Earnings call transcript: Personalis Q4 2024 beats EPS forecast, stock dips

Personalis Inc . (NASDAQ: NASDAQ:PSNL) reported its fourth-quarter 2024 earnings, surprising analysts with a narrower-than-expected loss. The company’s earnings per share (EPS) came in at -$0.23, beating the forecast of -$0.29. Despite the earnings beat, Personalis reported a 15% year-over-year decrease in revenue for the quarter, totaling $16.8 million. Following the announcement, Personalis shares fell by 5.36% to $4.15 in after-hours trading, reflecting tempered investor sentiment amidst broader market trends. According to InvestingPro data, the stock has shown significant volatility, with a beta of 1.74, and currently appears overvalued based on its Fair Value analysis.

Key Takeaways

• Personalis reported a narrower-than-expected loss for Q4 2024.
• Revenue decreased by 15% year-over-year to $16.8 million.
• The stock price dropped by 5.36% in after-hours trading.
• The company continues to focus on the Minimal Residual Disease (MRD) testing market.
• Personalis is targeting significant reimbursement milestones in 2025.

Company Performance

Personalis demonstrated resilience in a challenging market by reducing its net loss for 2024 to $81.3 million from $108.3 million in 2023. The company’s strategic focus on the MRD testing market and operational efficiencies, including headcount reductions and cost optimization, contributed to this improved performance. Despite a decline in quarterly revenue, Personalis achieved a full-year revenue growth of 15%, reaching $84.6 million.

Financial Highlights

• Revenue: $16.8 million in Q4 2024, a 15% decrease year-over-year.
• Full-year 2024 revenue: $84.6 million, up 15% from 2023.
• Gross margin: 31.7% for 2024, compared to 24.8% in 2023.
• Net loss: $81.3 million in 2024, reduced from $108.3 million in 2023.
• Cash and short-term investments: $185 million.

Earnings vs. Forecast

Personalis exceeded earnings expectations with an EPS of -$0.23, compared to the forecast of -$0.29. This represents a positive surprise of approximately 20.7%. The company’s ability to outperform EPS expectations, despite a year-over-year revenue decline, indicates effective cost management and operational efficiencies.

Market Reaction

Following the earnings release, Personalis’ stock fell by 5.36% to $4.15 in after-hours trading. This decline may reflect investor concerns about the company’s revenue contraction and future growth prospects. The stock’s movement contrasts with its 52-week high of $7.20, highlighting potential volatility in investor sentiment.

Outlook & Guidance

Looking forward, Personalis projects 2025 revenue between $80 million and $90 million, with an expected growth rate of 31% at the midpoint. The company aims to achieve reimbursement for at least two indications in 2025 and anticipates a gross margin of 21-23%, affected by unreimbursed test costs. Personalis plans to reduce cash usage to $75-$80 million in 2025.

Executive Commentary

CEO Chris Hall emphasized the strategic importance of 2025, stating, "We believe 2025 will be another pivotal year for Personalis as we drive our Win in MRD strategy." CFO Aaron Tachibana expressed confidence in the company’s financial position, noting, "We have cash to get us to cash flow breakeven."

Risks and Challenges

• Revenue Decline: Continued revenue contraction could impact future growth.
• Reimbursement Uncertainties: Delays in achieving reimbursement for new tests could affect financial performance.
• Market Competition: Increased competition in the MRD testing market may pressure margins.
• Economic Conditions: Broader economic challenges could impact healthcare spending and investment.

Q&A

During the earnings call, analysts inquired about the company’s customer base growth and revenue distribution in 2025. Personalis confirmed a growing customer base of approximately 300 doctors and expects revenue to be evenly split between the first and second halves of 2025. Biopharma revenue is anticipated to be stronger in the second half, contingent on reimbursement developments.

Full transcript - Personalis Inc (PSNL) Q4 2024:

Conference Operator: Ladies and gentlemen, greetings, and welcome to the Personalis Fourth Quarter twenty twenty four Earnings Conference Call. At this time, all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Caroline Connor from Investor Relations.

Please go ahead.

Caroline Connor, Investor Relations, Personalis: Thank you, operator. Welcome to Personalis’ fourth quarter twenty twenty four earnings call. Joining today’s call are Chris Hall, Chief Executive Officer and President Aaron Tachibana, Chief Financial and Chief Operating Officer and Rich Chen, Chief Medical (TASE:BLWV) Officer and EVP R and D. All statements made on this call that do not relate to matters of historical facts should be considered forward looking statements within the meaning of U. S.

Securities laws. For example, any statements regarding trends and expectations for our financial performance this year and longer term, cash runway, revenue expectations and timing, reimbursement goals, size and booking of orders, products, services, technology, clinical milestones, the outcome and timing of reimbursement decisions, expectations for existing and future collaboration activities, cost expectations, our market opportunity and business outlook. These statements are subject to risks and uncertainties that could cause actual results to differ materially from our current expectations. We encourage you to review our most recent filings with the SEC, including the risk factors described in our most recent filings. Personnel undertakes no obligation to update these statements except as required by applicable law.

Our press release with our fourth quarter and full year twenty twenty four results is available on our website, www.personnel.com, under the Investors section and includes additional details about our financial results. Our website also has the latest SEC filings, which we encourage you to review. A recording of today’s call will be available on our website by five P. M. Pacific Time today.

Now I’d like to turn the call over to Chris for his comments on fourth quarter business highlights.

Chris Hall, Chief Executive Officer and President, Personalis: Thank you, Caroline. Good afternoon, everyone, and thank you for joining us for our fourth quarter and full year twenty twenty four call. For those of you joining for the first time, welcome. Personalis is a leader in the fast growing MRD testing market. MRD stands for minimal residual disease and involves using blood, which is commonly called a liquid biopsy instead of imaging or invasive biopsies to monitor therapy effectiveness and to detect cancer recurrence.

The MRD market is expected to mature into a $20,000,000,000 market and with our ultra sensitive MRD test next personal, we believe Personalis is positioned for success. Our technology is able to spot cancer when there’s only one fragment of tumor DNA circulating and a million DNA fragments in blood. Our tumor profiling platforms and tests are cutting edge. We’re able to see more with high sensitivity and as a consequence, our platforms and tests are used by many of the world’s top biopharma companies to improve clinical trial results, personalized treatment, empower a new generation of therapies. Before we dive into our 2024 accomplishments, I want to share another case from this last quarter that highlights the power of our ultra sensitive test, Next (LON:NXT) Personal to change care.

During the last call, I discussed how a physician using Next Personal was able to spot a recurrence of breast cancer and get their patient access to therapy ahead of imaging. This quarter, one of our cases involved a woman in her 70s with stage three lung cancer that was being treated with chemotherapy plus immunotherapy. The doctor did a series of three next personal tests over several months that showed the level of circulating tumor DNA was increasing with each test suggesting the treatment regimen wasn’t working. Notably, all the results were in the ultra sensitive range. As a reminder, the ultra sensitive range covers measurements of circulating tumor DNA below 100 parts per million that our next personal test excels in quantifying and that could be missed with less sensitive tests.

Based on these results, the doctor switched the patient to a dual immunotherapy regimen with subsequent next personal test indicating an improved response. We hear many antidotes like this and they demonstrate how our platforms are impacting clinical care and frankly stories like this motivate us every day at Personalis. Twenty twenty four was a significant year for the company. We laid out a multi year strategy to grow our business with a focus on our women MRD strategy and we made big strides. Our full year revenue of $84,600,000 grew 15 over 2023 driven by biopharma growth of 60% year over year, which more than offset the expected decline from our enterprise customer.

The growth from biopharma was fueled by an acceleration of clinical trial patient samples from Moderna (NASDAQ:MRNA)’s Phase three melanoma trial during the first three quarters of twenty twenty four. For those new to Personalis, we provide Moderna with our tumor profiling capabilities to help enable them to create personalized neoantigen therapies for patients. Neoantigens are present only in cancer cells and our platform is used to identify them so that individualized therapies can be created. At the end of twenty twenty four, we agreed to a long term extension of our agreement with Moderna to be their partner for ongoing clinical trials through to commercialization. We expect this relationship to be a key driver of revenue growth for us in the next decade.

For our clinical business, 2024 was a pivotal year as we ramped our commercial efforts to pioneer the ultra sensitive MRD testing market. We drove a solid increase in test volumes as we continued to generate compelling clinical evidence that highlighted the power of next personal to detect cancer recurrence earlier than standard of care imaging and instill more confidence in negative ctDNA results. Our collaborators demonstrated outstanding MRD results for breast, lung and I O therapy monitoring using next personal and submitted manuscripts detailing these findings to medical journals, which we expect to see published in coming quarters. Once published, these studies are expected to support our submissions for Medicare reimbursement. On the IP front, we successfully settled our litigation with foresight in a way that underscored the value of our MRD intellectual property.

We also cross licensed our MRD patents with Marriott Genetics for tumor informed MRD approaches to ensure clear freedom to operate for each company. We believe this patient centric approach is best for us as a business, but importantly best for doctors, patients and payers. Lastly, in 2024, we raised a significant amount of capital. In total, we raised approximately $115,000,000 net of expenses by closing two strategic investments in using our ATM. The first strategic investment with Tempus expanded and accelerated our clinical distribution partnership and the second investment was by Merck (NSE:PROR).

Merck has been a long time collaborator and we’re thrilled to deepen our relationship with them. We ended 2024 with $185,000,000 in cash on the balance sheet and we have a strong liquidity position to continue ramping up our clinical volume ahead of reimbursement coverage. We believe 2025 will be another pivotal year for Personalis as we drive our Win and MRD strategy and ramp up our testing volumes touching more and more patient lives. We’re confident that this is working and ushering in a new way of managing cancer patients, enabling physicians to intervene sooner when a patient recurs and to have more confidence in a negative MRD result. There are three key areas we’ll be tracking as we move through the year.

These are the core elements of executing on the next chapter of our win in MRD strategy. First is clinical usage. We’ve gained significant traction in the clinical marketplaces. We delivered fourteen forty one molecular tests in the fourth quarter, an increase of 52% compared with nine forty five tests in the third quarter. The core of our strategy is a partner centric approach and we’re working with Tempest leveraging their approximately 200 person sales force to bring our approach to oncologists.

In 2024, the Personalis and Tempest commercial teams learned how to work together to relay the value of Nex Personal to doctors and the growth we’re seeing today is indicative of the strength of the relationship. Physician feedback has been positive and retention is high. We believe our growth is a testament to the power of our ultra sensitive approach and the compelling data we’ve been generating. Since launching our test commercially in the fourth quarter of twenty twenty three, we’ve grown test volume by at least 40% sequentially each quarter and our goal is to continue to increase test volume by 30% to 40% each quarter until we achieve reimbursement. We’ve been adding billing and customer care staff and focusing our internal teams on reducing turnaround time and scaling our lab to meet the increasing demand.

Additionally, we have built out our sales team to complement Tempest’s effort and are ready to hire additional commercial team members to accelerate sample growth on the backside of reimbursement. Second, is deepening the clinical evidence and achieving reimbursement. We are on track to get CMBS reimbursement for at least two indications in 2025. As we’ve previously discussed, we focused our evidence generation on three indications breast cancer, lung cancer and I O therapy monitoring. We previously summarized the findings from investigators at Royal Marsden for breast cancer, BHIO for therapy monitoring and TRACER X for lung cancer and those three studies and their results power three different Medicare submissions.

We’re pleased to report that our collaborators have now submitted manuscripts for all three of those indications to peer reviewed journals. Additionally, the breast cancer paper was recently accepted and we have now submitted for Medicare coverage and breast cancer ahead of our internal expectations. Publication is pending and we won’t say more about it until it is in the press, but we’re excited with this progress towards Medicare reimbursement. When the VHIO and TRACER X papers are accepted for publication, we plan to submit for Medicare reimbursement for immunotherapy monitoring and earlier stage one cancer respectively. In summary, we are tracking to achieve reimbursement at at least two of the indications this year and I look forward to updating you as this continues to unfold.

Our clinical study pipeline continues to deepen with now over 20 studies in progress. In breast cancer, we’re working with Vanderbilt, John Hopkins and other institutions on the PREDICT study and approximately one hundred and eighty patients study at early stage triple negative breast cancer and HER2 positive breast cancer and have an ongoing prospective study called Be Stronger one and triple negative breast cancer that has now enrolled more than 80 patients. We have an ongoing study with Dana Farber on HER2 positive patients and the Institute Curie on an approximately 100 patient early stage triple negative breast cancer study. We’re also working with MD Anderson on an additional breast cancer study. In I O therapy monitoring, we’re working with Valda Hebron or VHIO, UKE in two different melanoma studies, Duke in a study of gastric cancer patients and UCSD on a pan cancer IO therapy study across eight different subtypes.

In early stage lung cancer, we’re continuing to work with TRACER X team and we’re pushing forward on another study called DARWIN II. As the year progresses, collaborators will be presenting results of many of these studies at conferences. We expect this data to continue to highlight the importance of an ultra sensitive ctDNA detection and breast, lung and I O therapy monitoring as well as other cancer types. All of this is pointing towards a better way for managing cancer patients with an ultra sensitive approach. We of course the personnel are not done and we expect to announce additional studies through the year.

Deepening the clinical evidence is important to gain clinical traction and payer acceptance. The third area we will be tracking for investors is progress with our biopharma customers. Most of our biopharma revenue comes from our leading ImmunoIDnext platform, which is an advanced tumor profiling platform used to support translational research and novel therapies. The Immuno IDNEXT platform remains a platform of choice for biopharma companies developing immunotherapies, but we see other opportunities to serve biopharma customers. To those ends, our tumor profiling products that will continue to broaden with new versions developed to capture additional business from biopharma companies that have grown to trust Personalis as a partner.

This approach will expand the spectrum of biopharma use cases that our platforms can reach. And of course, we are deep into our second year of selling next personal for MRD testing to biopharma companies. Biopharma customers want and need an ultra sensitive approach to more effectively select patients for clinical trials and to more accurately monitor trial results. And we believe next personal elegantly meets the market need. The ultra sensitive approach may allow customers to get an answer regarding success or failure of clinical trials more quickly and more accurately.

We believe this can make for increased efficiency and can translate to significant revenue for our biopharma customers by getting answers sooner. We’ve done multiple pilots and technology assessments in 2024 and the value we create for biopharma customers is increasingly appreciated. We grew the revenue from MRD testing from biopharma companies more than 50% in 2024 and expect continued growth in 2025. The strategy of driving our ultra sensitive testing into biopharma customers while evolving our tumor profiling platforms to win more business should drive our growth in 2025 and I look forward to reporting on our progress in coming quarters. We’re running fast towards multiple milestones in 2025.

I believe it will be a significant year for personnel and most importantly for cancer patients as we execute our Goodstart growth drivers and redefine the way cancer is managed with an ultra sensitive MRD approach.

: I want to take

Chris Hall, Chief Executive Officer and President, Personalis: a minute to address our 2025 full year guidance. We have two core areas of focus in 2025. First, we are driving volume growth in front of next personal reimbursement and we are confident that we can continue to grow in test volumes at 30% to 40% each quarter. Second, we are driving towards reimbursement this year and on plan to achieve reimbursement at least two indications by the end of the year. We’re guiding revenue to be in the range of $80,000,000 to $90,000,000 Aaron will further discuss the details in a minute, but I wanted to provide some high level context.

That is, we’re modeling a run rate that is comparable to full year 2024 despite the loss of the lion’s share of Natera (NASDAQ:NTRA)’s business. When you take into account an expected decline of about $20,000,000 from Natera’s business, our expected growth rate in full year 2025 is around 31% at the midpoint of our guided range. We expect 2025 will be another transformative year for personnel and we appreciate all the investors that came into the story this last year and are now part of our journey to pioneer ultra sensitive MRD testing. We have created a unique company that is poised to be a key part of the fight against cancer. And of course that only happens because of the dedication and passion of our employees who work so hard to help us achieve our mission and improve the journey for cancer patients.

Chris Hall, Chief Executive Officer and President, Personalis: With that, I will now

Chris Hall, Chief Executive Officer and President, Personalis: turn it over to Aaron to review our financial results.

Aaron Tachibana, Chief Financial and Chief Operating Officer, Personalis: Thank you, Chris. I will discuss our fourth quarter and full year 2024 results and then cover our guidance for 2025. Total (EPA:TTEF) revenue for the fourth quarter of twenty twenty four was $16,800,000 representing a 15% decrease compared with $19,700,000 for the same period of the prior year. The decrease in revenue was expected and driven by lower volume from Natera, who has continued to reduce test volume as they transition to their own in house lab and also lower volume from the VA MVP as 2024 task order was mostly fulfilled in the third quarter. These reductions were partially offset by a 6% increase in biopharma revenue compared with the same period of the prior year.

In addition, we recognized $200,000 of clinical revenue from our NextDx tumor profiling test. Gross margin was 27.1% in the fourth quarter compared with 26.5% for the same period of the prior year. The year over year increase of 60 basis points was primarily due to favorable customer mix from the increase in biopharma volume. In the fourth quarter, we saw an impact of approximately eight percentage points to our gross margin due to unreimbursed test cost. Excluding those costs, gross margin would have been approximately 35%.

Operating expenses were $22,700,000 in the fourth quarter compared to $29,200,000 for the same period of the prior year. Most of the year over year decrease was attributed to actions taken to reduce headcount in 2023. The fourth quarter R and D expense was $11,500,000 compared with $13,600,000 for the same period of the prior year and SG and A expense was $11,200,000 compared with $11,500,000 for the same period of the prior year. In the fourth quarter of twenty twenty three, we classified $4,000,000 of employee severance cost as restructuring within the income statement and it’s included within the $29,200,000 previously mentioned. Net loss for the fourth quarter was $16,400,000 compared with $26,600,000 for the same period of the prior year.

Next, I will provide results for the full year of 2024. Total company revenue for the full year 2024 was $84,600,000 dollars representing a 15% increase compared with $73,500,000 for 2023. The increase was driven by growth from biopharma, which was fueled by Moderna’s Phase three clinical trial, which had robust patient enrollment through the first three quarters of the year and more than offset the decline in revenue from Natera and the VA MVP. Gross margin was 31.7% for the full year of 2024 compared to 24.8 for 2023. The year over year increase of 6.9 percentage points was primarily due to favorable customer mix from the increase in biopharma volume as well as cost reduction.

In the full year of 2024, unreimbursed test costs impacted gross margins by approximately four percentage points. Excluding those costs, gross margin would have been approximately 36%. Operating expenses were $95,100,000 for the full year of 2024 compared with $128,100,000 for the full year of 2023. Most of the year over year decrease was attributed to actions taken to reduce headcount in 2023 and also a one time facility lease impairment expense of $5,600,000 in 2023. R and D expense was $48,900,000 in 2024 compared to $64,800,000 in 2023.

SG and A expense was $46,200,000 in 2024 compared with $49,700,000 for 2023. And a bit of clarification for 2023, there is $8,100,000 in employee severance costs for headcount reduction shown in the restructuring line of the income statement and it’s included within the total operating expense amount of $128,100,000 previously mentioned. Net loss for the full year of 2024 was $81,300,000 compared with the net loss of $108,300,000 for 2023. We reduced our net loss year over year by increasing gross profit dollars from higher volume and reducing product costs and operating expenses. Now onto the balance sheet.

We finished the fourth quarter with a strong balance sheet with cash and short term investments of $185,000,000 During the quarter, Merrick made a strategic investment of $50,000,000 into Personalis by purchasing common stock at a price of $3.56 per share, which was the closing price of our common stock on 12/18/2024. This investment underscores the strength of our partnership with both Merck and Moderna. Throughout 2024, we operated cost effectively and reduced our cash usage down to $46,800,000 for the full year, which was approximately $20,000,000 lower than 2023. Now I’d like to turn to guidance. For the first quarter of twenty twenty five, we expect total company revenue in the range of $17,000,000 to $18,000,000 revenue from pharma tests and services and all other customers in the range of $10,000,000 to $11,000,000 and revenue from population sequencing plus enterprise customers of approximately $7,000,000 And for the full year of 2025, we expect total company revenue in the range of $80,000,000 to $90,000,000 This range is a bit wider due to the variability of reimbursement timing and prices revenue from pharma tests and services and all of their customers in the range of $62,000,000 to $64,000,000 population sequencing plus enterprise customers in the range of $15,000,000 to $16,000,000 clinical revenue in the range of $3,000,000 to $10,000,000 gross margin in the range of 21% to 23%, which is lower than the 32% for 2024 due to the impact of investing in clinical test volume ahead of reimbursement Net loss of approximately $85,000,000 which includes approximately $20,000,000 of un reimbursed test costs and cash usage in the range of $75,000,000 to $80,000,000 with the majority of the increase in cash usage compared with 2024 for investing in clinical test volume, clinical studies and commercial capabilities for ramping up our clinical volume before and after reimbursement.

We look forward to updating you on our progress during the next conference call in a few months. And with that, I will turn the call back over to the operator to begin the Q and A session. Operator?

Conference Operator: Thank The first question comes from the line of Thomas Flaten from Lake Street. Please go ahead.

Thomas Flaten, Analyst, Lake Street: Hey, good afternoon guys. Thanks for taking the question. Congrats on the quarter. Hey, Aaron, just sticking with guidance for a second. You have grouped together enterprise sales and the VA MVP program.

Should we read into that that there are continuing the Terra revenues or is there a different enterprise customer in there?

Aaron Tachibana, Chief Financial and Chief Operating Officer, Personalis: So Thomas, basically what we’ve done is we’ve guided both together. So there would be revenue from both, right? The VA contract is $7,500,000 So you can assume $7,500,000 to $8,000,000 for the VA balance fee for enterprise customers.

Thomas Flaten, Analyst, Lake Street: Great. And then maybe for Chris, I know you’ve mentioned how many tests you’ve done, but we haven’t heard at least I don’t recall hearing the number of customers you’ve had. And then if you’re willing to share that and then any thoughts on reorder rate for those physicians that have been using the test so far? Next Personal DX,

Aaron Tachibana, Chief Financial and Chief Operating Officer, Personalis: sorry. Yes,

Chris Hall, Chief Executive Officer and President, Personalis: we’re closing in on about 300 doctors last quarter using the test now. So that continues to grow really nicely. You see that in the volume that’s coming from both our organic group, which is only just a small group of about four ish people. And then Tempus, which is you know, which has got a couple hundred people out carrying the message to doctors. So, you know, closing on three hundred, the retention has been super high.

We talked about it last quarter. We talked about how, it was in the high 90s reorder rate. We’re not going to disclose that quarter over quarter and so many moving parts about what doctors do and how they practice. But we feel like that we feel the retention has been high and we feel like the value is just being underscored every day. About forty percent of our results, of our positive results are in the ultra sensitive range.

When physicians start to see the power of that, they’re sold and there’s so many success stories that we run into around finding cancer sooner and being able to intervene and being able to see things therapeutic response and get the physician get the patient on the right therapy and these things are underscoring the value and helping to cement the retention.

Thomas Flaten, Analyst, Lake Street: Super helpful. Thanks for taking the questions.

Aaron Tachibana, Chief Financial and Chief Operating Officer, Personalis: Thanks, Thomas.

Conference Operator: Thank you. The next question comes from the line of Yuko Oko from Morgan Stanley (NYSE:MS). Please go ahead.

Madison, Analyst, Morgan Stanley: Hi. This is Madison on for Yuko. Thanks for taking the question. Congrats on the quarter. Just wondering if we could start, I realized you gave color on first quarter, but wondering how we should be thinking about the phasing of the top line as we look out to the rest of 2025?

Aaron Tachibana, Chief Financial and Chief Operating Officer, Personalis: Yes. So basically in terms of the revenue guide, dollars 85,000,000 at the midpoint. And the way we look at it, Madison, is probably half first half, half of the revenue in the second half. And in terms of the mixture there, so biopharma is going to be probably forty percent first half, sixty percent second half, but the enterprise customers enterprise revenue would be the opposite. In addition, clinical sales, the guide there is $3,000,000 to $10,000,000 Most of that is going to be in the second half, right, primarily because it’s pending reimbursement.

Madison, Analyst, Morgan Stanley: And then on gross margins, I know last quarter, I think you noted a potential headwind of about 15 to 18 percentage points, from unreimbursed tests. Is that still how you’re thinking about it? And then just given the uncertainty of the specific timing of reimbursement, how should we be thinking about the GM cadence over the year?

Aaron Tachibana, Chief Financial and Chief Operating Officer, Personalis: Yes. So that’s the primary reason why we did provide a gross margin guide. Our gross margin guide for the full year of ’25 is 21% to 23%. In 2024, we achieved 32%. If we didn’t have the unreimbursed test costs in 2024, we probably would have been around 36%.

And going into 2025, as we assume no unreimbursed test costs, gross margins would be between 40% and the low 40s, right? And so there would be approximately 17% to 18% of headwinds due to the un reimbursed test costs.

Madison, Analyst, Morgan Stanley: Okay. Thank you.

Aaron Tachibana, Chief Financial and Chief Operating Officer, Personalis: Thank

Conference Operator: The next question comes from the line of Swaim Pachula Ramakanth from H. C. Wainwright. Please go ahead.

: Thank you. Thanks, Chris and Aaron. So when you talked about the three areas that you would be monitoring for growth in 2025 and beyond, Regarding when you’re talking about the clinical usage, you said not only utilizing the Tempus commercial team, but also you will be building a commercial team. Is this how much of an impact is it going to be on SG and A in 2025 or is this going to be pending reimbursement and all that? So most of that will actually be in late twenty five, early ’20 ’6.

How should we think about that, please?

Chris Hall, Chief Executive Officer and President, Personalis: Yes. I mean, we’ve always said we’ll have a small team. I mean, we’re mostly planning on depending on Tempest, but we’ll always have a small team for some of the relationships and also to work with the Tempus team in the field and be able to fill in some gaps and work and you learn a lot from doing that. We expect that team to be small. We’ve always said it will be relatively small investment in the next year or two.

And nothing about today’s call suggests that that’s not the case. And we’ll continue to just grow it as we go through the year by 1Cs and 2Cs. And a little bit more aggressive as we have line of sight exactly on reimbursement. But you always want to get in front of it because it takes some time to find the right people and get them into place get them trained.

Chris Hall, Chief Executive Officer and President, Personalis: Yes.

Chris Hall, Chief Executive Officer and President, Personalis: But it won’t be meaningful financially.

: Okay. And then talking about the reimbursement, it’s great that you already have one submission done for breast cancer. In terms of how what to expect on that in the sense in general, how long does it take for some of these submissions to come to a decision point? And in terms of the next one, I thought you said lung cancer. If that is true, is there any way we can gauge the timing on it or is this just TBD?

Aaron Tachibana, Chief Financial and Chief Operating Officer, Personalis: Yes. I think it’s I mean, so we

Chris Hall, Chief Executive Officer and President, Personalis: have never said that the next one would be lung cancer or I O therapy monitoring. But we have gotten to this point as all three of the key publications have been submitted and the lung cancer and the IO have been submitted. The journey of going through those that process with journals is variable, RK. And, if the lung cancer one gets accepted before the IO one, we’ll submit with the lung cancer. And if the IO one gets submitted sooner, then we’ll submit for IO sooner.

Our intention, to be clear, while we’re saying we expect to get two of three over the finish line, we’re shooting

Chris Hall, Chief Executive Officer and President, Personalis: for all three.

Chris Hall, Chief Executive Officer and President, Personalis: Our goal is to have all three accepted and all three submitted and move the ball forward on all three. And that’s what our internal goal is and that’s what we’re shooting for. But I mean, I think there’s realistically something always tends to happen. The time on the time from submission onwards, I think we think about it as six months plus or minus in general. I think sometimes it goes as long as nine and it could go as fast as three, but that’s sort of where it is.

But I expect the back half of the year is when we’ll start being able to make announcements on that. But we were super excited to be able to move the ball forward and be able to get to the point where we could submit and the submission looks great and we’re really confident that we’re

Chris Hall, Chief Executive Officer and President, Personalis: on the right track here.

: Yes, yes, perfect. Thanks for taking my questions. Thank you. Thanks.

Conference Operator: Thank you. The next question comes from the line of Dan Brennan from TD Cowen. Please go ahead.

William Ruby, Analyst, TD Cowen: Hi, this is William Ruby on for Dan. Just one question for you. With a cash usage of $75,000,000 to $80,000,000 are you anticipating that you’ll potentially look to the capital markets this year?

Aaron Tachibana, Chief Financial and Chief Operating Officer, Personalis: So we have plenty of capital in terms of what we’ve got on the balance sheet. What we’ve been saying, William, is that we have cash to get us to cash flow breakeven, right. In terms of going back to the markets to raise capital, we’ll have to look at how things come together the rest of the year. And if there’s an area where maybe we need to further invest and call it evidence or other areas of our business, then we’ll look at different opportunities. But sitting here today, there’s no specific need to come back to the market.

Thank you. Sure. Thank you. Ladies

Conference Operator: and gentlemen, as there are no further questions, this concludes the question and answer session. The conference of personnelis has now concluded. Thank you for your participation and you may now disconnect your lines.

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