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, ~~2022~~2023


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

For transition period from to

Commission File Number ~~001-39796~~001-40090

SOMALOGIC, INC.

(Exact name of registrant as specified in its charter)


Delaware						85-4298912
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification Number)

2945 Wilderness Place

Boulder, Colorado 80301

(303) 625-9000

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

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

Title of each class

Trading Symbol

Name of each exchange on which registered

Common Stock, $0.0001 par value

SLGC

Nasdaq Capital Market

Warrants to purchase Common Stock

SLGCW

Nasdaq Capital Market

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

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

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

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

☐

☒

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

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

As of August ~~5, 2022,~~10, 2023, there were approximately ~~183,453,347~~188,071,546 shares of the registrant's common stock outstanding.

TABLE OF CONTENTS


		Page

	Cautionary Note Regarding Forward-Looking Statements	1

	PART I—FINANCIAL INFORMATION
Item 1.	Condensed Consolidated Financial Statements	32
	Condensed Consolidated Balance Sheets	32
	Condensed Consolidated Statements of Operations and Comprehensive Loss	43
	Condensed Consolidated Statements of Stockholders' Equity	54
	Condensed Consolidated Statements of Cash Flows	76
	Notes to Condensed Consolidated Financial Statements	97
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2224
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3432
Item 4.	Controls and Procedures	3433
	PART II—OTHER INFORMATION
Item 1.	Legal Proceedings	3635
Item 1A.	Risk Factors	3635
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3635
Item 3.	Defaults Upon Senior Securities	3635
Item 4.	Mine Safety Disclosures	3635
Item 5.	Other Information	3635
Item 6.	Exhibits	3736

	Signatures	3837

Table of Contents

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

The information in this Quarterly Report on Form 10-Q includes “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. All statements, other than statements of historical fact included in or incorporated by reference into this Quarterly Report on Form 10-Q, regarding our strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects, plans and objectives of management are forward-looking statements. When used in this report, the words ““will be,” “will,” “expect,” “anticipate,” “continue,” “project,” “believe,” “plan,” “could,” “estimate,” “forecast,” “guidance,” “intend,” “may,” “plan,” “possible,” “potential,” “predict,” “pursue,” “should,” “target” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. These forward-looking statements are based on management’s current expectations and assumptions about future events and are based on currently available information as to the outcome and timing of future events.

These statements include, but are not limited to the following:

•the occurrence of any event, change or other circumstances, including the outcome of any legal proceedings that may be instituted against the Company;

•the ability to ~~maintain~~comply with the listing requirements of ~~the Company’s Common Stock on~~ the Nasdaq;

•the risk of disruption, including toin the Company’s information technology systems, to the Company’s current plans and operations;

•~~the ability to protect the Company’s intellectual property;~~

•~~the Company’s plans to engage in acquisition activities and the anticipated impact of such activities on the Company’s financial results;~~

•~~the impact of the procurement and budgetary cycles of customers;~~

•the ability to recognize the anticipated benefits of the Company’s business, which may be affected by, among other things, competition and the ability to grow and manage growth profitably and retain its key employees;

•costs related to the Company’s business;

•changes in applicable laws or regulations;

•the ability of the Company to raise financing in the future;

•the success, cost and timing of the Company’s product development, sales and marketing, and research and development activities;

•the ability to protect the Company’s intellectual property;

•the Company’s plans to engage in acquisition activities and the anticipated impact of such activities on the Company’s financial results;

•the impact of the procurement and budgetary cycles of customers;

•the Company’s ability to obtain and maintain regulatory approval for its products, and any related restrictions and limitations of any approved product;

•the Company’s ability to maintain existing license agreements and manufacturing arrangements;

•the Company’s ability to attract or retain sales and distribution partners;

•the Company’s ability to compete with other companies currently marketing or engaged in the development of products and services that serve customers engaged in proteomic analysis, many of which have greater financial and marketing resources than the Company;

•the size and growth potential of the markets for the Company’s products, and the ability of each to serve those markets, either alone or in partnership with others;

•the Company’s estimates regarding expenses, future revenue, capital requirements and needs for additional financing;

•the ability to use net operating losses and certain other tax attributes; and

•the Company’s financial ~~performance; and~~performance.

•~~the impact of the COVID-19 pandemic on the Company.~~

~~Table of Contents~~

The forward-looking statements contained in this Quarterly Report on Form 10-Q are based on the Company’s current expectations and beliefs concerning future developments and their potential effects on the Company. There can be no assurance that future developments affecting the Company will be those that the Company has anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond the Company’s control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described under section entitled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, ~~2021~~2022. Should one or more of these risks or uncertainties materialize, or should any of the assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. The Company will not and does not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

Table of Contents

PART 1 – FINANCIAL INFORMATION

Item 1. Financial Statements

SomaLogic, Inc.
Condensed Consolidated Balance Sheets
Unaudited

(in thousands, except share data)


		June 30, 2022		December 31, 2021			June 30, 2023		December 31, 2022
ASSETS	ASSETS					ASSETS
Current assets	Current assets					Current assets
Cash and cash equivalents	Cash and cash equivalents	$	418,182	$	439,488	Cash and cash equivalents	$	354,544	$	421,830
Investments	Investments	200,912		218,218		Investments	119,646		117,758
Accounts receivable, net	Accounts receivable, net	13,681		17,074		Accounts receivable, net	21,750		17,006
Inventory	Inventory	20,768		11,213		Inventory	15,123		13,897
Deferred costs of services	Deferred costs of services	8		462		Deferred costs of services	440		1,337
Prepaid expenses and other current assets	Prepaid expenses and other current assets	5,158		5,097		Prepaid expenses and other current assets	4,760		9,873
Total current assets	Total current assets	658,709		691,552		Total current assets	516,263		581,701
Non-current inventory	Non-current inventory	2,547		4,085		Non-current inventory	10,296		4,643
Property and equipment, net of accumulated depreciation of $16,448 and $15,244 as of June 30, 2022 and December 31, 2021, respectively		15,857		9,557
Accounts receivable, net of current portion						Accounts receivable, net of current portion	9,041		9,284
Property and equipment, net of accumulated depreciation and amortization of $21,390 and $17,899 as of June 30, 2023 and December 31, 2022, respectively						Property and equipment, net of accumulated depreciation and amortization of $21,390 and $17,899 as of June 30, 2023 and December 31, 2022, respectively	18,668		19,564
Other long-term assets	Other long-term assets	8,966		908		Other long-term assets	4,379		5,083

Intangible assets						Intangible assets	16,700		16,700
Goodwill						Goodwill	10,399		10,399
Total assets	Total assets	$	686,079	$	706,102	Total assets	$	585,746	$	647,374

LIABILITIES AND STOCKHOLDERS’ EQUITY	LIABILITIES AND STOCKHOLDERS’ EQUITY					LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities	Current liabilities					Current liabilities
Accounts payable	Accounts payable	$	19,076	$	15,089	Accounts payable	$	13,079	$	16,794
Accrued liabilities	Accrued liabilities	9,305		11,109		Accrued liabilities	10,926		20,678
Deferred revenue	Deferred revenue	5,300		3,021		Deferred revenue	5,083		3,383
Other current liabilities	Other current liabilities	1,250		66		Other current liabilities	2,413		2,477

Total current liabilities	Total current liabilities	34,931		29,285		Total current liabilities	31,501		43,332
Warrant liabilities	Warrant liabilities	8,005		35,181		Warrant liabilities	2,633		4,213
Earn-out liability		1,396		26,885

Deferred revenue, net of current portion	Deferred revenue, net of current portion	31,839		2,364		Deferred revenue, net of current portion	31,207		31,732

Other long-term liabilities	Other long-term liabilities	2,690		363		Other long-term liabilities	5,253		5,539
Total liabilities	Total liabilities	78,861		94,078		Total liabilities	70,594		84,816
Commitments and contingencies (Note 8)		0		0
Commitments and contingencies (No te 10)						Commitments and contingencies (No te 10)
Stockholders’ equity	Stockholders’ equity					Stockholders’ equity
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; no shares issued and outstanding at June 30, 2022 and December 31, 2021		—		—
Common stock, $0.0001 par value; 600,000,000 shares authorized; 183,453,324 and 181,552,241 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively		18		18
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; no shares issued and outstanding at June 30, 2023 and December 31, 2022						Preferred stock, $0.0001 par value; 1,000,000 shares authorized; no shares issued and outstanding at June 30, 2023 and December 31, 2022	—		—
Common stock, $0.0001 par value; 600,000,000 shares authorized; 188,071,445 and 187,647,973 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively						Common stock, $0.0001 par value; 600,000,000 shares authorized; 188,071,445 and 187,647,973 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively	19		19
Additional paid-in capital	Additional paid-in capital	1,134,024		1,110,991		Additional paid-in capital	1,182,645		1,171,122
Accumulated other comprehensive loss		(947)		(72)
Accumulated other comprehensive income (loss)						Accumulated other comprehensive income (loss)	17		(513)
Accumulated deficit	Accumulated deficit	(525,877)		(498,913)		Accumulated deficit	(667,529)		(608,070)
Total stockholders’ equity	Total stockholders’ equity	607,218		612,024		Total stockholders’ equity	515,152		562,558
Total liabilities and stockholders’ equity	Total liabilities and stockholders’ equity	$	686,079	$	706,102	Total liabilities and stockholders’ equity	$	585,746	$	647,374

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

Table of Contents

SomaLogic, Inc.
Condensed Consolidated Statements of Operations and Comprehensive Loss
Unaudited

(in thousands, except share and per share amounts)


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2022		2021		2022		2021			2023		2022		2023		2022
Revenue	Revenue									Revenue
Assay services revenue	Assay services revenue	$	10,931	$	16,236	$	29,731	$	30,809	Assay services revenue	$	16,597	$	10,931	$	35,016	$	29,731
Product revenue	Product revenue	714		462		1,167		655		Product revenue	2,909		714		4,095		1,167
Collaboration revenue	Collaboration revenue	762		762		1,525		1,525		Collaboration revenue	762		762		1,525		1,525
Other revenue	Other revenue	1,737		2,320		4,701		5,651		Other revenue	200		1,737		211		4,701
Total revenue	Total revenue	14,144		19,780		37,124		38,640		Total revenue	20,468		14,144		40,847		37,124
Operating expenses	Operating expenses									Operating expenses
Cost of assay services revenue	Cost of assay services revenue	6,571		7,656		17,951		13,811		Cost of assay services revenue	9,677		6,571		21,359		17,951
Cost of product revenue	Cost of product revenue	506		329		778		419		Cost of product revenue	1,498		506		2,132		778
Research and development	Research and development	17,636		8,590		31,436		16,708		Research and development	10,815		17,636		24,882		31,436
Selling, general and administrative	Selling, general and administrative	36,812		14,833		67,627		27,642		Selling, general and administrative	29,573		36,812		63,762		67,627
Total operating expenses	Total operating expenses	61,525		31,408		117,792		58,580		Total operating expenses	51,563		61,525		112,135		117,792
Loss from operations	Loss from operations	(47,381)		(11,628)		(80,668)		(19,940)		Loss from operations	(31,095)		(47,381)		(71,288)		(80,668)
Other income (expense)
Other income										Other income
Interest income and other, net	Interest income and other, net	833		69		1,039		71		Interest income and other, net	5,798		838		10,723		1,047
Interest expense		—		(148)		—		(1,322)

Change in fair value of warrant liabilities	Change in fair value of warrant liabilities	14,536		—		27,176		—		Change in fair value of warrant liabilities	527		14,536		1,580		27,176
Change in fair value of earn-out liability	Change in fair value of earn-out liability	9,027		—		25,489		—		Change in fair value of earn-out liability	—		9,027		15		25,489
Loss on extinguishment of debt, net		—		(1,630)		—		(1,630)
Total other income (expense)		24,396		(1,709)		53,704		(2,881)

Total other income										Total other income	6,325		24,401		12,318		53,712
Net loss before income tax provision										Net loss before income tax provision	$	(24,770)	$	(22,980)	$	(58,970)	$	(26,956)
Income tax provision										Income tax provision	(2)		(5)		(4)		(8)
Net loss	Net loss	$	(22,985)	$	(13,337)	$	(26,964)	$	(22,821)	Net loss	$	(24,772)	$	(22,985)	$	(58,974)	$	(26,964)

Other comprehensive loss
Net unrealized loss on available-for-sale securities		$	(209)	$	14	$	(861)	$	8
Foreign currency translation (loss) gain		(11)		—		(14)		1
Total other comprehensive (loss) gain		(220)		14		(875)		9
Other comprehensive income (loss)										Other comprehensive income (loss)
Net unrealized gain (loss) on available-for-sale securities										Net unrealized gain (loss) on available-for-sale securities	$	177	$	(209)	$	528	$	(861)
Foreign currency translation gain (loss)										Foreign currency translation gain (loss)	4		(11)		2		(14)
Total other comprehensive income (loss)										Total other comprehensive income (loss)	181		(220)		530		(875)
Comprehensive loss	Comprehensive loss	$	(23,205)	$	(13,323)	$	(27,839)	$	(22,812)	Comprehensive loss	$	(24,591)	$	(23,205)	$	(58,444)	$	(27,839)

Net loss per share, basic and diluted	Net loss per share, basic and diluted	$	(0.13)	$	(0.12)	$	(0.15)	$	(0.20)	Net loss per share, basic and diluted	$	(0.13)	$	(0.13)	$	(0.32)	$	(0.15)
Weighted-average shares outstanding, basic and diluted		183,143,391		114,904,241		182,599,949		114,691,007
Weighted-average shares outstanding used to compute net loss per share, basic and diluted										Weighted-average shares outstanding used to compute net loss per share, basic and diluted	186,741,112		183,143,391		186,633,391		182,599,949

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

Table of Contents

SomaLogic, Inc.
Condensed Consolidated Statements of Stockholders’ Equity
Unaudited

(in thousands, except share amounts)


	Three Months Ended June 30, 2023
	Common Stock			Additional Paid-In Capital	Accumulated Other Comprehensive Income (Loss)	Accumulated Deficit		Total Stockholders’ Equity
	Shares	Amount







Balance at March 31, 2023	187,945,232	$	19			$	1,178,212	$	(164)	$	(642,757)	$	535,310
Issuance of Common Stock upon exercise of options	12,608	—				27		—		—		27
Shares issued under employee stock purchase plan	113,605	—				223		—		—		223
Stock-based compensation	—	—				4,183		—		—		4,183

Net unrealized gain on available-for-sale securities	—	—				—		177		—		177
Foreign currency translation gain	—	—				—		4		—		4
Net loss	—	—				—		—		(24,772)		(24,772)
Balance at June 30, 2023	188,071,445	$	19			$	1,182,645	$	17	$	(667,529)	$	515,152


	Three Months Ended June 30, 2022
	Common Stock			Additional Paid-In Capital	Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit		Total Stockholders’ Equity
	Shares	Amount










Balance at March 31, 2022	182,176,926	$	18		$	1,120,910	$	(727)	$	(502,892)	$	617,309

Issuance of Common Stock upon exercise of options	1,241,871	—			3,510		—		—		3,510
Shares issued under employee stock purchase plan	34,527	—			133		—		—		133

Stock-based compensation	—	—			9,471		—		—		9,471



Net unrealized loss on available-for-sale securities	—	—			—		(209)		—		(209)
Foreign currency translation loss	—	—			—		(11)		—		(11)
Net loss	—	—			—		—		(22,985)		(22,985)
Balance at June 30, 2022	183,453,324	$	18		$	1,134,024	$	(947)	$	(525,877)	$	607,218

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

Table of Contents

SomaLogic, Inc.
Condensed Consolidated Statements of Stockholders’ Equity
Unaudited

(in thousands, except share amounts)


		Three Months Ended June 30, 2022													Six Months Ended June 30, 2023
		Common Stock			Treasury Stock				Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit			Total Stockholders’ Equity (Deficit)		Common Stock									Additional Paid-In Capital	Accumulated Other Comprehensive Income (Loss)	Accumulated Deficit	Total Stockholders’ Equity
		Shares	Amount			Shares		Amount													Shares			Amount								Total Stockholders’ Equity

Balance at March 31, 2022		182,176,926	$	18			—		$	—	$	1,120,910	$	(727)		$	(502,892)				$	617,309
Balance at December 31, 2022																						Balance at December 31, 2022	187,647,973		$	19				$	1,171,122				$	(513)			$	(608,070)			$	562,558
Issuance of Common Stock upon vesting of RSUs																						Issuance of Common Stock upon vesting of RSUs	185,863		—					—			—				—				—
Issuance of Common Stock upon exercise of options	Issuance of Common Stock upon exercise of options	1,241,871	—				—		—		3,510		—			—			3,510			Issuance of Common Stock upon exercise of options	124,004		—					199			—				—				199
Shares issued under employee stock purchase plan	Shares issued under employee stock purchase plan	34,527	—				—		—		133		—			—			133			Shares issued under employee stock purchase plan	113,605		—					223			—				—				223

Stock-based compensation	Stock-based compensation	—	—				—		—		9,471		—			—			9,471			Stock-based compensation	—		—					11,101			—				—				11,101

Net unrealized loss on available-for-sale securities		—	—				—		—		—		(209)			—			(209)
Foreign currency translation loss		—	—				—		—		—		(11)			—			(11)
Impact of adoption of ASC 326																						Impact of adoption of ASC 326	—		—					—			—				(485)				(485)
Net unrealized gain on available-for-sale securities																						Net unrealized gain on available-for-sale securities	—		—					—			528				—				528
Foreign currency translation gain																						Foreign currency translation gain	—		—					—			2				—				2
Net loss	Net loss	—	—				—		—		—		—			(22,985)			(22,985)			Net loss	—		—					—			—				(58,974)				(58,974)
Balance at June 30, 2022		183,453,324	$	18			—		$	—	$	1,134,024	$	(947)		$	(525,877)		$	607,218
Balance at June 30, 2023																						Balance at June 30, 2023	188,071,445		$	19				$	1,182,645		$	17			$	(667,529)			$	515,152


		Three Months Ended June 30, 2021															Six Months Ended June 30, 2022
		Common Stock			Treasury Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit		Total Stockholders’ Equity (Deficit)			Common Stock			Additional Paid-In Capital	Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit		Total Stockholders’ Equity
		Shares	Amount		Shares	Amount											Shares	Amount

Balance at March 31, 2021		74,166,739	$	742	(131,344)	$	(408)	$	398,910	$	(7)	$	(420,850)	$	(21,613)
Retrospective application of recapitalization		40,659,113	(731)		131,344	408		202,439		—		—		202,116
Balance at March 31, 2021		114,825,852	11		—	—		601,349		(7)		(420,850)		180,503
Balance at December 31, 2021																Balance at December 31, 2021	181,552,241	$	18		$	1,110,991	$	(72)	$	(498,913)	$	612,024

Issuance of Common Stock upon exercise of options	Issuance of Common Stock upon exercise of options	545,677	—		—	—		1,915		—		—		1,915		Issuance of Common Stock upon exercise of options	1,866,556	—			4,752		—		—		4,752
Shares issued under employee stock purchase plan																Shares issued under employee stock purchase plan	34,527	—			133		—		—		133

Issuance of Common Stock for services	Issuance of Common Stock for services	—	—		—	—		150		—		—		150		Issuance of Common Stock for services	—	—			50		—		—		50
Stock-based compensation	Stock-based compensation	—	—		—	—		4,614		—		—		4,614		Stock-based compensation	—	—			18,098		—		—		18,098

Net unrealized gain on available-for-sale securities		—	—		—	—		—		14		—		14

Net unrealized loss on available-for-sale securities																Net unrealized loss on available-for-sale securities	—	—			—		(861)		—		(861)
Foreign currency translation loss																Foreign currency translation loss	—	—			—		(14)		—		(14)
Net loss	Net loss	—	—		—	—		—		—		(13,337)		(13,337)		Net loss	—	—			—		—		(26,964)		(26,964)
Balance at June 30, 2021		115,371,529	$	11	—	$	—	$	608,028	$	7	$	(434,187)	$	173,859
Balance at June 30, 2022																Balance at June 30, 2022	183,453,324	$	18		$	1,134,024	$	(947)	$	(525,877)	$	607,218

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

~~Table of Contents~~

SomaLogic, Inc.
Condensed Consolidated Statements of Stockholders’ Equity
Unaudited

~~(in thousands, except share amounts)~~

Six Months Ended June 30, 2022
Common Stock Treasury Stock Additional Paid-In Capital Accumulated Other Comprehensive Income (Loss) Accumulated Deficit Total Stockholders’ Equity (Deficit)
Shares Amount Shares Amount
Balance at December 31, 2021 181,552,241 $ 18 — $ — $ 1,110,991 $ (72) $ (498,913) $ 612,024
Issuance of Common Stock upon exercise of options 1,866,556 — — — 4,752 — — 4,752
Shares issued under employee stock purchase plan 34,527 — — — 133 — — 133
Issuance of Common Stock for services — — — — 50 — — 50
Stock-based compensation — — — — 18,098 — — 18,098
Net unrealized loss on available-for-sale securities — — — — — (861) — (861)
Foreign currency translation loss — — — — — (14) — (14)
Net loss — — — — — — (26,964) (26,964)
Balance at June 30, 2022 183,453,324 $ 18 — $ — $ 1,134,024 $ (947) $ (525,877) $ 607,218

Six Months Ended June 30, 2021
Common Stock Treasury Stock Additional Paid-In Capital Accumulated Other Comprehensive Income (Loss) Accumulated
Deficit Total Stockholders’ Equity (Deficit)
Shares Amount Shares Amount
Balance at December 31, 2020 73,481,228 $ 735 (113,220) $ (352) $ 394,786 $ (2) $ (411,366) $ (16,199)
Retrospective application of recapitalization 40,785,287 (724) 113,220 352 202,488 — — 202,116
Balance at December 31, 2020 114,266,515 $ 11 — $ — $ 597,274 $ (2) $ (411,366) $ 185,917
Issuance of Common Stock upon exercise of options 957,466 — — — 2,792 — — 2,792
Issuance of Common Stock for services 162,737 — — — 264 — — 264
Stock-based compensation — — — — 7,754 — — 7,754
Surrender of shares in cashless exercise (15,189) — — — (56) — — (56)
Net unrealized gain on available-for-sale securities — — — — — 8 — 8
Foreign currency translation gain — — — — — 1 — 1
Net loss — — — — — — (22,821) (22,821)
Balance at June 30, 2021 115,371,529 $ 11 — $ — $ 608,028 $ 7 $ (434,187) $ 173,859

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

Table of Contents

SomaLogic, Inc.
Condensed Consolidated Statements of Cash Flows
Unaudited

(in thousands)

Six Months Ended June 30,
2022 2021
Operating activities
Net loss $ (26,964) $ (22,821)
Adjustments to reconcile net loss to cash used in operating activities:
Stock-based compensation expense 18,131 8,016
Depreciation and amortization 1,718 1,377
Amortization of debt issuance costs, discounts and premiums — 258
Noncash lease expense (746) —
Change in fair value of compound derivative liability — 7
Change in fair value of warrant liabilities (27,176) —
Change in fair value of earn-out liability (25,489) —
Amortization of premium on available-for-sale securities, net 82 155
Provision for excess and obsolete inventory 142 385
Provision (recovery) for doubtful accounts 17 (36)
Loss on extinguishment of debt, net — 1,630
Paid-in-kind interest — 165
Other 6 7
Changes in operating assets and liabilities:
Accounts receivable 3,376 3,919
Inventory (8,159) 109
Deferred costs of services 454 (271)
Prepaid expenses and other current assets (64) (570)
Other long-term assets 1,182 —
Accounts payable 3,454 172
Deferred revenue 31,754 2,502
Accrued and other liabilities (2,655) (877)
Payment of paid-in-kind interest on extinguishment of debt — (752)
Net cash used in operating activities (30,937) (6,625)
Investing activities
Proceeds from sale of property and equipment — 8
Purchase of property and equipment (7,477) (962)
Purchase of available-for-sale securities (112,287) (102,106)
Proceeds from sales and maturities of available-for-sale securities 128,650 30,872
Net cash provided by (used in) investing activities 8,886 (72,188)
Financing activities
Repayment of long-term debt — (36,512)
Payment of deferred transaction costs — (4,686)
Proceeds from exercise of stock options 4,885 2,738
Net cash provided by (used in) financing activities 4,885 (38,460)
Effect of exchange rates on cash, cash equivalents and restricted cash (20) (3)
Net decrease in cash, cash equivalents and restricted cash (17,186) (117,276)
Cash, cash equivalents and restricted cash at beginning of period 440,268 165,194
Cash, cash equivalents and restricted cash at end of period $ 423,082 $ 47,918

~~Table of Contents~~

SomaLogic, Inc.
Condensed Consolidated Statements of Cash Flows
Unaudited

~~(in thousands)~~


		Six Months Ended June 30,					Six Months Ended June 30,
		2022		2021			2023		2022
Supplemental cash flow information:
Cash paid for interest		$	—	$	1,627
Operating activities						Operating activities
Net loss						Net loss	$	(58,974)	$	(26,964)
Adjustments to reconcile net loss to cash used in operating activities:						Adjustments to reconcile net loss to cash used in operating activities:
Stock-based compensation expense						Stock-based compensation expense	11,490		18,131
Depreciation and amortization						Depreciation and amortization	3,644		1,718

Noncash lease expense						Noncash lease expense	1,133		505
Change in fair value of warrant liabilities						Change in fair value of warrant liabilities	(1,580)		(27,176)
Change in fair value of earn-out liability						Change in fair value of earn-out liability	(15)		(25,489)
Change in fair value contingent consideration						Change in fair value contingent consideration	455		—
Amortization of premium (accretion of discount) on available-for-sale securities, net						Amortization of premium (accretion of discount) on available-for-sale securities, net	(1,085)		82

Provision (recovery) for expected credit losses						Provision (recovery) for expected credit losses	(6)		17
Cloud computing arrangement expenditures						Cloud computing arrangement expenditures	(910)		(5,339)

Other						Other	45		6
Changes in operating assets and liabilities:						Changes in operating assets and liabilities:
Accounts receivable						Accounts receivable	(4,980)		3,376
Inventory						Inventory	(6,879)		(8,017)
Deferred costs of services						Deferred costs of services	897		454
Prepaid expenses and other current assets						Prepaid expenses and other current assets	1,002		(64)
Other long-term assets						Other long-term assets	—		1,182
Accounts payable						Accounts payable	(3,706)		3,454
Deferred revenue						Deferred revenue	1,175		31,754
Accrued and other liabilities						Accrued and other liabilities	(9,761)		(2,655)
Operating lease liabilities						Operating lease liabilities	(1,227)		(1,251)
Net cash used in operating activities						Net cash used in operating activities	(69,282)		(36,276)
Investing activities						Investing activities
Purchases of property and equipment						Purchases of property and equipment	(2,148)		(2,138)
Capitalized external use software development costs						Capitalized external use software development costs	(248)		—
Purchases of available-for-sale securities						Purchases of available-for-sale securities	(98,072)		(112,287)
Proceeds from maturities of available-for-sale securities						Proceeds from maturities of available-for-sale securities	94,291		128,650
Proceeds from sales of available-for-sale securities						Proceeds from sales of available-for-sale securities	3,484		—
Net cash (used in) provided by investing activities						Net cash (used in) provided by investing activities	(2,693)		14,225
Financing activities						Financing activities

Proceeds from exercise of stock options and employee stock purchase plan						Proceeds from exercise of stock options and employee stock purchase plan	422		4,885
Net cash provided by financing activities						Net cash provided by financing activities	422		4,885
Effect of exchange rates on cash, cash equivalents and restricted cash						Effect of exchange rates on cash, cash equivalents and restricted cash	(12)		(20)
Net decrease in cash, cash equivalents and restricted cash						Net decrease in cash, cash equivalents and restricted cash	(71,565)		(17,186)
Cash, cash equivalents and restricted cash at beginning of period						Cash, cash equivalents and restricted cash at beginning of period	427,282		440,268
Cash, cash equivalents and restricted cash at end of period						Cash, cash equivalents and restricted cash at end of period	$	355,717	$	423,082

Supplemental disclosure of non-cash investing and financing activities:	Supplemental disclosure of non-cash investing and financing activities:					Supplemental disclosure of non-cash investing and financing activities:
Purchase of property and equipment included in accounts payable		$	533	$	910
Capital expenditures included in accounts payable						Capital expenditures included in accounts payable	$	626	$	865
Operating lease assets obtained in exchange for lease obligations	Operating lease assets obtained in exchange for lease obligations	4,134		—		Operating lease assets obtained in exchange for lease obligations	—		4,134
Surrender of shares in cashless exercise		—		56

Issuance of Common Stock for services	Issuance of Common Stock for services	50		262		Issuance of Common Stock for services	—		50
Transaction costs included in accounts payable		—		685
Forgiveness of Paycheck Protection Program loan and accrued interest		—		3,561

Reconciliation of cash, cash equivalents and restricted cash	Reconciliation of cash, cash equivalents and restricted cash					Reconciliation of cash, cash equivalents and restricted cash
Cash and cash equivalents	Cash and cash equivalents	$	418,182	$	47,138	Cash and cash equivalents	$	354,544	$	418,182
Restricted cash included in prepaid expenses and other current assets						Restricted cash included in prepaid expenses and other current assets	547		—
Restricted cash included in other long-term assets	Restricted cash included in other long-term assets	4,900		780		Restricted cash included in other long-term assets	626		4,900
Total cash, cash equivalents and restricted cash at end of period	Total cash, cash equivalents and restricted cash at end of period	$	423,082	$	47,918	Total cash, cash equivalents and restricted cash at end of period	$	355,717	$	423,082

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

Table of Contents

SomaLogic, Inc.
Notes to Condensed Consolidated Financial Statements

Unaudited

Note 1 — Description of Business

Organization and Operations

SomaLogic, Inc. (“SomaLogic” or the “Company”) ~~was originally incorporated in Delaware on December 15, 2020~~operates as a special purpose acquisition company under the name CM Life Sciences II Inc. (“CMLS II”) for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization, or similar business combination with one or more businesses.

On September 1, 2021 (the “Closing Date”), we consummated the business combination (the “Business Combination”) of SomaLogic Operating Co. Inc. (“SomaLogic Operating”), a Delaware corporation formed on October 13, 1999, wherein SomaLogic Operating became a wholly-owned subsidiary of CMLS II. In connection with the closing of the Business Combination, we changed our name from CM Life Sciences II Inc. to SomaLogic, Inc.

The Business Combination was accounted for as a reverse recapitalization in accordance with U.S. generally accepted accounting principles (“GAAP”). Under this method of accounting, CMLS II was treated as the “acquired” company for financial reporting purposes and SomaLogic Operating was treated as the accounting acquirer. Accordingly, for accounting purposes, our financial statements represent a continuation of the financial statements of SomaLogic Operating with the Business Combination being treated as the equivalent of SomaLogic Operating issuing stock for the net assets of CMLS II, accompanied by a recapitalization. The net assets of SomaLogic Operating are stated at historical cost, with no goodwill or other intangible assets recorded. Operations prior to the Business Combination in these financial statements are those of SomaLogic Operating. The recapitalization of our Common Stock is reflected retrospectively to the earliest period presented, and is utilized for calculating net loss per share in all prior periods presented.

Other than information discussed herein, there have been no significant changes to our description of business and Business Combination disclosed in our Annual Report on Form 10-K for the year ended December 31, 2021 (the “2021 Form 10-K”).

~~We are~~ a protein biomarker discovery ~~and clinical diagnostics~~ company that develops slow off-rate modified aptamers (“SOMAmers®”), which are modified nucleic acid-based protein binding reagents that are specific for their cognate protein, and offer proprietary SomaScan® services, which provide multiplex protein detection and quantification of protein levels in complex biological samples. The SOMAmers®/SomaScan® technology enables researchers to analyze various types of biological samples for protein biomarker signatures, which can be utilized in drug discovery and development. Biomarker discoveries from SomaScan® can lead to diagnostic applications in various areas of diseases including cardiovascular and metabolic disease, nonalcoholic steatohepatitis, and wellness, among others.

SomaLogic, Inc. was incorporated in Delaware on December 15, 2020 as a special purpose acquisition company (“SPAC”) under the name CM Life Sciences II Inc. (“CMLS II”) for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization, or similar business combination with one or more businesses.

On September 1, 2021, we consummated a business combination (the “SPAC Merger”) wherein SomaLogic Operating Co. Inc. (“SomaLogic Operating”), a Delaware corporation formed on October 13, 1999, became a wholly-owned subsidiary of CMLS II. In connection with the closing of the SPAC Merger, we changed our name from CM Life Sciences II Inc. to SomaLogic, Inc.

Unless the context otherwise requires, the terms “we”, “us”, “our”, “SomaLogic" and “the Company" refer to SomaLogic, Inc. and its consolidated subsidiaries.

~~COVID-19 Pandemic~~

The ~~Company is subject~~SPAC Merger and presentation of historical amounts and balances after the SPAC Merger are more fully described in Part II, Item 8 “Financial Statements and Supplementary Data - Note 3 to ~~ongoing uncertainty concerning~~ the ~~Coronavirus Disease 2019 (“COVID-19”~~Consolidated Financial Statements - Business Combinations” in our Annual Report on Form 10-K for the year ended December 31, 2022 (the “2022 Form 10-K”) ~~pandemic, including its length~~. Our Common Stock and ~~severity and its effect~~warrants to purchase Common Stock are listed on the ~~Company’s business. Our suppliers~~Nasdaq under the ticker symbols “SLGC” and “SLGCW”, respectively.

Other than information discussed herein, there have been ~~impacted by the COVID-19 pandemic, and we have experienced supply delays for certain equipment, instrumentation, and other supplies that we use for~~no significant changes to our ~~services and products.~~

~~The COVID-19 pandemic continues to be dynamic and near-term challenges across the economy remain. The Company expects continued volatility and unpredictability related to the impact~~description of ~~COVID-19 on~~ business ~~results. The Company continues to actively monitor the pandemic and will continue to take appropriate steps to mitigate the adverse impacts on the business posed by the on-going spread of COVID-19.~~disclosed in our 2022 Form 10-K.

Note 2 — Summary of Significant Accounting Policies

Basis of Presentation

The condensed consolidated financial statements and accompanying notes include the accounts of SomaLogic and our wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. The accompanying condensed consolidated financial statements have been prepared in accordance with ~~GAAP~~accounting principles generally accepted in the United States (“GAAP”) for interim financial ~~information.~~information and applicable rules and regulations of the U.S. Securities and Exchange Commission regarding financial reporting. All intercompany transactions and balances have been eliminated in consolidation. Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASUs”) of the Financial Accounting Standards Board (“FASB”).

Certain information and disclosures normally included in consolidated financial statements prepared in accordance with GAAP have been condensed or omitted. Accordingly, these condensed consolidated financial statements should be

~~Table of Contents~~

SomaLogic, Inc.
Notes to Condensed Consolidated Financial Statements

~~Unaudited~~

read in conjunction with our audited consolidated financial statements as of and for the year ended December 31, ~~2021~~2022 included in the ~~2021~~2022 Form 10-K.

These unaudited condensed consolidated financial statements have been prepared on the same basis as our annual consolidated financial statements and, in the opinion of management, reflect all adjustments, which include normal recurring adjustments considered necessary for a fair presentation of interim financial information, to present fairly ~~the Company’s~~our condensed consolidated financial position and ~~its~~our results of operations and cash flows. The results of operations for the periods presented are not necessarily indicative of the results to be expected for the year ending December 31, ~~2022~~2023 or for any other future annual or interim period.

Certain reclassifications have been made to prior period amounts to conform to the current presentation.

Revisions of prior period consolidated financial statements

Capitalized software development costs related to hosting arrangements that are service contracts should be classified as operating activities in the statement of cash flows. We made immaterial revisions to amounts previously reported on our condensed consolidated statement of cash flows for the six months ended June 30, 2022 in order to reclassify capitalized cloud computing arrangement expenditures from investing activities to operating activities. The table below reflects the revisions:

Table of Contents

SomaLogic, Inc.
Notes to Condensed Consolidated Financial Statements

Unaudited


	Six Months Ended June 30, 2022
(in thousands)	As Previously Reported		Reclassification		Revised
Operating Activities
Cloud computing arrangement expenditures	$	—	$	(5,339)	$	(5,339)
Net cash used in operating activities	$	(30,937)	$	(5,339)	$	(36,276)

Investing Activities
Purchases of property and equipment	$	(7,477)	$	5,339	$	(2,138)
Net cash provided by investing activities	$	8,886	$	5,339	$	14,225

Supplemental disclosure of non-cash investing and financing activities:
Purchase of property and equipment included in accounts payable	$	533	$	332	$	865

The prior misclassification of these capitalized cloud computing arrangement expenditures was not material to the previously issued condensed consolidated financial statements as of and for the six months ended June 30, 2022.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported ~~amounts of assets and liabilities at the date of~~in the financial statements and disclosed in the ~~reported amounts of revenues and expenses during the periods.~~accompanying notes. Actual results could differ materially from ~~those~~these estimates.

Significant estimates and assumptions ~~reflected~~which form the basis of amounts reported in ~~these~~the condensed consolidated financial statements include, but are not limited to, the standalone selling prices of our performance obligations; timing of revenue ~~recognition, inventory valuation, incremental borrowing rates used~~recognition; fair value measurements; net realizable value of inventory; income taxes; and the fair value of intangible assets acquired in ~~the determination of lease assets and liabilities, the valuation of stock-based compensation awards, warrant liabilities valuations, and earn-out liability valuations.~~business combinations. We base our estimates on current facts and circumstances, historical experience, forecasted results, and ~~anticipated results, trends, and~~various other ~~relevant~~ assumptions that we believe ~~are reasonable under the circumstances. Actual results could differ~~to be reasonable. We obtain reports from ~~these~~third-party valuation experts to inform and support estimates ~~and such differences could be material~~related to ~~the Company’s consolidated financial position and results of operations.~~certain fair value measurements.

Concentration of Credit Risk and Other Risks and Uncertainties

Financial instruments that potentially expose ~~the Company~~us to concentrations of credit risk consist principally of cash, ~~and~~ cash equivalents, investments, and accounts receivable. ~~Our cash~~Accounts receivable are unsecured. Cash and cash equivalents are deposited with ~~high-quality~~major financial institutions. ~~Deposits at these institutions may, at times, exceed~~In certain accounts, we maintain cash balances in excess of federally insured limits. We have not experienced losses in these accounts and believe that we are not exposed to significant risk.

Significant customers are those that represent more than 10% of ~~the Company’s~~ total revenues for any period presented in the condensed consolidated statements of operations and comprehensive loss, or that represent more than 10% of the gross accounts receivable ~~balances for the periods and~~balance as of ~~each~~either balance sheet date presented. ~~For each significant customer,~~The table below sets forth percentages of revenue ~~as a percentage of total revenues~~ and gross accounts receivable ~~as a percentage of total gross~~attributable to significant customers:


	Accounts Receivable		Revenue
	June 30, 2023	December 31, 2022	Three months ended June 30,		Six months ended June 30,
			2023	2022	2023	2022
Customer A	19%	11%	28%	*	36%	25%
Customer B(1)	43%	51%	*	*	*	10%
Customer C	*	*	14%	*	*	*

(1) All revenue related to accounts receivable ~~as of~~from Customer B was recognized during the ~~periods presented were as follows:~~

Accounts Receivable Revenue
June 30, 2022 December 31, 2021 Three months ended June 30, Six months ended June 30,
2022 2021 2022 2021
Customer A * 10% * 22% 25% 22%
Customer B * * * 14% * 25%
Customer C 28% 20% * 10% 10% 13%
Customer D * 26% * * * *
year ended December 31, 2022.

* less than 10%

International sales entail a variety of risks, including currency exchange fluctuations, longer payment cycles, and greater difficulty in accounts receivable collection. ~~The risks of international sales are mitigated in part by the fact that contracts are in U.S. dollars.~~ Customers outside the United States collectively represent 53% and 33% ~~and 31%~~ of ~~the Company’s~~our revenues for the three months ended June 30, ~~2022~~2023 and ~~2021,~~2022, respectively, and represent 59% and 40% ~~and 28%~~of our revenues for the six months ended June 30, ~~2022~~2023 and ~~2021,~~2022, respectively. Customers outside of the United States

Table of Contents

SomaLogic, Inc.
Notes to Condensed Consolidated Financial Statements

Unaudited

collectively represented ~~24%~~32% and ~~18%~~23% of ~~the Company’s~~our gross accounts receivable balance as of June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively.

Certain components included in our products require customization and are obtained from a single source or a limited number of suppliers.

~~Leases~~Business Combinations

~~Following~~We account for business combinations using the ~~adoption~~acquisition method of accounting in accordance with ASC 805, Business Combinations. Application of this method of accounting requires that (i) identifiable assets acquired (including identifiable intangible assets) and liabilities assumed generally be measured and recognized at fair value as of the acquisition date and (ii) the excess of the purchase price over the net fair value of identifiable assets acquired and liabilities assumed be recognized as goodwill. Transaction costs related to business combinations are expensed as incurred and classified as selling, general and administrative expenses in the condensed consolidated statements of operations and comprehensive loss. Determining the fair value of assets acquired and liabilities assumed in a business combination requires management to use significant judgment and estimates, especially with respect to intangible assets.

During the measurement period, which extends one year from the acquisition date, we may record certain adjustments to the carrying value of the assets acquired and liabilities assumed with a corresponding adjustment to goodwill.

Contingent Consideration

Acquisition-related contingent consideration was initially recorded in the condensed consolidated balance sheets at its acquisition-date estimated fair value, in accordance with the acquisition method of accounting. Contingent consideration liabilities contractually due beyond 12 months are recorded in other long-term liabilities on the condensed consolidated balance sheets. The fair value of the acquisition-related contingent consideration is remeasured each reporting period, with changes in fair value recorded in selling, general and administrative expenses in the condensed consolidated statements of operations and comprehensive loss. The fair value measurement is based on significant inputs not observable by market participants and thus represents a Level 3 input in the fair value hierarchy.

Accounts Receivable and Allowance for Expected Credit Losses

Effective January 1, 2023, we adopted the requirements of ASU ~~2016-02,~~2016-13, ~~Leases~~Financial Instruments - Credit Losses (Topic ~~842)~~326), Measurement of Credit Losses on Financial Instruments (“~~ASC 842”~~ASU 2016-13”), along with the subsequently issued guidance amending and clarifying various aspects of ASU 2016-13, using the modified retrospective method of adoption. In accordance with that method, the comparative periods’ information continues to be reported under the relevant accounting guidance in effect for that period. For the current period, the standard replaces the existing incurred credit loss model with the current expected credit losses model for financial instruments, including accounts receivable, through a cumulative-effect adjustment to accumulated deficit as of the beginning of the first reporting period in which the guidance is effective.

Accounts receivable are recorded at invoiced amounts, net of an allowance for expected credit losses. We are exposed to credit losses primarily through sales of products and services. The estimation of the allowance for expected credit losses is based on ~~January 1, 2022,~~historical loss experience, the current aging status of receivables, current and estimated future economic and market conditions, and specific customer accounts considered to be at risk or uncollectible. We write off accounts receivable against the allowance for expected credit losses when we determine a balance is uncollectible and cease collection efforts. We did not write off any material accounts receivable balances during the periods ended June 30, 2023 and 2022.

The non-current portion of accounts receivable primarily consists of guaranteed minimum fixed royalty payments owed to us under licensing agreements. Non-current accounts receivable are recorded net of significant financing components.

Inventory

Inventory is stated at the lower of cost (on a first-in, first-out basis) or net realizable value. Cost is determined using a standard cost system, whereby the standard costs are updated periodically to reflect current costs. We estimate the recoverability of inventory by referencing estimates of future demands and product life cycles, including expiration. We periodically analyze our inventory levels to identify inventory that may expire prior to expected usage, no longer meets quality specifications, or has a cost basis in excess of its estimated net realizable value, and record a charge to cost of revenue for such inventory as appropriate. Inventory that is not expected to be used within 12 months of the balance sheet date is classified as non-current inventory in the accompanying condensed consolidated balance sheets.

Table of Contents

SomaLogic, Inc.
Notes to Condensed Consolidated Financial Statements

Unaudited

Intangible Assets

Intangible assets primarily consists of acquired in-process research and development (“IPR&D”). IPR&D relates to substantial research and development efforts that are incomplete at the acquisition date. IPR&D intangible assets are considered indefinite-lived until the completion or abandonment of the associated research and development efforts. During the development phase, these assets are not amortized but are tested for impairment annually during the fourth quarter of the year or more frequently if events or changes in circumstances indicate that it is more likely than not that the asset is impaired. Once the IPR&D activities are completed, the intangible asset is amortized over its useful life on a straight-line basis.

Goodwill

Goodwill represents the excess of the purchase price from business combinations over the fair value of the net assets acquired. Goodwill is not amortized but is tested for impairment at least annually during the fourth quarter, or more frequently if events or changes in circumstances indicate that it may be impaired. All of our goodwill is assigned to our one reporting unit.

We perform impairment testing by first assessing qualitative factors to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount, including goodwill. If we conclude that that it is more likely than not that the fair value of the reporting unit is less than its carrying amount, then a quantitative test is required.

If the estimated fair value of the reporting unit exceeds the carrying amount, goodwill is not considered to be impaired. If the carrying value exceeds estimated fair value, there is an impairment of goodwill and an impairment loss would be recorded. The impairment loss is calculating by comparing the fair value of the reporting unit less the carrying amount, including goodwill. Goodwill impairment would be limited to the carrying value of goodwill. There were no goodwill impairment losses recorded in any period presented.

Software Development Costs

Internal-Use Software

The Company capitalizes certain internal and external costs related to the acquisition and development of internal-use software or cloud computing arrangements during the application development stages of projects. The costs incurred for development of software intended for internal use and cloud computing arrangements are capitalized in accordance with ASC 350-40, Goodwill and Other, Internal-Use Software. These costs are included in property and equipment, net of accumulated depreciation and amortization in the condensed consolidated balance sheets.

When the software is ready for its intended use, the Company amortizes these costs using the straight-line method over the estimated useful life of the asset, or, for cloud computing service arrangements, over the term of the hosting arrangement. Costs incurred during the preliminary project or the post-implementation/operation stages of the project are expensed as incurred.

Software Developed for Sale

The costs incurred for the development of computer software to be sold, leased, or otherwise marketed are capitalized in accordance with ASC 985-20, Costs of Software to be Sold, Leased or Marketed, when technological feasibility has been established. Technological feasibility generally occurs when all planning, design, coding and testing activities are completed that are necessary to establish that the product can be produced to meet its design specifications, including functions, features and technical performance requirements. The establishment of technological feasibility is an ongoing assessment of judgment by management with respect to certain external factors, including, but not limited to, anticipated future revenues, estimated economic life and changes in technology. Capitalized software costs include direct labor and related expenses for software development for new products. Capitalized software costs are included in other long-term assets in the condensed consolidated balance sheets. Costs to develop software to be sold are not yet subject to amortization as our software to be sold was not available for general release as of June 30, 2023.

Impairment of Long-Lived Assets

We evaluate a long-lived asset (or asset group) for impairment whenever events or changes in circumstances indicate that the carrying value of the asset (or asset group) may not be recoverable. If indicators of impairment exist and the undiscounted future cash flows that the asset is expected to generate are less than the carrying value of the asset, an impairment loss is recorded to write down the asset to its estimated fair value based on a discounted cash flow approach. There were no impairment losses recorded in any period presented.

Table of Contents

SomaLogic, Inc.
Notes to Condensed Consolidated Financial Statements

Unaudited

Leases

We determine if an arrangement is a lease at inception of the contract. Operating lease right-of-use (“ROU”) assets are included in other long-term assets, and operating lease liabilities are included in other current liabilities and other long-term liabilities in the condensed consolidated balance sheets.

ROU assets and operating lease liabilities are recognized based on the present value of the future lease payments over the lease term at commencement date. As the implicit rate in ~~the Company's~~our leases is generally unknown, ~~the~~

~~Table of Contents~~

SomaLogic, Inc.
Notes to Condensed Consolidated Financial Statements

~~Unaudited~~

~~Company uses its~~we use our incremental borrowing rate based on the information available at the lease commencement date in determining the present value of future lease payments. ~~The Company gives~~We give consideration to ~~its~~our credit risk, term of the lease, total lease payments and ~~adjusts~~adjust for the impacts of collateral, as necessary, when calculating ~~its~~our incremental borrowing rates.

Operating lease ROU assets include lease incentives and initial direct costs incurred. When the lease incentives specify a maximum level of reimbursement and we are reasonably certain to incur reimbursable costs equal to or exceeding this level, we include the lease incentive in the measurement of the ROU assets and lease liabilities at commencement. The lease terms may include options to extend or terminate the lease when it is reasonably certain ~~the Company~~we will exercise any such options. Lease costs for our operating leases are recognized on a straight-line basis within operating expenses over the lease term in the condensed consolidated statements of operations and comprehensive loss.

We have lease agreements with lease and non-lease components. However, we have elected the practical expedient to not separate lease and non-lease components for all of our existing classes of assets. Therefore, the lease and non-lease components are accounted for as a single lease component. We have also elected to not apply the recognition requirement to any short-term leases with a term of 12 months or less.

We monitor for events or changes in circumstances that may require a reassessment or impairment of our leases, at which time our ROU assets for operating leases may be reduced by impairment losses.

Warrant Liabilities

During February 2021, in connection with CMLS II’s initial public offering, CMLS II issued 5,519,991 warrants (the “Public Warrants”) to purchase shares of Common Stock at $11.50 per share. Simultaneously, with the consummation of the CMLS II initial public offering, CMLS II issued 5,013,333 warrants through a private placement (the “Private Placement Warrants”, and together with the Public Warrants, the “Warrants”) to purchase shares of Common Stock at $11.50 per share. All of the Warrants were outstanding as of June 30, ~~2022.~~2023.

We classify the Warrants as liabilities on our condensed consolidated balance sheets as these instruments are precluded from being indexed to our own stock given that the terms allow for a settlement adjustment that does not meet the scope for the fixed-for-fixed exception in ASC 815, Derivatives and Hedging (“(“ASC 815”). Since the Warrants meet the definition of a derivative under ASC 815-40, ~~the Company~~we recorded these warrants as long-term liabilities at fair value on the date of the ~~Business Combination,~~SPAC Merger, with subsequent changes in their respective fair values recognized within change in fair value of warrant liabilities in the condensed consolidated statements of operations and comprehensive loss at each reporting date. See Note 11, Stockholders' Equity, for more information on the Warrants.

Earn-Out Liability

As a result of the ~~Business Combination,~~SPAC Merger, additional shares of Common Stock were provided to SomaLogic Operating shareholders and to certain employees and directors of SomaLogic (“Earn-Out Service Providers”) of up to 3,500,125 and 1,499,875, respectively (the “Earn-Out Shares”). The Earn-Out Shares are payable if the price of our Common Stock is greater than or equal to $20.00 for a period of at least 20 out of 30 consecutive trading days at any time between the 13- and 24-month anniversary of the ~~Closing Date~~closing date of the SPAC Merger (the “Triggering Event”). Any Earn-Out Shares issuable to an Earn-Out Service Provider (the “Service Provider Earn-Outs”) shall be issued only if such individual continues to provide services (whether as an employee or director) through the date of occurrence of the corresponding Triggering Event (or a change in control acceleration event, if applicable) that causes such Earn-Out Shares to become issuable. Any Earn-Out Shares that are forfeited pursuant to the preceding sentence shall be reallocated to the SomaLogic Operating ~~stockholders~~shareholders in accordance with their respective pro rata Earn-Out Shares.

The Earn-Out Shares ~~were~~granted to shareholders are recognized as a liability in accordance with ASC 815. The liability was included as part of the consideration transferred in the ~~Business Combination~~SPAC Merger and was recorded at fair value. The earn-out liability is remeasured at the end of each reporting period, with subsequent changes in fair value recognized within change in fair value of earn-out liability in the condensed consolidated statements of operations and comprehensive loss.

Revenue Recognition

~~The Company recognizes~~We recognize revenue from sales to customers under ASC 606, Revenue from Contracts with Customers (“ASC 606”). ASC 606 provides a five-step model for recognizing revenue that includes identifying the contract with a

Table of Contents

SomaLogic, Inc.
Notes to Condensed Consolidated Financial Statements

Unaudited

customer, identifying the performance obligations in the contract, determining the transaction price, allocating the transaction price to the performance obligations, and recognizing revenue when, or as, an entity satisfies a performance obligation.

~~The Company recognizes~~We recognize revenue when or as control of promised goods or services is transferred to ~~the Company’s~~our customers, in an amount that reflects the consideration ~~the Company expects~~we expect to be entitled to in exchange for those

~~Table of Contents~~

SomaLogic, Inc.
Notes to Condensed Consolidated Financial Statements

~~Unaudited~~

goods or services. Sales, value add, and other taxes collected concurrent with revenue-producing activities are excluded from ~~revenue and products are sold without the right of return.~~revenue.

Payment terms may vary by customer, are based on customary commercial terms, and are generally less than one year. ~~The Company does~~We do not adjust revenue for the effects of a significant financing component for contracts where the period between the transfer of the good or service and collection is one year or less. ~~The Company expenses~~We expense incremental costs to obtain a contract when incurred since the amortization period of the asset that would otherwise be recognized is one year or less.

Assay Services Revenue

~~The Company generates~~We generate assay services revenue primarily from the sale of SomaScan® services. SomaScan® service revenue is derived from performing the SomaScan® assay on customer samples to generate data on protein biomarkers. Revenue from SomaScan® services is recognized at the time the analysis data or report is delivered to the customer, which is when control has been transferred to the customer. SomaScan® services are sold at a fixed price per sample without any volume discounts, rebates, or refunds.

The delivery of each assay data report is a separate performance obligation. For arrangements with multiple performance obligations, the transaction price must be allocated to each performance obligation based on its relative standalone selling price. Judgment is required to determine the standalone selling price for each distinct performance obligation as there are few directly comparable products in the market and factors such as customer size are factored into the determination of selling price. We determine standalone selling prices based on amounts invoiced to customers in observable transactions.

Product Revenue

Product revenue primarily consists of equipment and kit sales to customers ~~who~~that assay samples in their own ~~laboratories.~~laboratories, referred to as authorized sites. Equipment is generally accounted for as a bundle with installation, qualification and training services. Revenue is recognized ~~over time~~ based on the progress made toward achieving the performance obligation utilizing input methods, including costs ~~and labor hours~~ incurred. ~~The Company receives fixed consideration per kit and revenue~~Revenue from kit sales is recognized upon transfer of control to the customer. Shipping and handling costs billed to customers are included in product revenue in the condensed consolidated statements of operations and comprehensive loss.

Collaboration Revenue

In July 2011, NEC Corporation (“NEC”) and ~~the Company~~SomaLogic entered into a Strategic Alliance Agreement (the “SAA”) to develop a professional software tool to enable SomaScan® customers to easily access and interpret the highly multiplexed proteomic data generated by SomaLogic’s SomaScan® assay technology in the United States. To support this development, NEC made an upfront payment of $12.0 ~~million and SomaLogic agreed to pay NEC a perpetual royalty on certain SomaScan~~® ~~revenues.~~million. This agreement includes a clause whereby if there is a material breach of the contract or change in control of ~~the Company, the Company~~SomaLogic, we may be required to pay a fee to terminate the agreement.

~~The Company~~We determined that the SAA met the criteria set forth in ASC 808, Collaborative Arrangements, (“ASC 808”) because both parties were active participants and were exposed to significant risks and rewards dependent on commercial failure or success. ~~The Company~~We recorded the upfront payment as deferred revenue to be recognized over the period of performance of 15 years. The revenue was recorded in collaboration revenue in the condensed consolidated statements of operations and comprehensive loss.

In March 2020, NEC and ~~the Company~~SomaLogic mutually terminated the SAA and concurrently ~~the Company~~SomaLogic and NEC Solution Innovators, Ltd. (“NES”), a wholly owned subsidiary of NEC, entered into a new arrangement, the ~~JDCA,~~Joint Development & Commercialization Agreement (the “JDCA”), to develop and commercialize SomaScan® services in ~~Japan, as described in the section entitled “Collaboration Agreements” above.~~Japan. NES agreed to make annual payments of $2.0 million for 5five years, for a total of $10.0 million, in exchange for research and development activities, as described below. ~~The Company~~We determined the JDCA should be accounted for as a modification of the SAA. Therefore, the remaining SAA deferred revenue balance as of the date of the modification was included as consideration under the JDCA resulting in total consideration of $15.3 million for research and development activities. We determined that this arrangement also meets the criteria set forth in ASC 808. The JDCA contains three separate performance obligations: (i) research and development activities, (ii) assay services, and (iii) a 10-year exclusive license of ~~the Company’s~~our intellectual property.

Table of Contents

SomaLogic, Inc.
Notes to Condensed Consolidated Financial Statements

Unaudited

(i) Research and Development Activities

~~The Company~~We determined that NES is not a customer with respect to the research and development activities associated with the collaboration arrangement under ASC 808. ~~The Company’s efforts related to the research and development activities are incurred consistently throughout the performance period. As a result, the Company recognizes~~

~~Table of Contents~~

SomaLogic, Inc.
Notes to Condensed Consolidated Financial Statements

~~Unaudited~~

We recognize revenue from these activities ~~over time~~based on ~~a straight-line basis and records revenue~~the progress made toward achieving the performance obligation utilizing input methods, including costs incurred, in collaboration revenue in the condensed consolidated statements of operations and comprehensive loss.

(ii) Assay Services

~~The Company~~We determined that NES is a customer for the assay services performance obligation, which should be accounted for using the criteria under ASC 606. ~~The Company receives~~We receive a fixed fee (standalone selling price) per sample in exchange for assaying samples, which is a service performed for other customers in the ordinary course of business. This performance obligation is recognized at a point in time when the assay data report is delivered to the customer and recorded in assay services revenue in the condensed consolidated statements of operations and comprehensive loss.

(iii) License of Intellectual Property

~~The Company~~We determined that NES is a customer for the license performance obligation, which should be accounted for using the criteria under ASC 606. ~~The Company receives~~We receive royalties based on NES’ net sales and determined the allocation of royalties solely to this performance obligation is consistent with the objectives in ASC 606. This performance obligation was satisfied at the beginning of the license term. Subject to the sales and usage-based royalty exception, revenue is recognized in the period in which the subsequent sale or usage has occurred. Royalties are recorded in other revenue in the condensed consolidated statements of operations and comprehensive loss.

Other Revenue

Other revenue includes royalty revenue and revenue received from research grants. ~~The Company recognizes~~We recognize royalty revenue for fees paid by customers in return for ~~the exclusive~~a license to make, use or sell certain licensed products in certain geographic areas. These fees are equivalent to a percentage of the customer’s related revenues. ~~The Company recognizes~~We recognize revenue for sales-based or usage-based royalties promised in exchange for a functional license of intellectual property when the later of the following events occurs: (i) the subsequent sale or usage occurs, or (ii) the performance obligation to which some or all of the sales-based or usage-based royalty has been satisfied. As such, revenue is recognized in the period in which the subsequent sale or usage has occurred.

In June 2008, ~~the Company~~SomaLogic and New England Biolabs, Inc. (“NEB”) entered into an exclusive licensing agreement, whereby ~~the Company provides~~we provide a license to use certain proprietary information and know-how relating to its aptamer technology to make and use commercial products. In exchange, ~~the Company receives~~we receive royalties from NEB for ~~these products.~~this functional license of intellectual property. In September 2022, SomaLogic and NEB entered into a license and settlement agreement (“NEB Agreement”) that terminated the existing exclusive licensing arrangement and provided for a settlement of $8.0 million of previously constrained royalties recognized for the year ended December 31, 2022. The NEB Agreement also provided a non-exclusive license arrangement for the same proprietary information and know-how under which we are guaranteed fixed minimum royalties of $15.0 million to be received over 3 years. We recognized revenue for the guaranteed fixed minimum royalties of $13.2 million for the year ended December 31, 2022, net of a significant financing component of $1.8 million. Any revenue above the guaranteed fixed minimum royalties is recognized in the period in which the subsequent sale or usage has occurred. We have recorded a receivable of $13.1 million as of June 30, 2023, of which $8.9 million is recorded in accounts receivable, net of current portion and $4.2 million is recorded in accounts receivable, net on the condensed consolidated balance sheets. Interest income related to the significant financing component was $0.2 million and $0.4 million for the three and six months ended June 30, 2023, respectively, and is included in interest income and other, net in the condensed consolidated statements of operations and comprehensive loss.

Grant revenue represents funding under cost reimbursement programs or fixed rate arrangements from government agencies and non-profit foundations for qualified research and development activities performed by ~~the Company. The Company recognizes~~SomaLogic. We recognize grant revenue when it is reasonably assured that the grant funding will be received as evidenced through the existence of a grant arrangement, amounts eligible for reimbursement are determinable and have been incurred, the applicable conditions under the grant arrangements have been met, and collectability of amounts due is reasonably assured. The classification of costs incurred related to grants is based on the nature of the activities performed by ~~the Company.~~SomaLogic. Grant revenue is recognized when the related costs are incurred and recorded in other revenue in the condensed consolidated statements of operations and comprehensive loss.

Illumina Cambridge, Ltd.

On December 31, 2021, ~~the Company~~we entered into a multi-year arrangement with Illumina Cambridge, Ltd. (“Illumina Agreement”) to jointly develop and commercialize co-branded kits that will combine Illumina’s Next Generation Sequencing (“NGS”) technology with SomaLogic’s SomaScan technology. Pursuant to the agreement, we received a non-refundable upfront payment of $30.0 million on January 4, 2022. This arrangement is accounted for in accordance with ~~Topic 606 by analogy. The Company~~

Table of Contents

SomaLogic, Inc.
Notes to Condensed Consolidated Financial Statements

Unaudited

ASC 606. We concluded there are two performance obligations: (1) ~~combined performance obligation that includes the following material promises: licenses, patents, training, transfer of know-how and~~ SOMAmer reagents necessary to develop and commercialize NGS based proteomic products, inclusive of the rights to licenses, patents and training to allow for the use ~~the SomaScan technology (“Bundled SomaScan Technology”),~~of such reagents and (2) an option to purchase goods post-commercialization with a material right (“Material Right”). The total transaction price is subject to a constraint since it is uncertain that commercialization will be achieved; and therefore the transaction price was determined to be $30.0 million and was allocated to each of the performance obligations identified on a relative standalone selling price basis. Revenue from the performance obligations is recognized as follows in product revenue in the condensed consolidated statements of operations and comprehensive loss:

~~Bundled SomaScan Technology~~:Reagents: Revenue is recognized aswhen control transfers to the customer (i.e., when the SOMAmer reagents are ~~shipped. The Company~~shipped). We estimated the standalone selling price (“SSP”) based on observable pricing of similar performance obligations.

Material Right: Revenue is recognized when Illumina exercises its option to purchase goods post-commercialization. ~~The Company~~We estimated the SSP based on ~~the~~an incremental discount to be provided to the customer adjusted for the likelihood that Illumina will exercise the option.

~~Table of Contents~~

SomaLogic, Inc.
Notes to Condensed Consolidated Financial Statements

~~Unaudited~~

~~Contract Modification:~~ In June 2022, Illumina issued a purchase order that changed the ~~future obligations due from SomaLogic~~promises under the Illumina Agreement. The purchase order represents a contract modification that is accounted for prospectively as if it were a termination of the existing contract and the creation of a new contract.

As a result, ~~the Company~~we determined that there were three new performance obligations (total of five performance obligations): (1) equipment bundle that includes customization services, integration services, system qualification services, site initiation services and training (“Equipment Bundle”), (2) qualification kits, and (3) support services. The contract modification resulted in an increase in the transaction price of $0.5 million. The updated transaction price was allocated between the performance obligations on a relative SSP basis. We estimated the SSP based on observable pricing of similar performance obligations. Revenue from the performance obligations is recognized as follows in product revenue in the condensed consolidated statements of operations and comprehensive loss:

Equipment ~~Bundle:~~Bundle: Revenue is recognized ~~over time~~ based on the progress made toward achieving the performance obligation utilizing input methods, including costs ~~and labor hours~~ incurred. ~~The Company estimated the SSP based on observable pricing of similar performance obligations.~~

Qualification ~~Kits:~~Kits: Revenue is recognized aswhen control transfers to the customer (i.e., when the qualification kits are ~~shipped. The Company estimated the SSP based on observable pricing of similar performance obligations.~~shipped).

Support Services: Revenue is recognized for the support services ~~over~~as the ~~service period, using an input method based on time. The Company estimated the SSP based on observable pricing of similar performance obligations.~~services are provided.

~~During~~We did not recognize any revenue during the three and six months ended June 30, 2023 or 2022 ~~the Company recognized $0.1 million of revenue~~ pursuant to the Illumina ~~Agreement.~~Agreement for performance obligations satisfied.

Restricted Cash

Restricted cash represents cash on deposit with a financial institution as security for letters of credit outstanding for the benefit of the landlords related to operating ~~leases.~~leases and a bank guarantee with an international customer. The portion of restricted cash expected to be released within twelve months is classified as prepaid expenses and other current assets on the condensed consolidated balance sheets was $0.5 million and $4.7 million as of June 30, 2023 and December 31, 2022, respectively. Cash expected to be restricted for greater than twelve months is classified as other long-term assets on the condensed consolidated balance sheets ~~based on the terms of the underlying leases. As of June 30, 2022 and December 31, 2021, the restricted cash on deposit~~ was ~~$4.9~~$0.6 million and $0.8 million ~~respectively.~~as of June 30, 2023 and December 31, 2022.

Income Taxes

We use the asset and liability method of accounting for income taxes. Under this method, deferred income tax assets and liabilities are determined based on differences between the tax bases of assets and liabilities and their respective financial reporting amounts, based on enacted tax laws and statutory tax rates applicable to the periods in which these temporary differences are expected to reverse. We evaluate the need to establish or release a valuation allowance based upon expected levels of taxable income, future reversals of existing temporary differences, tax planning strategies, and recent financial operations. Valuation allowances are established to reduce deferred tax assets to the amount expected to be more likely than not realized in the future.

The effect of income tax positions is recognized only when it is more likely than not to be sustained. Interest and penalties associated with uncertain tax positions are recorded in income tax benefit (provision) in the condensed consolidated statements of operations and comprehensive loss.

Table of Contents

SomaLogic, Inc.
Notes to Condensed Consolidated Financial Statements

Unaudited

Segment Information

~~The Company has 1~~We have one operating segment. ~~The Company’s~~Our chief operating decision maker (the “CODM”) role is performed by ~~the Company’s~~our Chief Executive Officer. The CODM manages ~~the Company’s~~our operations on a consolidated basis for purposes of allocating resources and assessing performance. Substantially all of ~~the Company’s~~our operations and decision-making functions are located in the United States.

Other Significant Accounting Policies

Our significant accounting policies are described in our ~~2021~~2022 Form 10-K. There have been no significant changes to those policies.

Recent Accounting Pronouncements

We are an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, as amended (the “JOBS Act”). The JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards. Thus, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to use this extended transition period and, as a result, we will not be required to adopt new or revised accounting standards on the relevant dates on which adoption of such standards is required for other public companies so long as we remain an emerging growth company.

Recently Adopted Accounting Standards

~~Leases.~~ ~~In February 2016, the FASB issued ASU 2016-02,~~ ~~Leases (Topic 842), which requires lessees to recognize assets and liabilities for the rights and obligations created by most leases on their balance sheet. In June 2020, the FASB issued ASU 2020-05,~~ ~~Revenue from Contracts with Customers (Topic 606) and Leases (Topic 842): Effective Dates for Certain Entities, which extended the effective date of ASU 2016-02 for non-public business entities.~~

We adopted ASU 2016-02, as amended, on January 1, 2022 using a modified retrospective approach and elected to apply the legacy lease guidance and disclosure requirements (“ASC 840”) in the comparative periods presented for the year of adoption.

~~We elected the package of transition practical expedients, permitting us to not reassess our prior conclusions about lease identification, lease classification and initial direct costs.~~

~~Table of Contents~~

SomaLogic, Inc.
Notes to Condensed Consolidated Financial Statements

~~Unaudited~~

The new lease standard impacted our condensed consolidated balance sheets as a result of the ROU assets and operating lease liabilities, but did not impact our condensed consolidated statements of operations or condensed consolidated statements of cash flows. The adoption did not require any cumulative-effect adjustments to opening accumulated deficit. We currently have no finance leases. Upon adoption, we recorded $4.1 million of ROU assets, $1.0 million of current operating lease liabilities, and $3.6 million of non-current operating lease liabilities.

~~For more information on our leases, refer to Note 5,~~ ~~Leases~~.

~~Income Taxes.~~ ~~In December 2019, the FASB issued ASU 2019-12,~~ ~~Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes~~, which removes certain exceptions to the general principles of ASC 740 as part of an overall simplification initiative. We adopted ASU 2019-12 prospectively when it became effective on January 1, 2022 and the adoption did not have a material impact on our condensed consolidated financial statements and related disclosures.

~~Accounting Standards Not Yet Adopted~~

Financial Instruments — Credit Losses. In June 2016, the FASB issued ASU 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, as amended, which sets forth a “current expected credit loss” ~~(CECL)~~(“CECL”) model that requires us to measure all expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions, and reasonable supportable forecasts. This replaces the existing incurred loss model and is applicable to the measurement of credit losses on financial assets measured at amortized cost and applies to some off-balance sheet credit exposures. ~~In November 2019, the FASB issued ASU 2019-10,~~ ~~Financial Instruments —~~ ~~Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates,~~ ~~which extends the effective date of ASU 2016-13 for non-public business entities.~~We adopted ASU 2016-13, as amended, ~~is effective for us~~ on January 1, 2023 ~~with early~~using a modified retrospective approach and recorded a cumulative effect adjustment to accumulated deficit. The adoption ~~permitted. We are currently evaluating the~~of ASU 2016-13 did not have a material impact ~~of adopting the standard~~ on our condensed consolidated financial ~~statements and related disclosures.~~

~~Convertible Debt, Contracts in an Entity’s Own Equity and EPS. In August 2020, the FASB issued ASU 2020-06,~~ ~~Debt - Debt with Conversion and Other Options (Subtopic 470-20)andDerivatives and Hedging - Contracts in an Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity~~, which simplifies the accounting for convertible debt by removing the requirements to separately present certain conversion features in equity. In addition, the amendment also simplifies the guidance in ASC Subtopic 815-40, ~~Derivatives and Hedging: Contracts in Entity's Own Equity~~, by removing certain criteria that must be satisfied in order to classify a contract as equity. Further, contracts which can be settled in cash or shares, excluding liability-classified share-based payment awards, are to be included in diluted earnings per share using the “if-converted” method if the effect is dilutive, regardless of whether the entity or the counterparty can choose between cash and share settlement. The share-settlement presumption may not be rebutted based on past experience or a stated policy. ASC 2020-06 is effective for us on January 1, 2024, although early adoption is permitted. ASU 2020-06 may be adopted through either the fully retrospective or modified retrospective method of transition. We are currently evaluating the impact of this standard on our condensed consolidated financial statements and related disclosures.statements.

Note 3 — Revenue

The following table ~~provides information about disaggregated~~disaggregates our revenue by product line:


		Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended June 30,				Six Months Ended June 30,
(in thousands)	(in thousands)	2022		2021		2022		2021			(in thousands)	2023		2022		2023		2022
Assay services revenue	Assay services revenue	$	10,931	$	16,236	$	29,731	$	30,809		Assay services revenue	$	16,597	$	10,931	$	35,016	$	29,731
Product revenue	Product revenue	714		462		1,167		655			Product revenue	2,909		714		4,095		1,167
Collaboration revenue	Collaboration revenue	762		762		1,525		1,525			Collaboration revenue	762		762		1,525		1,525
Other revenue:	Other revenue:										Other revenue:
Royalties	Royalties	930		2,050		3,885		5,050			Royalties	—		930		—		3,885
Other	Other	807		270		816		601			Other	200		807		211		816
Total other revenue	Total other revenue	1,737		2,320		4,701		5,651			Total other revenue	200		1,737		211		4,701
Total revenue	Total revenue	$	14,144	$	19,780	$	37,124	$	38,640		Total revenue	$	20,468	$	14,144	$	40,847	$	37,124

Contract Balances and Remaining Performance Obligations

As of June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, deferred revenue of ~~$37.1~~$36.3 million and ~~$5.4~~$35.1 million, respectively, was comprised of balances related to our collaboration revenue, product, assay services, and other revenue. As of June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, the portion of deferred revenue related to collaboration revenue was ~~$4.4~~$3.3 million and ~~$3.9~~$2.9 million, ~~respectively, which is being recognized on a straight-line basis over the period of performance.~~respectively. As of June 30, ~~2022,~~2023, the estimated remaining performance period is ~~2.8~~1.8 years. As of June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, the portion of

~~Table of Contents~~

SomaLogic, Inc.
Notes to Condensed Consolidated Financial Statements

~~Unaudited~~

deferred revenue related to assay services and other revenue was ~~$2.7~~$2.5 million and ~~$1.5~~$1.8 million, respectively. As of June 30, ~~2022,~~2023, the deferred revenue related to assay services and other revenue will be recognized within 12 months.

As of June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, the deferred product revenue related to the Illumina Agreement amounted to ~~$30.0~~$30.4 million ~~and nil, respectively.~~for each period. As of June 30, ~~2022,~~2023, the estimated remaining performance obligation period is approximately ~~nine~~7.5 years.

~~A summary~~

Table of Contents

SomaLogic, Inc.
Notes to Condensed Consolidated Financial Statements

Unaudited

During the ~~change~~three and six months ended June 30, 2023, we recognized revenue of $0.4 million and $1.6 million, respectively, from deferred revenue recorded in ~~contract liabilities is as follows:~~

(in thousands) June 30, 2022 December 31, 2021
Balance at beginning of period $ 5,385 $ 5,177
Recognition of revenue included in balance at beginning of period (1,618) (1,762)
Revenue deferred during the period, net of revenue recognized 33,372 1,970
Balance at end of period $ 37,139 $ 5,385
prior periods.

Note 4 — Accounts Receivable, net

Accounts receivable, net consisted of the following:


(in thousands)	June 30, 2023		December 31, 2022
Accounts receivable	$	31,421	$	26,441
Less: allowance for expected credit losses	(630)		(151)
Accounts receivable, net	$	30,791	$	26,290
Accounts receivable, net (current)	$	21,750	$	17,006
Accounts receivable, net of current portion	$	9,041	$	9,284

Note 5 — Business Combinations

On August 31, 2022, we acquired 100% of the equity interests in Palamedrix, Inc. ("Palamedrix") (the “Palamedrix Acquisition”) in exchange for purchase consideration of $29.7 million. Consideration transferred included cash of $15.8 million, equity consideration of $12.5 million, and contingent consideration of $1.4 million. Palamedrix is a DNA nano tech firm that provides scientific and engineering expertise, miniaturization technology and enhanced ease-of-use capabilities that we intend to leverage as we develop the next generation of SomaScan® Assay.

The Palamedrix Acquisition provided for up to $0.5 million to be paid to the founders contingent upon settlement of pre-acquisition legal matters. It also provided for three potential additional payments of up to $17.5 million to the owners, including non-founder and founder employees, to be settled in cash and/or Common Stock contingent on the achievement of certain net sales milestone targets by the fifth and sixth year anniversary of the closing date of the acquisition (the “Milestone Consideration”).

Note 6 — Fair Value Measurements

Assets measured at fair value on a recurring basis

The following tables set forth our financial assets measured at fair value on a recurring basis and the level of inputs used in such measurements:

As of June 30, 2022
(in thousands)

Amortized
Cost
Gross
Unrealized
Gain
Gross
Unrealized
Loss
Aggregate
Fair Value

Fair Value
Level
Cash and cash equivalents:
Cash $ 76,006 $ — $ — $ 76,006 Level 1
Money market funds 328,933 — — 328,933 Level 1
Commercial paper 13,246 — (3) 13,243 Level 2
Total cash and cash equivalents 418,185 — (3) 418,182
Investments:
Commercial paper 122,813 — (364) 122,449 Level 2
U.S. Treasuries 60,612 — (430) 60,182 Level 2
Asset-backed securities 4,011 — (11) 4,000 Level 2
Corporate bonds 9,405 — (72) 9,333 Level 2
Agency bonds 5,000 — (52) 4,948 Level 2
Total investments 201,841 — (929) 200,912
Total assets measured at fair value on a recurring basis $ 620,026 $ — $ (932) $ 619,094


As of December 31, 2021 (in thousands)		Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss		Aggregate Fair Value		Fair Value Level
As of June 30, 2023 (in thousands)											As of June 30, 2023 (in thousands)	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss		Aggregate Fair Value		Fair Value Level
Cash and cash equivalents:	Cash and cash equivalents:										Cash and cash equivalents:
Cash	Cash	$	114,533	$	—	$	—	$	114,533	Level 1	Cash	$	20,010	$	—	$	—	$	20,010	Level 1
Money market funds	Money market funds	324,955		—		—		324,955		Level 1	Money market funds	289,678		—		—		289,678		Level 1
U.S. Treasuries											U.S. Treasuries	44,841		15		—		44,856		Level 1
Total cash and cash equivalents	Total cash and cash equivalents	439,488		—		—		439,488			Total cash and cash equivalents	354,529		15		—		354,544
Investments:	Investments:										Investments:
Commercial paper	Commercial paper	177,852		16		(57)		177,811		Level 2	Commercial paper	13,720		1		(8)		13,713		Level 2
U.S. Treasuries	U.S. Treasuries	12,021		—		(9)		12,012		Level 2	U.S. Treasuries	98,418		33		—		98,451		Level 2
Asset-backed securities		12,084		—		(8)		12,076		Level 2
Corporate bonds		16,332		—		(13)		16,319		Level 2

Agency bonds											Agency bonds	7,491		—		(9)		7,482		Level 2
Total investments	Total investments	218,289		16		(87)		218,218			Total investments	119,629		34		(17)		119,646
Total assets measured at fair value on a recurring basis	Total assets measured at fair value on a recurring basis	$	657,777	$	16	$	(87)	$	657,706		Total assets measured at fair value on a recurring basis	$	474,158	$	49	$	(17)	$	474,190

Table of Contents

SomaLogic, Inc.
Notes to Condensed Consolidated Financial Statements

Unaudited


As of December 31, 2022 (in thousands)	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss		Aggregate Fair Value		Fair Value Level
Cash and cash equivalents:
Cash	$	44,045	$	—	$	—	$	44,045	Level 1
Money market funds	377,785		—		—		377,785		Level 1
Total cash and cash equivalents	421,830		—		—		421,830
Investments:
Commercial paper	58,794		—		(195)		58,599		Level 2
U.S. Treasuries	35,252		—		(175)		35,077		Level 2

Corporate bonds	11,782		—		(39)		11,743		Level 2
Agency bonds	12,426		—		(87)		12,339		Level 2
Total investments	118,254		—		(496)		117,758
Total assets measured at fair value on a recurring basis	$	540,084	$	—	$	(496)	$	539,588

As of June 30, 2023 and December 31, 2022, we had $0.2 million and $0.5 million, respectively, of accrued interest on investments recorded in prepaid expenses and other current assets on the condensed consolidated balance sheets.

Our investments consist of money market funds, commercial paper, U.S. Treasuries, corporate bonds, and agency bonds. All of the commercial paper, U.S. Treasuries, ~~asset-backed securities,~~ corporate bonds and agency bonds ~~that~~ are designated as available-for-sale securities and have an effective maturity date that is less than one year from the respective balance sheet date, and accordingly, have been classified as current in the condensed consolidated balance sheets.

We classify our investments in money market funds within Level 1 of the fair value hierarchy because they are valued using quoted market prices. We classify our commercial paper, ~~U.S~~U.S. Treasuries, asset-backed securities, corporate bonds and agency bonds as Level 2 and obtain the fair value from a third-party pricing service, which may use quoted market prices for identical or comparable instruments or model-driven valuations using observable market data or inputs corroborated by observable market data.

~~As all of~~We adopted ASU 2016-13 on January 1, 2023. Under the new guidance, we evaluated our available-for-sale securities ~~have been held~~with unrealized losses for impairment, considering available evidence, including the extent to which fair value is less than cost, whether an allowance for expected credit loss is required, and adverse factors that could affect the value of the securities. Any unrealized losses from declines in fair value below the amortized cost basis as a ~~year~~result of non-credit factors are recognized in accumulated other comprehensive loss as a separate component of stockholders’ equity, along with unrealized gains. Realized gains and losses and declines in fair value, if any, on available-for-sale securities are included in interest and other income, net in the condensed consolidated statements of operations and comprehensive loss.

We evaluated the available-for-sale securities as of ~~both~~ June 30, ~~2022~~2023 and ~~December 31, 2021,~~determined that no ~~security has been~~available-for-sale securities in an unrealized loss position ~~for 12 months~~are arising from credit related reasons. Additionally, we do not intend to sell or greater. We evaluated our securities for other-than temporary impairment and considered the decline in market value for the securities to be primarily attributed to current economic and market conditions. Itbelieve that it is not more likely than not that we will be required to sell the securities ~~and we do not intend to do so prior to the~~before recovery of the amortized cost ~~basis. Based on this analysis, the~~bases and have therefore not recorded any allowances for available-for-sale securities ~~were not considered to be other-than-temporarily impaired~~in our allowance for expected credit losses as of June 30, ~~2022 and December 31, 2021.~~2023. We did not recognize material realized gains or losses for the three or six months ended June 30, 2023.

Liabilities measured at fair value on a recurring basis

The following table presents information about ~~the Company’s~~our liabilities that are measured at fair value on a recurring basis, and indicates the fair value hierarchy of the valuation inputs ~~the Company~~we utilized to determine such fair value:


(in thousands)	(in thousands)	June 30, 2022		December 31, 2021		Fair Value Level	(in thousands)	June 30, 2023		December 31, 2022		Fair Value Level
Warrant liability - public warrants	Warrant liability - public warrants	$	4,195	$	18,437	Level 1	Warrant liability - public warrants	$	1,380	$	2,208	Level 1
Warrant liability - private placement warrants	Warrant liability - private placement warrants	3,810		16,744		Level 2	Warrant liability - private placement warrants	1,253		2,005		Level 2
Earn-out liability	Earn-out liability	1,396		26,885		Level 3	Earn-out liability	—		15		Level 3
Milestone contingent consideration							Milestone contingent consideration	1,620		1,165		Level 3
Holdback contingent consideration							Holdback contingent consideration	450		450		Level 3
Total liabilities measured at fair value on a recurring basis	Total liabilities measured at fair value on a recurring basis	$	9,401	$	62,066		Total liabilities measured at fair value on a recurring basis	$	4,703	$	5,843

Table of Contents

SomaLogic, Inc.
Notes to Condensed Consolidated Financial Statements

Unaudited

Liabilities that are measured at fair value on a recurring basis are recorded on the condensed consolidated balance sheet as of June 30, 2023 as follows:


(in thousands)	June 30, 2023		December 31, 2022
Other current liabilities	$	450	$	—
Warrant liabilities	2,633		4,213
Other long-term liabilities	1,620		1,630
Total liabilities measured at fair value on a recurring basis	$	4,703	$	5,843

Warrant liabilities

The public warrants were valued using Level 1 inputs as they are traded in an active market. The fair value of the private placement warrants is equivalent to that of the public warrants as they have substantially the same terms; however, as they are not actively traded, they are classified as Level 2 in the hierarchy table above.

Earn-out liability

The fair value of the Earn-Out Shares was estimated using a Monte Carlo simulation model. The fair value is based on the simulated price of the Company over the maturity date of the contingent consideration and increased by estimated forfeitures of Earn-Out Shares issued to Earn-Out Service Providers. During the three months ended March 31, 2023, the earn-out liability was determined to be immaterial and was fully written off.

Milestone Contingent Consideration

The fair value of milestone contingent consideration was estimated using a Monte Carlo simulation model. The fair value is based on an option pricing framework, whereby a range of possible scenarios were simulated around forecasted net sales.

The significant unobservable inputs used in the Monte Carlo simulation to measure the ~~Earn-Out Shares~~milestone contingent consideration that are categorized within Level 3 of the fair value hierarchy were as follows:


		June 30, 2022			December 31, 2021
Stock price on valuation date		$	4.52		$	11.64
									June 30, 2023	December 31, 2022
Volatility	Volatility	73.8		%	85.6		%	Volatility	35.0%	35.0	%
Risk-free rate	Risk-free rate	2.76		%	0.34		%	Risk-free rate	4.1%	4.0	%
Dividend yield		—		%	—		%
Weighted average cost of capital								Weighted average cost of capital	30.0%	30.0	%
Cost of debt								Cost of debt	10.0%	10.0	%

The change in the fair value of the ~~earn-out liability for the six months ended June 30, 2022~~milestone contingent consideration is summarized as follows:


(in thousands)		Fair Value
Balance as of December 31, ~~2021~~2022		$	~~26,885~~1,165
Change in fair value of ~~earn-out liability~~milestone contingent consideration	~~25,489~~455
Balance as of June 30, ~~2022~~2023		$	~~1,396~~1,620

Holdback Contingent Consideration

The fair value of holdback contingent consideration was estimated using a scenario-based analysis. The fair value is based on the expected holdback release date and expected holdback payment. The future expected payments were discounted to the valuation date using the cost of debt.

The significant unobservable inputs used in the scenario-based analysis to measure the holdback contingent consideration that are categorized within Level 3 of the fair value hierarchy were as follows:


	June 30, 2023	December 31, 2022
Cost of debt	10.6%	10.2	%

Table of Contents

SomaLogic, Inc.
Notes to Condensed Consolidated Financial Statements

Unaudited

Note 57 — Leases

We have operating leases for certain office spaces with lease terms ranging from two to five years. These leases require monthly lease payments that may be subject to annual increases throughout the lease term. Certain of these leases also include renewal options at our election to renew or extend the leases for additional periods ranging from three

~~Table of Contents~~

SomaLogic, Inc.
Notes to Condensed Consolidated Financial Statements

~~Unaudited~~

to ten years. These optional periods have not been considered in the determination of the ROU assets or lease liabilities associated with these leases as we did not consider the exercise of these options to be reasonably certain. The ROU asset is included in other long-term assets on the condensed consolidated balance sheets and was $2.8 million and $3.9 million as of June 30, 2023, and December 31, 2022, respectively.

Lease Costs

Lease costs for operating leases are recognized on a straight-line basis over the lease term. The total lease cost for the period was as follows:

Three Months Ended Six Months Ended
(in thousands) June 30, 2022 June 30, 2022
Operating lease cost $ 406 $ 807
Variable lease cost 209 390
Short-term lease cost 12 23
Total lease cost $ 627 $ 1,220

~~Rent expense for the three and six months ended June 30, 2021 was $0.5 million and $0.9 million, respectively.~~


	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands)	2023		2022		2023		2022
Operating lease cost	$	591	$	406	$	1,182	$	807
Variable lease cost	326		209		704		390
Short-term lease cost	12		12		24		23
Total lease cost	$	929	$	627	$	1,910	$	1,220

Lease Maturities

The table below reconciles the undiscounted lease payment maturities to the lease liabilities for our operating ~~leases as of June 30, 2022:~~leases:


(in thousands)	(in thousands)	June 30, 2022		(in thousands)	June 30, 2023
Remainder of 2022		$	925
2023		1,905
Remainder of 2023				Remainder of 2023	$	1,285
2024	2024	810		2024	1,143
2025	2025	834		2025	834
2026	2026	144		2026	143

Total	Total	4,618		Total	3,405
Less: amount of lease payments representing interest	Less: amount of lease payments representing interest	(181)		Less: amount of lease payments representing interest	(93)
Less: tenant improvement allowance yet to be received		(534)

Present value of future minimum lease payments	Present value of future minimum lease payments	3,903		Present value of future minimum lease payments	3,312
Less: current operating lease liabilities (included in other current liabilities)	Less: current operating lease liabilities (included in other current liabilities)	(1,250)		Less: current operating lease liabilities (included in other current liabilities)	(1,963)
Long-term operating lease liabilities (including in other long-term liabilities)		$	2,653
Long-term operating lease liabilities (included in other long-term liabilities)				Long-term operating lease liabilities (included in other long-term liabilities)	$	1,349

Supplemental Lease Information

Supplemental information related to our operating leases was as follows:


	June 30, ~~2022~~2023
Weighted average remaining lease term	~~2.8~~2.0 years
Weighted average discount rate	2.6	%

Cash paid for amounts included in the measurement of our operating lease liabilities for the six months ended June 30, 2023 and 2022 was $1.3 million and $0.9 ~~million.~~million, respectively.

~~As of June 30,~~In February 2022, we executed 2two separate lease agreements (the “Leases”) to lease buildings pending construction that ~~have~~had not yet commenced. Both leases ~~will~~were set to expire on November 30, 2033, unless extended or early terminated in accordance with the terms of the lease. In accordance with the lease agreements, we made a deposit of $4.1 million during the first quarter of ~~2022, which is classified as restricted cash and included in other long-term assets in the condensed consolidated balance sheets.~~2022. The ~~deposits are~~deposit was restricted from withdrawal and held by a bank in the form of collateral for an irrevocable standby letter of credit held as ~~security~~security.

On August 25, 2022, we entered into a lease termination agreement (the “Lease Termination”) for the Leases prior to lease ~~of one~~commencement. As consideration for the termination of the ~~Company’s facilities.~~

~~Our obligation~~Leases, we agreed to pay ~~rent for each building will begin approximately six months following~~ the ~~applicable commencement date~~landlord a termination fee of ~~each lease.~~$6.0 million of which $2.5 million was paid on the termination date. During the fourth quarter of 2022 the remaining liability was reduced by $1.0 million after the landlord entered into a separate lease with a third party. The ~~annual base rent for each lease is approximately $1.3~~remaining $2.5 million ~~per year. Each lease is subject to annual increases of approximately 3% per annum, up to approximately $1.8~~liability was paid in January 2023 and the $4.1 million ~~per year~~deposit was released in the final year of the term. Both leases include tenant improvement allowances in the amount of approximately $3.5 million per lease. We have the right to extend the term of these leases for 3 consecutive periods of 60 months each following the end of the then-current term.March 2023.

1819

Table of Contents

SomaLogic, Inc.
Notes to Condensed Consolidated Financial Statements

Unaudited

Note 68 — Inventory

Inventory ~~was comprised~~consisted of the following:


(in thousands)	(in thousands)	June 30, 2022		December 31, 2021		(in thousands)	June 30, 2023		December 31, 2022
Raw materials	Raw materials	$	21,905	$	15,205	Raw materials	$	23,418	$	16,710
Work in process	Work in process	1,401		—		Work in process	1,492		1,191
Finished goods	Finished goods	9		93		Finished goods	509		639
Total inventory	Total inventory	$	23,315	$	15,298	Total inventory	$	25,419	$	18,540
Inventory (current)	Inventory (current)	$	20,768	$	11,213	Inventory (current)	$	15,123	$	13,897
Non-current inventory	Non-current inventory	$	2,547	$	4,085	Non-current inventory	$	10,296	$	4,643

Note 79 — Accrued Liabilities and Other Long-Term Liabilities

Accrued liabilities consisted of the following:


(in thousands)	(in thousands)	June 30, 2022		December 31, 2021		(in thousands)	June 30, 2023		December 31, 2022
Accrued compensation	Accrued compensation	$	7,719	$	9,832	Accrued compensation	$	9,172	$	13,897
Accrued charitable contributions		400		400
Accrued restructuring costs						Accrued restructuring costs	442		2,223
Accrued lease termination fee						Accrued lease termination fee	—		2,500
Accrued real estate agent commission						Accrued real estate agent commission	—		764
Accrued medical claims	Accrued medical claims	567		398		Accrued medical claims	646		663
Other	Other	619		479		Other	666		631
Total accrued liabilities	Total accrued liabilities	$	9,305	$	11,109	Total accrued liabilities	$	10,926	$	20,678

Other long-term liabilities consisted of the following:


(in thousands)	June 30, 2023		December 31, 2022
Long-term operating lease liabilities	$	1,349	$	2,063
Milestone consideration replacement award liability	1,699		1,261
Milestone contingent consideration	1,620		1,165
Holdback contingent consideration(1)	—		450
Long-term deferred tax liability	585		585
Earn-out liability	—		15
Total other long-term liabilities	$	5,253	$	5,539

(1) As of June 30, 2023, the holdback contingent consideration is included within other current liabilities on the condensed consolidated balance sheet.

Note 810 — Commitments and Contingencies

Legal Proceedings

We are subject to claims and assessments from time to time in the ordinary course of business. We will accrue a liability for such matters when it is probable that a liability has been incurred and the amount can be reasonably estimated. When only a range of possible loss can be established, the most probable amount in the range is accrued. If no amount within this range is a better estimate than any other amount within the range, the minimum amount in the range is accrued. We are not currently party to any material legal proceedings in which a potential loss is probable or reasonably estimable.

Indemnification

In the normal course of business, ~~the Company enters~~we enter into contracts and agreements that contain a variety of representations and warranties and provide for general indemnifications. ~~The Company’s~~Our exposure under these agreements is unknown because it involves claims that may be made against ~~the Company~~us in the future, but that have not yet been made. To date, ~~the Company has~~we have not paid any claims or been required to defend any action related to ~~its~~our indemnification obligations. However, ~~the Company~~we may record charges in the future as a result of these indemnification obligations.

~~Note 9 — Debt~~

~~As of June 30, 2022 and December 31, 2021, we did not have any debt outstanding.~~

Prior to the Business Combination, we had received various forms of debt including convertible debt, a credit agreement, and funds issued through the Paycheck Protection Program. Prior to the consummation of the Business Combination, these forms of debt were settled or forgiven. The loan resulting from the Paycheck Protection Program was forgiven during the second quarter of 2021 and resulted in a gain on extinguishment of debt of $3.6 million for the three and six months ended June 30, 2021. The debt under the Company’s credit agreement was settled in the second quarter of 2021, which resulted in a $5.2 million loss on extinguishment of debt for the three and six months ended June 30, 2021.

~~Interest expense incurred during the three and six months ended June 30, 2021 was related to these forms of debt, primarily from the Company’s credit agreement.~~

1920

Table of Contents

SomaLogic, Inc.
Notes to Condensed Consolidated Financial Statements

Unaudited

Note 1011 — Stockholders' Equity

Under our amended and restated certificate of incorporation, we are authorized to issue 600,000,000 shares of Common Stock, par value of $0.0001 per share, and 1,000,000 shares of preferred stock, par value $0.0001 per share.

As of June 30, ~~2022,~~2023, there were an aggregate of 5,519,991 and 5,013,333 outstanding public warrants and private placement warrants, respectively. Each warrant entitles the holder to purchase one share of our Common Stock at a price of $11.50 per share at any time commencing on February 25, 2022. As of June 30, 2023, no warrants have been exercised. The warrants will expire on September 1, 2026 or earlier upon redemption or liquidation.

There have been no significant changes to the disclosures in our 2022 Form 10-K related to Common Stock, preferred stock, ~~and~~or our public and private placement warrants, including warrant redemption ~~terms disclosed in our 2021 Form 10-K.~~terms.

Note 1112 — Stock-based Compensation

We have various stock-based compensation plans, which are more fully described in Part II, Item 8 “Financial Statements and Supplementary Data - Note 13 to the Consolidated Financial Statements - Stock-based ~~compensation includes grants~~Compensation” in the 2022 Form 10-K. Under the 2021 Omnibus Incentive Plan (the “2021 Plan”), we have the ability to grant several forms of ~~equity~~ incentive awards ~~in the form of stock options and other stock-based awards as well as the issuance of common stock under a consulting agreement with a related party (see Note 14,~~ ~~Related Parties) and issuance of Earn-Out Shares~~ to ~~service providers in connection with the Business Combination. Stock-based compensation also includes the impact of common stock purchased through~~ our ~~employee stock purchase plan, which allows~~ eligible employees, ~~to purchase shares of our common stock at a price equal to 85% of their fair market value on the last day of a defined offering period. In~~directors, and non-employee consultants.

Effective January ~~2022,~~2023, we increased the reserve of Common Stock for issuance under all incentive plans by approximately 9 million shares in accordance with ~~our~~the 2021 ~~Omnibus Incentive~~ Plan. ~~There have been no significant changes to our equity incentive plans and types of stock-based incentive awards disclosed in our 2021 Form 10-K.~~

~~Stock-based compensation was recorded in the condensed consolidated statements of operations and comprehensive loss as shown in the following table:~~

Three months ended June 30, Six Months Ended June 30,
(in thousands)
2022 2021 2022 2021
Cost of assay services revenue $ 292 $ 92 $ 583 $ 181
Cost of product revenue 18 5 25 6
Research and development 1,834 871 3,566 1,574
Selling, general and administrative 7,316 3,796 13,957 6,255
Total stock-based compensation $ 9,460 $ 4,764 $ 18,131 $ 8,016

Stock-based compensation will fluctuate based on the grant-date fair value of awards, the number of awards, the requisite service period of the awards, modification of awards, employee forfeitures and the timing of the awards. Expense related to each stock option and restricted stock unit (“RSU”) award is recognized on a straight-line basis over the requisite service period of the entire award.

The following table summarizes our ~~award~~stock-based compensation expense:


	Three months ended June 30,				Six Months Ended June 30,
(in thousands)	2023		2022		2023		2022
Cost of assay services revenue	$	186	$	292	$	376	$	583
Cost of product revenue	28		18		38		25
Research and development	1,340		1,834		3,110		3,566
Selling, general and administrative	2,753		7,316		7,966		13,957
Total stock-based compensation	$	4,307	$	9,460	$	11,490	$	18,131

The following table summarizes activity for stock options and RSUs ~~for~~during the six months ended June 30, ~~2022:~~2023:


		Stock Options(1)	RSUs(2)		Stock Options(1)	RSUs(2)
Outstanding as of December 31, 2021		19,702,845	—
Outstanding as of December 31, 2022				Outstanding as of December 31, 2022	23,541,194	3,084,379
Granted	Granted	5,702,256	557,756	Granted	5,438,689	1,130,838
Exercised		(1,866,556)	—
Exercised or Issued				Exercised or Issued	(124,004)	(185,863)
Forfeited	Forfeited	(505,952)	(11,044)	Forfeited	(3,792,335)	(821,136)
Expired	Expired	—	n/a	Expired	(62,857)	—
Outstanding as of June 30, 2022		23,032,593	546,712
Outstanding as of June 30, 2023				Outstanding as of June 30, 2023	25,000,687	3,208,218

(1) The stock options generally vest over four years, with 25% vesting upon the first-year anniversary of the grant date and the remaining options vesting ratably each month thereafter.

(2) The RSUs vest subject to the satisfaction of service requirements. The grant date fair values of these awards are determined based on the closing price of our Common Stock on the date of grant.

We also incurred incremental stock-based compensation expense related to option modifications of $0.3 million and $1.3 million for the three and six months ended June 30, 2023. We incurred incremental stock-based compensation related to option modifications of nil and $0.1 million for the three and six months ended June 30, 2022.

We recorded nil and $3.7 million in stock-based compensation expense related to the Service Provider Earn-Outs during the six months ended June 30, 2023 and 2022, respectively. As the derived service period has passed, expenses related to the Service Provider Earn-Outs were fully recognized as of December 31, 2022.

Note 1213 — Income Taxes

There has historically been no federal or state provision for income taxes because ~~the Company has~~we have incurred operating losses and ~~maintains~~maintain a ~~full~~ valuation allowance against ~~its~~our net realizable deferred tax assets in the United States. For the three and six months ended June 30, 2023 and 2022, ~~and 2021, the Company~~we recognized no provision for income taxes in the United States. The provision for foreign income taxes was immaterial for the three and six months ended June 30, 2023 and 2022.

2021

Table of Contents

SomaLogic, Inc.
Notes to Condensed Consolidated Financial Statements

Unaudited

~~United States. The provision for foreign income taxes was immaterial for the three and six months ended June 30, 2022 and 2021.~~

Utilization of ~~the Company’s~~our net operating loss and tax credit carryforwards may be subject to a substantial annual limitation due to the ownership change limitations provided by the Internal Revenue Code and similar state provisions. Such an annual limitation could result in the expiration or elimination of the net operating loss and tax credit carryforwards before utilization. Management believes that the limitation will not limit utilization of the carryforwards prior to their expiration.

Note 1314 — Net Loss Per Share

The following table sets forth the computation of basic and diluted net loss per share:


		Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended June 30,				Six Months Ended June 30,
(in thousands, except share and per share data)	(in thousands, except share and per share data)	2022		2021		2022		2021			(in thousands, except share and per share data)	2023		2022		2023		2022
Net loss	Net loss	$	(22,985)	$	(13,337)	$	(26,964)	$	(22,821)		Net loss	$	(24,772)	$	(22,985)	$	(58,974)	$	(26,964)
Weighted-average shares outstanding, basic and diluted	Weighted-average shares outstanding, basic and diluted	183,143,391		114,904,241		182,599,949		114,691,007			Weighted-average shares outstanding, basic and diluted	186,741,112		183,143,391		186,633,391		182,599,949
Net loss per share, basic and diluted	Net loss per share, basic and diluted	$	(0.13)	$	(0.12)	$	(0.15)	$	(0.20)		Net loss per share, basic and diluted	$	(0.13)	$	(0.13)	$	(0.32)	$	(0.15)

During periods in which ~~the Company incurs~~we incur a net loss, diluted weighted average shares outstanding are equal to basic weighted average shares outstanding because the effect of all awards is anti-dilutive. The following outstanding shares of potentially dilutive securities were excluded from the computation of diluted net loss per share for the periods presented because including them would have been anti-dilutive:


		Three Months Ended June 30,		Six Months Ended June 30,		Three Months Ended June 30,			Six Months Ended June 30,
		2022	2021	2022	2021			2023	2022	2023	2022
Anti-dilutive shares:	Anti-dilutive shares:						Anti-dilutive shares:
Stock options to purchase common stock	Stock options to purchase common stock	23,032,593	15,636,018	23,032,593	15,636,018		Stock options to purchase common stock	25,000,687	23,032,593	25,000,687	23,032,593
Public warrants and private placement warrants	Public warrants and private placement warrants	10,533,324	—	10,533,324	—		Public warrants and private placement warrants	10,533,324	10,533,324	10,533,324	10,533,324
Convertible debt (on an if-converted basis)		—	571,106	—	571,106
Unvested RSUs outstanding		546,712	—	546,712	—

Unvested RSUs							Unvested RSUs	3,208,218	546,712	3,208,218	546,712
Replacement awards subject to vesting conditions							Replacement awards subject to vesting conditions	1,209,801	—	1,209,801	—

Total anti-dilutive shares	Total anti-dilutive shares	34,112,629	16,207,124	34,112,629	16,207,124		Total anti-dilutive shares	39,952,030	34,112,629	39,952,030	34,112,629

Note 1415 — Related Parties

The Company did not make any payments for an unconditional contribution to a related party during the six months ended June 30, 2022 or 2021. As of June 30, 2022, the remaining pledge of $0.4 million is recorded in accrued liabilities and is expected to be paid out within the next 12 months.

~~In June 2019, we entered into a consulting agreement (the “Master Agreement”) with Abundant Venture Innovation Accelerator~~Casdin Partners Master Fund, L.P (“~~AVIA”~~Casdin”), ~~a company that engages in business incubation activities. AVIA is a related party to the Company because Ted Meisel,~~founded by Eli Casdin, a member of our Board of Directors asand our principal owner, was a shareholder of ~~September 1, 2021, also serves on~~Palamedrix. Upon our acquisition of Palamedrix, Casdin received $0.8 million in cash, $0.8 million in equity, and the ~~board~~right to receive up to $0.3 million of ~~directors of AVIA. We also entered into a consulting agreement (the “Consulting~~ Milestone ~~Agreement”) with AVIA, to provide services~~Consideration related to ~~expanding our contractual relationships with health system providers. Pursuant to~~ the Master Agreement and the Consulting Milestone Agreement, the Company agreed to pay AVIA for business development activities. In June 2022, we amended the Consulting Milestone Agreement to redefine the milestones and payment terms. For the six months ended June 30, 2022 and 2021, we paid $0.3 million and $0.3 million, respectively for these consulting services.achievement of net sales milestones.

Note 1516 — ~~Subsequent Events~~Restructuring

On ~~July 25,~~December 16, 2022, following the ~~Company entered into~~completion of a strategic review of our business, we announced a workforce reduction plan (the "Strategic Reorganization") to reduce operating costs and focus on long-term growth opportunities in our life sciences business. Under this Strategic Reorganization, we reduced our workforce by approximately 16%, with a majority of these employees separating in December and the remaining affected employees separating over the next three-month period. Employees who were impacted by the restructuring were eligible to receive severance benefits contingent upon an ~~acquisition~~impacted employee's execution of a separation agreement, ~~to acquire 100%~~which included a general release of ~~the outstanding shares of Palamedrix, Inc. ("Palamedrix"). Palamedrix is a DNA nano tech firm~~claims against us. Certain impacted employees were covered by employment agreements or an existing severance plan that provides ~~deep scientific and engineering expertise, miniaturization technology and enhanced ease-of-use capabilities that the Company intends~~termination benefits.

One-time termination benefits were recorded pursuant to ~~leverage as it develops the next generation~~ASC 420, Exit or Disposal Cost Obligations, while termination benefits under ongoing benefit arrangements were recorded pursuant to ASC 712, Compensation - Nonretirement Postemployment Benefits.

We recognized restructuring charges of ~~SomaScan® Assay. The purchase price includes initial cash consideration of $14 million, initial stock consideration of $21~~approximately $0.1 million and ~~contingent consideration up~~$1.1 million primarily related to ~~$17.5 million based on certain milestones. In connection with this acquisition, we incurred approximately $0.7 million and $1.8 million of transaction costs~~one-time termination benefits during the three and six months ended June 30, ~~2022,~~2023, respectively. We do not expect to incur additional material employee severance and benefits expense. This reflects our best estimate, which may be revised in subsequent periods as the Strategic Reorganization progresses.

Table of Contents

SomaLogic, Inc.
Notes to Condensed Consolidated Financial Statements
Unaudited

The ~~related costs are recorded~~following table outlines the components of the restructuring charges included in ~~Selling, general and administrative on~~ the condensed consolidated ~~statement~~statements of operations and comprehensive ~~loss.~~ loss:


(in thousands)	Three Months Ended June 30, 2023		Six months ended June 30, 2023
Cost of assay services revenue	$	—	$	19
Research and development	—		243
Selling, general and administrative	59		838
Total employee severance and benefits	$	59	$	1,100

The ~~acquisition is expected~~following table outlines the changes in liabilities associated with our Strategic Reorganization, including restructuring expenses incurred and cash payments for the six months ended June 30, 2023:


(in thousands)
Balance at December 31, 2022	$	2,223
Accruals	1,062
Payments	(2,843)
Balance at June 30, 2023	$	442

The restructuring liabilities are included in accrued liabilities in the condensed consolidated balance sheets. We expect that substantially all of the remaining accrued restructuring liabilities will be paid in cash over the next 12 months. The charges recognized in the rollforward of our accrued restructuring liabilities do not include items charged directly to ~~close during~~expense for extension of the ~~third quarter~~exercise period of ~~2022.~~vested options.

2123

Table of Contents

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis should be read in conjunction with our unaudited condensed consolidated financial statements, and the related notes thereto, presented in this Quarterly Report on Form 10-Q as well as our audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, ~~2021~~2022 (the ~~“2021~~“2022 Form 10-K”). The following discussion and analysis contains forward-looking statements based upon our current expectations, estimates and projections that involve risks and uncertainties. Actual results could differ materially from those anticipated in these forward-looking statements due to, among other considerations, the matters discussed under Cautionary Note Regarding Forward-Looking Statements included elsewhere in this Quarterly Report on Form 10-Q. Unless the context otherwise requires, all references in this section to the “Company,” “we,” “us” or “our” refer to the business of SomaLogic prior to the consummation of the ~~Business Combination,~~SPAC Merger, and to the Company and its consolidated subsidiaries following the consummation of the ~~Business Combination.~~SPAC Merger.

SomaLogic, Inc. and our Predecessor

SomaLogic was originally formed as a special purpose acquisition company under the name CM Life Sciences II Inc. for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization, or similar business combination with one or more businesses. Prior to the ~~Business Combination,~~SPAC Merger, it did not have historical financial operating results. SomaLogic Operating, our accounting predecessor, is a leading commercial-stage proteomics company. In connection with the ~~Business Combination,~~SPAC Merger, SomaLogic Operating became a wholly owned subsidiary of SomaLogic.

Business Overview

SomaLogic is a leading commercial-stage proteomics company. We have built an integrated proteomics platform (“SomaScan Platform”) capable of robust, high throughput proteomics analysis with broad proteome coverage, low limits of detection, high reproducibility and at low costs. We designed our platform with the goal of being a universal proteomics platform, with the breadth (number of proteins measured) and precision (accuracy of measurement) important for discovery and research applications, and both the reproducibility and robustness important for clinical applications. We currently run our platform within our own laboratory, receive samples from customers and provide them proteomics analysis services. We ~~are~~have also ~~developing~~developed an integrated solution comprising kits and select equipment that ~~would enable~~enables customers to ~~perform~~use our ~~proteomics assay~~SomaScan Platform at their own sites and leverage our bioinformatics capabilities to analyze the data.

~~Impact~~On August 31, 2022, we completed the acquisition of ~~the COVID-19 Pandemic~~

~~In March 2020, the World Health Organization declared the Coronavirus Disease 2019 (“COVID-19”) outbreak to be~~Palamedrix, Inc. Palamedrix is a ~~global pandemic. Since then, COVID-19 has continued to spread throughout much of the United States~~DNA nano tech firm that provides deep scientific and ~~the world causing uncertainty~~engineering expertise, miniaturization technology and ~~disruption to business activities.~~

~~Our suppliers and customers have been impacted by the COVID-19 pandemic, and we have experienced supply delays for certain equipment, instrumentation and other supplies~~enhanced ease-of-use capabilities that we ~~use for~~intend to leverage as it develops the next generation of SomaScan® Assay. The acquisition expands the development of our portfolio of services, while enhancing our research capabilities, and ~~products as well as delays~~providing an immediate footprint in ~~customer sample receipt.~~

~~The COVID-19 pandemic continues to be dynamic~~the San Diego area with already-established staff, lab, and near-term challenges across the economy remain. We expect continued volatility and unpredictability related to the impact of COVID-19 on our business results. We continue to actively monitor the pandemic and we will continue to take appropriate steps to mitigate the adverse impacts on our business posed by the on-going spread of COVID-19.strong local talent pool.

Effects of Inflation

Inflation has impacted our results of operations for the six-month period ended June 30, ~~2022,~~2023, and our business could continue to be affected by inflation in the future.

Factors Affecting Our Performance

The following factors have been important to our business and we expect them to impact our results of operations and financial condition in future periods:

•Continued adoption of our services and products:

◦We have a well-established base of marquee customer and Key Opinion ~~Leaders~~Leader (“KOL”) relationships in place, and as we grow further, we expect to win contracts with new customers and expand the scope of existing contracts with existing customers.

◦We plan to develop and grow our offering of reagents and corresponding solutions, including both small and large plex capabilities, site-of-service deployed assay options, and bioinformatics offerings to attract additional customers and cross-sell to existing customers.

◦We continue to focus on growing our proteomics database and artificial intelligence and machine learning analytics to drive value and market opportunities.

◦We expect our total revenue may vary from period to period based on, among other things, the timing and size of new contracts, fluctuations in customer consumption of and adoption trends, ramp time and productivity of our salesforce, the impact of significant transactions, and seasonality. Failure to effectively develop and expand our sales and marketing capabilities or improve the productivity of our

sales and marketing organization could harm our ability to expand our potential customer and sales pipeline, increase our customer base, and achieve broader market acceptance of our offering.

•Continued investment in growth:

◦We continue to invest significantly in our laboratory process and commercial infrastructure.

◦Investments in research and development will include hiring of employees with the necessary scientific and technical backgrounds to enable enhancements to our existing services and products and bring new services and products to market.

•Ability to lower the costs associated with performing the assay:

◦We intend to reduce the cost of ~~raw materials~~manufacturing inventory by, in part, modifying our assays and laboratory processes to use materials and technologies that provide equal or greater quality at lower cost, improving how we manage our materials and negotiating favorable terms for our materials purchases.

◦We intend to reduce the cost of performing our SomaScan® assay as we move to either a less expensive array or Next Generation Sequencing system for our DNA readout of the protein concentrations present in a sample.

•Seasonality:

◦Our revenue can be seasonal dependent upon the procurement and budgeting cycles of many of our customers, especially government- or grant-funded customers, whose cycles often coincide with government fiscal year ends.

•~~Development and commercialization of clinical diagnostic tests:~~

◦We aim to continue to advance our portfolio of clinical diagnostic tests that leverage our proprietary proteomics platform and artificial intelligence-enabled bioinformatics. By developing additional tests, the Company can provide more options to customers and collaborators and further commercialize our platform driving growth in revenue.

•Expansion of our proteomic content:

◦To maintain our competitive advantage, we plan to increase the number of protein reagents for commercial availability based on allocated funding, resource availability, and the successful validation of new reagents.

◦Upon successful commercialization of the new reagents, the impact to cost of revenue for the new proteomic content is estimated to be offset by the increased efficiencies we may gain from sample volume growth and value engineering initiatives.

•Macroeconomic conditions:

◦A deterioration in macroeconomic economic conditions including risk of recession, decreased government funding, effects of inflation, labor shortages, supply chain issues and higher interest rates could impact both our and our customers’ operations. We could experience pricing pressure and decreased demand as a result.

Components of Results of Operations

Revenue

We derive our revenue from four primary sources: (1) assay services revenue, (2) product revenue, (3) collaboration revenue, and (4) other revenue. Customers include top biopharmaceutical companies and leading academic research universities.

Assay services revenue

We generate assay services revenue primarily from the sale of SomaScan® services. SomaScan® service revenue is derived from performing the SomaScan® assay on customer samples to generate data on protein biomarkers. We expect assay services revenue to increase over the ~~long term~~long-term with new and recurring sales opportunities. With the enhancement of our proteomic services, we expect to capture more market opportunities outside of the United States region, as well as winning contracts with new customers and expanding the scope of sales with existing customers.

Product revenue

Product revenue primarily consists of equipment and kit sales, which enable our customers to bring the SomaScan® proteomic platform in-house and to build lines of business based on this technology. ~~In preparation for a full-scale re-launch, we have established agreements and installed equipment at several sites to deploy kits in the future. This~~The establishment of SomaScan® Certified Sites will allow SomaLogic to quickly grow into new geographic regions and expand our customer base.

Collaboration revenue

Collaboration revenue consists of fees earned for research and development services, except for grant revenue research and development services that are classified in other revenue. Collaboration revenue currently relates to an arrangement with one customer, NEC Solution Innovators, Ltd. (“NES”), a wholly owned subsidiary of NEC Corporation

(“NEC”). We believe expanding collaborative arrangements with KOLs will allow for further enhancements of our integrated platform, lower barriers to adoption and introduce or expand new market channels and customers within geographic regions and markets we do not currently operate in.

Other revenue

Other revenue includes royalty revenue and revenue received from research grants. ~~The Company recognizes~~We recognize royalty revenue for fees paid by customers in return for ~~the exclusive~~a license to make, use or sell certain licensed products in certain geographic ~~areas.~~areas in the period in which the subsequent sale or usage has occurred. A license arrangement entered into in September 2022 with New England BioLabs (“NEB”) includes guaranteed fixed minimum royalties for which revenue has been recognized, net of the effect of a significant financing component. Any revenue above the guaranteed fixed minimum royalties is recognized in the period in which the subsequent sale or usage has occurred. Grant revenue represents funding under cost reimbursement programs from government agencies, and non-profit foundations for qualified research and development activities ~~performed by the Company.~~we perform. We expect other revenue to continue to grow as we expand our commercial team and continue to pursue additional licensing relationships.

Cost of revenue

Cost of assay services revenue

Cost of assay services revenue consists of raw materials and production costs, salaries and other personnel costs, overhead and other direct costs related to assay services revenue. It also includes ~~provisions for excess or obsolete inventory and~~ costs for production variances, such as yield losses, material usages, spending and capacity variances. Cost of assay services revenue ~~also includes royalty fees that~~is recognized in the ~~Company owes to third parties~~period the related ~~to assay services.~~revenue is recognized.

We expect cost of assay services revenue to increase as we grow our sample volume. We expect the cost per sample to decrease over the long term due to the efficiencies we may gain as sample volume increases from improved utilization of our laboratory capacity and other value engineering initiatives. If our sample volume throughput is reduced ~~as a result of the COVID-19 pandemic or otherwise,~~ cost of revenue as a percentage of total revenue may be adversely impacted due to fixed overhead cost.

Cost of product revenue

Cost of product revenue consists primarily of raw materials, equipment and production costs, salaries and other personnel costs, overhead and other direct costs related to product revenue. Cost of product revenue is recognized in the period the related revenue is recognized. Shipping and handling costs incurred for product shipments are included in cost of product revenue in the condensed consolidated statements of operations and comprehensive loss. ~~Cost of product revenue also includes royalty fees that the Company owes to third parties related to the sale of products.~~

Research and development

Research and development expenses consist primarily of salaries and benefits, laboratory supplies, clinical study costs, consulting fees and related costs. We believe that our continued investment in research and development is essential to our long-term competitive position. We plan to continue to invest significantly in our research and development efforts, including hiring additional employees, with an expected focus on advancing our assay and our bioinformatics platform, new clinical studies, as well as lowering the cost of assays. As a result of these and other initiatives, we expect research and development expenses will increase in absolute dollars in future periods and vary from period to period as a percentage of revenue.

Selling, general and administrative

Selling expenses consist primarily of personnel and marketing related costs. General and administrative expenses consist primarily of personnel costs for our finance, human resources, business development and general management, as well as professional services, such as legal and accounting services.

As we continue to introduce new services and products, broaden our customer base and grow our business, we expect selling, general and administrative expenses to increase in future periods as the number of sales and marketing and administrative personnel grows. We also anticipate incurring increased accounting, audit, legal, regulatory, compliance, director and officer insurance costs, as well as, investor and public relations expenses associated with operating as a public company.

Interest income and other, net

Interest income and other, net primarily consists of interest earned on our cash equivalents and investments, which are invested in money market funds, commercial paper, U.S Treasuries, asset-backed securities, corporate bonds, and agency bonds. Interest income and other, net also includes interest income recognized related to a significant financing component.

~~Interest expense~~

~~Interest expense is attributable to our borrowings under debt agreements as well as the change in fair value of the compound derivative liability.~~

~~Loss on extinguishment of debt, net~~

Loss on extinguishment of debt, net consists of a loss on extinguishment of debt due to the repayment of the Amended and Restated Credit Agreement, and offset by a gain on extinguishment of debt due to forgiveness of the Paycheck Protection Program (“PPP”) loan during the three and six months ended June 30, 2021.

Change in fair value of warrant liabilities

Change in fair value of warrant liabilities consists of changes in fair value related to the Public Warrant and Private Warrant liabilities. The warrant liabilities are classified as marked-to-market liabilities pursuant to ASC 815, Derivatives and Hedging ~~(“ASC 815”)~~, and the corresponding increase or decrease in value impacts our net loss.

Change in fair value of earn-out liability

Change in fair value of earn-out liability consists of changes in the earn-out liability related to Earn-Out Shares issued as part of the ~~Business Combination.~~SPAC Merger. The earn-out liability is classified as a marked-to-market liability pursuant to ASC 815 and the corresponding increase or decrease in value impacts our net loss.

Results of Operations

Comparison of the three months ended June 30, ~~2022~~2023 versus the three months ended June 30, ~~2021~~2022

Revenue


		Three Months Ended June 30,				Change					Three Months Ended June 30,				Change
(in thousands)	(in thousands)	2022		2021		$		%		(in thousands)	2023		2022		$		%
Assay services revenue	Assay services revenue	$	10,931	$	16,236	$	(5,305)	(33)	%	Assay services revenue	$	16,597	$	10,931	$	5,666	52	%
Product revenue	Product revenue	714		462		252		55	%	Product revenue	2,909		714		2,195		NM
Collaboration revenue	Collaboration revenue	762		762		—		—	%	Collaboration revenue	762		762		—		—	%
Other revenue	Other revenue	1,737		2,320		(583)		(25)	%	Other revenue	200		1,737		(1,537)		(88)	%
Total revenue	Total revenue	$	14,144	$	19,780	$	(5,636)	(28)	%	Total revenue	$	20,468	$	14,144	$	6,324	45	%

NM A percentage calculation is not meaningful due to change in signs, a zero-value denominator or a percentage change greater than 200.

Total revenue ~~decreased~~increased by ~~$5.6~~$6.3 million, or ~~28%~~45%, for the three months ended June 30, ~~2022~~2023 compared to the three months ended June 30, ~~2021.~~2022. The overall growth was driven by the continued adoption of the SomaScan Platform.

~~The $5.3 million, or 33%, decrease in assay~~Assay services revenue increased $5.7 million for the three months ended June 30, ~~2022~~2023 compared to the three months ended June 30, ~~2021~~2022. The growth was driven by an increase in the volume of samples received and processed during the current period.

Product revenue increased by $2.2 million for the three months ended June 30, 2023 compared to the three months ended June 30, 2022 primarily due to an increase in the volume of kit sales.

Other revenue decreased by $1.5 million for the three months ended June 30, 2023 compared to the three months ended June 30, 2022. The decrease is primarily driven by timing of revenue recognition for our guaranteed fixed minimum royalties under our agreement with NEB. The aggregate amount of the guaranteed fixed minimum royalties was recognized immediately upon entering the agreement with NEB in September of 2022, resulting in no revenue recognized for the three months ended June 30, 2023. However, we continue to receive fixed minimum royalty payments under this agreement. Other revenue further declined due to a decrease in ~~sample volumes resulting from fluctuations in consumer consumption, offset partially by an increase in average selling price driven by customer mix.~~grant revenue.

~~Product~~Cost of revenue


	Three Months Ended June 30,				Change
(in thousands)	2023		2022		$		%
Cost of assay services revenue	$	9,677	$	6,571	$	3,106	47	%
Cost of product revenue	1,498		506		992		196	%
Total cost of revenue	$	11,175	$	7,077	$	4,098	58	%

Total cost of revenue increased by ~~$0.3~~$4.1 million, or ~~55%~~58%, for the three months ended June 30, ~~2022~~2023 compared to the three months ended June 30, ~~2021~~2022.

Cost of assay services revenue increased by $3.1 million for the three months ended June 30, 2023 compared to the three months ended June 30, 2022 primarily due to an increase in the ~~sale~~volume of ~~equipment~~samples processed in the current period.

Cost of product revenue increased by $1.0 million for the three months ended June 30, 2023 compared to ~~new kits customers.~~the three months ended June 30, 2022 primarily due to an increase in the volume of kit sales.

~~Other revenue~~

Research and development


	Three Months Ended June 30,				Change
(in thousands)	2023		2022		$		%
Research and development	$	10,815	$	17,636	$	(6,821)	(39)	%

Research and development expenses decreased by ~~$0.6~~$6.8 million, or ~~25%~~39%, for the three months ended June 30, ~~2022~~2023 compared to the three months ended June 30, ~~2021~~2022. The decrease was primarily due to a ~~$1.1~~$4.4 million reduction in consulting fees and supplies costs related to content expansion and other internal projects. The decrease ~~in royalty revenue~~was further driven by a ~~decrease~~$3.4 million reduction in ~~COVID research funding,~~clinical studies costs. These decreases were partially offset by a ~~$0.5~~$1.0 million increase in ~~grant revenue.~~salaries and benefits due to increased headcount.

~~Cost of revenue~~Selling, general, and administrative

Three Months Ended June 30, Change
(in thousands) 2022 2021 $ %
Cost of assay services revenue $ 6,571 $ 7,656 $ (1,085) (14) %
Cost of product revenue 506 329 177 54 %
Total cost of revenue $ 7,077 $ 7,985 $ (908) (11) %


	Three Months Ended June 30,				Change
(in thousands)	2023		2022		$		%
Selling, general and administrative	$	29,573	$	36,812	$	(7,239)	(20)	%

~~Total cost of revenue~~Selling, general, and administrative expenses decreased by ~~$0.9~~$7.2 million, or ~~11%~~20%, for the three months ended June 30, ~~2022~~2023 compared to the three months ended June 30, ~~2021.~~

~~Cost~~2022. The decrease was primarily driven by a $5.0 million decrease in stock-based compensation expense. Stock-based compensation expense decreased as a result of ~~assay services revenue~~expense associated with Service Provider Earn-Out awards becoming fully recognized as of December 31, 2022. Stock-based compensation expense also decreased ~~by $1.1 million, or 14%, for~~following our reduction in headcount and the ~~three months ended June 30, 2022 compared to~~departure of certain prior officers of the ~~three months ended June 30, 2021.~~Company. The decrease in ~~cost of assay services revenue~~selling, general and administrative expenses was ~~primarily due to~~further driven by a $4.0 million decrease in ~~sample volumes resulting from fluctuations~~marketing costs. The decrease in ~~consumer consumption. This decrease~~selling, general and administrative was partially offset by ~~varying degrees of production inefficiencies due to delays in sample receipts.~~

Cost of product revenue increased by $0.2 million, or 54%, for the three months ended June 30, 2022 compared to the three months ended June 30, 2021 primarily due to the sale of equipment to new kits customers.

~~Research and development~~

Three Months Ended June 30, Change
(in thousands) 2022 2021 $ %
Research and development $ 17,636 $ 8,590 $ 9,046 105 %

Research and development increased by $9.0 million, or 105%, for the three months ended June 30, 2022 compared to the three months ended June 30, 2021. The increase in research and development was primarily due to a ~~$4.7~~$1.5 million increase in professional services fees, and supplies related to projects for reducing costs and content expansion, a $1.9 million increase related to increase in internal clinical studies, a $1.7 million increase in wages and benefits due to increased headcount in our research and development team and a $0.8$0.3 million increase in stock-based compensation expense ~~due to new option and RSU grants and Earn-Out Shares issued to Earn-Out Service Providers.~~

~~Selling, general, and administrative~~

Three Months Ended June 30, Change
(in thousands) 2022 2021 $ %
Selling, general and administrative $ 36,812 $ 14,833 $ 21,979 148 %

~~Selling, general, and administrative increased by $22.0 million, or 148%, for the three months ended June 30, 2022 compared~~related to the three months ended June 30, 2021. The increase in selling, general and administrative was primarily due to a $4.4 million increase in advisory and management services incurred in relation to public-company compliance and other transactions, including costs incurred in relation to the Palamedrix acquisition, a $7.5 million increase in wages and benefits due to increased headcount in our commercial and administrative teams, a $6.4 million increase in services incurred related to marketing initiatives and product development, a $3.7 million increase in stock-based compensation expense due to new option, RSU grants and Earn-Out Shares issued to Earn-Out Service Providers.accelerated vesting of options held by terminated executives.

Other income ~~(expense)~~

Three Months Ended June 30, Change
(in thousands) 2022 2021 $ %
Other income (expense):
Interest income and other, net $ 833 $ 69 $ 764 NM
Interest expense — (148) 148 (100) %
Change in fair value of warrant liabilities 14,536 — 14,536 NM
Change in fair value of earn-out liability 9,027 — 9,027 NM
Loss on extinguishment of debt, net — (1,630) 1,630 (100) %
Total other income (expense) $ 24,396 $ (1,709) $ 26,105


	Three Months Ended June 30,				Change
(in thousands)	2023		2022		$		%
Other income:
Interest income and other, net	$	5,798	$	838	$	4,960	NM

Change in fair value of warrant liabilities	527		14,536		(14,009)		(96)	%
Change in fair value of earn-out liability	—		9,027		(9,027)		(100)	%

Total other income	$	6,325	$	24,401	$	(18,076)	(74)	%

NM A percentage calculation is not meaningful due to change in signs, a zero-value denominator or a percentage change greater than 200.

Interest income and other, net increased by ~~$0.8~~$5.0 million for the three months ended June 30, ~~2022~~2023 compared to the three months ended June 30, ~~2021~~2022 due to ~~an average~~ higher ~~cash equivalents and investment balances as well as rising~~ interest rates during the ~~three months ended June 30, 2022 compared to the three months ended June 30, 2021.~~

Interest expense decreased by $0.1 million, or 100%, for the three months ended June 30, 2022 compared to the three months ended June 30, 2021 primarily due to the interest on the credit agreement during the three months ended June 30, 2021. The credit agreement was paid back in full in April 2021.current period.

The change in fair value of warrant liabilities resulted in a gain of ~~$14.5~~$0.5 million ~~during~~for the three months ended June 30, ~~2022,~~2023, due to the quarterly remeasurement of the warrant liabilities. The warrant liabilities were recorded as part of the Business Combination and did not exist during the three months ended June 30, 2021. Therefore no remeasurement of the warrant liabilities was recorded in the prior period.

~~The~~No change in fair value of the earn-out liability ~~resulted in a gain of $9.0 million for the three months ended June 30, 2022, due to the quarterly remeasurement of the earn-out liability. The earn-out liability~~ was recorded ~~as part of the Business Combination and did not exist~~ during the three months ended June 30, ~~2021. Therefore no remeasurement of~~2023 as the earn-out liability was ~~recorded in the prior period.~~

~~Loss on extinguishment of debt, net of $1.6 million for~~written off during the three months ended June 30, 2021 is due to a $5.2 million loss on extinguishment of debt as a result of the repayment of the Amended and Restated Credit Agreement in April 2021, offset by a $3.6 million gain on extinguishment of debt as of result of the forgiveness of the PPP loan in June 2021.March 31, 2023.

Comparison of the six months ended June 30, ~~2022~~2023 versus the six months ended June 30, ~~2021~~2022

Revenue

Six Months Ended June 30, Change
(in thousands) 2022 2021 $ %
Assay services revenue $ 29,731 $ 30,809 $ (1,078) (3) %
Product revenue 1,167 655 512 78 %
Collaboration revenue 1,525 1,525 — — %
Other revenue 4,701 5,651 (950) (17) %
Total revenue $ 37,124 $ 38,640 $ (1,516) (4) %

~~Total revenue decreased by $1.5 million, or 4%, for the six months ended June 30, 2022 compared to the six months ended June 30, 2021.~~

The $1.1 million, or 3%, decrease in assay services revenue for the six months ended June 30, 2022 compared to the six months ended June 30, 2021 was primarily due to a decrease in sample volumes resulting from fluctuations in consumer consumption.

~~Product revenue increased by $0.5 million, or 78%, for the six months ended June 30, 2022 compared to the six months ended June 30, 2021 primarily due to the sale of equipment to new kits customers.~~

Other revenue decreased by $1.0 million, or 17%, for the six months ended June 30, 2022 compared to the six months ended June 30, 2021 primarily due to a decrease in royalty revenue driven by a decrease in COVID research funding, offset by a slight increase in grant revenue.

~~Cost of revenue~~

Six Months Ended June 30, Change
(in thousands) 2022 2021 $ %
Cost of assay services revenue $ 17,951 $ 13,811 $ 4,140 30 %
Cost of product revenue 778 419 359 86 %
Total cost of revenue $ 18,729 $ 14,230 $ 4,499 32 %

~~Total cost of revenue increased by $4.5 million, or 32%, for the six months ended June 30, 2022 compared to the six months ended June 30, 2021.~~

Cost of assay services revenue increased by $4.1 million, or 30%, for the six months ended June 30, 2022 compared to the six months ended June 30, 2021. The increase in cost of assay services revenue was primarily due to varying degrees of production inefficiencies due to delays in sample receipts.

Cost of product revenue increased by $0.4 million, or 86%, for the six months ended June 30, 2022 compared to the six months ended June 30, 2021 primarily due to the sale of equipment to new kits customers.

~~Research and development~~

Six Months Ended June 30, Change
(in thousands) 2022 2021 $ %
Research and development $ 31,436 $ 16,708 $ 14,728 88 %

Research and development increased by $14.7 million, or 88%, for the six months ended June 30, 2022 compared to the six months ended June 30, 2021. The increase in research and development was primarily due to a $8.8 million increase in professional services and supplies related to projects for reducing costs and content expansion, a $0.9 million increase in internal clinical studies, a $3.3 million increase in wages and benefits due to increased headcount in our research and development team and a $1.7 million increase in stock-based compensation expense due to new option and RSU grants and Earn-Out Shares issued to Earn-Out Service Providers.

~~Selling, general, and administrative~~

Six Months Ended June 30, Change
(in thousands) 2022 2021 $ %
Selling, general and administrative $ 67,627 $ 27,642 $ 39,985 145 %

Selling, general, and administrative increased by $40.0 million, or 145%, for the six months ended June 30, 2022 compared to the six months ended June 30, 2021. The increase in selling, general and administrative was primarily ~~due to~~ a $6.4 million increase in advisory and management services incurred in relation to public-company compliance and other transactions, including costs incurred in relation to the Palamedrix acquisition, a $14.9 million increase in wages and benefits due to increased headcount in our commercial team, a $10.7 million increase in services incurred related to marketing initiatives and product development, and a $8.0 million increase in stock-based compensation expense due to new option and RSU grants and Earn-Out Shares issued to Earn-Out Service Providers.

~~Other income (expense)~~

Six Months Ended June 30, Change
(in thousands) 2022 2021 $ %
Other income (expense):
Interest income and other, net $ 1,039 $ 71 $ 968 NM
Interest expense — (1,322) 1,322 (100) %
Change in fair value of warrant liabilities 27,176 — 27,176 NM
Change in fair value of earn-out liability 25,489 — 25,489 NM
Loss on extinguishment of debt, net — (1,630) 1,630 (100) %
Total other income (expense) $ 53,704 $ (2,881) $ 56,585


	Six Months Ended June 30,				Change
(in thousands)	2023		2022		$		%
Assay services revenue	$	35,016	$	29,731	$	5,285	18	%
Product revenue	4,095		1,167		2,928		NM
Collaboration revenue	1,525		1,525		—		—	%
Other revenue	211		4,701		(4,490)		(96)	%
Total revenue	$	40,847	$	37,124	$	3,723	10	%

NM A percentage calculation is not meaningful due to change in signs, a zero-value denominator or a percentage change greater than 200.

Total revenue increased by $3.7 million, or 10%, for the six months ended June 30, 2023 compared to the six months ended June 30, 2022. The overall growth was driven by the continued adoption of the SomaScan Platform.

Assay services revenue increased by $5.3 million for the six months ended June 30, 2023 compared to the six months ended June 30, 2022. The growth was driven by an increase in the volume of samples received and processed during the current period.

Product revenue increased by $2.9 million for the six months ended June 30, 2023 compared to the six months ended June 30, 2022 primarily due to an increase in the volume of kit sales.

Other revenue decreased by $4.5 million for the six months ended June 30, 2023 compared to the six months ended June 30, 2022. The decrease is primarily driven by timing of revenue recognition for our guaranteed fixed minimum royalties under our agreement with NEB. The aggregate amount of our guaranteed fixed minimum royalties was recognized immediately upon entering the agreement with NEB in September of 2022, resulting in no revenue recognized for the six months ended June 30, 2023. However, we continue to receive royalty payments under this agreement. Other revenue further declined due to a decrease in grant revenue.

Cost of revenue


	Six Months Ended June 30,				Change
(in thousands)	2023		2022		$		%
Cost of assay services revenue	$	21,359	$	17,951	$	3,408	19	%
Cost of product revenue	2,132		778		1,354		174	%
Total cost of revenue	$	23,491	$	18,729	$	4,762	25	%

Total cost of revenue increased by $4.8 million, or 25%, for the six months ended June 30, 2023 compared to the six months ended June 30, 2022.

Cost of assay services revenue increased by $3.4 million for the six months ended June 30, 2023 compared to the six months ended June 30, 2022 primarily due to an increase in the volume of samples processed in the current period.

Cost of product revenue increased by $1.4 million for the six months ended June 30, 2023 compared to the six months ended June 30, 2022 primarily due to increased sales volume of kits.

Research and development


	Six Months Ended June 30,				Change
(in thousands)	2023		2022		$		%
Research and development	$	24,882	$	31,436	$	(6,554)	(21)	%

Research and development expenses decreased by $6.6 million, or 21%, for the six months ended June 30, 2023 compared to the six months ended June 30, 2022. The decrease was primarily due to a $6.6 million reduction in consulting fees and supplies costs related to content expansion and other internal projects. The decrease was further driven by a $3.8 million reduction in clinical studies costs. These decreases were partially offset by a $3.8 million increase in salaries and benefits due to increased headcount.

Selling, general, and administrative


	Six Months Ended June 30,				Change
(in thousands)	2023		2022		$		%
Selling, general and administrative	$	63,762	$	67,627	$	(3,865)	(6)	%

Selling, general, and administrative decreased by $3.9 million, or 6%, for the six months ended June 30, 2023 compared to the six months ended June 30, 2022. The decrease in selling, general and administrative was primarily due to a $4.8 million decrease in services incurred related to marketing initiatives and product development and a $7.5 million decrease in stock based compensation. The decrease in stock based compensation is driven by full expense recognition of the Service Provider Earn-Outs as of December 31, 2022 and departure of terminated executives throughout 2022 and 2023. The decrease in selling, general and administrative is offset by $3.2 million increase in advisory and management services, $2.1 million increase in wages and benefits due to increased headcount in our commercial and administrative teams, a $1.3 million stock based compensation expense related to the accelerated vesting of options held by terminated executives, $1.0 million of severance related to terminated executives. We have also incurred $0.8 million of restructuring charges during the period ended June 30, 2023.

Other income


	Six Months Ended June 30,				Change
(in thousands)	2023		2022		$		%
Other income:
Interest income and other, net	$	10,723	$	1,047	$	9,676	NM

Change in fair value of warrant liabilities	1,580		27,176		(25,596)		(94)	%
Change in fair value of earn-out liability	15		25,489		(25,474)		(100)	%
Loss on extinguishment of debt, net	—		—		—		NM
Total other income	$	12,318	$	53,712	$	(41,394)	(77)	%

NM A percentage calculation is not meaningful due to change in signs, a zero-value denominator or a percentage change greater than 200.

Interest income and other, net increased by ~~$1.0~~$9.7 million for the six months ended June 30, ~~2022~~2023 compared to the six months ended June 30, ~~2021~~2022 due to ~~an average~~ higher ~~cash equivalents and investment balances as well as rising~~ interest rates during the six months ended June 30, ~~2022~~2023 compared to the six months ended June 30, ~~2021.~~

Interest expense decreased by $1.3 million, or 100%, for the six months ended June 30, 2022 compared to the six months ended June 30, 2021 primarily due to the interest on the credit agreement during the three months ended June 30, 2021. The credit agreement was paid back in full in April 2021.2022.

The change in fair value of warrant liabilities resulted in a gain of ~~$27.2~~$1.6 million during the six months ended June 30, ~~2022,~~2023, due to the quarterly remeasurement of the warrant liabilities. The warrant liabilities were recorded as part of the Business Combination and did not exist during the six months ended June 30, 2021. Therefore no remeasurement of the warrant liabilities was recorded in the prior period.

The change in fair value of the earn-out liability resulted in a in an immaterial gain ~~of $25.5 million~~ for the six months ended June 30, ~~2022,~~2023, due to the quarterly remeasurement of the earn-out liability. The earn-out liability was ~~recorded as part of the Business Combination and did not exist~~fully written off during the ~~six months~~period ended June 30, ~~2021. Therefore no remeasurement of the earn-out liability was recorded in the prior period.~~

Loss on extinguishment of debt, net of $1.6 million for the six months ended June 30, 2021 is due to a $5.2 million loss on extinguishment of debt as a result of the repayment of the Amended and Restated Credit Agreement in April 2021, offset by a $3.6 million gain on extinguishment of debt as of result of the forgiveness of the PPP loan in June 2021.2023.

Non-GAAP Financial Measures

We present non-GAAP financial measures in order to assist readers of our condensed consolidated financial statements in understanding the core operating results used by management to evaluate and run the business, as well as, for financial planning purposes. Our non-GAAP financial measure, Adjusted EBITDA, provides an additional tool for investors to use in comparing our financial performance over multiple periods.

Adjusted EBITDA is a key performance measure that our management uses to assess its operating performance. Adjusted EBITDA facilitates internal comparisons of our operating performance on a more consistent basis, and we use this measure for business planning, forecasting, and decision-making. We believe that Adjusted EBITDA enhances an investor’s understanding of our financial performance as it is useful in assessing our operating performance from period-to-period by excluding certain items that we believe are not representative of our core business.

Adjusted EBITDA should not be considered as an alternative to, or more meaningful than, net loss as determined in accordance with GAAP or as an indicator of our operating performance. Certain items excluded from Adjusted EBITDA are significant components in understanding and assessing a company’s financial performance. Our presentation of Adjusted EBITDA should not be construed as an inference that our results will be unaffected by those adjusted items. Our Adjusted EBITDA may not be comparable to similarly titled measures of other companies because they may not calculate this measure in the same manner.

Adjusted EBITDA

We calculate Adjusted EBITDA as net loss adjusted to exclude interest expense, net, depreciation and amortization, income tax provision, and other non-recurring items. The other non-recurring items include the change in the fair value of warrant liabilities, ~~and~~change in fair value of the earn-out ~~liability.~~liability, stock-based compensation expense related to equity award modifications, and restructuring charges.

The following table is a reconciliation of net loss in accordance with GAAP to non-GAAP adjusted EBITDA for the three and six months ended June 30, ~~2022~~2023 and ~~2021:~~2022:


		Three Months Ended June 30,				Six Months Ended June 30,						Three Months Ended June 30,				Six Months Ended June 30,
(in thousands)	(in thousands)	2022		2021		2022			2021		(in thousands)	2023		2022		2023		2022
Net loss	Net loss	$	(22,985)	$	(13,337)	$	(26,964)		$	(22,821)	Net loss	$	(24,772)	$	(22,985)	$	(58,974)	$	(26,964)
Adjustments to reconcile to EBITDA:	Adjustments to reconcile to EBITDA:										Adjustments to reconcile to EBITDA:
Interest income and other, net	Interest income and other, net	(833)		(69)		(1,039)			(71)		Interest income and other, net	(5,798)		(838)		(10,723)		(1,047)
Interest expense		—		148		—			1,322

Income tax provision											Income tax provision	2		5		4		8
Depreciation and amortization	Depreciation and amortization	963		674		1,718			1,377		Depreciation and amortization	1,890		963		3,644		1,718
EBITDA	EBITDA	(22,855)		(12,584)		(26,285)			(20,193)		EBITDA	(28,678)		(22,855)		(66,049)		(26,285)
Adjustments to reconcile to Adjusted EBITDA:	Adjustments to reconcile to Adjusted EBITDA:										Adjustments to reconcile to Adjusted EBITDA:
Loss on extinguishment debt, net (1)		—		1,630		—			1,630
Change in fair value of warrant liabilities ~~(2)~~(1)	Change in fair value of warrant liabilities ~~(2)~~(1)	(14,536)		—		(27,176)		—	—		Change in fair value of warrant liabilities ~~(2)~~(1)	(527)		(14,536)		(1,580)		(27,176)
Change in fair value of earn-out liability ~~(3)~~(2)	Change in fair value of earn-out liability ~~(3)~~(2)	(9,027)		—		(25,489)			—		Change in fair value of earn-out liability ~~(3)~~(2)	—		(9,027)		(15)		(25,489)
Stock compensation expense related to equity award modifications (3)											Stock compensation expense related to equity award modifications (3)	272		—		1,224		—
Restructuring charges (4)											Restructuring charges (4)	59		—		1,100		—
Adjusted EBITDA	Adjusted EBITDA	$	(46,418)	$	(10,954)	$	(78,950)		$	(18,563)	Adjusted EBITDA	$	(28,874)	$	(46,418)	$	(65,320)	$	(78,950)

(1) Represents the $5.2 million loss on extinguishment of debt as a result of the repayment of the Amended and Restated Credit Agreement in April 2021 and offset by the $3.6 million gain on extinguishment of debt as a result of the forgiveness of the PPP loan in June 2021.

~~(2)~~ Represents change in fair value of warrant liabilities. See Note 4,6, Fair Value Measurements, for more details.

(2) Represents change in fair value of earn-out liability. See Note 6, Fair Value Measurements, for more details.

(3) Represents ~~change in fair value of earn-out liability.~~stock-based compensation expense related to equity award modifications that occurred separately from our Strategic Reorganization. See Note 4,12, ~~Fair Value Measurements~~Stock-based Compensation, for more details.

(4) Represents restructuring charges related to the Strategic Reorganization consisting of severance costs, other termination benefit costs, and non-cash stock-based compensation expense. See Note 16, Restructuring, for more details.

Liquidity and Capital Resources

Liquidity Outlook

We believe that our existing cash and cash equivalents and investments will be sufficient to support working capital and capital expenditure requirements for at least the next 12 months. Our future capital requirements will depend on many factors, including our sample volume growth rate, the pace of expansion of sales and marketing activities, the timing and extent of spending to supporting research and development efforts, the introduction of new and enhanced products and services, and the level of costs to operate as a public company. We may, in the future, enter into arrangements to acquire or invest in complementary businesses, products and technologies.

Cash Sources

Historically, our primary sources of liquidity have been proceeds from the ~~Business Combination,~~SPAC Merger, cash collected from our customers, net proceeds from sale of our capital stock, and borrowings from debt facilities. During the first six months of ~~2022,~~2023, our primary source of liquidity was cash collected from our customers in the amount of ~~$72.3~~$37.0 million.

As of June 30, ~~2022,~~2023, we did not have any outstanding debt.

Cash Uses

Historically, our primary use of cash has been to ~~investment~~invest in research and development, our laboratory process, commercial infrastructure and scale our operations to support growth.

We may be required to seek additional equity or debt financing. In the event we require additional financing, we may not be able to raise such financing on terms acceptable to us or at all. If we are unable to raise additional capital or generate cash flows necessary to expand our operations and invest in continued innovation, we may not be able to compete successfully, which would harm our business, operations, and financial condition.

We also have entered into various non-cancelable operating lease agreements for administrative and laboratory facilities. As of June 30, ~~2022,~~2023, our total future minimum lease commitments were ~~$4.6 million, and we have two lease agreements for buildings to be constructed in Louisville, Colorado, with lease terms that are expected to commence in 2023. See Note 5,~~ ~~Leases, for more information on our lease commitments.~~

$3.4 million.

Cash flows

The following table summarizes our cash flows for the periods presented:


		Six Months Ended June 30,					Six Months Ended June 30,
(in thousands)	(in thousands)	2022		2021		(in thousands)	2023		2022
Net cash used in operating activities	Net cash used in operating activities	$	(30,937)	$	(6,625)	Net cash used in operating activities	$	(69,282)	$	(36,276)
Net cash provided by (used in) investing activities		8,886		(72,188)
Net cash provided by (used in) financing activities		4,885		(38,460)
Net cash provided by investing activities						Net cash provided by investing activities	(2,693)		14,225
Net cash provided by financing activities						Net cash provided by financing activities	422		4,885
Effect of exchange rates on cash, cash equivalents and restricted cash	Effect of exchange rates on cash, cash equivalents and restricted cash	(20)		(3)		Effect of exchange rates on cash, cash equivalents and restricted cash	(12)		(20)
Net decrease in cash, cash equivalents and restricted cash		$	(17,186)	$	(117,276)
Net increase in cash, cash equivalents and restricted cash						Net increase in cash, cash equivalents and restricted cash	$	(71,565)	$	(17,186)

Cash flows from operating activities

Cash used in operating activities for the six months ended June 30, ~~2022~~2023 was ~~$30.9~~$69.3 million, and was primarily attributable to a net loss of ~~$27.0~~$59.0 million, which included a non-cash gain on the change in fair value of ~~the earn-out liability of $25.5 million and a non-cash gain on the change in fair value of~~ warrant liabilities of ~~$27.2~~$1.6 million and non-cash accretion of discount on available-for-sale securities, net, of $1.1 million. This was partially offset by non-cash stock-based compensation expense of ~~$18.1~~$11.5 million and non-cash depreciation and amortization of $1.7 million, non-cash lease expense of right of use asset of $0.7 million, non-cash provision for excess and obsolete inventory of $0.1 million, and non-cash amortization of premium on available-for-sale securities, net, of $0.1$3.6 million. Additionally, we incurred $0.9 million in cloud computing arrangement expenditures and experienced a net ~~increase~~decrease in our operating assets and liabilities of $29.3 million, which was primarily due to the $31.8 million increase in deferred revenue, a $3.5 million increase in accounts payable, and a $3.4 million decrease in accounts receivable. These changes were partially offset by a $2.7 million decrease in accrued and other liabilities and a $8.2 million increase in inventory.

Cash used in operating activities for the six months ended June 30, 2021 was $6.6 million, which was primarily attributable to a net loss of $22.8 million and was partially offset by non-cash stock-based compensation expense of $8.0 million, non-cash loss on extinguishment of debt, net of $1.6 million, non-cash depreciation and amortization of $1.4 million, non-cash provision for excess and obsolete inventory of $0.4 million, non-cash amortization of debt issuance costs, discounts and premiums of $0.3 million, non-cash amortization of premium on available-for-sale securities, net, of $0.2 million, and non-cash paid-in-kind interest of $0.2$23.5 million. Additionally, we experienced a net increase in our operating assets and liabilities of $4.2 million, which was primarily due to the $3.9 million decrease in accounts receivable and a $2.5 million increase in deferred revenue. These changes were partially offset by a $0.9 million decrease in accrued and other liabilities, the payment of paid-in-kind interest on extinguishment of debt of $0.8 million, and a $0.6 million increase in prepaid expenses and other current assets.

Cash flows from investing activities

Cash provided by investing activities for the six months ended June 30, ~~2022~~2023 was ~~$8.9~~$2.7 million, consisting of ~~$16.4~~$3.8 million for the ~~proceeds from sales and maturities~~purchases of ~~available-for-sale securities, net of purchase of available-for-sale securities, and $7.5 million for the purchase of property and equipment.~~

~~Cash used in investing activities for the six months ended June 30, 2021 was $72.2 million, consisting of $71.2 million for the purchase of available-for-sale~~available-for sale securities, net of proceeds from sales and maturities of ~~available-for-sale~~available-for sale securities, and ~~$1.0~~$2.1 million for the purchase of property and equipment.

Cash flows from financing activities

Cash provided by financing activities for the six months ended June 30, ~~2022~~2023 was ~~$4.9~~$0.4 million, which was attributable to the ~~proceeds from the exercise of options to purchase our common stock.~~

Cash used in financing activities for the six months ended June 30, 2021 was $38.5 million, consisting of $36.5 million for the repayment of long-term debt and $4.7 million of deferred transaction costs related to the Business Combination, partially offset by $2.7 million in proceeds from the exercise of options to purchase our common stock.

Critical Accounting Policies and Estimates

Our discussion and analysis of our financial condition and results of operations are based upon our condensed consolidated financial statements which have been prepared in accordance with United States generally accepted accounting principles, or GAAP. The preparation of the condensed consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue, costs, expenses and related disclosures. We evaluate our estimates and judgments on an on-going basis. We base our estimates on current facts, historical and anticipated results, trends, and other relevant assumptions that we believe are reasonable under the circumstances. Actual results could differ from these estimates, and such differences could be material to ~~the Company’s~~

our condensed consolidated financial position and results of operations. Within the context of these critical accounting policies, we are not currently aware of any reasonably likely event that would result in materially different amounts being reported.

Our significant accounting policies are described in more detail in Note 2, Significant Accounting Policies, in our ~~2021~~2022 Form 10-K. Our most critical accounting policies and estimates are those that require difficult, subjective, and/or complex judgments and estimates and are used in the preparation of our consolidated financial statements. Our critical accounting policies and estimates are described in more detail in Critical Accounting Policies and Estimates in our ~~2021~~2022 Form 10-K. ~~Other than information discussed herein, there~~There have been no significant changes to our critical accounting policies and estimates disclosed in our ~~2021~~2022 Form ~~10K~~10-K for the year ended December 31, ~~2021.~~2022.

~~Revenue recognition~~

~~We recognize revenue from sales to customers under ASC 606,~~ ~~Revenue from Contracts with Customers~~. ASC 606 provides a five-step model for recognizing revenue that includes identifying the contract with a customer, identifying the performance obligations in the contract, determining the transaction price, allocating the transaction price to the performance obligations, and recognizing revenue when, or as, an entity satisfies a performance obligation.

We recognize revenue when or as control of promised goods or services is transferred to the customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. Sales, value add, and other taxes collected concurrent with revenue-producing activities are excluded from revenue and products are sold without the right of return.

Payment terms may vary by customer, are based on customary commercial terms, and are generally less than one year. We do not adjust revenue for the effects of a significant financing component for contracts where the period between the transfer of the goods or services and collection is one year or less. We expense incremental costs to obtain a contract as incurred since the amortization period of the asset that would otherwise be recognized is one year or less.

~~Assay services revenue~~

We generate assay services revenue primarily from the sale of SomaScan® services. SomaScan® service revenue is derived from performing the SomaScan® assay on customer samples to generate data on protein biomarkers. Revenue from SomaScan® services is recognized at the time the analysis data or report is delivered to the customer, which is when control has been transferred to the customer. SomaScan® services are sold at a fixed price per sample without any volume discounts, rebates or refunds.

The delivery of each assay data report is a separate performance obligation. For arrangements with multiple performance obligations, the transaction price must be allocated to each performance obligation based on its relative standalone selling price. When assay services are included with other products or services within a customer contract, judgment is required to determine whether the promises are distinct or should be combined and to determine the transaction price allocation and standalone selling price. Standalone selling price is primarily determined based on amounts invoiced to customers in observable transactions. Standalone selling price varies depending on customer size, volume and contract length.

~~Product revenue~~

Product revenue primarily consists of equipment and kit sales to customers who assay samples in their own laboratories. Equipment is generally accounted for as a bundle with installation, qualification and training services. Revenue is recognized over time based on the progress made toward achieving the performance obligation utilizing input methods, including costs and labor hours incurred. The Company receives fixed consideration per kit and revenue from kit sales is recognized upon transfer of control to the customer. Shipping and handling costs billed to customers are included in product revenue in the condensed consolidated statements of operations and comprehensive loss.

~~Collaboration revenue~~

~~We provide research and development services that are accounted for in accordance with ASC 808,~~ ~~Collaborative Arrangements~~, because both parties are active participants and are exposed to significant risks and rewards depending on the activity’s commercial failure or success. The most critical judgments used to estimate revenue from collaborative arrangements include the determination of units of account within the scope of ASC 606, the number of distinct performance obligations, estimation of transaction price including allocation to the identified performance obligations, and determination of the pattern of recognition.

~~Other revenue~~

Other revenue includes royalty revenue and revenue received from research grants. We recognize royalty revenue for fees paid by customers in return for the exclusive license to make, use or sell certain licensed products in certain geographic areas. We recognize revenue for a sales or usage-based royalty promised in exchange for a license of intellectual property when the later of the following events occurs: (i) the subsequent sale or usage occurs, or (ii) the performance obligation to which some or all of the sales-based or usage-based royalty has been satisfied. As such, revenue is recognized in the period in which the subsequent sale or usage has occurred.

Grant revenue represents funding under cost reimbursement programs from government agencies and non-profit foundations for qualified research and development activities performed by the Company. For efforts performed under these grant agreements, our policy is to recognize revenue when it is reasonably assured that the grant funding will be received as evidenced through the existence of a grant arrangement, amounts eligible for reimbursement are determinable and have been incurred, the applicable conditions under the grant arrangements have been met, and collectability of amounts due is reasonably assured. The classification of costs incurred related to grants is based on the nature of the activities provided by the Company. Grant revenue is recognized when the related costs are incurred and recorded in other revenue in the condensed consolidated statements of operations and comprehensive loss.

~~Illumina Cambridge, Ltd.~~

On December 31, 2021, the Company entered into a multi-year arrangement with Illumina Cambridge, Ltd. (“Illumina Agreement”) to jointly develop and commercialize co-branded kits that will combine Illumina’s Next Generation Sequencing (“NGS”) technology with SomaLogic’s SomaScan technology. Pursuant to the agreement, we received a non-refundable upfront payment of $30.0 million on January 4, 2022. This arrangement is accounted for in accordance with Topic 606 by analogy. The Company concluded there are two performance obligations: (1) combined performance obligation that includes the following material promises: licenses, patents, training, transfer of know-how and SOMAmer reagents necessary to use the SomaScan technology (“Bundled SomaScan Technology”), and (2) an option to purchase goods post-commercialization with a material right (“Material Right”). The total transaction price is subject to a constraint since it is uncertain that commercialization will be achieved; and therefore the transaction price was determined to be $30.0 million and was allocated to each of the performance obligations identified on a relative standalone selling price basis.

~~Bundled SomaScan Technology~~:Revenue is recognized as control transfers when the SOMAmer reagents are shipped. The Company estimated the standalone selling price (“SSP”) based on observable pricing of similar performance obligations.

~~Material Right:~~ Revenue is recognized when Illumina exercises its option to purchase goods post-commercialization. The Company estimated the SSP based on the incremental discount adjusted for the likelihood that Illumina will exercise the option.

~~Contract Modification:~~ In June 2022, Illumina issued a purchase order that changed the future obligations due from SomaLogic under the Illumina Agreement. The purchase order represents a contract modification that is accounted for prospectively as if it were a termination of the existing contract and the creation of a new contract.

As a result, the Company determined that there were three new performance obligations (total of five performance obligations): (1) equipment bundle that includes customization services, integration services, system qualification services, site initiation services and training (“Equipment Bundle”), (2) qualification kits, and (3) support services. The contract modification resulted in an increase in the transaction price of $0.5 million. The updated transaction price was allocated between the performance obligations on a relative SSP basis.

~~Equipment Bundle:~~ Revenue is recognized over time based on the progress made toward achieving the performance obligation utilizing input methods, including costs and labor hours incurred. The Company estimated the SSP based on observable pricing of similar performance obligations.

~~Qualification Kits:~~ ~~Revenue is recognized as control transfers when the qualification kits are shipped. The Company estimated the SSP based on observable pricing of similar performance obligations.~~

~~Support Services:~~ Revenue is recognized for the support services over the service period, using an input method based on time. The Company estimated the SSP based on observable pricing of similar performance obligations.

~~During the three and six ended June 30, 2022, the Company recognized $0.1 million of revenue pursuant to the Illumina Agreement.~~

~~Warrant Liabilities~~

We classify the warrants as liabilities on the condensed consolidated balance sheets as these instruments are precluded from being indexed to our own stock given that the terms allow for a settlement adjustment that does not meet the scope for the fixed-for-fixed exception in ASC 815. Since the warrants meet the definition of a derivative under ASC 815-40, the Company recorded these warrants as long-term liabilities at fair value on the date of the Business Combination, with subsequent changes in their respective fair values recognized within change in fair value of warrant liabilities in the condensed consolidated statements of operations and comprehensive loss at each reporting date.

~~Earn-Out Liability~~

As a result of the Business Combination, the Company recognized Earn-Out Shares contingently issuable to former stockholders of Old SomaLogic as a liability in accordance with ASC 815. The liability was included as part of the consideration transferred in the Business Combination and was recorded at fair value. The earn-out liability is remeasured at the end of each reporting period, with the corresponding change in fair value recognized within change in fair value of earn-out liability in the condensed consolidated statements of operations and comprehensive loss at each reporting date.

Recently Issued Accounting Pronouncements

Please refer to Note 2, Significant Accounting Policies - Recent Accounting Pronouncements, in “Part I. Financial Information - Item 1. Financial Statements” for a discussion of recent accounting pronouncements and their anticipated effect on our business.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Not required for smaller reporting companies.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Under supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of June 30, ~~2022.~~2023. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of June 30, ~~2022,~~2023, based on the material weaknesses described below. In light of these material weaknesses, we performed additional analysis as deemed necessary to ensure that our financial statements were prepared in accordance with U.S. generally accepted accounting principles. Based on such analysis and notwithstanding the identified material weaknesses, management, including our Chief Executive Officer and Chief Financial Officer, believe the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q fairly represent in all material respects our financial condition, results of operations and cash flows at and for the periods presented in accordance with GAAP.

Limitations on the Effectiveness of Disclosure Controls and Procedures

Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well designed and implemented, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues within a company are detected. The inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple errors or mistakes. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls.

Management’s Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as such term as defined in Rules 13a-15(f)and 15d-15(f) under the Exchange Act. 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~~principles in the United States 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 policies or procedures may deteriorate.America.

Our internal control over financial reporting includes policies and procedures that: (i) pertain to maintaining records that, in reasonable detail, accurately and fairly reflect our transactions; (ii) provide reasonable assurance that transactions

are recorded as necessary for preparation of our financial statements in accordance with generally accepted accounting principles and that the receipts and expenditures of company assets are made in accordance with our management and directors authorization; and (iii) provide reasonable assurance regarding the prevention of or timely detection of unauthorized acquisition, use or disposition of assets that could have a material effect on our financial statements.

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 policies or procedures may deteriorate.

As of June 30, ~~2022,~~2023, our management assessed the effectiveness of our internal control over financial reporting based on the criteria for effective internal control over financial reporting established in "Internal Control – Integrated Framework (2013)", issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on this assessment and those criteria, management determined that our internal control over financial reporting was not effective as of June 30, ~~2022,~~2023, due to the material weaknesses described below.

Previously Identified Material ~~Weakness~~Weaknesses

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

~~In connection with Old SomaLogic’s financial statement close process~~The following material weaknesses were identified as a result of management’s assessment:

•As discussed in our Annual Reports on Form 10-K filed for the ~~year~~years ended December 31, 2021 and 2020, we identified a material weakness in our internal control over financial reporting ~~for the year ended December 31, 2020~~ due to ineffective controls over the

financial statement close process and lack of sufficient accounting and financial reporting personnel to ensure consistent application of GAAP and compliance with SEC rules and regulations. ~~This~~

•As discussed in our Annual Report on Form 10-K filed for the year ended December 31, 2022, we continued to identify material weaknesses related to the design and operation of controls supporting key principles related to the control activities, information and communication, and monitoring components of the COSO framework over: (i) significant nonrecurring transactions and events, (ii) inventory costing and classification, and (iii) the classification and presentation of the consolidated statement of cash flows. Specifically, management failed to design and implement certain risk assessment controls related to identifying and analyzing risks to achieve control objectives, and failed to address the impact of changes in the business on the system of internal controls

•As discussed in our Annual Report on Form 10-K filed for the year ended December 31, 2022, we identified a material weakness related to our information technology general controls. Specifically, effective controls were not maintained over user access to our Enterprise Resources (ERP) system that supports the accounting and reporting processes, causing a lack of segregation of duties in key processes.

These material weaknesses will not be considered remediated until management designs and implements effective controls that operate for a sufficient period of time and management has concluded through testing that these controls are effective. See “Remediation Plan” for details.

Remediation Plan

We are committed to the planning and implementation of remediation efforts to address control deficiencies and other identified areas of risk. In ~~response~~particular:

•We will enhance the design of existing controls, and where necessary, implement additional controls, over our accounting for significant nonrecurring transactions and will maintain evidence of management review controls.

•We will increase the deployment of both internal and external specialists to ~~this material weakness,~~assist our management ~~has expended, and will continue to expend, a substantial amount of effort and resources on~~with the remediation and improvement of our internal control over financial reporting. Our management developed a remediation plan, which includes the hiring of additional accounting and finance personnel with technical public company accounting and financial reporting experience, implementing enhanced accounting and financial reporting training, resources and software, and continuing to report regularly to the audit committee on the progress and resultsevaluation of the ~~remediation plan, including the identification, status~~accounting for significant nonrecurring transactions.

•We will design and ~~resolution of internal control deficiencies. More specifically, while we have processes to properly identify~~implement controls over inventory costing and ~~evaluate the appropriate accounting technical pronouncements~~classification.

•We will design and ~~other literature for all significant or unusual transactions, we are improving these processes~~implement controls to ensure that all cash inflow and outflow activity is appropriately classified and presented within the ~~nuances~~statements of ~~such transactions~~cash flow.

•We will remove unnecessary user access to our financially relevant IT systems based on job responsibilities and are ~~effectively evaluated~~ in the ~~context~~process of reconfiguring the ~~increasingly complex accounting standards. Our plans at this time include acquiring enhanced~~mapping of “roles and assigned privileges” to “duties” to ensure adequate segregation of duties is maintained within our ERP system.

•We will implement timely periodic reviews of existing user and administrator security roles and privileges.

•We will enhance the design of our information technology general controls over user access provisioning and monitoring controls to ~~accounting literature, research materials, software~~enforce appropriate system access and documents and increased training, reviews and communication among our personnel. Our remediation plan can only be accomplished over time and will be continually reviewed to assess whether we are achieving our objectives. There is no assurance that these initiatives will ultimately have the intended effects.segregation of duties.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) and Rule 15d-15(f) under the Exchange Act) that occurred during the ~~period covered by this Quarterly Report on Form 10-Q~~first quarter of 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

3534

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

We are party to lawsuits arising in the ordinary course of our business. We cannot predict the outcome of any such lawsuits with certainty, but management believes it is remote that pending or threatened legal matters will have a material adverse impact on our financial condition.

Due to the nature of our business, we are, from time to time, involved in other routine litigation or subject to disputes or claims related to our business activities. In the opinion of our management, none of these other pending litigation, disputes or claims against us, if decided adversely, will have a material adverse effect on our financial condition, cash flows or results of operations.

Item 1A. Risk Factors

~~Not required~~There are numerous factors that affect our business and operating results, many of which are beyond our control. The following risk factor supplements and, to the extent inconsistent, supersedes, the risk factors described in Part I, “Item IA. Risk Factors” in our 2022 Form 10-K. The risk factor included herein as well as the risk factors described in the 2022 Form 10-K should be carefully considered, together with the other information contained or incorporated by reference in this Quarterly Report on Form 10-Q and in our other filings with SEC in connection with evaluating us, our business and the forward-looking statements contained in this Quarterly Report on Form 10-Q. Additional risks and uncertainties not known to us at present, or that we currently deem immaterial, may affect us. The occurrence of any of these known or unknown risks could have a material adverse impact on our business, financial condition and results of operations.

We use artificial intelligence and machine learning in our business, and challenges with properly managing its use could result in reputational harm, competitive harm, and legal liability, and adversely affect our results of operations.

We currently incorporate artificial intelligence and machine learning (“AI”) solutions into our bioinformatics capabilities, and these applications may become important in our operations over time. Our competitors or other third parties may incorporate AI into their products and offerings more quickly or more successfully than us, which could impair our ability to compete effectively and adversely affect our results of operations. Additionally, if the content, analyses, or recommendations that AI applications assist in producing are or are alleged to be inaccurate, deficient, or biased, our business, financial condition, and results of operations may be adversely affected. The use of AI applications has resulted in, and may in the future result in, cybersecurity incidents that implicate the sensitive data of customers analyzed within such applications. Any such cybersecurity incidents related to our use of AI applications for ~~smaller reporting companies.~~ analysis of sensitive data could adversely affect our reputation and results of operations. AI also presents emerging ethical issues and if our use of AI becomes controversial, we may experience brand or reputational harm, competitive harm, or legal liability. The rapid evolution of AI, including potential government regulation of AI and it various uses, will require significant resources to develop, test and maintain our intelligence cloud platform, offerings, services, and features to help us implement AI ethically in order to minimize unintended, harmful impact.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Default Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

3635

Item 6. Exhibits.

Incorporated by Reference
Exhibit Number Description Form Exhibit Filing Date
2.1
Agreement and Plan of Merger, dated as of July 25, 2022, by and among SomaLogic, Merger Sub I, Merger Sub II, Palamedrix, and the Securityholder Representative#
8-K 2.1 7/27/2022
31.1*
Certification by Chief Executive Officer pursuant to Rule 13a-14(a) and 15d-14(a) of the Exchange Act Rules, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*
Certification by Chief Financial Officer pursuant to Rule 13a-14(a) and 15d-14(a) of the Exchange Act Rules, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**
Certifications by Chief Executive Officer pursuant to Title 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of Sarbanes-Oxley Act of 2002.
32.2**
Certifications by Chief Financial Officer pursuant to Title 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of Sarbanes-Oxley Act of 2002.
101.IN* Inline XBRL Instance Document
101.SCH* Inline XBRL Schema Document
101.CAL* Inline XBRL Calculation Linkbase Document
101.LAB* Inline XBRL Label Linkbase Document
101.PRE* Inline XBRL Presentation Linkbase Document
101.DEF* Inline XBRL Taxonomy Extension Definition LinkBase Document
104* Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)
* Filed herewith.
** Furnished herewith
# Schedules and exhibits have been omitted pursuant to Item 601(a)(5) of Regulation S-K, and certain terms were redacted in accordance with Instruction 6 to Item 1.01 of Form 8-K. SomaLogic hereby undertakes to furnish supplemental copies of any of the omitted schedules and exhibits upon request by the SEC.

Incorporated by Reference

Exhibit Number

Description

Form

Exhibit

Filing Date

10.1

Second Amendment to Supply Agreement, dated April 11, 2023, between SomaLogic, Inc. and Agilent Technologies, Inc.

10.2

Eliot M. Lurier Consulting Agreement, dated June 6, 2023, between SomaLogic, Inc. and Danforth

10.3

Separation Agreement and General Release, dated June 8, 2023, between SomaLogic, Inc. and Shaun Blakeman

10.4

Second Agreement to Collaboration Agreement, dated June 15, 2023, among SomaLogic, Inc., Illumina Cambridge, Ltd., and Illumina Inc.

8-K

10.1

6/22/2023

31.1*

Certification by Chief Executive Officer pursuant to Rule 13a-14(a) and 15d-14(a) of the Exchange Act Rules, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2*

Certification by Chief Financial Officer pursuant to Rule 13a-14(a) and 15d-14(a) of the Exchange Act Rules, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1**

Certifications by Chief Executive Officer pursuant to Title 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of Sarbanes-Oxley Act of 2002

32.2**

Certifications by Chief Financial Officer pursuant to Title 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of Sarbanes-Oxley Act of 2002.

101.IN*

Inline XBRL Instance Document

101.SCH*

Inline XBRL Schema Document

101.CAL*

Inline XBRL Calculation Linkbase Document

101.LAB*

Inline XBRL Label Linkbase Document

101.PRE*

Inline XBRL Presentation Linkbase Document

101.DEF*

Inline XBRL Taxonomy Extension Definition LinkBase Document

104*

Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

Filed herewith.

Furnished herewith

†

Certain of the exhibits and schedules to this Exhibit have been omitted in accordance with Regulation S-K Item 601(a)(5).

††

The Company has omitted portions of the exhibit as permitted under Regulation S-K Item 601(b)(10). The Registrant agrees to furnish on a supplemental basis an unredacted copy of this exhibit and its materiality and privacy or confidentiality analysis if requested by the SEC.

Management contract or compensatory plan or arrangement.

3736

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		SomaLogic, Inc.

Date:	August ~~15, 2022~~14, 2023	By:	/s/ ~~Roy Smythe~~Adam Taich
			~~Roy Smythe~~Adam Taich
			Interim Chief Executive Officer
			(Principal Executive Officer)

Date:	August ~~15, 2022~~14, 2023	By:	/s/ ~~Shaun Blakeman~~Eliot Lurier
			~~Shaun Blakeman~~Eliot Lurier
			Interim Chief Financial Officer
			(Principal Financial and Accounting Officer)

3837


	Six Months Ended June 30, 2021
	Common Stock			Treasury Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit		Total Stockholders’ Equity (Deficit)
	Shares	Amount		Shares	Amount
Balance at December 31, 2020	73,481,228	$	735	(113,220)	$	(352)	$	394,786	$	(2)	$	(411,366)	$	(16,199)
Retrospective application of recapitalization	40,785,287	(724)		113,220	352		202,488		—		—		202,116
Balance at December 31, 2020	114,266,515	$	11	—	$	—	$	597,274	$	(2)	$	(411,366)	$	185,917
Issuance of Common Stock upon exercise of options	957,466	—		—	—		2,792		—		—		2,792
Issuance of Common Stock for services	162,737	—		—	—		264		—		—		264
Stock-based compensation	—	—		—	—		7,754		—		—		7,754
Surrender of shares in cashless exercise	(15,189)	—		—	—		(56)		—		—		(56)
Net unrealized gain on available-for-sale securities	—	—		—	—		—		8		—		8
Foreign currency translation gain	—	—		—	—		—		1		—		1
Net loss	—	—		—	—		—		—		(22,821)		(22,821)
Balance at June 30, 2021	115,371,529	$	11	—	$	—	$	608,028	$	7	$	(434,187)	$	173,859


As of June 30, 2022 (in thousands)	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss		Aggregate Fair Value		Fair Value Level
Cash and cash equivalents:
Cash	$	76,006	$	—	$	—	$	76,006	Level 1
Money market funds	328,933		—		—		328,933		Level 1
Commercial paper	13,246		—		(3)		13,243		Level 2
Total cash and cash equivalents	418,185		—		(3)		418,182
Investments:
Commercial paper	122,813		—		(364)		122,449		Level 2
U.S. Treasuries	60,612		—		(430)		60,182		Level 2
Asset-backed securities	4,011		—		(11)		4,000		Level 2
Corporate bonds	9,405		—		(72)		9,333		Level 2
Agency bonds	5,000		—		(52)		4,948		Level 2
Total investments	201,841		—		(929)		200,912
Total assets measured at fair value on a recurring basis	$	620,026	$	—	$	(932)	$	619,094


	Three Months Ended		Six Months Ended
(in thousands)	June 30, 2022		June 30, 2022
Operating lease cost	$	406	$	807
Variable lease cost	209		390
Short-term lease cost	12		23
Total lease cost	$	627	$	1,220