Guardant Health, Inc. (GH) Earnings

Management highlights

### Regulatory Milestones - Received FDA approval for GARDEN360 Liquid CDX, the only FDA-approved liquid biopsy test integrating both genomic and epigenomic content. Phased rollout to U.S. customers began in June 2026, with full widespread availability planned after receiving ADLT designation expected in H1 2027. - Received FDA approval for a higher-throughput, lower COGS SHIELD workflow that will reduce per-test costs and improve lab scalability, with full production deployment imminent. - Completed the transition of GARDEN360 Liquid testing to the Novacic-X platform, reducing per-test cost by approximately $200. ### Clinical and Reimbursement Progress - SHIELD was added to the American Cancer Society (ACS) colorectal cancer screening guidelines, making it the only FDA-approved blood test included in both ACS and NCCN guidelines. - UnitedHealth Group (UHG), the largest U.S. commercial insurer, granted coverage for SHIELD as a primary colorectal cancer screening option for average-risk adults aged 45+, effective August 1, 2026. This expands total covered lives for SHIELD to approximately 70 million, or 60% of the U.S. eligible colorectal screening market. - Progress continues on MolDx Medicare reimbursement submissions for Reveal across breast cancer MRD surveillance, immunotherapy monitoring, and chemotherapy monitoring; IO and breast cancer submissions are closest to completion, with expectations for a decision by end of 2026. ### Platform and Product Highlights - Reveal (MRD/therapy monitoring test) has now achieved three consecutive quarters of accelerating volume growth, reaching over 100% year-over-year growth. Reveal Ultra, the next-generation higher-sensitivity tumor-informed MRD test, remains on track to launch by end of 2026. Late-stage cancer therapy monitoring (a new use case for Reveal) is a largely untapped multi-million annual test opportunity. - GARDEN's proprietary patient data repository now includes over 1.3 million patient tests and 700,000 epigenetic profiles across 100+ tumor types, which powers the Infinity AI platform for novel clinical app development and biopharma partner drug discovery. - The biopharma companion diagnostic franchise now has 28 CDX approvals, with four added in H1 2026. Two new CDX approvals were secured in Q2 2026 for partner therapies, and a new collaboration was announced with Nuvalent focused on GARDEN360 Tissue companion diagnostics. - SHIELD commercial expansion: The internal sales field organization now has over 400 professionals nationwide, and the dedicated health system team has expanded to over 30 people. The Quest co-promotion partnership performed well in its first full quarter of field activity. Majority of SHIELD-ordering physicians opt in to multi-cancer detection (MCD) reports as part of the company's data collection initiative. ### Financial Highlights - Non-GAAP gross margin was 67% in Q2 2026, up from 66% year-over-year, driven by lab efficiency and cost control. - Non-GAAP operating expenses were $288 million, up 34% year-over-year, with increases concentrated in commercial expansion for SHIELD. Adjusted EBITDA loss was $56 million, compared to a $52 million loss in Q2 2025. - Quarter-end cash and investments totaled approximately $1.2 billion, with Q2 free cash flow burn of $70 million, up from $66 million year-over-year due to higher CapEx for screening lab automation and infrastructure. - SHIELD cost per test is expected to fall ~15% from the current $410 by end of 2026, with a long-term target of $200 per test by 2028.

Guidance

- Full-year 2026 total revenue guidance is raised to a range of $1.34 billion to $1.36 billion, representing 36% to 38% year-over-year growth, up from prior guidance. - Oncology full-year guidance now expects 30% revenue growth and 50% volume growth, driven by continued adoption of GARDEN360 Liquid and strong growth of Reveal across MRD and therapy monitoring. - Biopharma and data full-year guidance is unchanged, expecting low double-digit revenue growth supported by new strategic partnerships and CDX pipeline progress. - Screening full-year revenue guidance is raised to $218 million to $230 million, with expected total SHIELD test volume of 270,000 to 285,000 tests, reflecting stronger than expected demand and the early UHG coverage win. - Full-year 2026 non-GAAP gross margin guidance is maintained at 64% to 65%, with cost reductions for GARDEN360 Liquid and SHIELD offset by product mix shifts as higher volumes of SHIELD and Reveal are processed. - Full-year 2026 non-GAAP operating expenses are now expected to be $1.08 billion to $1.1 billion, representing 20% to 22% year-over-year growth, driven by accelerated commercial and lab capacity investments for SHIELD. - Full-year 2026 free cash flow burn is now expected to be $195 million to $205 million, $10 million above prior guidance, due to higher CapEx for SHIELD lab capacity expansion. The business excluding screening is still expected to generate positive free cash flow in 2026. - The company remains committed to achieving company-wide cash flow breakeven by the end of 2027. Incremental ASP upside from ADLT designation for GARDEN360 Liquid could potentially accelerate this timeline.

Segment performance

Total company Q2 2026 revenue was $335 million, representing 44% year-over-year growth. 1. Oncology Segment: Revenue was $219 million, growing 38% year-over-year, contributing 65.4% of total Q2 revenue. Total oncology test volumes grew 63% year-over-year to 104,000 tests, with growth across all products: GARDEN360 Liquid grew over 30% year-over-year, GARDEN360 Tissue is the second fastest growing product with accelerating growth, and Reveal volume more than doubled year-over-year (over 100% growth) as the fastest growing product. ASPs for oncology were broadly stable sequentially. 2. Biopharma and Data Segment: Revenue was a record $61 million, growing 9% year-over-year, contributing 18.2% of total Q2 revenue. 3. Screening (SHIELD) Segment: Revenue was $53 million, up from $15 million year-over-year, contributing 15.8% of total Q2 revenue. SHIELD test volumes grew to 66,000 tests from 16,000 year-over-year, with an average selling price of approximately $800 per test.

Risks & headwinds

- Forward-looking statements, including revenue growth, reimbursement approvals, product launch timelines, and cost reduction targets, are subject to material risks and uncertainties that could cause actual results to differ materially from projected outcomes. - ASP increases from ADLT designation for GARDEN360 Liquid will take 12 to 24 months to fully flow through to realized pricing across Medicare Advantage and commercial payers, delaying expected margin upside. - Additional major payer coverage wins for SHIELD beyond UHG are not expected in the remainder of 2026, and the timing and likelihood of future coverage wins (including inclusion in USPSTF guidelines) remains uncertain. - Full materialization of the volume upside from the UHG coverage decision and the ACS guideline inclusion depends on successful negotiation of pricing and continued adoption by providers and patients. - Achieving the long-term $200 per test cost target for SHIELD and company-wide cash flow breakeven depends on continued volume scaling and successful execution of automation and efficiency initiatives, which may not occur as expected.

Analyst Q&A

• Q: How will ACS inclusion and early UHG coverage impact near- and long-term SHIELD volume and ASP, and what is the outlook for USPSTF inclusion?

  A: 70 million lives (60% of the total market) are now covered for SHIELD, which will be a material volume tailwind and expands access to younger patients under 65. ASP upside will take time to accrue as pricing negotiations with commercial plans are still ongoing. The outlook for USPSTF inclusion remains unchanged from prior expectations, with a likely late 2027 / early 2028 timeframe, but some payers have already begun coverage conversations ahead of a USPSTF decision.

• Q: What supports the 50% full-year oncology volume growth guide, how will G360 perform against tough year-over-year comps in Q3, and how did the early UHG coverage win happen and what does it mean for other payers?

  A: Oncology volume growth is broad-based across all products: G360 is growing over 30% YoY, Tissue growth is accelerating, and Reveal is growing over 100% YoY, so management is confident in hitting the 50% full-year target even with tough Q3/Q4 comps for G360. The early UHG coverage win was unexpected, driven by a multi-year existing relationship from the company's oncology business. While other major payers are not expected to announce coverage in the short term, no payer wants to be last to cover, and management notes encouraging early conversations with additional payers.

• Q: Where is G360 in its growth S-curve, and what should be expected for sequential SHIELD volume growth in Q3/Q4?

  A: G360 growth is being driven by increasing physician adoption and experience with the test, and significant untapped potential remains: as practice shifts to testing at every cancer progression, the market opportunity will expand significantly, supporting multi-year continued growth. Q2 sequential SHIELD growth was very strong, driven by the combination of the Quest co-promotion launch, DTC marketing, and field force expansion that created non-linear productivity gains. Management expects a more moderate but still healthy sequential growth rate of ~12,000 tests quarter-over-quarter in the second half, reflected in the updated guide, and is not overextending based on Q2's strong results.

• Q: What is the expected ADLT price for G360 Liquid CDX, how long will ASP uplift take to flow through, and how will incremental profit be allocated between reinvestment and bottom line gains?

  A: The expected ADLT price is $84.55, which will lift the current Medicare price from $5,000, with long-term G360 ASP expected to land around $5,000 overall. It will take 12 to 24 months for this pricing increase to flow through to all Medicare Advantage and commercial payer contracts. Some incremental gross profit will be reinvested in commercial expansion and innovation, but some will fall to the bottom line, which could accelerate the current end-of-2027 cash flow breakeven timeline. The company remains focused on hitting the breakeven target as quickly as possible.

• Q: How is Reveal therapy monitoring tracking, and what is the revenue opportunity after reimbursement? Has G360 Liquid FDA approval moved the needle on adoption from providers?

  A: Therapy monitoring is seeing very strong early uptake from existing G360 customers and is an underappreciated long-term opportunity. It represents a multi-million test annual opportunity, potentially as large as the MRD opportunity in the active cancer patient segment, as patients are tested multiple times per line of therapy. FDA approval for G360 Liquid occurred late in the quarter with a phased rollout, so adoption impact is still emerging. Early physician reception is very positive, but the biggest adoption uplift will not come until full launch after ADLT designation.