EXACT SCIENCES CORPEXAS
EXACT SCIENCES CORP Fair Value Disclosure
FAIR VALUE MEASUREMENTS
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The three levels of the fair value hierarchy established are as follows:
Level 1 Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis.
Level 2 Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.
Level 3 Unobservable inputs that reflect the Company’s assumptions about the assumptions that market participants would use in pricing the asset or liability. Unobservable inputs shall be used to measure fair value to the extent that observable inputs are not available.
The following table presents the Company’s fair value measurements as of December 31, 2025 along with the level within the fair value hierarchy in which the fair value measurements, in their entirety, fall.
| (In thousands) | Fair value at December 31, 2025 | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||||||||||||
Cash and cash equivalents | ||||||||||||||||||||||||||
| Cash and money market | $ | 955,996 | $ | 955,996 | $ | — | $ | — | ||||||||||||||||||
| Marketable securities | ||||||||||||||||||||||||||
Equity securities | $ | 8,715 | $ | 8,715 | $ | — | $ | — | ||||||||||||||||||
| Non-marketable securities | $ | 52,538 | $ | — | $ | — | $ | 52,538 | ||||||||||||||||||
| Liabilities | ||||||||||||||||||||||||||
| Contingent consideration | $ | (289,018) | $ | — | $ | — | $ | (289,018) | ||||||||||||||||||
| Total | $ | 728,231 | $ | 964,711 | $ | — | $ | (236,480) | ||||||||||||||||||
The following table presents the Company’s fair value measurements as of December 31, 2024 along with the level within the fair value hierarchy in which the fair value measurements, in their entirety, fall.
| (In thousands) | Fair Value at December 31, 2024 | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||||||||||||
Cash, cash equivalents, and restricted cash | ||||||||||||||||||||||||||
| Cash and money market | $ | 595,548 | $ | 595,548 | $ | — | $ | — | ||||||||||||||||||
Restricted cash (1) | 5,747 | 5,747 | — | — | ||||||||||||||||||||||
| U.S. government agency securities | 5,341 | — | 5,341 | — | ||||||||||||||||||||||
| Marketable securities | ||||||||||||||||||||||||||
| Corporate bonds | $ | 206,874 | $ | — | $ | 206,874 | $ | — | ||||||||||||||||||
| U.S. government agency securities | 140,952 | — | 140,952 | — | ||||||||||||||||||||||
| Asset backed securities | 83,339 | — | 83,339 | — | ||||||||||||||||||||||
Equity securities | 5,972 | 5,972 | — | — | ||||||||||||||||||||||
| Non-marketable securities | $ | 796 | $ | — | $ | — | $ | 796 | ||||||||||||||||||
| Liabilities | ||||||||||||||||||||||||||
| Contingent consideration | $ | (282,212) | $ | — | $ | — | $ | (282,212) | ||||||||||||||||||
| Total | $ | 762,357 | $ | 607,267 | $ | 436,506 | $ | (281,416) | ||||||||||||||||||
(1)Restricted cash primarily represented cash held by a third-party financial institution as part of a cash collateral agreement related to the Company’s credit card program. The restrictions lapsed in 2025 upon the removal of the cash collateral requirement by the third-parties.
There have been no material changes in valuation techniques or transfers between fair value measurement levels during the year ended December 31, 2025. The fair value of Level 2 instruments classified as cash equivalents and marketable debt securities are valued using a third-party pricing agency where the valuation is based on observable inputs including pricing for similar assets and other observable market factors.
Non-Marketable Securities
The following table summarizes the Company’s non-marketable securities, which are primarily included in other long-term assets on the consolidated balance sheet as of December 31, 2025 and December 31, 2024:
December 31, | ||||||||||||||
| (In thousands) | 2025 | 2024 | ||||||||||||
| Investments for which the fair value option has been elected | $ | 52,538 | $ | 796 | ||||||||||
| Investments without readily determinable fair values | 54,941 | 50,448 | ||||||||||||
| Equity method investments | 7,843 | 7,488 | ||||||||||||
| Total | $ | 115,322 | $ | 58,732 | ||||||||||
Fair Value Option Securities
The Company has elected the fair value option to measure certain non-marketable securities at fair value to simplify the accounting. The fair value measurement of non-marketable securities is categorized as Level 3 as the measurement amount is primarily based on significant, unobservable inputs.
In August 2025, the Company executed a note purchase agreement with Freenome Holdings, Inc. (“Freenome”) under which the Company purchased a $50.0 million senior convertible note, which bears interest at a rate of 5.0% per year and matures on August 12, 2030. The convertible note and accrued interest will be paid back in cash upon maturity, if not previously repaid or converted into equity at the applicable conversion price pursuant to optional or automatic mechanisms per the note purchase agreement. The Company utilizes a probability-weighted scenario-based discounted cash flow model under the income approach to measure the fair value of the note. Probabilities are applied to each potential scenario and the resulting values are discounted using a present-value factor. The passage of time, in addition to changes in probabilities and the present-value factor, may result in adjustments to the fair value measurement. Interest income is accrued based on the contractual annual interest rate, which is included in interest expense, net in the consolidated statement of operations. The fair value of the convertible note was $50.1 million as of December 31, 2025.
Gains and losses recorded on non-marketable securities for which the fair value option has been elected are recognized in investment income, net in the consolidated statement of operations. The following table provides a reconciliation of the beginning and ending balances of non-marketable securities valued using the fair value option:
| (In thousands) | Non-Marketable Securities | |||||||
Beginning balance, January 1, 2024 | $ | 7,650 | ||||||
Changes in fair value | (604) | |||||||
Settlement of non-marketable securities | (6,250) | |||||||
Balance, December 31, 2024 | 796 | |||||||
Purchases of non-marketable securities | 51,250 | |||||||
| Changes in fair value | 492 | |||||||
Ending balance, December 31, 2025 | $ | 52,538 | ||||||
Investments without Readily Determinable Fair Values
Investments without readily determinable fair values had the following cumulative upward and downward adjustments and aggregate carrying amounts as of December 31, 2025 and 2024:
December 31, | ||||||||||||||
(In thousands) | 2025 | 2024 | ||||||||||||
Cumulative upward adjustments (1) | $ | 5,595 | $ | 5,102 | ||||||||||
Cumulative downward adjustments and impairments (2) | (16,850) | (16,850) | ||||||||||||
| Aggregate carrying value | 54,941 | 50,448 | ||||||||||||
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(1) There were no material upward adjustments recorded for the years ended December 31, 2025, 2024, and 2023.
(2) There were no material downward adjustments or impairments for the years ended December 31, 2025, 2024, and 2023.
There were no material realized gains or losses recorded during the years ended December 31, 2025, 2024, and 2023.
Equity Method Investments
The Company has committed capital to venture capital investment funds of $18.0 million, of which $9.4 million remains callable through 2033 as of December 31, 2025. The aggregate carrying amount of these funds was $7.8 million and $7.5 million as of December 31, 2025 and 2024, respectively. Gains and losses recorded on the Company's investments in these funds were not significant for the years ended December 31, 2025, 2024, and 2023.
Contingent Consideration Liabilities
The fair value of the contingent consideration liabilities was $289.0 million and $282.2 million as of December 31, 2025 and 2024, respectively. As of December 31, 2025, the contingent consideration liability was included in other long-term liabilities in the consolidated balance sheet. As of December 31, 2024, $19.7 million was included in other current liabilities and $262.5 million was included in other long-term liabilities in the consolidated balance sheet.
The following table provides a reconciliation of the beginning and ending balances of contingent consideration:
Year Ended December 31, | ||||||||||||||||||||
| (In thousands) | 2025 | 2024 | 2023 | |||||||||||||||||
Beginning balance | $ | 282,212 | $ | 288,657 | $ | 306,927 | ||||||||||||||
Changes in fair value (1) | 26,806 | (3,345) | (18,044) | |||||||||||||||||
Payments (2) | (20,000) | (3,100) | (226) | |||||||||||||||||
Ending balance | $ | 289,018 | $ | 282,212 | $ | 288,657 | ||||||||||||||
(1) The change in fair value of the contingent consideration liability is included in general and administrative expenses in the consolidated statement of operations for the years ended December 31, 2025, 2024, and 2023.
(2) Payments were made to settle the product development milestone contingent consideration liabilities previously recorded related to the Company's acquisitions of Ashion Analytics, LLC (“Ashion”) and OmicEra Diagnostics GmbH in the years ended December 31, 2025 and 2024, respectively.
This fair value measurement of contingent consideration is categorized as a Level 3 liability, as the measurement amount is based primarily on significant inputs not observable in the market.
The fair value of the contingent consideration liability recorded from the Company's acquisition of Thrive related to regulatory milestones was $289.0 million as of December 31, 2025. The fair value of the contingent consideration liabilities recorded from the Company's acquisitions of Thrive and Ashion related to regulatory and product development milestones was $282.2 million as of December 31, 2024. The Company estimates the fair value of the contingent consideration liabilities related to the regulatory and product development milestones using the probability-weighted scenario based discounted cash flow model, which is consistent with the initial measurement of the contingent consideration liabilities. Probabilities of success are applied to each potential scenario and the resulting values are discounted using a present-value factor. The passage of time in addition to changes in projected milestone achievement timing, present-value factor, the degree of achievement if applicable, and probabilities of success may result in adjustments to the fair value measurement. The fair value of the contingent consideration liability recorded related to regulatory and product development milestones was determined using a weighted average probability of success of 90% as of December 31, 2025 and 2024, and a weighted average present-value factor of 5.5% and 6.2% as of December 31, 2025 and 2024, respectively. The projected fiscal year of payment range is from 2030 to 2031. Unobservable inputs were weighted by the relative fair value of the contingent consideration liabilities.
The revenue milestone associated with the Ashion acquisition is not expected to be achieved and therefore no liability has been recorded for this milestone as of December 31, 2025 or December 31, 2024.
Derivative Financial Instruments
The Company enters into foreign currency forward contracts on the last day of each month to mitigate the impact of adverse movements in foreign exchange rates related to the remeasurement of monetary assets and liabilities and hedge the Company’s foreign currency exchange rate exposure. As of December 31, 2025 and 2024, the Company had open foreign currency forward contracts with notional amounts of $31.8 million and $44.2 million, respectively. The Company’s foreign exchange derivative instruments are classified as Level 2 within the fair value hierarchy as they are valued using inputs that are observable in the market or can be derived principally from or corroborated by observable market data. The fair value of the open foreign currency forward contracts was zero at December 31, 2025 and 2024, and there were no gains or losses recorded to adjust the fair value of the open foreign currency contract held as of December 31, 2025. The contracts are closed subsequent to each month-end, and the gains and losses recorded from the contracts were not significant for the years ended December 31, 2025 and 2024.Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 13, 2026 | Showing above |
| 2024 | Feb 19, 2025 | |
| 2023 | Feb 21, 2024 | |
| 2022 | Feb 21, 2023 | |
| 2021 | Feb 22, 2022 | |
| 2020 | Feb 16, 2021 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.