Document

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of May 2024.
____________________________________
Commission File Number: 001-40627
SOPHiA GENETICS SA
(Exact name of registrant as specified in its charter)
La Pièce 12
CH-1180 Rolle
Switzerland
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:
Form 20-FxForm 40-F



SIGNATURE
This Report on Form 6-K (other than Exhibit 99.3 hereto), including Exhibits 99.1 and 99.2 hereto, shall be deemed to be incorporated by reference into the registration statement on Form F-3 (Registration No. 333-266704) of SOPHiA GENETICS SA and to be a part thereof from the date on which this report is filed, to the extent not superseded by documents or reports subsequently filed or furnished.

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.


SOPHiA GENETICS SA
Date: May 7, 2024
By:/s/ Daan van Well
Name:Daan van Well
Title:Chief Legal Officer
EXHIBIT INDEX
Exhibit No.Description

Document

Exhibit 99.1
Index to Consolidated Financial Statements
Table of Contents
F-1

Table of Contents
SOPHiA GENETICS SA
Unaudited Interim Condensed Consolidated Financial Statements
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SOPHiA GENETICS SA, Rolle
Interim Condensed Consolidated Statements of Loss
(Amounts in USD thousands, except per share data)
(Unaudited)
Three months ended March 31,
Notes    20242023
Revenue5$15,779 $13,966 
Cost of revenue(5,374)(4,272)
Gross profit10,405 9,694 
Research and development costs(9,391)(9,334)
Selling and marketing costs(6,951)(6,424)
General and administrative costs(12,825)(13,242)
Other operating income, net19 
Operating loss(18,756)(19,287)
Interest income, net758 862 
Foreign exchange gains (losses)4,610 (1,168)
Loss before income taxes(13,388)(19,593)
Income tax expense(316)(107)
Loss for the period(13,704)(19,700)
Attributable to the owners of the parent(13,704)(19,700)
Basic and diluted loss per share7$(0.21)$(0.31)
The notes form an integral part of these unaudited interim condensed consolidated financial statements.


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SOPHiA GENETICS SA, Rolle
Interim Condensed Consolidated Statements of Comprehensive Loss
(Amounts in USD thousands)
(Unaudited)
Three months ended March 31,
20242023
Loss for the period$(13,704)$(19,700)
Other comprehensive (loss) income:
Items that may be reclassified to statement of loss (net of tax)
Currency translation differences(9,393)1,971 
Total items that may be reclassified to statement of loss(9,393)1,971 
Items that will not be reclassified to statement of loss (net of tax)
Remeasurement of defined benefit plans(15)(70)
Total items that will not be reclassified to statement of loss(15)(70)
Other comprehensive (loss) income for the period$(9,408)$1,901 
Total comprehensive loss for the period$(23,112)$(17,799)
Attributable to owners of the parent$(23,112)$(17,799)
The notes form an integral part of these unaudited interim condensed consolidated financial statements.
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SOPHiA GENETICS SA, Rolle
Interim Condensed Consolidated Balance Sheets
(Amounts in USD thousands)
(Unaudited)
Notes    March 31, 2024    December 31, 2023
Assets
Current assets  
Cash and cash equivalents$103,735 $123,251 
Accounts receivable5, 610,890 13,557 
Inventory6,016 6,482 
Prepaids and other current assets4,486 4,757 
Total current assets125,127 148,047 
Non-current assets
Property and equipment6,583 7,469 
Intangible assets26,294 27,185 
Right-of-use assets14,714 15,635 
Deferred tax assets1,716 1,720 
Other non-current assets5,824 6,100 
Total non-current assets55,131 58,109 
Total assets$180,258 $206,156 
Liabilities and equity
Current liabilities
Accounts payable$6,245 $5,391 
Accrued expenses12,908 17,808 
Deferred contract revenue8,336 9,494 
Lease liabilities, current portion2,704 2,928 
Total current liabilities30,193 35,621 
Non-current liabilities
Lease liabilities, net of current portion14,738 15,673 
Defined benefit pension liabilities2,971 3,086 
Other non-current liabilities124 334 
Total non-current liabilities17,833 19,093 
Total liabilities48,026 54,714 
Equity
Share capital4,048 4,048 
Share premium472,031 471,846 
Treasury share(638)(646)
Other reserves48,279 53,978 
Accumulated deficit(391,488)(377,784)
Total equity132,232 151,442 
Total liabilities and equity$180,258 $206,156 
The notes form an integral part of these unaudited interim condensed consolidated financial statements.
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SOPHiA GENETICS SA, Rolle
Interim Condensed Consolidated Statements of Changes in Equity
(Amounts in USD thousands)
(Unaudited)

ShareShareTreasuryOtherAccumulated
Notescapital    premiumsharereserves    deficit    Total
As of January 1, 2024$4,048 $471,846 $(646)$53,978 $(377,784) $151,442 
Loss for the period— — — — (13,704)(13,704)
Other comprehensive loss— — — (9,408)— (9,408)
Total comprehensive loss   (9,408)(13,704)(23,112)
Share-based compensation9— — — 3,714 — 3,714 
Transactions with owners
Vesting of restricted stock units— — (5)— — 
Exercise of share options— 185 — — 188 
As of March 31, 2024$4,048  $472,031 $(638)$48,279 $(391,488) $132,232 


ShareShareTreasuryOtherAccumulated
NotescapitalpremiumsharereservesdeficitTotal
As of January 1, 2023$3,464 $471,623 $(117)$23,963 $(298,803)$200,130 
Loss for the period— — — — (19,700)(19,700)
Other comprehensive income— — — 1,901 — 1,901 
Total comprehensive loss   1,901 (19,700)(17,799)
Share-based compensation9— — — 2,430 — 2,430 
Transactions with owners
Vesting of restricted stock units— — (2)— — 
Exercise of share options— 148 — — 151 
As of March 31, 2023$3,464 $471,771 $(112)$28,292 $(318,503)$184,912 
The notes form an integral part of these unaudited interim condensed consolidated financial statements.
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SOPHiA GENETICS SA, Rolle
Interim Condensed Consolidated Statements of Cash Flows
(Amounts in USD thousands)
(Unaudited)
Three months ended March 31,
Notes20242023
Operating activities  
Loss before tax$(13,388)$(19,593)
Adjustments for non-monetary items
Depreciation1,158 1,284 
Amortization901 606 
Finance (income) expense, net(5,046)169 
Expected credit loss allowance6(48)638 
Share-based compensation93,714 2,430 
Movements in provisions and pensions(135)349 
Research tax credit(104)(451)
Working capital changes
Decrease (Increase) in accounts receivable2,168 (3,169)
Increase in prepaids and other assets(182)(859)
Decrease in inventory376 876 
(Decrease) Increase in accounts payables, accrued expenses, deferred contract revenue, and other liabilities(4,058)2,062 
Cash used in operating activities(14,644)(15,658)
Income tax paid(1)(121)
Interest paid(147)(5)
Interest received953 995 
Net cash flows used in operating activities(13,839)(14,789)
Investing activities
Purchase of property and equipment(99)(508)
Acquisition of intangible assets(50)(284)
Capitalized development costs(1,809)(935)
Proceeds upon maturity of term deposits— 16,213 
Net cash flow (used in) provided from investing activities(1,958)14,486 
Financing activities
Proceeds from exercise of share options188 151 
Capitalized borrowing transaction costs(49)— 
Payments of principal portion of lease liabilities(735)(1,086)
Net cash flow used in financing activities(596)(935)
Decrease in cash and cash equivalents(16,393)(1,238)
Effect of exchange differences on cash balances(3,123)695 
Cash and cash equivalents at beginning of the year123,251 161,305 
Cash and cash equivalents at end of the period$103,735 $160,762 
The notes form an integral part of these unaudited interim condensed consolidated financial statements.
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SOPHiA GENETICS SA, Rolle
Notes to the Unaudited Interim Condensed
Consolidated Financial Statements
1. Company information
General information
SOPHiA GENETICS SA and its consolidated subsidiaries (NASDAQ: SOPH) (“the Company”) is a cloud-native software company in the healthcare space, incorporated on March 18, 2011, and headquartered in Rolle, Switzerland. The Company is dedicated to establishing the practice of data-driven medicine as the standard of care in health care and for life sciences research. The Company has built a software platform capable of analyzing data and generating insights from complex multimodal datasets and different diagnostic modalities. This platform, commercialized as “SOPHiA DDM TM,” standardizes, computes and analyzes digital health data and is used in decentralized locations to break down data silos. The Company collectively refers to SOPHiA DDM TM Platform and related products and solutions as “SOPHiA DDM Platform.”
On June 26, 2023, during the Company’s Annual General Meeting, the move of the statutory seat from Saint-Sulpice, Canton Vaud, Switzerland to Rolle, Canton Vaud, Switzerland was approved.
As of March 31, 2024, the Company had the following wholly owned subsidiaries:
Name Country of domicile
SOPHiA GENETICS S.A.S. France
SOPHiA GENETICS LTD UK
SOPHiA GENETICS, Inc. USA
SOPHiA GENETICS Intermediação de Negócios LTDA Brazil
SOPHiA GENETICS PTY LTDAustralia
SOPHiA GENETICS S.R.L. Italy
All intercompany transactions and balances have been eliminated in consolidation.
The Company’s Board of Directors approved the issue of the unaudited interim condensed consolidated financial statements on May 7, 2024.
Basis of preparation
Compliance with International Financial Reporting Standards
These unaudited interim condensed consolidated financial statements, as of and for the three months ended March 31, 2024, of the Company have been prepared in accordance with International Accounting Standard (“IAS”) 34, Interim Financial Reporting (“IAS 34”) as issued by the International Accounting Standards Board (“IASB”) and should be read in conjunction with the audited consolidated financial statements as of and for the year ended December 31, 2023.
Accounting policies
The material accounting policies adopted in the preparation of these unaudited interim condensed consolidated financial statements are the same as those applied in the Company’s annual consolidated financial statements as of and for the year ended December 31, 2023, and have been consistently applied, unless otherwise stated. Where expense is definitively calculated only on an annual basis, as is the case for income taxes and pension costs, appropriate estimates are made for interim reporting periods.
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Income tax expense
Taxes on income in the interim periods are accrued using the tax rates that would be applicable based on the expected annual profit or loss of each of the Company entities.
Post-employment defined benefit plan expense
Post-employment defined benefit plan expense in interim reporting periods is recognized on the basis of the current year cost estimate made by the actuaries in their annual report as of the end of the preceding year. Potential remeasurement gains or losses from the defined benefits plan are estimated based on the relevant indexes at the end of the reporting period and recorded in the Company’s statements of comprehensive loss.
Designated cash
The Company has designated cash in a separate bank account to be used exclusively to settle potential liabilities arising from claims against Directors and Officers covered under the Company’s Directors and Officers Insurances Policy (“D&O Policy”). Setting up the designated account has significantly reduced the premiums associated with the D&O Policy. In June 2023, the Company obtained a new D&O Policy that allowed it to reduce the designated cash amount set aside in the separate bank account from $30 million to $15 million. The new D&O policy and reduction of designated cash went into effect in July 2023. The Company expects to continue to designate this cash balance for this sole use under the D&O Policy.
Recent new accounting standards, amendments to standards, and interpretations
New standards, amendments to standards, and interpretations issued recently effective
As of January 1, 2024 the amendments to paragraphs 69 to 76 of IAS 1, Presentation of Financial Statements (“IAS 1”), as issued by the IASB became effective. The Company assessed the changes to the accounting standard and determined the amendments had an immaterial impact on the Company’s financial statements.
New standards, amendments to standards, and interpretations issued not yet effective
In April 2024, IFRS 18, Presentation and Disclosure in Financial Statements, was issued to achieve comparability of the financial performance of similar entities. The standard, which replaces IAS 1 impacts the presentation of primary financial statements and notes, including the statement of earnings where companies will be required to present separate categories of income and expense for operating, investing, and financing activities with prescribed subtotals for each new category. The standard will also require management-defined performance measures to be explained and included in a separate note within the consolidated financial statements. The standard is effective for annual reporting periods beginning on or after January 1, 2027, and requires retrospective application. The Company is currently evaluating the new standard to determine if it will have a material impact on the Company’s financial statements.

There are no other IFRS Accounting Standards or IFRS Interpretations Committee interpretations that are not yet effective and that could have a material impact to the interim condensed consolidated financial statements.
Critical estimates and judgement
The preparation of the unaudited interim condensed consolidated financial statements in conformity with IAS 34 requires management to make judgements, estimates and assumptions. Information regarding accounting areas where such judgements, estimates and assumptions are of particular significance is set out in the annual financial statements under “Critical estimates and judgements”.
Going concern basis
These unaudited interim condensed consolidated financial statements have been prepared on a going concern basis.
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Foreign currency translation
Items included in the financial statements of each of the Company’s entities are measured using the currency of the primary economic environment in which the entity operates (“functional currency”). The Company’s reporting currency of the Company’s consolidated financial statements is the United States Dollar (“USD”). Assets and liabilities denominated in foreign currencies are translated at the month-end spot exchange rates, income statement accounts are translated at average rates of exchange for the period presented, and equity is translated at historical exchange rates. Any translation gains or losses are recorded in other comprehensive income (loss). Gains or losses resulting from foreign currency transactions are included in net income.
Historical cost convention
The financial statements have been prepared on a historical cost basis except for certain assets and liabilities, which are carried at fair value.
Issued share capital
As of March 31, 2024, the Company had issued 76,898,164 shares, of which 65,375,093 are outstanding, and 11,523,071 are held by the Company as treasury shares. As of March 31, 2023, the Company had issued 66,398,164 shares, of which 64,325,464 were outstanding, and 2,072,700 were held by the Company as treasury shares.
Treasury shares
During the first quarter of 2022, the Company issued 2,540,560 common share options to SOPHiA GENETICS LTD pursuant to a share delivery and repurchase agreement, which were immediately exercised, and repurchased the shares to hold as treasury shares for the purposes of administering the Company's equity incentive programs. During the second quarter of 2023, the Company issued 10,500,000 common share options to SOPHiA GENETICS LTD pursuant to a share delivery and repurchase agreement, which were immediately exercised, and repurchased the shares to hold as treasury shares. As of March 31, 2024, the Company held 11,523,071 treasury shares. As of March 31, 2023, the Company held 2,072,700 treasury shares.
Treasury shares are recognized at acquisition cost and recorded as treasury shares at the time of the transaction. Upon exercise of share options or vesting of restricted stock units, the treasury shares are subsequently transferred. Any consideration received is included in shareholders’ equity.
2. Fair Value
As of March 31, 2024, the carrying amount was a reasonable approximation of fair value for the following financial assets and liabilities:
Financial assets
Cash and cash equivalents
Accounts receivable
Other non-current assets—lease deposits
Financial liabilities
Accounts payable
Accrued liabilities
In the three months March 31, 2024, there were no significant changes in the business or economic circumstances that affected the fair value of the Company’s financial assets and financial liabilities.
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3. Financial Risk Management
In the course of its business, the Company is exposed to a number of financial risks including credit and counterparty risk, funding and liquidity risk and market risk (i.e. foreign currency risk and interest rate risk). The unaudited interim condensed consolidated financial statements do not include all financial risk management information and disclosures required in the annual financial statements and should be read in conjunction with the Company’s consolidated financial statements as of December 31, 2023. There have been no significant changes in financial risk management since year-end.
4. Segment Reporting
The Company operates in a single operating segment. The Company’s financial information is reviewed, and its performance assessed as a single segment by the senior management team led by the Chief Executive Officer (“CEO”), the Company’s Chief Operating Decision Maker (“CODM”).

5. Revenue

Disaggregated revenue

When disaggregating revenue, the Company considered all of the economic factors that may affect its revenues. The Company assess its revenues by four geographic regions Europe, the Middle East, and Africa (“EMEA”); North America (“NORAM”); Latin America (“LATAM”); and Asia-Pacific (“APAC”). The following tables disaggregate the Company's revenue from contracts with customers by geographic market (in USD thousands):

Three months ended March 31,
20242023
Switzerland$293 $175 
France2,546 2,338 
Italy2,446 2,125 
Spain1,411 1,687 
Rest of EMEA4,307 3,782 
EMEA$11,003 $10,107 
United States$2,448 $1,930 
Rest of NORAM532 246 
NORAM$2,980 $2,176 
LATAM$782 $976 
APAC$1,014 $707 
Total revenue$15,779 $13,966 

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Revenue streams
The Company’s revenue from contracts with customers has been allocated to the revenue streams indicated in the table below (in USD thousands):

Three months ended March 31,
20242023
SOPHiA DDM Platform$15,418 $13,749 
Workflow equipment and services361 217 
Total revenue$15,779 $13,966 
6. Accounts receivable
The following table presents the accounts receivable and lease receivable less the expected credit loss (in USD thousands):
March 31, 2024December 31, 2023
Accounts receivable$6,966 $10,259 
Accrued contract revenue4,988 4,451 
Lease receivable— 28 
Allowance for expected credit losses(1,064)(1,181)
Net accounts receivable$10,890 $13,557 
The Company records increases to, reversals of, and write-offs of the allowance for expected credit losses as “Selling and Marketing” expenses within its interim condensed consolidated statements of profit and loss. The following table provides a rollforward of the allowance for expected credit losses for the three months ended March 31, 2024 and 2023, that is deducted from the amortized cost basis of accounts receivable to present the net amount expected to be collected (in USD thousands):
20242023
As of January 1$1,181 $1,095 
Increase29 658 
Reversals(77)— 
Write-off(6)(20)
Currency translation differences(63)(2)
As of March 31$1,064 $1,731 

As of March 31, 2024 and December 31, 2023, the Company’s largest customer’s balance represented 19% and 24% of accounts receivable, respectively. All customer balances that individually exceeded 1% of accounts receivable in aggregate amounted to $4.6 million and $6.7 million as of March 31, 2024 and December 31, 2023, respectively.
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7. Loss per share
The Company’s shares are comprised of ordinary shares. Each share has a nominal value of $0.05 (CHF 0.05). The basic loss per share is calculated by dividing the net loss attributable to shareholders by the weighted average number of shares in issue during the period excluding treasury shares, which are shares owned by the Company. The table presents the loss for the three March 31, 2024 and 2023, respectively (in USD thousands, except shares and loss per share):
Three months ended March 31,
20242023
Net loss attributed to shareholders$(13,704)$(19,700)
Weighted average number of shares in issue65,308,830 64,242,871 
Basic and diluted loss per share$(0.21)$(0.31)
For the three months ended March 31, 2024 and 2023, the potential impact, on the calculation of loss per share, of the existing potential ordinary shares related to the share option plans is not presented, as the impact would be to dilute a loss, which causes them to be deemed “non-dilutive” for the purposes of the required disclosure.

8. Borrowings
Revolving credit facility
On June 21, 2022 the Company entered into a credit agreement (“the Credit Facility”) with Credit Suisse SA for up to CHF 5.0 million. Borrowings under the Credit Facility will bear interest at a rate to be established between the Company and Credit Suisse SA at the time of each draw down. Borrowings under the Credit Facility have no restrictions related to its use. As of March 31, 2024, the Company had no borrowings outstanding under the Credit Facility. On April 23, 2024, the Company terminated the Credit Facility. Refer to Note 11 - “Subsequent events” for additional information.
9. Share-based compensation
Stock Options
Share-based compensation expense for all stock awards consists of the following (in USD thousands):

Three months ended March 31,
2024    2023
Research and development$905 $547 
Selling and marketing194 (117)
General and administrative2,615 2,000 
Total$3,714 $2,430 
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10. Related party transactions
Related parties comprise the Company’s executive officers and directors, including their affiliates, and any person that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control of, the Company.
Key management personnel are comprised of six Executive Officers and Directors and seven Non-Executive Directors as of March 31, 2024. Key management personnel were comprised of six Executive Officers and Directors and seven Non-Executive Directors as of March 31, 2023.
Compensation for key management and non-executive directors recognized during the periods comprised (in USD thousands):
Three months ended March 31,
20242023
Salaries and other short-term employee benefits$1,169 $667 
Pension costs70 52 
Share-based compensation expense2,811 1,720 
Total$4,050 $2,439 
11. Events after the reporting date
Perceptive Credit Agreement

On May 2, 2024 (the “closing date”), the Company and its subsidiary SOPHiA GENETICS, Inc. entered into a credit agreement and guaranty (the “ Perceptive Credit Agreement”) with Perceptive Credit Holdings IV, LP, as lender and administrative agent, pursuant to which the Company may borrow up to $50.0 million principal amount of term loans, including (i) an initial tranche of $15.0 million principal amount of term loans on the closing date and (ii) up to $35.0 million principal amount of term loans that the Company may draw upon on or prior to March 31, 2026, subject to satisfaction of certain customary conditions. The term loans are scheduled to mature on the fifth anniversary of the closing date and accrue interest at Term SOFR plus 6.25% per annum; provided that upon the occurrence and during the continuation of any event of default, the term loans will accrue interest at Term SOFR plus 9.25% per annum. The Company has the right to prepay the term loans at any time subject to applicable prepayment premiums. The Perceptive Credit Agreement also contains certain mandatory prepayment provisions, including prepayments from the proceeds from certain asset sales and casualty events (subject to a right to reinvest such proceeds in assets used in the Company’s business within 180 days) and from issuances or incurrences of non-permitted debt, which will also be subject to prepayment premiums. The obligations under the Perceptive Credit Agreement are secured by substantially all of the Company and certain of the Company’s subsidiaries’ assets and are guaranteed initially on the closing date by SOPHiA GENETICS, Inc. The Perceptive Credit Agreement contains customary covenants, including an affirmative covenant to maintain qualified cash of at least $3.0 million, an affirmative last twelve months revenue covenant tested on a quarterly basis beginning June 30, 2024, and negative covenants including limitations on indebtedness, liens, fundamental changes, asset sales, investments, dividends and other restricted payments and other matters customarily restricted in such agreements. The Perceptive Credit Agreement also contains customary events of default, including payment defaults, material inaccuracy of representations and warranties, covenant defaults, bankruptcy and insolvency proceedings, cross-defaults to certain other agreements, judgments against the Company and The Company’s subsidiaries and change in control, the occurrence of which gives the lenders the right to declare the term loans and all obligations under the Perceptive Credit Agreement immediately due and payable.

In addition, the Company issued to Perceptive Credit Holdings IV, LP a warrant certificate (the “Warrant Certificate”) representing the right to purchase up to 400,000 ordinary shares at $4.9992 per share, with 200,000 ordinary shares available immediately and 200,000 ordinary shares to be available upon the drawdown of the second tranche of the term loans. The purchase rights represented by the Warrant Certificate are
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exercisable after becoming available, on a cash basis, at the option of the holder at any time prior to 5:00 p.m., Eastern time on the tenth anniversary of the applicable date of availability. The Warrant Certificate contains customary anti-dilution adjustments. In addition, the Company is required to file, within 30 business days of each availability date, a registration statement that registers for resale under the Securities Act the ordinary shares issuable upon exercise of the purchase rights represented by the Warrant Certificate. The Company will be required to keep such registration statement effective until all such ordinary shares have been sold, are eligible to be immediately sold to the public without registration or restriction, are no longer outstanding or are no longer held by persons entitled to registration rights.
Revolving credit facility

On April 23, 2024 the Company terminated its existing credit agreement with Credit Suisse SA for up to CHF 5.0 million. Additionally, the Company entered into a new credit agreement with Credit Suisse SA for up to 100,000 CHF to be used for cash credits, contingent liabilities, or as margin for OTC derivative transactions. Borrowings under the new credit agreement will bear interest at a rate to be established between the Company and Credit Suisse SA at the time of each draw down.

The Company has evaluated, for potential recognition and disclosure, events that occurred prior to the date at which the unaudited interim condensed consolidated financial statements were approved to be issued. There were no other material subsequent events.
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Document

Exhibit 99.2
Management’s discussion and analysis of financial conditions and results of operations
You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our interim condensed consolidated financial statements and the related notes included as Exhibit 99.1 to the Report on Form 6-K to which this discussion and analysis is included as Exhibit 99.2 and our audited financial statements and the related notes and the section “Operating and Financial Review and Prospects” in our Annual Report on Form 20-F for the year ended December 31, 2023.
Our interim condensed consolidated financial statements are presented in U.S. dollars and have been prepared in accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board (“IFRS”). None of the consolidated financial statements were prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”). The terms “dollar,” “USD” and “$” refer to U.S. dollars and the terms “Swiss franc” and “CHF” refer to the legal currency of Switzerland, unless otherwise indicated.
Unless otherwise indicated or the context otherwise requires, all references to “SOPHiA GENETICS,” “SOPH,” the “Company,” “we,” “our,” “ours,” “us” or similar terms refer to SOPHiA GENETICS SA and its consolidated subsidiaries.
Cautionary Statement Regarding Forward-Looking Statements
This discussion and analysis contain statements that constitute forward-looking statements. All statements other than statements of historical facts, including statements regarding our future results of operations and financial position, business strategy, technology, as well as plans and objectives of management for future operations are forward-looking statements. Many forward-looking statements can be identified by the use of forward-looking words such as “anticipate,” “believe,” “could,” “expect,” “should,” “plan,” “intend,” “estimate,” “will” and “potential,” among others. Forward-looking statements are based on our management’s beliefs and assumptions and on information currently available to our management. Such statements are subject to risks and uncertainties, and actual results may differ materially from those expressed or implied in the forward-looking statements due to various factors, including, but not limited to, those identified in the “Risk Factors” section of our Annual Report on Form 20-F for the year ended December 31, 2023 and in our other Securities and Exchange Commission (“SEC”) filings. These forward-looking statements include, among others:
our expectations regarding our revenue, gross margin, expenses, other operating results and cash usage, including statements relating to the portion of our remaining performance obligation that we expect to recognize as revenue in future periods;
our plans regarding further development of our SOPHiA DDMTM Platform and related products and solutions, which we collectively refer to as “SOPHiA DDM Platform,” and its expansion into additional features, applications and data modalities;
future investments in our business, our anticipated capital expenditures and our estimates regarding our capital requirements, future revenues, expenses, reimbursement rates and needs for additional financing;
our expectations regarding the market size for our platform, applications, products, and services and the market acceptance they will be able to achieve;
our expectations regarding changes in the healthcare systems in different jurisdictions, in particular with respect to the manner in which electronic health records are collected, distributed and accessed by various stakeholders;
the timing or outcome of any domestic and international regulatory submissions;
1


impact from future regulatory, judicial, and legislative changes or developments in the United States and foreign countries;
our ability to acquire new customers and successfully engage and retain customers;
the costs and success of our marketing efforts, and our ability to promote our brand;
our ability to increase demand for our applications, products, and services, obtain favorable coverage and reimbursement determinations from third-party payors and expand geographically;
our expectations of the reliability, accuracy and performance of our applications, products, and services, as well as expectations of the benefits to patients, medical personnel and providers of our applications, products and services;
our expectations regarding our ability, and that of our manufacturers, to manufacture our products;
our efforts to successfully develop and commercialize our applications, products, and services;
our competitive position and the development of and projections relating to our competitors or our industry;
our ability to identify and successfully enter into strategic collaborations in the future, and our assumptions regarding any potential revenue that we may generate thereunder;
our ability to obtain, maintain, protect and enforce intellectual property protection for our technology, applications, products, and services, and the scope of such protection;
our ability to operate our business without infringing, misappropriating or otherwise violating the intellectual property or proprietary rights of third parties;
our ability to attract and retain qualified key management and technical personnel; and
our expectations regarding the time during which we will be an emerging growth company under the Jumpstart our Business Startups Act of 2012 (“JOBS Act”) and a foreign private issuer.
These forward-looking statements speak only as of the date of this discussion and analysis and are subject to a number of risks, uncertainties and assumptions described in the “Risk Factors” section of our Annual Form 20-F for the year ended December 31, 2023, this discussion and analysis and our other SEC filings. Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified and some of which are beyond our control, you should not rely on these forward-looking statements as predictions of future events. The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. Moreover, we operate in an evolving environment. New risk factors and uncertainties may emerge from time to time, and it is not possible for management to predict all risk factors and uncertainties. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances or otherwise. You should read this discussion and analysis completely and with the understanding that our actual future results may be materially different from what we expect.
Overview
We are a cloud-native software technology company in the healthcare space dedicated to establishing the practice of data-driven medicine as the standard of care and for life sciences research. We purposefully built a cloud-native software platform capable of analyzing data and generating insights from complex multimodal data sets and different diagnostic modalities. Our platform standardizes, computes and analyzes digital health data and is used across decentralized locations to break down data silos. This enables healthcare institutions to share knowledge and experiences and to build a collective intelligence. We envision a future in which all clinical diagnostic test data is channeled through a decentralized analytics platform that will provide insights powered by large real-world data sets and AI. We believe that a decentralized platform is the most powerful and effective
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solution to create the largest network, leverage data and bring the benefits of data-driven medicine to customers and patients globally. In doing so, we can both support and benefit from growth across the healthcare ecosystem.

In 2014, we launched the first application of our platform to analyze next-generation sequencing (“NGS”) data for cancer diagnosis. We offer a broad range of applications used by healthcare providers, clinical and life sciences research laboratories and biopharmaceutical companies for precision medicine across oncology, rare diseases, infectious diseases, cardiology, neurology, metabolism and other disease areas. In 2019, we launched our solution for radiomics data that enables longitudinal monitoring of cancer patients and tumor progression throughout their disease journey. In 2022, we unveiled SOPHiA CarePath, a new multimodal module on our SOPHiA DDM Platform powered by our artificial intelligence and machine learning algorithms that integrates the capabilities of our genomics and radiomics solutions with additional modalities to further enable clinical decision-making. The module will allow healthcare practitioners to visualize data across multiple modalities (including genomic, radiomic, clinical, and biological) for individual patients in a longitudinal manner and derive additional insights through cohort design and comparison. SOPHiA CarePath has already been deployed as part of our Deep-Lung IV multimodal clinical study on non-small cell lung cancer.
We offer a range of platform access models to meet our customers’ needs. Our primary pricing strategy for our clinical customers is a pay-per-use model, in which customers can access our platform free of charge but pay for each analysis performed using our platform. To commercialize our applications and products, we employ our direct sales force, use local distributors and form collaborations with other global product and service providers in the healthcare ecosystem to assemble solutions to address customer needs. For example, we combine our solution and applications with other products used in the genomic testing process to provide customers integrated products in the testing workflow. As of March 31, 2024, our direct sales team consisted of more than 93 field-based commercial representatives.
Recent Developments
Continued Focus on Strategic Partnerships and Transactions
We are continually developing strategic relationships and engaging in strategic transactions across the healthcare ecosystem with companies who also provide products and services to our customers.
Key Operating Performance Indicators
We regularly monitor a number of key performance indicators and metrics to evaluate our business, measure our performance, identify key operating trends and formulate financial projections and strategic plans. We believe that the following metrics are representative of our current business, but the metrics we use to measure our performance could change as our business continues to evolve. Our key performance indicators primarily focus on metrics related to our SOPHiA DDM Platform, as platform revenue comprises the majority of our revenues.
Our Core Genomics Customers can access our platform using three different models: dry lab access, bundle access and integrated access. In the dry lab access model, our customers use the testing instruments and solutions of their choice and our SOPHiA DDM Platform and algorithms for variant detection and identification. In the bundle access model, we bundle DNA enrichment solutions with our analytics solution to provide customers the ability to perform end-to-end workflows. In the integrated access model, our customers have their samples processed and sequenced through select SOPHiA DDM Platform collaborators within our clinical network and access their data through our SOPHiA DDM Platform. As used in this section, the term “Core Genomics Customer” refers to any customer who accesses our SOPHiA DDM Platform through the dry lab, bundle, or integrated access models. We exclude from this definition customers who only use Alamut through our SOPHiA DDM Platform.
We are continually refining our KPIs. Historically, we had disclosed key performance indicators using Recurring Platform Customers, which constituted customers who had accessed our SOPHiA DDM Platform through only the dry lab and bundle models, as those customers typically exhibit more consistent consumption behavior. However, through the versatility of our Platform and solutions, we have been able to help many of our integrated customers bring NGS capabilities in-house and convert them into bundle access and dry lab customers.
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Therefore, we now disclose Core Genomics Customers, which we believe reflect the impact of customers who access and drive analysis volume through our SOPHiA DDM Platform as our Platform continues to evolve. We have adjusted prior year KPIs below to reflect the change in customer segmentation and analyses. As our business continues to evolve and we make revisions to our methodologies to calculate the number of customers, we may make further adjustments to our historical performance indicators.
Platform Analysis Volume
The following table shows platform analysis volume for the three months ended March 31, 2024 and 2023:

Three months ended March 31,
20242023
SOPHiA DDM Platform analysis volume*83,83376,783
*The figures in the table above have been adjusted to exclude analyses conducted during the period but for which chargebacks were issued or other adjustments were made to customers after the period. We do not believe that such adjustments are material to the periods presented.

Platform analysis volume represents a key business metric that reflects our overall business performance, as we generate revenue on a pay-per-analysis basis. Platform analysis volume measures the number of analyses that generated revenue to us and were conducted by our Core Genomics Customers. Analysis volume is a direct function of the number of active customers and usage rates across our customer base during a specified time period. While our platform analysis volume is a major driver of our revenue growth, other factors, including product pricing, access model used, customer size mix, Alamut license sales, biopharma service revenue and workflow equipment and services revenue, also affect our revenue. Because of that, our revenue may increase in periods in which our analysis volume decreases and vice versa.

Analysis volume increased to 83,833 from 76,783 for the three months ended March 31, 2024, representing year-over-year growth of 9%. The increase in volume was attributable to growth in our core platform analysis volume. The year-over-year growth in analysis volume for the three months ended March 31, 2024 was lower than historical average as a result of the continued decline in our COVID-19-related analysis volume; longer setup times for recently signed customers as more customers adopt new sequencer types and increasingly sophisticated applications, which require them to spend a bit more time on proficiency testing; and an elongated holiday season, which led to a slower start to January. These trends resulted in slower analysis volume growth in EMEA and LATAM, offset by stronger growth in NORAM and APAC. Across our application portfolio, our oncology applications outperformed rare and inherited disorders, driven by strength in our solid tumor business.

The increase in our core platform was driven by increased usage from our existing customer base as well as contributions from new customers we brought into routine usage.
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Total Core Genomics Customers
The following table shows the change in the number of existing Core Genomics Customers, as of March 31, 2024 and 2023, new Core Genomics Customers that went into routine usage during the three months ended March 31, 2024 and 2023, and the total number of Core Genomics Customers as of March 31, 2024 and 2023:
As of March 31,
20242023
Existing Core Genomics Customers444 423 
New Core Genomics Customers19 14 
Total Core Genomics Customers463 437 
We track the number of our Core Genomics Customers, defined as the number of customers who generated revenue through our usage of our bundle access, dry lab, and integrated access models during the specified time period, as a key measure of our ability to generate recurring revenue from our install base. We further define our Core Genomics Customers as “Existing,” if the customer had generated revenue prior to the current period presented, or “New,” if the customer first generated revenue in the current period presented.
The analysis excludes customers without any usage of our SOPHiA DDM Platform over the past twelve months and customers who have executed agreements with us that have not generated any revenue to us, including customers that are in the process of being onboarded onto our SOPHiA DDM Platform.
Total Core Genomics Customers increased to 463 as of March 31, 2024 from 437 as of March 31, 2023. The increase is primarily attributable to our continued customer acquisition momentum over the course of the intervening period net of churn, including several customers who used our products and services only to conduct COVID-19-related analyses.
Net Dollar Retention (NDR)
The following table shows the net dollar retention as of March 31, 2024 and 2023:
As of March 31,
20242023
Net dollar retention (NDR)123 %107 %

We track net dollar retention for our dry lab, bundle access, and integrated access customers as a measure of our ability to grow the revenue generated from our Core Genomics Customers through our “land and expand” strategy net of revenue churn, which we define as the annualized revenues we estimate to have lost from customers who access our platform through our dry lab access, bundle access and integrated access models and have not generated revenue over the past twelve months in that period based on their average quarterly revenue contributions from point of onboarding as a percentage of total recurring platform revenue. To calculate net dollar retention, we first specify a measurement period consisting of the trailing two-year period from our fiscal period end. Next, we define a measurement cohort consisting of Core Genomics Customers who use our dry lab access, bundle access, and integrated access models from whom we have generated revenues during the first month of the measurement period, which we believe is generally representative of our overall dry lab access, bundle access, and integrated customer base. We then calculate our net dollar retention as the ratio between the U.S. dollar amount of revenue generated from this cohort in the second year of the measurement period and the U.S. dollar amount of revenue generated in the first year. Any customer in the cohort that did not use our platform in the second year are included in the calculation as having contributed zero revenue in the second year.
Net dollar retention increased to 123% as of March 31, 2024 from 107% as of March 31, 2023. The year-over-year increase in revenue growth momentum was primarily attributable to the continued expansion of platform utilization by recurring core genomics customers and price increases effective over the trailing 12-month period.
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The increase was also slightly attributable to favorable foreign exchange movements for revenue generated in key transactional currencies other than the U.S. dollar, particularly the euro and the Swiss franc, on average over the trailing 12-month period and an annualized revenue churn rate of 5%, which is consistent with our prior comparative period and historical average.
Components of Results of Operations
For a discussion of our components of results of operations, see the “Operating and Financial Review and Prospects—Operating Results—Components of Results of Operations” section of our Annual Report on Form 20-F for the year ended December 31, 2023.
Results of Operations
Comparison of the Three Months Ended March 31, 2024 and March 31, 2023

The following table summarizes our results of operations for the three months ended March 31, 2024 and March 31, 2023.

Three months ended March 31,Change
(Amounts in USD thousands, except %)20242023$%
Revenue$15,779 $13,966 $1,813 13 %
Cost of revenue(5,374)(4,272)(1,102)26 %
Gross profit10,405 9,694 711 7 %
Research and development costs(9,391)(9,334)(57)%
Selling and marketing costs(6,951)(6,424)(527)%
General and administrative costs(12,825)(13,242)417 (3)%
Other operating income, net19 (13)(68)%
Operating loss(18,756)(19,287)531 (3)%
Interest income, net758 862 (104)(12)%
Foreign exchange gains (losses)4,610 (1,168)5,778 (495)%
Loss before income taxes(13,388)(19,593)6,205 (32)%
Income tax expense(316)(107)(209)(195)%
Loss for the period$(13,704)$(19,700)$5,996 (30)%
Revenue
The following table presents revenue by stream:

Three months ended March 31,Change
(Amounts in USD thousands, except %)20242023$%
SOPHiA DDM Platform$15,418 $13,749 $1,669 12 %
Workflow equipment and services361 217 144 66 %
Total revenue$15,779 $13,966 $1,813 13 %

Revenue was $15.8 million for the three months ended March 31, 2024 as compared to $14.0 million for the three months ended March 31, 2023. This increase was primarily attributable to an increase in SOPHiA DDM Platform revenue as well as a foreign exchange benefit of $0.2 million, related to favorable movements in exchange rates between key transactional currencies, particularly the euro and Swiss franc, and our reporting currency, the U.S. dollar. SOPHiA DDM Platform revenue was $15.4 million for the three months ended March
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31, 2024 as compared to $13.7 million for the three months ended March 31, 2023. This increase was primarily attributable to new customers onboarded onto our platform, increased usage across our existing customers, and, to a lesser extent, price increases, which did not have a material impact. Workflow equipment and services revenue was $0.4 million for the three months ended March 31, 2024 as compared to $0.2 million for the three months ended March 31, 2023. This slight increase was related to an increase in service revenue from customer setups for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023.
Cost of Revenue
The following table presents cost of revenue, gross profit, and gross margin:

Three months ended March 31,Change
(Amounts in USD thousands, except %)20242023$%
Cost of revenue$(5,374)$(4,272)$(1,102)26 %
Gross profit$10,405 $9,694 $711 %
Gross margin66 %69 %

Cost of revenue was $5.4 million for the three months ended March 31, 2024 as compared to $4.3 million for the three months ended March 31, 2023. This increase was primarily attributable to a $0.7 million increase in material and services costs correlated with revenue growth and a $0.5 million increase in outsourced service costs related to a specific biopharmaceutical customer. The decrease in gross profit margin to 66% for the three months ended March 31, 2024 as compared to 69% for the three months ended March 31, 2023 was primarily driven by higher costs and lower margins associated with the servicing of the initial phase of the aforementioned biopharmaceutical customer contract, partially offset by benefits from economies of scale achieved with regards to computational and storage-related costs.
Operating Expenses
The following table presents research and development costs, selling and marketing costs, general and administrative costs, and other operating income net:

Three months ended March 31,Change
(Amounts in USD thousands, except %)20242023$%
Research and development costs$(9,391)$(9,334)$(57)%
Selling and marketing costs(6,951)(6,424)(527)%
General and administrative costs(12,825)(13,242)417 (3)%
Other operating income, net19 (13)(68)%
Total operating expenses$(29,161)$(28,981)$(180)1 %

Research and Development Costs
Research and development costs were $9.4 million for the three months ended March 31, 2024 as compared to $9.3 million for the three months ended March 31, 2023. The slight increase was primarily attributable to a $0.6 million increase in employee-related expenses, including share-based compensation expense, to retain high performing employees and a $0.4 million increase in computational and storage-related expenses from ongoing product research, partially offset by a decrease of $0.7 million in professional fees as we reduce our reliance on outsourced development services.
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Selling and Marketing Costs
Selling and marketing costs were $7.0 million for the three months ended March 31, 2024 as compared to $6.4 million for the three months ended March 31, 2023. This increase was primarily attributable to a $0.7 million increase in employee-related expenses, including share-based compensation, as variable compensation increased in line with revenue growth and a $0.4 million increase in marketing expenses to drive additional customer engagement, partially offset by a $0.7 million decrease in the provision for doubtful accounts.
General and Administrative Costs
General and administrative costs were $12.8 million for three months ended March 31, 2024 as compared to $13.2 million for the three months ended March 31, 2023. This decrease was primarily attributable to a $0.5 million decrease in public company-related expenses and a $0.7 million decrease in employee-related expenses, excluding share-based compensation, associated with our headcount-related action taken in the prior year, partially offset by a $0.6 million increase in share-based compensation expense to retain key employees.
Other Operating Income, Net
Other operating income, net was income of less than $0.1 million for the three months ended March 31, 2024 as compared to other operating income of less than $0.1 million for the three months ended March 31, 2023.
Interest Income, net
The following table presents the interest income, net:

Three months ended March 31,Change
(Amounts in USD thousands, except %)20242023$%
Interest income, net$758 $862 $(104)(12)%

Interest income, net was $0.8 million for the three months ended March 31, 2024, compared to $0.9 million for the three months ended March 31, 2023. The slight decrease was primarily driven by a lower average cash balance in interest earning bank accounts and short-term deposits.

Foreign exchange gains (losses)
The following table presents the foreign exchange gains (losses):

Three months ended March 31,Change
(Amounts in USD thousands, except %)20242023$%
Foreign exchange gains (losses)$4,610 $(1,168)$5,778 (495)%

Foreign exchange gains were $4.6 million for the three months ended March 31, 2024, compared to foreign exchange losses of $1.2 million for the three months ended March 31, 2023. The foreign exchange gains recorded for the three months ended March 31, 2024 is primarily driven by an unrealized net foreign exchange gain of $4.8 million, primarily related to the outstanding intercompany receivable balances held by the Swiss parent entity that have not been settled with other subsidiaries, partially offset by an increase of $0.1 million in realized net foreign exchange losses. Unrealized gains and losses do not constitute a cash impact until the related transactions are settled.
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Income Tax Expense
The following table presents the income tax expense:
Three months ended March 31,Change
(Amounts in USD thousands, except %)20242023$%
Income tax expense$(316)$(107)$(209)(195)%
Income tax expense was $0.3 million for the three months ended March 31, 2024 as compared to $0.1 million for the three months ended March 31, 2023. The increase in tax expense was primarily attributable to an estimated increase in tax liability in France and Italy.
Liquidity and Capital Resources
Sources of Capital Resources
Our principal sources of liquidity were cash and cash equivalents totaling $103.7 million and $123.3 million as of March 31, 2024 and December 31, 2023, respectively, which were held for a variety of growth initiatives and investments in our SOPHiA DDM Platform and related solutions, products and services as well as working capital purposes. Our cash and cash equivalents are comprised of bank and short-term deposits with maturities up to three months. Separately, we held no term deposits with maturities between three and twelve months as of March 31, 2024 and December 31, 2023.
On April 23, 2024 we terminated our existing credit agreement with Credit Suisse SA for up to CHF 5.0 million. Additionally, we entered into a new credit agreement with Credit Suisse SA for up to CHF 100,000 to be used for cash credits, contingent liabilities, or as margin for OTC derivative transactions. Borrowings under the new credit agreement will bear interest at a rate to be established between us and Credit Suisse SA at the time of each draw down. As of March 31, 2024, we had no borrowings outstanding under the Credit Facility.

On May 2, 2024 (the “closing date”), SOPHiA GENETICS SA and our subsidiary SOPHiA GENETICS, Inc. entered into a credit agreement and guaranty (the “Perceptive Credit Agreement”) with Perceptive Credit Holdings IV, LP, as lender and administrative agent, pursuant to which we may borrow up to $50.0 million principal amount of term loans, including (i) an initial tranche of $15.0 million principal amount of term loans on the closing date and (ii) up to $35.0 million principal amount of term loans that we may draw upon on or prior to March 31, 2026, subject to satisfaction of certain customary conditions. The term loans are scheduled to mature on the fifth anniversary of the closing date and accrue interest at Term Secured Overnight Financing Rate (“SOFR”) plus 6.25% per annum; provided that upon the occurrence and during the continuation of any event of default, the term loans will accrue interest at Term SOFR plus 9.25% per annum. We have the right to prepay the term loans at any time subject to applicable prepayment premiums. The Perceptive Credit Agreement also contains certain mandatory prepayment provisions, including prepayments from the proceeds from certain asset sales and casualty events (subject to a right to reinvest such proceeds in assets used in our business within 180 days) and from issuances or incurrences of non-permitted debt, which will also be subject to prepayment premiums. The obligations under the Perceptive Credit Agreement are secured by substantially all of our and certain of our subsidiaries’ assets and are guaranteed initially on the closing date by SOPHiA GENETICS SA and SOPHiA GENETICS, Inc. The Perceptive Credit Agreement contains customary covenants, including an affirmative covenant to maintain qualified cash of at least $3.0 million, an affirmative last twelve months revenue covenant tested on a quarterly basis beginning June 30, 2024, and negative covenants including limitations on indebtedness, liens, fundamental changes, asset sales, investments, dividends and other restricted payments and other matters customarily restricted in such agreements. The Perceptive Credit Agreement also contains customary events of default, including payment defaults, material inaccuracy of representations and warranties, covenant defaults, bankruptcy and insolvency proceedings, cross-defaults to certain other agreements, judgments against us and our subsidiaries and change in control, the occurrence of which gives the lenders the right to declare the term loans and all obligations under the Perceptive Credit Agreement immediately due and payable.

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In addition, we issued to Perceptive Credit Holdings IV, LP a warrant certificate (the “Warrant Certificate”) representing the right to purchase up to 400,000 ordinary shares at $4.9992 per share, with the right to purchase 200,000 ordinary shares available immediately and the right to purchase an additional 200,000 ordinary shares to be available upon the drawdown of the second tranche of the term loans. The purchase rights represented by the Warrant Certificate are exercisable after becoming available, on a cash basis, at the option of the holder at any time prior to 5:00 p.m., Eastern time on the tenth anniversary of the applicable date of availability. The Warrant Certificate contains customary anti-dilution adjustments. In addition, we are required to file, within 30 business days of each date of availability, a registration statement that registers for resale under the Securities Act the ordinary shares issuable upon exercise of the purchase rights represented by the Warrant Certificate. We will be required to keep such registration statements effective until all such ordinary shares have been sold, are eligible to be immediately sold to the public without registration or restriction, are no longer outstanding, or are no longer held by persons entitled to registration rights.

In August 2023, we established an at-the-market offering program pursuant to which we may sell, from time to time, ordinary shares having an aggregate offering price of $50 million. For the three months ended March 31, 2024, we did not sell any ordinary shares under this program.

We have funded our operations primarily through equity financing and, to a lesser extent, through debt and revenue generated from the sale of access to our SOPHiA DDM Platform and related licenses and services. Invoices for our products and services are a substantial source of revenue for our business, which are included on our consolidated balance sheet as trade receivables prior to collection. Accordingly, collections from our customers have a material impact on our cash flows from operating activities. As we expect our revenue to grow, we also expect our accounts receivable and inventory balances to increase, which could result in greater working capital requirements.
Operating Capital Requirements
We expect to continue to incur net losses for the foreseeable future as we continue to devote substantial resources to research and development, in particular, to further expand the applications and modalities of our SOPHiA DDM Platform in order to accommodate multimodal data analytics capabilities across a wide range of disease areas; selling and marketing efforts for our SOPHiA DDM Platform to establish and maintain relationships with our collaborators and customers; and obtaining regulatory clearances or approvals for our SOPHiA DDM Platform and our products and services. We believe that our existing cash and cash equivalents will be sufficient to meet our working capital and capital expenditure needs for at least the next twelve months. We have based this estimate on assumptions that may prove to be wrong, and we could use our capital resources sooner than we currently expect. Our future capital requirements will depend on many factors, which are outlined in our Annual Report on Form 20-F for the year ended December 31, 2023 and our subsequent filings with the SEC.
Cash Flows
The following table summarizes our cash flows for three months ended March 31, 2024 and 2023:
Three months ended March 31,
(Amounts in USD thousands)20242023
Net cash provided by/(used in):
Operating activities$(13,839)$(14,789)
Investing activities(1,958)14,486 
Financing activities(596)(935)
Net decrease in cash and cash equivalents$(16,393)$(1,238)
Effect of exchange differences on cash and cash equivalents$(3,123)$695 
Operating Activities
For the three months ended March 31, 2024, net cash used in operating activities was $13.8 million, primarily attributable to our loss before tax for the period of $13.4 million, which was reflective of our continued
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development of new solutions and expansion of market opportunities for our SOPHiA DDM Platform, a $1.7 million net decrease in working capital, and $5.0 million of non-cash finance income, partially offset by $3.7 million of non-cash share-based compensation expense and $1.2 million of depreciation.
For the three months ended March 31, 2023, net cash used in operating activities was $14.8 million, primarily attributable to our loss before tax for the period of $19.6 million, which was reflective of our continued research and development of and commercialization activities for our SOPHiA DDM Platform, partially offset by $2.4 million of non-cash share-based compensation expense and a $1.1 million increase in working capital.
Investing Activities
For the three months ended March 31, 2024, net cash used in investing activities was $2.0 million, primarily attributable to $1.8 million of capitalized software development costs, $0.1 million of property and equipment purchases, and $0.1 million of intangible assets acquisitions.
For the three months ended March 31, 2023, net cash provided from investing activities was $14.5 million, primarily attributable to the maturity of $16.2 million of term deposits, partially offset by $0.9 million of capitalized software development costs.
Financing Activities
For the three months ended March 31, 2024, net cash used in financing activities was $0.6 million, primarily attributable to $0.7 million of rent payments on our office facilities in Rolle, Bidart, and Boston and less than $0.1 million of capitalized borrowing costs, partially offset by $0.2 million in proceeds from the exercise of share options.
For the three months ended March 31, 2023, net cash used in financing activities was $0.9 million, primarily attributable to rent payments on our office facilities in Rolle, St. Sulpice, and Boston.
Contractual Obligations and Other Commitments
As of March 31, 2024, other than the Perceptive Credit Agreement as described in Note 11 of our unaudited interim condensed consolidated financial statements, there have been no other material changes to our contractual obligations and commitments from those described in the “Operating and Financial Review and Prospects” section of our Annual Report on Form 20-F for the year ended December 31, 2023.
Internal Control over Financial Reporting
There were no changes to our internal control over financial reporting during the three months ended March 31, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Off-Balance Sheet Arrangements
We did not have, during the periods presented, and we do not currently have, any off-balance sheet arrangements or commitments.
Quantitative and Qualitative Disclosures about Market Risk
Interest Rate Risk
We had cash and cash equivalents totaling $103.7 million as of March 31, 2024, which are comprised of cash and short-term deposits with maturities up to three months. We also had no term deposits as of March 31, 2024. Our cash equivalents are subject to market risk due to changes in interest rates. Fixed rate securities may have their market value adversely affected due to a rise in interest rates. Due in part to these factors, our future investment income may fall short of expectation due to changes in interest rates or we may suffer losses in principal if we are forced to sell securities that decline in market value due to changes in interest rates.
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As we currently do have any outstanding debt as of May 2024, we are subject to interest rate risk related to debt obligations if the SOFR were to move significantly.
We do not believe that a hypothetical 100 basis points change in interest rates would have a material effect on our business, financial condition or results of operations. We do not enter into investments for trading or speculative purposes. We do not use any financial instruments to manage our interest rate risk exposure.
Foreign Exchange Risk
We operate internationally and the majority of our revenue, expenses, assets, liabilities, and cash flows are denominated in currencies other than our presentation currency. As a result, we are exposed to fluctuations in foreign exchange rates.
We do not believe that there have been material changes in our foreign exchange risk exposure from the disclosure included in the “Item 11. Quantitative and Qualitative Disclosures About Market Risk” section of our Annual Report on Form 20-F for the year ended December 31, 2023.
Credit Risk
We are exposed to credit risk from our operating activities, primarily trade receivables. Credit risk is the risk that a counterparty will be unable to meet its obligations under a financial instrument or customer contract. We assess writing off of receivables on a case-by-case basis if the outstanding balance exceeds one year.
We do not believe that credit risk had a material effect on our business, financial condition or results of operations. The largest customer balance represented 19% of accounts receivable as of March 31, 2024, which is attributable to one of our largest distributors. This distributor has a strong payment history and is in good standing with us. Our cash and cash equivalents are deposited with reputable financial institutions. If customers representing a significant percentage of our trade receivables are unable to meet their payment obligations to us, we may suffer harm to our business, financial condition or results of operations.
Inflation Risk
We believe our business is able to pass along increases in the costs of providing our products and services caused by inflation by increasing the prices of our products and services. For multi-year contracts, our general terms and conditions allow us to increase prices, at minimum on an annual basis. However, we do not believe that inflation had a material effect on our business, financial condition or results of operations. If our costs were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs through price increases. Our inability or failure to do so could harm our business, financial condition or results of operations.
Material Accounting Policies and Critical Judgments and Estimates
The preparation of financial statements in conformity with IFRS Accounting Standards requires the use of accounting estimates. It also requires management to exercise judgement in applying our accounting policies. Disclosed below are the areas which require a high degree of judgment, significant assumptions and/or estimates. The most significant assumptions used in the financial statements are the underlying assumptions used in revenue recognition, capitalized internal development costs, share-based compensation, goodwill impairment testing, defined benefit pension liabilities, expected credit loss, income taxes, and derivatives. We base estimates and assumptions on historical experience when available and on various factors that we determined to be reasonable under the circumstances. We evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates under different assumptions or conditions.
Our material accounting policies and critical estimates that involve a higher degree of judgment and complexity are described in the “Item 5. Operating and Financial Review and Prospects—E. Critical Accounting Estimates” section of our Annual Report on Form 20-F for the year ended December 31, 2023. There have been no material changes to our material accounting policies and critical estimates as disclosed therein, with the exception of our adoption of recent accounting pronouncements, as discussed below.
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Recent Accounting Pronouncements
In connection with our adoption of IFRS Accounting Standards for the preparation of our financial statements, certain new accounting standards and interpretations have been published that are not mandatory for the December 31, 2023 reporting periods and have not been adopted early by us. These standards are not expected to have a material impact on the entity in the current or future reporting periods and on foreseeable future transactions. See Note 2 to the audited condensed consolidated financial statements included in our Annual Report on Form 20-F for the year ended December 31, 2023 and Note 1 of our unaudited interim condensed consolidated financial statements included as Exhibit 99.1 to the Report on Form 6-K to which this discussion and analysis is included as Exhibit 99.2.
Emerging Growth Company Status
In April 2012, the JOBS Act was enacted. Section 107 of 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 applicable to public companies. This provision allows an emerging growth company to delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. This transition period is only applicable under U.S. GAAP. As a result, we will adopt new or revised accounting standards on the relevant dates on which adoption of such standards is required or permitted by the International Accounting Standards Board.
Subject to certain conditions, as an emerging growth company, we intend to rely on certain of these exemptions, including without limitation, (i) providing an auditor’s attestation report on our system of internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act and (ii) complying with any requirement that may be adopted by the Public Company Accounting Oversight Board, regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements, known as the critical audit matters. We will remain an emerging growth company until the earliest of (i) the last day of the fiscal year in which we have total annual gross revenues of $1.235 billion or more; (ii) December 31, 2026; (iii) the date on which we have issued more than $1.0 billion in non-convertible debt during the previous three years; and (iv) the date on which we are deemed to be a large accelerated filer under the rules of the SEC, which means the market value of our ordinary shares that are held by non-affiliates equals or exceeds $700.0 million as of the prior June 30th.
13
Document

Exhibit 99.3

SOPHiA GENETICS Reports First Quarter 2024 Results
Consistent Operational Execution; Robust New Business Momentum; Guidance Reaffirmed


BOSTON, United States and ROLLE, Switzerland, May 7, 2024 — SOPHiA GENETICS (Nasdaq: SOPH), a cloud-native software company and leader in data-driven medicine, today reported financial results for the first quarter ended March 31, 2024.
First Quarter 2024 Financial Highlights
Revenue grew 13% year-over-year to $15.8 million; Constant currency revenue excluding COVID-related revenue grew 12% year-over-year
Gross margins were 65.9% on a reported basis and 70.5% on an adjusted basis
Operating loss was $18.8 million on a reported basis and $14.1 million on an adjusted basis, representing year-over-year improvements of 3% and 13%, respectively
Reiterated full-year guidance, including revenue growth of 25% to 30%, adjusted gross margin of 72.5% to 72.7%, and adjusted operating loss between $45 million and $50 million
Entered into an agreement with Perceptive Advisors for up to $50 million in debt financing to provide additional capital flexibility to accelerate our growth and buttress our already strong balance sheet

"We delivered solid achievements in Q1 to fuel future growth, including the signing of 27 new core genomics customers, the official launch of MSK-ACCESS® powered with SOPHiA DDMTM, which has already gained remarkable traction worldwide, and new milestones working with BioPharma partners to diversify and expand the SOPHiA DDMTM network into locations such as Africa for the first time," said Jurgi Camblong, PhD., Chief Executive Officer and Co-founder. "Beyond those achievements, I am especially proud of our ability to continue to grow sustainably as we recorded yet another quarter of notable bottom-line improvements with adjusted operating loss improving 13% year-over year.”

Camblong added, "Looking forward to the rest of 2024, our team will remain laser-focused on onboarding the influx of new customers who have adopted SOPHiA DDMTM over the past two quarters, while also continuing to build off of the significant momentum of our new Liquid Biopsy offering with the launch of MSK-ACCESS® powered with SOPHiA DDMTM.”

Business Highlights

Expanding usage of SOPHiA DDM™ worldwide
Reached 463 core genomics customers as of March 31, 2024, who use SOPHiA DDMTM regularly to analyze cases of cancer and rare disease, up from 437 customers at the end of Q1 2023
Performed approximately 84,000 analyses on SOPHiA DDMTM in Q1 2024, representing 9% year-over-year analysis volume growth or 11% growth when excluding COVID-related analyses
Officially launched the Liquid Biopsy application, MSK-ACCESS® powered with SOPHiA DDM™, at the end of April; Capitalized on strong market demand and signed 9 customers pre-launch

Accelerating adoption of SOPHiA DDM™ by landing new Clinical customers
Landed 27 new core genomic customers in Q1 2024 who will implement SOPHiA DDM™ over the next several months, representing the second consecutive quarter of strong new business growth
Continued building momentum in the U.S. market with 34% year-over-year analysis volume growth in Q1 2024, 27% year-over-year revenue growth, and the signing of major, new U.S. healthcare institutions such as Mayo Clinic, one of the top-ranked academic medical centers in the world, who is adopting SOPHIA DDMTM’s capabilities in Oncology starting with HemOnc applications
Added 3 new countries to the SOPHiA DDMTM network with the signing of new customers in Romania, Norway, and Nigeria
Signed our first SOPHiA DDMTM customer in Africa, with the addition of Syndicate Bio, a precision medicine lab in Nigeria that aims to provide cancer diagnosis and treatment to the over 1 million cancer



patients in Africa each year; Syndicate Bio is the first lab in Africa to adopt MSK-ACCESS® powered with SOPHiA DDMTM as part of our monumental collaboration with MSK and AstraZeneca, which aims to advance health equity on a global scale by expanding access to comprehensive cancer testing
Continued gaining traction with the U.K.’s National Health Service (“NHS”) with the signing of Synnovis, a London-based lab providing services to the NHS, who will be adopting SOPHiA DDMTM’s new Liquid Biopsy applications

Leveraging SOPHiA DDMTM to deliver value to BioPharma partners
Finalized agreement with AstraZeneca to sponsor the deployment of MSK-ACCESS® powered with SOPHiA DDMTM to numerous institutions across the globe in 2024
Signed our first ever Breast Cancer Pilot project leveraging SOPHiA DDMTM’s multimodal algorithms and factories to identify predictive signatures of response to therapy which could lead to better, more personalized treatment of patients with advanced hormone-positive breast cancer

Growing sustainably by maintaining an obsession on operational excellence
Remained laser-focused on operational excellence by improving adjusted operating loss 13% year-over-year in Q1 2024 and maintaining adjusted gross margin above 70%
Reaffirmed commitment to grow sustainably and achieve adjusted operating profitability in the next 2+ years

Strengthening our capital position to support future growth initiatives
Entered into a new, five-year senior secured credit facility with Perceptive Advisors on May 2, 2024; the agreement provides access of up to $50 million in debt financing, consisting of an initial tranche of $15 million, and an additional tranche of $35 million available for draw through March 2026
Interest is payable in cash on the outstanding principal amount at a per annual rate equal to the sum of the higher of the applicable secured overnight financing rate (“SOFR”) or the minimum floor rate of 4.00% plus 6.25%
Under the terms of the agreement, Perceptive has been issued warrants to purchase 400,000 shares of the Company’s stock as of the closing date, with an exercise price equal to the 10-day volume weighted average price (“VWAP”) preceding the closing date. Warrants to purchase 200,000 shares will be issued immediately, and warrants to purchase an additional 200,000 will be issued upon drawing of the subsequent tranche

2024 Financial Outlook
Based on information as of today, SOPHiA GENETICS is reaffirming our previously provided guidance of:
Revenue between $78 million and $81 million, representing growth of 25% to 30% compared to full year 2023 revenue
Adjusted gross margin between 72.5% and 72.7%, compared to 72.2% in FY 2023
Adjusted operating loss between $45 million and $50 million, compared to $55.9 million in FY 2023

Other than with respect to revenue, the Company only provides guidance on a non-IFRS basis. The Company does not provide a reconciliation of forward-looking adjusted gross margin (non-IFRS measure) to gross margin (the most comparable IFRS financial measure), due to the inherent difficulty in forecasting and quantifying amortization of capitalized research & development expenses that are necessary for such reconciliation. In addition, the Company does not provide a reconciliation of forward-looking adjusted operating loss (non-IFRS measure) to operating loss (the most comparable IFRS financial measure), due to the inherent difficulty in forecasting and quantifying amortization of capitalized research & development expenses and intangible assets, share-based compensation expenses, and non-cash portion of pensions paid in excess of actual contributions, that are necessary for such reconciliation.

Earnings Call and Webcast Information

SOPHiA GENETICS will host a conference call and live webcast to discuss the first quarter 2024 results on Tuesday, May 7, 2024, at 8:00 a.m. (08:00) Eastern Time / 2:00 p.m. (14:00) Central European Time. The call will be webcast live on the SOPHiA GENETICS Investor Relations website, ir.sophiagenetics.com. Additionally, an audio replay of the conference call will be available on the SOPHiA GENETICS website after its completion.

Non-IFRS Financial Measures



To provide investors with additional information regarding the company’s financial results, SOPHiA GENETICS has disclosed here and elsewhere in this earnings release the following non-IFRS measures:
Adjusted gross profit, which the company calculates as revenue minus cost of revenue adjusted to exclude amortization of capitalized research and development expenses;
Adjusted gross profit margin, which the company calculates as adjusted gross profit as a percentage of revenue;
Adjusted operating loss, which the company calculates as operating loss adjusted to exclude amortization of capitalized research and development expenses, amortization of intangible assets, share-based compensation expense, and non-cash portion of pensions expense paid in excess of actual contributions to match the actuarial expense.
These non-IFRS measures are key measures used by SOPHiA GENETICS management and board of directors to evaluate its operating performance and generate future operating plans. The exclusion of certain expenses facilitates operating performance comparability across reporting periods by removing the effect of non-cash expenses and certain variable charges. Accordingly, the company believes that these non-IFRS measures provide useful information to investors and others in understanding and evaluating its operating results in the same manner as its management and board of directors.
These non-IFRS measures have limitations as financial measures, and you should not consider them in isolation or as a substitute for analysis of SOPHiA GENETICS’ results as reported under IFRS. Some of these limitations are:
These non-IFRS measures exclude the impact of amortization of capitalized research and development expenses and intangible assets. Although amortization is a non-cash charge, the assets being amortized may need to be replaced in the future and these non-IFRS measures do not reflect capital expenditure requirements for such replacements or for new capital expenditures;
These non-IFRS measures exclude the impact of share-based compensation expenses. Share-based compensation has been, and will continue to be for the foreseeable future, a recurring expense in the company’s business and an important part of its compensation strategy;
These non-IFRS measures exclude the impact of the non-cash portion of pensions paid in excess of actual contributions to match actuarial expenses. Pension expenses have been, and will continue to be for the foreseeable future, a recurring expense in the business; and
Other companies, including companies in the company’s industry, may calculate these non-IFRS measures differently, which reduces their usefulness as comparative measures.
Because of these limitations, you should consider these non-IFRS measures alongside other financial performance measures, including various cash flow metrics, net income and other IFRS results.
The tables below provide the reconciliation of the most comparable IFRS measures to the non-IFRS measures for the periods presented.
Presentation of Constant Currency Revenue and Excluding COVID-19-Related Revenue
SOPHiA GENETICS operates internationally, and its revenues are generated primarily in the U.S. dollar, the euro and Swiss franc and, to a lesser extent, British pound, Australian dollar, Brazilian real, Turkish lira and Canadian dollar depending on the company’s customers’ geographic locations. Changes in revenue include the impact of changes in foreign currency exchange rates. We present the non-IFRS financial measure “constant currency revenue” (or similar terms such as constant currency revenue growth) to show changes in revenue without giving effect to period-to-period currency fluctuations. Under IFRS, revenues received in local (non-U.S. dollar) currencies are translated into U.S. dollars at the average monthly exchange rate for the month in which the transaction occurred. When the company uses the term “constant currency”, it means that it has translated local currency revenues for the current reporting period into U.S. dollars using the same average foreign currency exchange rates for the conversion of revenues into U.S. dollars that we used to translate local currency revenues for the comparable reporting period of the prior year. The company then calculates the



difference between the IFRS revenue and the constant currency revenue to yield the “constant currency impact” for the current period.
The company’s management and board of directors use constant currency revenue growth to evaluate growth and generate future operating plans. The exclusion of the impact of exchange rate fluctuations provides comparability across reporting periods and reflects the effects of customer acquisition efforts and land-and-expand strategy. Accordingly, it believes that this non-IFRS measure provides useful information to investors and others in understanding and evaluating revenue growth in the same manner as the management and board of directors. However, this non-IFRS measure has limitations, particularly as the exchange rate effects that are eliminated could constitute a significant element of its revenue and could significantly impact performance and prospects. Because of these limitations, you should consider this non-IFRS measure alongside other financial performance measures, including revenue and revenue growth presented in accordance with IFRS and other IFRS results.
In addition to constant currency revenue, the company presents constant currency revenue excluding COVID-19-related revenue to further remove the effects of revenues that are derived from sales of COVID-19-related offerings, including a NGS assay for COVID-19 that leverages the SOPHiA DDMTM Platform and related products and solutions analytical capabilities and COVID-19 bundled access products. SOPHiA GENETICS do not believe that these revenues reflect its core business of commercializing its platform because the company’s COVID-19 solution was offered to address specific market demand by its customers for analytical capabilities to assist with their testing operations. The company does not anticipate additional development of its COVID-19-related solution as the pandemic transitions into a more endemic phase and as customer demand continues to decline. Further, COVID-19-related revenues did not constitute, and the company does not expect COVID-19-related revenues to constitute in the future, a significant part of its revenue. Accordingly, the company believes that this non-IFRS measure provides useful information to investors and others in understanding and evaluating its revenue growth. However, this non-IFRS measure has limitations, including that COVID-19-related revenues contributed to the company’s cash position, and other companies may define COVID-19-related revenues differently. Because of these limitations, you should consider this non-IFRS measure alongside other financial performance measures, including revenue and revenue growth presented in accordance with IFRS and other IFRS results.
The table below provides the reconciliation of the most comparable IFRS growth measures to the non-IFRS growth measures for the current period.
About SOPHiA GENETICS

SOPHiA GENETICS (Nasdaq: SOPH) is a cloud-native healthcare technology company on a mission to expand access to data-driven medicine by using AI to deliver world-class care to patients with cancer and rare disorders across the globe. It is the creator of SOPHiA DDM™, a platform that analyzes complex genomic and multimodal data and generates real-time, actionable insights for a broad global network of hospital, laboratory, and biopharma institutions. For more information, visit SOPHiAGENETICS.COM and connect with us on LinkedIn.

Forward-Looking Statements

This press release contains statements that constitute forward-looking statements. All statements other than statements of historical facts contained in this press release, including statements regarding SOPHiA GENETICS future results of operations and financial position, business strategy, products and technology, partnerships and collaborations, as well as plans and objectives of management for future operations, are forward-looking statements. Forward-looking statements are based on SOPHiA GENETICS’ management’s beliefs and assumptions and on information currently available to the company’s management. Such statements are subject to risks and uncertainties, and actual results may differ materially from those expressed or implied in the forward-looking statements due to various factors, including those described in the company’s filings with the U.S. Securities and Exchange Commission. No assurance can be given that such future results will be achieved. Such forward-looking statements contained in this press release speak only as of its date. We expressly disclaim any obligation or undertaking to update these forward-looking statements contained in this press release to reflect any change in the company’s expectations or any change in events, conditions, or circumstances on which such statements are based, unless required to do so by applicable law. No representations or warranties (expressed or implied) are made about the accuracy of any such forward-looking statements.



Investor Contact:
Kellen Sanger
IR@sophiagenetics.com
Media Contact:
Kelly Katapodis
media@sophiagenetics.com



SOPHiA GENETICS SA
Interim Condensed Consolidated Statements of Loss
(Amounts in USD thousands, except per share data)
(Unaudited)
Three months ended March 31,
20242023
Revenue$15,779 $13,966 
Cost of revenue(5,374)(4,272)
Gross profit10,405 9,694 
Research and development costs(9,391)(9,334)
Selling and marketing costs(6,951)(6,424)
General and administrative costs(12,825)(13,242)
Other operating income, net19 
Operating loss(18,756)(19,287)
Interest income, net758 862 
Foreign exchange gains (losses)4,610 (1,168)
Loss before income taxes(13,388)(19,593)
Income tax expense(316)(107)
Loss for the period(13,704)(19,700)
Attributable to the owners of the parent(13,704)(19,700)
Basic and diluted loss per share$(0.21)$(0.31)



SOPHiA GENETICS SA
Interim Condensed Consolidated Statements of Comprehensive Loss
(Amounts in USD thousands)
(Unaudited)
Three months ended March 31,
20242023
Loss for the period$(13,704)$(19,700)
Other comprehensive (loss) income:
Items that may be reclassified to statement of loss (net of tax)
Currency translation differences(9,393)1,971 
Total items that may be reclassified to statement of loss(9,393)1,971 
Items that will not be reclassified to statement of loss (net of tax)
Remeasurement of defined benefit plans(15)(70)
Total items that will not be reclassified to statement of loss(15)(70)
Other comprehensive (loss) income for the period$(9,408)$1,901 
Total comprehensive loss for the period$(23,112)$(17,799)
Attributable to owners of the parent$(23,112)$(17,799)



SOPHiA GENETICS SA
Interim Condensed Consolidated Balance Sheets
(Amounts in USD thousands)
(Unaudited)
March 31, 2024    December 31, 2023
Assets
Current assets 
Cash and cash equivalents$103,735 $123,251 
Accounts receivable10,890 13,557 
Inventory6,016 6,482 
Prepaids and other current assets4,486 4,757 
Total current assets125,127 148,047 
Non-current assets
Property and equipment6,583 7,469 
Intangible assets26,294 27,185 
Right-of-use assets14,714 15,635 
Deferred tax assets1,716 1,720 
Other non-current assets5,824 6,100 
Total non-current assets55,131 58,109 
Total assets$180,258 $206,156 
Liabilities and equity
Current liabilities
Accounts payable$6,245 $5,391 
Accrued expenses12,908 17,808 
Deferred contract revenue8,336 9,494 
Lease liabilities, current portion2,704 2,928 
Total current liabilities30,193 35,621 
Non-current liabilities
Lease liabilities, net of current portion14,738 15,673 
Defined benefit pension liabilities2,971 3,086 
Other non-current liabilities124 334 
Total non-current liabilities17,833 19,093 
Total liabilities48,026 54,714 
Equity
Share capital4,048 4,048 
Share premium472,031 471,846 
Treasury share(638)(646)
Other reserves48,279 53,978 
Accumulated deficit(391,488)(377,784)
Total equity132,232 151,442 
Total liabilities and equity$180,258 $206,156 



SOPHiA GENETICS SA
Interim Condensed Consolidated Statements of Cash Flows
(Amounts in USD thousands)
(Unaudited)
Three months ended March 31,
20242023
Operating activities  
Loss before tax$(13,388)$(19,593)
Adjustments for non-monetary items
Depreciation1,158 1,284 
Amortization901 606 
Finance (income) expense, net(5,046)169 
Expected credit loss allowance(48)638 
Share-based compensation3,714 2,430 
Movements in provisions and pensions(135)349 
Research tax credit(104)(451)
Working capital changes
Decrease (Increase) in accounts receivable2,168 (3,169)
Increase in prepaids and other assets(182)(859)
Decrease in inventory376 876 
(Decrease) Increase in accounts payables, accrued expenses, deferred contract revenue, and other liabilities(4,058)2,062 
Cash used in operating activities(14,644)(15,658)
Income tax paid(1)(121)
Interest paid(147)(5)
Interest received953 995 
Net cash flows used in operating activities(13,839)(14,789)
Investing activities
Purchase of property and equipment(99)(508)
Acquisition of intangible assets(50)(284)
Capitalized development costs(1,809)(935)
Proceeds upon maturity of term deposits— 16,213 
Net cash flow (used in) provided from investing activities(1,958)14,486 
Financing activities
Proceeds from exercise of share options188 151 
Capitalized borrowing transaction costs(49)— 
Payments of principal portion of lease liabilities(735)(1,086)
Net cash flow used in financing activities(596)(935)
Decrease in cash and cash equivalents(16,393)(1,238)
Effect of exchange differences on cash balances(3,123)695 
Cash and cash equivalents at beginning of the year123,251 161,305 
Cash and cash equivalents at end of the period$103,735 $160,762 



SOPHiA GENETICS SA
Reconciliation of IFRS Revenue Growth to Constant Currency Revenue Growth
and Constant Currency Revenue Growth Excluding COVID-19-Related Revenue
(Amounts in USD thousands, except for %)
(Unaudited)


Three months ended March 31,
20242023Growth
IFRS revenue$15,779 $13,966 13 %
Current period constant currency impact(184)— 
Constant currency revenue$15,595 $13,966 12 %
COVID-19-related revenue(35)(125)
Constant currency impact on COVID-19-related revenue— 
Constant currency revenue excluding COVID-19-related revenue$15,562 $13,841 12 %
SOPHiA GENETICS SA
Reconciliation of IFRS to Adjusted Gross Profit and Gross Profit Margin
(Amounts in USD thousands, except percentages)
(Unaudited)
Three months ended March 31,
20242023
Revenue$15,779 $13,966 
Cost of revenue(5,374)(4,272)
Gross profit$10,405 $9,694 
Amortization of capitalized research and development expenses(1)
727 432 
Adjusted gross profit$11,132 $10,126 
Gross profit margin66 %69 %
Amortization of capitalized research and development expenses(1)
%%
Adjusted gross profit margin71 %73 %



SOPHiA GENETICS SA
Reconciliation of IFRS to Adjusted Operating Loss for the Period
(Amounts in USD thousands)
(Unaudited)
Three months ended March 31,
20242023
Operating loss$(18,756)$(19,287)
Amortization of capitalized research & development expenses (1)
727 432 
Amortization of intangible assets(2)
174 173 
Share-based compensation expense(3)
3,714 2,430 
Non-cash pension expense(4)
77 78 
Adjusted operating loss$(14,064)$(16,174)



SOPHiA GENETICS SA
Reconciliation of IFRS to Adjusted Operating Loss
for the fourth quarter and fiscal year 2023
(Amounts in USD thousands)
(Unaudited)
Three months endedYear ended
December 31, 2023
Operating loss$(18,946)$(74,826)
Amortization of capitalized research & development expenses (1)
619 2,099 
Amortization of intangible assets(2)
193 729 
Share-based compensation expense(3)
4,211 15,247 
Non-cash pension expense(4)
(625)(394)
Costs associated with restructuring(5)
1,232 1,232.00 
Adjusted operating loss$(13,316)$(55,913)



Notes to the Reconciliation of IFRS to Adjusted Financial Measures Tables
(1)Amortization of capitalized research and development expenses consists of software development costs amortized using the straight-line method over an estimated life of five years. These expenses do not have a cash impact but remain a recurring expense generated over the course of our research and development initiatives.



(2)Amortization of intangible assets consists of costs related to intangible assets amortized over the course of their useful lives. These expenses do not have a cash impact, but we could continue to generate such expenses through future capital investments.
(3)Share-based compensation expense represents the cost of equity awards issued to our directors, officers, and employees. The fair value of awards is computed at the time the award is granted and is recognized over the vesting period of the award by a charge to the income statement and a corresponding increase in other reserves within equity. These expenses do not have a cash impact but remain a recurring expense for our business and represent an important part of our overall compensation strategy.
(4)Non-cash pension expense consists of the amount recognized in excess of actual contributions made to our defined pension plans to match actuarial expenses calculated for IFRS purposes. The difference represents a non-cash expense but remains a recurring expense for our business as we continue to make contributions to our plans for the foreseeable future.
(5)Costs associated with restructuring consists of compensation paid to employees during their garden leave period, severance, and any other amounts legally owed to the employees resulting from their termination as part of a planned workforce reduction, which we undertook to optimize our operations. Additionally, it includes any legal fees incurred as part of the restructuring process. While such actions are not planned going forward as part of our regular operations, we expect such expenses could still be incurred from time to time based on corporate needs.


Document
Execution Version
Credit Agreement and Guaranty
dated as of
May 2, 2024
among
SOPHiA GENETICS SA
as Borrower,
The Guarantors From Time To Time Party Hereto,
as Guarantors,

The Lenders From Time To Time Party Hereto,
as Lenders,
and
Perceptive Credit Holdings IV, LP,
as the Administrative Agent and as a Lender


4894-2985-1820
7040231
    
    
    
#98195096v26    


Table of Contents
Section    Heading    Page

Schedules:
Schedule 1    —    Commitments and Warrant Shares
Schedule 2    —    Notice Addresses
Schedule 3    —    Products
Schedule 7.05(b)    —    Obligor Intellectual Property
Schedule 7.14    —    Material Agreements
Schedule 7.15    —    Restrictive Agreements
Schedule 7.16    —    Real Property
Schedule 7.17    —    Pension Matters
Schedule 7.19(b)    —    Regulatory Approvals
Schedule 7.20    —    Capitalization
Schedule 7.22    —    Broker’s Fee
Schedule 7.26    —    Royalty and Other Payments
Schedule 8.18    —    Post-Closing Obligations
Schedule 9.01(b)    —    Permitted Indebtedness
Schedule 9.02(b)    —    Permitted Liens
Schedule 9.05    —    Existing Investments
Schedule 9.10    —    Transactions with Affiliates
Exhibits:
Exhibit A    —    Form of Guarantee Assumption Agreement
Exhibit B    —    Form of Borrowing Notice
Exhibit C    —    Form of Note
Exhibit D    —    Form of U.S. Tax Compliance Certificate
Exhibit E    —    Form of Compliance Certificate
Exhibit F    —    Form of Assignment Agreement
Exhibit G-1    —    Form of U.S. Security Agreement
Exhibit G-2    —    Form of Swiss Bank Account Pledge Agreement
Exhibit G-3    —    Form of Swiss Receivables Security Assignment Agreement
Exhibit H-1    —    Form of Patent & Trademark Security Agreement
Exhibit H-2    —    Form of Copyright Security Agreement
Exhibit H-3    —    Form of Swiss IP Pledge Agreement
Exhibit I    —    Form of Collateral Questionnaire

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#98195096v26    


Credit Agreement and Guaranty, dated as of May 2, 2024 (this “Agreement”), among SOPHiA GENETICS SA, a publicly listed stock corporation (société anonyme/Aktiengesellschaft) incorporated, organized and existing under the laws of Switzerland, registered with the commercial register of the Canton of Vaud under company number CHE-184.818.745 with registered address at Zone Artisanale La Pièce 12, 1180 Rolle/VD (“Borrower”), certain Guarantors from time to time parties hereto, the lenders from time to time party hereto (each, as a “Lender” and collectively, the “Lenders”) and Perceptive Credit Holdings IV, LP, a Delaware limited partnership (“Perceptive”), as administrative agent for the Lenders (in such capacity, together with its successors and assigns, the “Administrative Agent”).
Witnesseth:
Borrower has requested the Lenders to make term loans to Borrower, and the Lenders are prepared to make such loans on and subject to the terms and conditions hereof. Accordingly, the parties agree as follows:
Article 1
Definitions
    Section 1.01.    Certain Defined Terms. As used herein, the following terms have the following respective meanings:
“510(k)” means (a) any premarket notification and corresponding FDA clearance for a Device pursuant to FDA regulations, (b) any corresponding or substantially equivalent notification, application or clearance of a non-U.S. Regulatory Authority, and (c) all amendments, supplements and other additions and modifications thereto, and all documents, data and other information concerning any applicable Device which are necessary for, filed with, incorporated by reference in, or otherwise supportive of any of the foregoing.
“Accounting Change” has the meaning set forth in Section 1.02.
“Accounting Change Notice” has the meaning set forth in Section 1.02.
“Acquisition” means any transaction, or any series of related transactions, by which any Person directly or indirectly, by means of a take-over bid, tender offer, amalgamation, merger, purchase of assets, or similar transaction having the same effect as any of the foregoing, (a) acquires all or substantially all of the assets of any Person engaged in any business, (b) acquires all or substantially all of a business line or unit or division of any other Person, (c) acquires Control of securities of a Person engaged in a business representing more than 50% of the ordinary voting power for the election of directors or other governing body if the business affairs of such Person are managed by a Board or other governing body, or (d) acquires Control of more than 50% of the ownership interest in any Person engaged in any business that is not managed by a Board or other governing body.

    
    
    
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“Act” has the meaning set forth in Section 13.16.
“Administrative Agent” has the meaning set forth in the introduction hereto.
“Affected Financial Institution” means (a) any EEA Financial Institution or (b) any UK Financial Institution.
“Affiliate” means, with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified.
“Agreement” has the meaning set forth in the introduction hereto.
“Anti-Corruption Laws” means all laws, rules and regulations of any jurisdiction applicable to the Obligors and their Affiliates concerning or relating to bribery or corruption, including, without limitation, the Foreign Corrupt Practices Act of 1977, as amended.
“Anti-Terrorism Laws” means any laws or regulations relating to terrorism or money laundering, including, without limitation the Bank Secrecy Act (31 U.S.C. §§ 5311 et seq.), the Money Laundering Control Act of 1986 (18 U.S.C. §§ 1956 et seq.), the USA Patriot Act and any similar law enacted in the United States after the date of this Agreement.
“Applicable Margin” means 6.25% per annum.
“Approved Fund” means any Person (other than a natural person) that is engaged in making, purchasing, holding or investing in bank loans and similar extensions of credit in the ordinary course of its business and that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.
“Asset Sale” has the meaning set forth in Section 9.09.
“Assignment Agreement” means an assignment and assumption entered into by a Lender and an assignee of such Lender in substantially the form of Exhibit F.
“Available Tenor” means, as of the Closing Date, the only Available Tenor for Term SOFR is an interest period of one (1) month; provided that the Administrative Agent may select to use additional interest periods in accordance with the terms of Section 3.02(c)(iv) and such interest periods shall become Available Tenors upon such selection.
“Bail In Action” means the exercise of any Write Down and Conversion Powers by the applicable Resolution Authority in respect of any liability of an Affected Financial Institution.
“Bail In Legislation” means (a) with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the
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European Union, the implementing law, regulation, rule or requirement for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule and (b) with respect to the United Kingdom, Part I of the United Kingdom Banking Act 2009 (as amended from time to time) and any other law, regulation, rule or requirement applicable in the United Kingdom relating to the resolution of unsound or failing banks, investment firms or other financial institutions or their affiliates (other than through liquidation, administration or other Insolvency Proceedings).
“Bank Accounts” has the meaning set forth in the Swiss Bank Account Pledge Agreement.
“Bankruptcy Code” means Title 11 of the United States Code entitled “Bankruptcy.”
“Benchmark” means, initially, the Term SOFR Reference Rate; provided that if a Benchmark Transition Event has occurred with respect to the Term SOFR Reference Rate or the then-current Benchmark, then “Benchmark” means the applicable Benchmark Replacement to the extent that such Benchmark Replacement has replaced such prior benchmark rate pursuant to Section 3.02(c).
“Benchmark Replacement” means the first alternative set forth in the order below that can be determined by the Administrative Agent for the applicable Benchmark Replacement Date:
    (a)    Daily Simple SOFR; or
    (b)    the sum of: (i) the alternate benchmark rate that has been selected by the Administrative Agent and Borrower giving due consideration to (A) any selection or recommendation of a replacement benchmark rate or the mechanism for determining such a rate by the Relevant Governmental Body or (B) any evolving or then-prevailing market convention for determining a benchmark rate as a replacement to the then-current Benchmark for Dollar-denominated syndicated credit facilities and (ii) the related Benchmark Replacement Adjustment.
If the Benchmark Replacement as determined pursuant to clause (a) or (b) above would be less than the Floor, the Benchmark Replacement will be deemed to be the Floor for the purposes of this Agreement and the other Loan Documents.
“Benchmark Replacement Adjustment” means, with respect to any replacement of the then-current Benchmark with an Unadjusted Benchmark Replacement, the spread adjustment, or method for calculating or determining such spread adjustment, (which may be a positive or negative value or zero) that has been selected by the Administrative Agent and Borrower giving due consideration to (a) any selection or recommendation of a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement by the Relevant Governmental Body or (b) any evolving or then-prevailing market convention for determining a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such
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Benchmark with the applicable Unadjusted Benchmark Replacement for Dollar-denominated syndicated credit facilities at such time.
“Benchmark Replacement Date” means a date and time determined by the Administrative Agent, which date shall be no later than the earliest to occur of the following events with respect to the then-current Benchmark:
    (a)    in the case of clause (a) or (b) of the definition of “Benchmark Transition Event,” the later of (i) the date of the public statement or publication of information referenced therein and (ii) the date on which the administrator of such Benchmark (or the published component used in the calculation thereof) permanently or indefinitely ceases to provide all Available Tenors of such Benchmark (or such component thereof); or
    (b)    in the case of clause (c) of the definition of “Benchmark Transition Event,” the first date on which such Benchmark (or the published component used in the calculation thereof) has been determined and announced by the regulatory supervisor for the administrator of such Benchmark (or such component thereof) to be non-representative; provided that such non-representativeness will be determined by reference to the most recent statement or publication referenced in such clause (c) and even if any Available Tenor of such Benchmark (or such component thereof) continues to be provided on such date.
For the avoidance of doubt, the “Benchmark Replacement Date” will be deemed to have occurred in the case of clause (a) or (b) with respect to any Benchmark upon the occurrence of the applicable event or events set forth therein with respect to all then-current Available Tenors of such Benchmark (or the published component used in the calculation thereof).
“Benchmark Transition Event” means the occurrence of one or more of the following events with respect to the then-current Benchmark:
    (a)    a public statement or publication of information by or on behalf of the administrator of such Benchmark (or the published component used in the calculation thereof) announcing that such administrator has ceased or will cease to provide all Available Tenors of such Benchmark (or such component thereof), permanently or indefinitely; provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark (or such component thereof);
    (b)    a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the published component used in the calculation thereof), the Federal Reserve Board, the Federal Reserve Bank of New York, an insolvency official with jurisdiction over the administrator for such Benchmark (or such component), a resolution authority with jurisdiction over the administrator for such Benchmark (or such component) or a court or an entity with similar insolvency or resolution authority over the administrator for such Benchmark (or such component),
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which states that the administrator of such Benchmark (or such component) has ceased or will cease to provide all Available Tenors of such Benchmark (or such component thereof) permanently or indefinitely; provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark (or such component thereof); or
    (c)    a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the published component used in the calculation thereof) announcing that all Available Tenors of such Benchmark (or such component thereof) are not, or as of a specified future date will not be, representative.
For the avoidance of doubt, a “Benchmark Transition Event” will be deemed to have occurred with respect to any Benchmark if a public statement or publication of information set forth above has occurred with respect to each then-current Available Tenor of such Benchmark (or the published component used in the calculation thereof).
“Beneficial Ownership Regulation” has the meaning set forth in Section 13.16.
“Benefit Plan” means any “employee benefit plan” as defined in Section 3(3) of ERISA (other than a Multiemployer Plan) to which any Obligor or Subsidiary thereof incurs or otherwise has any obligation or liability, contingent or otherwise.
“Board” means, with respect to any Person, the board of directors or managers (as applicable) (or equivalent governing body) of such Person or any committee thereof.
“Borrower” has the meaning set forth in the introduction hereto.
“Borrowing” means a borrowing consisting of a Tranche A Term Loan made by the Lenders on the Closing Date or a Tranche B Term Loan made by the Lenders on the Tranche B Term Loan Borrowing Date, as applicable.
“Borrowing Notice” means a notice substantially in the form attached hereto as Exhibit B.
“Business Day” means a day (other than a Saturday or Sunday) on which commercial banks are not authorized or required to close in New York City or Lausanne, Switzerland.
“Capital Lease Obligations” means, as to any Person, the obligations of such Person to pay rent or other amounts under a lease of (or other agreement conveying the right to use) real and/or personal Property which obligations are required to be classified and accounted for as a capital lease on a balance sheet of such Person under IFRS and, for purposes of this Agreement, the amount of such obligations shall be the capitalized amount thereof, determined substantially in accordance with IFRS; provided that any lease that would have been considered an operating lease under IFRS or GAAP as in effect as of December 31, 2018 shall be treated as an operating
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lease for all purposes under this Agreement and the other Loan Documents, and all obligations in respect thereof shall be excluded from the definition of Indebtedness.
“Casualty Event” means any actual or constructive loss, condemnation, destruction, confiscation, requisition, seizure or forfeiture of all or any material portion of the assets of Borrower or any Material Subsidiary, excluding only those assets, individually or in the aggregate, subject to any such event during any calendar year with a fair market value as of the date thereof equal to or less than $1,000,000.
“Change of Control” means and shall be deemed to have occurred if:
    (a)    any “person” or “group” (within the meaning of Rule 13d-5 of the Exchange Act as in effect on the date hereof) shall own, directly or indirectly, beneficially or of record, shares representing 40% or more of the aggregate ordinary voting power represented by the issued and outstanding Equity Interests of Borrower;
    (b)    during any period of twelve (12) consecutive calendar months, the occupation of a majority of the seats (other than vacant seats) on the Board of Borrower by Persons who were neither (i) nominated or approved by the Board of Borrower, nor (ii) appointed by directors on the Board on the date hereof or so nominated; and
    (c)    each Obligor shall cease to own directly, beneficially and of record, determined on a fully diluted basis, 100% of the issued and outstanding Equity Interests of its Subsidiaries (other than an Immaterial Subsidiary) (except in a transaction permitted pursuant to Section 9.03 and Section 9.05).
“Claims” includes claims, litigation, demands, complaints, grievances, actions, applications, suits, causes of action, orders, charges, indictments, prosecutions, information (brought by a public prosecutor without grand jury indictment) or other similar processes, assessments or reassessments.
“Closing Date” means the Business Day on which all of the conditions set forth in Section 6.01 have been satisfied or waived by the Lenders and the Tranche A Term Loan is made.
“Closing Fee” has the meaning set forth in the Fee Letter.
“CO” means the Swiss Federal Code of Obligations (Code des Obligations/Obligationenrecht) of March 30, 1911, as amended from time to time.
“Code” means the Internal Revenue Code of 1986, as amended from time to time.
“Collateral” means any Property in which a Lien is purported to be granted under any of the Security Documents (or all such Property, as the context may require).
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“Collateral Agent” has the meaning set forth in Section 12.09(d).
“Collateral Questionnaire” means that certain Collateral Questionnaire and certification by a Responsible Officer of Borrower substantially in the form of attached hereto as Exhibit I and otherwise in form and substance satisfactory to the Administrative Agent.
“Commitment” means, with respect to each Lender, such Lender’s (a) Tranche A Term Loan Commitment and (b) Tranche B Term Loan Commitment and “Commitments” means all such commitments of all Lenders. The amount of each Lender’s Commitments is set forth on Schedule 1. The aggregate Commitments of all Lenders as of the Closing Date is $50,000,000.
“Commodity Account” has the meaning set forth in the U.S. Security Agreement.
“Compliance Certificate” means a compliance certificate of a Responsible Officer of Borrower as of the end of the applicable accounting period and in the form of Exhibit E.
“Conforming Changes” means, with respect to either the use or administration of Term SOFR or the use, administration, adoption or implementation of any Benchmark Replacement, any technical, administrative or operational changes (including changes to the definition of “Business Day,” the definition of “U.S. Government Securities Business Day,” the definition of “Interest Period” or any similar or analogous definition (or the addition of a concept of “interest period”), timing and frequency of determining rates and making payments of interest, timing of borrowing requests or prepayment, conversion or continuation notices, the applicability and length of lookback periods and other technical, administrative or operational matters) that the Administrative Agent reasonably determines (in consultation with Borrower) may be appropriate to reflect the adoption and implementation of any such rate or to permit the use and administration thereof by the Administrative Agent in a manner substantially consistent with market practice (or, if the Administrative Agent reasonably determines (in consultation with Borrower) that adoption of any portion of such market practice is not administratively feasible or if the Administrative Agent determines that no market practice for the administration of any such rate exists, in such other manner of administration as the Administrative Agent reasonably determines (in consultation with Borrower) is reasonably necessary in connection with the administration of this Agreement and the other Loan Documents).
“Connection Income Taxes” means Other Connection Taxes that are imposed on or measured by net income (however denominated) or that are franchise Taxes or branch profits Taxes.
“Contracts” means any contract, license, instrument, lease, agreement, obligation, promise, undertaking, understanding, arrangement, document, commitment, entitlement or engagement under which a Person has, or will have, any liability or contingent liability (in each case, whether written or oral, express or implied, and whether in respect of monetary or payment obligations, performance obligations or otherwise), excluding the Loan Documents.
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“Control” means, in respect of a particular Person, the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ability to exercise voting power, by contract or otherwise. “Controlling” and “Controlled” have meanings correlative thereto.
“Controlled Account” has the meaning set forth in Section 8.17(a)(i).
“Copyrights” has the meaning set forth in the U.S. Security Agreement.
“Daily Simple SOFR” means, for any day (a “SOFR Rate Day”), a rate per annum equal to the greater of (a) SOFR for the day (such day, a “SOFR Determination Day”) that is two (2) U.S. Government Securities Business Days prior to (i) if such SOFR Rate Day is a U.S. Government Securities Business Day, such SOFR Rate Day or (ii) if such SOFR Rate Day is not a U.S. Government Securities Business Day, the U.S. Government Securities Business Day immediately preceding such SOFR Rate Day, in each case, as such SOFR is published by the SOFR Administrator on the SOFR Administrator’s website, and (b) the Floor. If by 5:00 p.m. (New York City time) on the second (2nd) U.S. Government Securities Business Day immediately following any SOFR Determination Day, SOFR in respect of such SOFR Determination Day has not been published on the SOFR Administrator’s website and a Benchmark Replacement Date with respect to the Daily Simple SOFR has not occurred, then SOFR for such SOFR Determination Day will be SOFR as published in respect of the first preceding U.S. Government Securities Business Day for which such SOFR was published on the SOFR Administrator’s website; provided that, any SOFR determined pursuant to this sentence shall be utilized for purposes of calculation of Daily Simple SOFR for no more than three (3) consecutive SOFR Rate Days; provided further, Daily Simple SOFR shall be rounded upwards to the next 1/100% (if necessary). Any change in Daily Simple SOFR due to a change in SOFR shall be effective from and including the effective date of such change in SOFR without notice to Borrower.
“DEBA” means the Swiss Federal Debt Enforcement and Bankruptcy Act of April 11, 1889 (loi fédérale sur la poursuite et la faillite/Bundesgesetz über Schuldbetreibung und Konkurs), as amended from time to time.
“Default” means any Event of Default and any event that, upon the giving of notice, the lapse of time or both, would constitute an Event of Default.
“Default Rate” has the meaning set forth in Section 3.02(d).
“Deposit Account” has the meaning set forth in the U.S. Security Agreement.
“Designated Person” means a person or entity:
    (a)    listed in the annex to, or otherwise targeted by the provisions of, the Executive Order (as disclosed by World Check or another reputable commercially available database);
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    (b)    named as a “Specially Designated National and Blocked Person” on the most current list published by OFAC at its official website or any replacement website or other replacement official publication of such list (as disclosed by World Check or another reputable commercially available database); or
    (c)    with which the Lenders are prohibited from dealing or otherwise engaging in any transaction by any Economic Sanctions Laws.
“Device” means any (a) instrument, apparatus, implement, machine, contrivance, implant, in vitro reagent or other similar or related item, including any component, part or accessory, that (i) is intended for use in the diagnosis of disease or other conditions or in the cure, mitigation, treatment or prevention of disease, in man, or is intended to affect the structure or any function of the body of man, (ii) does not achieve its primary intended purpose or purposes through chemical action within or on the body of man and (iii) is not dependent upon being metabolized for the achievement of its primary intended purpose or purposes, or (b) any other item that meets the definition of “device” as set forth in Section 201 of the FD&C Act (21 U.S.C. § 321) and its implementing regulations, or (c) any other item that is regulated a medical device by the EMA, SwissMedic or other applicable non-U.S. Regulatory Authority.
“Device Clearance Application” means (a) any premarket approval application submitted under Section 515 of the FD&C Act (21 U.S.C. § 360e) (a “PMA”), (b) any de novo request submitted under Section 513(f) of the FD&C Act (21 U.S.C. § 360c(f)), (c) any 510(k) submitted under Section 510(k) of the FD&C Act (21 U.S.C. § 360(k)) seeking clearance from the FDA for a Device that is substantially equivalent to a legally marketed predicate Device, as defined in the FD&C Act, (d) any Investigational Device Exemption as defined in the FD&C Act, (e) any corresponding or substantially equivalent notification, application or clearance of a non U.S. Regulatory Authority including, with respect to the European Union, any equivalent submission to a Standard Body pursuant to an applicable directive of the European Council with respect to CE marking (or, if applicable, a self-certification of conformity with respect to any such directive through a “declaration of conformity”), and (f) all amendments, variations, extensions and renewals of any of the foregoing.
“Disqualified Equity Interests” means, with respect to any Person, any Equity Interest of such Person that, by its terms (or by the terms of any security or other Equity Interest into which it is convertible or for which it is exchangeable upon exercise or otherwise), or upon the happening of any event or condition (a) matures or is mandatorily redeemable (other than solely for Qualified Equity Interests), including pursuant to a sinking fund obligation or otherwise, (b) is redeemable at the option of the holder thereof (other than solely for Qualified Equity Interests), in whole or in part, (c) provides for the scheduled payments of dividends or other distributions in cash or other securities that would constitute Disqualified Equity Interests, or (d) is or becomes convertible into or exchangeable for Indebtedness or any other Equity Interests that would constitute Disqualified Equity Interests, in each case, prior to the date that is one hundred and eighty (180) days after the Stated Maturity Date; provided that, if such Equity Interests are issued pursuant to any plan for the benefit of directors, officers, employees or consultants of such Person or by any such plan to such directors, officers, employees or
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consultants, such Equity Interests shall not constitute Disqualified Equity Interests solely because they may be required to be repurchased by such Person upon the death, disability, retirement or termination of employment or service of such director, officer, employee or consultant.
“Dollars” and “$” means lawful money of the United States of America.
“Domestic Subsidiary” means any Subsidiary that is organized under the laws of the United States, any state thereof or the District of Columbia.
“Economic Sanctions Laws” means: (a) the Executive Order, the International Emergency Economic Powers Act (50 U.S.C. §§ 1701-1706), the Trading with the Enemy Act (50 U.S.C. §§ 4301-4341), any other law or regulation promulgated thereunder from time to time and administered by OFAC and any similar law enacted in the United States after the date of this Agreement; and (b) any other similar applicable law now or hereafter enacted by the United States Government, Switzerland, the United Nations Security Council, the European Union, or His Majesty’s Treasury of the United Kingdom.
“EEA Financial Institution” means (a) any credit institution or investment firm established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition, or (c) any financial institution established in an EEA Member Country which is a subsidiary of an institution described in clauses (a) or (b) of this definition and is subject to consolidated supervision with its parent.
“EEA Member Country” means any of the member states of the European Union, Iceland, Liechtenstein, and Norway.
“EEA Resolution Authority” means any public administrative authority or any person entrusted with public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.
“EMA” means the European Medicines Agency and any successor entity.
“Environmental Law” means any federal, state, provincial or local governmental law, rule, regulation, order, writ, judgment, injunction or decree relating to pollution or protection of the environment or the treatment, storage, disposal, release, threatened release or handling of Hazardous Materials, and all local laws and regulations related to environmental matters and any specific agreements entered into with any Governmental Authorities which include commitments related to environmental matters.
“Equity Interest” means, with respect to any Person, any and all shares, interests, participations or other equivalents, including membership interests (however designated, whether voting or nonvoting), of equity of such Person, including, if such Person is a partnership, partnership interests (whether general or limited) and any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of
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property of, such partnership, but excluding debt securities convertible or exchangeable into such equity.
“ERISA” means the United States Employee Retirement Income Security Act of 1974, as amended.
“ERISA Affiliate” means any Person that, as of the relevant time, would be considered a single employer with an Obligor pursuant to Section 414(b), (c), (m) or (o) of the Code.
“ERISA Event” means (a) a “reportable event” as defined in Section 4043 of ERISA with respect to a Title IV Plan, excluding, however, such events as to which the PBGC by regulation has waived the requirement of Section 4043(a) of ERISA that it be notified within thirty (30) days of the occurrence of such event; (b) a withdrawal by any Obligor or any ERISA Affiliate thereof from a Title IV Plan or the termination of any Title IV Plan resulting in liability under Sections 4063 or 4064 of ERISA; (c) the withdrawal of any Obligor or any ERISA Affiliate thereof in a complete or partial withdrawal (within the meaning of Section 4203 and 4205 of ERISA) from any Multiemployer Plan if there is any liability therefore, or the receipt by any Obligor or any ERISA Affiliate thereof of notice from any Multiemployer Plan that it is insolvent pursuant to Section 4245 of ERISA; (d) with respect to a Title IV Plan or Multiemployer Plan, as applicable, the filing of a notice of intent to terminate, the treatment of a plan amendment as a termination under Section 4041 or 4041A of ERISA, or the commencement of proceedings by the PBGC to terminate such plan; (e) the failure by any Obligor or an ERISA Affiliate thereof to make any required contribution to a Multiemployer Plan, or to meet the minimum funding standard of Section 412 of the Code with respect to any Title IV Plan or the failure to make by its due date a required installment under Section 430 of the Code with respect to any Title IV Plan; (f) the determination that any Title IV Plan is in “at risk” status within the meaning of Sections 430 of the Code or Section 303 of ERISA; (g) the determination that any Multiemployer Plan is in “critical” or “endangered” status within the meaning of Section 432 of the Code or Section 305 of ERISA; (h) the imposition on any Obligor of fines, penalties, Taxes or related charges under Section 4975 of the Code, Chapter 43 of the Code or under Sections 409, 502(c), (i) or (1) or 4071 of ERISA; (i) the imposition of any Lien on any of the rights, properties or assets of any Obligor pursuant to Title I or IV of ERISA or to Section 430(k) of the Code with respect to a Title IV Plan.
“EU Bail In Legislation Schedule” means the EU Bail In Legislation Schedule published by the Loan Market Association (or any successor Person), as in effect from time to time.
“Event of Default” has the meaning set forth in Section 10.01.
“Excess Funding Guarantor” has the meaning set forth in Section 11.08.
“Excess Payment” has the meaning set forth in Section 11.08.
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
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“Excluded Accounts” means (a) Deposit Accounts exclusively used for payroll, payroll Taxes and other employee wage and benefit payments to or for the benefit of the employees of Obligors, (b) a zero balance account that sweeps on a daily basis into a Controlled Account, (c) any Deposit Accounts, Securities Accounts or other similar accounts in which there is not maintained at any point in time funds on deposit greater than $50,000 in the aggregate for all such accounts pursuant to this clause (c) and (d) Segregated Health Care Accounts.
“Excluded Taxes” means any of the following Taxes imposed on or with respect to a Recipient or required to be withheld or deducted from a payment to a Recipient: (a) Taxes imposed on or measured by net income (however denominated), franchise Taxes and branch profits Taxes in each case (i) imposed as a result of such Recipient being organized under the laws of, or having its principal office or, in the case of a Lender, its applicable lending office located in, the jurisdiction imposing such Tax or (ii) that are Other Connection Taxes, (b) any U.S. federal withholding Taxes that are imposed on amounts payable to a Lender to the extent that the obligation to withhold amounts existed on the date that (i) a Lender became a “Lender” under this Agreement or (ii) a Lender changes its lending office, except in each case to the extent such Lender is a direct or indirect assignee of any other Lender that was entitled, at the time the assignment of such other Lender became effective, to receive additional amounts under Section 5.03 or such Lender was entitled to receive additional amounts under Section 5.03 immediately before it changed its lending office, (c) any Taxes imposed in connection with FATCA, and (d) Taxes attributable to such Recipient’s failure to comply with Section 5.03(f), including the failure to be true of any representation made pursuant to Section 5.03(f)(i) or Section 5.03(f)(ii).
“Executive Order” means the US Executive Order No. 13224 on Blocking Property and Prohibiting Transactions with Persons who commit, Threaten to Commit, or Support Terrorism.
Existing Credit Documents means the Existing Credit Facility and any other document, instrument, agreement or certificate delivered in connection with the Existing Credit Facility.
Existing Credit Facility” means that certain Framework Agreement for Loans, dated as of June 21, 2022, by and among Credit Suisse (Switzerland) Ltd. and Borrower.
“Expense Deposit” means a cash deposit in the amount of $50,000 made by Borrower to an Affiliate of Perceptive Advisors LLC pursuant to the Proposal Letter for the prepayment of the Lenders’ costs and expenses (payable pursuant to Section 13.03(a) and/or the Proposal Letter) incurred prior to the Closing Date.
“FATCA” means Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof, any agreements entered into pursuant to Section 1471(b)(1) of the Code and any fiscal or regulatory legislation, rules or practices adopted pursuant to any intergovernmental agreement, treaty or convention among Governmental Authorities entered into in connection with the implementation of the foregoing.
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“FD&C Act” means the U.S. Food, Drug and Cosmetic Act of 1938 (or any successor thereto), as amended from time to time, and the rules, regulations, guidelines, guidance documents and compliance policy guides issued or promulgated thereunder.
“FDA” means the U.S. Food and Drug Administration and any successor entity.
“Federal Health Care Program” has the meaning specified in Section 1128B(f) of the Social Security Act and includes the programs commonly known as Medicare, Medicaid, TRICARE and CHAMPVA.
“Fee Letter” means that certain Fee Letter, dated as of the Closing Date, among the Obligors, the Lender and the Administrative Agent.
“Financial Plan” has the meaning set forth in Section 8.01(i).
“Floor” means a rate of interest equal to 4.00%.
“Foreign Lender” means a Lender that is not a U.S. Person.
“Foreign Subsidiary” means any Subsidiary that is not a Domestic Subsidiary.
“GAAP” means generally accepted accounting principles in the United States of America, as in effect from time to time, set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants, in the statements and pronouncements of the Financial Accounting Standards Board and in such other statements by such other entity as may be in general use by significant segments of the accounting profession that are applicable to the circumstances as of the date of determination.
“GDPR” means the General Data Protection Regulation (Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016).
“Governmental Approval” means any consent, authorization, approval, order, license, franchise, permit, certification, accreditation, registration, clearance, exemption, filing or notice that is issued or granted by or from (or pursuant to any act of) any Governmental Authority, including any application or submission related to any of the foregoing.
“Governmental Authority” means any nation, government, branch of power (whether executive, legislative or judicial), state, municipality or other political subdivision thereof and any entity exercising executive, legislative, judicial, monetary, regulatory or administrative functions of or pertaining to government, including without limitation regulatory authorities, governmental departments, agencies, commissions, bureaus, officials, ministers, courts, bodies, boards, tribunals and dispute settlement panels, and other law, rule or regulation making organizations or entities of any State, territory, county, city or other political subdivision of the United States or any foreign country.
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“Guarantee” of or by any Person (the “guarantor”) means any obligation, contingent or otherwise, of the guarantor guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, and including any obligation of the guarantor, direct or indirect, (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation or to purchase (or to advance or supply funds for the purchase of) any security for the payment thereof, (b) to purchase or lease property, securities or services for the purpose of assuring the owner of such Indebtedness or other obligation of the payment thereof, (c) to maintain working capital, equity capital or any other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation or (d) as an account party in respect of any letter of credit or letter of guaranty issued to support such Indebtedness or obligation; provided, that the term Guarantee shall not include endorsements for collection or deposit in the Ordinary Course of Business.
“Guarantee Assumption Agreement” means a Guarantee Assumption Agreement substantially in the form of Exhibit A by an entity that, pursuant to Section 8.11(a), is required to become a “Guarantor”.
“Guaranteed Obligations” has the meaning set forth in Section 11.01.
“Guarantor” means, SOPHiA U.S. and any other Person joined as a Guarantor from time to time pursuant to Section 8.11(a).
“Guidelines” means, together, the guidelines S-02.123 in relation to interbank loans of September 22, 1986 as issued by the Swiss Federal Tax Administration (Merkblatt S-02.123 vom 22. September 1986 betreffend Zinsen von Bankguthaben, deren Gläubiger Banken sind Interbankguthaben), S-02.130.1 in relation to money market instruments and accounts receivable of April 1999 (Merkblatt S-02.130.1 vom April 1999 “Geldmarktpapiere und Buchforderungen inländischer Schuldner”), the circular letter No. 15 (1-015-DVS-2017) of October 3, 2017 in relation to bonds and derivative financial instruments as subject matter of taxation of Swiss federal income tax, Swiss withholding tax and Swiss stamp taxes (Kreisschreiben Nr. 15 “Obligationen und derivative Finanzinstrumente als Gegenstand der direkten Bundessteuer, der Verrechnungssteuer und der Stempelabgaben” vom 3. Oktober 2017) and the circular letter No. 34 of July 26, 2011 (1-034-V-2011) in relation to customer credit balances (Kreisschreiben Nr. 34 “Kundenguthaben” vom 26. Juli 2011) and the practice note 010-DVS-2019 dated February 5, 2019 published by the Swiss Federal Tax Administration regarding Swiss Withholding Tax in the Group (Mitteilung-010-DVS-2019-d vom 5. Februar 2019 – Verrechnungssteuer: Guthaben im Konzern), the circular letter No. 46 of July 24, 2019 (1-046-VS-2019) in relation to syndicated credit facilities, promissory note loans, bills of exchange and subparticipations (Kreisschreiben Nr. 46 vom 24. Juli 2019 betreffend “Steuerliche Behandlung von Konsortialdarlehen, Schuldscheindarlehen, Wechseln und Unterbeteiligungen”) and the circular letter No. 47 of July 25, 2019 (1-047-V-2019) in relation to bonds (Kreisschreiben Nr. 47 vom 25. Juli 2019 betreffend “Obligationen”) as issued, and as amended or replaced from time to time by the Swiss Federal Tax Administration, or as applied in accordance with a tax ruling (if any) issued by the Swiss Federal Tax Administration, or as substituted or superseded
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and overruled by any law, statute, ordinance, regulation, court decision or the like as in force from time to time.
“Hazardous Material” means any substance, element, chemical, compound, product, solid, gas, liquid, waste, by product, pollutant, contaminant or material which is classified or regulated as “hazardous” or “toxic” or words of like import pursuant to an Environmental Law and includes, without limitation, asbestos, polychlorinated biphenyls and petroleum (including crude oil or any fraction thereof).
“Health Care Compliance Program” has the meaning set forth in Section 7.07(b)(v).
“Health Care Laws” means, collectively, all Laws applicable to the business of Borrower or any of its Material Subsidiaries relating to (a) the manufacturing, sale, distribution, labeling, marketing, or promotion, or the provision of and payment for, health care products, items and services, including but not limited to all applicable Regulated Product Laws; (b) the privacy, security, storage, collection or other processing of consumer information, including but not limited to GDPR, HIPAA, and other applicable consumer privacy and security laws; (c) fraud and abuse, false claims, self-referral, kickbacks, fee-splitting, or patient brokering, including but not limited to (i) the federal Anti-Kickback Statute (42 U.S.C. § 1320a-7b(b)) and any similar state laws, (ii) the Ethics in Patient Referrals Act (Stark Law) (42 U.S.C. § 1395nn) and any similar state laws, (iii) the civil False Claims Act (31 U.S.C. § 3729 et seq.) and any similar state laws, (iv) the federal health care program exclusion provisions (42 U.S.C. § 1320a-7), (v) the Civil Monetary Penalties Act (42 U.S.C. § 1320a-7a), (vi) the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (Pub. L. No. 108-173), (vii) the Eliminating Kickbacks in Recovery Act (18 U.S.C. § 220) and (viii) other applicable requirements relating to prohibited remuneration, or the defrauding of, or making of any false claim, false statement, or misrepresentation of material facts to the Federal Health Care Programs or any Third Party Payor Program; (d) the corporate practice of medicine; (e) the provision of health care supplies, items or services to Federal Health Care Program beneficiaries or the billing of the Federal Health Care Programs; (f) clinical or other human subjects research and patient consent, including but not limited to the Federal Policy for Protection of Human Subjects; (g) required health care Permits, including applicable Laws relating to the licensure or registration of health care providers, suppliers, facilities, and manufacturers; (h) genetic counseling services; and (i) all rules and regulations promulgated under or pursuant to any of the foregoing.
“Hedging Agreement” means any interest rate exchange agreement, foreign currency exchange agreement, commodity price protection agreement or other interest or currency exchange rate or commodity price hedging arrangement.
“HIPAA” means the Health Insurance Portability and Accountability Act of 1996, 42 U.S.C. §§ 1320d-1329d-8, as amended by the Health Information Technology for Economic and Clinical Health Act, enacted as Title XIII of the American Recovery and Reinvestment Act of 2009, Public Law 111-5, as the same may be further amended, modified or supplemented from time to time, and its implementing regulations.
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“IFRS” means international accounting standards within the meaning of IAS Regulation 1606/2002 to the extent applicable to the relevant financial statements delivered under or referred to herein. Subject to Section 1.02, all references to “IFRS” shall be to IFRS applied consistently with the principles used in the preparation of the financial statements described in Section 7.04(a).
“Immaterial Subsidiary” means, as of any date, any Subsidiary for which (a) the consolidated total assets of such Subsidiary and its Subsidiaries is not in excess of 7.5% of the consolidated total assets of Borrower and its Subsidiaries, (b) the aggregate amount of the Revenue of such Subsidiary and its Subsidiaries on a consolidated basis is not in excess of 7.5% of Revenue of Borrower and its Subsidiaries, (c) the consolidated total assets of such Subsidiary and its Subsidiaries, when taken together with the consolidated total assets of all other Immaterial Subsidiaries and their Subsidiaries, is not in excess of 15.0% of the consolidated total assets of Borrower and its Subsidiaries and (d) the aggregate amount of the Revenue of such Subsidiary and its Subsidiaries on a consolidated basis, when taken together with the contribution to Revenue of all other Immaterial Subsidiaries and their Subsidiaries on a consolidated basis, is not in excess of 15.0% of Revenue of Borrower and its Subsidiaries in each case as of the last day of any four quarter period. As of the Closing Date, SOPHiA UK, SOPHiA Australia and SOPHiA Brazil are Immaterial Subsidiaries.
“Indebtedness” of any Person means, without duplication, (a) all obligations of such Person for borrowed money, (b) all obligations of such Person evidenced by bonds, debentures, notes, loan agreements or similar instruments, (c) all obligations of such Person upon which interest charges are customarily paid, (d) all obligations of such Person under conditional sale or other title retention agreements relating to Property acquired by such Person, (e) all obligations of such Person in respect of the deferred purchase price of Property or services (excluding current accounts payable incurred in the Ordinary Course of Business not overdue by more than one hundred twenty (120) days), (f) all Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on Property owned or acquired by such Person, whether or not the Indebtedness secured thereby has been assumed, (g) all Guarantees by such Person of Indebtedness of others, (h) all Capital Lease Obligations of such Person, (i) all obligations, contingent or otherwise, of such Person as an account party in respect of letters of credit and letters of guaranty, (j) obligations under any Hedging Agreement, currency swaps, forwards, futures or derivatives transactions, (k) all obligations, contingent or otherwise, of such Person in respect of bankers’ acceptances, (l) all obligations of such Person under license or other agreements containing a guaranteed minimum payment or purchase by such Person, (m) any Disqualified Equity Interests of such Person, (n) any earnout obligation at the time such obligation is both required to be reflected as a liability on the balance sheet of such Person in accordance with IFRS and not paid after becoming due and payable and (o) all other obligations required to be classified as indebtedness of such Person under IFRS. The Indebtedness of any Person shall, without duplication, include the Indebtedness of any other entity (including any partnership in which such Person is a general partner) to the extent such Person is liable therefor as a result of such Person’s ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness provide that such Person is not liable therefor.
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“Indemnified Party” has the meaning set forth in Section 13.03(b).
“Indemnified Taxes” means (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any Obligation and (b) to the extent not otherwise described in clause (a), Other Taxes.
“Industrial Designs” means all right, title and interests arising under any Laws in or relating to all industrial designs, intangibles of like nature, and any work subject to the design laws of the United States or any other country or any political subdivision thereof.
“Ineligible Assignee” means (a) a natural person or (b) the Obligors or any of their respective Affiliates.
“Information” has the meaning set forth in Section 13.17.
“Insolvency Proceeding” means (a) any case, action or proceeding before any court or other Governmental Authority relating to bankruptcy, reorganization, insolvency, liquidation, receivership, dissolution, winding up or relief of debtors, or (b) any general assignment for the benefit of creditors, composition, marshaling of assets for creditors, or other, similar arrangement in respect of any Person’s creditors generally or any substantial portion of such Person’s creditors, in each case undertaken under U.S. Federal, state or foreign law, including the Bankruptcy Code.
“Intellectual Property” means, with respect to any Person, all of such Person’s rights, title and interest in and to all Patents, Trademarks, Copyrights, Industrial Designs, Technical Information, whether registered or not and whether existing under U.S. or non-U.S. Law or jurisdiction, including, without limitation, all:
    (a)    applications, registrations, amendments and extensions relating to such Intellectual Property;
    (b)    rights and privileges arising under any applicable Laws with respect to any Intellectual Property;
    (c)    rights to sue for or collect any damages for any past, present or future infringements of any Intellectual Property; and
    (d)    rights of the same or similar effect or nature as described above in any jurisdiction corresponding to any Intellectual Property throughout the world.
“Interest Period” means, (a) as to the Tranche A Term Loan, (i) initially, the period beginning on (and including) the Closing Date and ending on (and including) the last day of the calendar month in which the Closing Date occurs, and (ii) thereafter, the period beginning on (and including) the first day of each succeeding calendar month and ending on the earlier of (and including) (x) the last day of such calendar month and (y) the Maturity Date, and (b) as to the
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Tranche B Term Loan, (i) the period commencing on (and including) the Tranche B Term Loan Borrowing Date and ending on (and including) the last day of the calendar month in which the Tranche B Term Loan Borrowing Date occurs, and (ii) thereafter, the period beginning on (and including) the first day of each succeeding calendar month and ending on the earlier of (and including) (x) the last day of such calendar month and (y) the Maturity Date.
“Invention” means any novel, inventive or useful art, apparatus, method, process, machine (including any article or Device), manufacture or composition of matter, or any novel, inventive and useful improvement in any art, method, process, machine (including any article or Device), manufacture or composition of matter.
“Investment” means, for any Person: (a) the acquisition (whether for cash, Property, services or securities or otherwise) of Equity Interests, bonds, notes, debentures, partnership or other ownership interests or other securities of any other Person or any agreement to make any such acquisition (including any “short sale” or any sale of any securities at a time when such securities are not owned by the Person entering into such sale); (b) the making of any deposit with, or advance, loan, assumption of debt or other extension of credit to, any other Person (including the purchase of Property from another Person subject to an understanding or agreement, contingent or otherwise, to resell such Property to such Person), but excluding any such advance, loan or extension of credit in the nature of an ordinary course trade receivable having a term not exceeding ninety (90) days arising in connection with the sale of services, inventory or supplies by such Person in the Ordinary Course of Business; (c) the entering into of any Guarantee of, or other contingent obligation with respect to, Indebtedness or other liability of any other Person and (without duplication) any amount committed to be advanced, lent or extended to such Person; (d) entering into any joint venture; or (e) the entering into of any Hedging Agreement. The amount of an Investment will be determined at the time the Investment is made without giving effect to any subsequent changes in value.
“IRS” means the U.S. Internal Revenue Service or any successor agency, and to the extent relevant, the U.S. Department of the Treasury.
“Joint Intellectual Property” means, at any time of determination, Intellectual Property jointly developed and jointly owned or otherwise jointly held by Borrower or any of its Subsidiaries, on the one hand, and any third party, on the other hand.
“Judgment Currency” has the meaning set forth in Section 13.20.
“Judgment Currency Conversion Date” has the meaning set forth in Section 13.20.
“Laws” means, collectively, all international, foreign, federal, state, provincial, territorial, municipal and local statutes, treaties, rules, regulations, ordinances, codes and administrative or judicial precedents or authorities, including the interpretation or administration thereof by any Governmental Authority charged with the enforcement, interpretation or administration thereof, and all applicable administrative orders, directed duties, requests,
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licenses, authorizations and Permits of, and agreements with, any Governmental Authority, in each case whether or not having the force of law.
“Lenders” has the meaning set forth in the introduction hereto.
“Lien” means any mortgage, lien, pledge, charge or other security interest, or any lease, title retention agreement, mortgage, restriction, easement, right of way, option or adverse Claim (of ownership or possession) or other encumbrance of any kind or character whatsoever or any preferential arrangement that has the practical effect of creating a security interest.
“Loan Documents” means, collectively, this Agreement, any Notes, the Security Documents, any Guarantee Assumption Agreement, the Fee Letter, the Warrant Certificate, any collateral access agreement, and any subordination agreement, intercreditor agreement or other present or future document, instrument, agreement or certificate delivered to any Lender in connection with this Agreement or any of the other Loan Documents, in each case, as amended, restated, supplemented or otherwise modified.
“Loan Exposure” means, with respect to any Lender, as of any date of determination, the outstanding principal amount of such Lender’s portion of the Term Loans; provided, at any time prior to the making of the Term Loans, the Loan Exposure of any Lender shall be equal to such Lender’s Commitment.
“Loss” means judgments, debts, liabilities, expenses, costs, damages or losses, contingent or otherwise, whether liquidated or unliquidated, matured or unmatured, disputed or undisputed, contractual, legal or equitable, including loss of value, professional fees, including fees and disbursements of legal counsel on a full indemnity basis, and all costs incurred in investigating or pursuing any Claim or any proceeding relating to any Claim.
“Majority Lenders” means, at any time, one or more Lenders having or holding Loan Exposure and representing more than 50% of the aggregate Loan Exposure of all Lenders.
“Margin Stock” means “margin stock” within the meaning of Regulations T, U and X.
“Material Adverse Change” and “Material Adverse Effect” mean a material adverse change in or effect on (a) the business, property, assets, financial condition, operations, performance or Property of the Obligors taken as a whole, (b) the ability of any Obligor to perform its obligations under any Loan Document, or (c) the legality, validity, binding effect or enforceability of the Loan Documents or the rights and remedies of any Lender under any of the Loan Documents.
“Material Agreement” means (a) any Contract which is listed in Schedule 7.14, (b) any other Contract to which any Obligor is a party or a beneficiary from time to time, or to which any assets or properties of any Obligor is bound, the loss or termination of which would reasonably be expected to result in a Material Adverse Effect and (c) any other Contract to which any Obligor is a party or a guarantor (or equivalent) whether existing as of the date hereof or in the
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future that during any period of twelve (12) consecutive months is reasonably expected to (i) result in payments or receipts (including royalty, licensing or similar payments) made to any Obligor in an aggregate amount in excess of $2,000,000 or (ii) require payments or expenditures (including royalty, licensing or similar payments) made by any Obligor in an aggregate amount in excess of $2,000,000; provided that, in each case, no Contract with respect to operational supplies, inventory or equipment entered into in the Ordinary Course of Business shall be a Material Agreement.
“Material Indebtedness” means, at any time, any Indebtedness of Borrower or any of its Material Subsidiaries, the outstanding principal amount of which, individually or in the aggregate, exceeds $1,500,000.
“Material Subsidiary” means any Subsidiary that is not an Immaterial Subsidiary.
“Maturity Date” means the earlier to occur of (a) the Stated Maturity Date and (b) the date on which the Term Loans are accelerated pursuant to Section 10.02.
“Multiemployer Plan” means any “multiemployer plan”, as defined in Section 4001(a)(3) of ERISA, with respect to which any Obligor or ERISA Affiliate incurs, or otherwise has, any obligation or liability, contingent or otherwise.
“Net Cash Proceeds” means,
    (a)    with respect to any Casualty Event, the amount of cash proceeds actually received in the form of insurance proceeds or condemnation awards in respect of such Casualty Event from time to time by or on behalf of Borrower or such Material Subsidiary after deducting therefrom only (i) actual costs and expenses related thereto incurred by Borrower or such Material Subsidiary and (ii) Taxes paid or payable in each case, in connection therewith or as a result thereof;
    (b)    with respect to any Asset Sale, the excess, if any, of (i) cash proceeds received in respect of such Asset Sale (including cash proceeds subsequently received (as and when received)) over (ii) the sum of (A) the direct costs of such Asset Sale then payable by the recipient of such proceeds excluding amounts payable to Borrower or any of its Material Subsidiaries, (B) Taxes paid or payable by such recipient in connection therewith or as a result thereof, (C) amounts required to be applied to repay principal, interest and prepayment premiums and penalties on Indebtedness secured by a Permitted Lien on the properties subject to such Asset Sale and (D) amounts reserved or deposited in escrow with respect to indemnity payments or price adjustments until such amounts are released to Borrower or any applicable Material Subsidiary; and
    (c)    with respect to the incurrence or issuance of any Indebtedness incurred by Borrower or such Material Subsidiary not permitted under Section 9.01, the excess, if any, of (i) the sum of the cash received in connection with such incurrence or issuance over (ii) the investment banking fees, underwriting discounts, commissions, costs and
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other reasonable expenses and other customary expenses (including reasonable attorney’s, accountant’s and other similar professional advisor’s fees), incurred in connection with such incurrence or issuance to third parties (other than any other Obligor or any of their respective Affiliates).
“Note” means a promissory note executed and delivered by Borrower to any Lender in the form attached hereto as Exhibit C.
“Obligations” means, with respect to any Obligor, all amounts, obligations (including, without limitation, all Warrant Obligations), liabilities, covenants and duties of every type and description owing by such Obligor to any Lender or any other Indemnified Party hereunder, arising out of, under, or in connection with, any Loan Document, whether direct or indirect (regardless of whether acquired by assignment), absolute or contingent, due or to become due, whether liquidated or not, now existing or hereafter arising and however acquired, and whether or not evidenced by any instrument for the payment of money, including, without duplication, (a) the principal amount of the Term Loans, (b) all interest on the Term Loans (including interest at the Default Rate), whether or not accruing after the filing of any petition in bankruptcy or after the commencement of any insolvency, reorganization or similar proceeding, and whether or not a Claim for post-filing or post-petition interest is allowed in any such proceeding, (c) any Prepayment Premium and (d) all other fees, expenses (including fees, charges and disbursement of counsel), interest, commissions, charges, costs, disbursements, indemnities and reimbursement of amounts paid and other sums chargeable to any Obligor under any Loan Document.
“Obligor Intellectual Property” means, at any time of determination, Intellectual Property owned by, licensed to or otherwise held by any Obligor at such time including, without limitation, the Intellectual Property listed on Schedule 7.05(b) (but excluding, for the avoidance of doubt, Joint Intellectual Property).
“Obligors” means, collectively, Borrower and any other Guarantor party to this Agreement from time to time, and each of the Obligors, an “Obligor”.
“OFAC” means the Office of Foreign Assets Control of the U.S. Department of the Treasury (or any successor thereto).
“Ordinary Course of Business” means, with respect to the Obligors, the ordinary course of business generally consistent with past custom and practice (including with respect to nature, scope, magnitude, quantity and frequency).
“Organizational Documents” means (a) with respect to any corporation, its certificate or articles of incorporation or organization, as amended, and its bylaws, as amended, (b) with respect to any limited partnership, its certificate of limited partnership, as amended, and its partnership agreement, as amended, (c) with respect to any general partnership, its partnership agreement, as amended, and (d) with respect to any limited liability company, its certificate of formation or articles of organization, as amended, and its operating agreement, as amended. In the event any term or condition of this Agreement or any other Loan Document requires any
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Organizational Document to be certified by a secretary of state or similar government official, the reference to any such “Organizational Document” shall only be to a document of a type customarily certified by such government official.
“Other Connection Taxes” means, with respect to any Recipient, Taxes imposed as a result of a present or former connection between such Recipient and the jurisdiction imposing such Tax (other than connections arising solely from such Recipient having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Loan Document, or sold or assigned an interest in any Term Loan or Loan Document).
“Other Taxes” means all present or future stamp, court or documentary, intangible, recording, filing or similar Taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Loan Document, except any such Taxes that are Other Connection Taxes imposed with respect to an assignment (other than an assignment made pursuant to Section 5.03(g)).
“Participant” has the meaning set forth in Section 13.05(e).
“Participant Register” has the meaning set forth in Section 13.05(f).
“Patents” has the meaning set forth in the U.S. Security Agreement.
“Payment Date” means the last day of each Interest Period; provided that if such last day of such Interest Period is not a Business Day, then the Payment Date for such Interest Period will be the next succeeding Business Day.
“PBGC” means the United States Pension Benefit Guaranty Corporation referred to and defined in ERISA and any successor entity performing similar functions.
“Perceptive” has the meaning set forth in the introduction hereto.
“Periodic Term SOFR Determination Day” has the meaning specified in the definition of “Term SOFR.”
“Permits” means all permits, licenses, registrations, certificates, orders, approvals, authorizations, consents, waivers, franchises, variances and similar rights issued by or obtained from any Governmental Authority, including, without limitation, those relating to Environmental Laws and Health Care Laws.
“Permitted Acquisition” means any Acquisition by any Obligor or any of its Subsidiaries, by (a) purchase, merger, amalgamation, license or otherwise, of all or substantially all of the assets of, all of the Equity Interests of, or a business line or unit or a division of, any
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Person or (b) license arrangement for the rights to use, develop, market or otherwise commercialize any Patents, Trademarks, Copyrights or other Intellectual Property; provided that:
    (i)    immediately prior to, and immediately after giving effect thereto, no Default or Event of Default shall have occurred and be continuing or would result therefrom;
    (ii)    all transactions in connection therewith shall be consummated, in all material respects, in accordance with all applicable Laws and in conformity in all material respects with all applicable Governmental Approvals;
    (iii)    in the case of the Acquisition of all of the Equity Interests of any Person, all of the Equity Interests (except for any such securities in the nature of directors’ qualifying shares required pursuant to applicable Law) acquired, or otherwise issued by such Person or any newly formed Subsidiary of such Person in connection with such Acquisition shall (A) be pledged to the extent required by Section 8.11 and (B) unless otherwise agreed to by the Administrative Agent, if the acquired Person becomes a Material Subsidiary, Borrower and/or such Material Subsidiary shall take each of the other actions set forth in Section 8.11, if applicable;
    (iv)    such Person (in the case of an Acquisition of Equity Interests) or assets (in the case of an Acquisition of assets or a division) (A) shall be engaged or used, as the case may be, in the same business or lines of business in which Borrower and/or its Subsidiaries are engaged or a business reasonably and substantially related thereto or (B) shall have a similar customer base as Borrower and/or its Subsidiaries;
    (v)    Borrower shall have provided the Administrative Agent with at least ten (10) Business Days’ prior written notice of any such Acquisition, together with summaries, prepared in reasonable detail, of all due diligence conducted by or on behalf of Borrower or the applicable Subsidiary prior to such Acquisition; and
    (vi)    the Acquisition shall have been approved by the Board or other governing body or controlling Person of the Person acquired or the Person from whom such assets or division is acquired.
“Permitted Cash Equivalent Investments” means (a) marketable direct obligations issued or unconditionally guaranteed by the United States or any agency or any State thereof having maturities of not more than two (2) years from the date of acquisition, (b) commercial paper with an average maturity of no more than one (1) year and having the highest rating from either Standard & Poor’s Ratings Group or Moody’s Investors Service, Inc., (c) any money market funds or other investment vehicles whose principal investments are in investments described in clauses (a) or (b) above, and (d) certificates of deposit maturing no more than one (1) year after issue
“Permitted Indebtedness” means any Indebtedness permitted under Section 9.01.
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“Permitted Licenses” means (a) licenses of over-the-counter software that is commercially available to the public, (b) inbound licenses for the use of any Patents, Trademarks, Copyrights, Industrial Designs and Technical Information of any third party and (c) licenses for the use of Obligor Intellectual Property, in each case, entered into in the Ordinary Course of Business or as otherwise may be approved by the applicable Obligor’s Board and so long as (i) no Event of Default has occurred and is continuing at the time such license is entered into and (ii) such license does not materially impair the Lenders from exercising their rights under any of the Loan Documents.
“Permitted Liens” means any Liens permitted under Section 9.02.
“Permitted Refinancing” means, with respect to any Indebtedness permitted to be refinanced, extended, renewed or replaced hereunder, any refinancings, extensions, renewals and replacements of such Indebtedness; provided that such refinancing, extension, renewal or replacement shall not (a) increase the outstanding principal amount of the Indebtedness being refinanced, extended, renewed or replaced, (b) contain terms relating to outstanding principal amount, amortization, interest rate or equivalent yield, maturity, collateral security (if any) or subordination (if any), or other material terms that, taken as a whole, are less favorable in any material respect to any Obligor or the Lenders than the terms of any agreement or instrument governing the Indebtedness being refinanced, (c) contain any new requirement to grant any Lien or to give any Guarantee that was not an existing requirement of the Indebtedness being refinanced and (d) after giving effect to such refinancing, extension, renewal or replacement, no Default shall have occurred (or could reasonably be expected to occur) as a result thereof.
“Person” means any individual, corporation, company, voluntary association, partnership, limited liability company, joint venture, trust, unincorporated organization or Governmental Authority or other entity of whatever nature.
“PFIC” has the meaning set forth in Section 8.01(j).
“Prepayment Premium” has the meaning set forth in Section 3.03(a).
“Pro Rata Share” has the meaning set forth in Section 11.08.
“Product” means (a) those Devices set forth (and described in reasonable detail) on Schedule 3 attached hereto, and (b) any current or future Device subject to any Product Development and Commercialization Activities by any Obligor, including any such Device currently in development.
“Product Agreement” means, with respect to any Product, any Contract, license, document, instrument, interest (equity or otherwise) or the like under which one or more Persons grants or receives (a) any right, title or interest with respect to any Product Development and Commercialization Activities of such Product, or (b) any right to exclude any other Person from engaging in, or otherwise restricting any right, title or interest as to, any Product Development and Commercialization Activities with respect to such Product, including any Contract with
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suppliers, manufacturers, distributors, clinical research organizations, hospitals, group purchasing organizations, wholesalers, pharmacies or any other Person related to such entity.
“Product Assets” means, with respect to any Product, (a) any and all rights, title and interest of the Obligors or any of its Subsidiaries in any assets relating to such Product or any Product Development and Commercialization Activities with respect to such Product, (b) all Product Related Information with respect to such Product or any related Product Development and Commercialization Activities, (c) any Product Agreement related to such Product or any such Product Development and Commercialization Activities, (d) any Intellectual Property, Regulatory Approvals and similar assets with respect to such Product or any such Product Development and Commercialization Activities, and (e) all rights, title and interests in any other property, tangible or intangible, manifesting or otherwise in respect of such Product or any such Product Development and Commercialization Activities, including, without limitation, inventory, accounts receivable or similar rights to receive money or payment pertaining thereto and all proceeds of the foregoing.
“Product Authorizations”