Sema4 SPAC

36 Non-GAAP Gross Margin Reconciliation Revenue Cost of services. Gross (Loss) Profit Add: Stock-based compensation expense. (1) Related party expenses Labor costs due to laboratory move (2) COVID-19 costs (3) Adjusted Gross Profit Adjusted Gross Margin $ $ 2020 179,322 184,648 (5,326) Year Ended December 31, 13,947 2,189 16,391 3,179 30,380 17% 2019 (in thousands) $ 196,174 $ 119,623 76,551 $ 710 1,859 79,120 40 % $ 2018 133,341 92,093 41,248 748 4,122 46,118 35 % (2) (1) Represents fees paid to ISMMS for certain services that, for GAAP purposes, are included in Cost of Services. Represents labor costs in respect of laboratory employees' time spent to support our laboratory move from New York City to Stamford, Connecticut in 2020. During the move, our laboratory employees dedicated their time to re-validating and re-establishing instruments and equipment, rebuilding interface, obtaining a CLIA license, and other tasks to make sure the move was done correctly. For GAAP purposes we included these activities in Cost of Services. However, as the laboratory move and effort spent by our employees are one-time activities, we adjusted our Gross Profit to reflect management's view of our normal operations. (3) Represents labor costs in respect laboratory employees' downtime. During the second quarter of 2020, we did not reduce the workforce in our laboratory from COVID-19. However, we suffered significantly due to the decrease in volume in Women's Health and other products. Accordingly, we have adjusted our Gross Profit to reflect the management-assessed impact from the decrease in productivity of existing laboratory employees due to COVID-19 in the second quarter of 2020. Revenue Cost of services Gross (Loss) Profit Gross Margin Add: Stock-based compensation expense COVID Costs(1) Adjusted Gross Profit Adjusted Gross Margin $ $ Six Months Ended June 30, 2021 (in thousands) 111,216 $ 121,443 (10,227) (9)% 19,463 9,236 8% $ 2020 76,757 75,224 1,533 2% (6) 3,179 4,706 6% (1) Represents labor costs with respect to laboratory employees' downtime. During the second quarter of 2020, we did not reduce the workforce in our laboratory from COVID-19. However, we suffered significantly due to the decrease in volume in Women's Health and other products. Accordingly, we have adjusted our Gross Profit to reflect the management-assessed impact from the decrease in productivity of existing laboratory employees due to COVID-19 in the second quarter of 2020. sema4

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