Personalis(US:PSNL)2025-08-05 20:05PART I — FINANCIAL INFORMATION Financial Statements This section presents Personalis, Inc.'s unaudited consolidated financial statements for the quarter and six months ended June 30, 2025, including balance sheets, income statements, and cash flows Consolidated Balance Sheets As of June 30, 2025, total assets decreased to $258.7 million from $270.3 million, primarily due to lower cash, while liabilities remained stable and equity decreased to $190.8 million Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $53,374 | $91,415 | | Total current assets | $193,343 | $203,015 | | Total assets | $258,680 | $270,268 | | Total current liabilities | $31,723 | $31,126 | | Total liabilities | $67,851 | $67,311 | | Total stockholders' equity | $190,829 | $202,957 | Consolidated Statements of Operations For Q2 2025, revenue decreased 23.8% to $17.2 million, and net loss widened to $20.1 million, with similar trends for the six-month period Statement of Operations Summary (in thousands) | Metric | Q2 2025 | Q2 2024 | Six Months 2025 | Six Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Revenue | $17,203 | $22,580 | $37,808 | $42,105 | | Loss from operations | $(21,804) | $(16,893) | $(39,500) | $(35,773) | | Net loss | $(20,056) | $(12,802) | $(35,806) | $(25,770) | | Net loss per share | $(0.23) | $(0.24) | $(0.41) | $(0.50) | Consolidated Statements of Cash Flows Net cash used in operating activities for the six months ended June 30, 2025, was $30.9 million, while investing activities used $26.9 million, and financing activities provided $19.8 million Cash Flow Summary for Six Months Ended June 30 (in thousands) | Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(30,896) | $(31,156) | | Net cash (used in) provided by investing activities | $(26,913) | $19,294 | | Net cash provided by financing activities | $19,760 | $2,645 | | Net change in cash | $(38,041) | $(9,237) | Notes to Consolidated Financial Statements The notes detail accounting policies, revenue recognition, and significant agreements, including customer concentrations and transactions with Tempus and Merck - The company has significant customer concentration. For the six months ended June 30, 2025, Moderna, VA MVP, and Natera accounted for 28%, 20%, and 13% of total revenue, respectively65146 Revenue by Customer Type (in thousands) | Customer Type | Q2 2025 | Q2 2024 | Six Months 2025 | Six Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Pharma tests and services | $11,023 | $13,197 | $24,617 | $23,009 | | Enterprise sales | $2,315 | $7,958 | $4,780 | $15,930 | | Population sequencing | $3,308 | $1,280 | $7,521 | $2,780 | | Clinical diagnostic | $469 | $117 | $777 | $312 | | Other | $88 | $28 | $113 | $74 | | Total revenue | $17,203 | $22,580 | $37,808 | $42,105 | - In December 2024, the company entered into an investment agreement with Merck, selling 14,044,943 shares for $50.0 million. $10.0 million of the proceeds are reserved for opening a new ISO-certified lab outside the U.S.103 - The company's agreement with Tempus involves Tempus marketing the NeXT Personal Dx test. Personalis compensates Tempus on a per-test basis and for promotional services. As of June 30, 2025, Personalis had received $5.0 million of a $6.0 million Market Development Fee from Tempus9192102 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q2 and H1 2025 financial results, highlighting revenue decline, operating expense fluctuations, liquidity, and strategic initiatives like NeXT Personal adoption Results of Operations Q2 2025 revenue decreased 24% year-over-year due to a 71% drop in Enterprise sales, partially offset by growth in Population sequencing and Clinical diagnostic revenue, while SG&A expenses increased 18% Q2 2025 vs Q2 2024 Revenue Change by Customer Type | Customer Type | Change | | :--- | :--- | | Pharma tests and services | (16%) | | Enterprise sales | (71%) | | Population sequencing | 158% | | Clinical diagnostic | 301% | | Total revenue | (24%) | - The decrease in Enterprise sales was mainly due to a 74% decrease in the number of samples processed for Natera in Q2 2025 compared to Q2 2024. The company does not expect a long-term commercial relationship with Natera beyond 2025147148 - The increase in SG&A expenses was primarily due to a $1.4 million increase in marketing activities for NeXT Personal Dx, including trade show expenses and Tempus' sales & marketing fees158159 - Other income in 2024 included a significant noncash gain of $3.0 million for Q2 and $7.7 million for the six months from the remeasurement of Tempus Warrants, which was not present in 2025, contributing to the higher net loss in 2025163 Liquidity and Capital Resources As of June 30, 2025, the company held $173.2 million in cash and investments, deemed sufficient for the next 12 months, with financing activities providing $19.8 million from the ATM facility - The company had $173.2 million in cash, cash equivalents, and short-term investments as of June 30, 2025, and believes this is sufficient to fund operations for at least the next 12 months164165 - For the six months ended June 30, 2025, financing activities provided $19.8 million in cash, largely due to $17.8 million in net proceeds from sales of common stock under the ATM facility61168170 - Material cash requirements include capital expenditures expected to be approximately $7.0 million in 2025 and $13.0-$14.0 million annually in 2026 and 2027 to expand NeXT Personal Dx capacity174 Quantitative and Qualitative Disclosures About Market Risk As a "smaller reporting company," Personalis is not required to provide the information requested under this item - The company is exempt from this disclosure requirement due to its status as a "smaller reporting company"181 Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2025, with no material changes in internal control over financial reporting - The CEO and CFO concluded that as of June 30, 2025, the company's disclosure controls and procedures were effective182 - No changes in internal control over financial reporting occurred during the latest fiscal quarter that materially affected, or are reasonably likely to materially affect, internal controls183 PART II — OTHER INFORMATION Legal Proceedings The company is not involved in any material legal proceedings as of June 30, 2025, and any ordinary course claims are not considered material - As of June 30, 2025, the Company was not involved in any material legal proceedings119186 Risk Factors This section details significant risks, including financial losses, customer concentration, operational dependencies, regulatory changes, cybersecurity threats, and intellectual property litigation Operational, Strategic and Business Risks The company faces operational risks from a history of net losses, substantial customer concentration, reliance on a single facility, and dependence on sole-source suppliers like Illumina - The company has a history of losses, with a net loss of $35.8 million for the six months ended June 30, 2025, and an accumulated deficit of $585.8 million188 - The company has substantial customer concentration, with its top five customers accounting for 72% of revenue for the six months ended June 30, 2025. It does not expect a long-term commercial relationship with Natera beyond 2025198199200 - The company relies on Illumina as its sole supplier for sequencers and associated reagents, and any disruption could negatively impact laboratory operations214 Regulatory, Legal and Cybersecurity Risks The company faces risks from potential FDA regulation of its Laboratory Developed Tests, complex data privacy laws, and significant cybersecurity threats that could lead to regulatory action and reputational harm - The company's tests are marketed as LDTs, but if the FDA determines they are subject to enforcement as medical devices, it could incur substantial costs and time delays for premarket clearance or approval257261 - The company is subject to numerous evolving data privacy and security laws in the U.S. (HIPAA, CCPA) and abroad (GDPR), and failure to comply could result in significant fines, litigation, and business disruptions295296298 - The company faces threats from cyberattacks, including ransomware, which could compromise sensitive data (PHI, genomic information) and lead to regulatory investigations, fines, and reputational harm281282283 Intellectual Property Risks The company's success depends on protecting its intellectual property and avoiding infringement in a litigious industry, facing uncertainty regarding patentability of genetic tests and risks of costly litigation - The company operates in an industry with extensive intellectual property litigation. A lawsuit, regardless of merit, could be costly and prevent the company from selling its tests332333 - Recent court decisions have created uncertainty about the patentability of inventions related to natural phenomena, which could affect the company's ability to protect its diagnostic tests341 - The company has been involved in legal proceedings to enforce its IP rights, such as a past complaint against Foresight for patent infringement, and two of its patents were recently invalidated in inter partes reviews initiated by Foresight351353 Financial and Market Risks and Risks Related to Owning Our Common Stock The company may need to raise additional capital, which could be dilutive, and its stock price is subject to volatility influenced by operating results and market conditions, with significant insider control - The company may need to raise additional capital, and its ability to do so could be impacted by worsening global economic conditions, potentially leading to operational cutbacks if funding is not secured370372 - The market price of the common stock is volatile and can be influenced by fluctuating operating results, competition, regulatory changes, and general market conditions373 - Insiders and holders of more than 5% of the common stock may exercise significant control over the company, including the election of directors and approval of major corporate transactions385 Unregistered Sales of Equity Securities and Use of Proceeds There were no unregistered sales of equity securities during the period - None412 Other Information There are no disclosures required under this item for the reporting period - There are no disclosures required by this Item 5414 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 report includes filed exhibits such as the 2020 Inducement Plan, CEO/CFO certifications (Sections 302 and 906), and Inline XBRL data415