Personalis, Inc. Leases Disclosure
Note 7. Leases
In 2021, the Company entered into a noncancelable operating lease for approximately 100,000 square feet in Fremont, California used for laboratory operations and its corporate headquarters. The lease term is 13.5 years and commenced in October 2022. The Company gained early access to the premises for the purpose of constructing and installing tenant improvements, for which the landlord contributed $15.1 million. Such contributions were accounted for as lease incentives and are recognized as reductions to lease expense over the lease term. The lease expires at the end of March 2036 and includes two options to extend the term for a period of five-years per option at market rates. The Company determined the extension options are not reasonably certain to be exercised. The lease includes escalating rent payments.
The Company has a noncancelable operating lease expiring in November 2027 for 31,280 square feet in Menlo Park, California previously used for laboratory operations and its former corporate headquarters. The lease includes escalating rent payments. The Company moved all laboratory operations to the Fremont facility during the third quarter of 2023, resulting in a lease impairment charge at that time. The Company is actively marketing the vacated Menlo Park space for sublease.
The Company has noncancelable operating leases for data center space expiring between 2025 and 2026. The leases include renewal options that the Company determined are not reasonably certain to be exercised. Separately, the Company also has various other short-term leases.
As of December 31, 2025 and 2024, operating leases had a weighted-average remaining lease term of 9.4 years and 9.9 years, respectively, and a weighted-average discount rate of 10.6% for each year. Discount rates are based on estimates of the Company's incremental borrowing rate, as the discount rates implicit in the leases cannot be readily determined. Future lease payments under operating leases as of December 31, 2025 were as follows (in thousands):
|
|
Amount |
|
|
2026 |
|
$ |
7,230 |
|
2027 |
|
|
7,189 |
|
2028 |
|
|
5,215 |
|
2029 |
|
|
5,371 |
|
2030 |
|
|
5,532 |
|
2031 and thereafter |
|
|
31,894 |
|
Total future minimum lease payments |
|
|
62,431 |
|
Less: imputed interest |
|
|
(23,673 |
) |
Present value of future minimum lease payments |
|
|
38,758 |
|
Less: current portion of operating lease liability (included in accrued and other current liabilities) |
|
|
(6,892 |
) |
Long-term operating lease liabilities |
|
$ |
31,866 |
|
Cash paid for operating lease liabilities, included in cash flows from operating activities in the consolidated statements of cash flows, was $8.1 million for each of the years ended December 31, 2025 and 2024.
Components of lease cost were as follows (in thousands):
|
|
Year Ended December 31, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
Lease cost |
|
|
|
|
|
|
||
Operating lease cost |
|
$ |
5,572 |
|
|
$ |
6,028 |
|
Short-term lease cost |
|
|
4 |
|
|
|
199 |
|
Variable lease cost |
|
|
2,264 |
|
|
|
2,027 |
|
Total lease cost |
|
$ |
7,840 |
|
|
$ |
8,254 |
|
In September 2025, the Company entered into an agreement to lease lab equipment for 36 months with 33 monthly payments of $0.1 million, commencing in January 2026. The Company classified this lease as a finance lease as the agreement contains an early buyout option which the Company was reasonably certain to exercise. Pursuant to the early buyout option, the Company can purchase the equipment and simultaneously terminate the agreement by paying the purchase price of $2.1 million in January 2026. In accordance with the agreement, in January 2026, the Company exercised the purchase option and paid $2.1 million. The purchase price was recognized as part of finance lease assets and finance lease liabilities. As of December 31, 2025, and liabilities were $3.1 million and $3.2 million, respectively. Finance lease cost was immaterial for the year ended December 31, 2025. As of December 31, 2024, the Company had no finance leases.
Finance lease liabilities with payments due within one year are classified as short-term liabilities and reported within the "Accrued and other current liabilities" line in the consolidated balance sheets. Finance lease liabilities with payments due beyond one year are classified as long-term liabilities and reported with the "Other long-term liabilities" line in the consolidated balance sheets. The classification of the finance lease liabilities as of December 31, 2025 is as follows (in thousands):
|
|
December 31, |
|
|
|
|
2025 |
|
|
|
$ |
2,583 |
|
|
|
|
621 |
|
|
|
$ |
3,204 |
|
|
About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.