Personalis (PSNL) risk factors, FY2024 10-K

Operational, Strategic and Business Risks

1. 01We have a history of losses and we expect to incur significant losses for the foreseeable future and may not be able to generate sufficient revenue to achieve or sustain profitability
2. 02If we cannot compete successfully with our competitors, we may be unable to increase or sustain our revenue or achieve and sustain profitability
3. 03Natera have fluctuated significantly and may continue to do so for the remainder of the term of the agreement, which could cause us to experience difficulty in achieving such metrics from time to time, or to meet our other obligations under our agreement
4. 04Building our clinical laboratory business is subject to a number of reimbursement challenges and we may not be able to establish the medical necessity of our tests for coverage or reimbursement rates that cover our costs
5. 05We rely on a limited number of suppliers, or in some cases, a sole supplier, for some of our laboratory instruments and materials, and we may not be able to find replacements or immediately transition to alternative suppliers should we need to do so
6. 06We 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
7. 07Our 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
8. 08If 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
9. 09We are researching and developing improvements to our tests and test features on a continuous basis, but we may not be able to make these improvements on a timely basis, and even if we do, we may not realize the benefits of these efforts in our financial results
10. 10Personalized cancer therapies represent new therapeutic approaches that could result in heightened regulatory scrutiny, delays in clinical development, or delays in achieving, or inability to achieve, regulatory approval, commercialization, or payor coverage, any of which could adversely affect our business
11. 11The loss of key members of our executive management team could adversely affect our business
12. 12We rely on highly skilled personnel in a broad array of disciplines and if we are unable to hire, retain, or motivate these individuals, or maintain our corporate culture, we may not be able to maintain the quality of our services or grow effectively
13. 13We have undertaken in the past, and may in the future undertake, internal restructuring activities that could result in disruptions to our business or otherwise harm our results of operations or financial condition
14. 14We may not be able to manage our future growth effectively, which could make it difficult to execute our business strategy
15. 15We may need to continue to invest in our infrastructure in advance of increased demand for our services; our failure to accurately forecast demand would have a negative impact on our business and our ability to achieve and sustain profitability
16. 16We may acquire businesses or assets, form joint ventures, or make investments in other companies or technologies that could harm our operating results, dilute our stockholders’ ownership, or cause us to incur debt or significant expense
17. 17Ethical, legal, and social concerns related to the use of genetic information could reduce demand for our tests
18. 18Our operations and employees face risks related to health crises that could adversely affect our operations, our financial condition, and the business or operations of our customers or other third parties with whom we conduct business
19. 19Expansion into international markets would subject us to increased regulatory oversight and regulatory, economic, social, health and political uncertainties, which could cause a material adverse effect on our business, financial position, and results of operations

Regulatory, Legal and Cybersecurity Risks

1. 20imposition of civil or criminal penalties
2. 21statements are found to be deficient, lacking in transparency, deceptive, unfair, or misrepresentative of our practices, we may be subject to investigation, enforcement actions by regulators or other adverse consequences
3. 22Our employees may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements, which could cause significant liability for us and harm our reputation
4. 23Complying with numerous statutes and regulations pertaining to our business is an expensive and time-consuming process, and any failure to comply could result in substantial penalties
5. 24similar foreign laws and regulations that apply to us in the countries in which we operate or may operate in the future
6. 25We could be adversely affected by violations of the FCPA and other worldwide anti-bribery laws
7. 26Changes in health care policy could increase our costs, decrease our revenue, and impact sales of and reimbursement for our tests
8. 27established a Center for Medicare and Medicaid Innovation at CMS to test innovative payment and service delivery models to lower Medicare and Medicaid spending
9. 28Merit-based Incentive Payment System. Under both APMs and MIPS, performance data collected each performance year will affect Medicare payments in later years, including potentially reducing payments
10. 29If we use hazardous materials in a manner that causes injury, we could be liable for resulting damages
11. 30Changes in tax laws or regulations could adversely affect our business and financial condition
12. 31Our effective tax rate may fluctuate, and we may incur obligations in tax jurisdictions in excess of accrued amounts
13. 32The exit of the U.K. from the EU could lead to further regulatory divergence and require us to incur additional expenses in order to develop, manufacture, and commercialize our products and services
14. 33Our business could be negatively impacted by environmental, social and corporate governance (ESG) matters or our reporting of such matters
15. 34Litigation or other proceedings or third-party claims of intellectual property infringement, misappropriation or other violations may require us to spend significant time and money, and could in the future prevent us from selling our tests or impact our stock price, any of which could have a material adverse effect
16. 35If we cannot license rights to use technologies on reasonable terms, we may not be able to commercialize new services or products in the future
17. 36Our patent rights, their associated costs, and the enforcement or defense of such patent rights may be affected by developments or uncertainty in the patent statute, patent case law, or USPTO rules and regulations
18. 37Patent terms may be inadequate to protect our competitive position for an adequate amount of time
19. 38during patent prosecution. 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
20. 39our 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
21. 40We have in the past been involved in legal proceedings to enforce our intellectual property rights and may in the future become involved in other lawsuits to protect or enforce our patents or other intellectual property, which could be expensive, time consuming, and unsuccessful
22. 41If we are unable to protect the confidentiality of our trade secrets and know-how, our business and competitive position would be harmed
23. 42We may not be able to enforce our intellectual property rights throughout the world
24. 43Obtaining and maintaining patent protection depends on compliance with various procedural, document submission, fee payment and other requirements imposed by governmental patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements
25. 44We employ individuals who were previously employed or otherwise engaged with universities or genetic testing, diagnostic or other healthcare companies, including our competitors or potential competitors
26. 45Our use of “open source” software could subject our proprietary software to general release, adversely affect our ability to sell our products and services, and subject us to possible litigation
27. 46If we fail to comply with our obligations under license or technology agreements with third parties, we may be required to pay damages and we could lose license rights that are critical to our business
28. 47We may be subject to claims challenging the inventorship of our patents and other intellectual property
29. 48If our trademarks and trade names are not adequately protected, then we may not be able to build name recognition in our markets of interest and our business may be adversely affected
30. 49We may seek to raise additional capital through equity offerings, debt financings, collaborations, or licensing arrangements to continue executing on our long-term business plan. Additional funding may not be available to us on acceptable terms, or at all
31. 50The market price of our common stock may be volatile or may decline steeply or suddenly regardless of our operating performance, we may not be able to meet investor or analyst expectations, and you may lose all or part of your investment
32. 51other general economic, industry, and market conditions, including factors unrelated to our operating performance or the operating performance of our competitors
33. 52Our quarterly results may fluctuate significantly, which could adversely impact the value of our common stock
34. 53Unstable market, economic and geo-political conditions may have serious adverse consequences on our business, financial condition and stock price
35. 54Adverse developments affecting the financial services industry could adversely affect our current and projected business operations and our financial condition and results of operations
36. 55We maintain our cash at financial institutions, often in balances that exceed federally insured limits
37. 56Insiders or holders of greater than five percent of our outstanding common stock may exercise significant control over our company and will be able to influence corporate matters
38. 57Future sales of shares by existing stockholders, or the perception that such sales could occur, could cause our stock price to decline
39. 58We do not currently intend to pay dividends on our common stock and, consequently, your ability to achieve a return on your investment will depend on appreciation of the value of our common stock
40. 59Future sales and issuances of our common stock or rights to purchase common stock, including pursuant to our equity incentive plans and under our at-the-market facility, could result in additional dilution of the percentage ownership of our stockholders and could cause the stock price of our common stock to decline
41. 60If securities or industry analysts do not publish research or reports about our business, or publish inaccurate or unfavorable research about our business, our stock price and trading volume could decline
42. 61Holders of our common stock could be adversely affected if we issue preferred stock
43. 62Our ability to use net operating losses to offset future taxable income may be subject to limitations
44. 63Delaware law and provisions in our amended and restated certificate of incorporation and amended and restated bylaws could make a merger, tender offer, or proxy contest difficult, thereby depressing the trading price of our common stock
45. 64establish advance notice requirements for nominations for election to our board of directors or for proposing matters that can be acted upon by stockholders at annual stockholder meetings
46. 65any action asserting a claim against us that is governed by the internal-affairs doctrine
47. 66The requirements of being a public company consume substantial resources, may result in litigation and may divert management’s attention
48. 67We currently are a “smaller reporting company” as defined in the Exchange Act. We intend to take advantage of exemptions from various reporting requirements applicable to other public companies that are not smaller reporting companies, including scaled disclosure on executive compensation
49. 68Our disclosure controls and procedures may not prevent or detect all errors or acts of fraud
50. 69If we fail to maintain effective internal control over financial reporting in the future, the accuracy and timing of our financial reporting may be adversely affected