
Part I - Financial Information Item 1. Condensed Consolidated Financial Statements (Unaudited) The unaudited condensed consolidated financial statements for June 30, 2025, reflect significant changes driven by the June 2025 IPO, including a substantial increase in cash, a shift from shareholders' deficit to positive equity, and strong revenue growth despite continued net losses - Net IPO proceeds of $459.5 million from 23,529,412 shares at $21.00, plus $68.9 million from over-allotment34 - All outstanding redeemable convertible preferred stock converted into 211,378,638 common shares upon IPO36 - A one-for-four reverse stock split of common stock was effective June 1, 2025, with all share and per-share data retroactively adjusted33 Condensed Consolidated Balance Sheets The balance sheet as of June 30, 2025, reflects significant financial improvement post-IPO, with cash increasing to $720.4 million and a $2.5 billion shareholders' deficit converting to $452.9 million positive equity Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash, cash equivalents, and restricted cash | $720,444 | $65,442 | | Total current assets | $833,319 | $215,729 | | Total assets | $955,058 | $343,734 | | Liabilities & Equity | | | | Total current liabilities | $90,180 | $165,423 | | Total liabilities | $502,154 | $620,921 | | Redeemable convertible preferred stock | $0 | $2,221,651 | | Total shareholders' equity (deficit) | $452,904 | $(2,498,838) | | Total liabilities, redeemable convertible preferred stock, and shareholders' equity (deficit) | $955,058 | $343,734 | Condensed Consolidated Statements of Operations and Comprehensive Loss For Q2 2025, total revenue increased 81.3% year-over-year to $181.4 million, but the company reported a net loss of $71.8 million, slightly higher than Q2 2024, due to increased operating and other IPO-related expenses Statement of Operations Summary (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | 6 Months 2025 | 6 Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $181,398 | $100,049 | $302,314 | $180,727 | | Loss from Operations | $(17,989) | $(67,011) | $(75,940) | $(159,234) | | Net Loss | $(71,790) | $(66,186) | $(174,370) | $(177,214) | | Net Loss per Share | $(7.97) | $(2.54) | $(12.80) | $(6.34) | - A $384.4 million deemed dividend on Series D preferred stock significantly increased net loss attributable to common shareholders for the three and six months ended June 30, 202514 Condensed Consolidated Statements of Cash Flows For the six months ended June 30, 2025, net cash used in operating activities improved to $24.1 million, while financing activities provided $682.7 million, primarily from the IPO, resulting in a $654.7 million net increase in cash Cash Flow Summary for the Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(24,050) | $(136,851) | | Net cash provided by (used in) investing activities | $(4,075) | $57,050 | | Net cash provided by financing activities | $682,687 | $199,979 | | Net increase in cash, cash equivalents, and restricted cash | $654,659 | $120,191 | Notes to Condensed Consolidated Financial Statements The notes detail accounting policies and significant financial events, including the company's business as an AI TechBio and precision medicine firm, pre-IPO financing, IPO specifics, revenue recognition, and long-term debt, including a $400 million term loan - Revenue is primarily derived from Molecular profiling services (MI Profile and Caris Assure) and Pharma research and development services44 - In April 2025, the company raised $167.7 million through private financing, including convertible notes, warrants, and Series E and F preferred stock29 - As of June 30, 2025, a $400 million term loan was outstanding, due January 2028, with an interest rate of 10.8%169171 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management highlights the company's strong revenue growth driven by molecular profiling solutions and increased clinical case volumes, achieving positive Adjusted EBITDA in Q2 2025, with IPO proceeds significantly strengthening liquidity for future operations and R&D investments - Global annual clinical case volume grew 26% year-over-year through Q2 2025203 - The launches of Caris Assure (Q1 2024) and MI Cancer Seek (Q1 2025) are anticipated as significant growth drivers203 Key Financial Metrics (in millions) | Metric | Q2 2025 | Q2 2024 | 6 Months 2025 | 6 Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $181.4 | $100.0 | $302.3 | $180.7 | | Net Loss | $(71.8) | $(66.2) | $(174.4) | $(177.2) | | Adjusted EBITDA | $16.7 | $(50.9) | $(19.5) | $(121.0) | | Free Cash Flow | N/A | N/A | $(28.1) | $(141.2) | Results of Operations Q2 2025 revenue increased 81.3% year-over-year to $181.4 million, primarily from 85.9% growth in Molecular Profiling services due to higher ASPs and increased clinical case volume, while operating expenses rose due to IPO-related stock-based compensation Revenue Comparison - Q2 2025 vs Q2 2024 (in thousands) | Revenue Stream | Q2 2025 | Q2 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Molecular profiling services | $162,924 | $87,656 | $75,268 | 85.9% | | Pharma research and development services | $18,474 | $12,393 | $6,081 | 49.1% | | Total revenue | $181,398 | $100,049 | $81,349 | 81.3% | - Molecular Profiling revenue growth was driven by higher MI Profile ASP (+$50.3 million), increased MI Profile volume (+$14.3 million), and Caris Assure volume and ASP growth (+$10.7 million)234 - General and administrative expenses increased by $23.3 million (56.7%) in Q2 2025, primarily due to a $20.3 million increase in IPO-related stock-based compensation242 Liquidity and Capital Resources As of June 30, 2025, the company held $718.9 million in cash and equivalents, with IPO proceeds and existing capital expected to fund operations for at least the next 12 months, alongside $400 million in outstanding term loan debt maturing in 2028 - As of June 30, 2025, the company had $718.9 million in cash and cash equivalents and an accumulated deficit of $2.7 billion280281 - Net cash provided by financing activities for the first six months of 2025 was $682.7 million, primarily from IPO net proceeds ($528.5 million) and pre-IPO financing288 - The company has a $400.0 million term loan due January 2028, with an interest rate of 10.8% as of June 30, 2025290292 Item 3. Quantitative and Qualitative Disclosures About Market Risk The company's primary market risks include interest rate risk on its $400 million variable-rate debt, where a 100 basis point increase would raise annual interest expense by $4.0 million, while foreign currency and inflation risks are currently not significant - The company faces interest rate risk on its $400.0 million variable-rate debt, where a 100 basis point increase would raise annual interest expense by $4.0 million312 - Foreign currency risk is minimal as substantially all revenue is generated in the United States314 Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were ineffective as of June 30, 2025, due to a material weakness in internal control over financial reporting, specifically a lack of qualified accounting resources, with remediation efforts underway - Disclosure controls and procedures were not effective as of June 30, 2025, due to a material weakness in internal control over financial reporting317 - The material weakness stems from insufficient qualified accounting resources with technical expertise for complex transactions317 - Remediation efforts include hiring experienced accounting and finance personnel and implementing enhanced review controls319 Part II - Other Information Item 1. Legal Proceedings In March 2025, the company received a Civil Investigative Demand from the U.S. Department of Justice regarding a False Claims Act investigation into Medicare's 14-day rule compliance, with the outcome currently uncertain - In March 2025, the company received a Civil Investigative Demand from the U.S. Department of Justice for a False Claims Act investigation322 - The investigation focuses on compliance with Medicare's "14-day rule" for date of service322 Item 1A. Risk Factors This section details significant risks, including intense competition, a history of substantial losses, reliance on product market acceptance, uncertain third-party payer reimbursement, potential LDT regulatory changes, supply chain dependency, cybersecurity threats, significant indebtedness, CEO voting power concentration, and internal control weaknesses - The company has a history of significant losses, with a net loss of $174.4 million for the first six months of 2025 and an accumulated deficit of $2.7 billion as of June 30, 2025332 - Uncertainty of coverage and reimbursement from third-party payers, including Medicare, poses a significant commercial risk360 - Reliance on Illumina as the sole supplier for NGS instruments and reagents presents a significant supply chain risk385 - The Founder, Chairman, and CEO, David D. Halbert, beneficially owns approximately 44.1% of outstanding common stock, significantly influencing shareholder matters646 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section details unregistered equity sales, including $30.0 million in convertible notes and preferred stock issued in April 2025 that converted to common stock upon the IPO, and the use of $519.5 million net proceeds from the June 2025 IPO - In Q2 2025, the company issued convertible notes, Series E & F Preferred Stock, and warrants in unregistered transactions, all converting to common stock upon the IPO685692 - The June 2025 IPO generated $519.5 million in net proceeds after deducting discounts and expenses687 Item 5. Other Information On August 8, 2025, Caris MPI, Inc. extended its Phoenix, Arizona clinical laboratory lease until August 31, 2031, with no Rule 10b5-1 trading arrangements adopted or terminated by directors or officers during the quarter - On August 8, 2025, the company extended the lease for its Phoenix, Arizona clinical laboratory until August 31, 2031695