Guardant Health, Inc. Q3 FY2024 Earnings Call

Hello, everyone, and welcome to the Guardant Health Q3 2024 Earnings Call. My name is Nadia and I will be coordinating the call today. I would now hand over to your host, Zarak Khurshid, Vice President of Investor Relations to begin. Zarak, please go ahead.

Thank you. Earlier today, Guardant Health released financial results for the quarter ended September 30, 2024. Joining me today from Guardant are Helmy Eltoukhy, Co-CEO; AmirAli Talasaz, Co-CEO; and Mike Bell, Chief Financial Officer. Before we begin, I'd like to remind you that, during this call, management will make forward-looking statements within the meaning of federal securities laws. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated. This call will also include a discussion of non-GAAP financial measures, which are adjusted to exclude certain specific items. Additional information regarding material risks and uncertainties, as well as the non-GAAP reconciliation to the most directly comparable GAAP financial measures are available in the press release Guardant issued today, as well as in our 10-K and other filings with the SEC. Guardant disclaims any intention or obligation to update or revise financial projections and forward-looking statements whether because of new information, future events or otherwise except as required by law. The information in this conference call is accurate only as of the live broadcast. With that, I would like to turn the call over to Helmy.

Thanks, Zarak. Good afternoon, and thank you for joining our third quarter 2024 earnings call. Starting on Slide 3, 12 years ago, we embarked on our mission to conquer cancer with data. Roughly two years later, we launched into the late-stage cancer market with our first version of Guardant360 in 2014. In 2021, we launched Guardant Reveal for cancer recurrence and monitoring. And this past quarter, on August 1, we were thrilled to launch our first test into the asymptomatic cancer screening market with Shield unlocking an exciting opportunity to potentially impact millions more individuals across the cancer continuum. As is our practice, I would like to start our call off with a story illustrating the important impact our tests can have on improving patients' lives. A woman was initially diagnosed with left breast cancer when she was 50 years old. With a family history of cancer, she opted for aggressive treatment and underwent a double mastectomy. A few years later, she began experiencing hip and lower back pain. After a doctor determined the breast cancer had metastasized, a Guardant360 liquid biopsy test was ordered to determine if the metastasis had any actionable biomarkers. An ESR1 mutation was revealed and she was placed on Elacestrant for therapy. The Guardant360 test report also noted a BRCA2 variant which was later confirmed to be a germline mutation after further testing in a specialized lab. As a result, her family underwent genetic testing, and her sister was found to carry the same BRCA2 germline mutation but had not experienced a cancer diagnosis to date. Her sister chose a prophylactic double mastectomy and oophorectomy as treatment and was found to have occult ovarian cancer. This case highlights the remarkable ability of Guardant360 to provide lifesaving information both for patients with symptoms and for those without. Turning to top-line performance in Slide 4, we continued our strong momentum into the third quarter with total revenue growing 34% to a record $191.5 million. This was driven by another quarter of robust precision oncology revenue, which increased 35% in the quarter supported by significant Guardant360 reimbursement tailwinds and broad-based volume growth fueled by our smart liquid biopsy transition. Turning to Slide 5. Clinical test volume for the third quarter grew 21% year-over-year and 7% quarter-over-quarter, reaching 53,100 tests driven by strength across the portfolio. In particular, Guardant360 performed extremely well in Q3 and grew mid-single-digits sequentially. Furthermore, Reveal continues to see strong growth even with our ongoing careful management of volumes ahead of broader reimbursement. As a reminder, our clinical test volume is specific to our oncology tests, which are Guardant360, TissueNext, Response, and Reveal and does not include screening test volumes from Shield. Q3 was another standout quarter for biopharma with volumes up 40% year-over-year to a record 10,500 tests. I will share some more details in our biopharma progress shortly. Looking more closely at some of the recent highlights within our therapy selection business in Slide 6. In late July, we launched our upgraded Guardant360 LVT and smart liquid biopsy, representing the most significant upgrade to our flagship precision oncology product. Guardant360 is the leading liquid biopsy test for patients with advanced cancer, with industry-leading turnaround time and the improved platform positions us for continued robust growth and share gain. The Guardant360 upgrade expands the number of genes by nearly tenfold, includes all guideline recommended genomic markers for solid tumors, improves the sensitivity for tumor burden detection by a factor of 10 and introduces the first feature enabled by our methylation tech stack and therapy selection. As the performance and richness of the Guardant360 LVT product evolves and we continue to generate clinical data and add features, oncologists will gain an unparalleled view of cancer that we believe will quickly become a new standard of care in the clinical management of advanced cancer patients. Due to this compelling upgrade, we are very pleased that we are already seeing an increase in both breadth and depth of accounts and believe this will continue to drive growth as additional capabilities are unlocked over time. In particular, Guardant360 LVT on smart liquid biopsy was the strongest contributor to year-over-year and sequential volume growth in the third quarter. We also saw continuing improvements in Guardant360 ASPs, which reached $3,000 in the third quarter. Last quarter, we shared the upgrade of our TissueNext test to identify more treatment options for patients with advanced cancer. We have seen strong interest in the expanded panel and are excited to share that effective January 1, 2025, Medicare pricing will increase from $3,100 to $3,500. Following these great updates, I'm excited to share that we again generated positive free cash flow in our therapy selection business in the third quarter. We also announced a partnership with Policlinico Gemelli in Rome, a leading European oncology center to implement on-site processing of Guardant360 CDx tests for therapy selection in advanced cancer patients. This will mark one of the first dedicated liquid biopsy testing facilities housed within a hospital system in Italy. This partnership is significant given there are approximately 400,000 new malignant tumor cases recorded annually across Italy. When implemented, oncologists in Italy will be able to access our tests to make more informed treatment decisions for patients with solid tumor cancers. Finally, results from the SCRUM-Japan GOZILA study were recently published in Nature Medicine demonstrating the significant survival benefits of using Guardant360 CDx to test patients with advanced gastrointestinal cancer. Of the 4,037 patients in the study, 24% received personalized targeted treatment based on Guardant360 CDx and this subgroup survived nearly twice as long as those who did not receive Guardant360 match therapy. This study further solidifies the clinical utility of Guardant360 in guiding effective treatment decisions for advanced cancer patients. Turning to our biopharma business on Slide 7. As I mentioned earlier, we had another record quarter of reported biopharma samples growing 40% year-over-year. Biopharma revenue grew 34% year-over-year in the third quarter. We continue to see a lot of excitement for Guardant Infinity, our newest biopharma offering powered by our smart liquid biopsy platform driven by applications such as improved performance, novel biomarker discovery and signature development. Smart liquid biopsy now represents over 50% of reported samples and new contracts. Importantly, this strength in biopharma is driven by our smart liquid biopsy upgrade and we are still in the early innings of this exciting upgrade cycle. We have recently seen an acceleration of our clinical Guardant360 LVT volume, demonstrating how biopharma R&D testing is an important leading indicator for demand of our clinical oncology tests and in turn, clinical patient testing is a driver for increasing biopharma interest. Taken together, these elements create an important virtuous cycle in the precision oncology space. Finally, we are also seeing increased momentum in China with a strong and growing pipeline of samples. Now shifting gears to Reveal on Slide 8, where we are the leader in tissue-free MRD. Last quarter, we shared that data from our COSMOS colon study looking at Stage 2 and Stage 3 patients was published in the peer-reviewed journal Clinical Cancer Research. This study was also submitted to MolDx for Medicare reimbursement for the CRC surveillance MRD indication and review is ongoing. Beyond CRC surveillance, we have an extensive pipeline of clinical cohorts for establishing validity and utility for Guardant Reveal. This will be instrumental in building compelling evidence that not only supports efforts to expand reimbursement but also has the potential to influence changes in practice guidelines. Looking ahead to the remainder of the year, we anticipate submissions for publications that will support potential Medicare reimbursement for coverage and breast cancer. Next year, we have important clinical validity studies for additional cancers such as lung, pancreatic and gastric. Moving on to Slide 9, we are excited by the demand we are seeing in the tissue-free MRD market and there are multiple near-term inflection opportunities in 2025. We continue to make good progress towards CRC surveillance reimbursement which will improve our ASP. We also remain on track on our COGS reduction initiatives for Reveal. As a reminder, these two milestones will be a significant step towards our long-term goal of achieving greater than 60% gross margins for our MRD business. While we are seeing strong growth and strong market appetite for Reveal, we continue to manage volumes to minimize cash burn and will continue to do so until Reveal is gross margin positive, which we anticipate in 2025. Overall, we are seeing tremendous growth and opportunity around Guardant360, TissueNext, and Reveal largely driven by our recent smart liquid biopsy platform transition. As a result of the great progress we have made this year and are continuing to make, we are more confident than ever that our oncology business will continue to see strong growth over the next few years. With that, I will now turn the call over to AmirAli for an update on screening.

Thanks, Helmy. Moving on to Slide 10, as we have previously announced, we are thrilled that FDA has approved our Shield blood test for colorectal cancer screening in adults ages 45 and older who are at average risk for the disease. Shield is the first blood test to be approved by FDA as a primary screening option for CRC and it's also the first blood test for CRC screening that is now covered by Medicare. Turning to Slide 11, just a few days after FDA approval, we brought Shield IVD to market with a successful launch in August. Our initial strategy is to focus on the covered patient population. This approach will help us to establish a strong foundation for industry-leading long-term scalability and profitability. I'm excited to share that we have had a very positive reception and seen strong demand from physicians and patients in the first few months of the test being commercially available. To highlight this positive impact of Shield, I'd like to share an example of a primary care provider in rural South Carolina who had previously been facing challenges keeping patients up to date with colorectal screening guidelines. With the introduction of Shield blood tests, he has seen his screening rate skyrocket. And in just the last few months alone, four of his patients received positive Shield tests, quickly went through colonoscopy procedures and ultimately were diagnosed with early-stage colorectal cancer. In all four of these cases, the disease was caught early enough that these patients only required a partial colectomy, avoiding any further treatment and most importantly were able to quickly resume their lives. Turning now to Slide 12, to share some more exciting details on the launch reception. Early post-launch volume was ahead of our expectations and we exited the quarter with strong momentum, which we continue to see in the fourth quarter. The majority of our volume is coming from covered patients. We saw robust depth of ordering by prescribing physicians. We continue to see an incredibly strong adherence rate of over 90%, which means over 90% of the patients completed the blood draw and we are on track to have a trained sales force of over 100 people in the field by end of this year. Moving on to Slide 13, we are very pleased to report that Shield received a Medicare price of $920, recognizing Shield as an important new class of first line CRC screening. This Medicare price makes us more confident that our ASP will be approximately $500 even prior to an advanced diagnostics laboratory test or ADLT designation. We continue to expect to obtain ADLT designation and secure an even more favorable Medicare price of $14.95 in 2025. Turning to Slide 14, CMS has finalized the policy to remove cost sharing for a follow-on colonoscopy after blood-based screening tests for Medicare beneficiaries. This ruling proactively removes barriers to blood-based CRC screening and acknowledges its unique benefits to promote access to cancer prevention early detection, particularly for individuals within rural communities and communities of color that are especially impacted by the incidence of CRC. We are encouraged by the quick inclusion of blood in the final 2025 physician fee schedule. This rule will go into effect on January 1, 2025. Moving on to Slide 15, we are proud of our team's execution throughout 2024, starting with publishing our pivotal study results in the New England Journal of Medicine, followed by positive advisory panel voting, receiving FDA approval with the first line screening label, and finally securing a favorable reimbursement rate and successful commercial launch. We look forward to executing our commercial scale-up and ramping adoption throughout the remainder of this year. We are excited about our upcoming milestones in 2025 and making Shield one of the most impactful products in the history of diagnostics. We are optimistic about the potential inclusion of Shield in American Cancer Society or ACS guidelines and expect to secure ADLT status which enables improved ASV. We are pleased with the progress on indication expansion for Shield to become a leading multi-cancer detection blood test and expect to present our multi-cancer data. We are also planning to upgrade our CRC screening test with Shield V2. With that, I will now turn the call over to Mike for more detail on our financials.

Thanks, AmirAli. Turning to Slide 16, I'll discuss our financial results for the three months ended September 30, 2024, and refer to year-over-year growth rates unless otherwise noted. Total revenue grew 34% to $191.5 million, primarily driven by precision oncology revenue, which increased 35% to $180.6 million. Precision oncology revenue from clinical tests increased 36% to $141.2 million. Clinical test volume grew to a record 53,100 tests in Q3 2024. Clinical volume growth of 21% was in line with our expectations and was primarily driven by Guardant360. As Helmy mentioned, we have seen very strong uptake of our upgraded Guardant360 LVT, which we launched in our smart liquid biopsy platform at the start of Q3 and which led Guardant360 to grow sequentially in the mid-single-digits. We also saw continued strong growth of Reveal and Tissue during the third quarter of 2024. For the full year 2024, despite the weather impacts we experienced at the end of Q3 and during October, we continue to expect total clinical volume growth to be approximately 20%. Once again, our biopharma business performed incredibly well in the third quarter with precision oncology revenue from biopharma tests totaling $39.4 million, increasing 34%. This exceptional growth was fueled by a record number of tests in the third quarter 10,500, which was up 40%. With good line of sight to the end of the year, we now expect biopharma revenue growth to be in the high-20s for the full year 2024. Finally, development services and other revenue totaled $10.9 million. As a reminder, precision oncology clinical test volume does not include Shield tests and we currently include Shield screening revenue in the development services and other line. We'll start to separately report Shield revenue and volume in the fourth quarter of 2024 as they become material to our numbers. Turning to Guardant360 ASPs on Slide 17. In the third quarter of 2024, we again saw very strong reimbursement and ASP trends for Guardant360. At our Investor Day in September 2022, we stated our goal was to reach an ASP of $3,000 for Guardant360 by 2028. Since our Investor Day, we've received an increase to our Guardant360 LVT Medicare rate from $3,500 to $5,000 and have seen significant improvements in both the amounts we've been paid for our tests and the speed at which we've been paid by commercial payers. As a result, we're very pleased to report that we achieved our long-term Guardant360 ASP goal of $3,000 in Q3 2024, roughly four years ahead of target. Achieving this milestone so quickly is a testament to the strategic and operational excellence of our reimbursement team. In addition, the significant improvement in commercial reimbursement has led us to collect more cash than expected for our tests, which in turn has resulted in active period revenue upsides throughout the year. In Q3 2024, cash collected for Guardant360 tests performed in prior periods was $12 million above our expectations. It's worth noting that of this $12 million upside more than half relates to tests performed in the first half of 2024, which illustrates how quickly and consistently we're now being reimbursed for our tests. Going forward, although we don't anticipate similar future out-of-period revenue upsides, we believe our new Guardant360 ASP of $3,000 is sustainable and that we have the opportunity to further improve it over the next few years. Moving on to non-GAAP financial measures on Slide 18, our non-GAAP gross margin excluding cost of screening continues to be very strong and was 65% in the third quarter of 2024. Non-GAAP operating expenses were $187.3 million, an increase of $10 million compared to the prior quarter. This was primarily driven by a planned increase in sales and marketing expense to support the commercial launch and expansion of Shield. The increase was partially offset by savings in R&D expense due to the reduction in ECLIPSE clinical trial spend, which completed enrollment towards the end of 2023. We continue to tightly control our operating expenses by leveraging the infrastructure we've built to support all of our businesses, by focusing our R&D spend on projects that will drive future growth, and by directing our incremental investments towards the sales and marketing line to accelerate revenue across both screening and oncology. As a result of our increased revenue and operating leverage, both our adjusted EBITDA and free cash flow improved year-over-year in Q3 2024. Adjusted EBITDA loss was $56.2 million in Q3 2024, a decrease of $23.5 million from Q3 2023. Free cash flow for the third quarter of 2024 was negative $55.3 million, an improvement of $24.9 million from $80.2 million in Q3 2023. We ended the third quarter of 2024 with approximately $1 billion in cash, which we continue to believe is sufficient to enable us to achieve our goal of reaching cash flow breakeven by 2028. We also believe that achieving a Guardant360 ASP of $3,000 well ahead of our target of 2028 will reduce our total cash burn over the next few years and could help bring forward our cash flow breakeven target date. Now, turning to our outlook and assumptions for the full year 2024 on Slide 19. We're pleased to be able to increase our revenue guidance for the third time this year and now expect full year 2024 revenue to be in the range of $720 million to $725 million, representing growth of approximately 28% to 29% compared to 2023. This compares to our initial revenue guidance of 16% to 19% that we provided in February of this year. This latest increase reflects the further improvement in Guardant360 ASPs, the cash collection upside we had in the third quarter, our higher expectation for full year biopharma revenue and revenue contribution from Shield. We continue to expect non-GAAP gross margin excluding screening to be in the range of 61% to 63% and non-GAAP operating expenses to be in the range of $720 million to $730 million, representing a flat to 1% decline year-over-year. In addition, we now expect free cash flow for 2024 to be in the range of negative $265 million to $275 million, an improvement of $70 million to $80 million compared to 2023 and an improvement compared to our prior expectations of negative $275 million to $285 million. We continue to expect that our therapy selection business will deliver positive free cash flow for the full year 2024 and screening cash burn this year will be approximately $175 million. Finally, while we typically reserve granular out-year commentary to our Q4 earnings in February, we would like to share some initial considerations as you think about next year. With the positive traction we're seeing from our launch of Guardant360 LVT on smart liquid biopsy, we expect an acceleration in Guardant360 volume growth in 2025. As a result of this, and continued expected strong growth across both Reveal and TissueNext, we expect oncology clinical volume growth to accelerate above 20% in 2025, even without including contributions from Shield, which we will report separately. Finally, turning to Slide 20, to review our catalysts. We've made significant progress on milestones across each of our business areas this year. As we look ahead to the rest of 2024, we are very excited about the potential opportunities across therapy selection, MRD and screening.

Thank you. Our first question goes to Bill Bonello of Craig-Hallum. Bill, please go ahead.

Hey, congratulations on a great quarter, guys. Question on the Shield plans sort of two parts on it. One with the initial Medicare pricing even before ADLT looking pretty strong, I'm curious if that makes you think differently at all about how aggressive you might be sort of early on in terms of your sales and marketing efforts. And then, the second part of that is just conventional wisdom is obviously that you need USPSTF recommendations to secure commercial reimbursement. I'm just curious if to what degree you think that's the case universally or if you've had conversations at all where people with payers where you think you might actually be able to secure reimbursement even without that.

Thanks, Bill, for the question. I want to reaffirm our commitment to maintaining investment levels for Shield, which will be approximately $200 million in the coming years, with this year set at $175 million as stated in our updated guidance. This investment level is contingent upon us achieving our business milestones. I am very optimistic about 2024 and the milestones we have reached, but we are still in the early stages of commercialization. We need to keep monitoring our volume growth and ensure we meet our revenue targets to sustain this level of investment. I'm also pleased with the Medicare pricing we received, which opens up significant opportunities. Our ASV is roughly $500, and even before achieving ADLT, we can anticipate reaching a reasonable gross margin for this test soon as our volume increases towards 2025. We are very satisfied with our current position. However, positive developments will not alter our financial discipline regarding investment levels. Regarding USPSTF, we view it as a critical milestone that will enhance commercial access for patients aged 45 to 64. That said, the current market segment we cover is considerable. We have ample business opportunities to pursue while we await guideline inclusion and USPSTF recommendations. This is a substantial market, and we are not merely waiting for those guidelines; there's plenty of business to explore, especially with the healthy gross margin we expect in the near future.

Hey guys, thanks for the questions. Congrats on the quarter. I think some of us were hoping to perhaps hear how Shield is doing in the field. I think most people thought somewhere in the low to mid-thousands of tests. I know, I think I heard you say you plan to report that out next quarter. But maybe AmirAli, can you just give us a sense of any metrics like ordering providers or just feedback that you're hearing in the field? I think that would be helpful. And then, a question for Mike, about the Shield target for $500 million plus by 2028, on a million tests. This is at your Analyst Day assumes assumed a price of $500 million plus. Your Medicare prices are is already set at $920 and may go up to $1,500. So just making sure you guys likely see some upside to that initial target that you provided at the Analyst Day.

Yes, Mark, that's a great question. We’re not providing a breakdown of Shield volume at this point, but I can say that we’re very happy with the progress. The initial volume following the launch has exceeded our expectations, and we’re three months in now. We had a strong couple of months last quarter and ended with good momentum that is continuing into this quarter. October was solid for us, although Q3 wasn’t a complete quarter for our metrics. It's a bit early to give specifics, but based on the traction we’re experiencing, we plan to report on the volume and revenue contributions from Shield in our Q4 numbers and during the Q4 call, so we look forward to providing more information then. The market feedback we anticipated has been very positive. The primary care physicians we are targeting are excited about offering this option to their patients and providing them with choices. As I mentioned earlier, the depth of ordering for this blood test is robust, which reflects the substantial potential of this market beyond our commercial efforts. I'm proud of our achievements, yet the reality is that the unscreened patient population and those needing re-screening represent a vast market. We are seeing significant depth of ordering currently, and I'm eager to share more details in our Q4 results.

Yes. And Mark, on your comments on our Investor Day target, yes, we set the target of in 2028 to be Shield revenue of $500 million with a million tests, and yes, implying an ASP of $500. I think since our Investor Day, quite a few things have gone positively for us versus the assumptions we had. Firstly, I think the ASP I'm getting this Medicare rate of $920 now we already have ASPs around the $500 mark. When we get the ADLT rate then it's going to depend on the payer mix. But I think we're confident we can increase the ASP above $500. So that's one thing. I think the other two assumptions that we had at that Investor Day was one, that we were assuming nothing more akin to a second line label. And of course, that's gone in our favor now and we have a first-line label. And then, secondly, we assumed that competition would be on the market about approximately a year after we launched. I think now we look at where potential competition is it's probably at least 2.5 years to be on the market after our launch back in August. So I think things are going very well for us. We don't want to sit here today and give out some new long-term guidance. But I think that $500 million and 1 million tests we're feeling very confident about.

Hey guys, thank you for taking my question. Our recent KOL checks indicate that therapy selection TAM may be larger than what we previously anticipated. Even during your IPO, the 700,000 late-stage metastatic solid tumor patients for a test like Guardant360. And given repeat testing opportunity, could you comment on what you see as the TAM in maybe the number of tests for Guardant360 and with respect to repeat ordering for the same patient?

Yes, no, thank you for the question. It's something that I think we outlined and break up at our Investor Day last year is essentially that, right now the market in therapy selection has been focused on what we call zero to one, just getting patients to one test per patient for a lifetime. And you see that now there are first-line, second-line, and third-line therapies. There needs to be adaptive management of patients as their therapies stop working and they get cycled to a new therapy. And so yes, we see the market growing by orders of magnitude. We can see a future where patients are getting three, four, five therapy selection tests over their lifetime, which obviously grows the market considerably. And that's why I think we're very excited about the future that is before us. We're seeing with our biopharma partners that they're testing their patients multiple times or testing samples multiple times for some of these new drugs. Just like we've seen, we saw record biopharma volume over the last few quarters in a space where people were struggling with biopharma. We are an outlier there. And now that's translating to the clinical side and I think you're going to see that further translate to further momentum in clinical testing. So yes, we see this as a really important growth driver that frankly only liquid biopsy can really hit because you can take tissue biopsies multiple times from patients in an easy way. And this is really where having what we consider to be the best performing and I think really sort of most complete liquid biopsy on the market with our new upgraded panel puts us in full position to capture that market.

Hey, thanks. On the back of COSMOS, I'm just wondering if you can help us size potential upside from Reveal surveillance coverage next year. I know you talked at the September conference of about 12 million or 15 million potential patients being cancer survivors, but what could it do next year? Any more framework you can put around ASP? You obviously have talked about the $2,000 ASP when you're paid by Medicare, but how do we think about ASPs next year? And then did you give us a G360 number? I know last quarter was $2,500. Can you give us the number there? And are you reiterating your 20% target for the year?

I can address the 20% target for next year. We reiterated during the call that we expect 20% clinical volume growth for this year, and we've observed acceleration in Guardant360 volume growth, mainly due to the LVT. As we look towards 2025, we anticipate further volume growth with Guardant360. Additionally, we are seeing positive momentum with TissueNext and Reveal, and we believe that Reveal's growth will be bolstered by increased reimbursements on the CRC surveillance front and by reducing our cost per test. This progress will help us transition Reveal from a negative to a positive gross margin. As we head into 2025, assuming we secure the CRC surveillance reimbursement, I expect an increase in our average selling price. While it’s hard to quantify that increase at this moment since it relies on the reimbursement rate from Medicare, we do expect an uptick in volume. With positive gross margins, we will be able to accelerate our efforts to significantly boost Reveal next year.

Yes. Hi, AmirAli, Helmy, thanks for taking my question, and Mike. It's great to see the Medicare at $920 for Shield and it'll be material in the fourth quarter. I mean, a bigger question here is that you're ahead of any other liquid biopsy CRC screening test in the market. A competitor could potentially emerge in 2026, but I think you're going to have V2 data before that. So could you please provide a timing on that V2 data and also what is your assumption of market penetration for Shield CRC now since having this in the market since August? Thank you.

Yes, thank you, Puneet. Regarding Shield V2, we still expect to have that data, and if the results are positive, we may consider upgrading our Shield product to V2 in 2025. We are making progress in that area. As for our market share with the blood test, we are only two months into it, so we don't yet have any significant market presence in colorectal cancer screening. Looking at our long-term projections, we previously mentioned at the Investor Day last fall that we were assuming a market share of 60% in blood-based colorectal cancer screening for a projected volume of 1 million. As Mike pointed out earlier, we anticipated more competitive progress than we have seen so far. However, we will see how the market develops. We do not expect any competing tests to receive FDA approval and Medicare reimbursement for at least the next two years, so we are in very good shape.

Hey, thanks for taking the question. Congrats on the quarter. For Mike, the growth implied by the updated guidance is 20% to 29% over 2023. That compares 16% to 19% in the initial guide for 2024. How much of that 11 percentage point delta in growth has been from these like prior period collections and the Medicare pricing updates for G360, like essentially what's the core revenue growth? And quickly for AmirAli, Shield has been available as an LDT since May of 2022. How many of those early patients have retaken the test? Where are those reordering rates looking like so far? What are your expectations? Thanks.

Yes. Kyle, from the sort of prior period cash upsides that we've had, we reported $8 million in Q1 and then $8 million in Q2 and then $12 million, so $28 million in total. But of that, of that $28 million, $8 million of that is within 2024, so coming from Q1 and Q2. So effectively from these out of period upside, it's roughly around $20 million. So the other obviously drivers of growth have been on the clinical volume side, primarily that's Guardant360 volume growth. It's been increased to the Guardant360 ASP. We reiterated again that that's now at $3,000. And then, of course, the incredible performance that we've seen in the biopharma business. So growth drivers really across all of the business on top of the additional sort of $20 million that we've got from prior year upsides.

Regarding reordering rate, Kyle, like as you mentioned, we launched the LDT in May of 2022, so and our recommended intervals every three years. So we haven't reached that time window for to see what fraction of those patients would get retested. That would be probably something toward the later part of next year that maybe we can have some data.

Hey, thanks. On the back of COSMOS, I'm just wondering if you can help us size potential upside from Reveal surveillance coverage next year. I know you talked at the September conference of about 12 million or 15 million potential patients being cancer survivors, but what could it do next year? Any more framework you can put around ASP? You obviously have talked about the $2,000 ASP when you're paid by Medicare, but how do we think about ASPs next year? And then did you give us a G360 number? I know last quarter was $2,500. Can you give us the number there? And are you reiterating your 20% target for the year?

Yes, I can address the 20% target for next year. We reiterated during the call that we expect 20% clinical volume growth for this year. We've observed an increase in Guardant360 volume growth, especially due to the LVT. Looking ahead to 2025, we discussed volume acceleration with Guardant360, and we're also seeing good progress with TissueNext and Reveal. The acceleration of Reveal is largely driven by anticipated additional reimbursements for CRC surveillance and our efforts to lower the cost per test, which would enable us to shift Reveal from a negative gross margin to a positive one. We're making strong progress in all these areas. As we approach 2025, assuming we secure the CRC surveillance reimbursement from all the relevant parties, we expect an increase in our average selling price. It's challenging to specify that increase at this point as it will depend on the reimbursement rate we receive from Medicare. However, we do anticipate an increase in volume, and with positive gross margins, we'll be positioned to significantly accelerate Reveal next year.

Yes. Hi, AmirAli, Helmy, thanks for taking my question, and Mike. It's great to see the Medicare at $920 for Shield and it'll be material in the fourth quarter. A competitor could potentially emerge in 2026, but I think you're going to have V2 data before that. So could you please provide a timing on that V2 data and also what is your assumption of market penetration for Shield CRC now since having this in the market since August? Thank you.

Thank you, Puneet. Regarding Shield V2, we still expect to have the data soon, and if the results are positive, we may upgrade our Shield to V2 in 2025. We're making progress in that area. As for our market share, our blood test has only been available for two months, so we don't yet have significant market share for CRC screening. In our long-term projections shared at last fall's Investor Day, we estimated having a 60% market share in blood-based CRC screening, assuming a total of 1 million tests at that time. As Mike mentioned earlier, we anticipated more progress from our competitors than we have seen so far. We'll see how the market develops. We do not expect any competing tests to receive FDA approval and Medicare reimbursement for at least the next two to two and a half years, which puts us in a strong position.

Hey, thanks for taking the question. Congrats on the quarter. For Mike, the growth implied by the updated guidance is 20% to 29% over 2023. That compares 16% to 19% in the initial guide for 2024. How much of that 11 percentage point delta in growth has been from these prior period collections and the Medicare pricing updates for G360, like essentially what's the core revenue growth? And quickly for AmirAli, Shield has been available as an LDT since May of 2022. How many of those early patients have retaken the test? Where are those reordering rates looking like so far? What are your expectations? Thanks.

Yes. Kyle, from the sort of prior period cash upsides that we've had, we reported $8 million in Q1 and then $8 million in Q2 and then $12 million, so $28 million in total. But of that, of that $28 million, $8 million of that is within 2024, so coming from Q1 and Q2. So effectively from these out of period upside, it's roughly around $20 million. So the other obviously drivers of growth have been on the clinical volume side, primarily that's Guardant360 volume growth. It's been increased to the Guardant360 ASP. We reiterated again that that's now at $3,000. And then, of course, the incredible performance that we've seen in the biopharma business. So growth drivers really across all of the business on top of the additional $20 million that we've got from prior year upsides.

Regarding reordering rate, Kyle, like as you mentioned, we launched the LDT in May of 2022, so and our recommended intervals every three years. So we haven't reached that time window for to see what fraction of those patients would get retested. That would be probably something toward the later part of next year that maybe we can have some data.

Hey, thanks. On the back of COSMOS, I'm just wondering if you can help us size potential upside from Reveal surveillance coverage next year. I know you talked at the September conference of about 12 million or 15 million potential patients being cancer survivors, but what could it do next year? Any more framework you can put around ASP? You obviously have talked about the $2,000 ASP when you're paid by Medicare, but how do we think about ASPs next year? And then did you give us a G360 number? I know last quarter was $2,500. Can you give us the number there? And are you reiterating your 20% target for the year?

I can take the 20% target for next year. We have reiterated during the call that we expect 20% clinical volume growth this year. We've observed an increase in Guardant360 volume growth, particularly driven by the LVT. As we approach 2025, we anticipate further volume acceleration with Guardant360, and we're also seeing good progress with TissueNext and Reveal. The acceleration of Reveal is largely due to additional reimbursements on the CRC surveillance side and our efforts to reduce the cost per test, allowing us to move from a negative gross margin to a positive gross margin. We are making significant progress in these areas. Assuming we receive the CRC surveillance reimbursement from all the relevant parties in 2025, I believe we'll see an increase in our average selling price. While it's challenging to quantify that increase at this stage, it will depend on the reimbursement rate from Medicare. We expect an increase in volume, and with positive gross margins, we will be in a position to accelerate Reveal significantly next year.

Yes. Hi, AmirAli, Helmy, thanks for taking my question, and Mike. It's great to see the Medicare at $920 for Shield and it'll be material in the fourth quarter. A competitor could potentially emerge in 2026, but I think you're going to have V2 data before that. So could you please provide a timing on that V2 data and also what is your assumption of market penetration for Shield CRC now since having this in the market since August? Thank you.

Thanks, Puneet. Regarding Shield V2, we continue to expect to have that data, and if the data is positive, we could potentially upgrade our Shield to V2 in 2025. We're making progress on that front. As for market share, we are only two months into our blood test, so we don't have substantial market share in CRC screening yet. In our long-term projections shared last fall at Investor Day, we initially estimated that we would achieve 60% market share in blood-based CRC screening, assuming a total market of 1 million. As Mike mentioned earlier, we anticipated more progress from some competitors than we've actually seen. However, we will see how the market evolves. We don't expect any competing tests to receive FDA approval and Medicare reimbursement for at least the next two years, which puts us in a strong position.

Hey, thanks for taking the question. Congrats on the quarter. For Mike, the growth implied by the updated guidance is 20% to 29% over 2023. That compares 16% to 19% in the initial guide for 2024. How much of that 11 percentage point delta in growth has been from these prior period collections and the Medicare pricing updates for G360, like essentially what's the core revenue growth? And quickly for AmirAli, Shield has been available as an LDT since May of 2022. How many of those early patients have retaken the test? Where are those reordering rates looking like so far? What are your expectations? Thanks.

Yes. Kyle, from the sort of prior period cash upsides that we've had, we reported $8 million in Q1 and then $8 million in Q2 and then $12 million, so $28 million in total. But of that, of that $28 million, $8 million of that is within 2024, so coming from Q1 and Q2. So effectively from these out of period upside, it's roughly around $20 million. So the other obviously drivers of growth have been on the clinical volume side, primarily that's Guardant360 volume growth. It's been increased to the Guardant360 ASP. We reiterated again that that's now at $3,000. And then, of course, the incredible performance that we've seen in the biopharma business. So growth drivers really across all of the business on top of the additional $20 million that we've got from prior year upsides.

Regarding reordering rate, Kyle, like as you mentioned, we launched the LDT in May of 2022, so and our recommended intervals every three years. So we haven't reached that time window for to see what fraction of those patients would get retested. That would be probably something toward the later part of next year that maybe we can have some data.

Hey, thanks. On the back of COSMOS, I'm just wondering if you can help us size potential upside from Reveal surveillance coverage next year. I know you talked at the September conference of about 12 million or 15 million potential patients being cancer survivors, but what could it do next year? Any more framework you can put around ASP? You obviously have talked about the $2,000 ASP when you're paid by Medicare, but how do we think about ASPs next year? And then did you give us a G360 number? I know last quarter was $2,500. Can you give us the number there? And are you reiterating your 20% target for the year?

I can address the 20% target for next year. First, we confirmed during the call that we still expect 20% clinical volume growth for this year. We've observed an increase in Guardant360 volume growth, mainly due to the LVT. Looking ahead to 2025, we have discussed anticipated volume acceleration with Guardant360, along with positive performance from TissueNext and Reveal. The acceleration of Reveal will primarily depend on securing additional reimbursements for CRC surveillance and reducing our cost per test, which will transition Reveal from a negative to a positive gross margin. We're making progress on these fronts. Assuming we receive CRC surveillance reimbursement from all the relevant parties in 2025, we anticipate an increase in our average selling price, though it's challenging to specify that increase until we know the Medicare reimbursement rate. We do expect an uptick in volume, and with positive gross margins, we will be able to significantly accelerate Reveal next year.

Yes. Hi, AmirAli, Helmy, thanks for taking my question, and Mike. It's great to see the Medicare at $920 for Shield and it'll be material in the fourth quarter. A competitor could potentially emerge in 2026, but I think you're going to have V2 data before that. So could you please provide a timing on that V2 data and also what is your assumption of market penetration for Shield CRC now since having this in the market since August? Thank you.

Thank you, Puneet. Regarding Shield V2, we still expect to have that data, and if it's positive, we could potentially upgrade our Shield to V2 in 2025. We're making progress on that front. As for our market share with the blood test, we are only two months in, so we haven't achieved any significant market share in CRC screening yet. In terms of our long-term projections, during last fall's Investor Day, we estimated that we would have a 60% market share in blood-based CRC screening at a point when we reach 1 million tests. As Mike mentioned earlier, we had anticipated more advancement from some competitors than we've seen so far. However, we’ll see how the market evolves. We don't expect any other competing tests to receive FDA approval and Medicare reimbursement for at least the next two years, so we feel we're in a strong position.

Hey, thanks for taking the question. Congrats on the quarter. For Mike, the growth implied by the updated guidance is 20% to 29% over 2023. That compares 16% to 19% in the initial guide for 2024. How much of that 11 percentage point delta in growth has been from these prior period collections and the Medicare pricing updates for G360, like essentially what's the core revenue growth? And quickly for AmirAli, Shield has been available as an LDT since May of 2022. How many of those early patients have retaken the test? Where are those reordering rates looking like so far? What are your expectations? Thanks.

Yes. Kyle, from the sort of prior period cash upsides that we've had, we reported $8 million in Q1 and then $8 million in Q2 and then $12 million, so $28 million in total. But of that, of that $28 million, $8 million of that is within 2024, so coming from Q1 and Q2. So effectively from these out of period upside, it's roughly around $20 million. So the other obviously drivers of growth have been on the clinical volume side, primarily that's Guardant360 volume growth. It's been increased to the Guardant360 ASP. We reiterated again that that's now at $3,000. And then, of course, the incredible performance that we've seen in the biopharma business. So growth drivers really across all of the business on top of the additional $20 million that we've got from prior year upsides.