• Revenue: $25.7 million, up 41% year over year.
• BioPharma Revenue Growth: 96% increase year over year.
• Gross Margin: Expanded to 34% from 19.1% in the prior year.
• Operating Expenses: $23.1 million, down from $34.3 million in the prior year.
• Net Loss: $39.1 million, including a $26 million non-cash expense related to warrant accounting.
• Cash and Short-term Investments: $143.7 million at the end of Q3.
• Clinical Tests Delivered: 945 in Q3, a 68% increase from Q2.
• Full Year Revenue Guidance: Increased to $83 to $84 million.
• Cash Usage Guidance: Reduced to $53 to $55 million for the full year.

• Warning! GuruFocus has detected 8 Warning Signs with PSNL.

Release Date: November 06, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Personalis Inc (NASDAQ:PSNL) achieved a 41% year-over-year revenue increase in Q3 2024, reaching $25.7 million.
• The company's BioPharma business grew by 96% year-over-year, driven by strong demand for tumor profiling and MRD products.
• Personalis Inc (NASDAQ:PSNL) raised approximately $62 million in capital, ending Q3 with $143.7 million in cash, extending their cash runway into the first half of 2027.
• The company has a strong partnership with Tempus, which has over 200 representatives promoting their products, contributing to a 68% increase in clinical tests delivered in Q3.
• Personalis Inc (NASDAQ:PSNL) is making significant progress in clinical evidence and reimbursement efforts, with multiple studies submitted for peer review and potential reimbursement for two indications expected in 2025.

Negative Points

• Personalis Inc (NASDAQ:PSNL) reported a net loss of $39.1 million in Q3 2024, including a $26 million non-cash expense related to warrant exercises.
• The company expects a sequential decline in revenue for Q4 2024, with guidance set at $15 to $16 million, primarily due to reduced revenue from Moderna and Natera.
• Gross margins are impacted by unreimbursed clinical test costs, with potential headwinds of 15 to 18 percentage points expected in 2025.
• The company's reliance on a few key partnerships, such as with Moderna, poses a risk if these relationships do not continue to generate substantial revenue.
• Personalis Inc (NASDAQ:PSNL) is still awaiting reimbursement for their MRD tests, which could impact future revenue growth if delayed.

Q & A Highlights

Q: Can you discuss the rationale behind expanding the Tempus Agreement for Next Personal ahead of reimbursement and how you're managing the volume ramp? A: Christopher Hall, CEO, explained that the expansion allows more representatives to be trained and familiar with the product, positioning the company for explosive revenue growth post-reimbursement. Aaron Tachibana, CFO, added that Tempus exercised warrants and made additional investments to support this expansion, acknowledging the need for more capital before reimbursement.

Q: How are you thinking about gross margin cadence for 2025 as volumes from Next Personal ramp up? A: Aaron Tachibana noted that while formal guidance for 2025 hasn't been provided, the gross margin for 2024 is expected to be around 31-32%. However, unreimbursed test costs could create headwinds of 15-18 percentage points in 2025, potentially lowering gross margins.

Q: Did MRD or CGP revenues increase sequentially, and is there an opportunity for these revenues to grow before Medicare approval? A: Aaron Tachibana confirmed that both MRD and CGP revenues increased, with Moderna driving most of the increase. Christopher Hall added that MRD revenue from BioPharma is gaining traction, with buying cycles typically involving pilots and tests before full adoption, indicating potential growth before Medicare approval.

Q: How is Next Personal being received in the marketplace compared to other MRD tests, and how much education is needed for understanding the ultra-sensitive range? A: Christopher Hall stated that the ultra-sensitive range is well-received, with physicians appreciating the ability to detect low-level cancer traces. The retention rate is high, with over 90% of physicians continuing to use the test, indicating strong acceptance and understanding.

Q: With the Moderna Melanoma study largely enrolled, how should we think about the $100 million aspirational target for 2025? A: Christopher Hall acknowledged that the target was set with the understanding that the Melanoma study would be largely completed. The company remains committed to this target, with ongoing studies and new trials expected to support revenue growth.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.