revenue as individual test results are delivered to customers.

For certain contracts with pharmaceutical companies where the Company is developing a companion diagnostic test in addition to performing regular testing services, revenue is primarily recognized proportionally as services are performed and/or tests are delivered.

A performance obligation represents a promise in a contract to transfer a distinct good or service to a customer, which represents a unit of accounting in accordance with ASC 606. A performance obligation is considered distinct from other obligations in a contract when it provides a benefit to the customer either on its own or together with other resources that are readily available to the customer and is separately identified in the contract. The Company considers a performance obligation satisfied once the Company has transferred control of a good or service to the customer, meaning the customer has the ability to use and obtain the benefit of the good or service. A portion of the consideration should be allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. The Company evaluates its contracts with laboratory partners and patients and identifies the performance obligations in those contracts, which are the delivery of the test results.

The total consideration the Company expects to collect in exchange for the Company’s products is an estimate and may be fixed or variable. Consideration includes reimbursement from both patients and insurance carriers, adjusted for variable consideration related to disallowed cases, percent of patient responsibility collected, refunds and reserves, and is estimated using the expected value method. For insurance carriers and product types with similar reimbursement characteristics, the Company uses a portfolio of relevant historical data to estimate variable consideration and total collections for the Company’s products. The Company constrains the estimated variable consideration when it determines it is probable that a significant reversal in the amount of cumulative revenue recognized may occur in future periods. The consideration expected from laboratory partners usually includes a fixed amount, but it can be variable depending on the volume of tests performed, and the Company determines the variable consideration using the expected value approach. For laboratory partners and patients, the Company allocates the total consideration to a single performance obligation, which is the delivery of the test results to the customers.

When assessing the total consideration expected to be received from insurance carriers and patients, a certain percentage of revenues is further constrained for estimated refunds.

The Company enters into contracts with insurance carriers, primarily with payment terms related to tests provided to patients who have health insurance coverage. Insurance carriers are considered third-party payers on behalf of the patients, and the patients are considered the customers who receive genetic test services. Tests may be billed to insurance carriers, patients, or a combination of insurance carriers and patients. Further, the Company sells tests to a number of domestic and international laboratory partners and identifies the laboratory partners as customers, provided that there is a test services agreement between the two parties.

The Company generally bills an insurance carrier, a laboratory partner or a patient upon delivery of test results. The Company also bills patients directly for out-of-pocket costs involving co-pays and deductibles that they are responsible for. The Company may or may not get reimbursed for the full amount billed. Further, the Company may not get reimbursed at all for tests performed if such tests are not covered under the insurance carrier’s reimbursement policies or the Company is not a qualified provider to the insurance carrier, or if the tests were not previously authorized.

Product revenue is recognized in an amount equal to the total consideration (as described above) expected to be received at a point in time when the test results are delivered. Approximately 90% of cash collections attributable to such product revenue occurs within nine months, with the remaining collections generally taking an additional six months. During this time, management routinely reassesses its estimates of actual to expected cash collections, which are based on historical collection rates and adjusted for current information and trends. To the extent cash collections for tests delivered in prior periods are trending higher than expectations, the Company will increase revenue recognized when sufficient evidence is obtained to conclude the additional revenue will not result in a significant reversal of revenue in a future period. If cash collections for tests delivered in prior periods are trending below expectations, the Company will reduce revenue to the amount expected to be collected based on the latest information and expectations. Increases or decreases to the amount of cash expected to be collected for tests delivered in prior periods are recognized in product revenue with a corresponding impact to accounts receivable during the period such determination is made. During the three months ended March 31, 2025 and 2024, the Company increased revenue by a net of $34.3 million and $33.7 million, respectively, for changes in estimate that increased revenue for tests delivered in prior periods that were fully collected, which increased revenue and decreased net loss by a corresponding amount and decreased loss per share by $0.25 and $0.28, respectively.

Product revenue was constrained via refunds estimated to be paid to insurance carriers. Certain refunds were recognized in accrued liabilities until they are either paid to the respective insurance carrier or it is determined the refund will not ultimately be paid, at which time the related accrual is reduced with a corresponding increase to revenue. During the three months ended March 31, 2024, the reserves for refunds to insurance carriers were reduced and product revenue increased by $2.1 million for amounts the Company determined would not be refunded to insurance carriers. The increased revenue and corresponding decreased net loss resulted in a decrease in loss per share of $0.02 for the three months ended March 31, 2024. There were no such adjustments to reserves recorded in the same period in 2025.

Under the Company's current policy, certain estimated future refunds are recognized as a reduction to accounts receivable. The allowance will be released in future quarters to offset the future credits and refunds paid to insurance carriers and patients. During the three months ended March 31, 2025 and 2024, the net allowance for future refunds reduced revenue by $3.5 million and $1.5 million, respectively. The decreased revenue and corresponding increased net loss resulted in an increased loss per share of $0.03 and $0.01 for the three months ended March 31, 2025 and 2024, respectively.

Licensing and Other Revenues

The Company recognizes licensing revenues from its cloud-based distribution service offering, Constellation, by granting licenses to its licensees to use certain of the Company’s proprietary intellectual properties and cloud-based software and in vitro diagnostic (“IVD”) kits. The Company also recognizes revenues from its strategic collaboration agreements, such as those with BGI Genomics Co., Ltd. (“BGI Genomics”) and Foundation Medicine, Inc. (“Foundation Medicine”). The Company recognizes licensing and other revenues through agreements with pharmaceutical companies in support of potential clinical trials managed by the pharmaceutical companies.

Constellation

The laboratory partners with whom the Company enters into a licensing arrangement represent the licensees and are identified as customers. The licensees do not have the right to possess the Company’s software, but rather receive services through the cloud software. These arrangements often include: (i) the delivery of the services through the cloud software, (ii) the necessary support and training, and (iii) the IVD kits to be consumed as tests are processed. The Company does not consider the software as a service, the support or the training as being distinct in the context of such arrangements, and therefore, they are combined as a single performance obligation. The software, support and training are delivered simultaneously to the licensees over the term of the arrangement.

The Company bills the majority of licensees, who process the tests in their laboratories, a fixed price for each test processed. Licensing revenues are recognized as the performance obligations are satisfied (i.e., upon the delivery of each test) and reported in licensing and other revenues in the Company’s statements of operations and comprehensive loss.

BGI Genomics

In February 2019, the Company entered into a License Agreement (the “BGI Genomics Agreement”) with BGI Genomics to develop, manufacture, and commercialize next generation sequencing-based genetic testing assays for clinical and commercial use. The BGI Genomics Agreement has a term of ten years and expires in February 2029. Pursuant to the BGI Genomics Agreement, the Company licensed its intellectual property to and provided development services for BGI Genomics. Following completion of development services, the Company began providing assay interpretation services over the term of the agreement.

According to the BGI Genomics Agreement, the Company is entitled to a total of $50.0 million, comprised of upfront technology license fees, prepaid royalties relating to future sales of licensed products and performance of assay interpretation services, and milestone payments. Due to uncertainties in achieving certain milestones, $6.0 million of the $50.0 million was constrained. A net of $44.0 million has been collected by the Company in cash, which includes $20.0 million in prepaid royalties.

The Company concluded that the license is not a distinct performance obligation as it does not have a stand-alone value to BGI Genomics apart from the related development services. Therefore, license and related development services, for each of the non-invasive prenatal tests (“NIPTs”) and Oncology products, representing two separate performance obligations, to which $24.0 million of transaction consideration was allocated. This performance obligation was fully satisfied in March 2023 and no further related amounts will be recognized as revenue.

As of December 31, 2024, the Company's performance obligation to provide ongoing NIPT assay interpretation services was removed. Therefore, the Company now has a single remaining performance obligation related to Oncology assay interpretation services, to which $20.0 million of transaction consideration was allocated and prepaid by BGI Genomics. During the three months ended March 31, 2024, the Company recognized $0.3 million related to oncology assay interpretation services, which was recognized against deferred royalties. During the three months ended March 31, 2025, the Company recognized an additional $0.1 million related to oncology assay interpretation services, which was recognized against deferred royalties. The Company has $17.2 million and $17.3 million in deferred revenue as of March 31, 2025 and December 31, 2024, respectively.

Disaggregation of Revenues

The following table shows disaggregation of revenues by payer types:

	Three months ended
	March 31,
	2025		2024
	(in thousands)
Insurance carriers	$	472,647	$	341,028
Laboratory partners		20,832		20,276
Patients		8,351		6,437
Total revenues	$	501,830	$	367,741

The following table presents total revenues by geographic area based on the location of the Company’s payers:

	Three months ended
	March 31,
	2025		2024
	(in thousands)
United States	$	492,305	$	359,413
Americas, excluding U.S.		1,692		1,481
Europe, Middle East, India, Africa		6,049		5,178
Asia Pacific and Other		1,784		1,669
Total revenues	$	501,830	$	367,741

The following table summarizes the Company’s beginning and ending balances of accounts receivable and deferred revenues:

	Balance at
	March 31,		December 31,
	2025		2024
	(in thousands)
Assets:
Accounts receivable, net	$	318,233	$	314,165
Liabilities:
Deferred revenue, current portion	$	20,557	$	19,754
Deferred revenue, long-term portion (1)		16,705		16,838
Total deferred revenues	$	37,262	$	36,592

(1) The deferred revenue, long-term portion is included within the “Deferred revenue, long-term portion and other liabilities” line item on the consolidated balance sheets.

The following table shows the changes in the balance of deferred revenues during the three months ended March 31, 2025 and 2024:

	Balance at
	March 31,
	2025			2024
	(in thousands)
Beginning balance	$	36,592	$	35,740
Increase in deferred revenues		10,163		7,941
Revenue recognized during the period included in deferred revenues at the beginning of the period		(9,418)		(7,048)
Revenue recognized from performance obligations satisfied within the same period		(75)		(100)
Ending balance	$	37,262	$	36,533

During the three months ended March 31, 2025, revenue recognized that was included in the deferred revenue balance at the beginning of the period totaled $9.4 million with approximately $0.4 million related to BGI Genomics and Foundation Medicine and the remaining $9.0 million related to genetic testing services. The current portion of deferred revenue includes $18.6 million from genetic testing services and $0.5 million from BGI Genomics and $1.5 million from Foundation Medicine as of March 31, 2025. The non-current portion of deferred revenue includes $16.7 million from the BGI Genomics Agreement as of March 31, 2025.

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Fair Value Measurements

3 Months Ended

Mar. 31, 2025

Fair Value Measurements

Fair Value Measurements

4. Fair Value Measurements

The Company's financial assets and liabilities carried at fair value are comprised of investment assets that include money market and investments.

The fair value accounting guidance requires that assets and liabilities be carried at fair value and classified in one of the following three categories:

Level 1: Quoted prices in active markets for identical assets and liabilities that the Company has the ability to access;

Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data, such as quoted prices, interest rates, and yield curves; and

Level 3: Inputs that are unobservable data points that are not corroborated by market data.

This hierarchy requires the Company to use observable market data, when available, and to minimize the use of unobservable inputs when determining fair value.

Assets and Liabilities That Are Measured at Fair Value on a Recurring Basis

The MyOme warrants issued to the Company are accounted for as derivatives and recorded at fair value on a recurring basis and are classified within Level 3 of the fair value hierarchy because the valuation methods include certain unobservable inputs.

The following table represents the fair value hierarchy for the Company’s financial assets and financial liabilities measured at fair value on a recurring basis:

	March 31, 2025								December 31, 2024
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
	(in thousands)
Financial Assets:
Cash, cash equivalents and restricted cash (1)	$	973,768	$	—	$	—	$	973,768	$	945,587	$	—	$	—	$	945,587
Municipal securities		—		17,832		—		17,832		—		22,689		—		22,689
Total financial assets	$	973,768	$	17,832	$	—	$	991,600	$	945,587	$	22,689	$	—	$	968,276

(1) Cash equivalents includes money market deposits and liquid demand deposits.

Fair Value of Short-Term and Long-Term Debt:

As of March 31, 2025 and December 31, 2024, the estimated fair value of the total principal outstanding and accrued interest of the Credit Line was $80.3 million and $80.4 million, respectively, and were based upon observable Level 2 inputs, including the interest rate based on the 30-day Secured Overnight Financing Rate (“SOFR”) average, plus 0.5%. The estimated fair value approximates the carrying value due to the short term duration and variable interest rate.

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Financial Instruments

3 Months Ended

Mar. 31, 2025

Financial Instruments

Financial Instruments

5. Financial Instruments

The Company elected to invest a portion of its cash assets in conservative, income earning, and liquid investments. Cash, cash equivalents, restricted cash and investments, which are classified as available-for-sale securities, consisted of the following:

	March 31, 2025								December 31, 2024
	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss		Estimated Fair Value		Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss		Estimated Fair Value
	(in thousands)
Cash, cash equivalents and restricted cash (2)	$	973,768	$	—	$	—	$	973,768	$	945,587	$	—	$	—	$	945,587
Municipal securities (1)		18,009		—		(177)		17,832		23,019		—		(330)		22,689
Total	$	991,777	$	—	$	(177)	$	991,600	$	968,606	$	—	$	(330)	$	968,276
Classified as:
Cash, cash equivalents and restricted cash (2)								973,768								945,587
Short-term investments								17,832								22,689
Total							$	991,600							$	968,276

(1) Per the Company’s investment policy, all debt securities are classified as short-term investments irrespective of holding period.  

(2) Cash equivalents includes liquid demand deposits and money market funds.

The Company invests in U.S. Treasuries, U.S. agency and high-quality municipal bonds which mature at par value and are all paying their coupons on schedule. The Company has therefore concluded an allowance for expected credit losses of its investments was not necessary and will continue to recognize unrealized gains and losses in other comprehensive income (loss). During the three months ended March 31, 2025 and 2024, the Company did not sell any investments. The Company uses the specific investment identification method to calculate realized gains and losses and amounts reclassified out of other comprehensive income (loss) to net loss. As of March 31, 2025, the Company had 6 investments in an unrealized loss position in its portfolio. Gross unrealized losses were not material as of March 31, 2025. Gross unrealized losses were primarily due to declines in the value of fixed rate instruments as interest rates in the broader market increased, and were not indictive of a decline in the credit worthiness of the underlying issuers. Accordingly, the Company did not record a credit loss reserve as of either March 31, 2025 or December 31, 2024.

The following table presents debt securities available-for-sale that were in an unrealized loss position as of March 31, 2025, aggregated by major security type in a continuous loss position. There were no debt securities available-for-sale in an unrealized loss position for less than 12 months as of March 31, 2025.

		Total
		Fair Value		Unrealized Loss
	(in thousands)
Municipal securities			17,832		(177)
Total		$	17,832	$	(177)

As of March 31, 2025, the Company’s portfolio of available-for-sale securities all have contractual maturities less than or equal to one year.

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Balance Sheet Components

3 Months Ended

Mar. 31, 2025

Balance Sheet Components

Balance Sheet Components

6. Balance Sheet Components

Allowance for Expected Credit Losses

The following is a roll-forward of the allowances for expected credit losses related to trade accounts receivable for the three months ended March 31, 2025 and 2024:

	Three Months Ended
	March 31,
	2025		2024
		(in thousands)
Beginning balance	$	7,259	$	6,481
Provision for expected credit losses		195		929
Write-offs		(20)		(158)
Total	$	7,434	$	7,252

Property and Equipment, net

The Company’s property and equipment consists of the following:

		March 31,		December 31,
	Useful Life	2025		2024
		(in thousands)
Machinery and equipment	3-5 years	$	129,005	$	117,076
Computer equipment	3 years		3,287		3,178
Purchased and capitalized software held for internal use	3 years		14,587		13,178
Leasehold improvements	Lesser of useful life or lease term		48,883		48,569
Construction-in-process			71,271		58,461
			267,033		240,462
Less: Accumulated depreciation and amortization			(86,580)		(78,416)
Total property and equipment, net		$	180,453	$	162,046

The Company’s long-lived assets are located in the United States.

Depreciation expense for the three months ended March 31, 2025 and 2024 was $8.2 million and $6.3 million, respectively. The Company did not incur any impairment charges during either period.

Other Accrued Liabilities

The Company’s other accrued liabilities consisted of the following:

	March 31,		December 31,
	2025		2024
	(in thousands)
Reserves for refunds to insurance carriers	$	10,171	$	11,276
Accrued charges for third-party testing		16,963		12,321
Testing and laboratory materials from suppliers		10,754		7,893
Marketing and corporate affairs		17,898		16,548
Legal, audit and consulting fees		66,097		54,208
Accrued shipping charges		1,945		1,625
Sales and income tax payable		5,602		4,416
Accrued third-party service fees		8,812		9,046
Clinical trials and studies		10,788		10,097
Operating lease liabilities, current portion		12,199		10,168
Property and equipment purchases		9,525		7,098
Other accrued expenses		7,695		2,197
Total other accrued liabilities	$	178,449	$	146,893

Reserves for refunds to insurance carriers include overpayments from and amounts to be refunded to insurance carriers, and additional amounts that the Company estimates for potential refund requests during the period. When and if these previously accrued amounts are no longer required based on actual refunds requested, any remaining reserve amounts are released. When the Company releases these previously accrued amounts, they are recognized as product revenues in the statements of operations and comprehensive loss.

The following table summarizes the reserve balance and activities for refunds to insurance carriers for the three months ending March 31, 2025 and 2024:

	March 31,
	2025		2024
	(in thousands)
Beginning balance	$	11,276	$	23,245
Additional (reversals) reserves		(622)		227
Refunds to carriers		—		(3,095)
Reserves released to revenue		(483)		(2,354)
Ending balance	$	10,171	$	18,023

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Leases

3 Months Ended

Mar. 31, 2025

Leases.

Leases

7. Leases

Operating Leases

In September 2015, the Company entered into a long-term lease agreement for laboratory and office space totaling approximately 94,000 square feet in Austin, Texas. The original lease term was 132 months beginning in December 2015 and expiring in November 2026, with monthly payments beginning in December 2016. In December 2021, the Company entered into an amendment of the Austin lease agreement, which extended the lease of the current premises through March 2033. The amendment also includes two additional office spaces (the “First Expansion Premises” and the “Second Expansion Premises”). The First Expansion Premises consists of 32,500 rentable square feet and commenced in February 2022. The Second Expansion Premises consists of 65,222 rentable square feet and commenced in September 2022. The terms of the First and Second Expansion Premises expire in March 2033. In March 2025, the Company entered into a lease agreement for additional premises of approximately 57,100 rentable square feet in Austin, Texas through March 2033 with an annual rent expense of approximately $0.9 million.

In October 2016, the Company entered into a lease directly with its landlord for laboratory and office spaces at its facilities located in San Carlos, California. The Company currently occupies approximately 136,000 square feet comprised of two office spaces (the “First Space” and the “Second Space”). The First Space covers approximately 88,000 square feet, and the Second Space totals approximately 48,000 square feet. In January 2021, the Company entered into an amendment of the lease to extend the term for 48 months to October 2027. The combined annual rent for the First Space and Second Space is $9.3 million, which commenced in October 2023. In July 2024, the Company entered into an amendment of the San Carlos lease to extend the term for 60 months to October 2032. The annual rent will be approximately $9.7 million beginning January 2025, escalating annually, and may be increased if the Company elects to utilize additional tenant improvement allowances. In January 2025, the Company entered into a lease agreement for additional premises of approximately 40,700 rentable square feet in San Carlos, California, through November 2028 with an annual rent expense of approximately $1.5 million.

The Company entered into a lease agreement in November 2020 to lease 11,395 square feet of space located in South San Francisco, California over a 36-month term. The premises are used for general office, laboratory and research use. The annual lease payment started at $0.9 million and escalates annually after commencing in December 2021. In December 2022, the Company exercised the renewal option of the South San Francisco lease agreement. In January 2023, the Company entered in an amendment to extend the lease term of the South San Francisco premises by three years, through November 2026.

The Company entered into a lease agreement in September 2023 to lease 16,319 square feet of space located in Pleasanton, California over a 60-month term. The premises are used for laboratory and research use and commenced in December 2023. The annual lease payment started at $0.5 million and escalates annually.

The Company has also historically entered into leases of individual workspaces and storage spaces at various locations on both a month-to-month basis without an established lease term, and more recently, for certain locations, has committed to terms approximating one to five years. For facilities without a committed lease term, the Company has elected to not recognize them as right-of-use assets on the consolidated balance sheets, as they are all considered short-term leases. For individual workspaces where the committed lease term exceeds one year, the Company has recorded a right-of-use asset on the consolidated balance sheets.

For the three months ended March 31, 2025, the Company had $10.9 million in noncash operating activities related to additional right-of-use assets resulting from entering into new lease agreements and extension of existing leases under ASC, Topic 842, Leases (“ASC 842”). For the three months ended March 31, 2024, the Company had $0.3 million in noncash operating activities related to additional right-of-use assets.

The operating lease right-of-use assets are classified as noncurrent assets in the consolidated balance sheets. The corresponding lease liabilities are separated into current and long-term portions as follows:

	March 31,		December 31,
	2025		2024
		(in thousands)
Operating lease liabilities, current portion included in other accrued liabilities	$	12,199	$	10,168
Operating lease liabilities, long-term portion		103,056		96,588
Total operating lease liabilities	$	115,255	$	106,756

As of March 31, 2025, the weighted-average remaining lease term was 7.38 years and the weighted-average discount rate was 7.1%.

The Company continues to recognize lease expense on a straight-line basis. The lease expense includes the amortization of the right-of-use assets with the associated interest component estimated by applying the effective interest method. For the three months ended March 31, 2025 and 2024, total lease expense of $4.4 million and $3.6 million was recognized in the condensed consolidated statements of operations and comprehensive loss, respectively. Cash paid for amounts in the measurement of operating lease liabilities totaled $4.5 million and $4.1 million for the three months ended March 31, 2025 and 2024, respectively.

The present value of the future minimum lease payments under all non-cancellable operating leases as of March 31, 2025 are as follows:

	Operating Leases
	(in thousands)
As of March 31, 2025
2025 (remaining 9 months)	$	14,794
2026		20,287
2027		19,673
2028		19,779
2029		18,291
2030 and thereafter		56,602
Total future minimum lease payments		149,426
Less: imputed interest		(34,171)
Operating lease liabilities	$	115,255

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Commitments and Contingencies

3 Months Ended

Mar. 31, 2025

Commitments and Contingencies

Commitments and Contingencies

8. Commitments and Contingencies

Legal Proceedings

The Company is or has been involved in legal matters, including investigations, subpoenas, demands, disputes, litigation, requests for information, and other regulatory or administrative actions or proceedings, including those with respect to intellectual property, testing and test performance, billing, reimbursement, marketing, short seller and media allegations, employment, and other matters. The Company is responding to ongoing regulatory and governmental investigations, subpoenas and inquiries, and contesting its current legal matters, but cannot provide any assurance as to the ultimate outcome with respect to any of the foregoing. There are many uncertainties associated with these matters.

The Company assesses legal contingencies to determine the degree of probability and range of possible loss for potential accrual in its financial statements. When evaluating legal contingencies, the Company may be unable to provide a reasonable estimate due to a number of factors, including the procedural status of the matter in question, the presence of complex or novel legal theories, and/or the ongoing discovery and development of information important to the matters. In addition, damage amounts claimed in litigation or other matters may be unsupported, exaggerated or unrelated to possible outcomes, and as such are not meaningful indicators of its potential liability. Loss contingencies, including claims and legal actions arising in the ordinary course of business, are recorded as liabilities when the likelihood of loss is probable and an amount or range of loss can be reasonably estimated. As of March 31, 2025, the Company determined that the aggregate accrual for legal contingencies that are probable and reasonably estimable is approximately $22.6 million. The Company is unable to predict the ultimate outcome of the matters described below and is unable to make a reasonable estimate of the amount or range of loss, if any, that could result from an unfavorable outcome of any such matters in excess of the amounts accrued by the Company.

Intellectual Property Litigation Matters.

The Company has been involved in two patent litigations against CareDx, Inc. (“CareDx”) in the United States District Court for the District of Delaware (“CareDx Patent Cases”). In the first CareDx Patent Case, CareDx alleged, in a complaint filed jointly with the Board of Trustees of the Leland Stanford Junior University in March 2019 and amended in March 2020, that the Company infringed three patents (the “CareDx Patents”). The complaint sought unspecified damages and injunctive relief. In September 2021, the Court granted the Company’s motion for summary judgment, finding all three CareDx Patents invalid. This finding was affirmed on appeal by the United States Court of Appeals for the Federal Circuit. CareDx’s petition for rehearing by the Federal Circuit, and its subsequent petition for certiorari to the United States Supreme Court, were both denied. In the second CareDx Patent Case, the Company alleged, in suits filed in January 2020 and May 2022, infringement by CareDx of certain of the Company’s patents, seeking unspecified damages and injunctive relief. In January 2024, after trial, the jury returned a verdict in favor of the Company, finding both asserted patents valid and one patent infringed by CareDx (the “Infringed Patent”) and awarding damages to the Company for lost profits and past royalties totaling $96.3 million. In February 2025, the Court granted CareDx’s motion for judgment as a matter of law and invalidated both asserted Natera patents, including the Infringed Patent.  The Company filed a notice of appeal to the Court of Appeals for the Federal Circuit in March 2025. Separately, in October 2024, an ex-parte re-examination petition was filed by CareDx with the United States Patent and Trademark Office (“USPTO”) challenging the validity of the Infringed Patent; the USPTO issued an Office Action rejecting the challenged claims of the Infringed Patent.

In January 2020, the Company filed suit against ArcherDX, Inc. (“ArcherDX”) in the United States District Court for the District of Delaware. In January 2021, the Company named an additional Archer DX entity, ArcherDx LLC, and Invitae as defendants. The Company alleged, among other things, that certain ArcherDX products, including the Personalized Cancer Monitoring (“PCM”) test, infringed three of the Company’s patents (the “ArcherDX Case”) and sought unspecified monetary damages and injunctive relief. Following a jury trial in May 2023 and a bench trial in June 2023, all three asserted patents were found to be valid and infringed by ArcherDX and Invitae, and the jury awarded damages totaling $19.35 million to the Company. In November 2023, the Court granted in part the Company’s motion for a permanent injunction against the PCM test, which the defendants have appealed. In February 2024, Invitae and ArcherDX filed a voluntary Chapter 11 petition in the U.S. Bankruptcy Court for the District of New Jersey, resulting in an automatic bankruptcy stay in the case. The stay was lifted, and post-trial proceedings resumed, in November 2024. Defendants’ interim appeals remain stayed pending the Court’s final resolution of the post-trial motions.

The Company is the subject of a lawsuit filed against it by Ravgen, Inc. (“Ravgen”) in June 2020 in the United States District Court for the Western District of Texas, alleging infringement of two Ravgen patents and seeking monetary damages and injunctive relief. In January 2024, after trial, the jury returned a verdict of non-willful infringement by the Company and found damages of $57 million. Judgment has not been entered by the Court. The Company intends to appeal certain of the rulings. In addition, various parties, including the Company, have filed petitions challenging the validity of the asserted patents with the United States Patent and Trademark Office, all of which were instituted for review, and some of which were decided in favor of upholding the challenged claims. The petitions filed by the Company and certain others remain pending.

In October 2020, the Company filed suit against Genosity Inc. (“Genosity”), in the United States District Court for the District of Delaware, alleging that various Genosity products infringe one of the Company’s patents and seeking unspecified monetary damages and injunctive relief. The case has been stayed pending the entry of a final judgment in the ArcherDX Case, in which the subject patent is also asserted. In February 2024, Genosity filed a voluntary Chapter 11 petition in the U.S. Bankruptcy Court for the District of New Jersey.

The Company is the subject of lawsuits filed against it by Invitae in the United States District Court of the District of Delaware alleging, in complaints filed in May and November of 2021, infringement of three patents and seeking monetary damages and injunctive relief. The parties have filed cross-motions for summary judgment, which motions are currently pending before the Court. In February 2024, as a result of Invitae’s voluntary Chapter 11 petition described above, the Court continued the trial, which is now scheduled for September 2025. Labcorp Holdings Inc. acquired the patents at issue in this case and is now the plaintiff.

The Company filed suits against Inivata, Inc. and Inivata Ltd. (collectively “Inivata”) in the United States District Court for the District of Delaware in January 2021 and December 2022, alleging that certain of Inivata’s oncology products infringe certain of the Company’s patents and seeking unspecified monetary damages and injunctive relief. The two suits have been consolidated. In March 2024, the Court stayed the case in light of the Company’s case against NeoGenomics Laboratories, Inc. (“NeoGenomics”), which acquired Inivata in 2021, discussed below.

In July 2023, the Company filed suit against NeoGenomics in the United States District Court for the Middle District of North Carolina (the “District Court”), alleging infringement of two Natera patents (the “’035 Patent” and the “’454 Patent”) by NeoGenomics’ commercialization of the RaDaR test and seeking monetary damages and injunctive relief. In December 2023, the Court denied NeoGenomics’ motion to dismiss the complaint, and granted the Company’s motion for preliminary injunction. The injunction went into effect as of January 12, 2024 and was affirmed on appeal in July 2024 by the Federal Circuit Court of Appeals. NeoGenomics filed a petition with the USPTO to review the validity of the ’454 Patent, which was denied in June 2024. NeoGenomics also filed a petition with the USPTO to review the validity of the ‘035 Patent, which proceeding was terminated in October 2024. Pursuant to the terms of a partial settlement of the case, the District Court entered a permanent injunction against NeoGenomics, and it has withdrawn its RaDaR test from the market. The case remains pending with respect to an updated version of the RaDaR test and the ‘454 Patent, as well as an additional Natera patent (the “596 patent”) that was added to the case in December 2024. Neogenomics has filed an inter partes review challenging the validity of the ‘596 patent; the USPTO has not yet instituted review. Trial is currently scheduled for October 2025.

Other Litigation Matters.

CareDx filed suit against the Company in April 2019 in the United States District Court for the District of Delaware, alleging false advertising, and related claims based on statements describing studies that concern the Company’s technology and CareDx’s technology, seeking unspecified damages and injunctive relief. The Company filed a counterclaim against CareDx in the United States District Court for the District of Delaware, alleging false advertising, unfair competition and deceptive trade practices and seeking unspecified damages and injunctive relief. In March 2022, after trial, the jury returned a verdict that the Company was liable to CareDx and found damages of $44.9 million. The jury also returned a verdict against CareDx, finding that CareDx had engaged in false advertising. In July 2023, the Court granted in part the Company’s motion for judgment as a matter of law requesting that the Court set aside the portions of the jury verdict adverse to the Company, ruling that CareDx is not entitled to any damages. The jury verdict of false advertising by CareDx remains in place. Both parties are appealing.

The Company is involved in two lawsuits against Guardant Health, Inc. (“Guardant”). In May 2021, Guardant filed suit against the Company in the United States District Court of the Northern District of California alleging false advertising and related claims and seeking unspecified damages and injunctive relief. Also in May 2021, the Company filed suit against Guardant in the Western District of Texas, alleging false advertising and related claims. The Company has voluntarily dismissed its Texas suit against Guardant and has asserted the claims from the Texas action as counterclaims in the California action, seeking unspecified damages and injunctive relief. In August 2021, Guardant moved to dismiss the Company’s counterclaims, which motion was denied in all material respects. Both parties filed cross-motions for summary judgment, which were granted in part and denied in part. In November 2024, after trial, the jury returned a verdict finding the Company liable for false advertising and found damages of $292.5 million. A final judgment has not been entered by the Court; the Company plans to appeal any adverse judgment. In February 2025, Guardant filed suit against the Company and two of its former employees who recently joined the Company in the United States District Court for the Northern District of California, alleging trade secret misappropriation, breach of contract and related tort claims, seeking unspecified damages and injunctive relief. Concurrently with the filing of the complaint, Guardant also moved for a temporary restraining order and expedited discovery, which motions Guardant subsequently withdrew. In April 2025, Guardant voluntarily dismissed its claims against one of the employee defendants without prejudice.

In November 2021, a purported class action lawsuit was filed against the Company in the United States District Court for the Northern District of California, by a patient alleging various causes of action relating to the Company’s patient billing and seeks, among other relief, class certification, injunctive relief, restitution and/or disgorgement, attorneys’ fees, and costs. In May 2023, the Court granted the Company’s motion to dismiss the lawsuit, and the case was dismissed without prejudice. In July 2023, the plaintiff filed analogous claims in the Superior Court of California, County of San Mateo, and subsequently filed an amended claim with an additional plaintiff. Based on the additional plaintiff, the case was transferred back to the United States District Court for the Northern District of California. The parties subsequently agreed that claims brought by the original plaintiff be remanded back to the Superior Court of California, County of San Mateo, and that the action be stayed pending the outcome of the action in the United States District Court for the Northern District of California.

In February 2022, two purported class action lawsuits were filed against the Company in the United States District Court for the Northern District of California. Each suit was filed by an individual patient alleging various causes of action related to the marketing of Panorama and seeking, among other relief, class certification, monetary damages, attorneys’ fees, and costs. These matters have been consolidated. The Company filed a motion to dismiss the consolidated lawsuit, which resulted in the plaintiffs filing an amended complaint in April 2023.

In March 2022, a purported class action lawsuit was filed against the Company and certain of its management in the Supreme Court of the State of New York, County of New York, asserting claims under Sections 11, 12, and 15 of the Securities Act of 1933. The complaint alleged, among other things, that the Company failed to disclose certain information regarding its Panorama test. The complaint sought, among other relief, monetary damages, attorneys’ fees, and costs. This matter was dismissed and the claims raised in this matter have been included in the lawsuit discussed below.

A purported class action lawsuit was filed against the Company and certain of its management in the United States District Court for the Western District of Texas, asserting claims under Sections 10(b) and 20(a) of the Securities Act of 1934 and Rule 10b-5 thereunder. The complaint, filed in April 2022 and amended in October 2022 (to include, among others, the claims raised in the lawsuit discussed in the preceding paragraph), alleges, among other things, that the management defendants made materially false or misleading statements, and/or omitted material information that was required to be disclosed, about certain of the Company’s products and operations. The complaint seeks, among other relief, monetary damages, attorneys’ fees, and costs. The Company filed a motion to dismiss this lawsuit, which was granted in part and denied in part. The Court has certified the class.

In each of October 2023 and January 2024, shareholder derivative complaints were filed in the United States District Court for the Western District of Texas and the United States District Court for the District of Delaware, respectively, against the Company as nominal defendant and certain of the Company’s management. Each complaint alleges, among other things, that the management defendants made materially false or misleading statements, and/or omitted material information that was required to be disclosed, about certain of the Company’s products and operations. Each complaint seeks, among other relief, monetary damages, attorneys’ fees, and costs.

In October 2024, a purported class action lawsuit was filed against the Company in the United States District Court for the Northern District of California, by patients alleging various causes of action relating to the Company’s preimplantation genetic test for aneuploidies. They request, among other relief, class certification, injunctive relief, restitution and/or disgorgement, attorneys’ fees, and costs. The Company has filed a motion to dismiss the lawsuit.

Director and Officer Indemnifications

As permitted under Delaware law, and as set forth in the Company’s Amended and Restated Certificate of Incorporation and its Amended and Restated Bylaws, the Company indemnifies its directors, executive officers, other officers, employees and other agents for certain events or occurrences that may arise while in such capacity. The maximum potential future payments the Company could be required to make under this indemnification is unlimited; however, the Company has insurance policies that may limit its exposure and may enable it to recover a portion of any future amounts paid. Assuming the applicability of coverage, the willingness of the insurer to assume coverage, and subject to certain retention, loss limits and other policy provisions, the Company believes any obligations under this indemnification would not be material, other than standard retention amounts for securities related claims. However, no assurances can be given that the covering insurers will not attempt to dispute the validity, applicability, or amount of coverage without expensive litigation against these insurers, in which case the Company may incur substantial liabilities as a result of these indemnification obligations.  

Third-Party Payer Reimbursement Audits

From time to time, the Company receives recoupment requests from third-party payers for alleged overpayments. The Company disagrees with the contentions of pending requests and/or has recorded an estimated reserve for the alleged overpayments if probable and estimable.

Contractual Commitments

The following table sets forth the material contractual commitments as of March 31, 2025:

Party	Commitments		Expiry Date
	(in thousands)
Laboratory instruments supplier	$	21,443	December 2027
Material suppliers		70,395	December 2026
Application service providers		4,733	January 2028
Cloud platform service provider		27,430	December 2028
Other material suppliers		44,570	Various
Total	$	168,571

During November 2024, the Company entered into an agreement to acquire clinical samples and data for oncology development. As of March 31, 2025, the Company has paid $14.0 million in cash, and is obligated to pay an additional $6.0 million, which is included in commitments above. An additional $50.0 million in potential payments owed to the third-party vendor, not included above, will depend on whether certain compliance approvals are obtained and commercial volume milestones are achieved.

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Stock-Based Compensation

3 Months Ended

Mar. 31, 2025

Stock-Based Compensation

Stock-Based Compensation

9. Stock-Based Compensation

Stock-Based Compensation Expense

The following table presents stock-based compensation expense recorded for equity-classified awards in the three months ended March 31, 2025 and 2024:

	Three months ended March 31,
		2025		2024
	(in thousands)
Cost of revenues	$	5,270	$	3,777
Research and development		26,511		20,649
Selling, general and administrative		46,046		40,021
Total	$	77,827	$	64,447

Stock Options

The following table summarizes option activity during the three months ended March 31, 2025:

		Weighted-
	Number of	Average
	Shares	Exercise
	Outstanding	Price
	(in thousands, except for per share data)
December 31, 2024	3,875	$	30.22
Options exercised	(50)	$	11.80
Options forfeited/cancelled	(3)	$	3.78
March 31, 2025	3,822	$	30.47

Restricted Stock Units and Performance-Based Awards

The following table summarizes unvested RSU and PSU activity during the three months ended March 31, 2025:

		Weighted-
		Average
		Grant Date
	Shares	Fair Value
	(in thousands, except for per share data)
Balance at December 31, 2024	10,593	$	61.28
Granted	2,721	$	171.72
Vested	(3,236)	$	59.65
Cancelled/Forfeited	(104)	$	74.42
Balance at March 31, 2025	9,974	$	86.75

The Company grants certain senior-level executives performance stock units that vest based on performance and time-based service conditions, which are referred to herein as performance-based awards. During the three months ended March 31, 2025 and 2024, the Company granted 0.4 million and 0.8 million performance-based awards with an aggregate grant date fair value of $64.9 million and $55.0 million, respectively. As of March 31, 2025, the Company expects to recognize remaining stock-based compensation expense of $142.1 million over the requisite performance period for these performance-based awards. The future stock-based compensation expense recognized for these performance-based awards may be up to 200% of grant date fair value based on the achievement of certain targets.

For all performance-based awards, the Company has recognized total stock-based compensation of $18.7 million and $20.7 million for the three months ended March 31, 2025 and 2024, respectively.

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Debt

3 Months Ended

Mar. 31, 2025

Debt

Debt

10. Debt

Credit Line Agreement

In September 2015, the Company entered into a credit line with UBS (the “Credit Line”) providing for a $50.0 million revolving line of credit. The Credit Line was subsequently increased from $50.0 million to $150.0 million in 2020. In June 2023, the Credit Line decreased from $150.0 million to $100.0 million. The Credit Line is secured by a first priority lien and security interest in the Company’s money market and marketable securities held in its managed investment account with UBS. The Company is required to maintain a minimum of at least $150.0 million in its UBS accounts as collateral, which is classified as cash, cash equivalents, and short-term investments in the consolidated balance sheets. UBS has the right to demand full or partial payment of the Credit Line obligations and terminate the Credit Line, in its discretion and without cause, at any time. In October 2023, the interest rate for the Credit Line was changed to the 30-day SOFR average, plus 0.5%. As of March 31, 2025, the Company has drawn down a total of $80.0 million, and there is $20.0 million remaining and available on the Credit Line. The interest rate as of March 31, 2025 was 4.83%.

For the three months ended March 31, 2025 and 2024, the Company recorded interest expense on the Credit Line of $1.0 million and $1.2 million, respectively. Interest payments on the Credit Line were made within the same periods. As of March 31, 2025 and December 31, 2024, the total principal amount outstanding with accrued interest was $80.3 million and $80.4 million, respectively.

Convertible Notes

In April 2020, the Company issued $287.5 million aggregate principal amount of Convertible Notes due 2027 in a private placement offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended. The Convertible Notes were senior, unsecured obligations of the Company and bore interest at a rate of 2.25% per year, payable in cash semi-annually. The Convertible Notes mature in May 2027, unless earlier converted, repurchased or redeemed in accordance with their terms. Upon conversion, the Convertible Notes were convertible into cash, shares of the Company’s common stock or a combination of cash and shares of the Company’s common stock, at the Company’s election.

The Convertible Notes were convertible into shares of the Company’s common stock, par value $0.0001 per share, at an initial conversion rate of 25.7785 shares of common stock per $1,000 principal amount of the Convertible Notes, which is equivalent to an initial conversion price of approximately $38.79 per share of common stock, convertible to 7,411,704 shares of common stock. The conversion rate and corresponding conversion price were subject to adjustment upon the occurrence of certain events.

On July 19, 2024, the Company elected to exercise its optional redemption right to redeem all $287.5 million aggregate principal amount of its outstanding 2.25% Convertible Notes due 2027 and instructed Wilmington Trust, National Association, as trustee under the Convertible Notes Indenture (the “Indenture Agreement”) governing the Convertible Notes, to issue a redemption notice to registered holders of the Convertible Notes. The date fixed for the redemption of the Convertible Notes was October 11, 2024 (the “Redemption Date”). The redemption price for the Convertible Notes was equal to 100% of the principal amount of the Convertible Notes to be redeemed plus accrued and unpaid interest to, but excluding, the Redemption Date. The Company elected physical settlement with the Company’s shares of common stock as the settlement method to apply to all conversions of the Convertible Notes. All terms and conditions associated with physical settlement are noted within the terms of the original Indenture Agreement. The conversion rate for holders who converted their Convertible Notes in connection with the Company’s election to redeem the Convertible Notes was increased by 0.4284 additional shares pursuant to the Indenture Agreement.

The following tables present total interest expense recognized related to the Convertible Notes during the three months ended March 31, 2025 and 2024:

	Three months ended
	March 31,
	2025		2024
	(in thousands)
Cash interest expense
Contractual interest expense	$	—	$	1,617
Non-cash interest expense
Amortization of debt discount and debt issuance cost		—		328
Total interest expense	$	—	$	1,945

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Income Taxes

3 Months Ended

Mar. 31, 2025

Income Taxes

Income Taxes

11. Income Taxes

During the three months ended March 31, 2025 and 2024, the Company recorded total income tax expense of approximately $173,000 and $428,000, respectively. The income tax expense is primarily attributable to state income tax and foreign income tax. Due to the Company’s history of cumulative operating losses, the Company concluded that, after considering all the available objective evidence, it is not more likely than not that all of the Company’s net deferred tax assets will be realized. Accordingly, all of the Company’s deferred tax assets, which includes net operating loss carryforwards and tax credits related primarily to research and development, continue to be subjected to a full valuation allowance as of March 31, 2025. The Company will continue to maintain a full valuation allowance until there is sufficient evidence to support recoverability of its deferred tax assets.

Interest and/or penalties related to income tax matters are recognized as a component of income tax expense. As of March 31, 2025 and December 31, 2024, there were no accrued interest and penalties related to uncertain tax positions.

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Net Loss per Share

3 Months Ended

Mar. 31, 2025

Net Loss per Share

Net Loss per Share

12. Net Loss per Share

The following table shows total outstanding potentially dilutive shares excluded from the computation of diluted loss per share as their effect would be anti-dilutive, as of March 31, 2025 and 2024:

	March 31,
	2025	2024
	(in thousands)
Options to purchase common stock	3,822	4,709
Performance-based awards and restricted stock units	9,974	11,901
Employee stock purchase plan	98	221
Convertible Notes	—	7,411
Total	13,894	24,242

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Segment Reporting

3 Months Ended

Mar. 31, 2025

Segment Reporting

Segment Reporting

13. Segment Reporting

In November 2023, ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, was issued which requires disclosure of incremental segment information on an interim and annual basis that are regularly provided to the chief operating decision maker (the “CODM”) and included within each reported measure of segment profit or loss. The Company has adopted this ASU as of December 31, 2024. The Company currently operates as a single reporting segment entity with the Chief Executive Officer as the CODM. The CODM relies on the financial statements presented within the annual report Form 10-K and quarterly Form 10-Q to evaluate the Company’s financial performance and make key operating decisions. The key area of focus of the CODM for the allocation of resources is the cash used in operations. These financial statements provide a comprehensive view of the Company’s overall financial condition, including information on expenses, assets, and liabilities. The significant expense categories are consistent with those presented on the face of the statements of operations and comprehensive loss. The CODM does not receive or use any other segmented or disaggregated financial or any significant expense information for decision-making purposes. Additionally, gross margin is regularly provided to the CODM and is derived based on the consolidated statements of operations and comprehensive loss as follows:

	March 31,
	2025		2024
	(in thousands except percentages)
Revenue	$	501,830	$	367,741
Cost of product revenues		184,613		158,833
Cost of licensing and other revenues		452		307
Gross margin	$	316,765	$	208,601
Gross margin percentage		63.1%		56.7%

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Subsequent Events

3 Months Ended

Mar. 31, 2025

Subsequent Events

Subsequent Events

14. Subsequent Events

None.

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Pay vs Performance Disclosure - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2025	Mar. 31, 2024
Pay vs Performance Disclosure
Net Income (Loss)	$ (66,936)	$ (67,599)

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Insider Trading Arrangements

3 Months Ended

Mar. 31, 2025

shares

Matthew Rabinowitz

Trading Arrangements, by Individual

Material Terms of Trading Arrangement

On March 14, 2025, Matthew Rabinowitz, our co-founder and executive chairman, adopted a trading arrangement for the sale of securities of the Company’s common stock (a “Rule 10b5-1 Trading Plan”) that is intended to satisfy the affirmative defense conditions of Securities Exchange Act Rule 10b5-1(c). Dr. Rabinowitz’s Rule 10b5-1 Trading Plan provides for the sale of 80,000 shares of common stock pursuant to the terms of the plan between June 13, 2025 and December 13, 2025.

Name

Matthew Rabinowitz

Title

co-founder and executive chairman

Rule 10b5-1 Arrangement Adopted

true

Adoption Date

March 14, 2025,

Aggregate Available

80,000

Expiration Date

December 13, 2025

Daniel Rabinowitz

Trading Arrangements, by Individual

Material Terms of Trading Arrangement

On March 14, 2025, Daniel Rabinowitz, our chief legal officer and secretary, amended a Rule 10b5-1 Trading Plan to provide for the sale of 19,908 shares of our common stock pursuant to the terms of the plan between June 13, 2025 and August 15, 2026.

Name

Daniel Rabinowitz

Title

chief legal officer and secretary

Aggregate Available

19,908

Modification Date

March 14, 2025

Rule 10b5-1 Arrangement Modified

true

Expiration Date

August 15, 2026

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Summary of Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2025

Summary of Significant Accounting Policies

Basis of Presentation

Basis of Presentation

The accompanying unaudited interim condensed consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information. The unaudited interim condensed consolidated financial information includes only adjustments of a normal recurring nature necessary for a fair presentation of the Company’s results of operations, financial position, changes in stockholders’ equity, and cash flows. The results of operations for the three months ended March 31, 2025, are not necessarily indicative of the results for the full year or the results for any future periods. The condensed consolidated balance sheet as of December 31, 2024 has been derived from audited financial statements at that date. These financial statements should be read in conjunction with the audited financial statements, and related notes for the year ended December 31, 2024 included in the Company’s Annual Report on Form 10-K filed with the SEC on February 28, 2025.

Liquidity Matters

Liquidity Matters

The Company has incurred net losses since its inception and anticipates net losses for the near future. The Company had a net loss of $66.9 million for the three months ended March 31, 2025 and an accumulated deficit of $2.6 billion as of March 31, 2025. As of March 31, 2025, the Company had $973.8 million in cash, cash equivalents, and restricted cash, $17.8 million in marketable securities, and an $80.3 million outstanding balance on its Credit Line (as defined in Note 10, Debt) including accrued interest. The Company is required to maintain a minimum of at least $150.0 million in its UBS accounts as collateral for its Credit Line, which is classified as cash, cash equivalents, and short-term investments in the condensed consolidated balance sheets. As of March 31, 2025, the Company had $20.0 million remaining and available on its Credit Line.

While the Company has introduced multiple products that are generating revenues, these revenues have not been sufficient to fund all operations and business plans. Accordingly, the Company has funded the portion of operating costs that exceeds revenues through a combination of equity issuances, debt issuances, and other financings.

The Company continues to invest in the development and commercialization of its existing and future products and, consequently, it will need to generate additional revenues to achieve future profitability and may need to raise additional equity or debt financing. If the Company raises additional funds by issuing equity securities, its stockholders will experience dilution. Additional debt financing, if available, may involve covenants restricting its operations or its ability to incur additional debt. Any additional debt financing or additional equity that the Company raises may contain terms that are not favorable to it or its stockholders and requires significant debt service payments, which diverts resources from other activities. Additional financing may not be available when necessary or in amounts or on terms acceptable to the Company. If the Company is unable to obtain additional financing, it may be required to delay or slow its investment in the development and commercialization of its products and significantly scale back its business and operations.

On July 19, 2024, the Company announced its decision to redeem all of its outstanding 2.25% Convertible Senior Notes (the “Convertible Notes”) due 2027. The redemption was completed on October 11, 2024 (the “Redemption Date”). The redemption price for the Convertible Notes equaled 100% of the principal amount of the Convertible Notes to be redeemed plus accrued and unpaid interest to, but excluding, the Redemption Date. The Company elected physical settlement with shares of its common stock as the settlement method to apply to all conversions of the Convertible Notes. On the Redemption Date, $287.4 million of Convertible Notes were redeemed for approximately 7.5 million shares of the Company’s common stock under the terms of the redemption notice. The remaining Convertible Notes not redeemed under the redemption notice were converted in exchange for cash at face value plus accrued interest totaling $0.1 million. As such, the Company’s redemption of its Convertible Notes did not have a material effect on its liquidity.

Based on the Company’s current business plan, the Company believes that its existing cash and marketable securities will be sufficient to meet its anticipated cash requirements for at least 12 months after May 8, 2025.

Principles of Consolidation

Principles of Consolidation

The accompanying condensed consolidated financial statements include all the accounts of the Company and its subsidiaries. All intercompany balances and transactions have been eliminated.

Use of Estimates

Use of Estimates

The preparation of financial statements in accordance with generally accepted accounting principles (GAAP) in the United States requires management to make estimates and assumptions about future events that affect the amounts of assets and liabilities reported, disclosures about contingent assets and liabilities, and reported amounts of revenues and expenses. Significant items subject to such estimates include stock-based compensation, the fair value of options, and the expected consideration (average selling price) to be received from contracts with customers, insurance payors, and patients. These estimates and assumptions are based on management's best estimates and judgment. Management regularly evaluates its estimates and assumptions using historical experience and other factors, including contractual terms and statutory limits; however, actual results could differ from these estimates and could have an adverse effect on the Company's financial statements.

Investments

Investments

Investments consist primarily of debt securities such as U.S. Treasuries, U.S. agency and municipal bonds. Management determines the appropriate classification of securities at the time of purchase and re-evaluates such determination at each balance sheet date. The Company generally classifies its entire investment portfolio as available-for-sale. The Company views its available-for-sale portfolio as available for use in current operations. Accordingly, the Company classifies all investments as short-term, irrespective of maturity date. Available-for-sale securities are carried at fair value, with unrealized gains and losses reported in accumulated other comprehensive income (loss), which is a separate component of stockholders’ equity.

The Company classifies its investments as Level 1 or 2 within the fair value hierarchy. Fair values determined by Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets that the Company has the ability to access. Fair values determined by Level 2 inputs utilize data points that are observable such as quoted prices, interest rates and yield curves. The Company holds Level 2 securities which are initially valued at the transaction price and subsequently valued by a third-party service provider using inputs other than quoted prices that are observable either directly or indirectly, such as yield curve, volatility factors, credit spreads, default rates, loss severity, current market and contractual prices for the underlying instruments or debt, broker and dealer quotes, as well as other relevant economic measures. The Company performs certain procedures to corroborate the fair value of these holdings. The Company also holds warrants issued by MyOme which are classified as Level 3 investments because the valuation methods include certain unobservable inputs. These warrants are accounted for as derivatives and recorded at fair value on a recurring basis.

Available-for-sale debt securities. The amended guidance from Accounting Standards Update (“ASU”) 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASC 326”), requires the measurement of expected credit losses for available-for-sale debt securities held at the reporting date over the remaining life based on historical experience, current conditions, and reasonable and supportable forecasts. The Company evaluated its investment portfolio under the available-for-sale debt securities impairment model guidance and determined the Company’s investment portfolio is composed of low-risk, investment grade securities and thus has not recorded an expected credit loss for its investment portfolio. Further, gross unrealized losses on available for sale securities were not material at March 31, 2025.

Accounts Receivable, net of allowance

Accounts Receivable, net of allowance

Trade accounts receivable and other receivables. The allowance for expected credit losses for trade accounts receivable is based on the Company’s assessment of the collectability of accounts related to its clinics and laboratory partner customers. The Company regularly reviews the allowance by considering factors such as historical experience, the age of the accounts receivable balances, and current economic conditions that may affect a customer’s ability to pay. See Note 6, Balance Sheet Components, for a roll-forward of the allowance for expected credit losses related to trade accounts receivable for the three months ended March 31, 2025 and 2024.

With respect to revenue recognized related to genetic test services provided to patient customers whereby consideration is expected to be received from insurance or patient payors, the Company recognizes a constraint to the estimated variable consideration such that it is not probable that a significant revenue reversal will occur. When assessing the total consideration expected to be received from insurance carriers and patients, a certain percentage of revenues is further constrained for estimated refunds. After applying the ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing (“ASC 606”) constraint, the Company assessed for credit losses under ASC 326 and determined an incremental credit loss was not needed given the quality of the insurance payors from whom such receivables are expected to be collectible and the relatively short duration over which the majority of receivables are collected. Accordingly, the Company currently does not have an incremental credit loss reserve nor allowance for expected credit losses against accounts receivable for insurance and patient payors due to the average selling price calculations, which incorporate these risks as net receivables are recorded.

Inventory

Inventory

Inventory is recorded at the lower of cost or net realizable value, determined on a first-in, first-out basis. Inventory consists entirely of supplies, which are consumed at the point biologic samples are collected and the Company provides genetic testing services; therefore, the Company does not maintain any work-in-process or finished goods inventory. The Company enters into inventory purchases commitments so that it can meet future delivery schedules based on forecasted demand for its tests.

The Company analyzes its inventory to determine whether the composition of its inventory is obsolete, slow-moving or unsalable. A write down of specifically identified unusable, or obsolete inventory in the period is recognized by considering product expiration dates and scrapped inventory. Any write-down of inventory to net realizable value establishes a new cost basis and will be maintained even if certain circumstances suggest the inventory is recoverable in subsequent periods. Costs associated with the write-down of inventory are recorded to cost of revenue on our consolidated statements of operations.

Accumulated Other Comprehensive Income (Loss)

Accumulated Other Comprehensive Income (Loss)

Comprehensive loss and its components encompass all changes in equity other than those with stockholders, and include net loss, unrealized gains and losses on available-for-sale marketable securities and foreign currency translation adjustments.

	Three months ended
	March 31,
	2025		2024
	(in thousands)
Beginning balance	$	(344)	$	(3,085)
Net unrealized gain on available-for-sale securities, net of tax and foreign currency translation adjustment		147		893
Ending balance	$	(197)	$	(2,192)

The change in net unrealized loss on available-for-sale securities is due to the impact of changes in interest rates on the value of fixed-rate investments and not due to any credit deterioration. Further, due to the short-term nature of these investments, the Company has the ability and intention to hold any such investments until maturity and does not expect to realize any material investment losses. As such, the Company has assessed the unrealized loss position for available-for-sale securities and determined that an allowance for credit loss was not necessary.

Revenue Recognition

Revenue Recognition

The Company recognizes revenue under ASC 606, using the following five step process:

● Identification of a contract, or contracts, with a customer;

● Identification of the performance obligations in the contract;

● Determination of the transaction price;

● Allocation of the transaction price to the performance obligations in the contract; and

● Revenue recognition when, or as, the performance obligations are satisfied.

The Company uses the expected value amount method of estimating variable consideration. The total consideration which the Company expects to collect in exchange for the Company’s products is an estimate and may be fixed or variable, and is primarily based on historical cash collections for tests delivered, as adjusted for current expectations. Current expectations of cash collections factor in changes in reimbursement rate trends, past events not expected to recur, and future known changes such as anticipated contractual pricing changes or changes to insurance coverage.  For insurance carriers and product types with similar reimbursement characteristics, the Company uses a portfolio approach to estimate variable consideration. When assessing the total variable consideration expected to be received from insurance carriers and patients, the Company considers both the magnitude and likelihood of a revenue reversal in the determination of the percentage of revenues to further constrain for estimated refunds.

See Note 3, Revenue Recognition, for detailed discussions of product revenues, licensing and other revenues, and how the five steps described above are applied.

Fair Value

Fair Value

The Company discloses the fair value of financial instruments for financial assets and liabilities for which the value is practicable to estimate. Fair value is defined as the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price).

Related Party Transactions

Related Party Transactions

On December 6, 2021, the Company participated along with certain other investors in the series B financing of MyOme, Inc. (“MyOme”), and purchased preferred shares and warrants in exchange for a cash payment of approximately $4.0 million which was allocated $2.2 million for preferred shares and $1.8 million for warrants. In August 2024, the Company participated in a subsequent round of the series B financing and purchased an additional $2.7 million of series B preferred shares at the same valuation as the initial round of financing in December 2021. The Company does not hold a seat on MyOme’s board of directors and does not participate or direct the day to day activities of MyOme. Because MyOme is a privately-held company without readily determinable fair values, the Company elected to account for its preferred Series B share investment in MyOme using the measurement alternative, which is cost, less any impairment, adjusted for changes in fair value resulting from observable transactions for identical or similar investments of the same issuer as of the respective transaction dates. When indicators exist and the estimated fair value of the investment is below its carrying amount, the Company would adjust the investment to fair value. The change in carrying value, resulting from the remeasurements, would be recognized in interest and other income, net on the consolidated statements of operations. During the three months ended March 31, 2024, no upward nor downward adjustments were recorded. The following are the Company’s related persons and the basis of each such related person’s relationship with MyOme:

● Matthew Rabinowitz, the Company’s executive chairman and co-founder, is the chairman of the board and founder of MyOme, and a beneficial holder of approximately 22.6% of the outstanding shares of MyOme on a fully dilutive basis;

● Jonathan Sheena, the Company’s co-founder and a member of the Company’s board of directors, is a stockholder and a member of the board of directors of MyOme;

● Daniel Rabinowitz, the Company’s Secretary and Chief Legal Officer, is a stockholder of MyOme; and

● Roelof Botha, the Lead Independent Director of the Company’s board of directors, is a managing member of Sequoia Capital. Certain funds affiliated with Sequoia Capital also participated in MyOme’s series B financing.

None of the related party investments in MyOme by our executives and directors noted above were at the behest of the Company nor funded by the Company.

In February 2024, the Company entered into a collaboration and commercialization agreement (the “Collaboration Agreement”) with MyOme pursuant to which the parties agreed to partner to offer certain genetic testing services to be developed and funded solely by MyOme and overseen by a joint steering committee. The Company agreed to assist MyOme with commercial activities. In connection with the Collaboration Agreement, the Company received a 10-year warrant to purchase 3,058,485 shares of MyOme's common stock at an exercise price of $0.25 per share, which is exercisable in whole or in part, commencing in February 2024, and can be converted to MyOme’s common stock upon the occurrence of MyOme’s initial public offering or a liquidation event (as such terms are defined in MyOme's certificate of incorporation). Additionally, upon the achievement of certain product commercialization milestones, the Company is eligible to receive an additional warrant exercisable for 2,080,565 shares of MyOme’s series B preferred stock with an exercise price of $0.01 per share. During September 2024, the Company achieved certain product commercialization milestones such that the warrant for 2,080,565 shares of MyOme’s series B preferred stock was due from MyOme to the Company. These warrants were granted and issued by MyOme to the Company during the fourth quarter of 2024, and were exercisable in whole or in part in December 2024. However, the Company needs to perform ongoing collaboration in exchange for the warrant consideration. Accordingly, the warrants have been included within other assets and allocated between short-term and long-term liabilities on the consolidated balance sheets. The Company is amortizing the liability as a reduction of selling and marketing expense upon commercialization and sale of the products contemplated under the Collaboration Agreement over the life of the contract. For the three months ended March 31, 2025, the amortization of the non-cash liability was $0.4 million.

The warrants issued to the Company in 2021 and 2024 are accounted for as derivative instruments and recorded within other assets on the consolidated balance sheets at fair value. The warrants were valued using the Black-Scholes valuation model as of each reporting period, including the date of issuance. Subject to the Company's achievement of certain commercialization milestones, the Company may receive additional warrants to purchase MyOme’s series B preferred stock. To the extent the genetic testing services are successfully commercialized, the Company will owe certain royalty payments to MyOme. For the three months ended March 31, 2025, the royalties to MyOme were not material. As of March 31, 2025 and December 31, 2024, the Company’s carrying amount of preferred shares in MyOme was $6.6 million and $4.9 million, respectively, on its consolidated balance sheets. The fair market value of the warrants as of March 31, 2025 and December 31, 2024 was $12.7 million and $11.2 million, respectively, on the consolidated balance sheets.

Risk and Uncertainties

Risk and Uncertainties

Financial instruments that potentially subject the Company to credit risk consist of cash, cash equivalents, and restricted cash, accounts receivable and investments. The Company limits its exposure to credit loss by placing its cash in financial institutions with high credit ratings. The Company's cash may consist of deposits held with banks that may at times exceed federally insured limits. The Company performs evaluations of the relative credit standing of these financial institutions and limits the amount of credit exposure with any one institution.

For the three months ended March 31, 2025, and 2024, there were no customers exceeding 10% of total revenues on an individual basis. As of March 31, 2025 and December 31, 2024, there were no customers with an outstanding balance exceeding 10% of net accounts receivable. 

For the three months ended March 31, 2025 and 2024, approximately 14.0% and 11.6%, respectively, of total revenue were paid by Medicare on behalf of multiple customers. As of March 31, 2025 and December 31, 2024, approximately 12.6% and 11.5%, respectively, of accounts receivable are expected to be paid by Medicare on behalf of multiple customers.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”) under its accounting standard codifications or other standard setting bodies and are adopted by the Company as of the specified effective date.

Recently Adopted Accounting Pronouncements

In March 2020, ASU 2020-04, Reference Rate Reform (Topic 848) (“Topic 848”) was issued which provides temporary optional guidance to ease the potential burden in accounting for reference rate reform. The new guidance provides optional expedients and exceptions for applying generally accepted accounting principles to transactions affected by reference rate reform if certain criteria are met. These transactions include contract modifications, hedging relationships, and sale or transfer of debt securities classified as held-to-maturity. ASU 2022-06, or Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848, defers the sunset date of Topic 848 from December 31, 2022 to December 31, 2024. Adoption of this standard occurred on January 1, 2025 and did not have a material impact on the Company’s consolidated financial statements.

New Accounting Pronouncements Not Yet Adopted

In December 2023, ASU 2023-09, Income Taxes - Improvements to Income Tax Disclosures, was issued, which requires enhanced disclosures in connection with an entity's effective tax rate reconciliation and income taxes paid disaggregated by jurisdiction. The standard became effective for annual periods beginning after December 15, 2024. The Company does not expect the adoption of this standard to have a significant impact on its consolidated financial statements.

In November 2024, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40) was issued which requires disaggregation of any relevant expense caption presented on the face of the income statement for certain expense categories. The new guidance is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact of the guidance on its consolidated financial statements. 

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Summary of Significant Accounting Policies (Tables)

3 Months Ended

Mar. 31, 2025

Summary of Significant Accounting Policies

Schedule of Accumulated Other Comprehensive Income (Loss)

	Three months ended
	March 31,
	2025		2024
	(in thousands)
Beginning balance	$	(344)	$	(3,085)
Net unrealized gain on available-for-sale securities, net of tax and foreign currency translation adjustment		147		893
Ending balance	$	(197)	$	(2,192)

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Revenue Recognition (Tables)

3 Months Ended

Mar. 31, 2025

Revenue Recognition

Schedule of disaggregation of revenues by payer types

	Three months ended
	March 31,
	2025		2024
	(in thousands)
Insurance carriers	$	472,647	$	341,028
Laboratory partners		20,832		20,276
Patients		8,351		6,437
Total revenues	$	501,830	$	367,741

Schedule of total revenue by geographic area

	Three months ended
	March 31,
	2025		2024
	(in thousands)
United States	$	492,305	$	359,413
Americas, excluding U.S.		1,692		1,481
Europe, Middle East, India, Africa		6,049		5,178
Asia Pacific and Other		1,784		1,669
Total revenues	$	501,830	$	367,741

Schedule of beginning and ending balances of accounts receivable and deferred revenues

	Balance at
	March 31,		December 31,
	2025		2024
	(in thousands)
Assets:
Accounts receivable, net	$	318,233	$	314,165
Liabilities:
Deferred revenue, current portion	$	20,557	$	19,754
Deferred revenue, long-term portion (1)		16,705		16,838
Total deferred revenues	$	37,262	$	36,592

(1) The deferred revenue, long-term portion is included within the “Deferred revenue, long-term portion and other liabilities” line item on the consolidated balance sheets.

Schedule of changes in the balance of deferred revenues

	Balance at
	March 31,
	2025			2024
	(in thousands)
Beginning balance	$	36,592	$	35,740
Increase in deferred revenues		10,163		7,941
Revenue recognized during the period included in deferred revenues at the beginning of the period		(9,418)		(7,048)
Revenue recognized from performance obligations satisfied within the same period		(75)		(100)
Ending balance	$	37,262	$	36,533

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Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2025

Fair Value Measurements

Summary of financial assets and liabilities measured on recurring basis

	March 31, 2025								December 31, 2024
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
	(in thousands)
Financial Assets:
Cash, cash equivalents and restricted cash (1)	$	973,768	$	—	$	—	$	973,768	$	945,587	$	—	$	—	$	945,587
Municipal securities		—		17,832		—		17,832		—		22,689		—		22,689
Total financial assets	$	973,768	$	17,832	$	—	$	991,600	$	945,587	$	22,689	$	—	$	968,276

(1) Cash equivalents includes money market deposits and liquid demand deposits.

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Financial Instruments (Tables)

3 Months Ended

Mar. 31, 2025

Financial Instruments

Schedule of available-for-sale securities

	March 31, 2025								December 31, 2024
	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss		Estimated Fair Value		Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss		Estimated Fair Value
	(in thousands)
Cash, cash equivalents and restricted cash (2)	$	973,768	$	—	$	—	$	973,768	$	945,587	$	—	$	—	$	945,587
Municipal securities (1)		18,009		—		(177)		17,832		23,019		—		(330)		22,689
Total	$	991,777	$	—	$	(177)	$	991,600	$	968,606	$	—	$	(330)	$	968,276
Classified as:
Cash, cash equivalents and restricted cash (2)								973,768								945,587
Short-term investments								17,832								22,689
Total							$	991,600							$	968,276

(1) Per the Company’s investment policy, all debt securities are classified as short-term investments irrespective of holding period.  

(2) Cash equivalents includes liquid demand deposits and money market funds.

Schedule of debt securities available-for-sale in unrealized loss position

		Total
		Fair Value		Unrealized Loss
	(in thousands)
Municipal securities			17,832		(177)
Total		$	17,832	$	(177)

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Balance Sheet Components (Tables)

3 Months Ended

Mar. 31, 2025

Balance Sheet Components

Schedule of allowances for credit losses related to trade accounts receivable and other receivables

The following is a roll-forward of the allowances for expected credit losses related to trade accounts receivable for the three months ended March 31, 2025 and 2024:

	Three Months Ended
	March 31,
	2025		2024
		(in thousands)
Beginning balance	$	7,259	$	6,481
Provision for expected credit losses		195		929
Write-offs		(20)		(158)
Total	$	7,434	$	7,252

Schedule of property and equipment

		March 31,		December 31,
	Useful Life	2025		2024
		(in thousands)
Machinery and equipment	3-5 years	$	129,005	$	117,076
Computer equipment	3 years		3,287		3,178
Purchased and capitalized software held for internal use	3 years		14,587		13,178
Leasehold improvements	Lesser of useful life or lease term		48,883		48,569
Construction-in-process			71,271		58,461
			267,033		240,462
Less: Accumulated depreciation and amortization			(86,580)		(78,416)
Total property and equipment, net		$	180,453	$	162,046

Schedule of other accrued liabilities

	March 31,		December 31,
	2025		2024
	(in thousands)
Reserves for refunds to insurance carriers	$	10,171	$	11,276
Accrued charges for third-party testing		16,963		12,321
Testing and laboratory materials from suppliers		10,754		7,893
Marketing and corporate affairs		17,898		16,548
Legal, audit and consulting fees		66,097		54,208
Accrued shipping charges		1,945		1,625
Sales and income tax payable		5,602		4,416
Accrued third-party service fees		8,812		9,046
Clinical trials and studies		10,788		10,097
Operating lease liabilities, current portion		12,199		10,168
Property and equipment purchases		9,525		7,098
Other accrued expenses		7,695		2,197
Total other accrued liabilities	$	178,449	$	146,893

Summary of reserve balance and activities for refunds to insurance carriers

	March 31,
	2025		2024
	(in thousands)
Beginning balance	$	11,276	$	23,245
Additional (reversals) reserves		(622)		227
Refunds to carriers		—		(3,095)
Reserves released to revenue		(483)		(2,354)
Ending balance	$	10,171	$	18,023

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Leases (Tables)

3 Months Ended

Mar. 31, 2025

Leases.

Schedule of lease liabilities

	March 31,		December 31,
	2025		2024
		(in thousands)
Operating lease liabilities, current portion included in other accrued liabilities	$	12,199	$	10,168
Operating lease liabilities, long-term portion		103,056		96,588
Total operating lease liabilities	$	115,255	$	106,756

Schedule of annual minimum lease payments

	Operating Leases
	(in thousands)
As of March 31, 2025
2025 (remaining 9 months)	$	14,794
2026		20,287
2027		19,673
2028		19,779
2029		18,291
2030 and thereafter		56,602
Total future minimum lease payments		149,426
Less: imputed interest		(34,171)
Operating lease liabilities	$	115,255

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Commitments and Contingencies (Tables)

3 Months Ended

Mar. 31, 2025

Commitments and Contingencies

Schedule of material contractual commitments

Party	Commitments		Expiry Date
	(in thousands)
Laboratory instruments supplier	$	21,443	December 2027
Material suppliers		70,395	December 2026
Application service providers		4,733	January 2028
Cloud platform service provider		27,430	December 2028
Other material suppliers		44,570	Various
Total	$	168,571

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Stock-Based Compensation (Tables)

3 Months Ended

Mar. 31, 2025

Stock-Based Compensation

Summary of stock-based compensation expenses

	Three months ended March 31,
		2025		2024
	(in thousands)
Cost of revenues	$	5,270	$	3,777
Research and development		26,511		20,649
Selling, general and administrative		46,046		40,021
Total	$	77,827	$	64,447

Summary of stock option activity

		Weighted-
	Number of	Average
	Shares	Exercise
	Outstanding	Price
	(in thousands, except for per share data)
December 31, 2024	3,875	$	30.22
Options exercised	(50)	$	11.80
Options forfeited/cancelled	(3)	$	3.78
March 31, 2025	3,822	$	30.47

RSU and performance-based awards

		Weighted-
		Average
		Grant Date
	Shares	Fair Value
	(in thousands, except for per share data)
Balance at December 31, 2024	10,593	$	61.28
Granted	2,721	$	171.72
Vested	(3,236)	$	59.65
Cancelled/Forfeited	(104)	$	74.42
Balance at March 31, 2025	9,974	$	86.75

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Debt (Tables)

3 Months Ended

Mar. 31, 2025

Debt

Summary of interest expense

The following tables present total interest expense recognized related to the Convertible Notes during the three months ended March 31, 2025 and 2024:

	Three months ended
	March 31,
	2025		2024
	(in thousands)
Cash interest expense
Contractual interest expense	$	—	$	1,617
Non-cash interest expense
Amortization of debt discount and debt issuance cost		—		328
Total interest expense	$	—	$	1,945

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Net Loss per Share (Tables)

3 Months Ended

Mar. 31, 2025

Net Loss per Share

Total outstanding potentially dilutive shares

	March 31,
	2025	2024
	(in thousands)
Options to purchase common stock	3,822	4,709
Performance-based awards and restricted stock units	9,974	11,901
Employee stock purchase plan	98	221
Convertible Notes	—	7,411
Total	13,894	24,242

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Segment Reporting (Tables)

3 Months Ended

Mar. 31, 2025

Segment Reporting

Schedule of Segment Reporting

	March 31,
	2025		2024
	(in thousands except percentages)
Revenue	$	501,830	$	367,741
Cost of product revenues		184,613		158,833
Cost of licensing and other revenues		452		307
Gross margin	$	316,765	$	208,601
Gross margin percentage		63.1%		56.7%

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Description of Business (Details)	3 Months Ended
	Mar. 31, 2025 segment
Description of Business
Number of operating segments	1

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Summary of Significant Accounting Policies (Details) shares in Thousands			1 Months Ended		3 Months Ended
	Oct. 11, 2024 USD ($)	Jul. 19, 2024 USD ($)	Jul. 19, 2024 USD ($)	Apr. 30, 2020 USD ($)	Mar. 31, 2025 USD ($) shares	Mar. 31, 2024 USD ($)	Dec. 31, 2024 USD ($) shares	Dec. 31, 2023 USD ($)
Policies
Net Income (Loss)					$ (66,936,000)	$ (67,599,000)
Accumulated deficit					2,634,798,000		$ 2,567,862,000
Cash, cash equivalents and restricted cash					973,768,000	$ 813,817,000	945,587,000	$ 642,095,000
Marketable securities					17,832,000		22,689,000
Short-term Credit Line, outstanding balance					80,345,000		$ 80,362,000
Collateral amount					150,000,000.0
Remaining borrowing capacity					$ 20,000,000.0
Common stock, shares issued | shares					135,932		132,646
Convertible Notes
Policies
Outstanding principal balance		$ 287,500,000	$ 287,500,000	$ 287,500,000
Per annum interest rate (as a percent)		2.25%	2.25%	2.25%
Percentage of principal amount converted	100.00%		100.00%
Convertible Notes Payable	$ 287,400,000
Convertible to shares of common stock	7,500,000			7,411,704
Proceeds from notes payable	$ 100,000
Line Of Credit-UBS
Policies
Collateral amount					$ 150,000,000.0
Remaining borrowing capacity					$ 20,000,000.0

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Summary of Significant Accounting Policies - AOCIL (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2025	Mar. 31, 2024
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning balance	$ (344)	$ (3,085)
Ending balance	(197)	(2,192)
Net unrealized gain on available-for-sale securities, net of tax and foreign currency translation adjustment
Accumulated Other Comprehensive Income (Loss) [Line Items]
Increase (decrease) in other comprehensive loss	$ 147	$ 893

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Summary of Significant Accounting Policies - Related Party (Details) - USD ($) $ / shares in Units, $ in Millions	1 Months Ended	3 Months Ended
	Feb. 29, 2024	Mar. 31, 2025	Aug. 31, 2024	Mar. 31, 2024	Dec. 06, 2021
Related Party Transaction [Line Items]
Investment in equity securities without readily determinable fair value					$ 2.2
Warrants to purchase stock
Related Party Transaction [Line Items]
Investment in equity securities without readily determinable fair value					1.8
Derivative fair value		$ 12.7		$ 11.2
MyOme, Inc.
Related Party Transaction [Line Items]
Investment in equity securities without readily determinable fair value			$ 2.7		$ 4.0
Warrants term	10 years
Warrants convertible into number of stock shares	3,058,485
Warrants exercise price (in dollars per share)	$ 0.25
MyOme, Inc. | Series B preferred stock
Related Party Transaction [Line Items]
Warrants convertible into number of stock shares	2,080,565
Warrants exercise price (in dollars per share)	$ 0.01
MyOme, Inc. | Preferred stock shares
Related Party Transaction [Line Items]
Carrying amount of investments		6.6		$ 4.9
MyOme, Inc. | Warrants to purchase stock
Related Party Transaction [Line Items]
Amortization of non-cash liability		$ 0.4
Executive chairman | MyOme, Inc.
Related Party Transaction [Line Items]
Ownership percentage					22.60%

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Summary of Significant Accounting Policies - Risks and Uncertainties (Details)	3 Months Ended		12 Months Ended
	Mar. 31, 2025 USD ($) customer	Mar. 31, 2024 USD ($)	Dec. 31, 2024 customer
Sales | Customer
Risk and Uncertainties
Number of customers exceeding 10% of benchmark | $	0	0
Sales | Customer | Medicare
Risk and Uncertainties
Concentration risk (as a percent)	14.00%	11.60%
Accounts receivable | Customer | Medicare
Risk and Uncertainties
Concentration risk (as a percent)	12.60%		11.50%
Accounts receivable | Credit
Risk and Uncertainties
Number of customers exceeding 10% of benchmark | customer	0		0

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Revenue Recognition (Details) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2025 USD ($) $ / shares	Mar. 31, 2024 USD ($) item $ / shares	Mar. 31, 2023 USD ($)	Dec. 31, 2024 USD ($)	Dec. 31, 2023 USD ($)
Other assets	$ 40,897			$ 36,720
Deferred revenue	$ 37,262	$ 36,533		36,592	$ 35,740
Product
Approximate percentage of revenue collected within 9 months	90.00%
Extended billing collection period (in months)	6 months
Increased (decreased) revenues		2,100
(Increased) decreased net loss		$ 2,100
(Increased) decreased net loss per share | $ / shares		$ 0.02
Tests delivered in prior periods that were fully collected
Increased (decreased) revenues	$ 34,300	$ 33,700
(Increased) decreased net loss	$ 34,300	$ 33,700
(Increased) decreased net loss per share | $ / shares	$ 0.25	$ 0.28
Amounts not refunded to insurance carriers
Increased (decreased) revenues	$ 3,500	$ (1,500)
(Increased) decreased net loss	$ (3,500)	$ (1,500)
(Increased) decreased net loss per share | $ / shares	$ (0.03)	$ (0.01)
BGI Genomics
Proceeds from license agreement	$ 44,000
Agreement term	10 years
Revenue, remaining performance obligation	$ 6,000
Transaction price	50,000
Deferred revenue	17,200			$ 17,300
Prepaid royalties	20,000
BGI Genomics | License and related development services
Number of performance obligations | item		2
Revenue, remaining performance obligation		$ 24,000
BGI Genomics | Oncology assay interpretation services
Revenue recognized	$ 100		$ 300
Revenue, remaining performance obligation					$ 20,000

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Revenue Recognition - Disaggregation (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2025	Mar. 31, 2024
Disaggregation of Revenue [Line Items]
Total revenues	$ 501,830	$ 367,741
United States
Disaggregation of Revenue [Line Items]
Total revenues	492,305	359,413
Americas, excluding U.S.
Disaggregation of Revenue [Line Items]
Total revenues	1,692	1,481
Europe, Middle East, India, Africa
Disaggregation of Revenue [Line Items]
Total revenues	6,049	5,178
Asia Pacific and Other
Disaggregation of Revenue [Line Items]
Total revenues	1,784	1,669
Insurance carriers
Disaggregation of Revenue [Line Items]
Total revenues	472,647	341,028
Laboratory and other partners
Disaggregation of Revenue [Line Items]
Total revenues	20,832	20,276
Patients
Disaggregation of Revenue [Line Items]
Total revenues	8,351	6,437
Licensing and other
Disaggregation of Revenue [Line Items]
Total revenues	$ 1,794	$ 3,069

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Revenue Recognition - Accounts Receivable and Deferred Revenue (Details) - USD ($) $ in Thousands	Mar. 31, 2025	Dec. 31, 2024	Mar. 31, 2024	Dec. 31, 2023
Assets
Accounts receivable, net	$ 318,233	$ 314,165
Liabilities:
Deferred revenue, current portion	20,557	19,754
Deferred revenue, long-term portion	16,705	16,838
Total deferred revenues	$ 37,262	$ 36,592	$ 36,533	$ 35,740

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Revenue Recognition - Changes in Balance of Deferred Revenues (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2025	Mar. 31, 2024
Revenue Recognition
Beginning balance	$ 36,592	$ 35,740
Increase in deferred revenues	10,163	7,941
Revenue recognized during the period that was included in deferred revenues at the beginning of the period	(9,418)	(7,048)
Revenue recognized from performance obligations satisfied within the same period	(75)	(100)
Ending Balance	$ 37,262	$ 36,533

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Revenue Recognition - Deferred Revenues (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2025	Mar. 31, 2024	Dec. 31, 2024	Dec. 31, 2023
Revenue recognized during the period that was included in deferred revenues at the beginning of the period	$ 9,418	$ 7,048
Deferred revenue, current portion	20,557		$ 19,754
Deferred revenue, Long-term	16,705		16,838
Deferred revenue	37,262	$ 36,533	36,592	$ 35,740
BGI Genomics
Deferred revenue, current portion	500
Deferred revenue, Long-term	16,700
Deferred revenue	17,200		$ 17,300
Foundation Medicine ("FMI")
Deferred revenue, current portion	1,500
BGI Genomics and Foundation Medicine
Revenue recognized during the period that was included in deferred revenues at the beginning of the period	400
Genetic testing services
Revenue recognized during the period that was included in deferred revenues at the beginning of the period	9,000
Deferred revenue, current portion	$ 18,600

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Fair Value Measurements (Details) - USD ($) $ in Thousands	1 Months Ended	3 Months Ended
	Oct. 31, 2023	Mar. 31, 2025	Dec. 31, 2024
Line Of Credit-UBS
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Line of credit facility, fair value of amount outstanding		$ 80,300	$ 80,400
Line Of Credit-UBS | SOFR
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Spread on interest rate (as a percent)	0.50%	0.50%
Recurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total financial assets		$ 991,600	968,276
Recurring | Cash, cash equivalents, and restricted cash
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total financial assets		973,768	945,587
Recurring | Municipal securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total financial assets		17,832	22,689
Recurring | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total financial assets		973,768	945,587
Recurring | Level 1 | Cash, cash equivalents, and restricted cash
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total financial assets		973,768	945,587
Recurring | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total financial assets		17,832	22,689
Recurring | Level 2 | Municipal securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total financial assets		$ 17,832	$ 22,689

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Financial Instruments (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2025 USD ($) position security	Mar. 31, 2024 USD ($) security	Dec. 31, 2024 USD ($)	Dec. 31, 2023 USD ($)
Debt Securities, Available-for-sale, Fair Value to Amortized Cost [Abstract]
Amortized Cost	$ 991,777		$ 968,606
Gross Unrealized Loss	(177)		(330)
Estimated Fair Value	991,600		968,276
Cash, cash equivalents and restricted cash	973,768	$ 813,817	945,587	$ 642,095
Short-term investments	$ 17,832		22,689
Number of investments sold | security	0	0
Number of investments, unrealized loss position | position	6
Credit loss reserve	$ 0		0
Fair value	17,832
Unrealized loss	(177)
Cash, cash equivalents, and restricted cash
Debt Securities, Available-for-sale, Fair Value to Amortized Cost [Abstract]
Amortized Cost	973,768		945,587
Estimated Fair Value	973,768		945,587
Municipal securities
Debt Securities, Available-for-sale, Fair Value to Amortized Cost [Abstract]
Amortized Cost	18,009		23,019
Gross Unrealized Loss	(177)		(330)
Estimated Fair Value	17,832		$ 22,689
Fair value	17,832
Unrealized loss	(177)
Available-for-sale securities
Debt Securities, Available-for-sale, Fair Value to Amortized Cost [Abstract]
Fair value	$ 0

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Balance Sheet Components - Allowance for Expected Credit Losses (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2025	Mar. 31, 2024
Balance Sheet Components
Beginning balance	$ 7,259	$ 6,481
Provision for expected credit losses	195	929
Write-offs	(20)	(158)
Total	$ 7,434	$ 7,252

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Balance Sheet Components - Property and Equipment, net (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2025	Mar. 31, 2024	Dec. 31, 2024
Property and Equipment, net
Property and equipment, gross	$ 267,033		$ 240,462
Less: Accumulated depreciation and amortization	(86,580)		(78,416)
Total Property and Equipment, net	180,453		162,046
Depreciation expense	8,200	$ 6,300
Impairment charge	0	$ 0
Equipment pledged	150,000
Machinery and equipment
Property and Equipment, net
Property and equipment, gross	129,005		117,076
Computer equipment
Property and Equipment, net
Property and equipment, gross	$ 3,287		3,178
Useful Life	3 years
Software held for internal use
Property and Equipment, net
Property and equipment, gross	$ 14,587		13,178
Useful Life	3 years
Leasehold improvements
Property and Equipment, net
Property and equipment, gross	$ 48,883		48,569
Construction-in-process
Property and Equipment, net
Property and equipment, gross	$ 71,271		$ 58,461
Minimum | Machinery and equipment
Property and Equipment, net
Useful Life	3 years
Maximum | Machinery and equipment
Property and Equipment, net
Useful Life	5 years

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Balance Sheet Components - Other Accrued Liabilities (Details) - USD ($) $ in Thousands	Mar. 31, 2025	Dec. 31, 2024	Mar. 31, 2024	Dec. 31, 2023
Balance Sheet Components
Reserves for refunds to insurance carriers	$ 10,171	$ 11,276	$ 18,023	$ 23,245
Accrued charges for third-party testing	16,963	12,321
Testing and laboratory materials from suppliers	10,754	7,893
Marketing and corporate affairs	17,898	16,548
Legal, audit and consulting fees	66,097	54,208
Accrued shipping charges	1,945	1,625
Sales and income tax payable	5,602	4,416
Accrued third-party service fees	8,812	9,046
Clinical trials and studies	10,788	10,097
Operating lease liabilities, current portion	12,199	10,168
Property and equipment purchases	9,525	7,098
Other accrued expenses	7,695	2,197
Total other accrued liabilities	$ 178,449	$ 146,893

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Balance Sheet Components - Reserve Balance and Activities for Refunds (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2025	Mar. 31, 2024
Balance Sheet Components
Beginning balance	$ 11,276	$ 23,245
Additional (reversals) reserves	(622)	227
Refunds to carriers		(3,095)
Reserves released to revenue	(483)	(2,354)
Ending balance	$ 10,171	$ 18,023

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Leases (Details) $ in Thousands	1 Months Ended			3 Months Ended
	Mar. 31, 2025 USD ($) ft²	Jan. 31, 2025 USD ($) ft²	Sep. 30, 2023 USD ($) ft²	Mar. 31, 2025 USD ($) ft² lease item	Mar. 31, 2024 USD ($)	Dec. 31, 2024 USD ($)	Jul. 31, 2024	Sep. 30, 2015 ft²
Lessee, Lease, Description [Line Items]
Operating lease liabilities, current portion included in other accrued liabilities	$ 12,199			$ 12,199		$ 10,168
Operating lease liabilities, long-term portion	103,056			103,056		96,588
Operating lease liabilities	$ 115,255			115,255		$ 106,756
Noncash operating activities related to right-of-use assets				$ 10,900	$ 300
Weighted average remaining lease term	7 years 4 months 17 days			7 years 4 months 17 days
Weighted average discount rate (as a percent)	7.10%			7.10%
Lease expense				$ 4,400	3,600
Operating lease payments				$ 4,500	$ 4,100
Austin TX, Long-term Lease
Lessee, Lease, Description [Line Items]
Lease space (area) | ft²	57,100			57,100				94,000
Number of office space locations | lease				2
Annual lease payment	$ 900
Term of lease	132 months			132 months
First Expansion Premises
Lessee, Lease, Description [Line Items]
Lease space (area) | ft²	32,500			32,500
Second Expansion Premises
Lessee, Lease, Description [Line Items]
Lease space (area) | ft²	65,222			65,222
Corporate Headquarters Lease
Lessee, Lease, Description [Line Items]
Lease space (area) | ft²	136,000			136,000
Number of office space locations | item				2
"First Space" Sublease
Lessee, Lease, Description [Line Items]
Number of office space locations | ft²				88,000
"Second Space" Sublease
Lessee, Lease, Description [Line Items]
Number of office space locations | ft²				48,000
Corporate Headquarters Lease Amendment
Lessee, Lease, Description [Line Items]
Annual lease payment				$ 9,300
Term of lease	48 months			48 months
San Carlos, CA Lease
Lessee, Lease, Description [Line Items]
Annual lease payment		$ 9,700
Renewal term of lease							60 months
Additional premises San Carlos, CA lease
Lessee, Lease, Description [Line Items]
Lease space (area) | ft²		40,700
Annual lease payment		$ 1,500
South San Francisco, CA Lease
Lessee, Lease, Description [Line Items]
Lease space (area) | ft²	11,395			11,395
Annual lease payment				$ 900
Term of lease	36 months			36 months
Renewal term of lease	3 years			3 years
Pleasanton, CA Lease
Lessee, Lease, Description [Line Items]
Lease space (area) | ft²			16,319
Annual lease payment			$ 500
Term of lease			60 months
Certain workspaces and storage spaces | Minimum
Lessee, Lease, Description [Line Items]
Term of lease	1 year			1 year
Certain workspaces and storage spaces | Maximum
Lessee, Lease, Description [Line Items]
Term of lease	5 years			5 years

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Leases - Payments (Details) - USD ($) $ in Thousands	Mar. 31, 2025	Dec. 31, 2024
Leases.
2025 (remaining 9 months)	$ 14,794
2026	20,287
2027	19,673
2028	19,779
2029	18,291
2030 and thereafter	56,602
Total future minimum lease payments	149,426
Less: imputed interest	(34,171)
Operating lease liabilities	$ 115,255	$ 106,756

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Commitments and Contingencies (Details) $ in Thousands	1 Months Ended												3 Months Ended
	Nov. 30, 2024 USD ($)	Jan. 31, 2024 USD ($) patent	Jul. 31, 2023 patent	Jun. 30, 2023 USD ($) patent	Dec. 31, 2022 lawsuit	Mar. 31, 2022 USD ($)	Nov. 30, 2021 patent	Sep. 30, 2021 patent	Jan. 31, 2021 patent	Oct. 31, 2020 patent	Jun. 30, 2020 patent	Mar. 31, 2020 patent lawsuit	Mar. 31, 2025 USD ($)	Feb. 28, 2022 lawsuit	May 31, 2021 lawsuit
Other commitments
Accrued settlement liability													$ 22,600
Total commitments													168,571
Acquired clinical samples and data for oncology development													14,000
Potential payments to third party vendor													50,000
Laboratory instruments supplier
Other commitments
Total commitments													21,443
Material suppliers
Other commitments
Total commitments													70,395
Application service providers
Other commitments
Total commitments													4,733
Cloud platform service provider
Other commitments
Total commitments													27,430
Other material suppliers
Other commitments
Total commitments													44,570
Clinical samples and data for oncology development
Other commitments
Total commitments													$ 6,000
CareDX Patent Case
Other commitments
Number of patent litigations | lawsuit												2
Loss contingency, patents allegedly infringed, number | patent								3				3
Gain contingency, patents allegedly infringed, number | patent		1
Amount awarded to other party						$ 44,900
Amount awarded from other party		$ 96,300
ArcherDX Case
Other commitments
Gain contingency, patents allegedly infringed, number | patent				3					3
Amount awarded from other party				$ 19,350
Ravgen Patent Case
Other commitments
Loss contingency, patents allegedly infringed, number | patent											2
Amount awarded to other party		$ 57,000
Genosity Inc. Patent Case
Other commitments
Gain contingency, patents allegedly infringed, number | patent										1
Inivata Patent Case
Other commitments
Number of patent litigations | lawsuit					2
Inivitae Patent Case
Other commitments
Loss contingency, patents allegedly infringed, number | patent							3
NeoGenomics Patent Case
Other commitments
Loss contingency, patents allegedly infringed, number | patent			2
Guardant Case
Other commitments
Number of lawsuits | lawsuit															2
Amount awarded to other party	$ 292,500
Class action
Other commitments
Number of lawsuits | lawsuit														2

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Stock-Based Compensation - Compensation Expense (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2025	Mar. 31, 2024
Stock based compensation expense
Stock-based compensation expense	$ 77,827	$ 64,447
Cost of revenues
Stock based compensation expense
Stock-based compensation expense	5,270	3,777
Research and development
Stock based compensation expense
Stock-based compensation expense	26,511	20,649
Selling, general and administrative
Stock based compensation expense
Stock-based compensation expense	$ 46,046	$ 40,021

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Stock-Based Compensation - Stock Options (Details) - Options to purchase common stock shares in Thousands	3 Months Ended
	Mar. 31, 2025 $ / shares shares
Stock Based Compensation
Options forfeited (in shares)	3
Number of shares Outstanding
Outstanding, beginning balance (in shares)	3,875
Options exercised (in shares)	(50)
Options forfeited/cancelled (in shares)	(3)
Outstanding, end balance (in shares)	3,822
Weighted-Average Exercise Price
Outstanding, beginning balance (in dollars per share) | $ / shares	$ 30.22
Exercised (in dollars per share) | $ / shares	11.80
Forfeited/cancelled (in dollars per share) | $ / shares	3.78
Outstanding, end balance (in dollars per share) | $ / shares	$ 30.47

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Stock-Based Compensation - Restricted Stock Units (Details) - Restricted stock units shares in Thousands	3 Months Ended
	Mar. 31, 2025 $ / shares shares
Shares
Balance (in shares) | shares	10,593
Granted (in shares) | shares	2,721
Vested (in shares) | shares	(3,236)
Canceled/Forfeited (in shares) | shares	(104)
Balance (in shares) | shares	9,974
Weighted Average Grant Date Fair Value
Balance (in dollars per share) | $ / shares	$ 61.28
Granted (in dollars per share) | $ / shares	171.72
Vested (in dollars per share) | $ / shares	59.65
Canceled/Forfeited (in dollars per share) | $ / shares	74.42
Balance (in dollars per share) | $ / shares	$ 86.75

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Stock-Based Compensation - Performance-based Awards (Details) - USD ($) $ in Thousands, shares in Millions	3 Months Ended
	Mar. 31, 2025	Mar. 31, 2024
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	$ 77,827	$ 64,447
Performance-based awards
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted (in shares)	0.4	0.8
Aggregate value	$ 64,900	$ 55,000
Target (percentage)	200.00%
Expected compensation expense recognition over requisite service period	$ 142,100
Stock-based compensation expense	$ 18,700	$ 20,700

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Debt (Details) shares in Thousands			1 Months Ended			3 Months Ended
	Oct. 11, 2024 USD ($)	Jul. 19, 2024 USD ($)	Jul. 19, 2024 USD ($)	Oct. 31, 2023	Apr. 30, 2020 USD ($) $ / shares	Mar. 31, 2025 USD ($) $ / shares shares	Mar. 31, 2024 USD ($)	Dec. 31, 2024 USD ($) $ / shares shares	Jun. 30, 2023 USD ($)	Dec. 31, 2020 USD ($)	Sep. 30, 2015 USD ($)
Debt Instrument [Line Items]
Remaining borrowing capacity						$ 20,000,000.0
Collateral amount						$ 150,000,000.0
Common Stock, Par or Stated Value Per Share | $ / shares						$ 0.0001		$ 0.0001
Common stock, shares issued | shares						135,932		132,646
Conversion rate increase			0.4284
Amortization of debt discount and issuance cost							$ 328,000
Interest expense						$ 1,005,000	3,124,000
Convertible Notes
Debt Instrument [Line Items]
Principal amount		$ 287,500,000	$ 287,500,000		$ 287,500,000
Per annum interest rate (as a percent)		2.25%	2.25%		2.25%
Interest expense							1,945,000
Common Stock, Par or Stated Value Per Share | $ / shares					$ 0.0001
Principal amount per convertible note					$ 1,000
Conversion price (in dollars per share) | $ / shares					$ 38.79
Initial conversion rate					25.7785
Convertible to shares of common stock	7,500,000				7,411,704
Percentage of principal amount converted	100.00%		100.00%
Line Of Credit-UBS
Debt Instrument [Line Items]
Maximum borrowing capacity									$ 100,000,000.0	$ 150,000,000.0	$ 50,000,000.0
Outstanding balance						80,300,000		$ 80,400,000
Credit facility drawn down						(80,000,000.0)
Remaining borrowing capacity						20,000,000.0
Collateral amount						$ 150,000,000.0
Effective interest rate (as a percent)						4.83%
Interest expense						$ 1,000,000.0	$ 1,200,000
Line Of Credit-UBS | SOFR
Debt Instrument [Line Items]
Spread on interest rate (as a percent)				0.50%		0.50%

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Debt - Interest Expense Recognized Related to Convertible Notes (Details) - Convertible Notes $ in Thousands	3 Months Ended
	Mar. 31, 2024 USD ($)
Cash interest expense
Contractual interest expense	$ 1,617
Non-cash interest expense
Amortization of debt discount and debt issuance cost	328
Total interest expense	$ 1,945

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Income Taxes (Details) - USD ($)	3 Months Ended
	Mar. 31, 2025	Mar. 31, 2024	Dec. 31, 2024
Income Taxes
Income tax expense	$ 173,000	$ 428,000
Interest and penalties accrued	$ 0		$ 0

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Net Loss per Share - Loss per Share (Details) - Convertible Notes		1 Months Ended
	Oct. 11, 2024 USD ($)	Apr. 30, 2020 USD ($)	Jul. 19, 2024 USD ($)
Earnings or Loss per Share [Line Items]
Principal amount		$ 287,500,000	$ 287,500,000
Convertible Notes Payable	$ 287,400,000
Convertible to shares of common stock	7,500,000	7,411,704

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Net Loss per Share - Potentially Dilutive Shares (Details) - shares shares in Thousands	3 Months Ended
	Mar. 31, 2025	Mar. 31, 2024
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Potentially dilutive shares not included in diluted per share calculation	13,894	24,242
Options to purchase common stock
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Potentially dilutive shares not included in diluted per share calculation	3,822	4,709
Performance-based awards and restricted stock units
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Potentially dilutive shares not included in diluted per share calculation	9,974	11,901
Employee stock purchase plan
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Potentially dilutive shares not included in diluted per share calculation	98	221
Convertible Notes
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Potentially dilutive shares not included in diluted per share calculation		7,411

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Segment Reporting (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2025	Mar. 31, 2024
Segment Reporting Information [Line Items]
Revenue	$ 501,830	$ 367,741
Product
Segment Reporting Information [Line Items]
Revenue	500,036	364,672
Cost of revenues	184,613	158,833
Licensing and other
Segment Reporting Information [Line Items]
Revenue	1,794	3,069
Cost of revenues	452	307
Single reportable segment
Segment Reporting Information [Line Items]
Revenue	501,830	367,741
Gross margin	$ 316,765	$ 208,601
Gross margin percentage	63.10%	56.70%
Single reportable segment | Product
Segment Reporting Information [Line Items]
Cost of revenues	$ 184,613	$ 158,833
Single reportable segment | Licensing and other
Segment Reporting Information [Line Items]
Cost of revenues	$ 452	$ 307