Abbott to acquire Exact Sciences (NASDAQ: EXAS) in $105-per-share cash deal
Filing Impact
Filing Sentiment
Form Type
10-K
Rhea-AI Filing Summary
Exact Sciences Corporation files its annual report describing strong growth in cancer diagnostics and a pending cash acquisition by Abbott Laboratories. In 2025 the company delivered more than 5.5 million test results, grew revenue 18%, and generated $491.4 million in operating cash flow.
Exact launched next‑generation products including the FDA‑approved Cologuard Plus colorectal screening test, the Oncodetect MRD test, and the Cancerguard multi‑cancer blood test, while securing Medicare reimbursement for Oncodetect. A major focus is an Agreement and Plan of Merger under which each share will be converted into $105.00 in cash, subject to stockholder approval and regulatory clearances, with a potential termination fee of about $628.7 million if the deal fails under specified circumstances.
Positive
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Insights
Pending Abbott cash acquisition reshapes Exact’s standalone outlook.
The report highlights an Agreement and Plan of Merger with Abbott Laboratories, under which each Exact share is expected to be converted into
This proposed transaction would end Exact’s life as an independent public company and make it a wholly owned Abbott subsidiary. The filing also notes customary interim operating covenants and a possible termination fee of about
The merger’s ultimate impact depends on completion, timing, and any conditions imposed by regulators or stockholders. Until then, Exact continues operating and investing in its pipeline under the constraints of the merger covenants described for the period through the anticipated closing in
Core diagnostics franchise shows scale, cash generation, and innovation.
Exact reports delivering more than 5.5 million cancer test results in 2025, 18% revenue growth, and cash provided by operating activities of
The company launched Cologuard Plus, Oncodetect MRD, and the Cancerguard multi‑cancer test, while securing Medicare reimbursement for Oncodetect. It also entered an exclusive U.S. license with Freenome covering blood‑based colorectal screening tests and underlying technology.
Execution now spans large‑scale lab operations, extensive reimbursement coverage, and a sizable pipeline in colorectal blood tests, MRD, and multi‑cancer early detection. Future filings will show how these assets are integrated and prioritized if the Abbott transaction closes and how ongoing R&D spending supports the portfolio.
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________________________________________________________________
FORM 10-K
| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||||||
For the fiscal year ended: | ||||||||
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||||||
Commission file number 001-35092
_____________________________________________________________________________
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) (Address of principal executive offices) | (IRS Employer Identification No.) (Zip Code) | ||||
Registrant’s telephone number, including area code: (608 ) 284‑5700
Securities registered pursuant to Section 12(b) of the Act:
The | ||||||||
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes x No ¨
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨ No x
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 report(s), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨e
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x 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. (Check one):
| x | Accelerated filer | ¨ | Non‑accelerated filer | ¨ | Smaller reporting company | Emerging growth company | |||||||||||||||||||||||
| (Do not check if a smaller reporting 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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. x
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ¨
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ¨
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b‑2 of the Act). Yes ☐ No x
The aggregate market value of the voting and non-voting common equity held by non-affiliates of the Registrant, as of the last business day of the Registrant’s most recently completed second fiscal quarter was approximately $9,970,230,370 (based on the closing price of the Registrant’s Common Stock on June 28, 2025 of $53.14 per share).
The number of shares outstanding of the Registrant’s $0.01 par value Common Stock as of February 12, 2026 was 190,888,211 .
DOCUMENT INCORPORATED BY REFERENCE
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EXACT SCIENCES CORPORATION
ANNUAL REPORT ON FORM 10‑K
YEAR ENDED DECEMBER 31, 2025
TABLE OF CONTENTS
| Page No. | ||||||||
Part I | ||||||||
Item 1. | Business | 4 | ||||||
Item 1A. | Risk Factors | 19 | ||||||
Item 1B. | Unresolved Staff Comments | 52 | ||||||
Item 1C. | Cybersecurity | 53 | ||||||
Item 2. | Properties | 54 | ||||||
Item 3. | Legal Proceedings | 54 | ||||||
Item 4. | Mine Safety Disclosures | 54 | ||||||
Part II | ||||||||
Item 5. | Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities | 55 | ||||||
Item 6. | Reserved | 55 | ||||||
Item 7. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 56 | ||||||
Item 7A. | Quantitative and Qualitative Disclosures about Market Risk | 66 | ||||||
Item 8. | Financial Statements and Supplementary Data | 67 | ||||||
Item 9. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure | 119 | ||||||
Item 9A. | Controls and Procedures | 119 | ||||||
Item 9B. | Other Information | 120 | ||||||
Item 9C. | Disclosure Regarding Foreign Jurisdictions that Prevent Inspections | 120 | ||||||
Part III | ||||||||
Item 10. | Directors, Executive Officers and Corporate Governance | 121 | ||||||
Item 11. | Executive Compensation | 134 | ||||||
Item 12. | Security and Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | 171 | ||||||
Item 13. | Certain Relationships and Related Transactions, and Director Independence | 174 | ||||||
Item 14. | Principal Accountant Fees and Services | 175 | ||||||
Part IV | ||||||||
Item 15. | Exhibits and Financial Statement Schedules | 176 | ||||||
Item 16. | Form 10-K Summary | 181 | ||||||
Signatures | 182 | |||||||
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PART I
This Annual Report on Form 10‑K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that are intended to be covered by the “safe harbor” created by those sections. Forward-looking statements, which are based on certain assumptions and describe our future plans, strategies, and expectations, can generally be identified by the use of forward-looking terms such as “believe,” “expect,” “may,” “will,” “should,” “would,” “could,” “seek,” “intend,” “plan,” “goal,” “project,” “estimate,” “anticipate” or other comparable terms. All statements other than statements of historical facts included in this Annual Report on Form 10‑K regarding our strategies, prospects, expectations, financial condition, operations, costs, plans, and objectives are forward-looking statements. Examples of forward-looking statements include, among others, statements we make regarding expected future operating results; expectations for development or launching of new or improved products, and services and their impact on patients; insurance reimbursement potential; our strategies, commercialization efforts, positioning, competition, resources, capabilities, and expectations for future events or performance; the anticipated benefits of our acquisitions, including estimated synergies and other financial impacts; and the timing of completion of the proposed acquisition of us by Abbott Laboratories. Forward-looking statements are neither historical facts nor assurances of future performance or events. Instead, they are based only on current beliefs, expectations, and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy, and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Actual results, conditions, and events may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Important factors that could cause actual results, conditions, and events to differ materially from those indicated in the forward-looking statements include, among others, the following: our ability to successfully develop and commercialize new products and services and assess potential market opportunities; our ability to successfully and profitably market our products and services; the acceptance of our products and services by patients and healthcare providers; our reliance upon certain suppliers; our ability to retain and hire key personnel; approval and maintenance of adequate reimbursement rates for our products and services within and outside of the U.S.; the amount and nature of competition for our products and services; the effects of any judicial, executive or legislative action affecting us or the healthcare system; changes in government policies, laws, regulations, and staffing; recommendations, guidelines and quality metrics issued by various organizations regarding cancer screening or our products and services; our ability to obtain and maintain regulatory approvals and comply with applicable regulations; our ability to protect and enforce our intellectual property; our success establishing and maintaining collaborative, licensing and supplier arrangements; the results of our validation studies and clinical trials, including the risks that the results of future studies and trials may differ materially from the results of previously completed studies and trials; our ability to manage an international business and our expectations regarding our international expansion and opportunities; the potential effects of changing macroeconomic conditions and geopolitical conflict; the possibility that the anticipated benefits from our business acquisitions will not be realized in full or at all or may take longer to realize than expected; the outcome of any potential litigation or legal proceeding; our ability to raise the capital necessary to support our operations or meet our payment obligations under our indebtedness; and risks and uncertainties related to the proposed acquisition of us by Abbott Laboratories, including the possible inability of the parties to consummate the proposed transaction on a timely basis or at all; the possible inability of the parties to satisfy the conditions precedent to consummation of the proposed transaction, including necessary regulatory approvals and the requisite vote by our stockholders, on a timely basis or at all; the possible occurrence of any event, change or other circumstance that could give rise to the termination of the merger agreement relating to the proposed transaction; the risk that such merger agreement may be terminated in circumstances that require us to pay a termination fee; the possibility that competing offers to acquire us may be made; the potential adverse impact on us of contractual restrictions under such merger agreement that limit our ability to pursue business opportunities or strategic transactions; risks relating to significant transaction costs associated with the proposed transaction and the possibility that the proposed transaction may be more expensive to complete than anticipated; potential adverse effects of the announcement or pendency of the proposed transaction, or any failure to complete the proposed transaction, on the market price of our common stock or on our ability to develop and maintain relationships with our personnel (including our ability to attract and retain highly qualified management and other scientific personnel) and customers, suppliers and others with whom we do business or otherwise on our business, financial condition, results of operations and financial performance; risks related to diversion of management’s attention from our ongoing business operations due to the proposed transaction; and the risk of litigation and/or regulatory actions related to the proposed transaction or our business and the outcome of any such litigation or regulatory action. The risks included above are not exhaustive. Other important risks and uncertainties are described in the Risk Factors and in Management's Discussion and Analysis of Financial Condition and Results of Operations sections in this Annual Report on Form 10-K and our subsequently filed Quarterly Reports on Form 10-Q. You are further cautioned not to place undue reliance upon any such forward-looking statements, which speak only as of the date made. Except as otherwise required by the federal securities laws, we undertake no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise.
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Item 1. Business
Overview
A leading provider of cancer screening and diagnostic tests, Exact Sciences Corporation (together with its subsidiaries, “Exact,” “we,” “us,” “our” or the “Company”) gives patients and health care professionals the clarity needed to take life-changing action earlier. Building on the success of the Cologuard® and Oncotype DX® tests, we are investing in our pipeline to develop innovative solutions for use before, during, and after a cancer diagnosis.
During 2025, we achieved many milestones, including:
•delivering more than 5.5 million results to patients with our portfolio of cancer tests,
•being recognized as a Great Place to Work for the seventh consecutive year,
•growing revenue 18% while decreasing operating expenses as a percentage of revenue,
•generating cash provided by operating activities of $491.4 million for the year ended December 31, 2025, an improvement of $280.9 million, respectively, compared to the year ended December 31, 2024,
•launching Cologuard PlusTM, our next-generation Cologuard test, Oncodetect®, our molecular residual disease (“MRD”) test, and Cancerguard®, the first commercially available multi-cancer early detection (“MCED”) blood test analyzing multiple biomarker classes,
•obtaining Medicare reimbursement for our Oncodetect test, through the Molecular Diagnostics Services Program (“MolDX”) effective April 2025 for serial use in patients with stage II, III, and resectable stage IV colorectal cancer in the adjuvant and recurrence monitoring settings over a five-year period,
•entered into an exclusive license agreement with Freenome Holdings, Inc. (“Freenome”) for blood-based colorectal cancer screening.
Our Products and Services
With a leading portfolio of products for earlier cancer detection and treatment guidance, we provide patients with earlier, smarter answers. Our current products and services focus on screening and precision oncology tests.
Merger Agreement
On November 19, 2025, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Abbott Laboratories (“Abbott”) and Badger Merger Sub I, Inc., a direct, wholly owned subsidiary of Abbott (“Merger Sub”), providing for the merger of Merger Sub with and into Exact (the “Merger”) on the terms and subject to the conditions set forth in the Merger Agreement. Upon the terms and subject to the conditions set forth in the Merger Agreement, at the effective time of the Merger (the “Effective Time”), the separate existence of Merger Sub will cease, and we will continue as the surviving corporation in the Merger and as a direct, wholly owned subsidiary of Abbott. At the Effective Time, on the terms and subject to the conditions set forth in the Merger Agreement, each share of our common stock (other than certain excluded shares) issued and outstanding immediately prior to the Effective Time will be converted into and will thereafter represent the right to receive $105.00 in cash, without interest, less any applicable withholding taxes. Following the Merger, Exact common stock will no longer be publicly traded or listed on The Nasdaq Stock Market LLC.
Under the terms of the Merger Agreement, we are subject to various customary covenants and obligations, including among others, until the earlier of the Effective Time and the termination of the Merger Agreement, the obligation to use commercially reasonable efforts to conduct our business in the ordinary course of business in all material respects and to refrain from taking certain actions without Abbott's consent, subject to specified exceptions. We do not believe the restrictions to which we are subject under the Merger Agreement will prevent us from meeting our debt service obligations, ongoing costs of operations, working capital needs or capital expenditure requirements.
Consummation of the Merger, which we currently expect to occur in the second quarter of 2026, is subject to the satisfaction or waiver of specified conditions, including the adoption of the Merger Agreement by the affirmative vote of holders of a majority of the outstanding shares of Exact common stock entitled to vote thereon (the “Stockholder Approval”), receipt of specified regulatory approvals and satisfaction of other customary closing conditions.
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The Merger Agreement contains certain termination rights for Exact and Abbott, including, among others, the right of each party to terminate if (i) the Merger is not consummated by November 19, 2026, subject to extension in certain cases, (ii) any law or order restraining, enjoining, making illegal or otherwise prohibiting the consummation of the Merger is in effect and has become final and non-appealable, (iii) the Stockholder Approval is not obtained upon a vote taken on the adoption of the Merger Agreement at the meeting of our stockholders held for the purpose of obtaining stockholder approval or any adjournment or postponement thereof, or (iv) the other party breaches or fails to perform its representations, warranties, agreements or covenants in the Merger Agreement in a manner that would cause the conditions to the consummation of the Merger to not be satisfied and does not cure such breach or failure within the applicable cure period, subject to certain exceptions. If the Merger Agreement is terminated under specified circumstances, we may be required to pay to Abbott a termination fee of approximately $628.7 million.
The foregoing description of the Merger Agreement and the transactions contemplated thereby does not purport to be complete and is qualified in its entirety by reference to the copy of the Merger Agreement that was attached as Exhibit 2.1 to our Current Report on Form 8-K filed on November 20, 2025 and that is incorporated by reference as an exhibit to this Annual Report on Form 10-K.
Our Screening Tests
Cologuard and Cologuard Plus Tests
Our flagship screening products, the Cologuard and Cologuard Plus tests, are patient-friendly, non-invasive, stool-based DNA (“sDNA”) screening tests that utilize a multi-target approach to detect DNA and hemoglobin biomarkers associated with colorectal cancer and pre-cancer. Biomarkers are targeted that have been shown to be strongly associated with colorectal cancer and pre-cancer. Methylation, mutation, and hemoglobin results are combined in the laboratory analysis through a proprietary algorithm to provide a single positive or negative reportable result.
We believe the large, underserved population of unscreened and inadequately screened patients represents a significant opportunity for our Cologuard and Cologuard Plus tests. It is widely accepted that colorectal cancer is among the most preventable, yet least prevented cancers. Colorectal cancer can take up to 10-15 years to progress from a pre-cancerous lesion to metastatic cancer and death. Patients who are diagnosed early in the progression of the disease — with pre-cancerous lesions or early-stage cancer — are more likely to have a complete recovery and to be treated less expensively. Colorectal cancer is the second leading cause of cancer deaths in the U.S. and the leading cause of cancer deaths in the U.S. among non-smokers. In 2025 in the U.S. there were approximately 154,000 new cases of colorectal cancer and approximately 53,000 deaths.
Upon approval by the U.S. Food and Drug Administration (“FDA”) in August 2014, our Cologuard test became the first FDA-approved sDNA non-invasive colorectal cancer screening test. In March 2025, we launched our FDA-approved Cologuard Plus test, our next generation version of Cologuard. Our Cologuard and Cologuard Plus tests are indicated for average risk adults 45 years of age and older.
Our peer-reviewed study, “Multitarget Stool DNA Testing for Colorectal-Cancer Screening,” published in the New England Journal of Medicine in April 2014, highlighted the performance of the Cologuard test in its 10,000 patient DeeP-C clinical trial. Subsequently, our peer-reviewed study, "Next-Generation Multitarget Stool DNA Test for Colorectal Cancer Screening," published in the New England Journal of Medicine in March 2024 highlighted the performance of the Cologuard Plus test in its 20,000 patient BLUE-C clinical trial. The results from these studies are summarized as follows:
Advanced Finding: | Cologuard | Cologuard Plus | ||||||||||||
Cancer Sensitivity | 92 | % | 95 | % | ||||||||||
Stage I - III Cancer Sensitivity | 93 | % | 94 | % | ||||||||||
High-Grade Dysplasia Sensitivity | 69 | % | 74 | % | ||||||||||
Specificity | 87 | % | 91 | % | ||||||||||
We believe the competitive advantages of sDNA screening provide a significant market opportunity. There are nearly 110 million Americans between the ages of 45 and 85 who are at average risk for colorectal cancer. At a three-year screening interval and an average revenue per test of approximately $592 for Cologuard Plus, this represents a potential $22 billion annual market for our Cologuard tests.
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More than 40% of Americans between the ages of 45 and 85 who are at average risk for colorectal cancer are not up-to-date with screening according to the American Cancer Society’s (“ACS”) colorectal cancer screening guidelines. We believe our Cologuard and Cologuard Plus tests help more people get screened for colorectal cancer. Internal studies have shown that approximately 40% of surveyed Cologuard users were previously unscreened for colorectal cancer.
Our Cologuard and Cologuard Plus tests are included in key guidelines and quality measures that many healthcare providers rely on when making screening recommendations.
•In its updated guidelines released in May 2021, the U.S. Preventive Services Task Force (“USPSTF”) gave an “A” grade to colorectal cancer screening starting at age 50 and continuing until age 75 and a “B” grade to colorectal cancer screening for ages 45 to 49. The updated guidelines include our Cologuard and Cologuard Plus tests (referred to in their statement as sDNA-FIT) as recommended screening methods for all average-risk patients in the 45-75 age group.
•The ACS recommends mt-sDNA as a front-line option colorectal cancer screening test, including our Cologuard and Cologuard Plus tests, in average-risk, asymptomatic individuals. The ACS recommends colorectal cancer screening beginning at age 45 for people at average risk of colorectal cancer.
•The National Comprehensive Cancer Network (“NCCN”) includes sDNA screening at a once-every-three-years interval in its Colorectal Cancer Screening Guidelines.
•The National Committee for Quality Assurance (“NCQA”) includes sDNA testing on a three-year interval as one of the methods permitted for colorectal cancer screening in its most recent Healthcare Effectiveness Data and Information Set (“HEDIS”) quality measures.
•The Centers for Medicare & Medicaid Services (“CMS”) includes our Cologuard and Cologuard Plus tests in its most recent Medicare Advantage Star Ratings program.
Cancerguard Test
Our Cancerguard test is designed to detect multiple cancers in their earliest stages from a single blood draw. Building on decades of research with Mayo and The Johns Hopkins University, the Cancerguard test combines multiple biomarker classes for earlier cancer detection, provides high specificity to help minimize false positives, and utilizes a streamlined imaging-based diagnostic pathway to reduce follow-up procedures. In September 2025, results from a multi-center, prospective, case-control ASCEND-2 study showed 68% sensitivity across six of the deadliest cancers and 64% overall sensitivity across a broad range of cancers, excluding breast and prostate. Additionally, the test achieved high specificity of 97.4%, helping to minimize false positives and avoid unnecessary procedures. Our Cancerguard test was launched as a self-pay laboratory developed test (“LDT”) in September 2025, and to support patient access, we entered into an agreement with Quest Diagnostics to enable blood collection at their approximately 7,000 patient access sites across the U.S. We are actively enrolling patients for a real-world evidence study conducted under a U.S. FDA-reviewed Investigational Device Exemption, which is designed to inform future regulatory submissions, support payer discussions on coverage and reimbursement, and guide efforts to include our Cancerguard test in clinical guidelines.
Genetic Testing
We have an extensive menu of predefined genetic tests for nearly all clinically relevant genes, additional custom panels, and comprehensive germline, whole exome (“PGxome®”), and whole genome (“PGnome®”) sequencing tests.
Our Precision Oncology Tests
Our precision oncology portfolio delivers actionable genomic insights to inform prognosis and cancer treatment after a diagnosis. We enable patients to take a more active role in their cancer care and make it easy for providers to order tests, interpret results, and personalize medicine by applying real-world evidence and guideline recommendations.
Oncotype DX Breast Recurrence Score® Test
Our Oncotype DX Breast Recurrence Score test has been demonstrated to identify patients who are most likely to benefit from chemotherapy as well as those who may receive no clinical benefit from chemotherapy.
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Among women, breast cancer is the most commonly diagnosed cancer and the leading cause of cancer death. In 2025, nearly 317,000 women are expected to be diagnosed with invasive breast cancer in the U.S. according to ACS, and nearly 59,000 women are expected to be diagnosed with non-invasive (in situ) breast cancer. Worldwide, it is estimated that there are approximately 2.3 million newly diagnosed cases of breast cancer each year.
The Oncotype DX Breast Recurrence Score test examines the activity of 21 genes in a patient’s breast tumor tissue to provide personalized information for tailoring treatment based on the biology of the patient’s individual disease. The test is supported by multiple rigorous clinical validation studies, including the landmark TAILORx and RxPONDER studies, confirming the test’s ability to predict the likelihood of chemotherapy benefit as well as the chance of cancer recurrence in the most common sub-type of early-stage breast cancer.
As the only test proven to predict both the likelihood of chemotherapy benefit and cancer recurrence, the Oncotype DX Breast Recurrence Score test is recognized globally as standard of care and is included in all major breast cancer treatment guidelines.
Oncotype DX Breast DCIS Score® Test
Our Oncotype DX Breast DCIS Score test provides ductal carcinoma in situ (“DCIS”) patients an individualized prediction of the 10-year risk of local recurrence (DCIS or invasive carcinoma), represented by a DCIS Score® result. This test helps guide treatment decision-making in women with DCIS treated by local excision, with or without tamoxifen. Development of our Oncotype DX Breast DCIS Score test was based on published results for the Oncotype DX Breast Recurrence Score test that showed similarity in the expression profiles of genes between DCIS and invasive breast cancer when both are present within the same patient tumor.
Oncotype DX Colon Recurrence Score® Test
In patients with stage II and stage III colon cancer, the decision to treat with chemotherapy following surgery is based on an assessment of the likelihood of cancer recurrence and, as a result, it is critical for clinicians to accurately assess a patient’s risk of recurrence. Our Oncotype DX Colon Recurrence Score test is a multi-gene test for predicting recurrence risk in patients with stage II and stage III A/B colon cancer to enable an individualized approach to treatment planning. By evaluating specific genes within a patient’s colon tumor, the test can determine the likelihood that the cancer cells will spread and cause the disease to return after surgery. Based on this information, healthcare providers and patients can make more informed treatment decisions. The Oncotype DX Colon Recurrence Score test is supported by three rigorous clinical validation studies confirming the test’s ability to provide additional and independent value beyond the currently used measures for determining colon cancer recurrence risk.
Oncodetect Test
Our tumor-informed Oncodetect MRD test is designed to detect small amounts of tumor DNA that may remain in patients’ blood after they have undergone initial treatment. This test is expected to help patients and oncologists understand the success of initial treatment, guide further treatment, and monitor for cancer recurrence. Results from the Alpha-CORRECT study, which primarily included patients with stage III colorectal cancer, showed our Oncodetect test achieved 78% sensitivity at the post-surgical timepoint and 91% sensitivity during the surveillance monitoring period, with specificities of 80% and 94%, respectively. In January 2025, complete findings from Alpha-CORRECT were published in the Journal of Surgical Oncology. Results from our Beta-CORRECT study, which we presented at the 2025 American Society of Clinical Oncology Annual Meeting, confirm a significant association between MRD positivity and recurrence in patients with stages II through IV colorectal cancer. Our Oncodetect test was launched as a LDT in April 2025, and based on results from the aforementioned studies, obtained Medicare reimbursement through the MolDX program effective April 2025 for serial use in patients with stage II, III, and resectable stage IV colorectal cancer in the adjuvant and recurrence monitoring settings over a five-year period.
OncoExTra® Test
In April 2021, we began performing and selling the OncoExTra test, previously known as GEM ExTra, as a result of our acquisition of Ashion Analytics, LLC (“Ashion”). The OncoExTra test applies comprehensive tumor profiling, utilizing whole exome and whole transcriptome sequencing, to aid in therapy selection for patients with advanced, metastatic, refractory, relapsed, or recurrent cancer. With an extensive panel of approximately 20,000 genes and 169 introns, the OncoExTra test is one of the most comprehensive genomic (DNA) and transcriptomic (RNA) panels available today.
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Riskguard® Test
Riskguard, our hereditary cancer test, helps people understand their inherited risk of cancer, arming them with critical information to make more informed treatment decisions.
Pipeline Research and Development
We are continuing to advance our pipeline of future screening and diagnostic products, including risk assessment, screening and prevention, early disease diagnosis, adjuvant and/or neoadjuvant disease treatment, metastatic disease treatment selection, and recurrence monitoring.
Through our collaboration with Mayo, we have successfully performed feasibility studies involving multiple types of cancer using tissue, blood, and other sample types. Our research and development programs are also powered by technologies we have exclusively licensed from JHU, Broad Institute, Inc. (“Broad Institute”), Oxford University, the Ludwig Institute for Cancer Research, TwinStrand Biosciences, Inc. (“TwinStrand”), and Freenome.
We are focusing our research and development efforts on three main areas:
•Colorectal Cancer Screening Test Development. In August 2025, we announced initial results for an internal version of our colorectal cancer screening blood test, showing sensitivities of 73% for colorectal cancer and 14% for advanced precancerous lesions at 90% specificity. This test included three methylation markers and a protein marker. It did not include the additional marker class presented at the European Society for Medical Oncology 2024 Congress. Internal testing and evaluation are ongoing for future versions of our blood-based colorectal cancer screening test. In August 2025, we acquired exclusive rights in the U.S. to the current and future versions of Freenome's blood-based colorectal cancer screening tests as well as the underlying technology, subject to regulatory approvals.
•MRD Test Development. In addition to the evidence supporting our Oncodetect test in colorectal cancer, we plan to validate our Oncodetect test in breast cancer and, subsequently, in multiple other solid tumor types. We also expect to enhance our MRD test by leveraging the Broad Institute’s Minor Allele Enriched Sequencing Through Recognition Oligonucleotides (“MAESTRO”) diagnostic testing technology, which we secured exclusive rights to in June 2023 through a sponsored research and license agreement. In 2026, we expect to introduce a next-generation version of this test leveraging the MAESTRO technology.
•MCED Test Development. In July 2024, our Cancerguard test was approved as an Investigational Device Exemption by the FDA to be used within a real-world evidence study, providing an opportunity to test 25,000 people over the next three years. The first patient was enrolled within this study at Baylor Scott & White, the primary study site, in August 2024. In the future, we plan to begin recruiting patients for the FDA registrational Study of All comeRs (“SOAR”) trial, which we expect to be one of the largest prospective, interventional multi-cancer screening trial ever conducted in the U.S.
Research and development, which includes our clinical study programs, accounts for a material portion of our operating expenses. As we seek to enhance our product portfolio and advance our pipeline, we expect that our research and development expenditures will continue to be a significant portion of our operating expenditures.
Commercial Operations
Our commercial functions include specific teams focused on screening, precision oncology, and international markets.
Screening Test Commercial Operations
We promote our Cologuard and Cologuard Plus tests through a national and market-based model comprised of our health systems, payers, primary care, market development, and inside sales team members.
Our sales team actively engages with healthcare providers and payers to emphasize the need for colorectal cancer screening, educate them on the value of our Cologuard tests, and facilitate their ability to order the test. We focus on specific healthcare providers and payers based on a combination of order history and ordering potential data. We also focus on healthcare provider groups and larger regional and national health systems through large, organized screening programs.
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A critical part of the value proposition of our Cologuard and Cologuard Plus tests is its adherence program, which involves active engagement with patients and providers by our adherence team. This customer-oriented support activity is focused on encouraging and helping patients complete Cologuard tests that have been ordered for them by their providers. We undertake a variety of health care activities to promote patient adherence including letters, text messages, online chat, emails, phone calls, and other direct-to-consumer digital efforts.
We have undertaken a significant marketing public relations effort to engage prospective patients in the U.S., including through the launch of targeted, direct-to-consumer advertising campaigns across national television, digital, social media, print, and audio channels. During 2025, we continued to deepen our investment in large, organized screening programs and direct ordering channels via Cologuard.com to further solidify our Cologuard and Cologuard Plus tests as a solution for patients who infrequently visit their health care provider.
We promote our Cancerguard test through our expansive commercial and operational infrastructure, including our national sales force that engages with primary care physicians, oncologists, and leading health systems. To support patient access, we have entered into an agreement with Quest Diagnostics to enable blood collection at Quest's approximately 7,000 patient access sites across the U.S., including through its patient service centers and in-office phlebotomists in provider offices, as well as mobile phlebotomy services for at-home collections.
Precision Oncology Commercial Operations
We promote our precision oncology tests through our precision oncology sales force. Our commercial infrastructure, including our sales force, managed care group, and patient support network, is critical to the success of our precision oncology products. In our domestic sales, marketing, and reimbursement efforts, we interact directly with medical, radiation, and surgical oncologists, pathologists, and payers. We employ a direct sales approach that targets oncologists and cancer surgeons. We also plan to continue to utilize data from our clinical studies published in peer-reviewed journals to demonstrate the clinical value of our precision oncology products. We believe the combination of these approaches is our best means to increase patient and healthcare provider awareness of our precision oncology products and services and the number of favorable reimbursement coverage decisions by third-party payers.
International Commercial Operations
We commercialize or plan to commercialize our Oncotype® tests internationally through employees in Canada, Japan, and a number of European countries, as well as through exclusive distribution agreements. We have provided our Oncotype tests in approximately 120 countries outside of the U.S. We do not offer our Cologuard tests, Cancerguard test, or Oncodetect test outside of the U.S. We are exploring opportunities to make these tests and other future products available outside of the U.S.
Inclusion of our products in guidelines and quality measures will be critical to our international success. The Oncotype DX breast cancer test is recognized in international guidelines issued by the St. Gallen International Breast Cancer Expert Panel and European Society for Medical Oncology. Our Oncotype DX breast cancer test has been recommended to guide certain patients’ chemotherapy treatment decisions by the National Institute for Health and Care Excellence in England, the Gynecologic Oncology Working Group in Germany, and the Japan Breast Cancer Society. Our Oncotype DX breast cancer test is reimbursed for certain patients in the public health systems in more than ten countries.
We are exploring opportunities to establish local laboratories in certain locations outside of the U.S. and established local testing capacity in Germany beginning in late 2021. Certain countries have severe restrictions on reimbursing tests performed abroad or exporting tissue samples or patient health data. These restrictions limit our ability to offer our tests in those countries without local laboratories or a method of test delivery that does not require samples to be transported to our U.S. laboratory.
Reimbursement for our Tests
Reimbursement for our Cologuard Tests
Our Cologuard tests have broad reimbursement coverage from Medicare and commercial payers. Updated USPSTF colorectal cancer screening guidelines mandate coverage of our Cologuard and Cologuard Plus tests beginning at age 45 for ACA covered health plans. Medicare Part B covers our Cologuard and Cologuard Plus tests once every three years for beneficiaries who are age 45 to 85, asymptomatic and at average risk for developing colorectal cancer.
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The following laws and regulations establish coverage requirements relevant to our Cologuard and Cologuard Plus tests.
•Section 2713 of the Patient Protection and Affordable Care Act (“ACA”) mandates that certain health insurers cover, without imposing any patient cost-sharing, evidence-based items or services that have in effect a rating of “A” or “B” in the current recommendations of USPSTF (“ACA Mandate”), which includes follow-up colonoscopy after a positive non-invasive stool-based screening test be covered without cost sharing.
•Federal regulations require that Medicare Advantage plans cover “A” or “B” rated preventive services without patient cost-sharing, and CMS has issued a notice affirming that Medicare Advantage plans must include coverage of our Cologuard and Cologuard Plus tests every three years without patient cost-sharing including coverage of a follow-up colonoscopy after a positive non-invasive stool-based screening test effective January 1, 2023. Additional Part B cost sharing for procedures performed in addition to follow-on colonoscopy (e.g. polyp removal or pathology) will be phased out by 2030.
•We believe that most states' laws mandate coverage of our Cologuard and Cologuard Plus tests by certain health insurance plans.
Most commercial payers have issued positive coverage decisions for our Cologuard test, and we have negotiated contracts with most payers to include our Cologuard test as an in-network service. Since its launch in March 2025, we have negotiated amendments with many commercial payers to issue positive coverage decisions and include our Cologuard Plus test as an in-network service. We continue to work with these payers to negotiate amendments to our existing network agreements to add the Cologuard Plus test. In-network agreements with payers have varying terms and conditions, including reimbursement rate, term, and termination. Other payers may perform post-payment reviews or audits, which may lead to payment recoupments.
State Medicaid agencies generally assign a reimbursement rate for our Cologuard and Cologuard Plus tests equal to or less than the prevailing Medicare rate, often determined by state law as a percentage of the Medicare reimbursement rate.
Reimbursement for our Precision Oncology Tests
We depend on government insurance plans, managed care organizations, and commercial insurance plans for reimbursement of our precision oncology tests.
Medicare coverage for our precision oncology tests is currently subject to the discretion of the local Medicare Administrative Contractors (“MAC”). Palmetto, the MAC that establishes the coverage and coding policies for most of our tests under Medicare, developed the MolDX, to identify and establish Medicare coverage for molecular diagnostic tests that fall within the scope of its Molecular Diagnostic Test local coverage decision (“LCD”). To obtain coverage under the MolDX program, developers of molecular diagnostic tests must submit a detailed dossier of analytical and clinical data to substantiate that a test meets Medicare’s requirements for coverage. We have received positive coverage decisions under the MolDX program for our breast, colon, Oncodetect, Riskguard, and OncoExTra tests.
Reimbursement of our precision oncology tests by third-party payers is essential to our commercial success. Where there is a payer policy, contract or agreement in place, we bill the third-party payer, the hospital or referring laboratory and/or the patient (for deductibles and coinsurance or co-payments, where applicable) in accordance with established policy, contract or agreement terms. Some payers may apply various medical management requirements, including a requirement that they give prior authorization for a precision oncology test before they are willing to pay for it. Where there is no payer policy in place, we pursue third-party reimbursement on behalf of each patient on a case-by-case basis. Our efforts on behalf of these patients involve a substantial amount of time and expense, and bills may not be paid for many months, if at all. Furthermore, if a third-party payer denies coverage after final appeal, it may take a substantial amount of time to collect from the patient, if we are able to collect at all.
State Medicaid agencies generally assign a reimbursement rate for our precision oncology tests equal to or less than the prevailing Medicare rate, often determined by state law as a percentage of the Medicare reimbursement rate.
International Reimbursement
In many countries, public healthcare systems are primarily responsible for financing and establishing reimbursement for diagnostic tests. The majority of our international precision oncology revenues come from reimbursement (directly or indirectly), payments from our distributors, and patient self-pay. We have obtained coverage or other public financing for our Oncotype DX breast cancer test outside of the U.S., including coverage for certain patients in more than ten countries.
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We expect that our international sales will be heavily dependent on the availability of reimbursement, and broadening coverage and reimbursement for our precision oncology tests and other tests outside of the United States will take years.
Our Clinical Laboratory and Manufacturing Facilities
We process our Cologuard, Cologuard Plus, and Cancerguard tests at two state-of-the-art, high-throughput clinical laboratories in Madison, Wisconsin that are certified pursuant to federal Clinical Laboratory Improvement Amendments (“CLIA”) and accredited by College of American Pathologist (“CAP”). Our total lab capacity at both facilities is approximately seven million Cologuard tests per year, with the opportunity to add additional capacity, if needed.
We currently manufacture our Cologuard, Cologuard Plus, and Cancerguard tests at our facilities in Madison, Wisconsin. We are committed to manufacturing and providing medical devices and related products that meet customer expectations and applicable regulatory requirements. We adhere to manufacturing and safety standards required by federal, state, and local laws and regulations and operate our manufacturing facilities under a quality management system. We purchase certain components for our Cologuard, Cologuard Plus, and Cancerguard tests from third-party suppliers and manufacturers.
A majority of our internally developed Oncotype tests for domestic and international patients are currently processed in our CLIA-certified and CAP-accredited clinical reference laboratory facilities in Redwood City, California. Beginning in 2022, Oncotype DX Breast Recurrence Score tests for German patients have been processed in our newly constructed facility in Trier, Germany, a portion of which is operated by a third-party partner. Our OncoExTra, immunohistochemistry, and Oncodetect tests, along with tests completed under certain reference lab agreements, are processed in our CLIA-certified and CAP-accredited clinical reference laboratory facilities in Phoenix, Arizona.
We process our predefined genetic tests for nearly all clinically relevant genes, additional custom panels, and comprehensive germline whole exome and whole genome sequencing tests in addition to our hereditary cancer test, Riskguard at our CLIA-certified and CAP-accredited DNA testing laboratory in Marshfield, Wisconsin.
We believe that we currently have sufficient capacity to process all of our tests for at least the next 12 months. We are in the process of expanding our existing facilities to prepare for the expected future growth in our operations.
Competition
We operate in a rapidly evolving and highly competitive industry. There are a number of private and public companies that offer products or have announced that they are developing products that compete with ours. We expect additional competition as other established and emerging companies introduce new tests and technologies. Certain of these companies have or may be acquired by, or enter into commercial partnerships with, larger companies with greater expertise, resources or brand recognition, which may increase their ability to offer or develop products that compete with ours.
We believe the principal competitive factors for our current and in-development products include the following:
•test performance, as demonstrated in clinical and analytical studies as well as in commercial and real-world experience;
•scope and extent of reimbursement and payer coverage;
•ease of use, including user experience for both patients and providers;
•value of product offerings, including pricing and impact on other healthcare spending;
•effectiveness of sales and marketing efforts and brand awareness;
•breadth of distribution of products and partnership base;
•reputation among patients and providers for development and introduction of new, innovative products;
•operational execution, including test turn-around time and test failures; and
•key opinion leader support, including endorsement in influential clinical guidelines.
We believe that the success of our products depends on our ability to differentiate ourselves, including through continued investment in product enhancements and new technologies, and to demonstrate that our products deliver the clinical and operational attributes that are most important to hospitals, clinics, group purchasing organizations, physicians, and patients.
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Screening Competition
The U.S. opportunity for colorectal cancer screening is large, consisting of nearly 110 million eligible individuals between the ages of 45 and 85, and has attracted numerous competitors. Our Cologuard and Cologuard Plus tests face competition from procedure-based detection technologies such as colonoscopy, flexible sigmoidoscopy, “virtual” colonoscopy—a radiological imaging approach that visualizes the inside of the bowel by CT scan (spiral computerized axial tomography)—as well as other stool-based colorectal cancer tests (including the fecal occult blood test, the fecal immunochemical test (“FIT”)), and capsule endoscopy.
Geneoscopy, Inc. (“Geneoscopy”) received FDA approval for its ColoSense stool-based test which competes directly with our Cologuard tests in the United States. We are aware of at least two other companies (Mainz Biomed and Prescient Metabiomics) who are developing stool-based colorectal cancer screening tests.
We are also aware of many companies including Guardant Health, Inc., Freenome, who we executed an exclusive license agreement with related to their blood-based colorectal cancer screening tests, GRAIL, Inc., and Natera Inc., that have developed or are developing blood-based colorectal cancer screening tests. Guardant Health, Inc. recently received FDA approval and Medicare coverage of its blood-based test (Shield). Collectively, these tests could represent significant competition for our current tests, our own in-development blood-based colorectal cancer screening test, and other tests we may develop in the future. Our competitors may also be developing additional methods of detecting colorectal cancer and pre-cancer that have not yet been announced.
We also entered the MCED market with our Cancerguard test, which was launched in September 2025. We are aware of other companies with MCED products either commercially available or in development that will compete directly with our Cancerguard test. These companies include GRAIL, Inc., Guardant Health, Inc., Caris Life Sciences, and Freenome.
The genetic testing market is highly competitive, and we expect this competition to intensify in the future as our competitors consolidate and new competitors emerge. We face competition from a variety of sources, including Ambry Genetics (owned by Tempus AI); Myriad Genetics, Inc.; Natera; Color Health, Inc.; GeneDx; Illumina; Variantyx; 3billion; a few large, established general testing companies such as Laboratory Corporation of America Holdings (LabCorp) and Quest Diagnostics Incorporated; and clinical laboratories in an academic or healthcare provider setting that perform clinical genetic testing on behalf of their affiliated institutions.
Precision Oncology Competition
Our precision oncology products compete against a number of companies that are developing or commercializing products to profile genes and gene expression in breast and colon cancer. These companies include Agendia Inc., Veracyte, Inc., Myriad Genetics, Inc., and Hologic, Inc.
Each of Natera, Tempus AI, Guardant, NeoGenomics, Myriad Genetics, Inc., Quest Diagnostics, and Personalis have commercially available competitive MRD tests or have such tests in development, which currently or may in the future compete directly with our Oncodetect MRD test. There are multiple companies who have therapy selection products (either tissue-based or blood-based) which compete with the OncoExTra test and our in-development OncoliquidTM test including Tempus AI, Caris Life Sciences, NeoGenomics, Myriad Genetics, Inc., and Delfi. Historically, our principal competition for our precision oncology tests has also come from existing diagnostic methods used by pathologists and oncologists. Advances in digital pathology and artificial intelligence have the potential to replace or complement these entrenched methods and may offer value comparable to our molecular tests. Other potential competitors include companies that develop diagnostic tests such as Roche Holding, Ltd, and Siemens AG, as well as other companies and academic and research institutions.
Seasonality
We are continuing to learn how seasonal factors may affect our business. Based on our experience to date, we expect some seasonal variations in our financial results due to a variety of factors, such as the year-end holiday period and other major holidays, vacation patterns of both patients and healthcare providers, climate and weather conditions in our markets, seasonal conditions that may affect medical practices and patient, payer, and provider activity, including influenza outbreaks that may reduce the percentage of patients that can be seen or decrease patient’s willingness to visit medical practices, and other factors relating to the timing of patient deductibles and co-insurance limits.
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Regulation
Certain of our activities are subject to regulatory oversight by the FDA under provisions of the Federal Food, Drug, and Cosmetic Act (“FDCA”) and regulations thereunder, including regulations governing the development, marketing, labeling, promotion, manufacturing, distribution, and export of medical devices. Our clinical laboratory facilities are subject to oversight by CMS pursuant to CLIA, as well as agencies in various states, including New York. We are subject to many other federal, state, and foreign laws, including those related to anti-fraud and abuse, anti-kickback, and patient privacy. Failure to comply with applicable requirements can lead to significant sanctions, including interruption of our operations, withdrawal of products from the market, recalls, payment denials, refunds and recoupments, refusal to authorize government contracts, product seizures, exclusion from participation in federal and state healthcare programs, civil money penalties, injunctions, and criminal prosecution. For more information, see “Item 1A. Risk Factors — Risks Relating to Governmental Regulation and Reimbursement.”
U.S. Food and Drug Administration
Unless otherwise exempted or subject to enforcement discretion, medical devices, which include screening and diagnostic tests, must receive either FDA or regulatory approval or clearance before being marketed in the United States. Our Cologuard and Cologuard Plus tests are regulated by the FDA as a Class III medical devices. The FDA granted premarket approval (“PMA”) for our Cologuard and Cologuard Plus tests in August 2014 and October 2024, respectively. The regulations governing our PMA-approved tests’ approval place substantial restrictions on how our tests may be marketed and sold, specifically, by prescription only.
Additionally, manufacturers of medical devices must comply with various regulatory requirements under the FDCA and regulations thereunder, including, but not limited to, quality system regulations, unless they are exempt, facility registration, product listing, labeling requirements, and certain post-market surveillance requirements. Entities that fail to comply with FDA requirements can be liable for criminal or civil penalties, such as recalls, detentions, orders to cease manufacturing, and restrictions on labeling and promotion, among other potential sanctions.
Certain of our products in development or additional diagnostic products and services that we seek to develop may be regulated by the FDA as medical devices and require FDA approval or clearance. The regulatory review and approval process for medical devices can be costly, timely, and uncertain. This process may involve, among other things, successfully completing clinical trials and submitting a premarket clearance notice or filing a premarket approval application with the FDA.
Laboratory Developed Tests
Our Oncotype DX, Oncodetect, Cancerguard, and OncoExTra tests, and certain other tests we offer are LDTs, and we may seek to commercialize certain of our products in development as LDTs. LDTs are clinical laboratory tests that are developed and validated by a laboratory for its own use. The FDA historically took the position that it has the authority to regulate such tests as medical devices under the FDCA and for the most part exercised enforcement discretion and not required clearance or approval of LDTs prior to marketing.
In May 2024, the FDA issued a final rule (the “LDT Rule”), which amended the FDA's regulations to make explicit that LDTs are devices under the FDCA and set forth a process for enhanced regulation of LDTs.
On March 31, 2025, the U.S. District Court in the Eastern District of Texas vacated the LDT Rule, holding that LDTs are "services" and therefore not subject to FDA regulation as “devices” under the FDCA.The FDA did not appeal the District Court decision and withdrew the LDT Rule on September 19, 2025, reverting to the Agency’s historical enforcement discretion position.
In the future, the FDA may change its position with respect to its regulation of the LDTs we offer or may seek to offer in the future. This may include eliminating any pathway for LDTs to be submitted for FDA clearance or approval or by defining different requirements that the FDA views to be in line with the District Court decision, causing us to incur substantial costs and time delays associated with meeting new requirements for pre-market clearance or approval, or causing us to experience decreased demand for or reimbursement for our tests due to an inability to secure FDA clearance or approval. Congress may also enact new legislation to regulate laboratory services and the impact of any such legislation is uncertain.
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Laboratory Certification, Accreditation, and Licensing
We are also subject to U.S. and state laws and regulations regarding the operation of clinical laboratories. CLIA requirements and laws of certain states impose certification requirements for clinical laboratories, and establish standards for quality assurance and quality control, among other things. CLIA provides that a state may adopt different or more stringent regulations than federal law and permits states to apply for exemption from CLIA if the state’s laboratory laws are equivalent to or more stringent than CLIA. For example, the State of New York's clinical laboratory regulations, which have received an exemption from CLIA, contain provisions that are in certain respects more stringent than federal law. Therefore, as long as New York maintains a licensure program that is CLIA-exempt, we will need to comply with New York's clinical laboratory regulations in order to offer our clinical laboratory products and services in New York.
We have current certificates to perform clinical laboratory testing. Clinical laboratories are subject to inspection by regulators and to sanctions for failing to comply with applicable requirements. Sanctions available under CLIA and certain state laws include prohibiting a laboratory from running tests, requiring a laboratory to implement a corrective plan, and imposing civil monetary penalties.
HIPAA and Other Privacy Laws
The Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act (“HIPAA”) established comprehensive protection for the privacy and security of health information. The HIPAA standards apply to three types of organizations, or “Covered Entities”: health plans, healthcare clearinghouses, and healthcare providers that conduct certain healthcare transactions electronically. Covered Entities and their business associates must have in place administrative, physical, and technical standards to guard against the misuse of individually identifiable health information. We perform activities that implicate HIPAA, such as providing clinical laboratory testing services as a Covered Entity and entering into specific kinds of relationships with Covered Entities and business associates of Covered Entities. Penalties for violations of HIPAA include civil money and criminal penalties.
Our activities must also comply with other applicable privacy laws, which impose restrictions on the access, use and disclosure of personal information. More state and international privacy laws are being adopted. Many state laws are not preempted by HIPAA because they are more stringent or are broader in scope than HIPAA, including the California Consumer Privacy Act of 2018 (“CCPA”), including expansions and amendments to CCPA pursuant to the California Privacy Rights Act which became operative on January 1, 2023. CCPA protects personal information other than health information covered by HIPAA and allows certain data access and erasure rights to California consumers as well as rights to limit use and disclosure of sensitive personal information. Other similar state laws have been enacted. Further, we are required to comply with international, national, and provincial personal data protection laws and regulations, including the European Union's (“E.U.”) General Data Protection Regulation (“GDPR”) and Japan's Act on the Protection of Personal Information (“APPI”). The GDPR and other national or provincial laws provide a prescriptive, detailed regulation that provides extensive powers to public authorities to sanction and stop use of personal data. The GDPR and national or provincial laws outside of Europe such as APPI have and will continue to require significant effort and expense to ensure compliance. All of these laws may impact our business and may change periodically, which could adversely affect our business operations.
Federal and State Billing and Fraud and Abuse Laws
Anti-fraud Laws/Overpayments. We are subject to numerous federal and state anti-fraud and abuse laws, including the Federal False Claims Act. Many of these anti-fraud laws are broad in scope, and neither the courts nor government agencies have extensively interpreted these laws. Prohibitions under some of these laws include:
•the submission of false claims or false information to government programs,
•the retention of any overpayments by governmental payers,
•deceptive or fraudulent conduct,
•excessive or unnecessary services or services at excessive prices, and
•defrauding private sector health insurers.
Numerous federal and state agencies enforce the anti-fraud and abuse laws. In addition, private insurers may also bring private actions. In some circumstances, private whistleblowers are authorized to bring fraud suits on behalf of the government against providers and are entitled to receive a portion of any final recovery.
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In addition, amendments to the False Claims Act impose severe penalties for the knowing and improper retention of overpayments collected from governmental payers. Within 60 days of identifying and quantifying an overpayment, a provider is required to notify CMS or the Medicare contractor of the overpayment and the reason for it and return the overpayment. These amendments could subject our procedures for identifying and processing payments to greater scrutiny. Overpayments may occur from time to time in the healthcare industry without any fraudulent intent. For example, overpayments may result from mistakes in reimbursement claim forms or from improper processing by governmental payers. We maintain protocols intended to identify any overpayments. From time to time we have identified overpayments and made refunds to government payers.
To avoid liability, we must carefully and accurately code claims for reimbursement, proactively monitor the accuracy and appropriateness of Medicare claims and payments received, diligently investigate any credible information indicating that we may have received an overpayment, and promptly return any overpayments.
Federal and State “Anti-Kickback” and “Self-Referral” Restrictions
Anti-Kickback Statute. The federal Anti-Kickback Statute prohibits persons from knowingly and willfully soliciting, receiving, offering, or paying remuneration, directly or indirectly, to induce either the referral of an individual, or the furnishing, recommending, or arranging for a good or service, for which payment may be made under a federal healthcare program, such as the Medicare and Medicaid programs, unless an exception applies. The term “remuneration” is not defined in the federal Anti-Kickback Statute and has been broadly interpreted to include anything of value, including for example, gifts, discounts, the furnishing of supplies or equipment, credit arrangements, payments of cash, waivers of payment, ownership interests and providing anything at less than its fair market value. Sanctions for violations of the federal Anti-Kickback Statute may include imprisonment and other criminal penalties, civil monetary penalties, and exclusion from participation in federal healthcare programs. Many states have also adopted laws similar to the federal Anti-Kickback Statute, some of which apply to the referral of patients for healthcare items or services reimbursed by any source, not only the Medicare and Medicaid programs, and do not contain identical safe harbors.
In addition, the Eliminating Kickbacks in Recovery Act of 2018 (“EKRA”) imposes criminal penalties for knowing or willful payment or offer, or solicitation or receipt, of any remuneration, whether directly or indirectly, overtly or covertly, in cash or in kind, in exchange for the referral or inducement of laboratory testing (among other healthcare services) unless a specific exception applies. Although it appears that EKRA was intended to reach patient brokering and similar arrangements to induce patronage of substance use recovery and treatment, the language in EKRA is broadly written and could apply to laboratory services covered under public or private payer arrangements.
Self-Referral Law. The federal “self-referral” law, commonly referred to as the “Stark” law, provides that healthcare providers who, personally or through a family member, have ownership interests in or compensation arrangements with a laboratory are prohibited from making a referral to that laboratory for laboratory tests reimbursable by Medicare, and also prohibits laboratories from submitting a claim for Medicare payments for laboratory tests referred by healthcare providers who, personally or through a family member, have ownership interests in or compensation arrangements with the testing laboratory. The Stark law contains a number of specific exceptions which, if met, permit healthcare providers who have ownership or compensation arrangements with a testing laboratory to make referrals to that laboratory and permit the laboratory to submit claims for Medicare payments for laboratory tests performed pursuant to such referrals. We are subject to comparable state laws, some of which apply to all payers regardless of source of payment, and do not contain identical exceptions to the Stark law.
Sunshine Act
In 2010, Congress enacted a statute commonly known as the Sunshine Act, which aims to promote transparency. The Sunshine Act requires manufacturers of drugs, devices, biologicals, and medical supplies covered by Medicare, Medicaid, or the Children’s Health Insurance Program to report annually to CMS any payments or other transfers of value made to certain healthcare providers and teaching hospitals, unless an exception applies. Manufacturers must also disclose to CMS any healthcare provider ownership or investment interests. Some states have similar transparency laws.
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International
When marketing our tests outside of the U.S., we are subject to other countries' regulatory requirements governing human clinical testing, export of tissue, marketing approval for our products, and performance and reporting of tests in each market. These requirements vary by jurisdiction, differ from those in the U.S., and may require us to perform additional pre-clinical or clinical testing. For example, the E.U. has amended its existing regulatory framework for in vitro diagnostics by introducing the Regulation 2017/746 (EU) (“EU IVDR”), which amends the existing framework and imposes stricter requirements for the development, marketing, and sale of in vitro diagnostics such as our Oncotype DX Breast Recurrence Score test in the E.U. These new regulations are more stringent in a variety of areas, including clinical requirements, traceability, quality systems, and post-market surveillance activities. The EU IVDR became effective starting in May 2022. As our Oncotype DX Breast Recurrence Score test has a pre-existing certification from our notified body, we had until May 2026 to meet certain of the new, more stringent regulatory requirements of EU IVDR with respect to our Oncotype DX Breast Recurrence Score test, including obtaining a new positive conformity assessment from our notified body. We received a CE marking on our Oncotype DX Breast Recurrence Score test in December 2023, certifying that we are in compliance with the new EU IVDR regulatory requirements. Complying with the requirements of these regulations has required us to, and may continue to require us to, incur significant expenditures. Failure to meet these requirements could adversely impact our business in the E.U. and other regions that tie their product registrations to the E.U. requirements. Additionally, in many countries outside of the U.S., coverage, pricing, and reimbursement approvals are also required in order for our tests to be made available to patients in substantial volume.
Many countries in which we offer our tests have anti-inducement laws or regulations prohibiting providers, as well as medical and in vitro diagnostic device manufacturers, from offering, paying, soliciting, or receiving remuneration, directly or indirectly, or providing a benefit to a healthcare professional in order to induce business, or may require declaration of any benefits provided to healthcare professionals. In situations involving healthcare providers employed by public or state-funded institutions or national healthcare services, violation of the local anti-corruption or anti-gift laws may also constitute a violation of the U.S. Foreign Corrupt Practices Act (“FCPA”).
The FCPA prohibits any U.S. individual, business entity, or employee of a U.S. business entity from offering or providing, directly or through a third party, including the distributors we rely on in certain markets, anything of value to a foreign government official with corrupt intent to influence an award or continuation of business or to gain an unfair advantage, whether or not such conduct violates local laws. In addition, it is illegal for a company that reports to the Securities and Exchange Commission (“SEC”) to have false or inaccurate books or records or to fail to maintain a system of internal accounting controls. We are also required to maintain accurate information and control over sales and distributors’ activities that may fall within the purview of the FCPA, its books and records provisions, and its anti-bribery provisions.
Other Laws
Occupational Safety and Health. In addition to its comprehensive regulation of health and safety in the workplace in general, the Occupational Safety and Health Administration has established extensive requirements aimed specifically at laboratories and other healthcare-related facilities. In addition, because our operations require employees to use certain hazardous chemicals, we also must comply with regulations on hazard communication and hazardous chemicals in laboratories. These regulations require us, among other things, to develop written programs and plans, which must address methods for preventing and mitigating employee exposure, the use of personal protective equipment, and training.
Specimen Transportation. Our commercialization activities subject us to regulations of the Department of Transportation, the U.S. Postal Service, and the Centers for Disease Control and Prevention that apply to the surface and air transportation, as well as importation, of clinical laboratory specimens.
Environmental. The cost of compliance with federal, state, and local provisions related to the protection of the environment has had no material effect on our business. There were no material capital expenditures for environmental control facilities in the year ended December 31, 2025 and there are no material expenditures planned for such purposes for the year ended December 31, 2026.
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Intellectual Property
We rely on a combination of patents, patent applications, copyrights, and trademarks, as well as contracts, such as confidentiality, material data transfer, and license and invention assignment agreements to protect our intellectual property rights. We also rely upon trade secret laws to protect unpatented know-how and continuing technological innovation.
We have intellectual property rights to a wide variety of technologies including sample preparation, sample preservation, biomarkers, gene expression and sequencing technology, and related methods and formulations.
Our success depends upon our ability to protect our technologies through patent coverage and, where necessary, defend and enforce our patents in administrative proceedings and litigation. As of December 31, 2025, we had 274 issued patents in the U.S. and 965 issued patents outside of the U.S., which includes validated patents issued by the European Patent Office in key E.U. countries, covering biomarkers and methods that are components of the Cologuard and Cologuard Plus tests, Oncoguard® Liver test, Oncotype DX tests, Oncodetect test, pipeline technologies or research methods, and platform technologies. Our issued U.S. patents expire at various times between 2026 and 2045. In addition, we have pending patent applications in the U.S. and in other countries, including provisional and non-provisional filings. Some of these U.S. patent applications also have corresponding pending or granted applications under the Patent Cooperation Treaty in Canada, Europe, Japan, Australia, and other jurisdictions. We solely own, jointly own, or exclusively license these patents and patent applications. In certain cases where joint ownership positions were created, we have negotiated contractual provisions providing us with the opportunity to acquire exclusive rights under the patents and patent applications. Under some patents and patent applications, we have elected to allow exclusive options to lapse without exercising the option. The joint ownership agreements generally are in the form of agreements that were executed at the onset of our collaborations with third parties.
License Agreements
We license certain technologies that are, or may be, incorporated into our technology under several license agreements, as well as the rights to commercialize certain diagnostic tests through collaboration agreements. Generally, the license agreements require us to pay single-digit royalties based on net revenues received using the technologies and may require minimum royalty amounts, milestone payments, or maintenance fees. For additional information on these relationships, including their ongoing financial and accounting impact on our business, refer to Note 11 of our Notes to Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K (“Notes to Consolidated Financial Statements”).
Mayo Foundation for Medical Education and Research
In June 2009, we entered into an exclusive, worldwide license agreement with Mayo Foundation for Medical Education and Research, under which Mayo granted us an exclusive, worldwide license to certain Mayo patents and patent applications, as well as a non-exclusive, worldwide license with regard to certain Mayo know-how. The scope of the license covers any screening, surveillance, or diagnostic test or tool for use in connection with any type of cancer, pre-cancer, disease, or condition. Our license agreement with Mayo was most recently amended and restated in September 2020.
The licensed Mayo patents and patent applications contain both method and composition claims that relate to sample processing, analytical testing, and data analysis associated with nucleic acid screening for cancers and other diseases. The jurisdictions covered by these patents and patent applications include the U.S., Australia, Canada, the E.U., China, Japan, and Korea. Under the license agreement, we assumed the obligation and expense of prosecuting and maintaining the licensed Mayo patents and are obligated to make commercially reasonable efforts to bring to market products using the licensed Mayo intellectual property.
In addition to granting us a license to the covered Mayo intellectual property, Mayo provides us with product development research and development assistance pursuant to the license agreement and other collaborative arrangements.
Johns Hopkins University
Through the acquisition of Thrive Earlier Detection Corporation (“Thrive”), we acquired a worldwide exclusive license agreement with The Johns Hopkins University for use of several JHU patents and licensed know-how. The license is designed to enable us to leverage JHU intellectual property in the development and commercialization of certain of our products.
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In addition to granting us a license to the covered JHU intellectual property, JHU provides us with research and development assistance pursuant to other collaboration arrangements.
Freenome Holdings, Inc.
In August 2025, we entered into a Collaboration and License Agreement (the “Agreement”) with Freenome Holdings, Inc., under which we and Freenome will collaborate to develop and commercialize certain blood-based screening and diagnostic products (“Collaboration Products”) for colorectal cancer. Upon execution of the Agreement, we have co-exclusive rights to commercialize Freenome’s existing CRC screening test as a laboratory developed test in the United States. Upon the later of (1) certain requirements related to antitrust clearance being satisfied (the “Antitrust Clearance Date”), which was obtained in November 2025, and (2) receipt of first-line FDA approval for a Collaboration Product, we will obtain exclusive rights to commercialize such Collaboration Products in the United States.
Human Capital
Our vision to provide the clarity to take life-changing action earlier drives us to find ambitious, dynamic individuals who thrive in a team-based environment. To facilitate talent attraction and retention, we strive to make Exact Sciences a diverse and inclusive workplace, with opportunities for our employees to grow and develop in their careers, supported by strong compensation, benefits, and health and wellness programs.
At December 31, 2025, we had approximately 7,200 full-time, part-time and temporary employees, 7,100 of which were full-time employees. 95% of our employees are located in the United States and none of our employees are represented by a labor union. During fiscal year 2025, our voluntary turnover rate was approximately 9%, below the healthcare industry benchmark, which is comprised of certain of our key competitors (Aon, 2025 Salary Increase and Turnover Study — Second Edition).
Diversity and Inclusion
We believe diversity in thought, experience, perspective, and background within our team is necessary to support our core value of innovation. We are firmly committed to providing equitable opportunity in all aspects of employment and will not discriminate in any employment decision because of a person’s race, color, sex, religion, national origin, age, disability, sexual orientation, marital status, gender identity, genetic information, veteran status, or any other basis prohibited by applicable law. In order to increase the pool of diverse candidates for open positions, we partner with community resource groups and participate in diversity-focused career recruiting efforts.
Our talent strategy and inclusion team, led by our Executive Vice President, Human Resources and Service, is responsible for developing and implementing our inclusion and diversity programs. The Human Capital Committee of our Board of Directors oversees and monitors our policies and strategies relating to culture, talent, and human capital management, including diversity, equity, and inclusion. We track and monitor workforce diversity data to ensure we are fulfilling our diversity and inclusion aspiration – to be known as a great place to work for all. Thanks, in part, to our compelling mission, competitive benefits and the positive results of our employee inclusion program, women make up approximately 53% of total employees (full-time and part-time), and 47% of management positions. Our nine-member Board of Directors includes four female members to support diversity of opinion and perspective at the board level. We have been recertified as Great Place to Work® in the U.S. for the seventh consecutive year and for the first time in Canada, France, Germany, Italy, Japan, Poland, and United Kingdom. In addition, we have been awarded Gallup Exceptional Workplace Award in 2025.
Compensation and Benefits
Attracting the best talent starts with offering industry-leading compensation and benefits. We want our compensation and benefits to give our employees a sense of ownership in our company, and pride and determination to achieve our mission. To help our eligible employees achieve financial well-being and share in the success they create, we offer competitive base pay, a company-sponsored 401(k) plan with employer matching, retirement planning resources, employee stock purchase plan opportunities, stock awards, and annual cash bonus programs. To help our eligible employees get and stay healthy, we offer our employees generous health benefits, including among others, medical, dental, and vision care coverage for employees and their dependents; family formation benefits (such as adoption assistance, (in)fertility treatments, etc.), life, disability, and accident insurance and critical illness benefits; health care and dependent care flexible spending account programs and employer contributions to health savings accounts (for specific medical plans). To enable our eligible employees to take the time they
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need to re-energize and focus on what matters most, we offer a parental leave program and ample time away benefits (vacation, sick, holidays, volunteer time, voting time, other leaves). To foster a culture of care and compassion, we offer eligible employees an employee assistance program with employer-paid counseling coverage for employee and household members, charitable donation matches, commuter benefits, wellness programs, including fitness and mental health/well-being, and more.
Training and Development
We invest significant resources to develop the talent needed to achieve long-term success. We have implemented a comprehensive employee training program that applies to all employees, including full-time, part-time, and temporary employees. Senior leadership, in conjunction with Human Resources, is responsible for ensuring that all staff, including contractors and consultants, have the appropriate education, training, competency, and credentials.
We create opportunities for personal growth, professional growth, and career mobility for all employees. From facilitated workshops to eLearning modules, individual development plans, mentoring, and coaching, we have invested in developmental capabilities to meet our employees at any stage of their career and help them grow. We have a variety of tools to facilitate developmental feedback. We maintain a mentoring program aimed to support the growth and development journey of employees, increase talent retention, enhance our inclusive culture, and increase partnership and collaboration across the business. We also host an annual leadership summit, bringing leaders across the Company together for two and a half days of dedicated development and enrichment activities. Thanks, in large part, to our training and development investments, in 2025 we were able to fill 36% of our open positions with internal candidates.
Financial Information
See our consolidated financial statements included elsewhere in this Form 10-K and accompanying notes to the consolidated financial statements.
Available Information
We were incorporated in the State of Delaware on February 10, 1995. Our corporate headquarters are located at 5505 Endeavor Lane, Madison, Wisconsin 53719. Our telephone number is 608-284-5700. Our Internet website address is www.exactsciences.com. Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8‑K, including exhibits, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 are available free of charge through the investor relations page of our Internet website as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. Our Internet website and the information contained therein or connected thereto are not intended to be incorporated into this Annual Report on Form 10-K.
Item 1A. Risk Factors
We operate in a rapidly changing environment that involves a number of risks that could materially affect our business, financial condition or future results, some of which are beyond our control. This discussion highlights some of the risks that may affect future operating results. These are the risks and uncertainties we believe are most important for you to consider. We cannot be certain that we will successfully address these risks. If we are unable to address these risks, our business may not grow, our stock price may suffer, and we may be unable to stay in business. Additional risks and uncertainties not presently known to us, which we currently deem immaterial or which are similar to those faced by other companies in our industry or business in general, may also impair our business operations.
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Risk Factors Summary
The following is a summary of the principal risks that could adversely affect our business, operations, and financial results.
Risks Related to the Merger
•Failure to complete, or delays in completing, the Merger could materially and adversely affect our results of operations and our stock price.
•Completion of the Merger is subject to the receipt of consents and approvals from government entities, which may impose conditions that could cause either party to abandon the Merger.
•We are subject to various uncertainties and restrictions on the conduct of our business while the Merger is pending.
•We will continue to incur substantial transaction-related costs in connection with the Merger.
•We and our directors and officers have been subject to lawsuits, and may be subject to additional lawsuits, relating to the Merger.
•Provisions of the Merger Agreement may deter alternative business combinations, and the trading price of our common stock could be negatively affected if the Merger Agreement is terminated in certain circumstances.
Risks Related to our Business and Business Strategy
•We may never become profitable or sustain profitability.
•We may need additional capital to execute our strategic plan.
•Our success depends heavily on our Screening and Precision Oncology tests and the successful commercialization of our tests in development.
•Our operating results could be subject to significant fluctuation, which could increase the volatility of our stock price and cause losses to our shareholders.
•We face intense competition from other companies and may not be able to compete successfully.
•If any of our facilities or our laboratory equipment were damaged or destroyed, or if we experience a significant disruption in our operations for any reason, our ability to continue to operate our business could be materially harmed.
•We heavily rely upon certain suppliers and other vendors, and any disruptions or failures with respect to our relationships with these counterparties could have a disruptive effect on our business.
•Cyberattacks, security breaches, loss of data, and other disruptions in relation to our information technology systems, as well as those of our third-parties with whom we have business relationships, could compromise sensitive information related to our business, prevent us from accessing it and expose us to substantial liability, which could adversely affect our business and reputation.
•We rely on courier delivery services to transport Cologuard collection kits to patients and samples for all of our tests back to laboratory facilities for analysis. If these delivery services are disrupted or become significantly more expensive, customer satisfaction and our business could be negatively impacted.
•The success of our business substantially depends on the efforts of our senior management team and our qualified personnel.
•Our business and reputation will suffer if we are unable to establish and comply with stringent quality standards to assure that the highest level of quality is observed in the performance of our tests.
•Our inability to manage growth could harm our business.
•We may engage in acquisitions or divestitures that are not successful and which could disrupt our business and reduce our financial resources and shareholder value.
•We may not be successful in achieving expected operating efficiencies and sustaining or improving operating margins and may experience business disruptions associated with restructuring and transformation activities.
•International expansion of our business exposes us to business, regulatory, labor, political, operational, financial, liability, compliance, payment collection, and economic risks associated with doing business outside of the U.S.
•Our business may be adversely affected by global macroeconomic conditions and volatility in the capital markets.
•Public health crises, such as the COVID-19 pandemic, have had, and could in the future have, adverse effects on our business and financial results.
•Ethical, legal, and social concerns related to the use of genetic information could reduce demand for our genetic tests.
•Climate change, or legal or regulatory measures to address climate change or other corporate social responsibility and sustainability matters, could adversely affect our business, financial condition, and results of operations.
•The use of Artificial Intelligence presents new risks and challenges to our business.
•We may be a party to litigation in the normal course of business or otherwise, which could affect our business and financial position.
Risks Relating to Governmental Regulation and Reimbursement
•We face uncertainty related to healthcare reform, pricing, coverage, and reimbursement.
•Healthcare policy changes, including recently enacted legislation reforming the U.S. healthcare system could have an adverse effect on our business, financial condition, results of operations and prospects.
•If payers, including managed care organizations, do not approve and maintain reimbursement for our tests at adequate reimbursement rates, our commercial success could be compromised.
•If we are unable to obtain or maintain reimbursement at adequate reimbursement rates for our Oncotype DX tests outside of the U.S., our ability to expand internationally will be compromised.
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•Failure to comply with federal, state, and foreign laboratory licensing and related requirements could cause us to lose the ability to perform our tests, experience disruptions to our business, or become subject to administrative or judicial sanctions.
•Our products could be subject to recall.
•Delays in receipt of, or failure to obtain, required FDA clearances or approvals for our products in development, or improvements to or expanded indications for our current offerings, could materially delay or prevent us from commercializing or otherwise adversely impact future product commercialization.
•Disruptions at the FDA and other government agencies and regulatory authorities caused by government shutdowns, policy changes, funding shortages, or key personnel disruptions could prevent new products and services from being reviewed or approved in a timely manner or at all, or otherwise prevent those agencies from performing normal governmental functions on which the operation of our business may rely, which could negatively impact our business, financial condition and results of operations.
•There exists substantial uncertainty regarding the future regulation of the LDTs.
•We are subject to numerous U.S. and foreign laws and governmental regulations, and any governmental enforcement action may materially affect our financial condition and business operations.
•Our business is subject to various complex laws and regulations applicable to providers of clinical diagnostics and services.
•Due to billing complexities in the diagnostic and laboratory service industry, we may have difficulties receiving timely payment for the tests we perform, and may face write-offs, disputes with payers and patients, and long collection cycles.
•Some of our activities may subject us to risks under federal, state, and foreign laws prohibiting “kickbacks” and false or fraudulent claims.
•Some of our activities may subject us to risks under the Foreign Corrupt Practices Act and similar anti-bribery laws in non-U.S. jurisdictions.
•Failure to comply with privacy, security, and consumer protection laws and regulations could result in fines, penalties, and damage to our reputation and have a material adverse effect on our business.
•Our employees, independent contractors, consultants, commercial partners, and vendors may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements.
•Changes in tax laws or regulations or exposure to tax liabilities could adversely affect our financial condition and results of operations.
Risks Relating to Product Development, Commercialization and Sales of our Products
•The success of the screening and diagnostic products and services we currently offer or may offer in the future will depend on the degree of market acceptance by healthcare providers, patients, healthcare payers, and others in the medical community.
•Uncertainty in the development and commercialization of our new tests or services could materially adversely affect our business, financial condition and results of operations.
•If we do not successfully manage the launch and marketing of new products or services, our financial results could be adversely affected.
•Recommendations, guidelines, and quality metrics issued by various organizations may significantly affect payers’ willingness to cover, and healthcare providers’ willingness to prescribe or order, our products.
•We expect to continue to make significant investments in our research and development efforts, which may not be successful.
•Interim, topline and preliminary data from our clinical studies that we announce or publish from time to time may change as more patient data become available and are subject to audit and verification procedures that could result in material changes in the final data.
•Our industry is subject to rapid change, which could make our current products and any future products we may develop, obsolete.
•The sizes of the markets for our current and future products have not been established with precision, and may be smaller than we estimate.
•Our dependence on distributors for sales in many countries outside of the U.S. could limit or prevent us from selling our tests in those countries and impact our revenue.
Risks Relating to our Intellectual Property
•We rely on strategic collaborative and licensing arrangements with third parties to develop critical intellectual property. We may not be able to successfully establish and maintain such collaborative and license agreements.
•We may be subject to substantial costs and liability, or be prevented from using technologies incorporated in our screening or diagnostic tests as a result of litigation or other proceedings relating to patent or other intellectual property rights.
•If we are unable to protect or enforce our intellectual property effectively, we may be unable to prevent third parties from using our intellectual property, which would impair any competitive advantage we may otherwise have.
•If patent regulations or standards are modified, such changes could have a negative impact on our business.
Risks Relating to our Securities
•If we fail to maintain an effective system of internal control over financial reporting, investors may lose confidence in the accuracy and completeness of our reported financial information and our stock price may be adversely impacted.
•Our stock price has fluctuated widely and, despite the pendency of the Merger, may continue to be volatile.
•We have recorded significant impairment charges and could do so again in the future
•Our significant indebtedness could adversely affect our business, financial condition and results of operations, and our ability to meet our payment obligations under such indebtedness and limit our ability to raise additional capital to fund our operations.
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Risks Related to the Merger
Failure to complete, or delays in completing, the Merger could materially and adversely affect our results of operations and our stock price.
The consummation of the Merger is subject to a number of closing conditions, including, among others, stockholder and regulatory approvals and clearances, a number of which are not within our control. Failure to satisfy the conditions to the consummation of the Merger could prevent, delay or otherwise materially and adversely affect the completion of the Merger. We can provide no assurance that all required approvals and clearances will be obtained or that all closing conditions will be satisfied, and, if all required approvals and clearances are obtained and the closing conditions are satisfied, we can provide no assurance as to the terms, conditions and timing of such approvals or clearances or the timing of the completion of the Merger. The Merger Agreement also contains termination rights for us and Abbott, which could prevent the consummation of the Merger, including a right for either party to terminate the Merger Agreement in certain cases if the Merger is not completed by November 19, 2026, subject to extension in certain cases. We cannot assure you that we will be able to consummate the Merger as currently contemplated under the Merger Agreement or at all. Risks related to the failure or delay of the Merger to be consummated include, but are not limited to, the following:
•under some circumstances, we may be required to pay a termination fee to Abbott of approximately $628.7 million;
•we may experience negative reactions from financial markets or the trading price of our common stock may decline to the extent that the current market price for our common stock reflects a market assumption that the Merger will be completed;
•the attention of our management and employees may be diverted by the Merger;
•we and our directors and officers have been subject to lawsuits, and may be subject to additional lawsuits relating to the Merger;
•it is possible that some of our key personnel leaves during the pendency of the Merger; and
•we may experience the loss of, and negative reactions from, physicians, patients, payors, suppliers, hospitals, manufacturers, and other business partners, including those with which we are seeking to establish business relationships, due to uncertainties about or any failure to complete the Merger.
The occurrence of any of these events individually or in combination could materially and adversely affect our business, results of operations, financial condition, and stock price. If the Merger is not consummated and one or more of these events occur, such as payment of a termination fee to Abbott or other significant transaction costs in connection with the Merger, our cash balances and other outstanding indebtedness at that time could be materially and adversely affected and our options for sources of financing or refinancing could be more limited than if we had not pursued the Merger. If the Merger is not completed, there can be no assurance that these risks will not materialize and will not materially and adversely affect our stock price, business, financial condition, results of operations or cash flows.
Completion of the Merger is subject to the receipt of consents and approvals from government entities, which may impose conditions that could cause either party to abandon the Merger.
Completion of the Merger is conditioned upon, among other things, the filing or receipt of the necessary notices, clearances, approvals, waivers or consents under certain antitrust and competition laws, including certain applicable health care entity notice of material change and other similar laws. We cannot provide any assurance that we or Abbott will obtain the necessary clearances, approvals, waivers or consents or that the applicable governmental authorities will not take action under applicable regulatory laws in respect of the pending Merger as they deem necessary or desirable, including seeking divestiture of substantial assets of the parties, requiring the parties to license, or hold separate, assets or terminate existing relationships and contractual rights, or requiring the parties to commit to certain undertakings with respect to their operations after the consummation of the Merger. Under certain circumstances, we or Abbott may be permitted to terminate the Merger Agreement in the event that required clearances, approvals, waivers or consents under certain antitrust and competition laws, including certain applicable health care entity notice of material change and other similar laws, have not been obtained by the one-year anniversary of the date of the Merger Agreement (subject to extension as permitted under the Merger Agreement). Private parties may also seek to take legal action under the antitrust laws under certain circumstances, which could significantly impede or even preclude obtaining required regulatory approvals. We cannot be certain that a challenge to the Merger will not be made or that, if a challenge is made, we will prevail.
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We are subject to various uncertainties and restrictions on the conduct of our business while the Merger is pending, which could have a material adverse effect on our business, results of operations and financial condition.
Uncertainty about the pendency of the Merger and the effect of the Merger on our employees, customers, suppliers, manufacturers, and other third parties who deal with us may have a material adverse effect on our business, results of operations and financial condition. These uncertainties may impair our ability to attract, retain and motivate key personnel pending the consummation of the Merger, as such personnel may experience uncertainty about their future roles following the consummation of the Merger. Additionally, these uncertainties could cause physicians, patients, payors, suppliers, hospitals, manufacturers, and other business partners who deal with us to seek to change existing business relationships with us or fail to extend an existing relationship with us, all of which could have a material adverse effect on our business, results of operations and financial condition and the market price of our common stock.
In addition, the Merger Agreement restricts us from taking certain actions without Abbott’s consent while the Merger is pending. These restrictions may prevent us from, among other things, hiring key personnel, buying or selling certain assets, making certain capital expenditures, refinancing or incurring certain indebtedness, entering into certain transactions, or making certain other changes to our business prior to consummation of the Merger or termination of the Merger Agreement. These restrictions and uncertainties could have a material adverse effect on our business, results of operations and financial condition during the pendency of the Merger.
We will continue to incur substantial transaction-related costs in connection with the Merger.
We have incurred significant legal, advisory and financial services fees in connection with the Merger. We have incurred, and expect to continue to incur, additional costs in connection with the satisfaction of the various conditions to consummation of the Merger, including seeking approval from our stockholders and from applicable regulatory authorities. If there is any delay in the consummation of the Merger, these costs could increase significantly.
We and our directors and officers have been subject to lawsuits, and may be subject to additional lawsuits, relating to the Merger.
Litigation is common in connection with the sale of public companies, regardless of whether the claims have any merit. As of the date of filing of this Annual Report on Form 10-K, three complaints have been filed on behalf of purported Exact stockholders asserting individual claims against us and our directors in connection with the Merger, which generally allege that the definitive proxy statement we filed in connection with the Merger includes false and misleading information and/or fails to disclose allegedly material information in violation of state law. The complaints seek, among other things, to enjoin us from consummating the Merger or, in the alternative, rescissory damages, and an award of attorneys’ fees. In addition to these complaints, we have received demands from purported Exact stockholders alleging similar deficiencies regarding the disclosures made in the definitive proxy statement under the federal securities law. One of the conditions to consummating the Merger is that no order restraining, enjoining, making illegal or otherwise prohibiting the consummation of the Merger shall have been issued by a court or other governmental authority and remain in effect. Consequently, if any lawsuit challenging the Merger is successful in obtaining an order preventing the consummation of the Merger, that order could delay or prevent the Merger from being completed. The time and costs of defending against litigation relating to the Merger may adversely affect our business.
Provisions of the Merger Agreement may deter alternative business combinations, and the trading price of our common stock could be negatively affected if the Merger Agreement is terminated in certain circumstances.
The Merger Agreement prohibits us from initiating, seeking, soliciting, knowingly facilitating or encouraging, or knowingly inducing or taking any other action designed or intended to lead to certain alternative takeover proposals from third parties, and from taking other similar actions, subject to exceptions set forth in the Merger Agreement. The Merger Agreement requires us to pay Abbott a termination fee of approximately $628.7 million if the Merger Agreement is terminated in certain circumstances in connection with a competing third-party acquisition proposal. These provisions could make it more difficult for us to pursue alternative offers from third parties. If the Merger Agreement is terminated and we determine to seek another business combination, we cannot assure our stockholders or other securities holders that we will be able to successfully negotiate a transaction with another company on terms comparable to the terms of the Merger Agreement, or that we will avoid incurrence of substantial fees associated with the termination of the Merger Agreement. In the event the Merger Agreement is terminated, our stock price may decline.
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Risks Related to our Business and Business Strategy
We may never become profitable or sustain profitability.
We have incurred losses since we were formed. From our date of inception on February 10, 1995 through December 31, 2025, we have accumulated a total deficit of approximately $4.71 billion. Our net loss was $207.9 million, $1.03 billion and $204.1 million for the years ended December 31, 2025, December 31, 2024, and December 31, 2023, respectively. We expect to continue investing significantly toward continued development and commercialization of our colorectal cancer screening technology, our precision oncology tests, our MCED and MRD tests, and other products and services. If our revenue does not continue to grow faster than our cost of sales and operating expenses, we will not become profitable. We cannot be certain that the revenue from the sale of any products or services based on our technologies will be sufficient to make us profitable.
We may need additional capital to execute our strategic plan.
Although we believe that we have sufficient capital to fund our operations for at least the next 12 months, we may require additional capital to fully fund our current strategic plan, which includes continuing to scale our screening and precision oncology tests and developing a pipeline of future products and services. Additional financing may not be available in amounts or on terms satisfactory to us or at all. Our success in raising additional capital may be significantly affected by general market conditions, the market price of our common stock, our financial condition and existing indebtedness, uncertainty about the future commercial success of our current products and services, the development and commercial success of future products or services, regulatory developments, the status and scope of our intellectual property, any ongoing litigation, our compliance with applicable laws and regulations, and other factors. If we raise additional funds through the sale of equity, convertible debt or other equity-linked securities, our shareholders’ ownership will be diluted, and the market price of our common stock could be depressed. We may issue securities that have rights, preferences, and privileges senior to our common stock. If we raise additional funds through collaborations, licensing arrangements or other structured financing transactions, we may relinquish rights to our technologies, products or services, grant security interests in our assets or grant licenses to third parties on terms that are unfavorable to us.
Our success depends heavily on our Screening and Precision Oncology tests and the successful commercialization of our tests in development.
Our ability to generate revenues depends very substantially on the commercial success of our screening and precision oncology tests. Additionally, we are devoting significant resources to developing new tests in colorectal cancer screening, MRD, MCED, and other areas of cancer diagnostics. There can be no assurance that we will be able to continue to grow sales of our screening and precision oncology tests or that we will develop or commercialize any other products or services that will generate significant revenue. The commercial success of our tests, our successful commercialization of any new products and our ability to generate revenues will depend on a variety of factors, including the following:
•acceptance in the medical community;
•inclusion in healthcare guidelines and recommendations;
•inclusion in quality measures, including the HEDIS measures and the CMS Medicare Advantage Star Ratings;
•recommendations and studies that may be published by government agencies, professional organizations, academic or medical journals or other key opinion leaders;
•patient acceptance and demand;
•patient compliance with orders for our tests by healthcare providers, and patient adherence to recommendations regarding periodic re-testing;
•successful new screening initiatives, including gap closure programs through which we partner with health systems and payers to deliver Cologuard test kits to their patients or members who are due for colorectal cancer screening under applicable guidelines;
•effective marketing and educational programs, including successful direct-to-patient marketing such as television advertising and social media;
•sufficient coverage and reimbursement by payers;
•the existence of federal or state laws that mandate coverage for colorectal cancer and other types of screening, the extent to which those laws mandate coverage of our tests and the enforcement of those laws;
•the amount and nature of competition from other products and procedures;
•maintaining regulatory approvals to legally market our products and services; and
•the ease of use of our ordering process for healthcare providers.
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If we are unable to continue growing sales of our screening and precision oncology tests, we are delayed or limited in doing so, or we are unable to successfully commercialize our tests in development or other new products, our business prospects, financial condition, and results of operations would be adversely affected.
Our operating results could be subject to significant fluctuation, which could increase the volatility of our stock price and cause losses to our shareholders.
Our revenues and results of operations have historically, and may in the future, fluctuate significantly, depending on a variety of factors, including the following:
•our success in marketing and selling, and changes in demand for, our screening and precision oncology tests, and the level of reimbursement and collection obtained for such tests;
•seasonal variations or non-seasonal events or circumstances affecting healthcare provider recommendations for our tests and patient compliance with healthcare provider recommendations, including without limitation, holidays, weather events, and circumstances such as disease outbreaks that may limit patient access to medical practices or institutions for diagnostic tests and preventive services;
•our success in collecting payments from third-party and other payers, patients and collaborative partners, variation in the timing of these payments and recognition of these payments as revenues;
•the pricing of our tests, including potential changes in CMS or other reimbursement rates;
•circumstances affecting our ability to provide our tests, including weather events, supply shortages, or regulatory or other circumstances that adversely affect our ability to manufacture our tests or process tests in our clinical laboratories;
•the results of our annual testing of intangible assets and goodwill for impairment charges when events or changes in circumstances indicate the carrying value may not be recoverable;
•fluctuations in the amount and timing of our selling and marketing costs and our ability to manage costs and expenses and effectively implement our business; and
•our research and development activities, including the timing, size, complexity, and cost of clinical studies.
If our revenues or operating results fall below the expectations of investors or public market analysts, the trading price of our common stock could decline substantially.
We face intense competition from other companies and may not be able to compete successfully.
We operate in a rapidly evolving and highly competitive industry. There are a number of private and public companies that offer products, or have announced that they are developing products that compete with ours.
Some of our current and potential competitors may have significant competitive advantages over us, which may make them more attractive to hospitals, clinics, group purchasing organizations, and physicians. See “Item 1. Business — Competition” in this Annual Report on Form 10-K for additional information regarding our competitors and the effects of competition on our business.
We may be unable to compete effectively against our competitors either because their products and services are superior or because they are more effective in developing or commercializing competing products and services. Furthermore, even if we do develop new marketable products or services, our current and future competitors may develop products and services that are more clinically or commercially attractive than ours, and they may bring those products and services to market earlier or more effectively than us. If we are unable to compete successfully against current or future competitors, we may be unable to increase market acceptance for, and sales of, our tests, which could prevent us from increasing or sustaining our revenues or achieving sustained profitability and could cause the market price of our common stock to decline.
If any of our facilities or our laboratory equipment were damaged or destroyed, or if we experience a significant disruption in our operations for any reason, our ability to continue to operate our business could be materially harmed.
Our manufacturing, testing and laboratory facilities are located in Madison and Marshfield, Wisconsin, Redwood City, California, Phoenix, Arizona, and Trier, Germany, and our headquarters are also located in Madison, Wisconsin. If our present, or any future facilities, were to be damaged, destroyed or otherwise unable to operate, whether due to fire, floods, storms, tornadoes, earthquakes, other inclement weather events or natural disasters, employee malfeasance, terrorist acts, power outages, or otherwise, it may render it difficult or impossible for us to perform our tests for some period of time, and our
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business could be severely disrupted. Our facilities and the equipment we use to perform our tests would be costly to replace and could require substantial lead time to repair or replace. The inability to perform our tests or the backlog of tests that could develop if any of our facilities become inoperable for even a short period of time may result in the loss of customers or harm our reputation, and we may be unable to regain those customers or rebuild our reputation in the future. Although we possess insurance for damage to our property and the disruption of our business, this insurance may not be sufficient to cover all of our potential losses and may not continue to be available to us on acceptable terms, if at all.
If our testing facilities become inoperable for any reason, we may not be able to transfer any or all testing to our other facilities and would need to rely on a third party to perform certain of these tests. We could use only another facility with established state licensure and CLIA accreditation, and for tests provided internationally, ISO 15189 accreditation. We cannot assure you that we would be able to find an appropriately certified facility willing to comply with the required procedures, that this laboratory would be willing to perform the tests for us on commercially reasonable terms, or that it would be able to meet our quality or regulatory standards. Alternatively, establishing a redundant facility for certain of our testing would require considerable time and money to secure adequate space, construct the facility, recruit and train employees, and establish the additional operational and administrative infrastructure necessary to support this facility. We also may not be able, or it may take considerable time, to replicate our testing processes or results in a new facility. Additionally, any such new facility would be subject to certification under CLIA and licensing by several states, including California and New York, which could take a significant amount of time and result in delays in our ability to resume operations.
We heavily rely upon certain suppliers and other vendors, and any disruptions or failures with respect to our relationships with these counterparties could have a disruptive effect on our business.
We purchase certain supplies and products from third-party suppliers. In some cases, due to the unique attributes of certain products that are incorporated into our tests or otherwise used in our operations, we maintain either a single-source supplier relationship or a very limited set of supplier relationships. Certain of our third-party suppliers possess exclusive intellectual property or otherwise may be the only party with the rights or expertise to provide us critical supplies and/or products. These third parties are independent entities subject to their own unique operational, regulatory compliance, and financial risks that are outside our control. These third parties may not be willing to enter or renew long-term supply arrangements with us or continue to supply us at all. Additionally, they may not perform their obligations in a timely and cost-effective manner, and they may be unwilling or unable to increase production capacity commensurate with demand for our tests or future products or services.
We may become dependent on additional single- or limited-source suppliers, or become increasingly dependent on existing suppliers, as we expand and develop our product and service pipeline. For example, Phillips-Medisize, LLC (“Phillips”) is now our sole source provider of Cologuard test kit manufacturing and our OncoExTra test is currently only validated to be performed on Illumina’s sequencing platform, and the MRD and MCED tests we launched in 2025 will similarly utilize this platform. We also rely on Hamilton Company (“Hamilton”) to provide us laboratory equipment and related supplies (such as racking and pipette tips) necessary to perform certain critical steps in our clinical laboratory tests, including our Cologuard and precision oncology tests. Although other companies may offer viable alternative platforms, we have invested significant capital, time and expertise to procure Phillips, Illumina, and Hamilton machines and to optimize their use in our tests.
We rely on third parties, such as contract research organizations, medical institutions and clinical investigators to conduct studies of our technologies that may be required by the FDA or other U.S. or foreign regulatory bodies. Our reliance on these third parties will not relieve us of our requirement to prepare, and ensure our compliance with, various procedures required under good clinical practices, even though third-party contract research organizations may prepare and comply with their own, comparable procedures. If these third parties do not successfully carry out their contractual duties or regulatory obligations or meet expected deadlines, our studies may be extended, delayed, suspended or terminated, the study data may be invalidated, and we may not be able to obtain a required regulatory approval.
We rely on certain software provided by Epic Systems Corporation (“Epic”), to manage or support a variety of critical business processes and activities (such as receiving and fulfilling orders, billing, collecting and making payments, shipping products, providing services and support to customers and fulfilling contractual obligations). Implementing new software to replace Epic would not only be costly, complex and difficult, but could negatively affect financial accounting and reporting processes, and disrupt external commercial activities such as order receipt and product delivery.
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We have engaged third party vendors to provide services with respect to a variety of business processes. Failure by these third parties to meet their contractual, regulatory and other obligations to us, or our failure to adequately monitor their performance, could result in our inability to achieve the expected cost savings or efficiencies and could result in additional costs to correct errors made by such service providers. Moreover, we have diminished control over the quality and timeliness of the outsourced services, including the cybersecurity protections implemented by these third parties.
The loss of a critical supplier or other vendor, the failure to perform by any such party, the deterioration of our relationship with any such party or any unfavorable modification to the contractual terms under which we are supplied certain supplies or services could have a disruptive effect on our business, and could adversely affect our results of operations for an extended period of time, particularly if we are required to validate an alternative vendor.
Cyberattacks, security breaches, loss of data, and other disruptions in relation to our information technology systems, as well as those of our third-parties with whom we have business relationships, could compromise sensitive information related to our business, prevent us from accessing it and expose us to substantial liability, which could adversely affect our business and reputation.
In the ordinary course of our business, we collect and store sensitive data, including personal information, credit card and other financial information, intellectual property and proprietary business information owned or controlled by us or other parties such as customers and payers. We also communicate sensitive data, including patient data, through phone, Internet, facsimile, multiple third-party vendors and their subcontractors. We depend on information technology (“IT”) systems for significant elements of our operations, including our laboratory information management system and our ExactNexus® technology platform. Our IT systems support a variety of functions, including laboratory operations, test validation, sample tracking, quality control, customer service support, billing and reimbursement, research and development activities, scientific and medical curation and general administrative activities. We face a number of risks related to protecting this critical information, including loss of access, inappropriate use or disclosure, unauthorized access, inappropriate modification and our being unable to adequately monitor, audit or modify our controls over such critical information. This risk extends to the third-party vendors and subcontractors we use to manage this sensitive data or otherwise process it on our behalf as well as other third parties we share information with like hospitals and health systems.
IT systems are vulnerable to damage from a variety of sources, including telecommunications or network failures, malicious human acts from criminal hackers, hacktivists, state-sponsored intrusions, industrial espionage and employee malfeasance, breaches due to employee error and natural disasters. Cyberattacks are becoming more sophisticated and frequent, and in some cases have caused significant harm at other companies. While we devote significant resources to protect the security of our IT systems, including the personal data and other information that we receive and store, there can be no assurance that any security measures will be effective against current or future security threats. We have experienced and expect to continue to experience attempted cyberattacks of our IT systems and networks. To date, none of these attempted cyberattacks has had a material effect on our operations or financial condition. However, any such breach or interruption could compromise our networks and the information stored therein could be accessed by unauthorized parties, publicly disclosed, lost or stolen. Despite the precautionary measures we have taken to prevent unanticipated problems that could affect our IT systems, unauthorized access, loss or disclosure could also disrupt our operations, including our ability to:
•process tests, provide test results, bill payers or patients;
•process claims and appeals;
•provide customer assistance services;
•conduct research and development activities;
•collect, process and prepare company financial information;
•provide information about our tests and other patient and healthcare provider education and outreach efforts through our website; and
•manage the administrative aspects of our business.
Any such access, disclosure or other loss of information could result in legal claims or proceedings, liability under laws that protect the privacy of personal information, such as the Health Insurance Portability and Accountability Act of 1996, similar U.S. state data protection regulations, the GDPR, and other regulations, the breach of which could result in significant penalties and damage to our reputation. In addition, disruptions to our business occurring as a result of system updates and enhancements, such as our efforts to move our precision oncology tests to our technology and services platform, could have a material adverse effect on our financial condition and operating results. There can be no assurance that our process of improving existing systems, developing new systems to support our expanding operations, protecting confidential patient
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information, and improving service levels will not be delayed or will not give rise to additional systems issues in the future. Although we carry insurance for this purpose, failure to adequately protect and maintain the integrity of our information systems and data, including as a result of a security breach, may result in significant losses that exceed our insurance coverage limits and have a material adverse effect on our financial position, results of operations, and cash flows.
We rely on courier delivery services to transport Cologuard collection kits to patients and samples for all of our tests back to laboratory facilities for analysis. If these delivery services are disrupted or become significantly more expensive, customer satisfaction and our business could be negatively impacted.
In most cases, we ship Cologuard collection kits to patients, and patients ship samples to our Madison, Wisconsin laboratory facilities for analysis by air and ground express courier delivery service. Additionally, medical providers typically ship samples for Oncotype DX testing to our laboratory facilities via air and ground express courier delivery service. Disruptions in delivery service, whether due to bad weather, natural disaster, labor disruptions, terrorist acts or threats, or for other reasons, can adversely affect customer satisfaction, specimen quality, and our ability to provide our services on a timely basis. If the courier delivery services that transport Cologuard collection kits or other test samples institute significant price increases, our profitability would be negatively affected and we may need to identify alternative delivery methods, if possible, modify our service model, or attempt to raise our pricing, which may not be possible with regard to tests covered by Medicare or commercially practicable with regard to tests covered by commercial payers.
The success of our business substantially depends on the efforts of our senior management team and our qualified personnel.
Our success depends largely on the skills, experience, and performance of our senior management team, and of the highly skilled personnel supporting our research and development programs, commercial laboratory operations, sales efforts, and information technology infrastructure. The loss of the service of any member of our senior management could significantly delay or prevent the achievement of our corporate strategies and initiatives, or adversely impact our ability to develop key relationships and commercialize our products and services. Also, facilitating seamless leadership transitions for key positions is a critical factor in sustaining the success of our organization. If our succession planning efforts are not effective, it could adversely impact our business. We face intense competition with other life science and technology businesses for certain highly technical or scientific personnel and experienced salespeople. We also compete with universities and public and private research institutions for highly qualified scientific personnel. In addition, as our sales efforts grow in size and complexity, we may not be able to successfully manage our dispersed or inside sales forces or our sales force may not be effective. Market competition for commercial, marketing, and medical affairs talent is significant, and we may not be able to hire or retain such talent, or acquire it through independent sales or other third-party organizations, on commercially reasonable terms, if at all.
Our business and reputation will suffer if we are unable to establish and comply with stringent quality standards to assure that the highest level of quality is observed in the performance of our tests.
Inherent risks are involved in providing and marketing our tests, including our Cologuard and Cologuard Plus tests and our precision oncology tests, and related services. Patients and healthcare providers rely on us to provide accurate clinical and diagnostic information that may be used to make critical healthcare decisions. As such, users of our tests may have a greater sensitivity to errors than users of some other types of products and services.
We must maintain top service standards and FDA-mandated and other quality controls. Past or future performance or accuracy defects, incomplete or improper process controls, excessively slow turnaround times, unanticipated uses of our tests or mishandling of samples or test results (whether by us, patients, healthcare providers, courier delivery services, or others) can lead to adverse outcomes for patients and interruptions to our services. These events could lead to voluntary or legally mandated safety alerts relating to our tests or our laboratory facilities and could result in the removal of our products and services from the market or the suspension of our laboratories' operations. Insufficient quality controls and any resulting negative outcomes could result in significant costs and litigation, as well as negative publicity that could reduce demand for our tests and payers’ willingness to cover our tests. Even if we maintain adequate controls and procedures, damaging and costly errors may occur.
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Our inability to manage growth could harm our business.
In connection with the commercialization of our tests, we have added, and expect to continue adding, personnel to certain areas of our business, including laboratory operations, quality assurance, and compliance. Our number of full-time employees has increased from 4,800 as of December 31, 2020 to 7,200 as of December 31, 2025. As we continue to build our commercialization, marketing, and sales efforts and expand research and development activities for current and new products and services, the scope and complexity of our operations is increasing significantly. In addition, our acquisitions have contributed to the increasing complexity of operations, requiring significant changes to our corporate operations as we integrate other companies and their personnel to our systems. This growth has also increased our operating expenses and capital requirements, and we expect that they will continue to increase. Our ability to manage our growth effectively requires us to expend funds to improve our operational, financial and management controls, reporting systems, and procedures. As we expand the commercialization of our current tests and move towards commercializing new tests, we will also need to effectively manage our growing manufacturing, laboratory operations, and sales and marketing needs. We are continuing to explore the need to add new facilities to support anticipated demand for our current and future tests. We face various risks in managing these expansion efforts, including financing, construction delays, budget management, quality control, design efficiency, and transition execution. If we are unable to manage our anticipated growth effectively, our business could be harmed.
We may engage in acquisitions or divestitures that are not successful and which could disrupt our business and reduce our financial resources and shareholder value.
We undertake acquisition activities from time to time. Certain risks may exist as a result of these and other acquisition activities, including, among others:
•potential unknown liabilities and unforeseen increased expenses, delays, or unfavorable conditions in connection with the integration of the acquired businesses into our business;
•diversion of management’s attention and company resources from our existing operations of our business;
•the issuance of dilutive securities, assumption or incurrence of additional debt obligations or expenses, or use of substantial portions of our cash in acquisitions;
•difficulties in successful integration of the operations and information technology systems of acquired businesses into our business;
•the potential loss of key employees, customers, and strategic partners of ours and of acquired businesses;
•the inability to realize the anticipated benefits of the acquisitions or do so within the anticipated timeframe;
•negative impacts on our near-term financial results after an acquisition or on our future financial results if we do not effectively manage our expanded operations; and
•the market price of our common stock may decline as a result of the acquisitions.
In the future, we may enter into transactions to acquire other businesses, products, services, or technologies, which may ultimately be unsuccessful. If we do identify suitable acquisition targets, we may not be able to make such acquisitions on favorable terms or at all. Any acquisitions we make may not strengthen our competitive position, and these transactions may be viewed negatively by investors, healthcare providers, patients, and others. We cannot predict the number, timing or size of future acquisitions or the effect that any such transactions might have on our operating results.
We may also pursue strategic divestitures that may prove distracting, unprofitable, or otherwise unsuccessful. A successful divestiture depends on various factors, including our ability to effectively transfer liabilities, contracts, facilities, and employees to the buyer, identify and separate the personnel, contracts, and assets, including intellectual property, to be divested from the portion of the business and assets that we wish to keep, and reduce fixed costs previously associated with the divested assets or business. In exiting a business, we may still retain liabilities associated with that business and other indemnification obligations. We may also need to provide transition services to the buyer for an extended period of time following the closing, which may cause us to incur unanticipated costs and distraction. With respect to any divestiture, we may encounter difficulty finding potential buyers or other divestiture options on favorable terms. We may agree to milestone or earnout-based consideration, the achievement of which will be outside our control, and which we may ultimately never receive. Any divestiture could affect our profitability as a result of the gains or losses on such sale of a business or service, the loss of the operating income resulting from such sale or the costs or liabilities that are not assumed by the acquirer (i.e., stranded costs) that may negatively impact profitability subsequent to any divestiture. We may also be required to recognize impairment charges as a result of a divestiture.
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We may not be successful in achieving expected operating efficiencies and sustaining or improving operating margins and may experience business disruptions associated with restructuring and transformation activities.
Portions of our business have been, and may in the future be, the subject of restructuring, optimization and cost reduction initiatives. For example, we recently announced our multi-year productivity plan. While we are undertaking these actions, as well as any future initiatives, with the goal of realizing potential efficiencies, we may not be successful in achieving efficiencies and cost reduction benefits we expect in full or at all. Further, such benefits might be realized later than expected, and the ongoing costs of implementing these measures might be greater than anticipated. If these measures are not successful or sustainable, we might undertake additional transformation and cost reduction efforts, which could result in future charges. Moreover, our ability to achieve our other business plans might be adversely affected, and we could experience business disruptions, if our restructuring and transformation efforts and our cost reduction activities prove ineffective.
International expansion of our business exposes us to business, regulatory, labor, political, operational, financial, liability, compliance, payment collection, and economic risks associated with doing business outside of the U.S.
While we do not offer our Cologuard and Cologuard Plus tests outside of the U.S., we currently commercialize or plan to commercialize our precision oncology tests through employees in Canada, Japan, and a number of European countries, as well as through exclusive distribution agreements. We have provided our Oncotype tests in approximately 120 countries. Our business strategy incorporates continued international expansion, which includes growing our direct sales and healthcare provider outreach and education capabilities outside of the U.S. and developing our relationships with payers and distributors in foreign markets. Doing business internationally involves a number of risks, including:
•difficulties in complying with multiple, conflicting, and changing laws, regulations, and policies, such as tax laws, trade policies, export and import restrictions, tariffs, employment laws, privacy and data protection laws, regulatory requirements and other governmental approvals, permits, and licenses, including the changing regulation in Europe with regard to medical device and in vitro diagnostic regulations;
•significant competition from local and regional product offerings and the fact that products designed for U.S. markets may not be preferred by foreign authorities, payers, medical providers, and patients;
•restrictions or prohibitions of transmitting personal data, including patient data, from foreign jurisdictions to our centralized laboratories in the U.S.;
•difficulties in staffing and managing foreign operations;
•difficulties in managing distributor relationships;
•complexities associated with managing multiple payer reimbursement regimes, public payers, or patient self-pay systems;
•logistics and regulations associated with shipping tissue samples, performing tests locally or complying with local regulations concerning the analysis of tissue, including infrastructure conditions and transportation delays;
•financial risks, such as longer payment cycles, difficulty collecting accounts receivable, lower margins resulting from smaller scale foreign operations, and exposure to foreign currency exchange rate fluctuations;
•regulatory and compliance risks that relate to maintaining accurate information and control over the activities of our sales force and distributors that may fall within the purview of the FCPA, its books and records provisions or its anti-bribery provisions, or similar anti-bribery or anti-corruption laws or regulations, such as the United Kingdom (“U.K.”) Anti-bribery Act and the U.K. Criminal Finances Act; and
•complexity of compliance with local standard contractual requirements to access public customers and payers.
Any of these factors could significantly harm our current international operations or future international expansion and, consequently, our financial condition and results of operations.
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Our business may be adversely affected by global macroeconomic conditions and volatility in the capital markets.
The growth of our business is, and will continue to be, affected by changes in the overall global economy. Various macroeconomic factors could adversely affect our business and the results of our operations and financial condition, including changes in inflation, high interest rates, foreign currency exchange rates, weakness in general economic conditions, and threatened or actual recessions, including those resulting from the current and future conditions in the global financial markets, shifting political landscapes, and budgeting constraints of governmental entities. Cost inflation, including increases in raw material prices, labor rates, transportation costs, and tariffs, may impact our profitability. Our ability to recover these cost increases through price increases is significantly limited by the process by which we are reimbursed for our products and services by government and private payers. In addition, disruptions in the U.S., Europe or other economies, including due to geopolitical conflict or uncertainty and changing international trade policies, could disrupt global markets, interrupt global supply chains, and have other potential inflationary or recessionary effects on the global economy.
The volatility of the capital markets could also affect the value of our investments and our ability to liquidate our investments in order to fund our operations. The high interest rate environment and reduced access to capital markets could also adversely affect the ability of our suppliers, distributors, licensors, collaborators, contract manufacturers, and other commercial partners to remain effective business partners or to remain in business. The loss of a critical business partner, or a failure to perform by a critical business partner, could have a disruptive effect on our business and could adversely affect our results of operations.
Public health crises, such as the COVID-19 pandemic, have had, and could in the future have, adverse effects on our business and financial results.
Pandemics or disease outbreaks, such as the COVID-19 pandemic, have created and may continue to create significant volatility, uncertainty and economic disruption in the markets in which we sell or plan to sell our current or future tests and in which we operate, and may negatively impact business and healthcare activity globally. For example, in response to the COVID-19 pandemic, governments around the world imposed measures designed to reduce the transmission of COVID-19, patients postponed visits to healthcare providers, certain healthcare providers temporarily closed their offices or restricted patient visits, healthcare provider employees became generally unavailable and there were disruptions in the operations of payers, suppliers, and other third parties that are necessary for our tests to be administered. The extent to which fear of exposure to or actual effects of COVID-19, new variants, disease outbreak, epidemic or a similar widespread health concern impacts our business will depend on future developments, which are highly uncertain and cannot be predicted with confidence, such as the speed and extent of geographic spread of the disease, the duration of the outbreak, travel restrictions, the efficacy of vaccination, and treatment; impact on the U.S. and international healthcare systems, the U.S. economy and worldwide economy; the timing, scope, and effectiveness of U.S. and international governmental response; and the impact on the health, well-being, and productivity of our employees; and short- and long-term changes in the behaviors of medical professionals and patients resulting from any such pandemic, outbreak, epidemic, or other health concern.
Ethical, legal, and social concerns related to the use of genetic information could reduce demand for our genetic tests.
Genetic testing has raised ethical, legal, and social issues regarding privacy rights and the appropriate uses of the resulting information. Governmental authorities could, for social or other purposes, limit or regulate the use of genetic information or genetic testing or prohibit testing for genetic predisposition to certain conditions, particularly for those that have no known cure. Similarly, these concerns may lead patients to refuse to use, or clinicians to be reluctant to order, genetic tests even if permissible. These and other ethical, legal, and social concerns may limit market acceptance of our genetic tests or reduce the potential markets for these tests, either of which could have an adverse effect on our business, financial condition or results of operations.
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Climate change, or legal or regulatory measures to address climate change or other corporate social responsibility and sustainability matters, could adversely affect our business, financial condition, and results of operations.
The effects of global climate change present risks to our business. Natural disasters, extreme weather, and other conditions caused by or related to climate change could adversely impact our supply chain, the courier delivery services we use, the availability and cost of raw materials and components, energy supply, water, transportation, or other inputs necessary for the operation of our business. Climate change and natural disasters could also impact behaviors of medical providers or patients or result in physical damage to our facilities as well as those of our suppliers, health care providers, and other business partners, all of which could negatively impact and disrupt our business and operations. Our facilities and our laboratory equipment would be costly to replace and could require substantial lead time to repair or replace. Although we believe we possess adequate insurance for the disruption of our business from causalities, such insurance may not be sufficient to cover all of our potential losses and may not continue to be available to us on acceptable terms, or at all.
New or additional legal or regulatory requirements may be enacted to reduce greenhouse gas emissions, mitigate the effects of climate change on the environment or address other corporate social responsibility and sustainability matters. Any such new or additional legal or regulatory requirements may increase the costs associated with, or disrupt, the development, manufacturing, and distribution of our tests or the performance of related services, which may adversely affect our business and financial results. In addition, any failure to adequately address stakeholder expectations with respect to corporate social responsibility and sustainability matters, including addressing climate change, may result in the loss of business, damage to our reputation, diluted market valuations, challenges in attracting and retaining talented employees and restrictions on certain aspects of our activities. Furthermore, our adoption of certain standards for our corporate social responsibility and sustainability efforts and related matters or mandated compliance to certain requirements could necessitate additional investments that could hinder our profitability.
The use of Artificial Intelligence presents new risks and challenges to our business.
Artificial Intelligence (“AI”) is increasingly being used across the global business landscape, including in the life sciences and healthcare industries. We have already employed certain AI technologies into our business to enhance our operations, products, technology, and services and expect our use of AI to increase as the technology rapidly evolves and improves. However, AI innovation presents risks and challenges that could impact our business. AI algorithms may be flawed. Datasets may be insufficient or contain biased information. Ineffective AI development and deployment practices by us or our commercial partners could result in violations of our confidentiality and privacy obligations or applicable laws and regulations, jeopardize our intellectual property rights, cause or contribute to unlawful discrimination, result in the misuse of personally identifiable information, including PHI, or give rise to significant cyber security risks, any of which could have a material adverse effect on our business, results of operations, and financial condition.
We may also face increased competition from other companies that are employing AI and related technologies, some of whom may develop more effective methods than we and any of our commercial partners have, which could have a material adverse effect on our business, results of operations, or financial condition. In addition, uncertainties regarding developing legal and regulatory requirements and standards may require significant resources to modify and maintain business practices to comply with U.S. and foreign laws concerning the use of AI and related technologies, the nature of which cannot be determined at this time.
We may be a party to litigation in the normal course of business or otherwise, which could affect our business and financial position.
From time to time, we are a party to or otherwise involved in legal proceedings, claims and government investigations, and other legal matters, both inside and outside the U.S., arising in the ordinary course of our business or otherwise. We are currently involved in various legal proceedings and claims that have not yet been fully resolved, and additional claims may arise in the future. Legal proceedings in which we are currently involved include those proceedings described in Note 14 of the Notes to Consolidated Financial Statements.
Additionally, the distribution, sale, use, and results of our tests could lead to liability claims. Legal proceedings can be complex and take many months, or even years, to reach resolution, with the final outcome depending on a number of variables, some of which are not within our control. From time to time, we may also be compelled to protect our business interests through the initiation of litigation against others. Litigation, whether offensive or defensive, is subject to significant uncertainty and may be expensive, time-consuming, and disruptive to our operations.
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Although we will vigorously defend and advocate for ourselves in such legal proceedings, their ultimate resolution and potential financial and other impacts on us are uncertain. For these and other reasons, we may choose to settle legal proceedings and claims, regardless of their actual merit. If a legal proceeding is resolved against us, it could result in significant compensatory damages, and in certain circumstances punitive or trebled damages, disgorgement of revenue or profits, remedial corporate measures or injunctive relief imposed on us. Even if litigation is resolved in our favor, costs and disruptions to the Company may have a negative impact on business. If our existing insurance does not cover the amount or types of damages awarded, or if other resolution or actions taken as a result of a legal proceeding were to restrain our ability to operate, our financial position, results of operations or cash flows could be materially adversely affected. Any claim brought against us, with or without merit, could increase our liability insurance rates or prevent us from securing insurance coverage in the future. In addition, legal proceedings, and any adverse resolution thereof, can result in adverse publicity and damage to our reputation, which could adversely impact our business.
The amounts we record for legal contingencies can result from a complex series of judgments about future events and uncertainties and can rely heavily on estimates and assumptions. While we have accrued for certain potential legal liabilities, there is no guarantee that additional costs will not be incurred beyond the amounts accrued.
Risks Relating to Governmental Regulation and Reimbursement
We face uncertainty related to healthcare reform, pricing, coverage, and reimbursement.
We must navigate complex and evolving healthcare regulations, which control how we conduct our business and how we are paid. Existing legislation, and possible future legal and regulatory changes, including potential repeal or modification of the ACA, could materially change the structure and finances of the health insurance system and the methodology for reimbursing medical services, drugs, and devices, including our current and future products and services. The ACA has also been the subject of various legal challenges and if the plaintiffs in any case challenging the ACA are ultimately successful insurance coverage for our tests could be materially and adversely affected. For example, in June 2024, the Fifth Circuit Court of Appeals in Braidwood Management v. Becerra affirmed a district court ruling that the ACA’s requirement that insurance cover certain preventive services without cost sharing is unconstitutional. However, in June 2025, the Supreme Court overruled the Fifth Circuit holding in Braidwood v. Becerra and affirmed the ACA’s requirement that insurance cover certain preventive services in its ruling now captioned as Kennedy v. Braidwood Management Inc. Future healthcare reforms, which may intend to reduce healthcare costs, may have the effect of discouraging third-party payers from covering certain kinds of medical products and services, particularly newly developed technologies, like those we have developed in the past or we may develop in the future. We cannot predict whether future healthcare reform initiatives will be implemented at the federal or state level or the effect any such future legislation or regulation will have on us. The taxes imposed by new legislation, cost reduction measures and the expansion or contraction in the government’s role in the U.S. healthcare industry may result in decreased profits to us, which may adversely affect our business, financial condition, and results of operations.
The Protecting Access to Medicare Act of 2014 (“PAMA”) presents significant uncertainty for future CMS reimbursement rates. Because Medicare currently covers a significant number of our patients, any reduction in the CMS reimbursement rate for our tests would negatively affect our revenues and our business prospects. Under PAMA, CMS reimbursement rates for clinical diagnostic laboratory tests are updated every three years or annually for clinical laboratory tests that are considered “advanced diagnostic laboratory tests.” There can be no assurance under PAMA that adequate CMS reimbursement rates will continue to be assigned to our tests.
Coverage of our Cologuard and Cologuard Plus tests and other screening or diagnostic products that we may develop may also depend, in whole or in part, on whether payers determine, or courts and/or legislative or regulatory authorities determine, coverage is required under applicable federal or state laws mandating coverage of certain cancer screening or diagnostic services. For example, while we believe the ACA requires most health insurers to cover our Cologuard and Cologuard Plus tests for most patients between the ages of 45 and 75 without patient cost-sharing, some health insurers have disagreed and determined not to cover our Cologuard and Cologuard Plus tests and others may take that position in the future. Further, states may decide to modify their laws, which may include repeal of those coverage mandates that we believe currently apply to our Cologuard and Cologuard Plus tests.
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Healthcare policy changes, including recently enacted legislation reforming the U.S. healthcare system could have an adverse effect on our business, financial condition, results of operations and prospects.
In the United States, there have been and continue to be a number of legislative and regulatory initiatives to contain healthcare costs. Federal and state lawmakers regularly propose and, at times, enact legislation that would result in significant changes to the U.S. healthcare system, some of which are intended to contain or reduce the costs of medical products and services, including our own products. For example, on July 4, 2025, the “One Big Beautiful Bill Act,” (“OBBBA”), was signed into law, and is expected to reduce the number of enrollments in Medicaid and ACA marketplace exchanges. Expiring ACA enhanced advanced premium tax credits may also contribute to a decline in enrollments. Future healthcare reforms and cost controls by payers and providers may affect our product sales revenue.
We expect additional state and federal healthcare policies and reform measures to be adopted in the future, due to federal legislative and regulatory changes, any of which could result in reduced demand for our products or additional pricing pressure and have a material adverse effect on our industry generally and on our customers. Additionally, reductions or turnover in government staff could delay, or change the outcome of, approvals, decisions, services or other government actions on which our business relies, and the substance of regulatory supervision may be influenced through the appointment of individuals to the regulatory authorities with jurisdiction over our products and operations. We cannot predict what other healthcare programs and regulations will ultimately be implemented at the federal or state level or whether any future legislation or regulation in the United States or staffing changes at government agencies may negatively affect our business, financial condition, results of operations and prospects. The continuing efforts of the government, insurance companies, managed care organizations and other payers of healthcare services to contain or reduce costs of healthcare may adversely affect our ability to set a price that we believe is fair for our products, our ability to generate revenue and achieve or maintain profitability and the availability of capital. Any changes of, or uncertainty with respect to, future coverage or reimbursement rates could affect demand for our products, which may prevent us from being able to generate additional revenue or attain profitability.
If payers, including managed care organizations, do not approve and maintain reimbursement for our tests at adequate reimbursement rates, our commercial success could be compromised.
Our commercial success depends, in large part, on the availability of reimbursement at adequate reimbursement rates for our current tests, including our flagship Cologuard and Oncotype tests and our products in development, from government insurance plans, managed care organizations and commercial insurance plans. Although we received positive coverage decisions and what we believe are adequate reimbursement rates from CMS for our Cologuard and Cologuard Plus tests, it is also critical that other third-party payers approve and maintain reimbursement for our Cologuard test at adequate reimbursement rates. We also have received positive coverage determinations for our Oncotype DX breast cancer test for N-, ER+ patients from most third-party payers, but have less favorable coverage for our other Oncotype tests. Additionally, successful commercialization of our newly developed products, including our Cologuard Plus test, our Oncodetect MRD test, and our Cancerguard MCED test, will also depend on our ability to obtain and maintain reimbursement from government insurance plans, managed care organizations, and commercial insurance plans at adequate reimbursement rates. Healthcare providers may be reluctant to prescribe, and patients may be reluctant to complete, our tests if they are not confident that patients will be reimbursed for our tests.
Third-party payers, both in the U.S. and internationally, are increasingly attempting to contain healthcare costs by limiting both coverage and the level of reimbursement for healthcare products and services. As a result, there is uncertainty surrounding the future level of reimbursement, if any, for our current tests and any new tests we may develop. Reimbursement by a third-party payer may depend on a number of factors, including a payer’s determination that tests using our technologies are sufficiently sensitive and specific; not experimental or investigational; approved or recommended by the major guideline organizations; subject to applicable federal or state coverage mandates; reliable, safe, and effective; medically necessary; appropriate for the specific patient; and cost-effective. Moreover, coverage determinations and reimbursement rates are subject to change, and we cannot guarantee that even if we initially achieve adequate coverage and reimbursement rates for our tests, they will continue to apply in the future or remain adequate as we face increases in operating costs, such as labor and supply costs that are subject to inflation, and government and commercial payers may cause us to accept lower prices.
Even where a third-party payer agrees to cover one of our tests, other factors may have a significant impact on the actual reimbursement we receive from that payer. For example, if we do not have a contract with a given payer, we may be deemed an “out-of-network” provider by that payer, which could result in the payer allocating a portion of the cost of the test to the patient, notwithstanding any applicable coverage mandate. We may be unsuccessful in our efforts to enter into, or maintain, a network contract with a given payer, and we expect that our network status with a given payer may change from time to time for a
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variety of reasons, many of which may be outside our control. To the extent one of our tests is out of network for a given payer, healthcare providers may be less likely to prescribe that test for their patients and their patients may be less likely to comply with those prescriptions that are written. Also, some payers may mandate prior authorization or other medical management practices that impose significant additional costs on us, may be difficult to comply with given our position as a laboratory that generally does not have direct access to patient medical records, may make healthcare providers less likely to prescribe our tests for their patients, and may make patients less likely to comply with healthcare provider orders for our tests, all or any of which may have an adverse effect on our revenues.
If we are unable to obtain or maintain reimbursement at adequate reimbursement rates for our Oncotype DX tests outside of the U.S., our ability to expand internationally will be compromised.
The majority of our international Oncotype DX breast and colon cancer test revenues come from payer reimbursement, including from public or government-controlled or regulated payers, payments from our distributors, and patient self-pay. Obtaining reimbursement from public payers outside of the U.S. generally involves complex requirements that we may be unable to satisfy.
Even if public or private reimbursement is obtained, it may be discontinued, cover competing tests, or the reimbursement may be limited to a subset of the eligible patient population or conditioned upon local performance of the tests or other requirements we may have difficulty satisfying.
Reimbursement levels outside of the U.S. may vary considerably from the domestic reimbursement amounts we receive. In addition, because we generally rely on distributors to obtain reimbursement for our tests in certain countries outside of the U.S., to the extent we do not have direct reimbursement arrangements with payers, we may not be able to retain reimbursement coverage in those countries if our agreement with a distributor is terminated or expires, if a distributor fails to pay us or if other events prevent payment.
Failure to comply with federal, state, and foreign laboratory licensing and related requirements could cause us to lose the ability to perform our tests, experience disruptions to our business, or become subject to administrative or judicial sanctions.
We are subject to CLIA, a federal law that regulates clinical laboratories that perform testing on specimens derived from humans for the purpose of providing information for the diagnosis, prevention or treatment of disease. CLIA regulations establish specific standards with respect to personnel qualifications, facility administration, proficiency testing, quality control, quality assurance and inspections. Any testing subject to CLIA regulation must be performed in a CLIA certified laboratory. CLIA certification is also required in order for us to be eligible to bill state and federal healthcare programs, as well as commercial payers, for our tests. In addition, some states, including California and New York, require that we hold licenses or permits to test samples from patients in those states, even if our laboratory facilities are not located in those states, and as a result we are also required to maintain standards related to those states’ licensure requirements to conduct testing in our laboratories.
Failure to comply with applicable clinical laboratory licensure requirements may result in a range of enforcement actions, including suspension, limitation or revocation of our CLIA certification and/or state licenses, imposition of a directed plan of action, on-site monitoring, civil monetary penalties, criminal sanctions, inability to receive reimbursement from Medicare, Medicaid, and commercial payers, as well as significant adverse publicity. Any sanction imposed under CLIA, its implementing regulations, or state or foreign laws or regulations governing clinical laboratory licensure or our failure to renew our CLIA certification, a state or foreign license or accreditation, could have a material adverse effect on our business, financial condition, and results of operations. Even if we were able to bring our laboratory back into compliance, we could incur significant expenses and potentially lose revenue in doing so.
We may also be subject to laboratory regulations in foreign jurisdictions as we seek to expand international utilization of our tests or as such jurisdictions adopt new licensure requirements, which may require review of our tests in order to offer them or may have other limitations such as restrictions on the transport of specimens necessary for us to perform our tests that may limit our ability to make our tests available outside of the U.S. Complying with licensure requirements in new jurisdictions may be expensive, time-consuming, and subject us to significant and unanticipated delays.
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Our products could be subject to recall.
Manufacturers of medical devices must comply with various regulatory requirements under the FDCA and regulations thereunder, including, but not limited to, quality system regulations, unless they are exempt, facility registration, product listing, labeling requirements, and certain post-market surveillance requirements. If we do not meet applicable regulatory or quality standards, our products may be subject to recall, and, under certain circumstances, we may be required to notify applicable regulatory authorities about a recall. Any such recalls could have an adverse effect on our ability to provide our tests, which in turn would adversely affect our financial condition.
Delays in receipt of, or failure to obtain, required FDA clearances or approvals for our products in development, or improvements to or expanded indications for our current offerings, could materially delay or prevent us from commercializing or otherwise adversely impact future product commercialization.
Unless otherwise exempted or subject to enforcement discretion, medical devices, which include screening and diagnostic tests, must receive either FDA regulatory approval or clearance before being marketed in the U.S. Our Cologuard and Cologuard Plus tests are regulated by the FDA as medical device and we may develop new tests that are deemed medical devices and require FDA clearance or approval. The FDA determines whether a medical device will require either regulatory approval or clearance based on statutory criteria that include the risk associated with the device and whether the device is similar to an existing, legally marketed product. The process to obtain either regulatory approval or clearance is costly, time-consuming, and uncertain. The regulatory approval process is generally more challenging than the clearance process. Even if we design a product that we expect to be eligible for the regulatory clearance process, the FDA may require that the product undergo the regulatory approval process. There can be no assurance that the FDA will ever permit us to market any new product that we develop. Even if regulatory approval or clearance is granted, such approval may include significant limitations on indicated uses, which could materially and adversely affect the prospects of any new medical device.
FDA regulatory approval or clearance is also required for certain enhancements we may make to our current tests or future FDA-approved or -cleared tests. FDA approval or clearance may also be required to make changes to the processes, equipment, reagents, and other consumables used in connection with a test. The FDA’s approval pathway can be time-consuming and costly and there can be no assurance that the FDA will ultimately approve any premarket approval submitted by us in a timely manner or at all.
In addition, the FDA’s ability to review and clear or approve new products or changes to existing products can be affected by a variety of factors, including government budget, funding, and staffing levels, changes in Presidential administration, statutory, regulatory, and policy changes, the FDA’s ability to hire and retain key personnel and accept the payment of user fees, and other events that may otherwise affect the FDA’s ability to perform routine functions. Average review times at the agency have fluctuated in recent years as a result. In addition, prolonged government shutdowns or global health concerns may prevent or delay the FDA or other regulatory authorities from conducting, at all or in a timely manner, their regular inspections, reviews, or other regulatory activities (including pre-submission engagements). Any such delay in the ability of the FDA or other regulatory authorities to timely review and process our regulatory submissions could have a material adverse effect on our business.
Delays in receipt of, or failure to obtain, clearances or approvals could materially delay or prevent us from commercializing our products or result in substantial additional costs that could decrease our profitability. In addition, even if we receive FDA clearance or approval for a new or enhanced product, the FDA may condition, withdraw, or materially modify its clearance or approval.
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Disruptions at the FDA and other government agencies and regulatory authorities caused by government shutdowns, policy changes, funding shortages, or key personnel disruptions could prevent new products and services from being reviewed or approved in a timely manner or at all, or otherwise prevent those agencies from performing normal governmental functions on which the operation of our business may rely, which could negatively impact our business, financial condition and results of operations.
Disruptions and leadership changes at the FDA, and resulting staff and policy changes may slow review or prevent approval of new products in the U.S., which may adversely affect our business, financial condition and results of operations. The ability and willingness of the FDA and other comparable foreign regulatory authorities to review and approve new products and services can be affected by a variety of factors, including government shutdowns, leadership, statutory, regulatory, and policy changes, government budget and funding levels, and key personnel disruptions. Average review times at regulatory authorities and government agencies have fluctuated in recent years as a result. Government funding of the FDA and other government agencies on which our operations may rely is subject to the political process, which is inherently fluid and unpredictable.
The U.S. federal government shut down on October 1, 2025, and in recent years has shut down several times. As a result, certain regulatory agencies, such as the FDA, have had to furlough critical employees and stop critical activities. If a prolonged government shutdown occurs in the future, it could significantly impact the ability of government agencies, including the FDA, to review and process our regulatory submissions, which could have a material adverse effect on our business.
There exists substantial uncertainty regarding the future regulation of the LDTs.
Our Oncotype, OncoExTra, Cancerguard, and Oncodetect tests and certain other tests we offer are marketed as LDTs, and we may seek to commercialize certain of our products in development as LDTs. LDTs are clinical laboratory tests that are developed and validated by a laboratory for its own use. The FDA historically has taken the position that it has the authority to regulate such tests as medical devices under the FDCA and has for the most part exercised enforcement discretion and has not required clearance, de novo classification, or approval of LDTs prior to marketing.
In May 2024, the FDA issued the LDT Rule which amended the FDA's regulations to make explicit that LDTs are devices under the FDCA. On March 31, 2025, the U.S. District Court in the Eastern District of Texas vacated the LDT rule, holding that LDTs are "services" and not subject to FDA regulation as “devices” under the FDCA.
The FDA did not appeal the District Court decision and withdrew the LDT Rule on September 19, 2025, reverting to the Agency’s historical enforcement discretion position. Nevertheless, the FDA may change its position with respect to its regulation of the LDTs we offer or may seek to offer in the future. This may include eliminating any pathway for LDTs to be submitted for FDA clearance or approval or by defining different requirements that the FDA views to be in line with the District Court decision, causing us to incur substantial costs and time delays associated with meeting new requirements for pre-market clearance or approval, or causing us to experience decreased demand for or reimbursement for our tests due to an inability to secure FDA clearance or approval. Congress may also enact new legislation to regulate laboratory services and the impact of any such legislation is uncertain.
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We are subject to numerous U.S. and foreign laws and governmental regulations, and any governmental enforcement action may materially affect our financial condition and business operations.
We are subject to regulation in the U.S. by both the federal government and the states in which we conduct our business, as well as in other jurisdictions outside of the U.S., including:
•Federal, state, and local laws regarding the use, storage, handling and disposal of medical and hazardous waste, as well as regulations relating to the safety and health of laboratory employees;
•the Federal Anti-Kickback Statute and state anti-kickback prohibitions and EKRA;
•the Federal Physician Self-Referral Law, commonly known as the Stark Law, and the state equivalents;
•the HIPAA, the CCPA, including expansions and amendments pursuant to the California Privacy Rights Act, and other state privacy laws;
•Federal, state, and local consumer protection laws governing communications and advertising, including the Telephone Consumer Protection Act (“TCPA”), the Controlling the Assault of Non-Solicited Pornography and Marketing Act (“CAN-SPAM Act”), and the Lanham Act;
•the Medicare civil money penalty and exclusion requirements;
•the Federal False Claims Act civil and criminal penalties and state equivalents; and
•the FCPA, the United Kingdom Anti-Bribery Act, the GDPR and other national or provincial laws protecting personal information, the E.U. Medical Device and In Vitro Diagnostic Device Regulations, and national laws restricting industry interaction with healthcare professionals, all of which may or will apply to our international activities.
We have adopted policies and procedures designed to comply with these laws. In the ordinary course of our business, we conduct internal reviews of our compliance with these laws. Our compliance is also subject to governmental review. The growth of our business and sales organization and our expansion outside of the U.S. may increase the potential of violating these laws or our internal policies and procedures. The risk of our being found in violation of these or other laws and regulations is further increased by the fact that many of them have not been fully interpreted by the regulatory authorities or the courts, and their provisions are open to a variety of interpretations.
The U.S. Attorney’s Offices have increased their scrutiny over the healthcare industry in recent years. The U.S. Congress, Department of Justice ("DOJ"), Office of Inspector General of the Department of Health and Human Services, and Department of Defense have all issued subpoenas and other requests for information to conduct investigations of, and commenced, civil and criminal litigation against healthcare companies related to financial arrangements with healthcare providers, regulatory compliance, product promotional practices, and documentation, coding, and billing practices. In addition, the Federal False Claims Act and state equivalents have led to whistleblowers filing numerous qui tam civil lawsuits against healthcare companies, in part, because a whistleblower can receive a portion of any amount obtained by the government through such a lawsuit.
Governmental enforcement action or qui tam civil litigation against us may result in material costs and occupy significant management resources, even if we ultimately prevail. In addition, qui tam litigation or governmental enforcement action may result in substantial damages (including treble damages), fines, civil and criminal penalties, payment of attorney's fees, or administrative remedies, including exclusion from government reimbursement programs and entry into corporate integrity agreements with governmental agencies, which could entail significant obligations and costs. As described further in Note 14 of the Notes to Consolidated Financial Statements, in September 2023, we entered into settlement agreements with the United States, acting through the U.S. DOJ, with respect to (1) a civil investigative demand initiated by the U.S. DOJ concerning Genomic Health, Inc.’s (“Genomic Health”) compliance with the Medicare Laboratory Date of Service billing regulations prior to our acquisition of Genomic Health in 2019 and (2) a qui tam lawsuit alleging violations of the Federal Anti-Kickback Statute and False Claims Act for offering gift cards to patients in exchange for returning the Cologuard screening test, for which Niles Rosen M.D., the petitioner in the qui tam lawsuit, was also a party to the settlement agreement. The settlement agreement between Genomic Health and the U.S. DOJ required us to pay $32.5 million, which was paid in September 2023 and the settlement agreement with the U.S. DOJ and Dr. Rosen required us to pay $13.8 million plus legal fees, which was paid in October 2023. Any such actions or litigation in the future could result in adverse penalties or outcomes that could materially and adversely affect our business, financial condition, and results of operations.
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Our business is subject to various complex laws and regulations applicable to providers of clinical diagnostic products and services.
As a provider of clinical diagnostic products and services, we and our partners are subject to extensive and frequently changing federal, state, local, and foreign laws and regulations governing various aspects of our business. In particular, the clinical laboratory and healthcare industry is subject to significant governmental certification and licensing regulations, as well as federal, state, and foreign laws regarding:
•test ordering and billing practices;
•marketing, sales, and pricing practices;
•health information privacy and security, including HIPAA and comparable state and foreign laws;
•insurance, including foreign public reimbursement;
•anti-markup legislation; and
•consumer protection.
We are also required to comply with FDA regulations, including with respect to our labeling and promotion activities. In addition, advertising of our tests is subject to regulation by the Federal Trade Commission ("FTC") and advertising of laboratory services is regulated by certain state laws. Violation of any FDA requirement could result in enforcement actions, such as seizures, injunctions, civil penalties and criminal prosecutions, and violation of any FTC or state law requirement could result in injunctions and other associated remedies, all of which could have a material adverse effect on our business. Most states also have similar regulatory and enforcement authority for medical devices. Additionally, most foreign countries have authorities comparable to the FDA and processes for obtaining marketing approvals. In particular, the entry into application of the E.U.'s In Vitro Diagnostic Device Regulation will impose new requirements and create new compliance risks. Obtaining and maintaining these approvals, and complying with all laws and regulations, may subject us to similar risks and delays as those we could experience under FDA, FTC, and state regulation. We incur various costs in complying and overseeing compliance with these laws and regulations. The growth of our business and sales organization, the acquisition of additional businesses or products and services and our expansion outside of the U.S. may increase the potential of violating these laws, regulations or our internal policies and procedures.
Healthcare policy has been a subject of extensive discussion in the executive and legislative branches of the federal and many state governments, and healthcare laws and regulations are subject to change. Development of the existing commercialization strategy for our tests and planned development of products in our pipeline has been based on existing healthcare policies. We cannot predict what additional changes, if any, will be proposed or adopted or the effect that such proposals or adoption may have on our business, financial condition, and results of operations.
If we, or our partners, fail to comply with these laws and regulations, we could incur significant fines and penalties and our reputation and prospects could suffer. Additionally, any such partners could be forced to cease offering our products and services in certain jurisdictions, which could materially disrupt our business.
Due to billing complexities in the diagnostic and laboratory service industry, we may have difficulties receiving timely payment for the tests we perform, and may face write-offs, disputes with payers and patients, and long collection cycles.
Billing for diagnostic and laboratory services is a complex process. We bill many different payers including patients, private insurance companies, Medicare, Medicaid, and employer groups, all of which have different billing requirements.
We are continuing to work with third-party payers to cover and reimburse our tests. If we are unsuccessful, we may not receive payment for the tests we perform for patients on a timely basis, if at all, and we may not be able to provide services for patients with certain healthcare plans. We may face patient dissatisfaction, complaints or lawsuits, including to the extent our tests are not fully covered by insurers and patients become responsible for all or part of the price of the test. As a result, patient demand for our tests could be adversely affected. To the extent patients express dissatisfaction with our billing practices to their healthcare providers, those healthcare providers may be less likely to prescribe our tests for other patients, and our business would be adversely affected.
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Even if payers agree to cover our tests, our billing and collections process may be complicated by the following and other factors, which may be beyond our control:
•complex and disparate reimbursement rules and requirements;
•disputes among payers as to which payer is responsible for payment;
•disparity in coverage among various payers or among various healthcare plans offered by a single payer;
•payer medical management requirements, including prior authorization requirements;
•differing information and billing requirements among payers;
•failure by patients or healthcare providers to provide complete and correct billing information; and
•limitations and requirement for patient billing, including those related to deductibles, co-payments, and co-insurance originating from contracts with commercial payers.
For example, pursuant to certain CMS rules (the “Medicare Laboratory Date of Service billing regulation”), subject to certain exceptions issued by CMS, we cannot bill Medicare directly for some tests provided for Medicare beneficiaries in some situations involving certain hospital patients and instead must bill hospitals for such tests. In these circumstances, only the hospital may bill Medicare for such tests. These billing rules may lead to confusion regarding whether Medicare provides adequate reimbursement for our tests, and could discourage providers from ordering our tests for Medicare patients or even non-Medicare patients. In addition, changes in Medicare billing rules and processes could result in delays in receiving payments or receiving payments that are less than the original invoice. When hospitals disclaim responsibility for or delay payment of our bills for tests affected by the Medicare Laboratory Date of Service billing regulation, and when our collection efforts are unsuccessful, we may be forced to accept payments from hospitals that are less than the original invoice or we may be unable to collect from hospitals at all despite diligent efforts.
Similarly, when we have a contract with a commercial payer to cover our tests, we are not permitted to bill patients insured by that payer for amounts beyond deductibles, co-payments, and co-insurance as prescribed in the coverage agreement between the payer and the patients. Therefore, when such contracted payers do not pay us our full, contracted rate for a test, for example, for failure to satisfy prior-authorization or other payer medical management requirements, we may not be permitted to collect the balance from the patient and our business is adversely impacted.
In the past, failures to submit claims to insurers timely have required us to record downward adjustments to our revenue. Despite efforts to improve our billing systems and prevent recurrences of these failures, future failures to timely submit claims could result in further downward adjustments to revenue.
As a result of the above, we may face write-offs of doubtful accounts, disputes with payers and patients, and long collection cycles.
We also may face lawsuits by government or commercial payers if they believe they have overpaid us for our test services or as a result of other circumstances. For example, as described in Note 14 of the Notes to Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K, in September 2023, Genomic Health, entered into a settlement agreement with the United States, acting through the U.S. DOJ, to resolve a civil investigation concerning Genomic Health’s compliance with the Medicare Date of Service billing regulation prior to our acquisition of Genomic Health in 2019. This settlement agreement required us to pay $32.5 million, which was paid in October, 2023.
Some of our activities may subject us to risks under federal and state laws prohibiting “kickbacks” and false or fraudulent claims.
In addition to FDA marketing and promotion restrictions, several other types of state and federal healthcare fraud and abuse laws have been applied in recent years to restrict certain marketing practices in the healthcare product and service industry and to regulate billing practices and financial relationships with healthcare providers, hospitals, and other healthcare providers. These laws include a federal law commonly known as the Medicare/Medicaid anti-kickback law, and several similar state laws, which prohibit payments intended to induce healthcare providers or others either to refer patients or to acquire or arrange for or recommend the acquisition of healthcare products or services. While the federal law applies only to referrals, products or services for which payment may be made by a federal healthcare program, state laws often apply regardless of whether federal funds may be involved. These laws constrain the sales, marketing, and other promotional activities of manufacturers of medical devices and providers of laboratory services by limiting the kinds of financial arrangements, including sales programs, that may be used with hospitals, healthcare providers, laboratories, and other potential purchasers or prescribers of medical devices and laboratory services. In addition, the Eliminating Kickbacks in Recovery Act of 2018
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imposes criminal penalties for knowing or willful payment or offer, or solicitation or receipt, of any remuneration, whether directly or indirectly, overtly or covertly, in cash or in kind, in exchange for the referral or inducement of laboratory testing (among other healthcare services) unless a specific exception applies. Although it appears that EKRA was intended to reach patient brokering and similar arrangements to induce patronage of substance use recovery and treatment, the language in EKRA is broadly written and can apply to laboratory services covered under public or private payer arrangements. EKRA permits the DOJ to issue regulations clarifying EKRA’s exceptions or adding additional exceptions, but it has not done so. As a result, there is no agency guidance and limited court precedent to indicate how, and to what extent, it will be applied and enforced. We cannot assure you that our relationships with healthcare providers, sales representatives, hospitals, customers, or any other party will not be subject to scrutiny or will survive regulatory challenge under EKRA. Other federal and state laws generally prohibit individuals or entities from knowingly presenting, or causing to be presented, claims for payment from Medicare, Medicaid, or other third-party payers that are false or fraudulent, or are for items or services that were not provided as claimed.
Additionally, to avoid liability under federal false claims laws, we must carefully and accurately code claims for reimbursement, proactively monitor the accuracy and appropriateness of Medicare claims and payments received, diligently investigate any credible information indicating that we may have received an overpayment, and promptly return any overpayments. Medicare payments are subject to audit, including through the Comprehensive Error Rate Testing (“CERT”) program, and payments may be recouped by CMS if it is determined that they were improperly made. Currently, a significant percentage of our revenues are generated by payments from Medicare. The federal anti-kickback statute and certain false claims laws prescribe civil and criminal penalties (including fines) for noncompliance that can be substantial. While we continually strive to comply with these complex requirements, interpretations of the applicability of these laws to marketing and billing practices are constantly evolving and even an unsuccessful challenge could cause adverse publicity and be costly to respond to, and thus could harm our business and prospects. Our failure to comply with applicable laws could result in various adverse consequences that could have a material adverse effect upon our business, including the exclusion of our products and services from government programs and the imposition of civil or criminal sanctions.
Some of our activities may subject us to risks under the Foreign Corrupt Practices Act and similar anti-bribery laws in non-U.S. jurisdictions.
Many countries in which we or our distributors offer our tests have regulations prohibiting providers, as well as medical and in vitro diagnostic device manufacturers, from offering or providing a benefit to a healthcare professional in order to induce business. In situations involving healthcare providers employed by public or state-funded institutions or national healthcare services, violation of local anti-corruption or anti-gift laws may also constitute a violation of the FCPA.
The FCPA prohibits any U.S. individual, business entity or employee of a U.S. business entity from offering or providing, directly or through a third party, including the distributors we rely on in certain markets, anything of value to a foreign government official with corrupt intent to influence an award or continuation of business or to gain an unfair advantage, whether or not such conduct violates local laws. We are also required to maintain accurate information and control over sales and distributors’ activities that may fall within the purview of the FCPA, its books and records provisions and its anti-bribery provisions. Other countries, including the U.K. and other Organisation for Economic Co-operation and Development (“OECD”) Anti-Bribery Convention members, have similar extraterritorial anti-corruption laws.
While there currently exists uncertainty regarding future enforcement of the FCPA, any violation of these laws, or allegations of such violations, by us or any of our commercial partners could disrupt our operations, involve significant management distraction, cause us to incur significant costs and expenses, including legal fees, and result in a material adverse effect on our business. We could also suffer severe penalties, including criminal and civil penalties, debarment from public procurement, disgorgement and other remedial measures.
Failure to comply with privacy, security, and consumer protection laws and regulations could result in fines, penalties, and damage to our reputation and have a material adverse effect on our business.
We are subject to a number of foreign, federal, and state laws and regulations protecting the use, disclosure, and confidentiality of certain patient health and personal information, including patient records, and restricting the use and disclosure of that protected information, including state breach notification laws, the Health Insurance Portability and Accountability Act, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, the European Union’s General Data Protection Regulation, the U.K. Data Protection Act and the U.K. GDPR, and the California Consumer Privacy Act, among others.
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HIPAA extensively regulates the use and disclosure of individually identifiable health information, known as “protected health information,” and require covered entities, including health plans and most health care providers, to implement administrative, physical and technical safeguards to protect the security of such information. Covered entities must report breaches of unsecured protected health information to affected individuals without unreasonable delay and notification must also be made to the U.S. Department of Health & Human Services, Office for Civil Rights (the “OCR”) and, in certain situations involving large breaches, to the media. Various U.S. state laws and regulations may also require us to notify affected individuals and state agencies in the event of a data breach involving individually identifiable information.
Violations of the HIPAA privacy and security regulations may result in criminal and civil penalties. The OCR enforces the regulations and performs compliance audits. In addition to enforcement by OCR, state attorneys general are authorized to bring civil actions seeking either injunction or damages in response to violations that threaten the privacy of state residents. We follow and maintain a HIPAA compliance program, which we believe complies with the HIPAA privacy and security regulations, but there can be no assurance that OCR or other regulators will agree. The HIPAA privacy regulations and security regulations have and will continue to impose significant costs on us in order to comply with these standards.
We also remain subject to state privacy-related laws, such as the CCPA, that are more restrictive than the privacy regulations issued under HIPAA. These laws vary and could impose additional penalties.
We utilize our patient adherence program to communicate with patients who are existing or potential users of our products and services for various business purposes. These activities could subject us to laws, rules and regulations relating to communications with consumers, such as the CAN-SPAM Act and the TCPA. Despite our compliance efforts, we could face allegations that we have violated these laws, rules, and regulations as we have in the past. Even if such allegations are without merit, we could face liability and harm to our reputation.
We are also subject to laws and regulations in foreign countries covering data privacy and other protection of health and employee information that may be more onerous than corresponding U.S. laws, including in particular the laws of Europe.
For instance, the GDPR applies across the European Union and includes, among other things, a requirement for prompt notice of data breaches to data subjects and supervisory authorities in certain circumstances and significant fines for non-compliance. The GDPR also requires companies processing personal data of individuals residing in the European Union to comply with EU privacy and data protection rules, even if we do not have a physical presence in the European Union. Noncompliance could result in the imposition of fines, penalties, or orders to stop noncompliant activities.
These laws and regulations, in addition to similar laws and regulations being enacted by other states and counties, impose stringent cybersecurity standards and potentially significant non-compliance penalties, involve the expenditure of significant resources, the investment of significant resources, and the investment of significant time and effort to comply. As these laws and regulations continue develop in the United States and internationally, we may be required to expend significant time and resources in order to update existing processes or implement additional mechanisms as necessary to ensure compliance with such cybersecurity laws.
Our employees, independent contractors, consultants, commercial partners, and vendors may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements.
We are exposed to the risk of fraud, misconduct, or other illegal activity by our employees, independent contractors, consultants, commercial partners, and vendors. Misconduct by these parties could include intentional, reckless, and negligent conduct that fails to comply with the rules and regulations of the CMS, FDA, and other comparable foreign regulatory authorities; provide true, complete and accurate information to such regulatory authorities; comply with manufacturing and clinical laboratory standards; comply with healthcare fraud and abuse laws in the U.S. and similar foreign laws; or report financial information or data accurately or to disclose unauthorized activities to us. In particular, research, sales, marketing, education, and other business arrangements in the healthcare industry are subject to extensive laws designed to prevent fraud, kickbacks, self-dealing, bribery, and other abusive practices, as well as off-label product promotion. These laws and regulations may restrict or prohibit a wide range of pricing, discounting, educating, marketing and promotion, sales and commission, certain customer incentive programs, and other business arrangements generally. Activities subject to these laws also involve the improper use of information obtained in the course of participant recruitment for clinical studies, which could result in regulatory sanctions and cause serious harm to our reputation. We maintain a global compliance program, including a code of business conduct and ethics and processes and systems for reporting, reviewing, and remediating allegations of potential non-compliance or other misconduct, but it is not always possible to identify and deter misconduct by employees and third parties,
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and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws. If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business, including the imposition of significant fines or other sanctions. Even if it is later determined after an action is instituted against us that we were not in violation of these laws, we may be faced with negative publicity, incur significant expenses defending our actions, and have to divert significant management resources from other matters.
Changes in tax laws or regulations or exposure to tax liabilities could adversely affect our financial condition and results of operations.
We are subject to tax in multiple U.S. tax jurisdictions and in foreign tax jurisdictions as we continue to expand internationally. As we grow, the development of our tax strategies requires additional expertise and may impact how we conduct our business. Our future effective tax rates could be unfavorably affected by changes in, or interpretations of, tax rules and regulations in the jurisdictions in which we do business or by changes in the valuation of our deferred tax assets and liabilities. Furthermore, we provide for certain tax liabilities that involve significant judgment. We are subject to the examination of our tax returns by federal, state, and foreign tax authorities, which could focus on our intercompany transfer pricing methodology as well as other matters. If our tax strategies are ineffective or we are not in compliance with domestic and international tax laws, our financial position, operating results, and cash flows could be adversely affected.
Risks Relating to Product Development, Commercialization, and Sales of our Products
The success of the screening and diagnostic products and services we currently offer or may offer in the future will depend on the degree of market acceptance by healthcare providers, patients, healthcare payers, and others in the medical community.
Our products and services may not gain market acceptance by healthcare providers, healthcare payers, and others in the medical community. The degree of market acceptance of our Cologuard test, Cologuard Plus test, Cancerguard test, our precision oncology tests, and other products and services that we offer will depend on a number of factors, including:
•demonstrated performance and utility;
•price;
•the availability and attractiveness of alternative tests;
•inclusion in healthcare guidelines and recommendations and quality measures;
•effective marketing and educational programs;
•recommendations and studies that may be published by government agencies, companies, professional organizations, academic or medical journals or other key opinion leaders;
•the willingness of healthcare providers to prescribe our products and services;
•the ease of use of our ordering process for healthcare providers; and
•adequate third-party coverage or reimbursement.
Uncertainty in the development and commercialization of our new tests or services could materially adversely affect our business, financial condition and results of operations.
Our success will depend in part on our ability to effectively introduce and increase market adoption of new offerings. The development and launch of new tests requires the completion of certain clinical development and commercialization activities that are complex, costly, time-intensive and uncertain, and requires us to accurately anticipate the preferences and needs of patients, clinicians, payers, and other counterparties, as well as emerging technology and industry trends. This process is conducted in various stages, and each stage presents the risk that we will not achieve our goals. We may not be successful in our current or future efforts to develop and commercialize tests in industries that are newer to us. Moreover, we have limited experience forecasting our future financial performance from our new products in these industries that are newer to us, and our actual results may fall below our financial guidance or other projections, or the expectations of analysts or investors, which could cause the price of our common stock to decline.
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We may experience research and development, regulatory, marketing, and other difficulties that could delay or prevent our introduction of enhanced or new tests and result in increased costs and the diversion of management’s attention and resources from other business matters, such as from our existing product offerings. For example, any tests that we may enhance or develop may not prove to be clinically effective in clinical trials or commercially, or may not ultimately meet our desired target product profile, be offered at acceptable cost and with the sensitivity, specificity, and other test performance metrics necessary to address the relevant clinical need or commercial opportunity; our test performance in commercial experience may be inconsistent with our validation or other clinical data; we may not be successful in achieving market awareness and demand, whether through our own sales and marketing operations or through collaborative arrangements; healthcare providers may not order or use, or third-party payers may not reimburse for, any tests that we may enhance or develop; or we may otherwise have to abandon a test or service in which we have invested substantial resources. We cannot assure you that we can successfully complete the clinical development of any new or enhanced product, or that we can establish or maintain the collaborative relationships that may be essential to our clinical development and commercialization efforts.
Clinical development requires large numbers of patient specimens and, for certain products, requires large, prospective clinical trials. We may not be able to enroll patients or collect a sufficient number of appropriate specimens in a timely manner; or we may experience delays during clinical development due to slower than anticipated enrollment or due to changes in study design or other unforeseen circumstances; or we may be unable to afford or manage the large-sized clinical trials that some of our planned future products may require.
The publication of clinical data in peer-reviewed journals is a crucial step in commercializing and obtaining reimbursement for tests like ours, and our inability to control when, if ever, results are published may delay or limit our ability to derive sufficient revenues from any test that is the subject of a study. Peer-reviewed publications regarding our tests may be limited by many factors, including delays in the completion of, poor design of, or lack of compelling data from, clinical studies, as well as delays in the review, acceptance, and publication process. If our tests or the technology underlying our current or future tests do not receive sufficient favorable exposure in peer-reviewed publications, the rate of clinician adoption of our tests and positive reimbursement coverage determinations for our tests could be negatively affected.
In addition, development of the data necessary to obtain regulatory clearance and approval of a test is time-consuming, requires us to incur significant costs, and carries with it the risk of not yielding the desired results. The performance achieved in published studies may not be repeated in later studies that may be required to obtain FDA premarket clearance or approval or regulatory approvals in foreign jurisdictions. Limited results from earlier-stage verification studies may not predict results from studies in larger numbers of subjects drawn from more diverse populations over longer periods of time. Unfavorable results from ongoing preclinical and clinical studies may delay, limit or prevent regulatory approvals or clearances or commercialization of our product candidates, or could result in delays, modifications or abandonment of ongoing analytical or future clinical studies, or abandonment of a product development program, any of which could have a material adverse effect on our business, operating results or financial condition. These and other factors beyond our control could result in delays or other difficulties in the research and development, approval, production, launch, ongoing commercialization, or distribution of enhanced or new tests and could adversely affect our competitive position and results of operations.
If we do not successfully manage the launch and marketing of new products or services, our financial results could be adversely affected.
We face risks associated with launching new products and pre-announcing products and services when the products or services have not been fully developed or tested. In addition, we may experience difficulty in managing or forecasting customer reactions, purchasing decisions, transition requirements, or programs with respect to newly-launched products (or products in development). If our products and services are not able to deliver the performance or results expected by our target markets or are not delivered on a timely basis, our reputation and credibility may suffer. If we encounter development challenges or discover errors in our products late in our development cycle, we may delay the product launch date. The expenses or losses associated with unsuccessful product development or launch activities, or a lack of market acceptance of our new products, could adversely affect our business, financial condition, or results of operations.
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In 2025, we launched new screening and diagnostic tests including Cologuard Plus test, our Oncodetect MRD test for patients with colorectal cancer, and our Cancerguard MCED test and expect to continue to launch new products in future years. The expenses associated with these launch activities were and any future launches are expected to be significant. Successful launches of these tests will involve a number of critical items including securing adequate reimbursement from both government and private payers, and developing effective marketing and sales programs. The knowledge and experience we gained commercializing our Cologuard and precision oncology tests may not translate into successful commercialization efforts with respect these or other new products.
Although our Cologuard Plus test has demonstrated superior performance to our Cologuard test, it will nevertheless require significant effort on our part and take time to transition. These transition efforts include processing both the Cologuard and Cologuard Plus tests in our facilities and updating our information technology platforms. In November 2024 our Cologuard Plus test, received reimbursement coverage from Medicare beginning on January 1, 2025. However, securing reimbursement from other payers will also require significant efforts on our part and take time to achieve.
Although we believe our Oncodetect test data demonstrates the utility of the test, successful commercialization will depend on our ability to garner acceptance in the medical community. We submitted data from the clinical validation study for our Oncodetect MRD test to MolDX, and obtained Medicare reimbursement effective April 2025 for serial use in patients with stage II, III, and resectable stage IV colorectal cancer in the adjuvant and recurrence monitoring settings over a five-year period, but there is no guarantee we will secure such coverage and reimbursement from other payers. After its initial launch in April 2025, our Oncodetect test may nonetheless fail to gain sufficient market acceptance by physicians, patients, third-party payers, such as Medicare and Medicaid programs and managed care organizations, and others in the medical community.
Recommendations, guidelines, and quality metrics issued by various organizations may significantly affect payers’ willingness to cover, and healthcare providers’ willingness to prescribe or order, our products.
Securing influential recommendations, inclusion in healthcare guidelines, and inclusion in quality measures are keys to our healthcare provider and payer engagement strategies. These guidelines, recommendations, and quality metrics may shape payers’ coverage decisions and healthcare providers’ cancer screening procedures.
The USPSTF, a panel of primary care providers and epidemiologists and other national experts funded by the U.S. Department of Health and Human Services’ Agency for Healthcare Research and Quality, makes influential recommendations on clinical preventive services. USPSTF updates its screening recommendations periodically, approximately every five to eight years. The USPSTF's most recent recommendation statement for colorectal cancer screening gave an “A” grade to colorectal cancer screening starting at age 50 and continuing until age 75 and gave a “B” grade to colorectal cancer screening for ages 45 to 49. Any update to the USPSTF recommendations that may have the effect of reducing screening, that does not include FIT-DNA in a favorable manner, or that adds new technologies could have a material adverse effect on our business.
Maintaining a high USPSTF recommendation for our Cologuard and Cologuard Plus tests may have certain potentially significant implications. For example, the ACA mandates that certain non-grandfathered health insurers cover evidence-based items or services that have in effect a rating of “A” or “B” in the current recommendations of USPSTF without imposing any patient cost-sharing. Similarly, federal regulations require that Medicare Advantage plans cover “A” or “B” graded preventive services without patient cost-sharing. Following the updated 2016 USPSTF recommendation statement, CMS issued an updated Evidence of Coverage notice for Medicare Advantage plans that affirms such plans must include coverage of our Cologuard test every three years without patient cost-sharing. While we believe the ACA Mandate requires certain health insurers to cover our Cologuard and Cologuard Plus tests for individuals between the ages of 45 and 75 without patient cost-sharing, some health insurers have disagreed. Enforcement of the ACA Mandate is difficult and depends on state, federal, or other third-party enforcement actions that we do not control. Further, a court or regulatory agency may agree with arguments that have been made, or that may in the future be made, by insurers and determine that the ACA Mandate does not require that they cover our Cologuard test, Cologuard Plus test, or future tests we may develop or may otherwise interpret the ACA Mandate in a manner unfavorable to us. Also, Congress may modify or repeal all or part of the ACA, and any such modification or repeal may repeal or limit the ACA Mandate for preventive services. Additionally, the ACA has also been the subject of various legal challenges and, if the plaintiffs are successful in any such challenges, insurance coverage for our Cologuard test, Cologuard Plus test, or future tests we develop could be materially and adversely affected. If for any of these reasons the ACA Mandate ceases to require coverage of our Cologuard test, Cologuard Plus test, or future tests we may develop or we are otherwise unable to secure effective enforcement of such mandate, our business prospects may be adversely affected.
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The healthcare industry in the U.S. has experienced a trend toward cost containment and value-based purchasing of healthcare services. Some government and private payers are adopting pay-for-performance programs that differentiate payments for healthcare services based on the achievement of documented quality metrics, cost efficiencies, or patient outcomes. Payers may look to quality measures such as the NCQA, HEDIS, and the CMS Medicare Advantage Star Ratings to assess quality of care. These measures are intended to provide incentives to service providers to deliver the same or better results while consuming fewer resources. Our Cologuard test has been included in NCQA's HEDIS measures since 2017 and in CMS's Medicare Advantage Star Ratings since 2018. If for some reason our Cologuard test was removed from or not included in HEDIS, the Star Ratings, or other quality metrics, payers may be less inclined to reimburse our Cologuard test at adequate levels, if at all, which could adversely impact our business. Additionally, if our Cologuard test was removed from or not included in HEDIS, the Star Ratings, or other quality metrics, healthcare providers may not earn quality credit for prescribing our Cologuard test and therefore may be less inclined to do so. If our Cologuard test or Cologuard Plus test fails to maintain its current position within any updated USPSTF colorectal cancer screening recommendations, our Cologuard test or Cologuard Plus test may, as a result, become excluded from the HEDIS measures and the Star Ratings.
We expect to continue to make significant investments in our research and development efforts, which may not be successful.
We expect to incur significant expenses on development efforts to improve our current products and develop a pipeline for future products and services, but such efforts may not be successful. Developing new or improved cancer tests is a speculative and risky endeavor. Candidate products and services that may initially show promise may fail to achieve the desired results in larger clinical studies or may not achieve acceptable levels of clinical accuracy. Results from early studies or trials are not necessarily predictive of future clinical study or trial results, and interim results of a trial are not necessarily indicative of final results. Significant adverse differences between initial or interim data and final data could significantly harm our reputation and business prospects.
Any cancer screening or diagnostic test we develop will need to demonstrate in clinical studies a high level of accuracy. Because cancer screening tests seek to identify relatively rare occurrences, if in a clinical study a candidate product or service fails to identify even a small number of cancer cases, the sensitivity rate may be materially and adversely affected and we may have to abandon the candidate product or service. Any cancer diagnostic test we develop will need to address an unmet medical need with accurate performance and utility.
We may need to explore a number of different biomarker combinations, alter our candidate products or platform technologies, and repeat clinical studies before we identify a potentially successful candidate. We may need to acquire, whether through purchase, license or otherwise, technologies owned by third parties, and we may not be able to acquire such technologies on commercially reasonable terms or at all. We also require human sample types, such as blood, tissue, and stool for our research and product development, which may not be available to us on a timely basis or commercially reasonable terms. Our inability to negotiate access to such clinical samples or the ability of other laboratories or our competitors to secure access to these samples before us could limit or delay our ability to research, develop, and commercialize future products. Product development is expensive, may take years to complete, and can have uncertain outcomes. Failure can occur at any stage of development. If, after development, a candidate product or service appears successful, we may, depending on the nature of the product or service, still need to obtain FDA and other regulatory clearances or approvals before we can market it. There can be no guarantee that the FDA would clear or approve any future product or service we may develop.
Even if the FDA and other regulatory authorities clear or approve a new product or service we develop, we would need to commit substantial resources to commercialize, sell, and market it before it could be profitable, and the product or service may never be commercially viable. In developing a test, we must make numerous assumptions regarding the commercial viability of a test, including with respect to healthcare providers’ and patients’ interest in a test, payers’ willingness to pay for a test, our costs to perform a test, and availability and attractiveness of competing offerings. Frequently, we must make those assumptions many years before a test is ready for clinical use.
If we determine that any of our current or future development programs is unlikely to succeed, we may abandon it without any return on our investment into the program. We may need to raise significant additional capital to bring any new products or services to market, which may not be available on acceptable terms, if at all.
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Interim, topline and preliminary data from our clinical studies that we announce or publish from time to time may change as more patient data become available and are subject to audit and verification procedures that could result in material changes in the final data.
From time to time, we may publicly disclose preliminary or topline data from our preclinical studies or clinical studies, which is based on a preliminary analysis of then-available data, and the results and related findings and conclusions are subject to change following a more comprehensive review of the data related to the particular study. We also make assumptions, estimations, calculations, and conclusions as part of our analyses of data, and we may not have received or had the opportunity to fully evaluate all data at time of disclosure. As a result, the topline or preliminary results that we report may differ from future results of the same studies, or different conclusions or considerations may qualify such results, once additional data have been received and fully evaluated. Topline data also remain subject to audit and verification procedures that may result in the final data being materially different from the preliminary data we previously published. As a result, topline data should be viewed with caution until the final data are available.
From time to time, we may also disclose interim data from our preclinical and clinical studies. Interim data from clinical studies that we may complete are subject to the risk that one or more of the clinical outcomes may materially change as patient enrollment continues and more patient data become available. Differences between preliminary, topline or interim data and final data could significantly harm our business prospects. Further, disclosure of such data by us or by our competitors could result in volatility in the price of our common stock.
Further, others, including regulatory agencies, such as the FDA, may not accept or agree with our assumptions, estimates, calculations, conclusions or analyses or may interpret or weigh the importance of data differently, which could impact the value of the particular program, the approvability or commercialization of the particular product candidate or product and our company in general. In addition, the information we choose to publicly disclose regarding a particular clinical study is based on what is typically extensive information, and you or others may not agree with what we determine is material or otherwise appropriate information to include in our disclosure and any information we determine not to disclose may ultimately be deemed significant with respect to future decisions, conclusions, views, activities or otherwise regarding a particular product, product candidate or our business.
If the interim, topline, or preliminary data that we report differ from actual results, or if others, including regulatory authorities, disagree with the conclusions reached, our ability to obtain approval for and commercialize our product candidates may be harmed, which could harm our business, operating results, prospects or financial condition.
Our industry is subject to rapid change, which could make our current products and any future products we may develop, obsolete.
Our industry is characterized by rapid changes, including technological and scientific breakthroughs, frequent new product introductions and enhancements and evolving industry standards, all of which could make our current and future products obsolete. Our future success will depend on our ability to keep pace with the evolving needs of our customers on a timely and cost-effective basis and to pursue new market opportunities that develop as a result of scientific and technological advances. In recent years, there have been numerous advances in technologies relating to the diagnosis and treatment of cancer. There have also been advances in methods used to analyze very large amounts of molecular information. We must continuously enhance our platform and develop new products to keep pace with evolving standards of care. If we do not update our product offerings to reflect new scientific knowledge about cancer biology, information about new cancer therapies or relevant clinical studies, our products could become obsolete and sales of our current products and any new products we may develop could decline or fail to grow as expected.
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The sizes of the markets for our current and future products have not been established with precision, and may be smaller than we estimate.
Our estimates of the annual total addressable markets for our current products and products under development are based on a number of internal and third-party estimates, including, without limitation, the size of screening and patient populations, adoption rates and screening intervals, and the assumed prices at which we can sell tests for markets that have not been established. While we believe our assumptions and the data underlying our estimates are reasonable, these assumptions and estimates may not be correct and the conditions supporting our assumptions or estimates may change at any time, thereby reducing the predictive accuracy of these underlying factors. As a result, our estimates of the annual total addressable market for our current or future products may prove to be incorrect. If the actual number of patients who would benefit from our products, the price at which we can sell our products, or the annual total addressable market for our products is smaller than we have estimated, it may impair our sales growth and have an adverse impact on our business.
Our dependence on distributors for sales in many countries outside of the U.S. could limit or prevent us from selling our tests in those countries and impact our revenue.
As of December 31, 2025, we have entered into exclusive distribution agreements for the sale of our Oncotype tests with distributors covering dozens of countries. We may enter into other similar arrangements to distribute our tests in other countries in the future. We intend to continue growing our business internationally, and to do so we may need to attract additional distributors to expand the territories in which we sell our tests. Despite contractual obligations, distributors may not commit the necessary resources to market and sell our tests to the level of our expectations. If current or future distributors do not perform adequately, or we are unable to enter into or maintain arrangements with distributors to market our tests in particular geographic areas, we may not realize long-term international revenue growth. Additionally, local laws may make it very difficult or costly for us to terminate or replace distributors, and local public procurement law may complicate providing our centralized laboratory services through a distributor. Furthermore, our revenue from distributors could be negatively impacted as a result of changes in business cycles, business or economic conditions, coverage determinations, reimbursement rates, changes in foreign currency exchange rates that make our tests more expensive in our distributors’ local currencies, or other factors that could affect their ability to pay us for tests on a timely basis or at all.
Risks Relating to our Intellectual Property
We rely on strategic collaborative and licensing arrangements with third parties to develop critical intellectual property. We may not be able to successfully establish and maintain such collaborative and license agreements.
The development and commercialization of our products and services rely, directly or indirectly, upon strategic collaborations and licensing agreements with third parties. We have collaborative and licensing arrangements with Mayo Foundation for Medical Education and Research, under which Mayo provides us with certain exclusive and non-exclusive intellectual property rights and ongoing product development and research and development assistance, and with Freenome Holdings, Inc., under which we acquired exclusive rights in the United States to current and future versions of Freenome’s blood-based, CRC screening tests, subject to regulatory approval (the “Freenome Agreement”). In addition, we have licensing agreements with other partners that provide us with intellectual property and other business rights crucial to our product development and commercialization. We have incorporated licensed technology into our commercialized tests and expect to continue relying on, and incorporating, licensed technology into our pipeline products. Our dependence on licensing, collaboration, and other similar agreements with third parties may subject us to a number of risks. There can be no assurance that any current contractual arrangements between us and third parties or between our strategic partners and other third parties will be continued on materially similar terms and will not be breached or terminated early. Any failure to obtain or retain the rights to necessary technologies on acceptable commercial terms could require us to re-configure our products and services, which could negatively impact their commercial sale or increase the associated costs, either of which could materially harm our business and adversely affect our future revenues and ability to achieve sustained profitability. We may not be able to realize the anticipated benefits from our collaboration agreements, and our investment into the licenses may lose value for any number of reasons.
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Under our collaboration and license agreement with Freenome, we will obtain exclusive rights under that agreement upon the later of obtaining (1) certain FDA approvals and (2) antitrust clearance. While we obtained antitrust clearance in the fourth quarter of 2025, there can be no assurance that necessary FDA approvals will be obtained and we will secure the expected exclusive license under the agreement. The value of our license rights under the Freenome agreement also depends to a significant extent upon Freenome’s ability to meet certain development and regulatory milestones, which may never be met. If these milestones are not met, it is likely that our investment will not yield the anticipated benefits.
In addition, establishing new strategic collaborations and licensing arrangements is difficult and time-consuming. Discussions with potential collaborators or licensors may not lead to the establishment of collaborations on favorable terms, if at all. To the extent we agree to work exclusively with one collaborator in a given area, our opportunities to collaborate with other entities could be limited. Potential collaborators or licensors may reject collaborations with us based upon their assessment of our financial, regulatory, or intellectual property position or other factors. Even if we successfully establish new collaborations, these relationships may never result in the successful commercialization of any product or service. In addition, the success of the projects that require collaboration with third parties will be dependent on the continued success of such collaborators. There is no guarantee that our collaborators will continue to be successful and, as a result, we may expend considerable time and resources developing products or services that will not ultimately be commercialized.
We may be subject to substantial costs and liability or be prevented from using technologies incorporated in our screening or diagnostic tests as a result of litigation or other proceedings relating to patent or other intellectual property rights.
Third parties may assert infringement or other intellectual property claims against our licensors, our licensees, our suppliers, our strategic partners, or us. We pursue a patent strategy that we believe provides us with a competitive advantage in the early detection of cancer and pre-cancer as well as in the guidance of cancer treatment decisions, and is designed to maximize our patent protection against third parties. We have filed patent applications that we believe cover the methods we have designed and use in our Cologuard and Cologuard Plus tests to detect colorectal cancer and pre-cancer, our Oncotype tests to provide prognosis and guide treatment decisions, and for pipeline cancer tests still in development. In order to protect or enforce our patent and other intellectual property rights, we may have to initiate actions against third parties. Any actions regarding patents could be costly and time-consuming and divert the attention of our management and key personnel from our business. Additionally, such actions could result in challenges to the validity, enforceability, or applicability of our patents. Because the U.S. Patent and Trademark Office (“USPTO”) maintains patent applications in secrecy until a patent application publishes or the patent is issued, we have no way of knowing if others may have filed patent applications covering technologies used by our partners or us. Additionally, there may be third-party patents, patent applications, and other intellectual property relevant to our technologies that may block or compete with our technologies. From time to time we have received correspondence from third parties alleging to hold intellectual property rights that could block our development or commercialization of products. While none of these inquiries to date have had any material effect on us, we may receive inquiries in the future that could have a material effect on our business. Even if third-party claims are without merit, defending a lawsuit may result in substantial expense to us and may divert the attention of management and key personnel. In addition, we cannot provide assurance that we would prevail in any such suits to the extent necessary to conduct our business according to our strategic plan or that the damages or other remedies, if any, awarded against us would not be substantial. Claims of intellectual property infringement may require that we, or our strategic partners, enter into royalty or license agreements with third parties that may only be available on unacceptable terms, if at all. These claims may also result in injunctions against the further development and commercial sale of services or products containing our technologies, which would have a material adverse effect on our business, financial condition, and results of operations.
If we are unable to protect or enforce our intellectual property effectively, we may be unable to prevent third parties from using our intellectual property, which would impair any competitive advantage we may otherwise have.
We rely on patent protection as well as a combination of trademark, copyright, and trade secret protection and other contractual restrictions to protect our proprietary technologies and other intellectual property rights, all of which provide limited protection and may not adequately protect our rights or permit us to gain or keep any competitive advantage. If we fail to protect our intellectual property, third parties may be able to compete more effectively against us and we may incur substantial litigation costs in our attempts to recover or restrict use of our intellectual property, which may not be entirely successful, if at all. Additionally, certain of our patents have begun to expire. This loss of intellectual property protection may permit third parties to use certain intellectual property assets previously exclusively reserved for our use.
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We cannot assure you that any of our currently pending or future patent applications will result in issued patents, and we cannot predict how long it will take for any such patents to be issued. Further, we cannot assure you that other parties will not challenge any patents issued to us or that courts will hold our patents to be valid or enforceable. We have been in the past, and may be in the future, the subject of pre- or post- grant proceedings challenges at the USPTO or international patent offices to determine priority of invention or validity of a patent, which could result in substantial cost to us as well as a possible adverse decision as to the priority of invention or validity of the patent involved. An adverse decision in any such challenge may result in the loss of rights under a patent or patent application. We cannot guarantee that we will be successful in defending challenges made against our patents and patent applications. Any successful third-party challenge to our patents could result in the unenforceability or invalidity of such patents. Additionally, agency workforce reductions or turnover could delay or change the outcome of approvals or decisions on which we rely to protect our intellectual property.
Even where we have valid patents, third parties may be able to successfully design their products and services around those patents, such that their products and services do not infringe our patents. We may face competition internationally in jurisdictions where we do not have intellectual property protection. Our business may be adversely affected to the extent third parties are able to develop or commercialize competing products and services that do not infringe our patents. We may also be adversely affected to the extent third parties develop or commercialize competing products or services in countries where we did not apply for patents, where our patents have not issued, or where our intellectual property rights are not recognized or are poorly enforced.
We depend on trademarks to establish a market identity for our company and our products and services. To maintain the value of our trademarks, we may have to file lawsuits against third parties to prevent them from using trademarks confusingly similar to or dilutive of our registered or unregistered trademarks. We also may not obtain registrations for our pending or future trademark applications, and might have to defend our registered trademarks and pending applications from challenges by third parties. Enforcing or defending our registered and unregistered trademarks might result in significant litigation costs and, if we are unsuccessful, might result in damages, including the inability to continue using certain trademarks.
We are currently engaged in patent infringement lawsuits against Geneoscopy for its infringement of multiple Company patents. Geneoscopy has in response alleged several claims against us, in addition to asking for the USPTO to reexamine the patentability of the patents in dispute. More information on these matters can be found in Note 14 of our Notes to Consolidated Financial Statements. Defending these lawsuits and patent challenges may result in substantial expense to us and may divert the attention of management and key personnel.
If patent regulations or standards are modified, such changes could have a negative impact on our business.
From time to time, the U.S. Supreme Court, other federal courts, the U.S. Congress, or the USPTO may change the standards of patentability and validity of patents within the cancer screening and diagnostics space, and any such changes could have a negative impact on our business.
There have been several cases involving “gene patents” and diagnostic claims that have been considered by the U.S. Supreme Court that have affected the legal concept of subject matter eligibility by seemingly narrowing the scope of the statute defining patentable inventions.
Additionally, in December 2014 and again in 2019, the USPTO published revised guidelines for patent examiners to apply when examining process claims that narrow the scope of patentable subject matter. While these guidelines may be subject to review and modification by the USPTO over time, we cannot assure you that our patent portfolio will not be negatively impacted by the decisions mentioned above, rulings in other cases, or changes in guidance or procedures issued by the USPTO.
Additional substantive changes to patent law, whether new or associated with the America Invents Act — which substantially revised the U.S. patent system — may affect our ability to obtain, enforce or defend our patents. Accordingly, it is not clear what, if any, impact these substantive changes will ultimately have on the cost of prosecuting our patent applications, our ability to obtain patents based on our discoveries, and our ability to enforce or defend our issued patents, all of which could have a material adverse effect on our business.
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Risks Relating to our Securities
If we fail to maintain an effective system of internal control over financial reporting, investors may lose confidence in the accuracy and completeness of our reported financial information and our stock price may be adversely impacted.
As a public company, we are subject to the Sarbanes-Oxley Act of 2002 and the related rules and regulations promulgated by the SEC, which require us, among other things, to maintain effective disclosure controls and procedures and internal control over financial reporting. Maintaining effective disclosure controls and procedures and internal control over financial reporting is necessary for us to produce reliable financial statements and to prevent fraud. In addition, we are required to disclose publicly for each fiscal year the conclusion of our management as to the effectiveness of our internal control over financial reporting and to report any material weaknesses identified by management. The Sarbanes-Oxley Act also requires that our management report on internal control over financial reporting be attested to by our independent registered public accounting firm. Although we determined that our internal control over financial reporting was effective as of December 31, 2025, we must continue to monitor and assess our internal control over financial reporting. If we identify material weaknesses in our internal control over financial reporting or if we are unable to assert that our internal control over financial reporting is effective when required in the future, or if our independent registered public accounting firm is unable to express an opinion as to the effectiveness of our internal control over financial reporting, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our common stock could be adversely affected.
Our stock price has fluctuated widely and, despite the pendency of the Merger, may continue to be volatile.
The market price for our common stock, like the securities of many other companies in the life sciences industry, has been highly volatile and could continue to be volatile and subject to significant price and volume fluctuations in response to various factors, many of which are beyond our control. Such factors include those listed in this “Item 1A. Risk Factors” section as well as:
•the timing of, and our ability to consummate, the Merger, including any changes in factors that influence the timing and likelihood of the consummation of the Merger;
•comments by securities analysts regarding our business or prospects;
•our quarterly operating performance;
•our issuance of common stock or other securities;
•our inability to accurately forecast future performance;
•our inability to meet analysts’ expectations;
•announcements by us or our competitors, including strategic actions, management changes, and material transactions; and
•general financial, domestic, international, economic, and market conditions, including overall fluctuations in the U.S. equity and credit markets, which may be unrelated or disproportionate to the operating performance of particular companies.
In the past, companies whose securities have experienced periods of volatility in market price have been subjected to securities class action or derivative litigation. In this regard, sharp drops in the market price of our common stock, could expose us to claims and litigation alleging violations of the securities laws or other related claims. Such litigation could result in substantial expenses and diversion of management’s attention and corporate resources, which would seriously harm our business, financial condition, and results of operations.
We have recorded significant impairment charges and could do so again in the future, which could have a material adverse impact on our results of operations.
Our balance sheet includes goodwill and intangible assets that represent 56% of our total assets at December 31, 2025, which are primarily associated with our acquisitions. These assets are reviewed for impairment at least annually, or when events or changes in the business environment indicate the carrying value not be recoverable. If the carrying value of the asset is determined to be impaired, then it is written down to fair value by a charge to operating earnings. An impairment of a significant portion of goodwill or intangible assets could have a material negative effect on our results of operations. During the fourth quarter of 2024, we performed a quantitative impairment assessment for the in-process research and development (“IPR&D”) intangible asset acquired as part of the acquisition of Thrive related to the development of a blood-based MCED test. The impairment assessment required a fair value measurement, and we determined that the fair value of the IPR&D was $420.0 million resulting in a non-cash, pre-tax impairment loss of $830.0 million.
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Our significant indebtedness could adversely affect our business, financial condition and results of operations, and our ability to meet our payment obligations under such indebtedness and limit our ability to raise additional capital to fund our operations.
We have a significant amount of indebtedness. As of December 31, 2025, we had total indebtedness of $2.35 billion consisting of aggregate principal and interest due under our convertible senior notes. We also had $5.9 million of letters of credit issued. This level of debt could have significant consequences on our future operations, including:
•increasing our vulnerability to adverse economic and industry conditions;
•making it more difficult for us to meet our payment and other obligations;
•making it more difficult to obtain any necessary future financing for working capital, capital expenditures, debt service requirements, or other purposes;
•requiring the dedication of a substantial portion of any cash flow from operations to service our indebtedness, thereby reducing the amount of cash flow available for other purposes, including capital expenditures;
•placing us at a possible competitive disadvantage with competitors that are less leveraged than us or have better access to capital than we have; and
•limiting our flexibility in planning for, or reacting to, changes in our business and the markets in which we compete.
Any of the above-listed factors could have an adverse effect on our business, financial condition, and results of operations and our ability to meet our payment obligations under our indebtedness.
Our ability to meet our payment and other obligations under our indebtedness depends on our ability to generate significant cash flow in the future. This, to some extent, is subject to general economic, financial, competitive, legislative, and regulatory factors as well as other factors that are beyond our control. We cannot assure you that our business will generate cash flow from operations, or that future borrowings will be available to us, in an amount sufficient to enable us to meet our payment obligations under our indebtedness and to fund other liquidity needs. If we are not able to generate sufficient cash flow to service our debt obligations, we may need to refinance or restructure our debt, sell assets, reduce or delay capital investments, share-settling the convertible notes or seek to raise additional capital, any of which events could have an adverse effect on our business, financial condition, and results of operations or be highly dilutive to our shareholders.
Our credit facilities contain certain customary representations, and warranties, affirmative covenants and negative covenants for credit facilities of this nature, including covenants that require delivery of financial statements and notices of events of default and restrictions on the incurrence of debt or guarantees, the creation of liens, the making of certain investments, loans and acquisitions, mergers and dissolutions, the sale of assets, the payment of dividends, and the repayment of certain junior debt, among others. Our obligations under our revolving credit facility are secured, pursuant to a guarantee and collateral agreement pursuant to which we granted to the lenders liens on substantially all of our assets, subject to certain exceptions and exclusions. A breach of any covenant in our credit facilities or the agreements and indentures governing any other indebtedness that we may have outstanding from time to time would result in a default under that agreement or indenture after any applicable grace periods. A default, if not waived, could result in, among other things, (i) acceleration of the debt outstanding under the agreement and the lenders exercising remedies, including with respect to the collateral we granted to them, which includes substantially all of our assets, and (ii) a default with respect to, and an acceleration of the debt outstanding under, other debt agreements. If that occurs, we may not be able to make all of the required payments or borrow sufficient funds to refinance such debt. Even if new financing were available at that time, it may not be on terms that are acceptable to us or terms as favorable as our current agreements. If our debt is in default for any reason, our business, results of operations and financial condition could be materially and adversely affected.
Item 1B. Unresolved Staff Comments
None.
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Item 1C. Cybersecurity
Governance
Our Board of Directors administers its cybersecurity risk oversight function directly through our Audit and Finance Committee (“AFC”). Our AFC has primary responsibility for overseeing our risk management practices, programs, and policies related to data privacy, data protection, and cybersecurity. The AFC reviews and evaluates the processes utilized by management to identify and assess the material internal and external risks that may affect our business. Our AFC regularly discusses our major risk exposures with management, legal counsel, and the internal audit department. This includes potential financial impact on the Company and the steps taken to monitor and control those risks. Annual reviews with management include summaries of legal and regulatory compliance matters, risk management activities, and cybersecurity assessments. Additionally, our AFC oversees the process by which our Board of Directors is informed regarding the risks facing the Company and coordinates with our legal counsel to ensure our Board of Directors receives regular risk assessment updates from management.
Our Artificial Intelligence Council, which includes the CISO, oversees adherence to AI ethical principles and regulatory requirements in the development and utilization of AI systems, including generative AI tools. AI governance is integrated within the broader governance framework discussed above.
The CISO provides our AFC with periodic updates about our cybersecurity program and material risks. This includes updates on cybersecurity practices and projects designed to strengthen internal cybersecurity and data protection.
Risk Management and Strategy
Processes for identifying and assessing cybersecurity risks
Processes for managing cybersecurity risks
The cybersecurity team tracks risks and incidents related to cybersecurity until the risk is mitigated to an acceptable level or fully remediated. When risks are identified, the cybersecurity team oversees mitigation plans with the risk owner, including communication of the plan and tracking of remediation efforts.
Processes for incorporating cybersecurity risks into the overall risk management process
Our process for identifying, assessing, and managing risks related to cybersecurity is incorporated into our Enterprise Risk Management (“ERM”) process. The Risk Management team meets at least annually with cybersecurity leadership to discuss identified cybersecurity-related risks and the potential likelihood and severity of each risk. Through the ERM process, cybersecurity risks are presented to the executive leadership team, including the CEO and CFO, as well as reported to the AFC.
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Item 2. Properties
As of December 31, 2025, our material facilities are as follows:
| Location | Primary Function | Total Square Feet (approx.) | Leased or Owned | |||||||||||||||||
| Madison, Wisconsin | Research and development, corporate, operations, and clinical laboratory | 1,514,017 | Leased/Owned | |||||||||||||||||
| Redwood City, California | Research and development, corporate, operations, and clinical laboratory | 243,195 | Leased | |||||||||||||||||
See Note 14 in the Notes to Consolidated Financial Statements for further discussion surrounding our leased facilities.
Item 3. Legal Proceedings
From time to time we are a party to various legal proceedings arising in the ordinary course of our business. Legal proceedings, including litigation, government investigations and enforcement actions could result in material costs, occupy significant management resources and entail civil and criminal penalties. The information called for by this item is incorporated by reference to the information in Note 14 of the Notes to Consolidated Financial Statements.
Item 4. Mine Safety Disclosures
Not applicable.
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PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Our common stock is currently listed on the NASDAQ Capital Market under the symbol “EXAS.”
As of February 12, 2026, there were 190,888,211 shares of our common stock outstanding held by approximately 151 holders of record.
We have never paid any cash dividends on our common stock and do not plan to pay any cash dividends in the foreseeable future.
See Note 13 in the Notes to Consolidated Financial Statements for further information on our stock-based compensation plans.
The following graph compares the cumulative total return on our common stock with the cumulative total return of the NASDAQ Composite Index and the NASDAQ Biotechnology Index for the five-year period ended December 31, 2025. The graph assumes that the value of the investment in our stock and in each index was $100 on December 31, 2020 and assumes that all dividends were reinvested.
_________________________________
* $100 invested on December 31, 2020 in stock or index including reinvestment of dividends.
Unregistered Sales of Equity Securities
Not applicable.
Item 6. Reserved
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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Objective
The purpose of this Management's Discussion and Analysis (“MD&A”) is to better allow our investors to understand and view our Company from management's perspective. We are providing an overview of our business and strategy including a discussion of our financial condition and results of operations. The following discussion of our financial condition and results of operations should be read in conjunction with the consolidated financial statements and the related notes thereto included elsewhere in this Annual Report on Form 10-K. We have omitted discussion of 2023 results where it would be redundant to the discussion previously included in Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations of our Form 10-K for the year ended December 31, 2024, which was filed with the Securities and Exchange Commission on February 19, 2025.
Overview
A leading provider of cancer screening and diagnostic tests, Exact Sciences Corporation gives patients and health care professionals the clarity needed to take life-changing action earlier. Building on the success of the Cologuard and Oncotype DX tests, we are investing in our pipeline to develop innovative solutions for use before, during, and after a cancer diagnosis.
Recent Developments and Trends
Merger Agreement
On November 19, 2025, we entered into the Merger Agreement with Abbott Laboratories and Merger Sub, providing for, among other things, the Merger on the terms and subject to the conditions set forth in the Merger Agreement. Upon the terms and subject to the conditions set forth in the Merger Agreement, at the Effective Time of the Merger, the separate existence of Merger Sub will cease, and we will continue as the surviving corporation in the Merger and as a direct, wholly owned subsidiary of Abbott. At the Effective Time, on the terms and subject to the conditions set forth in the Merger Agreement, each share of our common stock (other than certain excluded shares) issued and outstanding immediately prior to the Effective Time will be converted into and will thereafter represent the right to receive $105.00 in cash, without interest, less any applicable withholding taxes. Following the Merger, Exact common stock will no longer be publicly traded or listed on The Nasdaq Stock Market LLC.
Under the terms of the Merger Agreement, we are subject to various customary covenants and obligations, including, among others, until the earlier of the Effective Time and the termination of the Merger Agreement, the obligation to use commercially reasonable efforts to conduct our business in the ordinary course of business in all material respects and to refrain from taking certain actions without Abbott’s consent, subject to specified exceptions. We do not believe the restrictions to which we are subject under the Merger Agreement will prevent us from meeting our debt service obligations, ongoing costs of operations, working capital needs or capital expenditure requirements.
Consummation of the Merger, which we currently expect to occur in the second quarter of 2026, is subject to the satisfaction or waiver of certain conditions, including the Stockholder Approval, specified regulatory approvals and requirements having been obtained or satisfied and other customary closing conditions.
The Merger Agreement contains specified termination rights for Exact and Abbott, including, among others, the right of each party to terminate if (i) the Merger is not consummated by November 19, 2026, subject to extension in certain cases, (ii) any law or order restraining, enjoining, making illegal or otherwise prohibiting the consummation of the Merger is in effect and has become final and non-appealable, (iii) the Stockholder Approval is not obtained upon a vote taken on the adoption of the Merger Agreement at the meeting of our stockholders held for the purpose of obtaining stockholder approval or any adjournment or postponement thereof, or (iv) the other party breaches or fails to perform its representations, warranties, agreements or covenants in the Merger Agreement in a manner that would cause the conditions to the consummation of the Merger to not be satisfied and does not cure such breach or failure within the applicable cure period, subject to certain exceptions. If the Merger Agreement is terminated under specified circumstances, we may be required to pay to Abbott a termination fee of approximately $628.7 million.
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The foregoing description of the Merger Agreement and the transactions contemplated thereby does not purport to be complete and is qualified in its entirety by reference to the copy of the Merger Agreement that was attached as Exhibit 2.1 to our Current Report on Form 8-K filed on November 20, 2025 and that is incorporated by reference as an exhibit to this Annual Report on Form 10-K.
Multi-year Productivity Plan
In August 2025, we announced our multi-year productivity plan. The plan is central to achieving our long-term financial goals. These initiatives are intended to drive sustainable growth, improve operating leverage, and amplify our ability to invest in innovation and serve more patients by delivering more than $150 million in expected annual savings by 2026. These savings are expected to primarily come from general and administrative efficiencies through external spend optimization, restructuring certain support functions globally, and building more automation in core operations.
Product Opportunities
We estimate there are up to 55 million Americans that are not up to date with their colon cancer screenings. The capacity for screening colonoscopies in the U.S. is relatively fixed because it is dependent on the number of gastroenterologists available to perform the procedures. Health systems, payers, and health care providers are motivated to increase screening rates because they are measured as part of the HEDIS and Medicare Stars quality measure systems. More health systems and payers are recognizing the opportunity to partner with Exact Sciences to address their screening rates and related quality measures through large, organized screening programs including our care cap programs. We aim to partner with them to implement our Cologuard and Cologuard Plus tests within these programs as a solution for patients who infrequently visit their health care provider. Cologuard test utilization is increasing in this setting, helping us screen more Americans.
In June 2025, the U.S. Supreme Court affirmed that USPSTF members were constitutionally appointed and that the ACA Mandate that certain health insurers cover, without imposing any patient cost-sharing, evidence-based items or services that have in effect a rating of “A” or “B” in the current recommendations of the USPSTF, which includes our Cologuard and Cologuard Plus tests, in its decision in the Kennedy v. Braidwood Management case. The ruling did not disrupt coverage of our Cologuard and Cologuard Plus tests, reinforces the value of evidence-based preventive care, and solidifies our Cologuard and Cologuard Plus tests as valuable assets for payers in improving health outcomes.
We have an opportunity to impact even more lives by increasing adoption of Oncotype DX tests internationally, primarily through continued adoption in Japan. Breast cancer is the most common cancer among Japanese women, with about 45,000 new diagnoses of early-stage HR+, HER2- breast cancer each year. With reimbursement in place, we estimate our Oncotype DX test could help more than 100 women per day understand if their cancer is likely to recur and whether chemotherapy should be used in their treatment plan.
Macroeconomic Conditions
While factors such as increasing financial market volatility and uncertainty, inflation, exchange rate fluctuations, higher interest rates, government shutdowns, tariffs and geopolitical conflicts have not materially impacted our results of operations as of December 31, 2025, we are uncertain how these factors may impact our future operating results, including through the impact of consumer or medical provider behavior or by adversely impacting the operations of our suppliers.
Results of Operations
Revenue. Our Screening revenue primarily includes laboratory service revenue from our Cologuard and PreventionGenetics LLC (“PreventionGenetics”) tests while our Precision Oncology revenue includes laboratory service revenue from global Oncotype DX and therapy selection tests.
(Amounts in thousands) | 2025 | 2024 | Change | % Change | ||||||||||||||||||||||
| Screening | $ | 2,529,866 | $ | 2,103,868 | $ | 425,998 | 20.2 | % | ||||||||||||||||||
| Precision Oncology | 717,124 | 654,999 | 62,125 | 9.5 | % | |||||||||||||||||||||
| Total | $ | 3,246,990 | $ | 2,758,867 | $ | 488,123 | 17.7 | % | ||||||||||||||||||
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The increase in Screening revenue was primarily driven by a higher volume of completed Cologuard tests, which resulted from increases in rescreen rates, care gap programs, and growth in new ordering providers.
The increase in Precision Oncology revenue was primarily due to an increase in the number of completed Oncotype DX breast cancer tests, both domestically and internationally. This increase in completed Oncotype DX breast cancer tests was led by an increased number of ordering providers outside the U.S., particularly in Japan. In addition, we recognized sublicense revenue of $7.5 million for year ended December 31, 2025 under a sublicense agreement executed in the second quarter of 2025 related to technology originally licensed from TwinStrand in the third quarter of 2024.
Adjustments to revenue recognized during the year relating to prior year estimates were less than 1% of revenue recorded in our consolidated statement of operations for the years ended December 31, 2025 and 2024. The impacts to revenue related to change in transaction price are a function of differences in realized collections compared to original estimates, which includes upward adjustments stemming from optimizations in our reimbursement operations and downward adjustments from things such as payer denials.
We expect continuing revenue growth for our Cologuard and Oncotype tests subject to seasonal variability, timing of care gap programs, and additional growth from our recent and upcoming product launches. Our revenues are affected by the test volume of our products, patient adherence rates, payer mix, the levels of reimbursement, our order to cash operations, and payment patterns of payers and patients.
Cost of sales. Cost of sales includes the costs incurred to deliver our products and services including material and service costs, personnel costs including stock-based compensation, infrastructure expenses associated with laboratory testing services, shipping charges, depreciation, amortization of acquired intangible assets or license intangible assets related to products we have commercialized, and allocated facility and overhead costs. Cost of sales and gross margin consisted of the following:
(Amounts in thousands) | 2025 | % of Revenue | 2024 | % of Revenue | $ Change | % Change | ||||||||||||||||||||||||||||||||
Cost of sales | $ | 984,235 | 30.3 | % | $ | 840,150 | 30.5 | % | $ | 144,085 | 17.1 | % | ||||||||||||||||||||||||||
| Gross profit and gross margin | 2,262,755 | 69.7 | % | 1,918,717 | 69.5 | % | 344,038 | 17.9 | % | |||||||||||||||||||||||||||||
The increase in cost of sales for the year ended December 31, 2025 was primarily due to an increase in production costs, which was a result of an increase in completed Cologuard and Oncotype tests. Gross margin was consistent for the year ended December 31, 2025 compared to the same period in 2024, primarily due to efficiencies gained in our personnel and lab automation from increased Cologuard test volume, which was partially offset by an increase in volume from certain of our care gap programs. We expect that cost of sales will generally continue to increase in future periods as a result of an increase in our existing laboratory testing services and as we launch our pipeline products. We also expect to see a corresponding increase in personnel and support services associated with this growth.
Research and development, sales and marketing, and general and administrative expenses, including each item as a percentage of revenue, consisted of the following:
(Amounts in thousands) | 2025 | % of Revenue | 2024 | % of Revenue | $ Change | % Change | ||||||||||||||||||||||||||||||||
| Research and development | $ | 522,996 | 16.1 | % | $ | 431,210 | 15.6 | % | $ | 91,786 | 21.3 | % | ||||||||||||||||||||||||||
| Sales and marketing | 1,050,183 | 32.3 | % | 894,125 | 32.4 | % | 156,058 | 17.5 | % | |||||||||||||||||||||||||||||
| General and administrative | 888,674 | 27.4 | % | 781,825 | 28.3 | % | 106,849 | 13.7 | % | |||||||||||||||||||||||||||||
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Research and development expenses. Research and development expenses consist of costs incurred to develop new or enhance existing products and services, which primarily includes personnel costs including stock-based compensation, clinical study programs, materials and infrastructure costs, depreciation and amortization, and allocated facility and overhead costs. Research and development costs incurred for years ended December 31, 2025 and 2024 primarily related to the development of our colorectal cancer, MRD, and MCED tests. The increase in research and development expenses was primarily due to the upfront payment associated with our license deal executed with Freenome, which resulted in expense of $75.0 million in the fourth quarter of 2025. In addition, research and development expenses incurred to support our ongoing clinical studies increased primarily due to increased resources needed to support our pipeline tests as they approached and reached commercialization. The increase in costs incurred to support our ongoing clinical studies was partially offset by the termination of a license agreement with The Translational Genomics Research Institute, which resulted in the recognition of $25.8 million in the second quarter of 2024. We expect that research and development expenses will generally continue to increase in future periods as we continue to enhance our current products and invest in our pipeline.
Sales and marketing expenses. Sales and marketing expenses primarily include personnel costs including stock-based compensation and commissions for our sales force, marketing costs, customer-oriented support activities, depreciation and amortization expense, and allocated facility and overhead costs. Sales and marketing expenses increased primarily due to continued investment in high impact opportunities including our direct-to-consumer advertising campaigns and further development of large, organized screening programs. We anticipate sales and marketing expenses will generally increase in future periods as we reinvest in efforts to increase adoption of current products and support the launches of new products. We expect these expenses will decrease as a percentage of revenue over time, driven by the growth of Cologuard and Oncotype testing services.
General and administrative expenses. General and administrative expenses include costs associated with our corporate support functions, which primarily includes personnel costs including stock-based compensation, legal and professional service fees, depreciation and amortization, and allocated facility and overhead costs. General and administrative expenses increased primarily due to restructuring and business transformation related costs incurred as discussed in Note 15 of our Notes to Consolidated Financial Statements and an increase in certain incentive-based compensation arrangements. The increase in expenses was also attributed to the change in fair value of our outstanding contingent consideration liabilities. Refer to Note 7 of our Notes to Consolidated Financial Statements for further discussion of our outstanding contingent consideration liabilities. The decrease in general and administrative expenses as a percentage of revenue is primarily due to efficiencies gained in our personnel and information technology systems and a reduction in other discretionary spend as we continue to implement cost saving measures, which were partially offset by the factors described above. We expect general and administrative expenses will stabilize and decrease over time as we leverage efficiencies in our personnel, information technology systems, and the expected benefits from our multi-year productivity plan.
Other operating and non-operating expense (income) items consisted of the following:
(Amounts in thousands) | 2025 | 2024 | Change | |||||||||||||||||
| Impairment of long-lived and indefinite-lived assets | $ | 7,200 | $ | 869,460 | $ | (862,260) | ||||||||||||||
| Other operating income | — | (9,200) | 9,200 | |||||||||||||||||
| Investment income, net | (41,771) | (39,558) | (2,213) | |||||||||||||||||
| Interest expense, net | 39,361 | 27,016 | 12,345 | |||||||||||||||||
Income tax expense (benefit) | 4,061 | (7,304) | 11,365 | |||||||||||||||||
Impairment of long-lived and indefinite-lived assets. The impairment charges recorded during the year ended December 31, 2025 related to certain of our domestic facilities and corresponding leasehold improvements. The impairment charges recorded during the year ended December 31, 2024 included impairments to our IPR&D asset acquired as part of our acquisition of Thrive and building leases and corresponding leasehold improvements at certain of our domestic facilities. The impairment of the IPR&D asset is further discussed in Note 6 of our Notes to Consolidated Financial Statements.
Other operating income. The income recorded for the year ended December 31, 2024 represents the remeasurement of the contingent consideration asset from the sale of the Oncotype DX Genomic Prostate Score test ("GPS test") to MDxHealth SA ("MDxHealth"). The sale of the GPS test is further discussed in Note 17 of our Note to Consolidated Financial Statements.
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Investment income, net. The investment income for the years ended December 31, 2025 and 2024 was primarily due to gains recorded on our marketable and non-marketable securities.
Interest expense, net. Interest expense recorded from our outstanding convertible notes totaled $32.9 million for the year ended December 31, 2025. Interest expense recorded from our outstanding convertible notes totaled $22.3 million, which was partially offset by a net gain on settlement of convertible notes of $10.3 million, for the year ended December 31, 2024. The convertible notes are further described in Note 10 of our Notes to Consolidated Financial Statements.
Income tax benefit (expense). Income tax expense for the year ended December 31, 2025 was primarily related to current foreign and state tax expense. The income tax benefit recorded during the year ended December 31, 2024 was primarily related to current foreign and state tax expense offset by a U.S. deferred tax benefit.
Liquidity and Capital Resources
Overview
We have incurred losses since our inception, and have historically financed our operations primarily through public offerings of our common stock and convertible debt and through revenue generated by the sale of our laboratory testing services. We expect our operating expenditures to continue to increase to support future growth of our laboratory testing services, as well as an increase in research and development and clinical trial costs to support the advancement of our pipeline products and bringing new tests to market. We expect that cash, cash equivalents, and marketable securities on hand at December 31, 2025, along with cash flows generated through our operations, will be sufficient to fund our current operations through the expected closing date of the Merger, or, if the Merger is not completed or is delayed beyond our expectations, for at least the next twelve months based on current operating plans.
We may raise additional capital to expand our business, to pursue strategic investments, to take advantage of financing opportunities or for other reasons, with certain of the foregoing actions, if we were to move forward with them, requiring Abbott's approval under the Merger Agreement. If we are unable to obtain sufficient additional funds to enable us to fund our business plans and strategic investments, our results of operations and financial condition could be materially adversely affected, and we may be required to delay the implementation of our plans or otherwise scale back our operations. There can be no certainty that we will ever be successful in generating sufficient cash flow from operations to achieve and maintain profitability and meet all of our obligations as they come due.
Cash, Cash Equivalents, and Marketable Securities
As of December 31, 2025, we had approximately $956.0 million in unrestricted cash and cash equivalents and approximately $8.7 million in marketable securities.
We liquidated our portfolio of fixed income investments in the fourth quarter of 2025. Prior to this, the majority of our investments in marketable securities consisted of fixed income investments, and all were deemed available-for-sale. The objectives of this portfolio was to provide liquidity and safety of principal while striving to achieve the highest rate of return. Our investment policy limits investments to certain types of instruments issued by institutions with investment grade credit ratings and places restrictions on maturities and concentration by type and issuer.
Cash Flows
(Amounts in thousands) | 2025 | 2024 | ||||||||||||
Net cash provided by operating activities | $ | 491,438 | $ | 210,536 | ||||||||||
Net cash provided by (used in) investing activities | 195,121 | (442,155) | ||||||||||||
Net cash provided by (used in) financing activities | (338,090) | 231,874 | ||||||||||||
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Operating activities
The increase in cash provided by operating activities was primarily due to an increase in revenue, a decrease in our operating expenses as a percentage of revenue, and timing and magnitude of our cash outflows on our accounts payable and accrued liabilities including lower disbursements related to incentive-based compensation arrangements that were accrued as of December 31, 2024. This was partially offset by an increase in cost of sales to support the increase in revenue as discussed in the Results of Operations section above.
Investing activities
The increase in cash provided by investing activities was due to allocating more funds to money market accounts and reducing our investments in fixed income securities, allowing us to meet our liquidity needs for financing activities for year ended December 31, 2025, as further discussed below. In addition, we received a payment of $28.0 million in the second quarter of 2025 in settlement of a portion of our contingent consideration receivable related to the sale of intellectual property and know-how related to our GPS test to MDxHealth. These inflows were partially offset by an upfront payment of $75.0 million as part of our license deal with Freenome in the fourth quarter of 2025. Additionally, we made a payment of $50.0 million as part of the note purchase agreement that we executed with Freenome in the third quarter of 2025. We also made a payment of $45.0 million for our license of intellectual property from TwinStrand during the third quarter of 2024.
Financing activities
The increase in cash used in financing activities was primarily due to payments of $249.2 million on settlement of our previously outstanding convertible notes due in 2025 (“2025 Notes”) upon maturity in January 2025 and a cash payment of $19.0 million in settlement of the contingent consideration liability related to our acquisition of Ashion Analytics, LLC. In comparison, we received proceeds of $266.8 million from the issuance of convertible notes in the second quarter of 2024. In addition, we made a payment of $86.5 million related to the net settlement of equity awards associated with Company's acceleration of certain awards in the fourth quarter of 2025 as further discussed in Note 13 of our Notes to Consolidated Financial Statements. The increase in cash used in financing activities was partially offset by a payment of $50.0 million in settlement of our previously outstanding accounts receivable securitization facility upon maturity in 2024.
Material Cash Requirements
Convertible Notes
As of December 31, 2025, we had outstanding aggregate principal of $2.35 billion on our convertible notes with maturity dates of March 15, 2027 (the “2027 Notes”), March 1, 2028 Notes (the “2028 Notes”), March 1, 2030 (the “2030 Notes”), and April 15, 2031 (the “2031 Notes” and collectively, the “Notes”). The 2027 Notes have an outstanding principal balance of $563.8 million. The 2028 Notes have an outstanding principal balance of $589.4 million. The 2030 Notes have an outstanding principal balance of $573.0 million. The 2031 Notes have an outstanding principal balance of $620.7 million. The 2027 Notes, 2028 Notes, 2030 Notes, and 2031 Notes accrue interest at a fixed rate of 0.375%, 0.375%, 2.0%, and 1.750% per year, respectively, which is payable in cash semi-annually in arrears each year until the maturity date. See Note 10 of our Notes to Consolidated Financial Statements for further information. Until the six months immediately preceding the maturity date of the applicable series of Notes, each series of Notes is convertible only upon the occurrence of certain events and during certain periods. The Notes will be convertible into cash, shares of our common stock (plus, if applicable, cash in lieu of any fractional share), or a combination of cash and shares of our common stock, at our election. If the notes are not converted prior to the maturity date, the principal amount will be settled in cash upon maturity.
Lease Commitments
We act as lessee in our lease agreements, which include operating leases for corporate offices, laboratory space, warehouse space, vehicles, and certain laboratory and office equipment, and finance leases for certain equipment and vehicles. As of December 31, 2025, we had minimum operating and finance lease payments of $246.2 million and $13.0 million, respectively. Of the outstanding operating lease obligations, $43.2 million matures in 2026, and the remaining $203.0 million will mature in periods subsequent to 2026. Of the outstanding finance lease obligations, $6.3 million matures in 2026, and the remaining $6.7 million will mature in periods subsequent to 2026. See Note 14 of our Notes to Consolidated Financial Statements for further information.
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Contingent Consideration
Certain of our business combinations and asset acquisitions involve potential payment of future consideration that is contingent upon the achievement of certain regulatory and product revenue milestones. A liability is recorded for the estimated fair value of the contingent consideration on the acquisition date for business combinations. A liability is recorded when achievement of a milestone becomes probable for asset acquisitions.
As a result of the acquisition of Thrive in January 2021, an additional $450.0 million would be payable in cash to Thrive’s former shareholders upon the achievement of two discrete events, FDA approval and CMS coverage, for $150.0 million, and $300.0 million, respectively, in relation to the development and commercialization of a blood-based, MCED test. The projected fiscal year of payment range is from 2030 to 2031. See Note 7 of our Notes to Consolidated Financial Statements for further information.
License Agreements
We license certain technologies that are, or may be, incorporated into our technology under several license agreements, as well as the rights to commercialize certain diagnostic tests through collaboration agreements. Generally, the license agreements require us to pay single-digit royalties and sales-based milestone payments based on net revenues received using the technologies and may require minimum royalty amounts or maintenance fees.
In August 2025, we entered into a Collaboration and License Agreement with Freenome. As a result of the Collaboration and License Agreement, we could pay up to $700 million upon the achievement of certain development and regulatory milestones, including a $100 million payment upon first-line FDA approval of the first version of Freenome's CRC blood test. Freenome submitted the final module of the premarket approval application to the FDA for the first-version test in mid-2025.
The timing and amounts of any such royalty or milestone payments is unknown due to the uncertain nature of product development and associated net revenues using these technologies. Refer to Note 11 and Note 17 of our Notes to Consolidated Financial Statements for further information.
Capital Expenditures
We expect to continue to invest in capital expenditures to support the growth of our existing products and our research and development activities. Our current projects primarily include the build out of certain lab automation projects at our existing facilities in Madison, WI. These projects are expected to be completed in 2026 and beyond. We also have assets under construction related to laboratory equipment, leasehold and building improvements, and software projects.
Sources of Cash
In January 2025, we entered into a senior secured revolving credit agreement (the “Revolving Credit Agreement”) with JPMorgan Chase Bank, N.A., which provides us with access to $500.0 million on a revolving basis, including a letter of credit sublimit. The Revolving Credit Agreement also provides for uncommitted incremental facilities in an amount up to $200.0 million plus an unlimited additional amount so long as we are in pro forma compliance with certain financial covenants. The Revolving Credit Agreement expires in January 2028. The Revolver and Revolving Credit Agreement are further described in Note 9 of our Notes to Consolidated Financial Statements.
We believe that our anticipated income from operations, cash and marketable securities on hand, and borrowing capacity under our Revolving Credit Agreement will be adequate to meet our commitments through the expected closing date of the Merger, or, if the Merger is not completed or is delayed beyond our expectations, for at least 12 months from the issuance of this Annual Report on Form 10-K. However, we may need to raise additional capital to fully fund our current business plan and meet all commitments discussed above. We continuously evaluate our liquidity and capital resources, including access to external capital, in light of current economic and market conditions and our operational performance.
As of December 31, 2025, we had no off-balance sheet arrangements.
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Net Operating Loss Carryforwards
As of December 31, 2025, we had federal, state, and foreign net operating loss (“NOL”) carryforwards of approximately $418.6 million, $66.9 million, and $10.9 million, respectively. We also had federal and state research tax credit carryforwards of approximately $93.4 million and $43.2 million, respectively. The net operating loss and tax credit carryforwards will expire at various dates through 2041, if not utilized. The Internal Revenue Code of 1986, as amended, and applicable state laws impose substantial restrictions on a corporation’s utilization of net operating loss and tax credit carryforwards if an ownership change is deemed to have occurred. Additionally, tax law limitations may result in our NOLs expiring before we have the ability to use them. The Tax Cuts and Jobs Act (H.R. 1) of 2017 limits the deduction for NOLs to 80% of current year taxable income and provides for an indefinite carryover period for federal NOLs. Both provisions are applicable for losses arising in tax years beginning after December 31, 2017. As of December 31, 2025, we had $310.4 million of NOLs incurred after December 31, 2017. For these reasons, even if we attain profitability, our ability to utilize our NOLs may be limited, potentially significantly so.
A valuation allowance is provided for deferred tax assets if it is more likely than not these items will either expire before we are able to realize their benefit, or that future deductibility is uncertain. In general, companies that have a history of operating losses are faced with a difficult burden of proof on their ability to generate sufficient future income in order to realize the benefit of the deferred tax assets. We have recorded a valuation against our deferred tax assets based on our history of losses and current uncertainty as to timing of future taxable income. Given the future limitations on and expiration of certain Federal and State deferred tax assets, the recording of a valuation allowance resulted in a deferred tax liability of approximately $5.8 million remaining as of December 31, 2025, which is included in other long-term liabilities on our consolidated balance sheet.
Critical Accounting Policies and Estimates
Management’s discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the U.S. GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the amounts reported in our consolidated financial statements and accompanying notes. On an ongoing basis, we evaluate our estimates and judgments. We base our estimates on historical experience and on various other factors that are believed to be appropriate 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.
While our significant accounting policies are more fully described in Note 1 of our Notes to Consolidated Financial Statements, we believe that the following judgments are most critical to aid in fully understanding and evaluating our reported financial results.
Revenue Recognition. We recognize revenues when we release an approved patient test result to the ordering healthcare provider, in an amount that reflects the consideration we expect to collect in exchange for those services. The amount of revenue we recognize is based on the established billing rates less contractual and other adjustments, which yields the unconstrained amount that we expect to ultimately collect.
We determine the amount we expect to ultimately collect using historical collections, established reimbursement rates, and other adjustments. The expected amount is typically lower than, if applicable, the agreed-upon reimbursement amount due to several factors, such as the amount of any patient co-payments, out-of-network payers, the existence of secondary payers, and claim denials. A change in the estimated transaction price derived by the aforementioned inputs would ultimately impact the amount of revenue recognized during the period. We have historically recognized an upward or downward adjustment to revenues from a change in transaction price representing approximately 1% of prior year revenues. A 1% change in our estimated transaction price for revenue recognized for the year ended December 31, 2025 would result in an adjustment to revenue of approximately $32.5 million in 2026.
In the case of some of our agreements, the right to bill and collect exists prior to the receipt of a specimen and release of a test result to the ordering healthcare provider, which results in deferred revenue. The deferred revenue balance is generally relieved upon the release of the applicable patient’s test result to the ordering healthcare provider. We believe this point in time represents our fulfillment of our obligation to the customer.
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The quality of our billing operations, most notably those activities that relate to obtaining the correct information in order to bill effectively for services provided, directly impacts the collectability of our receivables and revenue estimates. As such, we continually assess the state of our order to cash operations in order to identify areas of risk and opportunity that allow us to appropriately estimate receivables and revenue. Upon ultimate collection, the aggregate amount received from payers and patients where reimbursement was estimated is compared to previous collection estimates and, if necessary, the transaction price is adjusted. Finally, should we later determine the judgments underlying estimated collections change, our financial results could be negatively impacted in future quarters.
Tax Positions. We record a valuation allowance to reduce the deferred tax assets reported if, based on the weight of the evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized.
We compute our provision for income taxes based on the statutory tax rates and tax planning opportunities available to us in the various jurisdictions that we operate. Judgment is required in evaluating our tax positions and determining our annual tax provision.
We have incurred significant losses since our inception and due to the uncertainty of the amount and timing of future taxable income, it may be necessary to record an allowance to reduce the tax assets we have recognized.
Management has determined that a valuation allowance of $736.0 million and $708.8 million at December 31, 2025 and 2024, respectively, is necessary to reduce the tax assets to the amount that is more likely than not to be realized. Due to the existence of the valuation allowance, future changes in our unrecognized tax benefits will not impact our effective tax rate.
Acquired Intangible Assets. We acquire finite-lived intangible assets through our business combinations and asset acquisitions, which primarily consist of developed technology. As of December 31, 2025, our developed technology intangible assets have a carrying value of $391.5 million. Key assumptions used to value developed technology under the income approach include projected revenue growth, projected gross margin and operating expenses, discount rate, tax rate, and obsolescence factor. We believe that the estimates applied are based on reasonable assumptions, but the estimates are inherently uncertain. As a result, the actual results may differ from the assumptions and judgments used to determine fair value of the assets acquired, which could result in material impairment charges in the future. Determining the useful life of the developed technology also requires judgment and actual useful life may differ.
Certain of our acquisitions include the acquisition of indefinite-lived IPR&D. There are major risks and uncertainties associated with IPR&D due to the regulatory approvals needed, which rely on the success of clinical trials that demonstrate product effectiveness. Key assumptions used to calculate the fair value of the IPR&D asset included inputs such as projected revenues, projected gross margin and operating expenses, discount rate, tax rate, obsolescence factor, and probability of commercial success. We believe that the estimates applied are based on reasonable assumptions, but the estimates are inherently uncertain. As a result, the eventual realized value of the IPR&D project may vary from its fair value at the date of acquisition, and material IPR&D impairment charges may occur in future periods. As a result of the acquisition of Thrive, we recorded an IPR&D asset of $1.25 billion in January 2021. As of December 31, 2024, the carrying value of our IPR&D asset was reduced to $420.0 million as a result of the impairment charge discussed in further detail below. As of December 31, 2025, the fair value of our IPR&D asset exceeded the carrying value, and accordingly no impairment charge was recorded. Further changes in key assumptions made in determining the fair value of the IPR&D asset in 2025, including the discount rate changing by 1% or the total after-tax discounted cash flows changing by 5%, would not have resulted in an impairment charge. Refer to the Impairment of Indefinite-Lived Assets section below for further discussion of the IPR&D associated with the acquisition of Thrive.
Contingent Consideration Liabilities. Business combinations may include contingent consideration to be paid based on the occurrence of future events, such as the achievement of certain development, regulatory, and sales milestones. Contingent consideration is a financial liability recorded at fair value at the acquisition date. We remeasure the fair value of outstanding contingent consideration liabilities at each reporting period.
The estimate of fair value contains uncertainties as it involves judgment about the likelihood and timing of achieving milestones as well as the present-value factor. A change in the assumptions made for probability of success, projected fiscal year of payment, and present-value factor could have a material impact on the estimated fair value. Our contingent consideration liability is primarily due to our acquisition of Thrive, which resulted in a contingent consideration liability of $352.0 million upon acquisition. Due to changes in macroeconomic conditions, the weighted average present-value factor decreased from 6.2% as of December 31, 2024 to 5.5% as of December 31, 2025, and the fair value of the contingent
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consideration liability was remeasured from $262.5 million as of December 31, 2024 to $289.0 million as of December 31, 2025. Further changes in the key assumptions made in determining the fair value of the contingent consideration liability recorded related to the acquisition of Thrive could result in a change in the estimated fair value of up to the amounts shown in the following table:
| Assumption | Unit of Measure Change | Fair Value Impact (In Thousands) | ||||||||||||
| Probability of success | 5% | $ | 16,100 | |||||||||||
| Projected fiscal year of payment | 1 Year | 15,100 | ||||||||||||
Present-value factor | 1% | 13,800 | ||||||||||||
Impairment of Indefinite-Lived Assets. We test indefinite-lived assets for impairment on an annual basis during the fourth quarter, or more frequently if events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Based on the qualitative assessment, if it is determined that the fair value of indefinite-lived intangible assets is more likely than not to be less than its carrying amount, the fair value will be calculated and compared with its carrying amount and an impairment charge will be recognized for the amount that the carrying value exceeds the fair value. Determining whether impairment indicators exist and estimating the fair value of our indefinite-lived intangible assets if necessary for impairment testing requires significant judgment. We performed our annual goodwill assessment using a qualitative assessment and concluded there were no impairments. Qualitative factors considered in this assessment included industry and market conditions, overall financial performance, and other relevant events and factors. For the year ended December 31, 2024, after performing our qualitative assessment on our IPR&D impairment test, we determined that the carrying value exceeded the fair value and recorded an impairment loss of $830.0 million. Key assumptions used to calculate the fair value of the IPR&D asset for the quantitative assessment included inputs such as projected revenues, projected gross margin, projected operating expenses, discount rate, tax rate, obsolescence factor, and probability of commercial success. For the year ended December 31, 2025, we elected to bypass the qualitative assessment and performed a quantitative assessment for our annual IPR&D impairment test and concluded that there were no impairment.
Impairment of Long-Lived Assets. We evaluate the fair value of long-lived assets, which include property, plant and equipment, leases, finite-lived intangible assets, and investments in non-marketable securities, for impairment whenever events or changes in circumstances indicate that the carrying amounts of the assets may not be fully recoverable. The review of qualitative factors requires significant judgment. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. We recorded impairment charges totaling $7.2 million, $39.5 million, and $0.6 million during the years ended December 31, 2025, 2024, and 2023, respectively, related to certain of our domestic facilities and corresponding leasehold improvements. We utilized the income approach to measure the fair value of the building leases and associated leasehold improvements, which required management to make estimates including cash flow projections and discount rates. We believe that the estimates applied are based on reasonable assumptions, but the estimates are inherently uncertain. As a result, the eventual realized value of the impaired asset may vary from its fair value.
Recent Accounting Pronouncements
See Note 1 of our Notes to Consolidated Financial Statements for the discussion of Recent Accounting Pronouncements.
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Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Interest Rate Risk
Our exposure to market risk is principally confined to our cash, cash equivalents and marketable securities, and our outstanding variable-rate debt. Beginning in the fourth quarter of 2025, we invest our cash in money market securities that are highly liquid in nature. Prior to the liquidation of our marketable security portfolio in the fourth quarter of 2025, we invested our cash, cash equivalents, and marketable securities in securities of the U.S. governments and its agencies and in investment-grade, highly liquid investments consisting of commercial paper, bank certificates of deposit, and corporate bonds, which were were classified as available-for-sale as of December 31, 2024. We place our cash, cash equivalents, and marketable securities with high-quality financial institutions, limit the amount of credit exposure to any one institution, and have established investment guidelines relative to diversification and maturities designed to maintain safety and liquidity.
Based on a hypothetical 100 basis point decrease in market interest rates, the potential losses in future earnings, fair value of risk-sensitive financial instruments, and cash flows are immaterial, although the actual effects may differ materially from the hypothetical analysis. While we believe our cash, cash equivalents, and marketable securities do not contain excessive risk, we cannot provide absolute assurance that, in the future, our investments will not be subject to adverse changes in market value. In addition, we maintain significant amounts of cash, cash equivalents, and marketable securities at one or more financial institutions that are in excess of federally insured limits. Given the potential instability of financial institutions, we cannot provide assurance that we will not experience losses on these deposits. We do not utilize interest rate hedging agreements or other interest rate derivative instruments.
As of December 31, 2025, we had no outstanding variable rate debt. If we were to draw down amounts under our Revolving Credit Agreement, we would be impacted by increases in prevailing market interest rates. All of our other significant interest-bearing liabilities bear interest at fixed rates and therefore are not subject to fluctuations in market interest rates; however, because these interest rates are fixed, we may be paying a higher interest rate, relative to market, in the future if circumstances change.
Foreign Currency Risk
The functional currency for most of our international subsidiaries is the U.S. dollar, and as a result we are not subject to material gains and losses from foreign currency translation of the subsidiary financial statements. Substantially all of our revenues are recognized in U.S. dollars, although a small portion is denominated in foreign currency as we continue to expand into markets outside of the U.S. Certain expenses related to our international activities are payable in foreign currencies. As a result, factors such as changes in foreign currency exchange rates or weak economic conditions in foreign markets will affect our financial results.
We enter into forward contracts to mitigate the impact of adverse movements in foreign exchange rates related to the re-measurement of monetary assets and liabilities and hedge our foreign currency exchange rate exposure. As of December 31, 2025, we had open foreign currency forward contracts with notional amounts of $31.8 million. Although the impact of currency fluctuations on our financial results has been insignificant in the past, there can be no guarantee that the impact of currency fluctuations related to our international activities will not be material in the future.
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Item 8. Consolidated Financial Statements and Supplementary Data
EXACT SCIENCES CORPORATION
Index to Financial Statements
| Page | |||||
Report of Independent Registered Public Accounting Firm (PCAOB ID | 68 | ||||
Consolidated Balance Sheets as of December 31, 2025 and 2024 | 70 | ||||
Consolidated Statements of Operations for the Years Ended December 31, 2025, 2024, and 2023 | 71 | ||||
Consolidated Statements of Comprehensive Loss for the Years Ended December 31, 2025, 2024, and 2023 | 72 | ||||
Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, 2025, 2024, and 2023 | 73 | ||||
Consolidated Statements of Cash Flows for the Years Ended December 31, 2025, 2024, and 2023 | 74 | ||||
Notes to Consolidated Financial Statements | 76 | ||||
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Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of Exact Sciences Corporation
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of Exact Sciences Corporation and its subsidiaries (the “Company”) as of December 31, 2025 and 2024, and the related consolidated statements of operations, of comprehensive loss, of stockholders’ equity and of cash flows for each of the three years in the period ended December 31, 2025, including the related notes (collectively referred to as the “consolidated financial statements”). We also have audited the Company's internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.
Basis for Opinions
The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed 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. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
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Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Valuation of Net Accounts Receivable - Variable Consideration
As described in Note 1 to the consolidated financial statements, the Company’s revenue is primarily generated by its laboratory testing services utilizing its Cologuard and Oncotype tests. The Company’s customer is primarily the patient, but the Company does not enter into a formal reimbursement contract with a patient. The Company’s transaction price is comprised of variable consideration and is allocated entirely to a single performance obligation defined as the point in time an approved patient test result is released to the ordering healthcare provider. Variable consideration is primarily derived from payer and patient billing and can be impacted by several factors such as the amount of contractual adjustments, any patient co-payments, deductibles or patient adherence incentives, the existence of secondary payers, and claim denials. Management estimates the amount of variable consideration using the expected value method and is the sum of probability-weighted amounts in a range of possible consideration amounts. When estimating the amount of variable consideration, management considers several factors, such as historical collections experience, current contractual and statutory requirements, customer mix, patient insurance eligibility and payer reimbursement contracts, and known or anticipated reimbursement trends not yet reflected in the data. The Company’s net accounts receivable as of December 31, 2025 was $299 million.
The principal considerations for our determination that performing procedures relating to the valuation of net accounts receivable - variable consideration is a critical audit matter are (i) the significant judgment by management due to the significant measurement uncertainty when developing the estimated amount of variable consideration; and (ii) a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating audit evidence obtained related to management’s estimate of the amount of variable consideration.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to management’s estimate of the amount of variable consideration, including controls over management’s methodology and data used in developing the estimate. These procedures also included, among others (i) testing management’s process for developing the estimated amount of variable consideration; (ii) evaluating the appropriateness of the method used by management; (iii) testing the completeness and accuracy of the underlying historical collection data used in the method; (iv) testing, on a sample basis, the accuracy of revenue transactions and cash collections from the historical billing and collection data used in management’s method; and (v) performing a retrospective comparison of actual cash collected subsequent to year-end to evaluate the reasonableness of the prior year estimate of the amount of variable consideration.
/s/ PricewaterhouseCoopers LLP
February 13, 2026
We have served as the Company’s auditor since 2020.
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EXACT SCIENCES CORPORATION
Consolidated Balance Sheets
(Amounts in thousands, except share data)
December 31, 2025 | December 31, 2024 | ||||||||||
| ASSETS | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Marketable securities | |||||||||||
| Accounts receivable, net | |||||||||||
| Inventory | |||||||||||
| Prepaid expenses and other current assets | |||||||||||
| Total current assets | |||||||||||
| Long-term assets: | |||||||||||
| Property, plant and equipment, net | |||||||||||
| Operating lease right-of-use assets | |||||||||||
| Goodwill | |||||||||||
| Intangible assets, net | |||||||||||
| Other long-term assets, net | |||||||||||
| Total assets | $ | $ | |||||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | $ | |||||||||
| Accrued liabilities | |||||||||||
| Operating lease liabilities, current portion | |||||||||||
| Convertible notes, net, current portion | |||||||||||
| Other current liabilities | |||||||||||
| Total current liabilities | |||||||||||
| Long-term liabilities: | |||||||||||
Convertible notes, net, less current portion | |||||||||||
| Other long-term liabilities | |||||||||||
| Operating lease liabilities, less current portion | |||||||||||
| Total liabilities | |||||||||||
Commitments and contingencies (Note 14) | |||||||||||
| Stockholders’ equity: | |||||||||||
Preferred stock, $ | |||||||||||
Common stock, $ | |||||||||||
| Additional paid-in capital | |||||||||||
Accumulated other comprehensive income (loss) | ( | ||||||||||
| Accumulated deficit | ( | ( | |||||||||
| Total stockholders’ equity | |||||||||||
| Total liabilities and stockholders’ equity | $ | $ | |||||||||
The accompanying notes are an integral part of these consolidated financial statements.
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EXACT SCIENCES CORPORATION
Consolidated Statements of Operations
(Amounts in thousands, except per share data)
| Year Ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| Revenue | $ | $ | $ | |||||||||||||||||
| Cost of sales | ||||||||||||||||||||
Gross profit | ||||||||||||||||||||
| Operating expenses: | ||||||||||||||||||||
| Research and development | ||||||||||||||||||||
| Sales and marketing | ||||||||||||||||||||
| General and administrative | ||||||||||||||||||||
| Impairment of long-lived and indefinite-lived assets | ||||||||||||||||||||
| Total operating expenses | ||||||||||||||||||||
Other operating income | ||||||||||||||||||||
| Loss from operations | ( | ( | ( | |||||||||||||||||
| Other income (expense) | ||||||||||||||||||||
Investment income, net | ||||||||||||||||||||
| Interest expense, net | ( | ( | ( | |||||||||||||||||
| Total other income (expense) | ||||||||||||||||||||
| Net loss before tax | ( | ( | ( | |||||||||||||||||
| Income tax benefit (expense) | ( | ( | ||||||||||||||||||
| Net loss | $ | ( | $ | ( | $ | ( | ||||||||||||||
| Net loss per share—basic and diluted | $ | ( | $ | ( | $ | ( | ||||||||||||||
| Weighted average common shares outstanding—basic and diluted | ||||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
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EXACT SCIENCES CORPORATION
Consolidated Statements of Comprehensive Loss
(Amounts in thousands)
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Net loss | $ | ( | $ | ( | $ | ( | |||||||||||
| Other comprehensive loss, before tax: | |||||||||||||||||
| Unrealized gain (loss) on available-for-sale investments | ( | ||||||||||||||||
| Foreign currency adjustment | ( | ||||||||||||||||
Comprehensive loss, net of tax | $ | ( | $ | ( | $ | ( | |||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
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Consolidated Statements of Stockholders’ Equity
(Amounts in thousands, except share data)
| Common Stock | Additional Paid In Capital | Accumulated Other Comprehensive Income (Loss) | Accumulated Deficit | Total Stockholders’ Equity | |||||||||||||||||||||||||||||||
| Number of Shares | $ Par Value | ||||||||||||||||||||||||||||||||||
| Balance, Balance, January 1, 2023 | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||
| Exercise of common stock options | — | — | |||||||||||||||||||||||||||||||||
| Issuance of common stock to fund the Company’s 2022 401(k) match | — | — | |||||||||||||||||||||||||||||||||
| Issuance of common stock upon settlement of restricted stock awards, net of shares withheld for taxes | ( | — | — | ||||||||||||||||||||||||||||||||
| Compensation expense related to issuance of stock options and restricted stock awards | — | — | — | — | |||||||||||||||||||||||||||||||
| Purchase of employee stock purchase plan shares | — | — | |||||||||||||||||||||||||||||||||
| Replaced restricted stock awards for business combination | — | — | |||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||
Other comprehensive income | — | — | — | — | |||||||||||||||||||||||||||||||
| Balance, December 31, 2023 | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||
| Exercise of common stock options | — | — | |||||||||||||||||||||||||||||||||
| Issuance of common stock to fund the Company’s 2023 401(k) match | — | — | |||||||||||||||||||||||||||||||||
| Issuance of common stock upon settlement of restricted stock awards, net of shares withheld for taxes | ( | — | — | ( | |||||||||||||||||||||||||||||||
| Compensation expense related to issuance of stock options and restricted stock awards | — | — | — | — | |||||||||||||||||||||||||||||||
| Purchase of employee stock purchase plan shares | — | — | |||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||
Other comprehensive loss | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||
| Balance, December 31, 2024 | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||
| Exercise of common stock options | — | — | |||||||||||||||||||||||||||||||||
| Issuance of common stock to fund the Company’s 2024 401(k) match | — | — | |||||||||||||||||||||||||||||||||
| Issuance of common stock upon settlement of restricted stock awards, net of shares withheld for taxes | ( | — | — | ( | |||||||||||||||||||||||||||||||
| Compensation expense related to issuance of stock options and restricted stock awards | — | — | — | — | |||||||||||||||||||||||||||||||
| Purchase of employee stock purchase plan shares | — | — | |||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||
Other comprehensive income | — | — | — | — | |||||||||||||||||||||||||||||||
| Balance, December 31, 2025 | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
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Consolidated Statements of Cash Flows
(Amounts in thousands, except share data)
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Cash flows from operating activities: | |||||||||||||||||
| Net loss | $ | ( | $ | ( | $ | ( | |||||||||||
Adjustments to reconcile net loss to net cash provided by operating activities: | |||||||||||||||||
| Depreciation | |||||||||||||||||
(Gain) loss on non-marketable and marketable equity investments | ( | ( | |||||||||||||||
Deferred tax benefit | ( | ( | ( | ||||||||||||||
| Stock-based compensation | |||||||||||||||||
Gain on settlements of convertible notes, net | ( | ( | |||||||||||||||
| Amortization of acquired intangible assets | |||||||||||||||||
Impairment of long-lived and indefinite-lived assets | |||||||||||||||||
| Asset acquisition IPR&D expense | |||||||||||||||||
| Gain on contingent consideration from sale of asset | ( | ( | |||||||||||||||
Remeasurement of contingent consideration liabilities | ( | ( | |||||||||||||||
| Non-cash lease expense | |||||||||||||||||
Other | ( | ||||||||||||||||
| Changes in assets and liabilities, net of effects of acquisition: | |||||||||||||||||
| Accounts receivable, net | ( | ( | ( | ||||||||||||||
| Inventory, net | ( | ( | ( | ||||||||||||||
| Operating lease liabilities | ( | ( | ( | ||||||||||||||
| Accounts payable and accrued liabilities | |||||||||||||||||
Other assets | ( | ( | ( | ||||||||||||||
Other liabilities | ( | ||||||||||||||||
Net cash provided by operating activities | |||||||||||||||||
| Cash flows from investing activities: | |||||||||||||||||
| Purchases of marketable securities | ( | ( | ( | ||||||||||||||
Maturities and sales of marketable securities | |||||||||||||||||
| Purchases of property, plant and equipment | ( | ( | ( | ||||||||||||||
Proceeds from contingent consideration receivable | |||||||||||||||||
Maturities and sales of investments in non-marketable securities | |||||||||||||||||
Purchases of non-marketable securities | ( | ( | ( | ||||||||||||||
| Business combination, net of cash acquired and issuance costs | ( | ||||||||||||||||
| Asset acquisitions, net of cash acquired | ( | ( | ( | ||||||||||||||
| Other investing activities | ( | ||||||||||||||||
| Net cash provided by (used in) investing activities | ( | ||||||||||||||||
| Cash flows from financing activities: | |||||||||||||||||
Proceeds from exercise of common stock options, net of cash paid for taxes | |||||||||||||||||
| Proceeds in connection with the Company's employee stock purchase plan | |||||||||||||||||
| Proceeds from issuance of convertible notes | |||||||||||||||||
Payments on accounts receivable securitization facility | ( | ||||||||||||||||
| Payments on settlement of convertible notes | ( | ||||||||||||||||
| Payment of taxes related to net share settlement of equity awards | ( | ||||||||||||||||
| Payments on settlement of contingent consideration liabilities | ( | ||||||||||||||||
| Other financing activities | ( | ( | ( | ||||||||||||||
Net cash provided by (used in) financing activities | ( | ||||||||||||||||
| Effects of exchange rate changes on cash and cash equivalents | ( | ||||||||||||||||
Net increase (decrease) in cash, cash equivalents, and restricted cash | ( | ||||||||||||||||
Cash, cash equivalents, and restricted cash, beginning of period | |||||||||||||||||
Cash, cash equivalents, and restricted cash, end of period | $ | $ | $ | ||||||||||||||
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Consolidated Statements of Cash Flows
(Amounts in thousands, except share data)
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Supplemental disclosure of non-cash investing and financing activities: | |||||||||||||||||
| Property, plant and equipment acquired but not paid | $ | $ | $ | ||||||||||||||
Issuance of | $ | $ | $ | ||||||||||||||
| Supplemental disclosure of cash flow information: | |||||||||||||||||
| Interest paid | $ | $ | $ | ||||||||||||||
Reconciliation of cash, cash equivalents, and restricted cash: | |||||||||||||||||
| Cash and cash equivalents | $ | $ | $ | ||||||||||||||
Restricted cash — included in other long-term assets, net | |||||||||||||||||
Total cash, cash equivalents, and restricted cash | $ | $ | $ | ||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
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Notes to Consolidated Financial Statements
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business
Merger Agreement
On November 19, 2025, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Abbott Laboratories (“Abbott”) and Badger Merger Sub I, Inc., a direct, wholly owned subsidiary of Abbott (“Merger Sub”), providing for, among other things, the merger of Merger Sub with and into Exact (the “Merger”) on the terms and subject to the conditions set forth in the Merger Agreement. Upon the terms and subject to the conditions set forth in the Merger Agreement, at the effective time of the Merger (the “Effective Time”), the separate existence of Merger Sub will cease, and the Company will continue as the surviving corporation in the Merger and as a direct, wholly owned subsidiary of Abbott. At the Effective Time, on the terms and subject to the conditions set forth in the Merger Agreement, each share of Exact common stock (other than certain excluding shares) issued and outstanding immediately prior to the Effective Time will be converted into and will thereafter represent the right to receive $105.00 in cash, without interest, less any applicable withholding taxes. Following the Merger, Exact common stock will no longer be publicly traded or listed on The Nasdaq Stock Market LLC.
Under the terms of the Merger Agreement, the Company is subject to various customary covenants and obligations, including, among others, until the earlier of the Effective Time and the termination of the Merger Agreement, the obligation to use commercially reasonable efforts to conduct the Company's business in the ordinary course of business in all material respects and to refrain from taking certain actions without Abbott’s consent, subject to specified exceptions. The Company does not believe these restrictions will prevent the Company from meeting its debt service obligations, ongoing costs of operations, working capital needs or capital expenditure requirements.
Consummation of the Merger is subject to the satisfaction or waiver of certain conditions, including the adoption of the Merger Agreement by the affirmative vote of holders of a majority of the outstanding shares of Exact common stock entitled to vote thereon (the “Stockholder Approval”), receipt of specified regulatory approvals and the satisfaction of other customary closing conditions.
The Merger Agreement contains specified termination rights for Exact and Abbott, including, among others, the right of each party to terminate if (i) the Merger is not consummated by November 19, 2026, subject to extension in certain cases, (ii) any law or order restraining, enjoining, making illegal or otherwise prohibiting the consummation of the Merger is in effect and has become final and non-appealable, (iii) the Stockholder Approval is not obtained upon a vote taken on the adoption of the Merger Agreement at the meeting of the Company's stockholders held for the purpose of obtaining stockholder approval or any adjournment or postponement thereof, or (iv) the other party breaches or fails to perform its representations, warranties, agreements or covenants in the Merger Agreement in a manner that would cause the conditions to the consummation of the Merger to not be satisfied and does not cure such breach or failure within the applicable cure period, subject to certain exceptions. If the Merger Agreement is terminated under specified circumstances, the Company may be required to pay to Abbott a termination fee of approximately $628.7 million.
The foregoing description of the Merger Agreement and the transactions contemplated thereby does not purport to be complete and is qualified in its entirety by reference to the copy of the Merger Agreement that was attached as Exhibit 2.1 to the Company’s Current Report on Form 8-K filed on November 20, 2025 and that is incorporated by reference as an exhibit to this Annual Report on Form 10-K.
Basis of Presentation and Principles of Consolidation
The accompanying consolidated financial statements include the accounts of Exact Sciences Corporation and those of its wholly owned subsidiaries. All intercompany transactions and balances have been eliminated upon consolidation.
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Notes to Consolidated Financial Statements (Continued)
Use of Estimates
The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Critical accounting policies are those that affect the Company's financial statements materially and involve difficult, subjective or complex judgments by management, and actual results could differ from those estimates. These estimates include revenue recognition, valuation of intangible assets and goodwill, contingent consideration, and accounting for income taxes.
Cash and Cash Equivalents
Marketable Securities
Management determines the appropriate classification of debt securities at the time of purchase and re-evaluates such designation as of each balance sheet date. Debt securities carried at amortized cost are classified as held-to-maturity when the Company has the positive intent and ability to hold the securities to maturity. Debt securities not classified as held-to-maturity are classified as available-for-sale. Available-for-sale securities are carried at fair value. The unrealized gains and losses, net of tax, on the Company's debt securities are reported in other comprehensive income. Marketable equity securities are measured at fair value and the unrealized gains and losses, net of tax, are recognized in other income (expense) in the consolidated statements of operations. The amortized cost of debt securities in this category is adjusted for amortization of premiums and accretion of discounts to maturity computed under the effective interest rate method. Such amortization is included in investment income, net. Realized gains and losses and declines in value as a result of credit losses on available-for-sale securities are included in the consolidated statements of operations as investment income, net. The cost of securities sold is based on the specific identification method. Interest and dividends on securities classified as available-for-sale are included in the consolidated statements of operations as investment income, net.
The Company’s investment policy limits investments to certain types of instruments issued by institutions with investment grade credit ratings and places restrictions on maturities and concentration by type and issuer. Investments in which the Company has the ability and intent, if necessary, to liquidate in order to support its current operations (including those with a contractual term greater than one year from the date of purchase) are classified as current.
Allowance for Doubtful Accounts
The Company estimates an allowance for doubtful accounts against accounts receivable using historical collection trends, aging of accounts, current and future implications surrounding the ability to collect such as economic conditions, and regulatory changes. The allowance for doubtful accounts is evaluated on a regular basis and adjusted when trends, significant events, or other substantive evidence such as an adverse change in a payer's ability to pay indicate that expected collections will be less than previously estimated. At December 31, 2025 and 2024, the allowance for doubtful accounts recorded was not significant to the Company’s consolidated balance sheets. For the years ended December 31, 2025, 2024 and 2023, there was an insignificant amount of bad debt expense written off against the allowance and charged to operating expense.
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Notes to Consolidated Financial Statements (Continued)
Inventory
Inventory is stated at the lower of cost or net realizable value. The Company determines the cost of inventory using the first-in, first out method (“FIFO”). The Company estimates the recoverability of inventory by reference to internal estimates of future demands and product life cycles, including expiration. The Company periodically analyzes its inventory levels to identify inventory that may expire prior to expected sale, no longer meets quality specifications, or has a cost basis in excess of its estimated realizable value and records a charge to cost of sales for such inventory as appropriate.
Direct and indirect manufacturing costs incurred during process validation with probable future economic benefit are capitalized. Validation costs incurred for other research and development activities, which are not permitted to be sold, are expensed to research and development in the Company’s consolidated statements of operations.
Materials that may be used for either research and development or commercial purposes are classified as inventory until the material is consumed or otherwise allocated for research and development. Materials that have alternative uses outside of commercial purposes are classified within prepaid expenses and other current assets on the consolidated balance sheet. If the material is used for research and development, it is expensed as research and development once that determination is made.
Property, Plant and Equipment
Software Development Costs
Costs related to internal use software, including hosted arrangements, are incurred in three stages: the preliminary project stage, the application development stage, and the post-implementation stage. Costs incurred during the preliminary project and post-implementation stages are expensed as incurred. Costs incurred during the application development stage that meet the criteria for capitalization are capitalized and amortized, when the software is ready for its intended use, using the straight‑line method over the estimated useful life of the software, or the duration of the hosting agreement.
Investments in Non-Marketable Securities
The Company determines whether its investments in non-marketable securities are debt or equity based on their characteristics. The Company also evaluates the investee to determine if the entity is a variable interest entity (“VIE”) and, if so, whether the Company is the primary beneficiary of the VIE, in order to determine whether consolidation of the VIE is required. If consolidation is not required and the Company does not have voting control of the entity, the investment is evaluated to determine if the equity method of accounting should be applied. The equity method applies to investments in common stock or in substance common stock where the Company exercises significant influence over the investee.
Investments in non-marketable securities determined to be equity securities without readily determinable fair values are accounted for under the measurement alternative method as permitted in Accounting Standards Codification (“ASC”) 321, Investments - Equity Securities. The Company adjusts the carrying value of its non-marketable equity securities for changes from observable transactions for identical or similar investments of the same issuer, less impairment. All gains and losses on non-marketable equity securities, realized and unrealized, are recognized in investment income, net in the consolidated statements of operations.
Investments in non-marketable securities determined to be debt securities are accounted for as available-for-sale or held-to-maturity securities unless the fair value option is elected.
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Notes to Consolidated Financial Statements (Continued)
Derivative Financial Instruments
Business Combinations and Asset Acquisitions
Intangible Assets
Purchased intangible assets are recorded at fair value. The Company uses a discounted cash flow model to value intangible assets. The discounted cash flow model requires assumptions about the timing and amount of future net cash flows, risk, the cost of capital, terminal values and market participants. The Company’s finite-lived intangible assets are being amortized on a straight-line basis over their estimated useful lives.
Patent costs are capitalized as incurred, only if the Company determines that there is some probable future economic benefit derived from the transaction. A capitalized patent is amortized over its estimated useful life, beginning when such patent is approved. Capitalized patent costs are expensed upon disapproval, upon a decision by the Company to no longer pursue the patent or when the related intellectual property is either sold or deemed to be no longer of value to the Company. The Company determined that all patent costs incurred during the years ended December 31, 2025, 2024, and 2023 should be expensed and not capitalized as the future economic benefit derived from the patent costs incurred cannot be determined.
Acquired In-process Research and Development (“IPR&D”)
Acquired IPR&D represents the fair value assigned to research and development assets that have not reached technological feasibility. The primary basis for determining technological feasibility of these projects is obtaining regulatory approval to market the underlying product. The amounts capitalized are accounted for as indefinite-lived intangible assets and are subject to impairment testing until completion or abandonment of the research and development efforts associated with the projects. Upon successful completion of the project, the capitalized amount is amortized over its estimated useful life. If a project is abandoned, all remaining capitalized amounts are written off immediately. The value assigned to acquired IPR&D is determined using the multi-period excess earnings method approach, which utilizes significant unobservable inputs (Level 3 inputs) including projected revenues, projected gross margin, projected operating expenses, discount rate, tax rate, obsolescence factor, and probability of commercial success. There are often major risks and uncertainties associated with IPR&D projects as the Company is required to obtain regulatory approvals in order to market the resulting products. Such approvals require completing clinical trials that demonstrate the product's effectiveness. Consequently, the eventual realized value of the IPR&D project may vary from its fair value at the date of acquisition, and IPR&D impairment charges may occur in future periods.
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Notes to Consolidated Financial Statements (Continued)
Contingent Consideration Liabilities
Certain of the Company’s business combinations involve potential payment of future consideration that is contingent upon the achievement of certain regulatory and product development milestones being achieved. The Company records contingent consideration at fair value at the date of acquisition based on the consideration expected to be transferred, estimated as the probability-weighted future cash flows, discounted back to present value. The fair value of contingent consideration is measured using projected probabilities of success, projected payment dates, present value-factors, and projected revenues (for revenue-based considerations). Changes in probabilities of success, present-value factors, and projected payment dates may result in adjustments to the fair value measurements. Contingent consideration is remeasured each reporting period using Level 3 inputs, and the change in fair value, including accretion for the passage of time, is recognized as income or expense within general and administrative expenses on the Company’s consolidated statements of operations. Cash contingent consideration payments up to the acquisition date fair value of the contingent consideration liability are classified as financing activities in the consolidated statements of cash flows, and amounts paid in excess of the original acquisition date fair value are classified as operating activities in the consolidated statements of cash flows.
Contingent Consideration Asset
The sale of the Company’s intellectual property and know-how related to the Company’s Oncotype DX Genomic Prostate Score test (“GPS test”) resulted in the recognition of variable consideration in accordance with ASC 606. The Company estimates the amount of variable consideration that it is entitled to each quarter using the most likely amount method and considers whether there are any constraints on the consideration. If it is probable that a significant reversal of a gain would not occur, the Company will record a gain. To determine the classification of the consideration, the Company determines if the consideration is conditional on something other than the passage of time. Revenue-based contingent consideration that is conditional on something other than the passage of time, including future revenues from sales related to the GPS test, result in the variable consideration being classified as a contract asset. At the time the amount earned is determined, and passage of time is the only condition remaining, the contract asset is reclassified to a receivable.
Collateralized Debt Instruments
Debt instruments that are collateralized by security interests in financial assets held by the Company are accounted for as a secured borrowing and therefore: (i) the asset balances pledged as collateral are included within the applicable balance sheet line item and the borrowings are included within long-term debt in the consolidated balance sheet; (ii) interest expense is included within the consolidated statements of operations; and (iii) in the case of collateralized accounts receivable, receipts from customers related to the underlying accounts receivable are reflected as operating cash flows, and (iv) borrowings and repayments under the collateralized loans are reflected as financing cash flows within the consolidated statements of cash flows.
Goodwill
Impairment of Long-Lived Assets
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Notes to Consolidated Financial Statements (Continued)
Net Loss Per Share
Basic net loss per common share was determined by dividing net loss applicable to common stockholders by the weighted average common shares outstanding during the period. Basic and diluted net loss per share is the same because all outstanding common stock equivalents have been excluded, as they are anti-dilutive as a result of the Company’s losses.
The following potentially issuable common shares were not included in the computation of diluted net loss per share because they would have an anti-dilutive effect due to net losses for each period:
| December 31, | ||||||||||||||||||||
| (In thousands) | 2025 | 2024 | 2023 | |||||||||||||||||
| Shares issuable upon conversion of convertible notes | ||||||||||||||||||||
| Shares issuable upon the release of restricted stock awards | ||||||||||||||||||||
| Shares issuable upon the release of performance share units | ||||||||||||||||||||
| Shares issuable upon exercise of stock options | ||||||||||||||||||||
Accounting for Stock-Based Compensation
The Company requires all share-based payments to employees, including grants of employee stock options, restricted stock, restricted stock units, shares purchased under an employee stock purchase plan (if certain parameters are not met), and performance share units to be recognized in the financial statements based on their grant date fair values. The estimated fair value of these awards is recognized to expense using the straight-line method over the requisite service period, which is generally the vesting period. The Company will recognize expense on an accelerated basis for restricted stock units upon an employee's death, disability, or upon retirement eligibility, provided certain criteria are met. Forfeitures of any share-based awards are recognized as they occur.
The fair values and recognition of the Company’s share-based payment awards are determined as follows:
The fair value of each service-based option award is estimated on the date of grant using the Black-Scholes option-pricing model. The Black-Scholes pricing model utilizes the following assumptions:
Expected Term—Expected life of an option award is the average length of time over which the Company expects employees will exercise their options, which is based on historical experience with similar grants.
Expected Volatility—Expected volatility is based on the Company’s historical stock volatility data over the expected term of the awards.
Risk-Free Interest Rate—The Company bases the risk-free interest rate on the implied yield currently available on U.S. Treasury zero-coupon issues with an equivalent expected term.
The fair value of service-based awards for each restricted stock unit award is determined on the date of grant using the closing stock price on that day.
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Notes to Consolidated Financial Statements (Continued)
Research and Development Costs
Research and development costs are expensed as incurred. These expenses include the costs of the Company's proprietary research and development efforts, as well as costs of IPR&D projects acquired as part of an asset acquisition that have no alternative future use. Acquired IPR&D assets that are acquired in an asset acquisition and which have no alternative future use are classified as an investing cash outflow in the consolidated statements of cash flows. Upfront and milestone payments due to third parties in connection with research and development collaborations prior to regulatory approval are expensed as incurred. Milestone payments due to third parties upon, or subsequent to, regulatory approval are capitalized and amortized into research and development costs over the shorter of the remaining license or product patent life, when there are no corresponding revenues related to the license or product. Nonrefundable advance payments for goods and services that will be used in future research and development activities are expensed when the activity has been performed or when the goods have been received, rather than when the payment is made.
Advertising Costs
Advertising costs are expensed as incurred. The Company expensed approximately $199.2 million, $180.3 million, and $137.9 million of media advertising during the years ended December 31, 2025, 2024, and 2023, respectively, which is recorded in sales and marketing expenses on the Company’s consolidated statements of operations.
Fair Value Measurements
The Financial Accounting Standards Board (“FASB”) has issued authoritative guidance that requires fair value to be based on the assumptions market participants would use when pricing an asset or liability and establishes a fair value hierarchy that prioritizes the information used to develop those assumptions. Under that standard, fair value measurements are separately disclosed by level within the fair value hierarchy. The fair value hierarchy establishes and prioritizes the inputs used to measure fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs. Observable inputs are inputs that reflect the assumptions that market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances.
Leases
The Company acts as lessee in its lease agreements, which include operating leases for corporate offices, laboratory space, warehouse space, vehicles, and certain laboratory and office equipment, and finance leases for certain equipment and vehicles.
The Company determines whether an arrangement is, or contains, a lease at inception. The Company records the present value of lease payments as right-of-use (“ROU”) assets and lease liabilities on the consolidated balance sheets. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent an obligation to make lease payments based on the present value of lease payments over the lease term. Classification of lease liabilities as either current or non-current is based on the expected timing of payments due under the Company’s obligations.
As the implicit interest rate is not readily determinable in most of the Company’s leases, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The incremental borrowing rate is the rate of interest that a lessee would have to pay to borrow on a collateralized basis over a similar term and at an amount equal to the lease payments in a similar economic environment and credit profile.
The ROU asset also consists of any lease incentives received. The lease terms used to calculate the ROU asset and related lease liability include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. “Reasonably certain” is assessed internally based on economic, industry, company, strategic and contractual factors. The leases have remaining lease terms of 1 year to 15 years, some of which include options to extend the lease for up to 10 years, and some of which include options to terminate the lease within 1 year. Operating lease expense and amortization of finance lease ROU assets are recognized on a straight-line basis over the lease term as an operating expense. Finance lease interest expense is recorded as interest expense on the Company’s consolidated statements of operations.
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Notes to Consolidated Financial Statements (Continued)
The Company accounts for leases acquired in business combinations by measuring the lease liability at the present value of the remaining lease payments as if the acquired lease were a new lease for the Company. This measurement includes recognition of a lease intangible for any below-market terms present in the leases acquired. The below-market lease intangible is included in the ROU asset on the consolidated balance sheets and are amortized over the remaining lease term. The Company has not acquired any leases with above-market terms.
Revenue Recognition
Revenues are recognized when the satisfaction of the performance obligation occurs, in an amount that reflects the consideration the Company expects to collect in exchange for those services. The Company’s revenue is primarily generated by its laboratory testing services utilizing its Cologuard, Oncotype DX, and PreventionGenetics LLC (“PreventionGenetics”) tests. The services are considered completed when the performance obligation is fulfilled, which is upon release of an approved patient test result to the healthcare provider. The Company follows ASC 606, Revenue from Contracts with Customers, to account for its laboratory service revenues.
Laboratory testing services
The Company’s customer is primarily the patient, but the Company does not enter into a formal reimbursement contract with a patient. The Company establishes a contract with a patient in accordance with other customary business practices, which is the point in time an order is received from a provider and a patient specimen has been returned to the laboratory for testing. Payment terms are a function of a patient’s existing insurance benefits, including the impact of coverage decisions with Center for Medicare & Medicaid Services (“CMS”) and applicable reimbursement contracts established between the Company and payers. However, when a patient is considered self-pay, or in the context of certain lab service or reference agreements, the Company requires payment prior to the commencement of the Company's performance obligations.
Additionally, the Company periodically engages with third party international distributor partners to provide patients access to the Company’s laboratory testing services and is considered the principal in these arrangements as control over the intellectual property, lab processing activities, and result delivery remain with the Company. Revenues from these contracts are recorded at gross in an amount that reflects the amount ultimately paid to the distributor for the testing services if known or, if this is unknown or unable to be estimated, is recorded at an effective net fixed transaction price equal to the amount billed to and received from the distributor.
The Company’s contracts have a single performance obligation, which is satisfied upon rendering of services, which culminates in the release of a patient’s test result to the ordering healthcare provider.
The Company’s transaction price is comprised of variable consideration and is allocated entirely to a single performance obligation defined as the point in time an approved patient test result is released to the ordering healthcare provider. Variable consideration is primarily derived from payer and patient billing and can be impacted by several factors such as the amount of contractual adjustments, any patient co-payments, deductibles or patient adherence incentives, the existence of secondary payers, and claim denials. Estimates of variable consideration are calculated using the expected value method and is the sum of probability-weighted amounts in a range of possible consideration amounts. Several factors are evaluated during this process, such as historical collections experience, current contractual and statutory requirements, customer mix, patient insurance eligibility and payer reimbursement contracts, and known or anticipated reimbursement trends not yet reflected in the data. The Company limits the amount of variable consideration included in the transaction price to the unconstrained portion of such consideration. In other words, the Company recognizes revenue up to the amount of variable consideration that is not subject to a significant reversal until additional information is obtained or the uncertainty associated with the additional payments or refunds is subsequently resolved. Differences between original estimates and subsequent revisions, including final settlements, represent changes in the estimate of variable consideration and are included in the period in which such revisions are made.
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Notes to Consolidated Financial Statements (Continued)
The Company monitors its estimates of transaction price to depict conditions that exist at each reporting date. If the Company subsequently determines that it will collect more or less consideration than it originally estimated for a contract with a patient, it will account for the change as an increase or decrease in the estimate of the transaction price (i.e., an upward or downward revenue adjustment) in the period identified.
When the Company does not have significant historical experience or that experience has limited predictive value, the constraint over estimates of variable consideration may result in no revenue being recognized upon completion of the performance obligations associated with the Company's tests, with recognition, generally occurring at the date of cash receipt.
Contract Balances
The timing of revenue recognition, billings, and cash collections results in billed accounts receivable and deferred revenue on the consolidated balance sheets. Generally, billing occurs after the release of an approved patient test result to the healthcare provider, resulting in an account receivable. However, the Company sometimes receives advance payment from a patient or a direct bill payer before services are performed, resulting in deferred revenue. The deferred revenue recorded is recognized as revenue at the point in time an approved patient test result is released to the patient's healthcare provider.
Practical Expedients
The Company does not adjust the transaction price for the effects of a significant financing component, as at contract inception, the Company expects the collection cycle to be one year or less.
The Company expenses sales commissions when incurred because the amortization period would have been one year or less. These costs are recorded within sales and marketing expenses in the Company’s consolidated statements of operations.
The Company incurs certain other costs that are incurred regardless of whether a contract is obtained. Such costs are primarily related to legal services and patient communications (e.g. adherence reminder letters). These costs are expensed as incurred and recorded within general and administrative expenses in the Company’s consolidated statements of operations.
Cost of Sales
Cost of sales reflects the aggregate costs incurred in delivering the Company's products and services and includes material and service costs, personnel costs, including stock-based compensation expense, equipment, and infrastructure expenses associated with laboratory testing services, shipping charges, allocated overhead such as rent, information technology costs, equipment depreciation, and utilities, and amortization of acquired developed technology or license intangible assets related to products commercialized by the Company. Costs associated with the shipment of Cologuard test collection kits are recognized upon shipment, and costs associated with performing the Company’s tests are recorded as the tests are performed regardless of whether revenue was recognized with respect to that test.
Foreign Currency Transactions
The functional currency for most of the Company’s international subsidiaries is the United States (“U.S.”) dollar. When the functional currency differs from the local currency, monetary assets and liabilities are remeasured at the current period-end exchange rate, while non-monetary assets and liabilities are remeasured at the historical rate. The gains and losses as a result of exchange rate adjustments of these subsidiaries are recognized in the consolidated statements of operations. Net foreign currency transaction gains or losses were not significant to the consolidated statements of operations for the periods presented.
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Notes to Consolidated Financial Statements (Continued)
Concentration of Credit Risk
Financial instruments that subject the Company to credit risk consist of cash, cash equivalents, and marketable securities. As of December 31, 2025, the Company had cash and cash equivalents deposited in financial institutions in which the balances exceed the federal government agency insured limit of $250,000 by approximately $892.6 million. The Company has not experienced any losses in such accounts and management believes it is not exposed to any significant credit risk.
Through December 31, 2025, the Company’s revenues have been primarily derived from the sale of Cologuard and Oncotype tests. The following is a breakdown of revenue and accounts receivable from major payers:
| % Revenue for the years ended December 31, | % Accounts Receivable at December 31, | |||||||||||||||||||||||||||||||||||||
| Major Payer | 2025 | 2024 | 2023 | 2025 | 2024 | 2023 | ||||||||||||||||||||||||||||||||
| Centers for Medicare and Medicaid Services | ||||||||||||||||||||||||||||||||||||||
| UnitedHealthcare | ||||||||||||||||||||||||||||||||||||||
Tax Positions
A valuation allowance to reduce the deferred tax assets is reported if, based on the weight of the evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The Company has incurred significant losses since its inception and due to the uncertainty of the amount and timing of future taxable income, the Company has determined that a valuation allowance at December 31, 2025 and 2024 is necessary to reduce the tax assets to the amount that is more likely than not to be realized. Due to the existence of the valuation allowance, future changes in the Company's unrecognized tax benefits will not impact the Company's effective tax rate.
Guarantees and Indemnifications
The Company, as permitted under Delaware law and in accordance with its bylaws, indemnifies its officers and directors for certain events or occurrences, subject to certain limits, while the officer or director is or was serving at the Company’s request in such capacity. The term of the indemnification period is for the officer’s or director’s lifetime. The maximum amount of potential future indemnification is unlimited; however, the Company has a directors and officers insurance policy that limits its exposure and may enable it to recover a portion of any future amounts paid. The Company believes the fair value of these indemnification agreements is minimal. Accordingly, the Company has not recorded any liabilities for these agreements as of December 31, 2025 and 2024.
Recent Accounting Pronouncements
Recently Adopted Accounting Pronouncements
In December 2023, the FASB issued Accounting Standards Update (“ASU”) No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. This update improves income tax disclosure requirements, primarily through enhanced transparency and decision usefulness of disclosures. The amendments in this update should be applied prospectively with the option to apply retrospectively and are effective for fiscal years beginning after December 15, 2024. The Company adopted and prospectively applied the amendments in this update during the fourth quarter of fiscal year 2025.
Recently Issued Accounting Pronouncements Not Yet Adopted
In October 2023, the FASB issued ASU No. 2023-06, Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative. This update modifies the disclosure or presentation requirements of a variety of topics in the ASC to conform with certain Securities and Exchange Commission (“SEC”) amendments in Release No. 33-10532, Disclosure Update and Simplification. The amendments in this update should be applied prospectively, and the effective date for each amendment will be the date on which the SEC’s removal of that related disclosure from Regulation S-X or S-K becomes effective. However, if the SEC has not removed the related disclosure from its regulations by June 30, 2027, the amendments will be removed from the Codification and not become effective. Early adoption is prohibited. The Company is currently evaluating the potential impact of this guidance on its consolidated financial statements.
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Notes to Consolidated Financial Statements (Continued)
In November 2024, the FASB issued ASU No. 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. This update enhances financial statement disclosures by requiring public business entities to disclose specified information about certain costs and expenses including the amounts of (a) purchases of inventory, (b) employee compensation, (c) depreciation, and (d) intangible asset amortization included in each relevant expense caption. The update also requires disclosure of certain amounts that are already required to be disclosed under current GAAP, disclosure of a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively, and disclosure of the total amount of selling expenses and, in annual reporting periods, an entity’s definition of selling expenses. The amendments in this update may be applied either prospectively or retrospectively and are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the potential impact of this guidance on its consolidated financial statements.
In May 2025, the FASB issued ASU No. 2025-03, Business Combinations (Topic 805) and Consolidation (Topic 810): Determining the Accounting Acquirer in the Acquisition of a Variable Interest Entity. This guidance clarifies the framework for identifying the accounting acquirer in transactions involving variable interest entities that meet the definition of a business. The amendments should be applied prospectively and are effective for fiscal years beginning after December 15, 2026, including interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the potential impact of this guidance on its consolidated financial statements.
In July 2025, the FASB issued ASU No. 2025-05, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses for Account Receivable and Contract Assets. This update introduces a practical expedient for all entities when estimating expected credit losses on current accounts receivable and current contract assets arising from revenue transactions accounted for under Topic 606. The expedient allows entities to assume current conditions as of the balance sheet date remain unchanged over the remaining life of the asset. The amendments are required to be applied prospectively and are effective for annual and interim periods beginning after December 15, 2025. Early adoption is permitted. The Company is currently evaluating adoption of the practical expedient.
In September 2025, the FASB issued ASU No. 2025-06, Intangibles—Goodwill and Other— Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. This update provides amendments to clarify and modernize the accounting for costs incurred to develop or acquire internal-use software. The amendments address the capitalization of implementation costs by utilizing a principles-based approach and consolidates website development guidance under Subtopic 350-40. The amendments can be applied prospectively, modified prospectively, or retrospectively and are effective for annual and interim periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the potential impact of this guidance and the timing of adoption.
In September 2025, the FASB issued ASU No. 2025-07, Derivatives and Hedging (Topic 815) and Revenue from Contracts with Customers (Topic 606): Derivatives Scope Refinements and Scope Clarification for Share-Based Noncash Consideration from a Customer in a Revenue Contract. This update introduces a scope exception to derivative accounting for certain contracts with underlyings tied to operations or activities specific to one of the parties. Additionally, the update clarifies that share-based noncash consideration received from a customer should be accounted for under Topic 606 until the right to receive or retain the consideration becomes unconditional. The amendments can be applied prospectively or modified retrospectively and are effective for annual and interim periods beginning after December 15, 2026. The Company is currently evaluating the potential impact of this guidance and the timing of adoption. The provisions related to Topic 606 are not applicable.
In December 2025, the FASB issued ASU No. 2025-10, Government Grants (Topic 832): Accounting for Government Grants Received by Business Entities. This update establishes authoritative guidance for entities receiving government grants, replacing previous guidance that relied on analogies to IAS 20 or ASC 450. Under the new guidance, entities must first determine whether the grant is related to an asset or income. Grants related to assets can either adopt the deferred income approach or the cost accumulation approach while grants related to income should be recognized in earnings on a systematic and rational basis over the periods in which the costs are incurred. The amendments can be applied modified prospectively, modified retrospectively, or retrospectively and are effective for annual and interim periods beginning after December 15, 2028. Early adoption is permitted. The Company is currently evaluating the potential impact of the guidance and the timing of adoption.
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Notes to Consolidated Financial Statements (Continued)
In December 2025, the FASB issued ASU No. 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements. This update clarifies that all entities issuing interim financial statements under U.S. GAAP fall within the scope of ASC 270. SEC registrants must follow the requirements of Regulation S-X, Rule 10-01, while non-SEC registrants may present interim financial statements, and related notes, under GAAP at the same level of detail as annual reporting. Additionally, entities issuing condensed interim financial statements must disclose material events occurring since the end of the prior fiscal year. The amendments can be applied prospectively or retrospectively, and are effective for annual and interim periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the potential impact of this guidance and the timing of adoption.
(2) REVENUE
| Year Ended December 31, | ||||||||||||||||||||
| (In thousands) | 2025 | 2024 | 2023 | |||||||||||||||||
| Screening | ||||||||||||||||||||
| Medicare Parts B & C | $ | $ | $ | |||||||||||||||||
| Commercial | ||||||||||||||||||||
| Other | ||||||||||||||||||||
| Total Screening | ||||||||||||||||||||
| Precision Oncology | ||||||||||||||||||||
| Medicare Parts B & C | $ | $ | $ | |||||||||||||||||
| Commercial | ||||||||||||||||||||
| International | ||||||||||||||||||||
| Other | ||||||||||||||||||||
| Total Precision Oncology | ||||||||||||||||||||
| COVID-19 Testing | $ | $ | $ | |||||||||||||||||
| Total | $ | $ | $ | |||||||||||||||||
Screening revenue primarily includes laboratory service revenue from Cologuard and PreventionGenetics, LLC tests while Precision Oncology revenue primarily includes laboratory service revenue from global Oncotype DX and therapy selection tests. The Company discontinued its COVID-19 testing operations in the second quarter of 2023.
At each reporting period end, the Company conducts an analysis of the estimates used to calculate the transaction price to determine whether any new information available impacts those estimates made in prior reporting periods. Adjustments to revenue recognized during the period relating to prior period estimates were less than 1 %, 1 %, and 2 % of revenue recorded in the Company’s consolidated statement of operations for the years ended December 31, 2025, 2024, and 2023, respectively.
The Company’s deferred revenue, which is reported in other current liabilities in the Company’s consolidated balance sheets, was not significant as of December 31, 2025 and 2024.
Revenue recognized for the years ended December 31, 2025 and 2024, which was included in the deferred revenue balance at the beginning of the year was not significant.
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Notes to Consolidated Financial Statements (Continued)
(3) MARKETABLE SECURITIES
The following table sets forth the Company’s cash, cash equivalents, and marketable securities at December 31, 2025 and 2024:
| December 31, | ||||||||||||||
| (In thousands) | 2025 | 2024 | ||||||||||||
| Cash and cash equivalents | ||||||||||||||
| Cash and money market | $ | $ | ||||||||||||
| Cash equivalents | ||||||||||||||
| Total cash and cash equivalents | ||||||||||||||
| Marketable securities | ||||||||||||||
| Available-for-sale debt securities | $ | $ | ||||||||||||
| Equity securities | ||||||||||||||
| Total marketable securities | ||||||||||||||
| Total cash, cash equivalents, and marketable securities | $ | $ | ||||||||||||
Available-for-sale debt securities, including the classification within the consolidated balance sheet at December 31, 2024, consisted of the following:
| (In thousands) | Amortized Cost | Gains in AOCI (1) | Losses in AOCI (1) | Estimated Fair Value | ||||||||||||||||||||||
| Cash equivalents | ||||||||||||||||||||||||||
| Commercial paper | $ | $ | $ | $ | ||||||||||||||||||||||
| Total cash equivalents | ||||||||||||||||||||||||||
| Marketable securities | ||||||||||||||||||||||||||
| Corporate bonds | $ | $ | $ | ( | $ | |||||||||||||||||||||
| U.S. government agency securities | ( | |||||||||||||||||||||||||
| Asset backed securities | ( | |||||||||||||||||||||||||
| Total marketable securities | ( | |||||||||||||||||||||||||
| Total available-for-sale debt securities | $ | $ | $ | ( | $ | |||||||||||||||||||||
(1) There was no tax impact from the gains and losses in AOCI.
The following table summarizes the gross unrealized losses and fair values of available-for-sale debt securities in an unrealized loss position as of December 31, 2024, aggregated by investment category and length of time those individual securities have been in a continuous unrealized loss position:
Less than one year | One year or greater | Total | ||||||||||||||||||||||||||||||||||||
| (In thousands) | Fair Value | Gross Unrealized Loss | Fair Value | Gross Unrealized Loss | Fair Value | Gross Unrealized Loss | ||||||||||||||||||||||||||||||||
| Marketable securities | ||||||||||||||||||||||||||||||||||||||
| U.S. government agency securities | $ | $ | ( | $ | $ | ( | $ | $ | ( | |||||||||||||||||||||||||||||
| Corporate bonds | ( | ( | ||||||||||||||||||||||||||||||||||||
| Asset backed securities | ( | ( | ( | |||||||||||||||||||||||||||||||||||
| Total available-for-sale securities | $ | $ | ( | $ | $ | ( | $ | $ | ( | |||||||||||||||||||||||||||||
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Notes to Consolidated Financial Statements (Continued)
The Company evaluates investments that are in an unrealized loss position for impairment as a result of credit loss. It was determined that no credit losses exist as of December 31, 2025 and 2024 because the change in market value for those securities in an unrealized loss position has resulted from fluctuating interest rates rather than a deterioration of the credit worthiness of the issuers.
The gains and losses recorded on available-for-sale debt securities and equity securities are included in investment income, net in the Company’s consolidated statements of operations. The gains and losses recorded were not significant for the years ended December 31, 2025, 2024, and 2023.
(4) INVENTORY
Inventory consisted of the following:
| December 31, | ||||||||||||||
| (In thousands) | 2025 | 2024 | ||||||||||||
| Raw materials | $ | $ | ||||||||||||
| Semi-finished and finished goods | ||||||||||||||
| Total inventory | $ | $ | ||||||||||||
(5) PROPERTY, PLANT AND EQUIPMENT
The carrying value and estimated useful lives of property, plant and equipment are as follows:
| December 31, | ||||||||||||||||||||
| (In thousands) | Estimated Useful Life | 2025 | 2024 | |||||||||||||||||
| Property, plant and equipment | ||||||||||||||||||||
| Land | n/a | $ | $ | |||||||||||||||||
| Leasehold and building improvements | (1) | |||||||||||||||||||
| Land improvements | ||||||||||||||||||||
| Buildings | ||||||||||||||||||||
| Computer equipment and computer software | ||||||||||||||||||||
Machinery and equipment | ||||||||||||||||||||
| Furniture and fixtures | ||||||||||||||||||||
| Assets under construction | n/a | |||||||||||||||||||
| Property, plant and equipment, at cost | ||||||||||||||||||||
| Accumulated depreciation | ( | ( | ||||||||||||||||||
| Property, plant and equipment, net | $ | $ | ||||||||||||||||||
(1) Lesser of remaining lease term, building life, or estimated useful life.
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Notes to Consolidated Financial Statements (Continued)
(6) INTANGIBLE ASSETS AND GOODWILL
Intangible Assets
The following table summarizes the net-book-value and estimated remaining life of the Company’s intangible assets as of December 31, 2025:
| (In thousands) | Weighted Average Remaining Life (Years) | Cost | Accumulated Amortization | Net Balance at December 31, 2025 | ||||||||||||||||||||||
| Finite-lived intangible assets | ||||||||||||||||||||||||||
Acquired developed technology | $ | $ | ( | $ | ||||||||||||||||||||||
| Trade name | ( | |||||||||||||||||||||||||
| Patents and licenses | ( | |||||||||||||||||||||||||
| Customer relationships | ( | |||||||||||||||||||||||||
| Total finite-lived intangible assets | ( | |||||||||||||||||||||||||
| In-process research and development | n/a | — | ||||||||||||||||||||||||
| Total intangible assets | $ | $ | ( | $ | ||||||||||||||||||||||
The following table summarizes the net-book-value and estimated remaining life of the Company’s intangible assets as of December 31, 2024:
| (In thousands) | Weighted Average Remaining Life (Years) | Cost | Accumulated Amortization | Net Balance at December 31, 2024 | ||||||||||||||||||||||
| Finite-lived intangible assets | ||||||||||||||||||||||||||
Acquired developed technology | $ | $ | ( | $ | ||||||||||||||||||||||
| Trade name | ( | |||||||||||||||||||||||||
| Patents and licenses | ( | |||||||||||||||||||||||||
| Customer relationships | ( | |||||||||||||||||||||||||
| Total finite-lived intangible assets | ( | |||||||||||||||||||||||||
| In-process research and development | n/a | — | ||||||||||||||||||||||||
| Total intangible assets | $ | $ | ( | $ | ||||||||||||||||||||||
As of December 31, 2025, the estimated future amortization expense associated with the Company’s finite-lived intangible assets for each of the five succeeding fiscal years is as follows:
| (In thousands) | ||||||||
| 2026 | $ | |||||||
| 2027 | ||||||||
| 2028 | ||||||||
| 2029 | ||||||||
| 2030 | ||||||||
| Thereafter | ||||||||
| Total | $ | |||||||
The Company recorded an IPR&D asset of $1.25 billion related to a project associated with the development of a blood-based, multi-cancer screening test (“MCED”) as part of the acquisition of Thrive Earlier Detection Corporation (“Thrive”) in January 2021.
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Notes to Consolidated Financial Statements (Continued)
During the fourth quarter of 2024, the Company performed a quantitative impairment assessment for the IPR&D asset, which required a fair value measurement as of the Company's annual test date, November 15, 2024. The Company determined that the fair value of the IPR&D was $420.0 million and recorded a non-cash, pre-tax impairment charge of $830.0 million. The impairment charge recorded was the result of a decrease in projected cash flows for the asset due to external factors since the acquisition, primarily an expected decline in reimbursement rates. The ongoing legislation discussion around the proposed MCED Act legislation gave the Company new information on how reimbursement may develop. The fair value of the IPR&D asset was measured using the multi-period excess earnings method approach, which utilizes significant unobservable inputs (Level 3 inputs) including projected revenues, projected gross margin, projected operating expenses, discount rate, tax rate, obsolescence factor, and probability of commercial success. The discount rate utilized in the fair value measurement was 18.0%. The impairment loss recorded is included in impairment of long-lived and indefinite-lived assets in the Company’s consolidated statement of operations.
The Company performed a quantitative assessment as part of its annual IPR&D impairment analysis in the fourth quarter of 2025 under which it determined that the fair value exceeded the carrying value and no impairment loss was recorded.
There were no
Goodwill
The change in the carrying amount of goodwill for the years ended December 31, 2025 and 2024 is as follows:
| (In thousands) | ||||||||
| Balance, January 1, 2024 | $ | |||||||
Resolution Bioscience acquisition adjustments (1) | ||||||||
Effects of changes in foreign currency exchange rates | ( | |||||||
| Balance, December 31, 2024 | ||||||||
| Effects of changes in foreign currency exchange rates | ||||||||
| Balance, December 31, 2025 | $ | |||||||
(7) FAIR VALUE MEASUREMENTS
The three levels of the fair value hierarchy established are as follows:
Level 1 Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis.
Level 2 Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.
Level 3 Unobservable inputs that reflect the Company’s assumptions about the assumptions that market participants would use in pricing the asset or liability. Unobservable inputs shall be used to measure fair value to the extent that observable inputs are not available.
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Notes to Consolidated Financial Statements (Continued)
The following table presents the Company’s fair value measurements as of December 31, 2025 along with the level within the fair value hierarchy in which the fair value measurements, in their entirety, fall.
| (In thousands) | Fair value at December 31, 2025 | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||||||||||||
Cash and cash equivalents | ||||||||||||||||||||||||||
| Cash and money market | $ | $ | $ | $ | ||||||||||||||||||||||
| Marketable securities | ||||||||||||||||||||||||||
Equity securities | $ | $ | $ | $ | ||||||||||||||||||||||
| Non-marketable securities | $ | $ | $ | $ | ||||||||||||||||||||||
| Liabilities | ||||||||||||||||||||||||||
| Contingent consideration | $ | ( | $ | $ | $ | ( | ||||||||||||||||||||
| Total | $ | $ | $ | $ | ( | |||||||||||||||||||||
The following table presents the Company’s fair value measurements as of December 31, 2024 along with the level within the fair value hierarchy in which the fair value measurements, in their entirety, fall.
| (In thousands) | Fair Value at December 31, 2024 | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||||||||||||
Cash, cash equivalents, and restricted cash | ||||||||||||||||||||||||||
| Cash and money market | $ | $ | $ | $ | ||||||||||||||||||||||
Restricted cash (1) | ||||||||||||||||||||||||||
| U.S. government agency securities | ||||||||||||||||||||||||||
| Marketable securities | ||||||||||||||||||||||||||
| Corporate bonds | $ | $ | $ | $ | ||||||||||||||||||||||
| U.S. government agency securities | ||||||||||||||||||||||||||
| Asset backed securities | ||||||||||||||||||||||||||
Equity securities | ||||||||||||||||||||||||||
| Non-marketable securities | $ | $ | $ | $ | ||||||||||||||||||||||
| Liabilities | ||||||||||||||||||||||||||
| Contingent consideration | $ | ( | $ | $ | $ | ( | ||||||||||||||||||||
| Total | $ | $ | $ | $ | ( | |||||||||||||||||||||
There have been no material changes in valuation techniques or transfers between fair value measurement levels during the year ended December 31, 2025. The fair value of Level 2 instruments classified as cash equivalents and marketable debt securities are valued using a third-party pricing agency where the valuation is based on observable inputs including pricing for similar assets and other observable market factors.
Non-Marketable Securities
The following table summarizes the Company’s non-marketable securities, which are primarily included in other long-term assets on the consolidated balance sheet as of December 31, 2025 and December 31, 2024:
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Notes to Consolidated Financial Statements (Continued)
December 31, | ||||||||||||||
| (In thousands) | 2025 | 2024 | ||||||||||||
| Investments for which the fair value option has been elected | $ | $ | ||||||||||||
| Investments without readily determinable fair values | ||||||||||||||
| Equity method investments | ||||||||||||||
| Total | $ | $ | ||||||||||||
Fair Value Option Securities
The Company has elected the fair value option to measure certain non-marketable securities at fair value to simplify the accounting. The fair value measurement of non-marketable securities is categorized as Level 3 as the measurement amount is primarily based on significant, unobservable inputs.
In August 2025, the Company executed a note purchase agreement with Freenome Holdings, Inc. (“Freenome”) under which the Company purchased a $50.0 million senior convertible note, which bears interest at a rate of 5.0 % per year and matures on August 12, 2030. The convertible note and accrued interest will be paid back in cash upon maturity, if not previously repaid or converted into equity at the applicable conversion price pursuant to optional or automatic mechanisms per the note purchase agreement. The Company utilizes a probability-weighted scenario-based discounted cash flow model under the income approach to measure the fair value of the note. Probabilities are applied to each potential scenario and the resulting values are discounted using a present-value factor. The passage of time, in addition to changes in probabilities and the present-value factor, may result in adjustments to the fair value measurement. Interest income is accrued based on the contractual annual interest rate, which is included in interest expense, net in the consolidated statement of operations. The fair value of the convertible note was $50.1 million as of December 31, 2025.
Gains and losses recorded on non-marketable securities for which the fair value option has been elected are recognized in investment income, net in the consolidated statement of operations. The following table provides a reconciliation of the beginning and ending balances of non-marketable securities valued using the fair value option:
| (In thousands) | Non-Marketable Securities | |||||||
Beginning balance, January 1, 2024 | $ | |||||||
Changes in fair value | ( | |||||||
Settlement of non-marketable securities | ( | |||||||
Balance, December 31, 2024 | ||||||||
Purchases of non-marketable securities | ||||||||
| Changes in fair value | ||||||||
Ending balance, December 31, 2025 | $ | |||||||
Investments without Readily Determinable Fair Values
Investments without readily determinable fair values had the following cumulative upward and downward adjustments and aggregate carrying amounts as of December 31, 2025 and 2024:
December 31, | ||||||||||||||
(In thousands) | 2025 | 2024 | ||||||||||||
Cumulative upward adjustments (1) | $ | $ | ||||||||||||
Cumulative downward adjustments and impairments (2) | ( | ( | ||||||||||||
| Aggregate carrying value | ||||||||||||||
_________________________________
(1) There were no material upward adjustments recorded for the years ended December 31, 2025, 2024, and 2023.
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Notes to Consolidated Financial Statements (Continued)
There were no material realized gains or losses recorded during the years ended December 31, 2025, 2024, and 2023.
Equity Method Investments
The Company has committed capital to venture capital investment funds of $18.0 million, of which $9.4 million remains callable through 2033 as of December 31, 2025. The aggregate carrying amount of these funds was $7.8 million and $7.5 million as of December 31, 2025 and 2024, respectively. Gains and losses recorded on the Company's investments in these funds were not significant for the years ended December 31, 2025, 2024, and 2023.
Contingent Consideration Liabilities
The fair value of the contingent consideration liabilities was $289.0 million and $282.2 million as of December 31, 2025 and 2024, respectively. As of December 31, 2025, the contingent consideration liability was included in other long-term liabilities in the consolidated balance sheet. As of December 31, 2024, $19.7 million was included in other current liabilities and $262.5 million was included in other long-term liabilities in the consolidated balance sheet.
The following table provides a reconciliation of the beginning and ending balances of contingent consideration:
Year Ended December 31, | ||||||||||||||||||||
| (In thousands) | 2025 | 2024 | 2023 | |||||||||||||||||
Beginning balance | $ | $ | $ | |||||||||||||||||
Changes in fair value (1) | ( | ( | ||||||||||||||||||
Payments (2) | ( | ( | ( | |||||||||||||||||
Ending balance | $ | $ | $ | |||||||||||||||||
(1) The change in fair value of the contingent consideration liability is included in general and administrative expenses in the consolidated statement of operations for the years ended December 31, 2025, 2024, and 2023.
(2) Payments were made to settle the product development milestone contingent consideration liabilities previously recorded related to the Company's acquisitions of Ashion Analytics, LLC (“Ashion”) and OmicEra Diagnostics GmbH in the years ended December 31, 2025 and 2024, respectively.
This fair value measurement of contingent consideration is categorized as a Level 3 liability, as the measurement amount is based primarily on significant inputs not observable in the market.
The fair value of the contingent consideration liability recorded from the Company's acquisition of Thrive related to regulatory milestones was $289.0 million as of December 31, 2025. The fair value of the contingent consideration liabilities recorded from the Company's acquisitions of Thrive and Ashion related to regulatory and product development milestones was $282.2 million as of December 31, 2024. The Company estimates the fair value of the contingent consideration liabilities related to the regulatory and product development milestones using the probability-weighted scenario based discounted cash flow model, which is consistent with the initial measurement of the contingent consideration liabilities. Probabilities of success are applied to each potential scenario and the resulting values are discounted using a present-value factor. The passage of time in addition to changes in projected milestone achievement timing, present-value factor, the degree of achievement if applicable, and probabilities of success may result in adjustments to the fair value measurement. The fair value of the contingent consideration liability recorded related to regulatory and product development milestones was determined using a weighted average probability of success of 90 5.5 % and 6.2 % as of December 31, 2025 and 2024, respectively. The projected fiscal year of payment range is from 2030 to 2031. Unobservable inputs were weighted by the relative fair value of the contingent consideration liabilities.
The revenue milestone associated with the Ashion acquisition is not expected to be achieved and therefore no liability has been recorded for this milestone as of December 31, 2025 or December 31, 2024.
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Notes to Consolidated Financial Statements (Continued)
Derivative Financial Instruments
(8) ACCRUED LIABILITIES
Accrued liabilities at December 31, 2025 and 2024 consisted of the following:
| December 31, | ||||||||||||||
| (In thousands) | 2025 | 2024 | ||||||||||||
| Compensation | $ | $ | ||||||||||||
| Professional fees | ||||||||||||||
| Other | ||||||||||||||
| Research and trial related expenses | ||||||||||||||
| Licenses | ||||||||||||||
| Assets under construction | ||||||||||||||
| Total | $ | $ | ||||||||||||
(9) LONG-TERM DEBT
Accounts Receivable Securitization Facility
On June 29, 2022, the Company, through a wholly owned special purpose entity, Exact Receivables LLC (“Exact Receivables”) entered into an accounts receivable securitization program (the “Securitization Facility”) with PNC Bank, National Association (“PNC”), with a scheduled maturity date of June 29, 2024. The Securitization Facility required the Company to maintain minimum borrowings under the facility of $50.0 million. Upon the maturity of the Securitization Facility in June 2024, the Company repaid the previously outstanding balance of $50.0 million in full. The Securitization Facility provided Exact Receivables with a revolving line-of-credit of up to $150.0 million of borrowing capacity, subject to certain borrowing base requirements, by collateralizing a security interest in the domestic customer accounts receivable of certain wholly owned subsidiaries of the Company. The debt issuance costs incurred related to the Securitization Facility were not significant and were amortized over the life of the Securitization Facility through interest expense, net within the consolidated statements of operations. Prior to the repayment, the outstanding balance accrued interest at a rate equal to a daily secured overnight financing rate (“SOFR”) plus a SOFR adjustment and an applicable margin. The interest rate was 6.89 % as of the maturity date.
Revolving Credit Agreement
On January 13, 2025, the Company entered into a senior secured revolving credit agreement (the “Revolving Credit Agreement”) with a syndicate of lenders.
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Notes to Consolidated Financial Statements (Continued)
Borrowings under the Revolving Credit Agreement are permitted up to a maximum amount of $500.0 million on a revolving basis. In addition, the Company may request, in lieu of cash advances, letters of credit with an aggregate stated amount outstanding not to exceed $20.0 million. Up to $50.0 million of borrowings may be made, at the Company’s election, in additional currencies. Borrowings under the Revolving Credit Agreement will be used for working capital and other general corporate purposes. The Revolving Credit Facility matures on the earlier to occur of January 13, 2028 and the date that is 91 days prior to the maturity date of indebtedness of the Company and any restricted subsidiary in the event that the aggregate outstanding principal amount of such maturing indebtedness equals or exceeds $300.0 million . The Revolving Credit Agreement also provides for uncommitted incremental facilities in an amount up to $200.0 million plus an unlimited additional amount so long as the Company is in compliance with certain financial covenants.
Outstanding revolving loans denominated in U.S. dollars under the Revolving Credit Agreement will bear interest at a floating rate of either (A) Term SOFR plus 0.10 % (subject to a 0.00 % floor) plus the Applicable Rate (as defined below) or (B) a base rate (subject to a 1.00% per annum floor) plus the Applicable Rate, as elected by the Company. Revolving loans denominated in foreign currencies will bear interest at floating reference rates described in the Revolving Credit Agreement plus the Applicable Rate. The Applicable Rate means (A) in the case of U.S. dollar base rate loans, a margin ranging from 1.50 % to 2.00 % per annum, depending on the Company's consolidated secured gross leverage ratio, and (B) in the case of U.S. dollar Term SOFR loans and all foreign currency loans, a margin ranging from 2.50 % to 3.00 % per annum, depending on the Company's consolidated secured gross leverage ratio.
The Company is required to pay customary fees for a credit facility of this size and type, including a commitment fee on the unused portion of the Revolving Credit Facility.
Certain of the Company's present and future subsidiaries (the “Subsidiary Guarantors”) guarantee the obligations under the Revolving Credit Agreement. The obligations under the Revolving Credit Agreement are secured by a first priority security interest in substantially all of the Company's and the Subsidiary Guarantors’ assets, subject to certain exceptions and exclusions. The Revolving Credit Agreement contains customary representations and warranties, affirmative covenants and negative covenants for credit facilities of this nature, including financial covenants. The Company must maintain a consolidated secured gross leverage ratio not to exceed 2.50 to 1.00 (subject to certain exceptions) and a consolidated interest charge coverage ratio not less than 3.00 to 1.00 , in each case, of as of the last day of each fiscal quarter.
The Company has agreed to various financial covenants under the Revolving Credit Agreement, and as of December 31, 2025, the Company was in compliance with all covenants.
(10) CONVERTIBLE NOTES
Convertible note obligations included in the consolidated balance sheet consisted of the following as of December 31, 2025:
| Fair Value (1) | ||||||||||||||||||||||||||||||||
| (In thousands) | Principal Amount | Unamortized Debt Discount and Issuance Costs | Net Carrying Amount | Amount | Leveling | |||||||||||||||||||||||||||
2031 Convertible Notes - | $ | $ | ( | $ | $ | 2 | ||||||||||||||||||||||||||
2030 Convertible Notes - | ( | 2 | ||||||||||||||||||||||||||||||
2028 Convertible Notes - | ( | 2 | ||||||||||||||||||||||||||||||
2027 Convertible Notes - | ( | 2 | ||||||||||||||||||||||||||||||
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Notes to Consolidated Financial Statements (Continued)
Convertible note obligations included in the consolidated balance sheet consisted of the following as of December 31, 2024:
| Fair Value (1) | ||||||||||||||||||||||||||||||||
| (In thousands) | Principal Amount | Unamortized Debt Discount and Issuance Costs | Net Carrying Amount | Amount | Leveling | |||||||||||||||||||||||||||
2031 Convertible Notes - | $ | $ | ( | $ | $ | 2 | ||||||||||||||||||||||||||
2030 Convertible Notes - | ( | 2 | ||||||||||||||||||||||||||||||
2028 Convertible Notes - | ( | 2 | ||||||||||||||||||||||||||||||
2027 Convertible Notes - | ( | 2 | ||||||||||||||||||||||||||||||
2025 Convertible Notes - | ( | 2 | ||||||||||||||||||||||||||||||
(1) The fair values are based on observable market prices for this debt, which is traded in less active markets and therefore is classified as a Level 2 fair value measurement.
(2) The Company’s convertible notes due in 2025 (the “2025 Notes”) matured on January 15, 2025 and were included in convertible notes, net, current portion on the consolidated balance sheet as of December 31, 2024. Upon maturity of the 2025 Notes on January 15, 2025, the Company made a cash payment of $250.4 million in settlement of the total principal of the 2025 Notes and accrued interest that was previously outstanding as of December 31, 2024.
Issuances and Settlements
In January 2018, the Company issued and sold $690.0 million in aggregate principal amount of 1.0 % Convertible Notes (the “January 2025 Notes”) with a maturity date of January 15, 2025. The January 2025 Notes accrued interest at a fixed rate of 1.0 % per year, payable semi-annually in arrears on January 15 and July 15 of each year, beginning on July 15, 2018. The net proceeds from the issuance of the January 2025 Notes were approximately $671.1 million, after deducting underwriting discounts and commissions and the offering expenses payable by the Company.
In June 2018, the Company issued and sold an additional $218.5 million in aggregate principal amount of 1.0 % Convertible Notes (the “June 2025 Notes”). The June 2025 Notes were issued under the same indenture pursuant to which the Company previously issued the January 2025 Notes (the “Indenture”). The January 2025 Notes and the June 2025 Notes had identical terms (including the same January 15, 2025 maturity date) and were treated as a single series of securities. The net proceeds from the issuance of the June 2025 Notes were approximately $225.3 million, after deducting underwriting discounts and commissions and the offering expenses payable by the Company.
In March 2019, the Company issued and sold $747.5 million in aggregate principal amount of 0.375 % Convertible Notes (the “2027 Notes”) with a maturity date of March 15, 2027. The 2027 Notes accrue interest at a fixed rate of 0.375 % per year, payable semi-annually in arrears on March 15 and September 15 of each year, beginning on September 15, 2019. The net proceeds from the issuance of the 2027 Notes were approximately $729.5 million, after deducting underwriting discounts and commissions and the offering expenses payable by the Company.
The Company utilized a portion of the proceeds from the issuance of the 2027 Notes to settle a portion of the 2025 Notes in privately negotiated transactions. In March 2019, the Company used cash of $494.1 million and an aggregate of 2.2 million shares of the Company’s common stock valued at $182.4 million for total consideration of $676.5 million to settle $493.4 million of the 2025 Notes, of which $0.7 million was used to pay off interest accrued on the 2025 Notes. The transaction resulted in a loss on settlement of convertible notes of $187.7 million.
In February 2020, the Company issued and sold $1.15 billion in aggregate principal amount of 0.375 % Convertible Notes (the “2028 Notes”) with a maturity date of March 1, 2028. The 2028 Notes accrue interest at a fixed rate of 0.375 % per year, payable semi-annually in arrears on March 1 and September 1 of each year, beginning on September 1, 2020. The net proceeds from the issuance of the 2028 Notes were approximately $1.13 billion, after deducting underwriting discounts and commissions and the offering expenses payable by the Company.
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Notes to Consolidated Financial Statements (Continued)
In February 2020, the Company used $150.1 million of the proceeds from the issuance of the 2028 Notes to settle $100.0 million of the 2025 Notes, of which $0.1 million was used to pay off interest accrued on the 2025 Notes. The transaction resulted in a loss on settlement of convertible notes of $50.8 million.
In February 2023, the Company entered into a privately negotiated exchange and purchase agreement with a single holder of certain of the Company’s 2027 Notes and 2028 Notes. The Company issued the holder $500.0 million aggregate principal amount of 2.0 % Convertible Notes due in 2030 (the “2030 Notes”) in exchange for $183.7 million of aggregate principal of 2027 Notes, $201.0 million of aggregate principal of 2028 Notes, and $138.0 million of cash. The extinguishment resulted in a gain on settlement of convertible notes of $17.7 million, which is included in interest expense, net in the consolidated statement of operations for the year ended December 31, 2023.
In March 2023, the Company entered into a privately negotiated exchange agreement with two holders of certain of the 2025 Notes. The Company issued the holder $73.0 million aggregate principal amount of 2030 Notes in exchange for $65.8 million of aggregate principal of 2025 Notes. The extinguishment resulted in a loss on settlement of convertible notes of $7.4 million, which is included in interest expense, net in the consolidated statement of operations for the year ended December 31, 2023.
The net proceeds from the issuance of the 2030 Notes were approximately $133.0 million, after deducting commissions and offering expenses payable by the Company. The 2030 Notes will mature on March 1, 2030 and bear interest at a rate of 2.0 % per year, payable semi-annually in arrears on March 1 and September 1 of each year, beginning on September 1, 2023.
In April 2024, the Company entered into a privately negotiated exchange and purchase agreement with certain holders of the Company’s 2028 Notes. The Company issued $620.7 million aggregate principal amount of 1.75 % Convertible Notes due in 2031 (the “2031 Notes”) in exchange for $359.7 million of aggregate principal of 2028 Notes, and $266.8 million of cash after deducting underwriting discounts. The extinguishment resulted in a gain on settlement of convertible notes of $10.3 million, which is included in interest expense, net in the consolidated statement of operations for the year ended December 31, 2024.
The net proceeds from the issuance of the 2031 Notes were approximately $259.8 million, after deducting commissions and offering expenses payable by the Company.
The 2031 Notes will mature on April 15, 2031 and bear interest at a rate of 1.75 % per year, payable semi-annually in arrears on October 15 and April 15 of each year, beginning on October 15, 2024. The Company has the ability to repurchase the 2031 Notes after April 17, 2029 upon the occurrence of certain events and during certain periods, as set forth in the Indenture filed at the time of the offering.
The extinguishment gains and losses recorded on the settlement of convertible notes discussed above represent the difference between (i) the fair value of the consideration transferred and (ii) the carrying value of the debt at the time of the exchange, and is included in interest expense, net in the consolidated statement of operations for the respective period.
Summary of Conversion Features
Until the six months immediately preceding the maturity date of the applicable series of the Company’s convertible notes (the “Notes”), each series of Notes is convertible only upon the occurrence of certain events and during certain periods, as set forth in the Indentures filed at the time of the original offerings. On or after the date that is six months immediately preceding the maturity date of the applicable series of Notes until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may elect to convert such Notes at any time, and if elected, the conversion would occur on the maturity date. The Notes will be convertible into cash, shares of the Company’s common stock (plus, if applicable, cash in lieu of any fractional share), or a combination of cash and shares of the Company’s common stock, at the Company’s election. If the Notes are not converted prior to the maturity date, the principal amount will be settled in cash upon maturity.
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Notes to Consolidated Financial Statements (Continued)
It is the Company’s intent to settle all conversions through combination settlement. The initial conversion rate is 8.96 , 8.21 , 12.37 , and 10.06 shares of common stock per $1,000 principal amount for the 2027 Notes, 2028 Notes, 2030 Notes, and 2031 Notes, respectively, which is equivalent to an initial conversion price of approximately $111.66 , $121.84 , $80.83 , and $99.36 per share of the Company’s common stock for the 2027 Notes, 2028 Notes, 2030 Notes, and 2031 Notes, respectively. The 2027 Notes, 2028 Notes, 2030 Notes, and 2031 Notes are potentially convertible into up to 5.0 million, 4.8 million, 7.1 million, and 6.2 million shares, respectively. The conversion rate is subject to adjustment upon the occurrence of certain specified events as set forth in the Indentures filed at the time of the original offerings but will not be adjusted for accrued and unpaid interest. In addition, holders of the Notes who convert their Notes in connection with a “make-whole fundamental change” (as defined in the Indentures), will, under certain circumstances, be entitled to an increase in the conversion rate.
If the Company undergoes a “fundamental change” (as defined in the Indentures), holders of the Notes may require the Company to repurchase for cash all or part of their Notes at a repurchase price equal to 100 % of the principal amount of the Notes to be repurchased, plus accrued and unpaid interest.
Based on the closing price of the Company’s common stock of $101.56 on December 31, 2025, the if-converted values on the 2027 Notes and 2028 Notes do not exceed the principal amount. The if-converted values on the Company's 2030 Notes and 2031 Notes exceed the principal amount by $147.0 million and $13.7 million, respectively.
The Notes do not contain any financial or operating covenants or any restrictions on the payment of dividends, the issuance of other indebtedness or the issuance or repurchase of securities by the Company.
Ranking of Convertible Notes
The Notes are the Company’s senior unsecured obligations and (i) rank senior in right of payment to all of its future indebtedness that is expressly subordinated in right of payment to the Notes; (ii) rank equal in right of payment to each outstanding series thereof and to all of the Company’s future liabilities that are not so subordinated, unsecured indebtedness; (iii) are effectively junior to all of the Company’s existing and future secured indebtedness and other secured obligations, to the extent of the value of the assets securing that indebtedness and other secured obligations; and (iv) are structurally subordinated to all indebtedness and other liabilities of the Company’s subsidiaries.
Issuance Costs
Issuance costs are amortized to interest expense, net over the term of the Notes. The following table summarizes the original issuance costs at the time of issuance for each set of Notes:
| (In thousands) | ||||||||
| 2031 Convertible Notes | $ | |||||||
2030 Convertible Notes | ||||||||
2028 Convertible Notes | ||||||||
2027 Convertible Notes | ||||||||
2025 Convertible Notes | ||||||||
Interest Expense
Interest expense on the Notes includes the following:
| Year Ended December 31, | ||||||||||||||||||||
| (In thousands) | 2025 | 2024 | 2023 | |||||||||||||||||
| Debt issuance costs amortization | $ | $ | $ | |||||||||||||||||
| Debt discount amortization | ||||||||||||||||||||
| Gain on settlement of convertible notes | ( | ( | ||||||||||||||||||
| Coupon interest expense | ||||||||||||||||||||
| Total interest expense on convertible notes | $ | $ | $ | |||||||||||||||||
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Notes to Consolidated Financial Statements (Continued)
The following table summarizes the effective interest rates of the Notes:
| Year Ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| 2031 Convertible Notes | % | % | % | |||||||||||||||||
| 2030 Convertible Notes | % | % | % | |||||||||||||||||
| 2028 Convertible Notes | % | % | % | |||||||||||||||||
| 2027 Convertible Notes | % | % | % | |||||||||||||||||
| 2025 Convertible Notes | % | % | % | |||||||||||||||||
(11) LICENSE AND COLLABORATION AGREEMENTS
The Company licenses certain technologies that are, or may be, incorporated into its technology under several license agreements, as well as the rights to commercialize certain diagnostic tests through collaboration agreements. Generally, the license agreements require the Company to pay single-digit royalties based on net revenues received using the technologies and may require minimum royalty amounts, milestone payments, or maintenance fees.
Mayo Foundation for Medical Education and Research
In June 2009, the Company entered into an exclusive, worldwide license agreement with the Mayo Foundation for Medical Education and Research (“Mayo”), under which Mayo granted the Company an exclusive, worldwide license to certain Mayo patents and patent applications, as well as a non-exclusive, worldwide license with regard to certain Mayo know-how. The scope of the license covers any screening, surveillance or diagnostic test or tool for use in connection with any type of cancer, pre-cancer, disease or condition. The Company’s license agreement with Mayo was most recently amended and restated in September 2020.
The licensed Mayo patents and patent applications contain both method and composition claims that relate to sample processing, analytical testing and data analysis associated with nucleic acid screening for cancers and other diseases. The jurisdictions covered by these patents and patent applications include the U.S., Australia, Canada, the European Union, China, Japan and Korea. Under the license agreement, the Company assumed the obligation and expense of prosecuting and maintaining the licensed Mayo patents and is obligated to make commercially reasonable efforts to bring to market products using the licensed Mayo intellectual property.
Pursuant to the Company’s agreement with Mayo, the Company is required to pay Mayo a low-single-digit royalty on the Company’s net sales of current and future products using the licensed Mayo intellectual property each year during the term of the Mayo agreement.
The Company is also required to pay Mayo up to $3.0 million in sales-based milestone payments upon cumulative net sales of each product using the licensed Mayo intellectual property reaching specified levels.
The license agreement will remain in effect, unless earlier terminated by the parties in accordance with the agreement, until the last of the licensed patents expires in 2039 (or later, if certain licensed patent applications are issued). However, if the Company is still using the licensed Mayo know-how or certain Mayo-provided biological specimens or their derivatives on such expiration date, the term shall continue until the earlier of the date the Company stops using such know-how and materials and the date that is five years after the last licensed patent expires. The license agreement contains customary termination provisions and permits Mayo to terminate the license agreement if the Company sues Mayo or its affiliates, other than any such suit claiming an uncured material breach by Mayo of the license agreement.
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Notes to Consolidated Financial Statements (Continued)
In addition to granting the Company a license to the covered Mayo intellectual property, Mayo provides the Company with product development and research and development assistance pursuant to the license agreement and other collaborative arrangements. In connection with this collaboration, the Company has incurred insignificant charges for the years ended December 31, 2025, 2024, and 2023, respectively. The charges incurred in connection with this collaboration are recorded in research and development expenses in the Company’s consolidated statements of operations.
Johns Hopkins University
Through the acquisition of Thrive, the Company acquired a worldwide exclusive license agreement with Johns Hopkins University (“JHU”) for use of several JHU patents and licensed know-how. The license is designed to enable the Company to leverage JHU intellectual property in the development and commercialization of certain of its products. The agreement terms would require the Company to pay single-digit sales-based royalties and up to $45.0 million in sales-based milestone payments on JHU licensed products that reach specified net sales levels. The Company will record the sales-based royalties once sales of licensed products have occurred and sales-based milestones once achievement is deemed probable. The Company recorded insignificant charges related to sales-based royalties during the year ended December 31, 2025, and the Company has not incurred charges related to the achievement of any sales-based milestones as of December 31, 2025.
Targeted Digital Sequencing (“TARDIS”) License Agreement
In January 2021, the Company entered into an exclusive, worldwide license to the proprietary TARDIS technology from The Translational Genomics Research Institute (“TGen”). Under the agreement, the Company acquired a royalty-free, worldwide exclusive license to proprietary TARDIS patents and know-how. Under the agreement, the Company was obligated to make milestone payments to TGen of up to $45.0 million in sales-based milestone payments upon cumulative net sales related to molecular residual disease (“MRD”) detection and/or treatment reaching specified levels. These payments were contingent upon achievement of these cumulative revenues on or before December 31, 2030, which was not achieved prior to the termination.
Effective May 1, 2024, the Company entered into termination agreements (the “Termination Agreements”) with TGen for the purpose of terminating the license and sponsored research agreement relating to the TARDIS technology and an additional sponsored research agreement with a broader scope (collectively, the “Original Agreements”). As part of the Termination Agreements, the Company will pay TGen $27.6 million in compensation for the termination of the Original Agreements, which will be allocated into three annual installments of $9.2 million per year beginning in the second quarter of 2024. The fair value of the termination payments as of the date of the Termination Agreements was $25.8 million, which was recorded as research and development expense in the consolidated statement of operations for the year ended December 31, 2024. The remaining $1.8 million in expense is being recognized ratably through the date of the final payment in the second quarter of 2026. The Company has recorded a liability of $9.0 million representing the fair value of the remaining payments, which is included in accrued liabilities on the consolidated balance sheet as of December 31, 2025. The termination payments eliminate the Company’s obligation to pay TGen any further payments, equities, fees, costs, or other amounts that would have been due under the Original Agreements, including the milestone payments. The Company’s ongoing development efforts for its pipeline tests are not impacted by the Termination Agreements.
Broad Institute, Inc.
In June 2023, the Company entered into an exclusive license agreement with Broad Institute, Inc. (“Broad Institute”) to utilize the Minor Allele Enriched Sequencing Through Recognition Oligonucleotides (“MAESTRO”) technology in the Company’s MRD testing. Under the license agreement, the Company is obligated to make development milestone payments to Broad Institute of up to $6.5 million upon achievement of certain development milestones related to prospective MRD tests that use the MAESTRO technology. In addition, the Company is obligated to make sales-based milestone payments to Broad Institute that equate up to a mid-single-digit royalty upon the achievement of certain cumulative net sales targets of licensed products using the MAESTRO technology beginning at $500.0 million. The Company will record the development milestones once achieved and the sales milestones once achievement is deemed probable. The Company has not incurred charges related to the achievement of development milestones or sales milestones as of December 31, 2025.
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Notes to Consolidated Financial Statements (Continued)
Watchmaker Genomics, Inc.
In July 2023, the Company entered into a co-exclusive development and license agreement with Watchmaker Genomics, Inc. (“Watchmaker”) under which the Company granted Watchmaker a co-exclusive license to the non-bisulfite technology for the detection of methylated DNA and other epigenetic modifications (“TAPS”). TAPS is based on patents obtained by the Company through an exclusive license agreement with the Ludwig Institute for Cancer Research. Under the agreement, both parties have the right to use and develop TAPS for commercial purposes. The Company has the potential to receive up to $82.0 million in sales-based milestone payments and mid-single-digit royalties based on future Watchmaker net sales of licensed products including TAPS. Additionally, Watchmaker has the right to sublicense TAPS, and the Company has the potential to receive royalties based on future Watchmaker sublicense receipts. The Company has not received any sales-based milestone payments, royalties on Watchmaker net sales of licensed products, or royalties on Watchmaker sublicense receipts as of December 31, 2025.
TwinStrand Biosciences, Inc.
In July, 2024, the Company entered into an agreement with TwinStrand Biosciences, Inc. (“TwinStrand”), under which TwinStrand licensed to the Company intellectual property related to the error correction technology in next-generation sequencing. The Company’s rights are broadly exclusive with respect to cell-free nucleic acid sequencing, subject to certain non-exclusive relationships in the field. The Company also holds exclusive rights to sublicense the licensed intellectual property. Under the license agreement, the Company made upfront payments to TwinStrand totaling $45.0 million in July 2024. The upfront payments were capitalized as a patent and license intangible asset in the consolidated balance sheet, which is amortized over its estimated useful life of 10 years. In addition, the Company agreed to pay TwinStrand a low-single-digit royalty on the Company’s and any sublicensee's net sales of certain licensed products and services. The Company will record the sales-based royalties once sales using relevant licensed products and services have occurred. Sublicense revenue and sales-based royalty charges were not significant for the year ended December 31, 2025.
Freenome Holdings, Inc.
In August 2025, the Company entered into a Collaboration and License Agreement (the “Agreement”) with Freenome Holdings, Inc., under which the Company and Freenome will collaborate to develop and commercialize certain blood-based screening and diagnostic products (“Collaboration Products”) for colorectal cancer (“CRC”). Upon execution of the Agreement, the Company has co-exclusive rights to commercialize Freenome’s existing CRC screening test as a laboratory developed test in the United States. Upon the later of (1) certain requirements related to antitrust clearance being satisfied (the “Antitrust Clearance Date”) and (2) receipt of first-line U.S. Food and Drug Administration (“FDA”) approval for a Collaboration Product, the Company will obtain exclusive rights to commercialize such Collaboration Products in the United States.
Under the terms of the Agreement, the Company made a payment to Freenome of $75.0 million in cash in November 2025. The Company received antitrust clearance in November 2025, and the upfront payment was recognized as research and development expense in the consolidated statement of operations in the fourth quarter of 2025.
Up to an additional $700.0 million would be payable based upon the achievement of certain development and regulatory milestones, which include a $100.0 million payment upon first-line FDA approval of a Collaboration Product, $100.0 million upon first-line FDA approval for the next-generation test contingent on meeting pre-defined performance benchmarks, and $500.0 million upon a Collaboration Product being rated as a first-line A or B test in the United States Preventive Services Taskforce (“USPSTF”) guidelines or meeting certain payer contracted coverage requirements. If the pre-defined performance benchmarks are not achieved, or if the Collaboration Product is rated as a second-line A or B test in the USPSTF guidelines, then each respective milestone payment may be reduced as provided in the Agreement. The Company will record the development milestones once achieved, and there have no charges incurred as of December 31, 2025.
The Company will pay Freenome a laboratory service fee for each CRC blood test processed by Freenome on behalf of the Company prior to laboratory testing being transferred to the Company’s facilities, which will be recognized as cost of sales as incurred. In addition, the Company will pay sales royalties on all net sales of Collaboration Products ranging from 0% to 10% depending on the test’s profitability and subject to customary royalty stacking provisions.
The Company also committed to $20.0 million in joint development costs annually over three years, which began on the Antitrust Clearance Date, and the costs incurred are recognized as research and development expenses as incurred.
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(12) STOCKHOLDERS' EQUITY
Changes in Accumulated Other Comprehensive Income (Loss)
The amount recognized in AOCI for the years ended December 31, 2025, 2024 and 2023 were as follows:
| (In thousands) | Cumulative Translation Adjustment | Unrealized Gain (Loss) on Securities (1) | AOCI | |||||||||||||||||
Balance at January 1, 2023 | $ | $ | ( | $ | ( | |||||||||||||||
Other comprehensive income before reclassifications | ||||||||||||||||||||
Amounts reclassified from accumulated other comprehensive income (loss) | ||||||||||||||||||||
Net current period change in accumulated other comprehensive income (loss) | ||||||||||||||||||||
| Balance at December 31, 2023 | $ | $ | $ | |||||||||||||||||
| Other comprehensive income (loss) before reclassifications | ( | ( | ||||||||||||||||||
Amounts reclassified from accumulated other comprehensive income (loss) | ||||||||||||||||||||
Net current period change in accumulated other comprehensive income (loss) | ( | ( | ||||||||||||||||||
| Balance at December 31, 2024 | $ | ( | $ | $ | ( | |||||||||||||||
Other comprehensive income before reclassifications | ||||||||||||||||||||
Amounts reclassified from accumulated other comprehensive income (loss) | ( | ( | ||||||||||||||||||
Net current period change in accumulated other comprehensive income (loss) | ( | |||||||||||||||||||
| Balance at December 31, 2025 | $ | $ | $ | |||||||||||||||||
_________________________________
Amounts reclassified from AOCI for the years ended December 31, 2025, 2024, and 2023 were as follows:
| Year Ended December 31, | ||||||||||||||||||||||||||
| Details about AOCI Components (In thousands) | Affected Line Item in the Statements of Operations | 2025 | 2024 | 2023 | ||||||||||||||||||||||
| Change in value of available-for-sale investments | ||||||||||||||||||||||||||
| Sales and maturities of available-for-sale investments | Investment income, net | $ | ( | $ | $ | |||||||||||||||||||||
| Total reclassifications | $ | ( | $ | $ | ||||||||||||||||||||||
(13) STOCK-BASED COMPENSATION
Stock-Based Compensation Plans
The Company maintains the following plans for which awards were granted from or had awards outstanding in 2025: the 2010 Omnibus Long-Term Incentive Plan (As Amended and Restated Effective July 27, 2017), the 2019 Omnibus Long-Term Incentive Plan, the 2025 Omnibus Long-Term Incentive Plan, and the 2010 Employee Stock Purchase Plan. These plans are collectively referred to as the “Stock Plans.”
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The Stock Plans are administered by the Human Capital Committee of the Company’s Board of Directors (“Human Capital Committee”). The 2019 Omnibus Long-Term Incentive Plan provides that upon an acquisition of the Company, all equity will accelerate by a period of one year . In addition, upon the termination of an employee without cause or for good reason prior to the first anniversary of the completion of the acquisition, all equity awards then outstanding under the respective plan held by that employee will immediately vest.
2025 Omnibus Long-Term Incentive Plan. The Company adopted the 2025 Omnibus Long-Term Incentive Plan (the “2025 Stock Plan”) on June 12, 2025 to grant share-based awards to employees, officers, directors, consultants, and advisors. Awards granted under the 2025 Stock Plan may include incentive stock options, as defined under the Internal Revenue Code, non-qualified options, restricted stock awards and other stock awards in amounts and with terms and conditions determined by the Human Capital Committee, subject to the provisions of the 2025 Stock Plan. The 2025 Stock Plan will expire on April 15, 2035 and after such date no further awards may be granted under the plan. Options granted under the 2025 Stock Plan expire ten years from the date of grant. Grants made from the 2025 Stock Plan generally vest over a period of to four years . At December 31, 2025, there were no options to purchase shares outstanding under the 2025 Stock Plan and 66,320 shares of restricted stock and restricted stock units were outstanding. At December 31, 2025, there were 12,357,179 shares available for future grant under the 2025 Stock Plan.
2019 Omnibus Long-Term Incentive Plan. The Company adopted the 2019 Omnibus Long-Term Incentive Plan (the “2019 Stock Plan”) on July 25, 2019 to grant share-based awards to employees, officers, directors, consultants, and advisors. Awards granted under the 2019 Stock Plan may include incentive stock options, as defined under the Internal Revenue Code, non-qualified options, restricted stock awards and other stock awards in amounts and with terms and conditions determined by the Human Capital Committee, subject to the provisions of the 2019 Stock Plan. The 2019 Stock Plan will expire on July 25, 2029 and after such date no further awards may be granted under the plan. Options granted under the 2019 Stock Plan expire ten years from the date of grant. Grants made from the 2019 Stock Plan generally vest over a period of to four years . At December 31, 2025, options to purchase 270,749 shares were outstanding under the 2019 Stock Plan and 7,874,434 shares of restricted stock and restricted stock units were outstanding. The Company's stockholders approved amendments to the 2019 Stock Plan to increase the number of shares available for future grant thereunder by 14,000,000 and 4,340,000 shares on June 9, 2022 and June 8, 2023, respectively. At December 31, 2025, there were no shares available for future grant under the 2019 Stock Plan.
2010 Omnibus Long-Term Incentive Plan. The Company adopted the 2010 Omnibus Long-Term Incentive Plan (the “2010 Stock Plan”) on July 16, 2010 to grant share-based awards to employees, officers, directors, consultants, and advisors. Awards granted under the 2010 Stock Plan may include incentive stock options, as defined under the Internal Revenue Code, non-qualified options, restricted stock awards and other stock awards in amounts and with terms and conditions determined by the Human Capital Committee, subject to the provisions of the 2010 Stock Plan. The 2010 Stock Plan expired on July 16, 2020 and after such date no further awards may be granted under the plan. Options granted under the 2010 Stock Plan expire ten years from the date of grant. Grants made from the 2010 Stock Plan generally vest over a period of to four years . At December 31, 2025, there were 510,540 share options and 3,340 shares of restricted stock and restricted stock units outstanding under the 2010 Stock Plan. At December 31, 2025, there were no shares available for future grant under the 2010 Stock Plan.
2010 Employee Stock Purchase Plan. The 2010 Employee Stock Purchase Plan (the “2010 Purchase Plan”) was adopted by the Company on July 16, 2010 to provide participating employees the right to purchase shares of common stock at a discount through a series of offering periods. The 2010 Purchase Plan will expire on October 31, 2030. The Company’s stockholders approved amendments to the 2010 Employee Stock Purchase Plan to increase the number of shares available for purchase thereunder by 500,000 shares, 2,000,000 shares, 3,000,000 shares, and 4,000,000 shares on July 24, 2014, July 28, 2016, June 9, 2022, and June 12, 2025, respectively. At December 31, 2025, there were 4,193,108 shares of common stock available for purchase by participating employees under the 2010 Purchase Plan.
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Generally, all employees whose customary employment is more than 20 hours per week and more than five months in any calendar year are eligible to participate in the 2010 Purchase Plan. Participating employees authorize an amount, between 1 % and 15 % of the employee’s compensation, to be deducted from the employee’s pay during the offering period. On the last day of the offering period, the employee is deemed to have exercised the employee’s option to purchase shares of Company common stock, at the option exercise price, to the extent of accumulated payroll deductions. Under the terms of the 2010 Purchase Plan, the option exercise price is an amount equal to 85 % of the fair market value, as defined under the 2010 Purchase Plan, and no employee can purchase more than $25,000 of Company common stock under the 2010 Purchase Plan in any calendar year. Rights granted under the 2010 Purchase Plan terminate upon an employee’s voluntary withdrawal from the 2010 Purchase Plan at any time or upon termination of employment. At December 31, 2025, there were 5,606,892 cumulative shares issued under the 2010 Purchase Plan.
Stock-Based Compensation Expense
The Company records stock-based compensation expense in connection with the amortization of restricted stock and restricted stock unit awards (“RSUs”), performance share units (“PSUs”), stock purchase rights granted under the Company’s employee stock purchase plan (“ESPP”) and stock options granted to employees, non-employee consultants, and non-employee directors. A summary of non-cash stock-based compensation expense by expense category included in the Company’s consolidated statements of operations for the years ended December 31, 2025, 2024, and 2023 is as follows:
| Year Ended December 31, | ||||||||||||||||||||
| (In thousands) | 2025 | 2024 | 2023 | |||||||||||||||||
| Cost of sales | $ | $ | $ | |||||||||||||||||
| Research and development | ||||||||||||||||||||
| Sales and marketing | ||||||||||||||||||||
| General and administrative | ||||||||||||||||||||
| Total stock-based compensation | $ | $ | $ | |||||||||||||||||
In connection with the Merger Agreement and to mitigate the potential impact of Sections 280G and 4999 of the Internal Revenue code of 1986, as amended, on the Company and certain of its employees, the Human Capital Committee approved the acceleration of 454,811 shares of previously unvested RSUs held by 12 employees and 1,227,496 shares of previously unvested PSUs held by 14 employees. Accelerated PSUs were accelerated based on the number of PSUs that would have otherwise been deemed achieved under the terms of the Merger Agreement. These modifications resulted in incremental stock-based compensation expense that will be recognized over the in substance service period of the respective award, which was not significant for the year ended December 31, 2025.
As of December 31, 2025, there was approximately $314.9 million of expected total unrecognized compensation cost related to non-vested stock-based compensation arrangements granted under all equity compensation plans. The Company expects to recognize that cost over a weighted average period of 2.33 years.
Stock Options
The Company determined the fair value of each service-based option award on the date of grant using the Black-Scholes option-pricing model, which utilized several key assumptions including risk-free interest rate, expected term, expected volatility, and dividend yield. There were no option awards granted during the years ended December 31, 2025, 2024 and 2023.
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Notes to Consolidated Financial Statements (Continued)
A summary of stock option activity under the Stock Plans is as follows:
| Options | Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term (Years) | Aggregate Intrinsic Value (1) | ||||||||||||||||||||||
| (Aggregate intrinsic value in thousands) | ||||||||||||||||||||||||||
Outstanding, January 1, 2025 | $ | |||||||||||||||||||||||||
| Exercised | ( | |||||||||||||||||||||||||
| Forfeited | ( | |||||||||||||||||||||||||
Outstanding, December 31, 2025 | $ | $ | ||||||||||||||||||||||||
Vested and expected to vest, December 31, 2025 | $ | $ | ||||||||||||||||||||||||
Exercisable, December 31, 2025 | $ | $ | ||||||||||||||||||||||||
_________________________________
(1) The total intrinsic value of options exercised, net of shares withheld for taxes, during the years ended December 31, 2025, 2024, and 2023 was $6.0 million, $7.8 million, and $11.7 million, respectively, determined as of the date of exercise.
Restricted Stock and Restricted Stock Units
The fair value of restricted stock and RSUs is determined on the date of grant using the closing stock price on that day.
A summary of restricted stock and RSU activity is as follows:
| Restricted Shares | Weighted Average Grant Date Fair Value (1) | |||||||||||||
Outstanding, January 1, 2025 | $ | |||||||||||||
| Granted | ||||||||||||||
| Released (2) | ( | |||||||||||||
| Forfeited | ( | |||||||||||||
Outstanding, December 31, 2025 | $ | |||||||||||||
(1) The weighted average grant date fair value of the RSUs granted during the years ended December 31, 2024 and 2023 was $56.94 and $62.36 , respectively.
(2) The fair value of RSUs vested and converted to shares of the Company’s common stock was $205.3 million, $184.2 million, and $158.2 million for the years ended December 31, 2025, 2024, and 2023, respectively. The stock-based compensation expense associated with the RSUs that were accelerated and vested in 2025 related to the modification of awards to mitigate the potential impact of Sections 280G and 4999 of the Internal Revenue Code of 1986, as amended, as discussed in further detail above, will continue to be recognized over the substantive service period of the respective award.
Performance Share Units
The Company has issued performance-based equity awards to certain employees which vest upon the achievement of certain performance goals, including financial performance targets and operational milestones.
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Notes to Consolidated Financial Statements (Continued)
A summary of PSU activity is as follows:
| Performance Share Units (1) | Weighted Average Grant Date Fair Value (2) | |||||||||||||
| Outstanding, January 1, 2025 | $ | |||||||||||||
| Granted | ||||||||||||||
| Released (3) | ( | |||||||||||||
| Forfeited | ( | |||||||||||||
| Outstanding, December 31, 2025 | $ | |||||||||||||
(1) The PSUs listed above assumes attainment of maximum payout rates as set forth in the performance criteria. Applying actual or expected payout rates, the number of outstanding PSUs as of December 31, 2025 was 631,833 .
(2) The weighted average grant date fair value of the PSUs granted during the years ended December 31, 2024 and 2023 was $63.68 and $80.50 , respectively.
Employee Stock Purchase Plan
A summary of ESPP activity is as follows:
| Year Ended December 31, | ||||||||||||||||||||
| (in thousands, except share and per share amounts) | 2025 | 2024 | 2023 | |||||||||||||||||
| Shares issued under the 2010 Purchase Plan | ||||||||||||||||||||
| Cash received under the 2010 Purchase Plan | $ | $ | $ | |||||||||||||||||
| Weighted average fair value per share of stock purchase rights granted during the period | $ | $ | $ | |||||||||||||||||
The 685,693 shares issued during the year ended December 31, 2025 were as follows:
| Offering period ended | Number of Shares | Weighted Average price per Share | ||||||||||||
| April 30, 2025 | $ | |||||||||||||
| October 31, 2025 | $ | |||||||||||||
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Notes to Consolidated Financial Statements (Continued)
The fair value of shares purchased under the ESPP is based on the assumptions in the following table:
| Year Ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| Risk-free interest rates | ||||||||||||||||||||
| Expected term (in years) | ||||||||||||||||||||
| Expected volatility | ||||||||||||||||||||
| Dividend yield | ||||||||||||||||||||
Shares Reserved for Issuance
The Company has reserved shares of its authorized common stock for issuance pursuant to its employee stock purchase and equity plans, including all outstanding stock option grants noted above at December 31, 2025, as follows:
| Shares reserved for issuance | ||||||||
2025 Stock Plan | ||||||||
| 2010 Purchase Plan | ||||||||
(14) COMMITMENTS AND CONTINGENCIES
Leases
The components of lease expense were as follows:
| Year Ended December 31, | ||||||||||||||||||||
| (In thousands) | 2025 | 2024 | 2023 | |||||||||||||||||
| Finance lease cost | ||||||||||||||||||||
| Amortization of right-of-use assets | $ | $ | $ | |||||||||||||||||
| Interest on lease liabilities | ||||||||||||||||||||
| Operating lease cost | ||||||||||||||||||||
| Short-term lease cost | ||||||||||||||||||||
| Variable lease cost | ||||||||||||||||||||
| Total lease Cost | $ | $ | $ | |||||||||||||||||
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| Year Ended December 31, | ||||||||||||||||||||
| (In thousands) | 2025 | 2024 | 2023 | |||||||||||||||||
| Cash paid for amounts included in the measurement of lease liabilities: | ||||||||||||||||||||
| Operating cash flows from operating leases | $ | $ | $ | |||||||||||||||||
| Operating cash flows from finance leases | ||||||||||||||||||||
| Finance cash flows from finance leases | ||||||||||||||||||||
| Non-cash investing and financing activities: | ||||||||||||||||||||
| Right-of-use assets obtained in exchange for new operating lease liabilities | ||||||||||||||||||||
| Right-of-use assets obtained in exchange for new finance lease liabilities | ||||||||||||||||||||
| Weighted-average remaining lease term - operating leases (in years) | ||||||||||||||||||||
| Weighted-average remaining lease term - finance leases (in years) | ||||||||||||||||||||
| Weighted-average discount rate - operating leases | % | % | % | |||||||||||||||||
| Weighted-average discount rate - finance leases | % | % | % | |||||||||||||||||
As of December 31, 2025 and 2024, the Company’s right-of-use assets from operating leases are $122.3 million and $117.0 million, respectively, which are reported in operating lease right-of-use assets in the Company’s consolidated balance sheets. As of December 31, 2025, the Company has outstanding operating lease obligations of $195.5 million, of which $33.6 million is reported in operating lease liabilities, current portion and $161.9 million is reported in operating lease liabilities, less current portion in the Company’s consolidated balance sheet. As of December 31, 2024, the Company had outstanding operating lease obligations of $184.5 million, of which $27.4 million is reported in operating lease liabilities, current portion and $157.1 million is reported in operating lease liabilities, less current portion in the Company’s consolidated balance sheet.
In the third quarter of 2024, the Company recorded an impairment charge of $18.7 million, which consisted of a right-of-use asset of $11.8 million and associated leasehold improvements of $6.9 million relating to one of its domestic facilities that was vacated in the fourth quarter of 2024 as a result of a change in strategic priorities. The Company used the income approach, under which the recoverability of the assets was measured by comparing the carrying amount of the asset to future undiscounted, pre-tax cash flows generated by the assets held. The fair value of the assets was determined using discounted cash flows, and the impairment charge recorded represents the difference between the carrying value and fair value of the impaired assets. The impairment charge recorded is included in impairment of long-lived and indefinite-lived assets in the Company’s consolidated statement of operations for the year ended December 31, 2024.
As of December 31, 2025 and 2024, the Company’s right-of-use assets from finance leases are $11.1 million and $19.8 million, respectively, which are reported in , net in the Company’s consolidated balance sheets. As of December 31, 2025, the Company has outstanding finance lease obligations of $12.1 million, of which $5.7 million is reported in and $6.4 million is reported in in the Company’s consolidated balance sheet. As of December 31, 2024, the Company had outstanding finance lease obligations of $21.0 million, of which $7.8 million is reported in other current liabilities and $13.2 million is reported in other long-term liabilities in the Company’s consolidated balance sheet.
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Notes to Consolidated Financial Statements (Continued)
Maturities of operating lease liabilities on an annual basis as of December 31, 2025 were as follows:
| (In thousands) | ||||||||
| 2026 | $ | |||||||
| 2027 | ||||||||
| 2028 | ||||||||
| 2029 | ||||||||
| 2030 | ||||||||
| Thereafter | ||||||||
| Total minimum lease payments | ||||||||
| Imputed interest | ( | |||||||
| Total | $ | |||||||
Maturities of finance lease liabilities on an annual basis as of December 31, 2025 were as follows:
| (In thousands) | ||||||||
| 2026 | $ | |||||||
| 2027 | ||||||||
| 2028 | ||||||||
| 2029 | ||||||||
| 2030 | ||||||||
| Thereafter | ||||||||
| Total minimum lease payments | ||||||||
| Imputed interest | ( | |||||||
| Total | $ | |||||||
Legal Matters
The Company accrues costs for certain legal proceedings and regulatory matters to the extent that it determines an unfavorable outcome is probable and the amount of the loss can be reasonably estimated. While such accrued costs reflect the Company’s best estimate of the probable loss for such matters, the recorded amounts may differ materially from the actual amount of any such losses. In some cases, no estimate of the possible loss or range of loss in excess of amounts accrued, if any, can be made because of the inherently unpredictable nature of legal and regulatory proceedings, which may be exacerbated by various factors, including but not limited to, that they may involve indeterminate claims for monetary damages or may involve fines, penalties or punitive damages; present novel legal theories or legal uncertainties; involve disputed facts; represent a shift in regulatory policy; involve a large number of parties, claimants or regulatory bodies; are in the early stages of the proceedings; involve a number of separate proceedings and/or a wide range of potential outcomes; or result in a change of business practices.
As of the date of this Annual Report on Form 10-K, amounts accrued for legal proceedings and regulatory matters were not significant except for the amounts accrued related to the matters discussed below. However, it is possible that in a particular quarter or annual period the Company’s financial condition, results of operations, cash flow and/or liquidity could be materially adversely affected by an ultimate unfavorable resolution of, or development in, legal and/or regulatory proceedings, including as described below. Except for the proceedings discussed below, the Company believes that the ultimate outcome of any of the regulatory and legal proceedings that are currently pending against it should not have a material adverse effect on financial condition, results of operations, cash flow or liquidity.
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Intellectual Property Litigation Matters
In November 2023, the Company filed suit against Geneoscopy, Inc. (“Geneoscopy”) in the United States District Court for the District of Delaware, alleging that certain of Geneoscopy’s products infringe the ‘781 Patent and seeking unspecified monetary damages and injunctive relief (the “’781 Action”) and in January 2024, the Company amended the complaint, alleging that Geneoscopy has made false and misleading statements in the marketing and promotion of its product, in violation of the Lanham Act. In May 2024, the Company filed a second complaint against Geneoscopy alleging infringement of the Company’s U.S. Patent No. 11,970,746 (the “’746 Patent”), which has been consolidated with the ’781 Action. Geneoscopy filed counterclaims against the Company challenging the validity of the patents at issue and alleging breach of contract, misappropriation of trade secrets, unfair competition, and other violations of state and federal law seeking unspecified monetary damages and injunctive relief. On July 16, 2024, the Company filed a motion for preliminary injunction seeking an order prohibiting Geneoscopy from selling its infringing Colosense test in the United States. On May 27, 2025, Geneoscopy filed amended counterclaims against the Company, alleging false advertising under the Lanham Act, as well as other related violations under state law. On August 21, 2025, the Company voluntarily withdrew its motion for preliminary injunction, without prejudice, to preserve the ability to refile after the U.S. Patent and Trademark Office concludes its review of additional asserted patents.
Geneoscopy petitioned the United States Patent and Trademark Office to institute an inter partes review (“IPR”) challenging the validity of the ‘781 Patent and the ‘746 Patent before the Patent Trial and Appeals Board (“PTAB”) and the PTAB instituted review for both patents. On July 9, 2025, the PTAB issued its decision finding all claims of the ‘781 Patent unpatentable. The Company filed a notice of appeal with the United States Court of Appeals for the Federal Circuit on September 10, 2025. On February 5, 2026, the PTAB issued its decision finding all claims of the '746 patent unpatentable. A notice of appeal may be filed on or before April 9, 2026. On February 20, 2025, Geneoscopy filed a motion to stay the district court litigation pending IPR of the ‘781 and ‘746 Patents, which the Court denied on August 21, 2025.
DOS Rule Matter
In September 2023, the Company’s wholly owned subsidiary Genomic Health, Inc., which was acquired in November 2019, entered into a settlement agreement with the United States of America, acting through the Department of Justice (“DOJ”) and on behalf of the Office of Inspector General of the Department of Health and Human Services, and two qui tam relators to resolve the previously disclosed civil investigation concerning Genomic Health’s compliance with the Medicare Date of Service billing regulations (the “DOS Rule Matter”). Genomic Health entered into the settlement agreement to avoid the delay, uncertainty and expense of protracted litigation. The settlement agreement contains no admission of liability by Genomic Health.
Under the terms of the settlement agreement, the Company made a payment of $32.5 million in September 2023, of which $22.4 million is included in general and administrative expenses in the Company’s consolidated statements of operations for the year ended December 31, 2023. Following the United States’ receipt of the settlement payment, the Company was released from any civil or administrative monetary claims under the civil False Claims Act and other specified civil statutes and common law theories of liability concerning the conduct identified in the settlement agreement.
On September 29, 2023, the United States District Court for the Eastern District of New York unsealed two qui tam actions filed under the False Claims Act involving the DOS Rule Matter, and on October 2, 2023, those two actions were dismissed with prejudice pursuant to the terms of the settlement agreement.
Gift Card Matter
In September 2023, the Company entered into a settlement agreement to resolve the previously disclosed False Claims Act qui tam suit that alleged a violation of the Federal Anti-Kickback Statute and False Claims Act for offering gift cards to patients in exchange for returning the Cologuard screening test (the “Qui Tam Suit”). In accordance with the settlement agreement, the Company made payment of $13.8 million plus legal fees in October 2023, which is included in general and administrative expenses in the Company's consolidated statement of operations for the year ended December 31, 2023. Following payment of the settlement amount, the Company was released from any civil or administrative monetary claims under the civil False Claims Act and other specified civil statutes and common law theories of liability concerning the conduct identified in the settlement agreement. On November 1, 2023, the court dismissed the qui tam suit with prejudice pursuant to the terms of the settlement agreement.
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Notes to Consolidated Financial Statements (Continued)
(15) RESTRUCTURING AND BUSINESS TRANSFORMATION
In August 2025, the Company announced a multi-year productivity plan (the “Plan”). The Plan includes several initiatives that are intended to drive sustainable growth, improve operating leverage, and amplify the Company’s ability to invest in innovation and serve more patients. These savings are expected to primarily come from general and administrative efficiencies, that in addition to restructuring certain support functions globally, include external spend optimization, and building more automation in core operations. The Company currently expects to incur additional business transformation costs of approximately $5 million through the completion of certain initiatives already underway, which are expected to be completed by the fourth quarter of 2026. The Company continues to pursue cost savings initiatives, and to the extent further cost saving initiatives are identified, the Company could incur additional charges to implement those business transformation initiatives in future periods.
The Company recorded the following charges related to the Plan for the year ended December 31, 2025.
| (In thousands) | ||||||||
Restructuring charges | $ | |||||||
Business transformation costs (1) | ||||||||
Total restructuring and business transformation | $ | |||||||
_________________________________
The restructuring charges were recorded as follows within the consolidated statement of operations for the year ended December 31, 2025:
(In thousands) | Cost of sales | Research and development | Sales and marketing | General and administrative | Total | |||||||||||||||||||||||||||
Employee termination costs | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Other costs | — | — | — | |||||||||||||||||||||||||||||
| Total restructuring charges | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
The following table summarizes activity in the liability related to the Company’s restructuring initiatives:
| (In thousands) | Employee Termination Costs | Other Costs | Total | |||||||||||||||||
Balance, December 31, 2024 | $ | — | $ | — | $ | — | ||||||||||||||
Charges (1) | ||||||||||||||||||||
| Payments | ( | ( | ( | |||||||||||||||||
Adjustments (2) | ||||||||||||||||||||
Balance, December 31, 2025 | $ | $ | $ | |||||||||||||||||
_________________________________
(1)Inclusive of the reversal of employee termination related charges originally recorded in the third quarter of 2025 primarily due to certain employees identified for termination finding other positions within the Company or voluntarily separating prior to their scheduled termination date.
The Company does not expect to incur additional significant costs related to this restructuring. Substantially all of the cash payments for the liability are expected to be disbursed by the middle of 2026.
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(16) EMPLOYEE BENEFIT PLAN
The Company maintains a qualified 401(k) retirement savings plan for Exact Sciences employees (the “401(k) Plan”). The Company also maintains additional retirement savings plans that are acquired as a result of business combinations. These plans are maintained for a period of time before being merged into the 401(k) Plan. Under the terms of the 401(k) Plan, participants may elect to defer a portion of their compensation into the 401(k) Plan, subject to certain limitations. Company matching contributions may be made at the discretion of the Company's Human Capital Committee.
The Human Capital Committee approved 401(k) Plan matching contributions for the years ended December 31, 2025, 2024, and 2023 in the form of Company common stock equal to 100 6 47.9 million, $44.1 million, and $40.6 million, respectively, in the statements of operations for the years ended December 31, 2025, 2024, and 2023.
(17) ACQUISITIONS AND DIVESTITURES
Business Combinations
Resolution Bioscience, Inc.
On September 12, 2023, the Company completed the acquisition of all of the outstanding capital stock of Resolution Bioscience, Inc. from Agilent Technologies, Inc. Resolution Bioscience develops and commercializes next-generation sequencing-based precision oncology solutions through its Clinical Laboratory Improvement Amendments (“CLIA”) certified lab based in Kirkland, Washington. The acquisition provides the Company with a high-quality blood-based therapy selection platform, complementing its comprehensive, tissue-based OncoExTra® test. The Company has included the financial results of Resolution Bioscience in the consolidated financial statements from the date of the acquisition.
The acquisition date fair value of the consideration transferred for Resolution Bioscience was approximately $54.2 million, which consisted of the following:
| (In thousands) | ||||||||
| Cash | $ | |||||||
| Fair value of replaced equity awards | ||||||||
| Total purchase price | $ | |||||||
The Company replaced unvested RSUs with a combination-date fair value of $4.6 million . Of the total consideration for replaced equity awards, $1.7 million was allocated to the consideration transferred, and $2.9 million was deemed compensatory as it was attributable to post acquisition vesting. The compensatory replaced equity awards will be expensed over the remaining service periods on a straight-line basis.
The following unaudited pro forma financial information summarizes the combined results of operations for the Company and Resolution Bioscience, as though the companies were combined as of the beginning of January 1, 2022.
Twelve Months Ended December 31, | ||||||||||||||
| (In thousands) | 2023 | 2022 | ||||||||||||
| Total revenues | $ | $ | ||||||||||||
| Net loss before tax | ( | ( | ||||||||||||
The unaudited pro forma financial information is presented for informational purposes only and is not indicative of the results that would have been achieved if the acquisition had taken place at such time. Expected cost savings and other synergistic benefits resulting from the acquisition were not reflected in the unaudited pro forma financial information. The Company did not have any significant, nonrecurring pro forma adjustments directly attributable to the acquisition included in the reported unaudited pro forma financial information. Revenue and net loss before tax from Resolution Bioscience included in the Company's consolidated statements of operations for the year ended December 31, 2023 was not significant.
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Acquisition-related costs were not significant and were recorded within general and administrative expenses in the consolidated statement of operations. These costs include fees associated with financial, legal, accounting, and other advisors incurred to complete the acquisition.
Divestitures
Oncotype DX Genomic Prostate Score Test
On August 2, 2022, pursuant to an asset purchase agreement (the “Asset Purchase Agreement”) with MDxHealth SA (“MDxHealth”), the Company completed the sale of the intellectual property and know-how related to the Company’s Oncotype DX Genomic Prostate Score test (“GPS test”).
The Asset Purchase Agreement required MDxHealth to pay the Company up to an additional $70.0 million of contingent consideration that would be earned and receivable in cash and/or equity based on the achievement of certain revenue milestones by MDxHealth between 2023 and 2025. Under the Asset Purchase Agreement, contingent consideration would have been recognized in the consolidated statement of operations when it was probable a significant reversal of a gain would not occur. As of December 31, 2022, no contingent consideration was probable of not resulting in a significant gain reversal due to minimum revenue thresholds in place and therefore it was fully constrained.
On August 23, 2023, the Company and MDxHealth executed the Second Amendment to the Asset Purchase Agreement (the “Second Amendment”). Under the Second Amendment, the Company agreed to allow MDxHealth to defer the 2023 contingent consideration payment by three years in exchange for additional consideration and more favorable contingent consideration terms, including elimination of the minimum revenue thresholds previously required to be met under the Asset Purchase Agreement. The Company received additional consideration with a fair value of $3.1 million, which was recorded as a gain for the year ended December 31, 2023, and is included in other operating income in the consolidated statement of operations.
Under the Second Amendment, the maximum contingent consideration increased from $70.0 million to $82.5 million and the minimum revenue thresholds previously required to be met under the Asset Purchase Agreement were eliminated. As a result of the elimination of the minimum revenue thresholds, the Company determined that a significant reversal of a gain is not probable and therefore the contingent consideration is no longer constrained. The Company recorded a contingent consideration gain of $9.2 million, and $73.3 million during the years ended December 31, 2024 and 2023, respectively, which totaled the maximum contingent consideration under the Second Amendment. The gains recorded are included in other operating income in the consolidated statement of operations. The gains recorded were estimated using historical GPS test revenues by MDxHealth under the most likely amount method.
As of December 31, 2025, the remaining contingent consideration balance, which includes the amount earned during the 2023 and 2025 earnout years classified as a receivable, was $54.5 million, of which $29.8 million is included in prepaid expenses and other current assets and $24.8 million is included in other long-term assets, net on the consolidated balance sheet. As of December 31, 2024, the contingent consideration balance, which includes the amounts earned during the 2023 and 2024 earnout years classified as a receivable, was $56.6 million, of which $27.9 million is included in prepaid expenses and other current assets and $28.7 million is included in other long-term assets, net on the consolidated balance sheet. As of December 31, 2024, the remaining portion of the contingent consideration of $25.9 million was classified as a contract asset, which was included in other long-term assets, net on the consolidated balance sheet.
In April 2025, the Company received the cash payment of $28.0 million related to the 2024 earnout year, which was included in prepaid expenses and other current assets on the consolidated balance sheet as of December 31, 2024. The cash receipt is presented as a cash inflow from investing activities for the year ended December 31, 2025 on the consolidated statement of cash flows.
On January 9, 2026, the Company and MDxHealth executed the Fourth Amendment to the Asset Purchase Agreement (“Fourth Amendment”) related to the sale of the GPS test. Under the Fourth Amendment, the Company agreed to restructure the timing of the remaining contingent consideration payments in exchange for additional consideration with a fair value of $4.7 million, which will be recorded as a gain within other operating income on the consolidated statement of operations during the first quarter of 2026. The remaining contingent consideration payments will be structured with $15.0 million due on or before April 15, 2026, $18.0 million due on or before April 15, 2027, and $21.5 million due on or before April 15, 2028.
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Notes to Consolidated Financial Statements (Continued)
Transaction-related costs were not significant and were recorded within general and administrative expenses in the consolidated statement of operations. These costs include fees associated with financial, legal, accounting, and other advisors incurred to complete the divestiture.
(18) SEGMENT INFORMATION
The Company is managed as one operating segment, and thus reports as a single reportable segment. This operating segment is focused on the development and global commercialization of clinical laboratory services allowing healthcare providers and patients to make individualized treatment decisions. The accounting policies of the segment are the same as those described in Note 1 - Summary of Significant Accounting Policies. The Company's Chief Operating Decision Maker (“CODM”), its , monitors the Company's operating performance and makes decisions regarding allocation of resources to its operations at the consolidated level. The measure of segment profit or loss used by the CODM in assessing performance and deciding how to allocate resources is based on net loss. The CODM is regularly provided consolidated net loss to monitor budget versus actual results on a monthly basis to timely identify deviations from expected results, which is used in assessing performance and deciding where to reinvest profits and allocate resources predominantly in the annual budget and forecasting process. Significant segment expenses regularly provided to the CODM are those presented on the consolidated statement of operations. These significant segment expenses include cost of sales, research and development, sales and marketing, and general and administrative. Additional significant segment expenses that are not separately presented in the consolidated statement of operations include stock-based compensation, depreciation expense, and amortization of acquired intangible assets, which are presented in the consolidated statement of cash flows, and restructuring and business transformation costs, which are presented in Note 15. For the year ended December 31, 2024, impairment of long-lived and indefinite-lived assets was identified as a significant segment expense as a result of a significant impairment charge discussed in Note 6. All other items presented on the consolidated statements of operations are characterized as other segment items.
The measure of segment assets provided to and reviewed by the CODM is reported on the consolidated balance sheet as total assets. Long-lived assets located in countries outside the U.S. are not significant.
The following table summarizes total revenue from customers by geographic region. Product revenues are attributed to countries based on ship-to location.
| Year Ended December 31, | ||||||||||||||||||||
| (In thousands) | 2025 | 2024 | 2023 | |||||||||||||||||
| United States | $ | $ | $ | |||||||||||||||||
| Outside of United States | ||||||||||||||||||||
| Total revenues | $ | $ | $ | |||||||||||||||||
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Notes to Consolidated Financial Statements (Continued)
(19) INCOME TAXES
Under financial accounting standards, deferred tax assets or liabilities are computed based on the differences between the financial statement and income tax bases of assets and liabilities using the enacted tax rates. Deferred income tax expense or benefit represents the change in the deferred tax assets or liabilities from period to period. At December 31, 2025, the Company had federal net operating loss, state net operating loss, and foreign net operating loss carryforwards of approximately $418.6 million, $66.9 million, and $10.9 million, respectively, for financial reporting purposes, which may be used to offset future taxable income. The Tax Cuts and Jobs Act (H.R. 1) of 2017 limits the deduction for net operating losses to 80% of current year taxable income and provides for an indefinite carryover period for federal net operating losses. Both provisions are applicable for losses arising in tax years beginning after December 31, 2017. As of December 31, 2025 the Company has $310.4 million of federal net operating loss carryovers incurred after December 31, 2017 with an unlimited carryover period and $108.2 million of federal net operating loss carryovers expiring at various dates through 2037. State and foreign net operating loss carryovers expire at various dates through 2045. All net operating loss carryforwards are subject to review and possible adjustment by federal, state, and foreign taxing jurisdictions. The Company also had federal and state research tax credit carryforwards of $93.4 million and $43.2 million, respectively, which may be used to offset future income tax liability. The federal credit carryforwards expire at various dates through 2045 and are subject to review and possible adjustment by the Internal Revenue Service. The state credit carryforwards expire at various dates through 2040 with the exception of $25.9 million of California research and development tax credits that have an indefinite carryforward period. All state tax credits are subject to review and possible adjustment by local tax jurisdictions. In the event of a change of ownership, the federal and state net operating loss and research and development tax credit carryforwards may be subject to annual limitations provided by the Internal Revenue Code and similar state provisions.
Loss before provision for taxes consisted of the following:
| Year Ended December 31, | ||||||||||||||||||||
| (In thousands) | 2025 | 2024 | 2023 | |||||||||||||||||
Income (loss) before income taxes: | ||||||||||||||||||||
| Domestic | $ | ( | $ | ( | $ | ( | ||||||||||||||
| Foreign | ||||||||||||||||||||
| Total loss before income taxes | $ | ( | $ | ( | $ | ( | ||||||||||||||
The expense (benefit) for income taxes consists of:
| Year Ended December 31, | ||||||||||||||||||||
| (In thousands) | 2025 | 2024 | 2023 | |||||||||||||||||
| Current expense (benefit): | ||||||||||||||||||||
| Federal | $ | $ | $ | |||||||||||||||||
| State | ||||||||||||||||||||
| Foreign | ||||||||||||||||||||
| Deferred tax expense (benefit): | ||||||||||||||||||||
| Federal | ( | |||||||||||||||||||
| State | ( | ( | ( | |||||||||||||||||
| Foreign | ( | ( | ( | |||||||||||||||||
| Total income tax expense (benefit) | $ | $ | ( | $ | ||||||||||||||||
The Company recorded an income tax expense for the year ended December 31, 2025 of $4.1 million primarily related to current foreign and state tax expense.
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Notes to Consolidated Financial Statements (Continued)
The components of the net deferred tax asset with the approximate income tax effect of each type of carryforward, credit and temporary differences are as follows:
| December 31, | ||||||||||||||
| (In thousands) | 2025 | 2024 | ||||||||||||
| Deferred tax assets: | ||||||||||||||
| Operating loss carryforwards | $ | $ | ||||||||||||
| Tax credit carryforwards | ||||||||||||||
| Compensation related differences | ||||||||||||||
| Lease liabilities | ||||||||||||||
| Capitalized research and development | ||||||||||||||
| Other temporary differences | ||||||||||||||
| Tax assets before valuation allowance | ||||||||||||||
| Less - Valuation allowance | ( | ( | ||||||||||||
| Total deferred tax assets | ||||||||||||||
| Deferred tax liabilities | ||||||||||||||
| Amortization | $ | ( | $ | ( | ||||||||||
| Property, plant and equipment | ( | ( | ||||||||||||
| Lease assets | ( | ( | ||||||||||||
| Other temporary differences | ( | ( | ||||||||||||
| Total deferred tax liabilities | ( | ( | ||||||||||||
| Net deferred tax liabilities | $ | ( | $ | ( | ||||||||||
A valuation allowance to reduce the deferred tax assets is reported if, based on the weight of the evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The Company has incurred significant losses since its inception and due to the uncertainty of the amount and timing of future taxable income and the realization of deferred tax liabilities, management has determined that a valuation allowance of $736.0 million and $708.8 million at December 31, 2025 and 2024, respectively, is necessary to reduce the tax assets to the amount that is more likely than not to be realized. Given the future limitations on and expiration of certain federal and state deferred tax assets, the recording of a valuation allowance resulted in a deferred tax liability of approximately $5.8 million remaining as of December 31, 2025, which is included in other long-term liabilities on the Company's consolidated balance sheet. The overall change in valuation allowance for December 31, 2025 and 2024 was an increase of $27.2 million and an increase of $243.0 million, respectively.
Activity associated with the Company's valuation allowance is as follows:
| December 31, | ||||||||||||||||||||
| (In thousands) | 2025 | 2024 | 2023 | |||||||||||||||||
| Balance as of January 1, | $ | ( | $ | ( | $ | ( | ||||||||||||||
| Valuation allowances established | ( | ( | ( | |||||||||||||||||
| Changes to existing valuation allowances | ( | ( | ||||||||||||||||||
| Acquisition and purchase accounting | ( | |||||||||||||||||||
| Balance as of December 31, | $ | ( | $ | ( | $ | ( | ||||||||||||||
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Notes to Consolidated Financial Statements (Continued)
The effective tax rate differs from the statutory tax rate due to the following:
| December 31, 2025 | ||||||||||||||
| Amount | Percent | |||||||||||||
| U.S. Federal statutory rate | $ | ( | % | |||||||||||
State and local taxes, net of federal income tax effect (1) | ( | |||||||||||||
| Foreign tax effects | ( | |||||||||||||
| Effect of cross border laws | ||||||||||||||
| Subpart F | ||||||||||||||
| Tax credits | ||||||||||||||
| Research and development | ( | |||||||||||||
| Other | ( | |||||||||||||
| Changes in valuation allowance | ( | |||||||||||||
| Nontaxable or nondeductible items | ||||||||||||||
| Stock-based compensation expense | ( | |||||||||||||
| Non-deductible executive compensation | ( | |||||||||||||
| Transaction costs | ( | |||||||||||||
| Meals and entertainment | ( | |||||||||||||
| Contingent consideration | ( | |||||||||||||
| Other non-deductible items | ( | |||||||||||||
| Other adjustments | ( | |||||||||||||
| Effective tax rate | $ | ( | % | |||||||||||
_________________________________
(1)The majority of taxes in the state and local income tax category are reported in Wisconsin and California.
| December 31, | ||||||||||||||
| 2024 | 2023 | |||||||||||||
| U.S. Federal statutory rate | % | % | ||||||||||||
| State taxes | ||||||||||||||
| Federal and state tax rate changes | ||||||||||||||
| Foreign tax rate differential | ||||||||||||||
| Research and development tax credits | ||||||||||||||
| Stock-based compensation expense | ( | ( | ||||||||||||
| Non-deductible executive compensation | ( | ( | ||||||||||||
| Loss on extinguishment - convertible debt | ( | |||||||||||||
| Other adjustments | ( | ( | ||||||||||||
| Valuation allowance | ( | ( | ||||||||||||
| Effective tax rate | % | ( | % | |||||||||||
For the year ended December 31, 2025, the Company recognized an income tax benefit, representing an effective tax rate of (2.0 )%. The difference between the expected statutory federal tax rate of 21.0% and the effective tax rate of (2.0 )% for the year ended December 31, 2025, was primarily attributable to the valuation allowance established against the Company's current period losses.
For the year ended December 31, 2024, the Company recognized an income tax benefit, representing an effective tax rate of 0.6 %. The difference between the expected statutory federal tax rate of 21.0% and the effective tax rate of 0.6 % for the year ended December 31, 2024, was primarily attributable to the valuation allowance established against the Company's current period losses.
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Notes to Consolidated Financial Statements (Continued)
For the year ended December 31, 2023, the Company recognized an income tax expense, representing an effective tax rate of (1.2 )%. The difference between the expected statutory federal tax rate of 21.0% and the effective tax rate of (1.2 )% for the year ended December 31, 2023, was primarily attributable to the valuation allowance established against the Company's current period losses.
The Company had unrecognized tax benefits related to federal and state research and development tax credits of $47.5 million, $43.3 million, and $36.4 million as of December 31, 2025, 2024, and 2023, respectively. These amounts have been recorded as a reduction to the Company's deferred tax asset, if recognized they would not have an impact on the effective tax rate due to the existing valuation allowance. Certain of the Company's unrecognized tax benefits could change due to activities of various tax authorities, including possible settlement of audits, or through normal expiration of various statutes of limitations. The Company does not expect a material change in unrecognized tax benefits in the next twelve months.
The following is a tabular reconciliation of the amounts of unrecognized tax benefits:
| December 31, | ||||||||||||||||||||
| (In thousands) | 2025 | 2024 | 2023 | |||||||||||||||||
| January 1, | $ | $ | $ | |||||||||||||||||
| Increase due to current year tax positions | ||||||||||||||||||||
| Increase due to prior year tax positions | ||||||||||||||||||||
| Decrease due to prior year tax positions | ( | ( | ( | |||||||||||||||||
| December 31, | $ | $ | $ | |||||||||||||||||
As of December 31, 2025, due to the carryforward of unutilized net operating losses and research and development credits, the Company is subject to U.S. federal income tax examinations for the tax years 2005 through 2025, and to state income tax examinations for the tax years 2005 through 2025. There were no
The Organization for Economic Co-operation and Development has endorsed a framework (“Pillar Two”) with model rules introducing a global minimum corporate tax rate via a system where multinational groups with consolidated revenue over €750.0 million are subject to a minimum effective tax rate of 15% on income arising in low-tax jurisdictions on a country-by-country basis. Many countries have implemented laws based on these model rules, with effective dates beginning January 1, 2024. These rules do not have a material impact on the Company for the current period and, as currently designed, are not expected to materially increase the Company’s global tax costs. The Company will continue to monitor U.S. and global legislative action related to Pillar Two for potential impacts.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
There have been no disagreements with accountants on accounting or financial disclosure matters.
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures.
As required by Rule 13a‑15(b) under the Securities Exchange Act of 1934 (the “Exchange Act”), our management, including our principal executive officer and principal financial officer, conducted an evaluation as of the end of the period covered by this report, of the effectiveness of our disclosure controls and procedures as defined in Rule 13a‑15(e) under the Exchange Act. Based on that evaluation, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures were effective as of December 31, 2025 to provide reasonable assurance that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported, within the time periods specified in Securities and Exchange Commission rules and forms and that material information relating to the Company is accumulated and communicated to management, including our principal executive officer and our principal financial officer, as appropriate to allow timely decisions regarding required disclosures.
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Changes in Internal Control over Financial Reporting.
There were no changes in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) under the Exchange Act during the quarter ended December 31, 2025, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Management’s Report on Internal Control over Financial Reporting.
Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a‑15(f) under the Exchange Act. The Company’s internal control over financial reporting is a process designed 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.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
We conducted an evaluation, under the supervision and with the participation of our management, of the effectiveness of our internal control over financial reporting as of December 31, 2025. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control—Integrated Framework (2013). Based on our assessment, management, including our principal executive officer and principal financial officer, concluded that, as of December 31, 2025, our internal control over financial reporting was effective based on those criteria.
The effectiveness of the Company's internal control over financial reporting as of December 31, 2025 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears herein.
Item 9B. Other Information
Rule 10b5-1 Trading Plans
During the three months ended December 31, 2025, none of our directors or officers (as defined in Rule 16a-1 under the Exchange Act) adopted or terminated Rule 10b5-1 trading arrangement ” or “non-Rule 10b5-1 trading arrangement ” (as those terms are defined in Item 408 of Regulation S-K).
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
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PART III
Item 10. Directors, Executive Officers and Corporate Governance.
Identification of Directors
Below is background information for each director, as well as information regarding additional experience, qualifications, attributes or skills that led the Company’s Board of Directors to conclude that such director should serve on the Board of Directors.
 | DIRECTOR QUALIFICATIONS Mr. Barber contributes over 40 years of experience serving in a series of executive roles with increasing scope of responsibilities in operations, human capital, engineering, and product management at General Electric Company (NYSE: GE). He is a well-respected innovator, inventor, and healthcare industry leader, with a proven global track record of launching transformational technologies and successfully delivering advanced products to market in the diagnostic imaging and point of care technology fields. KEY SKILLS AND EXPERTISE Global Business Perspective; Pipeline Development/Commercialization: Mr. Barber contributes significant global operational insights from his experience at pharmaceutical and other healthcare companies, where he has led product development for advanced healthcare technologies, positioning him with a unique understanding of product impact on a wide variety of healthcare focused stakeholders. While serving as CEO of GE’s Molecular Imaging and Computed Tomography business, he oversaw the launch of a revolutionary CT portfolio, game-changing, deep learning-based image reconstruction and patient positioning technology, as well as the world’s first digital PET scanner, transforming GE’s position in the cancer, oncology, and cardiac care markets globally. Talent Management; Corporate Governance and Sustainability: Acquired in his most recent role as Chief Diversity Officer for GE, where he was responsible for leading the approximately 179,000 employee company’s inclusion and diversity strategy to drive sustainable change with an added focus on enhancing employee engagement, leadership accountability, building an inclusive culture and reinvigorating inclusion and diversity learning and mentoring. He also brings valuable insight from his experience overseeing human capital management efforts, including a deep understanding of human resources, labor relations and sustainability matters. Executive Leadership: Obtained from Mr. Barber’s numerous executive leadership positions throughout his career at GE. While serving as CEO of GE’s Molecular Imaging and Computed Tomography business, he was responsible for driving growth and innovation to meet customer and business needs for multiple product lines. His executive responsibilities have also included oversight of complex operational execution of healthcare company manufacturing processes. CAREER HIGHLIGHTS General Electric (NYSE: GE) – multinational provider of energy solutions, jet engines and healthcare technologies ◦Chief Diversity Officer (2020-2022) ◦President and Chief Executive Officer, GE Molecular Imaging and Computed Tomography (2016-2020) ◦Chief Engineer, GE Healthcare and Chief Operating Officer, GE Healthcare Systems (2013-2015) ◦Vice President and General Manager, Molecular Imaging, GE Healthcare (2011-2012) ◦Vice President, Healthymagination Strategy (2009-2011) ◦Vice President of Technology, GE Healthcare (2007-2008) ◦Vice President of Engineering, Diagnostic Imaging (2005-2006) ◦Several additional roles (1982-2005) EDUCATION ◦B.S., Engineering, Milwaukee School of Engineering ◦Honorary Doctorate, Engineering, Milwaukee School of Engineering | |||||||||||||||||||
| Michael Barber | ||||||||||||||||||||
AGE: 65 INDEPENDENT DIRECTOR (CLASS III) SINCE: 2024 COMMITTEES Audit and Finance Innovation, Technology & Pipeline (Chair) | ||||||||||||||||||||
OTHER PUBLIC COMPANY BOARD DIRECTORSHIPS Dentsply Sirona, Inc (Nasdaq:XRAY) (since 2025) Catalent, Inc. (NYSE: CTLT) (2021-2024) | ||||||||||||||||||||
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 | DIRECTOR QUALIFICATIONS Mr. Clancy contributes over 30 years of experience in financial management and strategic business planning, as well as extensive financial leadership in the biopharmaceutical and biotechnology industries. His broad experience in strategic planning, financial management, capital allocation, mergers and acquisitions, business development and investor relations allow him to contribute insights to the Board’s oversight of value-creation initiatives. KEY SKILLS AND EXPERTISE Finance, Corporate Strategy and M&A: Acquired from his extensive financial and executive leadership experience at large, public companies with complex operations, including his former roles as the Chief Financial Officer of Alexion Pharmaceuticals, Inc. (Nasdaq: ALXN) and Biogen Inc. (Nasdaq: BIIB). During his tenure at Biogen, he oversaw the company’s rapid growth and shareholder value creation that ranked at the top decile of S&P 500 companies, driven by its expanded product lines and pipeline through organic growth opportunities and M&A. Mr. Clancy was recognized in the top three biotech CFOs in the Institutional Investor annual survey in all years from 2011-2020. Risk Management: As a board director at two other public life sciences companies, Mr. Clancy brings a deep understanding of the evolving risks associated with the industry. Additionally, he brings significant risk management expertise to the Board from his over 30-year career in financial management. His responsibilities have included leading the treasury, tax, investor relations and business planning groups of several multinational large companies. Diagnostics/Medical Device and Technology: Obtained through his service at executive level positions at large biopharmaceutical and biotechnology companies, where he was responsible for aligning the company’s financial management with strategic business planning. CAREER HIGHLIGHTS Alexion Pharmaceuticals, Inc. (Nasdaq: ALXN) – biopharmaceutical company ◦Executive Vice President and Senior Adviser (2019-2020) ◦Executive Vice President and Chief Financial Officer (2017-2019) Biogen, Inc. (Nasdaq: BIIB) – biotechnology company ◦Executive Vice President, Finance and Chief Financial Officer (2007-2017) ◦Senior Vice President, Finance (2006-2007) ◦Various other leadership roles, including Vice President, U.S. Marketing and Vice President of Portfolio Management (2001-2006) PepsiCo, Inc. (Nasdaq: PEP) – multinational food, snack and beverage company ◦Vice President and General Manager, Great West business unit (1997-2000) ◦Various other leadership positions (1987-1996) EDUCATION ◦B.S., Finance, Babson College ◦M.B.A., Columbia University | |||||||||||||||||||
| Paul Clancy | ||||||||||||||||||||
AGE: 64 INDEPENDENT DIRECTOR (CLASS III) SINCE: 2021 COMMITTEES Audit and Finance (Chair) Corporate Governance and Nominating | ||||||||||||||||||||
OTHER PUBLIC COMPANY BOARD DIRECTORSHIPS Sionna Therapeutics, Inc. (Nasdaq: SION) (Since 2022) Incyte Corporation (Nasdaq: INCY) (since 2015) Xilio Therapeutics (Nasdaq: XLO) (2020-2025) Agios Pharmaceuticals (Nasdaq: AGIO) (2013-2023) | ||||||||||||||||||||
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 | DIRECTOR QUALIFICATIONS Mr. Conroy has served as our Chief Executive Officer since 2009, and as Chairman of our Board of Directors since 2014. He has been responsible for transforming the organization into one of the world’s premier cancer diagnostics companies and contributes his extensive business knowledge, legal and executive leadership experience and strategic counsel to the Board. With more than 20 years in the healthcare and health technology space, Mr. Conroy has a deep understanding of our industry. KEY SKILLS AND EXPERTISE Executive Leadership; Finance, Corporate Strategy, and M&A: Obtained from his tenure as Chief Executive Officer of two major public diagnostics companies, Exact Sciences (Nasdaq: EXAS) and Third Wave Technologies (Nasdaq: TWTI). As our Chief Executive Officer, he has created shareholder value through innovative new technologies and key acquisitions, positioning the Company as a global leader in cancer screening and diagnostics. Diagnostics/Medical Device and Technology; Science, Research, and Development: Acquired significant experience overseeing the development, regulatory approval, and commercialization of diagnostic tests and building a high performing team culture within our Company. While Chief Executive Officer of Exact Sciences, he spearheaded collaborative research efforts to identify highly discriminant cancer biomarkers, leading to the development of Cologuard® and Cologuard Plus, our proprietary multi-marker tests for the early detection of colorectal cancer. Pipeline Development/Commercialization; Global Business Perspective: In his current role as Chief Executive Officer, he has led the Company through the regulatory approval and commercialization of Cologuard® - the first cancer diagnostic test to receive simultaneous FDA approval and national Medicare coverage. Additionally, he led the Company through development of innovative new tests such as Cologuard PlusTM, OncodetectTM, and CancerguardTM. Separately, while serving as Chief Executive Officer of Third Wave Technologies, he was responsible for the successful development oversight of Cervista, a cervical cancer screening test. His insight and global perspective into the development, regulatory approval and commercialization processes of diagnostic tests provides valuable insight to the Board in shaping our business strategy. CAREER HIGHLIGHTS Exact Sciences (Nasdaq: EXAS) ◦President, Chairman and Chief Executive Officer (since 2009, Chairman since 2014) Third Wave Technologies, (Nasdaq: TWTI) (acquired by Hologic, Inc. in 2008) – molecular diagnostics business ◦President and Chief Executive Officer (2005-2008) ◦General Counsel (2004-2005) GE Healthcare – healthcare technology arm of General Electric (NYSE: GE) ◦Intellectual Property Counsel (2002-2004) EDUCATION ◦B.S., Electrical Engineering, Michigan State University ◦J.D., University of Michigan | |||||||||||||||||||
| Kevin Conroy | ||||||||||||||||||||
AGE: 60 NON-INDEPENDENT DIRECTOR (CLASS I) SINCE: 2009 | ||||||||||||||||||||
OTHER PUBLIC COMPANY BOARD DIRECTORSHIPS Align Technology, Inc. (Nasdaq: ALGN) (since 2023) Adaptive Biotechnologies Corporation (Nasdaq: ADPT) (2019-2023) Epizyme, Inc. (Nasdaq: EPZM) (2017-2022) CM Life Sciences II Inc. (Nasdaq: CMIIU) (2021) SomaLogic, Inc. (Nasdaq: SLGC) (2021) Arya Sciences Acquisition Corp. (Nasdaq: ARYA) (2018-2020) | ||||||||||||||||||||
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 | DIRECTOR QUALIFICATIONS Mr. Coward contributes to the board decades of legal experience working with large corporations and emerging growth healthcare companies, where he has gained extensive legal and healthcare industry expertise. His previous role leading our legal department uniquely positions him with critical knowledge to advise on complex nuances that may impact our strategy and rapidly evolving business. KEY SKILLS AND EXPERTISE Diagnostics/Medical Device and Technology; Executive Leadership: Obtained significant operational and executive leadership experience from his multiple roles overseeing and advising the legal teams at a number of large public and early-stage growth companies. His strategic counsel included issues related to real estate, corporate affairs, governmental affairs, clinical and regulatory matters. Corporate Governance and Sustainability; Finance, Corporate Strategy, and M&A: Contributes a deep understanding of our business, gained during his time as our Chief Legal Officer, General Counsel, and Chief Administrative Officer, including experience analyzing and navigating legal, regulatory, compliance, corporate governance and sustainability issues, particularly as they affect the company’s corporate strategy and M&A. Pipeline Development/Commercialization, Global Business Perspective: Acquired expertise navigating the global, public company regulatory and legal landscape in the healthcare industry from his long career advising life sciences companies, including as a Managing Partner of the Raleigh, North Carolina office of K&L Gates LLP and as Associate General Counsel of GE Medical Systems. His pharmaceutical and biotechnology company counsel has spanned multiple pipeline development stages in areas including R&D, complex licensing, healthcare data and intellectual property. CAREER HIGHLIGHTS College of Charleston – public university ◦Adjunct professor of business law (since 2023) Exact Sciences (Nasdaq: EXAS) ◦Chief Legal Officer (January - December 2022) ◦Executive Vice President, Chief Administrative Officer (2018-2021) ◦Executive Vice President, General Counsel (2015-2022) K&L Gates LLP – global law firm ◦Managing Partner of Raleigh, NC office (2004-2014) Blue Rhino Corporation – leading supplier of consumer propane-related products ◦General Counsel (2003-2004) GE Medical Systems – a business of General Electric Company (NYSE: GE), medical electronic equipment manufacturer ◦Associate General Counsel (2002-2003) Smith Anderson Blount Dorsett Mitchell & Jernigan LLP – business and litigation law firm ◦Partner (1991-2002) EDUCATION ◦B.S., Business Administration, University of North Carolina at Chapel Hill ◦J.D., Columbia Law School | |||||||||||||||||||
| D. Scott Coward | ||||||||||||||||||||
AGE: 61 NON-INDEPENDENT DIRECTOR (CLASS II) SINCE: 2022 COMMITTEES Innovation, Technology and Pipeline | ||||||||||||||||||||
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 | DIRECTOR QUALIFICATIONS Mr. Doyle contributes extensive leadership experience from his career serving in various government leadership roles, including his two terms serving as the 44th Governor of the state of Wisconsin. He is a seasoned and skilled lawyer with expertise guiding both private and public companies as they operate through complex legal challenges and highly regulated industries. KEY SKILLS AND EXPERTISE Government, Regulatory, and Compliance: Mr. Doyle contributes significant government, regulatory and compliance experience from his decades serving in various elected official positions, including as Governor of Wisconsin, where he worked closely with policy makers and gained insights into policy and regulatory issues impacting the healthcare industry. He has experience working closely with the White House, high-ranking Administration officials and other governors, has led multiple coordinated multi-state legislative efforts and has argued three cases before the U.S. Supreme Court. Medical Practice and Public Health; Risk Management: Acquired throughout his career providing strategic legal counsel in the healthcare industry, including his oversight work of a major Medicare program and initiatives to expand healthcare coverage for state residents and advising clients on compliance with the evolving legal and regulatory frameworks governing the healthcare industry. He contributes to the Board strong analytical skills to evaluate the legal and regulatory risks affecting our business and strategy. Executive Leadership; Talent Management: Obtained proven executive leadership, managerial and talent management skills from his time serving as an elected state official and law firm partner. CAREER HIGHLIGHTS Doyle & Boyce Strategies – national foundations consultant ◦Partner (since 2011) Foley and Lardner LLP – international law firm ◦Of Counsel (2011-2024) State of Wisconsin, U.S. ◦44th State Governor (2003-2011) ◦Attorney General (1991-2003) ◦District Attorney, Dane County (1977-1982) EDUCATION ◦B.A., University of Wisconsin-Madison ◦J.D., Harvard Law School | |||||||||||||||||||
| James Doyle | ||||||||||||||||||||
AGE: 80 INDEPENDENT DIRECTOR (CLASS II) SINCE: 2014 COMMITTEES Human Capital Corporate Governance and Nominating | ||||||||||||||||||||
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 | DIRECTOR QUALIFICATIONS Ms. Petrovic contributes decades of experience as an executive in the medical device industry, where she is well-known as a visionary and inspiring leader who has dedicated her career to improving care for patients, while bringing tremendous value to the clinical community. She contributes extensive industry leadership experience and first-hand oversight of the successful launch of impact-focused technologies and medical devices, which have positively impacted business growth. KEY SKILLS AND EXPERTISE Executive Leadership; Pipeline Development/Commercialization: During Ms. Petrovic’s tenure as Chief Executive Officer of Insulet Corporation (Nasdaq: PODD), she spearheaded a period of strong financial growth as the company shifted to pharmacy and launched its flagship innovation, the Omnipod 5. She also contributes deep sales and marketing experience to the Board from her previous role as Chief Executive Officer at Clinical Innovations and several leadership positions at Hologic (Nasdaq: HOLX). Diagnostics/Medical Device and Technology; Government, Regulatory, and Compliance: Obtained from her career of developing deep relationships within the healthcare industry, particularly within diagnostics and screening, which has been critical in her oversight of the full commercialization lifespan of medical device products, including the critical regulatory approval stage. Talent Management; Finance, Corporate Strategy, and M&A: Acquired valuable talent acquisition and management experience from her numerous leadership positions of increasing responsibility at both Insulet Corporation and Hologic. While serving as Chief Executive Officer of Insulet Corporation, her responsibilities included active ultimate oversight of the finance and corporate strategy functions, which resulted in the company’s growth from $2 billion to over $20 billion in market capitalization. CAREER HIGHLIGHTS Insulet Corporation, (Nasdaq: PODD) – innovative medical device company ◦Board Member and Advisor (2018-2024) ◦President and Chief Executive Officer (2019-2022) ◦President and Chief Operating Officer (2016-2018) ◦President, Insulet Diabetes Products (2016) ◦Chief Commercial Officer (2015-2016) Clinical Innovations, LLC – developer and manufacturer of medical devices and diagnostics for women’s health ◦President and Chief Executive Officer (2013-2015) Hologic, Inc, (Nasdaq: HOLX) – medical technology company ◦Vice President and General Manager, GYN Surgical Products (2012-2013) ◦Vice President, Global Surgical Marketing (2010-2012) ◦Business Director (2008-2010) Cytyc Corporation (acquired by Hologic, Inc. in 2007) – biotechnology company focused on women’s health ◦Various leadership roles, including in sales (2000-2007) EDUCATION ◦B.S., Biology, University of Wisconsin-Milwaukee | |||||||||||||||||||
| Shacey Petrovic | ||||||||||||||||||||
AGE: 52 INDEPENDENT DIRECTOR (CLASS I) SINCE: 2020 COMMITTEES Corporate Governance and Nominating (Chair) | ||||||||||||||||||||
OTHER PUBLIC COMPANY BOARD DIRECTORSHIPS Ambu A/S (Nasdaq Nordic: AMBU B) (since 2022) Insulet Corporation (Nasdaq: PODD) (2018-2024) | ||||||||||||||||||||
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 | DIRECTOR QUALIFICATIONS Ms. Popovits has over 40 years of experience in the healthcare industry, serving in various leadership roles at Genomic Health, Inc, Genentech Inc., and American Critical Care. Ms. Popovits served as President and Chief Executive Officer of Genomic Health, Inc. (“Genomic Health”) from 2009 until its acquisition by Exact Sciences in 2019. Prior to that role, Ms. Popovits served as Genomic Health’s Chief Operating Officer from 2002 to 2009 and as its Chairman of the Board from 2012 to 2019. Prior her time at Genomic Health, Ms. Popovits served as Senior Vice President, Marketing and Sales from 2001 to 2002 and Vice President, Sales from 1994 to 2001 at Genentech, Inc. She also served as interim Chief Executive Officer for Talis Biomedical Corporation in 2021. Ms. Popovits was named the Most Admired CEO in 2014 by the San Francisco Business Times, Woman of the Year by Women Health Care Executives in 2008, received the Ferolyn Powell Leadership Award from MedTechWomen in 2019 and the Salute to Excellence Award from the American Liver Foundation in 2017. KEY SKILLS AND EXPERTISE Pipeline Development/Commercialization: Acquired significant executive and operational experience from her positions with pharmaceutical and other healthcare companies, including extensive experience in commercial strategy and capability building. Finance, Corporate Strategy and M&A: Possesses deep knowledge and expertise in advising and managing companies with multiple business units and in various segments of the healthcare industry. Executive Leadership: Ms. Popovits contributes proven leadership skills acquired from executive roles at Genomic Health and past and present board service at numerous public companies. CAREER HIGHLIGHTS Genomic Health, Inc – healthcare company ◦President and Chief Executive Officer (2009-2019) ◦President and Chief Operating Officer (2002-2009) Genentech, Inc. – biotechnology company ◦Senior Vice President, Marketing and Sales (2001-2002) ◦Vice President, Sales (1994-2001) ◦National Sales Manager (1987-1994) American Hospital Supply, American Critical Care Division ◦Division Manager, Southeast Region (1981-1987) EDUCATION ◦B.A., Business, Michigan State University | |||||||||||||||||||
| Kimberly Popovits | ||||||||||||||||||||
AGE: 67 INDEPENDENT DIRECTOR (CLASS I) SINCE: 2025 COMMITTEES Human Capital Innovation, Technology & Pipeline | ||||||||||||||||||||
OTHER PUBLIC COMPANY BOARD DIRECTORSHIPS 10x Genomics, Inc. (Nasdaq: TXG) (Since 2020) Talis Biomedical Corporation (Nasdaq: TLIS) (Since 2020) Kiniksa Pharmaceuticals, Ltd. (Nasdaq: KNSA) (Since 2018) | ||||||||||||||||||||
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 | DIRECTOR QUALIFICATIONS Ms. Trigg contributes over 25 years of experience in leadership within the healthcare and medical device industries. Through her executive experience at a number of corporations in the medical device field and her current role as CEO of a public company, Ms. Trigg has acquired expertise in cultivating relationships with shareholders and investors to advance her companies’ goals. Ms. Trigg brings to the Board a wealth of knowledge in developing strong governance practices and making high-level, strategic decisions to successfully shape a company’s future direction and growth. KEY SKILLS AND EXPERTISE Executive Leadership; Obtained from her experience holding executive level positions and leading multiple medical device companies, where she was charged with guiding companies towards their long-term goals, and developing strategic visions lending to future success. She has also obtained leadership experience from her previous board roles, acting as an oversight authority and financial steward for the benefit of the corporation. Finance/Corporate Strategy and M&A: Obtained from her time serving in executive level roles, Ms. Trigg has experience in developing strategy and commercial infrastructure which has led to successful initial public offerings and multiple favorable acquisitions of the companies she has led. Ms. Trigg’s early background in communications and marketing allow her to consider corporate strategies with a unique approach, which will be valuable to our Board. CAREER HIGHLIGHTS Outset Medical, Inc. (Nasdaq: OM) – dialysis focused medical device company ◦President and Chief Executive Officer (2014 - Present) ◦Chair of Board of Directors (2022 - Present) Warburg Pincus LLC - private equity firm ◦Executive in Residence (2012-2014) Medical Device Manufacturers Association (MDMA) ◦Chair of Board of Directors (2022-Present) Lutonix, Inc. (acquired by CR Bard) – cardiovascular medical device company ◦Executive Vice President (2010-2012) AccessClosure, Inc. (acquired by Cardinal Health) – vascular closure medical device company ◦Chief Business Officer (2006-2009) FoxHollow Technologies, Inc. (acquired by ev3/Covidien) - medical device company ◦Vice President, Marketing (2003-2006) Cytyc Corporation (acquired by Hologic, Inc.) - cervical cancer diagnostic systems company ◦Business Unit Director (2001-2002) Pro-Duct Health, Inc. (acquired by Cytyc Corporation) - breast cancer diagnostics company ◦Director, Market Development (2000-2001) Guidant Corporation ◦Senior Product Manager (1998-2000) EDUCATION ◦B.S., Communications, Northwestern University ◦M.B.A., Haas School of Business, University of California, Berkeley | |||||||||||||||||||
| Leslie Trigg | ||||||||||||||||||||
AGE: 55 INDEPENDENT DIRECTOR (CLASS II) SINCE: 2025 COMMITTEES Audit and Finance | ||||||||||||||||||||
OTHER PUBLIC COMPANY BOARD DIRECTORSHIPS Outset Medical, Inc. (Nasdaq: OM) (since 2014) Adaptive Biotechnologies (Nasdaq: ADPT) (2021-2023) Cardiovascular Systems, Inc. (Nasdaq: CSII) (2010-2017) | ||||||||||||||||||||
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 | DIRECTOR QUALIFICATIONS Ms. Zanotti contributes over four decades of health and personal care industry expertise, including executive and senior leadership experience. She contributes an impressive track record of successfully executing on international omni-channel growth initiatives, with valuable insights on go-to-market and customer engagement strategies that have reached millions of global customers. KEY SKILLS AND EXPERTISE Executive Leadership; Finance, Corporate Strategy, and M&A: Obtained from her various executive and senior level leadership experiences, including multiple public company board directorships. In her most recent role as Chief Executive Officer of Arbonne International, she was responsible for successfully fortifying the company’s financial standing and reputation as a premium international skin care and wellness enterprise. She has also overseen three public company sale transactions to strategic acquirers throughout her career. Pipeline Development/Commercialization: Acquired over four-decade career primarily in the health and personal care industry where she led global commercialization of multiple consumer products at Procter & Gamble (NYSE: PG), McDonald's Corporation (NYSE: MCD), and Arbonne International; led global pipeline development of pharmaceutical products for P&G, and then commercialized in North American market. All leadership positions led to significant business growth and profitability. Talent Management; Corporate Governance and Sustainability: Developed from her time serving on six public company boards, where she has contributed her expertise in compensation and talent acquisition and development. Her former directorships include companies focused on creating cleaner, more efficient and safer consumer and medical technology products that have helped transform the health and wellness industry. CAREER HIGHLIGHTS Arbonne International (acquired by Groupe Rocher in 2018) – botanically based skin care, cosmetic and nutrition company ◦Chief Executive Officer (2009-2018) McDonald’s Corporation, (NYSE: MCD) – global fast-food chain ◦Senior Vice President, Marketing (2002-2006) Procter & Gamble, (NYSE: PG) – manufacturer and marketer of consumer goods ◦Vice President and General Manager, North American Pharmaceutical and Corporate Women’s Health (1997-2002) ◦Various other leadership roles (1979-1997) EDUCATION ◦B.A., Economics/Studio Fine Arts, Georgetown University ◦M.B.A., Finance and Marketing, Xavier University | |||||||||||||||||||
| Katherine Zanotti | ||||||||||||||||||||
AGE: 70 INDEPENDENT DIRECTOR (CLASS I) SINCE: 2009 COMMITTEES Human Capital (Chair) | ||||||||||||||||||||
OTHER PUBLIC COMPANY BOARD DIRECTORSHIPS Diversey Holdings, Ltd. (Nasdaq: DSEQ) (2022-2023) Cutera, Inc. (Nasdaq: CUTR) (2019-2022) Hill-Rom Holdings, Inc. (NYSE: HRC) (2009-2013) Mentor Corporation (NYSE: MNT) (2007-2009) Alberto Culver Company (NYSE: ACV) (2006-2009) Third Wave Technologies, Inc. (Nasdaq: TWTI) (2006-2008) | ||||||||||||||||||||
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Identification of Executive Officers
Below is background information relating to our executive officers. Kevin Conroy is discussed above under “Information Concerning Directors and Nominees for Director”.
| Brian Baranick | |||||||||||||||||||||||
 | Brian Baranick, age 48, has served as General Manager, Precision Oncology since July 2022, and served as Senior Vice President, Strategy and Business Development from February 2021 to July 2022, and Vice President, Corporate Strategy from August 2020 to February 2021. Prior to joining Exact Sciences, Mr. Baranick was with L.E.K. Consulting, LLC, where Mr. Baranick was a Partner and Managing Director focused on growing the diagnostics and life science tools segment of L.E.K.’s healthcare vertical from 2007 to July 2020. Mr. Baranick holds a Ph.D. in Molecular Biology from the University of California Los Angeles. | ||||||||||||||||||||||
| Position: Executive Vice President and General Manager, Precision Oncology | |||||||||||||||||||||||
| Aaron Bloomer | |||||||||||||||||||||||
 | Aaron Bloomer, age 40, has served as our Chief Financial Officer since May 15, 2024. Prior to joining Exact Sciences, Mr. Bloomer previously served as the Vice President, Corporate Financial Planning, Reporting, and Analytics for Baxter International Inc. (NYSE: BAX), where he led Baxter International’s global financial planning and reporting function. Prior to joining Baxter International in August 2021, Mr. Bloomer held a series of increasingly senior roles with 3M Company (NYSE: MMM) from June 2008 to August 2021, including Senior Vice President, Corporate Financial Planning, Reporting and Analytics of 3M, Vice President and CFO of 3M’s Greater China area, Global Director and Division CFO for 3M’s Display Materials Division, and Global Senior Finance Manager and Division CFO of 3M’s Consumer Health Care Division. Mr. Bloomer earned a bachelor’s degree in business administration from the University of Wisconsin-Eau Claire and an M.B.A. from the University of Minnesota. | ||||||||||||||||||||||
| Position: Executive Vice President and Chief Financial Officer | |||||||||||||||||||||||
| Sarah Condella | |||||||||||||||||||||||
 | Sarah Condella, age 45, has served as our Executive Vice President, Human Resources since January 2021, and previously served in increasing roles of responsibility, including as Senior Vice President, Human Resources; Vice President; Senior Director; and Director, since joining Exact Sciences in 2012. Prior to joining Exact Sciences, Ms. Condella served as a Human Resources Manager at GE Healthcare and as a Manager and Project Director at the University of Wisconsin Survey Center. Ms. Condella currently serves on the board of the Madison Children’s Museum. Ms. Condella earned a bachelor’s degree and an M.B.A. from the University of Wisconsin-Madison. | ||||||||||||||||||||||
| Position: Executive Vice President, Human Resources & Service | |||||||||||||||||||||||
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| James Herriott | |||||||||||||||||||||||
 | James Herriott, age 45, has served as our Senior Vice President, General Counsel since January 2022 and as our Secretary since December 2022. Mr. Herriott previously served as our Deputy General Counsel from February 2020 until January 2022 and Senior Counsel from August 2018 to February 2020. Mr. Herriott joined us from the global law firm K&L Gates LLP, where he practiced corporate and securities law. Prior to his tenure at K&L Gates, Mr. Herriott practiced corporate and securities law at Paul Hastings LLP. Mr. Herriott earned a bachelor’s degree in economics from Duke University and a Juris Doctor from Vanderbilt University Law School. | ||||||||||||||||||||||
| Position: Senior Vice President, General Counsel | |||||||||||||||||||||||
| Jacob Orville | |||||||||||||||||||||||
 | Jacob Orville, age 52, has served as our General Manager, Screening since July 2022, as General Manager, Pipeline from November 2019 to July 2022, and as Senior Vice President, Pipeline from February 2019 to November 2019. Mr. Orville previously served as General Manager, Cardiometabolic & Endocrinology Franchise at Quest Diagnostics, Inc. from November 2017 to February 2018. Mr. Orville co-founded Cleveland HeartLab, Inc. in December 2008 and served as its Chief Executive Officer from December 2008 to November 2017, when it was acquired by Quest Diagnostics. Earlier in his career, Mr. Orville served in leadership and operational roles at NextGen Sciences, Inc. and Third Wave Technologies, Inc. Mr. Orville earned a bachelor’s degree from University of Massachusetts-Amherst and an M.B.A. from the University of Wisconsin-Madison. | ||||||||||||||||||||||
| Position: Executive Vice President and General Manager, Screening | |||||||||||||||||||||||
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Family Relationships and Certain Legal Proceedings
There are no family relationships between any of our directors or executive officers. There are no legal proceedings related to any of the directors or executive officers that must be disclosed pursuant to Item 401(f) of Regulation S-K.
Section 16(a) Reports
Section 16(a) of the Exchange Act requires our directors, executive officers, and persons who own more than 10% of a registered class of our equity securities to file reports of ownership and changes in ownership with the SEC. Such persons are required by SEC regulations to furnish us with copies of all such filings. Based solely on our review of copies of such filings, we believe that all reporting persons complied on a timely basis with all Section 16(a) filing requirements during the year ended December 31, 2025.
Code of Business Conduct and Ethics
We have in place a Code of Business Conduct and Ethics (the “Code of Ethics”) that applies to all of our directors, officers, and employees. The Code of Ethics is designed to deter wrongdoing and promote:
•honest and ethical conduct of everyone associated with the Company, including the ethical handling of actual or apparent conflicts of interest;
•full, fair, accurate, timely, and understandable disclosure in reports and documents that we submit to the SEC and in our other public communications;
•compliance with applicable governmental laws, rules, and regulations;
•the prompt internal reporting of violations of the Code of Ethics to an appropriate person identified in the Code of Ethics;
•accountability for adherence to the Code of Ethics; and
•safe, healthful, and sustainable working conditions, operations, and products.
The Code of Ethics provides for anonymous reporting of violations via reporting mechanisms approved by our Audit and Finance Committee. A current copy of the Code of Ethics is available at www.exactsciences.com. A copy may also be obtained, free of charge, from us upon a request directed to Exact Sciences Corporation, 5505 Endeavor Lane, Madison, Wisconsin 53719, attention: Investor Relations. We intend to disclose any amendments to or waivers of a provision of the Code of Ethics by posting such information on our website available at www.exactsciences.com and/or in our public filings with the SEC.
Stockholder Nominees for Director
There have been no material changes to the procedures by which stockholders may recommend nominees to the Board of Directors.
Audit and Finance Committee
The Audit and Finance Committee of the Board assists the Board in monitoring the integrity of our financial statements and our compliance with legal and regulatory requirements related to our financial statements and accounting policies. The Audit and Finance Committee currently consists of Paul Clancy (Chair), Michael Barber, and Leslie Trigg. Our Board of Directors has determined that each member of our Audit and Finance Committee is independent within the meaning of the Nasdaq director independence standards and applicable rules of the SEC for audit committee members. Our Board of Directors has also determined that each member of our Audit and Finance Committee qualifies as an “audit committee financial expert” under the rules of the SEC.
Among other things, our Audit and Finance Committee:
•Maintains accountability for assisting our Board of Directors in fulfilling its oversight responsibilities with respect to financial reports and other financial information
•Reviews, monitors, and reports to our Board of Directors on the adequacy of the Company’s financial reporting process and system of internal controls over financial reporting
•Selects, evaluates, and replaces the independent auditor and serves as ultimate authority to which independent auditors are accountable
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•Oversees the Company’s internal audit department, including the appointment, replacement, or dismissal of the director of internal audit and the internal audit department’s activities, including all issued internal audit reports, major findings, and updates on remediation of past findings
•In consultation with management, periodically reviews the adequacy of the Company’s disclosure controls and procedures and approves any significant changes thereto
•Advises and consults with management concerning plans and objectives for the Company’s capitalization, including the structure and amount of debt and equity required to meet the Company’s financing needs
•Regularly discusses with management, Company legal counsel, and the internal audit department the Company’s major risk exposures, including cyber security, their potential financial impact on the Company, and the steps taken to monitor and control those risks, and reviews with management annually a summary of legal and regulatory compliance matters and risk management activities
•Provides the Audit and Finance Committee report for inclusion in our proxy statement for our annual meeting of shareholders
•Recommends, establishes, and monitors procedures for the receipt, retention, and treatment of complaints relating to accounting, internal accounting controls, or auditing matters and the receipt of confidential, anonymous submissions by employees of concerns regarding questionable accounting or auditing matters
Insider Trading, Anti-Hedging and Pledging Policies
We have adopted an Insider Trading Policy containing policies and procedures governing the purchase, sale and/or other dispositions of our securities by our directors, officers, and employees, as well as by the Company itself. Such policies and procedures are reasonably designed to promote compliance with insider trading laws, rules and regulations, and any listing standards applicable to us. Our Insider Trading Policy has been filed as Exhibit 19 to our Annual Report on Form 10-K for the year ended December 31, 2024, as required by the rules and regulations of the SEC.
We prohibit Insiders from engaging in speculative transactions involving the Company's securities, including short sales, puts, calls or other publicly traded options on the Company's common stock. Additionally, insiders are prohibited from engaging in hedging, monetization transactions or similar arrangements involving the Company’s securities, such as zero-cost collars and forward sale contracts. Insiders are prohibited from holding the Company’s securities in a margin account or pledging such securities as collateral for a loan.
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Item 11. Executive Compensation.
Director Compensation
Compensation Policy for Non-Employee Directors
We maintain a compensation policy for our non-employee directors (the “Director Compensation Policy”) that is intended to enable us to attract and retain, on a longer-term basis, high-qualified, non-employee directors and to align their financial interests with those of our shareholders. We undertake an annual review of the type and form of compensation paid to our non-employee directors, which includes a market assessment and analysis by our independent compensation consultant, Aon Talent Solutions, a division of Aon plc (“Aon”) (formerly known as Radford).This assessment and analysis informed the Director Compensation Policy and generally positioned the cash and equity compensation paid to our non-employee directors at the market median of a peer group that is reviewed annually. For information regarding the peer group, which is the same peer group used in connection with the determination of executive compensation, see “Executive Compensation” below.
Under the Director Compensation Policy, each non-employee director who continues to serve as a director following the Company’s annual meeting of shareholders is entitled to an annual cash retainer as follows:
| Board Member Compensation | Annual Retainer ($) | |||||||
| Lead Independent Director | 110,000 | |||||||
| Director (other than Lead Independent Director) | 70,000 | |||||||
| Committee Chair Compensation | Annual Retainer ($) | |||||||
| Audit and Finance Committee | 25,000 | |||||||
| Human Capital Committee | 20,000 | |||||||
| Corporate Governance and Nominating Committee | 15,000 | |||||||
| Innovation, Technology and Pipeline Committee | 20,000 | |||||||
| Committee Member Compensation (Other than Committee Chairs) | Annual Retainer ($) | |||||||
| Audit and Finance Committee | 12,500 | |||||||
| Human Capital Committee | 10,000 | |||||||
| Corporate Governance and Nominating Committee | 7,500 | |||||||
| Innovation, Technology and Pipeline Committee | 10,000 | |||||||
In lieu of cash, each non-employee director may elect to receive shares of Company common stock having an equivalent dollar value.
In addition, members of our Innovation, Technology & Pipeline Committee receive an additional cash payment of $5,000 per full-day, on-site, special working meeting.
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Under the Director Compensation Policy, on the date of each annual meeting of shareholders, each non-employee director who is continuing to serve as a director following such meeting is granted restricted stock or deferred stock units having a value of $300,000 with the number of shares of restricted stock or deferred stock units to be issued determined based on the average closing price of the Company’s common stock on the 10 trading days preceding the grant date, rounded down to the nearest whole share. In addition, if the Chair of our Board of Directors is independent and such Chair will continue as Chair following the date of the annual meeting, such Chair will be granted an additional annual restricted stock or deferred stock unit award having a value of $15,000, with a number of shares of restricted stock or deferred stock units valued in the same manner as described in the preceding sentence. These annual equity award grants are scheduled to vest upon the earlier of the first anniversary of the grant date or the date of the next annual meeting of shareholders. However, upon the death or disability of a director or a change in control of us, such director’s equity awards will vest in full; and, upon a director’s ceasing to serve as a director for any other reason, such director’s equity awards will vest pro rata based on the number of days between the grant date and the date of cessation of services divided by 365.
Under the Director Compensation Policy, if a director is elected or appointed to our Board of Directors other than on the date of the Company’s annual meeting of shareholders, such director’s annual cash and equity compensation as described above, for the period between the date of such election or appointment and the date of the Company’s next annual meeting of shareholders, will be paid or granted in a pro rata amount on the date of such annual meeting to reflect the date of such director’s election or appointment and the date of the Company’s next annual meeting of shareholders. The number of shares of restricted stock or deferred stock units to be issued to the director based on the foregoing pro rata compensation is determined based on the closing price of the Company’s common stock on the 10 trading dates preceding the date of election or appointment, rounded down to the nearest whole share, and fully vested upon grant.
Upon his or her initial election to our Board of Directors, a new director is granted shares of restricted stock or deferred stock units having a value equal to $375,000 based on the closing sale price of our common stock on the 10 trading days preceding the date of appointment, rounded down to the nearest whole share. Such shares of restricted stock or deferred stock units vest in three equal annual installments. However, upon the death or disability of a director or a change in control of us, such shares of restricted stock or deferred stock units will vest in full (and, to the extent unvested, are forfeited if the director ceases to serve on our Board of Directors for any reason other than death or disability).
The Exact Sciences Corporation 2019 Omnibus Long-Term Incentive Plan (as amended, the “2019 Plan”) established annual limits on the awards issuable to our non-employee directors. Under the 2019 Plan, the maximum value of all equity awards granted to a non-employee director, taken together with any cash fees paid to such non-employee director and the value of equity awards granted under any other equity compensation plan of the Company or an affiliate during the calendar year, could not exceed $600,000 (calculating the value of any equity awards based on the grant date fair value for financial reporting purposes). However, awards granted to non-employee directors upon their initial election to our Board of Directors or the board of directors of an affiliate would not be counted towards this limit, and our board could make exceptions to this limit in extraordinary circumstances for an individual non-employee director if such individual non-employee director did not participate in the Board’s decision and the related compensation. The Exact Sciences Corporation 2025 Omnibus Long-Term Incentive Plan (the “2025 Plan”), which was approved by our shareholders in 2025, generally maintained the same annual limit provision, except that the annual limit was increased from $600,000 to $750,000, further increased to $1,500,000 for the calendar year in which an individual member joins the Board as a non-employee director (in each case subject to exceptions in extraordinary circumstances).
The foregoing compensation is in addition to reimbursement of all reasonable out-of-pocket expenses incurred by directors in attending meetings of our Board of Directors.
Stock Ownership Guidelines
As described below under "Compensation Discussion and Analysis" we maintain Stock Ownership Guidelines to encourage ownership of the Company’s common stock by our directors and executive officers, to further align their interests with the long-term interests of our shareholders, and to further promote the Company’s commitment to sound corporate governance. Our Stock Ownership Guidelines require directors to retain a number of shares with a Stock Value (as such term is defined in the guidelines) equal to or greater than five times the Annual Retainer (as such term is defined in the guidelines), subject to a phase-in period applicable to newly appointed directors. As of December 31, 2025, each of our non-employee directors was in compliance with the Stock Ownership Guidelines, or on track to meet them by the end of the phase-in period applicable to newly appointed directors.
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Non-Employee Director Compensation in 2025
The following table provides compensation information for the one-year period ended December 31, 2025 for each non-employee member of our Board of Directors. Mr. Conroy did not receive separate compensation for his service as a director in 2025. Mr. Conroy’s compensation for his services as an employee is discussed in the executive compensation disclosures below.
| Name | Fees Earned or Paid in Cash ($) | Stock Awards ($)(1) | All Other Compensation ($) | Total ($) | |||||||||||||||||||||||||||||||
| Michael Barber | 102,500 | 291,546 | — | 394,046 | |||||||||||||||||||||||||||||||
| Paul Clancy | 102,500 | 291,546 | — | 394,046 | |||||||||||||||||||||||||||||||
| D. Scott Coward | 80,000 | 291,546 | — | 371,546 | |||||||||||||||||||||||||||||||
| James Doyle | 127,500 | 291,546 | — | 419,046 | |||||||||||||||||||||||||||||||
Daniel Levangie (2) | 92,500 | 291,546 | — | 384,046 | |||||||||||||||||||||||||||||||
| Shacey Petrovic | 85,000 | 291,546 | — | 376,546 | |||||||||||||||||||||||||||||||
Kimberly Popovits (3) | 129,699 | (4) | 778,841 | — | 908,540 | ||||||||||||||||||||||||||||||
Kathleen Sebelius (5) | — | 359,878 | (6) | 51,680 | (7) | 411,558 | |||||||||||||||||||||||||||||
Leslie Trigg (8) | 78,438 | (4) | 717,866 | — | 796,304 | ||||||||||||||||||||||||||||||
| Katherine Zanotti | 90,000 | 291,546 | — | 381,546 | |||||||||||||||||||||||||||||||
_________________________________
(1)The amounts shown in this column indicate the aggregate grant date fair value of restricted stock or deferred stock unit awards computed in accordance with FASB ASC Topic 718, excluding the effect of estimated forfeitures. Generally, the grant date fair value is the amount that we would expense in our financial statements over the award’s vesting schedule. For additional information regarding the assumptions made in calculating these amounts, refer to Note 1 of our Notes to Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K (“Notes to Consolidated Financial Statements”). These amounts reflect our accounting expense for these awards and do not correspond to the actual value that will be recognized by the directors.
(2)Mr. Levangie retired from the Board of Directors effective August 5, 2025. In connection with his retirement, Mr. Levangie entered into a consulting agreement with the Company. Under the consulting agreement, Mr. Levangie agreed to provide consultation to the Board of Directors on an as needed basis from time to time until June 30, 2026. In consideration for his consulting services, all unvested equity awards held by Mr. Levangie at the time of his retirement remained outstanding and eligible to vest, subject to his continued service as a consultant. No cash fees or other compensation is payable under the consulting agreement.
(3)Ms. Popovits was appointed to the Board of Directors on January 2, 2025. Ms. Popovits was granted (i) an initial award of 6,387 shares of restricted stock on January 2, 2025, with an aggregate grant date fair value of $363,612, (ii) a prorated annual award of 2,290 shares of restricted stock on January 2, 2025 for her term ending at our 2025 annual meeting of stockholders, with an aggregate grant date fair value of $123,683 and (iii) an annual award of 5,398 shares of restricted stock on June 12, 2025, with an aggregate grant date fair value of $291,546, each such value computed in accordance with ASC Topic 718, excluding the effect of estimated forfeitures.
(4)Per the election of Ms. Popovits and Ms. Trigg, and in accordance with the Director Compensation Policy, 100% of Ms. Trigg’s and Ms. Popovits’ annual cash retainers were paid in shares of Company common stock having an equivalent dollar value.
(5)Ms. Sebelius retired from the Board of Directors effective April 29, 2025. In connection with her retirement, Ms. Sebelius entered into a consulting agreement with the Company. Under the consulting agreement, Ms. Sebelius agreed to provide consultation to the Board of Directors on an as needed basis from time to time until April 30, 2026.
(6)Represents a grant of restricted stock awards to Ms. Sebelius on May 1, 2025 pursuant to her consulting agreement that fully vests on April 30, 2026, subject to her continued service as a consultant.
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(7)Represents consulting fees that Ms. Sebelius received pursuant to her consulting agreement. Pursuant to the consulting agreement, Ms. Sebelius will receive a monthly sum of $6,460 until the agreement terminates on April 30, 2026
(8)Ms. Trigg was appointed to the Board of Directors on April 29, 2025. Ms. Trigg was granted (i) an initial award of 8,527 shares of restricted stock on April 29, 2025, with an aggregate grant date fair value of $381,924, (ii) a prorated annual award of 822 shares of restricted stock on April 29, 2025 for her term ending at our 2025 annual meeting of stockholders, with an aggregate grant date fair value of $44,396 and (iii) an annual award of 5,398 shares of restricted stock on June 12, 2025, with an aggregate grant date fair value of $291,546, each such value computed in accordance with ASC Topic 718, excluding the effect of estimated forfeitures.
As of December 31, 2025, the non-employee members of our Board of Directors held unexercised stock options and unvested shares of restricted stock, restricted stock units (“RSUs”) and deferred stock units as follows:
| Name | Number of Securities Underlying Unexercised Options | Unvested Shares of Restricted Stock, RSUs and Deferred Stock Units | |||||||||||||||
Michael Barber | — | 10,346 | |||||||||||||||
| Paul Clancy | — | 5,398 | |||||||||||||||
| D. Scott Coward | 27,836 | (1) | 7,992 | ||||||||||||||
| James Doyle | — | 5,398 | |||||||||||||||
| Daniel Levangie | — | 5,398 | |||||||||||||||
| Shacey Petrovic | — | 5,398 | |||||||||||||||
| Kimberly Popovits | — | 11,785 | |||||||||||||||
| Kathleen Sebelius | — | 7,631 | |||||||||||||||
Leslie Trigg | — | 13,925 | |||||||||||||||
| Katherine Zanotti | — | 5,398 | |||||||||||||||
_________________________________
(1)Represents 27,836 options granted to Mr. Coward in his role as Executive Vice President, Chief Legal Officer, and Secretary of the Company prior to his appointment to the Board.
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Executive Compensation
Compensation Discussion and Analysis
This Compensation Discussion and Analysis explains our executive compensation program as it relates to our named executive officers (“NEOs”) determined in accordance with SEC rules, whose compensation information is presented in the following tables and discussed in accordance with SEC rules. Set forth below are our NEOs and their current positions with the Company:
| Name | Position | |||||||
| Kevin Conroy | Chairman, President and Chief Executive Officer | |||||||
| Aaron Bloomer | Executive Vice President and Chief Financial Officer | |||||||
| Jacob Orville | Executive Vice President and General Manager, Screening | |||||||
| Brian Baranick | Executive Vice President and General Manager, Precision Oncology | |||||||
| Sarah Condella | Executive Vice President, Human Resources & Service | |||||||
Ongoing Compensation Policies and Practices
In setting executive base salaries, annual cash bonus opportunities, and equity incentive grant levels, our Human Capital Committee considers compensation for comparable positions in the market, the competition for talent, individual performance as compared to our expectations and objectives, our desire to motivate our employees to achieve short- and long-term results that are in the best interests of our patients and shareholders, and a long-term commitment to our Company. We target a competitive position, informed by an analysis of the practices of our peer group identified below, when determining the mix of compensation of base salary, annual cash bonus opportunities, and long-term incentive opportunities.
Role of Shareholder Say-on-Pay Votes
We value our shareholders’ opinions and feedback and are committed to maintaining an active dialogue to understand the priorities and concerns of our shareholders. We believe that ongoing engagement builds mutual trust and alignment with our shareholders and is essential to our long-term success. Through conversations with our shareholders, we gain valuable perspectives which are conveyed to the full Board of Directors and relevant committees of the Board of Directors. At our 2025 annual meeting of shareholders, we held a Say-on-Pay vote on the compensation of our named executive officers for 2024, which received the support of approximately 93.6% of the votes cast. We viewed this as an indication of our shareholders’ positive reaction to our compensation program for named executive officers. Accordingly, we made no changes to the program in response to this vote.
Objectives and Philosophy of Our Executive Compensation Program
Each year, the Human Capital Committee reviews our Company’s executive compensation philosophy and objectives and makes appropriate changes to ensure the sustained competitiveness of our program.
The compensation program for our executive officers is intended to achieve the following objectives:
•Market Competitiveness and Retention - Provide a competitive compensation package comparable to similarly sized companies in the life sciences industry that enables us to attract and retain qualified executives.
•Alignment with Business Strategy and Goals - Focus executive behavior on achievement of strategic goals and discourage excessive risk taking by including the use of multiple performance periods, duplicative metrics, and a clawback policy.
•Balance between Short-term and Long-term Perspectives - Maintain a compensation structure with a mix of base salary, cash incentives, and equity to balance executive focus between our annual and long-term objectives.
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•Pay-for-Performance - Ensure substantial portion of executive compensation components are earned based upon Company and individual performance.
•Shareholder Alignment - Align the interests of management and shareholders by providing management with long-term incentives through equity awards and robust stock ownership guidelines.
To realize these objectives, we use a balance of compensation vehicles, which are summarized in the table below. The focus of our compensation program is on total direct compensation opportunity (base salary, annual incentive compensation, and long-term incentive compensation), with an explicit role for each element. The following elements of our standard named executive officer pay program have been carefully selected and are reviewed on an annual basis.
| Base salary | Annual cash bonuses | Restricted Stock Units (RSUs) | Performance Stock Units (PSUs) | |||||||||||||||||||||||
| Acts as a vehicle to motivate and retain |  | | | | ||||||||||||||||||||||
| Provides stability and manages risk | | |||||||||||||||||||||||||
| Balances short-term focus with pursuit of long-term performance | | | | | ||||||||||||||||||||||
| Pays for performance | | | | |||||||||||||||||||||||
| Aligns executive interests with those of shareholders | | | | |||||||||||||||||||||||
| Incentivizes stock price growth | | | ||||||||||||||||||||||||
To complement this pay mix, our Board of Directors and the Human Capital Committee have also implemented numerous compensation policies and practices designed to enhance the governance of our executive compensation program, further our compensation objectives, and protect shareholder interests. These policies and practices include:
| Pay-for-performance | Most of our compensation is “at-risk” and is directly tied to Company performance and objectives, with caps on performance-based cash and equity incentive compensation | |||||||
| Corporate strategy adjustment | Our Human Capital Committee establishes incentive compensation programs based on metrics that are aligned with our corporate strategy and designed to grow long-term shareholder value | |||||||
| Recoupment policy | This enables reduction or recoupment of cash and equity incentive compensation in the instance of certain financial restatements and detrimental conduct | |||||||
| Stock ownership guidelines | Executives and directors are required to maintain a robust level of stock ownership to further align management with shareholder interests | |||||||
| Anti-hedging and pledging provisions | Our Insider Trading Policy strictly prohibits hedging and pledging activities by executive officers | |||||||
| Repricing prohibited | We may not reprice underwater stock options without prior shareholder approval, nor exchange them for cash or another equity award without prior shareholder approval | |||||||
| Compensation risk assessment | Our Human Capital Committee annually assesses the risk associated with our compensation policies and practices to ensure they are not reasonably likely to have a material adverse effect on the Company | |||||||
| Independent Compensation Consultant | The Human Capital Committee engages an independent compensation consultant | |||||||
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To evaluate the competitiveness of our compensation program, we compare it against the programs of peers in related industries at a similar stage of development and comparable financial profile. We also evaluate broader size-appropriate comparisons in related industries. More information about our use of peer group data is provided below. We also assess pay levels and pay mix of our aggregate executive and non-executive compensation programs through compensation positioning. For base salary, target bonus, and annual long-term incentives, we strive to keep our compensation program positioned at the market median. However, our compensation philosophy also recognizes the need for flexibility based on experience, scope of position, critical skills, and individual/corporate performance. We consider compensation data from our compensation peer group as one of several factors that informs our judgment of appropriate parameters for compensation levels. We do not strictly benchmark compensation to a specific percentile of our compensation peer group, nor do we apply a formula or assign strict relative weightings to specific compensation elements. We believe that over-reliance on benchmarking can result in compensation that is unrelated to the value delivered by our executive officers because it does not take into account the specific performance of the executive officers, the relative size, growth and performance of the Company, or any unique circumstances or strategic considerations of the Company.
Determining Executive Compensation
Role of Human Capital Committee and Management
It is the responsibility of our Human Capital Committee to administer our executive compensation practices, to ensure they are competitive and financially prudent, and that they include incentives that are designed to appropriately drive performance. To achieve these objectives, our Human Capital Committee periodically reviews commercially-available, industry-specific compensation data for companies at a similar headcount, revenue, market capitalization, and stage of development in the diagnostic, biotechnology, and medical device industries as a general guide for establishing our compensation policies, guidelines and pay mix.
Our Human Capital Committee, along with our Board of Directors, also reviews and approves corporate and financial performance objectives used in our executive compensation program to confirm that appropriate goals have been established and track performance against them. On an annual basis, our Human Capital Committee reviews tally sheets reflecting each executive officer’s compensation history with respect to each element of compensation, as well as projected payouts that would come due in connection with a termination of employment or change of control.
Our Human Capital Committee generally conducts an annual review of performance and compensation during the first quarter of each year for the purpose of determining the compensation of executive officers other than the Chief Executive Officer’s compensation. As part of this review, the Chief Executive Officer submits recommendations to our Human Capital Committee relating to the compensation of these officers based on individual performance relative to Company goals and objectives. The Human Capital Committee also reviews advice and recommendations from its independent compensation consultant. Following a review of these recommendations, our Human Capital Committee approves the compensation of these officers, with such modifications to the Chief Executive Officer’s recommendations as our Human Capital Committee considers appropriate.
Our Human Capital Committee’s annual review of the Chief Executive Officer’s compensation is subject to additional procedures. With input from the independent directors, the Lead Independent Director, along with our Human Capital Committee, reviews and evaluates the Chief Executive Officer’s performance relative to Company goals and objectives. The Lead Independent Director and the Human Capital Committee then establish the individual elements of the Chief Executive Officer’s total compensation based, in part, on this evaluation. Based on that evaluation and review and consultation with its independent compensation consultant, our Human Capital Committee then determines the Chief Executive Officer’s compensation. The Chief Executive Officer neither attends nor participates in the Committee’s deliberation or vote on his compensation.
Role of Independent Consultant
In 2025, the Human Capital Committee retained Aon as its independent executive compensation consultant. Our Human Capital Committee has assessed the independence of Aon pursuant to SEC and listing exchange rules and concluded that no conflict of interest exists between Aon and the Company, and that Aon is independent. Where appropriate, we take into consideration the advice of our independent executive compensation consultant.
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Use of Peer Group Data
As part of our annual review of our executive compensation philosophy, we also evaluate our compensation peer group. In 2025, with the guidance of Aon, our Human Capital Committee conducted an annual review of the competitiveness of our executive compensation program, including the competitiveness of our base salaries, target total cash compensation, long-term incentives, and target total direct compensation.
Aon analyzed the components of our executive compensation program against proxy statement data from a peer group of companies that consisted of:
•publicly-traded biotechnology, diagnostic, and medical device companies that were similar to the Company, including in terms of revenue, market capitalization, headcount, and stage of development;
•the universe of companies that consider us as a peer; and
•survey data from a broader group of commercial-stage public diagnostic, biotechnology, and medical device companies based on the following criteria:
| Metric | Range used in selecting peer group | |||||||
| Revenue | between $950 million and $8.6 billion | |||||||
| Market capitalization | between $4.0 billion and $35.0 billion | |||||||
| Headcount | between 2,475 and 22,500 | |||||||
| Profitability | between $120 million and $1.08 billion | |||||||
In October 2024, based on Aon’s review and recommendations regarding the Company’s executive compensation peer group, our Human Capital Committee approved the peer group for 2025. In its review, Aon focused on creating a peer group that:
•represented companies operating in the diagnostic, medical device, and biotechnology industries;
•comprised companies with at least one commercialized product; and
•captured comparable companies in terms of revenue, market capitalization, and headcount.
The following is a list of the 20 companies that comprised our 2025 compensation peer group:
2025 Compensation Peer Group | ||||||||||||||
| Life Sciences Tools and Services | Health Care Equipment | Biotechnology | ||||||||||||
| 10x Genomics, Inc. (TXG) | DexCom, Inc. (DXCM) | Alnylam Pharmaceuticals, Inc. (ALNY) | ||||||||||||
| Agilent Technologies, Inc. (A) | Edwards Lifesciences Corporation (EW) | BioMarin Pharmaceutical Inc. (BMRN) | ||||||||||||
| Bio-Rad Laboratories, Inc. (BIO) | Hologic, Inc. (HOLX) | Incyte Corporation (INCY) | ||||||||||||
| Bio-Techne Corporation (TECH) | IDEXX Laboratories, Inc. (IDXX) | Natera, Inc. (NTRA) | ||||||||||||
| Illumina, Inc. (ILMN) | Insulet Corporation (PODD) | |||||||||||||
| Masimo Corporation (MASI) | Health Care Supplies | |||||||||||||
| Health Care Services | Penumbra, Inc. (PEN) | Align Technology, Inc. (ALGN) | ||||||||||||
| Guardant Health, Inc. (GH) | Quidel Corporation (QDEL) | |||||||||||||
| ResMed Inc. (RMD) | ||||||||||||||
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For fiscal year 2025, the Human Capital Committee removed Seagen, Inc. and Horizon Therapeutics Public Ltd Co. as both companies were acquired in the prior year.
2025 CEO Compensation
The Human Capital Committee considered multiple factors in determining Mr. Conroy’s 2025 compensation, including his individual performance during 2025, the Company’s financial and operational performance, and his overall compensation positioning relative to our industry peer group. The committee also evaluated his leadership in executing our strategy, developing talent, and the criticality of his role and related retention considerations. The Human Capital Committee made no change to Mr. Conroy’s annual incentive target, which was set to 140% of base salary. The Human Capital Committee believes this target provides Mr. Conroy with motivation to meet or exceed financial and operational targets that are aligned with near-term success goals. The short-term incentive program is used for the entire organization, consistent with our team-based culture and philosophy that all employees share in the achievement of company performance measures. Finally, in considering Mr. Conroy’s long-term incentives, the Human Capital Committee considered the suggestion of shareholders and peer/industry practices, as well as the market competitiveness of his compensation and pay mix. They updated Mr. Conroy’s annual equity award with a split of 65% target PSUs and 35% RSUs, continuing to emphasize performance-based compensation at a level above industry norms.
These assessments and practices resulted in a predominantly performance-based target pay mix in 2025. A large percentage of Mr. Conroy’s pay is variable and “at-risk”, meaning that value will only be received if corporate and stock price performance is strong. This pay reflects our pay-for-performance culture and pay program.
Executive Compensation Elements
Our executive compensation program consists of the following three principal components:
1.Base Salary - Base salary rates are reviewed each year based on each executive’s responsibilities, individual performance, achievement of corporate goals, and a review of competitive salary and total compensation data.
2.Annual Cash Incentive - The annual cash incentive program is based on achievement of corporate goals and an, other than for Mr. Conroy, individual performance assessment; the details of the performance goals are discussed below.
3.Equity Grants - Equity grants serve as long-term incentives to ensure that a portion of the executives’ total compensation is linked to the Company’s long-term success and to align compensation with the interests of shareholders.
As noted above, our Human Capital Committee uses peer group data to help inform its decisions. Our Human Capital Committee applies judgment in establishing specific compensation elements and total compensation, taking into account not only peer data, but also factors such as Company business performance and individual performance; scope of responsibility; critical needs and skill sets; leadership potential; and succession planning. Our Human Capital Committee believes that retaining this flexibility gives the committee the ability to more accurately reflect factors and individual contributions that cannot be absolutely quantified. Based on these principles, which included consideration of the factors described above under “CEO Compensation,” we reached the following conclusions and took the following actions with respect to our NEOs’ executive compensation in early 2025:
Base Salaries
Each NEO’s base salary is a fixed component of annual compensation that reflects their scope of responsibility and organizational impact, as well as individual performance. Other considerations include, but are not limited to:
•level and breadth of experience;
•achievement of corporate and strategic goals;
•a review of competitive pay levels at comparable positions in peer companies;
•retention considerations; and
•the compensation levels required to attract qualified new hires.
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For fiscal 2025, base salaries were set as follows:
| Name | 2024 Year-End Base Salary ($) | 2025 Year-End Base Salary ($) | Increase | |||||||||||||||||
| Kevin Conroy | 1,083,368 | 1,083,368 | — | % | ||||||||||||||||
Aaron Bloomer | 600,000 | 630,000 | 5 | % | ||||||||||||||||
| Jacob Orville | 618,000 | 667,400 | 8 | % | ||||||||||||||||
| Brian Baranick | 600,400 | 642,400 | 7 | % | ||||||||||||||||
Sarah Condella | 509,000 | 549,700 | 8 | % | ||||||||||||||||
Please see below under “Summary Compensation Table” for the amount of base salary actually earned by each NEO.
In addition to the factors described above, base salary adjustments reflected merit- and market-based adjustments for the NEOs, as well as expanded scopes of responsibilities, to bring their base salaries closer to the peer group median.
Annual Cash Bonus Opportunity for 2025
Our Human Capital Committee believes that a meaningful portion of our executives’ compensation should be “at risk” or contingent upon successful implementation of our strategy and goals. Accordingly, one component of our executive compensation program is an annual cash bonus opportunity under which each of our executive officers are eligible to earn a specified target amount equal to a percentage of their base salary based primarily on the achievement of corporate goals determined by our Human Capital Committee. In 2025, as described below, we maintained a modifier in our annual bonus program that could increase or decrease the annual cash bonus based on individual performance (other than for Mr. Conroy, whose 2025 bonus payout was based entirely on achievement of corporate goals). Inclusion of an individual performance modifier complements our financial objectives by providing the Human Capital Committee the ability to emphasize strategic aspects of our performance and by allowing the Human Capital Committee to recognize and reward milestones and other outstanding accomplishments that may not immediately quantified (for example, strong leadership, executing mergers or acquisitions, relative out-performance during a market downturn, and similar factors).
In 2025, consistent with the prior year, our NEOs were eligible to earn target annual cash bonuses ranging from 70% to 140% of their base salary based on performance.
| Name | 2025 Year-End Base Salary ($) | 2025 Year-End Target Bonus | 2025 Target Bonus ($) | |||||||||||||||||
| Kevin Conroy | 1,083,368 | 140 | % | 1,516,715 | ||||||||||||||||
Aaron Bloomer | 630,000 | 70 | % | 441,000 | ||||||||||||||||
| Jacob Orville | 667,400 | 70 | % | 467,180 | ||||||||||||||||
| Brian Baranick | 642,400 | 70 | % | 449,680 | ||||||||||||||||
Sarah Condella | 549,700 | 70 | % | 384,790 | ||||||||||||||||
The dollar amounts shown in this table are on an annualized basis and do not correspond to the amount of bonus actually earned by a specific named executive officer. Please see below under “Summary Compensation Table” for the amount of bonus actually earned by each NEO.
In determining bonus payouts for the NEOs, the Human Capital Committee relied on pre-determined performance criteria for the corporate goals and did not exercise discretion in determining the level of corporate goals achieved under our 2025 annual cash bonus program. The performance criteria for 2025 are described below.
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In setting and determining the 2025 bonus awards for our NEOs, our Human Capital Committee considered the executive team’s achievement of the following metrics and corresponding performance goals, which were selected with a focus on driving our strategic priorities for 2025. As in previous fiscal years, the Human Capital Committee determined to use adjusted EBITDA as a metric in both the annual cash bonus and PSU programs because it believes that adjusted EBITDA is an important indicator of our operating performance.
For the purposes of this Compensation Discussion and Analysis, we utilize adjusted EBITDA as a metric in the annual cash bonus and PSU programs because we believe that adjusted EBITDA is an important indicator of our operating performance. For the purposes of determining annual cash bonus opportunities and performance under our PSUs, the Human Capital Committee defined adjusted EBITDA as: net loss adjusted for interest expense, income tax expense or benefit, investment income or loss, depreciation expense, amortization of acquired intangible assets, stock-based compensation including 401(k) match expenses completed in the form of our common stock, acquisition and integration costs, impairment charges on our long-lived and indefinite-lived assets, restructuring and business transformation expenses, and other charges or benefits resulting from transactions or events that are highly variable, significant in size, and that we do not believe are indicative of ongoing or future business operations. In accordance with the terms and conditions of the bonus plan, the Human Capital Committee also adjusted net loss for the Company’s November 2025 payment to Freenome Holdings, Inc. under its Collaboration and License Agreement.
| Performance Measures | Minimum (50%) | Target (100%) | Maximum (150%) | Target Weighting | ||||||||||
| Total Revenue | ≥ $2,883 billion | ≥ $3,100 billion | ≥ $3,317 billion | 80% | ||||||||||
| Adjusted EBITDA | ≥ $371 million | ≥ $437 million | ≥ $503 million | 20% | ||||||||||
Individual performance on leadership expectations (other than Mr. Conroy) | ‘+/-25% | |||||||||||||
Our Human Capital Committee determined the overall level of corporate goals achieved for 2025 was 133% of target based on achievement of total revenue of $3,247 billion and adjusted EBITDA of $475 million. The Human Capital Committee did not apply individual performance modifiers to the bonus payouts for any of the NEOs in 2025. Accordingly, Mr. Conroy, Mr. Bloomer, Mr. Orville, Mr. Baranick, and Ms. Condella received the cash bonuses in the table below.
| Name | 2025 Bonus at 100% of Target ($) | 2025 Bonus Actual Achievement ($) | ||||||||||||
| Kevin Conroy | 1,516,715 | 2,017,231 | ||||||||||||
| Aaron Bloomer | 441,000 | 586,530 | ||||||||||||
| Jacob Orville | 467,180 | 621,349 | ||||||||||||
| Brian Baranick | 449,680 | 598,074 | ||||||||||||
| Sarah Condella | 384,790 | 511,771 | ||||||||||||
2025 Annual Equity Awards
Our Human Capital Committee believes that equity awards provide our executive officers exposure to our share value over a long-term horizon, which motivates them to focus on long-term shareholder value. Performance of each NEO is the most prominent factor in the Human Capital Committee’s considerations in determining long-term equity awards to each of them. These awards are also intended to motivate the retention of our NEOs and provide them with a market competitive long-term equity incentive opportunity.
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Equity awards granted in 2025 consisted of RSUs and PSUs. The Human Capital Committee typically grants equity awards to NEOs during its regularly scheduled meeting early in the fiscal year. However, the timing of this approval may be changed in the event of extraordinary circumstances, including in connection with mid-year promotions and new-hires. In 2025, the Human Capital Committee did not take material nonpublic information into account when determining the timing and terms of equity awards and did not time the release of material nonpublic information to affect the value of executive compensation.
2025 Annual Equity Awards to Mr. Conroy, Mr. Bloomer, Mr. Orville, Mr. Baranick, and Ms. Condella
In January 2025, our Human Capital Committee approved annual equity awards to our NEOs consisting of time vesting RSUs, including the approval of the number of shares of our common stock subject to each award. These RSUs vest in four equal annual installments beginning on the first anniversary of the grant date. For each NEO other than Mr. Conroy, the annual RSU award represented 50% of his or her annual equity grant. Mr. Conroy's annual RSU award represented 35% of his annual equity grant.
In January 2025, the Human Capital Committee also approved 2025 annual PSUs, including awards granted to our NEOs consisting of three-year performance vesting PSUs tied to revenue growth (75%) and adjusted EBITDA (25%), in each case for fiscal 2027, as shown in the tables below, and modified by relative TSR (as further described below). For each NEO other than Mr. Conroy, the annual PSU award represented 50% of his or her annual equity grant. Mr. Conroy's annual PSU award represented 65% of his annual equity grant.
| Revenue Achievement | Percentage of Revenue PSUs earned | ||||
| Threshold | 50% | ||||
| Target | 100% | ||||
| Maximum | 150% | ||||
| Adjusted EBITDA | Percentage of Adjusted EBITDA PSUs earned | ||||
| Threshold | 50% | ||||
| Target | 100% | ||||
| Maximum | 150% | ||||
See “Annual Cash Bonus Opportunities” above for how adjusted EBITDA is determined.
Our Human Capital Committee has determined that the disclosure of the revenue and adjusted EBITDA target levels would provide our competitors with insight into our confidential strategic and planning processes and could cause us competitive harm. Therefore, our Human Capital Committee has determined not to disclose such target levels in accordance with SEC rules. When setting such target levels, our Human Capital Committee determined they are aggressive, yet achievable.
In 2025, the Human Capital Committee continued applying a relative TSR modifier in the PSU program. This modifier allows awards to be increased or decreased based on the Company’s TSR performance over a three-year period. The TSR is measured relative to a peer index consisting of companies that comprise the Russell 1000 Healthcare Index on the first day of the performance period, adjusted to reflect any such companies that are removed from the peer group on or before the last day of the performance period. The rTSR modifier can increase or decrease payout by as much as 50% (resulting in a maximum possible achievement of 225% of target). If our rTSR position is not above the 25th percentile (threshold achievement), the payout will be decreased by 50%, if our rTSR position is at the 50th percentile (target achievement), the payout will remain unchanged, and if our rTSR position is at or above the 75th percentile (maximum), the payout will be increased by 50%, with linear interpolation for achievement between threshold and target achievement levels, and between target and maximum achievement levels, as shown in the table below.
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| Relative TSR Percentile Rank | Payout Modification | ||||
| 25th percentile and below | 0.5x | ||||
| 50th percentile | 1.0x | ||||
| 75th percentile and above | 1.5x | ||||
The following table sets forth the intended dollar value of each NEO’s RSU and target PSU grants.
| Name | RSUs ($) (in thousands) | Target PSUs ($) (in thousands) | ||||||||||||
| Kevin Conroy | 5,600 | 10,400 | ||||||||||||
| Aaron Bloomer | 1,450 | 1,450 | ||||||||||||
| Jacob Orville | 1,450 | 1,450 | ||||||||||||
| Brian Baranick | 1,450 | 1,450 | ||||||||||||
Sarah Condella | 1,200 | 1,200 | ||||||||||||
Fiscal 2023 PSU Program Payout
As described in our proxy statement filed in April 2024, in January 2023, the Human Capital Committee approved 2023 annual equity awards, including awards granted to our then-NEOs. These awards consisted of three-year performance vesting PSUs tied 67% to revenue growth and 33% to adjusted EBITDA. The revenue targets were $2.8 billion, $2.95 billion, and $3.1 billion at the threshold, target and maximum payout levels. The adjusted EBITDA targets were $200 million, $300 million, and $400 million at the threshold, target and maximum payout levels. In addition, a relative TSR modifier was included. This modifier required awards to be increased or decreased by up to 50% based on the Company’s TSR performance over the performance period relative to a peer index consisting of companies that comprise the Russell 1000 Healthcare Index. If our relative TSR position was not above the 25th percentile (threshold achievement), the payout would be decreased by 50%, if our relative TSR position was at the 50th percentile (target achievement), the payout would remain unchanged, and if our relative TSR position was at or above the 75th percentile (maximum), the payout would be increased by 50%, with linear interpolation for achievement between target and threshold achievement levels, and threshold and maximum achievement levels. Following the end of the three-year performance period, the Human Capital Committee determined that 150% of the target revenue goal and 150% of the target adjusted EBITDA goal was achieved. In addition, the Human Capital Committee determined that the Company’s rTSR relative to the companies that comprise the Russell 1000 Healthcare Index was at the 90th percentile, which resulted in a rTSR modifier of 1.5x. Consequently, the 2023 PSUs were achieved at 225% of target.
See “Annual Cash Bonus Opportunities” above for how adjusted EBITDA is determined.
Other Compensation Practices and Policies
Merger Agreement with Abbott Laboratories
As previously announced, on November 19, 2025, we entered into the Merger Agreement with Abbott. See "Recent Developments and Trends — Merger Agreement" in Item 7. Management's Discussion and Analysis of financial Condition and Results of Operations of this Annual Report on Form 10-K.
Treatment of Equity Awards under the Merger Agreement
Under the terms of the Merger Agreement, at the Effective Time:
•Each stock option held by the NEOs (all of which are vested) as of immediately prior to the Effective Time will be cancelled and, for options with a per-share exercise price that is less than the Per Share Merger Consideration, converted into the right to receive a cash payment equal to the number of shares for which such option is exercisable multiplied by the excess of $105 (the “Per Share Merger Consideration”) over the per-share exercise price of such option, less any applicable tax withholding.
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•Each RSU granted prior to the date of the Merger Agreement, deferred stock unit and PSU held by the NEOs as of immediately prior to the Effective Time will be deemed to be fully vested, with any performance conditions deemed satisfied based on actual levels of achievement of applicable target levels as of the date of the Merger Agreement, and will be cancelled and converted into the right to receive the Per Share Merger Consideration in respect of each share subject to such award. Each RSU granted to an NEO on or after the date of the Merger Agreement will be assumed by Abbott at the Effective Time as an economically equivalent Abbott restricted stock unit on substantially the same terms and conditions.
In addition, with respect to our 2010 Employee Stock Purchase Plan, the Merger Agreement provides that (i) no new offering periods will commence and no participants will be permitted to increase elective deferrals following November 19, 2025 (the date of the Merger Agreement), (ii) any offering period under the plan in effect immediately prior to November 19, 2025 will terminate no later than five business days prior to the Effective Time, and (iii) amounts credited to participant accounts will be used to purchase shares of our common stock on the earlier of the scheduled purchase date for any such offering period and the date that is five business days prior to the Effective Time, in accordance with the terms of the Employee Stock Purchase Plan.
Section 280G Mitigation
In December 2025, in order to mitigate the potential negative impact of Sections 280G and 4999 of the Code on Exact and our NEOs, the Human Capital Committee approved the following actions (such actions are collectively referred to herein as the “Tax Mitigation”) and we entered into an Acceleration and Clawback Agreement with each NEO to effectuate the Tax Mitigation: we accelerated the payment of each NEO’s 2025 annual bonus that otherwise would be payable in 2026, other than any amounts that are subject to a prior deferral election, with performance for this purpose deemed to be 115% of the target level of performance; and we accelerated the payment of certain RSU and PSU awards that were granted prior to the date of the Merger Agreement, with the PSU awards, as applicable, paid based on (i) for PSU awards granted in 2023, 225% of the target level, (ii) for PSU awards granted in 2024, 104% of the target level, and (iii) for PSU awards granted in 2025, 218% of the target level. These actions were intended to mitigate the potential impacts of Sections 280G and 4999 of the Code on Exact and the NEOs, including to preserve potential compensation-related corporate income tax deductions for Exact that might otherwise be disallowed through the operation of Section 280G of the Code and to mitigate or eliminate the amount of excise tax that may be payable by an NEO pursuant to Section 4999 of the Code.
Specifically, the Human Capital Committee approved for each NEO the following accelerated payments: for Mr. Conroy, (i) an annual bonus in the amount of $436,056 and (ii) 713,931 shares subject to PSUs; for Mr. Bloomer, (i) an annual bonus in the amount of $507,150 and (ii) 63,099 shares subject to RSUs; for Mr. Orville, (i) an annual bonus in the amount of $537,257, (ii) 73,080 shares subject to RSUs, and (iii) 72,523 shares subject to PSUs; for Mr. Baranick, an annual bonus in the amount of $517,132, (ii) 73,080 shares subject to RSUs, and (iii) 92,523 shares subject to PSUs; and for Ms. Condella: (i) an annual bonus in the amount of $442,509, (ii) 47,208 shares subject to RSUs, and (iii) 42,018 shares subject to PSUs.
The accelerated payments (other than cash and shares withheld by us to cover tax withholdings) are subject to repayment in the event of a termination of employment under circumstances that would have caused such payments to be forfeited had they not been accelerated and paid in advance. For fiscal year 2025 annual bonuses and 2023 PSUs, we paid each NEO a true-up payment equal to the difference between actual performance results (determined after the end of fiscal 2025) and the amounts that were previously accelerated and paid in December 2025. In addition, if the Merger Agreement is terminated, and actual performance for the 2024 and 2025 PSUs exceeds the levels used for the accelerated payments described above, we will make an additional payment to each NEO equal to the difference between the actual performance result and the accelerated payment level.
Recoupment (“Clawback”) Policy
As required by the Dodd-Frank Act, we maintain a clawback policy. This policy requires that certain incentive compensation paid to any current or former executive officer, including our NEOs, will be subject to recoupment under specific circumstances. These circumstances include instances where the incentive compensation was calculated based on financial statements required to be restated due to material noncompliance with financial reporting requirements, without regard to any fault or misconduct. Additionally, that noncompliance must have resulted in overpayment of the incentive compensation within the three fiscal years preceding the fiscal year in which the restatement was required.
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Incentive compensation subject to such recoupment includes compensation granted, earned, or vested based wholly or in part upon the attainment of a financial reporting measure (as defined in the Dodd-Frank Act and the implementing regulations), including stock price and total shareholder return, on and after October 2, 2023. In addition, above and beyond the requirements imposed on us by Dodd-Frank, our clawback policy provides that in the event an employee of the Company at the level of Vice President or above, including our NEOs, engages in certain detrimental conduct, even if such conduct did not result in financial statements requiring to be restated due to material noncompliance with financial reporting requirements, we may recover incentive compensation received by such person during and after the period in which such detrimental conduct occurred.
Stock Ownership Guidelines
We maintain Stock Ownership Guidelines to encourage ownership of the Company’s common stock by our directors and key officers, to further align their interests with the long-term interests of our shareholders and to further promote the Company’s commitment to sound corporate governance. Under these guidelines, directors and officers at the level of Senior Vice President (or the equivalent) or higher have until four years from the date the director or officer becomes subject to the guidelines to achieve an ownership target. The ownership target is determined by reference to “Stock Value”, which is measured both when an individual commences services with us and on an annual basis. The ownership target for an individual is the lower of these two Stock Values, multiplied by a multiple of base salary, as described in the table below.
| Position | Stock Value Requirement | |||||||
| CEO | Number of shares with a Stock Value equal to or greater than 6 times Base Salary | |||||||
| Executive Officers | Number of shares with a Stock Value equal to or greater than 3 times Base Salary(1) | |||||||
_________________________________
(1)Until October 24, 2027, an officer at the level of Executive Vice President and equivalent is required to hold the number of shares with a Stock Value equal to or greater than 2 times Base Salary.
“Annual Retainer” or “Base Salary” for purposes of both the Floating Share Target and Fixed Share Target is the director’s annual retainer or the officer’s base salary, as applicable, on June 30 of each year.
“Stock Value” for purposes of the annual measurement (the “Floating Share Target”) is calculated annually on June 30 based on the average of the closing prices of Company common stock for the 30-trading day period ending on such date.
“Stock Value” for purposes of the measurement upon commencement of services (the “Fixed Share Target”) is calculated as of the date the director or officer originally becomes subject to the Stock Ownership Guidelines, based on the average of the closing prices of our common stock for the 30 trading day period ending on such date.
Each director and executive officer is expected to continuously own sufficient shares to satisfy the target ownership, once attained, for as long as he or she remains subject to the Stock Ownership Guidelines. Stock options do not count as owned shares for this purpose. For periods prior to October 24, 2027, time-based unvested restricted shares, restricted stock units, and deferred stock units that may only be settled in shares will count towards satisfaction of the ownership targets. Beginning on October 24, 2027, unvested deferred stock units, restricted shares, restricted stock units, or performance shares or units will no longer count towards satisfaction of the ownership targets. If an individual’s ownership target increases because of a change in position or compensation, the individual will have a three-year period to achieve the incremental number of shares required beginning on the effective date of the change in position or compensation.
If a director or executive officer does not receive his or her individual ownership target during the prescribed three-year period, the director or executive officer will be required to retain 50% of the shares issued to the director or officer pursuant to equity awards.
As of December 31, 2025, each of our directors and executive officers was in compliance with the Stock Ownership Guidelines.
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Restrictions on Hedging and Pledging of Company Securities
Our Insider Trading Policy prohibits short sales of our securities, including a “sale against the box,” by our directors and executives. Our Insider Trading Policy also prohibits directors and employees from engaging in hedging or monetization transactions, such as zero-cost collars and forward sale contracts, as they involve the establishment of a short position in our securities. Our Insider Trading Policy also prohibits directors and executives from holding our securities in a margin account or pledging such securities as collateral for a loan.
Compensation Risk Oversight
Our compensation program aims to avoid any incentives for executives to take imprudent risks that might harm us or our shareholders.
Our Human Capital Committee, together with management, reviewed the Company’s compensation policies and practices and concluded that our compensation policies and practices do not create risks that are reasonably likely to have a material adverse effect on the Company.
Deferred Compensation Plan
We maintain a non-qualified deferred compensation plan pursuant to which senior level employees, including our NEOs, may defer up to 75% of their base salary and 75% of their cash bonuses, and pursuant to which we may make matching and other contributions in our discretion. Any matching contributions made by us generally would become vested after the participant reaches one year of service, subject to earlier vesting upon death, disability, a change in control of us, or the participant becoming eligible for retirement under the plan. A participant generally may elect to receive his or her account balance under the plan on a date specified by the participant or upon the participant’s retirement, in either case in lump-sum or in annual installments as specified in the plan, provided that the participant’s remaining account balance generally would be paid to the participant in lump-sum in the event of the participant’s separation from service with us prior to retirement or in the event of death or disability. Consistent with past practice, we made no matching contributions in 2025.
Other Compensation
We permit executive officers to purchase common stock at a discount through our 2010 Employee Stock Purchase Plan on the same terms and conditions as our other employees. Executive officers may also participate in our 401(k) plan, which allows for the investment of a portion of plan assets in shares of our common stock. On January 20, 2026, our Human Capital Committee approved the payment of discretionary matching contributions to our 401(k) plan for 2025 to be made using Company stock in an amount equal to 100% of an employee’s total deferrals into the plan up to a limit of 6% of the employee’s eligible compensation (subject to IRS limits).
Deductibility of Compensation
Section 162(m) of the Internal Revenue Code generally places a limit of $1.0 million on our annual corporate tax deduction for compensation paid to certain “covered employees.” Currently, “covered employees” generally refers to the chief executive officer, chief financial officer, and the next three most highly compensated executive officers, as well as any individual who is (or was) a covered employee for any taxable year beginning after December 31, 2016. While considering tax deductibility as only one of several considerations in determining compensation, we believe that the tax deduction limitation should not compromise our ability to structure compensation programs that provide benefits to the Company that outweigh the potential benefit of a tax deduction and, therefore, may approve compensation that is not deductible for tax purposes.
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Accounting for Stock-Based Compensation
We follow The Financial Accounting Standards Board Accounting Standards Codification Topic 718, or ASC Topic 718, for our stock-based awards. ASC Topic 718 requires companies to measure the compensation expense for all share-based payment awards made to employees and directors, including stock options, restricted stock unit awards, and performance unit awards (including PSUs), based on the grant date “fair value” of these awards. This calculation is performed for accounting purposes and reported in the compensation tables below for equity awards to our NEOs, as required by the applicable SEC rules. ASC Topic 718 also requires companies to recognize the compensation cost of their stock-based compensation awards in their income statements over the period that the recipient of such compensation is required to render service in exchange for the option or other award. For PSUs, stock-based compensation expense recognized may be adjusted over the performance period based on interim estimates of performance against pre-set objectives.
Employment Agreements with our NEOs
We have entered into agreements with our NEOs under which we have agreed to certain compensation arrangements and severance and change of control benefits.
Each of these packages was determined based on negotiations with the applicable NEO and taking into account his or her background and qualifications and the nature of his or her position. We believe that these compensation packages are appropriate in light of the competition for top executives in the biotechnology field and among similarly situated companies, and that the terms of these arrangements are consistent with our executive compensation goals, including the balancing of short-term and long-term compensation to properly motivate our NEOs.
Conroy Employment Agreement
Mr. Conroy’s employment agreement, dated March 18, 2009, provides for a minimum base salary and for a minimum target bonus opportunity equal to at least 50% of his base salary, with the exact amount of any such bonus to be based upon the achievement of corporate and individual performance goals to be determined by our Human Capital Committee. At the end of 2025, Mr. Conroy’s annualized base salary was $1,083,368 and his target bonus opportunity was 140% of his base salary.
Under his agreement, Mr. Conroy would be entitled to certain payments and benefits in connection with certain termination events or a change of control as described under “Potential Benefits upon Termination or Change of Control” beginning on page 152 below. The agreement also prohibits Mr. Conroy from engaging in certain activities involving competition with us and from soliciting our employees for an 18-month period following termination of his employment with the Company.
Bloomer Employment Agreement
We entered into an employment agreement with our Chief Financial Officer, Aaron Bloomer, which provides for the following compensation: (i) annual base salary of $600,000 and annual target bonus of 70% of eligible earnings; (ii) RSUs with a value of approximately $3,350,000, subject to time-based vesting over four years on the annual anniversary of the grant date; (iii) PSUs with a target value of $1,650,000, which will vest in accordance with other performance-based equity awards granted to our NEOs for fiscal year 2024; (iv) new-hire RSUs with a value of approximately $750,000, which vested in full on April 15, 2025; (v) relocation bonus equal to $250,000 (plus reasonable moving expenses incurred in connection with the relocation) to assist Mr. Bloomer and his family with their relocation to Madison, WI where we are headquartered (subject to full reimbursement in the event Mr. Bloomer voluntarily terminates employment within 18 months of his date of appointment as our Chief Financial Officer); (vi) sign-on bonus $350,000 (subject to full reimbursement in the event Mr. Bloomer voluntarily terminates employment within 18 months of his date of appointment as our Chief Financial Officer); and (vii) eligibility for severance payments and benefits based on the Company’s existing severance payments and benefits structure for non-CEO NEOs, as set out in more detail below. At the end of 2025, Mr. Bloomer’s base salary was $630,000 and his target bonus opportunity was 70% of his base salary.
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In determining Mr. Bloomer’s initial equity awards and his relocation and cash signing bonuses, the Human Capital Committee took into account the compensation opportunity he forfeited when he separated from his prior employer. In addition, in entering into the employment agreement, the Human Capital Committee noted that we actively compete with other companies in seeking to attract and retain a skilled executive management team. This is particularly prevalent in our industry, where there are a number of rapidly expanding companies intensely competing for highly qualified candidates. The Human Capital Committee considered and analyzed CFO compensation within our compensation peer group at the time of the transition.
Under his agreement, Mr. Bloomer would be entitled to certain payments and benefits in connection with certain termination events or a change of control as described under “Potential Benefits upon Termination or Change of Control” beginning on page 152 below. The agreement also prohibits Mr. Bloomer from engaging in certain activities involving competition with us and from soliciting our employees or certain of our customers for a 12-month period following termination of his employment with the Company.
Orville Employment Agreement
Mr. Orville’s employment agreement, dated February 18, 2019, provides for a minimum base salary and for a minimum target bonus opportunity equal to 50% of his base salary, with the exact amount of any such bonus to be based upon the achievement of certain goals, including corporate and individual goals, to be determined by the Chief Executive Officer and our Human Capital Committee. At the end of 2025, Mr. Orville’s base salary was $667,400 and his target bonus opportunity was 70% of his base salary.
Under his agreement, Mr. Orville would be entitled to certain payments and benefits in connection with certain termination events or a change of control as described under “Potential Benefits upon Termination or Change of Control” beginning on page 152 below. The agreement also prohibits Mr. Orville from engaging in certain activities involving competition with us and from soliciting our employees or certain of our customers for a 12-month period following termination of his employment with the Company.
Baranick Employment Agreement
Mr. Baranick’s employment agreement, dated September 2, 2022, provides for a minimum base salary and for a minimum target bonus opportunity equal to 50% of his base salary, with the exact amount of any such bonus to be based upon the achievement of certain goals, including corporate and individual goals, to be determined by the Chief Executive Officer and our Human Capital Committee. At the end of 2025, Mr. Baranick’s base salary was $642,400 and his target bonus opportunity was 70% of his base salary.
Under his agreement, Mr. Baranick would be entitled to certain payments and benefits in connection with certain termination events or a change of control as described under “Potential Benefits upon Termination or Change of Control” below. The agreement also prohibits Mr. Baranick from soliciting our employees for a 12-month period following termination of his employment with the Company.
Condella Employment Agreement
Ms. Condella’s employment agreement, dated August 22, 2017, provides for a minimum base salary and for a minimum target bonus opportunity equal to 40% of her base salary, with the exact amount of any such bonus to be based upon the achievement of certain goals, including corporate and individual goals, to be determined by the Chief Executive Officer and our Human Capital Committee. At the end of 2025, Ms. Condella’s base salary was $549,700 and her target bonus opportunity was 70% of her base salary.
Under her agreement, Ms. Condella would be entitled to certain payments and benefits in connection with certain termination events or a change of control as described under “Potential Benefits upon Termination or Change of Control” below. The agreement also prohibits Ms. Condella from engaging in certain activities involving competition with us and from soliciting our employees or certain of our customers for a 12-month period following termination of her employment with the Company.
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Potential Benefits upon Termination or Change of Control
We believe that providing executives with severance and change of control protection is important for the following reasons:
•to allow executives to value the forward-looking elements of their compensation packages, and therefore limit retention risk; and
•to provide compensation assurances which are competitive with those of other similarly situated companies.
Accordingly, the Company’s employment agreements, equity awards, and related policies generally provide for salary continuation in the event of certain employment terminations beyond the control of the executive, as well as varying degrees of accelerated vesting of equity awards in the event of a change of control of the Company.
This “Potential Benefits upon Termination or Change of Control” section should be read in conjunction with the “Potential Payments upon Termination or Change of Control” section beginning on page 165 below, which provides a table that quantifies the benefits described in this section.
Severance and Change of Control Arrangements in General
We have entered into employment agreements and maintain certain plans and policies that will require us to provide compensation and other benefits to our executive officers in connection with certain events related to a termination of employment or change of control.
Each employment agreement provides that upon termination of the NEO’s employment, vested equity awards will remain open for exercise until the earlier of two years from the date of termination or the expiration date.
Conroy Employment Agreement
Under his employment agreement, entered into in 2009, Mr. Conroy would, upon termination without “cause,” resignation by “good reason” or certain “change of control” events (in each case as defined in his employment agreement), be entitled to receive certain benefits, as described below.
Upon termination without cause or resignation for good reason, Mr. Conroy would become entitled to receive the following:
•Salary continuation for a period of 18 months at his then current base salary, commencing on the first payroll date on or immediately following the 30th day following his termination;
•Any accrued but unpaid bonus, including without limitation any performance-based bonus, as of the termination date, all on the same terms and at the same times as would have applied had Mr. Conroy’s employment not terminated; provided, that if at the end of the applicable period within which Mr. Conroy’s employment was terminated a target bonus, or any other performance-based bonus, is paid to other senior executives, a pro-rata target or other performance-based bonus shall also be paid to Mr. Conroy at the same time but no later than March 15 of the following year;
•If Mr. Conroy elects COBRA coverage for health and/or dental insurance, Company-paid monthly premium payments for such coverage until the earliest of: (1) 12 months from the termination date; (2) the date Mr. Conroy obtains employment offering health and/or dental coverage comparable to that offered by the Company; or (3) the date COBRA coverage would otherwise terminate;
•A payment of $10,000 towards the cost of an outplacement consulting package within 30 days of termination; and
•The vesting of the then unvested equity awards granted to Mr. Conroy (whether stock options, restricted stock or stock purchase rights under the Company’s equity compensation plan, or other equity awards) will immediately accelerate by a period of 12 months.
In connection with a change of control, Mr. Conroy would become entitled to receive the following:
•In the event of termination by the Company without cause or by Mr. Conroy for good reason, within 12 months before, or if Mr. Conroy remains employed with the Company on, the effective date of a change of control, a lump-sum payment equal to 24 months of base salary and his pro rata target bonus through the effective date of the change of
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control; provided, that any payments previously made to Mr. Conroy in connection with the termination of his employment by the Company without cause or by Mr. Conroy for good reason within the 12 months preceding a change of control would be credited against any such lump-sum payment;
•Accelerated vesting of all outstanding unvested equity awards (whether stock options, restricted stock or stock purchase rights under the Company’s equity compensation plans, or other equity awards), subject to Mr. Conroy’s agreement to remain employed by the Company or any successor, if requested, for a period of at least six months following the change of control at Mr. Conroy’s then current base salary;
•In the event Mr. Conroy’s employment is terminated by the Company without cause or by him for good reason in anticipation or contemplation of a pending or potential change of control or while a potential change of control is under consideration or being negotiated by the Company’s Board of Directors, Mr. Conroy will be deemed to remain an employee for purposes of the incentive plan to which he is entitled to participate under his employment agreement (the “Long Term Incentive Plan”, described below) as of the effective date of the change of control and will receive a full payout under the Long Term Incentive Plan as described in his employment agreement as though he remained an employee of the Company as of the effective date of such change of control; and
•A tax gross-up payment in an amount sufficient to cause the net amount retained by him, after deduction of any parachute payment excise taxes, to equal the amounts payable as described above. At this time, our Board of Directors does not intend to provide any additional tax gross-up payments to employees it may hire in the future.
Pursuant to his 2009 employment agreement, Mr. Conroy is entitled to receive a Long Term Incentive Plan cash bonus upon a change of control. The bonus is based on the equity value of the Company at the time of the change of control. The bonus will equal 1.00% of such equity value if such equity value is between $100 million to $500 million, plus an additional 0.50% of such equity value for each incremental $50 million in such equity value above $500 million and below $1 billion, plus an additional 0.25% of such equity value for each incremental $50 million in such equity value above $1 billion and below $2 billion.
Bloomer, Orville, Baranick, and Condella Employment Agreements
Under their employment agreements, Mr. Bloomer, Mr. Orville, Mr. Baranick, and Ms. Condella would, upon termination without “cause,” resignation for “good reason” or certain “change of control” events (in each case as defined in their respective agreements), receive certain benefits, as described below.
The employment agreements with each of our current NEOs provide that the Company shall reduce these amounts in order to prevent any payments from being non-deductible under section 280G of the Code or subject to excise tax under Code section 4999.
Under their employment agreements, upon termination without cause or resignation for good reason, Mr. Bloomer, Mr. Orville, Mr. Baranick, and Ms. Condella would become entitled to receive the following:
•Salary continuation for a period of 12 months at the executive’s then current base salary, commencing on the first payroll date on or immediately following the 60th day following termination;
•Any accrued but unpaid bonus on the same terms and at the same times as would have applied had the executive’s employment not terminated;
•A lump-sum cash payment equal to 12 months of premium payments for COBRA coverage;
•A payment of $10,000 towards the cost of an outplacement consulting package within 30 days of termination; and
•The time-vesting of the then unvested time-based equity awards granted to the executive (whether stock options, restricted stock or stock purchase rights under the Company’s equity compensation plan, or other equity awards) that would have vested within twenty-four months will accelerate based on the individual’s years of service to the Company. Based on years of service, acceleration amounts may range from zero to 100%. For Mr. Bloomer and Mr. Baranick, any Performance Awards (as defined in their employment agreements) that have not become earned and payable prior to such Separation from Service (as defined in his employment agreement) will be canceled. For Mr. Orville and Ms. Condella, for purposes of Performance Awards (as defined in the applicable employment agreement), the executive will be treated as having remained in service for an additional 12 months following actual Separation from Service (as defined in the applicable employment agreement), provided that such Performance Awards will not become earned and vested solely as a result of such treatment, and the vesting and earning of all Performance Awards will remain subject to the attainment of all applicable performance goals, and such Performance Awards, if and to the extent they become earned and vested, will be payable at the same time as under the applicable award agreement.
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Under our employment agreements with Mr. Bloomer, Mr. Orville, Mr. Baranick, and Ms. Condella, each such executive would become entitled to 100% accelerated vesting of all outstanding unvested equity awards (whether stock options, restricted stock, RSUs or stock purchase rights under the Company’s equity compensation plans, or other equity awards) if (1) within 12 months after a change of control, the executive is terminated by the Company (or any successor) without cause or the executive terminates the executive’s employment for good reason; or (2) a change of control happens within four months after the Company terminates the executive without cause or the executive terminates the executive’s employment for good reason with Performance Awards deemed to have been fully vested and earned as of the change of control based upon the greater of (A) an assumed achievement of all relevant performance goals at the “target” level or (B) the actual level of achievement of all relevant performance goals as of the change of control. In addition, in fiscal 2024, following a competitive market assessment, the Human Capital Committee amended the Employment Agreements with each of Mr. Bloomer, Mr. Orville, Mr. Baranick, and Ms. Condella to provide that in the event of such termination, the cash severance benefit described above would increase to 18 months, and, additionally, the executive would also receive a cash payment equal to a pro-rata target annual bonus for the year of termination plus 150% of the executive’s target annual bonus for such year, subject to the individual executing and not revoking a waiver and release of claims in favor of the Company and its affiliates.
Under our employment agreements with Mr. Bloomer, Mr. Orville, Mr. Baranick and Ms. Condella, upon a change in control alone, the time-vesting of all outstanding equity awards will accelerate by a period of 12 months, including any Performance Awards such that if the applicable performance period is scheduled to end within 12 months following the change in control, the Performance Award shall be deemed to have been fully vested and earned as of the change in control based upon the greater of (A) an assumed achievement of all relevant performance goals at the “target” level or (B) the actual level of achievement of all relevant performance goals as of the change in control.
Key Defined Terms under the NEO Employment Agreements
For purposes of the employment agreements, “change in control” generally means:
•any “person” or group acting in concert (with certain exceptions) becomes the “beneficial owner” of more than 50% of the total voting power of the Company’s voting securities;
•certain changes to the composition of the Board of Directors during any 12-month period;
•a merger or consolidation of the Company with any other corporation other than a merger or consolidation that would result in the voting securities of the Company continuing to represent at least 50% of the total voting power of the Company or the surviving entity after such merger or consolidation; or
•the sale or disposition by the Company of all or substantially all of the Company’s assets.
For purposes of the employment agreements, “cause” generally means the executive’s:
•willful failure or refusal to perform executive’s duties that continues for a certain period after written notice from the Company;
•willful failure or refusal to follow or comply with any Company policy, rule or procedure that continues for a certain period after written notice (except for Mr. Conroy);
•commission of any fraud or embezzlement in connection with duties or committed in the course of employment;
•gross negligence or willful misconduct with regard to the Company or any of its affiliates resulting in a material economic loss to the Company;
•conviction of, or plea of guilty or nolo contendere to, a felony or other crime involving moral turpitude;
•with certain exceptions, conviction of, or plea of guilty or nolo contendere to, a misdemeanor the circumstances of which involve fraud, dishonesty or moral turpitude and that is substantially related to the circumstances of executive’s job with the Company;
•willful and material violation of any statutory or common law duty of loyalty to the Company or any of its affiliates;
•material breach of the employment agreement, the non-disclosure and invention agreement or the restrictive covenant agreement or similar arrangements;
•material breach of the Company’s policies prohibiting harassment, discrimination, and/or retaliation, the Company’s code of business conduct and ethics, and/or the Company’s insider trading policy (except for Mr. Conroy and Ms. Condella);
•for Mr. Bloomer and Mr. Baranick, exclusion, suspension, or debarment or other ineligibility to participate in any federal or state-funded program; or
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•for Mr. Bloomer and Mr. Baranick, refusal to submit to a background check or failure to complete a background check to the Company’s satisfaction, including any past conviction, plea or guilty or nolo contendere, violation of law, exclusion, suspension, or debarment that would otherwise be grounds for cause under the employment agreement.
For purposes of the employment agreements, “good reason” generally means:
•the executive’s base salary is reduced (x) in a manner that is not applied proportionately to other senior executive officers of the Company or (y) by more than 30% of the executive’s then current base salary;
•the executive’s duties, authority or responsibilities are materially reduced or are materially inconsistent with the scope of authority, duties and responsibilities of the executive’s position;
•the occurrence of a material breach by the Company of any of its obligations to the executive under the employment agreement;
•a relocation of the executive’s principal place of employment by more than 50 miles (except for Mr. Conroy);
•for Mr. Conroy, the Company materially violates or continues to materially violate any law or regulation contrary to the written advice of Mr. Conroy and the Company’s outside counsel to the Board of Directors and the Company fails to rectify such violation upon the written advice that such violations are taking place; or
•for Mr. Conroy, he is not nominated for election as a member of the Company’s Board of Directors at any Company annual meeting or other stockholder meeting at which Company directors are elected.
Conditions to Receipt of Severance and Change of Control Benefits
Under Mr. Conroy’s employment agreement, the Company’s obligations to provide him with the severance benefits described above are contingent on:
•Mr. Conroy’s resignation from our Board of Directors in the event of any termination of Mr. Conroy’s employment with the Company or upon the request of our Board of Directors in connection with any change of control;
•Mr. Conroy’s delivery and non-revocation of a signed waiver and release in a form reasonably satisfactory to the Company of all claims he may have against the Company;
•Mr. Conroy’s compliance with his Employee Confidentiality and Assignment Agreement with the Company;
•Mr. Conroy’s compliance with the 18-month non-competition covenant in his employment agreement; and
•Mr. Conroy’s compliance with the 18-month non-solicitation covenant in his employment agreement.
Under Mr. Bloomer’s, Mr. Orville’s, Mr. Baranick’s, and Ms. Condella’s employment agreements, the Company’s obligations to provide the severance benefits described above are contingent on:
•The executive’s delivery and non-revocation of a signed waiver and release in a form reasonably satisfactory to the Company of all claims he may have against the Company; and
•In the case of Mr. Bloomer, Mr. Orville, Mr. Baranick, and Ms. Condella, the executive’s compliance with the Non-Disclosure and Invention Assignment Agreement with the Company and the Non-Competition, Non-Solicitation and No-Interference Agreement with the Company.
Death or Disability
In accordance with Mr. Conroy’s, Mr. Orville’s, Mr. Baranick’s, and Ms. Condella’s employment agreement, in the event of the death or disability of the executive during the executive’s employment term, the following will occur:
•The executive’s employment and the executive’s employment agreement will immediately and automatically terminate; and
•All equity awards granted to the executive, whether stock options or stock purchase rights under the Company’s equity compensation plans, or other equity awards, that are unvested at the time of termination will immediately become fully vested and exercisable upon such termination; except in the case of Mr. Baranick, in which case, only time-based equity awards will become fully vested.
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Equity Award Death, Disability and Retirement Policy
We maintain the Exact Sciences Corporation Equity Award Death, Disability and Retirement Policy, as amended (the “Policy”). The policy provides for equity award benefits to our employees, including our NEOs, in the event of retirement, death (including following retirement), or disability. The Policy provides benefits to our NEOs upon retirement if the applicable NEO delivers to the Company notice at least 6 months before retirement. These benefits only apply to equity awards held by the NEO that were granted at least 6 months prior to the notice. For a time-based equity award held by an NEO, the equity award will continue to vest for four years following the date of the retirement (or, if earlier, through the last vesting date of the equity award) as if the NEO had not retired. For a performance-based equity award held by an NEO, upon the retirement of the NEO, provided that at least two-thirds of the performance period applicable to the performance-based equity award have elapsed on or prior to the retirement: (1) the equity award will remain outstanding and performance-vest based on actual performance at the end of the relevant performance period and (2) a prorated portion of the equity award that becomes performance-vested pursuant to the preceding clause (1) will immediately time-vest and accordingly become fully vested. For a stock option equity award granted on or after the effective date of the Policy, upon the retirement of the NEO holding the equity award, the post-termination exercise period relating to the retirement will be 2 years after the last vesting date applicable to the equity award (or, if earlier, the original expiration date of the equity award). These retirement benefits are contingent on the compliance, by the applicable NEO, with any confidentiality, non-competition, non-solicitation or similar obligations in favor of the Company or its Subsidiaries.
For purposes of the Policy, “retirement” means that, at the time of resignation, the NEO has:
•attained age 55 and completed 15 years of service with us; or
•attained age 60 and completed 10 years of service with us.
The Policy provides certain benefits upon the death or disability of an NEO. For a time-based equity award held by an NEO, upon the death (including following retirement) or disability of the NEO, the equity award will become fully vested. For a performance-based equity award held by an NEO (other than the CEO), upon the death (including following retirement) or disability of the NEO (1) the equity award will remain outstanding and performance-vest based on actual performance at the end of the relevant performance period and (2) a prorated portion of the equity award that becomes performance-vested pursuant to the preceding clause (1) will, following the measurement and determination, immediately time-vest and accordingly become fully vested. For a performance-based equity award held by the CEO at the time of his or her death (including following retirement) or disability, the equity award will remain outstanding and (1) the performance goal(s) applicable to the equity award will be measured, and the equity award will correspondingly be determined performance-vested, if at all, based on the measurements, as if the death (including following retirement) or disability had not occurred and (2) the portion of the equity award that becomes performance-vested pursuant to the preceding clause (1) will, following the measurement and determination, immediately time-vest and accordingly become fully vested. For a stock option equity award granted on or after the effective date of the Policy, upon the death or disability of the NEO holding the equity award, the post-termination exercise period relating to the death or disability will be 2 years after the last vesting date of the equity award (or, if earlier, the original expiration date of the equity award).
Change in Control Benefits under the 2010 Plan, the 2019 Plan, and the 2025 Plan
Under each of the 2010 Plan, the 2019 Plan, and the 2025 Plan, except as otherwise specifically provided in the applicable award agreement or in an executive’s employment agreement, upon the consummation of a change in control (as defined in each of the 2010 Plan, the 2019 Plan and the 2025 Plan) (i) all outstanding awards will remain the obligation of the Company or be assumed by the surviving or acquiring entity, and the shares of our common stock then subject to such awards will be automatically substituted for the consideration payable with respect to the outstanding shares of our common stock in connection with the change in control; and (ii) the time vesting and exercisability of all outstanding awards will immediately accelerate by a period of twelve months, provided that, with respect to Performance Awards (as defined in each of the 2010 Plan, the 2019 Plan and the 2025 Plan), such acceleration will apply to Performance Awards such that if the applicable performance period is scheduled to end within 12 months following the Change in Control, the Performance Award will be deemed to have been fully vested and earned as of the Change in Control based upon the greater of (A) an assumed achievement of all relevant performance goals at the “target” level or (B) the actual level of achievement of all relevant performance goals as of the Change in Control. In addition to the foregoing, with respect to awards granted prior to the consummation of the change in control, in the event that any such grantee who remains an employee of the Company or the acquiring or surviving entity immediately following the consummation of the change in control is terminated without cause (as defined in each of the 2010 Plan, the 2019 Plan and the 2025 Plan) or terminates his or her own employment for good reason as
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defined in each of the 2010 Plan, the 2019 Plan and the 2025 Plan) prior to the first anniversary of the consummation of the change in control: (1) all options and stock appreciation rights (“SARs”) outstanding on the date the grantee’s employment is terminated, will become immediately exercisable in full and will terminate, to the extent unexercised, on their scheduled expiration date, and if the shares of our common stock subject to the options and SARs are subject to repurchase provisions then the repurchase provisions will immediately lapse; (2) all restricted stock awards that are not Performance Awards outstanding on the date the grantee’s employment is terminated, will become vested in full and free of all repurchase provisions; (3) all RSUs that are not Performance Awards outstanding on the date the grantee’s employment is terminated will become vested in full, and if the shares of common stock subject to such RSU are subject to repurchase provisions then such repurchase provisions will immediately lapse; (4) all other stock-based awards (as defined in each of the 2010 Plan, the 2019 Plan and the 2025 Plan) that are not Performance Awards will become exercisable, realizable or vested in full, and will be free of all repurchase provisions, as the case may be; and (5) all restricted stock awards, RSUs and other stock-based awards that are Performance Awards will become fully vested and earned based upon the greater of (A) an assumed achievement of all relevant performance goals at the “target” level or (B) the actual level of achievement of all relevant performance goals as of the change in control.
For purposes of the 2010 Plan and the 2019 Plan, “change in control” generally means:
•any merger, consolidation or purchase of outstanding capital stock of the Company that would result in the voting securities of the Company representing less than 50% of the combined voting power of the voting securities of the Company or the surviving or acquiring entity; or
•any sale of all or substantially all of the assets or capital stock of the Company (other than in a spin-off or similar transaction).
For purposes of the 2025 Plan, “change in control” general means:
•any merger, consolidation, statutory conversion, domestication, continuance or purchase of outstanding capital stock of the Company after which the voting securities of the Company outstanding immediately prior thereto represent (either by remaining outstanding or by being converted into voting securities of the surviving, acquiring, resulting, converted, domesticated or continued entity) less than 50% of the combined voting power of the voting securities of the Company or such surviving or, acquiring, resulting, converted, domesticated or continued entity outstanding immediately after such event (other than as a result of a financing transaction); or
•any sale of all or substantially all of the assets or capital stock of the Company (other than in a spin-off or similar transaction).
For purposes of the 2010 Plan, the 2019 Plan, and the 2025 Plan, “cause” generally means, with respect to the executive:
•any act, or failure to act, or misconduct that is injurious to the Company or its affiliates;
•gross negligence or willful misconduct;
•conviction of (or entering a plea of guilty or nolo contendere to) a criminal offense (other than a minor traffic offense);
•fraud, embezzlement or misappropriation of funds or property of the Company or an affiliate;
•material breach of any term of certain agreements between the executive and the Company or an affiliate;
•any regulatory agency requiring the executive be removed from any office held by the executive with the Company or prohibiting or materially limiting the executive from participating in the business or affairs of the Company or any affiliate; or
•revocation or threatened revocation of any of the Company’s or any affiliate’s government licenses, permits or approvals, which is primarily due to the executive and that would be alleviated or mitigated in any material respect by the termination of the executive’s services to the Company.
For purposes of the 2010 Plan. the 2019 Plan and the 2025 Plan, “good reason” generally means:
•a material diminution in the executive’s responsibility, authority or duty;
•a material diminution in the executive’s base salary except for across-the-board salary reductions based on the Company’s financial performance similarly affecting all or substantially all management employees of the Company; or
•a material change in the geographic location at which the executive provides services to the Company.
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The PSUs granted to our NEOs in 2023, 2024, and 2025 provide that upon the consummation of a change in control (as defined in the 2019 Plan) prior to the NEO’s separation from service (as defined in the 2019 Plan), or upon a separation from service initiated by the Company or an affiliate in anticipation of the change in control and other than for cause (as defined in the 2019 Plan), and other than a separation from service due to death or disability, during the six-month period preceding the change in control, the PSUs will vest based upon the higher of “target” achievement or actual performance achieved through the change in control.
The summary of the foregoing benefits arising out of a change in control under the 2010 Plan, the 2019 Plan and the 2025 Plan are subject to and qualified by the terms and conditions of all applicable award agreements and employment agreements to which our NEOs are a party, in each case, as described in this Annual Report on Form 10-K.
Payments under the Exact Sciences Corporation Deferred Compensation Plan
Participants in our Company’s deferred compensation plan, including the NEOs, generally may elect to receive their account balances under the plan upon attaining an age specified by the applicable participant or upon the participant’s retirement, in either case in lump-sum or in annual installments as specified in the plan, provided that the participant’s remaining account balance generally would be paid to the participant in lump-sum in the event of the participant’s separation from service with us prior to retirement or in the event of death or disability. In addition, any unvested amounts in a participant’s account would vest upon the participant’s death, disability, a change in control or the participant becoming eligible for retirement under the plan.
Perquisites
The Company maintains an Executive Officer Perquisite Policy, which provides for personal security expenses not to exceed $49,000 per fiscal year for the Company’s Chief Executive Officer. The Company may also provide security benefits up to $24,500 per fiscal year to our other executive officers. In addition, given the high visibility of our Chief Executive Officer and in the interests of personal security and increased efficiency, the Policy provides our Chief Executive Officer an annual personal travel allowance of $200,000. The Policy further provides certain limited travel expenses for guests to accompany an executive officer for Company business and certain limited health-related expenses.
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REPORT OF THE HUMAN CAPITAL COMMITTEE
The Human Capital Committee has reviewed and discussed with management the Compensation Discussion and Analysis (the “CD&A”) for the year ended December 31, 2025, as contained in the foregoing section of this Annual Report on Form 10-K for the year ended December 31, 2025. In reliance on the reviews and discussions referred to above, the Human Capital Committee recommended to the Board of Directors, and the Board of Directors has approved, that the CD&A be included in this Annual Report on Form 10-K.
The Human Capital Committee:
Katherine S. Zanotti, Chair
James E. Doyle
Kimberly Popovits
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EXECUTIVE COMPENSATION TABLES
Summary Compensation Table for 2025
The following table represents summary information regarding the compensation of each of our NEOs for the three years ended December 31, 2025 and their current positions. Any differences in total values across the tables are due to rounding.
| Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards ($)(1) | Non-Equity Incentive Plan Compensation ($)(2) | All Other Compensation ($) | Total ($) | ||||||||||||||||||||||||||||||||||
Kevin Conroy Chairman, President and Chief Executive Officer | 2025 | 1,083,368 | — | 21,247,205 | 2,017,231 | 25,173,256 | (3) | 49,521,060 | |||||||||||||||||||||||||||||||||
2024 | 1,083,368 | — | 13,496,138 | 712,329 | 247,543 | 15,539,378 | |||||||||||||||||||||||||||||||||||
2023 | 1,041,700 | — | 12,976,236 | 1,920,277 | 181,686 | 16,119,899 | |||||||||||||||||||||||||||||||||||
Aaron Bloomer Executive Vice President and Chief Financial Officer | 2025 | 630,000 | — | 3,190,152 | 586,530 | 2,320,970 | (3) | 6,727,653 | |||||||||||||||||||||||||||||||||
| 2024 | 431,868 | (4) | 600,000 | (5) | 6,002,837 | 136,662 | (4) | 15,421 | 7,186,788 | ||||||||||||||||||||||||||||||||
Jacob Orville Executive Vice President and General Manager, Screening | 2025 | 667,400 | — | 3,282,739 | 621,349 | 6,042,316 | (3) | 10,613,804 | |||||||||||||||||||||||||||||||||
2024 | 618,000 | — | 3,581,298 | 202,812 | 31,082 | 4,433,192 | |||||||||||||||||||||||||||||||||||
2023 | 537,400 | — | 2,631,119 | 460,433 | 39,379 | 3,668,331 | |||||||||||||||||||||||||||||||||||
Brian Baranick Executive Vice President and General Manager, Precision Oncology | 2025 | 642,400 | — | 3,479,398 | 598,074 | 6,925,991 | (3) | 11,645,863 | |||||||||||||||||||||||||||||||||
2024 | 600,400 | — | 3,581,298 | 196,980 | 20,990 | 4,399,668 | |||||||||||||||||||||||||||||||||||
| 2023 | 513,200 | — | 2,631,119 | 408,951 | 20,739 | 3,574,009 | |||||||||||||||||||||||||||||||||||
Sarah Condella Executive Vice President, Human Resources | 2025 | 549,700 | — | 2,640,114 | 511,771 | 3,766,349 | (3) | 7,467,934 | |||||||||||||||||||||||||||||||||
2024 | 509,000 | — | 1,910,213 | 167,344 | 58,998 | 2,645,555 | |||||||||||||||||||||||||||||||||||
2023 | 494,200 | — | 2,104,867 | 394,080 | 65,549 | 3,058,696 | |||||||||||||||||||||||||||||||||||
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(1)The amounts in this column represent the aggregate grant date fair value of stock awards computed in accordance with FASB ASC Topic 718, excluding the effect of estimated forfeitures, plus the incremental accounting expense associated with the accelerated vesting and payment of PSUs in connection with the Tax Mitigation described in the Compensation Discussion and Analysis. The grant date market value of the PSUs granted in 2025, assuming that the highest level of performance is achieved under the applicable performance measures, is $23,816,176, $3,320,534, $3,320,534, $3,320,534, and $2,747,993, for Mr. Conroy, Mr. Bloomer, Mr. Orville, Mr. Baranick, and Ms. Condella, respectively. The amounts set forth in this column do not correspond to the actual value that may be recognized by our NEOs. For additional information regarding the assumptions made in calculating these amounts, refer to Note 1 of our Notes to Consolidated Financial Statements.
(2)The amounts reported in the Non-Equity Incentive Plan Compensation column reflect actual payments made under the annual cash bonus opportunities for fiscal years 2025, 2024, and 2023.
(3)The amounts in this column for fiscal 2025 include $24,907,409 for Mr. Conroy, $2,292,298 for Mr. Bloomer, $6,904,152 for Mr. Baranick, $6,010,934 for Mr. Orville and $3,696,099 for Ms. Condella, each representing the value of the accelerated vesting and payment of shares withheld by us to cover tax withholdings in connection with the Tax Mitigation described in the Compensation Discussion and Analysis (net of any amounts already reported for the applicable stock award in the Stock Awards column for fiscal year 2025), based on our share price on the date of acceleration and payment. The amounts in this column for fiscal 2025 also represent (i) $21,000 for each Mr. Conroy, Mr. Bloomer, Mr. Orville and Ms. Condella and $12,825 for Mr. Baranick in matching contributions under our 401(k) plan; (ii) $12,400 for Mr. Conroy, $7,672 for Mr. Bloomer, $10,382 for Mr. Orville, $9,014 for Mr. Baranick, and $8,184 for Ms. Condella in supplemental disability insurance premiums; (iii) $200,000 in personal travel expenses for Mr. Conroy and his guests; (iv) personal security expenses for Mr. Conroy (equal to $29,794) and Ms. Condella (equal to $29,313); (v) phone expenses for Mr. Conroy; (vi) expenses incurred in connection with executive medical benefits for Ms. Condella; and (vii) expenses associated with attendance at our annual sales achievement, consisting of spousal attendance, a cash stipend for personal expenses related to the event, and Company provided promotional items for, Ms. Condella. The value of such amounts was determined based on the actual cost of such benefits to the Company of such benefits to the Company.
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(4)Mr. Bloomer joined the Company on April 15, 2024. The salary presented is prorated based on the number of days he was employed with us in fiscal 2024. The non-equity incentive plan compensation amount presented was calculated as a percentage of the actual base salary earned for the bonus performance period.
(5)Pursuant to his employment agreement, Mr. Bloomer received a $250,000 relocation bonus and pay for reasonable moving expenses incurred with his relocation to Madison, Wisconsin and a one-time sign-on bonus of $350,000.
Grants of Plan-Based Awards in 2025
The following table sets forth all plan-based awards made to our NEOs in 2025 and certain other information.
| Name | Award Type | Grant Date | Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) | Estimated Future Payouts Under Equity Incentive Plan Awards(2) | All Other Stock Awards: Number of Shares of Stock or Units (#)(3) | Grant Date Fair Value of Stock Awards ($)(4) | ||||||||||||||||||||||||||||||||
| Board Approval Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | ||||||||||||||||||||||||||||||||
| Kevin Conroy | RSUs | 2/24/2025 | 1/28/2025 | — | — | — | — | — | — | 111,146(5) | 5,699,567 | |||||||||||||||||||||||||||
| PSUs | 2/24/2025 | 1/28/2025 | — | — | — | 12,901 | 206,415 | 464,434 | — | 15,547,638 | ||||||||||||||||||||||||||||
| Modified PSUs | 12/23/2025 | 12/23/2025 | — | 1,591,678(6) | ||||||||||||||||||||||||||||||||||
| Annual Cash Bonus | 568,768 | 1,516,715 | 2,275,073 | — | — | — | — | — | ||||||||||||||||||||||||||||||
| Aaron Bloomer | RSUs | 2/24/2025 | 1/28/2025 | — | — | — | — | — | — | 28,779(5) | 1,475,787 | |||||||||||||||||||||||||||
| PSUs | 2/24/2025 | 1/28/2025 | — | — | — | 1,799 | 28,799 | 64,753 | — | 1,714,365 | ||||||||||||||||||||||||||||
| Annual Cash Bonus | 165,375 | 441,000 | 661,500 | — | — | — | — | — | ||||||||||||||||||||||||||||||
| Jacob Orville | RSUs | 2/24/2025 | 1/28/2025 | — | — | — | — | — | — | 28,779(5) | 1,475,787 | |||||||||||||||||||||||||||
| PSUs | 2/24/2025 | 1/28/2025 | — | — | — | 1,799 | 28,779 | 64,753 | — | 1,806,952 | ||||||||||||||||||||||||||||
| Modified PSUs | 12/23/2025 | 12/23/2025 | — | 236,854(6) | ||||||||||||||||||||||||||||||||||
| Annual Cash Bonus | 175,193 | 467,180 | 700,770 | — | — | — | — | — | ||||||||||||||||||||||||||||||
| Brian Baranick | RSUs | 2/24/2025 | 1/28/2025 | — | — | — | — | — | — | 28,779(5) | 1,475,787 | |||||||||||||||||||||||||||
| PSUs | 2/24/2025 | 1/28/2025 | — | — | — | 1,799 | 28,799 | 64,753 | — | 2,003,611 | ||||||||||||||||||||||||||||
| Modified PSUs | 12/23/2025 | 12/23/2025 | 236,854(6) | |||||||||||||||||||||||||||||||||||
| Annual Cash Bonus | 168,630 | 449,680 | 674,520 | — | — | — | — | — | ||||||||||||||||||||||||||||||
| Sarah Condella | RSUs | 2/24/2025 | 1/28/2025 | — | — | — | — | — | — | 23,817(5) | 1,221,336 | |||||||||||||||||||||||||||
| PSUs | 2/24/2025 | 1/28/2025 | — | — | — | 1,489 | 23,817 | 53,588 | — | 1,418,779 | ||||||||||||||||||||||||||||
| Modified PSUs | 12/23/2025 | 12/23/2025 | — | 92,054(6) | ||||||||||||||||||||||||||||||||||
| Annual Cash Bonus | 144,296 | 384,790 | 577,185 | — | — | — | — | — | ||||||||||||||||||||||||||||||
_________________________________
(1)Amounts in the “Estimated Future Payouts Under Non-Equity Incentive Plan Awards” columns relate to annual cash bonus opportunities for 2025. “Threshold” is based on achievement of minimum performance and “Maximum” is based on achievement of stretch performance, in each case in each of the two different categories of performance goals for the annual cash bonus program in 2025 (excluding the performance modifier metrics). The actual amounts paid to our NEOs are included in the “Summary Compensation Table” above, and the calculation of the actual amounts paid is discussed more fully in the Compensation Discussion and Analysis above.
(2)Amounts in the “Estimated Future Payouts Under Equity Incentive Plan Awards” columns relate to payout opportunities of the PSUs granted in 2025, which were granted under our 2019 Plan. All the NEOs received PSUs under our 2025 annual PSU program, which is discussed more fully in the Compensation Discussion and Analysis above. Threshold is based on achievement of threshold of the adjusted EBITDA metric (and giving effect to the downward 50% rTSR multiplier). Maximum is based on achievement of maximum of the revenue metric and the adjusted EBITDA metric (and giving effect to the upward 50% rTSR multiplier).
(3)All RSUs were granted under our 2019 Plan.
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(4)The amounts shown in this column for “RSUs” and “PSUs” indicate the grant date fair value of RSUs and PSUs granted in fiscal 2025 computed in accordance with FASB ASC Topic 718, excluding the effect of estimated forfeitures, plus, for PSUs granted in fiscal 2025, the incremental accounting expense associated with the accelerated vesting and payment of the PSUs in connection with the Tax Mitigation described in the Compensation Discussion and Analysis. For additional information regarding the assumptions made in calculating these amounts, refer to Note 1 of our Notes to Consolidated Financial Statements. These amounts reflect our accounting expense for these awards and do not correspond to the actual value that will be recognized by our NEOs.
(5)This amount represents RSUs that vest in four equal annual installments beginning on February 27, 2026.
(6)This amount indicates the incremental accounting expense associated with the Tax Mitigation described in the Compensation Discussion and Analysis for PSUs granted before fiscal 2025. These amounts reflect our accounting expense for these awards and do not correspond to the actual value that will be recognized by our NEOs.
Outstanding Equity Awards at December 31, 2025
The following table presents information about information about unexercised options and unvested stock awards that were held by our NEOs as of December 31, 2025.
| Option Awards | Stock Awards | |||||||||||||||||||||||||
| Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($)(1) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(1) | ||||||||||||||||||
| Kevin Conroy | 235,388 | 21.68 | 02/23/27 | |||||||||||||||||||||||
| 66,047 | 44.37 | 02/27/28 | ||||||||||||||||||||||||
| 34,110 | 92.62 | 02/26/29 | ||||||||||||||||||||||||
| 100,916 | 98.18 | 02/14/30 | ||||||||||||||||||||||||
13,181(2) | 1,338,662 | |||||||||||||||||||||||||
36,286(3) | 3,685,206 | |||||||||||||||||||||||||
66,504(4) | 6,754,146 | |||||||||||||||||||||||||
111,146(5) | 11,287,988 | |||||||||||||||||||||||||
234,250(6) | 23,790,430 | |||||||||||||||||||||||||
309,017(7) | 31,383,767 | |||||||||||||||||||||||||
| Aaron Bloomer | 21,564(8) | 2,190,040 | ||||||||||||||||||||||||
17,976(5) | 1,825,643 | |||||||||||||||||||||||||
58,784(6) | 5,970,103 | |||||||||||||||||||||||||
64,753(7) | 6,576,315 | |||||||||||||||||||||||||
| Jacob Orville | 6,581 | 98.18 | 02/14/30 | |||||||||||||||||||||||
2,096(2) | 212,870 | |||||||||||||||||||||||||
5,008(3) | 508,612 | |||||||||||||||||||||||||
7,867(4) | 798,973 | |||||||||||||||||||||||||
8,507(5) | 863,971 | |||||||||||||||||||||||||
15,252(9) | 1,548,993 | |||||||||||||||||||||||||
34,858(6) | 3,540,178 | |||||||||||||||||||||||||
60,327(7) | 6,126,810 | |||||||||||||||||||||||||
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| Option Awards | Stock Awards | |||||||||||||||||||||||||
| Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($)(1) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(1) | ||||||||||||||||||
| Brian Baranick | 1,946(2) | 197,636 | ||||||||||||||||||||||||
4,651(3) | 472,356 | |||||||||||||||||||||||||
7,306(4) | 741,997 | |||||||||||||||||||||||||
7,900(5) | 802,324 | |||||||||||||||||||||||||
14,165(9) | 1,438,597 | |||||||||||||||||||||||||
34,080(6) | 3,461,165 | |||||||||||||||||||||||||
49,815(7) | 5,059,211 | |||||||||||||||||||||||||
| Sarah Condella | 3,900 | 5.03 | 02/28/26 | |||||||||||||||||||||||
| 21,948 | 21.68 | 02/23/27 | ||||||||||||||||||||||||
| 11,700 | 44.37 | 02/27/28 | ||||||||||||||||||||||||
| 7,790 | 92.62 | 02/26/29 | ||||||||||||||||||||||||
| 6,581 | 98.18 | 02/14/30 | ||||||||||||||||||||||||
2,096(2) | 212,870 | |||||||||||||||||||||||||
4,006(3) | 406,849 | |||||||||||||||||||||||||
6,294(4) | 639,219 | |||||||||||||||||||||||||
12,623(5) | 1,281,992 | |||||||||||||||||||||||||
31,867(6) | 3,236,413 | |||||||||||||||||||||||||
53,588(7) | 5,442,397 | |||||||||||||||||||||||||
_________________________________
(1)The market value of unvested and unearned time- and performance-based stock awards is based on the closing price of our common stock on December 31, 2025 ($101.56). Vesting is generally subject to continued service through the vest date for each award. The award amounts and values presented in this table exclude shares withheld by us to cover tax withholdings in connection with the Tax Mitigation described in the Compensation Discussion and Analysis.
(2)Represents the unvested portion of time-based stock awards granted on February 25, 2022, vesting in four equal installments on the first, second, third and fourth annual anniversary of the grant date.
(3)Represents the unvested portion of time-based stock awards granted on February 24, 2023, vesting in four equal installments each on February 29, 2024, February 28, 2025, February 27, 2026, and February 26, 2027.
(4)Represents the unvested portion of time-based stock awards granted on February 26, 2024, vesting in four equal installments each on February 28, 2025, February 27, 2026, February 26, 2027 and February 29, 2028.
(5)Represents the unvested portion of time-based stock awards granted on February 24, 2025, vesting in four equal installments each on February 27, 2026, February 26, 2027, February 29, 2028 and February 28, 2029.
(6)Represents number of performance-based stock awards granted on February 26, 2024 (or in the case of Mr. Bloomer, April 15, 2024). These stock awards vest based on revenue growth for 2026 (75%) and adjusted EBITDA for 2026 (25%). The performance-based stock awards may be increased or decreased based on the Company’s TSR performance over a three-year period, relative to a peer index consisting of companies that comprise the Russell 1000 Healthcare Index on the first day of the performance period, adjusted to reflect any such companies that are removed from the index on or before the last day of the performance period. In accordance with SEC rules, the amounts represent the maximum amounts payable in connection with such stock awards. Please see the Tax Mitigation described in the Compensation Discussion for details on adjustments made to these awards in connection with the Tax Mitigation.
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(7)Represents number of performance-based stock awards granted on February 24, 2025. These stock awards vest based on revenue growth for 2027 (75%) and adjusted EBITDA for 2027 (25%). The performance-based stock awards may be increased or decreased based on the Company’s TSR performance over a three-year period, relative to a peer index consisting of companies that comprise the Russell 1000 Healthcare Index on the first day of the performance period, adjusted to reflect any such companies that are removed from the peer group on or before the last day of the performance period. In accordance with SEC rules, the amounts represent the maximum amounts payable in connection with such stock awards. See the Compensation Discussion and Analysis above for additional details regarding these awards, including adjustments made to these awards in connection with the Tax Mitigation described in the Compensation Discussion and Analysis.
(8)Represents the unvested portion of time-based RSUs granted on April 15, 2024, vesting in four equal installments on the first, second, third and fourth annual anniversary of the grant date.
(9)This amount represents RSUs that vest in four equal annual installments beginning on August 5, 2025.
2025 Option Exercises and Stock Vested Table
The following table sets forth information for each of our NEOs regarding stock option exercises and vesting of stock awards during 2025.
| Name | Option Awards | Stock Awards | ||||||||||||||||||||||||
| Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($)(1) | Number of Shares Acquired on Vesting (#)(2) | Value Realized on Vesting ($)(3) | |||||||||||||||||||||||
| Kevin Conroy | 66,723 | 1,580,001 | 529,226 | 50,437,833 | ||||||||||||||||||||||
Aaron Bloomer | — | — | 52,414 | 3,928,631 | ||||||||||||||||||||||
| Jacob Orville | — | — | 112,199 | 10,279,349 | ||||||||||||||||||||||
| Brian Baranick | — | — | 125,732 | 11,680,930 | ||||||||||||||||||||||
| Sarah Condella | — | — | 73,907 | 6,781,356 | ||||||||||||||||||||||
_________________________________
(1)Value realized is calculated based on the closing price of our common stock on the date of exercise over the applicable option’s exercise price.
(2)Includes shares vesting under time-based RSUs during 2025, shares vesting under PSUs based on the satisfaction of certain performance targets for the year ending December 31, 2025, and shares withheld by us to cover tax withholdings in connection with the Tax Mitigation described in the Compensation Discussion and Analysis.
(3)Value realized is calculated based on the closing price of our common stock on the date of vesting. If the date of vesting was not a trading day, value realized is based on the closing price of our common stock on the immediately following trading day.
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2025 Nonqualified Deferred Compensation
| Name | Executive Contributions in Last FY ($) | Registrant Contributions in Last FY ($) | Aggregate Earnings in Last FY ($)(1) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at Last FYE ($)(2) | |||||||||||||||||||||||||||
| Kevin Conroy | 1,664,331 | — | 604,752 | — | 5,468,920 | |||||||||||||||||||||||||||
Aaron Bloomer | — | — | — | — | — | |||||||||||||||||||||||||||
| Jacob Orville | — | — | — | — | — | |||||||||||||||||||||||||||
| Brian Baranick | — | — | 1,706 | — | 12,630 | |||||||||||||||||||||||||||
| Sarah Condella | — | — | — | — | — | |||||||||||||||||||||||||||
_________________________________
(1)The Company’s deferred compensation plan does not pay above-market or preferential earnings, therefore no earnings reported in this column are reported as fiscal 2025 compensation in the Summary Compensation Table.
(2)$3,777,946 in cash compensation was reported in prior fiscal year summary compensation tables for Mr. Conroy.
We maintain a non-qualified deferred compensation plan pursuant to which senior level employees, including our NEOs, may defer up to 75% of their base salary and 75% of their cash bonuses, and pursuant to which we may make matching and other contributions in our discretion. Any matching contributions made by us generally would become vested after the participant reaches one year of service, subject to earlier vesting upon death, disability, a change in control of us, or the participant becoming eligible for retirement under the plan. Consistent with past practice, we made no matching contributions in 2025. Amounts in a participant’s account are treated as invested in notional investment options based on participant election from a menu of investment options selected by us.
Potential Payments upon Termination or Change of Control
Employment Agreements
The following table sets forth the estimated post-employment compensation and benefits that would have been payable to our NEOs under their employment agreements, assuming that each covered circumstance occurred on December 31, 2025. The amounts set forth below do not include changes in value to option awards that, in the event of the termination of an executive’s employment, will remain open for exercise for an extended period of time. Any differences in total values across the tables are due to rounding.
For further information regarding the following table, see the “Potential Benefits upon Termination or Change of Control” section of the Compensation Discussion and Analysis above.
| Name and Benefit | Severance Eligible Termination* ($) | Severance Eligible Termination In Connection with a Change in Control** ($) | Change of Control*** ($) | Death or Disability ($) | ||||||||||||||||||||||||||||||||||
| Kevin Conroy | ||||||||||||||||||||||||||||||||||||||
| Base Salary | 1,625,052 | (1) | 2,166,736 | (2) | 2,166,736 | (2) | — | |||||||||||||||||||||||||||||||
| Bonus | 2,017,231 | (3) | 1,516,715 | (4) | 1,516,715 | (4) | — | |||||||||||||||||||||||||||||||
| Long-Term Incentive Plan | — | 10,000,000 | (5) | 10,000,000 | (5) | — | ||||||||||||||||||||||||||||||||
| Stock Awards | 39,638,360 | (6) | — | 78,240,199 | (7) | 78,240,199 | (7) | |||||||||||||||||||||||||||||||
| COBRA | 32,668 | (8) | — | — | — | |||||||||||||||||||||||||||||||||
| Outplacement Consulting | 10,000 | (9) | — | — | — | |||||||||||||||||||||||||||||||||
Total Estimated Value (10) | 43,323,311 | 13,683,451 | 91,923,650 | 78,240,199 | ||||||||||||||||||||||||||||||||||
Aaron Bloomer | ||||||||||||||||||||||||||||||||||||||
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| Name and Benefit | Severance Eligible Termination* ($) | Severance Eligible Termination In Connection with a Change in Control** ($) | Change of Control*** ($) | Death or Disability ($) | ||||||||||||||||||||||||||||||||||
| Base Salary | 630,000 | (1) | 945,000 | (11) | — | — | ||||||||||||||||||||||||||||||||
| Bonus | 586,530 | (3) | 661,500 | (12) | — | — | ||||||||||||||||||||||||||||||||
| Stock Awards | 331,543 | (6) | 16,562,100 | (7) | 1,352,221 | (13) | — | |||||||||||||||||||||||||||||||
| COBRA | 20,311 | (8) | 20,311 | (14) | — | — | ||||||||||||||||||||||||||||||||
| Outplacement Consulting | 10,000 | (9) | 10,000 | (9) | — | — | ||||||||||||||||||||||||||||||||
| Total Estimated Value | 1,578,383 | 18,198,911 | (15) | 1,352,221 | (15) | — | ||||||||||||||||||||||||||||||||
| Jacob Orville | ||||||||||||||||||||||||||||||||||||||
| Base Salary | 667,400 | (1) | 1,001,100 | (11) | — | — | ||||||||||||||||||||||||||||||||
| Bonus | 621,349 | (3) | 700,770 | (12) | — | — | ||||||||||||||||||||||||||||||||
| Stock Awards | 7,952,199 | (6) | 14,049,912 | (7) | 8,516,314 | (13) | 14,049,912 | (7) | ||||||||||||||||||||||||||||||
| COBRA | 32,668 | (8) | 32,668 | (14) | — | — | ||||||||||||||||||||||||||||||||
| Outplacement Consulting | 10,000 | (9) | 10,000 | (9) | — | — | ||||||||||||||||||||||||||||||||
| Total Estimated Value | 9,283,616 | 15,794,450 | (15) | 8,516,314 | (15) | 14,049,912 | ||||||||||||||||||||||||||||||||
Brian Baranick | ||||||||||||||||||||||||||||||||||||||
| Base Salary | 642,400 | (1) | 963,600 | (11) | — | — | ||||||||||||||||||||||||||||||||
| Bonus | 598,074 | (3) | 674,520 | (12) | — | — | ||||||||||||||||||||||||||||||||
| Stock Awards | 1,190,131 | (6) | 12,173,286 | (7) | 1,754,246 | (13) | 3,652,910 | (16) | ||||||||||||||||||||||||||||||
| COBRA | 32,668 | (8) | 32,668 | (14) | — | — | ||||||||||||||||||||||||||||||||
| Outplacement Consulting | 10,000 | (9) | 10,000 | (9) | — | — | ||||||||||||||||||||||||||||||||
| Total Estimated Value | 2,473,273 | 13,854,075 | (15) | 1,754,246 | (15) | 3,652,910 | ||||||||||||||||||||||||||||||||
Sarah Condella | ||||||||||||||||||||||||||||||||||||||
| Base Salary | 549,700 | (1) | 824,550 | (11) | — | — | ||||||||||||||||||||||||||||||||
| Bonus | 511,771 | (3) | 577,185 | (12) | — | — | ||||||||||||||||||||||||||||||||
| Stock Awards | 7,129,309 | (6) | 11,219,739 | (7) | 7,129,309 | (13) | 11,219,739 | (7) | ||||||||||||||||||||||||||||||
| COBRA | 32,668 | (8) | 32,668 | (14) | — | — | ||||||||||||||||||||||||||||||||
| Outplacement Consulting | 10,000 | (9) | 10,000 | (9) | — | — | ||||||||||||||||||||||||||||||||
| Total Estimated Value | 8,233,448 | 12,664,143 | (15) | 7,129,309 | (15) | 11,219,739 | ||||||||||||||||||||||||||||||||
_________________________________
* “Severance Eligible Termination” means the executive’s termination of employment by the Company without cause or by the executive for good reason.
** “In connection with a Change of Control” means (1) for purposes of Mr. Conroy, a Severance Eligible Termination within 12 months preceding a change of control (or, for purposes of Mr. Conroy’s Long-Term Incentive Plan benefits, a Severance Eligible Termination preceding a pending or potential change of control), or (2) for all other NEOs, a Severance Eligible Termination within 4 months preceding or within 12 months following a change of control.
*** “Change of Control” means a change of control occurs without the executive’s termination.
(1)Represents salary continuation for a period of 18 months, in the case of Mr. Conroy, and 12 months for all other NEOs, upon a Severance Eligible Termination.
(2)Represents a single lump-sum payment equal to 24 months of Mr. Conroy’s then current base salary.
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(3)Represents 2025 bonus award. The amounts disclosed do not take into account the Tax Mitigation described in the Compensation Discussion and Analysis.
(4)Represents a pro-rata target bonus through the effective date of the change of control.
(5)Amounts represent payments due under the Long-Term Incentive Plan as set forth in Mr. Conroy’s employment agreement, assuming a change of control transaction at an equity value equal to the Company’s total market capitalization as of December 31, 2025.
(6)With respect to Mr. Conroy, represents the value of unvested stock awards held on December 31, 2025 that were scheduled to vest within 12 months of such date, based on the closing market price of the common stock on December 31, 2025 ($101.56) (assuming maximum performance with respect to performance-based stock awards). With respect to Mr. Bloomer, Mr. Orville, Mr. Baranick, and Ms. Condella, represents the value of the portion of unvested time-based stock awards held on December 31, 2025 that were scheduled to vest within 24 months of such date, based on the closing market price of the common stock on December 31, 2025 ($101.56). The number of time-based stock awards that would actually vest for each such NEO depends on their years of service with us, with (i) no acceleration for less than one year of service; (ii) 50% acceleration for one to five years of service; (iii) 75% acceleration for five to ten years of service; and (iv) 100% acceleration for ten or more years of service. With respect to Mr. Orville and Ms. Condella, also represents the value of unvested performance-based stock awards held on December 31, 2025 that were scheduled to vest within 12 months of such date, based upon the closing market price of the common stock on December 31, 2025 ($101.56) (assuming maximum performance with respect to performance-based stock awards). Pursuant to Mr. Orville’s and Ms. Condella’s employment agreement, performance-based stock awards would vest at actual performance levels at the end of the performance period. The amounts presented are net of shares withheld by us to cover tax withholdings in connection with the Tax Mitigation described in the Compensation Discussion and Analysis.
(7)Represents the value of unvested stock awards held on December 31, 2025, accelerating and vesting in full, based upon the closing market price on December 31, 2025 ($101.56) (assuming maximum performance with respect to performance-based stock awards). Pursuant to Mr. Bloomer’s, Mr. Orville’s, Mr. Baranick’s and Ms. Condella’s employment agreements, upon a severance eligible termination in connection with a change in control, performance-based stock awards would vest at the greater of actual or target performance levels. Pursuant to Mr. Conroy's employment agreement, the accelerated vesting is subject to Mr. Conroy's agreement to remain employed by the Company or any successor, if requested, for a period of at least six months following the change of control at Mr. Conroy's then current base salary. The amounts presented are net of shares withheld by us to cover tax withholdings in connection with the Tax Mitigation described in the Compensation Discussion and Analysis.
(8)Represents the estimated cost to the Company of a single lump-sum payment, or, in the case of Mr. Conroy, monthly payments equal to COBRA premiums for health, vision and/or dental insurance for a period of 12 months.
(9)Represents a single lump-sum cash payment made towards the cost of an outplacement consulting package.
(10)Mr. Conroy’s employment agreement provides for a gross-up payment intended to reimburse him for any excise tax imposed on “parachute payments” under the Code. If Mr. Conroy would otherwise become subject to any such excise tax, the Company currently expects that it would, consistent with the Tax Mitigation described in the Compensation Discussion and Analysis, implement appropriate measures to reduce or eliminate such excise taxes so that no gross-up payment would be payable to Mr. Conroy.
(11)Represents a single lump-sum payment equal to 18 months of the executive’s then current base salary upon a Severance Eligible Termination in connection with a Change of Control
(12)Represents a single lump-sum payment equal to (i) a pro-rata target bonus (to the extent not duplicative) plus (ii) 150% target annual bonus, in each case for the year of termination
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(13)Represents the value of unvested stock awards held on December 31, 2025 that were scheduled to vest within 12 months of such date, based upon the closing market price of the common stock on December 31, 2025 ($101.56) (assuming maximum performance with respect to performance-based stock awards). Pursuant to Mr. Bloomer’s, Mr. Orville’s, Mr. Baranick’s and Ms. Condella’s employment agreements, upon a change in control, performance-based stock awards would vest at the greater of actual or target performance levels. The amounts presented are net of shares withheld by us to cover tax withholdings in connection with the Tax Mitigation described in the Compensation Discussion and Analysis.
(14)Represents a lump-sum cash payment equal to 12 months’ premium payments for COBRA coverage for health, dental, and vision.
(15)The employment agreements with each NEO (other than Mr. Conroy) provide that the Company may reduce these amounts in order to prevent any payments from being non-deductible under section 280G of the Code or subject to excise tax under Code section 4999.
(16)Represents the value of all unvested time-based stock awards held on December 31, 2025, accelerating and vesting in full, based upon the closing market price on December 31, 2025 ($101.56). The amounts presented are net of shares withheld by us to cover tax withholding in connection with the Tax Mitigation described in the Compensation Discussion and Analysis.
Equity Award Death, Disability and Retirement Policy
The following table sets forth the estimated post-employment compensation and benefits that would have been payable to our NEOs under our equity award death, disability and retirement policy, assuming that each covered circumstance occurred on December 31, 2025.
For further information regarding the following table, see the “Potential Benefits upon Termination or Change of Control” section of the Compensation Discussion and Analysis above.
| Name | Retirement(1) ($) | Death/Disability(2) ($) | ||||||||||||
| Kevin Conroy | 38,926,289 | 78,240,199 | ||||||||||||
Aaron Bloomer | 7,995,751 | 10,183,848 | ||||||||||||
| Jacob Orville | 6,293,538 | 8,332,074 | ||||||||||||
| Brian Baranick | 5,960,353 | 7,643,674 | ||||||||||||
Sarah Condella | 4,698,538 | 6,509,354 | ||||||||||||
_________________________________
(1)Represents the closing market price of the stock underlying unvested equity awards held on December 31, 2025 ($101.56), in each case for which the continued service requirement would lapse upon retirement (with performance-based awards deemed earned at maximum levels). Pursuant to the Policy, performance-based stock awards would vest at actual performance levels at the end of the applicable performance period, and would be prorated for the period of service prior to retirement. The amounts presented are net of shares withheld by us to cover tax withholdings in connection with the Tax Mitigation described in the Compensation Discussion and Analysis.
(2)Represents the closing market price of the stock underlying unvested equity awards held on December 31, 2025 ($101.56), in each case that would vest upon death or disability, and the closing market price of the stock underlying performance-based stock awards for which the continued service requirement would lapse upon death or disability (with performance deemed earned at maximum levels). Pursuant to the Policy, performance-based stock awards would vest at actual performance levels at the end of the applicable performance period, and, other than for Mr. Conroy, would be prorated for the period of service prior to retirement. The amounts presented are net of shares withheld by us to cover tax withholdings in connection with the Tax Mitigation described in the Compensation Discussion and Analysis.
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As further described above in the “Compensation Discussion and Analysis,” NEOs are only eligible for these benefits upon death, disability or retirement. For purposes of the Policy, “retirement” means that, at the time of resignation, the NEO has: (1) attained age 55 and completed 15 years of service with us or (2) attained age 60 and completed 10 years of service with us. As of December 31, 2025, among the NEOs only Mr. Conroy was eligible for retirement benefits.
Change in Control Benefits under 2010 Plan and 2019 Plan
The following table sets forth the estimated benefits that would have been payable to the NEOs pursuant to their equity awards granted prior to the consummation of a change in control under the 2010 Plan and the 2019 Plan (as applicable) if a change in control had occurred on December 31, 2025. Any differences in total values across the tables are due to rounding. As of December 31, 2025, none of the NEOs held equity awards under the 2025 Plan.
For further information regarding the following table, see the “Potential Benefits upon Termination or Change of Control” section of the Compensation Discussion and Analysis above.
| Name | Severance Eligible Termination* within six months preceding the change in control ($) | Change in Control** ($) | Severance Eligible Termination*** within one year following the change in control ($) | ||||||||||||||||||||||||||
| Kevin Conroy | 53,706,858 | (1) | 63,428,790 | (2) | 78,240,199 | (3) | |||||||||||||||||||||||
Aaron Bloomer | 8,892,898 | (1) | 13,732,842 | (2) | 16,562,100 | (3) | |||||||||||||||||||||||
| Jacob Orville | 9,462,447 | (1) | 11,075,727 | (2) | 13,600,407 | (3) | |||||||||||||||||||||||
| Brian Baranick | 8,315,631 | (1) | 9,828,571 | (2) | 12,173,286 | (3) | |||||||||||||||||||||||
| Sarah Condella | 5,655,267 | (1) | 9,628,700 | (2) | 11,219,739 | (3) | |||||||||||||||||||||||
_________________________________
* “Severance Eligible Termination” means the executive’s termination of employment initiated by the Company or an affiliate in anticipation of the change in control and other than for cause, and in the case of performance-based stock awards granted to our NEOs in 2023 and 2024, other than a separation from service due to death or disability.
** “Change in Control” means a change in control occurs without the executive’s termination.
*** “Severance Eligible Termination” means the executive’s termination of employment by the Company (or the acquiring or surviving entity) without cause or by the executive for good reason.
(1)Represents the value of unvested performance-based stock awards on December 31, 2025, that will accelerate, based upon the closing market price of the common stock on December 31, 2025 ($101.56) (assuming maximum performance with respect to performance-based stock awards). Pursuant to the award agreements, performance-based stock awards would vest at the greater of actual or target performance levels as of the change in control. The amounts presented are net of shares withheld by us to cover tax withholdings in connection with the Tax Mitigation described in the Compensation Discussion and Analysis.
(2)Represents the value of time-based stock awards held on December 31, 2025, that were scheduled to vest within 12 months of such date, and all unvested performance-based stock awards held on December 31, 2025, accelerating and vesting in full, based upon the closing market price of the common stock on December 31, 2025 ($101.56) (assuming maximum performance with respect to performance-based stock awards). Pursuant to the award agreements, performance-based stock awards would vest at the greater of actual or target performance levels as of the change in control. The amounts presented are net of shares withheld by us to cover tax withholdings in connection with the Tax Mitigation described in the Compensation Discussion and Analysis.
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(3)Represents the value of all unvested stock awards held on December 31, 2025, accelerating and vesting in full, based upon the closing market price on December 31, 2025 ($101.56) (assuming maximum performance with respect to performance-based stock awards). Pursuant to the 2010 Plan and the 2019 Plan, performance-based stock awards would vest at the greater of actual or target performance levels as of the change in control. The amounts presented are net of shares withheld by us to cover tax withholdings in connection with the Tax Mitigation described in the Compensation Discussion and Analysis.
CEO PAY RATIO
As required by SEC rules, we are providing the following information about the relationship of the annual total compensation for 2025 of our median employee (excluding our CEO) and our CEO, Mr. Conroy, our Principal Executive Officer (“PEO”). The pay ratio provided below is a reasonable estimate calculated in accordance with SEC rules and methods for disclosure.
For 2025, the median of the annual total compensation of all our employees (other than our CEO) was $144,465; and the annual total compensation of our CEO, for purposes of this pay ratio disclosure (as discussed below), was $49,560,009. As a result, the ratio of the annual total compensation of our CEO to the median of the annual total compensation of all our employees was approximately 343 to 1.
For purposes of our CEO Pay Ratio calculation, we determined that there were no changes to our employee population or to our employee compensation arrangements that we believe would significantly affect the pay ratio disclosure, allowing us to use the same median employee identified in our proxy statement covering fiscal year 2024. As disclosed in our prior year’s proxy statement, we identified our median employee by (A) aggregating for each of our employees (other than our CEO) as of December 13, 2024 (our median employee determination date): (1) for permanent salaried employees, annual base salary, and solely for hourly employees, hourly rate multiplied by expected annual work schedule, including overtime (adjusted for the portion of the year actually worked for non-permanent employees); (2) target annual bonus for 2024; and (3) estimated grant date fair value of equity awards granted during 2024, and (B) ranking our employees (other than our CEO) from lowest to highest using this compensation measure. Amounts paid in currencies other than US Dollars were converted based on the average annual exchange rate as of the December 13, 2024 determination date. Due to anomalous compensation characteristics of our median employee, we substituted an employee near the median whose compensation was viewed as more representative.
For the annual total compensation of our median employee, we identified and calculated the elements of that employee’s compensation for 2025 in accordance with the requirements of Item 402(c)(2)(x) and then added the Company’s annual share of the cost of medical, dental, disability, and life insurance for the employee, resulting in annual total compensation of $144,465. For the annual total compensation of our CEO, we used the amount reported in the “Total” column of our 2025 Summary Compensation Table, adjusted as follows: to maintain consistency between the annual total compensation of our CEO and our median employee, we added the Company’s annual share of the cost of medical, dental, disability, and life insurance for our CEO (estimated at $38,949) to the amount reported in the Summary Compensation Table. This resulted in annual total compensation for purposes of determining the CEO pay ratio of $49,560,009, which exceeded the amount reported for our CEO in the Summary Compensation Table.
The pay ratio is a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S-K under the Securities Act of 1933, as amended, and based upon our reasonable judgment and assumptions. The SEC rules do not specify a single methodology for identification of the median employee or calculation of the pay ratio, and other companies may use assumptions and methodologies that are different from those used by us in calculating their pay ratio. Accordingly, the pay ratio disclosed by other companies may not be comparable to our pay ratio as disclosed above.
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Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
EQUITY COMPENSATION PLAN INFORMATION
We maintain the following equity compensation plans under which our equity securities that have been issued or are authorized for issuance to our employees and/or directors, in each case, as amended: the 2010 Omnibus Long-Term Incentive Plan, the 2010 Employee Stock Purchase Plan, the 2019 Plan and the 2025 Plan. The following table presents information about these plans as of December 31, 2025.
Plan Category(1) | Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights | Weighted Average Exercise Price of Outstanding Options, Warrants and Rights | Number of Securities Remaining Available For Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column 2) | ||||||||||||||||||||||||||
| Equity compensation plans approved by security holders | 8,029,188 | (2) | $ | 57.36 | (3) | 16,550,287 | (4) | ||||||||||||||||||||||
| Equity compensation plans not approved by security holders | 40,326 | (5) | 95.56 | (3) | — | ||||||||||||||||||||||||
| Total | 8,069,514 | $ | 57.37 | 16,550,287 | |||||||||||||||||||||||||
_________________________________
(1)Table does not include 34,847 shares of common stock issuable pursuant to outstanding stock options (which had a weighted average exercise price of $78.98 per share as of December 31, 2025), granted under GHI’s equity compensation plan (the “GHI Plan”), which the Company assumed in connection with the acquisition of GHI in 2019. No further awards may be granted under the GHI Plan. Table does not include shares that were paid in connection with the Tax Mitigation described in the Compensation Discussion and Analysis.
(2)Includes 510,540 options and 3,340 deferred stock units under the 2010 Plan, 270,749 options, 6,758,426 RSUs, and 463,239 target PSUs under the 2019 Plan, and 60,740 RSUs, and 2,480 target PSUs under the 2025 Plan.
(3)Does not reflect RSUs and PSUs included in the first column because RSUs and PSUs do not have an exercise price.
(4)Consists of 12,357,179 shares of common stock available for future issuance under our 2025 Plan, and 4,193,108 shares of common stock available for future issuance under our 2010 Employee Stock Purchase Plan. No further awards may be made under the 2010 Plan or the 2019 Plan.
(5)Includes 40,270 RSUs granted to 70 employees and 56 stock options granted to 1 employee pursuant to Nasdaq Rule 5635(c) under the 2019 Plan based on the shares that were available for grant under the GHI Plan at the time the Company acquired GHI. None of these RSUs were granted to individuals employed by the Company immediately prior to the acquisition of GHI.
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SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding beneficial ownership of our common stock as of January 30, 2026 by:
•each person or group of affiliated persons known by us to be the beneficial owner of more than 5% of our common stock;
•each NEO included in the Summary Compensation Table above;
•each of our directors;
•each person nominated to become a director; and
•all executive officers, directors, and nominees as a group.
Unless otherwise noted below, the address of each person listed on the table is c/o Exact Sciences Corporation at 5505 Endeavor Lane, Madison, Wisconsin 53719. To our knowledge, each person listed below has sole voting and investment power over the shares shown as beneficially owned except to the extent jointly owned with spouses or otherwise noted below.
Beneficial ownership is determined in accordance with the rules of the SEC. The information does not necessarily indicate ownership for any other purpose. Under these rules, shares of common stock issuable by us to a person pursuant to RSU awards expected to vest within 60 days of January 30, 2026 and options which may be exercised within 60 days after January 30, 2026 are deemed to be beneficially owned and outstanding for purposes of calculating the number of shares and the percentage beneficially owned by that person. However, these shares are not deemed to be beneficially owned and outstanding for purposes of computing the percentage beneficially owned by any other person. The applicable percentage of common stock outstanding as of January 30, 2026 is based upon 188,594,669 shares outstanding on that date.
| Name and Address of Beneficial Owner | Amount and Nature of Beneficial Ownership | ||||||||||||||||||||||||||||
| Number of Issued Shares | Number of Shares Issuable (1) | Total Shares Beneficially Owned | Percentage of Common Stock Outstanding | ||||||||||||||||||||||||||
| Directors and Named Executive Officers | |||||||||||||||||||||||||||||
| Brian Baranick | 104,544 | (2) | — | 104,544 | * | ||||||||||||||||||||||||
| Michael Barber | 13,136 | 2,474 | 15,610 | * | |||||||||||||||||||||||||
| Aaron Bloomer | 48,980 | (3) | — | 48,980 | * | ||||||||||||||||||||||||
| Paul Clancy | 26,038 | — | 26,038 | * | |||||||||||||||||||||||||
| Sarah Condella | 135,258 | (4) | 51,919 | 187,177 | * | ||||||||||||||||||||||||
| Kevin Conroy | 1,514,511 | (5) | 517,739 | 2,032,250 | 1.1 | % | |||||||||||||||||||||||
| D. Scott Coward | 62,256 | (6) | 27,836 | 90,092 | * | ||||||||||||||||||||||||
| James Doyle | 57,962 | — | 57,962 | * | |||||||||||||||||||||||||
| Jacob Orville | 101,924 | (7) | 6,581 | 108,505 | * | ||||||||||||||||||||||||
| Shacey Petrovic | 28,899 | (8) | — | 28,899 | * | ||||||||||||||||||||||||
Kimberly Popovits | 16,381 | — | 16,381 | * | |||||||||||||||||||||||||
Leslie Trigg | 17,169 | — | 17,169 | * | |||||||||||||||||||||||||
| Katherine Zanotti | 60,759 | — | 60,759 | * | |||||||||||||||||||||||||
| All directors, nominees and executive officers as a group (15 persons) | 2,257,188 | 610,203 | 2,867,391 | 1.5 | % | ||||||||||||||||||||||||
| Shareholders | |||||||||||||||||||||||||||||
The Vanguard Group(9) | 17,559,751 | — | 17,559,751 | 9.2 | % | ||||||||||||||||||||||||
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| Name and Address of Beneficial Owner | Amount and Nature of Beneficial Ownership | ||||||||||||||||||||||||||||
| Name and Address of Beneficial Owner | Number of Issued Shares | Number of Shares Issuable (1) | Total Shares Beneficially Owned | Percentage of Common Stock Outstanding | |||||||||||||||||||||||||
ARK Investment Management LLC(10) | 16,040,490 | — | 16,040,490 | 8.4 | % | ||||||||||||||||||||||||
Capital World Investors(11) | 16,140,861 | — | 16,140,861 | 8.5 | % | ||||||||||||||||||||||||
_________________________________
*Less than one percent.
(1)Represents shares of our common stock issuable pursuant to option, RSU, and deferred stock unit awards exercisable or issuable within 60 days of January 30, 2026. Does not include shares of stock issuable pursuant to option, RSU, and deferred stock unit awards not exercisable or issuable within 60 days of January 30, 2026, or shares of common stock issuable on January 30, 2026 upon purchase pursuant to the Company's 2010 Employee Stock Purchase Plan. The number of shares to be purchased on January 30, 2026 pursuant to the Company's 2010 Amended and Restated Employee Stock Purchase Plan was indeterminable as of January 30, 2026.
(2)Includes 670 shares held through our 401(k) plan.
(3)Includes 212 shares held through our 401(k) plan.
(4)Includes 6,124 shares held through our 401(k) plan.
(5)Includes 28,826 shares held through our 401(k) plan and 250,715 shares held in grantor retained annuity trusts in respect of which Mr. Conroy is the trustee and holds sole voting and investment power.
(6)Includes 4,694 shares held through our 401(k) plan.
(7)Includes 1,521 shares held through our 401(k) plan.
(8)Includes 7,095 shares held in a trust in respect of which Ms. Petrovic is a trustee and holds shared voting and investment power.
(9)The Vanguard Group, a Pennsylvania corporation (“Vanguard”), has the sole power to vote or to direct the vote of 0 shares, the shared power to vote or to direct the vote of 125,252 shares, the sole power to dispose or to direct the disposition of 17,156,979 shares, and shared power to dispose or to direct the disposition of402,772 shares. The principal address of Vanguard is 100 Vanguard Blvd., Malvern, Pennsylvania 19355. This information has been obtained from Amendment No. 11 to Schedule 13G filed by Vanguard with the SEC on February 13, 2024.
(10)ARK Investment Management LLC, a Delaware limited liability company (“ARK”) has the sole power to vote or to direct the vote of 14,979,193 shares, the shared power to vote or to direct the vote of 737,931 shares, the sole power to dispose or to direct the disposition of 16,040,490 shares, and shared power to dispose or to direct the disposition of 0 shares. The principal address of ARK is 200 Central Avenue, St. Petersburg, FL 33701. This information has been obtained from Amendment No. 1 to the Schedule 13G filed by ARK with the SEC on February 10, 2023.
(11)Capital World Investors ("CWI") is a division of Capital Research and Management Company ("CRMC"), as well as its investment management subsidiaries and affiliates Capital Bank and Trust Company, Capital International, Inc., Capital International Limited, Capital International Sarl, Capital International K.K., Capital Group Private Client Services, Inc., and Capital Group Investment Management Private Limited (together with CRMC, the "investment management entities"). CWI's divisions of each of the investment management entities collectively provide investment management services. CWI has the sole power to vote or to direct the vote of 15,836,838 shares, the shared power to vote or to direct the vote of 0 shares, the sole power to dispose or to direct the disposition of 15,841,296 shares, and shared power to dispose or to direct the disposition of 0 shares. The principal address of CWI is 333 South Hope Street, 55th Floor, Los Angeles, California 90071. This information has been obtained from the Schedule 13G/A filed by CWI with the SEC on November 13, 2025.
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Changes In Control
Except for the transactions contemplated by the Merger Agreement, we know of no arrangements, including any pledge by any person of our securities, the operation of which may, at a subsequent date, result in a change in control of the Company.
Item 13. Certain Relationships and Related Transactions, and Director Independence.
Certain Relationships and Related Transactions
Other than compensation agreements and other arrangements which are described in “Compensation And Other Information Concerning Named Executive Officers”, in 2025 there was not, and there is not currently proposed, any transaction or series of similar transactions to which we were, or will be, a party in which the amount involved exceeded, or will exceed, $120,000 and in which any director, executive officer, holder of five percent or more of any class of our capital stock, or any member of their immediate family had, or will have, a direct or indirect material interest.
Our Board of Directors has adopted a written policy with regard to related person transactions, which sets forth our procedures and standards for the review, approval, or ratification of any transaction required to be reported in our filings with the SEC or in which one of our executive officers or directors has a direct or indirect material financial interest, with limited exceptions. Our policy is that our Audit and Finance Committee shall review the material facts of all related person transactions (as defined in the related person transaction approval policy) and either approve or disapprove of the entry into any related person transaction. In the event that obtaining the advance approval of our Audit and Finance Committee is not feasible, our Audit and Finance Committee shall consider the related person transaction and, if our Audit and Finance Committee determines it to be appropriate, may ratify the related person transaction. In determining whether to approve or ratify a related person transaction, our Audit and Finance Committee will take into account, among other factors it deems appropriate, whether the related person transaction is on terms comparable to those available from an unaffiliated third-party under the same or similar circumstances and the extent of the related person’s interest in the transaction.
Board Independence
Our Board of Directors has determined that Michael Barber, Paul Clancy, James Doyle, Shacey Petrovic, Kimberly Popovits, Leslie Trigg, and Katherine Zanotti are each independent within the meaning of the director independence standards of The Nasdaq Stock Market (“Nasdaq”). Our Board of Directors also previously determined that Kathleen Sebelius, who resigned for her retirement on April 29, 2025, and Daniel Levangie, who resigned for his retirement on August 5, 2025, were independent under the Nasdaq director independence standards. Furthermore, our Board of Directors has determined that all of the members of our Audit and Finance Committee, Human Capital Committee, and Corporate Governance and Nominating Committee are independent within the meaning of the director independence standards of Nasdaq and the rules of the SEC applicable to each such committee.
Our Board of Directors has determined that Kevin Conroy and D. Scott Coward are not independent within the meaning of director independence standards of Nasdaq.
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Item 14. Principal Accountant Fees and Services.
Independent Registered Public Accounting Firm
The following table sets forth the aggregate fees billed or expected to be billed by PwC for 2025 for audit and non-audit services, including “out-of-pocket” expenses incurred in rendering these services. The nature of the services provided for each category is described in the following table.
PricewaterhouseCoopers
| Fee Category | 2025 | 2024 | ||||||||||||
Audit Fees (1) | $ | 3,242,500 | $ | 3,237,000 | ||||||||||
Audit-Related Fees (2) | 89,000 | 85,000 | ||||||||||||
| Tax Fees | — | — | ||||||||||||
| All Other Fees | — | — | ||||||||||||
| Total | $ | 3,331,500 | $ | 3,322,000 | ||||||||||
_________________________________
(1)Audit fees include fees for professional services rendered for the audit of our consolidated annual financial statements, quarterly reviews, consents, and assistance with and review of documents filed with the SEC. Audit fees also include fees for professional services rendered for statutory audits performed by PwC’s international affiliates.
(2)Audit-related fees for 2025 and 2024 include fees for the audit of our 401(k) Plans.
Pre-Approval Policies and Procedures
The Audit and Finance Committee’s policy is to pre-approve all audit and permissible non-audit services to be performed by the independent registered public accounting firm. These services may include audit services, audit-related services, tax services, and other services. All such services provided in 2025 were pre-approved by the Audit and Finance Committee. Pre-approval is generally provided for up to one year and any pre-approval is detailed as to the particular service or category of services and is generally subject to a specific budget. The independent registered public accounting firm and management are required to periodically report to the full Audit and Finance Committee regarding the extent of services provided by the independent registered public accounting firm in accordance with this pre-approval, and the fees for the services performed to date.
The Audit and Finance Committee has delegated pre-approval authority to its chair when necessary due to timing considerations. Any services pre-approved by such chair must be reported to the full Audit and Finance Committee at its next scheduled meeting.
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PART IV
Item 15. Exhibits and Financial Statement Schedules
(a)The following documents are filed as part of this Form 10‑K:
(1) Financial Statements (see “Consolidated Financial Statements and Supplementary Data” at Item 8 and incorporated herein by reference).
(2) Financial Statement Schedules (Schedules to the Financial Statements have been omitted because the information required to be set forth therein is not applicable or is shown in the accompanying Financial Statements or notes thereto).
(3) Exhibits
| Exhibit Number | Exhibit Description | Filed with this Report | Incorporated by Reference herein from Form or Schedule | Filing Date | SEC File/ Registration Number | ||||||||||||
2.1 | Agreement and Plan of Merger, dated as of November 19, 2025, by and among Abbott Laboratories, Badger Merger Sub I, Inc. and Exact Sciences Corporation | 8-K (Exhibit 2.1) | 11/20/2025 | 001-35092 | |||||||||||||
2.2 | Agreement and Plan of Merger, dated July 28, 2019, by and among the Registrant, Spring Acquisition Corp. and Genomic Health, Inc. | 8-K (Exhibit 2.1) | 7/30/2019 | 001-35092 | |||||||||||||
2.3 | Agreement and Plan of Merger, dated October 26, 2020, by and among the Registrant, certain subsidiaries of the Registrant, Thrive Earlier Detection Corp. and Shareholder Representative Services LLC | 8-K (Exhibit 2.1) | 10/27/2020 | 001-35092 | |||||||||||||
2.4 | First Amendment to Agreement and Plan of Merger, dated December 23, 2020, by and among the Registrant, certain subsidiaries of the Registrant, Thrive Earlier Detection Corp. and Shareholder Representative Services LLC | 8-K (Exhibit 2.1) | 1/5/2021 | 001-35092 | |||||||||||||
2.5 | Second Amendment to Agreement and Plan of Merger, dated January 4, 2021, by and among the Registrant, certain subsidiaries of the Registrant, Thrive Earlier Detection Corp. and Shareholder Representative Services LLC | 8-K (Exhibit 2.2) | 1/5/2021 | 001-35092 | |||||||||||||
3.1 | Sixth Amended and Restated Certificate of Incorporation of the Registrant | S-1 (Exhibit 3.3) | 12/4/2000 | 333-48812 | |||||||||||||
3.2 | First Amendment to Sixth Amended and Restated Certificate of Incorporation of the Registrant | 8-K (Exhibit 3.1) | 7/24/2020 | 001-35092 | |||||||||||||
3.3 | Second Amendment to Sixth Amended and Restated Certificate of Incorporation of the Registrant | 8-K (Exhibit 3.1) | 6/12/2023 | 001-35092 | |||||||||||||
3.4 | Eighth Amended and Restated By-Laws of the Registrant | 8-K (Exhibit 3.4) | 11/3/2025 | 001-35092 | |||||||||||||
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4.1 | Specimen certificate representing the Registrant’s Common Stock | S-1 (Exhibit 4.1) | 12/26/2000 | 333-48812 | |||||||||||||
4.2 | Indenture, dated January 17, 2018, by and between the Registrant and U.S. Bank Trust Company, National Association (as successor to U.S. Bank National Association), as Trustee | 8-K (Exhibit 4.1) | 1/17/2018 | 001-35092 | |||||||||||||
4.3 | Second Supplemental Indenture, dated March 8, 2019, by and between the Registrant and U.S. Bank Trust Company, National Association (as successor to U.S. Bank National Association), as Trustee (including the form of 0.3750% Convertible Senior Notes due 2027) | 8-K (Exhibit 4.2) | 3/8/2019 | 001-35092 | |||||||||||||
4.4 | Third Supplemental Indenture, dated February 27, 2020, by and between the Registrant and U.S. Bank Trust Company, National Association (as successor to U.S. Bank National Association), as Trustee (including the form of 0.3750% Convertible Senior Notes due 2028) | 8-K (Exhibit 4.2) | 2/27/2020 | 001-35092 | |||||||||||||
4.5 | Fourth Supplemental Indenture, dated March 1, 2023, by and between the Company and U.S. Bank Trust Company, National Association (as successor in interest to U.S. Bank National Association), as Trustee (including the form of 2.00% Convertible Senior Notes due 2030) | 8-K (Exhibit 4.2) | 3/1/2023 | 001-35092 | |||||||||||||
4.6 | Fifth Supplemental Indenture, dated April 17, 2024, between the Company and U.S. Bank National Association, as Trustee (including the form of 1.75% Convertible Senior Notes due 2031) | 8-K (Exhibit 4.2) | 4/17/2024 | 001-35092 | |||||||||||||
4.7 | Description of Common Stock | 10-K (Exhibit 4.6) | 2/16/2021 | 001-35092 | |||||||||||||
Lease Agreements | |||||||||||||||||
10.1 | Second Amended and Restated Lease Agreement, dated September 28, 2018, by and between University Research Park Incorporated and the Registrant | 10-K (Exhibit 10.1) | 2/21/2019 | 001-35092 | |||||||||||||
10.2 | Lease Agreement, dated June 25, 2013, by and between Tech Building I, LLC and Exact Sciences Laboratories, Inc. | 10-Q (Exhibit 10.2) | 8/2/2013 | 001-35092 | |||||||||||||
10.3 | Lease Agreement, dated November 11, 2015, by and between Metropolitan Life Insurance Company and Genomic Health, Inc. | 10-K (Exhibit 10.3) | 2/21/2020 | 001-35092 | |||||||||||||
10.4 | First Amendment to Lease Agreement, dated October 4, 2019, by and between Metropolitan Life Insurance Company and Genomic Health, Inc. | 10-K (Exhibit 10.4) | 2/21/2020 | 001-35092 | |||||||||||||
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10.5 | Lease Agreement, dated September 23, 2005, by and between Metropolitan Life Insurance Company and Genomic Health, Inc. | 10-K (Exhibit 10.5) | 2/21/2020 | 001-35092 | |||||||||||||
10.6 | First Amendment to Lease Agreement, dated September 5, 2006, by and between Metropolitan Life Insurance Company and Genomic Health, Inc. | 10-K (Exhibit 10.6) | 2/21/2020 | 001-35092 | |||||||||||||
10.7 | Second Amendment to Lease Agreement, dated November 30, 2010, by and between Metropolitan Life Insurance Company and Genomic Health, Inc. | 10-K (Exhibit 10.7) | 2/21/2020 | 001-35092 | |||||||||||||
10.8 | Third Amendment to Lease Agreement, dated November 11, 2015, by and between Metropolitan Life Insurance Company and Genomic Health, Inc. | 10-K (Exhibit 10.8) | 2/21/2020 | 001-35092 | |||||||||||||
10.9 | Fourth Amendment to Lease Agreement, dated October 4, 2019, by and between Metropolitan Life Insurance Company and Genomic Health, Inc. | 10-K (Exhibit 10.9) | 2/21/2020 | 001-35092 | |||||||||||||
Agreements with Executive Officers and Directors | |||||||||||||||||
10.10* | Employment Agreement, dated March 18, 2009, by and between Kevin T. Conroy and the Registrant | 8-K (Exhibit 10.1) | 3/18/2009 | 000-32179 | |||||||||||||
10.11* | Employment Agreement, dated February 18, 2019, by and between Jacob Orville and the Registrant | 10-K (Exhibit 10.17) | 2/21/2020 | 001-35092 | |||||||||||||
10.12* | First Amendment to Employment Agreement, dated July 31, 2024, by and between Jake Orville and the Registrant | 10-Q (Exhibit 10.2) | 11/5/2024 | 001-35092 | |||||||||||||
10.13* | Employment Agreement, dated August 22, 2017 by and between Sarah Condella and the Registrant | 10-K (Exhibit 10.16) | 2/16/2021 | 001-35092 | |||||||||||||
10.14* | Employment Agreement, dated September 2, 2022, by and between Brian Baranick and the Registrant | 10-Q (Exhibit 10.1) | 11/3/2022 | 001-35092 | |||||||||||||
10.15* | First Amendment to Employment Agreement, dated July 31, 2024, by and between Brian Baranick and the Registrant | 10-Q (Exhibit 10.3) | 11/5/2024 | 001-35092 | |||||||||||||
10.16* | Employment Agreement, dated April 15, 2024, by and between Aaron Bloomer and the Registrant | 10-Q (Exhibit 10.1) | 5/8/2024 | 001-35092 | |||||||||||||
10.17* | First Amendment to Employment Agreement, dated July 31, 2024, by and between Aaron Bloomer and the Registrant | 10-Q (Exhibit 10.1) | 11/5/2024 | 001-35092 | |||||||||||||
10.18* | Second Amendment to Employment Agreement, dated August 5, 2025, by and between Brian Baranick and the Registrant | 10-Q (Exhibit 10.4) | 8/6/2025 | 001-35092 | |||||||||||||
10.19* | Second Amendment to Employment Agreement, dated August 5, 2025, by and between Aaron Bloomer and the Registrant | 10-Q (Exhibit 10.5) | 8/6/2025 | 001-35092 | |||||||||||||
10.20* | Third Amendment to Employment Agreement, dated August 5, 2025, by and between Sarah Condella and the Registrant | 10-Q (Exhibit 10.6) | 8/6/2025 | 001-35092 | |||||||||||||
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10.21* | Second Amendment to Employment Agreement, dated August 5, 2025, by and between Jake Orville and the Registrant | 10-Q (Exhibit 10.7) | 8/6/2025 | 001-35092 | |||||||||||||
10.22* | Form of Acceleration and Clawback Agreement | 8-K (Exhibit 10.1) | 12/29/2025 | 001-35092 | |||||||||||||
Equity Compensation Plans and Policies | |||||||||||||||||
10.23* | The Registrant’s 2016 Inducement Award Plan | 10-Q (Exhibit 10.3) | 5/3/2016 | 001-35092 | |||||||||||||
10.24* | The Registrant’s 2016 Inducement Award Plan Form Restricted Stock Unit Award Agreement | S-8 (Exhibit 4.7) | 5/3/2016 | 333-211099 | |||||||||||||
10.25* | The Registrant’s 2010 Omnibus Long‑Term Incentive Plan (As Amended and Restated Effective July 27, 2017) | 10-Q (Exhibit 10.1) | 10/30/2017 | 001-35092 | |||||||||||||
10.26* | The Registrant’s Executive Deferred Compensation Plan dated January 1, 2019 | 10-K (Exhibit 10.22) | 2/21/2019 | 001-35092 | |||||||||||||
10.27* | The Registrant's 2019 Omnibus Long-Term Incentive Plan | S-8 (Exhibit 4.4) | 7/31/2019 | 333-23916 | |||||||||||||
10.28* | The Registrant's 2019 Omnibus Long-Term Incentive Plan Form Stock Option Award Agreement | 10-Q (Exhibit 10.2) | 8/1/2023 | 001-35092 | |||||||||||||
10.29* | The Registrant's 2019 Omnibus Long-Term Incentive Plan Form Restricted Stock Unit Award Agreement | 10-Q (Exhibit 10.3) | 8/1/2023 | 001-35092 | |||||||||||||
10.30* | The Registrant's 2019 Omnibus Long-Term Incentive Plan Form Restricted Stock Award Agreement | 10-Q (Exhibit 10.4) | 8/1/2023 | 001-35092 | |||||||||||||
10.31* | The Registrant's 2019 Omnibus Long-Term Incentive Plan Form Deferred Stock Unit Award Agreement | 10-Q (Exhibit 10.5) | 8/1/2023 | 001-35092 | |||||||||||||
10.32* | Genomic Health, Inc. Amended and Restated 2005 Stock Incentive Plan, as amended | S-8 (Exhibit 4.4) | 11/8/2019 | 333-234608 | |||||||||||||
10.33* | Thrive Earlier Detection Corp. 2019 Stock Option and Grant Plan | S-8 (Exhibit 4.6) | 1/5/2021 | 333-251900 | |||||||||||||
10.34* | The Registrant's Non-Employee Director Compensation Policy dated January 29, 2025 | 10-K (Exhibit 10.30) | 2/19/2025 | 001-35092 | |||||||||||||
10.35* | Amendment No. 1 to the Registrant's 2019 Omnibus Long-Term Incentive Plan | 8-K (Exhibit 10.1) | 6/9/2022 | 001-35092 | |||||||||||||
10.36* | Amendment No. 2 to the Registrant's 2019 Omnibus Long-Term Incentive Plan | 8-K (Exhibit 10.1) | 6/12/2023 | 001-35092 | |||||||||||||
10.37* | The Registrant's 2010 Employee Stock Purchase Plan (as amended and restated July 31, 2024) | 10-Q (Exhibit 10.5) | 11/5/2024 | 001-35092 | |||||||||||||
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10.38* | Amendment to the Amended and Restated Exact Sciences Corporation Employee Stock Purchase Plan (as amended and restated on July 31, 2024) | 8-K (Exhibit 10.2) | 6/16/2025 | 001-35092 | |||||||||||||
10.39* | The Registrant's 2025 Omnibus Long-Term Incentive Plan | 8-K (Exhibit 10.1) | 6/16/2025 | 001-35092 | |||||||||||||
10.40* | The Registrant's 2025 Omnibus Long-Term Incentive Plan Form Deferred Stock Unit Award Agreement | 10-Q (Exhibit 10.3) | 8/6/2025 | 001-35092 | |||||||||||||
10.41* | The Registrant's 2025 Omnibus Long-Term Incentive Plan Form Restricted Stock Unit Award Agreement | S-8 (Exhibit 4.8) | 7/11/2025 | 001-35092 | |||||||||||||
10.42* | The Registrant's 2025 Omnibus Long-Term Incentive Plan Form Performance Share Unit Award Agreement | S-8 (Exhibit 4.9) | 7/11/2025 | 001-35092 | |||||||||||||
10.43* | The Registrant's 2025 Omnibus Long-Term Incentive Plan Form Director Restricted Stock Award Agreement | S-8 (Exhibit 4.10) | 7/11/2025 | 001-35092 | |||||||||||||
10.44* | The Registrant's Equity Award, Death, Disability and Retirement Policy | 10-K (Exhibit 10.33) | 2/21/2024 | 001-35092 | |||||||||||||
10.45* | The Registrant's Executive Officer Perquisite Policy | 10-K (Exhibit 10.35) | 2/19/2025 | 001-35092 | |||||||||||||
| Other | |||||||||||||||||
10.46** | Technology License Agreement dated as of October 14, 2009 by and among Hologic, Inc., Third Wave Technologies, Inc., and the Registrant | 10-K (Exhibit 10.39) | 3/12/2010 | 000-32179 | |||||||||||||
10.47** | Amendment dated December 7, 2012 to Technology License Agreement dated October 14, 2009 by and among Hologic, Inc., Third Wave Technologies, Inc., and the Registrant | 10-K (Exhibit 10.37) | 3/1/2013 | 001-35092 | |||||||||||||
10.48** | Second Amended and Restated License Agreement dated effective January 31, 2020, by and between the Registrant and Mayo Foundation for Medical Education and Research | 10-Q (Exhibit 10.1) | 10/27/2020 | 001-35092 | |||||||||||||
10.49 | Credit Agreement dated as of January 13, 2025 by and among Exact Sciences Corporation, the lenders party thereto, JPMorgan Chase Bank, N.A., as administrative agent, and JPMorgan Chase Bank, N.A., BofA Securities, Inc. and PNC Bank, National Association, as Joint Lead Arrangers and Joint Bookrunners | 8-K (Exhibit 10.1) | 1/13/2025 | 001-35092 | |||||||||||||
19 | 10-K (Exhibit 19) | 2/19/2025 | 001-35092 | ||||||||||||||
21 | Subsidiaries of the Registrant | X | |||||||||||||||
23.1 | Consent of PricewaterhouseCoopers, LLP | X | |||||||||||||||
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| 24.1 | Power of Attorney (included on signature page) | X | |||||||||||||||
31.1 | Certification Pursuant to Rule 13a‑14(a) or Rule 15d‑14(a) of the Securities Exchange Act of 1934 | X | |||||||||||||||
31.2 | Certification Pursuant to Rule 13a‑14(a) or Rule 15d‑14(a) of the Securities Exchange Act of 1934 | X | |||||||||||||||
32 | Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | X | |||||||||||||||
97 | Incentive-Based Compensation Recovery Policy | 10-K (Exhibit 97) | 2/21/2024 | 001-35092 | |||||||||||||
| 101 | The following materials from the Annual Report on Form 10-K of Exact Sciences Corporation for the year ended December 31, 2025 filed with the Securities and Exchange Commission on February 13, 2026, formatted in Inline eXtensible Business Reporting Language (“iXBRL”): (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations, (iii) Consolidated Statement of Changes in Stockholders’ Equity, (iv) Consolidated Statements of Cash Flows and (v) related notes to these financial statements | X | |||||||||||||||
| 104 | The cover page from the Annual Report on Form 10-K of Exact Sciences Corporation for the year ended December 31, 2025 filed with the Securities and Exchange Commission on February 13, 2026, formatted in Inline eXtensible Business Reporting Language (“iXBRL”) | X | |||||||||||||||
(*) Indicates a management contract or any compensatory plan, contract or arrangement.
(**) Confidential Treatment requested for certain portions of this Agreement.
Item 16. Form 10-K Summary
Not applicable.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| EXACT SCIENCES CORPORATION | ||||||||
| Date: February 13, 2026 | By: | /s/ Kevin T. Conroy | ||||||
Kevin T. Conroy President & Chief Executive Officer | ||||||||
POWER OF ATTORNEY AND SIGNATURES
We, the undersigned officers and directors of Exact Sciences Corporation, hereby severally constitute and appoint Kevin T. Conroy our true and lawful attorney, with full power to him to sign for us and in our names in the capacities indicated below, any amendments to this Annual Report on Form 10‑K, and generally to do all things in our names and on our behalf in such capacities to enable Exact Sciences Corporation to comply with the provisions of the Securities Exchange Act of 1934, as amended, and all the requirements of the Securities Exchange Commission.
Pursuant to the requirements of the Securities and Exchange Act of 1934, as amended, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| Name | Title | Date | ||||||||||||
/s/ Kevin T. Conroy | President and Chief Executive Officer (Principal Executive Officer) and Chairman of the Board | February 13, 2026 | ||||||||||||
| Kevin T. Conroy | ||||||||||||||
/s/ Aaron Bloomer | Executive Vice President and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) | February 13, 2026 | ||||||||||||
Aaron Bloomer | ||||||||||||||
/s/ Mike Barber | Director | February 13, 2026 | ||||||||||||
Mike Barber | ||||||||||||||
| /s/ Paul Clancy | Director | February 13, 2026 | ||||||||||||
| Paul Clancy | ||||||||||||||
| /s/ D. Scott Coward | Director | February 13, 2026 | ||||||||||||
| D. Scott Coward | ||||||||||||||
| /s/ James E. Doyle | Lead Independent Director | February 13, 2026 | ||||||||||||
| James E. Doyle | ||||||||||||||
| /s/ Shacey Petrovic | Director | February 13, 2026 | ||||||||||||
| Shacey Petrovic | ||||||||||||||
/s/ Kim Popovits | Director | February 13, 2026 | ||||||||||||
Kim Popovits | ||||||||||||||
/s/ Leslie Trigg | Director | February 13, 2026 | ||||||||||||
Leslie Trigg | ||||||||||||||
| /s/ Katherine S. Zanotti | Director | February 13, 2026 | ||||||||||||
| Katherine S. Zanotti | ||||||||||||||
182
FAQ
What major transaction involving Exact Sciences (EXAS) is described in this 10-K?
Exact Sciences outlines a planned cash acquisition by Abbott Laboratories. A merger agreement signed in November 2025 provides that each Exact share will be converted into $105.00 in cash, subject to stockholder approval, specified regulatory clearances, and other customary closing conditions.
How did Exact Sciences (EXAS) perform operationally in 2025?
Exact Sciences reports significant operational scale and revenue growth. In 2025 it delivered more than 5.5 million cancer test results, increased revenue by 18%, and generated $491.4 million in cash from operating activities, an improvement of $280.9 million compared with the prior year.
What key new products did Exact Sciences (EXAS) launch in 2025?
Exact introduced several important diagnostic products during 2025. These include the FDA‑approved Cologuard Plus next‑generation stool DNA test, the Oncodetect MRD blood test, and Cancerguard, a multi‑cancer early detection blood test, along with a real‑world evidence study program for Cancerguard.
What are the main conditions and risks related to the Abbott–Exact Sciences merger?
The merger depends on multiple approvals and carries termination risk. Closing requires a majority stockholder vote, specified regulatory approvals, and other conditions. The agreement allows termination in defined circumstances and could require Exact to pay Abbott a termination fee of about $628.7 million.
How strong is reimbursement support for Exact Sciences’ core screening tests?
Exact’s Cologuard franchise benefits from broad guideline and payer support. Cologuard and Cologuard Plus are recommended in major colorectal screening guidelines, covered by Medicare every three years for eligible adults 45–85, and included in many commercial and quality programs, supporting adoption and revenue.
What strategic collaboration does Exact Sciences (EXAS) have with Freenome?
Exact entered a collaboration and license agreement with Freenome in 2025. The deal grants Exact rights to commercialize Freenome’s existing blood‑based colorectal cancer screening test in the U.S. and, after defined milestones, exclusive U.S. rights to future collaboration products and technology.
How large is the potential market for Exact’s Cologuard tests according to the filing?
The filing cites a substantial U.S. colorectal screening opportunity. Exact notes nearly 110 million average‑risk Americans aged 45–85 and estimates that, at a three‑year interval and about $592 average revenue per Cologuard Plus test, this represents a potential $22 billion annual market.
Exact Sciences Corp
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Feb 13, 2026
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Diagnostics & Research
Services-medical Laboratories
United States
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