Personalis (PSNL) risk factors, FY2025 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 profitability31% rewritten
2. 02If we cannot compete successfully with our competitors, we may be unable to increase or sustain our revenue or achieve and sustain profitability50% rewritten
3. 03enrollment and also may have needed to divert resources to respond to the pandemic. Another health epidemic or pandemic may negatively impact the value of any potential new VA MVP contract or orderNew
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 costs73% rewritten
5. 05enter into in the future may not be successful, or may terminate, which could adversely impact our business or affect our ability to develop and commercialize our testing servicesNew
6. 06We 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
7. 07International trade policies, including tariffs, sanctions and trade barriers may adversely affect our business, financial condition, results of operations and prospectsNew
8. 08We 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 testing services and pursue research and development efforts may be jeopardized29% rewritten
9. 09disruption of our business, but these types of insurance may not be sufficient to cover all of our potential losses or liabilities and may not continue to be available to us on acceptable terms, if at allNew
10. 10Our success depends on our ability to provide reliable and timely, high-quality genomic data and analyses and to rapidly evolve to meet our customers’ needs23% rewritten
11. 11If we cannot develop services to keep pace with rapid advances in technology, medicine, and science, or if we experience delays in developing such services, our operating results and competitive position could be harmed23% rewritten
12. 12We 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
13. 13Personalized cancer therapies represent new therapeutic approaches that could result in heightened regulatory scrutiny, delays in clinical development, or delays in or inability to achieve, regulatory approval, commercialization, or payor coverage, any of which could adversely affect our business
14. 14The loss of key members of our executive management team could adversely affect our business45% rewritten
15. 15our executive management team, and we may not be able to retain those individuals or replace them in the event we lose their services. We do not maintain “key person” life insurance on any of our employeesNew
16. 16We 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 testing services or grow effectively
17. 17We 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
18. 18We may not be able to manage our future growth effectively, which could make it difficult to execute our business strategy
19. 19We may need to continue to invest in our infrastructure in advance of increased demand for our testing services; our failure to accurately forecast demand would have a negative impact on our business and our ability to achieve and sustain profitability
20. 20We 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
21. 21Ethical, legal, and social concerns related to the use of genetic information could reduce demand for our tests
22. 22Our 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
23. 23Expansion 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. 24510(k) clearance process. Despite the time, effort and expense expended, there can be no assurance that a particular device ultimately will receive marketing authorization from the FDANew
2. 25imposition of civil or criminal penalties29% rewritten
3. 26Our 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. 27Complying 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. 28similar foreign laws and regulations that apply to us in the countries in which we operate or may operate in the future
6. 29We could be adversely affected by violations of the FCPA and other worldwide anti-bribery laws
7. 30Changes in health care policy could increase our costs, decrease our revenue, and impact sales of and reimbursement for our tests90% rewritten
8. 31If we use hazardous materials in a manner that causes injury, we could be liable for resulting damages
9. 32Changes in tax laws or regulations could adversely affect our business and financial condition94% rewritten
10. 33Our effective tax rate may fluctuate, and we may incur obligations in tax jurisdictions in excess of accrued amounts
11. 34Our business could be negatively impacted by environmental, social and corporate governance (ESG) matters or our reporting of such matters
12. 35Litigation 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
13. 36If we cannot license rights to use technologies on reasonable terms, we may not be able to commercialize new services in the future
14. 37Our 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
15. 38Patent terms may be inadequate to protect our competitive position for an adequate amount of time
16. 39prosecution. If we do not have sufficient patent life to protect our technologies and services, our competitive position, business, financial condition, results of operations, and prospects will be adversely affected
17. 40our 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
18. 41We 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
19. 42If we are unable to protect the confidentiality of our trade secrets and know-how, our business and competitive position would be harmed
20. 43We may not be able to enforce our intellectual property rights throughout the world
21. 44Obtaining 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
22. 45We 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
23. 46Our use of “open source” software could subject our proprietary software to general release, adversely affect our ability to sell our testing services and subject us to possible litigation
24. 47If 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
25. 48We may be subject to claims challenging the inventorship of our patents and other intellectual property
26. 49If 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
27. 50We 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
28. 51The 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
29. 52other general economic, industry, and market conditions, including factors unrelated to our operating performance or the operating performance of our competitors
30. 53Our quarterly results may fluctuate significantly, which could adversely impact the value of our common stock
31. 54Unstable market, economic and geo-political conditions may have serious adverse consequences on our business, financial condition and stock price73% rewritten
32. 55is a risk that one or more of our current service providers, manufacturers and other partners may not survive an economic downturn or rising inflation, which could directly affect our ability to attain our operating goals on schedule and on budgetNew
33. 56Adverse developments affecting the financial services industry could adversely affect our current and projected business operations and our financial condition and results of operations
34. 57We maintain our cash at financial institutions, often in balances that exceed federally insured limits
35. 58Insiders 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
36. 59Future sales of shares by existing stockholders, or the perception that such sales could occur, could cause our stock price to decline
37. 60We 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
38. 61Future 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
39. 62If 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
40. 63Holders of our common stock could be adversely affected if we issue preferred stock
41. 64Our ability to use net operating losses to offset future taxable income may be subject to limitations23% rewritten
42. 65Delaware 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
43. 66establish 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
44. 67any action asserting a claim against us that is governed by the internal-affairs doctrine
45. 68The requirements of being a public company consume substantial resources, may result in litigation and may divert management’s attention
46. 69We 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
47. 70Our disclosure controls and procedures may not prevent or detect all errors or acts of fraud
48. 71If 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