Personalis Inc
For the period ended Mar 31, 2025. Filed May 6, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2025 · Filed May 6, 2025
PSNL$15.79+1.5%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-09-30; filed 2024-11-06.
0000950170-24-122290
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-03-31; filed 2025-05-06.
0000950170-25-064512
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 106 previous paragraphs and 100 current paragraphs.
45 unchanged; 33 reworded; 22 added; 28 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 8 previous and 8 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (22)
Current report
First Quarter 2025 Highlights
Current report
Highlighted compelling performance of NeXT Personal for resectable Stage I-IV colorectal cancer (CRC) in a study of 71 patients with British Columbia (BC) Cancer and an oral presentation at the American Association for Cancer Research (AACR) in Chicago in April.
Current report
100% of patients that eventually recurred were detected as ctDNA positive by NeXT Personal, prior to detection on imaging.
Current report
87% of eventual clinical recurrences were detectable within the early landmark window, 2 to 8 weeks after surgery, with 85% detectable by 4 weeks.
Current report
o
Current report
64% of the positive detections in the landmark window were in the ultrasensitive range, below 100 parts per million (PPM).
Current report
o
Current report
100% of challenging distant metastatic recurrences prior to imaging were detected, including lung metastasis.
Current report
Published pivotal breast cancer study (Royal Marsden) using NeXT Personal in the Annals of Oncology and dossier submission was made to Medicare for reimbursement in early-stage breast cancer.
Current report
Published results from TRACERx study in Nature Medicine, showing ctDNA levels linked to lung cancer recurrence and highlighting NeXT Personal's detection in early-stage patients.
Current report
Clinical diagnostic includes sales of comprehensive tumor profiling test that is used to help select therapy for a cancer patient and identify potential clinical trials for a patient, and sales of ultra-sensitive, tumor-informed diagnostic tests, ordered by healthcare providers for cancer patients. Revenue in this category is derived from Medicare and private insurance reimbursements. As of March 31, 2025, we have not received Medicare coverage reimbursement for NeXT Personal Dx.
Current report
We expect selling, general and administrative expenses to increase over time to support the growth of our clinical diagnostic offerings.
Current report
(2) Includes related party sales and marketing expenses of $0.6 million for the three months ended March 31, 2025.
Current report
(1) Includes related party accounts receivable of $0.5 million and $2.5 million as of March 31, 2025 and December 31, 2024, respectively.
Current report
(2) Includes related party liabilities of $4.0 million and $2.9 million as of March 31, 2025 and December 31, 2024, respectively.
Current report
The increase in pharma tests and services revenue in the first quarter of 2025 was due to higher clinical trial samples processed for Moderna. We may see some variability in revenue for this customer over the next few quarters depending on timing of their ongoing trial enrollments. We expect continued growth in revenue from pharma tests and services as demand increases for our Next Personal MRD tests.
Current report
Revenue from enterprise sales decreased in the first quarter of 2025 due to a decrease of approximately 65% in the number of samples we processed for Natera compared to the same quarter in 2024.
Current report
Clinical diagnostic
Current report
Clinical diagnostic revenue is generated from Medicare and private insurance payors. In January 2024, we received a Medicare coverage determination for NeXT Dx, our ultra-comprehensive tumor genomic profiling assay. The revenue of $0.3 million in the first three months of 2025 was mainly attributable to an increase in NeXT Dx test volume and NeXT Personal Dx reimbursements received from some private payors.
Current report
Cost of revenue decreased in the first quarter of 2025 compared to the same quarter in 2024, notwithstanding a slight increase in revenue, primarily due to a favorable revenue mix from the increase in pharma tests and services combined with decreased enterprise sales.
Current report
Research and development remained consistent from quarter to quarter, as we continue to selectively invest in areas to enhance our services and product offering, in particular NeXT Personal Dx.
Current report
Selling, general and administrative expenses increased due to our marketing efforts related to NeXT Personal Dx in the first quarter of 2025 compared to the same quarter in 2024.
Removed paragraphs (28)
Previous report
Third Quarter 2024 Highlights
Previous report
Raised approximately $35.0 million in net financing proceeds from Tempus AI, Inc. (Tempus), consisting of $18.4 million from Tempus’ exercise of all its common stock warrants, at an average price of $2.00 per share, and $16.6 million net of expenses, from Tempus' purchase of common stock at a price of $5.07 per share.
Previous report
Highlighted clinical performance of NeXT Personal at the European Society of Medical Oncology (ESMO) Congress 2024 in Barcelona, Spain:
Previous report
Significant results from the TRACERx study presented by Professor Charles Swanton of University College London and the Francis Crick Institute with an expanded study cohort of non-small cell lung cancer (NSCLC) patients with strong detection rates for residual cancer in the challenging landmark period (first 10 to 120 days immediately after surgery).
Previous report
Compelling data for late-stage cancer patients on immunotherapy presented by Dr. Rodrigo Toledo of the Vall d’Hebron Institute of Oncology that accurately linked significant decreases in ctDNA levels in response to immunotherapy to longer overall survival than patients who did not respond well.
Previous report
Received a new task order in the amount of $7.5 million from the VA MVP.
Previous report
Selling, general and administrative expenses have decreased significantly since the completion of our reductions in workforce in 2023. We expect expenses to remain around this lower level over the short-term, but may increase in the medium-term to support future growth of our clinical diagnostic offerings.
Previous report
Restructuring and Other Charges
Previous report
Restructuring and other charges consists of charges in connection with our reductions in workforce and charges in connection with the closure of our China operations.
Previous report
Revenue from pharma tests and services increased 96%, or $7.5 million, in the third quarter of 2024, and increased 90%, or $18.3 million, in the first nine months of 2024. The primary driver was increases in revenue from one of our personalized cancer therapy customers that ramped up clinical trial patient enrollments. Revenue from this customer increased $7.9 million in the third quarter of 2024 and $15.6 million in the first nine months of 2024. Revenue from this customer is expected to decline over the next few quarters until this customer enrolls patients in its next set of clinical trials. The remainder of revenue increases in the first nine months of 2024 came from a small number of our largest pharmaceutical customers.
Previous report
Revenue from enterprise sales decreased 33%, or $2.5 million, in the third quarter of 2024 due to a decrease in the number of samples we processed for Natera and lower selling prices. The number of samples we processed decreased by approximately 10%, with lower selling prices accounting for the remainder of the revenue decrease.
Previous report
Revenue from enterprise sales decreased 14%, or $3.5 million, in the first nine months of 2024 due to lower selling prices. The number of samples we processed for Natera increased by over 18%, but such increase was offset by lower selling prices.
Previous report
Other revenue
Previous report
Other revenue increased $0.3 million in the third quarter of 2024 and $0.4 million in the first nine months of 2024, primarily due to increased sales of our NeXT Dx diagnostic test.
Previous report
Cost of revenue increased 15%, or $2.2 million, in the third quarter of 2024, and increased 12%, or $4.7 million, in the first nine months of 2024, due to higher revenue levels. The corresponding revenue increases were 41% and 26%, respectively. Cost of revenue increased at a lesser rate as compared to the corresponding revenue increases primarily because of lower labor costs resulting from workforce reductions and operational efficiencies.
Previous report
Specific components of the increase in the third quarter of 2024 were a $2.4 million increase in direct material costs to support higher revenue levels and a $0.3 million increase in allocated facilities and equipment costs, partially offset by a $0.5 million decrease in labor costs.
Previous report
Specific components of the increase in the nine months of 2024 were a $5.8 million increase in direct material costs to support higher revenue levels and a $1.9 million increase in allocated facilities and equipment costs (mainly due to moving our laboratory from our prior Menlo Park facility to our Fremont facility), partially offset by a $2.1 million decrease in labor costs and a $0.9 million decrease in shared laboratory costs due to greater usage of our laboratory capacity for R&D projects.
Previous report
The decreases in research and development expenses of 30%, or $5.1 million, in the third quarter of 2024, and 27%, or $13.8 million, in the first nine months of 2024 were primarily due to cost savings from our workforce reductions in 2023 and lower sample processing costs for product development, collaborations, and clinical evidence generation.
Previous report
Specific components of the decrease in the third quarter of 2024 were a $2.9 million decrease in sample processing costs incurred in our laboratory for product development, collaborations, and clinical evidence generation; a $1.4 million decrease in personnel-related costs driven by our workforce reductions; and a $0.8 million decrease in allocated facilities costs.
Previous report
Specific components of the decrease in the first nine months of 2024 were a $5.8 million decrease in personnel-related costs driven by our workforce reductions, a $4.4 million decrease in allocated facilities costs (primarily due to a reduction in R&D usage of our facilities relative to other functions, as well as lower facilities costs in general), and a $3.6 million decrease in sample processing costs incurred in our laboratory for product development, collaborations, and clinical evidence generation.
Previous report
The decreases in selling, general and administrative expenses of 4%, or $0.5 million, in the third quarter of 2024, and 8%, or $3.2 million, in the first nine months of 2024 were primarily due to lower professional outside services expenses and cost savings from our workforce reductions in 2023.
Previous report
Specific components of the decrease in the first nine months of 2024 were a $2.3 million decrease in personnel-related costs, a $2.3 million decrease in professional outside services, and a $0.6 million decrease in office equipment costs; partially offset by a $1.4 million increase in allocated facilities costs and $0.6 million increase in marketing costs such as trade shows expenses.
Previous report
Lease impairment
Previous report
During the third quarter of 2023, we completed the move of our laboratory operations from our Menlo Park facility to our Fremont facility and began actively marketing the Menlo Park space for sublease. Accordingly, we evaluated the ongoing value of the operating lease right-of-use asset associated with the Menlo Park facility. Based on this evaluation, we determined that the right-of-use asset with a carrying amount of $6.7 million was no longer recoverable and was impaired and wrote it down to its estimated fair value of $1.1 million, which resulted in a noncash impairment loss of $5.6 million. Estimated fair value was based on expected future sublease cash flows (derived from a third-party real estate broker), net of brokerage commissions and estimated tenant incentives, discounted at a market rate of return on similar assets. The estimation of fair value also included expected downtime prior to the commencement of a future sublease.
Previous report
Restructuring and other charges
Previous report
We reduced our workforce during the first quarter of 2023 to reduce cash burn and increase operating efficiencies, which affected about 100 employees. We also closed our China operations.
Previous report
The $4.0 million charge recognized in the first nine months of 2023 was comprised of $3.4 million in one-time employee termination benefits (including costs related to termination of our former China employees) and $0.6 million of other noncash charges (primarily asset disposals and impairments in connection with the closure of our China operations).
Previous report
In November 2023, we issued the Tempus Warrants. The Tempus Warrants included a provision under which the total number of shares issuable upon settlement were subject to adjustment. Consequently, the Tempus Warrants were classified as liability instruments while outstanding and subject to remeasurement at each balance sheet date, with changes in fair value recognized as other income (expense). We recognized noncash losses of $26.0 million and $18.3 million in the third quarter of 2024 and the first nine months of 2024, respectively, as a result of increases in the fair value of the Tempus Warrants since December 31, 2023. In August 2024, Tempus exercised in full the Tempus Warrants for $18.4 million in cash. There will be no further noncash gains or losses associated with the Tempus Warrants going forward.
Reworded paragraphs (33)
Previous wording
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited consolidated financial statements and the related notes and other financial information included elsewhere in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 filed with the Securities and Exchange Commission (the “SEC”) on February 28, 2024 (the “Annual Report”). In addition to historical consolidated financial information, the following discussion contains forward-looking statements that reflect our plans, estimates, and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. You should review the sections titled “Note Regarding Forward-Looking Statements” for a discussion of forward-looking statements and in Part II, Item 1A, “Risk Factors” for a discussion of factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis and elsewhere in this Quarterly Report on Form 10-Q and in our Annual Report.
Current wording
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited consolidated financial statements and the related notes and other financial information included elsewhere in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 filed with the Securities and Exchange Commission (the “SEC”) on February 27, 2025 (our “Annual Report”). In addition to historical consolidated financial information, the following discussion contains forward-looking statements that reflect our plans, estimates, and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. You should review the sections titled “Note Regarding Forward-Looking Statements” for a discussion of forward-looking statements and in Part II, Item 1A, “Risk Factors” for a discussion of factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis and elsewhere in this Quarterly Report on Form 10-Q and in our Annual Report
Previous wording
We develop and market advanced cancer genomic tests. Our tests are used by pharmaceutical companies for translational research, biomarker discovery, the development of personalized cancer therapies, and, we expect in the near future, for clinical trial enrollment. Our tests are used by physicians to detect cancer recurrence, monitor cancer evolution, and uncover insights for therapy selection. We also provide sequencing and data analysis services to support population sequencing initiatives.
Current wording
We develop, market, and sell advanced cancer genomic tests and services. Our services are used by pharmaceutical companies for translational research, biomarker discovery, the development of personalized cancer therapies, and for clinical trials. Our tests are used by physicians to detect residual or recurrent cancer in patients, monitor cancer response to therapy, and uncover insights for therapy selection. We also provide whole exome and whole genome sequencing services for other diagnostic companies and population sequencing initiatives.
Previous wording
Today, our products are routinely used by many of the largest oncology-focused pharmaceutical companies for analysis of patient samples in their clinical trials and drug development programs. Our advanced genomic sequencing and analytics also support the development of personalized cancer vaccines and other next-generation cancer immunotherapies. For example, we are providing genomic testing to Moderna, Inc. ("Moderna") in its ongoing clinical trials evaluating a personalized cancer vaccine. In addition, we partner with diagnostics companies by providing our advanced tumor profiling and analysis capabilities as an input to their products. More recently, we launched new diagnostic offerings for the clinical setting and, in November 2023, entered into an agreement with Tempus AI, Inc. ("Tempus") to commercialize our NeXT Personal Dx test. We have also pursued non-cancer related business opportunities, specifically within the population sequencing market, by providing whole genome sequencing ("WGS") services under contract with the U.S. Department of Veterans Affairs Million Veteran Program ("VA MVP").
Current wording
Today, our products are routinely used by many of the largest oncology-focused pharmaceutical companies for analysis of patient samples in their clinical trials and drug development programs. Our advanced genomic sequencing and analytics also support the development of personalized neoantigen therapies for cancer and other next-generation cancer immunotherapies. For example, we are providing genomic testing to Moderna, Inc. ("Moderna") in its ongoing clinical trials evaluating a personalized cancer therapy. In addition, we partner with diagnostics companies by providing our advanced tumor profiling and analysis capabilities as an input to their products. More recently, we launched new diagnostic offerings for the clinical setting and, in November 2023, entered into an agreement with Tempus to commercialize our NeXT Personal Dx test. We have also pursued non-cancer related business opportunities, specifically within the population sequencing market, by providing whole genome sequencing ("WGS") services under contract with the U.S. Department of Veterans Affairs Million Veteran Program ("VA MVP").
Previous wording
We are working with a growing number of leading cancer centers and world-class academic research institutions to build and publish the clinical evidence-base to support our products and our key indications, as well as to obtain reimbursement coverage from Medicare and other payors. Because of the ultra-high analytical sensitivity of our technology, we are primarily focusing on three indications: breast cancer, lung cancer, and immunotherapy (IO) monitoring. We have collaborations with Cancer Research UK, University College London, and the Francis Crick Institute (the TRACERx study); The Royal Marsden; the Vall d'Hebron Institute of Oncology (VHIO); Duke University; Vanderbilt University and Johns Hopkins University (the PREDICT study); the Dana-Farber Cancer Institute; University Medical Center Hamburg-Eppendorf (also known as UKE); and Criterium and the Academic Breast Cancer Consortium that will focus on building the evidence-base for our technology and these indications. If the key opinion leaders ("KOLs") we are collaborating with have a positive experience using our products, we are optimistic this will support broader use of our products by other KOLs, as well as clinicians in the future.
Current wording
We are working with a growing number of leading cancer centers and world-class academic research institutions to build and publish the clinical evidence-base to support our products and our key indications, as well as to obtain reimbursement coverage from Medicare and other payors. Because of the ultra-high analytical sensitivity of our technology, we are primarily focusing on three indications: breast cancer, lung cancer, and immunotherapy (IO) monitoring. We have collaborations with Cancer Research UK, University College London, and the Francis Crick Institute (the TRACERx study); Institut Curie; The Royal Marsden; the Vall d'Hebron Institute of Oncology (VHIO); the University of California, San Diego; Duke University; Vanderbilt University and Johns Hopkins University (the PREDICT study); the Dana-Farber Cancer Institute; the University of Texas M.D. Anderson Cancer Center; University Medical Center Hamburg-Eppendorf (also known as UKE); and Criterium and the Academic Breast Cancer Consortium, that will focus on building the evidence-base for our technology and these indications.
Previous wording
Our work in oncology is underpinned by our experience and capacity for next-generation sequencing at scale. We have the capacity to sequence and analyze over 350 trillion bases of DNA per week in our facility. We believe that our capacity is already larger than most cancer genomics companies, and we continue to build automation and other infrastructure to scale further as demand increases. To date, we have sequenced more than 475,000 human samples, of which more than 190,000 were whole human genomes.
Current wording
Our work in oncology is underpinned by our experience and capacity for next-generation sequencing at scale. We have the capacity to sequence and analyze over 350 trillion bases of DNA per week in our facility. We believe that our capacity is already larger than most cancer genomics companies, and we continue to build automation and other infrastructure to scale further as demand increases. To date, we have sequenced approximately 500,000 human samples, of which approximately 200,000 were whole human genomes.
Previous wording
Total revenue increased 41%, or $7.5 million, during the third quarter of 2024 compared to the third quarter of 2023, driven by higher revenue from pharma tests. Revenue from pharma tests was $15.7 million in the third quarter of 2024 compared to $8.0 million in the third quarter of 2023, an increase of 96%. This increase was partially offset by lower revenue from enterprise sales, which declined $2.5 million, or 33%.
Current wording
Total revenue increased $1.1 million, or 6%, during the first quarter of 2025 compared to the first quarter of 2024, driven by higher revenue from pharma tests and services and population sequencing from VA MVP. Revenue from pharma tests and services increased $3.8 million, or 39%, during the first quarter of 2025 compared to the first quarter of 2024. Revenue from population sequencing increased $2.7 million, or 181%, during the first quarter of 2025 compared to the first quarter of 2024. As expected, these increases were partially offset by lower revenue from Natera enterprise sales, which declined $5.5 million, or 69%.
Previous wording
Key business accomplishments and financial updates in the third quarter of 2024 include:
Current wording
Key business accomplishments and financial updates in the first quarter of 2025 include:
Previous wording
Raised an additional $27.2 million in net proceeds from selling common stock under our At-The-Market (ATM) program at a weighted-average price of $5.84 per share.
Current wording
Raised $17.8 million in net proceeds from selling common stock under our At-The-Market (ATM) program at a weighted-average price of $5.89 per share.
Previous wording
Delivered 945 total molecular tests in the third quarter of 2024, a 68% increase compared with the prior quarter.
Current wording
Delivered 2,184 total molecular tests in the first quarter of 2025, a 52% increase compared with 1,441 tests delivered in the fourth quarter of 2024.
Previous wording
We derive our revenue primarily from sales of advanced sequencing and analytics to the following four groups of customers:
Current wording
We derive our revenue primarily from sales of genomic tests and services to the following five customer types:
Previous wording
Other includes sales of genomic tests and analytics to universities and non-profits. This category also includes sales of diagnostics tests ordered by healthcare providers for cancer patients.
Current wording
Other includes sales of genomic tests and analytics to universities and non-profits.
Previous wording
Our ability to increase revenue will depend on our ability to further increase sales to these groups of customers, expand our customer base within each group, and expand our business in the clinical diagnostics market. To do this, we are developing a growing set of state-of-the-art services and products; advancing our operational infrastructure; building our regulatory credentials; focusing our marketing efforts on large pharmaceutical companies; developing and publishing the clinical evidence-base to support our products and our key indications, as well as working to obtain reimbursement coverage from Medicare and other payors; and seeking additional partnerships such as ours with Natera. We sell through a small direct sales force. In late 2023, we entered into an agreement with Tempus to commercialize NeXT Personal Dx in the clinical diagnostics market and will be leveraging Tempus' significantly larger sales force.
Current wording
Our ability to increase revenue will depend on our ability to further increase sales to these groups of customers and expand our customer base within each group. To do this, we are developing a growing set of state-of-the-art services and products; advancing our operational infrastructure; building our regulatory credentials; focusing our marketing efforts on large pharmaceutical companies; building and publishing the clinical evidence-base to support our products and services in our key indications, pursuing reimbursement coverage from Medicare and other payors; and seeking additional partnerships. We market to biopharma customers and doctors through a small direct sales force. In late 2023, we entered into an agreement with Tempus to commercialize NeXT Personal Dx in the clinical diagnostics market and will be leveraging Tempus' significantly larger sales force as a key vector to grow our clinical diagnostic business. In late 2024, we expanded our collaboration partnership with Tempus to enable Tempus to market and sell NeXT Personal to Tempus' pharmaceutical and biotech customers who wish to bundle MRD testing with other Tempus offerings in a given study.
Previous wording
We have one reportable segment from the sale of sequencing and data analysis services. Most of our revenue to date has been derived from sales in the United States.
Current wording
We have one reportable segment which is providing advanced cancer genomic tests and services for precision oncology applications, personalized testing, and other tests. Most of our revenue to date has been derived from sales in the United States.
Previous wording
We expense our research and development costs in the period in which they are incurred. We expect research and development expenses to remain fairly flat in the short-term since the completion of our reductions in workforce in 2023. Research and development expenses may decrease in the medium-term after investments in developing and publishing the clinical evidence-base to support our products and our key indications conclude.
Current wording
We expense our research and development costs in the period in which they are incurred. We expect research and development expenses to increase over time to support the growth of our clinical diagnostic offerings.
Previous wording
In connection with our November 2023 agreement with Tempus, we issued two warrants to Tempus to purchase, in the aggregate, up to 9,218,800 shares of our common stock (the “Tempus Warrants”). Other income (expense), net consists primarily of a noncash loss related to the remeasurement and settlement of the Tempus Warrants. Other income (expense), net also includes foreign currency exchange gains and losses.
Current wording
Other income (expense), net includes foreign currency exchange gains and losses. Other income (expense), net during the first quarter of 2024 consists primarily of a noncash gain related to the remeasurement of the warrants issued in connection with our November 2023 agreement with Tempus.
Previous wording
We launched a reduced-cost version of our exome product offering for Natera near the end of the first quarter of 2024 to support their requirement for an overall reduction in cost. Our total revenue from Natera in 2024 is expected to decline from comparable periods in 2023 due to their use of the reduced-cost version of our exome product offering. Our agreement with Natera includes minimum volume commitments through the end of 2024. We do not expect our commercial relationship with Natera to extend beyond 2024.
Current wording
Our total revenue from Natera in 2025 is expected to be lower from comparable periods in 2024 due to a forecasted decrease in the number of samples processed. Our agreement with Natera includes minimum volume commitments through the second quarter of 2025 and we do not expect a long-term commercial relationship with Natera beyond this year.
Previous wording
Population sequencing revenue is made up entirely of sales to the VA MVP. Revenue recognized each period is impacted by timing of our fulfillment of samples under each annual task order. The increase in revenue of 85%, or $2.0 million, in the third quarter of 2024 was due to an increase in the number of samples we processed because we fulfilled the VA MVP's 2023 annual task order in alignment with the VA MVP's fiscal year-end (September 2024), partially offset by a slight drop in selling prices. The decrease in revenue of 14%, or $1.2 million, in the first nine months of 2024 was due to a decrease in the number of samples we processed in addition to a slight drop in selling prices.
Current wording
Revenue recognized each period from population sequencing is impacted by timing of our fulfillment of samples under each annual task order. The increase in revenue in the first quarter of 2025 compared to the same quarter in 2024 was due to an increase in the number of samples we processed.
Previous wording
Our annual task orders from the VA MVP in 2024, 2023, and 2022 were $7.5 million, $7.5 million, and $10.0 million, respectively. Our contract with the VA MVP does not include specific testing turnaround times. Therefore, we may modulate the volume of samples processed from the VA MVP to accommodate sample volumes from other customers, which can vary from period to period. We anticipate fulfilling the new task order received in September 2024 during the first three quarters of 2025.
Current wording
Our annual task orders received from the VA MVP in 2024 and 2023 were $7.5 million each year. Our contract with the VA MVP does not include specific testing turnaround times. Therefore, we may modulate the volume of samples processed from the VA MVP to accommodate sample volumes from other customers, which can vary from period to period. We anticipate fulfilling the task order received in September 2024 during the first two quarters of 2025.
Previous wording
Specific components of the decrease in the third quarter of 2024 were a $1.1 million decrease in professional outside services and a $0.6 million decrease in office equipment costs, partially offset by a $0.7 million increase in allocated facilities costs and $0.5 million in other miscellaneous costs.
Current wording
Specific components of the increase in the first quarter of 2025 were a $0.8 million increase in marketing and marketing-related expenses and a $0.8 million increase in personnel costs, partially offset by a $0.5 million decrease in professional outside services and a $0.4 million decrease in allocated facilities costs.
Previous wording
The decreases in interest income were due to lower average investment balances, partially offset by increased yields. Interest expense is the recognition of imputed interest on noninterest bearing loans.
Current wording
The increase in interest income in the first quarter of 2025 compared to the same quarter in 2024 was driven by higher average investment balances, partially offset by decreased yields. Interest expense is the recognition of imputed interest on noninterest bearing loans.
Previous wording
Separately, upon dissolution of our China entity (Personalis (Shanghai) Ltd) during the first quarter of 2024, we reclassified an accumulated foreign currency translation loss of $0.2 million to other income (expense).
Current wording
Other income (expense), net, in the first quarter of 2025, consisted mainly of foreign currency remeasurements. Other income (expense), net, in the first quarter of 2024, consisted mainly of a $4.8 million noncash gain as a result of remeasurement of the Tempus Warrants (classified as liability instruments), partially offset by a $0.2 million reclassification of accumulated foreign currency translation loss to other income (expense), net, upon dissolution of our China entity (Personalis (Shanghai) Ltd.)
Previous wording
From our inception through September 30, 2024, we have funded our operations primarily from $279.8 million in net proceeds from our follow-on equity offerings in August 2020 and January 2021, $144.0 million in net proceeds from our IPO in June 2019, $89.6 million from issuance of redeemable convertible preferred stock, $36.2 million from Tempus exercising warrants and purchasing additional shares under an investment agreement (see Note 8, "Related Party Transactions" in our unaudited consolidated financial statements for additional information), $33.6 million in net proceeds from our at-the-market ("ATM") sales facility (see Note 2, "Summary of Significant Accounting Policies" in our unaudited consolidated financial statements for additional information), as well as cash from operations and debt financings. As of September 30, 2024, we had cash and cash equivalents of $75.8 million and short-term investments of $67.9 million.
Current wording
From our inception through March 31, 2025, we have funded our operations primarily from net proceeds from issuance of redeemable convertible preferred stock, issuance of common stock through our initial public offering ("IPO"), follow-on equity offerings and ATM facility (see Note 2, Summary of Significant Accounting Policies, in Part 1, Item 1 of this Form 10-Q in our Consolidated Financial Statements for additional information). Additionally, we have funded our operations from Tempus exercising warrants and purchasing additional shares of our common stock under an investment agreement, and Merck purchasing shares of our common stock under an investment agreement (see Note 8, Related Party Transactions, in Part 1, Item 1 of this Form 10-Q in our Consolidated Financial Statements for additional information), as well as debt financings. As of March 31, 2025, we had cash and cash equivalents of $71.0 million and short-term investments of $114.7 million.
Previous wording
We have based these future funding requirements on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we expect. If our available cash balances and anticipated cash flow from operations are insufficient to satisfy our liquidity requirements, including because of lower demand for our services or other risks described in this Quarterly Report on Form 10-Q, we may seek to sell additional common or preferred equity or convertible debt securities, enter into an additional credit facility or another form of third-party funding or seek other debt financing. We filed a sales agreement prospectus in December 2023 pursuant to which we may offer and sell up to an aggregate amount of $50.0 million of shares of our common stock through our ATM facility. As of September 30, 2024, $19.3 million in common stock remained available for future issuance under the ATM facility. The sale of equity and convertible debt securities may result in dilution to our stockholders and, in the case of preferred equity securities or convertible debt, those securities could provide for rights, preferences or privileges senior to those of our common stock. The terms of debt securities issued or borrowings pursuant to a credit agreement could impose significant restrictions on our operations. Additional capital may not be available on reasonable terms, or at all.
Current wording
We have based these future funding requirements on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we expect. If our available cash balances and anticipated cash flow from operations are insufficient to satisfy our liquidity requirements, including because of lower demand for our services or other risks described in this Quarterly Report on Form 10-Q, we may seek to sell additional common or preferred equity or convertible debt securities, enter into an additional credit facility or another form of third-party funding or seek other debt financing. We filed a sales agreement prospectus supplement in December 2024, pursuant to which we may offer and sell up to $50.0 million of shares of our common stock through our ATM facility. The sale of equity and convertible debt securities may result in dilution to our stockholders and, in the case of preferred equity securities or convertible debt, those securities could provide for rights, preferences or privileges senior to those of our common stock. The terms of debt securities issued or borrowings pursuant to a credit agreement could impose significant restrictions on our operations. Additional capital may not be available on reasonable terms, or at all. Our ability to raise additional capital may be adversely impacted by potential worsening global economic conditions and the recent disruptions to, and volatility in, the credit and financial markets in the United States and worldwide resulting from tariffs, other restrictive trade policies, the current administration’s focus on reducing government research spending and federal cost-cutting initiatives, actual or perceived changes in interest rates and inflation, and other macroeconomic factors. If we are unable to raise additional capital when needed or on favorable terms, our business, results of operations and financial condition would be adversely affected.
Previous wording
The $5.5 million decrease in cash used in operating activities was due to lower operating expenses, particularly as a result of our 2023 reductions in workforce, and higher gross margin (due to a combination of higher revenue levels and higher gross margin percentage). These increases in operating cash flow were partially offset by changes in working capital. Notably, during the first half of 2023 we received a significant customer deposit in connection with our agreement with Moderna to support its ongoing clinical trials project for development of a personalized cancer vaccine and the customer deposit did not repeat in 2024. We also paid more in rent during the first nine months of 2024 as compared to 2023 for our Fremont headquarters due to the end of a free rent period plus escalating rent payments. Furthermore, we paid more to vendors during the first nine months of 2024 as compared to 2023 due to timing of vendor shipments and billings.
Current wording
The decrease in cash used in operating activities in the first quarter of 2025 compared to the same quarter in 2024 was due to higher gross margin (due to a combination of higher revenue levels and higher gross margin percentage) and reduced working capital needs.
Previous wording
The $33.6 million decrease in cash provided by investing activities was due to investment of our cash into short-term investments, partially offset by a $7.0 million reduction in capital expenditures.
Current wording
The increase in cash used by investing activities in the first quarter of 2025 compared to the same quarter in 2024 was due to investment of our cash into short-term investments and $2.4 million increase in capital expenditures.
Previous wording
The $63.9 million increase in cash provided by financing activities was due to $27.5 million higher net proceeds from sales of common stock under our ATM facility, $36.2 million from Tempus exercising warrants and purchasing additional shares under an investment agreement, and $1.5 million lower repayments of loans; partially offset by $0.8 million payments of costs associated with the Tempus investment, and $0.5 million lower proceeds from our employee stock purchase program.
Current wording
The increase in cash provided by financing activities in the first quarter of 2025 compared to the same quarter in 2024 was due to $16.3 million higher net proceeds from sales of common stock under our ATM facility and $2.6 million in proceeds from loans, partially offset by $0.3 million repayments of loans.
Previous wording
Our material cash requirements in the short- and long-term consist primarily of variable costs of revenue, operating expenditures, capital expenditures, property leases, and other spend. We plan to fund our material cash requirements with our existing cash and cash equivalents and short-term investments, which amounted to $143.7 million as of September 30, 2024, as well as anticipated cash receipts from customers. To fund our material cash requirements in the short- and long-term, we may also seek to sell additional common or preferred equity or convertible debt securities, enter into an additional credit facility or another form of third-party funding or seek other debt financing.
Current wording
Our material cash requirements in the short- and long-term consist primarily of variable costs of revenue, operating expenditures, capital expenditures, property leases, and other spend. We plan to fund our material cash requirements with our existing cash and cash equivalents and short-term investments, which amounted to $185.7 million as of March 31, 2025, as well as anticipated cash receipts from customers. To fund our material cash requirements in the short- and long-term, we may also seek to sell additional common or preferred equity or convertible debt securities, enter into an additional credit facility or another form of third-party funding or seek other debt financing.
Previous wording
Variable costs of revenue. From time to time in the ordinary course of business, we enter into agreements with vendors for the purchase of raw materials, laboratory supplies and consumables to be used in the sequencing of customer samples. However, we generally do not have binding and enforceable purchase orders beyond the short term, and the timing and magnitude of purchase orders beyond such period is difficult to accurately project. We currently expect spending in this area to be higher in 2024 relative to 2023 primarily to support future growth in sales of our clinical diagnostics tests.
Current wording
Variable costs of revenue. From time to time in the ordinary course of business, we enter into agreements with vendors for the purchase of raw materials, laboratory supplies and consumables to be used in the sequencing of customer samples. However, we generally do not have binding and enforceable purchase orders beyond the short term, and the timing and magnitude of purchase orders beyond such period is difficult to accurately project. We currently expect spending in this area to increase in 2025 in order to support the planned increase in clinical test volumes ahead of expected reimbursement.
Previous wording
Operating expenditures. Our primary use of cash relates to employee compensation, spend on professional services, spend related to research and development projects, and other costs to support our research and development, selling, general and administrative functions. We currently expect our spend in these areas to be lower in 2024 relative to 2023 as a result of our workforce reductions in 2023. On a long-term basis, we manage future cash requirements relative to our long-term business plans.
Current wording
Operating expenditures. Our primary use of cash relates to employee compensation, spend on professional services, spend related to research and development projects, and other costs to support our research and development and selling, general and administrative functions. We currently expect our spending in all of these areas to increase slightly above the levels in 2024. On a long-term basis, we manage future cash requirements relative to our long-term business plans.
Previous wording
Capital expenditures. Capital expenditures are expected to be lower in 2024 from 2023 levels as we completed our planned significant laboratory capacity additions in 2023. Going forward, our capital expenditures are expected to consist primarily of laboratory equipment and computer equipment. We currently expect capital expenditures to be approximately $1 million in 2024 and between $5 million to $6 million in each of the years 2025 and 2026.
Current wording
Capital expenditures. Capital expenditures are expected to increase from 2024 levels as we expect to expand NeXT Personal Dx capacity. Going forward, our capital expenditures are expected to consist primarily of laboratory equipment and computer equipment. We currently expect capital expenditures to be approximately $8.0 million in 2025 and between $7 million to $10 million in each of the years 2026 and 2027.
Previous wording
Property leases. Our noncancelable operating lease payments were $72.6 million as of September 30, 2024. The timing of these future payments, by year, can be found in Part I, Item 1 of this Form 10-Q in the Notes to Unaudited Consolidated Financial Statements in Note 7, “Leases.”
Current wording
Property leases. Our noncancelable operating lease payments were $68.4 million as of March 31, 2025. The timing of these future payments, by year, can be found in Note 7, Leases, in Part I, Item 1 of this Form 10-Q in the Consolidated Financial Statements.
Previous wording
Other. As of September 30, 2024, we have an outstanding noninterest bearing loan that was used to finance the purchase of equipment for our laboratory. We owe a total of $1.6 million, of which the majority is payable in 2025. Further discussion of the loan can be found in Part I, Item 1 of this Form 10-Q in the Notes to Unaudited Consolidated Financial Statements in Note 6, “Loans.”
Current wording
Other. As of March 31, 2025, we have an outstanding noninterest bearing loan that was used to finance the purchase of lab equipment and software licenses. We owe a total of $3.9 million, of which the majority is payable in the next twelve months. Further discussion of the loan can be found in Note 6, Loans, in Part I, Item 1 of this Form 10-Q in the Consolidated Financial Statements.
Previous wording
See the section titled “Summary of Significant Accounting Policies—Recent Accounting Pronouncements” in Note 2 to our unaudited consolidated financial statements for additional information.
Current wording
See the section titled “Recent Accounting Pronouncements” in Note 2, Summary of Significant Accounting Policies, in Part I, Item 1 of this Form 10-Q in the Consolidated Financial Statements for additional information.