GRAIL, Inc. (GRAL) Earnings

Management highlights

- **Clinical Evidence & Validation** * Grail has completed two large-scale interventional clinical trials for its multi-cancer early detection (MSED) Gallery test: the 35,000-participant Pathfinder 2 study in North America and the 140,000-participant NHS Gallery trial in England, with detailed results presented at the 2026 ASCO Annual Meeting. * The Gallery test has a confirmed false positive rate of less than 0.5%, 3-6x lower than competing MSED tests, with a 50-60% positive predictive value and high accuracy for cancer signal origin localization. Adding Gallery to standard of care increased the cancer detection rate by 4 to 6.5x across the two trials, and can raise overall cancer detection rates from ~14% to 50%+ in the U.S. (60% in Pathfinder 2). * Grail's proprietary methylation platform is uniquely positioned for high-accuracy detection, and head-to-head research confirms adding other genomic features does not improve performance, only adds complexity, cost and noise. * Both trial publications are under active review by top-tier medical journals, with publication expected in the near future. - **Commercial Operations** * U.S. physician adoption continues to grow, with 1,000 new ordering providers added in Q2 2026. Electronic ordering integrations with Quest and Athena are driving new prescriber growth and increased order depth from existing providers. * The planned expansion of the U.S. field sales and medical teams was completed at the end of Q2 2026, with all new personnel trained and active in the field. Post-ASCO clinician feedback on new trial data has been very positive. * A partnership expansion with Priority Health (1.4 million members across Michigan and nearby states) will expand Gallery coverage to additional employer group plans. * Self-pay volumes account for ~70% of current Gallery sales, with strong growth also reported in digital health partnerships and employer-offered coverage. - **Strategic & International Development** * Grail completed a $110 million financing with Samsung C&T Corporation in Q2 2026, and launched a strategic collaboration to commercialize Gallery in South Korea, with potential expansion to Japan and Singapore. Initial regulatory and commercial planning discussions are just kicking off after completion of CFIUS review. * Grail remains in active, iterative review of its premarket approval (PMA) application with the FDA, submitted in early 2026. Grail expects the FDA to convene an advisory committee (adcom) for Gallery in fall 2026, with the adcom focusing exclusively on Grail's PMA data package.

Guidance

- FDA approval for Gallery is still expected in the first part of 2027, with no timeline changes from prior guidance despite expectations of a fall 2026 advisory committee meeting. - The expected 7% royalty to Illumina will resume at the end of Q4 2026, with no material financial impact on full Q4 2026 results. - Management expects FDA approval will create a clear market bifurcation: Gallery as a fully validated, FDA-approved MSED, and competing products as experimental, unvalidated tests with unknown risk-benefit profiles, which will clear up current market confusion. - Management expects the FDA approval process for Gallery will set a clear regulatory bar for all future MSED products entering the market. - Grail expects the expanded sales team to drive growing volume as clinical data is disseminated to clinicians through the second half of 2026, and will be fully positioned to scale after FDA approval. - Publication of Pathfinder 2 and NHS Gallery trial results is expected in the near future.

Segment performance

Grail operates with two core revenue segments for Q2 2026: 1. **Gallery Screening Revenue**: Total revenue of $42.6 million, representing 95.3% of total Q2 2026 revenue. This reflects a 24% year-over-year increase, with test volume of over 61,000 units, a 35% year-over-year increase. Year-to-date (first half 2026) Gallery revenue reached over $80 million, a 30% year-over-year increase, with volume of over 117,000 units, a 42% year-over-year increase. 2. **Development Services Revenue**: Total revenue of $2 million, representing 4.7% of total Q2 2026 revenue. Total company Q2 2026 revenue was $44.7 million, a 26% year-over-year increase. GAAP net loss was $110.2 million, a 3% decrease year-over-year. Non-GAAP adjusted gross profit was $21.6 million, a 34% year-over-year increase.

Risks & headwinds

- Competing MSED tests launched to market have only been validated via case-control observational data, not interventional studies in asymptomatic screening populations, creating customer and clinician confusion in the market. These competitors also have 3-6x higher false positive rates, which expose patients to unnecessary risks from radiation, invasive procedures and complications, and have unproven risk-benefit profiles. - While Grail expects a fall 2026 FDA advisory committee, FDA leadership changes and delays in recruiting panel members could potentially push the meeting into 2027, which would impact the approval timeline. No confirmed delay exists as of the call. - Ongoing NHS structural reform and organizational changes in the UK have created a temporary hiatus in discussions for future collaborations and expansion, even though stakeholder reaction to trial results has been positive. - CMS national coverage criteria will only be developed after FDA approval, so the timing and specifics of Medicare reimbursement remain uncertain. Payer coverage expansion prior to a Medicare decision is dependent on individual plan and self-insured employer actions, which are uncertain.

Analyst Q&A

• Q: With FDA advisory committee expected in the fall, what will the adcom focus on, could it be delayed to 2027, and will CMS wait for FDA approval to set coverage criteria? /

  A: Grail cannot predict the specific focus of FDA questions ahead of formal notification from the agency. The FDA division working on Grail's PMA has been stable and collaborative, and management cannot comment on potential delays related to panel recruitment. Grail's baseline assumption is that CMS can only undertake a national coverage analysis after FDA approval, so the company expects CMS will wait for approval to formalize criteria. (309 characters)

• Q: How has competitor entry impacted Gallery pricing, and what is the outlook for USPSTF review of MSED tests? /

  A: The current average selling price reflects pre-planned lower pricing for employer partners, negotiated alongside strengthened partnership commitments including marketing and blood draw events, and is not a reaction to competition. Competitor entry has caused market confusion, as competing tests have no screening population data and higher false positive rates; Grail's sales team is addressing this by highlighting Gallery's extensive validated clinical data. Management thinks it is unlikely the USPSTF will take up MSED review before an FDA-approved product is on the market. (416 characters)

• Q: What is the expected business impact of FDA approval in the 12-month window before a Medicare coverage decision? /

  A: FDA approval is the key milestone many payers have been waiting for to begin serious coverage discussions for Gallery. Many employers and self-insured plans have also indicated they will move forward with coverage after approval, and it will give Grail's sales teams greater confidence in outreach to provider clinics. (241 characters)

• Q: What drove Gallery volume growth in Q2 2026, and how is NHS reform impacting future UK plans? /

  A: Growth came from both adding 1,000 new ordering physicians and increasing order frequency from existing providers, with support from electronic ordering integrations and growing demand from digital health partners and employer plans. NHS organizational reform has caused a temporary pause in future collaboration discussions, but stakeholder reaction to Gallery's trial results has been strongly positive, and progress is expected once the organizational restructuring is complete. (327 characters)