Personalis, Inc. (PSNL)·Q4 2024 Earnings Summary

Executive Summary

• Q4 revenue of $16.8M declined 15% YoY on expected Natera/VA wind-down, but topped prior Q4 guidance of $15–$16M; FY24 revenue of $84.6M grew 15% and came in above the raised guidance range of $83–$84M, driven by strong biopharma momentum and Moderna Phase III activity .
• Clinical MRD adoption accelerated: molecular tests delivered rose 52% QoQ to 1,441 (vs. 945 in Q3 and 561 in Q2), supported by Tempus’ ~200-rep channel; ~300 doctors used the test in Q4 with high retention .
• 2025 outlook introduces revenue of $80–$90M but guides gross margin down to 21%–23% and net loss ~($85)M as PSNL invests in unreimbursed clinical testing ahead of reimbursement; management targets 30%–40% sequential test volume growth until reimbursement and expects at least two indications reimbursed in 2025 (breast submitted; IO and lung pending publication) .
• Potential stock catalysts: Medicare coverage decisions (breast submission already filed; IO/lung to follow), publication of IO and broader lung datasets, continued Tempus/biopharma traction, and execution against 30%–40% sequential MRD test growth target .

What Went Well and What Went Wrong

• What Went Well

  • Biopharma strength and Moderna partnership durability: FY24 revenue grew 15% with biopharma as key driver; long-term extension with Moderna and a $50M strategic investment by Merck reinforce platform positioning .
  • Clinical traction in MRD: Q4 molecular tests +52% QoQ to 1,441; ~300 doctors ordered with high retention; management aims to “continue to increase test volume by 30% to 40% each quarter until we achieve reimbursement” .
  • Reimbursement pathway advancing: Breast manuscript accepted and CMS coverage submitted; IO and lung manuscripts submitted and expected to support 2025 submissions—“tracking to achieve reimbursement in at least 2 indications this year” .

• What Went Wrong

  • Top-line pressure from enterprise/VA/Natera: Q4 revenue down 15% YoY to $16.8M on expected declines in Natera and VA MVP; enterprise sales fell sharply QoQ/YoY in Q4 .
  • Margin headwinds from unreimbursed clinical volume: Q4 gross margin 27.1% (vs. 34% in Q3), with ~8 ppt GM headwind from unreimbursed tests; 2025 GM guided to 21%–23% given investment ahead of reimbursement .
  • Visibility transition: Moderna-related revenue expected to normalize post-enrollment; PSNL must backfill Natera roll-off and manage VA timing while scaling clinical MRD and biopharma MRD pipelines .

Financial Results

Segment revenue mix (Q4 YoY):

Key KPIs and balance sheet:

Notes: In Q4, gross margin had ~8 ppt headwind from unreimbursed tests (ex-headwind GM ~35%); FY24 ex-headwind GM ~36% .

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “In 2024, we executed very well and are starting 2025 confident our strategy is working and we will ‘Win in MRD’.”
• “Since launching our test commercially in the fourth quarter of 2023, 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 are on track to get CMS reimbursement for at least 2 indications in 2025… breast cancer [paper] was recently accepted, and we have now submitted for Medicare coverage.”
• “We’re modeling a run rate that is comparable to full year 2024 despite the loss of the lion's share of Natera's business… expected decline of about $20 million from Natera… expected growth rate in full year 2025 is around 31% at the midpoint.”
• “Gross margin… would have been approximately 35% [in Q4] excluding unreimbursed test costs… headwinds due to unreimbursed test costs [in 2025] approximately 17% to 18%.”

Q&A Highlights

• Mix/VA/Natera: FY25 “population + enterprise” includes VA ($7.5–$8M) and enterprise; Natera largely rolled off .
• Customer adoption: ~300 doctors used the test in Q4; retention “high,” previously in the high-90s reorder rate .
• Phasing: FY25 revenue roughly 50/50 H1/H2; biopharma ~40/60; clinical $3–$10M mostly H2 pending reimbursement .
• Gross margin cadence: Unreimbursed tests present ~17–18 ppt headwind; without them GM would be ~low 40s .
• Reimbursement timeline: Typically 3–9 months post-submission; aiming for ≥2 indications in 2025 (pursuing all three: breast, IO monitoring, early-stage lung) .
• Capital needs: No specific need to access capital markets; cash runway to breakeven reiterated .

Estimates Context

• Wall Street (S&P Global) consensus for Q4 2024 EPS and revenue was unavailable at time of analysis due to S&P API rate limits. We therefore compare actuals to company guidance instead. Q4 revenue of $16.8M exceeded prior guidance of $15–$16M; FY24 revenue of $84.6M exceeded the $83–$84M range .
• Potential estimate revisions: FY25 GM guidance (21%–23%) and ~($85)M net loss including ~$20M unreimbursed test costs may drive near-term EPS estimate reductions, while accelerating MRD volumes and reimbursement milestones could lift outer-year revenue/gross profit trajectories .

Key Takeaways for Investors

• Clinical MRD ramp is the core growth engine: sequential test volume growth of 30%–40% targeted until reimbursement; ~300 engaged physicians and strong retention de-risk adoption scaling .
• Reimbursement is the key 2025 catalyst: breast submission filed; IO and lung publications pending and planned submissions thereafter; decisions typically 3–9 months from submission .
• Mix shift underway: biopharma and clinical MRD are offsetting enterprise/Natera wind-down; 2025 revenue guided to $80–$90M with heavier H2 biopharma and clinical contributions .
• Near-term margin headwinds are investment-driven: FY25 GM 21%–23% reflects unreimbursed clinical volume; headwinds of ~17–18 ppt cited; margin inflects post-coverage .
• Liquidity strengthened: $185M cash and Merck’s $50M strategic investment support runway to breakeven and evidence generation/commercial buildout .
• Strategic partnerships deepen moat: extended Moderna collaboration, expanded Tempus selling into biopharma, and advancing evidence base (e.g., Nature Medicine TRACERx lung publication) reinforce PSNL’s technological and commercial positioning .
• Trading implications: Near-term stock moves likely tied to reimbursement milestones and clinical evidence publications; watch clinical volume trajectory versus 30%–40% target and Q1/FY25 cadence signals .