Personalis narrows 2025 revenue outlook to $68M-$73M amid biopharma project delays and rapid clinical test growth

Earnings Call Insights: Personalis, Inc. (PSNL) Q3 2025

MANAGEMENT VIEW

* CEO Christopher Hall highlighted, "Q3 was another step forward in our Win-in-MRD strategy. We delivered 4,388 clinical tests, a 26% sequential and 364% year-over-year growth and now have 700-plus physicians ordering NeXT Personal." Hall also announced the submission of lung cancer for coverage, with three dossiers under review by MolDX and a continued target of two coverage decisions in 2025.
* Hall emphasized, "Our ultrasensitive NeXT Personal test is capable of detecting approximately one single fragment of tumor DNA in a million. This is not merely an improvement. It is a clinical necessity that allows us to detect recurrence months ahead of standard imaging."
* The company reported $14.5 million in revenue for the quarter, which Hall noted was "above the high end of our estimate." He explained that while clinical adoption is accelerating, "the uneven biopharma spending environment we discussed last quarter has persisted, creating continued variability in the timing of large project-based work."
* Hall stated, "Our partnership with Tempus... has been so effective that we've already achieved the primary volume target we set for the entire year."
* CFO Aaron Tachibana reported, "Total company revenue for the third quarter was $14.5 million, representing a 44% decrease compared with $25.7 million for the same period of the prior year. The decrease in revenue was driven by the expected decline of $4.6 million from Natera as we wind down this business, a $4.2 million decline from the VA MVP... and a $2.5 million decline from biopharma customers."
* Tachibana added, "Gross margin was 13.2% in the third quarter compared with 34% for the same period of the prior year. The year-over-year decrease... was expected and primarily due to the 44% lower revenue volume... and also an increase in clinical test costs in advance of reimbursement."

OUTLOOK

* Personalis updated its full-year 2025 revenue guidance to a range of $68 million to $73 million, revised from the prior range of $70 million to $80 million. Revenue from pharma tests and services and all other customers is now expected in the range of $50 million to $54 million, down from prior guidance of $52 million to $58 million. Revenue from population sequencing plus enterprise customers was raised to a range of $16.5 million to $17 million, up from $15 million to $16 million. Revenue from clinical tests reimbursed is now expected to be $1.5 million to $2 million, lowered from prior guidance of $3 million to $6 million. Tachibana stated, "Gross margin in the range of 22% to 24%, no change from the prior guidance... Net loss of approximately $85 million, no change from the prior guidance and cash usage of approximately $75 million."
* Hall explained, "This adjustment does not reflect a change in underlying demand for our technology and offerings, but rather the lumpy and unpredictable nature of our legacy translational research business."

FINANCIAL RESULTS

* Personalis reported $14.5 million in total company revenue for Q3 2025. Biopharma revenue was $13.2 million, a 16% decrease from $15.7 million for the same period of the prior year. Clinical revenue was $0.4 million from NeXT Dx and NeXT Personal molecular tests. Gross margin was 13.2%. Operating expenses were $25.2 million, with R&D expense at $12.2 million and SG&A at $13 million. Net loss for the quarter was $21.7 million. Cash and short-term investments stood at $150.5 million, with cash usage from operations and capital equipment additions for the quarter at $23.4 million.
* Tachibana noted, "The cash usage estimate has remained the same throughout the year, while our revenue estimate at the midpoint has declined by approximately 17% from the original range."

Q&A

* Thomas Flaten, Lake Street Capital Markets: Asked for updates on large customers coming online and clarification on logistical delays. Hall responded, "They both come online. One of them was a big driver of our Q3 numbers... we've signed 2 large prospective clinical trials that will start to kick in and be serviced over the next 2 to 3 years."
* Flaten queried logistical delays. Hall explained, "We've had some samples run into problems at customs... we've had some challenges getting samples across the border."
* Mark Massaro, BTIG: Asked about NeXT Personal growth below the previously communicated target and clinical revenue guidance. Hall attributed this to careful management of investments ahead of reimbursement and seasonality, stating, "We were thoughtful this quarter... Third quarter is always a tougher quarter... but we didn't respond by throwing more resources at it."
* Massaro also asked about the status of MolDX reviews. Hall said, "We have 3 in now. We've had productive conversations with MolDX... we think we're in a really good spot."
* Daniel Brennan, TD Cowen, asked about government shutdown impacts and MolDX review cadence. Hall and Chen described routine cycles and ongoing productive exchanges, with Hall stating, "We expect to get an answer back on all 3 of them by the end of the year."
* Thomas VonDerVellen, Guggenheim, inquired about average account size and pipeline growth. Hall noted, "There is more than $5 million of potential inside of these large customers... we're early stages in penetrating that."
* Michael Matson, Needham, asked about Natera's revenue outlook and clinical trial publications. Hall clarified, "It's very, very small in the fourth quarter" and that the TRACERx study should be published in the next quarter.

SENTIMENT ANALYSIS

* Analysts pressed on growth targets, revenue guidance, and the impact of biopharma volatility, displaying a slightly negative to neutral tone, particularly regarding the lowered growth and guidance. There was skepticism around logistical delays and clinical test volume growth.
* Management maintained a confident tone in prepared remarks, but during Q&A, responses were measured and occasionally defensive, focusing on prudence and discipline amid biopharma volatility. Hall stated, "We were thoughtful this quarter... we want to be prudent and create a wider range."
* Compared to the previous quarter, analyst tone shifted to more direct questioning about growth metrics and guidance reductions, while management shifted from emphasizing growth to highlighting operational discipline and risk management.

QUARTER-OVER-QUARTER COMPARISON

* Guidance for full-year revenue was reduced from $70 million-$80 million in Q2 to $68 million-$73 million in Q3. Guidance for clinical tests reimbursed was lowered from $3 million-$6 million to $1.5 million-$2 million. Population sequencing plus enterprise guidance was raised.
* Q3 saw biopharma project delays and logistical challenges, which were not as pronounced in Q2. Management in Q3 focused more on operational discipline and cash management, while Q2 remarks highlighted growth and Medicare reimbursement as key drivers.
* Analyst focus in Q3 moved towards the sustainability of growth, execution on reimbursement, and the impact of external delays. In Q2, questions centered on revenue trajectory and biopharma project timelines.
* Management's tone in Q3 reflected caution and careful scaling, compared to a more growth-oriented and optimistic outlook in Q2.

RISKS AND CONCERNS

* Management cited continued biopharma project delays and logistical challenges, notably customs issues impacting sample receipt, as key risks. Hall explained, "We've had some challenges getting samples across the border... we just want to be prudent and create a wider range."
* The timing of MolDX coverage decisions remains uncertain, with Hall noting, "There can always be some variability because... we don't control MolDX final clock."
* Analyst concerns focused on the potential for slower-than-expected growth, margin dilution, and the risk that clinical revenue guidance may be difficult to achieve without reimbursement decisions.

FINAL TAKEAWAY

Personalis management underscored solid clinical test volume growth and continued expansion of the physician base using NeXT Personal, while acknowledging persistent biopharma revenue variability and logistical challenges. The company lowered its full-year 2025 revenue outlook to $68 million-$73 million and clinical tests reimbursed to $1.5 million-$2 million, citing project timing and sample logistics, but reiterated confidence in its MRD strategy, clinical adoption momentum, and cash management discipline as it awaits key reimbursement coverage decisions.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/psnl/earnings/transcripts]

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