gral-20250331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

___________________________________________

FORM 10-Q

___________________________________________

(Mark One)


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

For the quarterly period ended March 31, 2025


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

For the transition period from to

Commission file number 001-42045

___________________________________________

GRAIL, Inc.

(Exact name of registrant as specified in its charter)

___________________________________________


Delaware			86-3673636
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)
1525 O’Brien Drive Menlo Park, California			94025
(Address of Principal Executive Offices)			(Zip Code)

(833) 694-2553

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	GRAL	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes x No o

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

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).

Yes o No ☒

As of May 12, 2025, the registrant had 35,973,494 shares of common stock, par value $0.001 per share, outstanding.

TABLE OF CONTENTS


			Page
Cautionary Note Regarding Forward-Looking Statements			1

Part I - Financial Information
Item 1. Financial Statements			2
Condensed Consolidated Balance Sheets			2
Condensed Consolidated Statements of Operations			3
Condensed Consolidated Statements of Comprehensive Loss			4
Condensed Consolidated Statements of Stockholders’/Member’s Equity			5
Condensed Consolidated Statements of Cash Flows			6
Notes to Condensed Consolidated Statements			7
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations			20
Item 3. Quantitative and Qualitative Disclosures About Market Risk			36
Item 4. Controls and Procedures			36

Part II - Other Information
Item 1. Legal Proceedings			37
Item 1A. Risk Factors			37
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			44
Item 3. Defaults Upon Senior Securities			44
Item 4. Mine Safety Disclosures			44
Item 5. Other Information			44
Item 6. Exhibits			45

Signatures			46

Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q (this “Form 10-Q”) contains forward-looking statements. In some cases, you can identify these statements by forward-looking words such as “aim,” “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “potential,” “predict,” “should,” “would,” or “will,” the negative of these terms, and other comparable terminology. These forward-looking statements, which are subject to risks, uncertainties, and assumptions about us, may include expectations and projections of our future financial performance, future tests or products, technology, clinical studies, regulatory landscape, compliance and strategy, potential market opportunity, anticipated growth strategies, sufficiency of cash on hand to finance our business, cost savings, budgets and strategies, restructuring and stock-based compensation costs, impact of the restructuring on our operations and anticipated trends in our business.

These statements are only predictions based on our current expectations and projections about future events and trends. There are important factors that could cause our actual results, level of activity, performance, or achievements to differ materially and adversely from those expressed or implied by the forward-looking statements, including those factors discussed under the sections entitled “Risk Factors” in this Form 10-Q and in our Annual Report on Form 10-K (filed on March 5, 2025) for the year ended December 31, 2024 (the “2024 Form 10-K). You should specifically consider the numerous risks described under these sections. Moreover, we operate in a dynamic and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results, level of activity, performance, or achievements to differ materially and adversely from those contained in any forward-looking statements we may make.

Forward-looking statements relate to the future and, accordingly, are subject to inherent uncertainties, risks, and changes in circumstances that are difficult to predict and many of which are outside of our control. Although we believe the expectations and projections expressed or implied by the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance, or achievements. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Except to the extent required by law, we undertake no obligation to update any of these forward-looking statements after the date of this Form 10-Q to conform our prior statements to actual results or revised expectations or to reflect new information or the occurrence of unanticipated events.

Part I - Financial Information

Item 1. Financial Statements

GRAIL, Inc.

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited)

(amounts in thousands, except share and per share data)


	March 31, 2025		December 31, 2024
Assets
Current assets:
Cash and cash equivalents	$	133,895	$	214,234
Short-term marketable securities	540,688		549,236
Accounts receivable, net(1)	19,309		20,312
Supplies(2)	18,716		18,632
Prepaid expenses and other current assets(3)	15,047		17,447
Total current assets	727,655		819,861
Property and equipment, net(4)	64,615		69,061
Operating lease right-of-use assets	62,328		66,373
Restricted cash	3,349		3,349
Intangible assets, net	1,982,306		2,016,890

Other non-current assets	7,352		7,773
Total assets	$	2,847,605	$	2,983,307
Liabilities and stockholders’/member’s equity
Current liabilities:
Accounts payable(5)	$	5,769	$	4,844
Accrued liabilities(6)	53,724		57,241

Operating lease liabilities, current portion	12,973		13,260
Other current liabilities	2,511		1,580
Total current liabilities	74,977		76,925
Operating lease liabilities, net of current portion	51,344		54,881
Deferred tax liability, net	305,192		345,860
Other non-current liabilities	2,424		2,236
Total liabilities	433,937		479,902

Preferred stock, par value of $0.001 per share; 50,000,000 shares authorized, no shares issued and outstanding as of March 31, 2025 and December 31, 2024	—		—
Common stock $0.001 par value per share, 1,500,000,000 shares authorized, 35,296,858 shares issued and outstanding as of March 31, 2025, 33,893,409 shares issued and outstanding as of December 31, 2024	35		34
Additional paid-in capital	12,321,510		12,305,250

Accumulated other comprehensive income	1,666		1,451
Accumulated deficit	(9,909,543)		(9,803,330)
Total stockholders’/member’s equity	2,413,668		2,503,405
Total liabilities and stockholders’/member's equity	$	2,847,605	$	2,983,307

(1) Includes related party accounts receivable, net of $59 and $65, respectively.

(2) Includes related party supplies of $742 and $3,130, respectively.

(3) Includes related party prepaid expenses and other current assets of $70 and $77, respectively.

(4) Includes related party property and equipment, net of $1,978 and $2,227, respectively.

(5) Includes related party accounts payable of $5 and $— , respectively.

(6) Includes related party accrued liabilities of $75 and $104, respectively.

See accompanying notes to condensed consolidated financial statements.

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GRAIL, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

(amounts in thousands, except share and per share data)


	Three Months Ended
		March 31, 2025		March 31, 2024
Revenue:
Screening revenue(1)		$	29,133	$	23,539
Development services revenue		2,704		3,182
Total revenue		31,837		26,721
Costs and operating expenses:
Cost of screening revenue (exclusive of amortization of intangible assets)(2)		17,123		13,722
Cost of development services revenue(3)		1,171		1,436
Cost of revenue — amortization of intangible assets		33,472		33,472
Research and development(4)		53,625		101,625
Sales and marketing		34,979		46,819
General and administrative(5)		45,074		57,069

Total costs and operating expenses		185,444		254,143
Loss from operations		(153,607)		(227,422)
Other income:
Interest income		7,779		2,901
Other income (expense), net		(584)		42
Total other income, net		7,195		2,943
Loss before income taxes		(146,412)		(224,479)
Benefit from income taxes		40,199		5,565
Net loss		$	(106,213)	$	(218,914)
Net loss per share — Basic and Diluted		$	(3.10)	$	(7.05)
Weighted-average shares of common stock used in computing net loss per share:		34,308,435		31,049,148

(1) Includes related party screening revenue of $77 and $129, respectively.

(2) Includes related party cost of screening revenue of $1,511 and $2,669, respectively.

(3) Includes related party cost of development services revenue of $163 and $45, respectively.

(4) Includes related party research and development expenses of $1,396 and $4,802, respectively.

(5) Includes related party general and administrative expenses of $— and $51, respectively.

See accompanying notes to condensed consolidated financial statements.

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GRAIL, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(unaudited)

(amounts in thousands)


	Three Months Ended
		March 31, 2025		March 31, 2024
Net loss		$	(106,213)	$	(218,914)
Other comprehensive income (loss):
Change in net unrealized gain on marketable securities		(250)		—
Foreign currency translation adjustment		465		(52)
Comprehensive loss		$	(105,998)	$	(218,966)

See accompanying notes to condensed consolidated financial statements.

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GRAIL, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’/ MEMBER’S EQUITY

(unaudited)

(amounts in thousands, except share data)


	Common Stock
	Shares	Amount		Additional Paid in Capital		Accumulated Other Comprehensive Income		Accumulated Deficit		Total Stockholders’ Equity
Balance as of December 31, 2024	33,893,409	$	34	$	12,305,250	$	1,451	$	(9,803,330)	$	2,503,405
Net loss	—	—		—		—		(106,213)		(106,213)
Stock-based compensation expense	—	—		16,261		—		—		16,261
Other comprehensive income	—	—		—		215		—		215
Release of restricted stock units	1,403,449	1		(1)		—		—		—
Balance as of March 31, 2025	35,296,858	$	35	$	12,321,510	$	1,666	$	(9,909,543)	$	2,413,668

See accompanying notes to condensed consolidated financial statements.



	Member’s Equity		Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit		Total Member's Equity
Balance as of December 31, 2023	$	11,421,446	$	1,066	$	(7,776,325)	$	3,646,187
Net loss	—		—		(218,914)		(218,914)
Stock-based compensation expense	170		—		—		170
Other comprehensive loss	—		(52)		—		(52)
Contribution from member, net	312,000		—		—		312,000
Balance as of March 31, 2024	$	11,733,616	$	1,014	$	(7,995,239)	$	3,739,391

See accompanying notes to condensed consolidated financial statements.

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GRAIL, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW

(unaudited)

(amounts in thousands)


	Three Months Ended
	March 31, 2025		March 31, 2024
Cash flows from operating activities
Net loss	$	(106,213)	$	(218,914)
Adjustments to reconcile net loss to net cash used by operating activities:
Amortization of intangibles assets	34,584		34,584
Depreciation	4,695		5,413
Stock-based compensation expense	16,211		29,106
Cash payment for equity awards	—		(42,913)
Deferred income taxes	(40,199)		(4,805)
Amortization of discount on marketable securities	(6,375)		—

Bad debt expense	273		—
Other	484		53
Changes in operating assets and liabilities:
Accounts receivable, net(1)	730		1,914
Supplies(2)	(34)		117
Operating lease right-of-use assets and liabilities, net	221		559
Prepaid expenses and other assets(3)	2,821		(3,576)
Accounts payable(4)	895		(7,709)
Accrued and other liabilities(5)	(3,105)		(1,115)
Net cash used in operating activities	(95,012)		(207,286)

Cash flows from investing activities
Purchases of property and equipment	(62)		(2,548)
Purchases of marketable securities	(220,527)		—

Proceeds from maturities of marketable securities	235,200		—
Net cash provided by (used in) investing activities	14,611		(2,548)
Cash flows from financing activities




Cash funding received from Illumina	—		312,000


Net cash provided by financing activities	—		312,000
Effect of exchange rate changes on cash, cash equivalents, and restricted cash	62		(37)
Net (decrease) increase in cash, cash equivalents, and restricted cash	(80,339)		102,129
Cash, cash equivalents and restricted cash — beginning of period	217,583		101,512
Cash, cash equivalents and restricted cash — end of period	$	137,244	$	203,641
Represented by:
Cash and cash equivalents	$	133,895	$	199,723
Restricted cash	3,349		3,918
Total	$	137,244	$	203,641
Supplemental cash flow information:

Property and equipment included in accounts payable and accrued liabilities	(268)		(593)
Operating cash flows paid for operating leases, net	(4,377)		(5,004)

(1) Includes changes in related party accounts receivable of $6 and $24, respectively.

(2) Includes changes in related party supplies of $2,388 and $(115), respectively.

(3) Includes changes in related party prepaid and other current assets of $7 and $—, respectively.

(4) Includes changes in related party accounts payable of $5 and $2,121, respectively.

(5) Includes changes in related party accrued liabilities of $(29) and $243, respectively.

See accompanying notes to condensed consolidated financial statements.

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GRAIL, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

NOTE 1. ORGANIZATION AND DESCRIPTION OF BUSINESS

GRAIL, Inc. (“GRAIL” or the “Company”), headquartered in Menlo Park, California, is an innovative commercial-stage healthcare company focused on saving lives and shifting the paradigm of early cancer detection. The Company’s Galleri blood test is a commercially available screening test for early detection of multiple types of cancer. GRAIL’s common stock is listed under the ticker symbol “GRAL” on the Nasdaq Stock Exchange.

GRAIL was previously acquired by Illumina, Inc. (”Illumina”) in August 2021, at which point it became a 100% owned subsidiary of Illumina, and held separate as a part of binding hold separate commitments implemented pursuant to orders issued by the European Commission. GRAIL separated from Illumina on June 24, 2024, as described below. GRAIL was a limited liability company (“LLC”) from August 19, 2021 to June 21, 2024 when it was converted into a corporation (the “Conversion”) in anticipation of such separation.

Separation from Illumina

On June 24, 2024, (the “Distribution Date”), Illumina completed the previously announced spin-off of GRAIL (the “Spin-Off”). The Spin-Off was completed through a distribution of 85.5% of the Company’s outstanding common stock to the holders of record of Illumina’s common stock as of the close of business on June 13, 2024 (the “Distribution”), which resulted in the distribution of 31.0 million shares of common stock. As a result of the Distribution, the Company became an independent public entity. Illumina’s ownership of GRAIL reduced to 4,502,126 shares of common stock representing 14.5% ownership of the Company after the Spin-Off. Unless the context otherwise requires, references to the “Company” or “GRAIL”, refer to (i) GRAIL, LLC prior to the Conversion and (ii) GRAIL, Inc. and its subsidiaries following the Conversion.

In connection with the Spin-Off, the Company entered into or adopted agreements that provide a framework for the relationship between the Company and Illumina, including, but not limited to the following:

•Separation and Distribution Agreement — governed the terms and conditions of the Spin-Off and sets forth aspects of the Company’s and Illumina’s relationship following the Spin-Off. See Note 7 — Legal And Regulatory Proceedings for more information regarding the contingencies related to this agreement.

•Tax Matters Agreement — governs the respective rights, responsibilities and obligations of Illumina and the Company after the Spin-Off with respect to all tax matters and includes restrictions to preserve the tax-free status of the Distribution. See Note 10 — Taxes for more information regarding income taxes and Note 7 — Legal And Regulatory Proceedings regarding the contingencies related to this agreement.

•Employee Matters Agreement — addressed employment, compensation, and benefits matters, including the allocation and treatment of assets and liabilities relating to employees and compensation and benefits plans and programs in which GRAIL employees participate, as well as the treatment of cash-based incentive awards in connection with the Spin-Off.

•Stockholder and Registration Rights Agreement — governs the respective rights, responsibilities and obligations of Illumina and the Company after the Spin-Off with respect to Illumina’s continuing ownership of GRAIL common stock.

•Supply and Commercialization Agreement Amendment — amends the Company’s supply and commercialization agreement with Illumina, which governs the ongoing supply and commercial relationship, including licensing, royalty payments and intellectual property between GRAIL and Illumina. See Note 12 — Related Party Transactions for more information regarding the royalty arrangements with Illumina.

Illumina provided the Company with disposal funding (the “Disposal Funding”) in the amount of $932.3 million in accordance with the Separation and Distribution Agreement, subject to a clawback feature in the event that the Company (i) consummates a change in control transaction, sells or licenses substantially all of its assets

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GRAIL, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

or adopts a plan of liquidation (collectively, a “GRAIL Change of Control”), or (ii) (1) pays any dividend on, or makes any other distribution in respect of, any shares of its capital stock or other equity or voting interests (other than a stock dividend or a stock split), or otherwise consummates a return of capital from the Company to any of its equity holders or (2) redeems, purchases or otherwise acquires any of its outstanding shares of capital stock or other equity or voting interests (other than the acquisition of any shares in order to effectuate a “net settlement” transaction for the purposes of satisfying tax withholding obligations arising in connection with the grant, vesting, exercise and/or settlement of any outstanding incentive equity awards of GRAIL held by its current or former employees), in each case, prior to September 24, 2025 (the 15-month anniversary of the Distribution Date). If the Company consummates a transaction described in the foregoing clause (i), the Company must return to Illumina a cash amount decreasing over time calculated by reference to the number of months which have elapsed since the Distribution Date at the time of the public announcement of the event giving rise to the change of control. If the Company consummates a transaction described in the foregoing clause (ii), the Company must return to Illumina a cash amount equal to the payments made by the Company in connection with such transaction. The amount of clawback payments made cannot exceed the amount of the initial disposal funding. See Note 7 — Legal And Regulatory Proceedings — Contingencies for details.

Our Ability to Continue as a Going Concern

The accompanying condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The realization of assets and the satisfaction of liabilities in the normal course of business are dependent on, among other things, the Company’s ability to manage its net loss and to become profitable and operate profitably, to manage the Company’s negative cash flows

SEC Form 10-Q filed by GRAIL Inc.