Personalis (PSNL) Moves To SELL
Personalis (PSNL) released preliminary Q4 results on January 11 and the official release after the close yesterday offered no surprises. Revenue was up 11% to $20.2 million, comprising $12.6 million from Veterans Affairs MVP program (down 9%) and $7.6 million from Biopharma customers (up 73%). EPS of -$0.34 missed by $0.04. Management said that it closed six new orders for its ImmunoID NeXT platform, bringing total customer count to 45. Guidance for Q1 2021 includes revenue of $20.3 million, with $5.6 million to $7 million coming from biopharma and the VA MVP program making up the balance. It is notable that the VA MVP contract has not yet been extended and there remain $43.5 million in unfulfilled orders. The assumption is this program will continue (it has since 2012); if it didn’t that would clearly be a big negative.
Taking it all in, the bottom line is that growth here seems like it is going to take longer to develop than we hoped. Looking out into 2021 and 2022 we may only see average annual sales growth near 10%. That’s not going to get the job done, in my view. We’ve been up very nicely on this stock and I had thought the secondary offering in January (boosted cash from around $200 million to roughly $360 million) might juice the stock as it could help accelerate the growth profile. That may not be the case. I hate to sell for a modest gain of around 10% after having been up nicely, but I’d hate more to take a loss, or keep holding while more attractive opportunities slip by. Let’s step aside here. SELL