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01/11 03:43
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call highlights several challenges: reduced revenue guidance, logistical delays, and increased expenses. Despite positive developments like new customer onboarding and potential Medicare reimbursement, the lowered guidance and uncertainties in timelines overshadow the positives. The Q&A session reveals cautious management responses and possible revenue delays into Q1. These factors, combined with increased cash usage and reduced gross margin projections, suggest a negative market reaction in the short term, likely leading to a stock price decline of -2% to -8%.
Revenue $14.5 million in Q3 2025, a 44% decrease compared to $25.7 million in Q3 2024. The decline was driven by a $4.6 million decrease from Natera, a $4.2 million decline from the VA MVP due to task order fulfillment in early 2025, and a $2.5 million decline from biopharma customers.
Biopharma Revenue $13.2 million in Q3 2025, a 16% decrease compared to $15.7 million in Q3 2024. The decline was primarily due to a $6.1 million decrease from Moderna's Phase III melanoma trial, partially offset by increased NeXT Personal MRD revenue.
Clinical Revenue $0.4 million in Q3 2025, compared to $0.3 million in Q3 2024, reflecting a slight increase.
Gross Margin 13.2% in Q3 2025, compared to 34% in Q3 2024. The 20.8% decrease was due to 44% lower revenue volume, reduced fixed cost absorption, and increased clinical test costs in advance of reimbursement.
Operating Expenses $25.2 million in Q3 2025, compared to $23.1 million in Q3 2024. The increase was attributed to higher selling expenses related to clinical test volume growth.
R&D Expense $12.2 million in Q3 2025, compared to $11.7 million in Q3 2024, reflecting a slight increase.
SG&A Expense $13 million in Q3 2025, compared to $11.4 million in Q3 2024, reflecting an increase due to selling expenses.
Net Loss $21.7 million in Q3 2025, compared to $39.1 million in Q3 2024. The prior year's net loss included a $26 million noncash expense related to warrants issued to Tempus.
Cash and Short-term Investments $150.5 million at the end of Q3 2025, with no significant debt other than small equipment loans.
NeXT Personal test: Delivered 4,388 clinical tests in Q3, a 26% sequential and 364% year-over-year growth. Capable of detecting one single fragment of tumor DNA in a million, enabling earlier detection of cancer recurrence and greater confidence in negative results.
CATE clinical trial: Launched in collaboration with Yale Cancer Center and Translational Breast Cancer Research Consortium to establish clinical utility for ctDNA-guided treatment in high-risk HR-positive HER2-negative breast cancer.
Market opportunity: The market for ultrasensitive cancer tests is expected to grow into a $20+ billion opportunity, with Personalis well-positioned to capture a significant share.
Physician adoption: Over 700 physicians are now ordering NeXT Personal, with high retention rates and growing clinical adoption.
Revenue performance: Q3 revenue was $14.5 million, exceeding estimates. Full-year revenue guidance adjusted to $68-$73 million due to biopharma project variability.
Operational scaling: Achieved primary volume target for the year ahead of schedule, now focusing on scaling operational and commercial foundations.
Win-in-MRD strategy: Focused on accelerating clinical adoption, driving reimbursement through clinical evidence, and leading with biopharma partnerships.
Reimbursement progress: Submitted lung cancer for coverage, with 3 dossiers under review by MolDX, targeting 2 coverage decisions in 2025.
Biopharma project timing variability: The timing of biopharma projects continues to show variability, leading to uneven revenue streams and impacting financial predictability.
Logistical delays in biopharma projects: Logistical delays unique to the quarter have impacted the timing of samples for several large projects, increasing revenue variability.
Decline in biopharma revenue: Biopharma revenue declined by 16% year-over-year, primarily due to the conclusion of Moderna's Phase III melanoma trial and other factors.
Gross margin decrease: Gross margin decreased to 13.2% from 34% year-over-year, driven by lower revenue volume and increased clinical test costs in advance of reimbursement.
Revenue decline from Natera and VA MVP: Revenue from Natera and VA MVP declined significantly due to the winding down of these businesses and fulfillment of prior task orders.
Unreimbursed clinical test costs: Investments in unreimbursed clinical test costs have impacted gross margins, with an 18% margin dilution in the third quarter.
Dependence on reimbursement approvals: Revenue from clinical tests is highly dependent on reimbursement approvals, which have not yet been obtained, leading to reduced revenue estimates.
Market conditions and spending environment: The uneven biopharma spending environment has persisted, creating challenges in securing consistent revenue streams.
Revenue Guidance: The company has revised its full-year 2025 revenue guidance to a range of $68 million to $73 million, down from the prior guidance of $70 million to $80 million. This adjustment reflects variability in biopharma project timelines and logistical delays impacting Q4 biopharma revenue.
Clinical Test Volume Growth: The company has achieved its annual target for clinical test volumes a quarter early, with over 4,388 tests delivered in Q3 2025. The focus for the rest of the year is on scaling operational and commercial foundations to prepare for Medicare coverage.
Reimbursement Goals: Personalis has submitted three dossiers for coverage with MolDX, targeting two coverage decisions by the end of 2025. The exact timing depends on MolDX review.
Market Opportunity: The market for ultrasensitive MRD tests is expected to grow into a $20+ billion opportunity, with Personalis well-positioned to capture a significant share.
Biopharma Revenue Growth: MRD biopharma revenue is projected to grow approximately 300% year-over-year, driven by strong demand for NeXT Personal in clinical trials.
Clinical Evidence and Trials: The company is launching the CATE clinical trial with Yale Cancer Center and the Translational Breast Cancer Research Consortium to establish clinical utility for ctDNA-guided treatment in high-risk breast cancer. Additionally, data from Phase III trials (NeoADAURA and LAURA) demonstrate the superiority of NeXT Personal in detecting MRD progression ahead of imaging.
Operational Scaling: Personalis is expanding its in-house sales force to complement its partnership with Tempus, ensuring readiness for the Medicare coverage inflection point.
The selected topic was not discussed during the call.
The earnings call highlights several challenges: reduced revenue guidance, logistical delays, and increased expenses. Despite positive developments like new customer onboarding and potential Medicare reimbursement, the lowered guidance and uncertainties in timelines overshadow the positives. The Q&A session reveals cautious management responses and possible revenue delays into Q1. These factors, combined with increased cash usage and reduced gross margin projections, suggest a negative market reaction in the short term, likely leading to a stock price decline of -2% to -8%.
The earnings call summary and Q&A indicate strong growth in MRD products, promising new indications, and strategic partnerships. Despite some challenges in the translational sector and policy headwinds, the company shows resilience with significant revenue growth and optimistic guidance. The Tempus partnership and expansion plans further support a positive outlook. While there are some uncertainties, the overall sentiment leans towards positive due to high growth rates, strategic positioning, and potential reimbursement achievements.
The earnings call presents a mixed outlook. While there is a significant increase in biopharma revenue and gross margin improvement, challenges such as competitive pressures, supply chain issues, and cash flow risks are concerning. The partnership with Moderna and potential future reimbursements offer positive long-term prospects, but the lack of a shareholder return plan and increased operating expenses weigh negatively. The Q&A section reveals cautious optimism but lacks concrete details on growth metrics. Overall, these factors balance each other out, leading to a neutral sentiment prediction for the stock price movement.
The earnings call indicates a positive sentiment with strong revenue growth, particularly in biopharma, and improved gross margins. The partnership with Moderna and high cash reserves further strengthen the outlook. Despite a net loss increase, the optimistic guidance and strategic focus on reimbursement and clinical evidence generation are promising. The Q&A session highlighted high retention and growth potential, though lacked some clarity on specifics. Overall, the positive elements outweigh the negatives, suggesting a likely stock price increase in the short term.
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