exdx-20260630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2026
☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 001-39049

EXAGEN INC.

(Exact name of registrant as specified in its charter)

Delaware

20-0434866

(State or Other Jurisdiction of
Incorporation or Organization)

(I.R.S. Employer
Identification No.)

1261 Liberty Way

Vista,

92081

(Address of Principal Executive Offices)

(Zip Code)


(760)			560-1501
(Registrant's Telephone Number, Including Area Code)

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

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.001 per share

XGN

The Nasdaq Global Market

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

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

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

Large accelerated filer

☐

Accelerated filer

☐

Non-accelerated filer

☒

Smaller reporting company

☒

Emerging growth company

☐

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

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

Total shares of common stock outstanding as of the close of business on July 30, 2026 was 24,225,339.

TABLE OF CONTENTS


		Page
Part I.	Financial Information
Item 1.	Financial Statements	1
	Unaudited Condensed Balance Sheets as of June 30, 2026 and December 31, 2025	1
	Unaudited Condensed Statements of Operations for the Three and Six Months ended June 30, 2026 and 2025	2
	Unaudited Condensed Statements of Stockholders' Equity for the Three and Six Months ended June 30, 2026 and 2025	3
	Unaudited Condensed Statements of Cash Flows for the Six Months ended June 30, 2026 and 2025	5
	Notes to Unaudited Condensed Financial Statements	6
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	34
Item 4.	Controls and Procedures	35

Part II.	Other Information
Item 1.	Legal Proceedings	36
Item 1A.	Risk Factors	36
Item 5.	Other Information	37
Item 6.	Exhibits	38
	Signatures	39

Part I. Financial Information

Item 1. Financial Statements

Exagen Inc.

Unaudited Condensed Balance Sheets

(in thousands, except share and per share amounts)


	June 30, 2026		December 31, 2025

Assets
Current assets:
Cash and cash equivalents	$	24,588	$	32,220
Accounts receivable, net	12,407		10,855
Prepaid expenses and other current assets	5,862		5,818
Total current assets	42,857		48,893
Property and equipment, net	6,565		6,938
Operating lease right-of-use assets	1,953		1,435
Other assets	560		756
Total assets	$	51,935	$	58,022
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	4,439	$	4,153
Accrued and other current liabilities	4,939		6,327
Deferred revenue	1,492		675
Finance lease liabilities, current	1,091		1,135
Operating lease liabilities, current	979		1,226
Borrowings, current	517		643
Total current liabilities	13,457		14,159
Borrowings, non-current, net of discounts and debt issuance costs	22,322		22,264
Finance lease liabilities, non-current	1,617		1,960
Operating lease liabilities, non-current	1,130		438
Warrant liability	1,193		1,752

Total liabilities	39,719		40,573
Commitments and contingencies (Note 5)
Stockholders' equity:
Preferred stock, $0.001 par value per share; 10,000,000 shares authorized, no shares issued or outstanding as of June 30, 2026 and December 31, 2025	—		—
Common stock, $0.001 par value per share; 200,000,000 shares authorized as of June 30, 2026 and December 31, 2025; 24,193,101 and 22,911,575 shares issued and outstanding as of June 30, 2026 and December 31, 2025, respectively	24		23
Additional paid-in capital	333,637		331,708
Accumulated deficit	(321,445)		(314,282)
Total stockholders' equity	12,216		17,449
Total liabilities and stockholders' equity	$	51,935	$	58,022

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

Exagen Inc.

Unaudited Condensed Statements of Operations

(in thousands, except share and per share amounts)


	Three Months Ended June 30,				Six Months Ended June 30,
	2026		2025		2026		2025

Revenue	$	19,941	$	17,202	$	37,247	$	32,700
Cost of revenue	7,724		6,807		14,825		13,182
Gross profit	12,217		10,395		22,422		19,518
Operating expenses:
Selling, general and administrative expenses	12,513		11,542		24,579		22,746
Research and development expenses	1,426		1,483		2,979		2,767
Total operating expenses	13,939		13,025		27,558		25,513
Loss from operations	(1,722)		(2,630)		(5,136)		(5,995)
Interest expense	(1,201)		(1,124)		(2,468)		(1,669)
Loss on extinguishment of debt	—		(295)		—		(295)
Change in fair value of warrant liability	(426)		(438)		456		(438)
Other income (expense), net	153		85		21		243
Loss before income taxes	(3,196)		(4,402)		(7,127)		(8,154)
Income tax expense	—		(37)		(36)		(37)
Net loss	$	(3,196)	$	(4,439)	$	(7,163)	$	(8,191)
Net loss per share, basic and diluted	$	(0.13)	$	(0.21)	$	(0.30)	$	(0.41)
Weighted-average number of shares used to compute net loss per share, basic and diluted	24,164,569		21,085,749		24,012,761		19,830,265

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

Exagen Inc.

Unaudited Condensed Statements of Stockholders' Equity

(in thousands, except share amounts)


	Common Stock			Additional Paid-In Capital		Accumulated Deficit		Total Stockholders' Equity
	Shares	Amount
Balances as of December 31, 2025	22,911,575	$	23	$	331,708	$	(314,282)	$	17,449
Issuance of stock from cashless warrant exercises	804,788	1		(1)		—		—
Issuance of stock from vested restricted stock units	275,671	—		—		—		—
Issuance of stock under Employee Stock Purchase Plan	96,023	—		295		—		295
Stock-based compensation	—	—		655		—		655
Net loss	—	—		—		(3,967)		(3,967)
Balances as of March 31, 2026	24,088,057	24		332,657		(318,249)		14,432

Issuance of stock from vested restricted stock units	105,044	—		—		—		—

Stock-based compensation	—	—		980		—		980
Net loss	—	—		—		(3,196)		(3,196)
Balances as of June 30, 2026	24,193,101	$	24	$	333,637	$	(321,445)	$	12,216

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

Exagen Inc.

Unaudited Condensed Statements of Stockholders' Equity

(in thousands, except share amounts)


	Common Stock			Additional Paid-In Capital		Accumulated Deficit		Total Stockholders' Equity
	Shares	Amount
Balances as of December 31, 2024	17,640,328	$	18	$	303,853	$	(294,331)	$	9,540
Issuance of stock from vested restricted stock units	229,151	—		—		—		—
Issuance of stock under Employee Stock Purchase Plan	80,554	—		198		—		198
Stock-based compensation	—	—		417		—		417
Net loss	—	—		—		(3,752)		(3,752)
Balances as of March 31, 2025	17,950,033	18		304,468		(298,083)		6,403
Issuance of stock from public offering, net of issuance costs of $1,598	3,852,500	4		18,623		—		18,627
Issuance of stock from warrant exercises	107,969	—		—		—		—
Issuance of stock on vesting of restricted stock units	88,129	—		—		—		—
Exercise of stock options	108	—		—		—		—
Stock-based compensation	—	—		443		—		443
Net loss	—	—		—		(4,439)		(4,439)
Balances as of June 30, 2025	21,998,739	$	22	$	323,534	$	(302,522)	$	21,034

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

Exagen Inc.

Unaudited Condensed Statements of Cash Flows

(in thousands)


	Six Months Ended June 30,
	2026		2025

Cash flows from operating activities:
Net loss	$	(7,163)	$	(8,191)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	1,227		906
Amortization of debt discount and debt issuance costs	273		121
Amortization of loan commitment fees	840		184
Change in fair value of warrant liability	(456)		438
Loss on extinguishment of debt	—		295
Bad debt expense	—		455
Non-cash operating lease expense	513		473
Stock-based compensation	1,635		860
Other	(99)		146
Changes in assets and liabilities:
Accounts receivable, net	(1,552)		(6,892)
Prepaid expenses and other current assets	(885)		798
Other assets	196		288
Operating lease liabilities	(586)		(533)
Accounts payable	201		(1,577)
Deferred revenue	817		283
Accrued and other current liabilities	(1,390)		(1,610)
Net cash used in operating activities	(6,429)		(13,556)
Cash flows from investing activities:
Purchases of property and equipment	(771)		(322)
Proceeds from disposal of property and equipment	—		6
Net cash used in investing activities	(771)		(316)
Cash flows from financing activities:

Proceeds from common stock issued, net of issuance costs	—		18,777

Proceeds from common stock issued under Employee Stock Purchase Plan	295		199
Principal payments on finance lease obligations	(387)		(139)
Principal payments on notes payable obligations	(340)		(265)

Proceeds from issuance of debt and warrants, net of discounts	—		23,672
Payment to extinguish debt	—		(19,705)
Payment of debt issuance costs	—		(670)
Net cash used in financing activities	(432)		21,869
Net decrease in cash, cash equivalents and restricted cash	(7,632)		7,997
Cash, cash equivalents and restricted cash, beginning of period	32,420		22,236
Cash, cash equivalents and restricted cash, end of period	$	24,788	$	30,233
Supplemental disclosure of cash flow information:
Cash paid for interest	$	1,712	$	1,222

Supplemental disclosure of non-cash items:
Unpaid equipment settled under financing arrangement	$	—	$	682
Right-of-use assets obtained in exchange for lease liabilities	$	1,031	$	—
Recognition of warrant liability	$	—	$	3,525


Unpaid financing costs included in accounts payable and accrued liabilities	$	—	$	350
Costs incurred, but not paid, in connection with capital expenditures	$	110	$	—

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

Exagen Inc.

Notes to Unaudited Interim Condensed Financial Statements

Note 1. Organization

Description of Business

Exagen Inc. (the Company) is a medical technology company primarily focused on the design, development and commercialization of a next-generation portfolio of testing products under the AVISE® brand, which allow for the differential diagnosis, prognosis and monitoring of complex rheumatic, autoimmune and autoimmune-related disease including, among others, systemic lupus erythematosus (SLE) and rheumatoid arthritis (RA).

Liquidity

The Company has incurred recurring losses and negative cash flows from operating activities since inception. The Company anticipates that it will continue to incur net losses in future periods. As of June 30, 2026, the Company had cash and cash equivalents of $24.6 million and had an accumulated deficit of $321.4 million. Since inception, the Company has financed its operations primarily through a combination of equity financings, debt financing arrangements, and revenue from sales of the Company's products. Based on the Company's current business plan, management believes that its existing capital resources will be sufficient to fund the Company's obligations for at least twelve months following the issuance of these condensed financial statements. Consistent with historical practice, the Company held claims in the three months ended March 31, 2026, which resulted in increases in its accounts receivable and an accelerated decrease in its cash and cash equivalents in the three months ended March 31, 2026, and a reversal of that trend occurred during the three months ended June 30, 2026 and is expected to continue in the remaining two quarters of the fiscal year ending December 31, 2026.

To execute its business plans, the Company may need additional funding to support its continuing operations and pursue its growth strategy. Until such time as the Company can achieve significant cash flows from operations, if ever, it may need to finance its operations through the sale of its common stock, debt financings or other strategic transactions. Although the Company has been successful in raising capital in the past, there is no assurance that it will be successful in obtaining such additional financing on terms acceptable to the Company, if at all. The terms of any financing may adversely affect the holdings or the rights of the Company's stockholders. Although management believes the Company's existing capital resources are adequate to fund operations for the next twelve months, if the Company is unable to obtain additional funding in the future, the Company could be forced to delay, reduce or eliminate some or all of its programs, product portfolio expansion plans or commercialization efforts, which could have a material adverse effect on the Company's business, operating results and financial condition and the Company's ability to achieve its intended business objectives.

Note 2. Summary of Significant Accounting Policies

Basis of Presentation and Use of Estimates

The accompanying unaudited interim condensed balance sheets as of June 30, 2026, condensed statements of operations and stockholders' equity for the three and six months ended June 30, 2026 and 2025, cash flows for the six months ended June 30, 2026 and 2025 and the related footnote disclosures are unaudited and have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (SEC), and with accounting principles generally accepted in the United States (GAAP) applicable to interim financial statements. These unaudited condensed financial statements and related footnote disclosures should be read in conjunction with the Company’s audited financial statements for the fiscal year ended December 31, 2025, included in its Annual Report on Form 10-K filed with the SEC on March 10, 2026 (the 2025 Annual Report). In management's opinion, the unaudited interim condensed financial statements have been prepared on the same basis as the audited financial statements included in the 2025 Annual Report and include all normal adjustments, necessary for the fair presentation of the Company's financial position as of June 30, 2026 and its results of operations for the periods presented. The results for the three and six months ended June 30, 2026 are not necessarily indicative of the results expected for the full fiscal year or any other interim period. The year-end condensed balance sheet data

was derived from audited financial statements, but does not include all disclosures required by GAAP. Certain reclassifications have been made to prior period amounts to conform to the current presentation.

The preparation of the accompanying unaudited condensed financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities as of the date of the condensed financial statements, and the reported amounts of revenue and expenses during the reporting period. Actual results could materially differ from those estimates.

Significant estimates and assumptions made in the accompanying unaudited condensed financial statements include, but are not limited to revenue recognition, stock-based compensation, the fair value of the warrant liability, the estimated incremental borrowing rate for the determination of the Company's operating and finance lease right-of-use (ROU) assets, and the recoverability of its long-lived assets and net deferred tax assets (and related valuation allowance). The Company evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors and adjusts those estimates and assumptions when facts and circumstances dictate. Actual results could materially differ from those estimates.

Concentration of Credit Risk and Other Risk and Uncertainties

Financial instruments that potentially subject the Company to credit risk consist principally of cash, cash equivalents and accounts receivable. Substantially all the Company's cash and cash equivalents are held at one financial institution that management believes is of high credit quality. Such deposits may, at times, exceed federally insured limits. The Company has not experienced any losses on its cash or cash equivalents.

Significant payors and customers are those which represent more than 10% of the Company's total revenue or accounts receivable balance at each respective balance sheet date. For each significant payor and customer, revenue as a percentage of total revenue and accounts receivable as a percentage of total accounts receivable are as follows:


	Revenue
	Three Months Ended June 30,				Six Months Ended June 30,
	2026		2025		2026		2025
Customer A	25	%	23	%	25	%	23	%
Customer B	17	%	16	%	19	%	17	%
Customer C	*		*		*		10	%
Customer D	*		10	%	*		*


	Accounts Receivable, Net
	June 30, 2026		December 31, 2025
Customer A	18	%	23	%
Customer B	32	%	19	%
Customer C	*		14	%

For the three months ended June 30, 2026 and 2025, approximately 89% and 91%, respectively, of the Company's revenue was related to the AVISE® CTD test. Revenue related to AVISE® CTD test for the six months ended June 30, 2026 and 2025 was approximately 90% and 91%, respectively.

The Company is dependent on key suppliers for certain laboratory materials, consisting primarily of reagents and biomarkers used in our diagnostic tests. For the three months ended June 30, 2026 and 2025 approximately 93% and 87%, respectively, of the Company's diagnostic testing supplies were purchased from two suppliers. For the six months ended June 30, 2026 and 2025 approximately 96% and 92%, respectively, of the Company's diagnostic testing supplies were purchased from two suppliers. An interruption in the supply of these materials would impact the Company's ability to perform testing services.

Disaggregation of Revenue

The following table includes the Company's revenues as disaggregated by payor and customer category (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2026		2025		2026		2025
Revenue:
Commercial	$	10,352	$	8,811	$	19,828	$	17,571
Government	5,206		3,926		9,487		7,633
Client direct bill(1)	4,275		4,371		7,725		7,367
Other(2)	108		94		207		129
Total revenue	$	19,941	$	17,202	$	37,247	$	32,700

(1)Includes hospitals, other laboratories, etc.

(2)Includes patient self-pay.

Cash, Cash Equivalents and Restricted Cash

The Company considers all highly liquid investments purchased with a remaining maturity date of three months or less upon acquisition to be cash equivalents. These investments are stated at cost, which approximates fair value.

The Company has an arrangement with a financial institution with which it has an existing banking relationship, whereby in exchange for the issuance of corporate credit cards, the Company agreed to obtain a certificate of deposit with this financial institution in the amount of $0.2 million as collateral for the balances borrowed on these cards (the Credit Card Program). The Company has classified the value of this certificate of deposit (including all interest earned thereon) within other assets in the accompanying balance sheets. The Company has the right to terminate the Credit Card Program at any time. Upon termination of the Credit Card Program and repayment of all outstanding balances owed, the Company may redeem the certificate of deposit (and all interest earned thereon).

Cash, cash equivalents and restricted cash presented in the accompanying condensed statements of cash flows consist of the following (in thousands):


	June 30, 2026		December 31, 2025
Cash and cash equivalents	$	24,588	$	32,220
Restricted cash	200		200
Total cash, cash equivalents and restricted cash	$	24,788	$	32,420

Long-Lived Assets

The Company’s long-lived assets are comprised principally of its property and equipment and operating lease assets. The Company amortizes all finite-lived intangible assets over their respective estimated useful lives. Operating lease assets are amortized over the term of the leases. In considering whether long-lived assets are impaired, the Company combines its long-lived assets into groupings, a determination which is made principally on the basis of whether the assets are specific to a particular test offered or technology being developed. If the Company identifies a change in the circumstances related to its long-lived assets that indicates the carrying value of any such asset may not be recoverable, the Company will perform an impairment analysis. A long-lived asset is deemed to be impaired when the undiscounted cash flows expected to be generated by the asset (or asset group) are less than the asset’s carrying amount. Management’s estimates of future cash flows are impacted by projected test volume and levels of reimbursement, as well as expectations related to the future cost structure of the entity. Any required impairment loss would be measured as the amount by which the asset’s carrying value exceeds its fair value, and would be recorded as a reduction in the carrying value of the related asset and a charge to operating expense.

Revenue Recognition

Substantially all of the Company's revenue has been derived from sales of its testing products and is primarily comprised of a high volume of relatively low-dollar transactions. The Company primarily markets its testing products to rheumatologists and their physician assistants in the United States. The healthcare professionals who order the Company's testing products and to whom test results are reported are generally not responsible for payment for these products. The parties that pay for these services (each, a payor) consist of commercial payors (healthcare insurers), government payors (primarily Medicare and Medicaid), client payors (hospitals, other laboratories, etc.) and patient self-pay.

The Company recognizes revenue in accordance with Accounting Standards Codification (ASC) Topic 606, Revenue from Contracts with Customers (ASC 606) and follows a five-step process to determine the amount and timing of revenue recognized: (1) identify the contract with the customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to performance obligations in the contract, and (5) recognize revenue when (or as) the performance obligation is satisfied. The Company's service is a single performance obligation that is completed upon the delivery of test results to the prescribing physician which triggers revenue recognition.

Payors are generally billed at the Company's list price, unless a separate pricing contract is in place. Net revenues recognized consist of amounts billed net of allowances for differences between amounts billed and the estimated consideration the Company expects to receive from such payors. The process for estimating revenues and the ultimate collection of accounts receivable involves significant judgment and estimation. The Company follows a standard process, which considers historical denial and collection experience, insurance reimbursement policies and other factors, to estimate allowances and implicit price concessions. Adjustments are recorded in the current period as changes in estimates occur. Further adjustments to the allowances, based on actual receipts, are recorded upon settlement. Included in revenues for the three months ended June 30, 2026 and 2025 were net revenue increases of $1.3 million and $0.1 million, respectively, associated with changes in estimated variable consideration related to performance obligations satisfied in previous periods. Included in revenues for the six months ended June 30, 2026 and 2025 were net revenue increases of $2.1 million and $1.0 million, respectively, associated with changes in estimated variable consideration related to performance obligations satisfied in previous periods. The transaction price is estimated using an expected value method on a portfolio basis.

Variable consideration is included in the transaction price only to the extent it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainties with respect to the amount are resolved. The Company's portfolios are grouped per payor (i.e. each individual commercial payor, Medicare, Medicaid, client payors, patient self-pay, etc.) and per test. Consideration may be constrained and excluded from the transaction price in situations where there is no contractually agreed upon reimbursement coverage or in absence of a predictable pattern and history of collectability with a payor. Accordingly, in such situations revenues are recognized on the basis of actual cash collections. Additionally, from time to time, the Company may issue refunds to payors for overpayments or amounts billed in error. Any refunds are accounted for as reductions in revenues in the condensed statements of operations as an element of variable consideration. The estimated expected refunds are accrued as a liability on the Company’s condensed balance sheets.

Collection of the Company's net revenues from payors is normally a function of providing complete and correct billing information, along with any requested medical or other claims-related information to the healthcare insurers. This generally occurs within 30 to 90 days of billing, however, the amount and timing of any reimbursements or collections for the Company's billed tests may vary by payor and other circumstances. Contracts do not contain significant financing components based on the typical period of time between performance of services and collection of consideration.

Amounts received prior to satisfying the above revenue recognition criteria are recognized as deferred revenue until all applicable revenue recognition criteria are met. Deferred revenue represents the portion of payments received that have not been earned. Throughout the year ended December 31, 2025, the Company entered into various work orders to perform diagnostic testing services, including identifying and evaluating biomarkers. The Company received nonrefundable, upfront payments for these services. The Company had deferred revenue related to these contracts of $1.5 million and $0.7 million as of June 30, 2026 and December 31, 2025, respectively. The Company recognized revenue of $0.4 million and $0.2 million out of the beginning deferred revenue balance during the six months ended June 30, 2026 and 2025, respectively. The Company expects to recognize revenue from unfulfilled performance obligations associated with service contracts within one year or less.

Accounts Receivable and Allowance for Credit Losses

The Company accrues an allowance for credit losses against its accounts receivable based on management’s current estimate of amounts that will not be collected. Management’s estimates are typically based on historical loss information adjusted for current conditions. The Company generally does not perform evaluations of the financial condition of the Company's customers and generally does not require collateral. The allowance for credit losses was zero as of June 30, 2026 and December 31, 2025. Adjustments for implicit price concessions attributable to variable consideration, as discussed above, are incorporated into the measurement of the accounts receivable balances and are not part of the allowance for credit losses. Accounts receivable was $12.4 million and $10.9 million at June 30, 2026 and December 31, 2025, respectively.

Loan Commitment Fees

Loan commitment fees are generally included as a reduction of the proceeds from the outstanding debt. If there were no borrowings drawn on the related credit facility, the loan commitment fees are classified as assets until the related debt is drawn. The Company’s loan commitment fee is comprised of an upfront cash payment and a contingent obligation to issue future warrants to Perceptive Credit Holdings IV, LP (Perceptive) in connection with the Credit Agreement and Guaranty, dated April 25, 2025 (Credit Agreement). The Company recorded $0.5 million in prepaid expenses and other current assets on the condensed balance sheets as of June 30, 2026. As the Company is not reasonably certain it will draw on the future debt tranches, the loan commitment fees are amortized ratably into interest expense over the outstanding draw periods. During the three and six months ended June 30, 2026, the Company recognized $0.2 million and $0.4 million, respectively, in non-cash interest expense related to the amortization of the loan commitment fees within the Company's condensed statements of operations. During each of the three and six months ended June 30, 2025, the Company recognized $0.2 million in non-cash interest expense related to the amortization of the loan commitment fees within the Company's condensed statements of operations. During the six months ended June 30, 2026, the Company recognized a loss of $0.4 million within other income (expense), net on the condensed statements of operations as a result of accelerating the amortization of the loan commitment fees asset recorded in connection with the Tranche C Loan (as defined below), which was terminated pursuant to the First Amendment (as defined below). See “Note 4. Borrowings—Perceptive Term Loan Facility” for more information.

Stock-Based Compensation

The Company recognizes compensation expense for all stock-based awards to employees and directors based on the grant-date estimated fair values over the requisite service period of the awards (usually the vesting period) on a straight-line basis. The fair value of stock options and purchases under the Company's 2019 Employee Stock Purchase Plan (ESPP) is determined using the Black-Scholes-Merton (BSM) option pricing model, which requires management to make certain assumptions regarding a number of complex and subjective variables. Equity award forfeitures are recorded as they occur.

The BSM option pricing model incorporates various inputs, including the fair value of the Company's common stock, expected volatility, expected term and risk-free interest rates. Volatility is based on the Company's historical calculated volatility since being publicly traded. The Company computes the historical volatility data using the daily closing prices of the Company’s common stock during the equivalent period that approximates the calculated expected term of the stock options. The weighted-average expected term of options was calculated using the simplified method, as the Company has concluded that its stock option exercise history does not provide a reasonable basis upon which to estimate the expected term. The risk-free interest rate for periods within the contractual term of the option is based on the U.S. Treasury yield in effect at the time of grant. The dividend yield is zero, as the Company has never declared or paid dividends and has no plans to do so in the foreseeable future.

The fair value of each restricted stock unit (RSU) is determined on the grant date using the closing price of the Company's common stock on that date. The Company's RSUs generally vest in equal annual installments over four years from the date of grant or, for grants to new hires, date of hire. Vesting of the RSU is subject to the holder's continued service with the Company. The Company issues new shares of common stock to satisfy the RSUs upon vesting.

The Company grants certain performance-based restricted stock units (PSUs) to its executive officers as part of its long-term incentive plan. The PSUs vest based on the achievement of both pre-determined market conditions and service conditions over a specified performance period. The Company issues new shares of common stock to satisfy the PSUs upon vesting and the PSUs are not settleable for cash. The fair value of the Company's PSUs is determined on the grant date using a Monte Carlo simulation model.

Comprehensive Loss

Comprehensive loss is defined as a change in equity of a business enterprise during a period, resulting from transactions from nonowner sources. There have been no items qualifying as other comprehensive loss and, therefore, for all periods presented, the Company's comprehensive loss was the same as its reported net loss.

Net Loss Per Share

Basic net loss per share attributable to common stockholders is calculated by dividing the net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period. Diluted net loss per share attributable to common stockholders is computed by dividing the net loss attributable to common stockholders by the weighted-average number of common stock equivalents outstanding for the period determined using the treasury-stock and if-converted methods. The weighted-average number of shares used to compute basic and diluted shares includes shares issuable upon the exercise of pre-funded warrants at a nominal price. Potentially dilutive common stock equivalents are comprised of warrants for the purchase of common stock, stock options, RSUs and PSUs outstanding under the Company's 2019 Incentive Award Plan (the 2019 Plan) and shares of the Company's common stock pursuant to the ESPP. For each of the three and six months ended June 30, 2026 and 2025, there was no difference in the number of shares used to calculate basic and diluted shares outstanding as the inclusion of the potentially dilutive securities would be anti-dilutive.

Potentially dilutive securities not included in the calculation of diluted net loss per share, because to do so would be anti-dilutive, are as follows (in common stock equivalent shares):


	June 30, 2026	June 30, 2025
Warrants to purchase common stock	—	580,339
Common stock options	931,506	564,441
Restricted stock units	1,973,952	1,679,624
Performance stock units	800,000	—
Employee stock purchase plan	75,562	54,454
Total	3,781,020	2,878,858

Recent Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (FASB), or other standard setting bodies and adopted by the Company as of the specified effective date. Unless otherwise discussed, Accounting Standards Updates (ASU) not included in the Company’s disclosures were assessed and determined to be either not applicable or are not expected to have a material impact on the Company’s financial statements or disclosures.

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40) (ASU 2024-03). This update requires entities to include more detailed information about the types of expenses, including purchases of inventory, employee compensation, depreciation, amortization, and depletion, in commonly presented expense captions such as cost of sales, research and development, and selling, general and administrative expenses. ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027, with early adoption permitted. The Company determined that the adoption of this standard will not have a material impact on its financial statements.

Recently Adopted Accounting Standards

In July 2025, the FASB issued ASU 2025-05, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets (ASU 2025-05). ASU 2025-05 amends ASC 326-20 to provide a practical expedient related to the estimation of expected credit losses for current accounts receivable and current contract assets that arise from transactions accounted for under ASC 606. ASU 2025-05 is effective for annual periods beginning after December 15, 2025, and interim reporting periods within that annual period, with early adoption permitted. The Company adopted this standard in 2026 and determined that it did not have a material impact on the Company's financial statements.

Note 3. Other Financial Information

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consist of the following (in thousands):


	June 30, 2026		December 31, 2025
Diagnostic testing supplies	$	4,159	$	3,296
Prepaid maintenance and insurance contracts	1,161		1,302
Loan commitment fees	505		1,182
Other prepaid expenses and other current assets	37		38
Prepaid expenses and other current assets	$