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Personalis Q3 Revenues Down 33 Percent on Disputed VA Contract

NEW YORK — Personalis on Wednesday reported a 33 percent year-over-year drop in revenues for the third quarter, reflecting the loss of revenue from a contract to provide population sequencing services to the US Department of Veterans Affairs.

For the three-month period ended Sept. 30, Personalis' revenues fell to $14.9 million versus $22.3 million the year before. All revenues in the quarter were derived from the company's biopharma and other customers including Natera, which accounted for $7.4 million of the total. Excluding revenues associated with the VA contract, its Q3 revenue was up 73 percent year over year.

Personalis has been providing whole-genome sequencing services to the VA's Million Veteran Program (MVP) since 2013. In a filing with the US Securities and Exchange Commission, Personalis said that an annual task order to provide whole-genome sequencing services to the VA's MVP had been renewed in September, but that it was later notified that the contract was under protest by a competitive bidder, requiring a work stoppage until the protest is resolved.

"We believe protests in competitive bidding processes for government contracts are not uncommon," the company said in the filing. "However, if the protest is not resolved in a manner favorable to us, the VA MVP may elect to terminate the contract."

Personalis' net loss for the third quarter jumped to $26.5 million, or $.58 per share, from $17.7 million, or $.40 per share, in the year-ago period.

Its R&D spending in the quarter rose 10 percent to $15.0 million from $13.6 million, while SG&A costs were up 22 percent to $14.8 million from $12.1 million.

At the end of the third quarter, Personalis had cash, cash equivalents, and short-term investments totaling $192.8 million.

Looking ahead, the Menlo Park, California-based firm said it expects full-year 2022 revenues in the range of $63.0 million to $64.0 million, with a net loss between $111.0 million and $114.0 million.

"We are pleased with the pace of our oncology revenue growth, as well as the continued adoption of our NeXT platform" for identifying targeted cancer treatments, Personalis CEO John West said in a statement. "We are making excellent progress on our strategic priorities, as demonstrated with the addition of new collaborations with leading cancer institutions that will use our extremely sensitive [minimal residual disease] offering, NeXT Personal, in studies designed to advance the field of oncology with the aim of enhancing the standard of care."