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What changed in Personalis, Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Personalis, Inc.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+509 added−506 removedSource: 10-K (2026-02-26) vs 10-K (2025-02-27)

Top changes in Personalis, Inc.'s 2025 10-K

509 paragraphs added · 506 removed · 396 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

73 edited+22 added−17 removed70 unchanged
Biggest changeIf any of the physicians or other healthcare providers or entities with whom we do business is found to be not in compliance with applicable laws, they may be subject to significant criminal, civil or administrative sanctions, including exclusions from government-funded healthcare programs. 12 Table of Contents HIPAA and HITECH Under the administrative simplification provisions of HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act (“HITECH”), HHS issued regulations that establish uniform standards governing the conduct of certain electronic healthcare transactions and requirements for protecting the privacy and security of protected health information (“PHI”), used or disclosed by covered entities and business associates.
Biggest changeHIPAA and HITECH Under the administrative simplification provisions of HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act (“HITECH”), HHS issued regulations that establish uniform standards governing the conduct of certain electronic healthcare transactions and requirements for protecting the privacy and security of protected health information (“PHI”), used or disclosed by covered entities and business associates.
It delivers industry-leading, ultra-high sensitivity, which we believe allows for detection of cancer earlier than other technologies. NeXT Personal helps answer these questions: Who are the right patients to enroll into a clinical trial? How are patients responding to the investigational therapy? Can circulating tumor DNA ("ctDNA") potentially be used as an endpoint in clinical trials?
It delivers industry-leading, ultra-high sensitivity, which we believe allows for detection of cancer recurrence earlier than other technologies. NeXT Personal helps answer these questions: Who are the right patients to enroll into a clinical trial? How are patients responding to the investigational therapy? Can circulating tumor DNA ("ctDNA") potentially be used as an endpoint in clinical trials?
NeXT Dx NeXT Dx is a comprehensive tumor profiling test that is used to help select therapy for a cancer patient and identify potential clinical trials for a patient. It analyzes a patient’s exome and transcriptome with matched tumor-normal analysis. We believe it improves chances of finding an effective therapy or help a doctor find an appropriate clinical trial.
NeXT Dx® NeXT Dx is a comprehensive tumor profiling test that is used to help select therapy for a cancer patient and identify potential clinical trials for a patient. It analyzes a patient’s exome and transcriptome with matched tumor-normal analysis. We believe it improves the chances of finding an effective therapy or help a doctor find an appropriate clinical trial.
Under PAMA, laboratories that receive the majority of their Medicare revenue from payments made under the Medicare Clinical Laboratory Fee Schedule (the "Physician Fee Schedule") are required to report to CMS, beginning in 2017 and every three years thereafter (or annually for “advanced diagnostic laboratory tests”), private payor payment rates and volumes for their tests.
Under PAMA, laboratories that receive the majority of their Medicare revenue from payments made under the Physician Fee Schedule are required to report to CMS, beginning in 2017 and every three years thereafter (or annually for “advanced diagnostic laboratory tests”), private payor payment rates and volumes for their tests.
NeXT Personal Dx involves the initial whole genome sequencing of matched tumor and normal samples from a patient in order to create a personalized detection assay for that patient based on the biology of the patient's cancer and the subsequent use of that personalized assay to test one or more samples of the patient's blood/plasma.
NeXT Personal Dx involves the initial whole genome sequencing of matched tumor and normal samples from a patient in order to create a personalized detection assay for each patient based on the biology of the patient's cancer and the subsequent use of that personalized assay to test one or more of the patient's blood/plasma samples.
ImmunoID NeXT ImmunoID NeXT is a tissue-based service that combines whole exome and whole transcriptome sequencing data with advanced analytics to provide a multi-dimensional view of the tumor and the tumor microenvironment from a single sample. It is designed to enable the development of more efficacious cancer (immuno) therapies and the next-generation of composite biomarkers to better predict patient response.
ImmunoID NeXT® ImmunoID NeXT is a tissue-based test that combines whole exome and whole transcriptome sequencing data with advanced analytics to provide a multi-dimensional view of the tumor and the tumor microenvironment from a single sample. It is designed to enable the development of more efficacious cancer (immuno) therapies and the next-generation of composite biomarkers to better predict patient response.
If patents are issued on our pending patent applications, the resulting patents are projected to expire on dates ranging from 2033 to 2042. Supply of Materials We rely on a limited number of suppliers for sequencers and other equipment and raw materials that we use in our laboratory operations.
If patents are issued on our pending patent applications, the resulting patents are projected to expire on dates ranging from 2033 to 2045. Supply of Materials We rely on a limited number of suppliers for sequencers and other equipment and raw materials that we use in our laboratory operations.
The commercial success of our current and future products in both domestic and international markets may depend in part on the availability of coverage and adequate reimbursement from third-party payors, including government payors, such as the Medicare and Medicaid programs, managed care organizations, and other third-party payors.
The commercial success of our current and future services in both domestic and international markets may depend in part on the availability of coverage and adequate reimbursement from third-party payors, including government payors, such as the Medicare and Medicaid programs, managed care organizations, and other third-party payors.
To this end, one of our key strategies is 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 services in our key indications.
To this end, one of our key strategies is 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 testing services in our key indications.
On August 2, 2011, the Budget Control Act of 2011 was signed into law, which, among other things, reduced Medicare payments to providers by 2% per fiscal year, effective on April 1, 2013 and, due to subsequent legislative amendments to the statute, will remain in effect until 2032, unless additional Congressional action is taken.
Further on August 2, 2011, the Budget Control Act of 2011 was signed into law, which, among other things, reduced Medicare payments to providers by 2% per fiscal year, effective on April 1, 2013 and, due to subsequent legislative amendments to the statute, will remain until 2032, unless additional Congressional action is taken.
We believe that we compete favorably because of our differentiated technology, such as our ultra-sensitive approach for MRD that is able to detect cancer recurrence many months before imaging or other technologies, comprehensive data and variant calling we provide to our biopharmaceutical customers, high-quality results, and exceptional service.
We believe that we compete favorably because of our differentiated technology, such as our ultrasensitive approach for MRD that is able to detect cancer recurrence many months before imaging or other technologies, comprehensive data and variant calling we provide to our biopharmaceutical customers, high-quality results, and exceptional service.
Clinical Evidence and Reimbursement Generating clinical evidence is critical for driving adoption of our tests in the clinical market (i.e., for cancer patients) and establishing reimbursement by Medicare and private insurance companies.
Clinical Evidence and Reimbursement Generating clinical evidence is critical for driving adoption of our tests in the clinical diagnostic test market (i.e., for cancer patients) and establishing reimbursement by Medicare and private insurance companies.
The Medicare Access and CHIP Reauthorization Act of 2015, enacted on April 16, 2015 (“MACRA”), repealed the formula by which Medicare made annual payment adjustments to physicians and replaced the former formula with fixed annual updates, and established a quality payment incentive program, also referred to as the Quality Payment Program.
The Medicare Access and 13 Table of Contents CHIP Reauthorization Act of 2015, enacted on April 16, 2015 (“MACRA”), repealed the formula by which Medicare made annual payment adjustments to physicians and replaced the former formula with fixed annual updates, and established a quality payment incentive program, also referred to as the Quality Payment Program.
Segments We manage our business as one operating segment, which is providing advanced cancer genomic tests and services for precision oncology applications, personalized testing, and other tests. We derive revenue primarily in the United States and manage our business activities on a consolidated basis.
Segments We manage our business as one operating segment, which is to provide advanced cancer genomic testing services for precision oncology applications, personalized testing services, and other tests. We derive revenue primarily in the United States and manage our business activities on a consolidated basis.
Regulatory Environment Coverage and Reimbursement Our ability to commercialize diagnostic tests based on our technology will depend in large part on the extent to which coverage and reimbursement for our tests can be achieved. Coverage and reimbursement of new products and services is uncertain, and whether we can obtain coverage and adequate reimbursement is unknown.
Regulatory Environment Coverage and Reimbursement Our ability to commercialize diagnostic testing services based on our technology will depend in large part on the extent to which coverage and reimbursement for our testing services can be achieved. Coverage and reimbursement of new services is uncertain, and whether we can obtain coverage and adequate reimbursement is unknown.
For example, in March 2010, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act (collectively, the “ACA”), became law. This law substantially changed the way health care is financed by both commercial payors and government payors, and significantly impacted our industry.
For example, in March 2010, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act (the “ACA”), became law. This law substantially changed the way health care is financed by both commercial payors and government payors, and significantly impacts our industry.
In addition, the U.S. government, state legislatures and foreign governments have shown significant interest in implementing cost containment programs to limit the growth of government-paid healthcare costs. Additionally, the coverage and reimbursement status of newly-approved or cleared laboratory tests, including our NeXT Personal Dx offering, is uncertain.
In addition, the U.S. government, state legislatures and foreign governments have shown significant interest in implementing cost containment programs to limit the growth of government-paid healthcare costs. Additionally, the coverage and reimbursement status of newly authorized laboratory tests, including our NeXT Personal Dx offering, is uncertain.
Certain arrangements between clinical laboratories and referring physicians have been identified in fraud alerts issued by the OIG as implicating the Anti-Kickback Statute. Efforts to ensure that our business arrangements with third parties will comply with applicable healthcare laws and regulations will involve substantial costs.
Certain arrangements between clinical laboratories and referring physicians have been identified in fraud alerts issued by the OIG as implicating the Anti-Kickback Statute. Efforts to ensure that our business arrangements with third parties will comply with applicable 12 Table of Contents healthcare laws and regulations will involve substantial costs.
Therefore, compliance with a federal Anti-Kickback safe harbor does not guarantee protection under EKRA. Because EKRA is a new law, there is very little additional guidance to 11 Table of Contents indicate how and to what extent it will be interpreted, applied and enforced by the government.
Therefore, compliance with a federal Anti-Kickback safe harbor does not guarantee protection under EKRA. Because EKRA is a new law, there is very little additional guidance to indicate how and to what extent it will be interpreted, applied and enforced by the government.
CMS will use this data to calculate a weighted median payment rate for each 13 Table of Contents test, which will be used to establish revised Medicare reimbursement rates for the tests. Laboratories that fail to report the required payment information may be subject to substantial civil monetary penalties.
CMS will use this data to calculate a weighted median payment rate for each test, which will be used to establish revised Medicare reimbursement rates for the tests. Laboratories that fail to report the required payment information may be subject to substantial civil monetary penalties.
On January 31, 2024, FDA announced its intent to initiate a reclassification process for most IVDs that are currently Class III (high risk), the majority of which are infectious disease and companion diagnostic IVDs, into Class II (moderate risk).
On January 31, 2024, FDA announced its intent to initiate a reclassification process for most IVDs that are currently Class III (high risk), the majority of which are infectious disease and companion diagnostic IVDs, into Class II (moderate risk) with certain special controls.
The FDA regulates, among other things, the research, design, development, pre-clinical and clinical testing, manufacturing, safety, effectiveness, packaging, labeling, storage, recordkeeping, pre-market clearance or approval, adverse event reporting, marketing, promotion, sales, distribution, and import and export of medical devices.
The FDA regulates, among other things, the research, design, development, pre-clinical and clinical testing, manufacturing, safety, effectiveness, packaging, labeling, storage, recordkeeping, pre-market authorization, adverse event reporting, marketing, promotion, sales, distribution, and import and export of medical devices.
We also use our and our Chief Executive Officer's X (formerly Twitter) accounts (@personalisinc; @C_HallBiotech) and our Chief Executive Officer’s LinkedIn accounts (https://www.linkedin.com/company/personalis-inc/; https://www.linkedin.com/in/christopher-hall-a982a0/) as channels of distribution for important company information.
We also use our X (formerly Twitter) and LinkedIn accounts (@personalisinc and https://www.linkedin.com/company/personalis-inc/, respectively) and those of our Chief Executive Officer (@C_HallBiotech and https://www.linkedin.com/in/christopher-hall-a982a0/, respectively) as channels of distribution for important company information.
The use of independent contractors is not a material part of our workforce strategy. Environment We are in compliance with the regulations established by the state of California Division of Occupational Safety and Health Requirements, and California Environmental Protection Agency applicable to our operations based in Fremont, California.
We consider our relations with our employees to be good. The use of independent contractors is not a material part of our workforce strategy. Environment We are in compliance with the regulations established by the state of California Division of Occupational Safety and Health Requirements, and California Environmental Protection Agency applicable to our operations based in Fremont, California.
Regulatory framework for medical devices in the United States Pursuant to its authority under the Federal Food, Drug and Cosmetic Act (“FDC Act”), the U.S. Food and Drug Administration (“FDA") has jurisdiction over medical devices, which are defined to include, among other things, in vitro diagnostic devices (“IVDs”).
Regulatory framework for medical devices in the United States Pursuant to its authority under the Federal Food, Drug and Cosmetic Act (“FDC Act”), the FDA has jurisdiction over medical devices, which are defined to include, among other things, in vitro diagnostic devices (“IVDs”).
Our turnover rates over the last three years have been consistent with such benchmarks. Reports of our position relative to the benchmarks are reported to management and the compensation committee of our board of directors on a periodic basis. As of January 31, 2025, we had 229 employees, of which 228 were full-time employees.
Our turnover rates over the last three years have been consistent with such benchmarks. Reports of our position relative to the benchmarks are reported to management and the compensation committee of our board of directors on a periodic basis. As of January 31, 2026, we had 260 employees, of which 259 were full-time employees.
In the U.S., there is no uniform policy for determining coverage and reimbursement. Coverage can differ from payor to payor, and the process for determining whether a payor will provide coverage is 8 Table of Contents separate from the process for setting the reimbursement rate.
In the U.S., there is no uniform policy for determining coverage and reimbursement. Coverage can differ from payor to payor, and the process for determining whether a payor will provide coverage is separate from the process for setting the reimbursement rate.
We are committed to evaluating our compliance with such regulations on a recurring basis. 14 Table of Contents Available Information Our website is located at https://www.personalis.com.
We are committed to evaluating our compliance with such regulations on a recurring basis. Available Information Our website is located at https://www.personalis.com.
The FDA has broad post-market enforcement powers, and if unanticipated problems with our products arise, or if we or our suppliers fail to comply with regulatory requirements following FDA clearance or approval, we may become subject to enforcement actions such as: • restrictions on manufacturing processes; • restrictions on product marketing; • warning letters; • withdrawal or recall of products from the market; 10 Table of Contents • refusal to approve pending PMAs, 510(k)s, or supplements to approved PMAs or cleared 510(k)s that we submit; • fines, restitution, or disgorgement of profits or revenue; • suspension or withdrawal of regulatory clearances or approvals; • limitation on, or refusal to permit, import or export of our products; • product seizures; • injunctions; or • imposition of civil or criminal penalties.
The FDA has broad post-market enforcement powers, and if unanticipated problems with our tests arise, or if we or our suppliers fail to comply with regulatory requirements following FDA marketing authorization, we may become subject to enforcement actions such as: • restrictions on manufacturing processes; • restrictions on marketing of our tests; • warning letters; • withdrawal or recall of our tests from the market; • refusal to provide marketing authorization for pending PMAs, De Novo authorization requests, 510(k)s, or supplements to approved PMAs, authorized De Novo requests, or cleared 510(k)s that we submit; • fines, restitution, or disgorgement of profits or revenue; • suspension or withdrawal of regulatory clearances or approvals; • limitation on, or refusal to permit, import or export of our tests; • seizures; • injunctions; or • imposition of civil or criminal penalties.
As of December 31, 2024, we own 30 issued U.S. patents and 16 issued foreign patents. Issued U.S. patents in our portfolio of company-owned patents are expected to expire between 2033 and 2038, excluding any additional term for patent term adjustments or patent term extensions.
As of December 31, 2025, we own 36 issued U.S. patents and 26 issued foreign patents. Issued U.S. patents in our portfolio of company-owned patents are expected to expire between 2033 and 2042, excluding any additional term for patent term adjustments or patent term extensions.
Class III devices are subject to general controls and special controls, and also require premarket approval prior to commercial distribution, which is a more rigorous process than premarket clearance.
Class III devices are subject to general controls and also require premarket approval prior to commercial distribution, which is a more rigorous process than the De Novo authorization or clearance process.
Unless an exemption applies, each new or significantly modified medical device we seek to commercially distribute in the United States will require either a premarket notification to the FDA requesting permission for commercial distribution under Section 510(k) of the FDC Act, also referred to as a 510(k) clearance, or approval from the FDA of a premarket approval application (“PMA”).
Unless an exemption applies, each new or significantly modified medical device we may seek to commercially distribute in the United States will require either a premarket notification to the FDA requesting permission for commercial distribution under Section 510(k) of the FDC Act, also referred to as a 510(k) clearance, de novo classification under Section 513(f)(2) of the FDC Act, or approval 9 Table of Contents from the FDA of a premarket approval application (“PMA”) under Section 515(c) of the FDC Act.
If the FDA were to require clearance, approval or authorization for the sale of Illumina’s RUO products and if Illumina does not obtain such clearance, approval or authorization, we would have to find an alternative sequencing platform for some or all of our clinical diagnostic tests.
If the FDA were to require marketing authorization for the sale of Illumina’s RUO products and if Illumina does not obtain such marketing authorization, we would have to find an alternative sequencing platform for some or all of our test services.
We would also be subject to ongoing regulatory requirements such as registration and listing requirements, medical device reporting requirements, and quality control requirements. The regulatory requirements to which our tests are subject would depend on the FDA’s classification of our tests.
We would also be subject to ongoing regulatory requirements such as registration and listing requirements, labeling requirements, medical device reporting requirements, and current good manufacturing practice requirements. The regulatory requirements to which our tests are subject would depend on the FDA’s classification of our tests.
Part 820, which requires manufacturers to follow elaborate design, testing, control, documentation, and other quality assurance procedures during the manufacturing process; the medical device reporting regulation, which requires that manufacturers report to the FDA if their device or a similar device they market may have caused or contributed to a death or serious injury or malfunctioned in a way that would likely cause or contribute to a death or serious injury if it were to recur; labeling regulations, including the FDA’s general prohibition against promoting products for unapproved or “off-label” uses; the reports of corrections and removals regulation, which requires manufacturers to report to the FDA if a device correction or removal was initiated to reduce a risk to health posed by the device or to remedy a violation of the FDC Act caused by the device which may present a risk to health; and the establishment registration and device listing regulation.
Part 820, which took effect on February 2, 2026, and requires manufacturers to follow elaborate design, testing, control, documentation, and other quality assurance procedures during the manufacturing process; the medical device reporting regulation, which requires that manufacturers report to the FDA if their device or a similar device they market may have caused or contributed to a death or serious injury or malfunctioned in a way that would likely cause or contribute to a death or serious injury if it were to recur; labeling regulations, including the FDA’s general prohibition against promoting products for unapproved or “off-label” uses; the reports of corrections and removals regulation, which requires manufacturers to report to the FDA if a device correction or removal was initiated to reduce a risk to health posed by the device or to remedy a violation of the FDC Act caused by the device which may present a risk to health; and the establishment registration and device listing regulation. 10 Table of Contents In addition, any marketing authorization that we may obtain for our tests may contain requirements for costly post-market testing and surveillance to monitor the safety or effectiveness of the tests.
As of January 31, 2025, more than 40% of our employees had completed a Ph.D. or other advanced science or medical degree. None of our employees are represented by a labor union or covered by collective bargaining agreements, and we have not experienced any labor work stoppages. We consider our relations with our employees to be good.
As of January 31, 2026, more than 40% of our employees had completed a Ph.D. or other advanced science or medical degree. 14 Table of Contents None of our employees are represented by a labor union or covered by collective bargaining agreements, and we have not experienced any labor work stoppages.
If the FDA determines that our tests and associated software do not fall within the definition of an LDT, or there are other regulatory or legislative changes, or if we voluntarily submit one or more of our tests for premarket notification, review, clearance or approval by the FDA as medical devices, we may be required to obtain premarket clearance for our tests and associated software under Section 510(k) of the FDC Act or approval of a PMA.
If the FDA determines that the tests and associated software used in our testing services do not fall within the definition of an LDT, or there are other regulatory or legislative changes, or if we voluntarily submit one or more of our tests for premarket notification, review, and marketing authorization by the FDA as medical devices, we may be required to obtain premarket authorization for our tests and associated software under Section 510(k), 513(f)(2), or 515(c) of the FDC Act.
The FDA has issued regulations classifying medical devices into one of three regulatory control categories (Class I, Class II, or Class III) depending on the degree of regulation that the FDA finds necessary to provide reasonable assurance of their safety and effectiveness.
The FDA has issued regulations classifying medical devices into one of three classes (Class I, Class II, or Class III) depending on risk of the device for use as intended and the degree of regulation that the FDA finds necessary to provide reasonable assurance of their safety and effectiveness.
ImmunoID NeXT helps answer these questions: What are the markers and composite biomarkers in the tumor and the tumor microenvironment that contribute to therapy response and resistance? What are the neoantigens in the tumor that can be used in individualized neoantigen therapy (INT)?
ImmunoID NeXT helps answer these questions: What are the markers and composite biomarkers in the tumor and the tumor microenvironment that contribute to therapy response and resistance?
NeXT Personal Dx helps answer these questions: Does the patient still have cancer after curative intent treatment? How is the patient's cancer responding to therapy? And, importantly, has the cancer potentially recurred?
NeXT Personal Dx helps answer these questions: Does the patient still have cancer after curative intent treatment? How is the patient's cancer responding to therapy? Has the cancer potentially recurred? And if so, are any resistance mutations and targetable mutations present?
The process for submitting and obtaining FDA approval of a PMA is much more costly, lengthy, and uncertain. It generally takes from one to three years or even longer and approval is not guaranteed. PMA approval typically requires extensive clinical data and can be significantly longer, more expensive and more uncertain than the 510(k) clearance process.
It generally takes from one to three years or even longer and approval is not guaranteed. PMA approval typically requires extensive clinical data and can be significantly longer, more expensive and more uncertain than the De Novo authorization or 510(k) clearance process.
Of these full-time employees, 83 were in research and development, 67 in laboratory operations, 40 in commercial operations and 38 in general and administrative functions. 226 of our full-time employees were located in the United States, with the remaining two located in Europe (including the U.K.).
Of these full-time employees, 91 were in research and development, 73 in laboratory operations, 52 in commercial operations and 43 in general and administrative functions. 257 of our full-time employees were located in the United States, with the remaining two located in Europe (including the U.K.).
VA MVP accounted for 9% and 13% of our revenue for the years ended December 31, 2024 and 2023, respectively. Our top five customers, including the VA MVP, Moderna and Natera, accounted for 81% and 74% of our revenue for the years ended December 31, 2024 and 2023, respectively.
Natera accounted for 8% and 30% of our revenue for the years ended December 31, 2025 and 2024, respectively. Our top five customers, including Moderna, the VA MVP and Natera, accounted for 62% and 81% of our revenue for the years ended December 31, 2025 and 2024, respectively.
The principal markets for our products are in the United States, Europe (including the U.K.), and rest of the world, including Asia-Pacific, which accounted for 96%, 3%, and 1%, respectively, of our revenue for the year ended December 31, 2024.
The principal markets for our testing services are the United States, Europe (including the U.K.), and rest of the world, including Asia-Pacific, which accounted for 90%, 9%, and 1%, respectively, of our revenue for the year ended December 31, 2025.
In December 2024, we agreed to expand the relationship to include biopharma industry customers. Under this expanded relationship, Tempus can offer our NeXT Personal MRD product to pharmaceutical and biotech customers who wish to bundle our tumor-informed MRD testing with other Tempus offerings in a given study.
Under this expanded relationship, Tempus can offer our NeXT Personal MRD testing service to pharmaceutical and biotech customers who wish to bundle our tumor-informed MRD testing with other Tempus offerings in a given study.
Additionally, several companies develop next-generation sequencing platforms that can be used for genomic profiling for biopharmaceutical research and development applications. These include Illumina, Inc. ("Illumina"), Thermo Fisher Scientific Inc., and other organizations that specialize in the development of next-generation sequencing instrumentation that can be sold directly to biopharmaceutical companies, clinical laboratories, and research centers.
("Illumina"), Thermo Fisher Scientific Inc., and other organizations that specialize in the development of next-generation sequencing instrumentation that can be sold directly to biopharmaceutical companies, clinical laboratories, and research centers.
Certain of these changes could impose additional limitations on the prices we will be able to charge for our tests, the coverage of or the amounts of reimbursement available for our tests from payors, including commercial payors and government payors. Human Capital We recognize that our employees are both our most valuable asset and our most important investment.
Certain of these changes could impose additional limitations on the prices we will be able to charge for our tests, the coverage of or the amounts of reimbursement available for our tests from payors, including commercial payors and government payors.
We perform our testing services in a large-scale, high quality, Clinical Laboratory Improvement Amendments of 1988 ("CLIA") certified and College of American Pathologists (“CAP”) accredited, laboratory located in our 100,000 square foot headquarters in Fremont, California.
We perform our testing services in a large-scale, high-quality, Clinical Laboratory Improvement Amendments of 1988 ("CLIA") certified and College of American Pathologists (“CAP”) accredited, laboratory located in our 100,000 square foot headquarters in Fremont, California. We were incorporated under the laws of the state of Delaware in 2011 under the name Personalis, Inc. and became a publicly-traded company in 2019.
The ACA contained a number of provisions expected to impact the clinical laboratory industry, such as changes governing enrollment in state and federal health care programs, reimbursement changes, and fraud and abuse.
The ACA contains a number of provisions that are expected to impact the clinical laboratory industry, such as changes governing enrollment in state and federal health care programs, reimbursement changes, and fraud and abuse. There have been executive, judicial and Congressional challenges and amendments to certain aspects of the ACA.
The Eliminating Kickbacks in Recovery Act The Eliminating Kickbacks in Recovery Act of 2018 (“EKRA”) prohibits payments for referrals to recovery homes, clinical treatment facilities, and laboratories and is similar to the federal Anti-Kickback Statute in that it creates criminal penalties for knowing or willful payment or offer, or solicitation or receipt, of any remuneration, whether directly or indirectly, overtly or covertly, in cash or in kind, in exchange for the referral or inducement of laboratory testing unless a specific exception applies.
We must also operate within the bounds of the fraud and abuse laws of the states in which we do business which may apply to items or services reimbursed by non-governmental third-party payors, including private insurers. 11 Table of Contents The Eliminating Kickbacks in Recovery Act The Eliminating Kickbacks in Recovery Act of 2018 (“EKRA”) prohibits payments for referrals to recovery homes, clinical treatment facilities, and laboratories and is similar to the federal Anti-Kickback Statute in that it creates criminal penalties for knowing or willful payment or offer, or solicitation or receipt, of any remuneration, whether directly or indirectly, overtly or covertly, in cash or in kind, in exchange for the referral or inducement of laboratory testing unless a specific exception applies.
Anderson Cancer Center; University Medical Center Hamburg-Eppendorf (also known as UKE); and Criterium and the Academic Breast Cancer Consortium. Furthermore, generating clinical evidence is crucial to obtaining reimbursement coverage from Medicare and other payors.
Anderson Cancer Center; University Medical Center Hamburg-Eppendorf (also known as UKE); Criterium and the Academic Breast Cancer Consortium; Yale Cancer Center; Aarhus University; British Columbia Cancer; and University Health Network, that will focus on building the evidence-base for our technology and these indications. Furthermore, generating clinical evidence is crucial to obtaining reimbursement coverage from Medicare and other private payors.
It is possible for a manufacturer to obtain a Class I or Class II designation without an appropriate predicate by submitting a de novo request for reclassification. The process for submitting a 510(k) premarket notification and receiving FDA clearance usually takes from three to 12 months, but it can take significantly longer and clearance is never guaranteed.
The process for submitting a 510(k) premarket notification and receiving FDA clearance usually takes from three to 12 months, but it can take significantly longer and clearance is never guaranteed.
For cancer patients NeXT Personal Dx NeXT Personal Dx is a tumor-informed liquid biopsy test for the detection of MRD. We believe NeXT Personal Dx is the first ultra-sensitive test on the market to detect MRD and monitor therapy response in patients with solid tumor cancers.
We believe NeXT Personal Dx, which was introduced in the fourth quarter of 2023, is the first ultrasensitive test on the market to detect MRD and monitor therapy response in patients with solid tumor cancers.
Both the 510(k) clearance and PMA processes can be resource intensive, expensive, and lengthy, and require payment of significant user fees.
These premarket review processes can be resource intensive, expensive, and lengthy, and require payment of significant user fees.
Generally, Class I devices do not require premarket authorization, but are subject to a comprehensive set of regulatory authorities referred to as general controls. Class II devices, in addition to general controls, generally require special controls and premarket clearance through the submission of a section 510(k) premarket notification.
Generally, Class I devices do not require premarket authorization, but are subject to a comprehensive set of regulatory requirements referred to as general controls.
The FDA requires medical device manufacturers to comply with, among other things, current good manufacturing practices for medical devices, set forth in the Quality System Regulation at 21 C.F.R.
Despite the time, effort and expense expended, there can be no assurance that a particular device ultimately will receive marketing authorization from the FDA. The FDA requires medical device manufacturers to comply with, among other things, current good manufacturing practices for medical devices, set forth in the Quality Management System Regulation at 21 C.F.R.
For diagnostics companies and population sequencing initiatives WES We perform whole exome sequencing ("WES") of cancer tissue and matched blood samples for diagnostic companies as an input to their products. 6 Table of Contents WGS We perform whole genome sequencing ("WGS") on human samples for research projects, such as population sequencing initiatives.
What are the neoantigens in the tumor that can be used in individualized neoantigen therapy (INT)? 6 Table of Contents For diagnostics companies and population sequencing initiatives WES We perform whole exome sequencing ("WES") of cancer tissue and matched blood samples for diagnostic companies as an input to their products.
(“Foresight”), Foundation Medicine, Inc., Freenome, Inc., Fulgent Genetics, Inc., Geneseeq Technology Inc., GRAIL, Inc., Guardant Health, Inc., Haystack Oncology, Inc., which was acquired by Quest Diagnostics Incorporated in June 2023, Laboratory Corporation of America Holdings, MedGenome Inc., Myriad Genetics, Inc., Natera, Inc. ("Natera"), NeoGenomics, Inc., Novogene Corporation, Predicine, Inc., Roche Molecular Systems, Inc., SAGA Diagnostics AB, Tempus, and Veracyte, Inc.
(“Natera”) in December 2025, Foundation Medicine, Inc., GRAIL, Inc., Guardant Health, Inc., Haystack Oncology, Inc., which was acquired by Quest Diagnostics Incorporated in June 2023, Laboratory Corporation of America Holdings, MedGenome Inc., Myriad Genetics, Inc.
We estimate that approximately half of new solid tumor cancer cases will be diagnosed in patients covered by Medicare. Competition Our principal competition comes from commercial and academic organizations that employ various approaches to produce information that is similar to the information that we generate for our customers.
Competition Our principal competition comes from commercial and academic organizations that employ various approaches to produce test results or information that is similar to what we generate for our patients and customers.
We protect our research and development investments, inventions, and unique processes by relying on a combination of patents, trademarks, copyrights, trade secrets, know-how, confidentiality agreements and procedures, non-disclosure agreements with third parties, employee disclosure and invention assignment agreements, and other contractual rights. 7 Table of Contents Our patent strategy is focused on seeking coverage for our core technology, our NeXT platform, including applications and implementations for enhancing sequencing coverage of certain genomic regions, identifying neoantigens, analyzing cell-free nucleic acids, and creating personalized cancer recurrence detection assays.
We protect our research and development investments, inventions, and unique processes by relying on a combination of patents, trademarks, copyrights, trade secrets, know-how, confidentiality agreements and procedures, non-disclosure agreements with third parties, employee disclosure and invention assignment agreements, and other contractual rights.
NeXT Dx helps answer the question: What are the tumor mutations with actionable therapies and clinical trials for the patient?
NeXT Dx helps answer the question: What are the tumor mutations with actionable therapies and clinical trials for the patient? For pharmaceutical and biopharmaceutical companies NeXT Personal NeXT Personal is a tumor-informed liquid biopsy test for detection of MRD and recurrence monitoring, in solid tumor cancers.
Because of the ultra-high sensitivity of our technology, we are initially focusing on three indications: breast cancer, lung cancer, and immunotherapy (IO) monitoring.
Because of the ultra-high sensitivity of our technology, we are initially focusing on three indications: breast cancer, lung cancer, and immunotherapy (IO) monitoring, where early-stage cancer recurrence historically has been difficult to detect. At this time, we are beginning to expand into other indications including colorectal cancer (CRC), cervical, and others.
One of our 2025 goals is to submit for Medicare reimbursement for NeXT Personal Dx upon publication of compelling clinical evidence, and receive Medicare coverage, in at least two of our three key indications. In January 2024, we received a final Medicare coverage determination for our NeXT Dx offering, extended retroactively to August 29, 2023.
One of our 2025 goals was to submit for Medicare reimbursement for NeXT Personal Dx upon publication of compelling clinical evidence and receive Medicare coverage.
Some of our present or potential competitors include Adela, Inc., BostonGene Corporation, Caris Life Sciences, Inc., DELFI Diagnostics, Inc., Exact Sciences Corporation, Foresight Diagnostics Inc.
Some of our present or potential competitors include Adela, Inc., Caris Life Sciences, Inc., DELFI Diagnostics, Inc., Exact Sciences Corporation, which it is expected to be acquired by Abbott Laboratories, Inc., in the second quarter of 2026, Foresight Diagnostics Inc. (“Foresight”), which was acquired by Natera, Inc.
We currently market our diagnostic tests as LDTs. On April 29, 2024, the FDA published final regulations to make explicit that IVD products are devices under the FDC Act, removing much of the FDA’s historical enforcement discretion for most LDTs.
We currently market our diagnostic test services as LDTs. On May 6, 2024, the FDA published a final rule on the regulation of LDTs, which amended the FDA regulations under 21 CFR Part 809 to make explicit that LDTs are devices under the FDC Act.
Customer Concentration We currently derive a significant portion of our revenue from Moderna, Inc. ("Moderna") by providing genomic testing in its ongoing clinical trials evaluating a personalized cancer therapy and Natera, Inc. ("Natera") under our partnership to provide advanced tumor analysis for use in Natera's MRD testing offerings.
As other technologies and platforms become available, we intend to evaluate them for potential use. Customer Concentration We currently derive a significant portion of our revenue from Moderna by providing genomic testing in its ongoing clinical trials for its personalized cancer therapy and the VA MVP, which is a large-scale population sequencing initiative.
It is unclear how any such challenges and the health reform measures of the current administration will impact the ACA. Other legislative changes have been proposed and adopted since the ACA was enacted.
It is possible that the ACA will be subject to judicial or Congressional challenges in the future. It is unclear how any such challenges and the health reform measures of the current administration will impact the ACA.
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.
Item 1. Bu siness. Company Background Personalis develops, markets, and sells advanced cancer genomic testing services. Our testing services are used by physicians to detect residual or recurrent cancer in patients, monitor cancer response to therapy, and uncover insights for therapy selection.
Item 1. Bu siness. Company Background Personalis develops, markets, and sells 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 testing services are used by pharmaceutical companies for translational research, biomarker discovery, the development of personalized cancer therapies, and clinical trials. We also provide whole exome sequencing services for other diagnostic companies and whole genome sequencing services for population sequencing initiatives.
Markets and Distribution Our customers include pharmaceutical companies, biopharmaceutical companies, diagnostics companies, universities, non-profits, government entities, and patients. We sell through a small direct sales force, organized by geography. In November 2023, we entered into an agreement with Tempus AI, Inc. ("Tempus") to co-commercialize NeXT Personal Dx in the clinical diagnostics market.
WGS We perform whole genome sequencing ("WGS") on human samples for research projects, such as population sequencing initiatives. Markets and Distribution Our customers include global pharmaceutical companies, biopharmaceutical companies, diagnostics companies, universities, non-profits, government entities, and cancer patients. We sell through a small direct sales force, organized by geography.
We were incorporated under the laws of the state of Delaware in 2011 under the name Personalis, Inc. and became a publicly-traded company in 2019. Products For pharmaceutical and biopharmaceutical companies NeXT Personal NeXT Personal is a tumor-informed liquid biopsy test for detection of minimal residual disease ("MRD"), therapy response and recurrence monitoring, in solid tumor cancers.
Testing Services For cancer patients NeXT Personal® Dx NeXT Personal Dx is a tumor-informed liquid biopsy test for the detection of minimal residual disease ("MRD") and recurrence monitoring.
Natera accounted for 30% and 43% and Moderna accounted for 28% and 5% of our revenue for the years ended December 31, 2024 and 2023, respectively. We previously derived a significant portion of our revenue from the U.S. Department of Veterans Affairs Million Veteran Program ("VA MVP"), which is a large-scale population sequencing initiative.
Moderna accounted for 22% and 28% and the VA MVP accounted for 17% and 9% of our revenue for the years ended December 31, 2025 and 2024, respectively. 8 Table of Contents We previously derived a significant portion of our revenue from Natera under our partnership to provide advanced tumor analysis for use in Natera's MRD testing.
The success of our organization is reliant upon each individual’s significant contribution to our corporate culture and goals.
Therefore, even if favorable coverage and reimbursement status is attained, less favorable coverage policies and reimbursement rates may be implemented in the future. Human Capital We recognize that our employees are both our most valuable asset and our most important investment. The success of our organization is reliant upon each individual’s significant contribution to our corporate culture and goals.
Removed
In conjunction with this final rule, the FDA proposed to phase out its general enforcement discretion approach for LDTs so that IVDs manufactured by a laboratory would generally fall under the same enforcement approach as other IVDs.
Added
In the first quarter of 2026, we introduced a new feature to our ultrasensitive test called Real-Time Variant Tracker™, and this capability is intended to provide clinicians with additional reporting of detected resistance-associated mutations and therapeutically targetable mutations that can potentially inform new opportunities to optimize patient management of disease.
Removed
This final rule also provides that FDA intends to exercise enforcement discretion and generally not enforce premarket review and quality system requirements (except for requirements under Part 820, subpart M (records)) for currently marketed IVDs offered as LDTs that were first marketed prior to April 29, 2024 and intends to exercise enforcement discretion and generally not enforce premarket review requirements for LDTs approved by the New York State Clinical Lab Evaluation Program (“NYS CLEP”).
Added
In addition, NeXT Personal can be used as a potential Clinical Trial Assay (CTA) to help select patients for a prospective Phase 2 or a Phase 3 trial for a new drug. Should these trials be successful then NeXT Personal may be approved by the FDA as a Companion Diagnostics test for that new drug.
Removed
Additionally, pursuant to the final rule, the FDA will gradually end its general enforcement discretion approach in five stages over a four-year period for other LDTs not approved by NYS CLEP and not already on market. Each stage of the proposed phaseout period would subject LDTs to a set of regulatory requirements.
Added
In November 2023, we entered into an agreement with Tempus to co-commercialize NeXT Personal Dx in the clinical diagnostics market. In December 2024, we agreed to expand the relationship to include biopharma industry customers.
Removed
If the FDA determines that our tests are subject to enforcement as medical devices, we could be subject to enforcement action, including administrative and judicial sanctions, and additional regulatory controls and submissions for our tests, all of which could be 9 Table of Contents burdensome.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeApplicable data privacy and security obligations, including applicable federal and/or state breach notification laws and foreign equivalents, as well as public company disclosure obligations, may require us, or we may voluntarily choose, to notify relevant stakeholders, including affected individuals, regulatory authorities and our stockholders, of certain security incidents or to take other actions, such as providing credit monitoring and identity theft protection services.
Biggest changeSee “— If our information technology systems or data, or those of third parties with whom we work or our data, are or were compromised, we could experience adverse consequences resulting from such compromise, including but not limited to regulatory investigations or actions; litigation; fines and penalties; disruptions of our business operations; reputational harm; loss of revenue or profits; loss of customers or sales; and other adverse consequences.” We are not aware of any unauthorized access to our financial systems or records. 34 Table of Contents Applicable data privacy and security obligations, including applicable federal and/or state breach notification laws and foreign equivalents, as well as public company disclosure obligations, may require us, or we may voluntarily choose, to notify relevant stakeholders, including affected individuals, regulatory authorities and our stockholders, of certain security incidents or to take other actions, such as providing credit monitoring and identity theft protection services.
In addition, competitors may develop their own versions of our current or planned future services and products in countries where we did not apply for or receive patents and compete with us in those countries, including encouraging the use of their products or services by biopharmaceutical companies in other countries.
In addition, competitors may develop their own versions of our current or planned future services in countries where we did not apply for or receive patents and compete with us in those countries, including encouraging the use of their products or services by biopharmaceutical companies in other countries.
Furthermore, our customers may decide to decrease or discontinue their use of our services due to changes in research and product development plans (including as a result of a public health crisis), failures in their clinical trials (which failures are statistically much more likely to occur than not at some point in the clinical development process, notwithstanding any enhanced patient stratification from the use of our proprietary tests and algorithms), financial constraints, or utilization of internal testing resources or tests performed by other parties, or other circumstances outside of our control.
Furthermore, our customers may decide to decrease or discontinue their use of our testing services due to changes in research and product development plans (including as a result of a public health crisis), failures in their clinical trials (which failures are statistically much more likely to occur than not at some point in the clinical development process, notwithstanding any enhanced patient stratification from the use of our proprietary tests and algorithms), financial constraints, or utilization of internal testing resources or tests performed by other parties, or other circumstances outside of our control.
If our information technology systems or data, or those of third parties with whom we work, are or were compromised, we could experience adverse consequences resulting from such compromise, including but not limited to regulatory investigations or actions; litigation; fines and penalties; disruptions of our business operations; reputational harm; loss of revenue or profits; loss of customers or sales; and other adverse consequences.
If our information technology systems or data, or those of third parties with whom we work or our data, are or were compromised, we could experience adverse consequences resulting from such compromise, including but not limited to regulatory investigations or actions; litigation; fines and penalties; disruptions of our business operations; reputational harm; loss of revenue or profits; loss of customers or sales; and other adverse consequences.
Such litigation or proceedings could substantially increase our operating losses and reduce the resources available for development activities or any future sales, marketing, or distribution activities. We may not have sufficient financial or other resources to conduct such litigation or proceedings adequately.
Such litigation or proceedings could substantially increase our operating losses and reduce the resources available for development activities or any future sales, marketing, or distribution activities. We may not have sufficient financial or other resources to conduct such litigation or proceedings adequately.
Collaborations are subject to numerous risks, which include that: • we may incur increased research and development expenses, and such activities may also divert management attention and resources and/or create competing internal priorities for us, which could prevent us from successfully conducting other parts of our business or collaborating with others; • collaborators have significant discretion in determining the efforts and resources that they will apply to collaborations; • collaborators may not pursue development and commercialization of our services or products or may elect not to continue or renew development or commercialization programs based on trial or test results, changes in their strategic focus due to the acquisition of competitive services or products, availability of funding, or other external factors, such as a business combination that diverts resources or creates competing priorities for our collaborator; • collaborators could independently develop, or develop with third parties, services or products that compete directly or indirectly with our services or products; • collaborators with marketing, manufacturing, and distribution rights to one or more services or products may not commit sufficient resources to or otherwise not perform satisfactorily in carrying out these activities; • we could grant exclusive rights to our collaborators that would prevent us from collaborating with others; • a large percentage of our revenue may be concentrated with the collaborators if the collaborations are successful and we may experience further losses if they are or later become unsuccessful; • collaborators may not properly maintain or defend our intellectual property rights or may use our intellectual property or proprietary information in a way that gives rise to actual or threatened litigation that could jeopardize or invalidate our intellectual property or proprietary information or expose us to potential liability; • disputes may arise between us and a collaborator that causes the delay or termination of the research, development, or commercialization of our current or future services or products or that results in costly litigation or arbitration that diverts management attention and resources; • collaborations may be terminated, and, if terminated, may result in a need for additional capital to pursue further development or commercialization of the applicable current or future services or products; • collaborators may own or co-own intellectual property covering our services or products that results from our collaborating with them, and in such cases, we would not have the exclusive right to develop or commercialize such intellectual property; • collaborators’ activities or use of our services or deliverables may create additional regulatory obligations and could lead to side effects or adverse events in patients, exposing us to potential liability or regulatory review; • collaborators’ sales and marketing activities or other operations may not be in compliance with applicable laws resulting in civil or criminal proceedings; and • we may choose or our collaborators may request or require us to expand our facilities and/or establish new facilities domestically and/or internationally, which may significantly increase our expenses and divert resources and management’s attention.
Collaborations are subject to numerous risks, which include that: • we may incur increased research and development expenses, and such activities may also divert management attention and resources and/or create competing internal priorities for us, which could prevent us from successfully conducting other parts of our business or collaborating with others; • collaborators have significant discretion in determining the efforts and resources that they will apply to collaborations; • collaborators may not pursue development and commercialization of our testing services or may elect not to continue or renew development or commercialization programs based on trial or test results, changes in their strategic focus due to the acquisition of competitive services or products, availability of funding, or other external factors, such as a business combination that diverts resources or creates competing priorities for our collaborator; • collaborators could independently develop, or develop with third parties, services that compete directly or indirectly with our testing services; • collaborators with marketing, manufacturing, and distribution rights to one or more services or products may not commit sufficient resources to or otherwise not perform satisfactorily in carrying out these activities; • we could grant exclusive rights to our collaborators that would prevent us from collaborating with others; • a large percentage of our revenue may be concentrated with the collaborators if the collaborations are successful and we may experience further losses if they are or later become unsuccessful; • collaborators may not properly maintain or defend our intellectual property rights or may use our intellectual property or proprietary information in a way that gives rise to actual or threatened litigation that could jeopardize or invalidate our intellectual property or proprietary information or expose us to potential liability; • disputes may arise between us and a collaborator that causes the delay or termination of the research, development, or commercialization of our current or future services or that results in costly litigation or arbitration that diverts management attention and resources; • collaborations may be terminated, and, if terminated, may result in a need for additional capital to pursue further development or commercialization of the applicable current or future services; • collaborators may own or co-own intellectual property covering our testing services that results from our collaborating with them, and in such cases, we would not have the exclusive right to develop or commercialize such intellectual property; • collaborators’ activities or use of our testing services or deliverables may create additional regulatory obligations and could lead to side effects or adverse events in patients, exposing us to potential liability or regulatory review; • collaborators’ sales and marketing activities or other operations may not be in compliance with applicable laws resulting in civil or criminal proceedings; and • we may choose or our collaborators may request or require us to expand our facilities and/or establish new facilities domestically and/or internationally, which may significantly increase our expenses and divert resources and management’s attention.
Our ability to successfully market our services that we have developed, and may develop in the future, will depend on numerous factors, including: • generation of sufficient reimbursement or coverage by insurance or governmental payors for our products; • our ability to demonstrate the utility and value of our services to our customers and potential customers; • the success of our commercial team, including sales and business development personnel; • the recruitment, hiring, and retention of our commercial team personnel; • whether our customers and potential customers accept that our services are sufficiently sensitive and specific; • our ability to educate our customers and potential customers of the utility of the comprehensiveness of our services and of testing patients at multiple time points; • our ability to continue to fund sales and marketing activities; • whether our services are considered superior to those of our competitors; • any negative publicity regarding our or our competitors’ services resulting from defects or errors; • our success obtaining and maintaining patent and trade secret protection for our services and technologies; and 16 Table of Contents • our success enforcing and defending intellectual property rights and claims.
Our ability to successfully market our testing services that we have developed, and may develop in the future, will depend on numerous factors, including: • generation of sufficient reimbursement or coverage by insurance or governmental payors for our testing services; • our ability to demonstrate the utility and value of our testing services to our customers and potential customers; • the success of our commercial team, including sales and business development personnel; • the recruitment, hiring, and retention of our commercial team personnel; • whether our customers and potential customers accept that our testing services are sufficiently sensitive and specific; • our ability to educate our customers and potential customers of the utility of the comprehensiveness of our testing services and of testing patients at multiple time points; • our ability to continue to fund sales and marketing activities; • whether our testing services are considered superior to those of our competitors; • any negative publicity regarding our or our competitors’ services resulting from defects or errors; • our success obtaining and maintaining patent and trade secret protection for our testing services and technologies; and 16 Table of Contents • our success enforcing and defending intellectual property rights and claims.
Private individuals can bring False Claims Act “qui tam” actions, on behalf of the government and such individuals, commonly known as “whistleblowers,” may share in amounts paid by the entity to the government in fines or settlement; • the federal Civil Monetary Penalties Law, which prohibits, among other things, the offering or transfer of remuneration to a Medicare or state healthcare program beneficiary if the person knows or should know it is likely to influence the beneficiary’s selection of a particular provider, practitioner, or supplier of services reimbursable by Medicare or a state healthcare program, unless an exception applies; 36 Table of Contents • the federal Physician Payments Sunshine Act, which requires certain manufacturers of drugs, biologicals, and medical devices or supplies that require premarket approval by or notification to the FDA, and for which payment is available under Medicare, Medicaid, or the Children’s Health Insurance Program, with certain exceptions, to report annually to CMS information related to (i) payments and other transfers of value to physicians (defined to include doctors, dentists, optometrists, podiatrists, and chiropractors), other healthcare professionals (such as physicians assistants and nurse practitioners) and teaching hospitals, and (ii) ownership and investment interests held by physicians and their immediate family members; • the HIPAA fraud and abuse provisions, which created federal civil and criminal statutes that prohibit, among other things, defrauding healthcare programs, willfully obstructing a criminal investigation of a healthcare offense, and falsifying or concealing a material fact or making any materially false statements in connection with the payment for healthcare benefits, items or services.
Private individuals can bring False Claims Act “qui tam” actions, on behalf of the government and such individuals, commonly known as “whistleblowers,” may share in amounts paid by the entity to the government in fines or settlement; • the federal Civil Monetary Penalties Law, which prohibits, among other things, the offering or transfer of remuneration to a Medicare or state healthcare program beneficiary if the person knows or should know it is likely to influence the beneficiary’s selection of a particular provider, practitioner, or supplier of services reimbursable by Medicare or a state healthcare program, unless an exception applies; 38 Table of Contents • the federal Physician Payments Sunshine Act, which requires certain manufacturers of drugs, biologicals, and medical devices or supplies that require premarket approval by or notification to the FDA, and for which payment is available under Medicare, Medicaid, or the Children’s Health Insurance Program, with certain exceptions, to report annually to CMS information related to (i) payments and other transfers of value to physicians (defined to include doctors, dentists, optometrists, podiatrists, and chiropractors), other healthcare professionals (such as physicians assistants and nurse practitioners) and teaching hospitals, and (ii) ownership and investment interests held by physicians and their immediate family members; • the HIPAA fraud and abuse provisions, which created federal civil and criminal statutes that prohibit, among other things, defrauding healthcare programs, willfully obstructing a criminal investigation of a healthcare offense, and falsifying or concealing a material fact or making any materially false statements in connection with the payment for healthcare benefits, items or services.
In addition, if we offer tests or services to customers within the EEA (and Northern Ireland) (whether directly or via intermediaries) that fall within the scope of the IVDR, we would be required to comply with strict requirements in order to affix the CE mark to our products, including requirements for clinical evidence, pre-market assessment of safety and performance, quality management system, traceability of products, promotion and advertising, and conduct costly post-market testing and surveillance to monitor the safety or effectiveness of our products in the EEA and detailed reporting obligations.
In addition, if we offer tests or services to customers within the EEA (and Northern Ireland) (whether directly or via intermediaries) that fall within the scope of the IVDR, we would be required to comply with strict requirements in order to affix the CE mark to products related to our testing services, including requirements for clinical evidence, pre-market assessment of safety and performance, quality management system, traceability of products, promotion and advertising, and conduct costly post-market testing and surveillance to monitor the safety or effectiveness of the tests related to our testing services in the EEA and detailed reporting obligations.
In addition, our suppliers or competitors may announce the development of new products, services or features that results in our customers’ or potential customers’ decision to reduce, postpone or cancel orders from us while they wait to determine which products, services or features are or will be perceived as technologically superior, more commercially successful or adopted as standards in the industry; such decisions by our customers or potential customers may be influenced by their concerns regarding the potential obsolescence of data generated using our services and features if our services or features are or will not be perceived as technologically superior, commercially successful or adopted as standards in the industry.
In addition, our suppliers or competitors may announce the development of new products, services or features that results in our customers’ or potential customers’ decision to reduce, postpone or cancel orders from us while they wait to determine which products, services or features are or will be perceived as technologically superior, more commercially successful or adopted as standards in the industry; such decisions by our customers or potential customers may be influenced by their concerns regarding the potential obsolescence of data generated using our testing services and features if our testing services or features are or will not be perceived as technologically superior, commercially successful or adopted as standards in the industry.
A court of competent jurisdiction could hold that third-party patents asserted against us are valid, enforceable, and infringed, which could materially and adversely affect our ability to commercialize any products, services or technologies we may develop and any other technologies covered by the asserted third-party patents and any adverse ruling or perception of an adverse ruling in defending ourselves could have a material adverse impact on our cash position and stock price.
A court of competent jurisdiction could hold that third-party patents asserted against us are valid, enforceable, and infringed, which could materially and adversely affect our ability to commercialize any services or technologies we may develop and any other technologies covered by the asserted third-party patents and any adverse ruling or perception of an adverse ruling in defending ourselves could have a material adverse impact on our cash position and stock price.
Similar actions and obligations may be imposed by the competent authorities of a European Union ("EU") Member State, or a foreign regulatory authority. The FDA requires medical device manufacturers to comply with, among other things, current good manufacturing practices for medical devices, set forth in the Quality System Regulation at 21 C.F.R.
Similar actions and obligations may be imposed by the competent authorities of a European Union ("EU") Member State, or a foreign regulatory authority. The FDA requires medical device manufacturers to comply with, among other things, current good manufacturing practices for medical devices, set forth in the Quality Management System Regulation at 21 C.F.R.
In certain cases where users choose not to implement, or incorrectly implement, those features or measures, misuse our services, or otherwise experience their own vulnerabilities, policy violations, credential exposure or security incidents, even if we are not the cause of a resulting customer security issue or incident, our customer and partner relationships, reputation, and revenue may be adversely impacted.
In certain cases where users choose not to implement, or incorrectly implement, those features or measures, misuse our testing services, or otherwise experience their own vulnerabilities, policy violations, credential exposure or security incidents, even if we are not the cause of a resulting customer security issue or incident, our customer and partner relationships, reputation, and revenue may be adversely impacted.
Currently, our only clinical reference or research and development laboratory facility is in Fremont, California. Our laboratory facility and equipment could be harmed or rendered inoperable by natural or man-made disasters, including fires, earthquakes, flooding, and power outages, which may render it difficult or impossible for us to sell or perform our services for some period of time.
Currently, our only clinical reference or research and development laboratory facility is in Fremont, California. Our laboratory facility and equipment could be harmed or rendered inoperable by natural or man-made disasters, including fires, earthquakes, flooding, and power outages, which may render it difficult or impossible for us to sell or perform our testing services for some period of time.
Inaccurate results or misunderstandings of, or inappropriate reliance on, the information we provide to our customers could lead to, or be associated with, lack of efficacy, side effects or adverse events in patients who use our tests, or who rely on our tests to determine therapies to develop, select or monitor, including treatment-related death, and could lead to termination of our services or result in claims against us.
Inaccurate results or misunderstandings of, or inappropriate reliance on, the information we provide to our customers could lead to, or be associated with, lack of efficacy, side effects or adverse events in patients who use our tests, or who rely on our tests to determine therapies to develop, select or monitor, including treatment-related death, and could lead to termination of our testing services or result in claims against us.
New cancer therapies typically have only a few years of clinical data associated with them, and much of that data may not be disclosed by the pharmaceutical company that conducted the clinical trials. This could limit our ability to develop services and products based on, for example, biomarker analysis related to the appearance or development of resistance to those therapies.
New cancer therapies typically have only a few years of clinical data associated with them, and much of that data may not be disclosed by the pharmaceutical company that conducted the clinical trials. This could limit our ability to develop services based on, for example, biomarker analysis related to the appearance or development of resistance to those therapies.
Our customers’ clinical trials are expensive, can take many years to complete, and their outcome is inherently uncertain. Failure can occur at any time during the clinical trial process. Product candidates in later stages of clinical trials may fail to show the desired safety and efficacy traits despite having progressed through pre-clinical studies and early clinical trials.
Our corporate customers’ clinical trials are expensive, can take many years to complete, and their outcome is inherently uncertain. Failure can occur at any time during the clinical trial process. Product candidates in later stages of clinical trials may fail to show the desired safety and efficacy traits despite having progressed through pre-clinical studies and early clinical trials.
Additionally, our sensitive information could be leaked, disclosed, or revealed as a result of or in connection with our employee’s, personnel’s, or vendor’s use of generative AI technologies. We are subject to stringent and evolving U.S. and foreign laws, regulations, rules, contractual obligations, industry standards, policies and other obligations related to data privacy and security.
Additionally, our sensitive information could be leaked, disclosed, or revealed as a result of or in connection with our employee’s, personnel’s, or vendor’s use of AI technologies. We are subject to stringent and evolving U.S. and foreign laws, regulations, rules, contractual obligations, industry standards, policies and other obligations related to data privacy and security.
Further, if any of our significant customers were to stop payment for our services, it would have a material adverse effect on our accounts receivable, increasing our credit risk. The failure of these customers to pay their balances, or any customer to pay future outstanding balances, would result in an operating expense and reduce our cash flows.
Further, if any of our significant customers were to stop payment for our testing services, it would have a material adverse effect on our accounts receivable, increasing our credit risk. The failure of these customers to pay their balances, or any customer to pay future outstanding balances, would result in an operating expense and reduce our cash flows.
The market price of our common stock may fluctuate or decline significantly in response to numerous factors, many of which are beyond our control, including: • actual or anticipated fluctuations in our operating results; • failure to meet or exceed financial estimates and projections of the investment community or that we provide to the public; • issuance of new or updated research reports by securities analysts or changed recommendations for our stock; • competition from existing tests or new tests that may emerge; • announcements by us or our competitors relating to significant acquisitions, strategic partnerships, joint ventures, collaborations, capital commitments, or by or pertaining to our customers, particularly the VA MVP, Moderna and Natera, as our largest customers; 48 Table of Contents • the timing and amount of our investments in the growth of our business; • actual or anticipated changes in regulatory oversight of our business or issues we may face with regulators; • additions or departures of key management or other personnel; • inability to obtain additional funding; • sales of our common stock by us or our stockholders in the future; • disputes or other developments related to our intellectual property or other matters, including litigation; • health epidemics or pandemics, geopolitical conflicts, inflation, global supply chain issues, regional or national economic slowdowns, recessions, depressions or other economic downturns; and • other general economic, industry, and market conditions, including factors unrelated to our operating performance or the operating performance of our competitors.
The market price of our common stock may fluctuate or decline significantly in response to numerous factors, many of which are beyond our control, including: • actual or anticipated fluctuations in our operating results; • failure to meet or exceed financial estimates and projections of the investment community or that we provide to the public; • issuance of new or updated research reports by securities analysts or changed recommendations for our stock; • competition from existing tests or new tests that may emerge; • announcements by us or our competitors relating to significant acquisitions, strategic partnerships, joint ventures, collaborations, capital commitments, or by or pertaining to our customers, particularly Moderna and the VA MVP, as our largest customers; 49 Table of Contents • the timing and amount of our investments in the growth of our business; • actual or anticipated changes in regulatory oversight of our business or issues we may face with regulators; • additions or departures of key management or other personnel; • inability to obtain additional funding; • sales of our common stock by us or our stockholders in the future; • disputes or other developments related to our intellectual property or other matters, including litigation; • health epidemics or pandemics, geopolitical conflicts, inflation, global supply chain issues, regional or national economic slowdowns, recessions, depressions or other economic downturns; and • other general economic, industry, and market conditions, including factors unrelated to our operating performance or the operating performance of our competitors.
In addition, technological innovations that result in the creation of enhanced products or diagnostic tools that are more sensitive or specific than ours may enable other clinical laboratories, hospitals, physicians, or medical providers to provide specialized products or services similar to ours in a more patient-friendly, efficient, or cost-effective manner than is currently possible.
In addition, technological innovations that result in the creation of enhanced services or diagnostic tools that are more sensitive or specific than ours may enable other clinical laboratories, hospitals, physicians, or medical providers to provide specialized services similar to ours in a more patient-friendly, efficient, or cost-effective manner than is currently possible.
For example, from January 2023 through April 2023, we experienced substantial disruption to use of our laboratory facility due to a failure of an electrical bus duct serving that facility. Furthermore, our laboratory facility and the equipment we use to perform our services and our research and development work could be costly and time-consuming to repair or replace.
For example, from January 2023 through April 2023, we experienced substantial disruption to use of our laboratory facility due to a failure of an electrical bus duct serving that facility. Furthermore, our laboratory facility and the equipment we use to perform our testing services and our research and development work could be costly and time-consuming to repair or replace.
If the parts of our laboratory facility where we store these biological samples were damaged or compromised, or if these biological samples or the resulting data were otherwise lost, damaged or compromised due to equipment malfunction, human error or other causes, our ability to pursue our research and development projects or provide our services, as well as our reputation, could be jeopardized.
If the parts of our laboratory facility where we store these biological samples were damaged or compromised, or if these biological samples or the resulting data were otherwise lost, damaged or compromised due to equipment malfunction, human error or other causes, our ability to pursue our research and development projects or provide our testing services, as well as our reputation, could be jeopardized.
The occurrence of any of these events could have an adverse effect on our business, reputation, and results of operations. If we cannot develop services and products to keep pace with rapid advances in technology, medicine, and science, or if we experience delays in developing such services and products, our operating results and competitive position could be harmed.
The occurrence of any of these events could have an adverse effect on our business, reputation, and results of operations. If we cannot develop services to keep pace with rapid advances in technology, medicine, and science, or if we experience delays in developing such services, our operating results and competitive position could be harmed.
Our principal competition comes from commercial and academic organizations that employ various approaches to produce information that is similar to the information that we generate for our customers. These commercial and academic organizations may not utilize our services or may not believe them to be superior to those tests that they currently use or others that are developed.
Our principal competition comes from commercial and academic organizations that employ various approaches to produce information that is similar to the information that we generate for our customers. These commercial and academic organizations may not utilize our testing services or may not believe them to be superior to those tests that they currently use or others that are developed.
While we will endeavor to try to protect our technologies, products, and services with intellectual property rights such as patents, as appropriate, the process of obtaining patents is time-consuming, expensive, and sometimes unpredictable. In addition, the patent position of companies engaged in the development and commercialization of diagnostic tests is particularly uncertain.
While we will endeavor to try to protect our technologies, and services with intellectual property rights such as patents, as appropriate, the process of obtaining patents is time-consuming, expensive, and sometimes unpredictable. In addition, the patent position of companies engaged in the development and commercialization of diagnostic tests is particularly uncertain.
We may also be unable to successfully research, develop, launch and/or commercialize our services or service capabilities. Furthermore, our NeXT Personal test is a next-generation, tumor-informed liquid biopsy assay designed to detect and quantify MRD and recurrence in patients previously diagnosed with cancer.
We may also be unable to successfully research, develop, launch and/or commercialize our testing services or service capabilities. Furthermore, our NeXT Personal test is a next-generation, tumor-informed liquid biopsy assay designed to detect and quantify MRD and recurrence in patients previously diagnosed with cancer.
Even if we were to find facilities with such qualifications to perform our services, they may not be available to us on commercially reasonable terms. Our success depends on our ability to provide reliable and timely, high-quality genomic data and analyses and to rapidly evolve to meet our customers’ needs.
Even if we were to find facilities with such qualifications to perform our testing services, they may not be available to us on commercially reasonable terms. Our success depends on our ability to provide reliable and timely, high-quality genomic data and analyses and to rapidly evolve to meet our customers’ needs.
Our Fremont facility expanded our laboratory capacity and, in order to execute our business model, we will need to make additional investments to further scale our infrastructure, including purchases of additional equipment, some of which can take several months or more to procure, setup, and validate, or increases to our software and computing capacity.
Our Fremont facility expanded our laboratory capacity and, in order to execute our business model, we will need to make additional investments to further scale our infrastructure, including purchases of additional equipment and applications, some of which can take several months or more to procure, setup, and validate, or increases to our software and computing capacity.
Consequently, we do not know whether any of our platform advances, products, services, and other technologies will be protectable or remain protected by valid and enforceable patents. Our competitors or other third parties may be able to circumvent our patents by developing similar or alternative technologies, services, or products in a non-infringing manner.
Consequently, we do not know whether any of our platform advances, services, and other technologies will be protectable or remain protected by valid and enforceable patents. Our competitors or other third parties may be able to circumvent our patents by developing similar or alternative technologies or services in a non-infringing manner.
We seek protection for certain aspects of our technologies, products, and services through the filing of patents, registration of copyrights, and use of non-disclosure agreements. In addition, we also rely on trade secrets and proprietary know-how protection for our confidential and proprietary information, and we have taken security measures to protect this information.
We seek protection for certain aspects of our technologies, and services through the filing of patents, registration of copyrights, and use of non-disclosure agreements. In addition, we also rely on trade secrets and proprietary know-how protection for our confidential and proprietary information, and we have taken security measures to protect this information.
Some of our customers have in the past suspended or terminated clinical trials or projects, received less funding than expected, experienced declining or delayed sales, or otherwise decided to reduce or eliminate their use of our services, and these and other customers may also do so in the future.
Some of our customers have in the past suspended or terminated clinical trials or projects, received less funding than expected, experienced declining or delayed sales, or otherwise decided to reduce or eliminate their use of our testing services, and these and other customers may also do so in the future.
The commercial success of current or future services and products in both domestic and international markets may depend in part on the availability of coverage and adequate reimbursement from third-party payors, including government payors, such as the Medicare and Medicaid programs, or equivalent foreign programs, managed care organizations, and other third-party payors.
The commercial success of current or future services in both domestic and international markets may depend in part on the availability of coverage and adequate reimbursement from third-party payors, including government payors, such as the Medicare and Medicaid programs, or equivalent foreign programs, managed care organizations, and other third-party payors.
Any successful opposition to these patents or any other patents owned by or, if applicable in the future, licensed to us could deprive us of rights necessary for the practice of our technologies or the successful commercialization of any products, services, or technologies that we may develop, which could lead to increased competition to our business and harm our business.
Any successful opposition to these patents or any other patents owned by or, if applicable in the future, licensed to us could deprive us of rights necessary for the practice of our technologies or the successful commercialization of any services or technologies that we may develop, which could lead to increased competition to our business and harm our business.
In addition, there can be no assurance that: • others will not or may not be able to make, use, offer to sell, or sell tests that are the same as or similar to our products or services but that are not covered by the claims of the patents that we own or license; • we or our future licensors or collaborators are the first to make the inventions covered by each of our issued patents and pending patent applications that we own or license; • we or our future licensors or collaborators are the first to file patent applications covering certain aspects of our inventions; • others will not independently develop similar or alternative technologies or duplicate any of our technologies without infringing our intellectual property rights; • a third party may not challenge our patents and, if challenged, a court would hold that our patents are valid, enforceable, and infringed; • any issued patents that we own or may license will provide us with any competitive advantages, or will not be challenged by third parties; • we may develop or in-license additional proprietary technologies that are patentable; • pending patent applications that we own or may license will lead to issued patents; 43 Table of Contents • the patents of others will not have a material or adverse effect on our business, financial condition, results of operations, and prospects; and • our competitors do not conduct research and development activities in countries where we do not have enforceable patent rights and then use the information learned from such activities to develop competitive products or services for sale in our major commercial markets.
In addition, there can be no assurance that: • others will not or may not be able to make, use, offer to sell, or sell tests that are the same as or similar to our testing services but that are not covered by the claims of the patents that we own or license; • we or our future licensors or collaborators are the first to make the inventions covered by each of our issued patents and pending patent applications that we own or license; • we or our future licensors or collaborators are the first to file patent applications covering certain aspects of our inventions; • others will not independently develop similar or alternative technologies or duplicate any of our technologies without infringing our intellectual property rights; • a third party may not challenge our patents and, if challenged, a court would hold that our patents are valid, enforceable, and infringed; • any issued patents that we own or may license will provide us with any competitive advantages, or will not be challenged by third parties; • we may develop or in-license additional proprietary technologies that are patentable; • pending patent applications that we own or may license will lead to issued patents; 44 Table of Contents • the patents of others will not have a material or adverse effect on our business, financial condition, results of operations, and prospects; and • our competitors do not conduct research and development activities in countries where we do not have enforceable patent rights and then use the information learned from such activities to develop competitive products or services for sale in our major commercial markets.
Speculation in the industry about our existing or potential relationships with biopharmaceutical companies could be a catalyst for adverse speculation about us, our services, and our technology, which can adversely affect our reputation and our business. In addition, the termination of these relationships could result in a temporary or permanent loss of revenue.
Speculation in the industry about our existing or potential relationships with biopharmaceutical companies could be a catalyst for adverse speculation about us, our testing services, and our technology, which can adversely affect our reputation and our business. In addition, the termination of these relationships could result in a temporary or permanent loss of revenue.
For example, there is no uniform worldwide policy regarding patentable subject matter or the scope of claims allowable in biotechnology patents. As such, we do not know the degree of future protection that we will have on our technologies, products, and services.
For example, there is no uniform worldwide policy regarding patentable subject matter or the scope of claims allowable in biotechnology patents. As such, we do not know the degree of future protection that we will have on our technologies, and services.
The VA MVP’s contracted orders for DNA sequencing and data analysis services have fluctuated significantly in value over time and are subject to the availability of funding, enrollment of veterans in the VA MVP study, and the VA MVP’s continued demand, if any, for our services among other factors.
The VA MVP’s contracted orders for DNA sequencing and data analysis services have fluctuated significantly in value over time and are subject to the availability of funding, enrollment of veterans in the VA MVP study, and the VA MVP’s continued demand, if any, for our testing services among other factors.
We have a single facility and if it becomes damaged or inoperable, or we are required to vacate our facility, our ability to sell and provide our services and pursue research and development efforts may be jeopardized. We currently derive our revenue from our genomic analysis conducted in our laboratories.
We have a single facility and if it becomes damaged or inoperable, or we are required to vacate our facility, our ability to sell and provide our testing services and pursue research and development efforts may be jeopardized. We currently derive our revenue from our genomic analysis conducted in our laboratories.
Several of our customers were delayed in sending us samples due to the inability to collect or ship samples during the COVID-19 pandemic, and these and additional customers may be disrupted from collecting samples or sending purchase orders or samples to us in the future in the event of the emergence of another health epidemic or pandemic.
Several of our customers were delayed in sending us samples due to their inability to collect or ship samples during the COVID-19 pandemic, and these and additional customers may be disrupted from collecting samples or sending purchase orders or samples to us in the future in the event of the emergence of another health epidemic or pandemic.
Since patent applications in the U.S. and most other countries are confidential for a period of time after filing, we cannot be certain that we or our licensors were the first to file any patent application related to our technologies, products, or services.
Since patent applications in the U.S. and most other countries are confidential for a period of time after filing, we cannot be certain that we or our licensors were the first to file any patent application related to our technologies or services.
Any provision of our amended and restated certificate of incorporation or amended and restated bylaws, or Delaware law that has the effect of delaying or deterring a change in control could limit the opportunity for our stockholders to receive a premium for their shares of our common stock, and could also affect the price that some investors are willing to pay for our common stock. 52 Table of Contents Our amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware and the federal district courts of the U.S. will be the exclusive forums for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, or employees.
Any provision of our amended and restated certificate of incorporation or amended and restated bylaws, or Delaware law that has the effect of delaying or deterring a change in control could limit the opportunity for our stockholders to receive a premium for their shares of our common stock, and could also affect the price that some investors are willing to pay for our common stock. 53 Table of Contents Our amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware and the federal district courts of the U.S. will be the exclusive forums for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, or employees.
If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business and results of operations, including the imposition of significant administrative, civil and criminal penalties, damages, fines, imprisonment, exclusion from government healthcare programs, contractual damages, refunding of payments received by us, reputational harm, additional reporting, or oversight obligations if we become subject to a corporate integrity agreement or other agreement to resolve allegations of non-compliance with the law and curtailment or restructuring 35 Table of Contents of our operations.
If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business and results of operations, including the imposition of significant administrative, civil and criminal penalties, damages, fines, imprisonment, exclusion from government healthcare programs, contractual damages, refunding of payments received by us, reputational harm, additional reporting, or oversight obligations if we become subject to a corporate integrity agreement or other agreement to resolve allegations of non-compliance with the law and curtailment or restructuring 37 Table of Contents of our operations.
We have no certainty that funding will be made available for our services, or that the VA MVP will honor its payment obligations under the current contract and task order, or award any future contracts, contract renewals or contracted orders to us.
We have no certainty that funding will be made available for our testing services, or that the VA MVP will honor its payment obligations under the current contract and task order, or award any future contracts, contract renewals or contracted orders to us.
Additionally, a key component of our research and development process involves using biological samples as the basis for the development of our services, and our services typically involve using biological samples provided by or on behalf of our customers or collaborators. In some cases, these samples are difficult to obtain.
Additionally, a key component of our research and development process involves using biological samples as the basis for the development of our testing services, and our testing services typically involve using biological samples provided by or on behalf of our customers or collaborators. In some cases, these samples are difficult to obtain.
Since companion diagnostic tests are part of FDA labeling, non-FDA cleared tests, such as the ones we currently offer as part of our services, would be considered an off-label use and this may limit our access to this market segment.
Since companion diagnostic tests are part of FDA labeling, non-FDA cleared tests, such as the ones we currently offer as part of our testing services, would be considered an off-label use and this may limit our access to this market segment.
If we cannot license rights to use technologies on reasonable terms, we may not be able to commercialize new services or products in the future. In the future, we may identify additional third-party intellectual property we may need to license in order to engage in our business, including to develop or commercialize new products or services.
If we cannot license rights to use technologies on reasonable terms, we may not be able to commercialize new services in the future. In the future, we may identify additional third-party intellectual property we may need to license in order to engage in our business, including to develop or commercialize new services.
If the breadth or strength of protection provided by our patents and patent applications is threatened, regardless of the outcome, it could dissuade companies from collaborating with us to license, develop or commercialize current or future products, services, or technologies.
If the breadth or strength of protection provided by our patents and patent applications is threatened, regardless of the outcome, it could dissuade companies from collaborating with us to license, develop or commercialize current or future services, or technologies.
Failure to achieve broad market acceptance of our services would materially harm our business, financial condition, and results of operations. If we cannot compete successfully with our competitors, we may be unable to increase or sustain our revenue or achieve and sustain profitability.
Failure to achieve broad market acceptance of our testing services would materially harm our business, financial condition, and results of operations. If we cannot compete successfully with our competitors, we may be unable to increase or sustain our revenue or achieve and sustain profitability.
As a result, we could be pressured to reduce the prices we charge for our services, which would have an adverse effect on our margins and financial position, and which would likely negatively affect our revenue and results of operations.
As a result, we could be pressured to reduce the prices we charge for our testing services, which would have an adverse effect on our margins and financial position, and which would likely negatively affect our revenue and results of operations.
In February 2021, we entered into a partnership in the field of personalized oncology with Natera, pairing our NeXT tumor profiling and diagnostic services and products with Natera’s personalized ctDNA test Signatera™ for treatment monitoring and MRD assessment.
In February 2021, we entered into a partnership in the field of personalized oncology with Natera, pairing our NeXT tumor profiling and diagnostic services with Natera’s personalized ctDNA test Signatera™ for treatment monitoring and MRD assessment.
The FDA or other applicable regulatory authorities may ask for specific post-market requirements, and additional information regarding benefits or risks of our services may emerge at any time prior to or after regulatory approval.
The FDA or other applicable regulatory authorities may ask for specific post-market requirements, and additional information regarding benefits or risks of our testing services may emerge at any time prior to or after regulatory approval.
Although we have had revenue from sales of our services since 2013, our services may never gain significant acceptance in the marketplace and therefore may never generate substantial revenue or permit us to become profitable.
Although we have had revenue from sales of our testing services since 2013, our testing services may never gain significant acceptance in the marketplace and therefore may never generate substantial revenue or permit us to become profitable.
As more information regarding cancer genomics becomes available to the public, we anticipate that more products and services aimed at identifying treatment options will be developed and that these products and services may compete with our services.
As more information regarding cancer genomics becomes available to the public, we anticipate that more products and services aimed at identifying treatment options will be developed and that these products and services may compete with our testing services.
Further, we may incorrectly determine that our technologies, products, or services are not covered by a third-party patent or may incorrectly predict whether a third party’s pending patent application will issue with claims of relevant scope.
Further, we may incorrectly determine that our technologies or services are not covered by a third-party patent or may incorrectly predict whether a third party’s pending patent application will issue with claims of relevant scope.
If we encounter delays or difficulties in securing, reconfiguring, or revalidating the equipment and reagents we require for our services, our business, financial condition, results of operations, and reputation could be adversely affected.
If we encounter delays or difficulties in securing, reconfiguring, or revalidating the equipment and reagents we require for our testing services, our business, financial condition, results of operations, and reputation could be adversely affected.
Third-party intellectual property right holders may also actively bring infringement or other intellectual property-related claims against us, even if we have received patent protection for our technologies, products, and services.
Third-party intellectual property right holders may also actively bring infringement or other intellectual property-related claims against us, even if we have received patent protection for our technologies and services.
Any of these events could have a material adverse effect on our reputation, business, or financial condition, including but not limited to: loss of customers; interruptions or stoppages in our business operations (including, clinical trials); interruptions or stoppages of data collection needed to train our algorithms; inability to process personal information or to operate in certain jurisdictions; limited ability to develop or commercialize our products and services; expenditure of time and resources to defend any claim or inquiry; adverse publicity; or substantial changes to our business model or operations.
Any of these events could have a material adverse effect on our reputation, business, or financial condition, including but not limited to: loss of customers; interruptions or stoppages in our business operations (including, clinical trials); interruptions or stoppages of data collection needed to train our algorithms; inability to process personal information or to operate in certain jurisdictions; limited ability to develop or commercialize our testing services; expenditure of time and resources to defend any claim or inquiry; adverse publicity; or substantial changes to our business model or operations.
We must continuously develop new services and products, enhance any existing services, and avoid delays in such developments and enhancements to keep pace with evolving technologies on a timely and cost-effective basis.
We must continuously develop new services, enhance any existing services, and avoid delays in such developments and enhancements to keep pace with evolving technologies on a timely and cost-effective basis.
Our current services and our planned future services and products could become obsolete unless we continually innovate and expand them to demonstrate benefit in the diagnosis, monitoring, or prognosis of patients with cancer.
Our current services and our planned future services could become obsolete unless we continually innovate and expand them to demonstrate benefit in the diagnosis, monitoring, or prognosis of patients with cancer.
Similarly, a finding that any of our other suppliers failed to comply with applicable requirements could result in interruptions in our ability to supply our services to the market and adversely affect our operations.
Similarly, a finding that any of our other suppliers failed to comply with applicable requirements could result in interruptions in our ability to supply our testing services to the market and adversely affect our operations.
In particular, ransomware attacks are becoming increasingly prevalent and severe and can lead to significant interruptions in our operations, ability to provide our services, loss of data and income, reputational harm, and diversion of funds.
In particular, ransomware attacks are becoming increasingly prevalent and severe and can lead to significant interruptions in our operations, ability to provide our testing services, loss of data and income, reputational harm, and diversion of funds.
Even if they are unchallenged, our patents and patent applications may not adequately protect our intellectual property, provide exclusivity for our technologies, products, and services, or prevent others from designing around our claims.
Even if they are unchallenged, our patents and patent applications may not adequately protect our intellectual property, provide exclusivity for our technologies and services, or prevent others from designing around our claims.
Even if the claims do not result in litigation or are resolved in our favor, the time and resources needed to resolve them could divert our management’s resources and seriously harm our business. 53 Table of Contents As a public company, it may be increasingly expensive for us to obtain director and officer liability insurance and, in the future, we may be required to accept reduced coverage or incur substantially higher costs to obtain coverage.
Even if the claims do not result in litigation or are resolved in our favor, the time and resources needed to resolve them could divert our management’s resources and seriously harm our business. 54 Table of Contents As a public company, it may be increasingly expensive for us to obtain director and officer liability insurance and, in the future, we may be required to accept reduced coverage or incur substantially higher costs to obtain coverage.
The collective efforts of each of our executives and others working with them as a team are critical to us as we continue to develop our technologies, services, products, and research and development programs.
The collective efforts of each of our executives and others working with them as a team are critical to us as we continue to develop our technologies, services, and research and development programs.
Complying with licensure requirements in new jurisdictions may be expensive and/or time-consuming, may subject us to significant and unanticipated delays, or may be in conflict with other applicable requirements. 30 Table of Contents Failure to comply with applicable clinical laboratory licensure requirements may result in a range of enforcement actions, including license suspension, limitation, or revocation, directed plan of action, onsite monitoring, civil monetary penalties, and criminal sanctions as well as significant adverse publicity.
Complying with licensure requirements in new jurisdictions may be expensive and/or time-consuming, may subject us to significant and unanticipated delays, or may be in conflict with other applicable requirements. 31 Table of Contents Failure to comply with applicable clinical laboratory licensure requirements may result in a range of enforcement actions, including license suspension, limitation, or revocation, directed plan of action, onsite monitoring, civil monetary penalties, and criminal sanctions as well as significant adverse publicity.
If we do not have sufficient patent life to protect our technologies, products and services, our competitive position, business, financial condition, results of operations, and prospects will be adversely affected.
If we do not have sufficient patent life to protect our technologies and services, our competitive position, business, financial condition, results of operations, and prospects will be adversely affected.
A failure in any one of these areas could make it difficult for us to meet market expectations for our services and could damage our reputation and the prospects for our business.
A failure in any one of these areas could make it difficult for us to meet market expectations for our testing services and could damage our reputation and the prospects for our business.
We engage in conversations with customers regarding potential commercial opportunities on an ongoing basis in the event that one of these customers’ drug candidates is approved.
We engage in conversations with corporate customers regarding potential commercial opportunities on an ongoing basis in the event that one of these customers’ drug candidates is approved.
If we are found to infringe, misappropriate, or otherwise violate a third party’s intellectual property rights, and we are unsuccessful in demonstrating that such rights are invalid or unenforceable, we may be required to pay substantial damages, including treble damages and attorneys’ fees for willful infringement; obtain one or more licenses from third parties in order to continue developing and marketing our products, services and technology, which may not be available on commercially reasonable terms (if at all) or may be non-exclusive, thereby giving our competitors and other third parties access to the same technologies licensed to us; 41 Table of Contents pay substantial royalties and other fees; and redesign any infringing tests or other activities, which may be impossible or require substantial time and monetary expenditure; or be prohibited from commercializing certain tests, all of which could have a material adverse effect on our business, financial condition, results of operations, and prospects.
If we are found to infringe, misappropriate, or otherwise violate a third party’s intellectual property rights, and we are unsuccessful in demonstrating that such rights are invalid or unenforceable, we may be required to pay substantial damages, including treble damages and attorneys’ fees for willful infringement; obtain one or more licenses from third parties in order to continue developing and marketing our testing services and technology, which may not be available on commercially reasonable terms (if at all) or may be non-exclusive, thereby giving our competitors and other third parties access to the same technologies licensed to us; pay 42 Table of Contents substantial royalties and other fees; and redesign any infringing tests or other activities, which may be impossible or require substantial time and monetary expenditure; or be prohibited from commercializing certain tests, all of which could have a material adverse effect on our business, financial condition, results of operations, and prospects.
In addition, changes in the law and legal decisions by courts in the U.S. and foreign countries may affect our ability to obtain adequate protection for our products, services and other technologies and the enforcement of intellectual property. Any of the foregoing could have a material adverse effect on our competitive position, business, financial condition, results of operations, and prospects.
In addition, changes in the law and legal decisions by courts in the U.S. and foreign countries may affect our ability to obtain adequate protection for our testing services and other technologies and the enforcement of intellectual property. Any of the foregoing could have a material adverse effect on our competitive position, business, financial condition, results of operations, and prospects.
If the FDA determines that our services are subject to enforcement as medical devices, or if foreign regulatory authorities regulate our products as IVDs, we could incur substantial costs and time delays associated with satisfying statutory and regulatory requirements such as pre-market clearance, approval or certification, and we could incur additional expense in offering our tests and tests that we may develop in the future.
If the FDA determines that our tests are subject to enforcement as medical devices, or if foreign regulatory authorities regulate our tests as IVDs, we could incur substantial costs and time delays associated with satisfying statutory and regulatory requirements such as pre-market clearance, approval or certification, and we could incur additional expense in offering our tests and tests that we may develop in the future.
In addition, supply-chain attacks have increased in frequency and severity, and we cannot guarantee that third parties and infrastructure in our supply chain or that of the third parties with whom we work supply chains have not been compromised or that they do not contain exploitable defects or bugs that could result in a breach of or disruption to our information technology systems or the third-party information technology systems that support us and our services.
In addition, supply-chain attacks have increased in frequency and severity, and we cannot guarantee that third parties and infrastructure in our supply chain or that of the third parties with whom we work have not been compromised or that they do not contain exploitable defects or bugs that could result in a breach of or disruption to our information technology systems or the third-party information technology systems that support us and our testing services.
On August 2, 2011, the Budget Control Act of 2011 was signed into law, which, among other things, reduced Medicare payments to providers by 2% per fiscal year, effective on April 1, 2013 and, due to subsequent legislative amendments to the statute, will remain until 2032 unless additional Congressional action is taken.
In addition, on August 2, 2011, the Budget Control Act of 2011 was signed into law, which, among other things, reduced Medicare payments to providers by 2% per fiscal year, effective on April 1, 2013 and, due to subsequent legislative amendments to the statute, will remain until 2032 unless additional Congressional action is taken.
However, the patent process is expensive, time consuming, and complex, and we may choose not to, or we may not be able to, apply for patents on certain aspects of our services, products, and other technologies in a timely fashion, at a reasonable cost, in all jurisdictions or at all, and any potential patent coverage we obtain may not be sufficient to prevent substantial competition.
However, the patent process is expensive, time consuming, and complex, and we may choose not to, or we may not be able to, apply for patents on certain aspects of our testing services and other technologies in a timely fashion, at a reasonable cost, in all jurisdictions or at all, and any potential patent coverage we obtain may not be sufficient to prevent substantial competition.
In addition, any patent applications we file may be challenged and may not result in issued patents or may be invalidated, rendered unenforceable or narrowed in scope after they are issued, and there is no guarantee any of our issued patents include or will include claims that are sufficiently broad to cover our products, services, and other technologies or to provide meaningful protection from our competitors.
In addition, any patent applications we file may be challenged and may not result in issued patents or may be invalidated, rendered unenforceable or narrowed in scope after they are issued, and there is no guarantee any of our issued patents include or will include claims that are sufficiently broad to cover our testing services, and other technologies or to provide meaningful protection from our competitors.
These services and products may compete with our services and products, and our patents or other intellectual property rights may not be effective or sufficient to prevent them from competing.
These services and products may compete with our testing services and our patents or other intellectual property rights may not be effective or sufficient to prevent them from competing.
As we commercialize additional services or products, we may need to incorporate new equipment, implement new technology systems and laboratory processes, or hire new personnel with different qualifications. Failure to manage this growth or transition could result in turnaround time delays, higher costs, declining service and/or product quality, deteriorating customer service, and slower responses to competitive challenges.
As we commercialize additional services, we may need to incorporate new equipment, implement new technology systems and laboratory processes, or hire new personnel with different qualifications. Failure to manage this growth or transition could result in turnaround time delays, higher costs, declining service and/or quality, deteriorating customer service, and slower responses to competitive challenges.
For example, we, or our licensors, may have inventorship disputes arise from conflicting obligations of employees, consultants, or others who are involved in developing our products, services, or technologies. Litigation may be necessary to defend against these and other claims challenging inventorship or our licensors’ ownership of our owned or in-licensed patents, trade secrets, or other intellectual property.
For example, we, or our licensors, may have inventorship disputes arise from conflicting obligations of employees, consultants, or others who are involved in developing our testing services or technologies. Litigation may be necessary to defend against these and other claims challenging inventorship or our licensors’ ownership of our owned or in-licensed patents, trade secrets, or other intellectual property.
If we cannot compete successfully against current or future competitors, or if we cannot maintain successful customer or supply relationships with Natera, Illumina or other present or potential competitors, we may be unable to ensure or increase market acceptance and sales of our current or planned future services, which could prevent us from increasing or sustaining our revenue or achieving or sustaining profitability.
If we cannot compete successfully against current or future competitors, or if we cannot maintain successful customer or supply relationships with Moderna, Illumina or other present or potential competitors, we may be unable to ensure or increase market acceptance and sales of our current or planned future services, which could prevent us from increasing or sustaining our revenue or achieving or sustaining profitability.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeOur cybersecurity risk assessment and management processes are implemented and maintained by our executive leadership team and led by the Vice President of Informatics , who has more than 20 years of experience in information technology and oversees the Informatics department which includes the Company’s hardware, software, help desk, and cybersecurity team.
Biggest changeOur cybersecurity risk assessment and management processes are implemented and maintained by our executive leadership team and led by our Chief Information Officer , who has more than 25 years of experience in information technology and oversees the Informatics department which includes the Company’s hardware, software, systems, help desk, and cybersecurity team.
Depending on the environment, we implement and maintain various technical, physical, and organizational measures, processes, standards and policies designed to manage and mitigate material risks from cybersecurity threats to our Information Systems and Data, including, for example: incident response plan, incident detection and response, disaster recovery and business continuity plans, risk assessments, network security controls, access controls, user management, asset management, hardware and data segregation, system monitoring and regular reviews.
Depending on the environment, we implement and maintain various technical, physical, and organizational measures, processes, standards and policies designed to manage and mitigate material risks from cybersecurity threats to our Information Systems and Data, including, for example: incident response plan, incident prevention, detection and response, disaster recovery and business continuity plans, risk assessments, network security controls, access controls, user management, asset management, hardware and data segregation, system monitoring and regular reviews.
Our cybersecurity team identifies and assesses risks from cybersecurity threats by monitoring and evaluating our threat environment and Personalis’ risk profile using various methods including, for example: using manual and automated tools, conducting scans of the threat environment, evaluating our and our industry’s risk profile, evaluating threats reported to us, conducting threat assessments, employee reporting, encryption of data, penetration testing, and regular reviews and internal and external audits.
Our cybersecurity team identifies and assesses risks from cybersecurity threats by monitoring and evaluating our threat environment and Personalis’ risk profile using various methods including, for example: using manual and automated tools, conducting scans of the threat environment, evaluating our and our industry’s risk profile, evaluating threats reported to us, conducting threat assessments, employee training and reporting, encryption of data, penetration testing, and regular reviews and internal and external audits.
The Vice President of Informatics is responsible for approving budgets, helping prepare for cybersecurity incidents, approving cybersecurity processes, and reviewing security assessments and other security-related reports. 55 Table of Contents Our cybersecurity incident response and vulnerability management processes are designed to escalate certain cybersecurity incidents to members of management depending on the circumstances, including the internal cybersecurity team and others, depending on severity.
Our Chief Information Officer is responsible for approving budgets, helping prepare for cybersecurity incidents, approving cybersecurity processes, and reviewing security assessments and other security-related reports. 56 Table of Contents Our cybersecurity incident response and vulnerability management processes are designed to escalate certain cybersecurity incidents to members of management depending on the circumstances, including the internal cybersecurity team and others, depending on severity.
The Vice President of Informatics reports to our Chief Financial Officer and is responsible for hiring appropriate personnel, helping to integrate cybersecurity risk considerations into our overall risk management strategy, and communicating key priorities to relevant personnel.
Our Chief Information Officer reports to our Chief Executive Officer and is responsible for hiring appropriate personnel, helping to integrate cybersecurity risk considerations into our overall risk management strategy, and communicating key priorities to relevant personnel.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Pr operties. Our corporate headquarters is located in Fremont, California, and comprise 100,000 square feet of space, pursuant to a lease that expires in 2036. The lease includes two options to extend the term for a period of five-years per option, at prevailing market rates.
Biggest changeItem 2. Pr operties. Our corporate headquarters is located in Fremont, California, and comprised of 100,000 square feet of space, pursuant to a lease that expires in 2036. The lease includes two options to extend the term for a period of five-years per option, at prevailing market rates.
See the disclosure under the heading "Contingencies" in Note 12 to our consolidated financial statements. Item 4. Mine Safe ty Disclosures. Not applicable. 56 Table of Contents PART II
See the disclosure under the heading "Contingencies" in Note 11 to our consolidated financial statements. Item 4. Mine Safe ty Disclosures. Not applicable. 57 Table of Contents PART II

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeItem 4. Mine Safety Disclosures 56 PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 57 Item 6. [Reserved] 57 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 58 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 68 Item 8.
Biggest changeItem 4. Mine Safety Disclosures 57 PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 58 Item 6. [Reserved] 58 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 59 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 68 Item 8.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeItem 5. Market for Registrant’s Common Equity, Related Stock holder Matters and Issuer Purchases of Equity Securities. Market Information Our common stock is listed on The Nasdaq Global Market under the symbol “PSNL.” Holders As of February 21, 2025, there were approximately 47 holders of record of our common stock.
Biggest changeItem 5. Market for Registrant’s Common Equity, Related Stock holder Matters and Issuer Purchases of Equity Securities. Market Information Our common stock is listed on The Nasdaq Global Market under the symbol “PSNL.” Holders As of February 20, 2026, there were approximately 38 holders of record of our common stock.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeRevenue The following table shows revenue by customer type (in thousands, except percentages): Year Ended December 31, 2024 2023 Change Pharma tests and services (1) $ 50,939 $ 31,904 $ 19,035 60% Enterprise sales 25,364 31,729 (6,365 ) (20%) Population sequencing 7,430 9,412 (1,982 ) (21%) Clinical diagnostic 759 38 721 1897% Other 122 398 (276 ) (69%) Total revenue $ 84,614 $ 73,481 $ 11,133 15% (1) Includes related party revenue of $2.0 million for the year ended December 31, 2024. 62 Table of Contents The following table shows customers that made up at least 10% of total revenue in each year presented: Year Ended December 31, 2024 2023 Natera, Inc. 30% 43% VA MVP * 13% Moderna, Inc. 28% * * Less than 10% of revenue Pharma tests and services The primary driver for the increase in pharma tests and services revenue in 2024 was due to increases in revenue from one of our personalized cancer therapy customers that ramped up clinical trial patient enrollments.
Biggest changeRevenue The following table shows revenue by customer type (in thousands, except percentages): Years Ended December 31, 2025 2024 Change Pharma testing services (1) $ 48,661 $ 50,939 $ (2,278 ) (4%) Enterprise sales 5,885 25,364 (19,479 ) (77%) Population sequencing 11,766 7,430 4,336 58% Clinical diagnostic 2,018 759 1,259 166% Other 1,318 122 1,196 980% Total revenue $ 69,648 $ 84,614 $ (14,966 ) (18%) (1) Includes related party revenue of $5.4 million and $2.0 million for the years ended December 31, 2025 and December 31, 2024, respectively.
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 Annual Report on Form 10-K, 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.
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 testing services or other risks described in this Annual Report on Form 10-K, 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.
Components of Operating Results Revenue We derive our revenue primarily from sales of genomic testing services to the following five customer types: • Pharma tests and services includes sales of testing services and data analytics for clinical trials and research to pharmaceutical companies in support of their drug development programs. • Enterprise sales includes sales of tumor profiling and diagnostic tests directly to another business as an input to their products.
Components of Operating Results Revenue We derive our revenue primarily from sales of genomic testing services to the following five customer types: • Pharma testing services includes sales of testing services and data analytics for clinical trials and research to pharmaceutical companies in support of their oncology drug development programs. • Enterprise sales includes sales of tumor profiling and diagnostic tests directly to another business as an input to their products.
The timing of these future payments, by year, can be found in Part II, Item 8 of this Form 10-K in the Notes to Consolidated Financial Statements in Note 7, “Leases.” Other . As of December 31, 2024, we have an outstanding noninterest bearing loan that was used to finance the purchase of equipment for our laboratory.
The timing of these future payments, by year, can be found in Part II, Item 8 of this Form 10-K in the Notes to Consolidated Financial Statements in Note 7, “Leases.” Other . As of December 31, 2025, we have an outstanding noninterest bearing loan that was used to finance the purchase of equipment for our laboratory.
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.
To do this, we are developing a growing set of state-of-the-art services; 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 testing services in our key indications, pursuing reimbursement coverage from Medicare and other payors; and seeking additional partnerships.
Samples arriving later than expected may not be processed in the quarter proposed and result in revenue the following quarter. Since many of our customers request defined turnaround times, we employ project managers to coordinate and manage the complex process from sample receipt to sequencing and delivery of results. • Investment in product innovation to support growth.
Samples arriving later than expected may not be processed in the quarter proposed and result in revenue the following quarter. Since many of our customers request defined turnaround times, we employ project managers to coordinate and manage the complex process from sample receipt to sequencing and delivery of results. • Investment in service innovation to support growth.
Overview 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.
Overview We develop, market, and sell advanced cancer genomic testing services. Our testing services are used by physicians to detect residual or recurrent cancer in patients, monitor cancer response to therapy, and uncover insights for therapy selection. Our testing services are used by pharmaceutical companies for translational research, biomarker discovery, the development of personalized cancer therapies, and clinical trials.
The fixed prices identified in the arrangements only change if a pricing amendment is agreed with a customer. In limited cases we provide our customers a discount if samples received above a certain volume are purchased. In such cases, the discount applies prospectively. We have analyzed such discounts if they represent a material right provided to a customer.
The fixed prices identified in the arrangements only change if a pricing amendment is agreed with a customer. In some cases, we provide our customers a discount if samples received above a certain volume are purchased. In such cases, the discount applies prospectively. We have analyzed such discounts if they represent a material right provided to a customer.
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 remain similar to the levels in 2024 to support expected higher levels of revenue. Operating expenditures .
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 remain similar to the levels in 2025 to support expected higher levels of revenue. Operating expenditures .
On a long-term basis, we manage future cash requirements relative to our long-term business plans. 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.
On a long-term basis, we manage future cash requirements relative to our long-term business plans. Capital expenditures . Capital expenditures are expected to increase from 2025 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.
Over the long-term, we anticipate higher gross margins as growing revenue leads to economies of scale. Research and Development Expenses Research and development expenses consist of costs incurred for the research and development of our services and products and costs related to conducting studies and collaborations with partners to validate the clinical utility of our offerings.
Over the long-term, we anticipate higher gross margins as growing revenue leads to economies of scale. Research and Development Expenses Research and development expenses consist of costs incurred for the research and development of our testing services and costs related to conducting studies and collaborations with partners to validate the clinical utility of our offerings.
All of the revenue in this category is from our partnership with the VA MVP. • 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.
All of the revenue in this category is from our partnership with the VA MVP. • 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 ultrasensitive, tumor-informed diagnostic tests, ordered by healthcare providers for cancer patients.
Most of our revenue to date has been derived from sales in the United States. Costs and Expenses Cost of Revenue Cost of revenue consists of raw materials costs, personnel costs (salaries, bonuses, stock-based compensation, payroll taxes, and benefits), laboratory supplies and consumables, depreciation and maintenance on equipment, and allocated facilities and information technology (“IT”) costs.
Most of our revenue to date has been derived from sales in the United States. Costs and Expenses Cost of Revenue Cost of revenue consists of raw materials costs, personnel costs (salaries, bonuses, stock-based compensation, payroll taxes, and benefits), laboratory supplies and consumables, depreciation and maintenance on equipment, allocated facilities and information technology (“IT”) costs and clinical diagnostic test costs.
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.
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 testing services and our key indications, as well as to obtain reimbursement coverage from Medicare and other payors.
Because our technology is novel, some customers begin using our products by initiating pilot studies involving a small number of samples to gain experience with our service. As a result, historically a significant portion of our revenue has come from existing customers.
Because our technology is novel, some customers begin using our testing services by initiating pilot studies involving a small number of samples to gain experience with our service. As a result, historically a significant portion of our revenue has come from existing customers.
Investment in research and development, including the development of new products and capabilities is critical to establish and maintain our leading position. We have invested significantly in our NeXT platform, introducing new products and additional capabilities. We are also collaborating with KOLs to support the clinical utility of our products.
Investment in research and development, including the development of new services and capabilities is critical to establish and maintain our leading position. We have invested significantly in our NeXT platform, introducing new services and additional capabilities. We are also collaborating with KOLs to support the clinical utility of our testing services.
While new customers initially may not account for significant revenue, we believe that they have the potential to grow substantially over the long term as they gain confidence in our service. Our ability to engage new customers is critical to our long-term success.
While new customers initially may not account for significant revenue, we believe that they have the potential to grow substantially over the long term as they gain confidence in our testing services. Our ability to engage new customers is critical to our long-term success.
Accessing these new customers through scientific engagement and marketing to gain initial buy-in is critical to our success and gives us the opportunity to demonstrate the utility of our products. • Obtaining coverage and reimbursement status of our diagnostic tests.
Accessing these new customers through scientific engagement and marketing to gain initial buy-in is critical to our success and gives us the opportunity to demonstrate the utility of our testing services. • Obtaining coverage and reimbursement status of our diagnostic tests.
We are pioneering the ultra-sensitive MRD testing market with the belief that an ultra-sensitive approach will lead to earlier intervention and the ability to better trust that a negative MRD patient is likely cancer-free.
We are pioneering the ultrasensitive MRD testing market with the belief that an ultrasensitive approach will lead to earlier intervention and the ability to better trust that a negative MRD patient is likely cancer-free.
We market to biopharma customers and doctors through a small 60 Table of Contents direct sales force. In late 2023, we entered into an agreement with Tempus to co-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.
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.
We believe that our ability to convert initial pilots into larger orders from existing customers has the potential to drive substantial long-term revenue. We expect there may be some variation in the number of samples they choose to test each quarter. • Adoption of our products and solutions by new customers.
We believe that our ability to convert initial pilots into larger orders from existing customers has the potential to drive substantial long-term revenue. We expect there may be some variation in the number of samples they choose to test each quarter. • Adoption of our testing services by new customers.
Our publications, posters and presentations at scientific conferences lead to engagement at the scientific level with potential customers who often make the initial decision to gain experience with our products.
Our publications, posters and presentations at scientific conferences lead to engagement at the scientific level with potential customers who often make the initial decision to gain experience with our testing services.
Recent Accounting Pronouncements See the sections titled “Summary of Significant Accounting Policies—Recent Accounting Pronouncements” in Note 2 to our consolidated financial statements for additional information. 67 Table of Contents
Recent Accounting Pronouncements See the sections titled “Summary of Significant Accounting Policies—Recent Accounting Pronouncements” in Note 2 to our consolidated financial statements for additional information.
We include in research and development expenses the costs to further develop software we use to operate our laboratory, analyze the data it generates, and automate our operations. We expense our research and development costs in the period in which they are incurred.
We include in research and development expenses the costs to further develop software we use to operate our laboratory, analyze the data it generates, and automate our operations. 61 Table of Contents We expense our research and development costs in the period in which they are incurred.
We plan to fund our material cash requirements with our existing cash and cash equivalents and short-term investments, which amounted to $185.0 million as of December 31, 2024, as well as anticipated cash receipts from customers.
We plan to fund our material cash requirements with our existing cash and cash equivalents and short-term investments, which amounted to $240.0 million as of December 31, 2025, as well as anticipated cash receipts from customers.
We believe this work is critical to gaining customer adoption and expect our investments in these efforts to continue. • Leverage our operational infrastructure. We have invested significantly in our sample processing capabilities and commercial infrastructure. With our current operating model and infrastructure, we can increase our production and commercialize new generations of our products.
We believe this work is critical to gaining customer adoption and expect our investments in these efforts to continue. 60 Table of Contents • Leverage our operational infrastructure. We have invested significantly in our sample processing capabilities and commercial infrastructure. With our current operating model and infrastructure, we can increase our production and commercialize new generations of our testing services.
(2) Includes related party sales and marketing expenses of $0.5 million for the year ended December 31, 2024. (3) Includes related party other expense of $18.3 million in connection with the change in fair value of Tempus Warrants for the year ended December 31, 2024.
(2) Includes related party sales and marketing expenses of $4.6 million and $0.5 million for the years ended December 31, 2025 and December 31, 2024, respectively. (3) Includes related party other expense of $18.3 million in connection with the change in fair value of Tempus Warrants for the year ended December 31, 2024.
As a result, these discounts do not constitute a material right and do not meet the definition of a separate performance obligation, except in limited instances. We do not offer retrospective discounts or rebates.
As a result, these discounts do not constitute a material right and do not meet the definition of a separate performance obligation. We do not offer retrospective discounts or rebates.
The inputs generally require analysis to develop. • Expected Term —The expected term assumption represents the contractual period of each of the two warrants. • Expected Volatility —Expected volatility was based on the Company's actual historical volatility over the expected terms of the warrants. • Expected Dividend Yield —The Black-Scholes option-pricing valuation model calls for a single expected dividend yield as an input.
The inputs generally require analysis to develop. 67 Table of Contents • Expected Term —The expected term assumption represents the contractual period of each of the two warrants. • Expected Volatility —Expected volatility was based on the actual historical volatility of our common stock over the expected terms of the warrants. • Expected Dividend Yield —The Black-Scholes option-pricing valuation model calls for a single expected dividend yield as an input.
The timing and size of sample shipments received after orders have been placed is variable. Since sample shipments can be large, and are often received from a third party, the timing of arrival can be difficult to predict over the short term. Although our long-term performance is not affected, we see quarter-to-quarter volatility due to these factors.
Since sample shipments can be large, and are often received from a third party, the timing of arrival can be difficult to predict over the short term. Although our long-term performance is not affected, we see quarter-to-quarter volatility due to these factors.
Liquidity and Capital Resources The following table presents selected financial information (in thousands): December 31, 2024 2023 Cash and cash equivalents, and short-term investments $ 185,009 $ 114,179 Property and equipment, net 48,274 57,366 Contract liabilities 3,100 7,216 Working capital 171,889 99,510 From our inception through December 31, 2024, we have funded our operations primarily from net proceeds from issuance of redeemable convertible preferred stock, IPO, follow-on equity offerings, At-the-Market ("ATM") facility (see Note 2, Summary of Significant Accounting Policies for additional information), Tempus exercising warrants and purchasing additional shares under an investment agreement, and Merck purchasing shares under an investment agreement (see Note 8, "Related Party Transactions" in our consolidated financial statements for additional information), as well as debt financings.
Liquidity and Capital Resources The following table presents selected financial information (in thousands): December 31, 2025 2024 Cash and cash equivalents, and short-term investments $ 239,953 $ 185,009 Contract liabilities 1,562 3,100 Working capital 228,321 171,889 From our inception through December 31, 2025, we have funded our operations primarily from net proceeds from issuance of redeemable convertible preferred stock, IPO, follow-on equity offerings, At-the-Market ("ATM") facility (see Note 2, "Summary of Significant Accounting Policies" for additional information), Tempus exercising warrants and purchasing additional shares under an investment agreement, and Merck purchasing shares under an investment agreement (see Note 8, "Related Party Transactions" in our consolidated financial statements for additional information), as well as debt financings.
As of December 31, 2024, we had cash and cash equivalents of $91.4 million and short-term investments of $93.6 million. We have incurred net losses since our inception. We anticipate that our current cash and cash equivalents and short-term investments are sufficient to fund our near-term capital and operating needs for at least the next 12 months.
As of December 31, 2025, we had cash and cash equivalents of $124.2 million and short-term investments of $115.7 million. We have incurred net losses since our inception. We anticipate that our current cash and cash equivalents and short-term investments are sufficient to fund our near-term capital and operating needs for at least the next 12 months.
Our concluded incremental borrowing rate for this remeasured lease was 10.5%, which resulted in a lease liability and right-of-use asset of $31.8 million. 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.
Our concluded incremental borrowing rate for this remeasured lease was 10.5%, which resulted in a lease liability and right-of-use asset of $31.8 million. During the third quarter of 2023, we completed the move of our laboratory operations from our Menlo Park facility to our Fremont facility, resulting in a lease impairment charge at that time.
We owe a total of $1.8 million, of which the majority is payable in 2025. Further discussion of this loan can be found in Part II, Item 8 of this Form 10-K in the Notes to Consolidated Financial Statements in Note 6, “Loans.” Critical Accounting Policies and Estimates Our consolidated financial statements are prepared in accordance with U.S. GAAP.
Further discussion of this loan can be found in Part II, Item 8 of this Form 10-K in the Notes to Consolidated Financial Statements in Note 6, “Loans.” Critical Accounting Policies and Estimates Our consolidated financial statements are prepared in accordance with U.S. GAAP.
Year Ended December 31, 2024 2023 2022 2021 2020 Consolidated Statements of Operations: (in thousands, except share and per share data) Revenue (1) $ 84,614 $ 73,481 $ 65,047 $ 85,494 $ 78,648 Costs and expenses Cost of revenue 57,789 55,273 51,697 53,837 58,534 Research and development 48,905 64,776 64,912 49,312 28,568 Selling, general and administrative (2) 46,187 49,726 63,969 47,698 33,692 Lease impairment — 5,565 — — — Restructuring and other charges — 8,077 — — — Total costs and expenses 152,881 183,417 180,578 150,847 120,794 Loss from operations (68,267 ) (109,936 ) (115,531 ) (65,353 ) (42,146 ) Interest income 5,510 5,901 2,396 367 949 Interest expense (24 ) (110 ) (201 ) (184 ) (2 ) Other income (expense), net (3) (18,485 ) (4,068 ) 61 (42 ) (24 ) Loss before income taxes (81,266 ) (108,213 ) (113,275 ) (65,212 ) (41,223 ) Provision for income taxes 18 83 40 14 57 Net loss $ (81,284 ) $ (108,296 ) $ (113,315 ) $ (65,226 ) $ (41,280 ) Net loss per share, basic and diluted $ (1.37 ) $ (2.25 ) $ (2.48 ) $ (1.49 ) $ (1.20 ) Weighted-average shares outstanding, basic and diluted 59,251,013 48,175,201 45,704,805 43,886,730 34,374,903 (1) Includes related party revenue of $2.0 million for the year ended December 31, 2024.
Year Ended December 31, 2025 2024 2023 2022 2021 Consolidated Statements of Operations: (in thousands, except share and per share data) Revenue (1) $ 69,648 $ 84,614 $ 73,481 $ 65,047 $ 85,494 Costs and expenses Cost of revenue 53,871 57,789 55,273 51,697 53,837 Research and development 50,264 48,905 64,776 64,912 49,312 Selling, general and administrative (2) 53,570 46,187 49,726 63,969 47,698 Lease impairment - - 5,565 - - Restructuring and other charges - - 8,077 - - Total costs and expenses 157,705 152,881 183,417 180,578 150,847 Loss from operations (88,057 ) (68,267 ) (109,936 ) (115,531 ) (65,353 ) Interest income 7,155 5,510 5,901 2,396 367 Interest expense (205 ) (24 ) (110 ) (201 ) (184 ) Other income (expense), net (3) (142 ) (18,485 ) (4,068 ) 61 (42 ) Loss before income taxes (81,249 ) (81,266 ) (108,213 ) (113,275 ) (65,212 ) Provision for income taxes 21 18 83 40 14 Net loss $ (81,270 ) $ (81,284 ) $ (108,296 ) $ (113,315 ) $ (65,226 ) Net loss per share, basic and diluted $ (0.91 ) $ (1.37 ) $ (2.25 ) $ (2.48 ) $ (1.49 ) Weighted-average shares outstanding, basic and diluted 89,240,435 59,251,013 48,175,201 45,704,805 43,886,730 62 Table of Contents (1) Includes related party revenue of $5.4 million and $2.0 million for the years ended December 31, 2025 and December 31, 2024, respectively.
Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
Our estimates are based on our historical experience and on various other factors that we believe are 66 Table of Contents reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources.
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. Property leases . Our noncancelable operating lease payments were $70.5 million as of December 31, 2024.
We currently expect capital expenditures to be between $8 million to $10 million in 2026 and between $10 million to $12 million in each of the years 2027 and 2028. Property leases . Our noncancelable operating lease payments were $62.4 million as of December 31, 2025.
Our primary use of cash relates to employee compensation, spend on professional services, spend related to research and development projects, and other costs related to our research and development, selling, general and administrative functions. We currently expect our spending in these areas to remain similar to the levels in 2024.
Our primary use of cash relates to employee compensation, spend on professional services, spend related to research and development projects, and other costs related to our research and development, selling, general and administrative functions. We currently expect our spending in these areas to increase compared to the levels in 2025 to support the growth of our clinical diagnostic offerings.
The decrease in revenue in 2024 was due to a decrease in the number of samples we processed in addition to a small decline in selling prices. Our annual task orders received in 2024 and 2023 were $7.5 million and $7.5 million, respectively. Our contract with the VA MVP does not include specific testing turnaround times.
The increase in revenue in 2025 was due to an increase in the total number of samples we processed. Our annual task orders received in 2025 and 2024 were $13.5 million and $7.5 million, respectively. Our contract with the VA MVP does not include specific testing turnaround times.
Other income (expense), net also includes foreign currency exchange gains and losses. 61 Table of Contents Trend Financial Information The following selected consolidated financial data should be read in conjunction with the consolidated financial statements and the notes thereto in Item 8 of Part II, “Financial Statements and Supplementary Data”. Historical results are not necessarily indicative of future results.
Trend Financial Information The following selected consolidated financial data should be read in conjunction with the consolidated financial statements and the notes thereto in Item 8 of Part II, “Financial Statements and Supplementary Data”. Historical results are not necessarily indicative of future results.
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.
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 August 2025 during the first three quarters of 2026. Clinical diagnostic Clinical diagnostic test revenue is generated from Medicare and private insurance payors.
The sale of equity and convertible debt securities may result in dilution to our stockholders and, in the case of 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.
The sale of equity and convertible debt securities may result in dilution to our stockholders and, in the case of convertible debt, those securities could provide for rights, preferences or privileges senior to those of our common stock.
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. We have one reportable segment which is providing advanced cancer genomic tests for precision oncology and personalized testing.
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.
The $103.6 million increase in cash provided by financing activities was driven by $50 million from Merck purchasing shares under an investment agreement, $36.2 million from Tempus exercising warrants and purchasing additional shares under an investment agreement, $26.6 million higher net proceeds from sales of common stock under our ATM facility, and $2.1 million lower repayments of loans; partially offset by $1.2 million payments of costs associated with the Tempus and Merck investments, and $0.6 million lower proceeds from our employee incentive plans.
The increase in cash provided by financing activities was due to $96.7 million higher net proceeds from sales of common stock under our ATM facility, $2.6 million higher proceeds from loans, $2.4 million higher proceeds from issuance of common stock under our equity incentive plans, and $1.0 million lower payments of costs associated with the Tempus and Merck investments, partially offset by $50.0 million in net proceeds from sale of common stock under the Merck investment agreement and $36.2 million in net proceeds of the Tempus warrant exercise and stock sale in 2024, and a $0.9 million higher repayments of loans.
December 31, 2024 2023 2022 2021 2020 (in thousands) Cash and cash equivalents, and short-term investments $ 185,009 $ 114,179 $ 167,658 $ 287,064 $ 203,290 Working capital 171,889 99,510 166,568 286,918 180,083 Total assets 270,268 225,099 292,700 396,528 244,842 Total debt 1,772 2,880 2,596 3,494 — Long-term obligations 36,185 48,424 41,430 54,914 9,261 Total liabilities 67,311 95,658 74,561 86,227 49,897 Total stockholders' equity 202,957 129,441 218,139 310,301 194,945 Results of Operations This section discusses 2024 and 2023 items and year-to-year comparisons between 2024 and 2023.
December 31, 2025 2024 2023 2022 2021 (in thousands) Cash and cash equivalents, and short-term investments $ 239,953 $ 185,009 $ 114,179 $ 167,658 $ 287,064 Working capital 228,321 171,889 99,510 166,568 286,918 Total assets (1) 334,164 270,268 225,099 292,700 396,528 Total debt 2,052 1,772 2,880 2,596 3,494 Long-term obligations 33,349 36,185 48,424 41,430 54,914 Total liabilities (2) 72,979 67,311 95,658 74,561 86,227 Total stockholders' equity 261,185 202,957 129,441 218,139 310,301 (1) Includes related party accounts receivable of $2.5 million as of December 31, 2025 and December 31, 2024.
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.
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.
Our performance depends on the willingness of pharmaceutical companies, enterprise customers, and oncologists to continue to seek more comprehensive molecular information to develop more efficacious cancer therapies. • The adoption of ultra-sensitive MRD testing.
Our performance depends on the willingness of pharmaceutical companies, enterprise customers, and oncologists to continue to seek more comprehensive molecular information to develop more efficacious cancer therapies. • Increasing adoption of our testing services and solutions by existing bio-pharma customers. Our performance depends on our ability to retain and broaden adoption with existing customers.
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.
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.
We expect research and development expenses to remain consistent in the short-term since the completion of our reductions in workforce in 2023. Selling, General and Administrative Expenses Selling expenses consist of personnel costs (salaries, commissions, bonuses, stock-based compensation, payroll taxes, and benefits), customer support expenses, direct marketing expenses, and market research.
We expect research and development expenses to increase over time to support the growth of our clinical diagnostic offerings. Selling, General and Administrative Expenses Selling expenses consist of personnel costs (salaries, commissions, bonuses, stock-based compensation, payroll taxes, and benefits), customer support expenses, direct marketing expenses, and market research.
We agree to provide services to our customers through a contract, which may be in the form of a combination of a signed agreement, statement of work and/or a purchase order. 66 Table of Contents We have evaluated the performance obligations contained in contracts with customers to determine whether any of the performance obligations are distinct, such that the customers can benefit from the obligations on their own, and whether the obligations can be separately identifiable from other obligations in the contract.
We have evaluated the performance obligations contained in contracts with customers to determine whether any of the performance obligations are distinct, such that the customers can benefit from the obligations on their own, and whether the obligations can be separately identifiable from other obligations in the contract.
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. Our work in oncology is underpinned by our experience and capacity for next-generation sequencing at scale.
Anderson Cancer Center; University Medical Center Hamburg-Eppendorf (also known as UKE); Criterium and the Academic Breast Cancer Consortium; Yale Cancer Center; Aarhus University; British Columbia Cancer; and University Health Network, that will focus on building the evidence-base for our technology and these indications.
Additional capital may not be available on reasonable terms, or at all. Our short-term investments portfolio is primarily invested in highly rated securities, with the primary objective of minimizing the potential risk of principal loss. Our investment policy generally requires securities to be investment grade and limits the amount of credit exposure to any one issuer.
The terms of debt securities issued or borrowings pursuant to 65 Table of Contents a credit agreement could impose significant restrictions on our operations. Additional capital may not be available on reasonable terms, or at all. Our short-term investments portfolio is primarily invested in highly rated securities, with the primary objective of minimizing the potential risk of principal loss.
Interest expense is the recognition of imputed interest on noninterest bearing loans. Other income (expense), net In connection with our November 2023 agreement with Tempus, we issued two warrants to purchase, in the aggregate, up to 9,218,800 shares of our common stock ("Tempus Warrants") at an average exercise price of $2.00 per share.
In connection with this agreement, we issued to Tempus two warrants to purchase, in the aggregate, up to 9,218,800 shares of our common stock. In August 2024, Tempus exercised the warrants in full to purchase 9,218,800 shares of our common stock for $18.4 million in cash, at an average exercise price of $2.00 per share.
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.
Today, our testing services 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 services to ModernaTX, Inc.
Building our clinical laboratory business is subject to a number or reimbursement challenges and we may not be able to establish the medical necessity of our tests (coverage) or payment rates that cover our costs (reimbursement). • Our revenue and cost are affected by the volume of samples we receive from customers from period to period.
We may not be able to establish the medical necessity of this additional indication (coverage) or payment rates that cover our costs (reimbursement). • Our revenues and costs are affected by the volume of samples we receive from customers from period to period. The timing and size of sample shipments received after orders have been placed is variable.
Revenue in this category is derived from Medicare and private insurance reimbursements. • Other includes sales of genomic tests and analytics to universities and non-profits. 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.
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.
Interest Income and Interest Expense Interest income consists primarily of interest earned on our cash, cash equivalents and short-term investments. Interest expense is the recognition of imputed interest on noninterest bearing loans.
We expect selling, general and administrative expenses to increase over time to support the growth of our clinical diagnostic offerings and expected gain of market share. Interest Income and Interest Expense Interest income consists primarily of interest earned on our cash, cash equivalents, and short-term investments. Interest expense is the recognition of imputed interest on noninterest bearing loans.
In addition, we received $6.0 million in proceeds from the issuance of Tempus Warrants and $3.4 million from loans in 2023, which did not occur in 2024. Material Cash Requirements 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.
Material Cash Requirements 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.
To date, we have sequenced approximately 500,000 human samples, of which approximately 200,000 were whole human genomes. 2024 Highlights Total revenue of $84.6 million increased 15%, or $11.1 million, during 2024 compared to 2023, primarily driven by higher revenue from pharma tests.
To date, we have sequenced approximately 571,000 human samples, of which approximately 219,000 were whole human genomes. 2025 Highlights Total revenue of $69.6 million decreased 18%, or $15.0 million, during 2025 compared to 2024, primarily due to lower expected revenue from Enterprise sales, which was primarily Natera.
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.
We filed a sales agreement prospectus supplement in November 2025, pursuant to which we offered and sold $100.0 million of shares of our common stock through our ATM facility. As of December 31, 2025, approximately $21.3 million remained available for sale, which was subsequently sold in January 2026.
Interest Income, Interest Expense and Other Income (Expense), Net The following table shows interest income and expense, and other income (expense), net (in thousands, except percentages): Year Ended December 31, 2024 2023 Change Interest income $ 5,510 $ 5,901 $ (391 ) (7%) Interest expense (24 ) (110 ) 86 (78%) Other income (expense), net (18,485 ) (4,068 ) (14,417 ) 354% Total $ (12,999 ) $ 1,723 $ (14,722 ) (854%) Interest income and interest expense The decrease in interest income was due to lower average investment balances in 2024, partially offset by increased yields on our investments.
Interest Income, Interest Expense and Other Income (Expense), Net The following table shows interest income and expense, and other income (expense), net (in thousands, except percentages): Year Ended December 31, 2025 2024 Change Interest income $ 7,155 $ 5,510 $ 1,645 30% Interest expense (205 ) (24 ) (181 ) 754% Other income (expense), net (142 ) (18,485 ) 18,343 (99%) Total $ 6,808 $ (12,999 ) $ 19,807 (152%) Interest income and interest expense The increase in interest income was driven by higher average investment balances, partially offset by decreased yields.
Costs and Expenses The following table shows costs and expenses (in thousands, except percentages): Year Ended December 31, 2024 2023 Change Cost of revenue $ 57,789 $ 55,273 $ 2,516 5% Research and development 48,905 64,776 (15,871 ) (25%) Selling, general and administrative 46,187 49,726 (3,539 ) (7%) Lease impairment — 5,565 (5,565 ) * Restructuring and other charges — 8,077 (8,077 ) * Total costs and expenses $ 152,881 $ 183,417 $ (30,536 ) (17%) * Not meaningful Cost of revenue The increase in cost of revenue in 2024 was primarily due to higher revenue levels (revenue increased 15% over the same period).
Costs and Expenses The following table shows costs and expenses (in thousands, except percentages): Year Ended December 31, 2025 2024 Change Cost of revenue $ 53,871 $ 57,789 $ (3,918 ) (7%) Research and development 50,264 48,905 1,359 3% Selling, general and administrative 53,570 46,187 7,383 16% Total costs and expenses $ 157,705 $ 152,881 $ 4,824 3% Cost of revenue The decrease in cost of revenue in 2025 was primarily due to lower revenue levels (revenue decreased 18% over the same period).
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").
In July 2025, we further expanded our collaboration partnership with Tempus to authorize Tempus to market NeXT Personal Dx for colorectal cancer and extend the term of the Tempus Agreement through November 25, 2029. 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.
There are no assurances that the market will value ultra-sensitive testing over other ways to monitor cancer and look for recurrence and disease. 59 Table of Contents • Increasing adoption of our products and solutions by existing bio-pharma customers. Our performance depends on our ability to retain and broaden adoption with existing customers.
There are no assurances that the market will value ultrasensitive testing over other ways to monitor cancer and look for recurrence and disease. • The continued development of the market for genomic-based tests.
Specific components of the decrease were a $3.1 million decrease in professional outside services, a $2.9 million decrease in personnel-related costs driven by our workforce reductions, and a $0.5 million decrease in office equipment costs; partially offset by a $1.4 million increase in allocated facilities costs, $1.0 million increase in other outside services and office expenses and a $0.6 million increase in other marketing costs, including trade shows expenses.
Specific components of the increase were a $1.6 million increase in research and development collaboration costs, a $0.6 million increase in personnel and personnel-related costs driven by increased headcount in 2025, a $0.3 million increase in professional service, a $0.3 million increase in repairs and maintenance and a $0.1 million increase in depreciation expense, partially offset by a $1.5 million decrease in lab supplies utilized.
Furthermore, we paid more to vendors in 2024 as compared to 2023 due to timing of vendor shipments and billings. 65 Table of Contents The $48.2 million decrease in cash provided by investing activities in 2024 was due to increase in investments of our cash into short-term investments by $17.8 million and reduction in maturities of our short-term investments by $40.0 million, partially offset by a $9.3 million reduction in capital expenditures.
The decrease in cash used in investing activities was due to a $15.6 million decrease in investment of our cash into short-term investments, partially offset by a $3.1 million increase in capital expenditures.
We amended our agreement with Natera during the fourth quarter of 2024 to extend minimum volume commitments through the second quarter of 2025. Population sequencing Revenue recognized each period from population sequencing is impacted by timing of our fulfillment of samples under each annual task order.
We no longer have a material commercial relationship with Natera and do not expect to have one going forward. 63 Table of Contents Population sequencing Revenue recognized each period from population sequencing is impacted by timing of our fulfillment of samples under each annual task order.
In August 2024, Tempus exercised the warrants in full to purchase 9,218,800 shares of Personalis common stock for $18.4 million in cash, at an average exercise price of $2.00 per share. The Tempus Warrants included a provision under which the total number of shares issuable upon settlement were subject to adjustment.
The Tempus Warrants included a provision under which the total number of shares issuable upon settlement were subject to adjustment.
Common Stock Warrants In November 2023, we entered into an agreement with Tempus to commercialize NeXT Personal Dx in the clinical diagnostics market. In connection with this agreement, we issued to Tempus two warrants to purchase, in the aggregate, up to 9,218,800 shares of our common stock.
Accordingly, we recognized a finance lease asset and a finance lease liability at the lease commencement date. In accordance with the agreement, in January 2026, we exercised the purchase option and paid $2.1 million. Common Stock Warrants In November 2023, we entered into an agreement with Tempus to commercialize NeXT Personal Dx in the clinical diagnostics market.
Other Income (Expense), Net 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 Other income (expense), net includes foreign currency exchange gains and losses. Other income (expense), net during the year ended December 31, 2024 consisted primarily of a noncash loss related to the remeasurement of the warrants issued in connection with our November 2023 agreement with Tempus, which was exercised in full and settled in August 2024.
Cash Flows Year Ended December 31, 2024 2023 Change Net cash used in operating activities $ (45,150 ) $ (56,258 ) $ 11,108 (20%) Net cash provided by (used in) investing activities (35,069 ) 13,099 (48,168 ) (368%) Net cash provided by financing activities 114,672 11,031 103,641 940% The $11.1 million decrease in cash used in operating activities in 2024 was primarily due to lower operating expenses, particularly lower payroll expenses as a result of our workforce reductions in 2023 and higher gross margin, due to a combination of higher revenue levels and higher gross margin percentage.
Cash Flows Year Ended December 31, 2025 2024 Net cash used in operating activities $ (74,946 ) $ (45,150 ) Net cash used in investing activities (22,568 ) (35,069 ) Net cash provided by financing activities 130,338 114,672 The increase in cash used in operating activities was primarily due to working capital needs and lower revenue with reduced gross margin.
We also provide whole exome and whole genome sequencing services for other diagnostic companies and population sequencing initiatives. 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.
We also provide whole exome sequencing services for other diagnostic companies and whole genome sequencing services for population sequencing initiatives.
Factors Affecting Our Performance We believe there are several important factors that we expect to impact our operating performance and results of operations, including: • The continued development of the market for genomic-based tests.
This includes approximately $109.0 million in net proceeds from our At-The-Market (ATM) sales program, executed at a weighted-average price of $8.43 per share Factors Affecting Our Performance There are several important factors that we expect to impact our operating performance and results of operations, including: • The adoption of ultrasensitive MRD testing.
Revenue from pharma tests was $50.9 million in 2024 compared to $31.9 million in 2023, an increase of 60%. This increase was partially offset by lower revenue from enterprise sales, which declined $6.4 million, or 20%.
Revenue from Enterprise sales was $5.9 million in 2025 compared to $25.4 million in 2024 and the decline was due to the winding down of the project with Natera. This decrease was partially offset by higher revenue from population sequencing, which increased $4.3 million, or 58%.
Specific components of the increase were a $4.0 million increase in direct material costs due to support higher revenue levels, a $2.1 million increase in allocated facilities and equipment costs (mainly due to moving our laboratory from our Menlo Park facility to our Fremont facility in the third quarter of 2023), partially offset by a 63 Table of Contents $2.8 million decrease in labor costs and a $0.7 million decrease in shared laboratory costs due to greater usage of our laboratory capacity for R&D projects.
Specific components of the decrease were a $10.3 million decrease in direct material costs due to lower biopharma revenue levels, a $0.7 million decrease in depreciation expenses resulting from capital equipment spend timing, partially offset by a $4.6 million increase in diagnostic test costs, a $1.5 million increase in laboratory supplies, a $0.7 million increase in equipment repairs and maintenance and a $0.3 million increase in personnel costs.
Clinical diagnostic 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 $0.8 million in 2024 was mainly due to an increase in NeXT Dx tests reimbursed by Medicare.
In February 2026, we also received Medicare coverage for NeXT Personal Dx for surveillance of patients with Stage I to III NSCLC, with an effective date of January 9, 2026. The increase in clinical diagnostic revenue was mainly attributable to an increase in NeXT Dx test volume and NeXT Personal Dx reimbursements received from certain private payors.
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Key business accomplishments and financial updates in 2024 and early 2025 include: • Received Medicare coverage for NeXT Dx, our comprehensive tumor profiling test and we are currently seeking Medicare coverage for our separate liquid biopsy molecular residual disease ("MRD") test, Next Personal Dx. • Delivered 3,285 total molecular tests in 2024, compared with 177 tests in the prior year. • Announced a new publication validating our NeXT Personal test, an ultra-sensitive, tumor-informed circulating tumor DNA (ctDNA) assay for detecting MRD, monitoring therapy response, and detecting recurrence in patients diagnosed with solid tumor cancers. o The analytical validation study was published in Oncotarget on March 14, 2024. o The test demonstrated a detection threshold of 1.67 parts per million (PPM) of ctDNA with 100% analytical specificity; enabling an ultra-sensitive range leading to early cancer detection. • Multiple clinical data results demonstrating the clinical performance of NeXT Personal were presented at the American College of Clinical Oncology meeting in Chicago.
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("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.
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Key presentations include: 58 Table of Contents o Compelling early-stage breast cancer detection results presented by Dr. Isaac Garcia-Murillas and team (Institute of Cancer Research, London) and Prof. Nicolas Turner and team (Royal Marsden NHS Foundation Trust UK).
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Department of Veterans Affairs Million Veteran Program ("VA MVP"). 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.

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