Note 8. Related Party Transactions

The Company determined that Tempus and Merck Sharp & Dohme LLC (“Merck”) are related parties because they own more than 10% of the Company's common stock.

Tempus

Tempus acquired its ownership stake in August 2024 by exercising two warrants issued to Tempus in November 2023 in consideration of Tempus' obligations to Personalis under the Tempus Agreement (as defined below), for an aggregate of 9,218,800 shares of Personalis' common stock at an average exercise price of $2.00 per share, and purchasing an additional 3,500,000 shares of Personalis' common stock at a price per share of $5.07 under an investment agreement entered into with Tempus in August 2024.

On July 20, 2026, the Company, Tempus, Aviary Development, Inc. (a wholly owned subsidiary of Tempus), and Toucan Development, LLC (a wholly owned subsidiary of Tempus) entered into a Merger Agreement. See Note 13 for further details.

Overview of Tempus Agreement

In November 2023, the Company entered into a Commercialization and Reference Laboratory Agreement (as amended by Amendment No. 1, dated August 16, 2024, Amendment No. 2, dated September 20, 2024, Amendment No. 3, dated December 13, 2024, Amendment No. 4, dated July 8, 2025 and Amendment No. 5 dated September 11, 2025, collectively, the “Tempus Agreement”) with Tempus pursuant to which Tempus markets the Company's NeXT Personal® Dx test in the United States. The Company performs tests ordered by patients through Tempus and the Company bills the patients or payors. The Company compensates Tempus for orders obtained and results delivered on a per-test basis. The term of the Tempus Agreement is six years, which may be extended for successive one-year terms. Either party may terminate the Tempus Agreement for convenience upon 30 months' prior written notice.

Under the Tempus Agreement, the Company conducted development activities to analytically validate NeXT Personal Dx in three indications: breast cancer, lung cancer and immuno-oncology monitoring. In consideration of the Company performing such development activities, in addition to the activation and first milestone fees, Tempus agreed to pay the Company a second milestone fee of $6.0 million (the "Market Development Fee"), payable in six equal quarterly installments.

Separately, the parties are performing co-promotion activities, and the Company is compensating Tempus for promotional and commercialization services through the end of 2026.

The Tempus Agreement also granted Tempus access to initial and longitudinal genomic data derived from performance of the tests and Tempus will have the right to use such data. If Tempus licenses such data to a third party and Tempus recognizes revenue from such license, Tempus will pay the Company a percentage of its gross revenues attributable to such license that is in the range of 10% to 20%. Such revenue share shall be payable during the term of the agreement and for 10 years thereafter. There was no revenue share recognized during the three and six months ended June 30, 2026 and 2025, respectively.

Impact of Tempus Agreement on the Consolidated Financial Statements

The Company recognized revenue of $0.1 million and an immaterial amount, respectively, for the three months ended June 30, 2026 and 2025 and $0.3 million and $0.5 million, respectively, for the six months ended June 30, 2026 and 2025, related to the Tempus Agreement and recorded it in its consolidated statements of operations. As of June 30, 2026 and December 31, 2025, $0.1 million and $0.4 million, respectively, was outstanding as a receivable from Tempus and is included in accounts receivable in the consolidated balance sheets.

The Market Development Fee for the second milestone is recorded as a liability when received and offset against promotional fees as they are paid by the Company to Tempus. As of September 30, 2025, all of the $6.0 million Market Development Fee for the second milestone has been received.

Merck

Investment Agreement with Merck

On December 19, 2024, the Company entered into an investment agreement (the "Merck Investment Agreement") with Merck under which the Company issued and sold 14,044,943 shares of common stock at a price per share of $3.56, representing the last reported closing price of the common stock. The Company received $50.0 million of cash from the sale of the shares and incurred $0.3 million of issuance costs directly related to the sale. Pursuant to the terms of the Merck Investment Agreement, the Company agreed to reserve $10.0 million of the proceeds to open an ISO-certified laboratory in a region outside of the United States, with such region mutually agreed upon by the Company and Merck. This cash was not legally restricted under the Merck Investment Agreement and therefore included in cash and cash equivalents as of June 30, 2026 and December 31, 2025. Concurrently with the execution of the Merger Agreement, Merck entered into a Voting Agreement with the Company. See Note 13 for details.

Before Merck became a related party in December 2024, the Company entered into a Master Service Agreement (the “Master Agreement”), in June 2017, as amended from time to time, with Merck for the performance of DNA and RNA sequencing analysis and data interpretation services, as well as synthesis and/or analysis of chemical compounds, genetic material and related samples for preclinical research purposes. In February 2024, the Company entered into an amendment whereby Merck engaged the Company to provide clinical laboratory services in connection with Merck's clinical studies.

The Company invoiced $8.3 million and $1.9 million, respectively, for the three months ended June 30, 2026 and 2025, and $11.2 million and $2.4 million, respectively, for the six months ended June 30, 2026 and 2025, pursuant to the terms of the Master Agreement and recorded as revenue in its consolidated statements of operations. As of June 30, 2026 and December 31, 2025, $7.4 million and $2.0 million, respectively, was outstanding as a receivable from Merck and included in accounts receivable in the consolidated balance sheets.