Guardant Health, Inc. Q4 FY2024 earnings call

Management Statement and Operational Highlights

• Oncology Achievements: Major upgrade of Guardant360 Test to Smart Liquid Biopsy platform, record revenues, increased test volumes, and expansion of therapy selection business. Reveal volumes growing with evidence for MRD business positioning for inflection in 2025.
• Reimbursement and ASP: Guardant360 ASP reached $3,000 ahead of target due to Medicare wins (e.g., Guardant360 LBT Medicare rate increased from $3,500 to $5,000), and tissue Medicare pricing increased from $3,100 to $3,500. Opportunities with state biomarker laws and commercial coverage expansion for further ASP improvement.
• Guardant360 Liquid: Transitioned to Smart Liquid Biopsy platform, reinforcing leading position in liquid CGP, with a rich pipeline of features leveraging the smart platform.
• Reveal Progress: Reduced COGS >50% by year-end 2024, on track for inflection in 2025 with CRC Surveillance reimbursement, improving ASPs.
• Biopharma and Data: Strong revenue growth, over 180 partnerships, collaboration with Boehringer Ingelheim for companion diagnostic development, and ConcertAI collaboration for data platform.
• Screening Progress: Shield FDA approved and Medicare covered for CRC, launched Shield IVDS assay, with international interest (e.g., Abu Dhabi Department of Health selection) and participation in NIH’s Vanguard Multi-Cancer Detection study.

Segment Performance

• Oncology: Q4 2024 revenue grew 30% year-over-year to $202 million, with full year 2024 revenue at $739 million (+31% y/y). Clinical revenue grew 34% y/y, with oncology clinical volumes in Q4 increasing 24% y/y (full year +20%), largely driven by Guardant360 with double-digit volume growth.
• Biopharma: 2024 revenue grew 31% y/y, fueled by over 180 partnerships and Smart Liquid Biopsy products representing >50% of new contracts.
• Screening: Shield received FDA approval and Medicare coverage for CRC screening. Q4 2024 screening revenue was $4.1 million, with 2025 guidance for screening revenues in the range of $25 million to $30 million, driven by 45,000 to 50,000 Shield tests (back-end loaded).

Guidance

• 2025 Revenue: Expected $850-860 million, +15-16% y/y (excluding non-recurring 2024 upside, +19-20% y/y). Oncology revenue +15% y/y, biopharma low-double-digit growth, screening $25-30 million.
• Gross Margin: Target range of 62-63%.
• Operating Expenses: $815-825 million, 8-9% increase compared to 2024.
• Cash Burn: Free cash flow burn $225-235 million in 2025, ~$200 million for screening, remainder non-screening burn $25-35 million, aiming for cash flow break even in Q4 2025.

Risks

• Reimbursement and Payer Coverage: Uncertainties in commercial payer coverage expansion and state biomarker laws affecting ASP for Therapy Selection products.
• Regulatory and Approval Risks: Delays or issues with ADLT status for Shield, NCCN guideline impact on Reveal adoption.
• Competition: Potential competitive launches affecting market share in oncology and screening segments.

Question and Answer

Q: Puneet Souda on Shield volume guide and Reveal NCCN recommendation A: AmirAli Talasaz noted positive field response, sales force expansion with 100 reps by end 2024, back-ended ramp; Helmy Eltoukhy stated NCCN guidelines moving in right direction, confident in Reveal adoption.

Q: Tycho Peterson on Shield ASPs, Abu Dhabi volume inclusion, ADLT status A: AmirAli Talasaz discussed monitoring payer mix, ADLT status timing uncertainty, Abu Dhabi volume not material to guide; Helmy Eltoukhy on Guardant360 Liquid field uptake.

Q: Dan Brennan on Reveal volumes and additional indications timelines A: Helmy Eltoukhy mentioned volume acceleration across oncology products, data submission for breast and monitoring indications in second half 2025; Mike Bell on Reveal volume acceleration being back-ended.

Q: Mark Massaro on G360 liquid product field response and non-Medicare interest A: Helmy Eltoukhy reported high team excitement, strong uptake of G360 Liquid; AmirAli Talasaz on Shield interest from non-Medicare population and future commercial coverage.

Q: Matt Sykes on Shield sales force expansion gating factors A: AmirAli Talasaz stated Shield investments gated on continued execution, financial discipline with annual net burn ~$200 million, favorable unit economics due to Medicare pricing.