Risk Factors Update Summary

• The addition of AI and machine learning technologies poses legal, regulatory, and reputational risks. Compliance challenges and potential enforcement actions are highlighted.
• FDA issued final guidance in Q4 2023 on presenting quantitative risk and efficacy info to consumers.
• Risks related to regulations not designed for remote diagnostic tests like Zio Services were added. This could adversely affect reputation, business, and operations.
• The disclosure of risks related to the use of third-party service providers outside the US for customer care and operations, including establishing resources in the Philippines, was added.
• FTC updated guidance on health claims, now requiring strong clinical data to support claims.
• A decrease in national reimbursement rates for Medicare-enrolled IDTF locations in 2024 compared to 2023 was disclosed. The rates range from $231 to $326.
• Changes in executive leadership, including the resignation of the Chief Operating Officer, may complicate retention efforts and future management recruitment.
• Risks related to compliance with various laws and regulations, such as the False Claims Act and state privacy laws, were detailed, with increased penalties per false claim.
• Net losses decreased from $123.4 million in 2023 to $116.2 million in 2022.
• The disclosure of risks associated with international expansion, including market, regulatory, and political risks in the EU, UK, and Japan, was emphasized.
• Accumulated deficit decreased from $522 million in 2022 to $645 million in 2023.
• Revenue from non-contracted third-party commercial payors increased from 6% to 7% of total revenue.
• Net losses decreased from $116.2 million in 2022 to $101.4 million in 2021.
• The company repaid the full balance of $35.0 million outstanding under the SVB Loan Agreement.