Guardant Health, Inc. Q4 FY2024 Earnings Call

Good afternoon. Thank you for attending today's Guardant Health Q4 2024 Earnings Call. My name is Tamia and I will be your moderator for today's call. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. I would now surpass the conference over to your host, Zarak Khurshid, VP of Investor Relations.

Thank you. Earlier today, Guardant Health released financial results for the quarter and year ended December 31, 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 specified 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 fourth quarter and full year 2024 earnings call. Starting on Slide 3, 2024 was an outstanding year for Guardant. I'm so proud of our team for their hard work and execution on delivering on a number of key milestones across our portfolio. In oncology, we made significant strides in both therapy selection and MRD. We completed a major upgrade of our flagship Guardant360 Test on to our new Smart Liquid Biopsy platform, all while generating record revenues, increasing test volumes and expanding the possibility of our therapy selection business. And we continue growing Reveal volumes and generating evidence for our MRD business, positioning us well for an inflection this year. In screening, we received FDA approval and Medicare coverage for our screening blood test for CRC, opening up an enormous market for early detection of cancer. Our team fired on all cylinders in 2024 and I'm even more excited for what is to come in 2025, in terms of product innovation, accelerated volume growth, and most importantly, the impact we will have on cancer patients around the world. As we typically do, I would like to start our call today with a story that highlights the importance of our tests and how they can work together synergistically to improve patient outcomes. In 2021, a 57-year-old woman was diagnosed with triple negative breast cancer. After completing standard-of-care therapy, she was tested for germline predisposition and was negative. Her oncologists then used imaging to monitor for recurrence. Unfortunately, after some time, imaging identified lung nodules. To get more information on whether or not these nodules were indeed metastatic, her oncologist ordered a non-invasive Guardant Reveal test. The test came back positive for ctDNA and was automatically reflexed to a Guardant360 test. Guardant360 identified a pathogenic BRCA1 mutation. The nodules were confirmed to be metastatic triple negative breast cancer and the patient is being considered for a PARP inhibitor. Guardant Reveal was crucial in confirming her cancer recurrence and the ability to effortlessly reflex to Guardant360 helped her oncologist move quickly to determine the next steps in her treatment. Turning to top-line performance in Slide 4, we had an excellent finish to the year with Q4 revenue growing 30% year-over-year to $202 million, bringing our total full-year revenue to $739 million, an increase of 31% year-over-year. Turning to Slide 5, this performance was driven by incredibly strong clinical revenue, which grew 34% year-over-year, supported by ASPs and reimbursement tailwinds. Total oncology clinical volumes in the fourth quarter increased 24% year-over-year, bringing our total clinical volume growth to 20% for the full year 2024. This was largely driven by Guardant360, which saw double-digit volume growth in 2024. Turning now to Slide 6 to take a closer look at the reimbursement tailwind supporting therapy selection. We saw significant ASP improvement over the course of the year. At our Investor Day in September of 2023, we stated our goal was to reach an ASP of $3,000 for Guardant360 by 2028. We achieved this target roughly four years ahead of schedule due to a number of reimbursement wins, including the increase of our Guardant360 LBT Medicare rate from $3,500 to $5,000. We also saw significant improvements in both the amounts we have been paid for our tests and the speed at which we have been paid by commercial payers. In addition to wins for Guardant360, Medicare pricing increased from $3,100 to $3,500, effective January 1st of this year, creating another important tailwind for our Therapy Selection business. Looking ahead this year, there are additional opportunities with state biomarker laws and continued commercial coverage expansion to further improve the ASP for our Therapy Selection products. Moving on to Slide 7. Last July, we transitioned our Guardant360 LBT onto our Smart Liquid Biopsy platform, representing the most significant upgrade to our flagship precision oncology products. The upgraded test, called Guardant360 Liquid, reinforces Guardant360's leading position in liquid CGP. Guardant360 Liquid expands the number of genes by nearly tenfold, including all guideline-recommended genomic markers for solid tumors and improves the sensitivity for tumor burden detection by a factor of ten. Guardant360 Liquid is resonating incredibly well and is helping to drive greater depth of ordering and increased testing frequency as physicians experience the capabilities of the upgraded platform first-hand. Importantly, we have a rich pipeline of additional features leveraging our smart platform, which we believe will generate a limitless number of differentiated applications. These apps will allow Guardant360 Liquid to help identify more patients for existing therapies that are undetectable by current CGP tests, detect harmful adverse effects of chemotherapy, and provide detailed phenotypic information about the tumor such as histology subtypes. Given the positive traction we are seeing from Guardant360 Liquid, we expect to continue to see an acceleration in Guardant360 volume growth in 2025. Turning to Slide 8 with our major product upgrades, growing use cases in both early and late-stage settings, and opportunities for international expansion, I am more confident than ever that the Therapy Selection portion of our oncology business will continue to see very strong growth over the next few years. Now shifting gears to Reveal in Slide 9, where we are the leader in tissue-free MRD. We were thrilled that Guardant Reveal, which runs on our Smart Liquid Biopsy platform, recently received Medicare coverage for CRC Surveillance Testing as a curative intent treatment for stages 1 through 4. Medicare reimbursement for Reveal is $1,644 per test, consistent with prior expectations. Utilizing ctDNA testing in the surveillance setting alongside standard-of-care monitoring such as CT scans has the potential to identify molecular recurrence of CRC ahead of traditional imaging. Now Reveal will be more widely available to patients and for oncologists in making more informed therapeutic decisions. We are encouraged to see the recent NCCN guideline updates related to MRD. The changes are beginning to reflect what we are seeing in clinical practice and represent increasing ratification of the value of ctDNA testing. The NCCN guideline updates reinforce our view of the productiveness of the opportunity and our commercial strategy. Turning to Slide 10. Beyond CRC surveillance, we have an extensive pipeline of clinical cohorts to further support the validity and utility of Guardant Reveal. We recently submitted data for publication supporting potential Medicare reimbursement for coverage in breast cancer and therapy monitoring. Looking ahead, we have a number of ongoing clinical validity studies for additional cancers, and we look forward to sharing updates on their progress throughout the year. Moving on to Slide 11. During the course of 2024, we made critical progress to reduce the COGS for Reveal and achieved more than a 50% reduction exiting the year. This reduction will save tens of millions of dollars in 2025 and was largely supported by the transition to our Smart Liquid Biopsy platform. This is an incredible accomplishment and is a testament to our team's ability to execute well. Turning to Slide 12, Reveal is on track to reach an important inflection point in 2025. As a reminder, despite very strong demand, we had been managing Reveal volumes ahead of Medicare reimbursements in order to manage our cash burn. Now with CRC Surveillance reimbursement in place, improving ASPs, and achieving a meaningful reduction to our COGS, we are making the test gross margin positive. We will be leveraging our robust commercial channel in oncology to push ahead with Reveal to meet the market demand for a tissue-free MRD test. This long-awaited milestone unlocks a key commercial market for us this year, and our team is focused on executing at a high level. Turning to Slide 13. We had a very strong year for Biopharma with 2024 revenue growing 31% year-over-year. This was fueled by a growing number of Biopharma partnerships, now above 180, and the growing mix of our Smart Liquid Biopsy platform, which now represents more than 50% of reported samples in new contracts. Our Smart Liquid Biopsy products offer improved performance, as well as key applications such as Novel Biomarker Discovery and signature development. This offering was a major growth catalyst in 2024 and is supporting strategic partnerships with top 20 global biopharma companies. Looking more closely at some of the recent highlights within our biopharma and data business on Slide 14. We originally announced a collaboration with Boehringer Ingelheim to develop a companion diagnostic for the detection of specific mutations in advanced lung cancer, and we have a robust pipeline of other companion diagnostic partnerships, positioning us well for this year. Moving on to data. In early January, we announced a collaboration with ConcertAI to create a differentiated data-as-a-service platform that integrates comprehensive patient EMR records with both genomic and epigenomic tumor profiling data. This platform augments Guardant with insights from ConcertAI's National Database of 5.5 million clinical records and our profiling data across more than 50 tumor types. This combined real-world evidence platform will help to accelerate cancer therapy research and development for biopharma partners. Our mission is to conquer cancer with data, and this collaboration brings us one step closer to achieving this goal.

Thanks, Helmy. Turning to Slide 15, our goal has always been to identify and catch many cancer attacks early when they are most treatable. We developed our Shield assay as a platform capable of multi-cancer detection across a range of indications. We selected CRC as our first indication for Shield given its regulatory and reimbursement pathway. We’ve made incredible progress in 2024, with Shield becoming the first FDA approved and Medicare-covered blood test for primary CRC screening. Turning into Slide 16. Upon our FDA approval, Shield was covered for 45 million Medicare beneficiaries at average risk of CRC. We are very pleased that Shield was recognized as an important new class of CRC screening and received a favorable Medicare price of $920. We recently received a unique CLA code for Shield and expect that upon securing advanced diagnostic laboratory tests or ADLT status designation for Shield, the Medicare rates will increase to an even more favorable price of $1,495. Moving on to Slide 17. In early August, just a few days after CRC approval, we were thrilled to launch our Shield IVDS assay. We are seeing outstanding reception from physicians and patients, and thousands of patients have been screened using our test. We are looking forward to scaling our impact quickly. Our strategy is to focus on the conversation population to drive a high mix of covered reimbursable tests. We delivered $4.1 million of Shield testing revenue in Q4, driven by a majority of samples coming from covered Medicare beneficiaries. In addition, I'm happy to report that in our first full quarter of launch, we achieved gross margin breakeven with Shield with heightened ASP of approximately $600. With the current rate of improvement, we expect Shield to be gross margin positive in its first full year post-launch, much sooner than we originally anticipated. This gives us flexibility to reinvest in our commercial infrastructure in 2025, while we maintain our annual screening cash burn target of $200 million. Turning now to Slide 18. While we are focused on scaling up in the U.S., we are exploring some strategic international interest in our screening platform. Recently, we were excited to announce that the Abu Dhabi Department of Health selected Shield to be a part of their screening program. Currently, the overall compliance to colorectal cancer screening in the region, with the current screening modalities including FIT and colonoscopy, is less than 10%, and the majority of colorectal cancers are getting diagnosed at later stages. The introduction of a non-invasive blood test as a more pleasant option may encourage greater participation in screening and boost early detection of CRC. This program initially aims to screen approximately 10,000 patients in the surrounding regions in UAE and may scale to approximately 100,000 annual tests in later phases. Moving on to Slide 19. We recently announced that Shield has been selected through a highly competitive process by NIH for the Vanguard Multi-Cancer Detection study. NIH’s decision to select Shield recognizes Guardant as a leader in the field of multi-cancer detection and validates our technology. The MCD test needed to detect the presence of disease across various cancer types with good sensitivity, especially for the detection of early-stage cancers, as well as accurately predicting cancer site of origin. We are pleased to announce that the performance data of Shield MCD in approximately 800 patients across ten cancer types will be presented at a scientific conference in the second quarter of 2025. Looking ahead, we are excited about our upcoming milestones in 2025, including the presentation of our multi-cancer data, the potential inclusion of Shield in American Cancer Society guidelines, and securing ADLT status, which enables improved ASP. We are also planning to operate 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 20. I'll now discuss some select financial highlights for the quarter and year ended December 31, 2024. Fourth quarter total revenue grew 30% to $202 million, primarily driven by precision oncology revenues, which also increased 30% to $185 million. Precision oncology revenue from clinical tests increased 35% to $146 million. Clinical tests volumes grew 24% to a record 57,300 tests in Q4 2024 and was primarily driven by Guardant360 which grew sequentially in the mid-single digits. We continue to see very strong uptake of our upgraded Guardant360 Liquid, which we launched in our Smart Liquid Biopsy platform at the start of Q3. We also saw continued strong growth of Reveal in tissue during the fourth quarter of 2024. Guardant360 ASP in the fourth quarter of 2024 was approximately $3,000. As we have seen throughout the year, we also had very strong commercial payer collections in the fourth quarter, which led to an after-period revenue upside of approximately $8 million above our expectations. Once again, our biopharma business performed incredibly well in the fourth quarter with precision oncology revenue from biopharma tech totaling $39 million, increasing 15%. This strong growth was fueled by another record quarter of tests in the fourth quarter, 11,050, which was up 16%. Finally, development services and other revenue totaled $17.2 million in Q4 2024 and includes $4.1 million screening revenue generated from the 6,400 Shield tests that we reported in the quarter. For the full year 2024, total revenue grew 31% to $739 million, with growth again being primarily driven by precision oncology revenue which increased 34% to $688 million. Precision oncology revenue from clinical tests increased 34% to $543 million. Clinical test volume in 2024 was 206,700, which represents growth of 20%. As Helmy mentioned, clinical volume growth was largely driven by an increasing Guardant360 test volumes which grew double digits in 2024. We saw continued strong growth of Reveal throughout the year, which despite managing volumes ahead of Medicare surveillance reimbursements, was our fastest growing clinical test in 2024. Finally, tissue also grew stronger throughout 2024. Clinical tests revenue growth was also driven by significant improvements through our Guardant360 ASP, which increased from approximately $2,750 in the fourth quarter of 2023 to approximately $3,000 in the second half of 2024. In addition to this tailwind, the significant improvement in reimbursement trends throughout the year allowed us to collect more cash for our tests than we had previously accrued, resulting in after-period revenue upsides throughout the year. For the full year 2024, revenue recorded for tests performed in prior years was approximately $35 million. Of this $35 million, approximately $13 million was consistent with our expectations based on historical experience in payment trends. However, the remaining $22 million was the result of better-than-expected cash collections and we view this as non-recurring after-period revenue upside for 2024. Turning to Biopharma. As mentioned earlier, our biopharma business performed incredibly well during 2024, with precision oncology revenue from biopharma tests circling $145 million, increasing 31%, and biopharma test volume growing 35% to 40,500 tests during the full year 2024. Finally, development services and other revenue totaled $51.1 million for the full year 2024 and includes $5.1 million of screening revenues generated from Shield tests that were reported between the IVD launch at the start of August and the end of the year. Moving on to Slide 21. Our non-GAAP gross margin continues to be very strong and was 63% in the fourth quarter of 2024, compared to 61% in the fourth quarter of 2023. We also saw an improvement on an annual basis with a 2024 non-GAAP gross margin of 62% compared to 61% in 2023. Excluding screening, non-GAAP gross margin was 64% for both the fourth quarter and full year 2024, an improvement from 63% in the prior year period and above the full year guidance range of 61% to 63% that we provided on our Q3 earnings call. Non-GAAP operating expenses were $215 million in the fourth quarter of 2024, an increase of 17% and $757 million for the full year 2024, an increase of 4%. Our full-year non-GAAP operating expense was above our guidance range of $720 million to $730 million due to a few one-time items in the fourth quarter of 2024. Firstly, we incurred significant litigation expenses related to the November false advertising trial, of which the jury unanimously found in favor of Guardant Health on all its claims and awarded us $293 million. Secondly, in Q4, we increased the full-year accrual for the 2024 company bonus plan in line with the Board approved payout level, which reflects a successful year with respect to bonus performance components such as top and bottom-line financial measures, the FDA approval of Shield, and the launch of new products. With the results of our increased revenue, gross profit, and operating leverage both our adjusted EBITDA and free cash flow improved year-over-year in full year 2024. Adjusted EBITDA loss was $258 million for the full year 2024, an improvement of $86 million compared to a loss of $344 million in 2023. We continue to be focused on cash and materially reduced our burn in 2024. Free cash flow burn of $275 million for the full year 2024 was in line with the guidance we provided on our Q3 earnings call and represents an improvement of $70 million compared to $345 million in 2023. I'm also pleased to report that our core Therapy Selection business was free cash flow positive in 2024, and that we successfully managed our cash burn for screening to be in line with our guidance target of approximately $175 million. Turning to the balance sheet on Slide 22. We ended the year with approximately $944 million in cash, cash equivalents, restricted cash, and marketable debt securities. Earlier this month, we successfully completed a private convertible debt exchange where we extended the maturity on $600 million of convertible debt with favorable terms, which we believe helps to mitigate potential balance sheet risk, while at the same time provides greater optionality to optimize our capital structure in the future. The $600 million of new convertible debt is now due in 2031 and comes with a 1.25% annual coupon and a 35% conversion premium, which represents a conversion price of $62.22. As a result of the transaction, our total debt was reduced from $1.15 billion to $1.09 billion, of which $491 million is our zero-coupon convertible debt, which is due in November 2027. We also structured a concurrent stock repurchase of $45 million to help mitigate dilution. Following these transactions, our pro forma cash position was approximately $887 million. We continue to expect that we will reach cash flow break-even in 2028 with cumulative free cash outflows of $450 to $550 million over the next three years. Turning to Slide 23, before discussing our outlook and assumptions for 2025, we want to take a moment to preview how we intend to present our revenue going forward. Rather than splitting revenue into Precision Oncology and development services and other, we are changing the presentation to better reflect our different business lines and to provide clarity on the performance of Shield. As such, for 2025 we are about to break out revenue into four components. In summary, the new revenue components are Oncology, which represents Clinical Therapy Selection and MRD testing revenues; Biopharma and data, which represents the total revenue we generate from our biopharma customers, namely biopharma sample testing revenue as well as biopharma companion diagnostic and data services revenue; Licensing and other, which was previously reported as other revenue; and finally, Screening, which will represent Shield testing revenues. Moving to Slide 24 for our Outlook and assumptions for full year 2025. We expect full year 2025 revenues to be in the range of $850 million to $860 million, representing growth of approximately 15% to 16% compared to 2024. Excluding the $22 million non-recurring out-of-period upside in 2024, this range implies total revenue growth of 19% to 20% in 2025. Now, breaking down the key assumptions in our revenue guidance. We expect oncology revenue to grow approximately 15% year-over-year in 2025, again, excluding the non-recurring out-of-period upside in 2024. This represents oncology revenue growth of approximately 20%. Given the positive traction we're seeing from our launch of Guardant360 LDT or Smart Liquid Biopsy, our recent Medicare CRC surveillance coverage for Reveal, and the upgrades we're making to our tissue tests, we expect volumes across all oncology clinical products to accelerate in 2025, and total oncology clinical volume growth to be approximately 25%. We expect our biopharma business to continue to perform well in 2025 and are forecasting low-double-digit growth for biopharma and data revenues. Finally, although it's still very early into the launch, we want to provide some initial guidance for screening revenues, which we expect to be in the range of $25 million to $30 million driven by 45,000 to 50,000 Shield tests. We expect this full-year volume to be significantly back-end loaded due to the time it will take to ramp up the productivity of newly hired reps throughout the year. Also, our guidance does not include any ASP impact from receiving ADLT designation; we continue to expect this to occur in 2025 and will update our guidance accordingly at the appropriate time. We've made great progress in reducing our COGS over the last few months. With both Reveal and Shield reaching gross margin breakeven, for 2025, we're confident that we can deliver full-year non-GAAP gross margins in the range of 62% to 63%, despite the impact of changes in product mix that we expect during the year. We expect total non-GAAP operating expenses to be in the range of $815 million to $825 million, representing an 8% to 9% increase compared to 2024. We will continue to gain significant operating leverage during 2025 and expect R&D and G&A expenses to be relatively flat compared to 2024, with the increase in operating expenses coming mainly from investments in screening sales and marketing as we continue to ramp up our commercial efforts for Shield. Lastly, we continue to be committed to reducing our cash burn each year in order to reach company-wide cash flow break-even in 2028. For full year 2025, we expect free cash flow burn to be in the range of $225 to $235 million, an improvement compared to $275 million for 2024. Our burn in 2025 will consist of approximately $200 million related to screening as we scale our Shield business and maximize our first mover advantage. Notably, excluding screening, we expect the remainder of the business to burn approximately $25 million to $35 million during the year, and to reach cash flow break-even in the fourth quarter of 2025. Finally, turning to Slide 25. We have a rich pipeline of catalysts across our business segments and are excited about the opportunities ahead. With that, we will now open the call to questions.

Thank you. The first question comes from Puneet Souda with Leerink Partners. You may proceed.

Yeah. Hi guys. Thanks for taking my questions. First one on screening and I’ll try to wrap one on Reveal as well. Shield guide of $25 million to $30 million was well ahead of us and I believe the street, as well. I appreciate it’s second half loaded, but could you talk about the sales force expansion that you expect is going to contribute here for the second half? Any other drivers and the feedback that you're getting from the field that gives you confidence in this $30 million on the upper end? And maybe what - what are you contemplating for the lower end? And on Reveal, congrats on the surveillance coverage. But can you square the NCCN? Unfortunately, NCCN recommended against surveillance. So could you balance those two? I know it's still early days of this market. How do you expect the adoption and Reveal to go as a result of that? Thank you.

Thank you, Puneet. Maybe I’ll start with the Shield question and give it to Helmy about Reveal. So the question to be very pleased with what we are hearing in the field, physician response, patient response. Now connecting it to our guidance, I make a few points. One is we launched it back in August with 50 reps in the field. We increased it to 100 as we ended the last year of 2024. The vast majority of the people we added came very late in 2024, and it will take some time for them to contribute productivity. As a result, we believe that our ramp rate is going to be more back-ended. I think it's important to consider this is our first full year of launch. So, obviously in launch years, this kind of growth is always more back-ended. In terms of the total number of reps that we expect to have, we mentioned at our Investor Day follow-up that we are planning to have about 150 people in the field by the end of 2025. Some factors are much better than what we expected, mainly the Medicare pricing. As a result, we will add maybe a little bit more people in the field. But again, many of these newly hired reps are not going to contribute meaningfully for about three to six months after their hire date. Maybe I will leave it here and turn it over to Helmy for Reveal.

Thanks, Puneet. Yeah, good question, and we actually were fairly encouraged when we saw the update in NCCN guidelines. I think, on the whole, it's actually a step forward in terms of recognizing the value of ctDNA testing, especially in the adjuvant setting. This is not too dissimilar from the sort of cadence we saw with NCCN guidelines for 360 in terms of Liquid Biopsy testing. The guidelines tend to be a little bit behind clinical practices, but I think all in all we're encouraged in terms of this moving in the right direction, and we're very confident, given the utility we see with surveillance testing, especially with Reveal that we will get to the right place in the coming years from a guideline perspective.

Thank you. The next question comes from Bill Bonello with Craig-Hallum Group. You may proceed.

Hey guys. Thanks for the call. Another one on Shield. I'm just curious if you are having any preliminary discussions with payers outside of Medicare commercial payers about Shield. I mean, obviously, the thinking there has been that you have to wait on USPSTF and whatnot, but I wasn't sure if there was activity you might be trying to accomplish ahead of that.

Yeah, Bill, we are in very early conversations with some payers in terms of having advisory reports and getting some initial feedback from them. We are planning to ramp up some of those engagements after we go into guidelines and right after ACS guideline inclusions that we are optimistic will hopefully happen in 2025. We will ramp up those activities.

Thank you. The next question comes from Tycho Peterson with Jefferies. You may proceed.

Hey thanks. A couple about Shield. So, you're getting for ASPs to move a little bit lower here, 580 at the midpoint versus 625 in the fourth quarter. Is that just Medicare fee-for-service dynamics? Or is that Abu Dhabi and maybe subsidized samples? And can you maybe just confirm whether the Shield volume guide includes Abu Dhabi? And then any risk to ADLT status, and then lastly, just ACS guidelines, do you expect that in the second quarter and how do you think about the lift that could come? I assume that's not baked into the guidance.

Yeah, so Tycho, thanks for the great questions. We are very pleased with the ASP that we printed for Q4. We just don't want to get ahead of ourselves; that was really the first full quarter data that we had. And we want to be very thoughtful with the ASPs that we are going to present in the first full year of launch. We are going to continue to monitor our payer mix that would impact the ASP. I would like to emphasize that this bump from ADLT improved Medicare rates is not embedded in our guidance. We are going to assess this factor at the appropriate time and then revise the guidance accordingly. Based on everything that we know, we are very confident about the ADLT process and we know how it works. It's just a matter of the mechanics of timing. It's a quarterly process, and when exactly it's going to be activated for us is something that is not very clear. So we just want to make sure we assess it before we include that upside to our guidance and ASPs. And regarding Abu Dhabi, very quickly, it is not dilutive for our ASPs. Without going into more details, we are very pleased with the engagement that we have with the Department of Health there.

Thank you. The next question comes from Dan Brennan with TD Cowen. You may proceed.

Great. Thanks for the questions. I'm going to focus on Reveal. Can you help us think through what stays in for ’25? We're showing that you guys did like 35,000 tests in ‘24, maybe ramping up to like 55 and ‘25. I know you're not going to give us specifics, but how do we think about what the impact of surveillance could be? And then B, when you think about the additional indications, breast and monitoring, could you just give us some color about timelines of when we might hear back on that? Thank you.

Maybe I'll start and maybe Mike can provide some of the sort of cadence there and volumes. But as we said in the prepared remarks, we see acceleration across each of our product lines in oncology in terms of volume growth. And certainly we're very pleased with how the year has started, not just for Reveal but for all our products. That being said, in terms of additional indications, as we mentioned, we submitted data for publication for both breast and monitoring late last year. As soon as those are published and accepted in respective journals, we will be submitting that for more diagnostic testing. We are thinking of sometime in the second half of this year, or at the earliest, we could see potential indication expansion for Reveal.

Yeah, maybe I will add, as Helmy mentioned, we expect Reveal volume acceleration. You're right, and we're not breaking out the Reveal volumes among all the volumes that we saw in big clinical oncology lines. But we expect Reveal to accelerate. It'll take some time, and we think this will be more back-end loaded for the acceleration increase during the year. That's really because we are just ramping up to be very much focused on CRC. So, we had a national sales meeting kickoff just two or three weeks ago. The team is very excited and energized to sell Reveal CRC. But it's going to take time for that traction to take hold, but we're looking forward to accelerating the volumes throughout the year.

Thank you. The following question comes from Subbu Nambi with Guggenheim. You may proceed.

Hey guys. Thank you for taking my questions. Two questions. On Shield, the Shield COGS reductions have already been impressive. Is it fair to assume that you're achieving the Shield COGS reduction via a similar approach as Reveal? And what is embedded in the 2025 guide? And for Reveal, what ASP is embedded in your guidance with respect to ramp, mix, ADLT timing? Thank you.

Yeah, so actually many of the R&D activities that we are doing at Guardant are highly leveraged, especially for the platforms that are based on epigenomics. There's a lot of synergy. So, on Reveal, which is an LDT product, you have seen what we have achieved by reducing the COGS through some improvements in technology stack and process improvements. Shield is an IVD product, so implementing some of these changes takes longer, but there are many synergies across both Shield and Reveal.

Yeah, and maybe I'll take the Reveal ASP. Yes, so of course we were very pleased to get the CRC Medicare surveillance coverage at $1,644 starting at the start of the year. So that's going to have a positive impact on ASP. We ended 2024 with an ASP roughly between $400 and $500. We are going to have a positive impact from the Medicare coverage, but there is a big mix impacting all of Reveal because we have CRC surveillance, adjuvant, breast, lung, and of course, there's Medicare and Medicaid for commercial. So there's a lot that we have to deal with from a mix perspective. But yeah, we would expect that the ASP in our guide is roughly to increase to something like $600. We haven't included any impact for ADLT in that $600. It is our intention to apply for ADLT rates and so similar to Shield; if and when we get that, we would expect an increase in the Medicare rates and we will change our guidance in line with receiving that.

Thank you. The next question comes from Mark Massaro with BTIG. You may proceed.

Hey guys. Thanks for the questions. Congrats on a strong 2024. The first one is for you, Helmy. I think about a year ago, there was probably an investor misconception that your G360 business was either saturating or about to go into deceleration. But in your prepared comments today, you indicated you plan to accelerate volumes across all your products this year. So, I was curious if you could just give us some anecdotes about what you're seeing in the field with the upgraded G360 liquid product. And then one for AmirAli, I recognize that the majority of your revenue came from Medicare in Q4. But I would be curious about the level of interest you're seeing build from a non-Medicare population, and whether or not you think you will be well addressed to equip those orders when the commercial payer coverage comes in?

Thanks, Mark. I appreciate your question. I can tell you at our international sales meeting, obviously, I've been going to them every year. This is probably the most excited I've seen the team given the sorts of products we have out there and Smart Liquid Biopsy with G360 and Reveal and then some of the ones we have upcoming. Especially with tissue. So we are seeing that momentum. We saw that momentum since we launched G360 and Smart Liquid Biopsy. There has been nice uptake from existing physicians and new physicians alike. And we really haven't even rolled out many of the exciting features yet. We have extremely high confidence just given how this year has started and how last year ended that G360 Liquid will continue to do well, and there is a lot of room for growth over the next two years in this market. I outlined some of the growth drivers. It's not just increased penetration; it is more applications going into the long tail of tumor types that other tests can’t address, some of the new findings we have, as well as where the field is going in terms of testing patients in each progression. We are really at the beginning of where Liquid Biopsy for therapeutic self-selection can grow.

Regarding Shield, on the younger patient or commercial side, our experience during Shield in Q1, we didn’t proactively work. So I just want to clarify that I'm really focusing on cohort patients. We're experiencing that in fact, this 65 and above was a minority of our ordering and payer mix. Our actions are changing based on data that points out there is coverage that needs to be expanded and access expanded to younger patient populations. There is a huge demand and opportunity for Shield to go to younger patients. Right now, I'm just focusing on reimbursable coverage like Medicare and some of our initiatives that we have internationally in Abu Dhabi. I may take those opportunities there; there was an earlier question, and I progressively answered what’s the level of assumption of contribution at this Abu Dhabi partnership. That program is aiming to test about 10,000 patients in the first year. That said, since the program needs to go through ramp logistics, we don’t know exactly how quickly they’re going to ramp. At this time, we are just assuming a fraction of those patients would be tested by Shield until we get more visibility over that data.

Thank you. The next question comes from Patrick Donnelly with Citi. You may proceed.

Hey guys. Thanks for the questions. Helmy, maybe one on Reveal. Just I know before the reimbursement may have held it back a little bit kind of pursuing the volumes. Can you talk about just the change in strategy? How that will go? And as Mike mentioned, maybe a little more of a second-half ramp as we go through that? And then a quick one for AmirAli just on V2 for Shield. Can you just talk through what the expectation there should be on the catalyst centered for V2? Thanks, guys.

Yeah, we've said before we’ve been somewhat limited in how much we are servicing the demand from our sales team. One of the big sort of exciting initiatives we had at our National Sales Meeting this year was really training on Reveal and getting the sales team motivated. They were very excited about being able to now offer this product a lot more robustly, and this will accelerate our efforts there. So yeah, there's a lot of room to grow, especially with tissue-free MRD. It's really the surveillance setting where you get the most juice out of the market, which is where most of the opportunity is, and that hasn't really been an area that we've been targeting, given the lack of reimbursement. The team is ready to go, and we're very excited for what this means for our oncology business.

Regarding Shield V2, it’s an active program for us right now. Stay tuned. We are planning to have a launch of both by the end of the year.

Thank you. The following comes from Dan Arias with Stifel. You may proceed.

Hey guys. Thanks. Helmy, on MRD, and maybe just piggybacking on your last comment there. The way that the field is evolving here as companies increasingly shoot for both tumor-informed and tumor-naïve approaches. As you think about your own portfolio and just the way to best serve the community, how interested are you in that idea and having both? And then just quickly and early I had someone ask for a clarification on Tycho’s question whether Abu Dhabi volumes are considered in the 45 to 50K outlook for test volumes? Thanks.

Yeah, we ultimately think that tissue for MRD is going to be the largest portion of the market. It's the simplest from a product-market fit because it addresses the 12 million cancer survivors that are more than five years out, out of the 18 million in the market. But that doesn't mean that a tumor-informed product would not be part of our portfolio at some point. We have to listen to the market and understand what the needs are of our customers and we'll continue to do that. We obviously launched Guardant360 tissue a couple of years ago. We have a major upgrade of that test this year and will continue to listen to the needs of the market and adapt as required.

As for Abu Dhabi, the contract and program are aiming for approximately 10,000 patients within the first year. That said, since we don't have visibility over how quickly they can ramp up, we assume that only a fraction of those are included in our guide, so it's not really a material part of our guidance. It's just a fraction of that 10,000 included.

Thank you. The next question comes from Tejas Savant with Morgan Stanley. Your line is open.

Hey guys. Good evening. So just a quick follow-up there on one of Tycho’s earlier questions. Is ACS guideline inclusion of second half ‘25 catalyst for use phenomenally? And then with that Supreme Court case looming here, I know there are offsets via ACS states and Medicare opportunities, obviously escalated from that situation. But will that require any sort of rejigging on your commercial effort on Shield? Or perhaps, would past you’ve talked about this activation energy sort of phenomenon. Will that be a bigger gating factor for you as a result of the decision against USPSTF?

Okay, so maybe I start with ACS about something. In terms of ACS, we are pleased with the conversation we continue to have with that team. We are optimistic that they would consider Shield in the CRC guidance review that they started working on. The exact timing we are not sure. But, we are confident based on what we know; it should be sometime in 2025. In terms of the Supreme Court case, we are focused mainly on the Medicare patient population and the covered patient population, which is not going to get impacted by that case. We are monitoring it closely. It’s good for the field that the Trump Administration is continuing to be on the opposite side and work against sections of that law case. But we'll see what happens. There's a lot of business for us on Medicare to mine while we are waiting to build that pathway access for younger patient populations in the future.

Thank you. The following comes from Rachel Vatnsdal with JPMorgan. You may proceed.

Well, thanks, good afternoon and thanks so much for taking the questions. So I wanted to dig into ASP assumptions this year, specifically on G360. So given the traction that you saw throughout 2024, can you walk us through your assumptions embedded for 2025? And what are the levers this year that you can see for continued growth in ASP on that front for Therapy Selection? Thanks.

Yeah, Rachel, it’s Mike. I’ll take that one. Just to reiterate, we had a very impressive increase in our ASP in Guardant360 in 2024. The main driver at the start of the year was increasing the Guardant360 LDT rate from $3,500 to $5,000. Throughout the year, we saw Medicare advantage flow through bringing them up to that rate. So, yes, Guardant360 ASP went from $2,750 in Q4 2023 to $3,000 in the back half of ’24. And furthermore, we have these out-of-period upsides just because we were receiving much more cash than we had previously accrued for. I think when we look at 2025, the $3,000 ASP we believe is here to stay. The opportunity for us is to focus on commercial payers and expanding coverage for Guardant360. We have very good coverage now. All the national payers cover Guardant360, but they don’t cover every time we run a test. So some cohorts for their LDT version, some for the CDX only vice versa. And in certain cases, only for specific cancer types like lung or breast FDA-approved indications. So, yeah, that’s the focus for us to expand the coverage over time. What's built into our guidance is really the $3,000 ASP for Guardant360. Should we accelerate that and the expansion of coverage, that will yield upside. Should we continue to receive more of these out-of-period upsides above our expectations, then again, that would be an incremental boost to our guidance, but we’re feeling bullish about our Guardant360 ASPs going forward.

Thank you. The next question comes from Kyle Mikson with Canaccord. You may proceed.

Hey guys. Thanks for the questions. Helmy, could you talk about the contribution for G360 tissue in 2025? And how important that’s going to be longer term in the portfolio, just given that extended opportunity enhances it to better position and lengthen the roadway for that G360? And secondly, AmirAli, could you just clarify the volume for Shield this year in terms of demographics of the patients and their insurance around ’24? Thanks.

We've seen pretty strong growth from our tissue franchise over the last few years since we launched it. But this significant upgrade for the tariffs makes it one of the most competitive offerings in this space from a capability perspective and one that is really going to resonate with physicians. Yeah, we're expecting that this will be a very important pillar for our Therapy Selection business and a major contributor over the next couple of years. I think it's really important to serve as a sort of pillar of what physicians use when they're saving a patient. Really doing both tests up front, and then continuing to monitor the patient with 360 going forward.

Regarding Shield, Q4 was primarily driven by Medicare beneficiaries. What we are assuming is that the majority of the volume will come from the targeted covered patients, meaning Medicare beneficiaries. So the commercial insurance, like younger patients, represents a minority volume.

Thank you. The next question comes from Mason Carrico with Stephens. You may proceed.

Hey. Thanks. Sorry if this has been asked. I am jumping between a few tonight, but on the growth you're seeing for G360 in the U.S., I did see with some insight into where exactly that incremental growth is coming from? Is it capturing incremental share from competitors, higher utilization in tumor types, or penetration in new accounts? Any clarity there would be helpful.

I would say it’s largely from greater depth from existing accounts. As you know, we have the majority of U.S. oncologists ordering Guardant360 today. So, it’s a lot more about getting greater depth. Some of it is regaining share from competitors, but it's also just greater utilization as well. There's still a lot of physicians that don't test all of their patients. So with a comprehensive genomic profiling test having capabilities that go beyond just the standard genomic test has been well-received and has resonated with many physicians. We see a lot more of that to come as we roll out these applications and features onto the platform.

Thank you. Our final question comes from Matt Sykes with Goldman Sachs. You may proceed.

Thanks for taking my questions. Maybe just quickly, AmirAli, just on sales force expansion for Shield. You talked a little bit earlier in the call about maybe being a little bit bigger than what you originally expected. But a year or two ago, you talked about gating factors that you have considered in a given point in terms of building that out. Could you just maybe kind of walk through what those gating factors today are? Is it ACS guidelines? Competitive launches in the future? Just how you are thinking about sizing that investment over the year and maybe into ’26?

Everything that we are discussing in terms of Shield investments is gated on continued execution and our belief that this brand will have a huge opportunity for us at Guardant Health. That remains constant. Another consistent factor is that, as we have mentioned, our annual net burn is going to be ring-fenced around this $200 million. We are executing – we are continuously executing based on that financial discipline. So what's embedded there is continued execution on the commercial side, ensuring that the volume is coming in, and that P&L unit economics makes sense. The point I made earlier about commercial expansion was just based on the fact that unit economics are more favorable today than what we assumed a year and a half ago, primarily because we didn’t expect Medicare pricing to be $920 year and a half ago versus what we expected to be $1,495.

Thank you. This concludes today's conference call. Thank you for your participation. You may now disconnect your line.