Personalis(PSNL) - 2025 Q1 - Quarterly Report

PART I — FINANCIAL INFORMATION Financial Statements This section presents the unaudited consolidated financial statements for Personalis, Inc. for the three months ended March 31, 2025, covering balance sheets, operations, and cash flows Consolidated Balance Sheets As of March 31, 2025, total assets slightly increased to $273,308 thousand, with total liabilities decreasing and stockholders' equity rising Consolidated Balance Sheet Highlights (in thousands) | Balance Sheet Item | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $71,001 | $91,415 | | Short-term investments | $114,687 | $93,594 | | Total current assets | $206,422 | $203,015 | | Total assets | $273,308 | $270,268 | | Liabilities & Stockholders' Equity | | | | Total current liabilities | $29,892 | $31,126 | | Total liabilities | $65,963 | $67,311 | | Total stockholders' equity | $207,345 | $202,957 | Consolidated Statements of Operations For Q1 2025, revenue increased 6% to $20,605 thousand, with net loss widening to $15,750 thousand due to a prior-year non-cash gain Q1 2025 vs Q1 2024 Statement of Operations (in thousands) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Revenue | $20,605 | $19,525 | | Cost of revenue | $13,398 | $14,032 | | Loss from operations | $(17,696) | $(18,880) | | Other income (expense), net | $(46) | $4,569 | | Net loss | $(15,750) | $(12,968) | | Net loss per share | $(0.18) | $(0.26) | Consolidated Statements of Cash Flows In Q1 2025, net cash used in operating activities improved to $17,961 thousand, with financing activities providing $20,087 thousand Cash Flow Summary (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(17,961) | $(20,413) | | Net cash (used in) provided by investing activities | $(22,542) | $6,301 | | Net cash provided by financing activities | $20,087 | $1,129 | | Net change in cash, cash equivalents and restricted cash | $(20,414) | $(13,003) | Notes to Consolidated Financial Statements The notes detail accounting policies, revenue disaggregation, and balance sheet components, highlighting significant customer concentration - The company operates as one reportable segment, providing advanced cancer genomic tests and services, and expects to continue incurring losses[47][48] Customer Concentration (Q1 2025) | Customer | Revenue % | Accounts Receivable % | | :--- | :--- | :--- | | Moderna, Inc. | 27% | 14% | | VA MVP | 20% | 11% | | Natera, Inc. | 12% | * | | Pfizer Inc. | * | 26% | | AstraZeneca UK Limited | * | 18% | *Less than 10% Revenue by Customer Type (in thousands) | Customer Type | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Pharma tests and services | $13,594 | $9,812 | | Enterprise sales | $2,465 | $7,972 | | Population sequencing | $4,213 | $1,500 | | Clinical diagnostic | $308 | $195 | | Other | $25 | $46 | | Total revenue | $20,605 | $19,525 | - In Q1 2025, the company sold 3,064,152 shares under its At-the-Market (ATM) facility, receiving $17,800 thousand in net proceeds[56] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q1 2025 financial performance, highlighting a 6% revenue increase driven by Pharma tests and Population sequencing, and details liquidity Results of Operations Total revenue for Q1 2025 increased 6% to $20,605 thousand, driven by Pharma tests and Population sequencing, partially offset by decreased Enterprise sales Revenue Change by Customer Type (Q1 2025 vs Q1 2024, in thousands) | Customer Type | 2025 | 2024 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Pharma tests and services | $13,594 | $9,812 | $3,782 | 39% | | Enterprise sales | $2,465 | $7,972 | $(5,507) | (69%) | | Population sequencing | $4,213 | $1,500 | $2,713 | 181% | | Clinical diagnostic | $308 | $195 | $113 | 58% | | Total revenue | $20,605 | $19,525 | $1,080 | 6% | - The company expects total revenue from Natera in 2025 to be lower than in 2024 and does not expect a long-term commercial relationship beyond 2025[145] - The increase in Selling, general and administrative expenses was driven by an $800 thousand increase in marketing and personnel costs related to the NeXT Personal Dx launch[152][153] - Other income in Q1 2024 included a $4,800 thousand non-cash gain from Tempus Warrants, contributing to the higher net loss in Q1 2025[156] Liquidity and Capital Resources As of March 31, 2025, Personalis had $185,700 thousand in cash and investments, deemed sufficient for the next 12 months, with $17,800 thousand raised from ATM facility - The company anticipates that current cash, cash equivalents, and short-term investments are sufficient to fund operations for at least the next 12 months[158] - Cash used in operating activities decreased to $18,000 thousand in Q1 2025 from $20,400 thousand in Q1 2024, due to higher gross margin and reduced working capital needs[161] - Cash provided by financing activities increased significantly to $20,100 thousand in Q1 2025, primarily due to $16,300 thousand higher net proceeds from ATM stock sales[163] - Capital expenditures are expected to be approximately $8,000 thousand in 2025 to expand NeXT Personal Dx capacity[167] Quantitative and Qualitative Disclosures About Market Risk The company is not required to provide this information as it qualifies as a "smaller reporting company" - As a "smaller reporting company," Personalis is not required to provide the information requested under this item[174] Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective as of March 31, 2025, with no material changes in internal controls - The CEO and CFO concluded that as of March 31, 2025, the company's disclosure controls and procedures were effective[175] - No changes were identified in the company's internal control over financial reporting that materially affected or are reasonably likely to materially affect controls[176] PART II — OTHER INFORMATION Legal Proceedings The company states that it is subject to various claims in the ordinary course of business but is not currently involved in any material legal proceedings - As of March 31, 2025, the Company was not involved in any material legal proceedings[116][179] Risk Factors This section details significant risks, including a history of losses, customer concentration, intense competition, potential FDA regulatory actions, cybersecurity threats, and intellectual property litigation Operational, Strategic and Business Risks The company faces significant operational and strategic risks, including a history of losses, substantial customer concentration, and reliance on a single facility and sole supplier - The company has a history of net losses, with a net loss of $16,000 thousand for Q1 2025 and an accumulated deficit of $566,000 thousand as of March 31, 2025[181] - The company has substantial customer concentration, with Natera accounting for 30% of revenue and Moderna for 28% in FY2024[191] - The company does not expect a long-term commercial relationship with Natera beyond 2025, as Natera plans to bring sequencing services in-house[193] - The company relies on a sole supplier, Illumina, for its sequencers and reagents, where supply disruption could significantly impact operations[208] Regulatory, Legal and Cybersecurity Risks The company faces significant regulatory risks from potential FDA enforcement on LDTs, compliance with complex healthcare laws, cybersecurity threats, and evolving data privacy regulations - The company's LDTs are subject to FDA enforcement discretion, and a change in stance could lead to substantial costs and delays for premarket approval[249][253] - The company's operations are subject to complex laws like the Anti-Kickback Statute, Stark Law, and HIPAA, with violations carrying significant penalties[301] - The company faces significant cybersecurity risks, including ransomware and supply-chain attacks, potentially compromising sensitive data and leading to litigation[273][274][275] - The company is subject to evolving U.S. and foreign data privacy laws (e.g., CCPA, GDPR), imposing strict obligations and risks of substantial fines[288][289][291] Intellectual Property Risks The company's success depends on avoiding third-party patent infringement and protecting its own IP, facing risks of costly litigation and challenges in patent enforcement - The company faces a high risk of litigation for intellectual property infringement, which could be costly and prevent the sale of its tests[323][325] - Recent legal proceedings include two of the company's patents being challenged and invalidated during inter partes reviews by Foresight Diagnostics[344][345] - The company's ability to obtain and enforce patents is uncertain due to evolving case law regarding the patentability of diagnostic methods[333] - The company relies on trade secrets and confidentiality agreements, but these may not provide adequate protection, risking competitive harm[348] Financial and Market Risks The company faces financial and market risks, including the potential need for additional capital, stock price volatility, concentrated ownership, and potential stock dilution - The company may need to raise additional capital, which could be impacted by worsening global economic conditions and market volatility[364][366] - The market price of the company's common stock is volatile, influenced by operating results, competition, and major customer announcements[367][368] - Insiders and holders of over 5% of common stock may exercise significant control, potentially influencing corporate matters and stock price[379] - The company's ability to use its net operating loss carryforwards of approximately $324,100 thousand (federal) and $302,500 thousand (state) may be limited by ownership changes[386] Other Information This section discloses that an officer of the company adopted a written trading plan under Rule 10b5-1 during the last fiscal quarter - Stephen Moore, SVP and Chief Legal Officer, adopted a Rule 10b5-1 trading plan on March 24, 2025, to sell up to 285,366 shares of common stock[409] Exhibits This section lists the exhibits filed with the Quarterly Report on Form 10-Q, including certifications by the Principal Executive Officer and Principal Financial Officer, and the Inline XBRL documents - The exhibits include the CEO and CFO certifications pursuant to Sarbanes-Oxley Act Sections 302 and 906, and Inline XBRL data for financial statements[413]